While the term “depression” is most often associated with the massive economic downturn of the 1930s that initiated an era of great suffering and a concomitant increase in social awareness and the creation of standardized safety net programs for populations the whole world over, such economic downturns have been occurring throughout history. Often, in the past, these times were known as “panics”, or simply financial crises. Since the “Great Depression,” however, American political society has become more enamored with the word “recession”.
Recession, however, has grown increasingly obtuse the more frequently they occur—which tends to be every few years, according to various lists of such occurrences on a national and international basis. Combined with economic expansions, they make up an ongoing wave pattern that, while begun long before the modern era was even conceptualized, have grown more frequent of late, if also somewhat less dramatic.
Although one has to admit such “drama” and its abatement may be more a matter of definition than actuality.
The formal definition of “recession” includes the dry statement that it is composed of “two consecutive quarters of decline in GDP, the combined value of all the goods and services produced in the US.” According to Wikipedia, “a more modern definition of a recession that’s used by the National Bureau of Economic Research (NBER) Dating Committee, the group entrusted to call the start and end dates of a recession, is ‘a significant decline in economic activity spread across the economy, lasting more than a few months.’”
For those of us balancing checkbooks to get dinner on the table, clothes on our kids, and maybe a week’s vacation each year, recessions tend to appear in news analysis, reflecting truths we’ve already started feeling: a sense that, should we want to shift employment, we can’t with any ease because jobs are disappearing. An off feeling that what seemed expensive a few months back is even more expensive now, without any discernible reason why visible from our lives. They reflect a mix of rising prices and disappearing funds that aren’t explained by anything we can control in our own lives or communities.
Headed back into Wikipedia, one reads that, “Economist Richard C. Koo wrote that under ideal conditions, a country’s economy should have the household sector as net savers and the corporate sector as net borrowers, with the government budget nearly balanced and net exports near zero. When these relationships become imbalanced, recession can develop within the country or create pressure for recession in another country. Policy responses are often designed to drive the economy back towards this ideal state of balance.”
There are long discussions about economists’ use of such terms as V-shaped, U-shaped, L-shaped, and W-shaped recessions. And near-constant reminders that whatever it is that we’re facing, it’s NOT as bad as the Great Recession. And either alarmist or not-being-paid-enough-attention to, depending on which side of the political economy one’s with.
What IS definitively true is that political reactions to economic dips and rises ARE serious, both in the immediate crashes that can break and bankrupt entire governments, and launch the sort of philosophic inquiries that result in everything from Thomas Hobbes’ Leviathan to Marx and Engels’ The Communist Manifesto, not to forget the rise of National Socialism or a host of more recent reactionary forces.
Consider how the Gas Crisis of 1973 joined forces with an inquiry into a place called Watergate and eventually brought in Jimmy Carter, whose single term drew to a close partly because of another recession tied to Middle East difficulties, and partly because of events set into motion by his decision to reckon with our nation’s citizens via that great bit of public speaking now referred to as the “malaise speech,” in which he asked for a concerted effort to overcome elements of greed in our character.
“Recessions have psychological and confidence aspects. For example, if companies expect economic activity to slow, they may reduce employment levels and save money rather than invest. Such expectations can create a self-reinforcing downward cycle, bringing about or worsening a recession,” Wikipedia continues in its bifurcated look at the recession/depression phenomenon. “The term animal spirits has been used to describe the psychological factors underlying economic activity…the sense of trust we have in each other, our sense of fairness in economic dealings, and our sense of the extent of corruption and bad faith. When animal spirits are on ebb, consumers do not want to spend and businesses do not want to make capital expenditures or hire people.”
Which is like saying it’s our fault for not reacting to economics more scientifically.
Which has understandably launched a growing body of new thought regarding economics in general since the last “Great Recession” that helped bring in first Obama, and then Trump.
“The primary lever of power in today’s world is the overly centralized, monopolistic control over money, banking, and finance,” noted the author and economist Thomas Greco in his 2010 book, Money: Understanding and Creating Alternatives to Legal Tender. “Money constitutes the greatest and most acute current problem, while being at once the structural domain that is most ready for a transformational shift.”
While economists have tended to write about Greco’s books, including The End of Money and the Future of Civilization as being better means for starting dialogues than providing guidance, his impact seems to be growing through localized efforts to build new economics on community bases, including in the Hudson Valley.
“I must confess to a distinct bias in favor of social justice, economic equity, personal freedom, participatory government and decision making, local self-reliance, and community self determination,” he writes. “These approaches are broadly outlined as follows: Cultivate functional diversity and versatility. Strengthen social bonds and organize for mutual support. Set and adhere to standards for quality of life: environmental, social, economic, recreational, and so forth. Build on available local resources and capabilities. Create buffering structures between global, national, regional, and local economies, not to isolate, but to provide a placid ‘safe harbor’ conducive to the overall realization of shared goals and a better quality of life. Maximize the amount of local value added in all economic activity. Give priority to fulfilling the needs that are closest to home: spend locally, save locally, invest locally.”
Talk about taking on animal spirits head on, and with respect.
“With the development of low-cost, efficient transport and communications technologies, markets have become increasingly efficient,” Greco has concluded. “Money, on the other hand, remains clouded in mystery and the subject of political intrigue. Money is a subject that very few people really understand.”
Until it hits them in the animal gut we all share.