Out Into the Sheltering Sky

In Immanuel Wallerstein's latest commentary he argues that those who claim we are now through the worst of the financial crisis, and that normal transmission will soon resume, are in denial. In fact

the world is only at the beginning of a depression that will last for quite a while and will get far worse than it is now. The immediate issue for governments is not how to recover but how to survive the growing popular anger they are all, without exception, facing.

According to Wallerstein there are three, almost irresistible, political responses to the crisis: economic protection, social protection (welfare state redistribution), and populist taxation of the wealthier tier, including wage caps for this tier. Such responses will do little more than mitigate the effects of the coming depression, and some will even continue to inflate markets that are already overvalued.

What then does Wallerstein offer in terms of hope?

It's a bit like being in the path of a tornado. The worst can come upon governments suddenly. When that happens, they have only minutes to take shelter in their cellars. The tornado then passes, and if one is still alive, one comes out to survey the damage. The damage will turn out to be very extensive. Yes, one can rebuild. But then the real argument begins - about how one rebuilds, and how fairly one shares the benefits of rebuilding.

How long will this gloomy picture prevail? No one knows or can be sure, but it will probably be a good number of years. In the meantime, governments will face elections, and voters will not be kind to the incumbents. Protectionism and social-democratic welfare serve governments the way the cellar does during a tornado. The quasi-nationalization of banks is another way of taking shelter in the cellars.

What we the people have to think about and prepare for is what we do when we emerge from the cellar, whenever that is. The fundamental question is how are we going to rebuild. That will be the real political battle. The landscape will be unfamiliar. And all our past rhetorics will be suspect. The key thing to realize is that rebuilding can take us into a far better world - but it can also take us into a far worse one. In either case, it will be a far different one.

Clip of land and sea-scape scenes
accompanying King Crimson - The Sheltering Sky (1981)