Neo-liberalism is unwell

In the Guardian, Martin Jacques places the temporary nationalisation of UK bank Northern Rock in a context of broader changes taking place in the global political economy. Jaques sees the West's current financial problems as symptomatic, not so much of capitalism's cyclical ups and downs, but of a seminal transformation of the nature and balance of economic power.

"[T]he underlying cause", says Jacques, "is permanent and far-reaching - a fundamental shift in power from the developed world to the developing world, and above all China and India. We have not witnessed anything like this since the inception of the west as an industrial powerhouse in the 19th century."

Read the whole thing here.

Last July, as the credit crisis began, Larry Elliot (whose writing is always an education) offered a good analysis of the economic imbalances and structural deficiences that are driving the changes that Jacques describes. Its worth revisiting that that article, which you can read here. The headline writer had it about right: "The hangover has kicked in - and here come the Chinese with the bill"

Elsewhere, over at the indispensible Tomdispatch, two other aspects of Western economic weakness are explored. Chalmers Johnson looks at how the United States' attempts dominate the globe militarily, without being able to meet the enormous costs that endevour involves, is paving the way to national bankruptcy in a classic case of imperial overstretch. Michael Klare looks at the part cheap oil played in inflating the West's economic bubble, and the part its rocketing price will play in bursting that bubble.

For more on the failures and contradictions inherent in the Anglo-Saxon economic model, see my articles "Bad Medicine" (on Western attempts to get the French to be more like us economically, which seem even more comical with hindsight), and "The Credit Crunch and the Free Market", (discussing the dissonance between neo-liberal policy and practice).

If Jacques is right, and we really are "only at the very beginning of the biggest geopolitical shift since the dawn of the industrial era", then we can expect the rest of this story to be messy and, at times, extremely painful. The question, as ever, will be who bears the costs of neo-liberalism's hubris.