This on-line version is the pre-copyedited, preprint version. The published version can be found here:

‘Narratives of crisis and crisis response: perspectives from North and South’, in P. Utting, S. Razavi, and R.V. Buchholz, eds, The Global Crisis and Transformative Change, Basingstoke: Palgrave Macmillan, 23-42, 2012.


This chapter explores attempts by different social forces to interpret the complex global financial and economic crisis as it unfolded from 2006 to the end of 2009. Much mainstream commentary has read the crisis from the viewpoints of capital accumulation rather than social reproduction, the global North rather than the global South, and the best way for states to restore rather than constrain the dominance of market forces. Such commentaries reflect government responses to the crisis, especially in the global North. Executive authorities reacted quickly with emergency measures to safeguard the monetary, banking and credit systems to prevent large banks and firms going bankrupt, and to restore the conditions for capital accumulation. They have been slower to respond to the needs of ‘social reproduction’ in daily, life course, and intergenerational terms; and to take effective action on impending environmental, food and fuel crises. I will explicate these differences in terms of how competing narratives about the crisis framed policy responses, and how structures of economic, political and ideological domination enabled economic and political elites in key power centres to push the risks and costs of crisis-management onto subaltern groups and developing countries. Thus, besides identifying the key responses from the global North, I examine developing countries’ engagement through, for example, the G-20, the so-called Stiglitz Commission established by the President of the 63rd General Assembly of the United Nations and the associated summit (United Nations General Assembly 2008; United Nations 2009a, 2009b), the G-77 and the People’s Republic of China (hereafter China), and efforts at South-South cooperation. I also comment briefly on social movement and activist groups and post-neoliberal futures.

I address these questions through a cultural political economy (hereafter CPE) approach. This explores the dynamic interaction of semiosis (the production of intersubjective meaning-making) and structuration (the articulation of social relations) and offers a way to critique ideology and domination. Meaning-making is foundational to all social relations because actors must simplify the complexities of the real world in order to ‘go on’ within it. Such reductions are never wholly ‘innocent’: in construing the world, these discourses frame lived experience, limit perceived courses of action, and shape forms of social contestation, alliance building and domination. Moreover, to paraphrase Orwell, while all actors engage in construal, some construals are more equal than others. Thus we must ask why some are translated into policy and get institutionalized, and others do not. This is not just a question of coherence, rhetoric, resonance and so on; it also depends on capacities to translate discourses into effective strategies and policies. Relevant factors include differential location in key organizations, networks and institutional configurations of inclusion, exclusion and domination; relative control over specific strategic resources, technical capabilities, communication media, disciplinary instruments and means of coordination; and the qualities of particular individual and collective agents in relation to particular conjunctures. Rather than elaborate the general principles of CPE, however, I illustrate how they can be applied to the semiosis and materiality of crisis.

Relevant conceptual aspects are addressed in the first section. Then the second section examines the nature of the crisis and, in particular, its relation to neoliberalism. The third section identifies and contrasts the varied interpretations of the crisis and proposed solutions. A concluding section reflects on the implications of crisis response for both neoliberalism and counter-hegemonic projects.

Interpreting crisis

Crises disrupt accepted views of the world and how to ‘go on’ within it and also call established theoretical and policy paradigms into question. Viewed objectively, crises are complex moments of indeterminacy, where ‘decisive’ action can make a major difference to future developments. Ideas and imaginaries shape the interpretation of crises and the responses thereto.At one pole of a continuum, some crises appear ‘accidental’, that is, are readily (if sometimes inappropriately) attributable to natural or ‘external’ forces (for example, a tsunami, crop failure, AIDS). At the other pole, there are form-determined crises, that is, crises rooted in crisis-tendencies or antagonisms associated with specific social forms (for example, capitalism). Another useful distinction is that between crises in a given social configuration and crises of that configuration. Crises ‘in’ occur within the parameters of a given set of natural and social arrangements. They are typically associated with routine forms of crisis-management that restore the basic features of these arrangements through internal adjustments and/or shifting crisis effects into the future, elsewhere, or onto marginal and vulnerable groups. This is exemplified in alternating phases of unemployment and inflation in the post-war advanced capitalist economies and their treatment through countercyclical state economic policies. Crises ‘of’ a system are less common. They occur when there is a crisis of crisis-management (that is, normal responses no longer work) and efforts to defer or displace crises encounter growing resistance. Such crises are more disorienting than crises ‘in’, indicating the breakdown of previous regularities and an inability to ‘go on in the old way’. Crises of crisis-management can cause social stasis or regression, attempts to restore the old system through force majeure, fraud, or corruption; efforts at more radical social innovation for good or ill, leading in some cases to exceptional regimes (for example, military dictatorship, fascism), or else to attempts to break the power of such regimes and initiate moves (successful or not) towards democratization. This can be illustrated from the crisis of the post-war mode of growth, reflected in the declining effectiveness of Keynesian economic policies, which created the conditions for a transition to a neoliberal regime shift and a finance-led mode of economic growth.

A CPE approach to major social crises examines: (i) how crises emerge when structural contradictions, crisis-tendencies and strategic dilemmas are intensified and/or when established patterns of crisis-management no longer work as expected and, indeed, when continued reliance thereon may aggravate matters; (ii) how contestation over the meaning of the crisis shapes responses through processes of variation, selection and retention that are mediated through a changing mix of semiotic and extra-semiotic mechanisms. A crisis will be most acute when crisis-tendencies and tensions accumulate across different but interrelated moments of a given system, limiting the scope for manoeuvre for any particular problem. Shifts in the balance of forces may also intensify crisis-tendencies by weakening or resisting established modes of crisis-management (Offe 1984). This produces a more or less acute crisis, a potential moment of decisive transformation, an opportunity for decisive intervention, or a moment when the dialectic of revolution-restoration favours restoration. This opens space for strategic interventions to significantly redirect the course of events rather than ‘muddle through’ in the hope that the crisis is resolved in due course or that the status quo ante can be restored by taking emergency measures to return to ‘business as usual’.

The disorienting and disruptive effects of crises tend to provoke many competing interpretations. While many of the initial accounts prove arbitrary and short-lived, lacking long-term consequences for power relations and overall social dynamics, some do get selected as the basis for crisis-management and/or for attempts to move beyond crisis. While some narratives need to convince only a few key policy makers or strategists leading to more administered, indirect, market-mediated, or molecular changes that involve limited participation from subaltern groups, others are effective only through their capacity to mobilize significant support from a broader range of social forces. Such transformative narratives connect personal experiences, the narratives of key stakeholders and organized interests, and grand narratives that provide broader context for making sense of the crisis. In the latter cases, the plausibility of narratives and their associated strategies and projects depends on their resonance (and hence capacity to reinterpret and mobilize) with the personal (including shared) narratives of significant classes, strata, social categories or groups affected by the crisis. Moreover, although many plausible narratives are advanced, their narrators will not be equally effective in conveying their messages and securing support for the lessons they hope to draw.

Crucial here are discursive selectivities, the organization and operation of the mass media, the role of intellectuals in public life, and the structural biases and strategically selective operations of various public and private apparatuses of economic, political and ideological domination. Such matters take us beyond questions of narrativity and specific organizational or institutional genres toward issues of the extra-discursive conditions of narrative appeal and stable semiotic orders and their structural and technological reinforcement. That institutional and meta-narratives resonate powerfully does not mean that they should be taken at face value. All narratives are selective, appropriate some arguments rather than others and combine them in specific ways. So we must also consider what goes unstated or silent, repressed or suppressed, in specific discourses. Nonetheless, if the crisis can be plausibly interpreted as a crisis in the existing economic order, minor reforms may first be tried to restore that order. If this fails or the crisis is initially interpreted primarily as a crisis of that order, more radical changes may be explored. In both cases conflicts are likely over the best policies to resolve the crisis and allocate its costs as different social forces propose new visions, projects, programmes, and policies and struggle over hegemony.

Crisis interpretations may address a more or less broad range of questions: the challenge of making sense of a ‘crisis’ (and its uneven development), attributing material, institutional, organizational and personal blame for the ‘crisis’, deciding in broad terms whether it is crisis in or of the relevant arrangements, charting alternative futures, and recommending specific lines of action oriented to different spatio-temporal horizons. In the present context, this poses crucial problems around delimiting the origins of a crisis in space-time, establishing whether it is purely economic or has broader roots and effects, and reducing its complexities to identifiable causes that could be targeted in the search for solutions (for a study of the 1997 ‘Asian’ crisis in the Republic of Korea on these lines, see Ji 2006). Often, wider ideational and institutional innovation going beyond the economy narrowly conceived is needed, promoted and supported by political, intellectual and moral leadership. Indeed, as Milton Friedman (1962:32) put it hyperbolically but tellingly: ‘[o]nly a crisis produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around’It follows that preparing the ground for crisis-induced strategic interventions helps to shape the nature and outcome of crisis-management and crisis responses. This preparation may include a new ‘economic imaginary’ linked to new state projects and hegemonic visions that can be translated into material, social and spatio-temporal fixes that would jointly underpin continued accumulation. Conversely, lack of preparation (for whatever reason) will make it harder to influence the struggle over crisis-interpretation and crisis-management, however adequate, with hindsight, the crisis-diagnosis may prove to have been.

It is a truism that getting consensus on interpretations about the crisis (or crises) and its (their) most salient features is to have framed the problem. In particular, successfully to blame one set of factors and/or actors distracts blame from oneself and sets the stage for efforts to resolve crisis. This depends partly on access to key deliberative forums (see below) and partly on persuasive power and resonance. Other things being equal, more resonant interpretations will get selected as the basis for action, whether this takes the form of restoration, piecemeal reform or more radical innovation. But other things are rarely equal. There is many a slip between the discursive resonance of particular interpretations and proposals in a given conjuncture and their translation into adequate policies, effective crisis-management routines, durable new social arrangements, and institutionalized compromises that can underpin new patterns of economic, political and social stability in a given spatial and temporal context. Crucial here is the correspondence, always limited and provisional, between new imaginaries and crisis-solutions and real, or potentially realizable, sets of material interdependences in the wider natural and social world.

The consensus can vary in interesting ways. When crisis-management is reduced to issues of the best policies, defined through hegemonic or dominant forces, opportunities for more radical solutions are marginalized (Wolff 2008). This holds not only for regional, national or federal political regimes but also for the international system, where the policies of major international institutions and forums are at stake (see below on the Bretton Woods institutions, United Nations (UN) agencies, and alternative international groupings). Limiting crisis-management to the search for correct policies also implies that the crisis is due to incorrect policy or inadequate regulation rather than being rooted in deeper structural causes that are linked to patterns of economic, political and social domination.

Forums matter too. Powerful narratives without powerful bases from which to implement them are less effective than more ‘arbitrary, rationalistic and willed’ accounts that are pursued consistently by the powerful through a de facto exercise of power. This has proved important in the global crisis because some international institutions and some national states are clearly more important than others: even if the UN General Assembly adopted an agreed position on the global crisis, it would have been less influential (even if more legitimate) than bodies such as the International Monetary Fund (IMF), World Bank and the World Trade Organization (WTO), because of its slow-footedness in reaching agreement, its weak capacities to implement decisions, and the ability of leading states to block radical recommendations. Moreover, as the Stiglitz Commission demonstrates, UN deliberations are shaped by particular theoretical and policy paradigms as well as power plays that limit serious consideration of radical alternatives. At best, then, the UN family of organizations provides scope for developing sub-hegemonic narratives, that is, accounts that are widely accepted in regional forums and subaltern organizations, but do not challenge mainstream paradigms. This indicates the need to address the overall architecture of global, regional and national organizations and the differential capacity to jump scales to pursue solutions at the most effective scale(s) of action and intervention. The scope for pursuing counter-hegemonic narratives is even more limited within this institutional architecture and points to the increased importance of regional forums, local initiatives and social movements (see below).

Timing and sequencing also matter. Because this crisis was not only ‘made in the USA’ but broke there, with contagion spreading first to other neoliberal, finance-led regimes, crisis interpretations and reactions were initially shaped by readings in these heartlands. Developed nations focused on their own financial market stability rather than addressing crisis-induced global repercussions. It was clearly harder in 2006–08 than 1997–08 to blame East Asian ‘crony capitalism’ or the spread of contagion from indebted, incompetent or weak emerging economies. The reverse flow, from the centre to semi-peripheral and peripheral formations, developed mainly from October 2008. Even then some economies were relatively insulated because they were less exposed to the world market (for example, Brazil, India and Indonesia). Regarding the others, the impact began in developing economies with the most globally integrated financial sectors (notably in Eastern Europe). It was then relayed through trade relations as manufacturing and commodity prices and/or volumes dropped (notably in East Asia, sub-Saharan Africa and through ties to Russia and Central Asia). Subsequently, it was mediated through falling remittances from migrant workers and through other repercussions on the informal sector that affected the most vulnerable groups in many economies. And most recently, it has been intensified through its effects on public sector finances, which, even without the weak fiscal and institutional capacities that characterize many less developed economies, are limiting the scope to pursue countercyclical policies and cushion the impact of the crisis (see Oxfam International 2010). The impact outside the developed economies was often slower than in comparable crises in the 1980s and 1990s. This is reflected in the initial relative lack of mass upheavals or mobilization of radical social movements, especially where centre-left governments were in power and may have been vulnerable to hostility from right-wing parties and movements.

Finally, power matters. Although I have already noted that not all discourses and their spokespersons are equal, it is particularly important during periods of crisis to recall Karl Deutsch’s definition of power, namely, the capacity not to have to learn from one’s mistakes (Deutsch 1963:37). We shall see below that the asymmetries of power in the geo-economic and geopolitical field are especially significant in the selection of crisis-interpretations and their translation into crisis-responses. This is a fundamental factor behind the re-assertion of key elements in the neoliberal project despite the initial shock to that project from the form, timing, location and incidence of the current crisis.

The global crisis and neoliberalism

The origins of the present crisis and the social malaise of the past three decades are closely linked, as the editors’ introduction notes, to a neoliberal development framework (UNRISD 2010). But the crisis involves more than neoliberalism, however expansively this is defined; and this fact must inform any analysis of the adequacy of crisis interpretation and crisis responses. A preliminary account would note at least five interrelated crises: a global environmental crisis; a crisis in the world market as it underwent continuing neoliberalization; a decline in United States (US) hegemony, dominance and credibility in the post-Cold War from the late 1990s onwards; a range of structural or branch crises in important sectors (such as automobiles and agriculture); and a crisis in finance-led growth regimes in major neoliberal regimes. These have been superimposed on more local (regional, national, sub-national regional, local crises) and linked to other crises (fiscal, legitimacy, institutional, and so on).The fuzziness of neoliberalism makes it a highly contested term that serves to organize struggles across the economic, political and ideological fields. It has been mobilized both to advance the neoliberal cause and to identify a common enemy for counter-hegemonic and subaltern forces. A detailed analysis should certainly distinguish forms, stages, phases and steps of neoliberalization on different scales and at different sites. In this context it is useful to distinguish four main forms of neoliberalism that emerged during the 1970s and 1980s, and identify their contribution to the crises that unfolded in the mid- to late 2000s (see also Jessop 2010).

The most radical form is neoliberal system transformation. This was tried in the states that emerged from the decomposition of the former Soviet Bloc, with Russia and Poland providing two well-known examples. This tabula rasa approach was premised on the view that ‘creative destruction’ of inherited state socialist institutions was expected to lead somehow to the spontaneous emergence of a fully functioning liberal market economy and society and a more gradual development of liberal democracy.

More significant in the leading liberal market economies have been neoliberal regime shifts, including Australia, Canada, New Zealand, the United Kingdom, the United States and, most recently, Iceland. This shift rolled back policies and institutions associated with the Keynesian welfare post-war settlement and rolled out or restructured institutions to consolidate the new regime, tilt the balance of forces more heavily in favour of capital, and institutionalize the neoliberal economic imaginary. Similar transitions occurred in Latin America during the 1970s–1990s in response to crises in the import-substitution industrialization model.

A third form comprises more or less wide-ranging neoliberal structural adjustment programmes. These involve adopting policies in line with the ‘Washington consensus’ to qualify for financial and other assistance to crisis-hit economies. These measures are more exogenous, resulting from imposition by the leading capitalist powers and/or transnational economic institutions and organizations more than from domestic politics, whether liberal democratic or authoritarian in nature. But they may well be endorsed by certain local capitals and state managers. Where there is relatively unified political opposition (as in Mahathir’s Malaysia in 1997–08), however, such measures may be diluted or waived. While often presented as technical or technocratic solutions to economic crises, they also have uneven economic, political and social impacts domestically.

Fourth, there are relatively pragmatic, modest and potentially reversible neoliberal policy adjustments. These are deemed necessary to maintain alternative economic and social models in the face of internationalization and a global shift in the balance of forces; and are often associated with the survival of corporatist and/or statist features from the relevant models. Nordic social democracies and so-called Rhenish capitalism, associated, for instance, with Germany and the Netherlands, provide examples.

The coincidence of these four forms in the first half of the 1990s marked the highpoint of neoliberalism. Yet this was also when signs of failure emerged and it became clear that: (i) neoliberal system transformation had largely failed as a ‘grand project’; (ii) neoliberal regime shifts need to be flanked and supplemented by various forms of ‘third way’ policies, networks, and public-private partnerships (PPPs) to maintain their momentum despite growing resistance and/or signs of failure; (iii) neoliberal structural adjustment rarely produced the promised results, often aggravated the underlying problems, and could provoke a political backlash as populist politics were revived; and (iv) neoliberal policy adjustments rarely led to neo-liberal regime shifts (witness, Sweden and Germany in the 1990s, where conservative governments worked within their inherited models of social compromise). Each form of neoliberalism (and its associated crisis-tendencies and failures) contributed to the current crisis in its own way. Neoliberal regimes promoted unsustainable finance-led accumulation, tried to impose neoliberalism elsewhere in the world market through structural adjustment programmes, redesigned the architecture and rules of the game of an increasingly integrated world economy. It is this model that has been most heavily discredited in the current global economic crisis.

Neoliberalism tends to judge all economic activities in terms of the prevailing global average rate of profit and all social activities in terms of their contribution to capital accumulation. For it is capital in its exchange-value aspect that is most easily disembedded from broader socio-spatial-temporal contexts and thereby freed to ‘flow’ relatively smoothly in search for profit world-wide. Unsurprisingly, coupled with the continuing deregulation of capital, world market integration and a commitment to shareholder value, neoliberalism benefited highly leveraged, hypermobile financial capital, rewarding ‘financial innovation’, reinforcing its share of total profits and boosting its ability to displace and defer problems onto other economic actors and interests, other systems and the natural environment. Neoliberalism has also encouraged the extension of profit-oriented, market-mediated accumulation into spaces where it was previously absent. Through these and other mechanisms, the expanded reproduction of capital tends to weaken the structural constraints associated with other societal subsystems or institutional orders and/or to resist their agents’ efforts to control the economy.

Even finance capital (let alone capital in general) cannot escape its long-term material dependence on the need to produce real surplus-value before it can be realized and distributed. Nor can capital escape its material dependence on the existence and performance of other institutional orders (for example, protection of property rights and contracts, basic education, legislation and its enforcement, scientific discoveries). And, of course, it always remains the prisoner of its own crisis-tendencies. Thus the overaccumulation of deregulated financial capital combined with the deflationary impact of neoliberalism, eventually pricked financial bubbles around the world. This has not ended the influence of neoliberalism, however, thanks to the legacies of policies, strategies and structural shifts dating from the neoliberal highpoint, continuing attempts to impose neoliberal logic after the crisis, and the adaptations forced on other social formations as they react to the crisis. Crucial in this regard are the asymmetries of power in the world market and the interstate system and architecture of global economic governance, which have enabled unreformed international financial institutions (IFIs) and the usual ‘financial suspects’ to shape the initial response to the crisis.

Made in the USA, broke in the USA

From the first significant translation of neoliberalism into policy in Chile in 1973, the United States has pushed for neoliberalism via global, multilateral and bilateral measures, backed by key international financial, trade and regulatory regimes. In doing so, despite claims to have boosted prosperity, it has prompted crises around the world. The current crisis is the first global crisis of post-war capitalism that was not only ‘made in America’ but also broke out there. This makes it comparable with the Great Depression. However, whereas the United States was an ascending geo-economic power in the 1930s, it has now lost its post-war hegemony and is losing economic and political dominance at different rates and in different ways relative to Brazil, China, the European Union, India, Japan, Russia, and other growing economies. This can be seen in the US fiscal, budgetary and trade deficits and the re-emergence of a multipolar world. Yet the United States remains structurally dominant due to its weight in the world market, its implication in the negative externalities flowing from the many disproportions in that market and the global distortions it has created on strategic and policy grounds. An important element here is the positive feedback effects of the international trade and financial imbalances between the United States and China, and the environmental destruction generated by the unsustainable growth of Chinese production and US consumption. In addition, the capacity of US capital and state to displace and defer the contradictions of neoliberalism onto other spaces and times at small cost to themselves (as opposed to US workers and the wider population) has reached its limits. This is reflected in ‘blowback’ (Johnson 2000) in the form of neoliberal crisis at home, with, as is evident, massive potential to damage the growth dynamic of the US economy.

In the global North, especially the leading neoliberal regimes, the main crisis interpretations and measures taken are typical of those taken by liberal-democratic political regimes in the face of crisis. Broad (and often ill-defined) discretionary powers have been granted to the executive, or its nominees, to solve the crisis (Rossiter 1948; Scheuerman 2002). In the present case, such measures were declared essential to ensure timely, targeted and temporary action to return the economy to robust good health. Political power was concentrated and centralized in the hands of a small group of decision makers (often recruited directly from the financial sector), with broad consensus among the leading political parties on the emergency measures to be taken. While this prevented a general financial meltdown, it also narrowed the effective scope of public debate to a limited set of public alternatives and diverted attention from questions of institutional design, as well as from deeper causes in the basic social relations that reproduce crisis-tendencies and shape the forms that they take. In the United States, this has been further reinforced by an American version of ‘crony capitalism’, massive lobbying and partisan obstruction of even those limited measures of financial and banking reform that have been proposed by the Obama Administration.

The unfolding crisis and its contested interpretation

Paraphrasing Baudrillard (1995) on the Gulf War, one could say ‘the Crisis’ did not happen. Given its complexity and the wide range of possible entrypoints and standpoints from which to read it, there are countless interpretations, explanations, strategic plans and specific policy recommendations. These range from early claims about the terminal crisis of capitalism through to the equally fanciful initial belief that it was a temporary blip in an otherwise well-functioning, self-correcting free market system. Even ‘mainstream’ interpretations, explanations, blame and proposed solutions reflect different regional, national, and macroregional economies’ experiences of ‘the’ global financial crisis and its broader repercussions. A CPE approach explores which of these interpretations gets selected as the basis for private and public attempts to resolve the crisis. This is not reducible to narrative resonance, argumentative force or scientific merit (although each may have its role), but also depends on important structural, agential and technological selectivities. Critical here is that most accounts lack support from economic and political actors with enough economic, administrative, fiscal or legislative resources to offer ‘necessary’ institutional and policy solutions on the most relevant scales of action.

My current research suggests that the dominant crisis-interpretation in liberal market economies after the initial emergency measures is that this is a crisis in finance-led accumulation or, at most, in neoliberalism. As such it can be resolved through a massive, but strictly temporary, financial stimulus, recapitalization of the biggest (but not all) vulnerable banks, (promises of) tighter regulation, and a reformed (but still neoliberal) international economic regime. This will allegedly permit a return to neoliberal ‘business as usual’ at some unfortunate, but necessary, cost to the public purse, some rebalancing of the financial and ‘real’ economies and, in the medium-term, cuts in public spending to compensate for the costs of short-term crisis-management. One reason for the lack of popular mobilization against the crisis and these measures in the heartlands of neoliberalism may be the widespread belief that ‘everyone’ is to blame because of generalized ‘greed’ based on the financialization of everyday life in the neoliberal economies. This implies that the housing bubble and financial meltdown were due to excessive consumption rather than unregulated, profit-oriented supply of loans, and also distracts attention from the explosive growth in unregulated derivatives. A more significant account, especially in the United States, ‘blames’ China for its exchange rate policy, sweated labour, excess savings and so forth, and, accordingly, demands that it bears a significant part of the burden of economic restructuring in the immediate post-crisis period (see chapter by Andrew Fischer in this volume).

To labour the obvious, the crucial sites for crisis-interpretation and crisis-management following the outbreak of crisis in 2006–08 have been the United States and the IFIs that it dominates. Beyond this, we have seen advocacy of a G-2 (with its proposed membership having switched from the United States and the European Union to the United States and China) as the most appropriate and most effective partnership to lead crisis-management and the redesign of international governance (for example, Bergsten 1999, 2008). Although there have been many bilateral United States–China high-level dialogues, an effective working partnership is lacking. Hence the most heavily promoted forum for resolving the current financial and economic crisis has become the G-20, at first informally, then formally. This self-elected group of 19 key industrial and emerging market economies (plus the European Union, the IMF, World Bank and other major IFIs) has become the de facto global crisis committee. This reflects growing recognition of the actual and potential influence of the ‘BRIC’ economies (Brazil, Russia, India and China) and the creditor position of major East Asian economies. Thus, the G-20 Summit in November 2008 expanded the Financial Stability Forum to incorporate creditor nations, including China; and, in April 2009, it established a Financial Stability Board with a wider remit. This has integrated the leading ‘Southern’ economies into problem-solving and burden-sharing, thereby strengthening the leading IFIs, and has also reinforced an unsustainable growth-oriented global economy. But the informal, self-selected status of the G20 means that it cannot replace the United Nations, IMF, WTO and other official bodies in crisis-management, with their official status and, in some cases, significant strategic intervention capacities (Bello 2009).

A sometimes favoured alternative is the G-77, which comprises a loose union of developing nations. Despite its association with China, it lacks, however, clout in international decision making. Yet its members are generally among the worst affected victims of the crisis, due to contagion and/or spillover effects, and are also suffering from the longer term and more wide-ranging effects of climate change produced over many decades by the developed economies. The G-77 has been a major voice calling for more concerted action to deal with world poverty and the Millennium Development Goals (MDGs), including a debt moratorium, enhanced IMF resources and increased official development assistance (ODA) (e.g., Ministerial Declaration 2009). It has also demanded that polluters pay for climate change, the stalled Doha Development Round negotiations be re-activated, mutually beneficial South-South trade arrangements and regional cooperation among developing economies be pursued, technology be transferred in ways that do not reproduce dependence on the developed economies, and the global South be more effectively integrated into global economic governance through reform of the international financial and economic institutions. This could also include new forms of international reserve (for example, BRIC arrangements) as an alternative to the dollar, euro, yen and Special Drawing Rights. With fewer resources, however, many members of the G-77 have been forced to pursue procyclical monetary and fiscal policies, adversely affecting their economies.

Looking beyond the leading neoliberal economies and their house-trained IFIs, the crisis is more often read by leading forces in other capitalist regimes in one or both of two ways: (i) as a crisis of finance-led accumulation, prompting efforts to limit the influence of the financial sector through more radical re-regulation, restrictions on the size and activities of banks, and greater investment in the ‘real economy’; and/or (ii) as a crisis of neoliberalism, which has led to efforts to roll-back neoliberalism at home and impose more controls on market forces in supranational and international contexts. Even in more neostatist or neocorporatist advanced capitalist economies, however, this has not yet prompted leading forces to question the broader commitment to world market integration or to take seriously sub- or counter-hegemonic proposals from subaltern nations, institutions, agencies and social forces.

Dominant and prominent approaches

Overall, taking account of responses across the broad spectrum of advanced capitalist economies, whether more or less neoliberal in orientation, economic and political elites have looked to solutions that involve variable combinations of the following.

  1. The restructuring, recapitalization and nationalization of banks, as well as isolating toxic assets in state-owned or state-supported ‘bad banks’. This is a core plank of crisis-management in neoliberal and other economies and has been pursued through emergency legislation and executive discretion, and behind a veil of secrecy.
  2. State-sponsored Keynesianism, involving a shift from ‘private Keynesianism’ – where consumer debt sustained demand despite declining real wages – to massive expansion of demand through quantitative easing and short-term stimulus to some of the hardest hit industrial sectors. Both solutions are handicapped because neoliberalism has weakened state capacities ideationally and materially and reinforced dependence on private sector financial expertise, that is, on the same forces that created the crisis. Deregulation and liberalization also led to a loss of steering ability, hence the resort to printing money which is one of the least demanding of state responses, and in historically low interest rates with the resulting risk of debt-deflation. The economic crisis has also intensified the loss of temporal as well as territorial sovereignty, and this is reflected in the resort to fast policy and the concentration of political power in few hands.
  3. A medium-term strategy of restructuring the international financial architecture. This is proving difficult to realize in a concerted and coherent way. It appears easier to introduce new institutions than reform old ones, which leaves the latter in place and in power. The displacement of the G-8 by the G-20 illustrates this well and the key players still seem to be committed to more free trade, de-regulation, and so on. The opportunity for tighter regulation seems already to have been lost as the semblance of ‘business as usual’ has been restored – although few experts claim the crisis is fully resolved.
  4. The turn to rapidly growing market economies like the BRIC quartet as offering good prospects for investment and an exit strategy from the slower-growing developed economies, as well as potential allies in multilateral re-regulation.
  5. The remoralization of capitalism in tune with corporate social responsibility (CSR) and responsible competitiveness (Sum 2009).
  6. A Green New Deal, which is being heralded in many quarters as a ‘magic bullet’ (Brand 2009) – capitalism’s best hope to create jobs, restore growth, deal with the problem of peak oil and limit climate change (for example, NEF 2008). Little agreement exists, however, on how to proceed, let alone how to translate promised action into binding multilateral commitments, as shown by the 2009 Copenhagen Summit. It is associated with many different visions and strategies, with neoliberal, neocorporatist, neostatist, and neo-communitarian inflections that prioritize, respectively, market incentives, social partnership, societal steering and solidarity. At stake, however, are the form, manner and likelihood of its retention as a powerful imaginary that can be translated into accumulation strategies, state projects and hegemonic visions. Currently, it seems likely that the Green New Deal will acquire a strong neoliberal inflection in the leading national economies whatever its form beyond them and/or at local level.

Alternative voices and solutions

There are many other accounts of the crisis and proposals for reform, but they are not backed by economic and political actors with enough economic, administrative, fiscal or legislative resources to offer effective crisis-management solutions or long-term prospects for another type of global economic order. The attempt by the United Nations General Assembly to take a lead in the global debate on the crisis illustrates this well. In October 2008, the President of the General Assembly established a commission of experts with the mandate ‘to review the workings of the global financial system, including major bodies such as the World Bank and the IMF, and to suggest steps to be taken by Member States to secure a more sustainable and just global economic order’ (United Nations General Assembly 2008). The General Assembly also convened a three-day summit in June 2009 ‘to identify emergency and long-term responses to mitigate the impact of the crisis, especially on vulnerable populations, and initiate a needed dialogue on the transformation of the international financial architecture, taking into account the needs and concerns of all Member States’ (see United Nations 2009a). These initiatives aimed to give a voice to the interests of developing countries, which are not fairly represented in the existing institutions of global economic governance.

But as the ‘Stiglitz Commission’ prepared its report, the main lines of policy response were already being set by the leading economies (the United States, the European Union, China) and institutions of global economic governance. Furthermore, sharp differences of opinion emerged between the G-77 group of 130 developing countries that pushed for a major role for the United Nations in dealing with the crisis and backed a comprehensive set of reforms, and Northern countries, including the United States and the European Union, that played a blocking game (Brettonwoodsproject 2009). Although the Commission’s outcome report mentioned the disjunction between growing world market integration and the weakness of representative global economic governance, identified problems of institutional design and the inequities of the international reserve system, and the need for economic and social measures to protect the most vulnerable, the specific proposals that it actually recommended did not measure up to the critique (United Nations 2009b). The Commission failed to propose an alternative to finance-led growth (Amin 2009; Khor 2009) or question the basic logic of profit-oriented, market-mediated capital accumulation and its implications for the ‘triple crisis’ of finance, development and the environment.

By the end of 2009 and from the limited vantage point of the global North, the financial crisis appeared to have been managed relatively effectively within a broadly neoliberal framework. The leading developed economies had emerged (or were emerging) from recession and the costs of crisis-management had been passed on to small and medium enterprises, the ‘middle classes’, organized labour, and vulnerable groups in both developed and developing countries.

The challenges to neoliberalism have come primarily from social movements and some governments in the global South. It is possible to identify nine sets of sub- or counter-hegemonic discourses, projects and practices that have gained currency in the context of the crisis.

  1. A trend toward relatively autonomous regional solutions and/or multipolar cooperation aimed at de-coupling from the neoliberal dynamic of the global North with its inherent deflationary bias. Two prominent examples are the revival of proposals for an Asian monetary fund and the Bolivarian Alliance for the Americas (ALBA), which (following the withdrawal of Honduras) currently comprises eight Latin American and Caribbean member states. Instituted in 2004 by Venezuela and Cuba to promote South-South solidarity and fair trade as an alternative to neoliberalism, ALBA has nevertheless been weakened by the crisis and faces domestic opposition from right-wing populist groups and external neoliberal forces.
  2. Demands for a re-adjustment of the balance between capital and labour to boost demand, employment and decent work. This makes most sense in more developed economies without large informal sectors.
  3. Emphasizing the close connection between economic development and social protection and the fact that measures of social protection, should also contribute to economic recovery.
  4. Relatedly, neoliberal trickle-down policies are being rejected in favour of a trickle-up approach on the grounds that money ‘invested in the poor’ has an immediate economic stimulus impact and also contributes to social development. This policy can have a neoliberal inflection (witness the idea of ‘the bottom billion’[5]), or be aimed at promoting a social economy and social empowerment.
  5. A human rights approach is being advocated to economic development, environmental justice, global governance, and transparency. This focuses not only on strengthening soft and hard law but also active citizenship and claims making, which are seen as crucial for the realization of rights.
  6. There are demands for tax reform through closure of tax havens, clampdown on tax evasion, and imposition of a ‘Robin Hood’ tax on financial transactions to release billions of dollars for investment in poverty reduction and social infrastructure.
  7. The exhaustion of neoliberal theoretical and policy paradigms is complemented by the activities of the World Social Forum, its regional affiliates and similar bodies concerned to promote South-South cooperation, mutual learning and policy transfer on the basis of social movements and social activism with a strong emphasis on various anti-imperialist, anti-capitalist, feminist, environmentalist, anti-racist, socialist and autonomist alternatives.
  8. Many local and regional initiatives are pursuingalternative development strategies based on fair trade, a solidarity economy, local trading schemes, eco- and agri-tourism, slow food, and so on.
  9. The benefits of revamped developmental states for a post-neoliberal world are being asserted – with even grudging, half-hearted recognition from bodies such as the IMF and World Bank.


This chapter has addressed attempts to draw and implement appropriate lessons for economic and social governance and policy and considered how they are constrained by the world market, the interstate system and global governance regimes, and an asymmetrical ‘global civil society’. It has indicated, without fully being able to establish, the wide range of interpretations of the global economic crisis; and it has also indicated how, from the initial proliferation of interpretations, those more congenial to the leading social forces have been privileged for action. Until the fiscal crisis of the state (including local and regional states as well as sovereign states) re-emerged with a vengeance in 2010, many individuals in the developed economies seem to have accepted the crisis as a fact of life and turned to coping strategies, populist anger against ‘banksters’ and politicians seemed to have been defused, financial capital was blocking serious reform attempts, and a return to capitalist normality seemed to have occurred. In short, it seemed that a phase of normalization had been reached as the main lines of national and international response had been agreed and were being pursued. Indeed, one important general conclusion is that the overall project of neoliberalism has emerged stronger even if finance-led accumulation has been discredited. Initial worries about strong protectionist responses that would be hard to remove and slow the economy were not realized:

For months, we’ve heard that the economic crisis would unleash protectionism, trade conflict and ‘de-globalisation’. But far from unravelling, the world economy seems likely to emerge from the crisis more, not less globalised. . . .  the crisis has actually spurred more efforts to liberalise trade than restrict it, as a way of cutting costs, attracting investment and boosting competitiveness. . . . So why didn’t globalisation implode? One reason is that the international economic system has proved stronger than even its defenders had hoped (Hancock and Greenhill 2009).

Nonetheless, while the overall trend emerging from crisis interpretation and response appears to have been the further strengthening of the neoliberal project at the cost of some modest (and capitalistically necessary) limits on finance-led accumulation, it is also evident that the crisis has opened space for sub- and counter-hegemonic discourses, projects and practices. Of course, these have not become hegemonic or dominant responses for reasons explored above, but they have proved significant sources of local and regional resilience and have put social and environmental protection on the agenda away from the mainstream forums. There is widespread evidence (illustrated in other contributions to this volume) that local solutions can be developed to address the short-term effects of the crisis in its various local manifestations, and the challenge is to establish ways to exploit this real-time experimental laboratory to find what works, for whom, when and why, as a basis for mutual learning and policy transfer among subaltern groups. But a global crisis cannot be solved at local level (even in a slower, less runaway world that is partly decoupled from the world market and that emphasizes local sustainability).

To overcome the fragmentation of parochial solutions (which might also intensify uneven development and global inequalities), new international solutions are required with a massive reallocation of resources and enhanced state capacities accountable to popular social forces. However one judges the impact of the crisis on the legitimacy and credibility of neoliberalism, the legacies of 30 years of the neoliberal project in its various guises will continue to shape the dynamics of the ‘triple crisis’ and the geopolitical conjuncture in which it must be managed. The crisis of neoliberalism on global scale does not mean that neoliberal era has ended: it will continue to have path-dependent effects for many years.

Thus there can be no quick-fix to the crisis. Events in the European Union in early 2010 and the more general signs of a double-dip recession indicated that the global economic crisis had not disappeared, and that the emergency measures had produced only an illusion of business-as-usual while downgrading the urgency of other moments of the multiple crises confronting global capital and marginalizing the voices of the ‘global South’. Attention was redirected from the crisis in the financial sector and the real (but private) economy to the public sector, framed in terms of accumulated government debt, unsustainable public spending and public sector employment.

Neither can there be a global solution to the crisis, and it would be especially presumptuous to prescribe remedies for the global South in this context. An exception can perhaps be made for calls to develop forums in which the lessons of local struggles and local experiments can be connected, generalized and provided with adequate resources. It is also crucial to reassert the urgency of addressing other global crises that have been downgraded and marginalized as leading forces address the global financial crisis.


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Narratives of Crisis and Crisis Response: Perspectives from North and South