Turning a Blind Eye to the Political Promise of the Financial Crisis

By Adrian Parr and Brad Evans

The financial crisis of 2008 catapulted the world into one of the worst financial upheavals since the Great Depression of the 1930s. Below, Adrian Parr and Brad Evans suggest that the opportunities for new economic alternatives and equitable forms of social organisation are rapidly declining, and address the importance of putting the political back into the discussion of the ongoing financial crises.

On September 15, 2008 the financial services company Lehman Brothers filed for bankruptcy. The week beginning Monday October 6, the Dow Jones Industrial Average fell at least 1% a day for six consecutive days, as the S&P 500 fell 22% in six trading sessions.1 By Friday October 10, 2008 the London stock market had “suffered its third largest fall ever” with the FTSE 100 falling by over 10% in early trading “wiping about £89.5billion off the value of Britain’s biggest companies.”2 The global economy went into free fall as the world’s leaders and business figures scrambled to stop it. A domino effect of bankruptcy, foreclosures, and rising unemployment set in.

Five years on and not much has changed since the world catapulted into one of the worst financial upheavals since the Great Depression of the 1930s. A vibrant people’s movement had briefly bubbled to the surface demanding change and a redistribution of power and wealth. Yet the opportunities to test-run brave new economic alternatives and equitable forms of social organisation are rapidly frittering away.

For a moment there, all eyes and hopes were on the Occupy Movement as it reclaimed public space in New York City, London, Madrid, Rome, Sydney, and Tapei just to name a few. The slogan, “We are the 99%”, struck a chord loud and deep in the hearts of people from all walks of life. People from around the world joined forces to demonstrate en-masse against the financial corruption and greed that had triggered the 2008 global financial meltdown demanding an end to the gross inequities and skewed power relations a capitalist economy produces.

In October 2011 hunger strikers in Mexico City protested outside the Mexican Stock Exchange. Occupy movement student protesters were pepper sprayed by police in the campus quad of UC Davis on November 28, 2011. The incident went viral sparking a lively public debate over the tensions between democracy, militarism, and public space. Meanwhile, in January 2012 over forty people were arrested as they attempted to occupy Rondebosch Common, one of the wealthiest suburbs in the most unequal city of South Africa: Cape Town. Lives once treated as a means to an end, that end being the accumulation of capital and the centralisation of power in the hands of few, had come together to collectively demand politics be placed in the service of the 99%.

The unseen, unheard, majority had transformed into a loud visible minoritarian force, peacefully rallying around shared aspirations, outrage, anxieties, and optimism for a new world order. That is, a world neither organised around irresponsible financial markets and the interests of a few reckless bankers or investors maximising the short-term financial interests of shareholders, nor catering to the excesses of capitalism. How would such a world work? For one, it would have a renewed sense of public governance. A political condition premised upon intolerance toward the artificiality of democratic consensus and compromise, which in practice amounts to private interests persistently undermining the public condition of governance through campaign contributions and lobbying activities. A new world order that would respond to the growing number of poor and unemployed by improving social safety nets, healthcare, and education opportunities. A society that promotes and nurtures long-term value, and a political system committed to the redistribution of wealth.

With the financial crisis the neoliberal notion that social and environmental problems can be left up to the free market to solve came into question. UK Prime Minister Gordon Brown blamed the crash on the systemic failures of capitalism. European Central Bank President, Jean-Claude Trichot criticised the neoliberal turn toward deregulation, urging the Bretton Woods agreement be reinstated. During his speech at New York’s Economic Club Trichot announced: “It’s absolutely clear that financial markets need discipline: macroeconomic discipline, monetary discipline, market discipline.”3

Even socialism appeared to have lost its controversial taste. The February 6, 2009 issue of Newsweek featured an article by Jon Meacham titled “We Are All Socialists Now”. He explained Americans needed to recognise that the Age of Reagan had come to a close and a new age of big government had ironically been ushered under the US Republican Presidency of George W. Bush. Bush had bailed out the financial sector to the tune of US$700 billion.4 Picking up on the growing sympathy for socialist approaches, Meacham nevertheless argued the European welfare state was the cause of high unemployment in Europe. He forewarned readers against following in the footsteps of their European comrades, contending government intervention in the economy would restrict economic growth at a time when it was needed most.

Three main criticisms shaped the explanatory framework as to why the situation occurred. Firstly, it was bad people, such as the bankers and “rogue traders” selling mortgages to the poor who couldn’t afford their repayments and the unrestrained avarice of the private sector. Secondly, it was bad government with policies that favored the rich and loosened regulation. Thirdly, it was bad ideas, for example everyone was comfortable with living with debt and the illusion that prosperity would be endless.

For a moment there, all eyes were on the Occupy Movement as it reclaimed public space in New York City, London, Madrid, Rome, Sydney, and Tapei. The slogan, “We are the 99%”, struck a chord loud and deep in the hearts of people from all walks of life.

The dominant narrative describing the impact of the financial crisis was economic. The housing bubble had burst putting a serious dent in that market. The global financial market was completely destabilised. This spooked investors, and in turn sent further shock waves throughout the economy. Banks and corporations were either going bankrupt or teetering on the verge of bankruptcy, and layoffs ensued. Governments the world over were on the brink of falling; indeed a large chunk of the US Presidential campaign of 2008 was fought over whether or not markets needed to be more or less regulated.

The upshot is that a series of economic solutions were put on the table: lower interest rates, promote consumption, encourage more personal debt, and most of all use public money to save the private sector. The question of a fair response to the vulnerabilities and disadvantage the financial crisis has exacerbated however, continues to be sidestepped. Disadvantage and vulnerability are multifaceted problems. And within the landscape of poverty it is women, immigrants, children, the sick, and elderly who continue to experience deeper hardships and whose situation largely falls below the radar.



Such populations constitute an invisible majority; lives that can seemingly be abstracted by the technical language so often favored by macro-economists and political scientists.

In the Eurozone a drop in construction jobs directly impacts immigrant migrant workers whose low-skill set make it difficult to reintegrate them into the economy and as informal workers they run the risk of losing their visa status. Immigrant workers are caught in a terrible double bind unable to return home to a sluggish economy and stuck in a country where there is little work, all the while often furnishing a debt from having borrowed money to migrate. Worse still, they become the obvious targets for new forms of nationalism and fundamentalism that purposefully emerge in times of crises.

From 2000 to 2009 the number of US children living below the national poverty rate of $22,050 a year for a family of four grew 33%. The majority of poor children are African American, with 36% of black children living in poor families. In some states, such as Ohio and Michigan, this figure increases to 46%.  That says nothing to the levels of mass incarceration that overwhelmingly victimises poor people of color and dislocation. What does it say of a society that favors the mass imprisonment of a racially distinct underclass at a yearly financial cost comparable to full board graduate study at an Ivy League University?

Nancy Birdsall of the Center for Global Development came out in February 2009 urging the world’s wealthiest countries develop a coordinated fiscal stimulus to deal with the situation. She went onto to clarify that the International Labour Organisation predicted the developing world would lose 50 million jobs. The World Bank projected Africa would have zero growth in per capita income. In response she explained:

“five billion people living in developing countries are innocent victims of the global economic crisis. Most live in countries with limited resources for stimulus packages, let alone for food stamps and unemployment insurance. This is true even in the many developing countries that have had responsible government and economic management for some two decades.”7

The focus on resuscitating the global market and national economies has meant that the most vulnerable continue to suffer the consequences of reckless and irresponsible behavior and policies that they have had little or no say in creating. What is more, as a recent study by Oxfam suggests, the levels of measurable inequalities have grown to such levels that it now seems impossible to argue that neo-liberal policies benefit all the worlds’ citizens. As the paper finds, 1% of the world elite have now amassed nearly half the planet’s wealth in their personal fortunes. This control over some $110 trillion equates to the total wealth of the poorest 3.5 billion people.8

The paper also finds that 85 of the world’s richest people have as much income as the poorest 50%; while nearly 70% of the world citizens have seen a marked increase in relative poverty. The implications, they argue, could not be more pronounced and stark:

“This massive concentration of economic resources in the hands of fewer people presents a significant threat to inclusive political and economic systems. Instead of moving forward together, people are increasingly separated by economic and political power, inevitably heightening social tensions and increasing the risk of societal breakdown.”

Austerity is not an ideological position, it is the expression of the logic of capitalism whereby production is placed in the service of capital accumulation, and an ethos of privatisation, commodification, and competition holds sway.

What we therefore confront here is the possibility of widespread resentment and social unrest. Indeed, whilst we don’t simply buy into the reductionist economic arguments that poverty itself is the principle cause of violence such that it becomes all too easy to blame the global poor for conditions of instability and crises; it is nevertheless clear that such contrasts in fortunes, economically or politically, are not sustainable.

So what might it mean to bring the political back into the discussion of the ongoing financial crises? Whilst by no means exhaustive, there are certainly a number of historical lessons we might draw from this and political principles that could be followed. This is especially the case if we are to extend the same levels of ethical care and responsibility placed onto the shoulders of the global poor in encounters marred by exploitative conditionality.

Firstly, we need to be clearer that policies of austerity don’t simply represent a universal tightening of the belt. Austerity is not an ideological position, it is the expression of the logic of capitalism whereby production is placed in the service of capital accumulation, and an ethos of privatisation, commodification, and competition holds sway. Eerily reminiscent of the socially disastrous structural adjustment policies imposed upon many in Latin America, Sub-Sahara Africa and South East Asia during the 1980’s and 1990’s, the policy of austerity is tantamount to a re-distributive tax that has benefitted the rich, whilst felt more acutely by the global poor.

Secondly, we need a new vocabulary for describing the conditions of hardship and daily suffering endured by many of the world citizens. This requires a more sober and honest reflection on the connections between policies of enrichment and policies of despair. As the eminent sociologist Zygmunt Bauman has written, there is a need to deploy more compelling terms that truly impress the political and social stakes:

‘Casualties are dubbed “collateral” in so far as they are dismissed as not important enough to justify the costs of their prevention, or simply “unexpected” because the planner did not consider them worthy of inclusion… Thinking in terms of collateral damage tacitly assumes an already existing inequality of rights and chances, while accepting a priori the unequal distribution of the costs of undertaking action.’9

Thirdly, we need to ask more uncomfortable questions about the ways in which entire populations are continually rendered disposable as a matter of systemic design. That is to say, we need to question more critically the real violence of poverty in ways that force us to confront both the daily tragedies of lives on the margins of existence, along with the intellectual neglect that creates such conditions in the first instance.

Fourthly, we need to move beyond the types of analytical reductionism in policy discourse that strips human life of any political agency. The global poor are not simply a problem to be solved. Neither is the human subject some undifferentiated mass that can be governed as if all that mattered was aggregated levels of growth. Such assessments too often conceal the concentration of power and mask the true scale of human suffering.

Fifthly, we need to move beyond outdated ways of thinking about politics as if the only way to conceive of engagement is through the framework of the State. Power has long since been elevated into what Manuel Castells has called the “global space of flows”.10 This is not a call to simply replicate a deeply flawed “representative” model on a global level with a new cadre of political professionals. It is to take heed of the voices from below in ways that empower them to influence those forces that profoundly shape their lives; forces which at present they have no viable say in whatsoever.

And finally, we need to start a new conversation at a systemic level on the real political consequences of financial irresponsibility. For if we can accept that economic activity is always political, this requires us to move beyond simply calling out scrupulous banking practices as criminal or focusing on individualising cases of rogue activity. The catastrophe brought upon many by the systematic abuse of power should raise more serious questions about what actually constitutes a crime against humanity.

About the Authors

Brad Evans is the Founder/Director of the Histories of Violence Project & a Senior Lecturer in International Relations at the Global Insecurities Centre, the University of Bristol. His latest books include Resilient Life: The Art of Living Dangerously (with Julian Reid, Polity Press: 2014) & Liberal Terror (Polity Press: 2013). He is currently co-directing a global initiative titled “Disposable Life” that interrogates the meaning of mass violence and human destruction on the 21st Century.

Adrian Parr is the Director of the Charles Phelps Taft Research Center at the University of Cincinnati and a UNESCO water chair. Her recent books include The Wrath of Capital (Columbia University Press, 2013) and Hijacking Sustainability (MIT Press, 2009). She is co-directing the global initiative “Disposable Life”.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.