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Abstract
In 2008, the world experienced the worst financial crisis since the Great Depression. The crisis is often described in relation to its proximal risk factors such as the proliferation of risky loans and mortgage-based securities, but the root causes of the Great Recession include distal risk factors such as indiscriminate capital flow, excessive financial deregulation, and high concentration of wealth in the top distribution. Ultimately, the crisis is a byproduct of neoliberal policies and the ‘self-correcting market’ ideology that guided national and global macroeconomic reforms since the 1970s. Evidence indicates that the Great Recession led to increases in unemployment and suicides, especially in Europe and in the US. Estimates based on the effects of previous economic downturns suggest that the crisis produced negative health and nutritional outcomes in developing countries. Data, however, also show that recessions can be characterized by increases in life expectancy at birth. These favorable trends seem associated with policy regimes favoring a more egalitarian distribution of income and stronger social protections that can decouple the link between unemployment and suicides during crises (‘healthy de-growth’.). New rules and regulations at the national and global level are needed to prevent future financial crises. The crisis also provides an opportunity to challenge neoliberalism, the ideology of the ‘self-correcting market’ and envision a new model of economic development where GDP growth is longer the main national policy priority. Governments can achieve a regime of ‘healthy de-growth’ if they step in with appropriate policy interventions toward a more egalitarian distribution of income and stronger social protections.
Acknowledgements
An early version of this paper was presented at the Sheffield Political Economy Institute (SPERI) Annual Conference “Austerity vs. Growth: the Future of European Political Economy” in Sheffield – July 3, 2013. We thank Michael Marmot for his useful comments to an early version of this manuscript. The views expressed are those of the authors.
