Bubble economy under scrutiny
16 January 2009
The publication of a new book by Kevin Doogan, Jean Monnet Professor in the School for Policy Studies, has been described by leading British sociologist Ralph Fevre as ‘a seismic event’ that ‘annihilates conventional wisdom on labour markets’ .
We are often told that a new global economy has emerged which has transformed our lives. It is argued that the pace of technological change, the mobility of multinational capital and the privatisation of the welfare state have combined to create a more precarious world. Companies are outsourcing, jobs are migrating to China and India, and a job for life is said to be a thing of the past. The so-called ‘new capitalism’ is said to be the result of these profound changes.
Kevin Doogan takes issue with these widely accepted ideas and subjects the transformation of work to detailed examination through a comprehensive analysis of developments in Europe and North America.
The book is particularly relevant in the light of the current economic crisis, with Doogan arguing that the precariousness of employment is not a natural consequence of the new global economy but is manufactured, emanating from neoliberal policy and greater exposure of the economy to market forces.
‘It is difficult to assess future economic prospects unless we have an understanding of how we ended up in the current situation,’ says Doogan. ‘In the early days of the economic crisis, the view was expressed that the housing market crash was an aberration. The “real economy” had sustained unprecedented levels of growth based on technological innovation, globalisation and deregulated markets, and would weather the exuberance of the housing market and the price corrections necessary to restore the normal workings of the new economy. Trillions of dollars later, however, the problems seem much deeper routed and intractable as economic recession tightens its grip on the advanced economies. What we have witnessed is not just the pricking of a housing bubble, but the bursting of the bubble economy.’
He continues: ‘When management consultants, business gurus, economic correspondents and government spokespeople breathlessly evoked the wonders of the new economy, the more circumspect commentators warned of the rise of a bubble economy in which economic growth was fuelled by extraordinary levels of financial speculation, consumer debt and over-production. Speculative bubbles have been a feature of the recent history of capitalism as “dot.com” gave way to “dot.bom” and, later in the 1990s, the explosion of investment in telecommunications eventually led to a crash that was responsible for three million job losses in the US in the early years of this decade. The subsequent growth of sub-prime mortgage lending and the toxic assets that spread like a virus through global financial markets must be seen as another, albeit catastrophic, chapter in the recent history of neoliberal capitalism.’
These events invite on to the stage those who have challenged the economic orthodoxies of the past two decades. ‘This discussion of new capitalism seeks to explain why so many were misled for so long,’ says Doogan. ‘The book aims both to counter despair and to contribute to the restoration of rationality in the management of economic affairs.’
New Capitalism has received huge critical acclaim around the world. Randy Hodson of The Ohio State University and editor of the American Sociological Review describes it as ‘a theoretically insightful and empirically informed critique … A must read for scholars and students of work, economy and polity’, while Peter Auer, Chief of the Employment Analysis and Research Unit, International Labour Organization, comments that Doogan’s findings are ‘particularly welcome’.
New Capitalism? The Transformation of Work, is published by Polity (www.polity.co.uk), paperback ISBN 978 0 7456 3325 1, £16.99, hardback ISBN 978 0 7456 3324 4, £55.