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Someone born in Britain in 1990, as I was, turned 18 in 2008 having never known a recession. My childhood coincided with the West's long boom. Economic output expanded in the UK, without interruption, from 1992 until 2008. The whole world, not just Britain, was growing apace. If the fall of the Berlin Wall raised the curtain on this era of prosperity, then the bankruptcy of Lehman Brothers in September 2008 ended it.

The sage of the boom was Alan Greenspan, the chairman of the Federal Reserve for 20 years who had an intoxicating confidence in the efficiency of markets. In 2007 Greenspan published his memoirs, calling them The Age of Turbulence, a title that would prove more accurate as a description of what was to come than what had already passed. Testifying to the US Congress a month after the Lehman Brothers bankruptcy, Greenspan was stunned by what had happened to the world he had helped to build.  He said he had found a "flaw in the model that I perceived is the critical functioning structure that defines how the world works". The scientific parlance doesn't disguise his shock; here was an octogenarian questioning what he had spent his whole life trying to prove to be true. He would later revise his theory: people, he came to argue, aren't quite as rational as he once thought. If this fundamentalist was having doubts, what were the agnostics supposed to make of the crash and all that followed?

Making sense of the crash is a good working definition of what Standpoint has aimed to do in its economics coverage. Founded in 2008, the magazine has known only economic tumult. As well as questioning the efficacy of policy decisions made since the crash, our contributors have probed further, getting to the moral essence of recent events. In the background loom the giants of economic thought. The legacies of Keynes, Smith, Hayek, Bagehot and Marx are all considered in this ebook. "What would Keynes do?" ask Robert Skidelsky and Tim Congdon while Gertrude Himmelfarb reconsiders Adam Smith's invisible hand.

The initial convulsions of the financial system are only the first chapter of this tale. The most important questions soon concerned the viability of high levels of Government debt and the future of the eurozone. Standpoint writers have followed the story and this ebook deals with the financial crisis in all its manifestations. An assortment of economic breeds contribute to Chronicling the Crash. Devout Hayekians appear alongside life-long Keynesians; a prominent Labour MP writes on one page, a Thatcherite policy wonk on the next. What unites the authors is their determination to untangle the economic knot Western governments have tied.

It is now five years since the crash began. We are poorer than we were at the beginning of 2008, when UK GDP peaked. GDP may be beginning to rise again but Britain, and the rest of the West, still face economic uncertainty. The government is borrowing too much. The eurozone has not found answers to questions of existential importance. Washington politics makes the world's largest economy the laughing stock of its rivals. In the longer term, a new economic reality looms. My generation grew up not knowing recession, came of age during the crash and will likely spend their adult lives poorer than their parents and grandparents. If this is to be the new normal then the questions posed in Chronicling the Crash are as important as ever.

 
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harderwijk
November 8th, 2013
6:11 AM
Democracy, as generally understood, is predicated on the assumption that the majority always knows best. But such definitions are only acceptable if we agree to ignore the detail. Whenever a noble but vain attempt is made to arrive at a suitable consensus about a detailed analysis of what words ought to mean, we always arrive at the uncomfortable realisation that no two people have ever been ‘on the same page’. The reason for this is uncomfortably obvious and therefore also conveniently ignored. No two people have ever been raised by the same parents in the same place at the same time and have not attended the same schools, or places of worship and work. Each human brain develops under unique circumstances. We know our desire for consensual, convivial concurrence is forlorn. That is why we have all grown up to approach every transaction by instinctively avoiding as much of the detail as possible. Just to get along, get a deal, a treaty, a contract. It’s how we do business in every business, at home and abroad. The assumption that the majority always knows best is a public perception. That is, not what you might privately think, but what we all need to believe ‘most people are most likely to agree with’. As such, all public perceptions are illusions. And we all depend on our illusions to make sense of our experience. All we have for making sense is language. And, like it or not, all language is an essential, notoriously ambiguous and therefore hopelessly unreliable semantic system for effecting all human intercourse. Which is primarily all about trade. We all deal in commodities. Compliments, crude oil, terms of endearment, appliances, sexual favours, labour, news, groceries, love, energy, respect and attention. Whenever we are dealing with each other we are negotiating the efficient exchange of ‘goods’. The word illusion gets a bad press. But we depend on illusions all the time. Indeed, time itself is an illusion. Nobody knows what time is, or whether time exists, as an experimentally falsifiable ‘fact of nature’. Debating the existence of time is like disapproving of the existence of God. The illusion of time passing is amplified by our experience of ageing, as measured by our convenient practice of dividing the period of the Earth’s rotation on its axis. As told by our clocks, time is most certainly not an illusion, evoking the illusion that time flows according to the familiar ticking of the seconds and days, months and years of our own mathematical devising. Rather than a transcendent, extra-linguistic phenomenon, time is wholly contrived, derived from our Earth-bound experience. Before the Neolithic revolution, time was unknown. It was unnecessary to “keep time”. But then, ten millennia or so ago, when our hunter-gatherer ancestors accidentally turned to tillage, animal husbandry and the accumulation of surplus and trade, keeping time became indispensable. Therefore, our essential concept of time is certainly not an illusion. The word is universally understood, in any language, and used intelligibly to make sense, facilitate human intercourse and commerce. But the time we rely on, to navigate the seas and visit the Moon, is not some sort of ‘celestial’ or ‘universal’ time, but terrestrial time, as measured on Earth. The same will apply if we get to Mars, and beyond. But, understood as some sort of ‘God-given’, physical imperative, time is an – eminently useful – illusion. As is democracy. The word is not an illusion. Like time, democracy is a word that has acquired universal acceptance. Indeed, it is that universality that ought to arouse suspicion. Curiously, while democracy is instantly understood everywhere, the word has no universally accepted meaning. Which is why this detail, too, is always conveniently ignored. There is no suitable definition of democracy acceptable to all. As is nearly always the case with the most common words and expressions in everyday language, the multiplicity of dubious concepts lurking behind such words as ‘democracy’, ‘freedom’, ‘justice’, ‘morality’ and ‘civilisation’ are all essentially, indispensably, illusory. “The people know best.” This is another public perception relying on the belief that terms like, ‘most people’, describe a real, experiential phenomenon, itself an illusion, and that such a mythical body of people is capable of forming a ‘collective consciousness’, in order to articulate complex corporate ideas. We know that’s simply not true. No two people ever think exactly alike. As figments of the imagination, public perceptions are indispensable for all political discourse. On the mere strength of the public perception of democracy, ‘democratically elected’ officials can confidently claim a clear ‘mandate’, another illusion, to officiate with legal authority, act responsibly and legitimately “on behalf of my loyal constituents”. Without such illusions, it’s hardly worth getting out of bed.

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