Crisis Without End? The Unravelling of Western Prosperity, by Andrew Gamble

I feared, in taking on this book for review, that it would simply be one more in an already too-great number of volumes trying to explain what caused the current financial crisis, whether it was foreseeable and why it was so severe; or – no less frustratingly – using the crisis to “unmask” those capital-letter evils, NEOLIBERALISM or CAPITALISM. Happily, Andrew Gamble’s insightful and thought-provoking book is neither.

As gripping as it is scholarly, Crisis Without End? deploys insights from political philosophy, economics, economic history and politics in its analysis of the recent crisis and its consequences for future political and economic outcomes. Thoroughly researched anecdotal evidence helps to put the crisis in the bigger picture, as Gamble considers the “why” and the “what now” not from a purely economic point of view, but by putting it into a societal context and raising questions about fairness and legitimation that traditional economists working within narrow limits – eg, Pareto optimality – cannot answer. This is not a book on the financial crisis per se, but one that uses the crisis as a point of departure to consider how our world has been ordered over the past century, along the way displaying in-depth understanding of the events leading up to the crash and the actions taken to respond to it.

Before analysing the consequences of the crisis for neoliberalism, Gamble lays out his notion of a neoliberal economic order and details how the current international economic system was set in place after the Second World War. This section is extremely valuable, as most scholars connected to post-structuralist or post-Marxist schools of thought are content to use neoliberalism as a kind of bogeyman-placeholder for all that is wrong with the predominant political and economic system in the West without ever defining the notion.

While one does not have to agree with the anti-neoliberalism rhetoric, Gamble’s introduction ably sets the pace for what follows by showing that while the crisis wounded the neoliberal order, five years on it seems remarkably unscathed. He then embarks on answering his main question: Why has the neoliberal order proved so resilient, and can it renew itself in the face of the challenges to its effectiveness, sustainability and legitimacy that the crisis revealed?

Gamble lays out three hypotheses – thesis, antithesis and synthesis – about why we haven’t seen much change in the aftermath of the recent global financial crisis. 1) The crisis was just a blip. Although it seemed serious, it has no long-term significance for the functioning of the present economic system because it is not structural. 2) The 2008 crash revealed not just a serious malfunctioning of the financial system but deeper underlying problems that need fixing before recovery is possible. 3) And most plausibly, in Gamble’s view: the crisis has revealed an impasse. The fundamentals governing the international economic order have changed, but since the immediate crisis was contained, incumbent policymakers could stave off radical change. However, the neoliberal order has become highly unstable and postponing change will lead to further breakdown or deadlock. Hence the “crisis without end”.

A compelling line of argument appears in Gamble’s second step, where he discusses the three fundamental conflicts underlying the functioning of the neoliberal economic order that the crisis has not only revealed but intensified. He compares the current crisis’ characteristics to those of the two major crises in the 20th century in light of the dilemmas that he sees as inherent in the international neoliberal order: governance, growth and fiscal trade-offs.

The governance dilemma lies in the tension between a unified international market order and a fragmented state system, between international connectedness and national sovereignty, in which the emergence of new powers poses severe challenges to the existing order. The growth trade-off manifests itself in the tension between the incentives needed for maximising private gains and the social conditions necessary to facilitate private accumulation. The question of how sustainable growth can be achieved in the face of prolonged stagflation and environmental risks is at the heart of this dilemma. Finally, the fiscal dilemma concerns the legitimacy of markets, as uncontrolled competition undermines social cohesion and solidarity, especially with increasing debt and falling living standards.

Gamble paints his picture in broad strokes, and in arguably overly gloomy shades. The welfare state may be more resilient than he might admit, especially its continental and Scandinavian versions, because different primary mechanisms of redistribution were originally put into place. While the Anglo-Saxon variety relies mainly on redistribution through taxation, the continental version is contribution-based. Since the fiscal dilemma implies difficulties of raising revenues from taxes, inequality is more of a problem in the tax-based redistributive systems prevalent in liberal market economies.

The fundamental dilemmas underlying neoliberalism raise the question of what has to change before a new era of prosperity in the West can be established, and Gamble considers four scenarios. The first is the default, where nothing much changes and rising internationalisation leads to further shocks and a perpetual crisis. The other three scenarios move away from a unipolar economic order; in scenario 2, to a bipolar situation in which US-Chinese competition over resources and markets spurs protectionism and a decline in trade with renewed fiscal and monetary problems. Scenarios 3 and 4 involve multipolar situations, with either multilateral cooperation including emerging powers leading to a more diversified new market order (scenario 3), or with conflictive and bloc-building tendencies bringing more fragmentation and decline in international flows (scenario 4). Evidently, scenario 3 is most likely to restore confidence and build conditions for sustainable growth.

Alas, Gamble leaves the question of how to achieve scenario 3 unanswered, and concludes that the future is likely to include aspects of all four. Like me, the reader may be left wishing he had taken a few more risks in identifying conditions that make different outcomes more likely.

This is clearly not a book that crunches numbers and draws conclusions based on well-identified empirical evidence, but Gamble gives his own account of the general feeling that there is something wrong and lethargic about the way the West is dealing with the aftermath of the financial crash, and that only more radical change can lead us back to sustainable growth and prosperity.

Like Thomas Piketty in Capital in the Twenty-First Century, Gamble shows that the global financial crash and its effects are not just manifestations of the normal capitalist cycle, but extraordinary, and will affect the world and the international economy for decades to come. Although he analyses the crisis through the lens of a critique of neoliberalism, this does not distract from his insights into the challenges for economic and political systems at both transnational and domestic levels. Where Piketty’s book convinces with myriad historical data and empirically derived evidence, Gamble’s gripping narrative persuades via insight and anecdotal evidence.

My personal quibble with Gamble’s approach is that we must have faith in his analytical brilliance and persuasive argumentation, because none of us knows the counterfactual – what type of social and/or economic system would generate better societal outcomes, and better from what perspective? Arguably, more rigorous empirical identification and quantitative evidence would have helped the momentum and credibility of some of his arguments. Nevertheless, Crisis Without End? is a compelling read, and its well-formulated arguments offer manifold insights.