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Here, we discuss whether any conclusions can be drawn about the political consequences of the current economic crisis against the background of what happened in the 1930’s.
THE DEPRESSION in the 1930’s and the current crisis both have their origins in the US, but did quickly spread to other parts of the world. The crises started in the financial sector. They are thus related to events on the financial markets: the large falls on the New York Stock Exchange in October 1929 and the bankruptcy of the American bank Lehman Brothers in September 2008. But the financial crises did soon become broad economic crises with large falls in trade, production and employment. Here, we discuss whether any conclusions can be drawn about the political consequences of the current economic crisis against the background of what happened in the 1930’s. What are the differences in the economic policy? How are the governing parties affected? Do politics move to the right or the left? What happens to the belief in democracy?
FISCAL POLICY was more expansionary in 2008– 2010 than during the 1930’s crisis. Large stimulatory programmes were decided on already a few months after the Lehman bankruptcy. Explanations might be that we have learnt from earlier mistakes and that there has been an improvement in the coordination at the international level. Moreover, the expansion of the government sector in many countries has led to an automatic increase in transfers in bad times. And the political environment in the 2000’s has been less subject to conflicts in many places.
DOWNTURNS in the economy tend to hit governing parties hard. This applies to both the 1930’s and currently the 2000’s. Moreover, it applies to both periods that right-wing parties seem to be doing better than left-wing parties. But over time, left-wing parties have been doing better, which might be due to the fact that the crisis affects broader groups of voters.
THERE WAS A BREAKDOWN IN DEMOCRACY in many countries in the 1930’s. The risk for a recurrence today is very small, but there are worrying signs in different places. And there might be a decrease in the confidence in democracy if the economic conditions are so bad that no political parties can fulfil the voters’ expectations.
AUTHOR Johannes Lindvall is Associate Professor (Docent) of Political Science at Lund University. E-mail: firstname.lastname@example.org.