"This slump won’t end until 2031"

December 15, 2011 11:02 AM

You know about the Great Depression, but do you know about the Long Depression? For a while now some have been suggesting we're in a "Third Depression", not so much like the Great one, but more like the Long Depression (1873–96) of 23 years (originally called the Great Depression). Suggesting "This slump won’t end until 2031".

In retrospect, it wasn’t hard to see that the markets were becoming dangerously unstable. Germany had just adopted a new monetary system, and Europe was being flooded with cheap German money. Greece had signed up to a monetary union with Italy and France but was struggling to hold it together. Financial markets had been deregulated. New technologies were transforming production and communications, allowing money to move across borders at lightening speed. And a massive new industrial power was flooding the world with cheap manufactured goods, blowing apart old industries. When it all fell apart in an almighty crash, it was only to be expected.

A prophesy for London, New York or Berlin in 2012? Not exactly. It is a description of Vienna in 1873. (from last link)

posted by stbalbach (44 comments total)

What we need is a good ol' fashioned world war to kick things into high gear!
posted by kaseijin at 11:17 AM on December 15, 2011 [7 favorites]

How do we know we're not in the Endless Depression?
posted by swift at 11:20 AM on December 15, 2011 [2 favorites]

Or we could just invade Iran. That will solve everything.
posted by wittgenstein at 11:23 AM on December 15, 2011

We could fast forward through the Gilded Age and get on with a new period of Worker Organizing and prosperity, couldn't we? That would save some time and trouble....
posted by GenjiandProust at 11:27 AM on December 15, 2011 [8 favorites]

It's funny how the Long Depression was known as the Great Depression, until the Great Depression. So our Depression could become the new Great Depression. The old Great Depression would become the Long Depression and the Long Depression would be just a little Depression.
posted by storybored at 11:28 AM on December 15, 2011

Manic Depression?
posted by BigHeartedGuy at 11:30 AM on December 15, 2011 [1 favorite]

I don't understand. In the 23 years between 1873 and 1896 wouldn't some sensible person have proposed an end to the big government regime of excessive regulations that were presumably causing the recession?
posted by compartment at 11:30 AM on December 15, 2011 [26 favorites]

In 2031 I'll be 58, which is coincidentally the age my father retired at.

I have a feeling I will not be retiring at 58.
posted by The Card Cheat at 11:37 AM on December 15, 2011 [6 favorites]

I plan to die on the job. Of kicking the shit out of my boss.
posted by Bunny Ultramod at 11:51 AM on December 15, 2011 [9 favorites]

Well, we just did a pretty good job re-enacting the decade-long invasion and occupation of the Philippines from around the same time frame in Iraq, so we may as well go for reenacting this depression too. Hopefully we aren't replaying everything backwards, it would suck to finally get to the end of the depression in 2031 and be in for a civil war next.
posted by XMLicious at 11:57 AM on December 15, 2011 [1 favorite]

Thanks a lot Debbie Downer. What's next? Asteroid slamming into us?
posted by stormpooper at 11:57 AM on December 15, 2011

Nope. Rogue planet that's been hiding behind the sun.
posted by kaseijin at 12:00 PM on December 15, 2011 [4 favorites]

Sorry, stormpooper.

Here, maybe this economic news aggregator is more your style!

BTW, if that story about the asteroid is true, I need to sell some life insurance options...
posted by IAmBroom at 12:04 PM on December 15, 2011 [1 favorite]

Didn't you see? The Recession technically ended two years ago. We're only in a Jobless Recovery. CEO income is up 27-40%. American Consumers and their Record Christmas Sales Season is going to keep this Economy, in its current form, intact while Europe tears itself apart. This is NOT a Recession or Depression, it is the next stage of a not-yet-complete 30-year process of transforming the American Economy into a Corporate Paradise. The instability is just a usually-but-not-always-effective tool for redistributing wealth to the "smart money" people. Any other explanation is standard Economics School Bullshit.
posted by oneswellfoop at 12:11 PM on December 15, 2011 [11 favorites]

You can't have a Corporate Paradise without customers.
posted by storybored at 12:12 PM on December 15, 2011 [5 favorites]

This is moronic. Instead of looking to the future and huge forces somewhat unique to our time (like a marching rise in the cost of oil extraction in a globalized world), he's looking waaay back to a different world that ran on a fundamentally different timescale with a fundamentally different understanding of the systems in question.

Kudos for coming out and saying "this could last 20 years", but looking so far back without looking ahead is stupid.
posted by -harlequin- at 12:14 PM on December 15, 2011 [3 favorites]

It's funny how the Long Depression was known as the Great Depression, until the Great Depression.

WWI was known as the Great War until WW2 happened.
posted by ceribus peribus at 12:24 PM on December 15, 2011 [1 favorite]

Kudos for coming out and saying "this could last 20 years", but looking so far back without looking ahead is stupid.

But there's nothing to look ahead to.

There's no foreseeable end for the current slump in large part because we're using the wrong means to try to "cure" what ails us. Because what ails us, at all levels, isn't a lack of liquidity - it's debt. Debt fueled virtually all the economic "progress" of the past 30 years; and so now comes the delveraging, but policymakers just don't seem to get it. Free money for the banks so they can lend lend lend - but to whom? We're not going back to debt-fueled growth; that's just not happening, but Washington seems to desperately hope we can.

Because without debt, what does fuel growth? Rising wages? No? Then what? Maybe we need a new bubble, and I'm sure we'll get one. Because without it, we are in for a prolonged period of deleveraging, and it's going to be politically destabilizing. Which is likely why those lovely little provisions were tucked into the National Defense Authorization Act in the first place.
posted by kgasmart at 12:25 PM on December 15, 2011 [6 favorites]

Come on, I'm almost out of whiskey after the Methane bubble thread and then you drop this?
posted by hellojed at 12:25 PM on December 15, 2011 [4 favorites]

I think part of what we're up against is a need for a new economics. Trying to fix this recession is difficult in part because we're just starting brush into some of the real-world limits to the perpetual growth model.

But it sounds like there is just no economics for trying to conceptualize what a world without unlimited growth could even look like. No-one can think outside the growth box because it's black inky void out there where none of the foundations of our economics hold true any more.

Are there any leading economists who are grappling with this? People trying to figure out a model for prosperity that doesn't depend on unlimited growth?
posted by -harlequin- at 12:37 PM on December 15, 2011 [3 favorites]

Our Great Depression is our lives.
posted by telstar at 12:48 PM on December 15, 2011 [1 favorite]

How cheery.
posted by one more dead town's last parade at 12:49 PM on December 15, 2011

ceribus peribus: "WWI was known as the Great War until WW2 happened."

How cynical would it have been if it had been known as World War I from the very beginning?
posted by brundlefly at 12:53 PM on December 15, 2011 [7 favorites]

a model for prosperity that doesn't depend on unlimited growth?

Steady State Economy
posted by stbalbach at 12:53 PM on December 15, 2011 [3 favorites]

Are there any leading economists who are grappling with this? People trying to figure out a model for prosperity that doesn't depend on unlimited growth?

Not that I know of, and of course most seem to think we're going to grow our way out of our current troubles.

Whaddya mean, we've hit the limits of growth! But nothing grows forever. And not just our economics, but our overall societies, are based on the notion that this is possible. So unless some tremendous new technological breakthrough makes more go-go growth possible, and/or unless that growth is actually sustainable, powered not through debt but through wage growth, then what I see instead is a breakup of the growth-based society. Which doesn't necessarily have to be as scary as it sounds, but Kunstler, among others, has talked of how in the future this society will be forced to return to a "world made by hand," with more focus on local trade, local communities.

I don't know how realistic that is. But I also don't know what the alternative could possibly be, either.
posted by kgasmart at 12:54 PM on December 15, 2011

Good news! Those reports you heard earlier about how 50% of the population was now in the lower income category(less than twice the poverty rate)? Mistaken!

It's 31.8%.

So, yay for that, right?
posted by dglynn at 1:01 PM on December 15, 2011

Unlimited growth is about technological capability, not resource use. Why do you think we have so many portable electronic devices nowadays? Because we keep engineering them to be smaller and lighter and require less power, in manufacturing or use. Same thing with a lot of appliances, vehicles etc. We're not going to stop innovating, and every time we do innovate we create value that did not exist previously. There are no limits to economic growth any more than there are limits to knowledge, unless you want to fast forward to the heat death of the universe or so.
posted by anigbrowl at 1:33 PM on December 15, 2011 [2 favorites]

While I think a growing economy is never going to be strictly speaking impossible - there are always smarter ways to use things and technological innovation, a hard limit on energy production and other resources makes growth a lot harder and a lot smaller. Conventional economic policy really hasn't had to deal with that.
posted by Zalzidrax at 1:39 PM on December 15, 2011 [1 favorite]

Of course it has. There were hard limits on resource production for most of human history. The nature of the limits has changed, is all. Economics is fundamentally the study of efficient resource allocation under conditions of scarcity. People's complaints about economics are generally complaints about particular macroeconjomic theories, and are best remedied by studying some microeconomics. Really, study microeconomics or go home - 's a crime that we don't teach it in elementary school. It's easy, and will help to demystify macro.
posted by anigbrowl at 1:54 PM on December 15, 2011

I don't agree with the fellow in the last link. It's easy to look at any period in history and find parallels with your own. And today's massively interconnected, algorithmically traded world is a completely different place from the telegraph and steamship connected globe of 1873. And not inconsequently, people back then were making things up as they went along because they'd never been in such a position before. Now we have a (supposedly) well developed science of economics, extensive computer modeling, and a wealth of experience to draw upon.

And the guy is wrong about the causes of this current crisis:


"Five, it won’t be fixed easily. The parallel with the 1930s is dangerous, because it has convinced bankers and policy makers that if you can just pump up demand, everything will be OK. It won’t.

Sure, demand is important — there is no point in letting it collapse. But this won’t be over until all three structural problems get fixed. Debt needs to be paid down to manageable levels, a new reserve currency needs to be created, and the euro needs to be put out of its misery. None of these are simple tasks, and none will be done quickly."


The main problem today is a crisis of ideas. The people in power just don't understand what's happening, and don't know how to fix it, because their ideological blinders keep them from seeing the truth. Improvement will come when someone in a major economy, maybe in desperation, finally applies some proper stimulus and has great success. Others will follow that lead. The other stuff about limits to growth and price shocks from scarce commodities will happen eventually, but we're not even at that point yet. Maybe in twenty-five years or so, after we get through the current crisis of stupidity.
posted by Kevin Street at 2:17 PM on December 15, 2011

I learned about the slump of 1873-96 reading Giovanni Arrighi's masterpiece, The Long Twentieth Century. Well worth your time.
posted by Abiezer at 2:19 PM on December 15, 2011 [1 favorite]

We're not going to stop innovating, and every time we do innovate we create value that did not exist previously.

But we don't necessarily create jobs, or domestic employment that pays what used to be called a decent wage.

So we create value - for shareholders, primarily. Maybe for Chinese peasants. But we're in depression despite this increase in "value," so no, I don't see where technological advances are the answer. 5G phones, mobile devices with twice the processing power of what we see now, a doubling of internet speeds - and how many jobs will this create, will it put upward pressure on wages? Will this "value," in fact, increase the buying power of western consumers? Has it?

If not, then that model is dead.
posted by kgasmart at 2:20 PM on December 15, 2011 [3 favorites]

WWI was known as the Great War until WW2 happened.

Maybe the next world war will make WWII look like WWI, part 2.
posted by Apocryphon at 2:53 PM on December 15, 2011

"Kunstler, among others, has talked of how in the future this society will be forced to return to a "world made by hand," with more focus on local trade, local communities."

And I despise that idea. Because you know what Kunstler's dream society would look like? Imagine all the stories that portray how shitty small town life is, from "The Scarlet Letter" to "The Lottery", only this time there'll be no city, no place for those who don't fit in to run away to. It'll be small-town oppression, of the sort where the miller can rape your sister because the sheriff is his brother. Poor, ignorant and oppressed; picture a locally produced hand-made boot stomping on your face forever.
posted by happyroach at 3:04 PM on December 15, 2011 [7 favorites]

Maybe for Chinese peasants.

My in-laws thank you for deigning to mention them, o mighty one, and apologize for having the temerity to drink your fucking milkshake.
posted by anigbrowl at 3:11 PM on December 15, 2011

Maybe the next world war will make WWII look like WWI, part 2.

Second Thirty Years War, Long War, European Civil War. I love periodization, they are never fully right but emphasize some interesting factor.

I learned about the slump of 1873-96 reading Giovanni Arrighi's masterpiece, The Long Twentieth Century. Well worth your time.
posted by Abiezer

Hey thanks Abiezer I'm going to check that out, never heard of it, but exactly what I need a good long view history of how we got here.
posted by stbalbach at 3:44 PM on December 15, 2011

Unlimited growth is about technological capability, not resource use

You've missed the problem. Our actual resource use has been growing exponentially, and we don't have an economic model for coping with a loss of that growth in resource use.

If we can maintain some other forms of growth (such as technological capability) without growing our resource use, that's super cool beans, but that is kind of missing the danger that we haven't actually figured out how to survive on fixed resource consumption yet, so we don't know how to get to that place.

The net effect of increasing technological capability is currently accelerating our use of more resources faster. Right now, growth in technological capability is doing the opposite of what you propose it should do - the efficiency gains you talk about are being offset and heavily outweighed by the gains it offers in resource-consumption.

The ideal you espouse is where we want to be, but it doesn't address the problem we face in finding a path to get from here to there - a system that doesn't depend on perpetual growth (of natural resource use).
posted by -harlequin- at 4:03 PM on December 15, 2011 [2 favorites]

No, poor people in other countries catching up with us is consuming lots of resources, even though they're doing so more efficiently than we did on the first go round. Simply providing everyone in India with a roof over their head requires a lot of capital and resource expenditure. It used to be that when there were too many people for the local economy to support you had mass famine or war. I prefer our current problem set.
posted by anigbrowl at 4:29 PM on December 15, 2011 [1 favorite]

How cynical would it have been if it had been known as World War I from the very beginning?

Well, Wilson tried calling it "The War to End All Wars." Boy did he feel silly 20 years later.... Well, except for the being dead part, that saved him some crow-eating, I tell you what.

Maybe the next world war will make WWII look like WWI, part 2.

WWII pretty much was WWI, part 2. The next one would have to be WWII, take 2. Or, perhaps, the Cold War, take 3. Whatever it is, it will suck.
posted by GenjiandProust at 4:52 PM on December 15, 2011

Matthew Lynn author and financial journalist

One of his other insights was that Charlie Sheen was a super genius who had discovered the future of media because he had 2 million followers on twitter. Wall Street should apparently learn from his antics.
posted by humanfont at 5:15 PM on December 15, 2011

@happyroach

Thank you. That is an excellent point.
posted by This, of course, alludes to you at 5:16 PM on December 15, 2011

anigbrowl yesssssssssss
posted by beefetish at 5:53 PM on December 15, 2011

The more people that say "things are different now, we’re so much better/smarter/faster than people in the past" the more I’m sure we’re doomed.
posted by bongo_x at 8:17 PM on December 15, 2011 [2 favorites]

I think that with this depression , people will have the initiative to think and learn the reasons all this happened. It's time we leave according to our earnings, budgets, and try to go back to our simple and healthy life like the life of our grand parents.
It was not so bad after all.
Enough complaining all the time.
I believe that everything happens with a cause.
Let's us go back to our basic value and leave this competition for futile objects: more i-phones,T.V.'s,furniture, houses,etc.
posted by Whatisbackpain at 7:26 AM on December 16, 2011