When the day you talk about global crisis, the first answer comes up to your mind immediately would be the global financial crisis happened in 2007 – 2008, the worst financial crisis since the Great Depression of the 1930s. The crisis began in the United States with the bursting of the U.S. housing bubble of declining credit availability and then a wave of bubble crushed that damaging the investor confidence in the stock market. Finally the crisis spread globally with the effect of a great economic recession in U.S and later to Europe, Asia, so on and so forth.
Even though the financial crisis had gone through with the great helps from the government, still, the economic condition, especially in the U.S. and the Eurozone are still in risk and instability. Despite pouring in trillions of dollar into the stock market to help get rid of the huge private bank debts, government had no way to stop the increasingly risky bubble formation of the introduction of over- expanded stock products provided by the bank. Moreover, the managerial class of the bank enjoyed the favor from the government fund after overcoming the bankruptcy crisis which most of them still shared more than millions of dollar as their premiums and bonus. The incontrollable operation of bank service over different sectors in the society like housing, insurance and by- products of stock contributes an unstable element to the global economy.
It is at the utmost moment to take action to prevent another breakout of such a huge, vast and damaging financial crisis happening again in a global scale. Hence, there are two ways out suggested and practiced in an extreme diverse way. The first way out of the crisis that the modern economists would not be suggested to that is the protectionism and the second way out are the more advanced capitalism and liberalism. In the period of financial crisis, protectionism suggests that government should adopt policy of protecting the domestic industries and market against the foreign competition though increasing tariffs, subsidies or limiting the import quotas, so on and so forth. By all means that government can do to make the local economy stable. On the contrary, Neo- capitalism suggests a totally different way that protectionism would only make the crisis more complicated and damaging than recovery. Other than that is the global remedy of market self- regulation. Neo- capitalists believe that the market could self- regulate itself during crises if governments, corporations and people are able to maintain spending in the market.
In the nowadays financial capitalist world, money becomes a number game of the big transnational corporations and banks. Millions, billions, trillions of dollars are flowing through the global stock market, if there is not a good way to regulate or supervise it, neither protectionism nor neo- capitalism could prevent the other outbreak of global economic crisis.
Han Chun Kit
Joseph Stiglitz (2009) ‘The global crisis, social protection and jobs’ International Labour Review 148(1-2) pp. 1 – 13
Colin Crouch (2011) ‘The Market and its Limitations’ The Strange Non-Death of Neoliberalism (Polity Press), pp. 24 – 48.
Peter Burnham (2014), ‘Depoliticisation: economic crisis and political management’. Policy and Politics vol. 42 no.2, pp 189 – 205.
Treasury Department CPP Transaction Report. February 24 2009. Retrieved from http://timeline.stlouisfed.org/
Larry Elliott. 14 December 2014. ‘The euro- crisis- history is repeating itself…again’ The Guardian. Retrieved from http://www.theguardian.com/business/2014/dec/14/eurozone-crisis-history-repeating-itself-again
István P. Székely, Paul van den Noord. 06 October 2009. ‘Economic crisis in Europe: Cause, consequences, and responses – A report by the European Commission’. Retrieved from http://www.voxeu.org/article/economic-crisis-europe-cause-consequences-and-responses
The Editors of Encyclopædia Britannica. 24th August 2014. ‘Protectionism’ Encyclopædia Britannica. Retrieved from http://www.britannica.com/EBchecked/topic/479643/protectionism