POINT OF VIEW. Health crisis and systemic rupture: what rebound?

On the economic front, stock markets around the world began to fall from February 24. But in reality, this health crisis was only one triggering factor, certainly very powerful, of a crisis already there, in reality of a multi-crisis on a planetary scale. As a catalyst, virus brutally exposed the high degree of decomposition of our current economic and political models.

Four financial cycles

In this decomposition, the role of finance was blatant during the half century when its hegemony was exerted on the world economy. In fact, four successive financial cycles, of about a dozen years each. Each time, they caused serious systemic shocks:

1971-1987. The first financial cycle takes place (1971-1984). It is marked by the deregulation of the financial sphere which ends with the violent bond crash of 1987.

1996. The second cycle continued deregulation through the liberalization of capital movements, which resulted in the systemic crisis that hit the countries of Southeast Asia.

2008. The third systemic crisis was triggered by large systemic banks behind the uncontrolled expansion of toxic financial derivatives.

2020. Private and public debt distress, due in part to the financial crisis of 2007-2008, formed bubbles that burst with the powerful trigger for Covid-19.

Towards a true economic democracy

The effect of these cycles has been considerable on economic policies: after each systemic crisis, the States have had to compensate for the losses of the private sector and revive the economy, through public expenditure which increased their debt.

Do we want to start a new cycle and continue on the same logic? However, the aspirations of peoples for democratic change have been affirmed very clearly all over the world. We defend here two ideas which are, in our eyes, so many “tipping points” to change our economic model and move towards a true economic democracy.

– Citizen coins. Credit is there to meet essential needs that affect projects of households, businesses, and those related to public services. Take the European example. Making the euro a “citizen” currency would consist in supporting all initiatives which could give the European Parliament a power of orientation for monetary policy. It is he who could, for example, decide to issue “coronabonds”.

The same would apply to local currencies: a controlled control of the distribution of credit by an elected citizen power can be the pledge of a policy of public investments planned on several scales, in particular in ecological matters.

– An equal codetermination in companies. Can we democratize financing circuits without reviewing the way companies manage their financial flows?

Co-determination experiences have already developed in some countries, but these experiences have never gone as far as the parity of the decisions taken in the management committees. This is the other “tipping point”, in our view essential, for modifying the organization of powers in the company, and ultimately changing the economic model.

(*) Professor emeritus of the University of Toulouse, former member of the General Council of the Banque de France, author of: “When the left tried again; the unpublished account of the nationalizations of 1981 and some lessons that can be drawn from it “, Lux, February 2020.

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