A week ago I promised to explain why I was optimistic about the outlook for the global economy in the light of the G20 meeting. Let us start by looking at the dangers that face the world and then ask ourselves if we are addressing them in a proper an adequate way.
In the last three years a crisis that started off financial (in the Credit Crunch) became economic (as GDP fell) and then social (as millions became unemployed). The big question is whether it will now go political in a serious sense as electorates respond with anger to the resultant suffering and, if so, what political form it will take.
There is a major predecent that is not helpful. The Great Depression of the 1930s preceded and in part caused the Second World War; without it is most unlikely that Hitler would have been returned to power in 1934. If our current recession degenerates into a 1930s-style Depression, for which there must be at least one chance in five, there is a real danger that a worldwide conflict will break out. One chance in five is serious odds; we have therefore to plan on the assumption that the worst can happen — and then take steps to avoid it.
There is another precedent that gives me comfort. It is worthwhile to look up “Concert of Europe’ in Wikipedia. From 1814 to 1914, the Concert constituted a kind of informal world government consisting of the then Great Powers This is where I get optimistic. More later.
Will Hopper
