Painful birth of a new epoch of simplicity

An unpopular, costly war; a sliding dollar; high levels of US government debt; behind us, 20 years of growth; oil and commodity prices out of control… Remember the first oil shock of 1973? Or are we looking at 2008?

Just as 1973 was the harbinger of a new political epoch — of individualism ascendant over social democracy — so 2008 will be. But this time, we’ll be trading failed liberal individualism for an epoch of restraint, regulation and simplicity. The seeds of each economic epoch spring from the understanding of the crisis that precipitates it. Social democracy came out of the Crash of 1929 because the Great Depression led us to understand the interdependencies of our economic lives. When workers are laid off, demand falls; when demand falls, factories close; when factories close, workers are laid off. This is the simple loop that taught us that the social safety net is good for capitalism.