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Crashed: How a Decade of Financial Crises Changed the World. By Adam Tooze. New York: Viking, 2018. Pp. xiv, 706. $23.79, hardcover.
Written clearly and entertainingly, Crashed provides numerous insights for economic historians trying to assimilate the events of the past decade into their view of the world. For the general reader to whom it is addressed, however, it will be depressing to learn that the global financial crisis (GFC) of September 2008 lingers on. Adam Tooze, a self-described “Left-liberal historian” emphasizes that the financial forces that spawned the 2008 crisis remain in place. Global finance, underpinned by the resources of the Federal Reserve System of the United States, is perhaps even stronger and less susceptible to “prudential regulation” than ever. No resolution, whether from self-correcting market forces or initiatives of government regulation, is in sight.
Moreover, while the crisis appeared to originate in the United States, due to regulatory negligence, foreign governments and financial intermediaries were fully responsible as well. Indeed, foreign responses since the crisis have made a final resolution even more complicated and remote. Tooze’s extensive narrative of both political and financial events, based on a wide variety of international sources, albeit mainly European and American, continually raises the question of legitimacy—were the financial policies undertaken in the United States, Europe, and China worth the loss of political acceptance even if they seemed effective in terms of financial outcomes?
How will it all turn out? Wisely, Tooze does not predict, but he does provide an extensive list of financial factors and government policies across the world we should keep watching. First, we must monitor the financial innovations that have enabled ever-larger capital movements across national boundaries since 1971. After the collapse of the Bretton Woods Agreement, the central banks of the world took full responsibility for control of the world’s money supply for the first time in history. Just how they should exercise their responsibility, however, is still an ongoing learning-by-doing process of making mistakes and then correcting them—or not, depending on political incentives and directives as well as economic. In the meantime, multinational corporations have exploited opportunities for profit opened in a global market for their products, their labor force, and for their debt.
Second, how are governments coordinating their fiscal...