Editorial

Liberal conservatism in Turkey enters a crisis

Popular resitance to the rule of the Justice and Development Party (AKP) in Turkey and the brutal crackdown by the government have made news around the world recently. Yet, typical assessments of the AKP from 2002, when it first formed a government, to the present have stressed its contribution to normalising parliamentary democracy. They have also emphasised the benefits of removing from the political scene the strong Turkish state, whose authoritarian actions cannot be attributed to capture by (or influence from) any particular civil coalition.

There is, however, an alternative assessment of the rule of AKP that rests on the orientation of its governments toward the New Right.

Read more...

Stagnating economy, thriving finance

 Are mature economies in long-term stagnation? In the four years since the great crisis of 2007-9, the USA has grown at an annual rate of 2.2%, Germany 2%, Japan 1.6% and the UK 1%. Considering that the GDP of these countries shrunk by a total of 4-6% during the crisis, they have just about made up this lost ground - and the UK has not even achieved that. Meanwhile, the prospects for growth in 2014 and beyond look far from bright.

Some well-known economists have begun to sound very worried. Larry Summers, for instance, has claimed that long-term stagnation is the ‘new normal’. The reason is that the interest rates required for sustained, privately-led growth would actually be negative. Since nominal rates cannot fall below zero, mature economies can break out of stagnation only if they have a financial bubble. This is a bit like taking amphetamines: there is a heavy price to pay when the bubble bursts. Paul Krugman has essentially concurred, describing the current state of affairs as a ‘liquidity trap’. For both economists, the answer is decisive expansion of public spending.

Read more...