AP asks nervously how we'll know when the economy has bottom out. the only way to understand our current economic crisis is to study the economic crises of the past. History may not exactly repeat itself, but it's the only guide we have to the present. Indeed, we wouldn't have gotten into this ludicrous mess had we done a better job of remembering how the free market utopians had done this before, not only in Thirties, but also the Eighties and Nineties. As Eric Hobsbawn, in his magisterial The Age of Extremes: A History of the World, 1914-1991, argues (pp 103):
Those of us who lived through the years of the Great Slump still find it almost impossible to understand how the orthodoxies of the pure free market then so obviously discredited, once again came to preside over a global period of depression in the late 1980s and 1990s, which, once again, they were equally unable to understand or to deal with. Still, this strange phenomenon should remind us of the major characteristic of history which it exemplifies: the incredible shortness of memory of both the theorists and practitioners of economics. It also provides a vivid ilustration of society's need for historians, who are the professional remembrancers of what their fellow-citizens wish to forget.
It's not just free market economists who have short memories. Theoretical political scientists too, like Francis Fukyama also have a tendency to conveniently forget the past. It was Fukuyama who twenty years ago in the free market journal The National Interest, declared that we were at the end of history and that all nations would now become liberal democracies. 1989's Fall of the Berlin Wall and the other revolutions in Eastern Europe seemed to prove Fukuyama's theoretical point. Social science trumped history. And thus the forgetting began.
As I explain in today's Daily Beast, the international financial meltdown had delivered history back to Eastern Europe with a vengeance. Just as the economic crisis in America, has woken us up to the lessons of the past, so East Europeans are nervously reminding themselves of the catastrophic Thirties and the impact of the first Wall Street Crash on the region. American foreign policy makers need to reacquaint themselves with East European history too. As Western Europe becomes more and more preoccupied with its own crisis and Putin's Russia grows in confidence, it is likely that America will once again become embroiled in the complex politics and economics of Eastern Europe.