How are we to understand the new phase of capitalism that has emerged, over the last half-decade or so, from the long downturn that followed the postwar boom? A decisive resolution, at last, of a twenty-year period of crisis, with the deep restructuring that took place from the mid-seventies to the mid-nineties now clearing the way for sustained capital accumulation? Or as a more troubled exit into a new stage marked by further financial instability? Crise et sortie de crise reminds us that this is not the first time that modern capitalism has transformed itself in the course of a profound structural crisis. In this view from Paris, the emergence of the neoliberal order is set in a century-long perspective: what can the solutions of the Great Depression that beset the final decades of the nineteenth century tell us about the trajectories of today?

Duménil and Lévy begin with an analysis of the slowdown of the seventies, following les trente glorieuses—the 30 glorious postwar years. The rate of profit is taken as the key variable here, in a quite classical sense. They postulate a ‘Marxian trajectory’ in which, at a certain point, the established pattern of economic advance was no longer able to deliver rapid gains in labour productivity without the cost of fixed-capital investment soaring. On both sides of the Atlantic, the attempt to restore conditions for profitable expansion by using Keynesian methods to maintain activity failed, yielding only a brief stay of execution for the postwar model. It was at this stage, they argue, that finance capital began a decisive intervention to reassert—for the first time since the early thirties—its own hegemonic control.

It was this finance-led turn to neoliberal policies at the beginning of the eighties that released all the classic mechanisms of crisis. Recession and monetary restriction forced reorganization of the productive system, while unemployment restored labour-market discipline. In fact, argue Duménil and Lévy, the claims of labour soon ceased to be the main barrier to profitable investment. Instead, the instability and the relatively poor growth-rates of Western economies over the following decades are traced to policies imposed by finance capital which, in practice, prolonged the crisis. The leap in interest rates after 1979 inhibited productive investment, despite the recovery in gross rates of profit. Deregulation of capital flows on a world scale resulted in sharper and more frequent fluctuations of the business cycle—‘disorders’ of neoliberalism triggering devastating disruptions in the developing world, from the debt crisis in Mexico at the beginning of the period to the East Asian crises at its close. As income was steadily transferred from producers to shareholders, capitalism’s inherent tendency to ‘reproduce and exacerbate inequalities and injustice’ intensified.

Duménil and Lévy situate financial globalization within the context of American hegemony, but they see developments on both sides of the Atlantic as broadly similar. In an analysis darkened, perhaps, by the spectre of three million out of work in France—and in contrast to much Anglo-Saxon writing—the role of mass unemployment during the long downturn is a central theme of Crise et sortie de crise. Mainstream accounts of Europe’s supposed labour-market rigidities are dismissed, and the greater persistence of European unemployment explained by a somewhat less advantageous balance between expansion and rationalization—giving rise to slightly faster growth of labour productivity, at the cost of job-creation.

This weakness, in turn, is traced to macroeconomic policies in the EU, which Duménil and Lévy view as excessively restrictive, even when the new financial constraints on governments are taken into account. Had economic growth been only 0.2 per cent per annum higher, growth of labour productivity only 0.2 per cent slower and the effective work week reduced by 0.1 per cent a year, unemployment rates could have been contained. ‘It was not a miracle that was needed but a little improvement (un petit mieux) or slightly less of a deterioration.’ They fail to add that lack of effective, Europe-wide coordination of macroeconomic policies also contributed to stubbornly high levels of unemployment. The severe monetary contractions of the early eighties, and again at the beginning of the nineties, were both marked by unusual disarray among EU states.

Crise et sortie de crise draws some striking comparisons between the last quarter of the twentieth century and the Great Depression of 1875–93. Duménil and Lévy read the Victorian downturn, too, as the outcome of a ‘Marxian trajectory’—that is, a major structural crisis precipitated by a failure to build enough innovations into established investment patterns. A fundamental restructuring of productive relations and financial mechanisms—the rise of the massive corporations and investment banks supporting them, above all in the US—eventually restored the yield on new investments, through the breakthrough in labour productivity associated with the assembly line and scientific management. This is a precedent that suggests a new phase of sustained economic dynamism is a real possibility today. But the rise of big business also made for dangerous imbalances in the turn-of-the-century productive system. The giant firms existed alongside very large numbers of smaller and less efficient enterprises, often in the same sectors; only very buoyant market conditions made it possible, for a time, to run old and new orders in parallel. Another source of instability lay in the extreme fragility of the financial structures—dominated by investment banking—that had promoted the rise of the big companies. Duménil and Lévy thus define the crash of 1929 and the worldwide depression that followed it as ‘the crisis stemming from the resolution of the crisis of the late nineteenth century’. The collapse expressed a failure by the dominant economic groups to move beyond orthodox prescriptions and to adapt institutional frameworks and policies to new conditions.

The authors make no apocalyptic predictions. The very fact that 1929 took place, they argue, makes it unlikely to happen again: any disturbance serious enough to trouble the centre will immediately meet with statist intervention. The lessons of fin-de-siècle restructuring yield a more sober verdict: the technical and economic conditions for a new expansionary phase of capitalist growth do indeed exist, but may be undermined by serious imbalances in rates of development and unstable systems of financial control. Finance capital may wish to move to a new, more centralized stage of neoliberalism; but, the authors point out, it is not the only actor here.