What We've Had in the Past Two Years is No Bust: What To Do? Basics of a New Deal for Europe

In a depression, recommendations by the (dominant) economic theory, its implementation by politicians and the response by enterprises and households are so interlinked and interlaced that the overall economy will (slowly) shrink or (at best) become blocked up in stagnation. It is a crisis of the overall system that those economists whose roadmap led directly into this misery fail to perceive. The conduct of individual players is rational (within their capacities), but the overall result isn't. The need to find culprits and discipline them is part of the crisis process. The development of a new theory could envelop the systemic character of the crisis, a policy based on it could overcome it. But this takes (too much) time. Alternatively, politics is attempting a fundamental change of course by changing key system terms without having a new (theoretical) roadmap. That was the basic idea of Roosevelt's New Deal in 1933. What is needed for this is empathic, concrete and interventionist thinking and the courage to detach oneself from the prevailing opinion. The concept of a New Deal is of great relevance given the current situation in the EU, especially since returning to Keynes (even to the original) does not suffice (although one should restart where the ribbon of concrete thinking got torn up rather than return to the laissez-faire, and then one could/should have gone beyond Keynes). The key components of a "contemporary" New Deal for Europe are, on the one hand, comprehensively changing the incentives that make entrepreneurial action better than financial wizardry (stabilising interest rates and exchange rates, price path for fossil fuels, etc.) and, on the other hand, measures to cope with (common) tasks that were neglected in a neoliberal age, from an all-out improvement of the environment to integrating and supporting children with a migratory background, and the establishment of a sustainable system of old age care. Such a programme needs to be financed mostly from additional taxes imposed on financial capital, its profits and financial transactions.