Two puzzles strike me about the present crisis. The first is that this crisis still lacks an encompassing name. Like a slave passing from one owner to another, it has laboured under several names in its short career: sub-prime crisis, banking crisis, financial crisis, global saving / spending or supply / demand imbalance, “Great Recession”, “Eurozone crisis”, to name a few.

These labels help uncover narratives for a troubled period. One of them might run as follows: a global saving / spending imbalance fed a speculative bubble that led in some sequence to the first three crises named above, and then to the “Great Recession”. Now it is washing up on some shores as a sovereign debt / currency crisis.

There is a problem however with such narratives: they tell the story like J.K. Galbraith rather than, say, Ben Bernanke. To the policy sciences that have long been shot of this style of narration, they are a frustrating reminder that parsimony can sometimes be an unattainable luxury.

Beyond mutating story lines, none of these labels manages to capture the true dimensions of the current crisis. Whether we consider duration or magnitude, “Great Recession” better describes the experiences of the US and UK than say that of Germany, not to mention China or India, none of which however escaped the wider crisis. Even in the US, which has now been officially out of the recession for nearly as long as it was in it (i.e. six quarters), stubbornly high unemployment rates have opened up a yawning gap between the conventional definition of recession and how its victims experienced this “Great Recession”.

It may appear unfair to expect a definitive label for a crisis that is still in our midst. As a term for the 1930s the “Great Depression” was in all likelihood a retrospective label, not as far as I am aware a contemporary one. But since then the policy sciences have advanced and grown in influence. One result of this has been to shrink the lag between a phenomenon and its naming. “Globalisation”, for example, was named and celebrated (or lamented) in academic circles and beyond even as it was thought to be happening. During the 1997 Asian financial crisis “crony capitalism” became in no time at all the diagnosis of the crisis and of everything wrong with the region.

Post-positivists caution that labels may be ontologically prior to the phenomena they describe. Naming may be constitutive of a phenomenon, ushering it at least into coherent view if not into existence. In this view “globalisation” might be regarded as an ex-ante ontological imaginary, not an ex-post description of a prior reality.

Names may also probably help usher out of view a recalcitrant event resisting burial. As an attempt to find an encompassing label for a crisis that takes ever new forms and refuses to go away, “Great Recession” might for instance serve perfectly to bracket and contain the crisis in the past, and to fragment and scatter its “residuals” in the present.

Failure to name this crisis may be related to the failure to nail it. Labelling fragments but not the whole may likewise reflect a preference to address the crisis piece-meal.

This leads to my second puzzle: the refusal or inability of Western governments to deploy the full arsenal of policy instruments available to them.

The glib explanation for this failure in the US is that its ability to pursue fiscal policies is hampered by resistance from the right. But this begs a further question. What explains the right’s successful resistance to “big government” despite the economic and moral failures of deregulated capitalism having left the US at the mercy of a providence less divine than Confucian?

The Eurozone’s ironies deserve the talents of a Swift or a Hašek. Here institutional constraints shaped by Germany’s fears of other European governments resorting to ante-dated “reparation” claims on it to finance their profligacy – picture Germany here as a giant “labour camp” where people toil long and hard to finance leisurely lifestyles in sunnier European climes they are only allowed to glimpse for a few weeks each year – have led to an arresting stalemate between Europe’s political leadership and international bond markets. It is hard to see how this can be resolved except by yielding to the caprices of the bond market. In years to come Europe will probably hear as much about “international bond-buyers” strikes as it now does about French transport strikes.

There is inevitable speculation about the impact of this crisis on global power relations. My guess is that the West’s inability to confront the crisis may eventually come to matter as much as growth rate differentials. Indeed we may already be glimpsing some historical role reversals. The West appears burdened with problems it can neither name nor nail. Meanwhile all the neatly packaged and labelled prescriptions – Brasilia Consensus, Beijing Consensus, Mumbai Consensus, São Paulo Consensus, etc. – seem for what they are worth to come from some place else.

Brussels sprouts consensuses with the regularity of a cuckoo-clock. It is a small if telling detail that nobody has thought yet to name one for it.

This article was written by Professor Balachandran and originally appeared in the section entitled "Perspectives on the Global Crisis" in Globe No. 7, Spring 2011. Globe is published twice a year and is an insight into our professors’ and experts’ analyses of major world issues, our research projects, our events, our Alumni and more.

Faculty member since 2000, Professor Gopalan Balachandran is an editor of the Indian Economic and Social History Review and a Fellow of the Centre for Development Economics, New Delhi. His research focuses on international economic history, history of ideas and institutions, historical studies of development as well as labour and financial history. His publications include John Bullion’s Empire: Britain’s Gold Problems and India between the Wars, The Reserve Bank of India, 1951–1967, and India and the World Economy, 1850–1950.