This financial crisis is the transition to a new world; like birth, it is painful

Summary:   This is an attempt to gain a historical perspective on our time, speculation about our present and future — seen in terms of past cycles.

Here is a surefire way to get economists’ attention:   tell them that we are only in the second “inning” of this downturn.  Their incredulity results from belief that the trough is near — with the recovery (fast or slow) starting this Fall or Winter.

Perhaps.  Posts on this site describe an alternative view, that the post-WWII era has ended.  We have entered a transitional period.  This has been the pattern of modern history. 

  • The old world ended with American and French Revolutions,
  • followed by a transitional period called the Napoleonic Wars. 
  • The “British Century” — aka the “long peace” — began with Congress of Vienna in 1815,  
  • then crashing and burning in 1914 (WWI).
  • Then came another transitional period, lasting 30 years until 1945, followed by
  • the “American century” lasting 60 years (almost a century if dated from our entry into WWI),
  • aborted by demographic trends and feckless mis-management of our domestic finances.

We can only guess about the duration and difficulty of this transition to a new world order, and the nature of the new global system.  These periods are like singularities — like birth itself.  The passage is painful, and one has no idea what awaits on the other side.

The fall of the British Empire, a victim of failing social cohesion

So gorgeous was the spectacle on the May morning of 1910 when 9 kings rode in the funeral of Edward VlI of England that the crowd, waiting in hushed and black-clad awe, could keep back gasps of admiration. In scarlet and blue and green and purple, 3 by 3 the sovereigns rode though the palace gates, with plumed helmets, gold braid, crimson sashes, and jeweled orders flashing in the sun.

After them came 5 heirs apparent, 40 more imperial or royal highnesses, 7 queens, and a scattering of special ambassadors from uncrowned countries. Together they represented 70 nations in the greatest assemblage of royalty and rank ever gathered in one place and, of its kind, the last. The muffled tongue of Big Ben tolled 9 by the clock as the cortege left the palace, but on history’s clock it was sunset, and the sun of the old world was setting in a dying blaze of splendor never to be seen again.

—  The opening of The Guns of August by Barbara Tuchman

The “British century” — its period as global hegemon — ended in part due to internal dissension.  The rebellion of Ireland (started in 1916, the embers still burning today) and class “warfare” weakened the UK’s cohesion and its ability to respond to threats.  Even during WWII Ireland remained neutral (the UK desperately needed its ports), while strikes damaged its already war-wrecked economy. 

This poor social cohesion contributed to it having one of the slowest recoveries from WWII in Europe.  (West Germany ended food rationing in 1948.  In Britain it became stricter (bread rationing began in 1946), ending in only 1954. 

It is a common story for nations.  Growing fractures in social cohesion brought many South American countries from prosperity in mid-century to poverty by the century’s end.  By social cohesion I mean the ability to work together under stress, usually resulting from shared beliefs and goals.

About America

Some future historian might pick some event in 2000 to mark the end of the American century, some spectacle of American confidence and power following the fall of the Soviet Union and the inflating of the tech bubble.  It was a brief moment of world hegemony.

America has been weakened by the cumulative burden of  our foolish errors during the past 40 years (starting in the late 1960’s, with the weakening of the Bretton Woods system, race wars, and Viet Nam — plus our disastrously poor responses to all three problems.  Still, we retain our core strengths: 

  • a hard-working, innovative, people
  • a largely free-market economy (these things are relative)
  • a strong republican government (as in “republic”, not the party)

However, something might have changed in America during the past generation or so.

What’s happening in America?

Is something similar happening in America?  Consider the following.

  • Rising cynicism towards government, a loss of confidence in its honesty and efficacy.
  • Rising alienation, reaching near total levels in some minority communities.

And in turn the government may becoming alienated from its people.  As seen by…

  • the steady increase in the ranks of government employees who are armed, and
  • the massive expansion of SWAT teams, and the grim toll of deaths they reap each year, often when delivering warrants (see here for details).

Two trends to watch:

  1. Fading allegiance to the Constitution, and decreased willingness to fight in its defense.
  2. The US is rapidly becoming a multi-ethnic society — and these seldom show high degrees of cohesion.

Afterword

Please share your comments by posting below.  Per the FM site’s Comment Policy, please make them brief (250 words max), civil, and relevant to this post.  Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

For information about this site see the About page, at the top of the right-side menu bar.

For more information from the FM site

To read other articles about these things, see the FM reference page on the right side menu bar.  Of esp interest these days:

Some posts about the Constitution and our government:

  1. Forecast: Death of the American Constitution, 4 July 2006
  2. The Constitution: wonderful, if we can keep it, 15 February 2008
  3. Congress shows us how our new government works, 14 April 2008
  4. See the last glimmers of the Constitution’s life…, 27 June 2008
  5. Remembering what we have lost… thoughts while looking at the embers of the Constitution, 29 June 2008
  6. A report card for the Republic: are we still capable of self-government?, 3 July 2008
  7. Another step away from our Constitutional system, with applause, 19 September 2008
  8. What comes after the Consitution? Can we see the outlines of the “Mark 3″ version?, 10 November 2008

57 thoughts on “This financial crisis is the transition to a new world; like birth, it is painful”

  1. Indian Investor #16: How do you date the Roman Empire?

    In its primary glory from the conquest of Carthage to its death-throes at Mazinkert was over 1200 years. Even if you want to terminate it sometime after Heraclius with the rise of the Muslim Calphiate, it lasted for 800 years.

    The Muslim Empire lasted from the start of the Caliphate until the death of the Ottoman Empire in 1918 – another 1200+ year run of dominance of a region. Again, even if one dates its demise to the defeat at Vienna, the Muslims dominated the middle of the world for 1000 years.
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    Fabius Maximus replies: When Americans speak of the Roman Empire, they usually mean that part centered on Rome (the “western” Empire). Dating from Carthage’s fall in 146BC, it lasted 622 years utnil its fall (again using conventional marker) in 476AD.

  2. pluto #18: “On a side note, FM is concerned about the US becoming a multi-cultural nation. We were a VERY multicultural nation because of immigration until 1930’s (roughly a generation after the immigration floodgates were closed).”

    This is just so laughable upon many levels. The vast majority of Americans pre-1930 were people with a heritage in the northwest of Europe – England, Ireland, Scotland, Scandanavia, Germany, Holland, and France sharing a relatively uniform Christian culture with a singular Protestant-Catholic fault. The culture itself was dominated by Anglo-Irish norms to which the peripheral Scandanvaians and Germans were not far distant.

    The number of Blacks, Asians, Jews, Italians, Poles, Hungarians, and Greeks was extremely minimal in comparison to the combine of the NW European dominant block.

    That society was nothing like what we have today where every corner of the world lives in America in its own group with its own religion and culture, and where the previously dominant NW European block is now around just 50-60% of the total population.
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    Fabius Maximus replies: This is certainly not correct about the US after the early 20th century waves of immigration from southern Europe at other areas.

    It was not really correct in any meaningful sense for 19th century America, either. Just to mention one error, the large number of involuntary immigrants from Africa. Per the census of 1880, Blacks made up 41% of the population of the Old South — making it a very multi-cultural region.

  3. For those who think the U.S. is doomed – consider the situation ~ 1930. Great depression. This country was getting wrecked. So how did we come out ahead? The rest of the world got wrecked more — by WWII! Simple as pie.
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    Fabius Maximus replies: This comment seems confused. (1) Do many people consider the US “doomed”? Some do; some always do (probably going back to 1783). (2) Confusing a depression with the “Great Depression” is just sloppy thinking, albeit widespread (blame our poor education system?). (3) Generalizing from one historical event looks foolish, IMO, assuming there is only one path for history.

  4. If we were to posit that we are now heading to the end of our ’empire’ — is this such a bad thing? Should we be in the empire game at all? I recently heard Howard Zinn speak and his thoughts on the matter were that not only should we not be an empire, but accept multipolar world which would remove the bulls eye on us for terrorists. Certainly it would make our international agenda harder to push through, but it might also decrease the amount of our burdens.

    Also, riffing off the point that we have more armed government agents (and assuming that doesn’t simply correlate to our increased population), I once had a professor who claimed that the increased use of force by a government implies that it is losing its legitimacy. True authority does not come from a gun but a badge and uniform. If that’s the case then our government has a real problem if we need to shoot people to serve them warrants.
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    Fabius Maximus replies: A great point, and one I have written about many times! Change is not necessarily bad, even if the transition proves painful.

  5. FM: “When Americans speak of the Roman Empire, they usually mean that part centered on Rome (the “western” Empire). Dating from Carthage’s fall in 146BC, it lasted 622 years utnil its fall (again using conventional marker) in 476AD.”

    That is the problem of the ignorance of Americans then, because AD 476 was a pretty meaningless event for everyone involved except the later chronologers! It was certainly exciting for the French and Germans, whose historians created this distinction and invented the “Byzantine Empire”, so that they could claim the mantle of Rome for themselves via Clovis and Charlemagne. It is perpetuated by the appalling ignorance of the eastern Roman Empire perpetrated in western history books of the past few hundred years (pretty much ever since Gibbons, who was one of the last to allow the Romans of Constantinople to share a common history with the Roman Empire).

    The capital of the Roman Empire was transferred to the more secure east circa AD 330. The Empire ruled over by Justianian (a Latin speaking Roman from Macedonia) in the 500’s from Constantinople included Italy, Dalmatia, Africa, and Spain (about 60% of the old western part of the Empire). Heraclius still had much of that part of the Empire circa AD 600. The future Papal States and Duchy of Venice and the Meditteranean Islands including the Baelerics all remained part of the Roman Empire through the mid-AD 700’s, and retained a dependency on Constantinople through the late AD 800’s until the chaos of the 10th century. (In fact, the liquidation of Venice and the Papal States between 1793 and 1870 represented the termination of the final continuous historic political structures coming down to us from the time of the Caesars.)

    The Army defeated at Manzikert by the Turks was the Roman Army, and the Emperor taken captive was the Roman Emperor Romanos IV Diogenes. The Turks called the people they took captive “Romans” and called their new state the Seljuk Sultunate of Rum (Rome).

    What do they say? If it walks like a duck and quacks like a duck, and even calls itself a duck, its a duck! Right?
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    Fabius Maximus replies: Communication is a series of shorthands. Roman empire and Eastern Roman Empire, both quite clear and easy to understand. Your war against colloquialisms is quixotic, esp as refering the empire centered on the city of Rome as the default usage for “Roman Empire” has the appeal of simplicity and clarity. You objections to this seem a bit pedantic, IMO.

  6. “FM: It was not really correct in any meaningful sense for 19th century America, either. Just to mention one error, the large number of involuntary immigrants from Africa. Per the census of 1880, Blacks made up 41% of the population of the Old South — making it a very multi-cultural region.”

    Yes, but hardly anyone lived in the South then in comparison to the population found north of the Ohio and Potomac. Just 13 million lived in the Confederate States while 37 million lived in the rest of the US.

    1790, blacks were 19% of the US population while NW Europeans were the remaining 81%. In 1880, they were just 15% of the US population. That’s not an indication of some sort of multi-culturalism like today.

    In 1920, there were 105 million Americans, and just 5 million were foreign born in Southern or Eastern Europe or Latin America or Asia. If you double that to include their native born descendants and throw in the 10 million blacks, you are left with 85 million Americans of NW European ancestery. That’s pretty overwhelmingly monocultural, especially with the southern and eastern Europeans concentrated in a handful of cities and the blacks overwhelmingly living in the so-called black belt of the south.
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    Fabius Maximus replies: Your original statement was

    “The vast majority of Americans pre-1930 were people with a heritage in the northwest of Europe. … The number of Blacks, Asians, Jews, Italians, Poles, Hungarians, and Greeks was extremely minimal in comparison to the combine of the NW European dominant block.”

    This is subjective, but 19% from Africa is not “extremely minimal” in my opinion.

  7. A great discussion!

    Re FM’s: ” On what basis do you say this? Europe from 1648 to 1914 was a world in many ways more tightly interconnected than the EU today (let alone the world). Certainly far fewer barriers to movement of people and trade across borders (which barely existed).”

    You have been reading history through the lens of those that wrote it: the upper classes. Working class people – most of them in those days little better than indentured slaves aka serfs – enjoyed no such mobility, even within their own county of residence, let alone Europe as a whole.

    Now: whether this is a good or bad thing is another question!
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    Fabius Maximus replies: Thank you for making this point. History is too often written as the story of the rich, ignoring the unwritten lives of the vast majority.

  8. Brushing off 45 as pedantic does not answer. The remarkable and still inexplicable fact about Rome’s decline is the FACT that Constantine moved the capital and nobody really seemed to notice! Rome did not change. Its Senate continued to meet, it continued paying the dole for another three centuries!, its law courts remained a great authority. But it was no longer the capital. There was an effort from the East to create a dual empire and the Western Emperor was sited at Ravenna which could be protected, relatively, by marshes and wasteland. How is it that the Capital of many centuries, a city of 1.5 million lost its Seat and nobody seemed to notice or care?
    Rome was unable to defend itself and attempted to by constructing more and larger elaborate wall defenses which, inadvertantly led to its destruction. When the Visigoths, a traveling horde of app. 35,000 were unable to break in, in a pique of frustration, they broke several of the great aqueducts. The V’s took themselves off to Spain where they conducted the first ethnic cleansing of Jews in Europe, before moving on to Africa and finally coming to rest in Tunisia where their descendants became Muslims. Meanwhile in Rome, there was no longer the technical skill to repair the aqueducts which quickly turned the outskirts into marshes which became malarial swamps. Within two generations, the metropolis of more than a million was reduced to the Vatican and its hangers-on, about 25.000! which it remained for almost 800 years! But the Empire did not really die. Local gentry survived in Provence especially, and Roman life continued for centuries. As did Latin and not only because of the Church.
    I mention these very interesting facts not from a love of pedantry but to point out that Rome, like most civilizations, did not collapse, but faded. American obsession with Rome I expect expresses the founders shame and confusion from being slavers, a profound immorality that was well recognized by Cicero and Seneca among others who were no more able to give it up than was Jefferson. Free lunch gets to be a habit. Except for the most superficial similarities there are no deep parallels between the two and America is most emphatically still in its early career. Will it outlast Rome is a decent question? More interesting is will the people who are America in 2300 have any idea who we were?
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    Fabius Maximus replies: The western Roman Empire collapsed. The Eastern, built on an older and deeper foundation, survived for centuries longer.

  9. “If you double that to include their native born descendants and throw in the 10 million blacks, you are left with 85 million Americans of NW European ancestery. That’s pretty overwhelmingly monocultural…”

    That’s a great American sentence! I mean, until recently the Europeans have been slaughtering each other incessantly since long before the rampaging Visigoths described above! Probably the only reason they stopped is because of those pesky nuclear bombs and the fact that no city in Europe wants to resemble Germany’s urban wastelands of 1945 x 10 to the (nuclear) power of minus one million!

    The fact that in America we regard Germans, Italians, Brits, Dutch, Poles, Irish etc. as one people (which actually I don’t think was the case until well into the early twentieth century) is quite a testament to multiculturalism.

    Thought about cohesion: yes, traditional nation states may be fading but two things:

    1. Local community and regional community identity has to remain a bulwark of bedrock ‘culture’. Whatever systems emerge have to balance the large ‘unions’ with vibrant local and regional culture much better than is currently the case in all developed nations.

    2. The experiential kernel involved here is the sense of being part of what we call ‘we’. In class war for example – to use a hackneyed phrase – what happens is that those who were we become a ‘they’, as in ‘those fat cats on Wall St. skimming off the cream from all our hard work and banking in offshore accounts tax free, THEY couldn’t care less about us or our country.’ I expect more of this sort of fracturing of the sense of ‘we’ – unless we do incarcerate all those pesky ‘terrorists’ and stimulus plans miraculously works of course!

  10. We disagree Fabius but this is not the place to wrangle that one out. Chateau Ausonne, a comely Bordeaux is named for Ausonius whose family remained Roman gentry for centuries. Roman law did not survive because of the Church. Eastern Empire if remembered at all, will be recalled as the nursemaid of Islam. Happy to continue this, obviously, offline.

  11. what? roman just “faded”??? c’mon dude…as if it bothered to say if the US is fading or collapsing?
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    Fabius Maximus replies: These things depend on one’s context. Rome died over centuries. That’s a collapse if one considers the peak to trough change, but a fade considering how slowly it died.

  12. FM:”What evidence is there that “{Obama} is making both conscious efforts and perceptible headway in reversing the trends of cynicism, minority alienation, and the like.”

    I don’t have a link for this, cuz’ it’s real life and not the intertubes, but as far as black men and their place in the USA, my sense is Obama has actually made a difference. Me, I’m the one who is a little depressive and now it’s the black friends with confidence about Obama. “He’ll have some plan for sure!” (Though he doesn’t actually, Geithner, cough, cough.) I see Obama signs and bumper stickers around here. Something has ‘clicked over.’

    My prediction: the rebellion starts this time in the white ex-middle class, not in the black towns. The blacks have less farther to fall and the Obama election is just enough to give them a sense of belonging. The whites in this nation will not know what hit them. The government is going to be this thing that comes with the bankers to take your house away because you can’t pay taxes. There’s the fault line for the coming decade or so.

    FM:”Fading allegiance to the Constitution, and decreased willingness to fight in its defense.”

    The constitution remains a symbol like the liberty bell and Mt. Rushmore. Americans are still willing to fight for ‘America’ as far as putting on uniforms and marching around with guns and things. You mean here, I suppose, fighting for the original legal text of the constitution. How much allegiance has there ever been to this. For example is the ‘electoral college’ sacred because it’s in the original text?

    FM:”By social cohesion I mean the ability to work together under stress, usually resulting from shared beliefs and goals.”

    There have been warning signs. There’s the Iraq reconstruction — New Orleans is still in ruins. Can this country do anything anymore? We make big plans and spend money, but then on the other side of the pipe no water comes out. Will the banking disaster become our Chernobyl? In the sense of Chernobyl as an event that crystallizes to the world the idea “these guys don’t have a clue what they’re doing.”

  13. Other than China which has collapsed numerous times and absorbed its conquerors, name a single political culture that disappeared whose legal code and language survived it aside from Rome? In this sense it could be argued that the end of Rome came finally with the American and French revolutions. And what did the Eastern Empire provide? Christianity, the Greek penchant for mystery finally and wholly triumphing over the rationalist genius which so brilliantly sought to stave off the irrational which the barbarians brought with them from the Steppe.

  14. How about ancient Judea/Israel and Hebrew and Kosher laws? The latter might not be codified by a nation state but they are alive.

  15. Well underscore, one is the language of a nation and the other might be soon codified — I hope not unless pork is admitted. I do believe that there was genuine Jewish nationalism but it produced a civil war which contributed to Exile. We seem to miss the Temple but who missed the priests? Nobody who could write apparently. I do not wish to introduce Jwwish exceptionalism, particularly now that the world seems to be again heading toward the norm toward Jews — demonization, but the Jews hardly constituted an empire or a political culture, in comparison say with the Persians, the Seljuks, Abbasids etc. But I do think the Jews have a bigger future than they have had a past. Possibly the bumblings of an aging pessimist trying to convert.

  16. Well being ex-British. The UK Elites stuffed up and it was obvious at the time (60’s, 70’s, even more so in the 80’s). Not the working people. Lack of investment, poor education (in England), crumbling infrastructure, a long sad list.

    Just before WW2, Lord Boyd Orr (the great nutritionist, Google him) went to Nazi Germany. The sheer physical differences he saw between poor and working class British and their equivalents in Germany were astonishing. Taller, better teeth, no rickets, basically far healthier, stronger and fitter.

    The great British Empire, for some, but the average working class person saw little of that wealth, and it showed in the most basic level, their diet. Malnutrition was the norm for the majority of ordinary people right up to the war (when scientific rationing was introduced). Rickets was common. I knew people only 5’6″ tall with the classic bandy legs who grew up in that time.

    The elites had became rentiers, living off ‘investments’, mostly overseas. Staring to sound familiar?

    At the end of WW2 Britain was broke, but it has tremendous technological potential. The world leader in jet engines (the US couldn’t even make a jet engine in 1945), radar, computers, nuclear power, etc. A base that could have been built on. But the elites of the time found it more profitable … for them .. to give away most of it for nothing to the US, then invest in the US companies and pick up the profits. Just taking jet engines alone: if the UK had stood up to the US, every jet engine made there ever since, would have to have paid a royalty to Rolls Royce and Powerjet.

    They sold out their country (that includes Churchill, who was .. half American). The UK elites have always, to a tremendous degree, invested far more overseas than in their own country. The figures are shocking over the decades. This accelerated greatly after Thatcher.

    Starting to sound even more familiar?

    Social cohesion? Bit hard to maintain it when your own elites are selling you out and you have 90% unemployment (yes, really in some areas in the 80’s). In actual fact social cohesion was too strong, some regular nice big marches and massive riots might have made the elites there think a bit (ah la France).

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