Green shoots of the soul
May 6, 2009
Last November, when things were grimmer than grim and every economic article contained the world “since the Great Depression”, I sat in an editorial meeting and called recovery for April/May this year. O how they laughed!
I have been known to be wrong in the past, and time will tell whether or not I’m wrong again now, but there was method to my madness and I’ll stand by it.
I’ve been in the workforce for two decades – I’m in the middle – not last in, not, hopefully, first out. Although there was a recession when I got my first job, since then, I’ve had little experience of economic downturn. Neither has the 50% or so of the workforce who joined after me.
True, there have been mild cycles: the downturn after 911, for instance, came at a particularly difficult time for me professionally – we had just moved from the UK to Australia and my UK clients were pulling their heads in before I had a base of Australian ones to plug the gaps. But before long things were buzzing again, investors were investing, and the second half of the great millennial boom took off.
The Great recession
This time, we were told, was to be different. In September last year, with the bankruptcy of Lehman Brothers, we were staring into the abyss. The bankers, securitisers, manufacturers of financial products, and financial engineers had created a speculative bubble so large, so unwieldy and complex that it would take years to dismantle. Suddenly the newspapers were full of “trillions” when “billions” had heretofore been generally sufficient.
O-kay. Clearly, with governments around the world throwing money around like confetti, hysterical headlines daily, and literally thousands being laid off as companies adjusted to the new reality, things had changed – and radically – within the course of twelve months.
Still, I felt, and still feel, that there is a physical limit to how long people – and by people I mean the collective of individuals that make up the broader economy – can feel depressed for.
Consider this: there is no fundamental reason why anybody actually has to engage in much of this frantic economic activity we call “work” at all. Our subsistence needs could be fulfilled with much less effort than we put in– so why do we insist on caning it so frenetically anyway? Answer: animal spirits.
John Maynard Keynes couldn’t see any fundamental reason for all this frantic risk taking and entrepreneurial activity. The everyday ambitious but risky decisions we take (such as actually getting up and going to work) can’t be explained through rational economic reasoning, because we really know so little of the future. Instead, they are the result of “animal spirits – of a spontaneous urge to action rather than inaction.”
So my call for green shoots about now was less a product of fundamental economic analysis - of the kind I have o so much respect for - and more born of the conviction that there is only so much bad news the human spirit can take, and after a while, the urge to action rather than inaction, to boldness rather than timidity, to venture rather than wallow will inevitably kick in. Lucy Kellaway, the FT’s work columnist, has observed these green shoots of the soul starting to spout thus:
“The new cheer is the latest phase in the emotional cycle of recession. The first phase was denial, which started almost two years ago with Northern Rock and Fannie Mae and Freddie Mac. Then, last autumn, denial gave way to shock and fear. We worried that the world would never be the same again and we were deeply afraid. After fear, came rage. It was all the bankers’ fault and we wanted to skin them alive. And after rage came acceptance. We accept that the economy is in recession. But now, hot on the heels of acceptance, comes cheer.”
Sure, the banks are still busy “deleveraging” and the economic indicators remain uniformly down. More will lose their jobs, and as the old saying goes, a recession is when others lose their job, a depression is when I lose mine. But my guess is that people – particularly of my own “instant gratification” generation and those younger, are over it. Soon the animal spirits will kick in, the next wave of innovation and employment will be unleashed, and all this talk of the end of capitalism will be just that…talk.
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