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Economic Crises as Sicknesses and Catastrophes

by S Puehringer, M Schnetzer and P Schreiner Wednesday, Nov. 18, 2015 at 4:06 AM

The 2008 financial crisis is often wrongly described as a "state debt crisis" where cause and effect are inverted and economists and the market are released from responsibility. Sickness and catastrophe metaphors dominate discussion


By Stephan Puehringer

[This blog article published on January 16, 2014 is translated from the German on the Internet,]

The importance of language or metaphors in public debates is often underrated. On one side, dominant thought patterns are revealed through phrases like “healing powers of the market” or “economic Tsunami” used by economic experts in political-economic discourses. On the other side, this has a massive political effect since pictures of economic processes serve as bases of argumentation for economic austerity programs cutting state spending and blocking a clear view of capitalism’s systemic crisis-susceptibility.

More than five years after the outbreak of the financial crisis, we find ourselves in the most severe and most persistent economic crisis of the postwar era. On account of continuing and bad economic forecasts, the Great Recession is emphasized following the Great Depression of the 1930s. As to the media discourse, the predominant term for characterizing the present crisis is “state debt crisis” and no longer “financial crisis.” Thus a new lingual definition dominates that simultaneously results in a re-interpretation or new interpretation of the crisis. Even without a more detailed analysis of the argumentative strategies on the causes of the Great Recession, the constant application of a terminology around “state debts” implies the attention is guided to the role of the state in the crisis (with clearly negative connotations in this case).


Because of the changed lingual framework of the political-economic debate, “state debt crisis” on one side stands as an analogy to the Great Recession. On the other side, the new definition of crisis is an argumentative basis for continually ascribing less significance to the financial crisis in explaining the causes for the outbreak of the crisis. Consequently the Great Recession is subdivided in several partial crises whose causal conditions are hidden. If one considers the state debts of the EU, Austria or the eurozone before the crisis, these were declining from the middle of the 1990s to 2007 and first rose intensely after the eruption of the crisis. Thus the crisis in the form of tax losses and reactions to the crisis in the form of economic- and bailout-packages caused the increase of state debts. The causal connection between the financial crisis and “state debt crisis” is obvious.


Since clear empirical evidence exists that the cause for the Great Crisis was not high state indebtedness, the question why this new interpretation and re-interpretation occurred and what could be potential effects of metaphors and narratives in the political-economic discourse – particularly in crisis times. In this connection, the media-transported judgments and arguments of economists as experts for economic processes seem interesting. The public discourse of economists in the opinion-forming German language media is analyzed with a discourse- and metaphor study in the research project “Economists in the Financial Crisis.” The dominant lingual figures, metaphors and pictures applied by economists to describe the financial crisis are investigated. “Worldviews” of the economy, markets and economic crises are derived from them.

Following cognitive metaphor theory (based on Lakoff/ Johnson “Life in Metaphors”), conceptual metaphors on which these “worldviews” are based are very important because the pictures reveal central human thought patterns.

The following five conceptual metaphors could be derived from the public debate of German-speaking economists on the financial crisis from the fall of 2008 to the winter of 2009:

• The financial crisis as sickness that has infected the economy

• The financial crisis as a natural phenomenon or catastrophe with disastrous consequences

• The (financial-) market as a sensitive actor to which human qualities are ascribed

• Economic action requires specific economic and moral standards

• The financial crisis as bad luck in the economic game

Quantitatively the first two are highlighted as central and will be described in detail.


The first striking metaphor in economists’ discourse on the financial crisis is the sickness metaphor. “The patient Germany” has a “serious infection” or the German economy has been “infected.” The problem of credit shortage is described in another picture: “The arteries of the economy (…) are clogged” and therefore a “heart attack occurs.” In other contexts, financial crises are described as “fevers” and “overheating” while state interventions against the crisis are described as “cholera” (delimited from the worse “plague”). The “danger of infection” from outside is drastically presented in the description that “the crisis devours the whole Euro-periphery…” and ultimately “reaches the center.” In all these pictures, crisis is described as a pathological condition of the economic system so a “healthy body” of a functioning economy can be juxtaposed to the attacked state of health of the “body of the economy.” The role of specialized medical treatment is derived from the dichotomous description of sickness acting from the outside by economists as experts for the “body of the economy.” The importance of specialized expertise is emphasized repeatedly in this context. “Getting worked up over the thermometer when one doesn’t have a fever does not help at all.” Hope exists. Even when the “body economy” passes through a “grave sickness,” it is robust “simply because market economies are generally robust systems.” One only needs trust the “healing powers of the market.”


The second striking conceptual metaphor for the financial crisis is the nature- or catastrophe metaphor. Thus the “American crisis” is described as an “economic Tsunami” that “rolls to Germany.” The effects of the crisis are equated with “tectonic shifts” on the markets that act as “shocks” or “an example.” The picture of a potentially disastrous external threat scenario is often drawn. “The big hits come nearer” or a credit derivative can become a “weapon of mass destruction” as in nuclear physics. The conduct of individual actors in the financial system leads to a “breaking of the dam” and “then there is no holding it back any more.” Through nature- and catastrophe metaphors, an outward danger is generally described that affects the system. In this way, a crisis explanation is encouraged that ascribes the causes of the crisis to an “external” threat, whether a “Tsunami,” “an earthquake” or a “flood.” In a countermove, we or Germany “swim like corks on the waves of the world economy.”

On one hand, nature- and catastrophe metaphors prevent the ascription of responsibility for bad predictions of economists. On the other hand, the crisis is explained through “extreme shocks” as exogenous, not endogenous or systemic which has great significance on the effect of crisis explanations. This description of crisis as an extreme and extraordinary event misjudges the permanent crisis susceptibility of the financial system like capitalism in itself. The political demand that is based on such a picture of the crisis can then be supporting the system of the economy or the market that is stable and functioning in itself. In this context, financial- and economic crises are understood merely as “extraordinary events” that can have momentous effects like natural disasters to which people are ultimately and powerlessly handed over. In this understanding, capitalism of itself cannot produce any crises.


In summary, the dominance of a reduced understanding of normality can occur in the discourse of economists. The financial crisis is understood as an extraordinary event that acts on the economy from the outside in the metaphorical analogies in the sickness-, nature- and catastrophe-metaphors – that were the dominant pictures of economists in speaking about the financial crisis. This dichotomous understanding appears in the pairs of opposites healthy/ sick bodies, silent oceans/ Tsunami, stable/ tottering buildings or functioning machine/ external attack.

From this perspective, it is hardly surprising that theoreticians very quickly “come back to normality” by means of political arguments based on an understanding of normality of economic experts. Austerity programs are the logical consequence in the EU crisis policy since the financial crisis was not largely interpreted as a systemic crisis of capitalism. Market-radical, neoliberal thinking reflected in this predominant understanding of normality makes it possible to view the 2008/09 Keynesian oriented state economic programs as extraordinary. However austerity programs to combat the “state debt crisis” fit well in the framework of political-economic “normality.”


Applying specific metaphors should not be understood as a process of influencing public opinion. Specific thought-patterns are revealed in language and in the applied pictures. Dominant metaphors are closely related to the political-economic hierarchy of power…

Language and metaphors cannot be separated from political-economic power relations. Their role in the construction of reality is more important than often assumed. The 2012 Beigewum publication “Imagine economy. Neoliberale Metaphern im Wirtschaftspolitischen Diskurs” shows this importance is gradually recognized more and more.


By Matthias Schnetzer

[This blog-article published on April 2, 2014 is translated from the German on the Internet,]

“For a long time, inequality was ignored. Now it is at the center of political-economic discussion around the globe,” the renowned distribution economist Tony Atkinson recently wrote. International institutions increasingly thematicize the growing concentration of income and assets. In Austria, the spread of incomes and the concentration of assets are emphasized more and more. However despite intensive distribution debates, the pressure of progressive forces was too weak to overcome the blockade of the conservative side that defends an unjust distribution of incomes and assets with flimsy arguments.

Remarkably many institutions from the neoliberal camp have jumped on the train and thematicize distribution questions. A study of the International Monetary Fund (IMF) was published although the fund was hardly concerned about the costs of inequality and starting points of redistribution policy for a long while. The paper concludes that trifling income inequality leads to constant economic growth and redistribution does not inhibit growth. For a longer time, the OECD called attention to the spread of incomes and in a recent report confirms the negative social effects of crisis and inequality. NASA also recently financed a study whose apocalyptic conclusion excited wide-ranging media attention. According to that study, the exploitation of natural resources and the unequal distribution of wealth could lead to the total collapse of civilization.


That the distribution debate picks up speed is largely due to ever improved data. In the Anglo-Saxon area, there is qualitative high-grade data that enables detailed analyses of the income- and assets-situations of households. The Oxford economist Tony Atkinson and Salvatore Morelli from the University of Napal recently published a new data bank with long-term international distribution data. There is also a huge new data project for the US with the collaboration of Berkeley economist Emanuel Saez. Saez is currently occupied with the long-term distribution of US assets since 1913.

The fresh wind in the international debate stirred up by the new data is noticeable. In Austria, the possibilities for investigating the concentration of incomes and assets are also better…


Although the data on income and assets concentration has triggered a broad public debate, that data has long been barred from political decisions. The empirical findings and the economic theory provide many arguments for a redistribution of assets although conservatives blocked all discussion of wealth- and inheritance taxes in past budget debates. A discussion on the responsibility and payment of the costs is absolutely necessary…

Austrian society faces great challenges in the social realm that also must be financed. The debate on distribution and financing will play an important role in the tasks lined up in the areas of care, pensions, housing and education. Taxation of mammoth inheritances and wealth must have a central place on the political agenda despite or because of the vehement resistance of the forces against just distribution of income and assets. The question about the distribution of economic and political power is raised. A fair distribution of the financing burden for necessary state expenditures is vital.

The air-stream of the international discussion strengthens the following wind in the Austrian distribution debate. The book of the French economist Thomas Piketty makes an important contribution to this discussion. Piketty discusses the systemic roots of inequality, not only its superficial symptoms.


With his Opus magnum “Capital in the Twenty-First Century,” Piketty wrote a book praised by Nobel Prize winner for economics Paul Krugman as “the most important economics book of the year” and described as a “turning point in economic thinking” by former World Bank economist Branko-Milanovic. This book has awakened interest far beyond economics.

The distribution economist tries to derive laws of the capitalist economic system and analyze the foundations of income and assets inequality. In his self-definition as a sociologist more than a pure economist, Piketty supports his investigation on a wide range of data sources. The collection of income and assets data and fruitful collaboration with Atkinson and Saez help him. Moreover Piketty takes unusual ways in economics beyond statistical conclusions and hearkens back to authors of classical literature with historical references – from Jane Austen to Honore de Balzac…


By Patrick Schreiner

[This blog-article published on June 17, 2013 is translated from the German on the Internet,]

The distribution question is alive again in Germany. The “Fair Sharing – Tax Wealth” campaign and the fiscal resolutions of DIE LINKE (the Left Party in Germany), the SPD and the greens have had a considerable media echo. Redistribution of incomes and assets from top to bottom is discussed again. The current financial and economic crisis is above all a distribution crisis.

Whoever speaks about the crisis must speak about neoliberalism. The economic history after 1945 can be divided in two epochs in nearly all western industrial states – the time before the neoliberal turn – and the time afterwards. Until the 1980s, wages, productivity, investments and production pushed each other. Markets were strongly regulated. Unions were strong. High wages were the basis for a strong demand for goods and services – and made possible profits, investments and growth.


On the other hand, profits in the neoliberal accumulation model carried out in the 1970s/ 1980s were based on a massive redistribution of prosperity benefiting owners of capital, not on high wages and economic demand. Essential elements of this model are:

• a market fundamentalism that on principle rejects state intervention in market interactions. This was and is the most important ideological foundation for deregulating labor and financial markets.

• an individualization of responsibility, well-being and social security. For neoliberals, these are tasks and responsibilities of individuals. This was and is the most important ideological basis for dismantling social security in the last decades.

• the enormous weakening of employees and their unions. Profits should soar even through low wages.

• globalization. Workers are set in competition with each other for the lowest possible wage and the worst possible working conditions through free capital- and goods transactions.

Neoliberalism was very successful measured by its goal. Redistribution to the benefit of profits and capital incomes and to the favor of high salaries increased the unequal distribution of incomes.


Polarization in income distribution has disastrous social and economic consequences and leads to missing economic demand. Persons with low incomes spend a higher share of their incomes for consumption – while persons with high incomes save more.

Businesses can only gain profits (and ultimately nothing else counts in capitalism) when their goods and services are purchased. Profit possibilities decrease when the masses spend less and less money because wages fall and social benefits are cut.

The attempt to find the way out of this situation of inadequate economic demand and ensure profits without raising wages and transfer payments ultimately led to crisis. Two closely-connected economic mechanisms show how increased social inequality provoked the crisis.


Invested financial assets drastically increased in the last decades – and globally – because of redistribution from bottom to top. If these assets amounted to trillion or 120% of the global gross social product in 1980, they skyrocketed to 2 trillion or 349% of the GDP by 2007.

This enormous growth of global investments caused an expanded significance of the financial sector. The money had to be invested and the tendency to ever more speculative financial investments prevailed. These speculative investments were less profitable in the real economy because of the inadequate demand. The invention of ever more complex and dangerous “financial innovations” by financial market actors was encouraged. Large parts of the economics guild and the media called these processes an essential cause of the crisis. The role of the virtually exploding global wealth was mostly repressed.


New forms of “securitization” were and are the most important “financial innovation” of deregulated financial market capitalism. Credits are bought in the form of securities (“securitized”) and resold. Such processes were the basis for the real estate bubbles that burst in 2007. These bubbles allowed until the outbreak of the crisis partly balanced the collapsing global economic demand. It is striking that the decline of wages and transfer payments in the past decades on the global scale was greater than the decline of consumption. The budgets of employees and receivers of transfer payments did not only react to falling incomes by limiting their spending but financed their consumption through indebtedness.

Upon closer consideration, clear distinctions appear between different countries. So the indebtedness of the private sector in the US, Spain and Great Britain increased drastically. On the other hand, the budgets in other countries like Germany reacted to declining incomes mainly with consumer renunciation. This led directly to inadequate economic demand.

Those countries where falling incomes were not compensated by a higher private indebtedness pursued an aggressive export strategy in foreign trade. While Germany leads the way, Switzerland and Austria also realized high and constantly growing export surpluses. They profited from the economic demand maintained through the growing indebtedness of private households in the US, Spain, Italy and other countries. Germany profited from others’ work while the US acted as the global economic locomotive.

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