The Credit Crunch: Neo-Liberalism, Financialisation and the Gekkoisation of
Society
by John D. Bone
University of Aberdeen
Sociological Research Online, Volume 14, Issue 2,
< http://www.socresonline.org.uk /14/2/11.html>
doi:10.5153/sro.1928
Received: 11 May 2009 Accepted: 26 May 2009 Published: 30 May 2009
Abstract
This paper offers a broad overview and analysis of some of the main causes and consequences of the
current economic crisis. While attempting to flag up some of the key continuities between the conditions
contributing to the current crisis and those that produced the 'great crash' of 1929, it is argued that the
'credit crunch' must be understood in broad historical context. Specifically, it is suggested that the turn to
neo-liberal economics in the late 1970's, principally in the UK and US, restored many of the structures and
socio-economic characteristics that were prevalent in the 1920's, inevitably producing a highly similar
outcome. Overall, it is argued that the (re)financialisation of the economy, the deregulation of markets,
together with the cultivation of a culture of rampant individualism and acquisition, pervading the markets and
wider society, have coalesced to sow the seeds of reckless profit seeking that have led to the current
crisis. Moreover, given that latter, it is suggested that the current upheaval is as much a reflection of social
and cultural decay as it is a failure of economic governance.
Keywords: 'Credit Crunch', Neo-Liberalism, Financialisation, Housing Bubble, the
'Great Crash', 'Gekkoisation'
Introduction
…Practices of the unscrupulous money changers stand indicted in the court of public
opinion, rejected by the hearts and minds of men. True, they have tried, but their efforts have
been cast in the pattern of an outworn tradition. Faced by failure of credit, they have proposed
only the lending of more money. Stripped of the lure of profit by which to induce our people to
follow their false leadership, they have resorted to exhortations, pleading tearfully for restored
conditions. They know only the rules of a generation of self-seekers. They have no vision, and
when there is no vision the people perish. The money changers have fled their high seats in
the temple of our civilization. We may now restore that temple to the ancient truths. The
measure of the restoration lies in the extent to which we apply social values more noble than
mere monetary profit.
(President Franklin D. Roosevelt, Inaugural Address, March 4th 1933)
1.1 Over the last year, a great deal of the more serious output from the world’s media has been dominated
by discussion of the ‘credit crunch’, its causes and its potential consequences. The broad consensus of
this debate has been that the world’s bankers, and associated players in the financial sector, had
overreached themselves in terms of engaging in risky financial dealings, and lending far too much money for
people to overindulge in consumption and, in particular, investment in property.
1.2 It appears clear, however, that the current crisis represents more than merely a cyclical outbreak - albeit
a serious one - of ‘irrational exuberance’ amongst the financial community (Shiller, 2000). Rather,
fundamental changes to the structure of the economy, the regulatory framework in which contemporary
business has been conducted and, critically, the manner in which the culture of contemporary capitalism
has evolved and pervaded the wider culture over the last three decades, in various ways that are briefly
discussed below, can be seen to have coalesced to produced conditions that inevitably lend themselves
towards increasing instability and crises, such as that currently being experienced.
1.3 Supporting this view, the evident parallels in terms of economic policy, financial management,
organisation, culture and practice that led to the crash of 1929 indicate that the current crisis is evidence of
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