The Impact of Deindustrialization.

Summary Most observers consider that the crisis began in 2007 and has experienced many vicissitudes ever since. Some hope it will resolve itself soon, others suggest analyses leading to different economic policy proposals. The only virtual consensus is in the name, ‘financial crisis’. The present authors do not see it that way, however. Of course, finance played a significant role, but it was fundamentally a crisis of the real economy. We believe that the crisis is the result of the massive transfer of business activity, between 1995 and 2005, from the developed countries to those countries which would become known as the emerging nations. This was the unprecedented phenomenon of deindustrialization of the rich countries and submission in the short term to the diktat of the western consumer, who was so greatly tempted by the low cost of consumption and investment. This is the period when it was enviously reported that one hour of Chinese labour cost 40 times less1 than the labour of an American or European having the same qualifications. This miracle needed to be exploited quickly without thinking too much about the consequences, i.e. the price to be paid for supporting the newly unemployed. It would result in an explosion in the costs of social welfare and, above all, the disintegration of the world economy in the face of the brutality of this unprecedented impact.