1929 or 1989?

At the start of the crisis, many equated our times with that of a tumultuous year

Opinion | Dominique Moisi | May 2009

Finance Minister Josef Pröll, former Minister of Agriculture, apparently knows how to tackle the economic crisis, refuting claims by Nobel Laureate Paul Krugman that Austria faces a risk | An original cartoon by Kata Cserveny

As the economic crisis deepens and widens, the world has been searching for historical analogies to help us understand what has been happening. At the start of the crisis, many people likened it to 1973 or 1982, which was reassuring, because both dates refer to classical cyclical downturns.

Today, the mood is grimmer, with references to 1929 and 1931 beginning to abound, even if some governments continue to behave as if the crisis was more classical than exceptional. The tendency is either excessive restraint (Europe) or a diffusion of the effort (the United States).

For geo-strategists, however, the year that naturally comes to mind, in both politics and economics, is 1989. Of course, the fall of the house of Lehman Brothers has nothing to do with the fall of the Berlin Wall. Indeed, on the surface it seems to be its perfect antithesis: the collapse of a wall symbolizing oppression and artificial divisions versus the collapse of a seemingly indestructible and reassuring institution of financial capitalism.

Yet 2008-2009,  like 1989, may very well correspond to an epochal change. The end of the East-West ideological divide and the end of absolute faith in markets are historical turning points.

In 1989, liberal democracy triumphed over the socialist ideology incarnated and promoted by the Soviet Bloc. There are obvious differences between 1989 and now. First, and perhaps above all, the revolutions of 1989 and the subsequent collapse of the Soviet Union put an end to global bipolarity. By contrast, 2009 is likely to pave the way to a new form of bipolarity, but with China substituting for the Soviet Union.

Second, whereas democracy and market capitalism appeared as clear – if more fragile than expected – winners in 1989, it is difficult in 2009, with the spread of the global crisis, to distinguish winners from losers. Everyone seems to be a loser, even if some are more affected than others.

Yet, history is unfair, and the U.S., despite its greater responsibility for today’s global crisis, may emerge in better shape than most countries from the morass. As a visiting professor at Harvard and MIT, I am getting a good preview of what the world could look like when the crisis finally passes.

One senses something like the making of an American-Asian dominated universe. From the incredible media lab at MIT to the mathematics and economics departments at Harvard, Asians – Chinese and Indians, in particular – are everywhere, like the Romans in Athens in the first century BC.

But before this new order appears, the world may be faced with spreading disorder, if not outright chaos. What, for example, will happen to a country as central and vulnerable as Egypt when hundred of thousands of Egyptians working in the Gulf are forced to return to their homeland as a result of the crisis in the oil-producing countries? When the rich get less rich, the poor get poorer. And what about the foreign workers who have reached for the "European dream" and are now faced with potential explosions of xenophobia in Europe’s supposedly open countries?

The consequences of 1989 ended up being less enduring than many observers, including me, would have assumed. We can only hope that, in the end, the consequences of 2009 similarly prove to be far less dramatic than we now – intuitively and in our historical reflexes – feel them to be.


Dominique Moisi, a founder and Senior Advisor at Ifri (French Institute for International Relations), is currently a Professor at the College of Europe in Natolin, Warsaw. The French version of his last book "The Geopolitics of Emotion" has just been published in France

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