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Aftermath:The Cultures of the Economic Crisis- 2012 , Manuel Castells

Updated: Sep 7, 2018

Sources of US instability seen as:

  1. global computerised trading of capital and stocks

  2. deregulation

  3. invention of new exotic financial produces which bypassed regulation and were difficult to understand

  4. easy credit in US gave consumers a chance to take on more and more debt which lenders provided on assumption that failure would be bailed out by the state

  5. the bursting of the real estate bubble in the US infected banks and markets everywhere

  6. the banking bonus rules encouraged brokers to take huge risks for their own benefit

The proportion of debt to household income in the US rose from 3 percent in 1998 to 130 percent in 2008. Mortgage delinquencies also rose from 2.5 percent to 118 percent – unleashing a massive financial crisis where hundreds of US banks went bust and the myth of the self regulated market disappeared.

Opposition from the Republicans prevented Obama's plans to re-inflate the economy through public investment. Right wingers are now taking power supported by the white middle classes – but this is a model where small elites in power are increasingly isolated from the poorer masses. It does not appear to be sustainable.

Portugal was doing well until 2007 when the financial bubble burst hitting credit and banking. As the economy contracted the sovereign debt crisis increased as governments tried to spend their way out of recession. Market contagion from Greece and Ireland led to impossibly high interest rates from lenders who financed the sovereign debt – a bail-out was needed. The ECB could have bought Portugese bonds earlier but it did not and the whole credibility of the modern democratic process has been undermined.

The unfolding of the crisis shows that the political system still cannot control the operations and effects of the banking/finance sector. Hence the Occupy movement etc.

We now see 4 strands of economic activity in the post crisis world:

  1. growth in the new new high tech sector which benefits an educated and privileged elite but which is too small to help the masses

  2. a crisis in the public and semi-public sector where tax revenues are insufficient to finance growth in employment

  3. a growth in the low skill black market economy

  4. the appearance of an emerging culture based on a new set of values about the meaning of life

The new way of life 4 comes from 2 sources: they are many people (not just neo-hippies) are searching for new values as a conscious objective and the masses who have nothing to spend except their cancelled credit cards.

However the rest of world outside US and Europe is not in crisis. This is creating a new dynamic in the world which needs to be understood.

It is the hypothesis of the book that the entire economic process is dependent on “culture” (i.e. a set of values) and we are now at the threshold of major change in these values.

Which culture succeeds in becoming dominant will determine the fate of the world! That is the question examined in this book – although no conclusions are reached! MC clearly hopes the new alternative lifestyles will emerge in some effective political form but he gives no clue how or what this might be!


The crisis at Berkeley mirrors what happened everywhere. State support for the University was drastically cut. Demonstrators made illogical and unrealistic demands which did not change policies. The public became increasingly disaffected with government and the government increased taxes and reduced spending thus making unemployment rise to dangerous levels.

More generally -

“Confused and conflicting ways of imagining the patterns of contemporary events are taking place at a time when the human demands on the planet are much greater than can be sustained but where the dominant ideology of capital accumulation through technological innovation only intensifies the crises.”

“ In our world we decipher time as we live it, prophesying as we do it, while all too aware that the end is all around us.”

Ch. 2

The four primary values of modern culture:

  1. nature – an infinite resource able to be transformed and managed by understanding its scientific laws

  2. science – a legitimate way to discover truth

  3. universality – where the values of europeans were translated to become norms all over the Earth

  4. sovereignty – where each state is seen as an independent atom acting as a legitimate component of the inter state system

MC sees each hegemony being replaced after wars approximately every 4 generations – the current oil wars possibly signalling the end of the current US hegemony.

“Progress through the transformation of nature” is the goal of modern economies – maybe we will have to transform this objective in the new emerging cultures? There is a crisis in each of the four primary values of our current culture. We have become afraid of the future.

Ch.6 Trust

Trust in established institutions is falling rapidly.

From 2008 to 2011 trust in the US banking fell from 46 percent to 25 percent. In the uK the same fall took place from 30 percent to 16 percent.

Public trust in the news media is even lower – 27 percent in the US and 22 percent in the UK. Increasingly people put more trust in NGOs.

Increasingly people turn to 'nationalism” because they have a need to believe in something.

Ch.9 – Growth of non-capitalist institutions and activities in Catalonia

Very important chapter showing the extent of non-capitalist activities in the area of Barcelona.

Many people have already taken up alternative lifestyles – particularly with agroecological farming which is more than just organic production.

Estimates of the numbers involved in Catalonia:

  • agro-ecological production networks – 12 – 1000 people

  • agro-ecological/consumer networks – 120 – 14,000 people

  • exchange networks - 45 – 5000 people

  • social currency networks – 15 – 750 people

  • free universities – 3 – 600 people

  • hacklabs – 1 – 150 people

  • shared parenting co-ops – 10 – 250 people

  • seedbank networks – 4 – 80 people

  • community based urban orchards – 40 – 600 people

  • Ethical banks – 4 – 280,000 people

Actors divided into 3 categories – Transformatives, Practitioners and Adaptives.

Non-capitalist activities divided into 3 categories: Self-sufficient, Altruistic and Exchange/Co-operation

  1. Self-sufficient categories: home repairs clothing repairs/making appliances repaired car/bike/mcycle repaired food and stuff from the street growing fruit and veg rearing meat

  2. Altruistic categories: lending books, music and movies to those outside the family sharing tools and expensive kit outside the family lending money to outsiders without charging interest doing house or car repairs or work for others without charging money taking care of old, sick or children outside family without money

  3. Exchange and Co-operation: have legally downloaded free software buy food from an ecological farmer have done teaching exchanges without money changing hands have exchanged other products without money have shared use of a car with non-family members have taken part in a community garden or orchard have taken care of others children in exchange for their own childcare have used social currency or an ethical bank

The Survey

  • 800 people surveyed – over half thought capitalism bad or very bad

  • 60 percent would like to work less and earn less if that option were available

  • On average each person took part in about 6 alternative activities

  • 77 percent believe that society can change for the better

Complex Chapters on China and South America

China put 400 billion dollars (equiv) into circulation to prevent their economy failing after 2008.


MC is very pessimistic. The world still tries to cling on to the old institutions which got us into this mess while the new institutions and values are struggling to develop. People no longer trust the old economic structures that provided certainty, the free market and the banking system. But the new cultures based on translating the meaning of life into economic meaning are still in the process of being created.


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