The global financial crisis which developed in 2008 arguably had the potential to undermine the stability of the entire financial system of modern capitalist economies. Although there have been economic and financial crises at both regional and international levels before, this crisis was somewhat different in its breadth and depth. It was also unique due to the sheer level of the cost of governments’ responses to it.
It was clear during the crisis that mainstream economic opinion was unable to accurately predict how far the crisis would spread. Therefore, a post-crisis analysis might prove more fruitful when using heterodox approaches to political economy. The writings of Marx, and Marxist analysts, have been propelled into greater prominence since the crisis broke out and offer some convincing analyses of the modern capitalist system and the broader causes and consequences of crises of this system, including the global financial crisis. Based on Gramscian theories of hegemony, the regulation approach has been developed as a toolkit to help understand how the capitalist system is able to evolve counter-cyclical responses. These responses enable capitalism to withstand repeated systemic shocks and continue to persist and expand despite the very real human pain which these shocks can create.
Here, the regulation approach is used as a method of analysis and offers unique insights into how the crisis developed as part of a broader financialist regime of accumulation, which saw financialism and shareholder-driven market behaviour come to dominate the capitalist system globally. The regulation approach shows how social policies, in particular those relating to unemployment, co-evolve with regimes of accumulation in order to provide foils to counter-hegemonic projects developing during times of economic crisis. This will be demonstrated to be a valid proposition, with the New Zealand government’s unemployment-related policies (before and after the crisis) used as a case study to test the approach’s validity.
