The Political Origins of Our Economic Discontents: Contemporary Adjustment Problems in Historical Perspective

—0 —+1 129 The fi nancial crises and recession of 2008– 9 are the worst experienced by the developed democracies since World War II. Will this crisis inspire radical changes in policies or in the economic models that underlie them? How do we explain the adjustment paths countries take in the wake of such a crisis? These are economic questions about the sources of demand and supply in a chastened world, and po liti cal questions about how the will to adjust is generated. Such issues can be approached in various ways, but in the po liti cal economy as in the forest, if we want to know where we are going, it is useful to know from where we have come. Therefore, this chapter considers how the developed democracies addressed parallel challenges over the past seven de cades with a view to understanding better how they are responding to the current ones. To this problem, I bring a synoptic perspective that emphasizes the architecture of the po liti cal economy, seen as a set of interdependent institutional structures, encompassing or gan i za tion al relations among economic actors, the policy regimes supporting those relationships, and the international regimes in which they are embedded (Eichengreen 1996b). Drawing on a wellestablished literature, I outline the institutional architecture of the developed po liti cal economies