European Capitalism Developments

In Europe, where the financial crisis was transformed into national debt crises in several countries, the current phase of the denial cycle marked by an official policy approach predicated o n the assumption that normal restored through a mix of austerity, privatization and less state involvement came through (anti-Keynes). The other view is this. Governmental investments – and financial decision-making to regulate the effective demand in national economies is based on the basic principles introduced by John Maynard Keynes in his ‘General Theory o f Employment, Interest and Money (1936), The solution of the temporary crisis of the democratic capitalism might be linked to Keynes by his successors the neo-Keynesians. However, the representative democracy has become weak and fragmented , and under control of international powerful multinationals. The citizens not any longer look upon their national government as their representatives but as representatives for interest of foreign states and international organizations. Poor public politics and policies are what come out of it.


Introduction
The political German scientist Wolfgang Streeck writes in the Le Monde Dip lo matique, January 2012 that "Every day we read in the newspapers that the markets dictate what sovereign and democratic states can do and what they cannot do for their citizens. The consequence is that the citizens not any longer look upon their govern ment as their rep resentatives but as representatives for interest of fo reign states and international organizations". This is a correct statement. It is not the market that directly dictates governments, that is what deregulation of markets does. There is a close relation between the development of the modern western regulatory state and the process of creat ing markets and correcting markets in terms of Giando menico Majone's conceptualization of the regulatory state (Majone, 1994, www.scholink.org/ojs/index.php/jetr Journal of Economics andTechnology Research Vol. 1, No. 1, 2020 26 Published by SCHOLINK INC. 1997, 2003. It is regulations to accomplish these goals, both nationally and internationally, that dictate governments. The Eu ropean Union dictates the government of the member states. So does membership of the World Trade Organization (WTO). Nat ional impotence is the outcome of the huge amount of world wide market agreements (Veggeland, 2009). USAs depth of state is more than about 2 860 000 billion dollar in foreign loans, and President Donald Trump has additionally promised a gigantic investment program. If implemented on future infrastructure like roads and railways and walls, the loans certainly will increase dramatically. Th is program means new huge extra loans. Financial crisis and recession dominates the Western capitalism of our t ime. The crisis in the Euro-zone is evidently a grave blow to European integration, but intimately connected to the international financial crisis. The collapse of the national state finances understood as a man ifestation of a fundamental mechanism in the capitalistic system, where un -balance and un-stability is the rule instead of the opposite. The Western democratic capitalis m has in the year after the Second World War, went through three crises and conflicting phases, and is now going through a fourth one. For the EU, additionally, the Great Britain is getting out as a member state, Brexit, and the huge refugee problem generates a pressure, which is waiting for an expensive solution.
In Europe, where the financial crisis transformed into national debt crises in several countries, the current phase of the denial cycle marked by an official policy approach predicated on the assumption that normal restored through a mix of austerity, privatization and less state involvement came through (anti-Keynes). The claim is that advanced countries do not need to apply the standard toolkit used by emerg ing markets, including debt restructurings, higher inflation, capital controls, and significant financial repression. Advanced countries do not resort to such gimmicks, policy makers say. To do so would be to give up hard-earned credibility, thereby destabilizing expectations and throwing the economy into a future vicious circle. Although the view that advanced co untry financial crises are completely different, and therefore should be handled completely differently, has been a recurrent ideological refrain, notably in both the European sovereign debt crises and the U.S. subprime mo rtgage crisis, this view is at odds with the historical track record. In most advanced economies, based on Keynesianism, state intervention, debt restructuring or conversions, financial tools , and higher inflation have been integral parts of the resolution of significant debt overhangs.

Method
This paper is drawing on different disciplines. Firstly, it gives a short historical introduction to international economic crises. Different views and exp lanations are presented b y different scholars.
Secondly, economic theories are telling us what probably has happened and what is going on nowadays.
The economist Rajan, introduced above, gives weight on economic and social inequality in his explanation. Others, especially in Europe, put weigh on the denial cycle marked predicated on the assumption that normal restored markets is most effectively achieved through a mix o f austerity,

Economic Crises
The after war period of economic crises started with 1) the stagflation crisis of the 1970s. Afterward came 2) a public deficit crisis up, fo llo wed by 3) a privatized deficit crisis. Today the phase forth is ruling consisting of both 4) a public and a privatized deficit crisis, a combination crisis. Adequately three solution to crises has been tested out with conditional success, and a forth s olution is by now implemented. What we know is that every one of the solutions of the crises using traditional tools has led up to the next fo llo wing crisis ( universal impact, namely to secure cheap loans to them suffering for not having participated in the growth of the economy and its outcome. The banks took the advantage of the situation to earn money of suspect real estate loans, namely subprime loan. The real estate market was fo r a while a hot spot in its function, realizing products to constantly higher prizes. People bought housing products characterized by steadily rising prizes , believing that the prizes would continue to rise-into heaven.  (2012) concludes: "The crisis of today threatens the democratic order as much as the economic order, maybe even more". As in the past, the crisis will find a provisional solution. Most likely, the crisis of co mbination this time will not favor the interests of speculative financial actors, which probably will beco me subordinated stronger international regulations , in Eu rope of the EU (In the USA with the new President Trump with his buzzword "A merica First" nobody knows the way out). The interests will remain, but expand their self in tight contact with the real capital, i.e., in contact with global industrial monopoly interests. Consequently, the citizens will to an even lower extent look upon their government and polit icians as representatives and guaranty for democracy.

The Democratic Capi talism and the Neo-Keynesian Expl anation on the Crisis of Combination
Govern mental investments -and financial decision-ma king to regulating the effective demand in Firstly, a central point in Keynesian theory was arguments for an active state whose main ro le was to correcting markets and to stabilizing econo mic circulations. We have described and analyzed the stagflation crisis of the 1970s/1980s and found that the state remained active. The Western governments chose comprehensive public loan taking and the issuing of government bonds, which later on got the consequence of a public crisis of credit.
Secondly, by using the term "inclination" to consume, Keynes was able to explain how the consumption behavior changed its character parallel to changing prizes in the market, in our case in the housing market. When the prizing of real estate rises, an inclination arises which generates a feeling of value gain, which turns into a feeling of saving money. Further on this turns into increasing consume because it is believed that the 'savings' are available right there. This is the background for the development of what we have called the privatized credit crisis as a follower of the public cred it crisis. inclination to loan taking stopped by claiming a higher level of guarantee to get such loans.

Results
We might describe the situation characterizing the Western democratic cap italism of today, involving three variables. High level of loan (Germany an exception) taking and aggregated consume generated a situation of low emp loy ment. During the crisis of co mbination o f public and privatized credit crisis the unemploy ment rate will increase as time pass on. By necessity the inclination to public and private consume will be shrinking caused by mutual dependency between the variables. The inclination to the crackdown of aggregated demand and the growth of unemployment is strengthening by strong budget regulations and pay back of public loans. This situation occurred in the Euro-zone countries and hit them both economically and politically. In terms of Keynesian theory, the effect ive demand will decrease in the national economies. Th is triggers a negative economic spiral with growing unemploy ment followed by a corresponding decrease in purchasing power. When the national GNP begins decreasing it triggers printing of money, and the economies get threatened by increasing inflation. In the EU the European Central Bank (ECB) is very much aware of this mechanis m, and keep on to implement a strong monetary policy in the Euro-zone. The other side of the coin is the grave impact of this policy on the Mediterranean countries already hit by the crisis of the capitalis m. In the Euro zone, no one of its member states is allowed to devaluate its currency (Euro) in their endeavor to win more co mpetitive ability in the world market. Low inflation rate makes loan does fall regarding nominal value. Consequently, the unemployment rate continues to rise followed by social and political disorder in the European countries mentioned. The crisis is most likely spreading to other countries as well.
Accordingly, a temporary respond in Europe seems to be on the one hand to increase the effective demand by import 1) cap ital fro m outside Eu rope to compensate for internal public loan taking. Such capital could co me fro m the growing economies of the so-called BRICS countries, i.e. Brazil, Russia, India, Ch ina and South Africa. USA experiences a solution to the financial crisis by being a market for Chinese export whose payment remains as loan but with US dollar as involved currency in the business transactions. Regarding President Trump he has announced an end to this, and Ch ina will response in a way we so far do not know. 2) Do llar are printed and put into the money circulation, but inflation fails to appear because of US dollar as a g lobal currency regard ing economic t ransactions.
On the employ ment side might decreasing consume be avoided by giving the salaries of the labor force an upheaval. Increasing demand and consume will be an immed iately output of the strategy, this deduced fro m the Keynesian analyses of inclination. The understanding of the comb ination crisis in the democratic capitalis m is detained with a failure when it is explained as a crisis caused by an expensive welfare state together with public loans taken up to restore and pay for the services of the welfare state.
Also the consideration of making the financial crisis part of the general housing policy and the political wish to make people o wners of their own housing facilities is detained with failure. Rather, the explanation is to be found in the absence of Keynesian theory and its recommendation of govern mental interventions when crisis hit the economic circulat ion in the capitalistic economy.

Discussion and Conclusion
Shaping economic politics represents political choices. To go for a liberalized market economy generate consequences very much different co mpared to them generated by Keynesian strategies. The Nobel Prize winner in economy, Pau l Krugman, has named the period between 1950 and 1972 "the period of compression" (2007). The Keynesian principles dominated and pressed the market and the state together in a cooperative order. The unemploy ment was low and the inflation under control.
Interventions of the government adjusted the market, and the building of the appreciated welfare state was the final outco me.
In contrast to this situation, Krug man says, that the period since 1980 characterized by divergence; the state has withdrawn fro m the marked and beco me a regulatory state, while the market forces were given freedo m to develop and expand, only limited and in interplay with judicial regulations. The period characterized by high unemploy ment, but with inflat ion under control. Th is control came up due to the monetary polit ical strategy whose main object ive was fighting inflat ion. The salaries of ord inary people in the democratic cap italist countries went into a race to the bottom, and the trade unions lost power and influence in the economic and polit ical games. This form of governance under former Prime Minister Margaret Thatcher in the UK and former President Ronald Reagen in the USA is well known.
Since the 1980s frag mentation of governance regimes has been a dominant development trend due to steering principles deduced from New Public Management theories. The representative democracy has become weak and frag mented and under control of international supranational citizens not any longer look upon their government as their representatives but as representatives for interest of foreign states and international organizations . Poor public politics and policies are what co me out of it.
Two cases show that the people of Great Britain voted no stay as a member of the EU, and with Brexit as the consequence. The majority of the cit izens wanted their country to be independent and national with benefits to the depth-dependent part of the people, caused by the foreign regulatory power of the EU.UK is now fro m January 2020 a none member of the European Union. In the USA the people elected the rude businessman Donald Tru mp as their President with a hope that he could bring them better liv ing conditions with his turn-around economic policies and turn to nationalis m; "A merica first".
The similarity between the two cases was the belief of the cit izens that not any longer could the government be looked upon "as their representatives but as representatives for interest of foreign states and international organizations" respectively UK the EU and USA China, Mexico and mult inational trade agreements.