First paragraphThe recession of 2009 following the financial market crisis of 2008 was severe, especially in Europe. World GDP decreased by 0.6 per cent, the GDP of the USA by 2.6 per cent, and in the European Monetary Union (EMU) it declined by 4.1 per cent (IMK/OFCE/WIFO 2011). The export-oriented German economy had to face a relatively strong negative growth of 4.7 per cent of GDP. By mid-2010, however, it seemed that the disastrous effects of the financial market crisis were successfully countered by stabilisation measures in countries all around the world: rescue programmes for banks were established in most of the European countries; some countries like Ireland and Spain tried to compensate for the effects of busted housing bubbles; and fiscal stimuli were initiated to dampen the downturn of the economy, e.g. by the introduction of a scrapping premium for cars in Germany, France and other countries.

Th e world economy is presently suff ering from the most severe economic crisis since the Great Depression in the early 1930s. As by now seems to be obvious, the present fi nancial crisis, massive state intervention in the fi nancial markets in order to prevent a melt-down, and fi scal stimulus packages inconceivable even several months ago, mark the failure of an economic policy agenda which might be called ›neo-Liberalism‹. 1 Th is agenda, broadly speaking, focussed on the deregulation of fi nancial, labour and goods markets and on minimising state intervention. It meant a massive redistribution of income and wealth at the expense of labour and ordinary households, increasing imbalances on the global level and rising fi nancial fragility. Th e failure of this policy agenda is also a failure of mainstream economic theory which has supported it. In particular those theories which are based on the confi dence and fi rm belief that free markets will be stable and generate a full employment equilibrium-at least in the long run-and that the only role left for macroeconomic policies, in particular monetary policies, is to facilitate and accelerate the adjustment process towards this equilibrium, as for example in the dominating New Consensus Model (NCM), have failed. Th e fi rm belief in the stability of a free market monetary production economy is not only theoretically unconvincing, as Keynes, Kalecki, Robinson and other post-Keynesians have claimed for many decades. It is now-again-obvious that economic policy programmes based on this view might lead into disaster. Th e question then is: Where do we go from here? In the fi rst place, this is a question of how economic policies should deal with the fi nancial crisis and economic recession in the short run, and which should be the regulations and in

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