Welcome to the Frozen Economy

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There are more opposing forces: Consumer borrowing is up, while home values have fallen precipitously and mortgage delinquency rates are reaching record levels. The U.S. trade deficit continues to rise, while the cost of shipping a standard container from China has tripled since 2000, and many goods now cost more to transport and distribute than to produce. GDP is rising slightly, but the amount we can afford to buy with what we produce is growing at a pace that's even slower, by a full percentage point, than real GDP, according to the Dallas Fed. Home prices have fallen back, but the Conference Board indicates that the number of people intending to purchase a home in the next six months is at a 25-year low.

Americans are not alone in their shock and bewilderment. Demonstrations and riots over the rising cost of food and fuel are spreading from Asia and Africa across Europe.

Memories of Depression

Civilizations can prosper or decline. This is no coin flip but a consequence of how well societies perceive and adapt to economic, social, and environmental ruptures. In 1980, still in the grip of the last energy crisis, Americans signed on for "Morning in America." The promise of Ronald Reagan's candidacy, and of every President and Congress since, has been to humor our fears with a message of eternal sunshine—that everything is as it has always been. We've been lulled into escapism by opportunistic leaders. We chose to be pacified. Now decades have been lost while we've kept our heads in the sand. Most Americans alive today cannot recall the Depression—the last great shattering of our economic life—and what it felt like to be frozen. Will the economy mark the onset of our lingering decline, or will it finally rally us from denial?

As the economy ices over, the next President will confront a challenge that can be compared only to the one Franklin D. Roosevelt faced nearly 80 years ago. Discontinuous change will require a bold reexamination of our social contract and the rules of wealth creation in a global system. Thawing the frozen economy will entail reinvention of our public and private institutions, especially as they bear on health, education, finance, and energy. These are themes I plan to address in my next columns. In the meantime, here's my advice to the candidates: Start at Moody's Diner. Lose the cameras. Bring a notebook.

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Shoshana Zuboff is the author of The Support Economy: Why Corporations Are Failing Individuals and the Next Episode of Capitalism. She was the Charles Edward Wilson Professor of Business Administration at Harvard Business School.