Political economy in free-fall

Published online 10 March 2010.

In a previous diary I discussed the notion of progressive ideology, which suggests that basic tenets of “progressivism” prevent it from articulating any sort of meaningful political resistance to neoliberalism, which in this era is the one ideology which has triumphed over all of the others, and thus the one ideology which matters.

In today’s discussion I will put forth the political meaning of this ideological formation: political economy in free-fall.

(Crossposted at Docudharma)

Flies are buzzing around my head
Vultures circling the dead
Picking up every last crumb
The big fish eat the little ones
The big fish eat the little ones
Not my problem give me some

-Radiohead, from the song “Optimistic”

So on today’s rec list we have NBBooks telling us of former IMF economist Simon Johnson, whose theory is that of the “doomsday cycle”:

Simon shows how the 1980s Reagan Revolution transformed the U.S. financial system and set in motion a “Doomsday Cycle” that has not yet been stopped, but is still careening toward yet another economic cataclysm.

Doubtless you all read and heard this from MinistryOfTruth’s diary which reported on Michael Moore’s prediction of a second crash.  At any rate, NBBooks’ diary only echoes another such, not rec-listed unfortunately, by gjohnsit about the worsening situation:

Right from the start of this crisis, our leaders have prescribed the wrong medicine for what ails us.

Of course, if you prescribe the wrong medicine in medicine, the patient dies.  When do we admit this as a possibility?  gjohnsit continues with his diagnosis:

The problem isn’t the ability of banks to get money. The problem is finding credit-worthy borrowers. Everyone from Wall Street to Main Street is already overloaded in debt after purchasing overvalued assets.

Of course, it’s even worse than this.  No amount of further credit-worthy borrowing will save the debtors from debt peonage.  Only a real transfer of wealth will alleviate their plight, and the winners in this game are not going to give up their gains.

Which brings me to the fundamental difficulty here.  With all of the pretensions of economics to being a “science,” why do we still have “economic downturns”?  Shouldn’t they have fixed this little problem, and paved the way for indefinite prosperity?

Well, no.  “Economic downturns” are in fact going to get worse in the future, and for the same singular reason as they’ve always happened.

To understand this one, singular reason, we need to go back to the fundamentals.  Capitalism is based on exploitation, the exploitation of labor by capital.  The expansion of the capitalist system has been through its steadily-increasing labor pool: increases in the number of people working for capitalists have allowed the capitalist economy to remain “healthy,” thus “growth.”

Invariably, however, the capitalist system runs into what are called crises of overproduction.  Capital produces too many goods, which are caught chasing too little money.  Apologists for the capitalist system love to praise its productive dynamism — well, this is the downside.  There may be something in the stores, but who has the money to buy it anyway?  This is the fundamental crisis of the system.

The fundamental cause of overproduction is that of a surplus of capital.  When you have too many businesses out there looking to make a profit, they constitute too much of a drag upon the “economy as a whole.”  I’ve put “economy as a whole” in scare-quotes because the “economy as a whole” is the main fetish of economics as an academic discipline.  Economists, you see, don’t really care about poverty or hunger or warfare or disease or ecological devastation, you know, the REAL concerns of the human race.  They’ve got their priorities in ORDER, mind you, and so the real concern of the world is the “economy as a whole.”  That’s what they see us supporting, every day, when we go to work.

At any rate, the most glaring contradiction in economic logic is that the main drag upon the “economy as a whole” is the problem of the surplus of capital.  Harry Shutt describes this in great detail in his books.  Of course, for the propagandists of the system  (see e.g. the Republican Party), the entrepreneur is God’s Representative On Earth, i.e. our savior.  So they won’t listen if you tell them there are too many of these “entrepreneurs.”

However, there are periodic instances throughout the history of capitalism (e.g. the Great Depression, the Panic of 1837 and so on) when there are “too many entrepreneurs” for a “healthy economy.”  So in these circumstances one of two things must occur:

  1. A good chunk of capital must die — the capitalists must close their businesses, fold up their tents, declare bankruptcy, and join the working class, or:
  1. The capitalists can “buy into” government.  You’ve probably seen this method described in other places, and describing it is quite simple.  If you’re a capitalist, you give your favorite lobbyists money so they can give that money to politicians.  The politicians then enact legislation which keeps your businesses swaddled in profits.  You can then pay your lobbyists more money.  It’s a win-win-win all the way around, except for maybe the taxpayers who are footing the bills (and putting in the hours) to make all of this predatory activity possible.  This is the way that “surplus” capital can maintain its lifespan far beyond the time when it really ought to have died.

Well, back in the old days of the boom-bust cycle, the periodic death of capital through economic busts (the panic of 1893, the panic of 1873, the panic of 1907 and so on) kept there from being “too much capital.”  Profit rates declined, businesses went under.  Today, however, capital has bought into government so thoroughly that government will excuse any amount of business fraud in order to prop up the profit rates of those who are deemed “too big to fail.”

At any rate, in the final analysis it doesn’t matter if the great masses of average men and women in America are up to their noses in debt, or if they are just simply too dirt poor — either way you’re going to have a dead consumer base and a shrinking economy, and when you have too much capital it will be a drag on what’s left of that little wealth actually possessed by the masses.  Today, we have far too much capital, and the government can’t print money fast enough to keep it satisfied.  Further legislation, moreover, is predicated on keeping capital well-placated, as (for instance) the Senate “health insurance reform” bill was structured through behind-the-scenes deals with the pharmaceutical industry and the insurers, and so we see one of its defenders here at Orange telling us:

Yes, this bill is a giveaway to the insurance companies. However, if you’re sick and don’t have health insurance, do you care about whether or not insurance companies are making a lot of money or not? No, of course not.

Well, perhaps you ought to care.  Kudos to Broken Arrow for actually responding to this point rather than merely demonizing Left opponents of “health insurance reform” as “purity trolls.”


At any rate, I promised you that I was going to bring neoliberalism into this discussion.  There is, at present, no countervailing force which will oppose the neoliberals in their domination of the Federal government.  The “progressives,” as I pointed out in this diary, are ideologically constrained to endorse “Left” neoliberalism and to passionately hate all apostates who dare criticize “Left” neoliberal legislation (e.g. permits for “humanitarian warfare,” “health insurance reform,” destructive “education reform”).  Other ideologies, as I pointed out in the same desire, are all complicit with the neoliberal program.  And the neoliberal program, of course, retains its rigidity even with the economic crisis: promote an ideology of “free markets” while at the same time channeling legislation to prop up the profit rate for “too big to fail” corporations.

What I didn’t say in the earlier diary is that, with the wheels greased by the Federal government and with all functional ideologies in American politics committed to neoliberal policy in some form or another, the whole system of political economy is in free-fall.  The deal has been sealed: capital’s future will be assured no matter what, while the economy, the political system, and the fates of the masses are going down, down, down.  Oh, sure, in a previous era popular upheaval might have stopped them, but today popular upheaval is confined to reactionaries such as the Oath Keepers, who are rightfully afraid of the Federal government (and thoughtfully adopting a number of survivalist moves) for reasons which are so totally hateful and wrong on so many levels.

Thus the comparison between the Great Depression and the current Great Recession falls flat, because the popular upheavals of the 1930s are only in evidence today among the least helpful segments of the population.  This of course is a major reason why we can expect no FDR-like President to save us from the coming economic collapse — Barack Obama for the most part fitting the comparison made of him in Harpers to Herbert Hoover.

Another way to think about the difference between the 1930s and now is in terms of culture.  During the 1930s there was what historian Michael Denning called a “cultural front” — in which intellectual figures such as John Dos Passos, John Steinbeck, Kenneth Burke, and Richard Wright were actual socialists and not just mere liberals offering occasional plugs for John Kerry.  What we have instead, today, is a cultural milieu dominated by corporate consolidation at all levels of industry, and a public school system which offers no serious resistance to government initiatives aimed at its privatization.

And educational privatization will merely be the last capitulation of the educational systems to the economic demands of a portion of the professional class it helped create.  The educational systems of the 1960s, the Golden Era of the capitalist system, were (as Clark Kerr called them) “multiversities” which created an accelerating credentials race in which millions of people across America sought entry into higher-wage managerial positions through the acquisitions of increased numbers of Bachelor’s, Master’s, and even doctoral degrees.  The universities, then, laid the ground for the managerial class whose job expectations were tied to the vast surplus of capital which dominates today’s global economy.  If their privatization is now mandated by government, this is then perhaps the outcome of three decades’ of policies turning their operation into a credentials race.  At this point who is left to defend the mere “pursuit of knowledge” against the corporations?

The worst aspect of this trend will be in our society’s total inability to deal with climate change.  Our global society’s addiction to 85 million bbls/day (about three billion gallons) of crude oil (and an equal carbon equivalent in coal) will not be stopped by a government dominated by its handmaidenship to a vast surplus of capital.  Thus we can expect some of the worst climate predictions of Mark Lynas’ Six Degrees to come true at some point.

Thus government, economy, and culture are all in free fall.  The “leadership” of each is unanimously devoted to a further narcissistic concentration of power and money among a relatively small cadre of families at the top of enormous pyramids of wealth and power, to the detriment of all.  Politics appears to be counter-productive because consolidated organization aims its combined might against dreams of a sustainable future.  In such an environment, all pin their hopes on further capitalism, in which each hopes against the others to join a managerial “middle” class whose dreams of home ownership have since been compromised by the bursting of real estate bubbles.

Playing outdoors, the most fundamental of human aims, has been supplemented and in many instances replaced by watching expert millionaires and collegiate wannabes do the same on television.  It was more fun when it was just playing outdoors.  But do you see, now, why I want you all to imagine post-capitalism?


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