Published online 25 March 2009.
This diary will attempt to address the current economic debate in light of the general analysis of the system presented by John Bellamy Foster in his piece in the March Monthly Review, titled “A Failed System: The World Crisis of Capitalist Globalization and its Impact on China.” Foster is, I would argue, correct, without really being all that proactive. I will conclude this diary with a couple of suggestions on how to read Foster and on what to do.
(crossposted at Docudharma)
Now, I was thinking of redoing yesterday’s diary, titled “Some Perspective Please: Gowan’s Piece in NLR.”
I think the problem with that one is that I spent too much time translating it out of “Economese” into English. What I didn’t figure was that Gowan’s essay requires the reader to know a lot of the background behind his economic analysis, and so merely translating it into plain English would still render it, well, confusing. Let me try to summarize Gowan briefly here.
Gowan is saying a few, rather important things:
- The current economic downturn isn’t as bad as it is because of the problem in the housing market; it’s as bad as it is because the CDOs collapsed in value. Housing may be part of it; housing is by no means the whole potato.
- The global economy now constitutes a “megabubble,” a bubble encompassing the entire economy, and the whole thing is now being deflated. Oops!
- The economic structure is the way it is not because of some doctrine of “laissez-faire” that everyone supposedly follows, but rather because the financial elites constitute a cartel, and because said elites have been making their big money on the creation and deflation of economic bubbles since the ’70s.
- The current downturn, then, is the “bubble that got away”; it’s the global bubble which, when deflated, took down a big chunk of the ENTIRE world economy and put the entire “financialization” scheme in jeopardy around the world. It is, then, not just a minor downturn; it’s the big Kahuna.
- The bailouts are intended, as I’ve said MANY times before, to bring back the system that was, even though that same system produced the situation that is.
In retrospect, that’s all I was really trying to say in that diary. Since the world economy is infused with this “bubble” nature, its deflation cannot be regarded as trivial, nor is this a matter of the failure of “laissez-faire” or any other such phony doctrine. Now I want to proceed onward to today’s exhibit, the Foster article.
A few words about Foster should suffice: he’s a professor of Sociology at the University of Oregon, he’s an ecosocialist who has written a book about how Marx was an ecologist of sorts, and he’s the editor of the Monthly Review, the flagship publication of American socialism.
Foster’s opinion on the Geithner plan is given in the editorial of the same issue of the Monthly Review:
The secret of this gigantic fraud needs to be exposed: if these toxic assets were to be purchased at their current value then the general insolvency would immediately be clear from the balance sheet of every financial institution. The whole operation therefore requires that a vast gift of public funds be handed over to the care and custody of the obscenely rich incompetents who helped engineer the catastrophe.
Yep, that’s a pretty uneqivocal “not good.”
Foster’s article is germane to the current situation; but it pretty much repeats things he’s said before. It offers a criticism of the capitalist system without really showing how something new can be brought into being. It’s a general example of how someone can “be right” without necessarily offering a proactive opinion upon a topic.
In the article in question, Foster starts with an elaborate preface on how the “common wisdom” about economics is now turning away from neoclassical and “monetarist” models toward a re-embrace of Keynesianism, typified by the vogue around Paul Krugman and his book The Return of Depression Economics and the Crisis of 2008. (Those of you who are staking your reputations upon a defense of Krugman had thus better read this book.)
Here Keynes is introduced only so that Foster can show that he wasn’t radical enough, and that Marx was right all along in his diagnosis of capitalist economic crises. Foster quotes Volume 3 of Capital:
For Marx, there was never any doubt about the root cause of capitalist economic crises. “The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit.”
Marx predicted that eventually, under capitalism, the capitalist classes would get so hungry for profit that they would impoverish the working people who were supposed to buy their stuff. Low wages and high prices allow individual corporations to profit, sure, but the eventual result of both things is a bunch of bankrupt consumers, and an economic downturn. If the rich hog everything, then the economy will be no fun for anyone. Pretty simple stuff.
Marx is further said (by Foster) to prophesy the era of financial capitalism in which we live today. Thus when the article talks about the current crisis, Foster relies on the Marxists. In this regard we can see that the late Paul Sweezy is said to have predicted the current crisis to a T. Here’s what Sweezy is to have stated:
Still, at some point the rising mountain of debt would grow beyond the capacity of capitalist governments to intervene effectively as the lender of last resort, and a financial avalanche would result in an unprecedented crisis. Such a major, historic crisis of capitalism, arising out of conditions that were equally unprecedented, would pose not merely the “return of depression economics” as this was understood, in a very limited fashion, by orthodox economists, but would mean the collapse of an entire financialized regime of accumulation with lasting real world repercussions. The most likely long-term result was a deep slowdown in the trend-rate of growth.
Foster then proceeds to a discussion of abrupt climate change. Foster believes in the Hansen predictions, which suggest that world society needs to reduce global atmospheric CO2 levels to 350 ppm, down from the current 385 ppm. This, of course, won’t be possible under capitalism.
After a few words about the international system, the decline of US imperialism and the rise of China, Foster concludes with a general pessimism about capitalism:
It is clear that neoliberal globalization has come to an end, and that capitalism is in a long-term crisis. We are now faced with “depression economics,” not as a special case, but as a general one.
At the end of this piece, we can read a few inspirational words about revolution in Latin America. Unfortunately these examples don’t spread beyond Latin America. However, one can’t be a socialist if one doesn’t end on a high note.
Foster is clearly right; capitalism cannot be saved. Foster is also right about Marx, the Marxists, and abrupt climate change.
However, everyone’s still committed to capitalism, and tearing everyone away from dependency upon capital and its malignant modes of production (which ought to be our FIRST priority) has given way here to the reiteration of old, stock arguments about how Marx and the Marxists were right all along. This is a problem of emphasis, not a problem of whether Foster is “correct” or not.
Without any path through to a post-capitalist world, everyone is likely to go with “trust Team Obama; it’s the best we’ve got.”
Moreover, the “revolutions” in Latin America are really more about creating a healthy working class than about dealing with the problem of climate change. It seems that the real source of power for the Left in Latin America is the Venezuelan government’s control of precious (and disappearing) oil supplies; oil, of course, is a good part of the problem concerning abrupt climate change, environmental deterioration under capitalism, and so on.
In the end, Foster has only a scattershot argument, and it only shows that capitalism won’t succeed, without any notion that any other economic system could succeed either.
I think the problem lies in the notion of “economics” as an autonomous discipline here. We simply aren’t going to get anywhere by pushing and pulling financial levers while leaving the economy the way it is. Marx was right about the contradiction of capitalism described above, in which people eventually lose their power to consume because too much must go to corporate profit. No financial bailout will change the fact that the corporations are too powerful already.
The dependency of the working class upon “jobs,” endemic to capitalism but also to old 20th century forms of “state socialism,” feeds into the problem of our economic structure. As long as we need “jobs,” corporations will be able to use their power to supply said “jobs” as a tool for the accumulation of wealth and power within the capitalist system. Authoritarian governance will also be able to allocate “jobs” according to ideological criteria.
Two fundamental changes have to happen:
- a reconceptualization of the human being by (and in) our social institutions, away from the notion of human beings as “entrepreneurs of themselves,” and toward an idea of people as “ecosystem stewards,” each and all living off of the land. This means the end of the regime of “jobs,” and the beginning of a popular movement to extend to all the right to live off of the land, using of course the most advanced technical means possible (and with the co-operation of communities toward each other) while (at the same time) living within biospheric limits to growth.
- a move away from economics as an autonomous sphere of inquiry and toward a notion of “post-capitalist environmental design,” which would entail “ecological discipline,” a channeling of human abilities toward the aims of sustainability.
Today, ecology appears as a minor discipline, an adjunct to a scientific establishment which aims at technology-based understandings of the physical world. Science, moreover, casts a spell over the social sciences, of which the most important is economics, because of its intimate relationship to chresmatics, the art of making money.
In the future, that intellectual division between “sciences” or “academic disciplines” will have to be replaced by an intellectual unity, of all sciences as adjuncts of ecology, which will be the science of holding things together despite the damage caused to planet Earth by the capitalist system. Foster does well to note this, and so many other things, about capitalism; yet he has only scratched the surface here.
N.B.: UNTIL we figure out how we are going to build some sort of post-capitalist alternative to the current system, we can expect more Geithners, and more giveaways.