Gerald Levy wrote:

>In a startling plot twist, Doug H, it seems, -- has written an article
>for _LM_.
>Is that correct, Doug? What's the title of the article and the issue # of
>the magazine?
>Now it seems that Doug has been cast in the role of Julius Caesar.
>Doug turns to his former friend and says:
>"Et tu Brutae?"

Here's the article (as I submitted it - there may have been minor 
editing changes in the published version, but I didn't do a 
word-by-word comparison). Judge for yourself.



In love with disaster
by Doug Henwood

Back in 1992, I wrote an article in the newsletter I edit 
<> saying 
that it was pretty likely that the U.S. financial system wasn't going 
to implode. After the roaring eighties peaked around 1989, the U.S. 
economy fell into stagnation, and bank failures and bankruptcies 
reached frightening proportions. Since by most ordinary measures, the 
financial structure was as bad as or worse than 1929's, it wasn't at 
all alarmist to fear the worst.

But George Bush's government came up with hundreds of billions (no 
one really knows for sure how many) to save the wrecked savings & 
loan industry, and Alan Greenspan's Federal Reserve pushed real 
interest rates down to 0% and kept them there for years. State action 
saved capital from itself, and I thought it was time to say that 
there would be no second Depression. Saying so evoked a fair amount 
of mail and phone calls, ranging from those expressing concern about 
my sanity to those expressing outright hostility.

Last fall, I said pretty much the same thing about the Asian 
financial crisis - that, thanks to state intervention (mainly an 
indulgent U.S. Fed and the ministrations of the IMF), the worst of 
the 1997-98 melodrama was probably behind us. I made it clear that I 
didn't think the worst was over for the workers and peasants of Asia 
- just that the systemic meltdown of the global financial system was 
looking pretty unlikely. This too evoked reactions similar to 1992's 
all clear.

I recount this not to brag about my prescience; I've made lots of bad 
calls in my life too, though they're a lot less pleasant to think 
about. One of those bad calls was to take the 1987 stock market crash 
all too seriously - I thought it was the overture to a rerun of the 
1930s, when it turned out to be the financial equivalent of a summer 
thunderstorm. That made me think a lot about catastrophism.

The left, Marxist and non-Marxist, has long shown an unhealthy 
affinity for disaster. Bank runs, currency crises, oil spills get 
radicals' blood running. But this hasn't proved a very fruitful 
passion. Of course it goes without saying that a system so prone to 
crisis - where it's become routine that a major country go under 
every couple of years - has, by definition, serious systemic 
problems. But despite the turmoil and misery that come with these 
crises, capitalism  has shown a remarkable capacity to heal itself, 
and even to turn crisis to its advantage. The bourgeois state has 
become remarkably skilled at socializing losses, and shifting the 
burdens of adjustment onto the poor and the weak. The terminal 
crisis, the death agony of capitalism, just refuses to arrive.

Let's think back for a moment on some of the great financial 
disasters of the last 20 years.

* There was the Third World debt crisis, that even respectable people 
thought might be a system breaker. Instead, the creditor countries, 
led by the U.S. Treasury and the IMF, used the crisis to force debtor 
countries to dismantle protectionist development machinery, open up 
to foreign trade and capital flows, and privatize state enterprises. 
The human consequences have been severe - massive impoverishment and 
polarization - but the system emerged not merely intact but 

* There was the (now-forgotten) U.S. leveraging mania of the 1980s, 
which I mentioned at the beginning of this article. Not only were 
several hundred billion dollars of public money expended with almost 
no debate - at a time when we were constantly told there was no money 
available for social spending - the Fed's low-interest-rate policy 
set the stage for the great bull market in stocks of the mid- and 
late-1990s. That bull market has not only greatly enriched the 5% of 
shareholders who hold 95% of all stock, it's also contributed to the 
broad prestige of U.S. capitalism. That prestige and the bull market 
probably won't last forever, but it's been quite a lovely run so far.

* And there were the two great "emerging market" disasters - Mexico 
in 1994-95 and Southeast Asia in 1997-98 - both of which looked like 
potential system-breakers, especially the Asian melodrama. But again, 
the combination of emergency funding and engineered depression in the 
crisis countries kept the system together. Mexico was further 
"liberalized," and the developmentalist state regimes of Southeast 
Asia, particularly Korea, have been placed under siege. It's too 
early to tell whether Asia will undergo a complete neoliberal 
renovation, the way Latin America did during its years of crisis, but 
Western banks and multinationals have been buying up choice 
properties that were long off-limits to foreign investors.

Now I'd never want to argue that this approach to crisis will work 
for all time. Capitalism has throughout its history has gone through 
quite a few smashups, and the dismantling of a lot of the stabilizing 
mechanisms of the Keynesian era may eventually take a toll on the 
system's capacity to reproduce itself. But it's important both 
theoretically and practically to recognize that  despite many claims 
to the contrary coming from both Marxists and Chicago-school 
free-marketeers, state bailout managers have become quite 
accomplished at forestalling the day of reckoning that many persist 
in declaring inevitable.

So does that mean I've made peace with capitalism? No, far from it. 
It's still a system that produces poverty alongside wealth, and 
alienation even among its winners. Bailouts frequently require that 
productive capacity be destroyed and real incomes be halved to 
preserve the paper wealth of the creditor class. Many catastrophists 
share this analysis, but I think they let their desires get the 
better of them: because they hate the system, they embrace disaster 
scenarios. They feel politically powerless to transform the system 
they hate, so they posit its inevitable self-destruction.

That faith in inevitable self-destruction has deeply unfortunate 
political consequences. You end up looking profoundly silly for 
saying that the sky is falling when the firmament remains 
well-attached. In the 19th century U.S., about half our economic time 
was spent in recession or depression - but since World War II, only 
about a quarter of our time has been. If you don't have a critique 
adequate to periods of expansion, chances are three to one you're 
going to sound pretty off-key. And the belief that hard times will do 
good revolutionary work lacks empirical support. There was a lot more 
troublemaking going on during the Golden Age of the 1950s and 1960s 
than there's been ever since, and the depression endured by much of 
the so-called Third World since the early 1980s has sparked little 
discernable political resistance. If you find capitalism appalling, 
and you can't tune your critique to those moments when it's working 
reasonably well, you might as well give up.

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