Sandwichman wrote:
...
One way to look at this is that the "current" crisis really began
around 30 years ago and has manifested itself as a continuing series
of crisis-management interventions engineered to keep the debt
expanding one step ahead of the wolf at the door. Or, to put it more
bluntly, one could characterize the entire period as the bailout stage
of capitalism.
The phrase "spatio-temporal fix" (shifting/stalling of overaccumulation
crisis), and the idea of displacement (not resolution) of crisis, are
central to newer Marxist interpretations of this long-term crisis, sure.
Cheers,
Patrick
http://www.zmag.org/sustainers/content/2004-12/03bond.cfm
Crunch time for US capitalism
If you are like many aggrieved people I know, the prospect of the US
economic empire stumbling, tripping, and maybe even crashing is welcome
indeed.
So cheer up, it seems like comeuppance season has dawned. Former Federal
Reserve governor Paul Volcker warned earlier this year of a "75% chance
of a financial crisis hitting the US in the next five years, if it does
not change its policies."
As Volcker told the Financial Times a month ago, "I think the problem
now is that there isn't a sense of crisis. Sure, you can talk about the
budget deficit in America if you think it is a problem - and I think it
is a big problem - but there is no sense of crisis, so no one wants to
listen."
That may have just changed. Volcker's successor, Alan Greenspan, scared
the financial markets into a mini-seizure last week by admitting, "It
seems persuasive that, given the size of the U.S. current account
deficit, a diminished appetite for adding to dollar balances must occur
at some point."
Former US Labor secretary Robert Reich predicted in September: "The
mainstream view is that the budget deficit is going to get larger.
Simultaneously, the mainstream view is that there is no reason to
believe that the trade deficit is going to shrink any time soon. In
fact, I see the dollar continuing to decline and I see at some point a
tipping point. because at some point it becomes a lousy investment."
A week after the election, former Treasury secretary Robert Rubin
accused Bush of "playing with fire" for allowing the dollar to weaken
alongside continuing federal deficit spending, a combination which would
generate "serious disruptions in our financial markets."
Added C. Fred Bergsten, director of the Institute for International
Economics in Washington (a voice of pure orthodoxy), "Everyone in the
market knows the dollar has to come down a lot. People are starting to
run for the exits."
That run for the exit could be extremely costly for China, for example,
with former Treasury official Nouriel Roubini telling Reuters that about
8% of its GDP - or half a trillion $US - would be lost in the event the
Chinese currency was allowed to find its real value, and the dollar
crashed a further 20%.
Of course, this isn"t about merely tracking the volatility of the
dollar"s price against other countries, which will dip and dive and
strengthen for erratic short-term reasons. Deeper, structural analysis
is required.
Yale-based anarchist David Graeber half-jokingly suggests "a systematic
division of labour in which Marxists critique the political economy, but
stay out of organising, and anarchists handle the day-to-day organising,
but defer to Marxists on questions of abstract theory; i.e., in which
Marxists explain why the economic crash in Argentina occurred and the
anarchists deal with what to do about it."
Right, then, what do Marxists and other dissident economists have to
say, what with mega-Argentine-scale financial problems looming?
To start with diagnoses of the situation, four critical schools of
thought are worth citing because they have somewhat different - and
often competing - ideas about what ails US and global capitalism:
1) Overly competitive corporations, which drive down the rate of profit;
2) Overconfidence within financial markets, which today act more like a
casino than savings/investment mechanism; 3) Overproduction of
commodities, as a persistent reflection of inadequate consumer buying
power; and 4) Overaccumulation of capital more generally, a problem
which cannot be displaced forever, but which one day must face more
severe devaluation.
In the first case, the best example is UCLA historian Robert Brenner's
2003 book *The Boom and the Bubble* and subsequent analysis in New Left
Review, London Review of Books, Against the Current, and other journals.
In the second, followers of the late US financial economist Hyman Minsky
- like David Felix of Washington University and Steve Keen of University
of Western Sydney - argue that financial markets inexorably move from
accommodating capitalism, to hosting speculative investments, to
becoming a pure gamble, in the spirit of the old "Ponzi"-style inverted
pyramid schemes.
The third category draws on the legacy of John Maynard Keynes, whose
solutions to "underconsumption" typically involve loose credit and
generous state subsidies, so as to boost consumer buying power. Many
radical economists in the US have renewed this line of argument, perhaps
because it is politically safer than calling for anti-capitalist
revolution. (Reagan, Bush Sr and Bush Jr could be described as "military
Keynesians" thanks to their vast budget deficits and Pentagon-hedonism.)
Arguing the fourth case, eloquent classical Marxists like Ellen
Meikskins Wood in her book *Empire of Capital* (2003) and David Harvey
in *The New Imperialism* (2004) have updated important earlier accounts
of overaccumulation by Simon Clarke (*Keynesianism, Monetarism and the
Crisis of the State*, 1988), Harvey in *The Condition of Postmodernity*
(1989), Harry Shutt (*The Trouble with Capitalism*, 1999) and Robert
Biel (*The New Imperialism*, 2000).
Opposed to these is a Marxist position which respects the strength,
resourcefulness and self-healing capacity within capitalism - and
especially reflects upon the weakness of the system"s main enemy: the
working class. Those arguing that the system is *not* facing a systemic
overaccumulation crisis include Leo Panitch, Sam Gindin and Chris Rude
in the new *Socialist Register 2005: The Empire Reloaded*, Doug Henwood
in *After the New Economy* (2003) and Giovanni Arrighi (criticizing
Brenner) in *New Left Review* last year.
Some of these latter accounts stress a fifth school of Marxist theory:
class struggle as determinant. And it is true, the world's working class
and nearly all counterhegemonic national struggles have suffered
persistent, debilitating defeats over the past three decades, which
certainly helps explain capital"s apparent recovery from 1970s woes.
Yet the internal contradictions continue bubbling up. Globalization has
generated economic stagnation, not dynamism. According to even the World
Bank, the increase in the world"s annual GDP per person fell from 3.6%
during the 1960s, to 2.1% during the 1970s, to 1.3% during the 1980s to
1.1% during the 1990s and 1% during the early 2000s.
Moreover, GDP measures are notorious overestimates of social welfare,
especially since environmental degradation became more extreme from the
1970s. We must also factor in the extremely uneven character of
accumulation across the world, with some sites - like Eastern Europe and
Africa - suffering rapidly declining per capita GDP for much of the
globalization epoch.
Or consider a classical symptom of capitalist crisis: the corporate rate
of profit. At first glance, the after-tax US corporate profit rate -
which fell precipitously from the mid-1960s - appeared to recover
beginning in 1984, nearly reaching earlier post-war highs (although it
must be said that tax rates were much lower in the recent period).
On the other hand, corporate interest payments remained at record high
levels throughout the 1980s-90s. Subtracting interest expenses, we get a
better sense of net revenue available to the firm for future investment
and accumulation, which indeed remained far lower from the early 1980s-
present, than during earlier periods, according to French Marxists Gérd
Dumenil and Dominique Lévy (http://www.cepremap.ens.fr).
Dumenil and Levy also deconstruct the ways that US corporations
responded to declining manufacturing-sector accumulation. Manufacturing
revenues were responsible for roughly half of total (before-tax)
corporate profits during the quarter-century post-war "Golden Age", but
fell to below 20% by the early 2000s.
In contrast, profits in the financial sector rose from the 10-20% range
during the 1950s-60s, to above 30% by 2000. Financiers doubled their
asset base in relation to non-financial peers during the 1980s-90s.
What does this mean?
According to Harvey, the contradictions of capitalism were "displaced"
instead of resolved: they were moved across time and space, especially
via hyperactive financial markets. Time is accounted for in the vast
credit bubble, which lets you pay now, on the basis of debt, and hope to
earn future revenues to cover your loan repayments.
And capitalism's use of "space" - geographic crisis displacement - is
really what globalization has been about: allowing corporations facing
falling profits to seek relief in sites where raw materials and labor
are cheaper, where regulations are fewer, and where new markets for
products might emerge. Hence corporate profits drawn from global
operations rose from a range of 4 to 8% during the 1950s-60s to above
20% by 2000.
To be sure, some of the problems faced by capitalism have not been
simply stalled and shifted around. Some vicious hits - asset
devaluations - have occurred in different sites over the past 30 years.
These included the Third World debt crisis (early 1980s for commercial
lenders, but still going on for most of the world's states and
societies); energy finance shocks (mid 1980s); crashes of international
stock (1987) and property (1991-93) markets; crises in nearly all the
large emerging market countries (1995-2002); and even huge individual
bankruptcies which had powerful international ripples.
Late-1990s examples of financial-speculative gambles gone very sour in
derivatives, exotic stock market positions, currency trading, and bad
bets on commodity futures and interest rate futures include Long-Term
Capital Management ($3.5 billion)(1998), Sumitomo/London Metal Exchange
(,1.6 billion)(1996), I.G.Metallgessellschaft ($2.2 billion)(1994),
Kashima Oil ($1.57 billion)(1994), Orange County, California ($1.5
billion)(1994), Barings Bank (,900 million)(1995), the Belgian
government ($1 billion)(1997), and Union Bank of Switzerland ($690
million)(1998).
From 2000, subsequent US firm bankruptcies on an even larger scales -
e.g., Enron, Anderson Accounting, World Com, Tyco - had more to do with
corruption, but were also symptoms of financial gambling in immature
markets.
Most importantly, the US stock market was the site of an enormous "New
Economy" bubble until 2000, perhaps culminating in the Dot Com crash
which wiped $8.5 trillion of paper wealth off the books from peak to
trough (in the US alone) - but on the other hand, seemingly reinflating
in 2003-04 thanks to the return of household investors and mutual fund
flows, and possibly rising further in future years if Bush begins social
security privatisation.
There were crashes not only in New York, but also 1/3 declines during
2002 in Finland, Germany, Greece, Ireland, Netherlands,and Sweden, and
other less severe falls in most other stock markets.
David Harvey provides a further idea to interpret how the system
responds to overaccumulation and financial overhang. Inspired by Rosa
Luxemburg"s ruminations a century ago over the relations between
capitalism and non- capitalist spheres of life, he describes new systems
of "accumulation by dispossession", which means, essentially, the
looting of the commons and use of extra-economic power to gain profits.
The systems of dispossession today also more explicitly attack the
sphere of "reproduction", where exploitation occurs especially through
unequal gender power relations. This reflects the "reprivatization" of
life, as York University political scientists Isabella Bakker and
Stephen Gill argue in their 2003 book *Power, Production and Social
Reproduction*.
Together, these concepts allow Marxists to explain why "capitalist
crisis" doesn"t automatically generate the sorts of payments-system
breakdowns and mass core-capitalist unemployment problems witnessed
during the main previous conjuncture of overaccumulation, the Great
Depression.
According to a careful analysis by York University"s Greg Albo in last
year"s *Socialist Register 2004: The New Imperial Challenge*, "The
economic slowdown and neoliberalism led to a significant
financialization of the economy from the 1970s onwards." Today, "The
deflation of the asset bubble adds another tension between the US and
other zones that complicates any path of adjustment in the world market."
That"s all I seem to have room for in this installment: some teaser
quotes, a dash of Marxist theory, and preliminary evidence. In the next
column, I"ll unpack the statistics that indicate a new round of profound
economic vulnerability, not to mention very serious "tension between the
US and other zones". And there are, as well, some profound political
lessons to learn, if we're not to be taken for a ride on the
roller-coaster this time, as we were during the late 1990s.
(Patrick - [EMAIL PROTECTED] - teaches political economy at the
University of KwaZulu-Natal and directs the Centre for Civil Society -
http://www.ukzn.ac.za/ccs)
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