(Mayer is the U.S.'s most distinguished historian.)
Counterpunch Weekend Edition
March 27-29, 2009
The Poverty of Monetarism
Too Big to Fail?
By ARNO J. MAYER
Blaming the U.S. subprime mortgage meltdown for the global financial and
economic blowout of 2008 is like blaming the assassination of Archduke
Franz Ferdinand for World War I. In each case, a discrete event sparked
a wider conflagration—but the tinder was already there.
In the early dawn of the 21st century, American capitalism continues to
predominate and set the pace. But ever-more-frequent disturbances in
the world economy undermine the pretended apoliticism of the
econometrists who presume to legitimate and fine-tune capitalism in
normal times. Acute convulsions invariably force a return to classical
political economy rooted in moral philosophy and ethics, as practiced by
Adam Smith, David Ricardo, Karl Marx, John Maynard Keynes, and Friedrich
von Hayek. Although today’s reigning economists, finance ministers, and
central bankers are adept at manipulating interest rates and the money
supply, by themselves such monetarist nostrums are of little use: the
present disarray demands concerted political intervention.
In the midst of the First World War, French Prime Minister Georges
Clemenceau exclaimed that war was too serious a matter to be left to the
generals. Similarly, today’s great economic recession is too grave to be
entrusted to the likes of Robert Rubin and Henry Paulson, Alan Greenspan
and Ben Bernanke, Lawrence Summers and Timothy Geithner. Not that
politicians are any less out of their depth. But it is their
responsibility to take matters in hand, with mathematical economists and
financial wizards on tap, not on top. As they do so, they enlist the
hallowed titans and champions of the Wall Street-Washington consensus to
stabilize the shaken financial and corporate Establishment, as if to
make certain that the foxes should continue to guard the henhouse.
Of course, in the U.S., both Democrats and Republicans retain their
unshaken faith in the benign power of the unchained “invisible hand,”
though few choose to remember Adam Smith’s constant concern about social
and economic inequalities. As sworn free marketeers, they insist that
the current crisis is not structural but contingent, and that its roots
lie in the failure of the regulatory system—which America’s two major
parties, beholden to powerful special interests and lobbies, conspired
to dismantle for decades. Predictably, rather than call for the
prosecution of wildcat CEOs and negligent governors of the equities
markets, the power elite lambastes the evil geniuses of boundless greed:
the speculators, gamblers, cheats, and sharks. Like Jesus chasing the
moneylenders from the Temple of God, they propose to run today’s
transgressors out of Wall Street, the temple of world capitalism. They
raise the specter of the Great Depression of 1929 in order to blunt
popular social movements of both left and right. And they oppose “Wall
Street” to “Main Street” to avoid discussing the vast gulf between the
upper ten thousand on the one hand and the salaried middle classes,
wage-earning blue collars, and working poor on the other. With the
richest 5% of Americans earning more than a third of all personal income
and the long-stagnant minimum wage often ignored, it is astounding that
political discourse should fixate on the suffering of middle-class
families. Even John J. Sweeney, president of the AFL-CIO, stresses the
need to “counterbalance corporate power and reverse the decline of the
middle class.” And Gordon Brown, Britain’s New Labour Prime Minister,
urges Washington and London to “seize the moment” to bring about “the
biggest expansion of middle-class incomes and jobs the world has ever
seen.” Perish the thought that anyone should mention the working and
lower-middle classes, let alone the poor: for the moment, in America,
the streets are quiet, picket lines thin, sit-ins rare, and town hall
meetings calm.
full: http://www.counterpunch.org/mayer03272009.html
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