No country on earth, be that China, Japan and the others, who are heavily
invested in dollar denominated US financial assets can let the US economy
collapse, for if they do that their economies will collapse too and we all
collectively will suffer from that chaos.
It is my view that where Roach, and possibly myself, went wrong was that we
expected that this Ponzi scheme cannot continue this long.
The question remains open WHETHER there comes a time when even the collective action of all countries acting in concert to keep the Ponzi going is not enough and, if so, how that might work itself out. Anyone who thinks they have the answer to that question is on shaky ground and that includes those who think it is a chicken littleism to ask the question.
But what is this "economic collapse" thing anyway? Isn't it more a matter of severe economic dislocation that proves intractable to established policy tools? Between the late 1960s and the mid 1980s the US made a transition from Fordism to neoliberalism without a great depression, revolution or world war. There was plenty of small d dislocation but no big c collapse. The contradictions of the neoliberal policy regime have been more obvious to many of us than its strategic virtues. As a consequence the successes of that regime (in its own terms) may have seemed surprising. But I want to suggest a "dynamic of learning" that is ultimately subversive of the continuation of such successes.
My hypothesis is that it takes about a "generation" for the new rules of the new game to become so thoroughly internalized that gaming the system comes as second nature. This is because people who grew up under the old rules persist in translating the new rules into old rule format. In my view, this has something to do with Marx's distinction between formal and real subsumption of labour under capital.
How long is a generation? It depends, but roughly it would be about 20-30 years. So let's say it takes somewhere between 20 and 30 years to completely overhaul the system and it takes another 20 or 30 years to subvert the new rules. That would suggest a total cycle with a frequency of, say 45 to 55 years. Just to be provocative, let's call that cycle a Kondratieff wave. To be clear: I do not believe in Kondratieff waves! But I do believe in a generational dynamic of learning. It seems to me that we are once again in a period of "regime change." Neoliberalism has run its course. To paraphrase Richard Nixon, "we are all neoliberals now" (whether we like it or not). But, like the Monty Python's Spanish Inquisition, NOBODY expects neoliberalism .
The chief weapon of neoliberalism is surprise...surprise and fear...fear and surprise.... Its two weapons are fear and surprise...and ruthless efficiency.... Its *three* weapons are fear, surprise, and ruthless efficiency...and an almost fanatical devotion to the Market.... Its *four*...no... *Amongst* its weapons.... Amongst its weaponry...are such elements as fear, surprise.... I'll come in again.
--
Sandwichman
