Financial crisis has been with us since 2007. Not much is changing. Have the established forms of capitalism failed? Chris Smith urges us to think about the economy from a progressive perspective.
Global capitalism continues to lurch from one crisis to the next, just as any good Marxist account of reality tells you it is destined to do. The US, the world’s largest economy and lynchpin of global capitalism is having its credit rating downgraded for the first time in its history. Whether this downgrade by one ratings agency turns out to be as universally damaging to the workings of interconnected world markets, as has been trumpeted by a hyperbolic financial media, remains to be seen – but it still constitutes a new frontier of financial strife.
The Eurozone remains besieged by the shadowy forces of financial speculators, trying to bring down larger members of the community, Spain and Italy, having already crippled the peripheral nations Greece and Ireland. Things have gotten so bad in the Western world that China, the world’s largest creditor nation has now stepped in to tell the US (and by extension the rest of western civilisation, comprised of the nations of Europe who set their political-economic compass via America ) to live within its means. With stock markets from Wall Street to Berlin predicted to fall again when markets re-open this week expect plenty of column inches to be dedicated to marking this week as the date China cemented its ascendancy to status of the globes premier nation. The West is destined to be surpassed because it is decadent, corrupt and spendthrift (the left) or uncompetitive, impinged by the dead hand of the state and ensnarled in its own safety nets (the right).
What we should really be focussing on is how the west has proved unwilling (opposed to simply unable) to seriously engage a crisis that is purely of our own making. “The financial crisis” has been with us since 2007 now. In this time it has progressed in popular parlance from credit crunch to banking crisis to recession. To recession with fear of double dip, to jobless recovery to talk of a second great depression to debt crisis finishing with the current catch all of financial crisis. In this time we have had how many headlines, opinion pieces and books telling us this marks a revolution in how we live our lives individually and order our societies collectively? Their point, coming from numerous ends of the political spectrum, being that we cannot return to “business as usual” as it was business as usual that got us into the mess.
The idea that we must think outside the box to conquer this crisis has fallen on deaf ears, as politicians and business leaders obsess about nothing other than getting back to life before the crash and this is why we continue to flounder.
The political economy of the west has been deeply flawed since the oil shock stagflation of the late 1970’s that created the new right of Reagan and Thatcher. The key principle of their creed being that the individual could better decide how to spend their money than the state and by being allowed to do so could best serve the rest of society. To facilitate this the post war consensus of the welfare state was scaled back to enable the greater personal consumption required for this model of supply side economics to grow, better known as the trickledown effect. The extension of credit was a prerequisite to allow the poorest to do their patriotic duty and consume, with credit being tied to fixed assets, most infamously houses.
If we fast forward to the present crisis the solutions presented to us by the Labour government are identical to the above ideas that caused this problem; cutting VAT to stimulate consumer spending; legislating to make banks lend more to business. As for the Tory led coalition we now have: cut corporation tax to encourage the rich to invest; raise personal allowance to allow consumers (not citizens, note) more control over their incomes to spend. At best, the measures taken have tinkered with a defunct system when what is needed is thorough reconstruction and rethinking.
Think tanks such as the New Economics Foundation and the Green Party have presented thoughtful studies and proposals on how we can move beyond crisis, to depressing levels of non-coverage, and stereotyped reportage in the right wing press. Particularly the Green New Deal document produced in 2007 linking the West’s economic crisis to the coming threats of peak oil and climate change. Which, due to the inclusion of the latter two issues, received no true debate of its merits as a set of genuinely revolutionary ideas for changing the game, instead just found itself reduced to another report either preaching to the converted or firing up the opposition camp to the point that serious discussion gets drowned out.
For it is serious discussion is what we need and more than ever. Why have financial institutions been allowed to return to profitability after almost destroying life as we know it? Why do we as a society apparently continue to value their services more than healthcare providers, scientists or teachers when we collectively revile them for what they did and accept they don’t do anything truly essential? Why do we apparently accept the nonsense that the free market is the best way of organising our affairs (attracting the best people to the best jobs and all that) when it clearly isn’t the case as if it was millionaire bankers earning more in a year than many do in a lifetime would not have failed us so badly.
We also have to face the uncomfortable truth that in democracies we all share a portion of the blame for what went wrong in the West. For we all share responsibility for shaping out nations, as in democracies we are blessed with the freedoms to do so, and it is our responsibility to take this more seriously than many of us have done. We can choose to not buy clothes manufactured in sweat shops, or factory produced foods, or to support politicians that lack inspiration or integrity. The enduring nature of this financial crisis has shown us that we cannot consume our way out of trouble anymore, and in societies where we have been bred to believe happiness is stuff this requires us to rethink the whole meaning of existence. The point no longer can be to work to earn, to earn to consume the planet simply does not have enough resources for us to do this. Even more worrying is the prospect of “resource wars” caused by increasing scarcity exacerbated by the developing world led by China and India pursuing Western consumption habits in order to join us as modern societies.
The proposals from Green groups that we need to localise our economies, consume less and derive satisfaction from more than how we conserve resources opposed to exploiting them opposed to just finding new ways of producing are compelling not just because in my view they make sense to a world of finite resources but they are a coherent and new vision for a world of new challenges, opposed to the distinct lack of such new thinking that characterises the traditional right and left.
Mainstream political debate has barely scratched the surface of these issues, which are the real ones underpinning the crisis of capitalism. It is little surprise we find ourselves floundering when the only solutions we have been presented with have actually caused our problems. Again as any good Marxist interpretation of the world tells us capitalism exists by lurching from one crisis to the next and we shouldn’t be surprised by the frequency. It was Marx himself who explained capitalism’s dominance by its ability to reinvent itself to meet new challenges. What is missing from today’s debate is how capitalism does not get reinvented unless someone (the state, activists, business, intellectuals) makes conscious effort to do so and in order for this to happen the first thing we need to do is talk seriously about what has gone wrong, why and how we intend to avoid it happening again – repeating a pain inducing action again and again is a sign of sadism if performed against another, masochism if performed against the self, nothing more.