Ah, there are so many imponderables in this week's economic crash. The question that keeps coming back to me is: why are no capitalist big-shots jumping out of windows? That was one of the iconic images of the Great Depression -- even satirized with funny Monopoly game capitalists with top hats and monocles doing the leap in early cartoons. What gives? Maybe it's just that these big buildings now have sealed windows.
No, actually, I think it goes to the point we were always taught in high school economics. The smart people have figured out how we would never have a great crash again. Actually, what they figured out is how the ones at the top could take home their winnings and be sitting pretty when the market crashed. Richard Fuld, the CEO of Lehman Brothers, raked in nearly half a billion dollars in total compensation between 1993 and 2007. Hence, no jumpers.
But seriously, folks, can we get a little deeper in our thinking about the economy than this hand-wringing and tip-toeing around the mysterious thing called the "market," like a bunch of superstitious Greeks groveling before the great Sphinx?
We could start with a few questions:
-- Why is the market for private benefit when it is booming and a public liability when it goes bust?
-- How did we let these neo-cons accomplish massive privatization of public functions, supposedly because the public sector is inefficient and corrupt? What they have done is deliver huge public resources into private coffers.
-- How did the party which claimed to favor small government, lowered debt, and free markets end up producing the most astounding government size, the highest debt, and a socialized market for the rich (something that has previously been described as fascism)?
-- Who gets to make these decisions -- like the one to double the debt load of the US government -- overnight? Usually it takes years of hearings to get a few million released for education or health. Who's the guy, or the committee, that has an overnight meeting and decrees this new reality?
-- What about this religious faith that the free market has wisdom, an invisible hand much like a beneficent god, to set all things right?
-- Do we still believe it is a free market -- or is it a fixed game set up by the super-rich to fill their pockets? (Sub question: are we simply too polite to ask for our money back?)
-- Why do the media rush to the CEO's, and the economists at the University of Chicago, for explanations -- when these were the guys who got us into this mess? (Sub question: why do they still have any credibility at all -- or is credibility a function of power?)
Another interesting observation about this kind of crisis is that Marxist analysis always takes a beating when we are in boom times. Class struggle? Exploitation? How quaint! But whenever it goes bad, as it always does, dialectical materialism starts to make sense. We have been in a long boom period and even the academic radicals in the west, led by the French theorists, have declared that the material contradictions are not so important, wealth is made and passed around through information technology, and we live in a world where ideas and essays are the battleground. But the markets are crashing. And so it's time once again for a little reality check.
Today hardly anyone thinks about Marxist analysis and almost no one can even explain what it is. As an old new leftist, I would like to propose just a few things to think about here. One is called the "labor theory of value." That just means that things that have exchange value, commodities and stuff that can be sold, are made by labor. Yeah, I know, some people get rich by inventing web pages or thinking up a logo. But these are just privileges of the metropolis, people passing around surplus values that have been gained through exploitation of the rest of the world. Soon, it creates an illusion that they are actually creating value. As my dad, an old Midwest industrialist, once said dismissively of the service-economy-based Las Vegas: "They're all just taking each others' laundry out."
Here is how you can understand the crisis today as a deep, structural crisis, not just a business cycle. You make lots of money by exploiting someone's labor. In Europe, they learned they could make even more money by super-exploiting labor from people around the world, and by stealing their resources. Holland in the 17th century was the leading maritime power, dominating exploitation of Asia and taking the lead in the slave trade. Suddenly they experienced an "embarrassment of riches," an economic bubble that saw prized tulip bulbs trading for hundreds of guilders. Were people actually creating wealth by trading those bulbs? No, they were enjoying the billions that were flowing in from imperial projects.
Economic boom times, and especially overgrown bubbles, always correspond with this kind of world domination. After World Wars I and II, the US experienced great booms. Both times we had positioned ourselves more centrally in the world economy and its system of tribute and exploitation. The bubble ascribed to the technology boom corresponds to the fall of the Soviet Union and the incorporation of its markets and resources into the triumphant American unipolar world. Was wealth being created by that kid in Silicon Valley thinking up a new start-up? No. But trillions of dollars were flowing into the US economy and it felt like it was being created by computers, not the labor of billions around the world. In such a bubble, huge amounts of wealth are spread around and people bid up ghost packages until they get beyond the actual labor-produced values can sustain, causing an "adjustment" -- or a crash.
So what about this latest one -- the boom bubble which took the form of an imagined eternal rise in housing values? It seems to have corresponded to the great transformation of the last decade -- the globalization of production. Early colonialism used the Third World as a site of raw materials, mineral and agricultural, and the metropoles for industrial production. The great switch has been to move production to the Third World -- factories in China, Guatemala, Nigeria, etc. all churn out goods for the wealthy countries. Again, this led to a huge influx of resources. Everything seemed to be in an endless spiral of wealth. The US and European economies were mainly service and the wealthy countries became entirely parasitic. The neo-liberals declared that we lived in a globalized world, with the free movement of capital, of profits, of production capacity... but not of people. The immigration barriers stayed in place to make sure that the privileges stayed in the center.
Not that things were so lovely for working stiffs or the unemployed. As Aviva Chomsky points out in her brilliant They Take our Jobs and 20 Other Myths About Immigration, the new economy has made super consumers of the center but it has brought huge burdens. Key expenses of life, which were once considered a common good and were within easier reach, have now been isolated as privileges, and private benefits -- housing, health care, and education. And racist state violence increases, as US society sees ghetto communities as simply surplus population, ripe for imprisonment and ultimately extermination. The Katrina scandal is a perfect example of their policy towards African Americans.
Again, those at the top pumped up the housing frenzy, pushing weak mortgages, bundling them, paying themselves to give these bundles AAA ratings, paying themselves to trade them around, and essentially making a pyramid of pay-outs for themselves. Marxists don't talk about fixing the system (that's what Keynesians do). But what's missing from a lot of the discussions is a plan to lessen the effect of the crisis on people with no investments. Today the lack of a safety net hurts especially those who have lost jobs. American will now pay for Clinton's welfare reform and the lack of universal health care. Municipal pension funds have taken a big hit in this bear market and a lot of cops, fire fighters, teachers, and other public employees should worry about retirement. So even a liberal amelioration plan should call for:
-- Re-regulation of banks and public necessities, an end to the Social Darwinist economy based on survival of the fittest.
-- An end to privatization of education and health care. Public investment in projects that forward the public good.
-- Use this same bail-out money to pay off the debts of poor people who have gotten over their heads with trick loans. Then the banks would be holding paper that is worth something and working class families don't lose their houses.
But ultimately the crisis is deeper than these fixes can address. US capitalist domination is at an end. Growing over the past decade have been other forces at work -- countering the US drive for global domination. US hegemony in the world is suddenly in doubt. American free access to markets, labor power, and energy is now being challenged. The US has been bogged down in an expensive and self-destructive war in Iraq. The Chinese, the Russians, the Venezuelans and Bolivians all began to push back, to reject the script that had the US happily running the world for eternity. For less than the cost of one month of the Iraq war, China purchased all the mineral rights to copper and cobalt in the Congo. Suddenly the gravy train was drying up. The infinite future of US hegemony, of US exploitation of labor power from around the world, was in question. Marx's old analysis, about the long-term tendency of proletarianization, of people drawn off the land and into factories, of increasing unrest and crisis, seems to be borne out on a world scale.
So, what are to make of this crisis and what are we to do about it? Asking the CEO's and neo-liberal economists to redesign the game sounds like a bad bet. Those in power certainly want to maintain and expand US military power. After all, it is only through military domination that we can get those juicy markets, with all their tribute, back. McCain foresees a century of war -- with the US as a weakened imperial power fighting everyone -- China, Korea, Russia, Iran, Iraq, Cuba, Venezuela, etc. -- in order to come out on top. In addition, of course, they see ecological rapacity as our birthright. Having unleashed environmental disaster through our own production and over-consumption, we have only been able to complain weakly about the parallel developments of toxic spewing factories around the world and to call for our own intensification of the disaster, with the cry of "drill, baby, drill."
Will we all be forced to sign up for this war, for a world that is bloody tooth and claw, one that could easily end up in nuclear annihilation? Or could we adjust our expectations, our greed, and our relationship with the rest of the world to find a more modest, more humane, more livable future? There is another way -- one that involves relations with the world and the earth that are peaceful and harmonious. Perhaps this crisis, coupled with war weariness, will push us to begin to imagine it.