This reminds me of Doug's recent excerpt from Zizek's Tarrying with the Negative: "As we know from Keynes onwards, the capitalist economy is "virtual" in a very precise sense: Keynes's favorite maxim was that in the long term we are all dead; the paradox of the capitalist economics is that our borrowing from the (virtual) future, i.e., our printing of money "uncovered" in "real" values, can bring about real effects (growth). Herein lies the crucial difference between Keynes and economic "fundamentalists" who favor the actual "settling of accounts" (reimbursing the credits, abolishing the "borrowing from the future"). Keynes's point is not simply that "unnatural" crediting by way of "uncovered" money, inflation, or state spending can provide the impulse which results in actual economic growth and thus enables us eventually to achieve a balance whereby we settle accounts at a much higher level of economic prosperity Keynes concedes that the moment of some final "settling of accounts" would be a catastrophe, that the entire system would collapse. Yet the art of economic politics is precisely to prolong the virtual game and thus to postpone ad infinitum the moment of final settlement. In this precise sense capitalism is a "virtual" system: it is sustained by a purely virtual keeping of accounts; debts are incurred which will never be cleared. However, although purely fictitious, this "balancing" must be preserved as a kind of Kantian "regulative Idea" if the system is to survive...."
>From Masha Florenskaya's piece "Covering Russia" which can be found in LBO
88: "Many concepts are difficult to distall and translate to a western audience. For instance the fact that many regional governments collect more than half of all taxes in goods and services. Or the particularly challenging concept of mutual debt offsets. The federal government owes a local school system, which owes the country's electricity monopoly Unified Energy Systems, which owes the federal government. Under mutual offsets, condemned by the IMF and outlawed by a presidential decree last year, the circle of debt is broken by each one cancelling the next and so on. Government and company debts magically disappear, though the economy remains cashless. UES has reported only 18% of payments it collects are in cash."
Why is the IMF condemning mutual offsets? Is it trying to "shore up" the appearance or the ideological power of "balancing," the Kantian "regulative Idea" as Zizek describes it.?
And as far as what Max says about crises
>c. it is not obvious that this can't go on indefinitely.
>There is clearly a price to pay in terms of financial
>instability and periodic catastrophies outside of the
>core industrialized countries, but whether this merits
>the name "crisis," in the sense of something that can
>bring down the system with a crash, or merely routine
>is highly debatable (and we've debated it quite often).
I tend to think we dodged a bullet with the Russian devaluation. The evidence is that Greenspan actually lowered rates back then. I agree it could go on indefinitely. It should be noted that chicken littles didn't circulate the phrase "Asian crisis," the mainstream media did. Maybe they thought the alarmist word "crisis" would sell more. "Asian flu" was a metaphor I really disliked because it suggested that the crisis was not endemic to the system, but rather an external agent. Both flu and crisis are misleading in the sense that the whole thing was started by speculative attacks. One thing I remember from the New York Times series is the description of Thai government officials weeping once they knew they had been beaten by the speculators.
Russia's currency is down 70%, Brazil's is down 45%. In Indonesia, Christians and Muslims are killing each other. Who here remebers Walter Benjamin's dictum that the fact that 'everything just goes on' *is* the crisis?
Let me speculate in a non-panglossian vein. Japan doesn't reflate even though it goes less than zero on interest rates. It raises taxes on consumption again for some bizarre reason. China goes under. Glass-Stegall(sp?) is repealed and now banks in U.S. provide insurance and own the many hedge funds which are springing up; Long Term Capital Management clones sprinkle the country side. The privatization of Social Security puts millions in the stock market which, on cue, crashes. People panic, not least those whose retirement money has been wiped out. Banks/brokerage firms go under. The U.S. consumer starts turning Japanese and ceases spending. The U.S. escalates its trade war with Europe, dampening global trade and deepening the depression. Europe starts raising trade barriers and its Central Bank continues sado-monatarist policy. The fighting in Kosovo spills over to Macedonia; Greece and Turkey go to war, messing up Europe even more. Greenspan resigns in shame (good thing); Republican President appoints sado-monetarist in his place (bad thing). Bipartisan consensus is to eliminate governement debt in order to create a "favorable investment atmosphere." U.S. isolationists defund the IMF and World Bank. Capital flows out of the "developing" world. Disco makes a comeback. Self-help guru Tony Robbins becomes immensely popular. Holds rally of millions in DC which the media covers ad naseum. Reagan expires. Clinton weeps at funeral. Media coverage is such that one can't eat enough to puke enough.