On Sep 1, 2010, at 5:50 PM, Patrick Bond wrote:
> Then you should pass those eyes of yours over some charts by Barry Eichengreen and Kevin O'Rourke - http://www.voxeu.org/index.php?q=node/3421 - for they show how this one gathered, over its first year, far more downside momentum than did the 1929-30 crash, in all economic categories, thus requiring your taxes to bail out your banks with more speed (and less resistance) than the US and UK Treasuries managed 70 years ago.
>
> But going blind to that crash-plus-world-historic-rip-off may, at least, make you feel better?
Are you disappointed that everything didn't keep collapsing?
>> Crisis, surely, is that point at which "economic" changes can no longer be contained
>
> There are all manner of definitions. My favourite is Robert Cox's in which he posits that a crisis is a system's disequilibrium to the extent that a solution cannot be established through the internal laws of motion of the system, and thus requires some kind of intervention from outside that system.
The state is outside the system?
> See above for at least one coherent 'meaning', even if you don't like it, Doug. The point is that the 1970s witnessed a 'crisis' (yes?) and the reaction was what we might call displacement, via those shifting-stalling-stealing routines (above). Some, like yourself and a couple of wonderful Toronto comrades, seem to think that the recent crisis had nothing to do with the 1970s crisis,
That's just not true.
<http://www.leftbusinessobserver.com/Gloomy.html>
Much of the restoration in corporate profitability from the early 1980s through the late 1990s—a trend that sagged in the early 2000s, then returned, though not as magnificently as before—came from squeezing labor harder—wage cutting, union busting, outsourcing, and the rest of the familiar story. All this constrained purchasing power in an economy that thrives on mass consumption. What wage incomes couldn’t support got a lift from borrowing—credit cards first, then mortgages. The credit outlet is now shut, and will be for quite a while, forcing consumption to depend on wage income, which is shrinking. Capital will want to squeeze labor harder to restore profitability, but consumption won’t have credit to help it out.
<http://www.leftbusinessobserver.com/LearningNothing.html>
I see the U.S. as being in the midst of several structural crises. There’s the economic crisis—and not just the immediate one, caused by the housing bust. That was the culmination of a process long in the making. The capsule history would be this. In the 1970s, the American ruling class was faced with several interrelated problems. Abroad, having just lost Vietnam, the U.S faced a crisis of imperial authority. The Third World was demanding a bigger slice of the pie. Oil and other commodity exporters were nationalizing resources. Japanese and European competition was hammering U.S. manufacturing. At home, the streets were full of demonstrators, women and minorities were agitating against white male privilege, and the working class had developed a serious attitude problem. Corporate profitability, which had peaked around 1966, had been drifting lower ever since. From the point of view of the U.S. ruling class, things were slipping out of control.
That class eventually engineered a very successful crackdown. It had several dimensions. First, in 1979, Jimmy Carter, blindly following the recommendation of David Rockefeller, appointed Paul Volcker chair of the Federal Reserve. On taking office, Volcker announced that the U.S. standard of living must decline, and then made it happen. He drove interest rates towards 20%, provoking the deepest recession since the 1930s. That terrified the U.S. working class, and drove Latin America into debt-crisis-induced depression.
Just over a year after Volcker’s ascendancy, voters put Reagan into the White House. Reagan’s major contributions to the class war were firing the striking air traffic controllers, signalling open season on the unions; cutting taxes on the rich, signalling that all social constraints on wealth accumulation were suspended; and rebuilding U.S. military power, signalling that the era of imperial reticence following Vietnam was over.
It all worked splendidly. Unions were broken, wages stagnated, and Latin America was restructured using the club of debt. Corporate profitability bottomed out in 1982 and began a fifteen-year surge. But—and this is a very big but—an economy that was dependent on high levels of mass consumption and a political system that depended on the same thing for its legitimacy had to figure out how to keep spending up while wages were heading south. The answer, as we all know, was debt: household liabilities more than doubled relative to income between 1982 and 2008. The ratio has since come down a bit, but not by much.
So here’s the structural crisis: profitability was restored, but at the cost of fostering unsustainable levels of personal debt. The profit boom and the upward redistribution also gave rise to a gusher of cash that flowed into the financial markets, prompting a proliferation of incomprehensible instruments of mind-boggling vastness. The ratio of financial assets of all kinds to GDP more than doubled between 1982 and 2007. That too has come down a bit, but not by much. The financial sector’s share of corporate profits nearly tripled over the same interval.
> next year's Socialist Register talks of the crisis 'continuing', in a way James and you may object to. Sorry about that, comrades!
Hey, I've got a piece in there.
As I've said so many times I'm beginning to bore myself, this crisis is going to be around for quite a while. But it's wrong to call 1982-2007 a long crisis, because capital restructured itself very dynamically and subdued its political challenges. Unless, like Jim O'Connor, you think that capitalism has been in crisis for 700 years (as he once told me).
Doug