Identifying the real culprits

I haven’t said anything in the blog yet about the Occupy Wall St protest movement - which is most remiss of me. An article in what is a new magazine for me – Orion Magazine – expresses the issues very well

What is needed is a new paradigm of disrespect for the banker, the financier, the One Percenter, a new civic space in which he is openly reviled, in which spoiled eggs and rotten vegetables are tossed at his every turning. What is needed is a revival of the language of vigorous old (US) “progressivism”, wherein the parasite class was denounced as such. What is needed is a new Resistance. We face a system of social control “that offers nothing but mass consumption as a prospect for our youth,” that trumpets “contempt for the least powerful in society,” that offers only “outrageous competition of all against all.

There’s also a good post (and discussion) on the Real Economics blogsite And Jonathan Scheel has an eloquent piece in The Nation on the subject.
And yesterday I came across the website of the marvellously-entitled Centre for the Study of Capital Dysfunctionality – set up before the global crisis at the London School of Economics by a financier who simply became disgusted with his experiences and now writes and talks eloquently about alternative systems.
He and others produced a book about the Future of Finance last year which (like a lot of others I suspect) I missed. It can be quickly downloaded hereand should be read in conjunction with the report which came from the Vickers banking commission which was set up by the UK Government in 2010

The Occupy Wall St movement is overdue (see my blog the Dog which didn’t bark) and is explained by two simple emotions – anger and impotence. Anger at the greed and wealth of a tiny group of financiers who provide no service but simply use invented money to sustain a sick way of life for themselves which impoverishes the majority. And impotence at a political system which not only gave them this opportunity in the first place – but shows no sign of wishing or being able to rein them in.

A recent, mainstream American book Winner Take All – how Washington made the rich richer and turned its back on the middle class explores these questions. How did the incredible inequalities arise? And why is the American political system acting so perversely – with voters apparently supporting the parties whose governments dismantled the regulatory systems and created the mess? The book shows quite clearly that American government is in bed with corporate power. No surprise there for many of us in Europe – but a bit of an eye opener for the average American reader whose access to such books is fairly limited. An excellent review (and discussion thread)summarises thus -

The book downplays the importance of electoral politics, without dismissing it, in favor of a focus on policy-setting, institutions, and organization. First and most important – policy-setting. Hacker and Pierson argue that too many books on US politics focus on the electoral circus. Instead, they should be focusing on the politics of policy-setting. Government is important, after all, because it makes policy decisions which affect people’s lives. While elections clearly play an important role in determining who can set policy, they are not the only moment of policy choice, nor necessarily the most important. The actual processes through which policy gets made are poorly understood by the public, in part because the media is not interested in them (in Hacker and Pierson’s words, “[f]or the media, governing often seems like something that happens in the off-season”).
And to understand the actual processes of policy-making, we need to understand institutions. Institutions make it more or less easy to get policy through the system, by shaping veto points. If one wants to explain why inequality happens, one needs to look not only at the decisions which are made, but the decisions which are not made, because they are successfully opposed by parties or interest groups. Institutional rules provide actors with opportunities both to try and get policies that they want through the system and to stymie policies that they do not want to see enacted.

What is particularly interesting about the review is that it sets the book in the wider context of the malaise of American academic social science -

There is no field of American political economy. Economists have typically treated the economy as non-political. Political scientists have typically not concerned themselves with the American economy. There are recent efforts to change this, coming from economists like Paul Krugman and political scientists like Larry Bartels, but they are still in their infancy. We do not have the kinds of detailed and systematic accounts of the relationship between political institutions and economic order for the US that we have e.g. for most mainland European countries. We will need a decade or more of research to build the foundations of one.
Hence, while Hacker and Pierson show that political science can get us a large part of the way, it cannot get us as far as they would like us to go, for the simple reason that political science is not well developed enough yet. We can identify the causal mechanisms intervening between some specific political decisions and non-decisions and observed outcomes in the economy. We cannot yet provide a really satisfactory account of how these particular mechanisms work across a wider variety of settings and hence produce the general forms of inequality that they point to. Nor do we yet have a really good account of the precise interactions between these mechanisms and other mechanisms.

One of the discussants in the discussion thread on the book review asked what the European literature said on the matter. The only response was a reference to Wolfgang Streeck’s new book on Germany - Re-forming Capitalism; institutional change in the German political economy. Earlier this year I mentioned a couple of recent publications which have exposed the extent of big business influence on the EU – Bursting the Bubble (Alter EU 2010); and Backstage Europe; comitology, accountability and democracy by Gijs Jan Brandsma.
The painting is (of course) by Georg Grosz - Eclipse of the sun - about the military-industry complex