It’s
significant that the best expositions of the global economic crisis and its
causes do not come from economists……..somehow the framework within which the
modern economist operates precludes him/her from even the vaguest of
glimmerings of understanding of the complexity of socio-economic events. Their
tools are no better than adequate for short-term work…..
For
real insights into the puzzles of the modern world, think rather David Harvey
(a geographer); John Lanchester and James Meek (novellists and writers); Susan
Strange and Susan George (political science); or Wolfgang Streeck – a Koeln
Professor of Sociology. All have extensive and eclectic reading; a focus on the long-term; and the ability to provoke and write clearly.
Streeck is also Director there of the Max Planck
Institute and an unlikely scourge of capitalism – but his texts are becoming
ever more apocalyptic.
For my money, his analysis offers much more than everyone's current favourite Thomas Pikety - whose 700 page magnum opus I suspect few have actually read.
The
New Left Review is the favoured outlet for Streeck’s long, clear and incisive
articles eg one
in 2011 on “The Crisis of Democratic Socialism” and then one last summer on
“How
Will Capitalism End?” introducing an English audience to the arguments of
the short book Buying
Time – the delayed crisis of democratic capitalism which had appeared in
Germany in 2013. European Tribune offered the following useful summary -
Capitalism
and democracy were a powerful couple during the "trente glorieuses"
post-WWII years. Expectations of economic growth, full employment and
increasing prosperity became so entrenched that the fundamental antagonisms
between the two were overlooked, or even deemed to have been definitively
relegated to the dustbin of history. This, indeed, was the dominant view of the
Frankfurt School during Streeck's formative years.
The book's introduction,
"Crisis theory : then and now" deals with this historically
embarrassing mis-analysis. Jürgen Habermas, in particular, developed the notion
of the "legitimation crisis", postulating that people expect
governments to intervene successfully in the economy to try and ensure economic
prosperity, and that failure would cause the validity of the capitalist system
to be questioned, thus undermining its legitimacy.
Streeck
presents his book as an attempt to rehabilitate crisis theory, explaining that
the postulated legitimation crisis is now upon us... forty years later, having
been pushed back by our governments' successive, and moderately successful,
attempts at buying time.In
fact, the end of the post-war boom indeed led to a legitimation crisis
- but it was not the workers/ consumers / electors who revolted. It was
capital.
The
notion of "Late
Capitalism" has been around since the beginning of the 20th
Century. But the predicted demise of capitalism is late, and keeps getting
later. The error committed by the neo-Marxian Frankfurt thinkers, in Streeck's
analysis, was to have considered capital as a resource, more or less
biddable and accountable to democracy. Of course, as they should have known,
capital is an actor, particularly in class struggle.
Streeck
outlines several phases in the attempts by governments to buy time for their
socio-economic model subsequent to the boom years :
Inflation
In the 70s, productive investment started to fall short of what was required
for full employment. Inflationary monetary policy was the first ploy to buy
time, accommodating wage rises in excess of productivity growth. But the
replacement of real growth with nominal growth lost its charm with stagflation
in the late 70s, which put a squeeze on profits and threatened to lead to a
capital strike.
Public
debt
The monetarist revolution of Reagan, Thatcher and imitators put capital back in
the driver's seat. The recession they provoked, with its mass unemployment, did
however require additional revenue to keep the wheels turning, and governments
resorted massively to borrowing.
Private
debt
In the 1990s and 2000s, slashing of public services and reduction of public
debt was accompanied by an explosion of private debt.
Each
of these phases is seen by Streeck as a means of conjuring money out of
nowhere, in order to enjoy the benefits of growth in excess of growth itself.
The financial crisis of 2008 is seen as the final reckoning, the
democracy/capital nexus being confronted with its contradictions.According
to Streeck, democracy and capital were forced by circumstances into an arranged
marriage after WWII. But each successive crisis entailed the progressive
emancipation of capital from democratic constraints. Self-regulated markets
were alleged to function efficiently, and government intervention in economic
matters was de-legitimised. This ideology is now so dominant that it is hardly
even questioned after the massive nationalization of private losses which was
imposed on the citizen/taxpayer as the price to prevent economic collapse in
the recent crisis.
The
expansion of the financial sector, and the ever-increasing mobility of capital,
have made the capital markets a harsh and fickle mistress for democracy. In
fact, Streeck identifies the fact that governments are now accountable to two
distinct constituencies : their citizen electors, or people of the nation
(Staatsvolk), and their creditors, or people of the market (Marktvolk). The
characteristics of these two constituencies of what he calls the “debt state”
can be portrayed thus -
Staatsvolk
|
Marktvolk
|
National
|
international
|
Citizens
|
investors
|
civil
rights
|
claims
|
Voters
|
creditors
|
elections
(periodic)
|
auctions
(continuous)
|
public
opinion
|
interest
rates
|
Loyalty
|
"confidence"
|
public
services
|
debt
service
|
Other
useful resources on the book are -
The painting is one from the current exhibition in Sofia's National Gallery - on Industrial Landscaoes. It's Lavrenov's marvellous "20 years of socialist construction"!!