Thursday, 25 September 2008

Capitalism in Crisis: More Party Games

I'm no economist. So I've been trying to find out what people who claim to know what they're talking about think about the financial crisis.

It's becoming clearer and clearer that there is no mainstream - or Leftwing - consensus on what to do about the crisis. Bush was on TV last night telling everyone to back the Poulson plan - basically a 'reverse auction' of bad debt. But the very readable and honest Paul Mason says there are real doubts as to whether this can possibly work even on a purely technical basis.

The Democrats want to enforce a modified 'fire sale', so more of the losses stay with the banks - Bush wants to refund the banks (i.e. nationalise the debt) to restore systemic liquidity and re-float the system.The American Hard Right is against any rescue package - market discipline has to be seen to work apparently. But most people seem to think this would result in something not too dissimilar to the 'Shock Therapy' experienced by the former Soviet Union after its collapse.

Over at Lenin's tomb, they're treating the rescue package simply as a form of giant outdoor relief for the plutocrats. (Which is nice, as it allows them to bend this strange situation into an analysis which they had prepared earlier - e.g. they're against it. I do find the consistency of the SWP & their friends almost as comforting as I did the Blue Peter presenters of my youth...). Compass, on the other hand, are taking a fairly straightforward line, not a million miles from the sort of thing I heard in my CP days all those years ago: it's all about Finance Capital(bad) getting too big for its boots relative to Industrial and Productive Capital. Meanwhile that strange but well informed economic commentator Stumbling and Mumbling - can he really be a Marxist as he claims, or is it all tongue in cheek? - wonders if, actually, the links between a stock market crash and a downturn in the real economy are necessarily that automatic. But he seems pretty much alone in this thought - which, in any case, is more of a wondering out loud than a definite conclusion. Meanwhile the markets continue to slide and, we're told - or possibly threatened, depending on who you listen too - that failure of the Bush plan will mean Untold Carnage and The End of the World As We Know It.

Brown is going for a mildly Keynesian response as if this was, actually, 1929 redux. But is it? other commentators have been hinting at something closer to the sort of depression which hit Japan in the early 1990s. About which I must confess I know diddly squat, but I suspect someone in the media or blogosphere is going to educate me soon.....

So I'm not going to move away from my 'pass the parcel' analogy - it still looks like that to a economic ignoramus like me. But I'm beginning to understand our much vaulted experts of both Left and Right are a bit stumped about not merely what's in the parcel (no-one knows how much debt there actually is) but also about how to judge who wins the game they're playing anyway. So maybe it's class struggle as a version of 'murder in the dark' as well.


  1. I realise it's difficult to avoid a tone of condescension when dealing with the Left, particularly if you are or have been on the Left. Perhaps it is an instance of the leftist 'autophobia' that Domenico Losurdo describes.

    However that may be, you are simply wrong to say that I had a pre-prepared analysis. I didn't. I genuinely didn't know what to make of the proposed bail-out until its contours became obvious, and widespread opposition had already developed among both right-wing and left-wing commentators in the US.

    Let's be clear: if this bail-out wasn't just a massive gift to the very people who brought us this crisis - if, in fact, it contained some reciprocity, accountability and a promise to protect jobs etc, I would probably be far more ambivalent about it.

    But you could have detected that from what I wrote rather than 'bending' what I said into an analysis which you had 'prepared earlier'.

  2. Hi Lenin, thanks for the feedback - and yeah, you're right, I did sound a bit arsey, didn't I? So sorry from this newbie bloggie if you felt I was being supercilious.

    But that's certainly not because I have any pretence that I know what to do about the crisis. If anything it's because I am only too aware how easy it is for people with a leftwing background, including me, to fall into boilerplate responses. So I made a joke at your expense. That's all.& now I've apologised.

    I am unconvinced anyone has an answer to this problem as yet (or, if they have, it hasn't come across my radar). &, ultimately, I'm interested in solutions ...