Credit crunch? But that's soo last month darling...
Well, the Red Newt disagrees. Here is the Newt's conclusion after looking at a new Harvard Business School paper:
"Financial circulation has been restored in the core of the system. But circulation is stopping in the periphery of the system both geographically and in terms of financial markets within the most economically developed economies themselves. This is now where the credit crunch is most advanced. In addition to the importance of this development itself a key issue will be whether the poisons being produced from this financial gangrene will invade the core of the financial system again."
What's interesting to me is how many left commentators - see Richard Murphy this morning, or Tom at Labour and Capital, or Stumbling - see a key part of the problem revolving around the autonomy of management from ownership. Now, to any one educated in 1970s style sociology like me this immediately calls up memories of James Burnham - rather than, say, C.Wright Mills, who also worked on elites but stressed their cohesion, not how they were divided. I dimly recall a noticeable slice of the set reading for my degree was devoted to Marxist and otherwise leftist critiques of Burnham - but here we have a whole host of leftist commentators seemingly taking him as their starting point. Whilst this approach does undermine the pristine theory - well, pristine fairy-tale - of shareholder control, it also leaves a lot less space for the kind of traditional bosses v workers class struggle analysis so beloved of the left. There is a second tension: between owners and the robber barons of management who have effective but not titular control of any organisation's assets and strategy.
Or perhaps it simply shifts the ground of class struggle. Here's a link - via Casino Crash - to a very clear summary by a SOAS academic . His key points?
1. Real improvements in the distribution of income are needed. Increases in unemployment benefits, real wage gains and progressive tax cuts are vital to the restoration of economic stability.
2. The public provision of housing, pensions, education and health care needs to replace private provision through capital markets. Privatisation of these services has passed onto individuals not only their costs, but also the financial risksassociated with illness, labour-market uncertainty, and instability of investment.
3. Mass public investment programmes that bolster both demand and productivity are critically needed. We need a form of Keynesianism which helps wage earners, not financial capital.
2. The public provision of housing, pensions, education and health care needs to replace private provision through capital markets. Privatisation of these services has passed onto individuals not only their costs, but also the financial risksassociated with illness, labour-market uncertainty, and instability of investment.
3. Mass public investment programmes that bolster both demand and productivity are critically needed. We need a form of Keynesianism which helps wage earners, not financial capital.
Hi Charlie
ReplyDeleteI thought I'd pop over and say hello.
I can't claim to be a Burnhamite, not having read any of his stuff (except a very general introduction).
To be honest my views on this stuff point in different directions. On the one hand I think the failure of ownership (and the failure by shareholders to exercise ownership) is really the principal-agent problem at heart. This exists not only in the company-shareholder relationship, but also in the ordinary say/pension scheme member-fund manager one. As a result of this I don't the whoel thing works like ownership in reality and I do think executives skim off money for themselves as a result of the lack of oversight.
On the other hand, I'm a weedy social democratic type lefty and don't think business people inevitably do the wrong thing (because I don't accept that the idea of rational and financially self-interested economic agents is a very accurate model to work with). So I'm not totally sure that the lack of engaged 'owners' necessarily matters that much.
Then again I think that financialisation can encourage behaviour that is closer to the rational economic man ideal, so perhaps it's no surprise that the real scandals have emerged in either financial institutions or those that sought to behave more like them (ie Enron).
Make of that lot what you will!
Nice blog by the way - will add to my list. One admin point - I have trouble reading it at work as it takes ages to load, which doesn't seem to happen with other blogs. Not sure why this happens as I am a bit of a technophobe.
cheers
Tom
Tom,
ReplyDeleteI'm posting in reply here as I can't seem to find a way of replying by email via your site. I can only hope you brave the slow loading time to see this reply (no idea why that is, but I'll try myself from another machine to see if it's a general problem.) I'm really grateful for your comments.
I'm not saying you're wrong - I do hope that came across in the posting. I'm saying I'm of a different generation and with a different intellectual formation. Specifically: I was a '1980's vintage' member of the CPGB and Marxism Today supporter who walked away from the wreckage of those particular hopes in the early nineties and who has only recently re-emerged from a focus on community politics, interspaced with periods of straightforward political inactivity. I'm trying to make sense of both my heritage and the very different Left I find in today's blogsphere.
I'm not an economist - indeed, I share the general view of 'once-upon-a-time' Marxists - that economics, as a discipline , is a retreat from the sort of political economy that Marx criticised in the first place. And, quite unlike the esteemed Stumbling, I am definitely a methodological collectivist in philosophical terms. So I'm constantly looking for analysis categories I can fit into my previous schema - categories such as 'class struggle'.
Yet the people who I find interesting and informed in the Left blogosphere - yourself included - don't operate from such a basis. You all mainly seem wrapped up in demonstrating the flaws in classical economic theory (e.g. 'the principal-agent' problem), flaws which, in the 1970s and 1980s, were simply seen as obvious truths, at least on the Left, rather than things needing to be argued.
All this may simply mean I'm a sad old Lefty whose time has long gone but continues to operate in outdated categories of thought. But I hope it means I can ask embarrassing but ultimately revealing questions like the drunk uncle at a family wedding....
I think you're right that there is a focus (certainly it's something I'm interested in) on taking on some fairly old ideas in economics. That's a reflection of how deeply neo-liberalism has influenced politics, and how widely accepted some of the ideas associated with it have (or hopefully 'had') become.
ReplyDeleteAnd yes it's a generational think too I guess as in the time I've developed ideas about politics & economics the intellectual centre of gravity has been more pro-market and anti-state. Only now are starting to get past some of this stuff which may mean that we don't have to argue over the bits which as you suggest are self-evident.
My own journey has been an odd one as I can probably claim to be one of a very small number of trade unionists in the UK who have tried to use shareholder ownership as a form of leverage. I've broadly conclude that it's a useful (and sometims very powerful) campaigning tool, but that tha 'ownership' idea does fit very well. My views on that stuff are formed more by experience than anything, so it's interesting to see people like Chris Dillow at S&M make the same sort of points from a more intellectual standpoint.
Keep on asking the awkward questions!