economic crisis

Playfully infusing a familiar Occupy Wall Street chant with the mindless noshing of zombies, last month around 100 costumed protestors undertook a small but significant “Night of the Living Debt” march around the New York University campus and Washington Square Park.

debt is emerging as a connective thread for OWS organizers and their allies as they begin to build toward the movement’s one year anniversary of September 17, variously known as S17, Black Monday and Occupy Year One.

Over two hours, several dozen people from a wide range of backgrounds and generations delivered emotionally-charged, first-person testimonials about the experience of debt-servitude to Wall Street and its intermediary institutions.

An emphasis on debt could be politically promising -- particularly as it helps people understand the trap of capitalism, the way the system feeds off them, the way it relies on debt at multiple levels and establishes terms of credit and debit for the benefit of the capitalist class. A politics of debt seems especially posed to reach a middle class that compensated for its declining income with credit (that said, household indebtedness has declined since the beginning of the great recession even as part of that decline can be attributed to mortgage defaults). 

there seem to be some challenges or potential drawbacks to a political strategy based on debt:

It is difficult to overcome the individual dimension of debt: the individual quality of debt (credit card, mortgage, student loan) presents a collective action problem.

Unemployment is at 6 percent, the krona is only worth 50 percent of its pre-crisis value, and household debt is at 130 percent of GDP. To add insult to injury, while ordinary people suffer the effects of runaway banking, the current government has decided to move forward with the ousted former government's plan to pay off some bogus foreign debts.

SUPPORT FOR the parties entrusted with the people's welfare is half what it was two years ago, and it's no surprise. After overthrowing the government that ushered in the crisis, voting against the debt repayments on two separate occasions, and electing a government that promised to "work with the people," Icelanders have been betrayed.

A modern state needs a “nation” to “legitimise” itself, justify its demands for obedience from its citizens by invocation of a common past and shared destiny – whereas a “nation” needs the coercive power of the state to make its unity (“sharing”) real – to replace the multitude of local traditions or dialects with one history, one language. With the emergence of the modern state, the trinity of nation, state and territory has been established as the seat and holder of sovereignty.

after a couple of centuries of nation-state building, the time of diasporization has arrived…

every process has its discontents, and diasporization is no  exception. Denmark or the Netherlands, until recently symbols of openness and hospitality, turned into pioneers of barring immigration and reintroduced boundary control. And yet such resistance to diasporization may well be a lost battle.

Van der Pijl’s exceptionally rich study of Bilderberg and subsequent US-European geopolitical maneuvres, The Making of an Atlantic Ruling Class (which thankfully Verso Press is about to reissue), provides the theoretical underpinning that I feel Jones’ passionately conspiratorialist followers desperately need, if they ever aim to properly judge the world’s complex combinations of structure and agency.

ut religion, Freemasonry, Rotary, Jews, etc., can be subsumed into the social category of ‘intellectuals’, whose function, on an international scale, is that of mediating the extremes, of ‘socializing’ the technical discoveries which provide the impetus for all activities of leadership, of devising compromises between, and ways out of, extreme solutions.”

But they were nervous, too, of a coming political storm, remarked van der Pijl. Representing both BP and Goldman Sachs in 2007, Peter Sutherland (former WTO director) “was quoted as saying that it had been a mistake to have referenda on the EU constitution. ‘You knew there was a rise in nationalism; you should have let your parliaments ratify the treaty, and it should be done with.’ Kissinger said words to the same effect concerning unification of the Americas, stressing the need to mobilise the enlightened media behind its propagation.”

On the face of it, that seems like an absurd suggestion. After all, for capitalists, things couldn't be better. Corporate profits and executive pay are going gangbusters. There are few if any impediments for the business sector to getting whatever it wants, whether it's free trade deals, a free hand to bust unions, gut workplace and environmental laws, and pressure governments to do their bidding, whether it's bailing them out and never holding them to account.

in an era of globalization and free trade, the ability of capital to give workers higher wages is limited. And cracking down on dissent and becoming more authoritarian, has its limits too, as Syria and Egypt and Libya demonstrate. Capitalism might not be overthrown, but it might be facing a period where its very foundations are eaten away because it continues to exclude too many people from the opportunities they want and deserve.

If the IMF leadership praised the dictatorship, insisted on austerity and advocated squeezing poor people for more taxes, what business does it have today in giving similar advice to Tunisia, or anywhere in the Middle East and North Africa, or for that matter Europe or anywhere at all? What can we learn about IMF thinking in Tunisia, Egypt and Libya, as well as Palestine?

In contrast, there was no IMF conditionality aimed at reforming the dictatorship and halting widespread corruption by Ben Ali and his wife's notorious Trabelsi family, or lessening the two families' extreme level of business concentration, or ending the regime's reliance upon murderous security forces to defend Tunisian crony capitalism, or lowering the hedonism for which Ben Ali had become famous.

In addition to expanding Public Private Partnerships (PPPs, a euphemism for services privatization and outsourcing), the IMF named its priorities: "adopting as early as possible a full-fledged VAT, complementing energy subsidy reform with better-targeted transfers to the most needy, and containing the fiscal cost of the pension and health reforms."

I like the Financial Times (FT) for two main reasons: it gives me all I need to know that day in about seven pages every morning, and the fact that its ‘sound.’ By ‘sound’ I mean that, unlike the Murdoch press, I can rely on the FT to tell me the truth since consistently lying to the global investor class is a losing business model. But one should remember that for the FT, as it is for the rest of us, it’s still the truth as they see it.

while political capture gets a lot of the post-crisis press, rightly– with my favorite recent slip being Spencer Bachus (R-Al) cracker that “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks”– it’s intellectual capture that, in my opinion, really does the damage (hence my last blog piece on Cowboys and Indians). Indeed, once you start to look for this, you begin to see its effects everywhere.

Hirschman pointed out that conservative arguments come in three distinct theses. First is the “Perversity thesis” where any well meaning reform produces its opposite outcome: ‘welfare makes you poor’ – that sort of thing. The second is the “Jeopardy thesis” where reforms put at risk more than they can ever deliver–­ the fear of extending the suffrage is typical. Third is the “Futility thesis” where reforms are simply pointless – fill in any and all opposition to global warming.

the silences in The General Theory allowed for the simultaneous existence of different types of Keynesian economists.  Even though all such economists agree on the need for fiscal and monetary policy, they do not agree on the limit of such policies and the exact method of pursuing them.  For example, liberal Keynesians—such as the “Post-Keynesians” who try to distance themselves from the neoclassical teachings—and conservative Keynesians—such as the “New Keynesians” who are quite eclectic in their theories—are often at odds with one another as to how high the deficit can go or what steps the Federal Reserve System should take.

What is very curious in the present state of affairs is that, unfortunately, no other country other than China retains those rights. No other major partner (of the G20) has fully retained those rights, although some of the emerging countries such as India and Brazil have done something to that effect. Instead, they have generally accepted the dictates of the US.

It is important to understand that this is the central problem. The problem is the global integrated monetary and financial system, ruled as it is by the dollar, that is ruled by the exclusive prerogative of the US Treasury and Federal Reserve, of the US state. This is not acceptable. That is the problem. The problem is not the exchange rate of the Yuan or that of the Rupee or any other currency. Absolutely not.

First, for those who assume that the system is not so bad, and who accept that the US dollar should continue to be effectively the major, if not absolutely the exclusive international currency, the idea would be to restore the system as it was before the 2008 financial breakdown along with, perhaps, some minor regulatory reforms (most of which are essentially more cosmetic and rhetorical than real). This is exactly what the Stieglitz Commission and the Stieglitz report aim at. It accepts that the US dollar should remain the almost exclusive international currency (with some minor concessions). But it also accepts the right of the US government to manage the currency exclusively and on its own. As for everyone else, they have to adjust to the US dictates. This is, of course, not acceptable, especially for the South. If the Europeans, the British, the Japanese accept it that is their business. But I don't see why the Asians, the Latin Americans, the Africans should accept it. And it is not accepted, certainly not by China and some of the emerging states - India and Brazil in particular. Although it is not accepted morally by African states, in practice they have completely accepted to submit to its consequences - they have done nothing to respond to the challenge. So, that is the Stieglitz style solution. And it has completely failed. Nobody pays attention to the Stieglitz report, which has been dropped in the waste-basket, and nobody really cares about it. It has not convinced the partners, especially from the South. Even the North does not give any consideration to the recommendations of Stieglitz.