My last blog entry was written after the record bounce back of the finance markets last Friday after short selling was banned. As could be gathered, I was not convinced that the crisis was over (any more than when that French bloke was arrested, after Northern Rock was nationalised, after the other actions which were mention to be one-offs which harmed an otherwise sound system). And guess what? Crisis is back.
What an insane way to run an economy!
My last blog entry was written after the record bounce back of the finance markets last Friday after short selling was banned. As could be gathered, I was not convinced that the crisis was over (any more than when that French bloke was arrested, after Northern Rock was nationalised, after the other actions which were mention to be one-offs which harmed an otherwise sound system). And guess what? Crisis is back.
What an insane way to run an economy!
Now the US government is going to bailout the financial giants. Such is capitalism, profits are privatised and costs socialised. As An Anarchist FAQ discusses, the notion that profits are rewards for risks has always been a flawed argument. Particularly as the corporation itself is a classic example of socialising risk and costs. So this bailout is not surprising, it is how capitalism works.
Of course, the various defenders of “pure” capitalism will be explaining why this is all the fault of the state (as if there were a capitalism possible without a state in reality!). As I suggested, these usually have Austrian accents and will be seeking to convince the world that, finally, their time has come.
Needless to say, they will fail to mention that at the last big crisis (the 1930s), their leading advocate (von Hayek) was defeated by the likes of Kaldor and Saffra which, in turn, ensured the success of Keynesian (although that victory was a somewhat a pyrrhic one as Keynes did not break sufficiently from neo-classical economics and that allowed the post-war “bastard Keynesianism” to dominate).
I doubt their message will take hold this time either, particularly as no ruling class will let their economy be destroyed in order to rebuild it again in a “pure” form (which would not actually work). But their recommendations that wages be cut, workers let go and the welfare state ended will be utilised, I am sure. After all, “socialism for the rich” is to be expected, socialism for the poor is another matter….
For those interested in an analysis of capitalism as a system, post-Keynesian economists is worth investigating. At its best, it combines the best of Marx and Keynes and analyses the links between finance and industry. Also, there are many reasons for a crisis — but ultimately they are all rooted in the fact that capitalism is based on the oppression and so exploitation of labour.
This crisis is, fundamentally, a product of capital being too strong — it would be hard to blame it on wages being too high given that stagnation in wages in America — and so demand not being sufficient to ensure repayment of the loans required to maintain a “middle-class” lifestyle. Added to this are the communication problems associated with markets, the way the aggregate of individual decisions can cause irrational results (such as bubbles, as everyone goes into a specific market — such as housing or dot.com shares).
One thing is sure, the time is for anarchists to start making practical suggestions on what people can do — such as squatting housing, community organising to fight evictions and provide essential services, occupations of workplaces threatened by closure, union organising drives and so on.