The Global Organic Crisis: Paradoxes, Dangers and Opportunities

The capitalist world has experienced its deepest economic meltdown since the Great Depression of the 1930s. Paradoxically, whereas the earlier period saw the breakdown of liberal capitalism, the rise of fascism and Nazism, and the Soviet alternative to liberal capitalism (the Soviet Union), today neo-liberalism and capitalist globalization still remain powerful, and apparently supreme, on the stage of world history. Despite the financial implosion on Wall Street and its "near-death experience" for financial capitalism and the G8’s somnambulant political leaders, few coherent left alternative programs have commanded sufficient political organization or popular support to mount a serious challenge or to pose credible alternatives.

So what arguments can progressive political forces use to begin to mobilize transformative resistance in ways that can give credibility to new forms of politics and society? We start with the simple observation that appearances can be deceptive and indeed this is to be expected in the present politically paradoxical global conjuncture. This conjuncture corresponds, in part, the Chinese character for crisis, a character that combines moments of danger and opportunity. It is linked to the fact that the current global political situation involves far more than a crisis of capitalist accumulation since it is pregnant with the following paradox: "The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear."

The full version of this article has been published online by Monthly Review. To access the full text, click here.

The real cost of the bail outs – alternatives to consider

One estimate is that about US$17 trillion has so far been allocated for “economic emergency funds” by the USA, EU and other G8 nations to promote macroeconomic stabilization. However the basic question “what kind of stabilisation, of what, and for whose benefit?” is not being asked by many commentators.

A political economy analysis of these huge outlays would normally assess them in terms of their “opportunity costs” – the alternative uses of the funds that have been foregone, for example the money could have been used to increase expenditures on health, education and training and social infrastructure more generally and in so doing provide benefits and economic relief to the majority of the population.

The basic economic argument in favour of such a socially oriented approach is that the G8 policies are both overly expensive and unlikely to be fully effective – whether they reverse the slump remains to be seen (see my post on “green shoots”). The economic argument for increased social expenditures (e.g. on accessible education, affordable housing, health care and social programs) is that they have far more favourable effects on macroeconomic stabilization than financial bail-outs. Social expenditures raise aggregate demand in far greater measure than do outlays on financial bailouts. This is because poorer people spend more of their income than the wealthy. Thus smaller outlays result in a larger growth of consumption and demand – needed to reverse economic slump and to mitigate rising unemployment. A social approach would also result in much lower costs for taxpayers as they finance future government debt.

Looking beyond, we need to fundamentally rethink our social and economic policies in the longer and medium-term to promote a different kind of society. Restoring previous levels and patterns of consumption according to the present economic paradigm will simply return us to a socially and ecologically unsustainable path of development, to say nothing of the fiscal consequences of the current bailouts which will be imposed on not only ourselves but future generations. As things stand, G8 policies are principally governed by the dictates of a hyper-consumerist, energy intensive and individualistic paradigm, a kind of monoculture of the market and the mind, or what I call the global “market civilization”.

A fundamental rethink of the logic of market civilization is of course the work of many millions of people throughout the world – what I call the progressive organic intellectuals. By this I mean not only trained economists and ecologists with high degrees of technical expertise, but more broadly the very large numbers of progressive, engaged and thoughtful people across all walks of life dissatisfied with the current situation and pressing for change. They are found in schools, in health care institutions, in trade unions and in a range of social organizations and they are beginning to combine and assert their collective identity as a political force. They look towards the social and economic future not only preoccupied with immediate issues but also with a view to long term questions and initiatives.

Many of the social programs that I mentioned above were always treated by G8 governments as economically inefficient and impossible to finance – and inconsistent with the prevailing ideology of disciplinary neo-liberalism. Surely the scale and the immediacy of the 2008-09 global economic bailouts indicate that this was simply an ideological and political choice? With different political pressures and forces at work a radically new agenda for social and economic transformation becomes possible.

So what would such a radical economic reform agenda look like? I would suggest that this agenda might include initiatives to:

1. Rethink the tax base in a more macro-economically efficient way whilst ensuring that the future distribution of tax burdens is equitable and sustainable. Whilst much has been made of the need to prevent tax avoidance and tax evasion, especially in offshore centres and to close loopholes in national tax codes, perhaps the biggest shift in taxation regimes over the past 30 years has been the increasing use of indirect taxation. Indirect taxes on the whole tend to be regressive and hit the poor hardest. On the other hand direct taxation on the wealthy and on corporations – taxes that used to be very high after the Second World War – have fallen considerably. So a fundamental rethink of the question of taxes is imperative especially as the costs of the bailouts will be borne by future taxpayers, and given that demographic changes which will also create enormous fiscal pressures (see 4., below).
2. Develop comprehensive measures to ensure that the economy is regulated effectively and prudently, e.g. preventing financial institutions from excessively risky practices such as using financial derivatives and products that are not properly understood nor secure; measures to govern world trade that are democratically accountable and premised on meeting social objectives rather than on simply maximizing profits and enlarging the freedoms of capital at the expense of socially and democratically defined needs;
3. Develop policies to revitalize our public and collective services such as public health systems as well as infrastructure such as public transport and public information and communications systems; these policies should be based upon more fundamental democratization of public institutions, legal systems and the governance of property rights;
4. Deal with demographic shifts and related social issues: e.g. health issues and fiscal costs associated with the ageing society in Europe and Japan: breakdown the unhelpful dichotomies that govern policies in such areas such as “young” and “old” and so-called “productive” and “unproductive” members of society;
5. As noted, to rethink policies to change the destructive logic of affluent lifestyles and thus minimize over-consumption, waste and bad diets and thus promote healthier ways of living, whilst preserving toleration and diversity of social choices.

For this to be possible the language of political economy and public policy needs to be reinvented and progressive organic intellectuals need to engage in education at a variety of levels -- to help transform the way in which people conceive of political, material and ecological conditions which govern the limits of the possible both now and in the future. In so doing the goals would be to forge a new commonsense concerning the nature of the world and its potential future. This means that new policies and institutions in education, in the media, and more broadly a series of initiatives that can begin to respond to the challenges and ethical questions we face, both locally and globally. This would imply significant changes in not only the field of economics but also across the social, human and natural sciences to produce a more integral and forward looking understanding that can help to promote sustainability and social justice.

The Constitution of Global Capitalism

Here is an article that contains some of the key ideas and arguments that I will be working on during 2009-10 when I am the Erkko Professor at the Collegium for Advanced Studies at the University of Helsinki. It contains the conceptualization of two of the constitutive structures of contemporary capitalism -- what I call disciplinary neo-liberalism and the new constitutionalism.

For the pdf click here

Economic crises open spaces to new politics

An article “Economic crises open spaces to new politics” reported on the Finland Capitalism 2009 Conference. It focused on the part of my argument that highlighted how the global crises open up possibilities for new political movements, not only the progressive movements but also for reactionary movements as well as for authoritarian political responses -- in the context of wrenching social and economic dislocations.

It was published on 30 April 2009 in the Finnish newspaper Kansan Uutiset. See the internet-version of the newspaper here: http://www.kansanuutiset.fi/nakoislehti/20090430/ See pages 22-23

Reflections on the global crisis

This is the launch of my website -- much more will follow!

Below is the abstract & outline of a lecture I delivered in Helsinki, Finland to the Capitalism 2009 conference organized by the Finland Left Forum. An edited version of the talk will be posted on the Left Forum website relatively soon.

Political Reflections on the Global Economic & Financial Crisis

The financial and economic crisis - which appears to be simply a crisis that is internal to the functioning of global capitalism - is in reality part of a much wider and deeper global crisis. In this state of economic emergency, those mainly responsible for the policies that led to the financial collapse have claimed the right to produce the solutions with relatively little significant challenge from the progressive lefts. What is needed however is a new way to think through global challenges in ways that go beyond the confines of narrow solutions that simply favour capital. In my lecture I will therefore outline some principles and policies for the progressive lefts to consider: in fiscal policy, on lifestyles and sustainability, on public services, on the ageing society and in education and culture.

A Powerpoint which formed the outline of the lecture can be downloaded here and a smaller Word document of the same can be found here.

The conference web page and abstracts of the other presentations can be found here.

For those of you who read Finnish, here is a link to a newspaper article based upon an interview where some of the main points of my lecture are discussed: Helsingin Sanomat, 23/4/09 (1MB PDF).