America, a Spark Away From Riots of Its Own

Some readers of the blog may have got the impression that I'm a pretty smart guy; if so, I'm about to disabuse you, by talking about something I don't fully understand: the great economic collapse, how and why it is happening and what to do about it. Why? Because unless I spell out my tentative and possibly mistaken perceptions, I won't have a chance to correct or develop them.

Probably the most important post-World War II development has been the freeing of finance capital from its former bonds. As long as there have been markets, even before the birth of capitalism in England in the late middle ages (E.M. Wood, The Origin of Capitalism), there has been credit — "finance" —in some form.

But even as late as Marx (who died in 1883) or even Lenin (1924), there were some constraints on finance capital, national loyalty being one of them. Thus J. P. Morgan was hailed for his "civic responsibility," demonstrated most dramatically in the Panic of 1907.

But finance capital has broken free and now dictates to its former masters: trade, state, local authorities of all kinds, traditional loyalties.  It is a collective organism, like an anthill or a beehive or a city, e.g., London today, where the impulse toward mass action overcomes whatever rationality or notion of self-preservation its individual components may possess. Finance capital no longer recognizes any nation, but acts on its own only to aggrandize itself. And since it thinks of nothing but its own appetite, it does not hesitate to consume and destroy the industrial and commercial systems on which it feeds. If left entirely uncontrolled, the parasite will destroy its host — and then even bankers and security traders will despair.

Which is why things may not go quite to this extreme, that is, to the total self-destruction of the system. But we're getting close. Some financiers are able to raise their heads above the tumult (see links to Soros below) and see the dangers and may be willing to cede some control. But the forces of destruction are so strong and states (national governments) so timorous they (states and financiers) are acting too late to prevent great devastation — high unemployment in Europe, starvation in Africa, and turmoil everwhere.

And that of course is what is stimulating other and opposite movements of mass organisms, collective movements impelled more by rage than by sense, also overwhelming the rationality of individual participants and also possibly destroying the systems that sustain them. From Somalia to Athens to London and many other places. O, if we could just channel all that furious energy into a real revolution, establishing a truly sustainable system for reproducing social life! It will happen, surely, but  — if we continue to behave as our species has over the millennia — only at the last possible moment.

(See Ford Releases Report on German Subsidiary and WWII.) These days, such operations — financing all sides in a war, for example — seem to be simpler to execute. And with the ease of moving money instantly, globally, through the Internet, patriotic concerns and the powers of states to regulate transactions have all but evaporated.

Three steps to resolving the eurozone crisis | George Soros

Germany must defend the euro | George Soros

America, a Spark Away From Riots of Its Own

Empire’s Last Gasp — A Two-Act Scenario; Charles Degelman returns to classic texts by Marx and Lenin

It is probably true, as Charlie Degelman suggests, that Marx and Lenin provide pointers, but a lot has happened since them and so we're going to have to try to figure this out without them.

For my earlier comments on "good and bad capitalism" and related issues, click on keyword "capitalism" below.

And here's something to listen to while you ponder these problems: Ry Cooder: No Banker Left Behind - YouTube


Anonymous said...

Whilst the liberation of financial markets may be a factor in the present economic crisis there is a more significant factor which will still be relevant even if controls are reintroduced.

The shift of economic might to the east means that the west must adjust. We borrow too much, we use more resources per capita, we expect too much from the State and we pay ourselves too much. None of this is caused by bankers.

This painful adjustment will take many years, it will not be linear and some western nations will adjust better than others.

We also have the other long term factor - demographics.

Bankers did not set up unfunded pensions at c50 for Greek citizens!


Bankers did not determine the present

gef said...

Thanks, Andrew. Yes, that shift of economic power to the east (of Europe, west of the US — i.e., China, India & maybe Indonesia & Japan) is of major importance. Impossible (for me, anyway) to predict how it will play out. Those countries are very different from one another in the obstacles they face to capital accumulation and development, and none will replicate the original pattern that was led by Great Britain 200 years ago. I didn't understand your last sentence, about "pensions at c50 for Greek citizens".

Anonymous said...

My point is that many of your references and,indeed, the politicians and press focus on wicked bankers.

Whilst failures and greed were causes of the recent sharp recession we must not use thwm as scapegoats. We are all, collectively, responsible for what is happening. It was our political representatives that voted through generous welfare benefits.
Greeks are/were retiring on generous pensions at 50/55.

Incidently many of the welfare benefits favour the middle classes and do not target the genuinely disadvantaged. The recent deal on the US debt ceiling - no reduction in the major entitlement benefits but at the same time programs directly targetted at the poor are
being cut back by many States.

Let us not forget that during the interwar years many Germans blamed the world financiers (mainly jewish) - and looked what that led to.

In essence my point is we all need to take responsibility for where we are and be realistic about our future. And our grandchildrens!!

Anonymous said...

Bad joke - Greece has banned the exports of humus and tarasamalta because of the fear of a double dip recession!

gef said...

Ugh! Καλι νικτα.