An article on the "credit crunch" financial crisis, from "The Whinger" number 7, Fall 2008.
Crunchonomics Meets Trashonomics - Paul Petard
Apparently there has been some sort of "crisis" going on recently in the big wide world, or so people say. They tell you it is to do with the economy, before calling you "stupid". Fucked if I know what it is really all about. Although we might be able to intelligently guess some of it.
Some of it seems to involve a big inflated housing mortgage and financial credit bubble underpinning western imperial economic hegemony, particularly large in the U.S. and the U.K. for the last ten years suddenly going pop! thrrrp! plop! Some of the small banks were pushing their luck a bit and were vulnerable, they were infected with toxic debts. Savers and investors got the "jitters" and weren't too happy to invest in them any more. So some of the small banks went under and got eaten by some of the big banks.
But some of the big banks were also infected too and started to catch a financial cold. So the state capitalists and governments muscled in and nationalized part of the banks.
Unfortunately this doesn't mean us little people have become real small shareholders in the assets. It is more like the government has nationalized the banks' debts at our expense and we're going to have to pay for it with extortionate higher regressive taxes against ordinary and lower income earners over the next few years. Most people have already guessed that the first budget after the next election will be horrible.
Meanwhile the stock market fell a massive chunk as there is a shortage of spare cash to invest and it can't lift itself up out of the doldrums. The massively inflated house prices that lots of people had banked on and borrowed on have now crashed 15% in one year in the UK. Apparently in parts of Detroit houses are like seriously cheap if you wanted to live there, but of course in somewhere like grey London they are still way beyond what you or I can afford.
"Recession" is the current buzzword and mass involuntary unemployment is back, although it never really went away. One side effect of this is I don't quite feel so socially excluded or left out as usual, but for many it is a real problem. The real unemployment level in the UK could now be higher than 3 million, about 12% of the workforce, if it were not for the government fiddling the figures (the "official" figure is over 1.8 million).
Despite threats whip the unemployed and make them jump up and down on the spot, they can't, and don't want to, "solve" the "problem", they just carry on paying the majority of us dole money to go indoors and shut up. This isn't situationist work-free heaven, it is just mindless powerless near subsistence daily life drudge, and bureaucratic dependency. And one does want a share of some of the productive labour sometimes, if there is any.
It is all very well philosophizing about "social relations" as general misty processes, but in practise social relations involve people-interactions, and some people have a lot more power and privilege to impose the dominant social relations than others. This particular situation I'm in ends up cultivating in me not just a dislike for the individual rich, and naughty private capitalists that many currently love to hate, but actually a more specific anger with the state-welfarist bureaucratic system, and its bureaucratic fat cat subsidariat-salariat, immediately ruling over me. And also, alongside this, a specific loathing of crummy landlordism.
I am much pleased to hear that, despite the situation in London, apparently many cowboy buy-to-let landlords in the north east of England have been caught out by the onset of slump. They are now desperate for tenants, and the boot is now temporarily on the other foot.
Apparently the capitalist economy in China is experiencing a "fall" in its growth rate from over 10% per year to maybe 8% or less, which if you think about it , is still a big steaming capitalist growth rate! So despite what some romantic millenarians think, I don't think all capital accumulation and capitalist development is about to end just yet, in a couple of years it might widely surge again.
Maybe the big "globalised neoliberal market economy" project-thing they've been trying to shove down our throats is now really crashing and pulling all the big capitalists down with it, maybe not. But even if it is, it doesn't inevitably mean the end of all local small capitalists and freelance merchant gangs. Somali pirates hijacking oil tankers are a demonstration of that.
Gordon the moron Brown has been attempting to launch bureaucratic takeovers of more and more of the economy and the society under the panic cloak of the "crisis". As private industrial capital and finance capital weaken and retreat, then moribund state bureaucracy steps forward. More and more of economy just becomes a suspended artificial toy for the state rentier, revenue collector, and bureaucrat to play games with. So who is "predominant" now?... socialism or barbarism, or bureaucratic state corporatist misery and a life wasted on welfare?
The so-called "crisis": The final failure of "capitalism", or just another failure of "apocalypse"?
"Lower interest rates and lower taxes," they cry, "We must spend money into the economy to keep it afloat." And for the short term the government obliges with a temporary de facto pay rise for the upper working classes and lower middle classes. If necessary interest rates could be lowered all the way down to 0% -Proudhonism is here!? They are desperate to avoid deflation, a much nastier lurgy for the economy than the usual inflation. But it would make my dole money worth more, before they cut me off.
Build more railways! build more social housing! upgrade school buildings, build more trident nuclear missiles!!! Funny how social housing and nuclear megadeth go hand in hand under Keynesian measures to try and beat recession. What a mess they are dragging us into.
But what if anything might have been going on, on our side of the equation, behind the scenes to give the economy such a bad hangover? Maybe it was something to do with millions of workers starting to assert themselves in the far east and putting a partial halt to the neoliberal "race to the bottom" with wages. Labour costs in the most industrialized parts of south eastern China have climbed 50% in the last four years. The minimum industrial wage in Shanghai went up by 12% in Sep 2007, and then climbed another 14% in April 2008.
Inside China wage demands have been fuelled by both inflation and by industrial militancy. Many exported Chinese manufactured goods on which we increasingly depend are becoming more expensive. Periodic waves of riotous industrial insurrection in the garment factories of Bangladesh have forced some of the clothing and fashion corporations to stop and think a bit.
But is it just about worker revolts in the far east? What about the ongoing long-term problem of industrial profitability in the west? The workers are too expensive, and the industries and their employees need continual government subsidies in one form or another. For some years the credit card and mortgage bubble allowed some of the upper working class in the west a sort of increase in their social wage, they were encouraged to go on an atomized credit card fuelled spending spree, and this helped divert from workplace wage pressure and militancy.
This came at the expense of community and solidarity, and paradoxically the shattering of social fabric ends up encouraging social disfunctionality, pushing up health and social welfare costs further down the line. The state has to spend more money again.
The state is even forced to take responsibility itself for part of the workers' struggles and demands: putting up the minimum wage, paying working tax credit, allowing more maternity leave, implementing some workplace health regulations, etc. These are token and never enough of course. But it is interesting to note how the state must step in and take a lead in advancing workers' demands, as many workers are too atomized/ fragmented/ knackered to organize even reformist demands for themselves.
In a minority of sectors some formal industrial action still goes on; transport workers, civil service and local government staff, post office workers, education and health workers,... When formal organized strikes and industrial action takes place it isn't always clear who has actually "won", or what the outcome really was. Both sides must continue to tread carefully.
Whether it is an official union walk-out for a day or two, a slowdown, work to rule, overtime boycott, sick-in, refusal of dangerous conditions and equipment, demanding to do something more socially useful, expropriating part of the production ("strikes" aren't the only form of struggle), there is always some little industrial grumble going on somewhere. Does this explain the "crisis"?
Maybe it is the true cost of failed imperial aggressions, killing sprees, and plunders in Iraq and Afghanistan finally coming home, this is probably a significant part of the immediate economic problem.
Maybe also there is something else... We continually hear the media talk in terms of "lack of confidence" in the economy and the urgent need to "restore confidence". What is this "lack of confidence"? Is it just some piece of pop psychology, or some piece of systemic false consciousness that obscures more than it reveals? Is it just businesses and entrepreneurs just feeling a little wary of each other?
Maybe some of it has to do with several million formerly "ordinary" and "small-c conservative" people in the west, and also elsewhere, in the back of their minds undergoing a fundamental loss of belief.
Even up to ten years ago many of these people might not have been uncritical of some aspects of the political and economic systems under which they lived, and would not have regarded the capitalist economy as perfect. Nonetheless they would have seen the various problems as temporary aberrations, exceptions to the rule, and all essentially solvable, or at least absorbable, within the framework of the existing capitalist economy. They would still have believed that, despite minor problems, endless capitalist growth and development, and the endless expansion of the consumer economy, were essentially benign, and for the overall benefit of the majority, and was undoubtedly the progressive way forward.
Now millions of formerly ordinary small-c conservative people, not just your usual political activists and radical suspects, have become consciously aware in the back of their minds that GLOBAL WARMING and CLIMATE CHAOS and GLOBAL RESOURCE DEPLETION and LIMITATIONS are all for real, and are going to start seriously kicking in within their lifetime. What they now understand consciously in the back of their minds is that the much wider economic system has serious finite limitations. Large-scale capitalist growth and development and expansion can't just go on indefinitely, sooner or later they have to seriously trip up.
In itself, knowing this is not yet something one could call a social revolutionary consciousness, but it is already a significant shift in part of mass consciousness. The majority of these people are not yet rushing to join the activist scene, or join street protests or political groups, or form strike committees. For the time being they are carrying on going through the motions, if they can, of going to their jobs and doing their shopping and continuing with their "normal" daily life routines. But instead of working and consuming with fundamental belief and eager enthusiasm, they are now in so many little ways beginning to withdraw participation and effort in their corner of the political and economic systems, and starting to drag their feet.
What might be a next step is when thousands of bus stop conversations turn from the weather to what can people do in a libertarian way to mutually help each other break out of the misery.
Paul Nov 2008.