Capital could not just abolish the gains of the postwar period. It was necessary to preserve social peace. The "trick" in the 1970s consisted of using inflation to defuse the emerging conflict between labour and capital over redistribution. The money machine was used to compensate for the loss of income which resulted from the reduction in capital’s contribution to the welfare state… Evidently, that could not last. So from the late 1970s inflation was replaced with public debt, and states borrowed (rather than tax) in order to be able to keep up the level of services. Then, in the 1990s, when states began to worry about the growing weight of debt servicing as part of their budgets, and reduced their spending (and thus social services) we took recourse to private debt. In other words, we made it easier than ever for households to take on debt so that they could preserve their purchasing power, which was being cut back by these budget consolidation measures. And that led us to the 2008 catastrophe.
First published in Le Monde. Translated by Loren Balhorn.
via Wikimedia Commons.
Seen from Germany, it is possible to envy, admire, and feel sorry for France all at the same time. One can envy their freewheeling public debates on topics like “globalisation” and Americanisation, Europeanisation and Germanisation, capitalism, neoliberalism, “competitiveness,” and “structural reforms." This is because, in France, it is still allowed to publicly ask what words like “cosmopolitanism” really mean; what societies have to accept in exchange for this cosmopolitanism, how much thereof a society really needs or wants and, moreover, what sorts of compromises societies must make in a global market characterised by a universalistically diluted form of constitutional patriotism. In Germany, by contrast, those who neglect to drink from society’s daily dose of the cosmopolitan nectar tend to be excommunicated from public discourse. There is no legitimate public discussion of the French questions — not in literature, not in the social sciences, not in the media, and not in the parliament (here, as an institution driven by allegedly eternal and unchanging “Western values," least of all). Such questions are shunned, pushed into the far-right corner. Maybe it has to be this way in Germany, and maybe German expectations that it should be this way in other countries as well are merely an expression of envy.
"If I told you eight years ago that America would reverse the great recession, reboot the auto industry, and unleash the greatest stretch of job creation in our history ... you might have said our sights were set a little too high." Thus boasted the former US president Barack Obama in his farewell address. But is the financial crisis really behind us? Has the strategy implemented to save the banks not, on the contrary, created the conditions for the next conflagration? Cédric Durandwrites.
An abbreviated version of this article appeared in the February 2017 Le Monde diplomatique. Translated by David Broder.
Figure 1: GDP growth in the advanced economies
Happy anniversary! On 2 April 2007, New Century Financial Corporation entered into liquidation. The collapse of this US real estate investment company — the second biggest provider of the now-infamous subprime mortgages — fired the starting gun on a financial crisis bigger than any the world had seen since 1929. Ten years on, capitalism is still yet to recover from this major shock. Growth is sluggish, under-employment endemic and the extreme monetary policies implement by central banks are reaching their limits.
“Before capitalism will go to hell, it will for the foreseeable future hang in limbo, dead or about to die from an overdose of itself but still very much around, as nobody will have the power to move its decaying body out of the way.” - Wolfgang Streeck
After years of ill health, capitalism is now in a critical condition. Growth has given way to stagnation; inequality is leading to instability; and confidence in the money economy has all but evaporated.
We present a reading list of titles that examine our current economic state, including Wolfgang Streeck's critically-acclaimed analysis, How Will Capitalism End? and Geoff Mann's provocative new book on Keynesianism, political economy, and revolution.
All these books are 40% off (with free shipping) until Feb 5th, midnight UTC. Click here to activate your discount.