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Los Angeles Review of Books challenges the legitimacy of economic soothsayers

Phan Nguyen15 August 2011

“Autumn of the Empire” is the title to Joshua Clover’s analysis of the current economic crisis, approached within the context of four books reviewed in the Los Angeles Review of Books. Among the titles that Clover discusses are Robert Brenner’s The Economics of Global Turbulence and two books by the late Giovanni Arrighi, The Long Twentieth Century and Adam Smith in Beijing.

All of the books were first published before the economic bubble burst—a significant detail because like many before him, Clover disputes the retrospective argument that the crisis was unforeseen. More importantly:

The question of why so many danger cries went unheeded may seem to invite an inquiry into ideological blindness. On a different conceptual plane, however, it may be more interesting to ask instead: What counts as a prediction? Or, perhaps, the practical corollary: Who counts as an economist?

After all, other thinkers—other sorts of thinkers, concerned with broader understandings than the tightly focused technicians who dominate contemporary debates—grasped the situation at a considerable distance and with remarkable acuity. They mostly don’t appear in surveys of crisis callers, even as their predictions may have the most significant things to tell us about how best to peer from our current vantage, toward the horizon.

Among those possessing exceptional acuity is Robert Brenner, described by Clover as “capital’s most lucid contemporary historian,” and whose Economics of Global Turbulence details this contemporary history “with remarkable and sustained insight.” Explains Clover:

The brute situation, far more striking than most will admit, can be summarized in a single stark fact: During the “Long Boom” of 1948–1973, the lowest annual profit rate in the U.S. industrial sector was still higher than the highest such rate in the ensuing period, the “Long Bust.” This fact is all the more shocking for being so contrary to the largely accepted story—often centered around the Reagan presidency, or Clinton’s “new economy,” depending on one’s party preference—of recent American history as one of minor falls and major lifts.

Brenner’s argument about how this came to pass is rigorous and buttressed by extraordinarily careful empirical research.

As for Arrighi, Clover declares that The Long Twentieth Century has “the grandeur of a sprawling epic, and the schematic grace of a Richard Neutra blueprint”:

It is the single most useful text on offer for anyone who wants to narrate the story of world capitalism—from its nascent form on the rim of the Mediterranean to the current reach of the United States’ empire, and beyond.

With the principal insights of Brenner and Arrighi in mind, Clover then revisits the notion of economic prognosticators:

When we talk casually about “who predicted the crisis,” we habitually don’t mean those who understood the mechanisms, who had an analytic method that might help us understand the future that crashes in upon us. We don’t mean to discover who is capable of historical thought, or what that thought might be.

We mean stock pickers, more or less. We mean those whose insights could direct us when to get in and when to get out. This is the only mode of thought recognized by The Economist and the economists sanctioned by the guild’s conventions. Such thought has moved from being a hobby of speculators to an entire episteme, a mode of knowledge that dominates all others.

Like democracy itself, this official thought presents itself as having subtleties, wings, parties. But the oppositions on offer—NYT vs. WSJ, Krugman vs. Cochrane, saltwater vs. freshwater schools of economics—can’t begin to grasp the fullness of the situation. Whether discovering “green shoots” or hand-wringing over a “jobless recovery,” they think unquestioningly in terms of a return to normalcy, debating only the rate and method: the crisis a mere blink in the long stare of empire.

But the scandalous lesson we learn from heterodox thinkers like Brenner, Duncan, and Arrighi is quite a different one: that the American experience is grand, outsized, but not entirely novel. Industrial growth is bound to undo itself as a profit center, to be replaced by a regime of finance; this regime’s profit mechanism is always the bubble and its total crisis inescapable; and this is how empires end.

Visit the Los Angeles Review of Books to read the article in full.

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