Guardian UK: Capitalism lies in shambles, and the left has gone awol

[marmar]

Capitalism lies in shambles, and the left has gone awol
It should be the moment for progressives to proffer remedies, and yet a year into the credit crunch they remain largely silent

Aditya Chakrabortty The Guardian, Thursday August 7 2008



Just one thing is missing from the financial drama that has captivated us for the past year. Yes, the meltdown of the markets has been thrilling, the run on Northern Rock was spectacular, and the scalp count of chief executives is rising nicely. But where in this bonfire of capitalist certainties is the left?

Lefties, progressives, social democrats: however wide you want to spread the net, you still won't catch any. In this debate, they've gone awol. Gordon Brown is mesmerised by his plunging poll ratings and hidebound by the orthodoxy of light-touch regulation. Labour backbenchers haven't fizzed with ideas, either. The most radical policies have instead come from a former Shell economist turned Lib Dem MP: Vince Cable. There's been barely a squeak from progressive thinktanks.

Capitalist crisis usually spells opportunity for progressives - their moment to point out errors and suggest remedies. Franklin Roosevelt's New Deal is the famous example, but more recent is the Asian crisis of the late 90s, when the left teamed up with local activists to attack the International Monetary Fund for mishandling an entire continent. Ten years on, the IMF still hasn't recovered its authority.

Who is diagnosing the credit crunch? Well, try whoever wrote this: "One way of looking at the present situation would be to see it as the ultimate breakdown of that phase of western economic development known as 'financial capitalism'." Did it come from a venerable Marxist academic on New Left Review? No, the author is Stephen Lewis, an economist at a City firm trading derivatives. He's not the only financier doing some hard thinking. Josef Ackermann, the boss of Deutsche Bank, confesses: "I no longer believe in the market's self-healing power." The former head of the US central bank, Paul Volcker, is blunter still: "The bright new financial system, with all its talented participants, with all its rich rewards, has failed the test of the marketplace." ..............(more)

The complete piece is at: http://www.guardian.co.uk/commentisfree/2008/aug/07/economics.creditcrunch

[pinto]

1. Interesting article. The Guardian can be hyperbolic at times, a little

sensational; I liked this piece.

<some outtakes>

Take the conventional analysis of this crisis. It was imported, we're told, from Subprimesville, USA - yet the easy credit originally came from savings-stuffed Asia lending to the debtor nations of America and the UK. Then there's the chucking together of all our ills into a pot marked "credit crunch", when, really, three different ingredients are at work: an inevitable slowdown after years of shopping and borrowing, accelerated and exacerbated by a sudden drought of credit, and the added grit of the soaring price of oil and other raw materials.

<snip>

What should a progressive economic platform look like? I'd suggest three principles. First, it must be populist, supporting people rather than mortgage lenders. Ministers should remember that bank bosses form a tiny constituency - and they aren't natural Labour voters. Second, it should concentrate on targeted interventions. Now isn't the time for new taxes, so progressives need to think harder about using market mechanisms to help the struggling. With gas bills so high, Ofgem should ensure more are put on social tariffs. Finally, leftwingers have to be more nimble.

<snip>

Housebuilders and banks would like nothing better than to wind the clock back to spring 2007 and start over, as if the credit crunch never happened. It's up to progressives to push a fairer alternative. As recession looms, there's enough appetite for one: this is as close as the left gets to what stockbrokers call a buying opportunity.

[Beregond2]

2. I think the reason the left doesn't have much to say

about this is because the answers are so obvious: restore the regulatory mechanisms that the rightwing have decimated. It isn't all that difficult.

[pinto]

5. I agree on that point. De-regulation has been devastating. As has the loss of oversight.

[T_i_B]

8. Well the reasons why invading Iraq was a bad idea could be described as "obvious"....

...but the left still made the case, and quite rightly so. So why not where economics is concerned?

I have to say that I agreed with this article 100%.

[Enthusiast]

10. I have little hope

That this re-regulation will be allowed. Corporate influence is at an all time high in our legislature and money rules.

[checks-n-balances]

3. Part of the problem in the U.S. has been the DLC

and all their offshoots. They abandoned the heart of what Dems have always stood & fought for, convinced themselves of the need for a militaristic stance, just in order to get elected. This time, however, those who aren't rethugs or who haven't drunk the koolaid (or are too busy not to have been duped by corporate media) will be willing to listen to so-called a 'left-leaning' populism that addresses the needs of lower & middle income people.

There are other factors and reasons, but the DLC (which I'm convinced has roots in the RNC) bought into unregulated capitalism a long time ago. Those Dems who continue to listen to tone-deaf DLCers, who keep repeating the definition of "insane" by doing the same thing over & over again & expecting the same results, are going to be unpleasantly surprised. Most of the electorate that ultimately rejects the republicans won't be interested in repub lite.

The fact that congressional Dems have forgotten their political rootsand adopted the ways of their opponents, but their penchant for triangulation should have abandoned after the Age of Bill Clinton (once called a "New Democrat").

[jwirr]

4. Capitalism as we knew it was based on the idea of plenty. We are

now in the beginning of the age of scarcity. If capitalism is having a bad time now imagine what it is going to be like when we really run out of resources.

[JohnyCanuck]

6. Infinite growth in a finite system finally reaching its limits?

Why is economic growth a threat to economic sustainability, national security, and international stability?

To grow, an economy requires more natural capital, including soil, water, minerals, timber, other raw materials, and energy sources. When the economy grows too fast or gets too big, this natural capital is depleted, or "liquidated." To function smoothly, the economy also requires an environment that can absorb and recycle pollutants. When natural capital stocks are depleted, and/or the capacity of the environment to absorb pollutants is exceeded, the economy is forced to shrink.

National security, meanwhile, is a function of economic sustainability. The economic strife of a nation may result in insurrection or revolution, and eventually the nation-state may turn its agressions outward. From the Nazi doctrine of Lebensraum to the 21st century powder kegs, war invariably involves, and often revolves around, struggles for resources by nations that have exceeded their ecological capacities - or have had their capacities impacted by other states.

Can't technology alleviate the threat of economic growth?

Some economists think that, because a particular production process can become more efficient (more output per unit of natural capital), there is no limit to economic growth. These economists and “technological optimists” are disregarding the second law of thermodynamics, the entropy law, which tells us that we cannot achieve 100% efficiency in the economic production process. When the entropy law is applied across all economic sectors, or in other words when the limits to efficiency have been reached, the only remaining way to grow the economy is by using more natural capital (including energy).

Remember: to think there is no limit to growth on a finite planet is precisely, mathematically equivalent to thinking that you may have a stabilized, steady state economy on a perpetually shrinking planet. Both claims are precisely, equally ludicrous!

http://www.steadystate.org/CASSEFAQs.html#anchor_83

[jwirr]

7. For me this idea is as old as the 70s when my teachers talked about

finite resources. To bad no one was listening.

[tama]

9. Yup

And the reason why the so called "left" is silent and non-interesting while capitalism is dying, is that also the "left" (especially "populist" and "liberal" left) is still very much part of the infinite growth -paradigm. And same goes for the politically bought and tamed "greens".

True radicals don't even appear on the political map as it is usually fantasized - hint to where to find the radicals (meaning going to the root (lat. radix) of the matter not only in theory but also in practice) is "anarchoprimitivism", permaculture, ecovillages and other intentional communities, etc. Roots are below the soil, out of sight, except for the radical gardeners... ;-)

[Enthusiast]

11. I was listening.

But money still rules government action and inaction.

[QC]

12. The American left doesn't do class anymore.

We have a cultural left now, which is pretty damn worthless in the present circumstances.

[T_i_B]

13. Yep

It's all "lifestyle" issues from the left these days, which is pretty much irrelevant to many, many people.

And yet we have so many bad things happening in the economy that are really hurting the least well off. Why don't you hear more from the left about the possibility of introducing a windfall tax and using the proceed to alleviate fuel poverty for instance?

Tony Blair and Gordon Brown did that over here in 1997 when they were popular. Maybe they should try it again. You never know, it might make them popular again?