The Nature of the Beast: Its Vulnerabilities and Its Replacement
"We need to stop the bleeding" - anonymous insider at the World Economic Forum 2009
One can safely assume that the bleeding referred to here is not that of the Palestinians. Nor is it the real blood shed by 1,000,000 Iraqis or countless millions of others throughout the world suffering the brutality of military aggression. It refers, instead, to the hemorrhage of value by a system facing bankruptcy – financial and moral. While it is, therefore, a metaphor and a rather obscene one in light of the literal carnage going on (in Gaza as this is being written), it nonetheless aptly describes the primary symptom of a diseased patient. What it fails to do is call for a diagnosis. And that is our task.
"It was all one big lie. It couldn't go on." – Bernie Madoff upon his arrest
This, of course, applies not only to the particular Ponzi scheme in question but to finance capitalism in general. This is so obvious it has been acknowleged by many liberal economists, including Paul Krugman, who asked, "How different is what Wall Street in general did from the Madoff affair?" To get to the roots of capitalism's current malaise, however, we cannot stop at Wall Street. In fact, finance, trade and production are interdependent and are all threatened with collapse – not because people don’t need goods and services, but for lack of profitability. We have to ask two questions (as would any physician seeking to identify the nature of a malady): when did it begin? and when might it end? No one doubts that this is a crisis comparable to the Great Depression but that says very little except, perhaps, that those making the comparison are ignorant or hiding something. There has been more than one Great Depression and these extend back at least several hundred years. Indeed, this is not the first time that the question of capitalism's demise has been seriously raised, not to mention hoped for and actively sought. Diagnosis is made more difficult because the tools most often employed are appendages of the disease itself. Thus in 1843 Engels could write: "Political economy came into being as a natural result of the expansion of trade, and with its appearance elementary, unscientific huckstering was replaced by a developed system of licensed fraud, an entire science of enrichment."1 In other words, this is not about the "ECONOMY" at all. This is a system of domination, and the malady is not monetary or financial or any other such narrow construction that wishes us to look at the fracture of an elbow when we're seeking the cause of blindness.
"I discovered a flaw in the model that I perceived is the critical functioning structure that defines how the world works." -– Alan Greenspan
What followed the first wave of financial collapse, as everyone knows, was the headlong rush into the arms of the State. Gasps of shocked incredulity emitted from pundits and politicians as if this were really anathema to the accumulation of wealth. It was decried as socialism or as the abandonment of "free-market principles.” But such nonsense was just one lie used to cover up another, since every serious player in the game knows that the State has always been "the regulator and the guarantor" of capitalism, to use Braudel's phrase.2 That Ayn Rand, Friedrich Hayek, Milton Friedman and Alan Greenspan were capable of one of the great intellectual frauds in history is merely a tribute to the venality and duplicitousness of capitalists. Needing an intellectual prop to defend themselves against Das Kapital, they grasped for neoliberalism, albeit after trying Keynes for a few decades.
The striking resemblance of this concoction to the "Piltdown Man" is made greater when one considers it took 40 years for that hoax to be exposed. In any event there was never any doubt on the part of the biggest capitalists that the State was theirs – by right and by possession. So, when the World Economic Forum hosts a seminar titled "The Return of State Power" they are merely announcing to their clients (formerly known as the "masters of the universe") that the State will now be needed, once again, to regulate and guarantee, and a new theory will be devised to defend against those which more credibly diagnose the sickness of the system. Neoliberalism is like phrenology – a pseudo-science once taken very seriously and now discarded as patent nonsense.3 Its usefulness as a "golden calf" is over.
The Thing is...
That still leaves us with the task of accurately identifying what "it" really is. Is this a chronic condition of an exhausted system, with terminal consequences? Is it merely a bump on the noggin of an otherwise wonderfully adroit athlete in the great olympics of history? To understand the nature of the beast, its vulnerabilities and its possible replacement, we have to look beyond capitalism to the society and the planet off of which it feeds. There is a flaw in the concept that reduces everything to money, price, profit, wealth, value or for that matter any abstraction at all. For one thing, it is impossible to see capitalism's inherent contradictions, much less possible alternatives, from within its proprietors' self image. A pathogen cannot diagnose itself. More importantly, it is necessary to reject the entire mental construct of economics. This is a church, and its high-priests are well-educated, reasonable people, but they are nonetheless a faith immunized against history, the physical sciences and philosophy, accepting without question formulas designed to justify inequality by proving its mathematical inevitability. They cannot allow any serious examination of the function – in real life – of popular struggle or spontaneous self-organization let alone the role in production and exchange of solidarity, mutual benefit or sustainability. These they reject as archaic, dreamy longings that would have us living in dung huts scrounging nuts and berries instead of enjoying the wonders that "modern," "rational" methods have provided. Excuse me?!
Inquiring minds want to know: what will stop the lying? What will bring peace and justice to the world? How can inequality be reduced and a healthy relationship with our environment be created? For the answers to these questions we have to use tools found in history, philosophy and – yes – science, precisely to avoid twisting reality to fit a preconceived formula. By clearly identifying what has happened we may be able to determine what will happen. Better yet, we may be able to work toward what should happen. Thus, in order to understand the present situation, it is useful to look at one important moment in recent history that displays all the relevant social forces. In this manner, we can see the particularity of Obama's election without falling prey to the flipside of neoliberalism which views Obama as the second coming of Roosevelt or Keynes, or the State as people's savior.
Obama Wins the Booby Prize: Captain of the Titanic
Before proceeding, it is important to note that the great significance attached to Obama's election already puts the lie to the claims of economists and all “defenders of the faith.” Clearly, politics of some sort is back in command and the "return of state power" mentioned above means that decisions will be taken by those more worthy of the public trust than the now disgraced “Business Leaders.” While this is clear proof that a scam has been run, it does not necessarily offer an alternative. Indeed it is glaringly obvious that the capitalists are handing the reins to the State and celebrating Obama precisely to avoid the consequences of their failure. The problem is that it is not only "the ownership society" that is in crisis but the State as well. When Obama says “we are ready to lead once more,”4 it can only mean three things: 1.once America led, 2. it is not leading now, and 3. there are those who will follow. But there is nothing Obama or anyone else can do to restore the US to its role as dominant Superpower. Not only did 30 years of neoliberalism take its toll practically and ideologically on the state as an institution, but the only Mission Bush Accomplished was to expose the fatal weakness of the Empire. Not only was the War on Terror unreal, it ended in defeat! How can anyone lose a game they rigged in the first place? The world sees the US as big, dangerous and incompetent – to be resisted, outmaneuvered and taken advantage of but not followed.
There is a broad consensus that the early 1970s marked the end of 30 golden years of capitalist expansion that followed WWII. What is often ignored is that the "economic downturn" then was accompanied by an unprecedented threat to the system's existence – and on a global scale. In spite of repeated calls to “move on,” to “get over it,” to put the sixties to rest, etc., the effects of that tumultuous period continue to be felt.
In the joint communiqué issued by the Chinese and US governments published upon Nixon's visit with Mao in 1972 the Chinese said: "Countries want independence, nations want liberation and the people want revolution – this has become the irresistible trend of history." This statement encompasses three distinct but interdependent factors: 1. the last great revolutionary storms that offered the promise of actually changing the world, which came to a crescendo in 1968; 2. the end of the great boom that followed WWII somewhere between 1970-73, signaled by Nixon's floating of the dollar and the abandonment of Bretton Woods; 3. looming US defeat in the war in Vietnam. The combination of worldwide revolution, a shuddering halt to capitalist expansion, and defeat of the world's greatest power by a small country definitely marks a pivotal moment in history.5 Certainly the ruling elites on both sides of the Iron Curtain thought so at the time (hence Nixon's China visit).
Subsequent events up to and including Obama's election are all a product of that turning point. These can be further subdivided into the Reagan/Thatcher counterrevolution of the ‘80s which effectively brought the sixties to an end, the collapse of communism and the end of the Cold War in the ‘90s, and, of course, the most recent episode – Bush – which has proven so disastrous for everyone. A word of caution, however: to examine the sixties is not a nostalgic longing for them. While there is much to be inspired by, there is also much to reject. Moreover, the sixties were many things in many places – Vietnam, the Cultural Revolution in China, Prague Spring, the May events in Paris and so forth. It is not possible, therefore, to simply compress everything into one term. My purpose is to look at certain key features of the sixties as they unfolded in the US. These can be quickly outlined by four common words that were in everyday speech but held profound content for all who used them. These are: the System, the Movement, Consciousness, and Liberation.
By the System people were not only referring to capitalism or to economics at all. The System represented the constellation of forces that dominated and controlled all aspects of social life from sexual mores to the oppression of black people, from the exploitation of labor to the suppression of student protest. Above all, it was not confined to the United States but included the Soviet Union as well. The System was everything that kept people down and it had to be overthrown or radically transformed; it could not be reformed and preserved. Furthermore, it was doomed.
The Movement was a direct outgrowth of the Civil Rights and anti-war movements that gave it birth but it was also the grandchild of the Labor Movement and the Peace Movement of an earlier generation. It was an all-encompassing term that invited people in without requiring membership cards or dues. Thus, by 1968 a supporter of the Farmworkers and an organizer of draft resistance or a GI Coffehouse would consider themselves part of the Movement. For the millions swept up in this great undertaking, the System was the enemy, and the war in Vietnam, the oppression of Blacks and Chicanos and the alienation of youth were just the most grievous signs of its depraved nature. By 1970, Women's Liberation, Environmentalism and the struggle for Gay Rights grew out of and in turn radically transformed the Movement itself.
Consciousness expansion came into wide use in the years between 1965 and 1970 referring to everything from LSD to Nietzsche to Buddha to Mao. Women's Liberation inspired the even more widespread use of the term Consciousness raising. In any case, this was no ivory tower, academic debate. This was a serious pursuit on behalf of large numbers of ordinary people to come to grips with philosophical, political and spiritual questions that inevitably erupt when people aspire to more than merely improving their lot within an oppressive social framework. And people did, generally, aspire to more. The idea of a revolution of some kind ushering in a truly different world had fired the imaginations of many who thought at the time that their victory was both assured and imminent. That they (we) were wrong about this does not alter the point.
Liberation was originally inspired by the independence movements that swept Africa and Asia in the early sixties. The right of nations to self-determination was part of the UN Charter signed in 1948 and was given significance by the collapse of Europe's colonial empires in the face of popular revolt following WWII. But the greatest spur to widespread use of the word came from the National Liberation Front in Vietnam. As resistance to the war merged with the struggle of black people for civil rights, both movements moved from focusing on specific targets to a wholesale assault on the System in the interest of people's liberation everywhere. Thus the Civil Rights Movement gave way to the struggle for Black Liberation.
It is worthy of note that the cumulative effect was a drastic reduction of the influence of the mainstream media and Establishment propaganda in general. A salient feature of the Movement was the effectiveness of Liberation News Service, Newsreel, and the hundreds of underground newspapers that appeared throughout the US. On the one hand, an entire generation learned to distrust anything reported by the New York Times or Network Television. Most people assumed that what was offered there was an attempt to tell us what to think about what they wanted us to think about. This should be of particular interest to those exploring the Internet today.
What can these concepts do to inform an understanding of current events? Have they any relevance to seizing the opportunities presented by the crisis and by Obama's election?
First off, the System by any other name is still the system. Consciousness expansion or raising should be put squarely back on the agenda with this crucial clarification: it is Philosophy proper, so maligned in the 20th Century, that must be our tool for exploring consciousness. The project launched 3000 years ago by the Greeks must be taken up once more. From Pythagoras to Hegel, from Plato to Badiou: Study it. As for a movement, it is still lacking in the broad, anti-systemic sense that existed in the sixties. So, too, is a clear image of what liberation consists of. There are, however, some strong indications already taking practical form, of what must be part of anything leading towards a movement for liberation. These include:
-– Majorities within countries and in all countries
-– Equality as means and end
-– The public, the polity, the people, humanity organized as such
-– Affirmation: popular initiative, popular decision, popular defense
There are others, perhaps better stated, but the basic thrust is that we must appeal to majorities to fight for the common good in ways that practice egalitarianism and popular decision-making while effectively defending themselves against governments and capitalists alike. There are many bases of commonality between majorities already – for peace, universal health care and protection of the environment, to name a few – that are blatantly and arrogantly opposed by governments and business the world over. Uniting across the divisions that have been erected and including everyone in an invitation to participate is necessary and possible now. If Obama's election motivates people to take such steps themselves, it could produce unintended consequences for ruling elites that see in his election their own salvation.
In one sense – and one alone – the election of an African-American to the presidency of the United States is most significant: it can be seen as a victory for the Civil Rights Movement in particular and a blow against racism in general. No doubt this signals the end of a very long period wherein racism was the preferred technique of conquest and power. That this has now been made untenable – thanks to dedicated struggle and a rapidly changing world demographic – can only be welcome. Divide and rule, however, is a constant of power. It may drop racism but it will surely find another means to pit people against each other. What matters, then, is using this opening to unite more broadly and to pursue the goals implicit in the struggles against racism, sexism or homophobia, which are universal and benefit everyone. Ultimately this rests on the principle of equality, not “equal opportunity.” Equal opportunity is available in any Casino. All may play, one may win, the house never loses.
In any event it cannot be denied that events conspire to rebut Obama's central promises: capitalism cannot be saved, the US cannot be restored to world dominance, and though the State may provide some alleviation of the most egregious suffering it cannot do more than reestablish the basis for future episodes of similar or even worse depredation. In fact, there are serious predictions that capitalism is facing terminal decline (see Wallerstein)6 and the question is what will replace it. A better world is possible but it is not preordained. Only a populace organized and educated to emancipate itself can bring this new world into being.
Toward this end certain lessons must be learned. The Sixties gave birth to what has grown into a thoroughgoing critique of all previous attempts to analyze the System and to replace it. Among the useful tools arising from that period are World Systems Theory (Wallerstein), Chaos Theory (Prigogene, Stengers) and Philosophy (Badiou).7 All embrace the profound insights of Marx without becoming dogmatic or adopting uncritically the Marxism of parties. Indeed, all draw inspiration from the great traditions of anarchism, communism, feminism and environmentalism without ignoring the shortcomings of each. Furthermore, all call for society's renewal. Nothing less can grasp the great scope of the problem or its great potential. Finally, all demand affirmation as well as a negation. It is not enough to call for the destruction of the System; it is incumbent on everyone to articulate what will replace it.
1. Frederick Engels, Outline of a Critique of Political Economy
2. Fernand Braudel, Civilization & Capitalism, 15th-18th Century (New York: Harper & Row, 1979). This is Braudel’s magnum opus and should be required reading in every high school class. Braudel’s innovative approach to historical research leads to a compelling argument about what capitalism is.
3. This is not mere hyperbole. Imre Lakatos, Spiro Latsis and Gunnar Myrdal all argued that both Friedman and Hayek were purveyors of “pseudo-science.” In fact, “four Nobel prize laureates protested at Friedman’s award, and most notably the 1974 joint laureate of the Economics award, Gunnar Myrdal, complained that Friedman’s prize (and also Hayek’s) was undeserved because the economics did not qualify as a science…” http://en.wikipedia.org/wiki/Imre_Lakatos
4. Obama’s inaugural address
5. The communiqué is available at www.chinadaily.com.cn/09chinausrelations/2009-01/07/content_7374002.htm It should be noted that the first part of the statement, before the dash, is indisputably accurate as a description of how the world looked then. The second part is debatable since this trend was effectively resisted by the Reagan/Thatcher counterrevolution. In the long term it may prove to be true but the present situation is remarkable, in part, because it follows the “triumph of capitalism” and its relatively unfettered plunder for the last 20 years.
6. Immanuel Wallerstein’s analysis is based on the work of Russian economist Nikolai Kondratiev whose study of long term business cycles revealed 50-60 year phases. These are sometimes called “grand supercycles” based on the work of Ralph Nelson Elliott. They have proven quite accurate when applied to the last 500 years and have led Wallerstein to predict the end of capitalism sometime between 2020 and 2030. http://sites.google.com/site/radicalperspectivesonthecrisis/news/wallersteincapitalismsdemise
7. Space limitations preclude a more detailed discussion of a wider range of thought that one could consider to have been catalyzed by the world revolution of 1968. I offer these three because they cannot be ignored in any serious discussion and they offer fresh approaches to age-old problems. Crucial works include: The Essential Wallerstein (New York: The New Press, 2000), Ilya Prigogine and Isabelle Stengers, Order Out of Chaos: Man’s New Dialogue with Nature (Boulder, CO: New Science Library, 1984), and Alain Badiou, Manifesto For Philosophy (Albany: SUNY Press, 1989).