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Edited on Mon Nov-24-08 09:43 AM by HamdenRice
I should preface this by saying that if you think that the collapse of capitalism was preordained and inevitable, or if you think that the stock market is just a casino, or that peak oil will lead inevitably to the collapse of civilization, you probably should stop reading here. Our basic assumptions about how the world works are probably different. I'm in favor of a mixed system that leans heavily toward the socialist side, but that doesn't mean I buy into some claims about the system that I consider improbable.
The big picture of our global economic system was that, however irrationally it was structured, however unfair it was, however wasteful, however much poverty still exists, indeed, however murderous it has been to many, the last 20 years or so had seen an increase in what some progressive economists like Amartya Sen call (somewhat oddly, even sarcastically) "opulence." In normal conversation, opulence means something like ostentatious wealth, but in econo-talk it simply means well being through acquiring commodities -- the ability of people to feed their children, buy clothing against the elements and find shelter. There was enormous poverty, especially in the politically unstable parts of Africa, and in south Asia, but there had been a strong growth in the "getting by" working classes and an increase in the size of the middle classes, and hence an increase in opulence or well being, in places as different as East Asia, Brazil, India, more parts of Africa than you would guess -- and above all in China.
Financially, we often hear sensational, scary statistics about "debt", but debt to me is simply the flip side of savings. Global savings are the excess of goods, services and human energy and creativity over what has been consumed, expressed in dollars, and debt is simply the investment of some of those savings into the production efforts or consumption of others.
Some of the best reporting on the financial crisis has been by the usually non-technical, non-political, "This American Life" on NPR. In one of their first reports on the crisis, they talked about the $70 trillion pool of global savings, or money, looking for a place to be invested -- $70 trillion that represented the excess of human energy, goods, and services produced over what was consumed, an excess that could have been deployed to find alternative energy, provide clean water in poor countries, buy appropriate-technology agricultural implements where people find it hard to grow enough food, whatever. While a certain amount of that $70 trillion was owned by "fat cats," like hedge fund managers and CEOs, you'd be amazed how much of it represented the excess of rice produced over rice consumed by Chinese farmers we would consider poor, and cheap manufactured goods produced over cheap manufactured goods consumed, by Chinese factory workers -- those farmers and workers being among the thriftiest people on earth -- and those surpluses therefore being held by Chinese banks and the Chinese foreign exchange authority.
Another big chunk of it represents all that gas we buy from the middle east, held by middle east bankers and the big international oil companies. I would like to write an entirely separate post someday about how the oil companies (and their protectors, Bush and Cheney) are probably the most directly responsible entities in the world for this catastrophe by mercilessly gouging the entire American energy consuming public from the time of the alleged pipeline shut downs in the wake of Katrina, until recently, when big oil seemed to become scared shitless of what they've done and lowered the price of gas practically to Clinton era levels -- which gouging was the underlying economic, family budget issue that pushed so many already stretched families into foreclosure.
Putting aside how unfair the distribution of these surpluses is, the existence of these surpluses should have been a sign of what could have had a healthy global economy. Lots of spare capacity to solve our problems.
Instead, much of that $70 trillion was invested in MacMansions -- actually, in the U.S. real estate market in general. Moreover, the bankers managed to do it in a way that has caused a financial collapse -- pretty much for no underlying material reason. We've terrified the holders of that $70 trillion into withdrawing it suddenly, not just from the real estate market, but from virtually every potential field of investment. There have been lots of posts lately in the liberal blogosphere about consumers having their credit card limits lowered or their cards canceled; no matter what the card company tells you, that's the effect of one part of the $70 trillion in savings being terrified into not buying the banks' "credit card receivable asset backed securities."
What's so fucked up about our current situation is that it is not a catastrophe based on shortage.
That's the big picture. "They" blew the management of $70 trillion in excess human global savings.
It is not that there is not enough stuff to go around, such that we have to live in poverty, but there's a very real probability that most of us are going to have to live in poverty anyway for some time (think: Argentina or Russia after their currency crises). In a depression of this kind, it's not that farms and factories disappear, or that our ability to produce stuff somehow ends. It's that the complex, fantastical, imaginary systems for circulating money grind to a halt and for reasons that, deep in their hearts, even economists don't understand, the ceasing of the circulation of that imaginary stuff leads to a grand ceasing of the circulation of the real stuff.
That's the puzzle and horror of modern depressions, compared to, say, 17th century famines. They aren't caused by scarcity; they're caused by fear, the greed and stupidity of business leaders, and the sudden inability of our system of symbols, called money, to coordinate our activities. We're like a global human body trying to walk while having an epileptic seizure. That's why they are fundamentally surreal.
Karl Marx had several concepts to describe this: alienation, objectification and fetishism.
Today, we are likely to think of the word "fetish" in a sexual way -- i.e., a person has a fetish for a body part or sexual activity. But anthropologically, the word fetish refers to a little god -- a piece of stone or wood that some indigenous people somewhere worship as though it were a real being with supernatural powers and procreative powers over these same people. Perhaps hurricane season is coming or the wives are infertile and terror spreads through the "tribe." In many places, people make offerings of food, beeswax, incense, animal blood and other things of value to placate the "little god," in the hope that the fetish object will smile kindly on them.
But of course it's the people who created the fetish, and not vice versa. Those people could, if they freed their minds, smash the fetish, burn it or destroy it -- or perhaps best of all, ignore it. The people have created this little thing and given it power over their lives. They have taken their wonderful human power and agency, and turned it into an object -- through objectification -- that is outside of themselves.
Then they surrender to that objectified power. That process is an example of what Marx (the young Marx, the philosopher Marx) called "alienation." You take your own "God given," wonderful human powers and capacities, and you give it to some thing, "a little god," and then you tell yourself that that thing has power over you -- even though you created it, and you could, if you chose, control it. You alienate yourself from your own talent, power and agency.
It's sad and pathetic but it's something we humans do too often.
Well, when it comes to the financial system and the circulation of money, we're hardly better than some native, squatting in some impoverished village worshiping a fetish. We're exactly the same. An imaginary system of numbers in computers (most money isn't printed anyway) has gone haywire, and we're going to let it impoverish us.
I can't believe they fucked this thing up so badly.
It's not like there's not enough to go around. It's not like the factories have been bombed or the farm fields sewn with salt. It's not like the factory workers, nurses, teachers, drivers, cooks, writers, and plumbers suddenly woke up and forgot how to operate a lathe, comfort the sick, teach children, drive a truck, make pasta, compose an essay or fix a leaky drain pipe, but it's likely that millions of them are going to be idled. Numbers in computers are about to plunge the world into at best a sharp short impoverization and at worse a prolonged global depression.
The $70 trillion in surpluses is still around, although it's been marked down in value quite a bit by our own fear, terror and panic. There's still enough to go around -- real stuff represented by that $70 trillion -- at least until the oil runs out, but even then if we had used the $70 trillion wisely, we could have transitioned to powering our society with something other than fermented dead dinosaurs and swamp slime from hundreds of millions of years ago.
But "they", the bankers, really fucked us up big time.
So now there's really only one thing left to do -- if it can be done. The next president, President Obama, is going to have to ignore our numerical fetish objects residing in the cyberspace that exist in the banks of the world that are telling us we can't work, produce, and live. Franklin Roosevelt did it by just hiring people on the government payroll and putting the country back to work, but even he wasn't bold enough to do it on the scale necessary until World War II broke out.
I don't know what President elect Obama can do come January. The massive jobs program sounds like a good start, but I'm a bit worried that some of the high priests of our numerical fetish are being re-installed in the temple. It looks likely that Citibank is going to collapse, which will send more terror through the cyber channels of the fetish worshipers than we've seen even in this financial catastrophe. (Why is Robert Rubin, who did some good things under Clinton, but then helped wreck Citigroup, being invited back into the temple?) If the collapse comes, if I were president, I would fully nationalize Citibank, ask for an investment of a few trillion from our Chinese and middle eastern "friends" and start lending with the People's Bank of America, and then I'd put our society on a stringent diet to turn us into savers again, which diet would have to eventually end up with an 80% reduction in military spending -- that is, if I were president and there were not a lunatic right wing in this country that has already been calling Obama a closet socialist, secret Muslim terrorist, a Marxist, Manchurian candidate and worse, which is to say, this is, unfortunately, scarcely imaginable. It's as though the lunatic right wing has anticipated everything President Obama will have to do to clean up George Bush's complete and total catastrophe, and pre-defined it as treason.
Until January, we're still stuck, however, with the fetish object approach. We'll continue to offer hundreds of billions of dollars worth of the equivalent of beeswax, food, incense, and blood, at the alter of our own global fetish object, and maybe, if we're lucky, the "little god" will smile on us, and the terror will subside.
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