Back in July 2008 in Reset – Dialogues on Civilizations | Essays: Benjamin Barber I presented the then latest from the author of the excellent and prescient Jihad vs McWorld. Now the Arts & Letters Daily has pointed to Barber in the US progressive magazine Nation: A Revolution in Spirit.
As America, recession mired, enters the hope-inspired age of Barack Obama, a silent but fateful struggle for the soul of capitalism is being waged. Can the market system finally be made to serve us? Or will we continue to serve it? George W. Bush argued that the crisis is "not a failure of the free-market system, and the answer is not to try to reinvent that system." But while it is going too far to declare that capitalism is dead, George Soros is right when he says that "there is something fundamentally wrong" with the market theory that stands behind the global economy, a "defect" that is "inherent in the system."
The issue is not the death of capitalism but what kind of capitalism–standing in which relationship to culture, to democracy and to life? President Obama’s Rubinite economic team seems designed to reassure rather than innovate, its members set to fix what they broke. But even if they succeed, will they do more than merely restore capitalism to the status quo ante, resurrecting all the defects that led to the current debacle?
Being economists, even the progressive critics missing from the Obama economic team continue to think inside the economic box. Yes, bankers and politicians agree that there must be more regulatory oversight, a greater government equity stake in bailouts and some considerable warming of the frozen credit pump. A very large stimulus package with a welcome focus on the environment, alternative energy, infrastructure and job creation is in the offing–a good thing indeed.
But it is hard to discern any movement toward a wholesale rethinking of the dominant role of the market in our society. No one is questioning the impulse to rehabilitate the consumer market as the driver of American commerce. Or to keep commerce as the foundation of American public and private life, even at the cost of rendering other cherished American values–like pluralism, the life of the spirit and the pursuit of (nonmaterial) happiness–subordinate to it….
Then here in Oz The Monthly hits the newsagents today with Kevin Rudd’s The Global Financial Crisis.
From time to time in human history there occur events of a truly seismic significance, events that mark a turning point between one epoch and the next, when one orthodoxy is overthrown and another takes its place. The significance of these events is rarely apparent as they unfold: it becomes clear only in retrospect, when observed from the commanding heights of history. By such time it is often too late to act to shape the course of such events and their effects on the day-to-day working lives of men and women and the families they support.
There is a sense that we are now living through just such a time: barely a decade into the new millennium, barely 20 years since the end of the Cold War and barely 30 years since the triumph of neo-liberalism – that particular brand of free-market fundamentalism, extreme capitalism and excessive greed which became the economic orthodoxy of our time.
The agent for this change is what we now call the global financial crisis. In the space of just 18 months, this crisis has become one of the greatest assaults on global economic stability to have occurred in three-quarters of a century. As others have written, it "reflects the greatest regulatory failure in modern history". It is not simply a crisis facing the world’s largest private financial institutions – systemically serious as that is in its own right. It is more than a crisis in credit markets, debt markets, derivatives markets, property markets and equity markets – notwithstanding the importance of each of these.
This is a crisis spreading across a broad front: it is a financial crisis which has become a general economic crisis; which is becoming an employment crisis; and which has in many countries produced a social crisis and in turn a political crisis. Indeed, accounts are already beginning to emerge of the long-term geo-political implications of the implosion on Wall Street – its impact on the future strategic leverage of the West in general and the United States in particular.
The global financial crisis has demonstrated already that it is no respecter of persons, nor of particular industries, nor of national boundaries. It is a crisis which is simultaneously individual, national and global. It is a crisis of both the developed and the developing world. It is a crisis which is at once institutional, intellectual and ideological. It has called into question the prevailing neo-liberal economic orthodoxy of the past 30 years – the orthodoxy that has underpinned the national and global regulatory frameworks that have so spectacularly failed to prevent the economic mayhem which has now been visited upon us…
Some of the critique offered (predictably) by Gerard Henderson is worth noting, despite the predictability.
The essential problem with Rudd’s essay is that it is ahistorical. The fact is that what he terms neo-liberalism has not prevailed in Britain, the US or Australia. Moreover, if it did, then the likes of Tony Blair and Gordon Brown in Britain, Bill Clinton in the US, and Bob Hawke and Paul Keating in Australia did nothing to turn it back. The conservatives in these three nations did not substantially cut regulation or taxation or spending (along with the welfare state that it underpins). Indeed, in Australia, it was Hawke and Keating who started the economic reform process in the early 1980s. Rudd mentions this briefly in his essay but does not seem to appreciate that this reality undermines his thesis….
Whether the thesis is undermined by the somewhat partisan history given by Rudd is itself open to question. He may have sought to minimise the bipartisan nature of the problem, but that does not mean the problem is not pretty much as diagnosed. Paul Keating skated around the issue of bipartisan blame on Lateline last night, though I have to say I do like (in contrast to so much we hear) Keating’s folksy idiom. Keating rightly cautions against seeing the USA as the fixer in this mess. And there doesn’t seem to be much joy in substituting one partisan reading of history for another, which is perhaps all Henderson has done.
Kind of related: I commend Ross Gittins this morning:
… It’s important to understand Mr Rudd is not talking about a $115 billion decline in budget revenues from where they are now, but rather that they will grow by $115 billion less than formerly expected.
The $115 billion is spread over the next four years – that is, it averages less than $30 billion a year – which means it hasn’t happened yet and is just an estimate of what may happen.
The actual figure could be more or less than $115 billion – Treasury’s record on accurately predicting budget figures isn’t too flash – and we have known about $40 billion of it since November.
Given all that, Mr Rudd could be accused of making it sound both bigger and scarier that it is. If so, he’s adding to the gloom and doom.
Why on earth would he do that? Because he’s anxious to ensure the blame for the slide from budget surplus to deficit goes to the global financial crisis, not to him and his Government.
Who’d be silly enough to blame Labor for a budget deficit at a time like this? The Opposition…
And it’s a big, 20-page issue, with stories on climate justice, tax justice, public housing and the dangers of tasers.
There’s much more — there’s the ABC childcare debacle, Yabun 2009, a feature on reskilling older workers, a feature on Tanya Plibersek MP, and reviews of The Wrestler starring Mickey Rourke, The Lieutenant by Kate Grenville, and the new record by Howling Bells. Soul-folk singer, Itu, talks about recent inspirations, and you’ll also find details about St Jerome’s Laneway Festival on February 8 and Family Day at the Block on February 21.
I’ve been commissioned to cover Mardi Gras Fair Day on 15 February – I and the Casio, that is. Should be fun.