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Where We Stand: Monthly Review and the Credit Crisis

Sunday afternoon, October 5th, 2008, a moment at the height of a global credit crisis, the like of which has not been seen by anyone under the age of eighty.  The time will come when calm has returned, and when we at Monthly Review will point to a record over the last several years of an attempt at persuasion (not with much success) and prophecy (with much greater success) as credible and accurate as any offered anywhere.  But at this moment suddenly we are receiving requests from our friends and subscribers that we address the conjuncture — the combination of momentary circumstances and events producing the day-to-day shocks of the current crisis.

At even a small distance, the picture has cleared up a lot.  Already we can say that scarcely anyone believes anymore in the final triumph of liberal capitalism and the “end of history,” or that financial markets are self-regulating, or that “[a]n open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention” (Henry Paulson, in March, 2007), or more generally that finance-dominated capitalism offers the best route to global development and prosperity.

And for those who continue to believe that the masters of finance created real wealth by manufacturing exotic “financial products” — well, there’s nothing that can be said that would make a difference to them if the evidence of events does not.  But such are not our audience, at least not our intended audience.  It’s not of course the case that our hoped-for audience and our actual audience fully correspond; in fact we know they do not.  Yet in responding to requests that we address and explain the economic conjuncture (and even tell the rulers of the United States how they should save capitalism, as if we knew or they would pay attention to us), we at Monthly Review might usefully pause first to consider our intended audience.

In the “About” section on our webpage we say: Monthly Review has kept a steady viewpoint.  That point of view is the heartfelt attempt to frame the issues of the day with one set of interests foremost in mind: those of the great majority of humankind, the propertyless.  But of course that audience cannot afford the subscriptions that make it possible for Monthly Review to exist, nor likely the web access that would make it possible to read us online.  For those on whose financial support we rely, no doubt their endangered pension funds are now uppermost in their minds, and reasonably so.  Yet the contradiction is that they are not those whom, in the last analysis, we seek to address.

So, what meaning does this credit crisis have for the great majority of humankind, the propertyless?  Obviously we are not referring here only to those both naked and starving, but to those without financial assets (beyond such cash or bank balances as might fund consumption for a few months or less) or with negative equity, whose debts are more or less equal to — or greater than — the worth of their car or bicycle, their house or shack or plot of land.  We will not do the statistics over the whole world, but even in the United States the government admits that more than one-third of Black and Hispanic households fall into this category and those numbers are likely to be underestimated.  Looking at the United States, the situation even for those with small property is not good.  For families below the top 20 percent in income in the United States, household income has stagnated (with real wages still at 1970s levels), net savings are non-existent, and debt service payments now average close to 20 percent of annual income.  Mortgage foreclosures and bankruptcies are rising rapidly.  Pension funds are being robbed at every turn.  Health benefits are non-existent or eroding.  Unions, with a few exceptions, are fading away.  Public schools are in decay and under assault.  The country is in an interminable war that serves only the current power structure.  The clear rejection of the Paulson bankers’ bailout plan by a majority of U.S. workers was therefore not simply an angry, irrational confused response (given the U.S. media what but confusion could be expected?), but reflected at least in part the recognition that the real social buyout should be aimed at those at the bottom, where the need is the greatest, and not at the corporate rich at the top.  Meanwhile, for Africa, India, China, Latin America, Indonesia, Bangladesh there can be no serious question but that the great majority do not have financial resources sufficient to keep them alive for more than a few months; by and large for them not only the bailout but the credit crisis itself is of questionable relevance.

For those in such precarious straits (albeit of varying proportions) — and we must insist on repeating that they are the global majority — the credit crisis may indeed have some impact in certain concrete circumstances.  Cutbacks in already inadequate social spending will impact many of the propertyless in the United States, and they are our neighbors and friends and we must do what we can to help.  It is true that those employed at meager wages in China in an industry producing goods for export to the United States might well face yet worse circumstances.  Yet, overall, the conclusion is clear that this credit crisis will not make much if any immediate difference for the global majority.  Their difficult survival depends on social and economic relations far removed from the broken circuits of global finance.

Taking a slightly longer perspective, the outlook — which would suggest that a global depression is likely to follow on the credit crisis — might even be said to be favorable.  In some of the more prosperous countries, a return to Keynesian rational capitalism would mean an increase in social spending and benefit the propertyless, harshly impacted by the imposition of now discredited neoliberal “reforms.”  But the primary lesson is one that Latin America above all is now well positioned to learn and to benefit from.  In the midst of the crisis the country least affected is and shall be Cuba; already it is beyond any doubt that the best place anywhere in the world to rely on social provision rather than the scraps of individual savings, the best place to be propertyless, is Cuba.

And in China, India, and South Africa the path ahead is the subject of deep and stirring debate and struggle, with the outcome not by any means certain.  The end of neoliberal intellectual hegemony, the discrediting of “reform” in the interest of the bankers and the rich, are the surest signs of hope for the great majority.  At Monthly Review we therefore should take as a primary task the job of driving the stake into the heart of what should be mortally wounded neoliberalism.  Let us collect and repeat the paeans sung by the Trevor Manuels and Chidambarams and Paulsons to “open, competitive, and liberalized financial markets.”  Let us ruthlessly ridicule all the years of the dishonest jargon of “economic freedom” and “reform” spewed upon the public by economists and journalists serving as the bankers’ whores.  Let us help clear the ground for a global return to the socialist path, the only hope for the majority of humankind — the propertyless.

John Mage is an officer of the Monthly Review Foundation.

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