[OPE] Who or what is to blame?

From: Jurriaan Bendien (adsl675281@tiscali.nl)
Date: Wed Apr 09 2008 - 21:21:19 EDT

A New York Times/CBS poll found that "the overwhelming majority of Americans do not want the government to help banks in trouble from the sub-prime crisis, even if it could prevent a deeper recession. The poll also found that Americans blame government officials for the crisis more than they blame the banks or greedy home buyers who got in over their heads. Forty per cent said regulators were mostly to blame, while 28 per cent blamed lenders. Only 14 per cent blamed the borrowers." (NZ Herald, 5 april 2008).

That shows you how terribly confused people really are about the credit crisis, and how the media make the confusion worse with junk statistics (as if lenders are themselves not also big borrowers, and borrowers do not lend, or that regulators can prevent speculation crises from occurring).  Kevin McConway, a senior statistics lecturer at the Open University, says statistical abuse damages his profession. "Statistics in the UK are actually pretty reliable but more and more often you see surveys that mean nothing, data that looks important but isn't, or statistics that are just made up. It destroys public trust in all statistics." http://www.independent.co.uk/news/science/numbers-up-the-truth-about-statistics-806301.html

Meanwhile Dr Stiglitz, the great liberal apologist of the rentier class, wrings his hands about the "the "unconscionable" system of generous bonuses paid to investment bankers for exacerbating the global credit crisis. "The system of compensation almost surely contributed in an important way to the crisis," said Professor Stiglitz, a former chairman of the President's Council of Economic Advisers, under Bill Clinton. "The system was designed to encourage risk taking - but it encouraged excessive risk taking. In effect, it paid them to gamble. When things turned out well, they walked away with huge bonuses. When things turn out badly - as now - they do not share in the losses."" http://www.independent.co.uk/news/business/news/economist-stiglitz-blames-crunch--on-flawed-city-bonuses-system-799869.html

In other words, if wealthy people insure their wealth against every possible eventuality, avoid/evade tax at every opportunity, and ensure guaranteed shortterm profit taking, they are entrepreneurs "taking a risk" (sic.). Point is that the actual financial risks investment bankers run, are not really bigger or smaller whether they are currently making a profit or running a loss. At most you can say that if they incurred big losses they might be forced to change jobs. All we are really left with here is the vulgar idea that if fund managers make a loss, they should be punished, and that "excessive" risks were taken. But how do you define "excessive" risks anyway? The only real proof there is that the risks were excessive, is if they result in big losses. All the time that the same investment activities did not result in losses but made big money, the risks taken were considered "sustainable". In point of fact, a large share of the bad loans did not even originate with banks, with with non-bank organizations. 

Currently I cannot find even one author in the bourgeois or leftist media who is prepared to attack the problem of how rampant speculation (shifting wealth from A to B without adding to it) impacts on real output growth of a type that benefits the population. Almost all authors see the speculation as a "bubble" rather than a structure feature of modern economies and of globalisation.  All you get is banale arguments about whether the world would be better off, if rich countries experienced more growth and redistributed it to developing countries, or whether the world would be better off if developing countries themselves experienced higher economic growth, even if this increased socio-economic inequality. The very idea that economic growth has anything to do with wellbeing or happiness is cast into doubt, while there is no critique at all of what this "growth" actually happens to consist of.

But if I am correct that speculation is a structural feature of modern rentier capitalism, rather than simply a bubble, then this entails that the credit problems will rumble on a lot longer than you might expect in a "normal" recession - precisely because the capital tied up in financial assets and properties is nowadays a large multiple of the capital tied up in productive assets. It is not simply a question of "bad leveraging" but of the uncontrollable expansion of credit money, which feeds on itself. That is to say, the longterm stagnation of the real economy persists precisely because of rampant speculation which deregulation made possible, and which will increase, rather than diminish, under conditions of greater market volatility. The only way you would curb that, is by simply prohibiting all sorts of speculation, but this is unlikely to happen, given the existing balance of power among capitalists, and the weakness of workers' political organisations. Neoliberal freedom turns out to be precisely freedom for the speculator.

The otherwise erudite British conservative David Selbourne then bemoans the cultural decadence that "modern free societies, the freest history has known, are gradually disintegrating from abuse of their freedoms. The harms being done to them by exploitation of their liberties are real; the harms being caused to them by the erosion of those liberties are largely imaginary. It is here too that most of the left, whose socialist ideals have largely been displaced by an open-ended libertarianism, should take care. For the vacuous notion of liberty they now espouse is really a claim to the right to do as one pleases. This is the same idea about liberty as the "free marketeer" who brooks no interference with "choice", even if it wrecks society and the planet." http://www.guardian.co.uk/commentisfree/2008/apr/08/humanrights.constitution

The problem with this argument is that the alleged "freedoms" don't really exist much except for the well-off - if you are strapped for cash, you cannot simply do as you please, at best you can mimick the dream of doing that, by seeking pleasures that cost little - and that is exactly why the Left should embrace real libertarianism, rather than revert to neo-Stalinism. Every gain in the freedom of speculative capital in reality translates into more unfreedom and regulation of the working classes and the poor, since it is premised on securing property against those who haven't got it. A social system has been created, where people are expected to take responsibility for things that they cannot effectively take responsibility for, and in which the biggest game in town is shifting the costs of your own consumption to someone else. That is the problem.

Selbourne's own formulation is self-contradictory: on the one hand, modern societies are supposedly "the freest that history has known" while on the other hand, the liberties are "vacuous" and "exploited". Seems to me you cannot have it both ways - either the liberties are real, or they are vacuous and just a liberty to exploit. If both apply at the same time, you need to specify what freedoms you are talking about then. The other day, the government of New Zealand - where the world's most radical neo-liberal experiment occurred - signed a free trade agreement with China, but the NZ prime minister was quick to point out that this did not imply that more Chinese immigration would be permitted, and that human rights in China are a "separate issue". That's quite a good illustration of who really gets the freedom, and who doesn't. 

Astonishingly the New York Times/CBS poll mentioned above found that at present only 15% of the American population rate the war in Iraq as the top problem their country faces. So if millions of Iraqis are killed, hungry, diseased or maimed for life, driven to destitution or exiled, as result of a deliberate, longterm holocaust policy of the US government, only one in seven or so of Americans consider this more serious than their own economic problems. Although this might prove that material self-interest is the prime motive force in human behaviour, it surely signifies a very lugubre morality if ever there was one, and even more bizarrely, American imperialists then also even have the nerve to whip up ethnic hatred in Tibet to put pressure on the Chinese, even although that will benefit nobody. You cannot really blame the Chinese for regarding the Western governments as very hypocritical, in that case. The same people who sermonize about freedom here, are complicit in mass murder and devastation there.

Where will the neoliberal era ultimately end? Most probably, in more criminality, religious mania and wars, and therefore, in "gated global communities" walled off from danger zones. The main reason for that is very simple: if large masses of people can no longer enduringly prosper through honest work doing something productive, then this erodes the very basis of a shared civil morality - because it is no longer clear and agreed why somebody should be entitled to goods and services as such, and others not, which means that increasingly might makes right, and the strong defeat the weak, regardless of any moral principle. Everyone becomes a hustler and a hucksterer in a territory which brands some as "insiders"and others as "outsiders", but the "deals" done escape from the rule of law, about the very interpretation of which there is no longer any agreement by all. 

Here in Holland, the puberal, half-baked MP Geert Wilders was able to raise a storm of moral angst and indignation with just one grotty little video about the alleged evils of Islam, but more than anything else, the controversy about it indicates just how big the moral confusion has already become. At the root of it all, is a social set-up in which people can increasingly enrich themselves with what they haven't themselves produced, while the real producers themselves are steadily impoverished, relatively and absolutely. 

That may be a rather somber conclusion, but to balance that out, in modern society much more effect can be achieved faster with a lot less product, as indeed Wilders' infantile little video itself proves. There are a lot more constructive alternatives possible than there ever were before, if we do not pander to cultural pessimism or think that we can free other people who have to free themselves. Optimism costs nothing, and benefits your health; it enables us to see the world in a new light, instead of through the prism of a tradition we do not owe or own. 


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