Another Wall Street bubble, thanks to the bailout posted by Richard Seymour

Labels: banks, bubble, capitalism, federal bail-out, profits, recession, us economy, wall street

Mega bailout posted by Richard Seymour

I missed this. They've got a lot of what it takes to get along. The first column in the chart below represents the figure proposed to bail-out banks and credit institutions in TARP. The second represents the total amount that the US government is now committed to supplying to the same institutions.

Labels: banks, capitalism, credit, federal bail-out, tarp, us ruling class

The end of freedom posted by Richard Seymour

The spectacle of right-wing commentators lamenting the end of the free market and the imposition of tyrannical state socialism is ridiculous and, in its way, pathetic. It reminds one of those apologists for Southern slavery who deride Lincoln as an agent of communism on the basis of what Marx said of the Civil War. Yet, in a way, I sympathise. The feeling of one's ideological universe imploding cannot be pleasant, and must be disorienting. For what is actually happening here? In a way, bail-outs under neoliberalism are nothing new. And even as the British government moved to partially nationalise the banking system, Brown was very clear to state that the individual entities will remain private, while Darling insisted that such entities as were wholly nationalised would repay the amount spent on them in full and would be restored to the private sector. It is pitched as a pragmatic effort to stabilise the system within the terms of neoliberalism, not as a significant parting from it. But those for whom the ideologeme of the 'free market' was a living reality don't believe them and, while their distress might provide momentary amusement, there is an important sense in which they understand very well what is taking place.

A few weeks back I was at a talk by Dan Hind at the very glamorous offices of the IPPR just off the Strand. (Actually, they were rather drab and inconspicuous offices, although I hesitate to extend the same description to its permanent inhabitants - I will have a book to promote myself, you know). It was, as you would expect, about his book on The Threat to Reason, which holds that there are more dangerous forms of irrationality than spiritualism, snake oil salesmen, cults, religion and 'postmodernism'. One of which, as he pointed out, happens to be the claim that 'free markets' are hardwired into 'human nature'. Some version of this claim has implicitly underwritten the programmes of successful political parties in much of Europe and the United States for three decades - this is not to say that majorities actually believe such zaniness, but it is to point to the hegemonic status of these ideas. It is not just the pseudo-pragmatic claim that 'markets work', are the most effective delivery system for goods and services, and are superior in most respects to the state or any other conceivable collective form in which production, distribution and exchange could take place. It is much deeper than that: it is the ideological claim that human beings are naturally inclined to truck, barter and trade, and that freedom consists precisely in allowing this deep urge to be fulfilled. In some right-wing sociology, this is indeed all that human beings ever do, whether in regard to commerce, love or friendship. Unfreedom consists in every form of public life that restricts or regulates such activities, and so there must be a balance between such cessions of authority to non-market institutions (regulators, tax collectors, policemen) as are deemed necessary for markets to work and the need to obsessively contain such authority. Further to that, obstacles to that natural propensity are posed not only by monopolists but especially by trade unions and the kinds of radical anticapitalist political parties that encourage secession from the 'free market'. These are implicitly 'totalitarian' threats, and a good liberal state is one that is capable of responding effectively to them, curbing their power, and - if the threat becomes too extreme - destroying them. This is how Milton Friedman and his students became collaborators with the Pinochet regime. And it is how Friedman himself came to defend child participation in waged labour as a necessary step on the road to freedom.

The longevity of this silly and sinister dogma is not for want of effective criticism. It was skewered long ago by Karl Polanyi, who pointed out that markets in the modern, capitalist sense - so far from being the result of a natural human propensity - were created by violent government intervention. Moreover, he argued that freedom was not best protected in it, but rather that the passing of the market economy "can become the beginning of an era of unprecedented freedom", since "regulation and control can achieve freedom not only for the few, but for all". Freedom for the few entailed the freedom to exploit, to make gains radically incommensurate with one's contribution to society, to hold back innovations and prevent their being used for the wider good (such as HIV drugs). Such freedom can only be sustained in the long run by force and violence, and ultimately fascism. Liberty for the many involved limiting those freedoms claimed by the few as the only freedom worth having. It was true that such freedom as had been claimed for the market was cognate with other freedoms championed by liberalism: freedom of expression, of conscience, of association, and - of course - free labour. However, the capitalist market would leave neither of these freedoms intact were it not humanised, disciplined and regulated, and ultimately suppressed. So Naomi Klein, though brilliant, is not original in asserting that 'free markets' have an elective affinity with coercion, violence and dictatorship. Corey Robin draws on a long tradition of left-wing and progressive thought when he points out that, contrary to the common bromides of neoliberalism and 'antitotalitarianism', states are often the repositories of freedom while civil society and the market is often its enemy. And the unwillingness of so many millions of human beings to pursue their purportedly innate disposition, their curious and sometimes powerful reservations about it, has been a permanent aporia of this kind of liberalism.

But then why should such implausible doctrines not only have survived the Keynesian/state capitalist interregnum but actually come to thrive again? How could it be that a sizeable number of people have appeared to acquiesce in its basic assumptions? This reminds us that ideology is not merely (mis)reportage: if I say that the Queen is a symbol of the glorious traditions of a Christian nation, I am making an ideological claim; but if I say that the Queen is a particularly large fifth moon orbiting Omicron Persei 8, I am not. It is difficult to understand why this is if you consider a claim just in relation to its truth value. In order to understand the ideological representation of markets, one has to understand something about how markets function. One cannot neatly seperate a pro-market discourse from what it is discoursing about. This is what is important in Marx's 'ideology criticism' - far from upholding a banal dichotomy between 'essence' and 'appearance', Marx collapsed the distance between the two. They are not identical, but nor are they autonomous. As he argued in the Grundrisse, against Proudhon and his followers, social equality is precisely not just a false claim made for markets. Rather, individuals are "stipulated for each other", in the context of an exchange of equivalents, as free and equal agents. Market transactions do not express themselves as involuntary expropriation, even where that is in fact what is happening, but as voluntary engagements.

That explains the context in which the ideas of neoliberalism could even be comprehensible; the historic collapse of the postwar social democratic compromise provided the occasion for their aggressive relaunch; and the liberalisation of the stock exchange announced their hegemony. The true believers really do see the broad historical shift that is taking place. The financialisation of the economy and aggressive deregulation that neoliberalism championed is drawing to a close. This doesn't mean that such regulatory models as are introduced are likely to be to the general benefit of the population. We are not, short of a sudden upsurge in American radicalism backed up by organisational regroupment, about to see the New Deal restored. Nor does it mean that the reconstitution of class power that is about to take place will diminish finance capital as such - rather, it is likely to concentrate its power, and integrate it more closely with the state. And in fact, unless there is resistance, it is likely to be a much more authoritarian state. But for neoliberals, state intervention into the economy in itself constitutes a net contraction of the total available freedom. And this is what they think they mean by communism, or socialism, or - as in Naomi Wolf's histrionical audit of the Bush administration's recent actions - a fascist coup. These people have spent a great percentage of their adult lives believing that the alternative to a perpetual liberalisation of the markets was the restoration of serfdom. Capital and its managers were always more pragmatic: their aim was to hegemonise the state, to make it a powerful instrument of their interests, not to diminish it.

Labels: capitalism, federal bail-out, freedom, neoliberalism, socialism, wall street

Interests posted by Richard Seymour

Labels: capitalism, crisis, federal bail-out, financial sector, neoliberalism

Spec-tac-u-lar posted by Richard Seymour

It is impossible to watch the news media for any length of time in this climate. The conventions that work so well when things are merely tough all over jar horribly when things are turning to shit. The pseudo-belligerent tone of inquiry, the determined trivialisation, the handy diversion of any serious thought into prepared memes, all of this is just enraging. Take this, for example. The economist Nouriel Roubini and the former investment banker turned tabloid columnist Oliver Kamm are invited to discuss the financial crisis with presenter Stephen Sackur. Roubini describes the proposed bail-out as "socialism for the rich", and Sackur immediately diverts it into the right-wing meme, "he's saying it's socialism!" as if that's the same thing. He then goes on to refer to Roubini as a Prophet of Doom, and then as Dr Doom. And he taunts him a few times by saying that he would rather allow the economy to collapse and wait for a 'pure' plan than accept the imperfect one that has been proposed, seemingly impervious to Roubini's reply. He then invites Kamm, as a former merchant banker, to say he has been too greedy, as though the activities of hedge funds and so on were a matter of individual choice rather than of the imperatives of capital accumulation (for which Kamm is an ideologue and an apologist). Kamm naturally bats this noisome question away with ease. All of this perplexing, frustrating inanity is offered under the rubric of 'hard talk', a somewhat laboured attempt to capitalise on the Paxman fetish in which viewers enjoy the thrill of watching some politician or commentator get roundly abused and sometimes spoken down to. It is almost as if every time Roubini tries to give a serious answer, someone is yelling Sackur's ear that it's getting too boring, that he must interject some confrontation somehow, make it more exciting. Infotainment. If it's going to be that way, they may as well give Sacha Baron Cohen the contract so that at least we can be pleasantly diverted while the ship sinks. At the same time, Chris Morris could be left to review Sarah Palin's 'debate' performances and produce 'word clouds' representing David Cameron's speeches. And that way, when David Cameron cuts corporation tax and inheritance tax, cracks down on Muslims, slashes public spending on vital services, and does nothing to compel banks to increase the supply of affordable mortgage credit, we will at least know that his favourite word is 'people'.

More insidiously, there is the constant drama of the stocks: they're up, they're down, they're chaotic, they're unstable, the brokers apparently subject to wild mood swings due to 'optimism' or 'pessimism' about the bail-out. One finds oneself ignoring the evidence of one's own senses. If the evidence relates that there isn't really that strict a correlation between the fluctuations of the stock market and the politics of the bail-out (albeit, we all know that the markets will throw a massive hissy fit for a day or two if they don't get their billions), so much the worse for the evidence. The media narrative is unbelievably uniform, from country to country: almost every major outlet has it that the bail-out is essential to avoid sudden death, accusing those who voted against it of being too attentive to voters' concerns (or rather, too 'populist', as it is often put). The financial surges and slumps are thus interpreted as providing empirical support for the Bush administration's blackmail. The market data becomes the stuff of a glorified form of geomancy, or palmistry: "this line right here, that's your marriage line, says you'll be divorced before this crisis is through... that one says if you don't give Paulson everyone he wants, you're going to lose your home... this one warns you against your natural herd-like 'populist' instincts...". We are sternly warned of the horror that awaits us, horror whose dimensions can only be guessed at from the mortified faces of the stockbrokers themselves, if we refuse to capitulate, and tell the bankers to take a hike.

But there's something else. Take a look at this (via Qlipoth):



This is the destruction of the American 'middle class'. Their lives, their homes, their belongings, all consumed in the relentless fury of creative destruction. People flee in a hurry, as if a tornado was rushing toward them, leaving behind computers, televisions, birth certificates, photographs, memories, all of it now material for the furnace of waste capital. This is a normal component of the capitalist 'business cycle'. And if a function of the news media is to bracket public memory in such a way that each crisis is experienced as if it were brand new, the result of an exogenous assault on an otherwise venerable profit system, a function of culture appears to be to naturalise the experience of crisis when it does come. By 'function' I do not mean 'intended effect' - it is just the particular contribution that the media industry makes to the reproduction of the social system. The weltanschauung winds have been blowing for a long time in this direction. For every half-way decent anti-corporate production that the media corporations produce (Michael Clayton, The Wire, etc), there are probably several thousand that encourage one not to be so wedded to one's stuff, from the pantheistic American Beauty, to the pop-Heideggerian Fight Club, to the eco-capitalist Wall-E. These, and lesser shows like them, are often praised as 'anti-consumerist', but it is surely more accurate to describe them as 'anti-materialist'. Please don't fret, by the way, if you happen to like some of these films and think I'm spewing arse-gravy. I like them all, and this isn't an attack on your enthusiasms. After the way my review of Batface: the Dark Shite went down, I feel obliged to point that out. I am just speculating about a deep cultural logic. The aesthetic appreciation of the destruction of our stuff seems to be as essential to cultural production as waste production, planned obsolescence and the cyclical obliteration of use values is embedded in capitalism. Congruently, the idea that people might have a collective interest in, and strategies for, defending their stuff, is not within the culture industry's repertoire of conventions. In fact, for all the justified mockery of the evangelicals and their evident delight in spelling out the ineluctable and grotesque end that awaits most of humanity, it is a cultural commonplace that there is nothing we can do in the face of catastrophe other than aestheticise it. Indeed, just as in Christian eschatology, we prove ourselves equal to the catastrophe and thus worthy of redemption in the cleansed aftermath precisely by exulting in it. Everyone else belongs to the growing nation of whiners, who ought to be repenting their sins of over-indulgence rather than trying to stop the inevitable.

Labels: bush administration, capital, capitalism, culture industry, federal bail-out, financial sector, media, spectacle

An alternative proposal posted by Richard Seymour

Labels: crash, federal bail-out, financial sector, neoliberalism, ruling class, schadenfreude

The Fix Is [Not] In [Yet] posted by Richard Seymour

They got the $700bn bailout, with one or two 'provisions' that, in fact, don't really deviate that much from the Paulson plan, contrary to some of the analysis. A few things to note when looking at the summary: they still get their $700bn, phased and with a bit more oversight than was planned (ie, more than zero) - but remember that the $700bn figure was just pulled out of thin air, a large enough number to allow maximum latitude to the Goldman Sachs wonderboy in helping out Wall Street; they won't cap executive remuneration, but they will tax it a bit more if it's above $500,000, so the inevitable bragging about zero tolerance for executive pay is unwarranted; there will be some taxes on golden parachutes, but the "era of golden parachutes" is far from "over", as Nancy Pelosi has been bragging. Finally, the government supposedly expects to make a small profit on the enterprise once it's returned to the private sector, which is how previous bailouts have worked. This will be the selling point. They will say that they have no intention of draining the public purse, and that every penny will be restored in due course. But this assumes that the bailout will have the effect of restoring these institutions as profit-making enterprises. There is no guarantee whatsoever that any of this money will be seen again. In fact, the markets are plummeting, supposedly because of doubts about the efficacy of the bailout. And it also raises the question of why the public shouldn't just own it, and keep all the profit. After all, private ownership and markets don't seem to have been particularly advantageous in the past.

This is not about economic competence, moral hazard, perverse incentive, or any of the other cynosures of neoliberal policy wonkery. And preserve us from the absurd claim that this is some kind of socialism. It is about class power. If they wanted to resuscitate the economy, here are some possibile uses for that $700bn. Think of households and public sector institutions that are failing largely because the system is failing them: they couldn't put $700bn to better use? How about just nationalising the healthcare system? All of that would certainly stimulate the economy, provide jobs and help people who really are in need, but it would also risk revivifying the exiguous social democratic constraints on the operations of capital. You give people the idea that the tax base should be used in their interests, to give them secure jobs with decent pay, public services, well-funded inner city schools, any of that, they might never be away from the till with their hands out. Greedy taxpayers have to learn that this money is earmarked for conscientious wealth creators and their warriors, not for sloths with their heads stuck in the bargain bucket.

Meanwhile, the Brown administration didn't waste any time this time in nationalising most of Bradford and Bingley, much to the chagrin of the Tories, who are just frantic - frantic, don't you know? - about the costs to lower income taxpayers. The Conservatives want the Bank of England to take over the company and run it down. The trouble is, of course, that the government are not nationalising to protect jobs, and therefore probably will run it down in muchy the same way as they have run down Northern Rock. The Tories know this. It's being done to protect liquidity, to keep the banks lending to one another. This is why even right-wingers like Vince Cable approve of the nationalisation. But the Tories, aside from once more positioning themselves to the left of the government, are being disinguous: this particular nationalisation cost millions rather than billions, and it isn't going to drain the public purse. It is almost as if the three main parties are playing a game of 'chicken', each urging the other to do least to ward off the crisis. What I suspect is actually happening is that the rules of the game are changing far too rapidly for them to assimilate it. The language of economic liberalism will survive the practise for a long while, for what is emerging is an increasingly interventionist state. Even the Tories, while talking about the virtues open markets, are pleding tough regulatory regimes. This is by no means a reversion to a less predatory form of capitalism, although resistance by workers can make it so in the short term, but it does open up the argument somewhat: put briefly, if the state can protect profits and stock exchanges, it can protect jobs and public services.

Labels: democrats, federal bail-out, gop, neoliberalism, new labour, ruling class, tories

Two polls: spot the difference. posted by Richard Seymour

This one asks: "As you may know, the government is potentially investing billions to try and keep financial institutions and markets secure. Do you think this is the right thing or the wrong thing for the government to be doing?" 57% support the bail-out, 30% oppose it.

And this one asks: "Do you favor or oppose the proposal for the federal government to purchase up to $700 billion in assets from finance companies?" 44% oppose it, 25% support it.

Labels: capitalism, federal bail-out, george w bush, neoliberalism