(1) We should always have in mind that capitalism is perpetually in crisis for about 80 percent of the population who every day receive way less for their labors and have way less influence over their lives than they ought to – or, even worse, who daily eke out only threadbare existences with virtually zero control over their own lives. Tens of millions in poverty, millions homeless, an almost uncountable number pummeled by educational and health deficits, raging wars, and endless other grotesque deprivations on behalf of the top fifth, and even more so the top fiftieth of the society, up to and including destroying the planet we live on, would be an economic crisis in all eyes were we not living in a society that measures success and failure solely by examining effects on elites.
(2) We should understand as well, however, that sometimes capitalism can enter a different kind of crisis, the kind where in addition to wrecking holy havoc on the poor and weak, the system starts to go bad for elites as well as to get even worse for others. Because they afflict rather than only enrich powerful people, these unusual situations are deemed crises. But, we also ought to note that elites calling only these unstable situations crises due to their caring only about effects on themselves, doesn’t obviate the reality that these situations also threaten to make things horrendously worse for everyone else, as well.
(3) The first permanent type crisis is endemic to our system. It exists every day of capitalism’s life, only ameliorated more or less depending on the relative power of workers as opposed to owners. The second type crisis, however, arguably shouldn’t exist at all. It arises, in the modern world, when a faction of the elite manage to redirect economic policies so excessively toward themselves, and so obliviously to broader implications, that society’s economic gears begin to freeze and the possibility for complete breakdown arises.
(4) This relatively rare type two crisis is what Right Wing market fundamentalism has wrecked on us, accumulating from the time of Reagan to now. First, market fundamentalism removed means of regulation designed to prevent these type crises from unfolding. Second, market fundamentalism induced a climate of belief and habit that oriented behavior in directions provoking type 2 crises, in the current case, the proximate problem had to do with profit seeking regarding mortgages, among other features. But the real culprit was the market fundamentalism driving profit seeking policies and wiping out structures and inclinations to oversee outcomes. So we get what we have – serious dislocation, great hurt, and – the novel part – a growing danger of much worse to come, including outright depression.
(5) In today’s world skewed as it is by corporate hegemony, reactions to type two crises always overwhelmingly seek only to get us back to stability. This generally entails some degree of government intervention, even nationalization though with a sell back into private control later. You will hear mainstreamers say greed got us where we are, but you won’t hear them say capitalism got us here. You will here them say we need to curb greed – excessive greed, that is – somewhat. But you won’t hear them say we need to replace capitalism.
(6) For some elites worrying about debilitating prospects, correcting the situation and avoiding worse to come means seeking only to get us back into the condition of markets uber alles they were recently gorging on. This is a bit like an infant that continually seeks to grab something that will burn, who finally gets burnt, badly, and then quickly sets up the situation to recur, though first rubbing a bit of butter on the wounds, but is even more dangerous and more likely to bring on worse to come. For other elites, correcting the situation and avoiding worse to come will mean seeking to get us back into a condition of elite gain, of course, elites won’t abide anything less than their own gain, but with safeguards re-instituted and a new regulatory state interventionist ethos aimed to prevent further burning of their thumbs. This is more like, say, the Mafia paying attention to the long term risks of their getting too greedy, instead of being fanatically driven only by the short term riches to be had, but it turns the more corrective route is better not only for elites, but also the rest of us as well.
(7) The initial Paulson proposal sought the first type result – reinvigorate markets, don’t bother with much regulation, get back to the trough, and fill up on profits. The Congressional bargain, derailed by Republicans, moved at least somewhat toward the second type proposal, with a bit of punishment and a trend toward some (but not enough) continuing government regulation. But Republican resistance to the Congressional approach, and with minor exceptions. Democratic support for it, had little to nothing to do with sincere concern for the plight of working people. Rather, their conflict is about how best can elites aggrandize themselves. Is it with markets running rampant, again, ala the make-believe populist grass roots Republicans? Or is it with at least a nod toward serious regulation and oversight, and an end to market fundamentalism, ala the almost back-to-Keynesian Democrats.
(8) The House deal was much better than the original Paulson proposal, but far from an FDR like New Deal, much less anything that would head toward having a new and far better economy, though one can imagine, and work for, such enrichments.
(9) We can imagine there existing a serious and powerful left in the U.S. If this did exist it would make its own proposals. Assuming the population wasn’t yet ready to claim absolute and comprehensive control over the economy and self manage it, such proposals would also emphasize getting stability back, but would undertake real nationalizations, impose far more regulation, protect homeowners with recalibration of mortgages, and instead of only elevating old style system preserving government intervention as against market fundamentalism, try to define what progressive interventionism should be about – including economic redistribution, power redistribution, job redefinition, green and social investment, etc. We can conceive valid and worthy specifics that a left might fight for and win in these circumstances, if there were only a serious left to do it – but given the absence of that left, the real issue isn’t so much what it might wisely do if it existed, but why it doesn’t exist and what can be done to bring it into being.
(10) Sadly, though this time will hopefully be an exception to the rule, type two capitalist crises don’t naturally, of their own dynamics, produce such a left. Rather, they tend to produce quite reactionary – looking backward – inclinations, even among a large proportion of progressives. We can only hope that at least leftists commenting on the media ordained crisis of instability and danger will constantly point out the other permanent crisis that is capitalism itself, and the need to not just get back to the status quo ante, but, instead, to work toward attaining a new economy, in a new society.
(11) For myself, that positive approach would mean advocating steps leading not just away from the threatening abyss, which we certainly do need to avoid, but toward, however tentatively, participatory economy and participatory society. For others it may mean somewhat different goals. But let’s not, as leftists either act as though nothing should be done, dislocating all humanity – or that nothing that at all benefits the rich should be done, foreclosing virtually all real world options – or as though the only issue is getting stability back with regulations administered by an entirely authoritarian and alienated state. We need to avoid disaster, yes, but we need to do it in ways that move toward avoiding a replay of market madness, on the one hand, and that produce more just outcomes, leading ever further toward new social relations, on the other hand.