I recently came across a fairly good survey of radical perspectives on the current economic crisis at the International Socialism (IS) website. Having just read Nouriel Roubini’s latest book on the crisis, I felt compelled to put a few thoughts down regarding the stark contrast in approaches to explaining the events of 2007-2008.
A useful analogy for anyone seeking to conceptualize how the radical critiques of the crisis differ from mainstream–and even most progressive–critiques might be this: Imagine that a large skyscraper is in the process of being erected. Floor by floor, workers are feverishly working to get the building ever taller. The only issue is that the building was built on an inherently unstable foundation. It is not easy to predict when the foundation will adjust, but the fact that it will is irrefutable. Now, a few weeks into this project, one of the floors collapses and does serious damage to the rest of the building.
So how is this event covered?
First, someone starts saying that the materials used to build the supports for the floor that collapsed were sub-standard. Next, someone argues that it was actually a few of the workers who built the floor improperly. Someone else says that there was too much weight on that particular floor. Another says the concrete could have been better. Yet another says that there could have been more oversight. And so on.
Are these allegations true? They very well might be. Can they be true if we accept a radical critique as well? Yes, and I’ll explain why.
A radical critique of the skyscraper disaster would go something like this: No matter what, the building was built on a foundation that was doomed to give way. Trying to erect a skyscraper on that foundation was an impossibility from day 1. So, since it was inevitable that the building would break down at some point because of the poor foundation, it is only of secondary importance that we devote our energies toward discussing specifically where it broke down. Yes, the supports might have been of lousy material. The floor might have been made better. It would have been better to have less weight on the floor. More oversight may have helped prevent that particular floor from breaking down. But in the end, some form of disaster was going to happen. Therefore, the floor breaking was related to the building’s collapse, but was not the cause of it. If I were to fill a crowded room with harmful germs, is it of any importance to discuss the person whose immune system was so relatively weak that s/he happened the first in the room to become sick? The first case of someone becoming ill would be related to the rest of the class becoming ill; it would not be the cause of it.
So, when approaching the crisis from a radical standpoint, it becomes virtually useless to discuss things like greed, finance/shadow banking, and deregulation. Saying that the crisis was the result of "too much greed" is perhaps the most vapid statement that could be said. It would be like saying that, in a war, there were so many civilian deaths because "soldiers got too crazy."
But then there is the more popular discussion of "evil Wall Street" and the problems of "finance capitalism" and/or "the shadow banking system." Roubini’s book offers a longer, more thought-out list of culprits–most of which have to do with deregulation, poor incentives for bond raters, banks becoming too big and too integrated, etc. As described above, it’s not to say that these things are unimportant or there are serious problems associated with them. But, if we are to truly understand the radical critiques, we must see these in the same light as we saw the charge that "the supports for the floor were built improperly." True? Yes, but it is only of secondary importance, as are the unregulated world of finance capitalism, the "shadow banking system," etc. With such pressure and such strain, the crack had to emerge somewhere and at sometime.
What’s more interesting, though, is the debate among the radicals. Much of this debate has to do with Marx’s theory of the tendency of the profit rate to fall, and the degree to which this theory explains the current crisis. Until more recently, I had no idea that there was such fiery debate among radicals in trying to find the "real" cause of the crisis. The IS article provides the reader with a variety of views and attempts to pull them together at the end. It is useful for those wishing to see what it is like within the world where everyone is essentially addressing "the foundation"–not the composition or quality of "the building"–even if they may be quarreling over what it is–exactly–about the foundation that leads to crisis.