Within this framework, the first panel, consisting of David Harvey, Duncan Foley, Beverly Silver, and Immanuel Wallerstein, offered a state-of-the-field view on our understandings of the present crisis with reference to capitalism as an economic system effecting society through the mediation of the political sphere.
A brief, and likely partial, summary of their presentations follows:
Clearly working within his training as a geographer-cum-social theorist Harvey discussed “crisis” as a thing, appearing, disappearing (much like a plague), shifting geographically and within the system of capitalism itself. Here one day in the New York financial markets, gone the next to appear in Greek state finances. He pointed out, however, that “global” is perhaps misapplied to the crisis, as it has not appeared to effect places such as Brazil, Argentina, or Australia, all states that have substantial economic ties to China, which appeared in his talk, as the potential center of an alternative orientation of capital. The crisis, he argued, being a distinctly North American and European problem, is a crisis of joblessness, with a net loss of nearly 20 million, 7.5 million of which were in the US alone. He remarks that the crisis, at one point, economic, demanding state intervention to prevent a complete collapse of financial institutions and markets, has shifted into a political crisis. The significance of this shift is that it means the decisions being made currently about how to address the “crisis,” are not taking place in reference to “economic necessity,” but are political choices. The two possible choices he saw were deficit reduction, a la Cameron in Great Britain, or Keynesian intervention a la China and India. He then proceeded to critique the deficit reduction avenue on the grounds that it was an expression of capital’s long term project to unload the social reproduction costs, which most recently it was forced to bear during the Fordist period. On these grounds he linked today’s political choices to both the fundamental nature of capital to externalize such costs and to the post-1970s rise of “plutocratic politics.” In reference to the latter, he argued that the politics of creating huge deficits (with arms development, military aggression, and tax cuts), has intentionally created the grounds on which to attack the social programs developed during the Fordist period. Quoting Warren Buffett’s claim that there is class warfare, and the rich are waging and winning it, Harvey placed much emphasis on the role of capitalists themselves in both creating the crisis and propagating politics that will continue to impoverish the vast majority of the world’s peoples in order to perpetuate profits. The capitalists are building arks, he said, while it would seems the rest will drown in the coming deluge.
Foley’s talk had three parts: first, he related the current crisis to Marx’s theories of crisis; second, he discussed the last 30-40 years of political economy and macroeconomic policy; third, he speculated about where we will go from here.
In the first part, Foley distinguished between crisis caused by falling rate of profit, which is about upward pressure on wages, and crisis caused by a rising rate of exploitation, which is associated with falling wages. Both, he pointed out, are problems of aggregate demand, which is the necessary counterpart to capitalist production. He identified four major periods of crisis in capitalism -- the 1890s, 1930s, 1970s, and 2007-08. The 1890s and 1970s, he argued, were crises of the falling rate of profit. Those in the 1930s and 2007-08 are crises of the rising rate of exploitation.
The second part of Foley’s presentation discussed how globalization and financialization worked to resolve the crisis of the 1970s. Globalization allowed firms to reduce costs not through advances in productivity, but by relocating production to areas in the world with reduced labor costs. This enabled huge surplus value creation, which in turn fed financialization. Two problems pervaded this system, however. The first was a problem of sufficient world aggregate demand; the second was the pressure on the financial system to transform money into investment. (In concrete terms these seem to be the stagnation/fall in the middle-class standard of living and the increasing complexity and speculative nature of financial instruments. Foley did not concretize them.)
In the last part of the talk, Foley raised three problems for moving forward. The first is the uneveness of the crisis and the problem of world aggregate demand. The second is the dilemma of what will happen with the dollar. As the major reserve currency the US cannot control its own exchange rate, which has hampered its ability to resolve the economic problems it faces. Secondly, floating exchange rates enable competitive devaluation of currencies, which is enabling some states, such as China, to maintain an artificially high share of world demand. The final problem Foley foresees is that of U.S. hegemony. In so far as this hegemony has kept internecine capitalist warfare at bay (and implicitly, kept the system working), he wonders if the U.S. can continue to do so. The appearance of the inevitable decline of the U.S. raises the question of whether the world economic system can operate without a hegemon, and whether a place like China, which again appears as the potential center of a future capitalist system, sufficiently understands the nature of the problems of the capitalist world system so to take on such a role.
Silver’s presentation provided a Braudelian long-duree (500 year) and Schumpeterian short-term (100 year) perspective on the 2007-2008 crisis. Silver presented capitalism as possessing a cyclical rhythm, in which a systemic cycle of accumulation comes into being, rises (going through a golden age), and peaks. Its fall is synchronic with the rise of the preconditions for the next systemic cycle of accumulation. The end of a particular cycle is marked not by a single crisis, but a period of crisis. On this model Silver hypothesized the 1970s as the beginning of the end of the current cycle of accumulation and the crisis of 2007-08 as a potential end-point. This would mean that a new systemic cycle of accumulation is starting, and Silver, like Harvey and Foley sees in China a potential new center of a cycle of accumulation. She was not prescriptive however.
Silver’s Schumpeterian perspective on patterns of crisis emphasized shifts in the cause of crisis and policy responses. She identified the four same moments of crisis as Foley, and noted a pattern of pendulum swings in both the cause and response:
1896: the exploitation of labor was too low from the point of view of capital and the response was the consolidation and centralization of (monopoly) capitalism
1930s: the exploitation of labor was too high from the point of view of capital and the response was the “Global New Deal”
1970s: the exploitation of labor was too low from the point of view of capital and the response was the redistribution of capital
2007-8: the exploitation of labor was too high from the point of view of capital, and we might assume a swing back to state intervention and assistance for labor, but Silver was not deterministic.
Siliver’s Braudelian perspective analyzed the dominant political form of cycles of accumulation. It began with the city-state of Genoa in the fifteenth century, moved through to the Dutch of the sixteenth and seventeenth century, the British in the eighteenth and nineteenth and the ended with the US in the twentieth. Her analysis highlighted that the increasing size and complexity of the dominant political unit in a given cycle, moving from city state, to nation-state, to empire, to a potential “world state,” envisioned, but not achieved, by the US.
In conclusion she observed that to ever get beyond the continuous crises of capitalism the labor reducing and resource consuming tendencies of capital would need to be replaced with labor absorption and resource conservation. This was to say that reversion to the Keynesian model of the mid-twentieth century would not be the solution.
Citing his multiple publications on the topic of capitalism and crisis, Wallerstein summarized the five premises which run through his work and concluded with speculation as to tactics that may move society beyond capitalism.
“All systems have lives.” Systems have properties and relations that determine their normal functioning. This normal functioning runs in cyclical rhythms that are always moving outward from the original point until their reach the point of structural crisis. This is to the say that the normal functioning of any system eventually causes its end.
Endless accumulation drives the capitalist social system. This accumulation is driven by quasi-monopolies supported by states, which are both a necessary feature and self-liquidating. This frameworks firmly ties the fate of states with the fate of capitalism, meaning no state is wholly sovereign, and that favored economic zones are constantly slowly shifting as quasi-monopolies rise and fall. A hegemonic power always work to maximize the benefits of the system to its own economic interests, but “true hegemony” only lasts about 25 years, and is also self-liquifying.
Between 1945 and 1970 the greatest period of global economic expansion ever took place under the ascendency of US hegemony. Since 1970 the shift from production to finance has produced the greatest number of speculative bubbles and levels of indebtedness ever seen. Since 1970 US hegemony has had the “swiftest and most total” decline.
In the political sphere, the revolutions of 1968 marked the rejection of centrist liberalism, which splintered the left and gave rise to a “reinvigorated world right,” that has asserted itself more effectively than the left, and whose objective has been to reduce all the gains of the lower classes.
Chaos is the primary character of structural crisis. Wallerstein described chaos as constant and rapid fluctuations within the parameters of a system; a period in which uncertainty if the defining characteristics of all areas of society, state, and economy. Such uncertainty produces a subjectivity that demands protection, looks for scapegoats, tends towards extremism and thus produces gridlock.
In moving from an analysis of the nature of the crisis of capitalism to its overcoming, Wallerstein warned that in the short term we face only the ability to choose between the lesser of the evils. In the mid-term he argues the world can choose to organize itself either in a the “Spirit of Davos” (site of the meeting of the annual World Economic Forum)or the “Spirit of Puerto Alegre.” Both are potential modes of post-capitalist social organization. The former he argued is a spirit of hierarchy and exploitation; an iron-fist with a homogenizing vertical structure. The latter is a spirit of democracy and egalitarianism. To promote the “Spirit of Alegre” Wallerstein recommended the following tactics:
- intellectual discussion in an open spirit
- rejection of economic growth for a goal of decommodification
- global equalization of standards of living in such a way that emphasizes autonomy of peoples and communities
- an end to all foreign military bases
- an end to all social inequalities