Understanding the Debt Clash

The chief difficulty in a crisis, and the purpose of this blog, is to understand what's going on. A crisis is a moment of genuine indeterminacy, where the rules of the game, indeed the whole game, that were present before are no longer valid. This poses a difficult problem for research and is only worse for research meant to intervene in the historical transformations (which is the point of this blog). The challenge is not only to give an account of why one thing or another happens, but to draw lines of significance that can help us in our attempts to position ourselves facing toward a free society.

The American political clash around the debt ceiling provides an excellent example of what makes moments of crisis so difficult.

What Isn't happening:
1) America is not caught in an unsustainable debt trap due to a crash in GDP.

Unlike the sovereign debt crisis in the Eurozone, America is not swamped under a crisis level of debt. Those crises occurred because the bond markets in Europe became so scared of default that rates began to rise. Thus Greece, Ireland and now Italy have all faced skyrocketing borrowing rates that mean any budget deficit (which necessitate some borrowing) becomes compounded by deadly interest rates. This is very similar to the debt crisis of the global south we saw at the beginning of neoliberalism 20 to 30 years ago (and a chief way neoliberalism established itself globally), where the World Bank and the IMF made borrowing impossible for states that did not get behind radical privatization and free-trade programs.


While it is an anomaly, Italy's situation demonstrates very clearly why America is not caught in these kinds of crisis producing dynamics. Financial Times's investment editor (and my vote for best hair in Britain), James Mackintosh lays this out quite clearly in a recent analysis video. Both Italy and the US have comparable debts, Italy at 120% GDP and the US at just under 100% GDP, but the difference is in the interest rates they can borrow at. In the last few years Eurozone bond markets have become terrified of the less secure national economies, known as the PIIGS (Portugal, Ireland, Italy, Greece and Spain). As a result Italy now has to borrow money at 5.5% for 5 year bonds. As a matter of fact, Italy is projected to actually run a small surplus before interest, something unthinkable in the US. America, however, borrows at nearly 0% interest. The uncertainty in the equities and bond market have sent investors fleeing to US Treasury bonds as the safest bet around, plummeting US borrowing rates. This means that, in the short term, it's becoming nearly impossible for Italy to stay afloat, while the US has nothing to worry about. Certainly mounting American debt might be a problem somewhere down the line, but it's not a crisis.

2) There is no mass populist movement for government austerity.

This seems almost common sense. I have a lot of trouble imagining poor and working class folks deciding and fighting en masse for cuts to the government programs that help them get by. But this nonsense is the very image that the Tea Party and Fox News would like us to believe. Unfortunately due to the bankruptcy of American media this narrative has become fairly mainstream. There are plenty of polls that say most Americans do not support cuts to medicare, medicaid, or social security. Even without polls we only have to think back to the confusing scene during the healthcare debate when a woman passionately cried at a town hall for a Democrat to, "lay your hands off my medicare!"

That's not to say the Tea Party does not have a populist character. Their appeals to patriotism, simple financial principles, and social conservatism (to a degree) resonate with large swaths of the American population. But this, as with most populisms, has nothing to do with mass belief in the political program. Instead it seems to be out of fear and desperation. People have been unemployed for dangerous lengths of time, wealth inequality is becoming more egregious and apparent, and many of the basic social traditions like family life and religion that made all this palatable are falling apart. As Walker says the tea party does provide a coherent response to the crisis and there's a populist desire for that regardless of content.

3) There is not a popular collapse of "the social."

Here is where I might be disagreeing with Walker's analysis if he wants to locate the collapse of "the social" in mass popular consciousness. I agree that the Tea Party ideology is an extreme extension of the Thatcherite position that "there is no society," but this is a very abstract and rarefied thought. "Society" as an abstract entity rarely appears as such in popular consciousness. In Fordism it appeared largely as the state, in Liberalism it was largely national tradition. It doesn't seem like "the market" experienced under neoliberalism is any less a mode of appearance of "society" than either of these. The one distinction, and this is crucial, that the market is wholly out of our collective control. The nation is, drawing from Benedict Anderson, an imagined community to which one was a part. The state is subject to one's collective political will. The market however is like the weather, it's hopeless to hope to effect for most people. It's this hopelessness of active participation in society, of truly having any agency in society, that's still gone for most people, and it would take a great deal to change that belief.

How do we think about all this?
Right now I have no hope of giving an account of what is happening, because I don't think we're clear on what kind of account we need. It would be simple to give a journalistic/factual story for how the Tea Party rose to this position of holding the country hostage. But that wouldn't be enough. From that perspective this moment looks like a repeat of 1992, when Newt Gingrich took control of the house, with the stakes raised. But from the perspective of trying to articulate a Left response to this unique moment of crisis, this falls short.

We shouldn't be after a better account of how one thing or another happened in a crisis. All the stable lines of causality that exist in a stable form of accumulation are out the window. Most of the dominoes that were going to fall with any necessity have already fallen, and the rest is radically contingent. Will the Euro survive? Will austerity take hold? Will China become financially hegemonic as well as productively? Even these economic concerns are up for grabs, let alone the cultural and social transformations afoot.

What we need to do instead is try to judge the significance of events. Instead of asking how we got here, ask what "here" means. This means asking questions like what form of accumulation might austerity and tea party politics fit into, or what the conditions of "solution" to the crisis are. It also means that we can't always build up our understanding purely from the facts (if this were ever possible), we have to know what we're looking for. This is why I'm so curious about the responsible business practice discourse, not because it's got any traction, but because it seems to be the kind of thing that could take hold in a moment of crisis. Most importantly, this also means looking for lines of thought and action that might articulate an oppositional or emancipatory politics. It will almost always be provisional, and hypothetical. It takes a great deal of theoretical wagering, hedging and some faith. This all looks like bad science, but we're not doing science in the usual sense.

Historical significance is something that is never in fact stable and is almost always post festum. However the desire for a better world means actively attempting to intervene not simply in the world, but in history. We must find ways to do things that are historically significant. Our analysis must not simply tell us what is, but what it means for our larger struggle and semi-blind quest for justice.