comments by Nick Paretsky.
There’s analysis and commentary all over the internet on the pending nationalization of the banking system throughout the advanced capitalist world; here’s a little more.
During the seventies, when capitalism was entering a long period of crisis, (a crisis some argue never really was resolved), some radicals thought the U.S. ruling class would be forced to turn to state planning of the economy, emulating the planning methods of European and Japanese capitalism. Paul Sweezy of Monthly Review predicted “a great leap into state capitalism” was coming (this is in a 1975 issue of Monthly Review). The Reagan recession of the early ‘80s kept alive the analysis that capitalism was on the verge of a new phase of development in which the state would have a much greater role in the economy. I think this view was influenced by Marx’s belief that the contradictions of capitalism grow in intensity as it develops, that the resolution of crises, such as the Great Depression, eventually leads to contradictions surfacing at a higher level down the road. This analysis turned out to be wrong (at least in the short term), but now Paul Sweezy’s 1975 prediction that a “great leap into state capitalism” was around the bend (he said this Monthly Review) is coming true.
It seems likely that the vast nationalization that will be underway will only prop up the corporate sector, but won’t resolve underlying structural problems in capitalist economies. There is still an absence of a coherent, long-term perspective or program for capitalism within the ruling class. But capitalist thinking about this is beginning.
One important center of organized support within the ruling class for a more statist form of capitalism seems to be the Council on Foreign Relations (a U.S. ruling class body) and the closely linked Trilateral Commission. I monitor the CFR & the Trilateral Commission because past research (in a past life as a graduate student in sociology) seemed to me to show that these organizations, during the ruling class economic strategy debates of the seventies and early ‘80s, were vehicles for a capitalist policy current supportive of a more active economic role for the state.
(When looking at international capitalist policy-planning organizations, everybody’s heard of the Trilateral Commission, Bilderberg, and Davos, but there are others, including the World Business Council for Sustainable Development, the International Chamber of Commerce, and the Atlantic Institute for International Affairs. There’s a good article examining these organizations and their slightly different policy orientations by William K. Carroll and Colin Carson in the journal Global Networks. 3, 1. 2003. “The Network of Global Corporations and Elite Policy Groups: A Structure for Transnational Capitalist Class Formation?” pp.29-57. Carroll and Carson take the view that we are dealing with a global ruling class. The article’s apparently no longer available for free on the internet, but I can provide a PDF copy if anyone’s interested.)
Last Friday the CFR’s website posted an interview with a member of the CFR’s board of directors, David Rubenstein (http://www.cfr.org/publication/17508/grasping_radical_economic_change.html).Rubenstein is a cofounder of the Carlyle Group, a big private equity firm which had some temporary notoriety after 9/11 because of its dealings with the Bin Laden family via George Bush Sr. Rubenstein is also a board member of the Institute for International Economics, a think tank closely connected to the CFR and Trilateral Commission. He’s also been an adviser to JPMorgan-Chase. Rubenstein gives an honest (capitalist) appraisal of the situation:
“The leaders in our government today, and the leaders of the business world today, do not really have a clear understanding of what needs to be done. I’m not sure anybody does. Everything that has been thought of has been tried and it hasn’t yet worked. I do think that at some point we will hit a bottom and people will say this is as far down as the markets should go. The problem is that by the time we hit that bottom, it may well be that many companies do not survive, that unemployment has gone up much higher than people can tolerate, that the credit system is not fatally but near-fatally wounded, and the entire economic construct under which the globe has conducted itself has to be radically changed. Nobody has ever anticipated something like this, nobody has ever seen anything like this, and it’s therefore taxing everybody’s abilities to ﬁnd out what the solution is.”
Rubenstein goes on to advocate the kind of massive equity injections in banks now being supported by Paulson, and also argues that industrial and other non-financial companies will need similar government investment. He briefly calls for government-business “cooperation,” in a way that sounds to me like French-style economic planning of the post-World War 2 period, and Japan’s planning “miracle.” He also talks, like a good businessman, about the opportunities for making money out of the crisis. He doesn’t unveil a comprehensive, point by point program for change, but I think he’s talking about a new model of capitalism, not just a temporary set of measures to prop up the system that can be dispensed with after a while, allowing a return to neoliberalism. (Government ownership itself is, of course, not all that new: there’s the French case in postwar reconstruction, and during the Great Depression in the U.S. the Reconstruction Finance Corporation did the same thing. But Rubenstein seems to be thinking of permanent arrangements in which government ownership becomes a central mechanism for economic growth.)
How do we define “Liberal, Centrist, Conservative” sectors of the ruling class? What is the “liberal” capitalist position? It’s possible for capitalists to support a great deal of state intervention without being “liberal” in the New Deal, Ted Kennedy sense, where there’s a welfare state and organized labor is made a “partner” in the government planning process. John Connally of Texas and people around him advocated large-scale government bailouts of corporations while being hostile to trade unions and other New Deal constituencies. Remember, also, that “liberal” capitalists in the recent past who have advocated government ownership have not been all that liberal: the prime case being the financier Felix Rohatyn, active in the Democratic Party, who advocated during the early 1980s a new Reconstruction Finance Corporation to make equity investments in companies as a tool for “reindustrialization”. Rohatyn’s liberal brand of state interventionis, involved a lot of austerity for the working class. Rohatyn is famous for overseeing the rescue of NYC from bankruptcy in the 1970s, a rescue which involved squeezing the working class. Rohatyn endorsed “right-to-work” laws.
Is Rubenstein a “liberal” capitalist? He was an official in the Carter administration. He probably supports Obama. But in his brief interview he shows no concern with creating a new “compact” with labor, or with creating some welfare safety net for all the those who are being and will be emmiserated and devastated by the crisis. (He might address these issues elsewhere.)
Any state interventionist capitalist program is going to be faced with certain problems over the long haul which will force more authoritarian, repressive forms of rule, not only directed at the working class but also at certain sectors of capital. Not only will governments have to take ownership positions in companies, they will also be forced to make choices about the fate of individual firms, such as which will be allowed to live and which must die. There will be capitalist resistance to these decisions. There may be struggles within the state apparatuses between different capitalist groupings over the direction of restructuring. A heavy hand will be needed to keep recalcitrant capitalists under control.
With widespread nationalizations, a problem for the ruling class will be the politicization of the economy. There will be demands for state action to serve the interests of the working class (a bailout for the banksters, why not for ordinary people), which may not be easily be accomodated. An ideological benefit of neoliberalism was that economic conditions – such as unemployment, low wages, and general working class misery – could be portrayed as being the result of the impersonal, almost “natural” forces of the “free market”. When economic life is no longer governed by the “invisible hand,” and economic conditions are the result of visible. conscious, collective decisions by the state and capitalists, the state becomes a target of protests; the class character of the state is more clearly revealed. The class struggle becomes politicized, state power becomes an issue.
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