David Harvey, author of A Brief History of Neoliberalism, and Alexander Cockburn, author of End Times: The Death of the Fourth Estate, don’t think small when it comes to change. They aren’t afraid to think about significant, even radical changes to the social order we’ve grown so used to, whether it’s requiring full employment, reimagining urban living, or repudiating credit card debt and abolishing Wall Street speculation.
Robert Hormats, Vice Chairman of Goldman Sachs, is to be installed as Under Secretary of Economics, Business, and Agricultural Affairs. This comes as one more, probably unnecessary reminder of the total control exercised by Wall Street over the Obama administration’s economic and financial policy. True, Hormats is “a talker rather than a decider” according to one former White House official, but he will find plenty of old friends used to making decisions, almost all of them uniformly disastrous for the U.S. and global economy.
Amidst the ongoing financial crisis, Nobel Prize-winning economist Joseph Stiglitz writes that in the modern era of globalization it is developing countries which provided important engines for economic growth, and therefore any global recovery will only be achieved in which they play a central role. The G20 continues to lack the political legitimacy required to represent so many citizens outwith their own borders, in which they channel their recovery packages through the IMF, an organisation whose policies “remain controversial-so much so that many countries are reluctant to turn to it for assistance”. Stiglitz writes:
This is not only the worse global economic downturn of the post World War era, it is also the first serious global downturn of the modern era of globalization. There is need for a global response to this global downturn. But our responses are framed at the national level, and often take insufficient account of the effect on others. The result is that there is less coordination than there should be, a smaller stimulus than would be optimal-and well less designed. Every crisis comes to an end, and this one will too. But a poorly designed stimulus means that the downturn will last longer, and the recovery will be slower, and more innocent victims will be hurt badly. Among the innocent victims of this crisis are the many developing countries-even countries that have had good regulatory and macro-economic policies-far better than those pursued by the US and some European countries-are being badly affected. While in the US, a financial crisis transformed itself into an economic crisis, in many developing countries, the economic downturn is creating a financial crisis. While the U.S. may have the resources to bail out its banks and to stimulate its economy, the developing countries cannot. Continue reading “A Global Recovery Needs A Global Response”
In an excellent, thorough investigation of the financial crisis in the last issue of the London Review of Books, John Lanchester had presented the scrapping of pensions in the public sector as a worst case scenario. Looks like it has already started to happen in the private sector with Barclays scrapping the pensions of its 17,000 employees. This does not, of course, affect the President Bob Diamond who last year raked in £21 m, nor does it affect the rest of the the 1,500 best paid employees. Here is Lanchester (however, let me warn that this piece is more than 14,000 words long, so you better have a good strong copy of coffee and plenty of free time before diving in; also, I’ve appended a reader’s letter correcting an accounting error made by the author):
It’s a moment of confusion and loathing that most of us have experienced. You’re in a shop. It’s time to pay. You reach for your purse or wallet and take out your last note. Something about it doesn’t feel quite right. It’s the wrong shape or the wrong colour and the design is odd too and the note just doesn’t seem right and . . . By now you’ve realised: oh shit! It’s the dreaded Scottish banknote! Tentatively, shyly – or briskly, brazenly, according to character – you proffer the note. One of three things then happens. If you’re lucky, the tradesperson takes the note without demur. Unusual, but it does sometimes happen. If you’re less lucky, he or she takes the note with all the good grace of someone accepting delivery of a four-week-dead haddock. If you’re less lucky still, he or she will flatly refuse your money. And here’s the really annoying part: he or she would be well within his or her rights, because Scottish banknotes are not legal tender. ‘Legal tender’ is defined as any financial instrument which cannot be refused in settlement of a debt. Bank of England notes are legal tender in England and Wales, and Bank of England coins are legal tender throughout the UK, but no paper currency is. The bizarre fact of the matter is that Scottish banknotes are promissory notes, with the same legal status as cheques and debit cards.
These feared and despised instruments, whose history has long been of interest to economists, come in three varieties from three issuing banks: the Bank of Scotland, the Royal Bank of Scotland and the Clydesdale Bank. Small countries with big ambitions but few natural resources need ingenious banking systems. The history of the Netherlands, Venice, Florence and Scotland show this – and so does the tragic recent story of Iceland. ‘In the 17th century, when English and European commerce was expanding by leaps and bounds,’ James Buchan wrote in Frozen Desire, ‘the best Scots minds felt acutely the shortage of . . . what we’d now call working capital; and Scots promoters were at the forefront of banking schemes in both London and Edinburgh, culminating in the foundation of the Bank of England in 1694 and the Bank of Scotland in 1695.’ The powers down south, however, came to think – or pretended to think – that the Bank of Scotland was too close to the Jacobites, and so in 1727 friends of prime minister Walpole set up the Royal Bank of Scotland.
An in-depth interview with Professor David Harvey, the famous Marxist geographer and one of the most compelling critics of the neoliberal architecture of the global economy. His brilliant book A Brief History of Neoliberalism is key to understanding the complex historical and ideological origins of the present economic crisis and the global consolidation of the political project of neoliberalism since the late 1970s.
AMY GOODMAN: What do you think is the—what is being proposed by the G20 leaders? And what needs to be done in this country?
DAVID HARVEY: I think Tony Benn was exactly right in the earlier segment, and it’s a great pleasure to be here after him. I was always an admirer of his.
What they’re trying to do is to reinvent the same system. And I think this is a collective concern, and
there’s a lot of squabbling on the details, as it were. But the fundamental argument they are making is, how can we actually reconstitute the same sort of capitalism we had and have had over the last thirty years in a slightly more regulated, benevolent form, but don’t challenge the fundamentals? And I think it’s time we challenge the fundamentals.
Two weeks ago, Abe Moscowitz dropped dead of a heart attack and was reincarnated as a lobster. Trapped off the coast of Maine, he was shipped to Manhattan and dumped into a tank at a posh Upper East Side seafood restaurant. In the tank there were several other lobsters, one of whom recognized him. “Abe, is that you?” the creature asked, his antennae perking up.
“Who’s that? Who’s talking to me?” Moscowitz said, still dazed by the mystical slam-bang postmortem that had transmogrified him into a crustacean.
“It’s me, Moe Silverman,” the other lobster said.
“O.M.G.!” Moscowitz piped, recognizing the voice of an old gin-rummy colleague. “What’s going on?”
“We’re reborn,” Moe explained. “As a couple of two-pounders.”
Seuman Milne: “It’s hardly surprising that some want to trash the City, but to claim that the G20 protesters have no alternative is nonsense.”
When mass protests exploded on the streets of Seattle in 1999 against the kind of globalisation embodied in the World Trade Organisation, their anti-capitalist message was widely portrayed as utopian. A decade on, as anti-capitalist demonstrators vented their fury yesterday on the social and ecological vandals of the City and prepared to do battle today outside the G20 meeting in the heart of what was once London‘s docks, it looks more like common sense.
Frank Rich had an excellent column in the Sunday New York Times in which he suggested that President Obama’s economic team is unsuited to deal with the financial crisis. “I fear,” he wrote, “that too many of the administration’s officials are too marinated in the insiders’ culture to police it, reform it or own up to their own past complicity with it.” Let’s hope his fears are proven wrong.
But Rich’s column points to a larger and possibly more disturbing feature of our predicament: very few of the country’s economic experts foresaw the tsunami that is now upon us. Indeed, most of them thought that the global economy was working well and needed nothing more than some tweaking here and there. This is why Obama ended up appointing a team of economic experts who not only failed to see the storm coming, but in the case of Timothy Geithner and Larry Summers, promoted policies that helped cause it. Simply put, there were hardly any sagacious business people, economists, or policymakers who he could have turned to for help.