Sunday, September 19, 2010

My Log 226 Sept 19 2010: NY Times writer confirms David Harvey’s Marxist analysis of the economic meltdown

It is kind of odd that the day after I made a link to the informative interview about the economic meltdown granted by urban geographer David Harvey to International Socialist Review, validation of his Marxist interpretation should come from an article
in the New York Times---which I suppose could be called an icon of capitalist media.

Harvey’s thesis, which those readers who have bothered to peruse his article will know, is that there are so many contradictions in capitalism that they inevitably lead to crises, one after the other. Each of them is addressed and corrected in its capitalist fashion, but, says Harvey, these corrections are never complete or permanent. Usually they succeed only in moving the crisis on to the next crisis. And this is what has happened in the handling of the economic meltdown, which has left Western society facing a crisis of unemployment.

Now comes an article by Bob Herbert in the NYT on this crisis of unemployment that has seized the United States. "The American economy is on its knees and the suffering has reached historic levels,” Herbert writes. “Nearly 44 million people were living in poverty last year, which is more than 14 percent of the population. That is an increase of 4 million over the previous year, the highest percentage in 15 years, and the highest number in more than a half-century of record-keeping. Millions more are teetering on the edge, poised to fall into poverty.

“More than a quarter of all blacks and a similar percentage of Hispanics are poor. More than 15 million children are poor.”

Herbert notes that the middle-class are in retreat, and writes: “I don’t know what it will take, maybe a full-blown depression, for policy makers to decide that they need to take extraordinary additional steps to cope with this drastic economic and employment emergency. Nothing currently on the table will turn things around in a meaningful way. We’re facing a jobs deficit of about 11 million, which is about how many new ones we’d have to create just to get our heads above water. It will take years — years — just to get employment back to where it was when the recession struck in December 2007.

“While working people are suffering the torments of joblessness, underemployment and dwindling compensation, corporate profits have rebounded and the financial sector is once again living the high life. This helps to keep the people at the top comfortably in denial about the extent of the carnage. Millions of struggling voters have no idea which way to turn…”

Okay, this is the situation in the United States, as described in the system’s most important newspaper, which says the governing elites are in a state of denial of the crises the society is confronting.

Now on to Harvey’s analysis. He writes that an important theme of his recent book, The Enigma of Capital is that capitalism doesn’t solve its crises, but moves them around:

“…we’ve sort of solved the banking crisis, but now we’ve
got a sovereign debt crisis of the finances of states. You see this of course in southern Europe, Greece, Spain, and Portugal. But internally in the Untied States we also have a fiscal crisis emerging with California for example, being one of the largest public budgets in the world, which is in serious difficulty. So we’ve shifted the locus of the crisis from the financial institutions to state finance.

“Then there is a big question of how that is going to be addressed and that is the big question that is on the agenda right now. Whereas this time last year it was how to stabilize the banks, it’s now how to stabilize state finances and this is a question that is not going away easily; it’s one we’re going to have to be concerned with over the next ten or fifteen years. Alongside of that, as they attempt to stabilize state finances through austerity they’re going to stabilize high unemployment. That is the question emerging now, they shifted it from the financial institutions, then to state finances, and then to the people in terms of austerity and unemployment. The big question then is how are the people going to respond?”

He suggests that in Britain, with Cameron’s massive cuts in services, and in New York state, with huge budget cuts and immense unemployment in the public sector, there will be a great struggle between the public sector unions and the State, a modern version of the class struggle, to which Harvey, incidentally, attributes much of the high standard of living achieved up to 1970.

To judge by the New York Times article, and other evidence slowly being produced about the coming crisis of unemployment in the US --- see for example, in a previous post the item on the millions of so-called “99ers”, those people who have run out of their unemployment insurance after 99 weeks, and are now facing immediate destitution, loss of their homes, status and everything else they had thought was permanent --- there is no room any longer to deny the prospect of a disastrous crisis developing around unemployment. Obama at the moment seems to embody the idea of Nero fiddling while Rome burns.


  1. Great piece Boyce, here in old blighty we have two parties: the beep beep beep party and the ring ring ring party, both arguing over the sound the fire alarm should make - whilst standing in the smoldering ruins of the family home.


  2. Dear Bushwacker: I always think of you as an aussie. Dont tell me you live in what my Dad always called The Old Country! How can you bear it? I once had a chance to settle there, but after spending 11 years there, I had had enough, and scuttled off to resume life in Canada.