[OPE] estimating the severity and duration of a capitalist economic crisis

adsl675281@tiscali.nl

Jerry, 

You raise a topic which is quite difficult and complex, and to which I cannot do justice in a short comment. My general opinion is that we can in fact usefully forecast far more than we actually do, provided we understand fully what is required for accurate and useful forecasting. I regard forecasting in general and forecasting in the social sciences in particular as a special branch of science, with its own methodologies and spirituality (you can specify basic "laws" of forecasting, or if you like operative principles). Basically, if you want to do good forecasting, you really have to want to do it, and you have to be prepared to do whatever it takes, and that already cuts out most people as professional forecasters (it takes a lot of work and discipline). Some of the obstacles (not the only ones) to forecasting are:

- the characteristics of the subjectmatter we seek a forecast for
- dogma & ideology & ethics
- cultural resistance to forecasting
- bad theory, concept formation and problem formulation
- lack of comprehensive data
- psychological/emotional factors
- inadequate knowledge of relevant history
- lack of recruitment of suitable personnel
- inadequate training of forecasters
- poor organisation & communication & division of labour
- property rights
- political or military pressures
- the pressure to generate a forecast before you have done what it takes to make the forecast
- feedback effects (the effect of the forecast on the course of events)
- lack of finance
- lack of freedom & privacy
- the exploitation of ignorance ("in the land of the blind, one-eye is king")

All of these aspects and others impact on the problem of overestimation and underestimation - it may take quite a bit of analysis to explain why a forecast succeeded or failed.  As far as economic fluctuations are concerned, generally you can say that an "overshooting" (or exaggeration) effect occurs. Thus, in a boom, an mood of opulence and optimism emerges, creating excessive confidence that it will continue; while in a slump, things begin to appear worse than they really are. There is a "manic" element in human nature which asserts itself especially in conditions of some or other crucial imbalance. Irrational "panics" occur because particular social classes or groups have a special, characteristic emotional susceptibility or sensitivity (receptivity) for particular event types. 

Forecasting science differs from prophecy, in the sense that we can explain in detail the reasoning we used in making the forecast. There does not yet exist a special autonomous college of forecasting as far as I know (anymore than a college for the study of social cooperation), but obviously one topic you have to learn about is the history of successful and unsuccessful forecasting. Above all, the forecaster has a very deep sense of temporality, which is another way of saying that the forecaster has a profound sense of history (the relative timing of historical processes). The forecaster is very aware of what he can and cannot achieve from his location in the theatre of world history. Forecasting science is continuously building models of successful forecasting and good forecasters, based on experience from which it is continuously learning. In this way, we are continuously selecting better forecasters, and weeding out lousy forecasting methods. I have sometimes toyed with the idea of doing a thesis on it, it's very interesting.

There are all kinds of philosophers and ideologists who tell us about all the things we cannot know, just as medieval clerics claimed a religious monopoly over knowledge. But in the Marxian tradition (and the pragmatic tradition), we do not accept this. Whether we can know something is usually not primarily a theoretical or philosophical question, but a practical question. The only proof there is about what we can and cannot know, is a practical proof, a mater of practical experimentation. If our theory leads us to believe that we cannot know something, we are most probably wrong, it is just that for practical purposes or technically we cannot know about it yet at present, given the current state of knowledge & organisation. Mostly, if we regard something as unknowable, that is usually because of how we have defined it - if you define something in a certain way, then it is obvious that it is unknowable. It appears unknowable, because of the way we have defined it. A definition is a composite of distinctions which rule some things in and rule some things out, in order to fix a phenomenon, as an aid to abstractive procedures. If we rule in or rule out the wrong things, we can generate a lot of "unknowables" which would never exist, if we abstracted more appropriately.  

Antonio Gramsci wrote something to the effect that "we are all intellectuals or philosophers" in a sense, and in the same way, we are all forecasters. Most of us get pretty good at forecasting at least a few things, even if they do not seem very significant. Often you can forecast better because you are not clouded by all kinds of theoretical nonsense, because you are outside the fray. All the professional forecaster does, is to develop this faculty of human experience to the maximum extent, he develops forecasting for the sake of forecasting, because he is motivated to do it, whereas for most people the forecasting they do is an ancillary aspect of their lives. 

Can countries protect themselves from the "US economic disease"? Yes and no, I think. 

No, because the same problems occur internationally, and did not simply originate in the United States. Typically, the United States pragmatically "borrows" and adapts knowledge & techniques from other countries to make money with. The proof of success is that you can make money with them, i.e. that they will sell. American culture is a kind of synthesis of all kinds of cultures, out of which a pragmatic functionalism emerged, a sort of understanding or paradigm about how human development (in a broad sense) generally "works" with a stock of metaphors and cliches to describe that. Because of the strong belief that this paradigm is of universal applicability, however, very serious mistakes are made in understanding and relating to other cultures, which vary from this model in important respects. Moreover, the world economy is an interconnected, interdependent whole. Leon Trotsky described this very well (if a bit rhetorically) for example in "The Third International After Lenin" and similary Rosa Luxemburg describes it in her "Introduction to Political Economy". 

But yes, because a lot depends on what kinds of social values and exemplars a society seeks to promote, and that permits a lot of variability. There is no particular reason why you necessarily have to organize your society in the American way, that is ultimately a political matter. Since some aspects of American society are good and progressive and others reactionary and bad, you can accept some of it and reject other bits, and adapt them to your own situation. Which is in fact what usually happens.

As regards the "hegemony" question, "hegemony" is essentially a political concept and not an economic one, it has to do with one's power to assert one's idea and getting others to believe it. It is just that when we inquire into the source of that power, it usually has a lot to do with economic strength and weight. In an economic sense, I think American hegemony doesn't really exist anymore, that is more a fantasy put about by people who make a superficial analysis of the data. But it still has some validity to talk about an Anglo-American political hegemony, ultimately based on military power (destructive power) and supported by English language. The basic problem there, is that military power cannot generate a better society, at best it is an aid to that, it might prevent a worse society from developing. You generate a better society, if you can mobilize masses of people around a political idea, around a vision of a more desirable state of affairs. That is how you get durable hegemony. 

Even if you bomb a society to bits, you still do not eliminate popular resistance, and in fact you might get horrible mutations. In modern society, which is rapidly changing under the impact of technological and cultural change, it has become very difficult to generate the political unity & support which is required to implement coherent policies that really improve things. This in turn give rise to a politics which becomes brazenly opportunist, in the sense that politicians deliberately or under pressure look for "shortcuts" - shortcuts to wealth, shortcuts to power & influence, shortcuts to the good life, shortcuts to getting the most work done with the least effort (shifting the burden of work to someone else). It is a sort of "cheating".  But that really gets in the way of establishing any kind of durable hegemony. Even if the shortcuts seem to work, after a while they fail, and then you get a tremendous turnover of political personnel happening. It's a kind of crisis of leadership - you can only lead, if others will follow, but if others do not follow, then although you may be in a leadership position, you don't really have much power. You have power only if, when you lead, others follow you. 

A characteristic of modern world society is that people are really rather uncertain about power relations, about who really has power, the balance of power, the configurations of power relations, the changes in power relations. How can you establish what they really are? Well, at the most basic level, you do that by testing out how far you can go, to what extent you can assert your own idea, "seizing the moment" as it were. But even this practice seems to become a little elusive, and often it is no longer so very clear what you can conclude from the tests. By way of analogy, in an ordinary football game, you have two teams and rules of play, and it's clear who wins within a finite playing time. But it becomes a lot less clear, if the rules are constantly changed in the course of play, if people do not stick to the rules, and more players are constantly added and subtracted to the teams who don't necessarily have the same objective. How do you know in that case, if you are winning and how "your side" is doing? How do you evaluate progress?

>From my global perspective, the problems of American society are, relatively speaking, not very serious and you could technically eliminate most of the important problems in about ten years, if there was a will to do so. Other countries and poor people generally have far worse problems - if you look at United Nations data for example, this is very easy to understand. In many parts of the world, there is a permanent crisis, such as is described for instance by Mike Davis. Because it is a permanent crisis, it is a more or less constant reality, and therefore the very notion of "crisis" is not even very helpful, it is more a moral judgement about an undesirable state of affairs. 

Because I cannot work on these questions fulltime, I cannot give you any readymade answers beyond what I have said, but like I say it is not too difficult to get some answers if you do what it takes to get them. It is not that we cannot know these things, but that we haven't done the type of research which reliably sorts out the most likely future scenarios. But you are also correct in the sense that social scientific knowledge is rarely "neutral" - its dissemination has "feedback effects" and affects the future course of events. The concern of the social scientist is that people should understand the truth about their society, good or bad, with the belief that if people talk bullshit about this, it will not help solve social problems. To solve social problems, you always have to recognize them for what they really are - false notions make the problems worse. But telling the truth by itself says nothing about what people will do with that truth, most likely they will use that truth, to further their own interests. Out of this, you get the problem of how social scientific knowledge is best conveyed, given that it is such a reflexive practice. This problem was inadequately theorized by Marx in my opinion.

The "financial crisis" (credit squeeze) to my way of thinking is only an "appearance form" of much more essential socio-economic problems. You can of course just look at the financial crisis separately, but to understand the real economic dynamics you have to be much more thoroughgoing, and incorporate various different layers or strands of analysis. The world economy is a hugely complex totality about which you could tell all kinds of stories, and people do. But what sort of story you tell, really depends on what kinds of questions you ask, and seek answers to, against the background of the knowledge or theory you have. Investors want to know the most likely price trends in the future, because they want to make more money from trade. Well I wouldn't mind making some money myself, but that is not my primary concern.

Jurriaan 

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