[OPE] class illusions about the crisis and the state

Intellectuals often think that ideas have power, but they have power, only if they persuade an organised force to pursue those ideas, and give them real effect - the power of knowledge is really the dependence of others on those who have that knowledge. Realistically, I tend to think it is the other way around: you need a radicalisation or some kind of popular movement, before there will be an influential alternative economic program.

In reality there are plenty alternatives being mooted all the time, it's just that they remain ineffectual and remain so, until they have the weight of a large mass of people behind them. That usually begins to happen only when unemployment rises above 10% or so of the working population.

Typically, based on the experience of the 20th century, real unemployment rates of between about 10% and about 20% create the conditions for significant socio-economic reform. Real unemployment rates in excess of about 20% create the potential for revolutionary upheavals, which radically alter the superstructure and sometimes the economic base.

Dialectically therefore I guess it's a question of trying to link the new ideas to those strata of the population who are more likely to be the "movers and shakers" in the future. It's often really not so much a question of quality of ideas per se, but of the ability to organise people.

The era of "neoliberal" ideological dominance from about 1980 gave rise to a new generation which has very little understanding of the macro-economy, since spontaneous market activity was supposed to balance everything out, and there was supposed to be no alternative to that.

Indeed most economics departments no longer teach any profound empirical understanding of the national economy, never mind the world economy. Social science departments, insofar as they do not discuss obscure topics and postmodernist metaphors, are often concerned more with mitigating the social effects of market activity. The overall financial implications of policies often go beyond what people can understand. Consequently, we may be surprised, after the initial disorientation, with what people will come up with qua alternatives.

Typically, the first alternatives latched on to, are alternatives drawn from the past, such as Keynes, and only when those fail, does a process of innovation begin to accelerate.

Keynes's economic prescriptions were based very much on the idea that you had an autonomous national economy, in which the state could use various legal and financial levers to channel capital into productive, job-creating investment. But that doesn't apply anymore to such a large extent, under conditions of:

- fairly free international mobility of money-capital and investment capital
- increased privatisation and sub-contracting to private enterprise
- a reduced role of the productive sector in the economy, and internationalized product-chains
- financial punishment for private initiative with regulations, taxes and the power of big business dominating markets
- the growing power of an ageing rentier class owning very large amounts of non-productive assets
- an import-export sector involving perhaps a quarter or a third of all the goods and services traded.

All that really remains of Keynes proper, is the idea that the state has an obligation to create jobs, and bail out business to the extent that not doing so would threaten the whole economic order.

Substantively, post-Keynesianism is really about the "management or engineering of aggregate demand", it's a sort of underconsumptionist theory, but the presumption is always that you are actually able to actually "manage" it.

To the extent, however, that this "management" only leads to more capital flight and divestment, post-Keynesian prescriptions are also ineffectual. Ultimately, enterprises are interested in reducing total labour-costs, not increasing them, and that gets in the way of the post-Keynesian prescriptions. Post-Keynesianism therefore tends to reduce to the idea that "you are better off being in a job where your income is just a bit more than the dole, than being unemployed", where the state bureaucrats justify their social role as the "providers and allocators of work" (including, importantly, for themselves of course!) and as the providers of the social/physical infrastructure for business.

In reality, there is no economic way out for capitalism, other than "more globalisation", not "less globalisation" (including more national specialization producing for a world market). Hence for example you get the slogan in Germany that it must become a more "export-oriented economy" (the snag there is, that even if you run a trade surplus, it still doesn't provide sufficient additional jobs in the domestic economy). It is not that economic nationalism in the sense of self-sufficiency is undesirable per se, but rather that it is increasingly impossible.

The role of the state is then to help facilitate the adjustment of the national economy to internationalized trading processes. In this adjustment process, there are obviously winners and losers, and then you try to contain the losses, such that social stability is maintained, while emphasizing the advantages of the winners as something to emulate. This is an ongoing, longterm process. It is not so much that the state has a social contract with citizens, but that the state has a social contract with business - a "New Deal" for business. In fact, the state is itself more of a business, so this is really more a business-to-business operation. The public servant is no longer a servant of the people, but a corporate employee with clients and customers, selling products.

The economists are obsessed with GDP growth, but this, as I pointed out before, really misses the wood for the trees, insofar as it tells us very little about the distribution and use of disposable income and wealth. The GDP concept is a convenient ideological peg to blot out any discussion of socio-economic inequality, and this inequality is "naturalized" or simply blamed on faulty life-choices.

One overall result of all this is, that the tenor of bourgeois ideology is to de-emphasize the drama of unemployment altogether, to accentuate non-economic ways of getting ahead in life (through socially ingratiating yourself with others who can lift you on the ladder to wealth and prospects of interesting work), and to place the blame and stigma for unemployment much more clearly on the psychological and social deficiencies of the individual, rather than on the arcanery of finance and management. Despite the rhetorics of freedom, this implies in reality a much more servile society, a society of the "servants of wealth", in which those who monopolize an income-generating resource have a whole retinue of what are effectively "servants" around them, ranked by income and status in an increasingly "feudal" manner (feudal, because entitlements are conditional on and judged on fulfilling personal/social obligations and a defined style of behaviour).

Jurriaan

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Received on Sun Dec 28 12:09:58 2008