A Stiegler Follow Up Post

Peter Gratton links to my review of Stiegler's For a New Critique of Political Economy and notes:

I would think Devin would question some of the Marxian categories he introduces–the task of some of his current work–but I think he brings them up not to say Stiegler is wrong because he’s fallen afoul of doctrinaire Marxism, but simply that if you’re going to critique Marx, you better get him right.

Discussing Marx--without becoming mired in the numerous debates over Marx and Marxist theory--in the forum of a book review can be challenging, especially in discussions of political economy, where it is quite easy to come off as dogmatic. Peter thankfully points out that this is not what I am doing. And yet, unfortunately, my recent work on Rancière and Marx has yet to see the light of day in published form, which means the reader sees the results of the work, and not the process of critique behind it. 

What I am trying to do, in the review of Stiegler, is discuss his work in relation to those aspects of Marx's thought that I think have (or should have) bearing on contemporary debates. If we're going to talk about political economy, then I think we have to talk about expropriation and class within capitalism, and if we're going to talk about neoliberalism, then--following David Harvey--I think it is necessary to discuss aspects of what he calls accumulation by dispossession. Especially if you're going to pay tribute the to the 150th anniversary of Marx's Contributions to a Critique of Political Economy (1859).

But I'm doing more in other parts of the review than using Marx as a heuristic device for criticizing Stiegler. So, when I bring up the distinction between objectification (Vergegenständlichung) and alienation or externalization (Entfremdung or Entäußerung) from the 1844 manuscripts, I'm taking the point very seriously. If you read Marx through French debates (post-Althusser or post-Foucault), the difference between objectification and alienation will not be on your map, as Althusser dismisses, as we all know, much of the early Marx as too humanist--not to mention that Marx's work was dismissed by Foucault as an anthropologizing discourse--think The Order of Things, the sand on the beach, etc. But I came to this problem through Lukacs, or I used to come at these problems after Althusser and Foucault, until Lukacs (and, since he doesn't get enough credit, Karl Korsch) convinced me otherwise.

That aside, I think one of the central problems of the Stiegler's and Agamben's of contemporary philosophy is to mistake the fact that humans produce things with alienation. That is, you make something, or, in Agamben's more extreme moments, use language, then you're already captured in an apparatus, and thus ultimately alienated. The distinction between objectification and alienation is to differentiate between humans mediating, through making things, their relations with each other and with nature, and a historically situated mode of production, capitalism, which expropriates so much of human activity. If you don't, you run the risk of bemoaning cellular phones as the worst and most ubiquitous of apparatuses.

But it's not just the Heideggerian approach that runs into trouble, there's a Sartrean version of the same problem, which causes trouble for Rancière: the question turns on what it means to activate and maintain egalitarian practices without them reifying into inegalitarian institutions. I'm still working this out, but I can say this question is the reason that the problem of objectification and alienation has become one of my concerns.

A Review of Stiegler's "New" Critique of Political Economy

My review of Bernard Stiegler's For a New Critique of Political Economy is up on the CSCP website. I argue that

Despite his claim of commemorating the 150^th anniversary of the publication of Marx’s Contributions to a Critique of Political Economy (1859), Stiegler does little more than replace Marx’s class analysis and revolutionary critique of capitalism with an analysis of how technology leads to short-term thinking.

While you are brushing up on Stiegler, don't forget to revisit a classic piece of criticism, Peter Gratton's review of Taking Care of Youth and the Generations on the NDPR.

How to Strain Ethical Credibility

Occasional contributor and reader Joshua Kurdys has a post up on the value of developing natural gas drilling in rural Pennsylvania. In these so-called times of austerity, it might seem advantageous to consider "positive tax implications" in poorer rural areas over environmental and human health impacts. Joshua writes (the bold is my emphasis):

The problem is that these values do not have clear market prices and can't be easily or consistently quantified in cost calculations. The individuals and communities that accept drilling in exchange for quick cash infusions often need the money since drilling often takes place in poor, rural areas but this need does not necessarily reflect the fair market value of what is sold and that means granting the assumption that fair market value could conceivably be determined. Where fair market value is difficult to determine and this uncertainty is either overlooked or ignored by claims of economic development from drilling the situation strains ethical credibility. In those situations, trumpeting the value of economic development from drilling would be analogous to someone purchasing kidneys from the poor and then patting themselves on the back for their contributions to the homeless. Where the fair market value of the object in question is indeterminable, whether it involves determining the value of a kidney or the environment in prime drilling areas, it is impossible to draw conclusions from economic data alone.

The Late George Carlin On America and Social Stratification

The late comedian George Carlin died in June 2008. Carlin was funny but also very political in his content. In his interviews he pulled no punches. Actually, one could argue that he gave punches in his interviews and debates. On mainstream media he even used the "C" word: class. May he rest in peace. May we all get some peace.

"Freedom, Equality, Property, and..."

There's a great, and well-known, passage in Capital that marks the transition from the critique of the process of exchange to the critique of the process of production that reads:

This sphere that we are deserting, within whose boundaries the sale and purchase of labour-power goes on, is in fact a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham. Freedom, because both buyer and seller of a commodity, say of labour-power, are constrained only by their own free will. They contract as free agents, and the agreement they come to, is but the form in which they give legal expression to their common will. Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent. Property, because each disposes only of what is his own. And Bentham, because each looks only to himself. The only force that brings them together and puts them in relation with each other, is the selfishness, the gain and the private interests of each. Each looks to himself only, and no one troubles himself about the rest, and just because they do so, do they all, in accordance with the pre-established harmony of things, or under the auspices of an all-shrewd providence, work together to their mutual advantage, for the common weal and in the interest of all. 

As our reading of A Brief History of Neoliberalism underlined (see especially Chapter 2), many of these same elements are still part of the justification of deregulated markets, etc. We see, in contemporary ideology, the ascription of sanctity to freedom and property, with the presupposition that each individual enters the market as an equal. But I've been wondering for the past few weeks about who would be-- in the hypothetical case that one of my papers would be paraphrasing this passage, more specifically a paper on Lukacs-- a good contemporary replacement for Bentham. 

At first I thought of busting Zizek's move of replacing 'Freedom, Equality, Property, ...' with academic buzzwords like 'desiring-machines, multitudes, etc.' but this doesn't work for what I want to do. My point isn't a critique of competing philosophical approaches, but a critique of capitalism, so the important point isn't how our French comrades talk about it, but how liberals and neoliberals talk about it. It needs to be a figure that the 'responsible' political theorist (if he or she accidentally walked into the conference room) would feel obligated to defend because obviously I'm making a mockery of the serious thought that this particular figure represents.

So I've got two names: Rawls and Nozick. They obviously have different connotations. Rawls might be good, because in the general liberal way of thinking, he supplies the 'veil of ignorance' quality to the legal structures surrounding the market, replacing the history behind it with a very thought experiment-y abstraction. Then again, Nozick's best-known justification for the market and its apparatus, the labor and transfer Lockean jive (although I hear he backtracked a bit at some point), basically boils down to what I called, in a similar context, the philosophical equivalent of money laundering. I've also considered Habermas, and even Sloterdijk (although the latter's recent work might just be a bit too outlandish for these purposes).

I find that Rawls is more likely to be the figure that the 'responsible' political theorist feels obligated to defend. But now that I think of it, I might work this very discussion about substitution into the paper itself, proceeding from Bentham, to Rawls, to Nozick, to Habermas.

"A Brief History of Neoliberalism," Chapter 6

Chapter Six puts neoliberalism "on trial," and the central question is whether the implementation of neoliberalism has done what its ideological proponents claim it does: protect individual freedom and increase his or her free choice.

Not to spoil the fun, but we already know. We've lived through the financial crisis and everything that's followed. But this does not render Harvey's analysis in Chapter Six redundant or obsolete. It documents many of the warning signs, and provides markers for making sense of what seems to be yet another reinforcement of class power, at least concerning the weak reforms proposed in the United States. [1]

But more importantly, Harvey provides a analytical toolkit to evaluate whether or not neoliberalism continues by different means, for he argues that neoliberalism is much more pragmatic than ideological. While its ideological proponents might bluster about mistakes they might have made (Writing this reminds me of a line from David Mitchell's novel Cloud Atlas: "Where there's bluster, there's duplicity"), much of--if not all-- the financial and institutional infrastructure is still in place. Even if, before the crash, neoliberalism had failed to stimulate worldwide growth [2], and even if "all global indicators on health levels, life expectancy, infant mortality, and the like show losses rather than gains in well-being since the 1960s" (p. 154), several tenets of neoliberalism seem unshakable.

Which leaves us with the class power thesis: neoliberalism proved appealing because it provides a system for re-entrenching class power domestically and redistributing wealth from the global south to the global north's financial centers. I don't think it's a stretch to argue that two of the crucial analytical indicators of the retreat of neoliberalism would be the reversal of these trends. There are two other indicators that I think we should watch (that is, on which we should focus in out critiques).  

First, accumulation by dispossession. Harvey renovates what Marx called "primitive accumulation," because dispossession is an ongoing, rather than completed, process. The concept includes (among other things) privatization and commodification, financialization, closure of commons, transfer of state or public property rights to private property rights, and "a raft of techniques such as the extraction of rents from patents and intellectual property rights [sometimes stolen from the general intellect of indigenous or  might we say 'underprivatized' populations --D.Z.S.]  and the diminution or erasure of various forms of common property rights (such as state pensions, paid vacations, and access to education and health care) won through a generation or more of class struggle" (pp. 159-160).

Second, the prevalence of NGOs in overexploited regions. Often NGOs fill the void left by a collapse in public services in the face of political or environmental crisis. And while they can fulfill basic needs, they do not provide a long term solution to crisis (that is, if they aren't part of fomenting a crisis as a front group for particular interested parties-- think US involvement in Venezuela). Because NGOs are not accountable to local populations and often negotiate directly with state or class power, they cannot or do not step out of the neoliberal framework, but rather reinforce it (p.177). It might be worth quoting what I wrote in a review, loosely speaking, of Peter Hallward's Damming the Flood:

Non-governmental Organizations are not neutral. This is a difficult point to get across. First, it probably has to do with the neutral sounding name, when many of these groups could properly be called, in the case of Haiti, Ideological Counter-state Apparatuses. Hallward shows how the operation of NGOs allows 'rich countries a morally respectable way of subcontracting the sovereignty of the nations they exploit' (179). While some of these groups do respectable work with the poor and exploited, the problem remains that their primary responsibility is to the sources of their funding, which means that they function according to a mandate set not by the people of Haiti, but to rich donors outside of the country. Instead of directly giving foreign aid to the government, where it has the possibility of being utilized according to a plan (here health, there jobs, there education), these tasks are privatized, fragmented, and often rely on elite contacts for local distribution, which reproduces class inequality.

Let's not forget that some of the same people who are out re-establishing class power are the same that sit on the boards of some NGOs. Which reminds me of a problem that I have about Harvey's use of 'upper class' or 'elite' to designate class power. While I admit that 'bourgeoisie' sounds dusty and Victorian, these other terms seem to be too available for capture within non-Marxist, parliamentarian, and/or wrongheaded right-wing critiques of 'power' or, might we say, class power. The question is, how can we designate the ruling class of the contemporary order, in a way that describes it concisely and accurately?

These trends can only be reversed by movements that can establish alternate forms of social organization, that can move from local resistance to broader democratic governance (and I don't mean that in a parliamentarian sense). As difficult or abstract as such projects sound, fighting the global resources of capitalism demands/requires movements that can establish-- or organize?-- "freedom of speech and expression, of education and economic security, rights to organize unions, and the like" as primary freedoms, while making  "property rights and the profit rate derivative" (p. 182).

Matt's going to finish our reading of A Brief History of Neoliberalism this week by discussing 'Freedom's Prospect.'

Notes

[1] I've previously discussed some of the proposed strong reforms here.

[2] The numbers: "Aggregate global growth rates stood at 3.5 per cent or so in the 1960s and even during the troubled 1970s fell to only 2.4 per cent. But the subsequent growth rates of 1.4 per cent and 1.1 percent for the 1980s and 1990s (and a rate that barely touches 1 per cent for 2000) indicate that neoliberalization has broadly failed to stimulate worldwide growth" even with the deficit spending of the United States and China (p. 154).

"A Brief History of Neoliberalism," Chapter 5

While Chapter 4 of David Harvey's A Brief History of Neoliberalism outlines the uneven geographical implementation of neoliberalism, Chapter 5 analyzes the "peculiar path" of China's entry, via  the reforms initiated by Deng Xiaoping, into an increasingly neoliberalized and globalized economy (although it is more proper to say 're-entry' regarding the longue durée of China's relationship to global political economy). [1] Whether the outcome is socialism 'with Chinese characteristics' or privatization 'with Chinese characteristics,' the transformation of China's economy over the last thirty years has led to high growth, a rising standard of living, but also dramatic inequalities of wealth between urban and rural populations, with the resulting unrest and instability that such inequalities produce. [2] Much of this growth has been export led, and as such, China has benefited from the international frameworks for trade and finance that have promoted neoliberalism.

Unsurprisingly, especially for those who have been following our discussion, the central question for Harvey is whether the transformation of China's economy has led to the reconstitution of upper class power. His analysis is focused and does not lapse into shock and awe that the more popular punditry has produced while discussing China (some of these tendencies are described in Perry Anderson's review for the London Review of Books entitled "Sinomania"). Harvey argues that China has constructed "a particular kind of market economy that increasingly incorporates neoliberal elements interdigitated with authoritarian centralized control" (p. 120). In this regard, the salient features of China's political economy are:

• Accumulation by dispossession. Privatization of communal property and steps toward the financialization of the economy has created speculative bubbles in real estate. Corporatization of state owned enterprises followed by buyouts of worker shareholding (sometimes through coercive means) and state bailouts of non-performing loans have transferred large amounts of wealth to the elite. Yet class formation, Harvey argues, has been a complicated affair; while reforms have prevented "the formation of any coherent capitalist class power bloc within China," they have not prevented, through a combination of corruption, clientelism, and opportunism, a "growing integration of party and business elites in ways that are all too common in the US" (pp. 123, 150).
• Steep inequalities produced by uneven geographical development. Economic reform has reinforced social inequality between urban and rural areas. Not only is there a large disparity in income, there are reductions in social services and the implementation of user fees for public services. Residency restrictions (separating town and country) have led to a labor force of peasants (especially young women) that-- lacking legal protection-- is "vunerable to super-exploitation" not only through low wages, but also through non-payment of wages and pension obligations (p. 148).
• Proletarianization. The working class has nearly tripled between 1978 and 2000, increasing from 120 million to 350 million (270 million workers plus 70 million peasants who have found wage work). Greater flexibility (that is, precariousness) in the labor market, and uneven geographical development has produced large labor surpluses that the Chinese state has confronted through public deficit spending, on dam projects, and massive projects in infrastructure and public transportation. [3]

Nevertheless, China cannot just deficit spend its way out of political upheaval. As Giovanni Arrighi notes in Adam Smith in Beijing, "public order disruptions" (protests, riots, and other forms of unrest) have increased from around 10,000 in 1993 to 87,000 in 2005. [4] Harvey concludes with remarks on the possibilities for political subjectivity and mass movements in China. Rather than paraphrase, this passage is worth quoting at length:

Both state and migrant workers, [S.K. Lee] suggests, reject the term working class and refuse 'class as the discursive frame to constitute their collective experience'. Nor do they see themselves as 'the contractual, juridical, and abstract labour subject normally assumed in theories of capitalist modernity', bearing individual legal rights. They typically appeal instead to the traditional Maoist notion of the masses constituted by 'workers, the peasantry, the intelligentsia and the national bourgeoisie whose interests were harmonious with each other and also with the state'. In this way workers 'can make moral claims for state protection, reinforcing the leadership and responsibility of the state to those it rules'. The aim of any mass movement, therefore, would be to make the central state live up to its revolutionary mandate against foreign capitalists, private interests, and local authorities (pp. 149-150).

Whether the Chinese state responds to these challenges through outright repression, opportunist intervention, class compromise, or through a more egalitarian redistribution of wealth remains to be seen.

Next week, we will conclude with Chapters Six and Seven.

Notes

[1] Recall, of course, Mao's well-known remark that Deng was a secret 'capitalist roader.'

[2] Not to mention large scale and rapid environmental degradation.
[3] Deficit spending, and Chinese state control of capital flow run counter to the "global rules of the IMF, the WTO, and the US Treasury." While Harvey notes that these kind of economic practices cannot continue "in perpetuity" due to China's agreements with the WTO (for example), it's not difficult to notice that China uses its large holdings in US debt for political leverage.
[4] See Arrighi, Adam Smith in Beijing (London: Verso, 2007), 377.

"A Brief History of Neoliberalism," Chapter 3

Let's face it: the more prominent contemporary continental philosophers have not attempted  too many in-depth analyses of the functions of the neoliberal state form. Given that they are often focused on revitalizing a theory of the subject in our cynical and consensual times, and given that talk about seizing state power evokes whispers about Lenin or Stalin-- that is, authoritarianism-- this makes sense. Nevertheless, it also makes sense that a theory of collective subjectivity should say something about what we are up against, about the interaction of the state and capital in what David Harvey calls neoliberal governance.[1]

Hardt and Negri have already shown us the wrong direction; recall in the heady days when so many people were reading Empire, how misguided their celebration of the end of big government was even then, which they attempted to rectify in Multitude.

Since then, Zizek has taken some interest in delineating the relationship between the state and capital, but he has been unusually tentative. When talking about the use of patents to generate profit through rents, in First as Tragedy, Then as Farce, he writes:

Perhaps therein resides the fundamental "contradiction" of today's "postmodern" capitalism: while its logic is de-regulatory, "anti-statal," nomadic, deterritorializing, and so on, its key tendency to the "becoming-rent-of-profit" signals a strengthening of the role of the state whose regulatory function is ever more omnipresent (p. 145).[2]

The general point about rent extraction is correct, but it's addled with enough Deleuzian jargon and inverted commas that its impact is completely muted. I've annotated this passage in my copy; it says that Zizek could straighten this out if he spent more time reading up on political economy rather than Chesterton, Paul, etc. [3] Which is why we're now reading through the third chapter of David Harvey's A Brief History of Neoliberalism.

Probably part of the provisional character of the philosophical analysis of the neoliberal state is derived from its pragmatic variability. While the neoliberal state is relatively simple to define in theory, neoliberal governance often departs from the theoretical template. If we accept what I will call Harvey's 'class power thesis': (neoliberalism is a political project to restore class power), then these pragmatic departures should be expected.

In its theoretical form the state would promote individual choice through the guarantees of property rights, free trade, free markets, and rule of law. Individual choice is contrasted with state decision making, and in all cases-- theoretically-- the interaction of and competition between individuals in the private sphere/market is held to be more efficient and productive than public decision making (of course, more efficient and productive for what end?). The 'free choice' of the individual-- even if this is the legal fiction of the business or corporation as individual-- is "regarded as a fundamental good" (p. 64). Hence neoliberals are "assiduous" when it comes to implementing the privatization of public goods and the deregulation of markets (what, following Harvey, we've called forcing open markets), and they exhibit strong preferences for juridical resolution of individual-social conflicts rather than democratic or parliamentarian means.

Even in theory several contradictions and tensions are present. Harvey notes that neoliberalism has some theoretical difficulty when confronted with monopoly power, market failures (especially regarding environmentalism) that are often conjured away with questionable assumptions, and a fetish regarding the 'technological fix' for all problems (do I have to mention BP here?), even if technology is in some cases socially disruptive.  Nevertheless, these tensions have often been turned to pecuniary advantages through temporary fixes. Rather than resolving crises, neoliberalism provokes them:

There is an inner connection, therefore, between technological dynamism, instability, dissolution of social solidarities, environmental degradation, deindustrialization, rapid shifts in time-space relations, speculative bubbles, and the general tendency towards crisis formation within capitalism (p. 69).

Rather than interpret this situation as an accident, the class power thesis grasps these connections as means for the redistribution of wealth. Even crises, as Harvey discusses in Chapter 4, serve as a mode of redistribution.

In practice, neoliberal governance exhibits two fundamental biases that show how decisions favoring class power trump the theoretical template. First, when faced with a decision between 'fostering' a 'good business' or 'good investment' climate and labor or environmental concerns, neoliberal governance chooses in favor of business and investment. Not that on all levels these decisions are specifically made with class motives behind them. Rather neoliberal political economy is structured to coerce competition between cities, regions, countries; so while not all decisions need exhibit class motive (often at the local levels they are made to preserve a collapsing set of social relationships), the structure does.

Second, neoliberal states "typically favour the integrity of the financial system and the solvency of financial institutions over the well-being of the population or environmental quality" (p. 71). 

The neoliberal reliance (or is this a fetish too?) upon monetarism and the integrity of money means that neoliberal governance "cannot tolerate any massive financial defaults even when it is the financial institutions that have made the bad decision" (p. 73). This is a particularly perverse bias. From a theoretical perspective, the neoliberal ought to hold individual investors responsible for their bad choices, just as neoliberals would want to force people to be responsible for their actions and well-being, their health care, education, pension, etc. As Harvey notes, some "fundamentalist-minded" neoliberals argue that organizations that protect investors, such as the IMF, should be abolished. But they don't prevail over pragmatics Their failure is not unexpected if one uses class analysis.

The protection of finance also benefits the upper class at the expense of the public. Domestically, the general populace is forced to bear the burden of financial failure, just as it happened, most recently, in the 2008 bailout. Since this burden is shifted through the state-- that is, as public debt-- it also constrains future deficit spending on public goods that benefit the majority. [4] Internationally, finance-protection-- brokered through the IMF-- is used to transfer wealth from the global south to the global north through austerity measures,  debt repayment, and the removal of barriers to the flow of goods and capital /foreign investment (although the reverse does not hold).

Of course, the neoliberal response to the movement of organized labor and forms of social solidarity is, as we've already seen, the exception to the rule. One of the prime difficulties of confronting neoliberalism is that it uses competition between regions and improvements in communication and investment flow to break social solidarity. Capital accumulation benefits from uneven geographical development. Even if labor is able to move to regions with better pay and greater benefits, the state can still manage this movement through restricting immigration, or increasing it.

In addition, the state, with its monopoly on violence, can curb certain forms of "redistribution through criminal violence" (what a great phrase) through incarceration (p. 48). It is difficult to ignore both the tendency toward surveillance and incarceration as social policy over the last few decades, especially in the United States. While Harvey does not discuss these social transformations in detail, one of the purposes of reading Harvey is to establish the features of neoliberal pragmatics before turning to how it interacts with other social institutions.

Next Week: We will be working through at least Chapters 4-6.

Notes

1. On 'governance': Harvey writes that one of the pronounced features of neoliberalism is the shift from government ("state power on its own") to governance ("a broader configuration of state and key elements in civil society"). I think this distinction is useful as long as that we add the phrase "... which includes the redistribution of state resources, and transfer of state functions, to private corporations." See p. 77.

2. "Becoming-rent" is discussed in more depth in Christian Marazzi's accessible (although marred by some typographical errors) The Violence of Financial Capitalism. Trans. Kristina Lebeveda (Semiotext(e), 2010), 44-66.

3. Since I'm on the topic, has anybody else noticed how Zizek hardly references Lacan in First as Tragedy? Is this the case in Living in the End of Times as well? Matt, I'm asking you!

4. Thomas Frank's The Wrecking Crew (Metropolitan Books, 2008) argues that neoconservatives deliberately misgovern in order to later justify privatizing government functions.

"A Brief history of Neoliberalism", Chapter 2

Neoliberalization being in the most general terms a re-distribution of wealth from the poor to the very rich, Harvey asks in Chapter 2 how exactly such a blatantly unjust process could have been pulled off. The answer is fairly simple when looking at countries like Chile and Argentina: labour leaders, community organizers, socialist politicians, etc, were jailed, tortured and assassinated by police and military. Demonstrators and strikers were beaten, killed, and terrorized. Social wealth and infrastructure were sold off, in short, under truncheon blows and at gunpoint.

But what about the United States and Britain, where neoliberalism "had to be accomplished by democratic means"[39]? Harvey argues that the success of neoliberalism (i.e. from the point of view of the rich) was prepared in these countries by a construction of consent; this implied gaining hegemony over, mobilizing and manipulating what Gramsci calls "common sense", defined not as that which is sensible, but merely as "the sense held in common" [Ibid.]. Cultural and traditional beliefs, values and fears were employed, in short, to "mask other realities" - namely, the brute economic facts of post-Fordist capital accumulation and the dismantling of social institutions to further line the pockets of the wealthy [Ibid.]. Neoliberalism employed ideological tools especially where existing social mores, traditions and institutions posed barriers to neoliberalization by brute force alone.

This is not to say that Reagan and Thatcher failed to use bribery, threat and an increasingly militarized police to great effect. Rather, it is to point out that existing values were also manipulated in such a way as to render the great majority of the American and English populations blind and complicit to the looting of their own hard-earned social infrastructures. Take for instance the ideal of personal freedoms, which, many Americans flatter themselves has long been a hallmark of their country. As Harvey points out, "Any political movement that holds individual freedoms to be sacrosanct is vulnerable to incorporation into the neoliberal fold" [41]. This is because at the level of personal property rights and freedoms, neoliberalism delivers (that is, to the rich and to a certain strata of corrupt labour); moreover, through its media it aggressively drives home the point that there are no other personal freedoms worthy of the name.

The real coup pulled off by neoliberalism with respect to "common sense", however, was to separate the ideal of personal freedoms, i.e. property freedoms, from that of social justice (whereas, for instance in May 68 in France as well as other left-libertarian crests of history, these formed an ideological knot). The ideology of personal freedoms, divorced from social justice, naturally became a bulwark against state intervention in the economy. Note that corporations are considered persons; therefore the personal freedoms of, to take a contemporary example, BP, serve as a legal and ideological barrier to the idea that the company owes anything to anyone for what it has extracted, and the resultant environmental costs. The success of neoliberalism in organizing "common sense" in this way accounts for the ubiquitous and totally bizarre images of poor Americans marching in the streets for their right to not be able to afford cancer treatments. It also accounts for the dominant perception that property destruction by militants (and cops disguised as militants) at the Toronto G20 convergence was violence par excellence, whereas beatings, unlawful detentions and sexual assaults by police officers against peaceful protesters were largely ignored by mainstream media and roundly praised by all levels of Canada's (increasingly neoliberal) government.

As regards what might be called the North American scene, two points especially are noteworthy here: so-called "postmodernism" and Reagan's organization of a Christian conservative "moral majority" to back the GOP. The first, which comprises a kind of cynical-radical chic, Harvey devastatingly critiques in his The Condition of Postmodernity (required reading for anyone dabbling in the often polluted waters of continental theory). Postmodernism as Harvey reads it is an ideology of personal property rights and the "freedom" to pursue petty, amoral pleasures (Coke or Pepsi? Gay porn or straight? You see?? You're free!!!). This hedonistic ideology has hamstrung or at least significantly confused a substantial section of what would otherwise be the radical youth; therefore neoliberalism has proven "more than a little compatible" with it [50]. The flipside of postmodernism is, of course, the organization of the Christian Right. By grafting "family values" onto an economic programme destructive of the very roots of healthy family life among the poor, Reagan ensured the support of those who would have had the most to gain from his deposal. (It should of course also be underscored that the Democrats, who would otherwise represent a cultural and social counter-pressure to the GOP, have long since been compromised to the core. Chances of election under neoliberalism are slim to nil barring deals with the corporate devil, as it were.)

The story in Britain was much the same - strike breaking, bait-and switch maneuvering, selling off bits and pieces of the social safety net - but it's notable that Thatcher's approval was in the dumps prior to the Falklands/Malvinas war. Reagan and other neoliberal leaders were not slow in taking Thatcher's cue; when things look bad for the neoliberal state, organize a war against a country which can hardly defend itself, and be sure to mobilize as much fear and national pride as possible. This is a model we have inherited, with terrible consequences.

Harvey is sure to underscore the failure of the Left to beat the neoliberals at their game in terms of the "common sense" factor. They lacked an adequate response, but also a positive programme. This underscores that the educational and, dare I say it, propagandistic wing of the new social movements has its work cut out for it. But what about Obama, and his audacity of hope? Can't he be called on to save us? Here is what Harvey has to say: "[The genius of Reagan and Thatcher] was to create a legacy and a tradition that tangled subsequent politicians in a web of constraints from which they could not easily escape. Those who followed, like Clinton and Blair [and, evidently, Obama], could do little more than continue the good work of neoliberalization, whether they liked it or not" [63].

"A Brief History of Neoliberalism," Chapter 1

As I mentioned in the prefatory remarks for our reading of A Brief History of Neoliberalism, David Harvey sets out to analyze a central contradiction of neoliberalism, between the theoretical project to reorganize capitalism around and extension and intensification of property rights, free markets (especially in the financial sector) and free trade, and a political project to re-establish conducive conditions for capital accumulation and for re-entrenching elite economic power (p. 19).

Harvey argues that the theoretical side of neoliberalism primarily functions as a justification of the larger project. In fact, he calls it a "utopian" project because it is never perfectly realized (as its own proponents often say whenever a neoliberal state runs into economic trouble), but rather implemented through "a very complex process entailing multiple determinations and not a little chaos and confusion" (p. 9). Nevertheless, he argues that the redistribution of wealth to the upper classes of a given country is a consistent structural feature neoliberalism. 

The first chapter introduces both the history of the theoretical project and the political project.* As a theoretical project, neoliberalism emerged after nearly three decades on the ideological fringes as a solution to the crisis of embedded liberalism in the 1970s. Embedded liberalism-- usually called Keynsianism-- was the result of a class compromise between a strong working class and the bourgeois state, and was designed to stave off crises the crises that beset 1930s capitalism. To maintain this compromise the domestic policy of a liberal state aimed for full employment, social welfare (in health care, education, etc.) and economic growth (Harvey does not here discuss how the foreign policies of these same states sometimes involved hyper-exploitation of  the populations of colonial, post-colonial, clientele and/or lesser developed locales). Through the 1950s and 1960s embedded liberalism produced high levels of economic growth, but it was unable to resolve the crises of stagflation in the 1970s, compounded by the war in Vietnam and the OPEC oil embargo.

Neoliberalism, historically speaking and not because its era is over, was, when not implemented by military means (as in Chile or Argentina), proposed as one solution to this crisis. It had "long been lurking in the wings of public policy" (p. 19), and can be traced back to the formation of the Mont Pelerin Society in 1947, a group that seemed to view any hint of solidarity beyond meeting in exclusive clubs to be a dire threat to civilization itself. The proponents of neoliberalism did, however, possess a sense of purpose, gradually integrating the financial resources of the elite with their intellectual resources, creating think tanks, promoting their work in academia, and networking. By 1976, two neoliberal theorists-- Friedrich von Hayek and Milton Friedman-- had won Nobel prizes in economics, and by 1980 its proponents had found the sympathetic ears of Ronald Reagan and Margaret Thatcher.

Neoliberalism secured its place in public policy through an ideological process, but Harvey does not define it through its own credo. Instead, he analyzes the policy transformations that came were implemented by its proponents. I won't be rehearsing many of the details, but there are several features that define the turn to neoliberalism. First: a monetary policy "designed to quell inflation no matter what the consequences might be for employment" (p. 23). However, as Harvey argues, monetarism is a necessary but not a sufficient condition for neoliberalism (p. 24). The implementation of neoliberalism took place--takes place-- in other areas of government policy, such as  privatization and deregulation (forcing new markets open...), shifting the tax burden from the rich to the general populace, and the use of austerity measures to break down the power of social solidarity and union organization. And, most importantly, neoliberalization "has meant... the financialization of everything" (p. 33).

Where financialization has led, I've discussed before in a review of Paul Mason's Meltdown (although the review doesn't cover the 'efforts' of the IMF and WTO in enforcing austerity measures while protecting financial instruments).

Harvey;s account of financialization, unlike Mason, has a much stronger class character. I've used, like Harvey, references to the "upper class" or the "elite" instead of the classic term "bourgeoisie" because one of the features of neoliberalism is the reconfiguration of ruling class power. Along with the usual state-corporate clientelism, the rise of information technology and biotechnology, finance is at the forefront of neoliberalism. The 'financialization of everything' has transformed many Western companies from industrial producers to financial operations (like General Motors...). Harvey writes that

One substantial core of rising class power under neoliberalism lies...with the CEOs, the key operators on corporate boards, and the leaders in the financial, legal, and technical apparatuses that surround this inner sanctum of capitalist activity (p. 33).

In addition, Harvey views financialization as integral to the process and not, as many traditional and Marxists economists view it, as parasitical on real (i.e. industrial) production.

Regarding the working class, however, we largely see (described in Chapter 2) the decomposition of working class power, and disarray in the recomposition of organized resistance to neoliberalism on an international scale. This being said, not all is lost; we do know that there are consistent and local attempts to resist and refuse the exploitation of neoliberalism. The final chapter of A Brief History of Neoliberalism closes with a  general discussion of "Freedom's Prospect."

We've got several chapters to read before getting there. Over the next two chapters we will see how neoliberalism captured hegemony in intellectual, cultural, and political discourses, and how it captures and transforms the state. Through the transformation of state structures neoliberalism could establish its 'inevitability' both ideologically and structurally, "to create a legacy and a tradition that tangled subsequent politicians in a web of constraints from which they could not easily escape" (p. 63).

Later this week: Matt reading Chapter 2, and I will read Chapter 3.

*The usual caveats apply here about the distinction of theory and practice being an analytic tool, etc.

A Preface to Reading "A Brief History of Neoliberalism"

One of the central difficulties late capitalism, Fredric Jameson writes in his Postmodernism, or, The Cultural Logic of Late Capitalism (1991), is cognitively mapping its systematic features. Late capitalism-- what we now typically call neoliberalism-- is, he argues, defined by the compression of time to the point of ahistoricism (although this feature of capitalism was already grasped by Marx in his critique of the Robinson Crusoe stories of classical economists), and the suppression of distance and the saturation of space. This metaphor of 'mapping' itself, however, is paradoxical, because it does not mean that we have recourse to maps to trace this geography, but the very activity of mapping politics in time and space requires grasping the specific reconfigurations of the relationships between history, geography, and political economy in late capitalism.

Jameson's argument, was directed against the anti-systematizing tendencies of the North American reception of postmodernism, the proponents of which often refused to render accounts of politics, culture, and the like, in a systematic totality. His claim-- relevant then as much as now-- is that the variety cultural expressions in late capitalism can only be understood historically as a totality, that accounting for a large set of particular variations is not incompatible with an analysis of the global configurations of political economy.

Nevertheless, these configurations of political economy remained difficult to map, although the totality of their relations are typically now referred to as neoliberalism, a concept that encompasses the aforementioned compression of time-space, the conservative counterrevolution that captured state power in various metropoles in the late 1970s and early 1980s, and the postmodernization (if I can be permitted such a term) of culture. Even this brief description itself betrays the difficulty I'm trying to get at; it is as if each feature of neoliberalism suggests a number of exceptions, throwing us back on the problem of particularity and totality: how is it possible to conceptualize neoliberalism as both a set of particular, concrete variations through the history of the past 30 years and across geographical space, and as an increasingly global, and globalized, totality?

Starting next week, Matt and I will be re-reading one of most clear and concise responses to the preceding questions, David Harvey's A Brief History of Neoliberalism (2005). There are two reasons why this book remains, for me, a constant reference point as I slowly work out the relationships between philosophy, political economy, and praxis.

First, Harvey's arguments and expressions are clear. His terminological choices reflect his conceptual commitments, and cast a critical eye on 'common sense' phrases. Where so many have been inclined to fight over the extent of deregulation or privatization, or whether they are desirable, which locks the debate into a specific neoliberal conceptual field, Harvey re-politicizes the terms. So, for instance, talking about the role of the state in neoliberal theory, he argues that its partisans aren't against the state in toto, they are against a particular kind of state. They don't mind if the state engages in deficit spending for military action, of if it preserves the integrity of money or private property, nor if the state forces open new markets:

if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary (2).

What is this state action? What is so commonly referred to as privatization or deregulation becomes, in Harvey's terms, a use of state power to accomplish political-economical goals.

This kind of analysis is possible because Harvey does not just analyze neoliberalism as a form of reorganizing  and compressing time-space through capitalism (which is a worth contribution alone), he also, second, argues that this form of capitalism is a way to redistribute wealth upwards; that is, Harvey argues that neoliberalism is a political project to reinforce elite class power, through both structural and ideological means. The force of his argument, I think, is the result of his reference to class analysis...

But we're getting ahead of ourselves here. We're only at the 'Preface,' which introduces the reader to neoliberlism and its history. Therefore, I would like to invite our readers to take their copy down from the shelf and read along, and comment, over the next few weeks as we analyze A Brief History of Neoliberalism chapter by chapter, as we discover the continued relevance of Marxist analysis in the so-called era after neoliberalism.

Next week: Chapters 1-3.

Update: I'm usually on top of these things, but I forgot to mention that Matt reviewed Harvey's Spaces of Global Capitalism" back in April.

Teaching Marx, Part 2

As I mentioned before, I spent a few days teaching Marx to my Great Philosophers class. The first day was dedicated to a bit of intended disorientation for them, while on the second, we looked at the Preface to A Contribution to the Critique of Political Economy (here). I will spare you my notes, but I discussed how this text has an ambivalent place in many interpretations of Marx; while it provides a concise statement on historical materialism, it seems to veer toward a deterministic account of social change. The voluntarist side of Marxism, to which I incline, is often forced to reject Marx's strict distinction between base and superstructure, or to reject passages such as

No social order ever perishes before all the productive forces for which there is room in it have developed; and new, higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society itself. Therefore mankind always sets itself only such tasks as it can solve; since, looking at the matter more closely, it will always be found that the tasks itself arises only when the material conditions of its solution already exist or are at least in the process of formation.

Now, I feel fairly ambivalent about these kinds of passages, because while they seem to endorse an economic determinism, they also seem to support Marx's argument that changes that do not affect the base will not lead to liberation. However, by removing the subjective aspect of social struggle, they seem to describe better the transitions from one capitalist superpower to another: once one economic center's productive forces are fully developed and become an impediment to further development, another economic center takes its place. 

I have, nevertheless, started rethinking my take on the distinction between the base and the superstructure. This division is often criticized for making the superstructure (political, intellectual and social life) dependent on the economic base.

Unlike many of the other approaches that historicize social forms, historical materialism requires that these forms must be understood as embedded in capitalist and imperialist forms of social relationships. Furthermore, we ought to look at how the financialization of capitalism produces a failure of meaning in the transition from economic forms to forms of political struggle. By this I mean that radical political struggle, and radical philosophy, has not yet 'mapped' these new social relations and organized clear political demands to change these relationships, which is why so much of the critique of finance capitalism has focused on bankers or has demanded administrative solutions to financial crises. This is not enough.  As Christian Marazzi points out, in The Violence of Financial Capitalism, reform must start at the base. This means questioning assumptions about consumption, production, and investment in new ways. Marazzi argues that reform at the base ought to return the right of social ownership to the forefront of criticism. His specific example is the right to housing as a social right rather than a private right, but we could also add better financial access to education and intellectual commons, amongst other things.

Geography of a Recession

Honestly, you've got to watch this graphic on the geography of a recession more than once to really take it in.

Glass-Steagall and the Future of Reform

Today marks the tenth anniversary of the repeal of the 1933 Glass-Steagall Act, which created a legal separation of commercial banks and investment banks. Today on Counterpunch you can find a succinct and well-written article by Robert Weissman, entitled "Maniacal Deregulation," on the repeal of Glass-Steagall. Far from being an arcane matter, Glass-Steagall was a central piece of legislation preventing commercial banks from participating in the kind of high-risk investment that is to blame for the current recession-depression.

Repeal of Glass-Steagall had many important direct effects but the most important was to change the culture of commercial banking to emulate Wall Street's high-risk speculative betting approach.

"Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people's money very conservatively," writes Nobel Prize-winning economist Joseph Stiglitz. "It is with this understanding that the government agrees to pick up the tab should they fail. Investment banks, on the other hand, have traditionally managed rich people's money -- people who can take bigger risks in order to get bigger returns. When repeal of Glass-Steagall brought investment and commercial banks together, the investment-bank culture came out on top. There was a demand for the kind of high returns that could be obtained only through high leverage and big risk-taking."

Weissman then sets out a set of demands for true reform, which means probably not the kind of reform that we will be told 'is necessary':

• Instead of creating a new regulatory body, banking reform should focus on industry structure, This included reinstating the legal barrier between commercial banks and investment banks, along with stricter regulation.
• Keep commercial banks, backed by the FDIC, from getting involved in speculation.
• Breaking up the giants of the financial industry because they wield too much political power.
• And finally, Weissman says it best: "we need broad reform in the area of money and politics. We need public financing of Congressional regulations, even stronger lobbyist reforms, and tight restrictions to close the revolving door through which individuals spin as they travel between positions in government and industry." This, I think is worth pointing out, probably has to be the basis of other reforms and not the other way around.
  

Nobody Could Have Predicted...

Today I've read over a few articles talking about how economists got the economy wrong. Each, in some way, try to cast light on the obscurantist claim that nobody could have predicted the downturn by showing how a particular set of circumstances brought about the intellectual blinders worn by contemporary economists. Together, they make an interesting read First, Paul Krugman explains how the economics profession gradually shifted from Keynsian theory to neo-liberalism. Keynes can be simplified to two points: 1) that markets require regulations (especially finance), and 2) "he called for active government intervention — printing more money and, if necessary, spending heavily on public works — to fight unemployment during slumps."

The story of neo-liberalism is the story of the struggle against Keynes. Neo-liberalism reduces regulation to monetary policy. As Krugman writes:

Monetarists asserted, however, that a very limited, circumscribed form of government intervention — namely, instructing central banks to keep the nation’s money supply, the sum of cash in circulation and bank deposits, growing on a steady path — is all that’s required to prevent depressions.

This view is often associated with Alan Greenspan, but the policy was first introduced by Paul Volker during Jimmy Carter's presidency. Couple this with a blind faith in markets and an attack on regulations, and we're pretty close to neoliberal policy. If there is a general difference between the two approaches, it is that neoliberalism advocates Federal Reserve policy while Keynsians advocate government spending during market downturns (and note that neoliberal hegemony only occurred in the USA with heavy Keynsian-style military spending in the background).

And then, ideologically, neo-liberalism has one more particular quirk: any time that its policies fail, it is always, according to its partisans, because deregulation didn't go far enough. There is always some other government function that is interfering with the free market.

Krugman doesn't explain how neo-liberalism became hegemonic beyond the university and regulatory system. On its forced introduction across the globe, see Naomi Klein's The Shock Doctrine. In the USA, the neoliberals have been running the show for the last three decades, and while Alan Greenspan has 'admitted' to some mistakes, their ideology is still dominant. How were economists "seduced by the vision of a perfect, frictionless market system," as Krugman puts it?

Ryan Grim, at the Huffington Post, says we should follow the money. While through the mid-1970s the academics of economics were largely divorced from the Federal Reserve, today the Fed largely reinforces its own ideology through academic publications and funding:

The Federal Reserve's Board of Governors employs 220 PhD economists and a host of researchers and support staff, according to a Fed spokeswoman. The 12 regional banks employ scores more. (HuffPost placed calls to them but was unable to get exact numbers.) The Fed also doles out millions of dollars in contracts to economists for consulting assignments, papers, presentations, workshops, and that plum gig known as a "visiting scholarship." A Fed spokeswoman says that exact figures for the number of economists contracted with weren't available. But, she says, the Federal Reserve spent $389.2 million in 2008 on "monetary and economic policy," money spent on analysis, research, data gathering, and studies on market structure; $433 million is budgeted for 2009.

So while much of neoliberal ideology is discredited, it still has a strong academic industry behind it. Which is why, when the current administration turns to the question of new regulations for the financial sector, there will be strong resistance both ideologically (from PhDs whose careers are at stake) and financially (there is lots of money at stake in Wall Street, as we know). The difficult task is to legislate significant reform before Congress can be bought off, and before the President takes in too much bad advice from his economic advisers, who largely were responsible for getting us into this mess. And then, as Thomas Frank points out, we might not even get out of the clear with new regulation:

What if some future administration were to install as the chairman of the Federal Reserve—or as chief of whatever agency is made into the One Big Regulator—a man who really doesn't believe in the regulatory mission? What if control of the systemic regulator is handed over to a person who considers 19th-century economic arrangements to be a sort of aspirational ideal? A man who turns out to be a dedicated fan of Ayn Rand, that Nietzsche of the boardroom? A man who blows off warning signs because, in his perfect theoretical universe of rational markets, the only really systemic problem is government itself?

This is no hypothetical problem, because Frank is referring to Alan Greenspan, who presided over the Fed from 1987 to 2006, and was, for all the wrong reasons, ascribed to have deity-like powers.

Given these problems, it's difficult not to be skeptical and cynical about reform.

The Origins of Sustained Growth

Did the scientific revolution, the British or French enlightenment, or the introduction of new forms of proto-capitalism create the conditions for sustained development? Kenneth Pomeranz’s The Great Divergence, published in 2000 by Princeton University Press, argues that none of these theses are supported by anything other than blind speculation. The evidence for all of them is weak, contradictory, and tentative. This book juxtaposes regions from various places throughout the world demonstrating these theses' flaws. While a confluence of technologies coupled with new forms of economic behavior became available to Europeans, New World resources, stolen from native Americans, abolished the land constraints experienced in Europe.

Pomeranz equates development in Western Europe with various areas of East Asia. Using this framework he investigates themes commonly argued regarding what made Europe unique in its early growth. He illustrates that cultures all over the world experimented with systems of proto-capitalism, had access to similar technologies, and used and demanded luxury items. Various theorists argue that these sets of features caused the divergence in economic and social prosperity experienced in the West. A gross misrepresentation develops at this loci: that if ‘western’ patterns of economic engagement and scientific progress preceded it’s take off then the west’s philosophical thinking was more ‘advanced.” Pomeranz exhaustively shows that these features did not arise uniquely in Europe and that something else must have paved the way towards the initial jump to sustained growth. Chapter by chapter he demolishes these theories which claim an account of the divergence in prosperity experienced at the onset of modernity. Access to New World land and resources are the only clear differences that careful investigation reveal.

Additional resources and land in the New World gave its newcomers the ability to develop more rapidly and ultimately culminated in the Industrial Revolution in his assessment. The New World took pressure off of the land in Europe facilitating a rise in economic growth. Pomeranz attributes some development to newly acquired New World food stuffs like the potato and guano, both of which allowed Western European farmers to grow more calories with the same amount of land at home, further easing pressure. This coupled with the ability of Europeans to move to the New World, relieving Europe of excess population eased the press of consumption. Thus, for Pomeranz, Europe’s position in accessing colossal new land and resources, at great cost to its inhabitants, differentiated it from other segments of the world.

The Culture of Wall Street

Meltdown, but Is It the End of Greed?

Paul Mason, Meltdown: The End of the Age of Greed.
London: Verso, 2009.

I imagine that writing books on current affairs can be a perilous affair, because they so quickly become obsolete. However, if done correctly, they are important because the book format allows for viewing current events as a totality, and can shape how people view the world around them. This is perhaps most difficult to accomplish with economics, which is already a difficult subject for most. I pretend to no expertise, with my education in the field being largely auto-didactic and Marxist. My own interest has revolved around educating myself about neo-liberalism and globalization, and two of the more important, and comprehensible accounts of both, in my humble opinion, are David Harvey's A Brief History of Neoliberalism and Giovanni Arrighi's Adam Smith in Beijing.

Paul Mason's Meltdown: The End of the Age of Greed displays the same rigor and clarity of Harvey or Arrighi. He shows how neoliberalism, with its creed of deregulation, privatization, and financialization led to the collapse of finance and the banking industry. According to Mason, the driving force behind financialization was a surplus of capital that people sought to invest for a profit. Due to low interest rates, this surplus could not all be invested profitably in production of goods and services, and turned toward increasing financialization and speculation. The result: low interest rates have fueled

repeated bubbles in the price of assets: stock markets, houses, and latterly commodities like oil and grain. What we have seen since the year 2000, as investment dipped and interest rates fell, is the tendency for capital to flow frantically into one asset bubble after another, with the finance system as the conduit (p.70)

These bubbles are much easier to map, as it were, with commodities such as oil. Where Mason is at his best is showing how much more difficult it is to understand what happens when the greatest crisis revolves around derivatives such as credit default swaps and collateral debt obligations. A collateral debt obligation (CDO) is a set of "bonds wrapped together, often issued only for the purpose of being wrapped up and sold, in chunks, with the risks inside not immediately obvious to the credit rating agencies that gave them a risk rating (p. 188)" and a credit-default swap is, in this case, insurance on the CDO. The credit-default swap proved irresistible for profiteering because it both enabled investors to move liabilities off their balance sheets (because they were insured) in the form of CDOs, and CDOs offered buyers a higher interest rate. For a very short time, the going was good for high finance:

The value of asset-backed securities issued each year ballooned from a few billion in the late 1990s to $2 trillion when the bubble burst. The value of the credit default swaps grew much faster: from zero to $58 trillion in 2008 (p. 92-93).

The problem, of course, with this kind of money (The total GDP of the world was $65 trillion) is that it produces institutional incentives that are perverse. As Mason points out, quickly conflicts of interest arose between creditors and ratings agencies as everybody in the finance sector sought to cash in: "bond issuers [were] paying to have their own products to be rated," and rating agencies never had a reliable method for calculating risk (p. 94).

Thus when the subprime mortgage market went bust, and investors sought to cash in on their insurance on defaults, banks had to curb their short-term lending to hold more capital on hand to pay out on bad debt and maintain investor confidence. The sheer size of the default market amplified this problem, and soon, it became impossible to put a value on much of the paper (toxic debts, as it were) they were pushing around.

What came next is what Mason calls the credit freeze (which he pinpoints to August 7, 2007): a bank would look at their stack of toxic debt, and realized that if their trading partners had the same problem, they would not get back the money they had lent them. This lack of confidence was based on the fact that CDOs were layered, or structured, with debt possessing various levels of risk, and if the riskier debt was spread around (across the globe, actually), very few of the main players would be able to avoid the consequences of debt default. Soon short-term credit dried up, which made it more difficult to finance the long-term debt. This situation was compounded with a commodities bubble driven by speculation, which resulted in the global economy entering a period of both inflation (due to the increased price of oil and other commodities from August 2007 to September 2008) and tighter credit, and finally, the financial system melted down (pp. 99-117).

Overall, Mason's analyses are clear and critical. Perhaps the most obvious shortcoming of Meltdown is his confidence that we have reached an 'end of the age of greed.' For Mason, the partial nationalization of banks is evidence that neoliberal ideology, with its emphasis on minimal government intervention in the market has been discredited. But, as David Harvey argues, in practice proponents of neoliberalism don't mind if private risk is shifted to the public. Perhaps this sounds familiar:

neoliberal states typically favor the integrity of the financial system and the solvency of financial institutions over the well-being of the population or environmental quality (pp. 70-71).

Does that sound similar to any country's bailout plan that we can think of? Only a year after the the meltdown began and, apparently, as the headline says, "Credit Swaps Lose Stigma as Confidence Returns." Revisionism has already begun:

“A functioning credit-default swaps market contributes to more efficient extension of credit” by giving investors and lenders confidence that the industry won’t implode, said Alexander Yavorsky, a senior analyst at Moody’s Investors Service in New York. The consequences of Lehman’s failure “were astronomical, broadly speaking, but the CDS market worked well,” he said.

Worked well, of course, for those who continue to profit, but the rest of us? Must have something to do with the "astronomical" part. So apparently, those in the industry haven't really learned their lesson, requiring, as Mason points out, state intervention and stricter, even more aggressive regulation. But it is not an end to the age of greed. Neoliberal practice does not abhor a crisis, in fact, crises (as Mason observes) are built into the system. Yet the term 'greed' makes it sound the meltdown was the product of ill behaving individuals, when, as Harvey argues, the transfer of wealth from the state and world's poor to the world's richest is part of the design of neoliberalism itself. The first step to a more egalitarian system, aside from regulation, is to close the revolving door between finance capitalism and government, a move neither party in the USA seems able or willing to do.