Washington to the World: Drop Dead!
By David Peterson at Nov 14, 2008
For a soaring defense of the freedom to prey upon the less powerful, no less than a proclamation to the rest of the world that while it still clings to power, the Bush Regime will stave-off any Tooth-Fairy hope for adopting the necessary and sufficient changes to the way that international financial capital conducts its affairs, we can find no louder expression than the American President's prepared remarks before the Manhattan Institute yesterday in New York City.
Notice that George Bush outlined what his Regime believes to be the five objectives of the Group of 20 (i.e., the G-1 Plus 19) summit in
"The leaders attending this weekend's meeting agree on a clear purpose -- to address the current crisis, and to lay the foundation for reforms that will help prevent a similar crisis in the future," Bush said. "It will focus on five key objectives: understanding the causes of the global crisis, reviewing the effectiveness of our responses thus far, developing principles for reforming our financial and regulatory systems, launching a specific action plan to implement those principles, and reaffirming our conviction that free market principles offer the surest path to lasting prosperity."
As all serious inquiries about true causes (as opposed to the hierarchy of merely proximate causes, about which one can abstract from true causes and publish tracts until Doomsday) take us to that insidious, reflexive nexus where human nature and human history intersect; and as almost nobody is willing to go there, aside from a few honest souls and reflective saints, we can rule out any discussion of true causes at the G-1's summit, and real solutions along with it. Short of a catastrophic outcome that nobody desires, nobody wills, and the unpredictable consequences of which nobody consciously chooses, the humans are as likely to renounce en masse the fucked-up mess they find themselves in, and to start all over again, from scratch, as ... [fill-in the blank with whatever zero-probability event tickles your fancy -- say, the proverbial lump of coal not burning when placed in the fire, and the like].
End of story.
Less abstractly, notice also that Objective Five negates the other four -- and no doubt was included in Bush's speech to leave no room for doubt. Suffer as much as the G-19 or the G-191 may, the G-1 has no intention of accepting substantive reform in any realm it dominates. So don't mess with the United States of America.
Thus, to repeat Bush's words, this weekend's G-1 exercise at legitimation will "[reaffirm] our conviction that free market principles offer the surest path to lasting prosperity."
Indeed. Bush's prepared text even called this the "most important principle."
Indeed. Bush's prepared text even called this the "most important principle."
While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth. And the surest path to that growth is free markets and free people. (Applause.)
This is a decisive moment for the global economy. In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed and exploitation and failure. It's true this crisis included failures -- by lenders and borrowers and by financial firms and by governments and independent regulators. But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people all across the globe.
Like any other system designed by man, capitalism is not perfect. It can be subject to excesses and abuse. But it is by far the most efficient and just way of structuring an economy. At its most basic level, capitalism offers people the freedom to choose where they work and what they do, the opportunity to buy or sell products they want, and the dignity that comes with profiting from their talent and hard work. The free market system provides the incentives that lead to prosperity -- the incentive to work, to innovate, to save, to invest wisely, and to create jobs for others. And as millions of people pursue these incentives together, whole societies benefit.
Free market capitalism is far more than economic theory. It is the engine of social mobility -- the highway to the American Dream. It's what makes it possible for a husband and wife to start their own business, or a new immigrant to open a restaurant, or a single mom to go back to college and to build a better career. It is what allowed entrepreneurs in
Ultimately, the best evidence for free market capitalism is its performance compared to other economic systems. Free markets allowed
Meanwhile, nations that have pursued other models have experienced devastating results. Soviet communism starved millions, bankrupted an empire, and collapsed as decisively as the Berlin Wall.
The record is unmistakable: If you seek economic growth, if you seek opportunity, if you seek social justice and human dignity, the free market system is the way to go. (Applause.) And it would be a terrible mistake to allow a few months of crisis to undermine 60 years of success.
Just as important as maintaining free markets within countries is maintaining the free movement of goods and services between countries. When nations open their markets to trade and investment, their businesses and farmers and workers find new buyers for their products. Consumers benefit from more choices and better prices. Entrepreneurs can get their ideas off the ground with funding from anywhere in the world. Thanks in large part to open markets, the volume of global trade today is nearly 30 times greater than it was six decades ago -- and some of the most dramatic gains have come in the developing world.
In short: The Bush Regime's message to the world couldn't be any clearer, and we can sum-it-up in two simple words. -- To recall an old New York Times headline from the mid-1970s: Drop dead!
"President Bush Discusses Financial Markets and World Economy," White House Office of the Press Secretary, November 13, 2008. (Also see the Regime's "In Focus: Economy" webpage.)
"Summit on Financial Markets and the World Economy," White House Office of the Press Secretary, November 14-15, 2008
"Telling It Like It Is: At A Tipping Point," Editorial, Investor's Business Daily, November 14, 2008
"Capitalism Works: Bush," Janet Whitman, National Post, November 14, 2008
"Bush Speaks In Defense Of Markets," Sheryl Gay Stolberg and Robert Pear, New York Times, November 14, 2008
"That G-20 Show," Editorial, Wall Street Journal, November 14, 2008
"Bush Warns of Aggressive Economic Regulation," Dan Eggen, Washington Post, November 14, 2008
"The Surest Path Back to Prosperity," George W. Bush, Wall Street Journal, November 15, 2008. [Yes, friends. The devout state-capitalists at the WSJ published a text of their President's November 13 remarks before the Manhattan Institute.]
Update (November 15): For a world-class set of reflections on the current and enduring human crisis in and through which we all live, see István Mézáros' "The Unfolding Crisis and the Relevance of Marx," based on the text he prepared for a public symposium in
I'll excerpt the closing 2,200 words from Mézáros' text below.
One point that I should add is that, based on IMF data that I've seen, I believe that Mézáros understates the magnitude of the so-called "derivatives" non-market. In the IMF's most recent Global Financial Stability Report (October, 2008, pp. 70-74), the IMF estimates that there are "$400 trillion... outstanding...interest rate derivatives (forwards, futures, and swaps)," rather than the much smaller -- though still gargantuan -- $152 trillion "parasitic world of finance" that Mézáros mentions. Furthermore, if we add-in global foreign exchange transactions, which the Bank for International Settlements estimates reached $3.2 trillion daily by April 2007 (at this rate, an annual total of $800 trillion), we get an even more mind-boggling notion of the magnitude of financial capital in the world today, the financial, insurance, and real estate "markets" and the countless permutation-securities "derived" therefrom not only having blasted-off for outer space, but also having left the good earth's orbit light-years behind. (For the BIS data, see the Triennial Central Bank Survey 2007, p. 4.)
Such is the runaway and in every sense of the term out-of-control nature of the current institutional arrangements that are served and protected by the G-1 regime headquartered in the White House, as well as central banks around the world.
The immense speculative expansion of financial adventurism, especially in the last three or four decades, is of course inseparable from the deepening crisis of the productive branches of industry and the ensuing troubles arising from the utterly sluggish capital accumulation (and indeed failed accumulation) in that productive field of economic activity. Now, inevitably, in the domain of industrial production, the crisis is also getting much worse.
Naturally, the necessary consequence of the ever deepening crisis in the productive branches of the "real economy" (as they are now beginning to call it in contrast to speculative financial adventurism) is the growth of unemployment everywhere on a frightening scale and the human misery associated with it. To expect a happy solution to these problems from the capitalist state's rescue operations would be a great illusion.
This is the context where our politicians should really begin to pay attention to the "important lesson of history," instead of "dishing out large dollops of public money" under the pretence of "the lesson of history." For as a result of historical development under the rule of capital in its structural crisis, in our own time we have reached the point where we must be subjected to the destructive impact of an ever worsening symbiosis between the state legislative framework of our society and the material productive as well as financial dimension of the established societal reproductive order.
Understandably, that symbiotic relationship can be, and frequently it also happens to be, managed with utterly corrupt practices by the privileged personifications of capital, in business as much as in politics. For, no matter how corrupt such practices might be, they are fully in tune with the institutionalized counter-values of the established order. And -- within the framework of the symbiosis prevailing between the economic field and the dominant political practices -- they are legally quite permissible, thanks to the most dubious and often even clearly anti-democratic facilitating role of the impenetrable legislative jungle provided by the state.
Fraudulence, in a great variety of its practicable forms, is the normality of capital. Its extremely destructive manifestations are by no means confined to the operation of the military-industrial complex. By now, the direct role of the capitalist state in the parasitic world of finance is not only fundamentally important, in view of its all-pervasive magnitude, as we had to find out with shocking clarity during the last few weeks, but also potentially catastrophic.
The embarrassing fact of the matter is that the giant U.S. mortgage companies, Fannie Mae and Freddie Mac, were corruptly supported and generously supplied with highly profitable but totally undeserved guarantees by the American state's legislative jungle in the first place, as well as through the personal services of unpunished political corruption. Indeed, the capitalist state's ever more dense legislative jungle happens to be the "democratic" legitimator of institutionalized fraudulence in our societies. The editors and journalists of The Economist are in fact perfectly well acquainted with the corrupt practices whereby, in the case of the giant American mortgage companies, receiving outrageously preferential treatment from their state (here I quote The Economist)
allowed Fannie and Freddie to operate with tiny amounts of capital. The two groups had core capital (as defined by their regulator) of $83.2 billion at the end of 2007; this supported $5.2 trillion of debt and guarantees, a gearing ratio of 65 to one. [!!!] According to CreditSights, a research group, Fannie and Freddie were counterparties in $2.3 trillion-worth of derivative transactions, related to their hedging activities. There is no way a private bank would be allowed to have such a highly geared balance sheet, nor would it qualify for the highest AAA credit rating. . . . They used their cheap financing to buy higher-yielding assets.
[Moreover,] With so much at stake, no wonder the companies built a formidable lobbying machine. Ex-politicians were given jobs. Critics could expect a rough ride. The companies were not afraid to bite the hands that fed them.
The "hands that fed them" refer, of course, to the American state legislative body. But why should the companies be afraid? For such giant companies constitute a total symbiosis with the capitalist state. This is a relationship corruptly asserting itself also in terms of the personnel involved, through the act of hiring politicians who could serve them preferentially, with a mind-boggling "gearing ratio of 65 to one" and yet the AAA credit rating, according to the reluctant confession of The Economist.
The gravity of the present situation is underlined in a characteristic way by the circumstance, reported in these words by The Economist: "traders in the credit-default swaps market have recently made bets on the unthinkable: that
The big trouble for the global capital system is, though, that the default of
In a world of financial insecurity nothing suits better the practice of gambling with astronomical and criminally unsecured sums on the world's stock exchanges -- foreshadowing an earthquake of magnitude 9 or 10 on the Financial "Richter Scale" -- than to call the enterprises which engage in such gambling "Securities Management"; . . . When exactly and in what form -- of which there can be several, more or less brutal, varieties -- the U.S. will default on its astronomical debt, cannot be seen at this point in time. There can be only two certainties in this regard. The first is that the inevitability of the American default will deeply affect everyone on this planet. And the second, that the preponderant hegemonic power position of the
Of course, the aggravating condition today is that the rest of the world -- even with the historically most ironical massive Chinese contribution to the balance sheet of the American Treasury -- is less and less capable of filling the "black hole" produced on an ever growing scale by America's insatiable appetite for debt financing, as demonstrated by the global reverberations of the recent U.S. mortgage and bank crisis. This circumstance brings the necessary default of
The truth of this disturbing matter is that there can be no way out of these ultimately suicidal contradictions, which are inseparable from the imperative of endless capital-expansion -- arbitrarily and mystifyingly confounded with growth as such -- irrespective of the consequences, without radically changing our mode of social metabolic reproduction by adopting the much needed responsible and rational practices of the only viable economy, oriented by human needs instead of alienating, dehumanizing, and degrading profits.
This is where the overwhelming impediment of capital's self-serving interdeterminations must be confronted, no matter how difficult it must be under the prevailing conditions. For the absolutely necessary adoption and appropriate future development of the only viable economy is inconceivable without the radical transformation of the established socioeconomic and political order itself.
Gordon Brown recently voiced his displeasure with "unfettered capitalism," in the name of totally unspecified "regulation." You may remember that Gorbachev, too, wanted a kind of regulated capitalism, under the name of "market socialism," and you must also know what happened to him and to his grotesque daydream. British Conservative Prime Minister Edward Heath's expression, a very long time ago, for the same sin of "unfettered capitalism" was "the unacceptable face of capitalism." And yet, "unfettered capitalism," despite its "unacceptable face," not only remained "acceptable" all these decades but -- in the course of its further development -- has become much worse. The causal foundation of our ever more serious problems is not the "unacceptable face of unregulated capitalism" but its destructive substance. It is that overpowering substance that must resist and nullify all efforts aimed at restraining the capital system even minimally -- as, indeed, it actually succeeded in! doing so in the form of metamorphosing social-democratic "Old Labour" in
But the last thing we need today is to continue to tie knots on winds, when we have to face the gravity of capital's structural crisis, which calls for the institution of radical systemic change. It is most revealing about the incorrigible character of the capital system that even at a time like this -- when the immense magnitude of the unfolding crisis cannot be denied any longer even by the system's most devoted ex-officio apologists, a crisis described a few days ago by no less a figure than the Deputy Governor of the Bank of England as the greatest economic crisis in all human history -- nothing can be contemplated, not to mention actually done, to change the fundamental defects of an ever more destructive societal reproductive order by those who control the economic and political levers of our society.
In contrast to the recent illumination by his own Deputy, the Governor of the Bank of England, Mervyn King, had no reservations at all about the soundness of the cherished capital system, nor did he have the faintest anticipation of a coming crisis when he praised to the sky Martin Wolf's capital-apologetic book with its complacent, peremptorily assertive title: Why Globalization Works. He called that book "a devastating intellectual critique of the opponents of globalization" and a "civilized, wise and optimistic view of our economic and political future." Now, however, everybody is forced to have at least some concern about the real nature and necessarily destructive consequences of dogmatically hailed capitalist globalization.
Naturally, my own attitude to Wolf's book was very different from that of Mervyn King and others who share the same vested interests. I commented at the time of its publication that
the author, who is the Chief Economics Commentator of the London Financial Times, forgets to ask the really important question: For whom does it work?, if it does. It certainly works, for the time being, and by no means that well, for the decision makers of transnational capital, but not for the overwhelming majority of humankind who must suffer the consequences. And no amount of "jurisdictional integration" advocated by the author -- that is, in plain English, the tighter direct control of the deplored "too many states" by a handful of imperialist powers, especially the biggest one of them -- is going to remedy the situation. Capitalist globalization in reality does not work and cannot work. For it cannot overcome the irreconcilable contradictions and antagonisms manifest through the global structural crisis of the system. Capitalist globalization itself is the contradictory manifestation of that crisis, trying to overturn the cause/effect relationship in a vain attempt to ! cure some negative effects by other wishfully projected effects, because it is structurally incapable of addressing their causes.
In this sense, the recent attempts to counter the intensifying crisis symptoms, by the cynically camouflaged nationalization of astronomic magnitudes of capitalist bankruptcy, out of the yet-to-be-invented state resources, could only highlight the deep-seated antagonistic causal determinations of the capital system's destructiveness. For what is fundamentally at stake today is not simply a massive financial crisis but humanity's potential self-destruction at this juncture of historical development, both militarily and through the ongoing destruction of nature.
Despite the concerted manipulation of interest rates and the recent vacuous Summits of the dominant capitalist countries, nothing has been lastingly achieved by "throwing gigantic dollops of money" into the bottomless hole of the "crunched" global financial market. The "comprehensive global answer to the confidence gap," as wishfully projected by The Economist and its masters, belongs to the world of (not so pure) fantasy. For one of the greatest historic failures of capital, as the long established mode of social metabolic control, is the continued dominance of potentially most aggressive nation states and the impossibility of instituting the state of the capital system as such on the basis of the structurally entrenched antagonisms of the capital system.
To imagine that within the framework of such antagonistic causal determinations a harmonious permanent solution could be found to the deepening structural crisis of a most iniquitous production and exchange system -- which is now actively engaged in producing even a global food crisis, on top of all of its other crying contradictions, including the ever more pervasive destruction of nature -- without even attempting to remedy its grievous iniquities is the worst kind of wishful thinking, bordering on total irrationality. For, self-contradictorily, it wants to retain the existing order despite its necessarily explosive iniquities and antagonisms. And the so-called "jurisdictional integration of the too many states" under a self-appointed few, or one, as advocated by some capital-apologists can only suggest the -- equally self-contradictory -- permanence of potentially suicidal global imperialist domination.
This is why Marx is more relevant today than ever before. For only a radical systemic change can offer the historically sustainable hope and solution for the future.
 Lehman Brothers, one of the principal private merchant banks, had a gearing ratio of 30 to 1. That is bad enough!
 "Fannie Mae and Freddie Mac: End of Illusions," The Economist, 19-25 July 2008, p. 84.
 "A Brief Family History: Toxic Fudge," The Economist, 19-25 July 2008, p. 84.
 "Fannie Mae and Freddie Mac: End of Illusions," The Economist, 19-25 July 2008, p. 85.
 "The Present Crisis," quoted from Part IV of Beyond Capital (published in London in 1995), pp.962-3. (In Spanish in Más allá del capital, Caracas: Vadell Hermanos Editores, 2001, pp. 1111-12.)
 See "Qualitative Growth in Utilization: The Only Viable Economy," Section 9.5 of my book The Challenge and Burden of Historical Time, New York: Monthly Review Press, 2008, pp. 272-93 (published in Herramienta, Numbers 36 and 37).
 Mervyn King's endorsement, on the back cover of Martin Wolf's book Why Globalization Works, Yale University Press, 2004.
 In "Education -- Beyond Capital," Opening Lecture delivered at the Fórum Mundial de Educação, Porto Allegre, July 28, 2004. In Spanish reprinted in La educación más allá del capital, Rio de Janeiro: Siglo Veintiuno Editores / Clacso Coediciones, 2008. See also the chapter "Why Capitalist Globalization Cannot Work?" in my book The Challenge and Burden of Historical Time, New York: Monthly Review Press, 2008, pp. 380-398; Spanish edition: El desafío y la carga del tiempo histórico, Caracas: Vadell Hermanos Editores / Clacso Coediciónes, 2008, pp. 371-389.