This is the report of a panel discussion in the Left Forum chaired by Mike Meeropol. Enjoy!
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WHY SHOULD RADICALS DEVELOP A PROGRAM FOR REFORM OF AMERICAN CAPITALISM IN THE CONTEXT OF THE CURRENT CRISIS?
OUR TOPIC FOR TODAY IS THE PROGRESSIVE PROGRAM FOR RECOVERY AND FINANCIAL RECONSTRUCTION … IT IS AVAILABLE ON THE PERI WEBSITE
MIKE MEEROPOL’s INTRODUCTION.
[Recently retired as Professor of Economics from Western New England College in Springfield, MA.]
It seems to me that the radical tradition in understanding modern capitalism consists of two different, sometimes co-existent and sometimes antagonistic, interpretations of the “economic laws of motion” of our society.
One is the Monopoly-Capitalism Stagnation thesis that perhaps is traceable to certain passages in Capital but really begins with Rosa Luxembourg and Paul Sweezy. Josef Steindl followed by Baran and Sweezy developed full length treatments and the analysis was continued by Paul Sweezy and Harry Magdoff and John Bellamy Foster in a variety of publications beginning in the 1970s. The most recent example of the use of this approach was John Foster and Fred Magdoff’s book The Great Financial Crisis (Monthly Review Press, 2009) which sets the current economic difficulties, particularly for American Capitalism, in the context of the long run tendency for monopoly capital to experience stagnation in economic growth due to the difficulties of absorbing an ever-growing economic surplus.
The second approach which has many strands – one developed by one of our panelists David Kotz. – is the SSA approach – SSA standing for Social Structures of Accumulation. The SSA approach (which as David has pointed out intersects in many ways with the approach of the French Regulation School) argues that Capitalism goes through different phases — and in the early stages of each phase it exhibits rather significant and successful periods of growth during which time capital accumulation and economic transformations helps capitalism fulfill what Marx called its “historic mission” to make it possible for the world to fully develop the productive forces. [we leave out for the moment whether he was too optimistic about the possibility of escaping from scarcity].
Now, capitalism may experience periods of stagnant growth but that is not a permanent feature. As a new SSA emerges, capitalism gets “new life” as it were. According to the SSA approach as applied to the United States, an SSA based on the reforms instituted in the US by the New Deal and the immediate post WW II period was quite successful from World War II into the 1970s. This SSA included (this is not to be thought of as an exhaustive list) US hegemony in the capitalist world (including the role of the dollar as the key international currency in a system of fixed exchange rates), military Keynesianism at home, a limited capital-labor accord at home, and a minimal but significant social safety net.
Beginning in the 1970s, the contradictions of that SSA (not just in the US, by the way) led ultimately to the emergence of the neoliberal version of capitalism.
During the question period, someone asked for a clarification of what neoliberalism actually is. What follows is a short definition/description provided by David Kotz:
Neoliberalism includes institutions, policies, economic theories, and an ideology. The policies are liberalization, privatization, and “stabilization” (use of monetary policy only against inflation and fiscal policy aimed at a balanced budget). (The latter — stabilization — was not followed by either the Reagan or the second Bush Administrations – instead it was used as a political tool to argue against large scale government undertakings because “we” couldn’t afford it.)
The dominant theory is a free-market version of neoclassical economic theory, associated with such names as Milton Friedman, Friedrich Hayek, and Ronald Coase. Neoliberal ideology is marked by glorification of individual choice, markets, and private property; a view of the state as inherently an enemy of individual freedom and economic efficiency; and an extreme individualist conception of society.
The neoliberal institutions include a long list. At the international level, neoliberal institutions include the new form of transnationalized production (spread across many countries) and the institutions that support free movement of goods, services, and capital globally (the WTO, IMF, World Bank). At the domestic level in the USA, neoliberal institutions include full domination of labor by capital, a shift in jobs from permanent to temporary/part time, very limited welfare services from the state, a shift in taxation from the rich and corporations to middle income groups, a hollowing out of the state as many public services are provided by private contractors, and the freeing of business (including finance) from government regulation.
[back to the Meeropol introduction to the panel]
NOW – there is debate as to whether neoliberalism ever created a successful SSA either in Britain or in the US – and I am sure many would dispute whether even an “unsuccessful SSA” – if that is not itself a contradiction in terms – emerged from the neoliberal, Washington consensus project.
Nevertheless, whatever we want to call neoliberalism – I think it is fair to say that it has crashed and burned in spectacular fashion in the past year.
Why I am bringing up these two different meta-theoretical approaches in an introduction to a panel on a set of specific and practical proposals which has little theoretical analysis attached to it?
Because it appears to me – and it did appear to me at the meeting where the first steps towards creating this proposal were taken – that the kind of approach we as radicals take to the current crisis in capitalism depends crucially on whether we think that a new SSA – a more human-faced capitalism – a capitalism that moves to protect the planet, improve lives in the third world, redress the imbalances of income, security and power within the first world – is possible.
I believe it is part of the SSA approach that the type of capitalism that emerges from the current crisis can be a much more human and thus humane version of that system than neo-liberalism. I believe it is also inherent in the SSA approach that a fascistic, nationalist, militarist, anti-immigrant (thus racist), anti-poor version of capitalism might also emerge.
If one accepts the SSA approach to understanding the laws of motion of modern capitalism then a set of progressive proposals to re-make capitalism into a more humane (much more humane) version of itself than the previous neo-liberal incarnation is not only doable but essential. If we don’t do it, who will?
However – and this is a big however – if the stagnation approach is accurate – or if the earlier more traditional Marxist view of ever-increasing intensity of crises is accurate – then our job is not to be chasing a will o’ wisp of reformism but to increase the consciousness of the disaffected population in favor of socialism and nothing short of socialism. That approach, I think (I don’t want to put words in people’s mouths), would argue that a program such as produced by the group last November that is available here and on the PERI website is a waste of time.
OUR SPEAKERS WILL ADDRESS ISSUES EMBEDDED IN THAT PROGRAM FOR RECOVERY AND FINANCIAL RECONSTRUCTION –
The first presenter was David Kotz,
Professor of Economics at the University of Massachusetts, Amherst. David presented a detailed outline of his remarks in advance. What follows are his outlined notes interspersed with my [Meeropol’s] notes …
Reform versus Radical Transformation in the Context of Today’s Ec Crisis
David Kotz, Left Forum, April 19, 2009
We have here a very old debate in the left.
Q: What is the route to social transformation — to replacing Capitalism by a fundamentally different kind of social system.
Various names: Socialism, communism, anarchism, participatory democracy.
1) Should the left avoid working for reforms and instead directly work to bring the new society?
2) Or does the route to a new society necessarily require that initially the left has to work toward bringing reforms in Capitalism?
If the latter, what kind of reforms should the left support?
2. SSA Theory vs other theories of Capitalist Development
The SSA theory is a Marxist-influenced theory of stages of Capitalist development.
It argues that various coherent institution-specific forms of Capitalism have arisen in history.
It argues that each form has promoted capital accumulation for a time, then enters a crisis phase.
Thus, it describes a history of reform of Capitalism (along with some steps backward).
But it does not advocate reform of Capitalism.
The SSA theory suggests that the left should take account of the possibility that another period of reformed Capitalism can emerge from a systemic crisis of the existing form.
But that does not imply that the aim of the left should be reformed Capitalism.
I would be very disappointed if, out of this crisis, we got version 2.0 of a state-regulated, social democratic form of Capitalism.
We can admit that a SD compromise form of Capitalism is better for popular constituencies than is Neoliberal Capitalism –
But that does not imply that reform should be our aim.
SSA theory says that a systemic Capitalist crisis will be followed by one of 3 resolutions:
1) a reactionary restructuring of Capitalist institutions, based on the sole power of Capital — perhaps some version of fascism.
2) a progressive restructuring of Capitalist institutions, based on compromises between Capital and various popular groups, especially the working class.
3) the replacement of Capitalism by the new society, based on the power of popular constituencies overcoming the power of Capital.
The question here is what is the role of reform programs issued by the left in the struggle to get to resolution #3?
3. Reform and Revolution
Key problem: Radical transformation requires a radical and militant mass movement — and this does not exist at this time in the USA.
Our aim should be to build such a movement, in conditions of a systemic crisis.
We recently learned from the Rasmussen poll that 33% of people under age 30 in the US favor socialism over Capitalism — so there is something to work with out there.
(David noted that he believes that this may be because the right wing attacked Obama’s program as “socialist” and since Obama and his program are both quite popular, especially among people under 30, some of them said, well, “if this is socialism, we like it…” David suggested that the right made a serious tactical mistake by calling Obama’s programs socialist — it made the idea of “socialism” a more positive one …)
But still that 30% does not form a radical and militant mass movement.
[Meeropol comment: But if even HALF of those 30% were to become organized and committed to action in furtherance of the end of radical change, that would be an astoundingly large mass movement! Thus, David’s next point is crucial.]
Answer: Building a radical and militant mass movement, in conditions of a systemic crisis of Capitalism, requires organizing ordinary people around the ways in which the crisis is bearing down on them.
The left has to propose short term measures that address people’s immediate oppression.
It has to do so seriously, proposing measures that, if adopted, would be effective.
What are the main ways the crisis is oppressing ordinary people:
1) Loss of home
2) Loss of job
3) Loss of much of savings
4) Loss of health insurance
5) Loss of public services as State & Local governments cut back programs
6) Insecurity and fear of future
The document A Progressive Program for Economic Recovery and Financial Reconstruction was a product of a sizeable gathering of left and progressive economists in November in NYC.
Not all of the participants were “leftist” in the sense of wanting to go beyond Capitalism. Thus, the document is a compromise.
The leftists at the November meeting made proposals, others made more moderate proposals, the result was a compromise.
The document is oriented toward reform — it does not speak of going beyond Capitalism.
It does address many of the above needs of ordinary people, although largely in reformist ways — moderate measures that would not challenge Capitalism.
(David noted that there was a significant absence of sectarianism in the discussion – that there was significant give and take – that there was a real desire to come up with something that would be useful and that would actually make a positive difference if it were applied.)
David argued that the proposal does contain 2 “radical” proposals:
[I would argue that some of the financial reconstruction proposals are also radical …as is the entire change in the IMF approach to third world countries in difficulty.]
Govt as employer of last resort.
This embodies the idea that people have the right to a job.
This goes against the logic of Capitalism, which is that jobs result when a Capitalist can get a profit from hiring someone.
Actually instituting such a program would be very good for working people and very deleterious to Capitalist profit-making.
If instituted, it would raise the question of which is more important, the right of the majority to a job or the right of the wealthy minority to have good conditions for profit-making.
It would show that profits require the fear of unemployment.
2) Foreclosure moratorium, right to stay in a home as a renter.
[Meeropol explanation: The right to stay in a home as a renter was initially proposed in an OP-ED by Dean Baker and Mark Weisbrot in the Providence Journal on August 31, 2008. This piece is available at
The proposal is relatively simple but it would be a real redistribution of the pain from the recent housing bubble from homeowners to creditors. It simply calls for a law to be passed that permits anyone whose primary residence is foreclosed upon to stay in that home as a renter paying local market rents for at least 10 years. This would quickly force foreclosing companies to work out deals to get the ownership of the property off their hands. It would also permit house prices to continue to fall from their bubble inflated levels without harming homeowners. Unlike complete moratoria, it would not protect speculators who bought up many homes.]
This recognizes a right to stay in one’s home regardless of bank’s “property rights.”
It is a step toward decommodifying housing.
I favor a broader set of radical demands including the following:
1) Govt as employer of last resort [discussed above]
2) Raise minimum W to living wage
This asserts the right of workers to a decent living standard.
[Meeropol commentary: By the way, the document as distributed has an unfortunate omission. On p. 3 the sentence that begins “Raising the minimum wage…” should have the following words inserted “and wages in general” right after … In other words, our proposal is not just to raise the minimum wage but to raise wages in general so as to redress the growing inequality between income derived from labor (which has been losing out dramatically) and income derived from capital.]
3) Govt takeover of all mortgages in foreclosure, with aim of reducing payments to affordable level.
This asserts the right to a home.
[Meeropol comment: I wonder about this one. Maybe it was implicit but it should only apply to owner occupied homes otherwise you’re also bailing out speculators.]
4) To deal with loss of savings:
A) raise minimum SS pensions to assure decent living standard
B) national health insurance
C) free public higher education
These would address the fear and insecurity people are facing as well as the loss of their saving.
5) Make the financial sector permanently part of the public sector.
A great lesson of the financial crisis is that large Financial Institutions can make profits but not suffer losses — must be bailed out.
Some have said the lesson is to deconcentrate Financial Institutions
(What that means is break up large institutions into smaller ones so that no one of them becomes “too big to fail”) David sees this demand as unrealistic. They would reconcentrate.
Some say re-regulate them — they would lobby for lifting the regulations, as did last time.
The obvious solution is that any sector of the economy that is essential and cannot be allowed to lose money should not be in the private sector.
A public financial system would end speculative activity, steer credit to socially useful purposes, and would not lobby for deregulation.
This demand challenges the view that the profit motive is the best way to structure economic activity.
If the left puts forward such demands, they would make sense to millions of people.
Making such demands can play a role in organizing a radical mass movement.
[Meeropol comment: Here is where a criticism mentioned by Bill Tabb comes in to play. The right has a mantra that they trot out regularly – “government is quite inefficient – it would do a WORSE job.” We have to be prepared for that argument and have answers.]
4. Another Period of Social Democratic Compromise?
It is not possible to foreclose the possibility of another period of SD compromise.
Capitalism has proved resilient before.
But it faces the most serious obstacle in its history to another period of Capitalist expansion: the now binding environmental constraint.
As Marx predicted, Capitalism has now spread around the world, breaking down what he called Chinese walls. [Given China’s crucial role in any new emerging Capitalist SSA, this term is particularly apt!]
But as Marx did not predict, this does not just develop the Forces of Production.
It threatens the extinction of our species, as we use up natural resources and destroy the environmental basis of our civilization.
David argues that Capitalism cannot survive without forever increasing the production of Consumer Goods.
A new period of Social Democratic compromise would require renewal of rapid growth.
But this conflicts with the requirements of human survival.
A socialist planned economy, based on common property, could potentially meet the needs of the world’s population without continuing expansion of production.
The so-called developed world does not need more Consumer good production.
For this part of the world, people could live better lives with declining total output, given appropriate restructuring and redistribution.
The so-called developing world does need a higher living standard, but a planned ec could bring it gradually in an environmentally sustainable manner.
The world’s vast resources of innovative people — many now coming from the developing world — could find ways to do this, instead of developing new video games or new ways to get monopoly profits for hi tech companies.
In a socialist world, it is likely that people in the developed countries would willingly part with part of their income each year to contribute to sustainable development in the rest of the world.
These should be among our key arguments as the left seeks to build a mass movement demanding a radical transformation of our society.
Terrence McDonough, Michael Reich, and David M. Kotz (eds), Contemporary Capitalism and its Crises: Social Structure of Accumulation Theory for the 21st Century, Cambridge and New York: Cambridge University Press, forthcoming 2009.
THE SECOND PRESENTATION WAS BY
RADHIKA BALAKRISHNAN, Professor of Economics and International Relations at Marymount Manhattan College (who will be taking up her position as Director at the Center for Women’s Global Leadership at Rutgers University in September, 2009.)
Radhika’s presentation stressed the work she has been doing on connecting economic policy to the international Human Rights agenda. Though the United States has failed to sign some of the recent International Human Rights accords, they helped write the Universal Declaration of Human Rights in 1948 and they have signed on to a number of recent accords, including the Convention on the elimination of discrimination.
The approach Radhika and her colleagues have taken is to look at various human rights documents that governments have already officially signed on to and to connect the promises made by these governments to their actual economic policies. When their policies violate these agreements, that violation becomes an important organizing tool.
They were published long before this crisis reared its ugly head but are even more crucial now. A free pdf of the document is available at
She argued that the intersection of international human rights activists with progressive economists can become the basis for developing a meaningful critique of how the neo-liberal policy regimes (all over the world) have led governments to violate their treaty obligations.
For example the Maastricht Guidelines are available at http://www1.umn.edu/humanrts/instree/Maastrichtguidelines_.html
These guidelines supposedly enjoin all EU governments to respect, protect and fulfill economic and social rights.
An important point about human and social rights is that governments have a responsibility to take steps to move towards certain goals and the principle of non-retrogression means that they cannot take steps to move away from those goals.
1) To take just one example, de-regulation involves a failure to protect citizens from the vagaries of the market.
2) In the context of the current economic crisis, cuts in state and local government funding involve retrogression in already existing rights. The human rights approach demands that the maximum available resources be channeled to fulfilling those rights.
3) Her group looked at the tax cuts instituted by the Bush Administration beginning in 2001 and showed a significant decline in the tax to GDP ratio in the United States. In addition, there was an increased devotion of national government revenues to the defense department. These two combined involved a decrease in resources available to fulfill already promised human rights.
4) In looking at Monetary and Fiscal Policy – the United States Federal Reserve System has a dual responsibility (under the Humprey Hawkins Full Employment and Balanced Growth Act of 1978) to not only promote price stability but maximum employment (there is actually a 4% target rate for unemployment).
The failure of the FED (and the Federal Government with its fiscal policy) to promote that target breaks the law.
5) Looking at Mexico, Radhika and her colleagues note that the Mexican policy regime does NOT have a mandate to promote maximum employment.
In considering the Minimum Wage, when it is allowed to be cut by inflation that is a human rights violation.\
Though the US government has failed to sign many conventions, they have (as mentioned above) signed the convention on the elimination of discrimination. Radhika noted that according to that convention, discrimination remedies must be undertaken immediately. Housing foreclosures are examples of discrimination at work.
NAFTA forced an actual revision of the Mexican Constitution. One of the results is that there was a massive increase in the price of staples and a significant decrease in the price of junk food. The diet of the average Mexican has changed as a result of this impact, leading to a rise in obesity, and other diet-related problems.
The switch in pensions from defined benefit to defined contribution types — private sector defined benefit pensions are now virtually non-existant and the 401-K and 403-B type pension plans involve all the risk of future incomes resulting from DECADES of saving during working years being borne by the individual worker rather than the company or society as a whole. This is an example of what Radhika and her colleagues have come to call BIASED REGULATION. It’s not DE-regulation, it’s BIASED regulation. It’s a regulation that fails to protect.
There was a challenge from the discussant that unless this analysis is knitted together with serious counters fo the to-be-exoected “mainstream” (=reactionary) economists’ counter-argument (that the reality of the economy precludes devotion to these human rights – or worse, that attempting to directly achieve these rights will damage the possibility of helping these folks – example used was the minimum wage increase only hurts the poor by causing unemployment) these become pie-in-the-sky desires unconnected to reality.
Radhika argued in responose that the linkage of human rights concerns with concrete macro-economic demands are a powerful combination and we should not dismiss the importance of having “utopian” demands as part of our political strategy.
She agreed that ETHICAL arguments on their own do not work — but ethical arguments wedded to already existing documented agreements wedded to concrete economic arguments about the POSSIBILITY of achieving these human rights ends ARE practical political strategies.
PRESENTATION BY BILL TABB, Retired as Professor of Economics at Queens, College, CUNY and the Graduate Center.
Bill was the only person on the panel who had not participated in the drafting of the Program. I (Meeropol) had asked Bill to be a pair of independent eyes on the document to discuss issues related to the appropriate role of radicals in the context of reformism.
Bill noted in beginning his presentation that since neither Radhika nor David had spoken at length about the document and since the audience had not yet had a chance to read the document, he would confine his remarks to their presentations.
[MEEROPOL ASIDE: We apologize for those participants in the session who would have liked more details about the program itself and just urge anyone who hasn’t already read it to check it out following the link earlier in this posting.]
He immediately identified the issue as one of searching for “non-reformist reforms.” He specifically identified the need to push progressive measures that would move to increase de-commodification.
This probably needs a bit of development. De-commodification involves breaking the link between bribing a capitalist to organize the production of some good or service and the satisfaction of the human needs/desires for the use values associated with that good or service. The world wide development of capitalism has increased the range of needs and wants satisfied by commodities as opposed to by household production or collective provision (by some political entity or self-help group). De-commodification (as in David’s proposal re housing) attempts to reverse that trend.
Bill noted that in his view we on the left are not criticizing Obama sufficiently. If the right wing end up being the only ones criticizing him, then to the extent that his programs are not successful, it is only the right that will gain support.
We on the left MUST criticize the Geithner program which is basically a gigantic fraud claiming you can find market values for the garbage (so-called toxic assets) that banks and other financial entities are stuck with. Ordinary Americans are furious at this program and we on the left must develop a coherent strategy for dealing with the reforms that are already in place.
Bill’s main thrust was that we on the left must speak directly to ordinary people about our proposals and his main criticism is that the proposals have not been developed sufficiently well to fit together.
For example: The proposal involves strong support for a massive stimulus spending package. Bill argued that there must be more about HOW we as radicals want the money to be spent. Who will decide what to do with the money? If it’s corrupt local politicians, then a big increase in expenditure may produce bad results. We need to couple demands for stimulus spending with demands to democratize the spending process.
Bill continued to reiterate that at every step of the way, when we make proposals, we need to talk specifically about how our VISION differs from the current approach – including the approach of the Obama Administration.
Rather than a laundry list in general, we must show how all issues tie together. We need to be more specific about how it fits together.
[MEEROPOL NOTE: I think it is important that people check out the totality of the proposal to see how far from this goal articulated by Bill it is – or if it gets close…]
Another specific issue: When we deal with banks, we have to recognize that (again) absent true democratic controls, public banks are not necessarily better than private banks. Thus, nationalization without democratization is not progress.
Turning to Radhika’s discussion, Bill argued that we need to engage the arguments that will be made in suggested that these cutbacks are ESSENTIAL given the realities of the economy. Just asserting that the cutbacks deny basic human rights is insufficient if the counter-argument is that REALITY makes those cutbacks necessary.
Ethical arguments on their own won’t work.
In another example, in discussing the minimum wage, we on the left have to be ready to respond to the counter-argument that raising the minimum wage (and wages in general) will only lead to higher levels of unemployment. We do have good arguments against that assertion but we must be ready to do it.
In general, Bill argued that it is correct to show what actually existing capitalism does to people (violating human rights, etc.) but in proposing non-reformist reforms we need to go further than just a list of things to do but need to pre-emptively respond to obvious potential counter-arguments.
Bill wanted to make clear that his disagreement is not with the good intentions expressed by the document and by Radhika and her colleagues in working on making macro-economic policy a human rights issue – but he wanted to push very strongly the idea that we need to show people how they are being screwed AND how it would be possible to do things very differently.
The job is much larger than the two presentations made it out to be.
A believable set of specifics is important but it is very important to explain the content of our alternatives as quite different from what we’re stuck with now. We cannot just appeal to general principles like human rights …
THE DISCUSSION THAT FOLLOWED HAD MANY USEFUL INTERVENTIONS. I unfortunately did not take good notes on most of them so I urge anyone who wants the full benefit of the discussion to find the You Tube version of the session.
One very specific question asked for a description/definition of NEO-LIBERALISM. (See the first page of this post for David’s answer).
There were a few discussions from the floor that urged us not to be too critical of Obama — but just as strong counters that it was essential that the left be critical when his program is just warmed over Clintonism.
One strong point made from the floor was that the proposed Budget was the best budget that had ever been proposed in terms of pushing a progressive agenda. This also brought some significant argument.
Bill Tabb wanted to make clear that he was not criticizing the efforts of Radhika and others who seek to use the human rights rubric to criticize actually existing capitalism. He was criticizing the presentations in relation to the program under discussion not the actual on the ground activities of various individuals and organizations who do outstanding work in the cause of progress.
One intervention caused me to take particularly good notes, and I am therefore sharing them. They were presented by Hugo Radice who recently retired from Leeds University in the UK.
Hugo made three points and followed up some with an e-mail to me after the conference:
(1) We shouldn’t underestimate the strength of neoliberalism, since it’s become ‘the commonsense’ and there is no clear alternative that actually goes forward, not back;
[Meeropol comment: This fits in with David’s view that the only capitalist SSA possible is a re-visiting of a social democratic version of capitalism. David is extremely skeptical that this would work. I also argued in my comments at the end of the session, that the pro-neo-liberal instincts seem to have penetrated public consciousness – at least among my students – though Radhika had a more positive report about her students.]
(2) while left analysis on the credit / banking side of the crisis focuses on the 2 solutions of bail-outs versus nationalisation, maybe the financial sector can just muddle through;
In his e-mail Hugo stated the following:
The ‘muddle through’ prognosis seems to have some supporting evidence in recent weeks. The major UK banks that have not had equity investment from the government – that is, Barclays and HSBC especially – have been refusing to take various forms of state bail-out money and/or guarantees. Their reasoning is that the government is bound to attach strings to public assistance, and the uncertainty over the future cost of those strings will make it much harder for them to raise private capital. From what I can see, it looks like the same story in the USA.
Another interesting development – see today’s Financial Times, (April 23, p.55) – is that there has already been a massive unwinding of credit default swaps, reducing the gross outstanding value by 29% to $38.6 trillion; and new trading activity, i.e. writing of new CDSs, has actually grown again in the first quarter. This does rather put into perspective Michael Hudson’s apocalyptic vision of crashing debt pyramids.
Then there’s the unexpected recovery in Merger & Acquisition activity – fat fees for the banks as always….. and finally, it seems that smaller ’boutique’ banks, and those hedge funds that didn’t crash and burn last year, have been picking up toxic assets for a song, sorting them out, and making good money by reselling the good bits bundled up with the bad (see “Boutique banking” by Stephen Armstrong, New Statesman 20 April ’09 p.18).
FINALLY, Hugo argued that the left should
(3) establish some kind of standing commission to develop the radical alternative economic policies that will truly be non-reformist reforms.
Hugo argued that such a commission would need to be in touch with the wide gamut of progressive groups to both get input and share ideas and PARTICULARLY CRITICISMS of the Obama Administration’s policies.
This led me to make a comment at the end:
One of the proposals in the Program under discussion is for the creation of a Congressional Select Committee to institute hearings modeled on the PECORA Hearings of the 1932-34 period. Those hearings helped pave the way for New Deal regulations of Wall Street and reform of the Financial Sector. They proved invaluable at revealing what went wrong in the 1920s. Given that the intellectual underpinnings of neo-liberalism is still “commonsense” to much too many of our fellow citizens, and given that the right wing is already out with their narratives of what caused the problem (“too much borrowing” – “the wrong kind of government intervention” – as in Fannie Mae and Freddie Mac) it is essential that we push for full disclosure and full exposure of the bankruptcy of neo-liberal policy and theory.
I would close this (rather long) report by urging people to demand of their members of the Congress that they support a full scale inquiry modeled on the Pecora Hearings.