Consumption: a response to Michael Roberts
Michael Roberts writes in response to my piece on Marx:
However, Henwood reckons the current crisis is the result of inequality and low wages reducing consumption and thus the answer is to raise wages and public spending. The problem with this view of Marx is that it does not match the facts: consumption did not slump at all prior to the Great Recession: it was the collapse of the housing market, profits and then investment, not consumption. Raising wages and reducing inequality will help the majority but lower profitability further and thus reignite the capitalist crisis. It’s not higher shares for labour that is the answer but the replacement of the capitalist mode of production.
I’m all for the latter, but it’s a tall order. It’s one for the long run, and as the man said, in the long run we’re all dead. Keynes said that in response to the mainstream prescription for high unemployment, which is to do nothing because capitalism’s marvelous tendency towards equilibrium will take care of the problem in the long run. Sometimes I feel the same ways about these calls for revolution. The same with climate change. In the long run, revolution will take care of things, but in the short-to-medium run, things look fairly bleak.
But I never argued that consumption declined before the Great Recession. On the contrary, it was a record share of GDP during the 2001–2007 expansion, 67.3%, 7 points above the 1950s and 1960s averages. I said that borrowing was used to offset stagnant or declining incomes to sustain mass consumption:
[A] system dependent on high levels of mass consumption has a hard time coping with the stagnation or decline in mass incomes…. Borrowing sustained the mass consumption model for a few decades. Non-rich households borrowed to buy cars, buy food, pay medical bills, buy ever-more-expensive houses, and so on. Conveniently, rich households had plenty of spare cash to lend them. That model broke apart in 2008 and has not — and cannot — be revived. Without the juice provided by spirited borrowing, demand remains constricted and growth rates, low. (See also: Europe.)
A footnote: I didn’t have the space, but mass consumption is necessary not only to the pre-existing economic model, it’s politically essential for legitimating a brutal and unstable system. So far, the bourgeoisie has managed to keep discontent well-bottled, but you never know how long their luck will continue.
A second footnote: the consumption figure is inflated by medical expenditures that are paid for by third parties like insurance companies. Such expenditures are treated as consumption in the national income accounts; take those away, and consumption looks a lot weaker. More on that soon.
Fresh audio product
Just uploaded to my radio archives:
March 27, 2014 Philip Shelley on firing tenured faculty in Maine (for more search this Twitter hashtag) • César Ayala (UCLA) and Rafael Bernabe (University of Puerto Rico), authors of Puerto Rico in the American Century: A History since 1898, on the Puerto Rican economic mess
Who will defend The Market?
Speaking of Thomas Piketty’s Capital in the Twenty-First Century, Ryan Cooper points to anxiety on the right about its considerable splash, and its rigorous argument for the tendency of wealth to concentrate over time. He quotes James Pethokoukis of National Review, who worries that a New Marxism is afoot:
John Maynard Keynes and Friedrich Hayek famously squared off in the 1930s, Left versus Right. But when Keynes published his revolutionary General Theory in 1936, Hayek went silent. It was a de facto retreat that helped give free rein to anti-market forces — even if that was not what Keynes intended — for decades until Milton Friedman and Anna Schwartz wrote A Monetary History of the United States in 1963 and energized the intellectual fight against statism. Who will make the intellectual case for economic freedom today?
Pethokoukis, conceding that Piketty’s case is “well argued, [but] far from airtight,” doesn’t try the heavy lifting himself, though he does seem to be overdoing the threat to capitalism’s hegemony. Still, his anxiety is worth savoring.
The right-wing classics of the 1960s and 1970s—I remember them well, I was a follower for a bit—were published when their ideas were fresh arguments against a Keynesian orthodoxy. Fifty years later, with neoliberalism ideologically triumphant but presiding over vast social and ecological wreckage, it’s hard to imagine anything with the verve or persuasiveness of Friedman’s Capitalism and Freedom being written (or tweeted) today.
Pethokoukis should also reflect on the remarkable things that Corey Robin got NR’s founder to say in Lingua Franca back in 2001:
William F. Buckley Jr. says, “The trouble with the emphasis in conservatism on the market is that it becomes rather boring. You hear it once, you master the idea. The notion of devoting your life to it is horrifying if only because it’s so repetitious. It’s like sex.”
Sex is actually much better than the market, but let’s bracket that and consider as well what Corey got Irving Kristol to say:
“American conservatism lacks for political imagination. It’s so influenced by business culture and by business modes of thinking that it lacks any political imagination, which has always been, I have to say, a property of the left. If you read Marx, you’d learn what a political imagination could do.”
And, Buckley again:
At the end of our interview, I ask Buckley to imagine a younger version of himself, an aspiring political enfant terrible graduating from college in 2000, bringing to today’s political world the same insurgent spirit that Buckley brought to his. What kind of politics would this youthful Buckley embrace? “I’d be a socialist,” he replies. “A Mike Harrington socialist.” He pauses. “I’d even say a communist.”
The challenge, though, Buckley disclosed, was “conjoining all of that into an arresting afflatus.” But it’s not clear that the right has one of those at the ready either.
I review Piketty
Bookforum has unleashed my review of Thomas Piketty’s Capital in the 21st Century. The opening:
The core message of this enormous and enormously important book can be delivered in a few lines: Left to its own devices, wealth inevitably tends to concentrate in capitalist economies. There is no “natural” mechanism inherent in the structure of such economies for inhibiting, much less reversing, that tendency. Only crises like war and depression, or political interventions like taxation (which, to the upper classes, would be a crisis), can do the trick. And Thomas Piketty has two centuries of data to prove his point.
Fresh audio product
Just posted to my radio archives:
March 20, 2014 Anatol Lieven on Ukraine • Micah Uetricht, author of Strike for America, on the Chicago Teachers Union
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March 13, 2014 Andrew Ross, author of Creditocracy, on debt and resistance • Evelyn McDonnell, author of Queens of Noise, on The Runaways
March 6, 2014 Greg Grandin, author of Empire of Necessity, on the real history behind Melville’s Benito Cereno • Melissa Gira Grant, author of Playing the Whore, on sex work as work
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February 27, 2014 George Ciccariello-Maher, author of We Created Chavez, on the unrest in Venezuela • Adolph Reed, author of this article, on the long, sad decline of the American left
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February 20, 2014 Richard Walker, co-author with Suresh Lodha of The Atlas of California, on the Golden State’s physical and social geography, history, economy, ecology
Fresh audio product
Sorry for the delay, but three shows freshly posted to my radio archives:
January 30, 2014 Laura Newland, author of Chasing Zeroes, on how Wall Street is messing up college life • excerpts from Kshama Sawant’s response to the State of the Union • Tom Philpott on GMOs and ag tech
January 23, 2014 Christian Parenti on nature, capital, and the state • Anne Elizabeth Moore on political unrest in Cambodia
January 16, 2014 Stephanie Coontz on why men need feminism • Branko Milanovic on the world income distribution (paper here)
Oops…
I forgot to change the year directory on the radio archive to /2014/, so the links I initially posted didn’t work. Now they do:
January 9, 2014 (back after holiday reruns) two interviews recorded on a visit to Lisbon: economist Ricardo Paes Mamede and labor historian Raquel Varela on Portugal and the eurocrisis
Fresh audio product
I visited Lisbon the week after Christmas and two of my souvenirs are the interviews that make up this show, freshly posted to my radio archives:
January 9, 2014 (back after holiday reruns) two interviews recorded on a visit to Lisbon: economist Ricardo Paes Mamede and labor historian Raquel Varela on Portugal and the eurocrisis
Fresh audio product
Just posted to my radio archives:
December 19, 2013 Sam Gindin, former advisor to the Canadian Auto Workers Union, on why unions need a left • Christy Thornton, grad student organizer at NYU, on unions and the corporate university
There was no December 12 show because KPFA was fundraising. The December 26 show is a rerun because of the holidays.
Bill de Blasio’s continuing evolution
I’ve been a little distracted the last few days so I’m only catching up with the news that Bill de Blasio named Anthony Shorris as first deputy mayor. The Daily News described him as “a seasoned city government hand and veteran troubleshooter,” which is certainly one angle.
Another would be this: he worked in a couple of finance posts for Ed Koch, for Joel Klein at Bloomberg’s Board of Ed, and is now Vice Dean, Senior Vice President and Chief of Staff of the NYU Langone Medical Center and board member of the NYS Hospital Association. He’s also on the board of the Regional Plan Association, one of capital’s peak associations for the economic and physical development of the city and its inner suburbs, and is co-chair of its Fourth Regional Plan. So a real-estate friendly guy out of the medical-industrial complex.
De Blasio disappeared for a few weeks after the election. Now we know what he was doing – reassuring the FIRE elite that all that “tale of two cities” talk was just electoral hot air.
Cue the apologists and holders of feet to the fire….
Fresh audio product
Just added to my radio archives:
December 5, 2013 Mark Fisher, author of “Exiting the Vampire Castle” and Capitalist Realism, on Russell Brand, identitarianism, and depressive hedonia • George Scialabba, author of For The Republic, on democracy & plutocracy
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November 21, 2013 Jennifer Silva, author of Coming Up Short, on the consciousness of younger working-class adults • Heidi Shierholz of the Economic Policy Institute on what has and hasn’t been driving wage inequality (paper here)
November 14, 2013 Richard Seymour on the politics of austerity in the UK (here’s the pic of David Cameron preaching austerity from a gold lectern) • Arun Gupta looks behind the fast food workers organizing campagin (article here)
LBO News from Doug Henwood 