RSA ANIMATE: Crises of Capitalism

okay so we've been through this crisis and uh there are all sorts of uh explanatory formats out there and it's interesting to look at the different genres one genre is that it's all about human frailty i mean alan greenspan took refuge in the fact it's human nature he said you can't do anything about that but there's a whole world of explanations that kind of say it's uh the predatory instincts it's the instincts for mastery it's the delusions of investors and the greed and all the rest of it so there's a whole range of discussion of that and of course the more we learn about the daily practices on wall street we kind of figure there's a great deal of truth in all of that the second genre is that there's institutional failures the regulators were asleep at the switch the shadow banking system innovated outside of their purview etc etc etc and therefore institutions have to be reconfigured and it has to be a global of effort by the g20 something of that kind so we look at the institutional level and say that has failed and that has to be reconfigured the third genre is to say everybody was obsessed with a false theory they read too much hayek and believed in the efficiency of markets and it's time we actually got back to something like keynes or we took seriously uh hyman minsky's theory about the inherent instability of financial activities the next genre is that this is it has cultural origins now we don't hear that much in the united states but if you were in germany and france many people there would kind of say this is an anglo-saxon disease and and it's nothing to do with us and uh i happened to be in brazil when it was going on and lula was kind of saying well first off he was saying oh thank god the united states has been disciplined by the equivalent of the imf we've been through it eight times in the last 25 years and now it's their turn fantastic said lula and all the latin americans i knew until it hit them which it does and then they kind of changed their tune a little bit so there's a kind of a way of which it became cultural and you can see that by the way in which the this whole greek thing is being handled the way the german press is saying well it's the greek character it's defects in the greek character and and there's a lot of rather nasty stuff going on around that but actually there are some cultural features which have led into it for instance the us fascination with homeownership which is supposedly a deep cultural value so 67 68 percent of u.s households are homeowners it's only 22 percent in switzerland because it's a cultural value in the united states has been supported by the mortgage interest tax deduction which is a huge subsidy uh it's been promoted since the 1930s very explicitly in the 1930s built up because the theory was that debt incumbent homeowners don't go on strike and then there's a kind of notion that there's a failure of policy and the policy has actually intervened and there's a funny kind of alliance emerging between the glenn beck wing of fox news and the world bank both of whom say the problem is too much regulation of the wrong sort so there are all these all of these ways and all of them have a certain truth and skilled writers will take one or other of those perspectives and build a story and actually write a very plausible kind of story rip about this and i thought to myself well what kind of plausible story can i write which is none of the above which is one of the things i always think to myself and it's not hard to do particularly if you're coming from a marxist perspective because you know there aren't many people who try to do this analysis from a marxist perspective and i was really really clued into this why by this uh uh thing that happened at the london school of economics uh about a year and a half ago when her majesty the queen asked the economist how come you guys didn't see this thing coming i mean she didn't say it exactly that way but you know it's just the sentiment and and they got very upset and then she actually called the bank of governor bank of england said how come you didn't see it coming and and and then the british academy put forward this got all together all these economists and they came up this fabulous letter to her majesty and it was it was it was absolutely astonishing it said well you know many dedicated people intelligent smart spent their lives working on aspects of this thing very very seriously but the one thing we missed was systemic risk you say what and then it went on to talk about a politics of denial and all the rest of it so i thought well you know systemic risk you know i can translate it into the marxian thing you're talking about the internal contradictions of capital accumulation and maybe i should write a thing about the internal contradictions of capital accumulation and try to figure out the role of crises in the whole history of capitalism and what's specific and special about the crisis this time around and there were two ways in which i thought i would do that one was to sort of look at what's happened since 1970s to now and the thesis there is that in many ways the form of this current crisis is dictated very much by the way we came out of the last one that the problem back in the 1970s was excessive power of labor in relationship to capital but therefore the way out of the crisis last time was to discipline labor and we know how that was done it was done by offshoring it was done by you know thatcher and reagan and it was done by a neo-liberal doctrine it was done all kinds of different ways but by 1985 or 86 the labor question had essentially been sold for capital it had access to all of the world's labor supplies nobody in this particular instance has cited greedy unions as the root of the crisis nobody this instance is saying this has anything to do with with excessive power of labor if anything is the excessive power of capital and in particular the excessive power of finance capital which is the root of the problem now how did that happen well we've been since the 1970s in a phase of what we call wage repression that wages have been remained stagnant the share of wages and national income right throughout the oecd countries has steadily fallen it's even steadily fallen in china of all places so that there are less and less being paid out in wages well wages turn out to be also the money which buys goods so if you diminish wages then they've got a problem with where's your demand going to come from and the answer was well get out your credit cards we'll give everybody credit cards so we'll overcome if you like the problem of effective demand by actually pumping up the credit economy and american households british households have all roughly tripled their debt over the last 20 30 years and a vast amount of that debt of course has been in within the housing market and and out of this comes a theory which is very very important that capitalism never solves its crisis problems it moves them around geographically and what we're seeing right now is a geographical movement of that everybody says well okay everything's beginning to recover in the united states and then greece goes bang and everybody says what about the pigs you know and it's interesting you had a finance crisis we should fight in in in the financial system you've sort of half solved that but at the expense expense of a sovereign debt crisis actually if you look at the accumulation process of capital you see a number of limits and a number of barriers and there's a wonderful language that marx uses in the grunderisa where he talks about the way in which capital cannot abide a limit it has to turn it into a barrier which it then circumvents or transcends and then when you look at the accumulation process you look at where the barriers and and limits might lie and the simple way to look at it is to say look a typical the typical circulation process of accumulation goes like this you start with some money you go into the market and you buy labor power means the production and you put that me them to work with a given technology an organizational form you create a commodity which you then sell for the original money plus a profit now you then take part of the profit and you recapitalize it into an expansion for very interesting reasons there are two things about this one is there a number of barrier points in here how is the money got together in the right place at the right time in the right in the right volume and that takes financial ingenuity so the whole history of capitalism has been about financial innovation and financial innovation has the effect of also empowering the financiers and the excessive power of the financiers can sometimes they get they do get greedy no question about it and if you look at financial profits in the united states they were soaring after 1990 they're going up like this profits in manufacturing were coming down like this and you could see the imbalance in this country i think the way in which this country has sided with the city of london against british manufacturing since the 1950s onwards has had very serious implications for the economy of this country you've actually screwed industry in order to keep you know financiers uh happy any sensible person right now would join an anti-capitalist organization and and you have to because otherwise we're going to have this the continuation and notice it's a continuation of all sorts of negative aspects for instance the racking up of wealth you would have thought the crisis would have stopped that actually more billionaires emerged in india last year than ever they doubled last year the wealth of the rich i mean just read something this morning in this country has has accelerated just two years just last year what happened was the main leading hedge fund owners got personal remunerations of three billion dollars each in one year now i thought it was obscene and insane a few years ago when they got 250 million but they're now hauling in 3 billion now that's not a word world i want to live in and if you want to live in it be my guest i don't see us debating and discussing this i don't have the solutions i think i know what the nature of the problem is and unless we're prepared to have a very broad-based discussion that gets away from you know the normal kind of problem you get in the political campaign and you know everything's going to be okay here next year if you vote for me you know it's crap you should you should you should know it's crap and and and say it is and and we have a duty it seems to me those of us are academics and seriously involved in the world to actually change our mode of thinking you

Channel: RSA

Views: 3,264,236

Keywords: the rsa, rsa, crisis of capitalism, david harvey, sociology, capitalism, anti, wall street, new social order, investors, lehman brothers, banks, banking system, G20, mastery, greed, neo liberalism, hayek, keynes, IMF, stocks, mortgages, policy failure, world bank, regulation, economic regulation, free markets, marxism, marx2 marxist marxist analysis, governor of bank of england, bank of england, enigma of capital, credit crunch, marx, marxist geography, RSAnimate, bankers, RSA Animate

Id: qOP2V_np2c0

Length: 11min 10sec (670 seconds)

Published: Mon Jun 28 2010