Capital Resurgent: Dumenil et Levy

I hope to summarize Gerard Dumenil & Dominique Levy’s Capital Resurgent: Roots of the Neoliberal Revolution, 2004.

But time being what it is, I’ll just start here with the upshot, from page 191-192.

Neoliberalism is the economic, political and social dominance (resurgence) of finance. (Per Marx: M-C-M’. A crisis tendency to financial apotheosis is characteristic of capitalism.) What has neoliberalism contributed? According to Dumenil and Levy (2004), “Finance can claim responsibility for at least three kinds of actions”:

1) Finance induces the vast society-wide engorgement of management. This happened in the current period, as at the turn of the 20th century, through mergers and because of the need to organize and finance (192), as well as to repress labor for the sake of profit-enhancing efficiency.

2) For a while (1990s), finance allocated capital toward new technologies. Dumenil and Levy demonstrate that the profit-rate decline that began in the late 1960s was caused by a decline in investment in technological development.

They also show that societies don’t need finance-dominated capitalism, which comes with large social and economic costs, to allocate capital to technological development. For example, states (with regulated and disciplined finance) have been excellent at inducing technological development, as in the early-to-mid 20th century. Their economic policy institutions (such as the Bretton Woods institutions) could have adjusted, rather than turning over the reins to financial capital.

When investment in technology slowed down in the late 1960s, and profits likewise declined, a path to retain the “dream of civilized capitalism” (206) was still available. “The crisis of the dollar should logically have led to reinforcing world institutions, governed by international bodies that were more independent from private interests” (192). “There was no need to abandon fixed exchange rates or limits on capital mobility, unless they were required to restore American preeminence” (192, my italics). The failure to pursue “civilized capitalism” alternatives was not the result of a lack of “intellectual capacity to conceive of such alternatives, but rather the (capitalist) social and political conditions…given the violence of the struggle by finance to reestablish its hegemony” (193).

In implementing some of financial capital’s policy demands, such as floating currency, economic nationalists in the Nixon administration enabled the US to maintain centrality via the dollar for at least 40 years. The costs to labor, states’ independence, investment in non-financial capital, and economic stability were huge and in some cases crippling. The inequality costs to people were savage. Many horrific environmental, social, war, political, etc. crises were launched by the resurgence of financial control facilitated by American economic nationalists (The dollar as the global reserve currency enables the US alone to go into debt and still maintain capital inflows and economic independence). Neoliberalism “is an aggressive and violent form of capitalism” (192).

3) Through its system of corporate governance, financial capital imposed society-wide constraints focused on achieving high profit rates. These high profit rates did not entail sufficient economic development, as the profits came at the expense of the working class (in ubiquitous, “efficient,” profit-maximizing management practices), and were distributed to managers and shareholders, who allocate wealth very poorly (hoarding, speculating, and squandering).

The party at the end of the US’s economic reign

The US Hindenburg is going down.

Under the not-really-suppressed sanctimoniousness and judgmentalism (bad hoi poloi!) of this NYTimes article on average people who’ve stopped paying banks (moral hazard contagion?) on foreclosed homes, is a sign about where the post-1969 ascendance of financial capital is headed.

At this point, 40 years on, the only way the financialized capitalism of the US can keep it up is by stripping the working class of any capacity to consume for the world market. Without mass consumption, the dollar won’t be the global exchange currency anymore. When that happens, the strip-mining goes into overdrive.

There’s only one rational course for the working class and smallholders now: People are partying before the fall. Why not? Because whatever consumption (past or present) we throw our tiny, suppressed incomes at, there’s not enough in our wallets to pay for it all. Kind of like a drained aquifer.

Here the NYTimes lamely suggests debt-riddled working class people should get more jobs. What’s the hurry for us to kill ourselves in overwork now? Ha! As if there were not gigantic –and more hidden!–unemployment. As if that treadmill of pain were not also headed off the cliff. It’s not a debt-management strategy. It’s a desperate debt collection ploy, for the benefit of the rich who are dimly beginning to suspect that they’ve been shitting in their kitchen for a number of decades, if not as a fundamental capitalist practice.

We will be in a lot of pain, and by and large people believe they can’t do anything about it. The militarized law’n’order state has crushed both pessimism of the intellect and optimism of the will. There’s no Left left to plan and push from the other direction; there’s complete repression. We can’t organize and push for change anymore. There are no tools but our elites.

Where do you want to be when the bolts of fascism are all screwed in? I’ll tell you one place I don’t want be: The US.

There seems to be some fringe elite economic policy thought to de-financialize the US economy (cf Christina Romer of Obama’s Council of Economic Advisors; James K. Galbraith on definancializing Europe). But they won’t be able to do it in time–because, as with the environment, the insular, self-satisfied political-economic elites can’t get it together to see that the tank wheels of this leviathon are spinning hard for the edge of the cliff.

In the meantime, here’s a link to how to declare bankruptcy protection (!Si, se puede!) from student loan collections.

Right: Christina Romer allegedly once publicly mentioned reducing financial capital’s role in the US economy.