Law & Political Economy

The enduring entanglement of modern property law with this original “feudal calculus” is a thread running throughout Pistor’s book. Most importantly, it informs her skepticism about the alignment that is commonly assumed in liberal grand narratives among progress, property rights, and the rule of law (understood in the sense of the universal applicability of general rules, such that no one class received preferential treatment by the state).

There have been revolutionary moments, Pistor concedes, in which property owners did line up behind the demand for general rights—the American and French Revolutions being cases in point. But once their property was established, owners became, like their feudal predecessors, defenders of privilege. They have advocated not universal binding rules, but what Max Weber called a “modern particularism,” finding ways around the law when it suited their interests.” —Tooze reviews Pistor (2019).

The Usual Suspects: The University of Chicago, Ronald Coase, and Aaron Director established the school of Law and Economics in the 1960s. Its purpose was to diffuse the functionalist liberal grand narrative on capitalist law, in which capitalist law is mythologized as harmonizing interests throughout society by creating rules that maximize efficiency, productivity, and economic growth. This obfuscatory economist-managed myth factory helped distribute resources and power globally, but within the inegalitarian rules of feudal privilege that efface the citizenship and interests of smallholders and life on Earth.

Responding to the 20th-21st century expropriation explosion and democratic dissipation, Pistor is part of a new school, Law & Political Economy, that clarifies that global Anglo law, based in New York and London, actually marries exceptionalist feudal restrictions on [immobile] land property alienability with increasing volumes of extremely-mobile exclusive private property claims [only obliquely upon–but governing the disposition of– tangible assets], so that states enforcing this elite, privately-manufactured law have come to unequally, inequitably, exceptionally enforce the asset claims of large, global capital owners against the interests and welfare of the rest of societies.

Note the gendered leadership of the Law & Econ v. Law & Political-Economy networks. Together patriarchs may imagine their protection racket as benevolent. Women are experientially informed about the central, pervasive, destructive role of expropriation in capitalism.



Bhattacharya, Tithi. 2017. Social Reproduction Theory. Pluto.

Choudry, Aziz & Adrian A. Smith, eds. 2016. Unfree Labour? Struggles of Migrant and Immigrant Workers in Canada. PM Press.

Ghodsee, Kristin. 2018. Why Women Have Better Sex Under Socialism.

Graeber, David. 2006. “Turning Modes of Production Inside Out: Or, Why Capitalism is a Transformation of Slavery.” Critique of Anthropology 26 (1): 61-85.

Kapczynski, Amy.

Kalecki, Michal. 1971. Selected Essays on the Dynamics of the Capitalist Economy 1933-1970. Cambridge University Press.

Kato, Daniel. 2015. Liberalizing lynching: Building a new racialized state. Oxford University Press.

Law & Political Economy blog.

Lawrence, Andrew G. 2014. Employer and Worker Collective Action. Cambridge University Press.

Marx, Karl. 1867. Part VIII, “Primitive Accumulation,” Capital V. I.

Moore, Jason. 2015. Capitalism in the Web of Life. Verso.

Orren, Karen. 1991. Belated Feudalism: Labor, the Law, and Liberal Development in the United States. Cambridge University Press.

Pistor, Katharine. 2019. The Code of Capital: How the Law Creates Wealth and Inequality. Princeton University Press.



Capitalism & Corruption

Capitalism overfloweth with marketing. It’s fair enough to point out the system never does deliver the goods.

“First and last, it’s a question of money,” Clarence Darrow said. “Those men who own the earth make the laws to protect what they have. They fix up a sort of fence or pen around what they have, and they fix the law so the fellow on the outside cannot get in. The laws are really organized for the protection of the men who rule the world. They were never organized or enforced to do justice. We have no system for doing justice, not the slightest in the world.” 

Not all condemnations of corruption are equal. Certainly, one can and should warn against getting stuck upon ‘corruption’ as a problem of individual moral failing, against assuming that such an individual moral failing can cause our age’s contradictions and crises. Zizek thunders against clerics’ efforts to blind us to the causes of our problems with their anti-historical, idealist framing:

“The first two things one should prohibit are therefore the critique of corruption and the critique of financial capitalism. First, let us not blame people and their attitudes: the problem is not corruption or greed, the problem is the system that pushes you to be corrupt. The solution is neither Main Street nor Wall Street, but to change the system where Main Street cannot function without Wall Street. Public figures from the pope downward bombard us with injunctions to fight the culture of excessive greed and consummation – this disgusting spectacle of cheap moralization is an ideological operation, if there ever was one: the compulsion (to expand) inscribed into the system itself is translated into personal sin, into a private psychological propensity, or, as one of the theologians close to the pope put it: ‘The present crisis is not crisis [sic] of capitalism but the crisis of morality.’”

But you need not simply use the charge of “corruption” as an emotional tool with which to blind, distract, manipulate, and control nearly-powerless subjects, as the conservative Papacy, flexing its enduring utility to feudal power, does to the unsuspecting, the faithful, and the libertarian. Rather, you can, as does Marx, comprehend corruption as an inevitable product of a social order that demands concentrated economic surplus/power accumulation.

“In every stockjobbing swindle every one knows that some time or other the crash must come, but every one hopes that it may fall on the head of his neighbour, after he himself has caught the shower of gold and placed it in safety. ‘Après moi le déluge!’ is the watchword of every capitalist and of every capitalist nation. Hence Capital is reckless of the health or length of life of the labourer, unless under compulsion from society” Marx, Capital, Volume I, Chapter 10 (1867).

It is not that emotion or condemnation is wrong. Emotion is human, and often must be addressed strategically. Leftists would be autistic dupes to let conservatives monopolize emotions, and ridiculous to flatter themselves that to leave emotion to conservatives makes Leftists pristine, ethical…otherwordly, in imitation of imaginary deities, and similarly ineffable, ineffectual. That’s a trap that’s been laid before, and we should recognize it.

The problem is the socially-irrational concentration of the massive accumulation of wealth–capitalism. That is fundamentally corrupt. The problem is, as Zizek recognizes, “Main Street’s” rigid inability to function without Wall Street, to the point of compounding, brakeless social and environmental irrationality. Socialism is needed to break this free-fall, to put a brake on the capitalist corruption of human sociability.

The How & Why of Privatization Touts

At the Ivies, the students are instructed by only the most high-status, most fail-tastic privatization marketeers (AKA conservative economists) that only the best-funded gentlemen’s networks can float.

How privatization and class warfare is sold to future US leadership: with lies, covering obscene kleptocracy and its further socialized costs.

Note: Larry Summers may have long since lost his royal Harvard throne, but not just because of his sexism (the putative cause) and racist ecological imperialism (There’s that too.), or even just being an evil overlord of the rampant social, economic and environmental mega-destruction that is neoliberalism. Rather, his Harvard departure is likely due to this: Summers decided to use Harvard funds to pay the costs (The US Justice Department fined Shleifer $26.5 million) of Andrei Shleifer’s massive kleptocratic privatization profiteering in post-communist Russia.

Yee-ha! Good ole fancy boys! Creme de la…uh… I’m guessing Summers himself has enjoyed many, many such back-scratching indulgences over the years, and it’s all par for the course for that highly-oiled and polished ruling mafioso. What was that? Did someone mention Goldman Sachs owns the Fed and the US government? You don’t say. Now what were we talking about? Berlusconi?

Harvard University: You will never find a more wretched hive of scum and villainy. We must be cautious.

Geist in the Machine

Arundhati Roy’s “Capitalism, a ghost story” is beautifully written and meaty.

“By calling their tower Antilla, do the Ambanis hope to sever their links to the poverty and squalor of their homeland and raise a new civilisation? Is this the final act of the most successful secessionist movement in India? The secession of the middle and upper classes into outer space? 

As night fell over Mumbai, guards in crisp linen shirts with crackling walkie-talkies appeared outside the forbidding gates of Antilla. The lights blazed on, to scare away the ghosts perhaps. The neighbours complain that Antilla’s bright lights have stolen the night. 

 Perhaps it’s time for us to take back the night.”

Virginia, Meet Financial Capital

This Guardian article shows one way (the divorce between compensation and performance) in which financial capital does not function according to conservative economic theory, with its ideologically-convenient ignorance of human reflexivity and power.

Any reporter worth his salt knows that following Goldman Sachs’ trail of hell-ooze is always worth his time. Greg Palast reports on how Goldman Sachs colluded with Greece’s (former) right-wing government to 1) create the image that conservatives can govern a democracy, which they patently cannot, and 2) screw the world economy and the majority of the people in that economy, for their own unchecked aggrandizement.

Palast, who is selling his book Vulture’s Picnic, deserves to be quoted at length on this overview of the conservative-nursemaided primitive accumulation of Greek wealth:

“In 2002, Goldman Sachs secretly bought up €2.3 billion in Greek government debt, converted it all into yen and dollars, then immediately sold it back to Greece. Goldman took a huge loss on the trade. Is Goldman that stupid?

Goldman is stupid—like a fox. The deal was a con, with Goldman making up a phony-baloney exchange rate for the transaction. Why?

Goldman had cut a secret deal with the Greek government in power then. Their game: to conceal a massive budget deficit. Goldman’s fake loss was the Greek government’s fake gain. Goldman would get repayment of its “loss” from the government at loan-shark rates. The point is, through this crazy and costly legerdemain, Greece’s right-wing free-market government was able to pretend its deficits never exceeded 3 percent of GDP. Cool.

Fraudulent but cool.

But flim-flam isn’t cheap these days: On top of murderous interest payments, Goldman charged the Greeks over a quarter billion dollars in fees.

When the new Socialist government of George Papandreou came into office, they opened up the books and Goldman’s bats flew out.

 Investors went berserk, demanding monster interest rates to lend more money to roll over this debt. Greece’s panicked bondholders rushed to buy insurance against the nation going bankrupt. The price of the bond-bust insurance, called a credit default swap (or CDS), also shot through the roof. Who made a big pile selling the CDS insurance?

 Goldman. And those rotting bags of CDS’s sold by Goldman and others? Didn’t they know they were handing their customers gold-painted turds? That’s Goldman’s specialty.

 In 2007, at the same time banks were selling suspect CDS’s and CDOs (packaged sub-prime mortgage securities), Goldman held a “net short” position against these securities. That is, Goldman was betting their financial “products” would end up in the toilet. Goldman picked up another half a billion dollars on their “net short” scam.

But, instead of cuffing Goldman’s CEO Lloyd Blankfein and parading him in a cage through the streets of Athens, we have the victims of the frauds, the Greek people, blamed. Blamed and soaked for the cost of it. The “spread” on Greek bonds (the term used for the risk premium paid on Greece’s corrupted debt) has now risen to — get ready for this––$14,000 per family per year.”

December 2011 update:

The rich mouth off, concerning what assholes they are. (Hint: MIGHTY assholes.)

Law’n’Order Corrupts Absolutely

Authoritarian Law’n’Order is by its very nature corrupt and corrupting. Here, law enforcement officers relate how they fabricated drug charges against innocent people, in order to meet Law’n’Order quotas.

…Once again proving that you are a bona fide idiot, if you think militarized policing and prison slavery build-up is a concession to the working class and an imposition of firm, fatherly (or feminist. whatever.) order. The working class will pay for each and every police and prison job through the nose and then through every other orifice they’ve got.

Running Unalienated

Here in “The Lost Secret of Running” is 1) a brilliant little story of how capitalism (in the form of Nike) distorts our species being (We are a long-distance running species.) and hurts us; and 2) how to run as if you had a human body. Hint: It’s not how you’ve learned to run, which is to maximize Nike’s profits. Includes a video and stills of human running technique.

It turns out, that if we run like humans, we can run far, and faster, and without pain.

Human running (with some degree of desperation)

Showing more stills of proper running technique, this blog calls 100-up running technique “Chi running”. The technique’s about the same.

In a related story of what happens to food and health when financial capital steps in, here is an article about the blog confessions of a retired General Mills exec.
Need to know how to eat as if you were a human? Check out Michael Pollan.

“Man grows used to everything, the scoundrel”
Fyodor Dostoyevsky

US Tentacles in Ugandan Homo-murderous Law

Bush-regime evangelical clientelism propelled Uganda to the homosexual hate hysteria it currently stews in.

The Rev. Kapya Kaoma, a Zambian, went undercover for 6 months in Uganda, to witness and report that US evangelicals, who thanks to the Bush regime wield enormous power in Uganda, provided the legitimacy and facade of expertise for the promotion of homophobic hysteria in Uganda and the country’s institution in 2009 of a death penalty for gay people.

With the turnover in US leadership, American conservative evangelicals, a major client of the Bush regime, were assured by the Obama administration that they would not face reduced public funding of their “social service” activities, which include campaigning against human and civil rights for gays, and proselytizing for their religious sects in countries like Uganda.

The recent relevation that conservative evangelicals (Scott Lively, Caleb Lee Brundidge, and Don Schmierer) have spurred murderous state policy in Uganda strengthens the case against ending remaining clientelistic relationships between the US state and the Republican clients, as conservative evangelicals had attempted to hide the nature of their activities in Uganda, presenting a more moderate face in the US. It is now much more difficult to see where “compassionate” conservatism ends and barbarous conservatism begins.

But for all their US-side claims to civility, as missionary Scott Lively blogged proudly, his campaign was ““a nuclear bomb against the gay agenda in Uganda.” Or a nuclear bomb against human rights, more accurately.

Corruption in the US at the 21st Century

Transparency International (TI), the international community’s foremost corruption watchdog, compiles a global Corruption Perception Index every year wherein a variety of “yes-no” questions are posed to respondents from 180 different countries. The results are telling, and they lead to TI’s overall corruption rank for each state…

TI’s corruption barometer found that in Europe, Latin America and sub-Saharan Africa, political parties are perceived to be most conducive to corruption. In Asia, the Middle East, North Africa and the Western Balkans, suspicions lie with the civil service. And in North America, it is the parliament or legislature.

Most police officers in America do not require greased palms for their services. But if one wishes to attend a chicken cordon bleu dinner with Sen. Max Baucus of Montana, it will cost him $10,000 (fly fishing and camping in Big Sky Montana with the same gentleman only costs a quarter of that though). Congressman Joe Crowley’s company, however, may be purchased for a piffling $100, including karaoke—unless one wishes to buy in bulk and also attend a “VIP After Party,” in which case the bill rises to $1,000.

The going rate for lunch with Congresswoman Suzanne Kosmas seems to be around $500, as is also the price for a savory “Taste of Michigan” luncheon with Congressman Bart Stupak. And for those who feel like splurging, a seat at the “Healthcare Community Dinner Honoring Pete Stark” will set one back a modest $2,500.

Charlie Palmer steaks and health-care talk with Republican Sens. Chuck Grassley, Mike Enzi and Richard Burr costs either $2,000 or $5,000, depending on one’s desired propinquity to the head of the table…

Has the $787,641 to Max Baucus’ coffers (and, to be fair, he is but one of 535) from the health professionals industry since 2005 played any role in his shaping health-care reform legislation? …

Such is also the case for conservative Blue Dog Democrats in the House, such as Mike Ross of Arkansas, who just days after voicing his criticism of the progressively minded health-care bills was wooed with extravagant fundraisers by health-care industry lobbyists. (The Blue Dogs received) 25 percent more in contributions from the health-care and insurance industries.”

Excerpted from Whatley, Stuart. 2009. “American Plutocracy.” The Huffington Post, July 31.

At the Helm & on the Deck of the Great Depression II

Conservative v. liberal economic explanations for economic failure, the interests they express, and their policy implications

Friedman and Schwartz’s (A Monetary History of the United States, 1867-1960. 1963.) conservative monetarist thesis was that Fed policy caused the Great Depression by restraining Wall Street speculation. (See Bernake’s Fed speech).

This explanation for the Great Depression was formed in opposition to the Keynesian and Marxist explanations for the Great Depression. Keynesian and Marxist explanations faulted not the federal government (the job of which is to foster the conditions for capitalist accumulation, which at times means managing and even subordinating the competing interests of different sectors of capital) for the Great Depression. Instead Keynesian and Marxist economists faulted capitalism and its tendency toward inequality, social irrationality, and uncreative destruction. They showed that prior to the Great Depression, there had been overproduction—capital had too large a share of social income and workers too little; with all their excess riches, capitalists had invested in profit-seeking productive enterprises beyond lower-income consumers’ ability to consume, and in response to the disappointing returns to productive investments, capitalists had turned to finance and speculation to increase their accumulation. At that point, progressive economists explained, accumulation became radically disassociated from social rationality, and elite hoarding even took precedence over profit. The federal government had to step in to (temporarily) reign in capitalists in order to save capitalism.

Friedman’s paradigm switched the explanatory timeframe, blocking out how investment had outstripped consumption capacity in the 1920s, leading capitalists to use their riches to gamble to continue to build wealth. He blocked out how this Wall Street gambling activity had in turn led to the collapse of socially-rational productive activities while concentrating wealth further among the surviving capitalists.

Like liberal economists, Friedman was interested in accumulation; but unlike liberal economics, the policy implication of conservative economics is essentially that accumulation is the sole necessary and sufficient basis for a functioning economy. Keynsians argued, by contrast, that accumulation is a necessary but insufficient basis for a broadly functioning economy, pointing to the role of increasing inequality in starving the market, handicapping the working class, and so undermining the basis for long-term capitalist accumulation. Liberals and Marxists have maintained that the US (and the global) economy at the onset of the Great Depression was already in the process of crashing. Monetarist policy could not stop it. (Other than the cross-national association between the abandonment of globalization / the gold standard and reducing the length of the depression, there is little evidence that other forms of monetarist policy could have stopped the depression. Monetarism is just a counterfacutal theory.)

The assertion, in conservative economics, that accumulation automatically produces a functioning capitalist economy, is not even a necessary component to the theory. It’s superficial. The assertion is little more than a marketing ploy to attract liberals (who are also interested in maximizing accumulation) to the conservative program. Without the untenable conservative line that accumulation automatically produces a functioning capitalist economy (absolutely independent of workers’ and consumers’ conditions), it is ultimately beside the conservative economics point, whether a capitalist economy survives.

Friedman’s work was supported and promoted by capitalists in Austria, England, and the US. Their goal was the removal of checks and balances (regulation, taxation, socially-rational incentives) on their own powers (hence the promotion in conservative theory of a particular kind of liberty–liberty divorced from equality). Friedman’s explanatory scheme was designed to produce a political result—removing collective checks and balances on globally-dominant capitalists—by changing how citizens and decision-makers understood economic failure.

Following the implicit logic of conservative economics (and dispensing with the superficial and magical assertion that all a functioning economy needs is accumulation), we can see that Friedman and other conservative economists did not (and do not) care about a broadly-functioning economy. Consider: the interests behind the propagation of conservative economic theory do not change if capitalism fails. The survival of capitalism is a liberal concern. For conservatives, capitalism is only one mode of accumulation in an arsenal of strategies that includes other socially-irrational political-economies. The conservative goal is the concentrated dominance of a steep social hierarchy by any means necessary (Right, Ayn Rand?). The allure of conservatism is social stability. Its form of social stability is achieved by crippling the vast majority of humans.

Conservative economics has been determining policy, and continues to determine state policy toward economic failure

Friedman argued that by creating the disincentive for finance capital to speculate (by increasing the interest rate), the government restricted the amount of money available in the economy, and this caused the Depression. Friedman implied that speculation (gambling by capitalists, rather than investment in production) was always, everywhere a productive use of wealth that complemented productive investment. In this perspective, social rationality ceases to exist. Only the interests of the people who control capital matter.

Armed with Friedman’s theory that only government containment of capitalist entitlements prevents a healthy economy, economists and economic policy makers since the 1970s—when conservative economics became hegemonic (took over the universities and public policy globally)—have worked diligently to ensure the removal of socially-rational incentives, regulation, and taxation on the people who control capital.

The lessons that conservative economists say arise from the Great Depression and which dictate policy are as follows:
1) Taxpayers should prop up money supply. However, money supply should only be propped by giving financial capitalists more wealth and power. Financial capitalists should be given all latitude to operate as they see fit.
2) Interest rates should not be raised for any reason, whether to discourage speculation broadly or to discourage speculators from devaluing the currency.
3) Currency devaluation is not a problem.
4) The Fed should do whatever it takes to reduce the cost, to capitalists, of borrowing money, including reducing interest rates on government bonds and corporate debt.
5) Taxpayers should immediately and continuously bail out private banks, and government should print more money to give to banks. Banks should never be allowed to flounder or fail. Even if they are acting like bottomless pits, banks should not be nationalized. The entirety of the national wealth should be delivered to bank owners and managers, if must be.
6) Speculators should be allowed to speculate to their hearts’ content.
7) Taxpayers should prop up prices to whatever extent is needed to maintain capitalists’ wealth.

Take a look at these conservative conclusions. They were policy in the good times of the speculative bubbles, and they are policy in the ensuing economic decline, regardless of which capitalist party controls government. They constitute, very clearly, policy to redistribute as much wealth as possible to the top.

Once again in 2009 we find ourselves forced to recognize that the conservative formula does not automatically produce profit, the basis of capitalism. In fact, conservative policy allows the people who control capital to accumulate wealth and power without producing profit—without capitalism.

But in the vicious circle created by giving the most powerful people unchecked power, we have purged our society, and indeed much of the world, of respected political-economists who can even defend liberals’ capitalism, much less reduce the inequality that is strangling our collective and individual ability to adapt and innovate. That is why we are inexorably headed for a second Great Depression. A Great Depression is brute misery, just as a war in the Congo is brute misery. It is incumbent upon whatever non-conservative thinkers exist to educate themselves collectively and collectively produce and circulate pro-Enlightenment, low-inequality, environmentally-sound political-economic theories and policies that can help pave the way toward a less miserable, less brutish humanity.

And we must now acknowledge that the Marxists are correct: Whether liberal or conservative economic theory governs, a capitalist economy will periodically fail. There are fundamental contradictions within capitalism—it’s a total system that requires accumulating wealth and power without crushing the social and economic base—a nearly impossible balance, politically (even for social democrats, who still do the best at it). Over time, capitalism requires that people consume more as they earn less. Not immediately, but over time that integral requirement just breaks down the system, just as it initially built it up. Such integral contradictions can only be patched and glossed for a time, never eradicated.

(Hence exuberant, speculative bubbles are not signs of success—though they do allow their winners to amass fortunes and they do provide jobs and bolster consumption for a few years. But they don’t fix a collapsed foundation. Speculative bubbles are indicators that the capitalist economy is already headed for a depression. The reign of finance capital is a very bad sign for the working class. It means that working class people–and by this I also mean middle class people–are about to be used for meat.)

What can be done?

Too long we have wallowed in fatuous, elitist, misanthropic accounts, philosophical, political-economic, and artistic, of how social rationality does nothing but create mediocre humans. We need to grow up and face the fact that humans, including elites, are in fact somewhat mediocre great apes. We have a few good parlor tricks, and it’s amazing that we’re alive and we need to maximize experiences for everyone, but we are all each and every one of us, innately, fundamentally unspectacular. We have got to get over our petulant, egotistic, neurotic elitist fetish, because (Alas, Ayn and Frederick!) it’s all rubbish. (Want a sort of tally? Read Alan Weisman’s The World without Us (2007).)

The historical record around the world is clear: overpopulation, ignorance, and irrationality are maximized through high-inequality human relationships. For pity’s sake—think of the jaw-dropping human capacity, released under such circumstances, for pillaging, plundering, inflicting suffering and debasement, and committing atrocities.

We should never elevate accumulation to the level of prime directive. We do not produce better humans when we turn our backs on history, not when we collapse into the adolescent dream that by freeing the most powerful to do whatever they want, we liberate the human potential. Rather, it is in a world in which all humans may develop throughout their lives that we will see a proliferation of human ingenuity. We may not worship ingenuity from afar as much, but the thrill of wonder will be unchained from mystifications when human ingenuity is freed. (Think of it as the second coming of Prometheus.)

We progress when we actively work to decrease inequality—so mentally and physically damaging to social animals such as ourselves—and operate our social systems—including our political economies—as if they were the context and medium for all humans, which they are, rather than a throne built of human bodies for Great Men.

Given that our leaders are stuck in a conservative paradigm, just as elite economic leaders were stuck in a liquidationist paradigm in the early 1930s (again we’re all limited humans, including elites), non-elites should consider the following economic survival strategies:

1) Organize. Social movements can substitute for community where communities are not thick enough to help individuals and families, and social movements buffer political, economic and environmental costs. Organize around political economic approaches that do not discount working class, female, minority, immigrant, youth, and disabled people’s life quality, as well as environmental quality. Models for social movement are many and include the Minnesota Farm-Labor Party in the 1930s, the Grange at the turn of the 20th century, the multi-pronged social movement(s) in turn of the 20th century Sweden, the contemporary Dem Party Economic Recovery house meetings, the Civil Rights Movement in black churches in the mid-20th century US, etc. (See a social movements sociologist for guidance.) People involved in social movements usually build organizations. Create alternative goods and services co-ops.

2) Plant food gardens.

3) Take home maintenance classes. Develop a skill you can trade in an economic depression.

4) Buy a bike trailer and get a commuting bike for everyone in the family. Use bikes for transport as much as possible.

5) Real estate prices must go down to real estate value (based on income)–that is, 2001 prices. You should NOT pay more than the 2001 price for a home. If you can’t negotiate the 2001 price at the moment, rent, and wait a couple years until you can. The price WILL go down to the 2001 price. It is sheer irrationality to throw away your money to save someone else who gambled on the vain hope of infinitely balooning assets (blithely ignoring stagnant and declining incomes) and eventually lost. Interest rates for homebuyers may go up to 7 or 8%. (It’s only interest rates for capital that must be suppressed in conservative theory. For a good discussion of the role of high consumer interest rates in destroying a country’s productive capacity, see Thomas Geoghegan’s “Infinite Debt” in the April 2009 issue of Harper’s.) If you find a good landlord who is not in danger of foreclosure, rent. When asset prices have inflated as they have, renting is cheaper than all the costs associated with home ownership, and renting will give you much more flexibility to stay on your feet in a time of economic instability. Update: Banks aren’t lending to non-investors now (2009) anyway, so you probably cannot buy a home even if you want to. This means that investors rather than working class families will own an increasing share of property in the US, and in light of this, you should see survival strategy #1 above: Organize renters.

6) If you lose your job or do not make enough to pay credit cards and/or mortgage, see here for instructions.

7) Bear no or very few children. There are plenty of poor people in the US and plenty of children who need adults, if you want to nurture humans.

Depression-era investment tips:

7) Only invest in oil *before* the US goes to war on an oil country. Then get out before prices decline.
8) Stem cell technology will boom. In fact, luxury medical services or luxury medical organizations (hospitals that cater to the rich, etc.) will continue to thrive as inequality goes off the charts.
9) Luxury goods and services will continue to do fine as inequality goes off the charts.
10) The entertainment industry will do fine, as it did in the last Great Depression.
11) Alcohol sales will increase.

The end of globalization

Note for the acadmic-industrial complex that is about to melt down anyway: Globalization is over.

Although the rest of his logic is clear, Bernake does not make explicit the rationale for why taxpayers should prop up prices on top of keeping money supplied to capitalists. Though, in general, conservative theory holds that the government and the society should do anything to ensure that people who control money retain whatever wealth there is to be had. However, Bernake does imply that the conservative price-propping policy recommendation is deduced from the observation that countries that dropped the gold standard recovered from the depression faster. Perhaps the gold standard research has simply been used willy-nilly to support all hypotheses deriving from conservative economic theory.

Post-1980 monetarist research into the Depression-era relationship between the gold standard and depression severity could produce other conclusions not mentioned by Bernake. Another implication of the gold standard observation is that a globalized economy requires that one country—traditionally Britain and then the US—be firmly in a respected superpower position to manage banks and money markets around the world. If banks and capitalists around the world lose faith in that superpower’s ability to manage money, then globalization collapses.

An alternative policy conclusion stemming from the early-20th century gold standard observation could be that countries should abandon the reserve currency in a depression—say, the dollar in upcoming years. That is, countries should bail out of globalization. Otherwise, when other countries hold the reserve currency—for example, gold in the Great Depression, the dollar today—their economic depression will be exacerbated. In either case, I don’t think the current scenario looks good for the US dollar or globalization.