File spoon-archives/marxism-international.archive/marxism-international_1997/marxism-international.9710, message 479


Date: Fri, 24 Oct 1997 13:59:59 -0500
Subject: Re: M-I: Global Financial Crisis


Siddharth Chatterjee wrote:

>The article "The Global Financial Crisis" by Prof. Michel Chossudovsky
>presents a frightening picture of the crisis of capitalism looming
>ahead. It basically addresses the issue of the conflict between the
>relations and forces of production. Yet, according to others (our own
>Doug Henwood for example), capital is strong and vigorous. How can
>these two diametrically opposite views be understood? That is, what
>does the hard economic data indicate? Or are the conventional measures
>like GDP not adequate to describe the real situation? Can any one
>provide some knowledgeable answers as we head into the 21st century?

My personal line, which is admittedly sluttishly flexible, is that capital
is very strong now, and has become quite ingenious at handling crises, but
that there's no guarantee that this can continue forever. So I'm holding
judgment on the Asian crisis: it may be the onset of the real thing, but
then again it may just be a little financial squall.

I thought the 1987 stock market crash was the beginning of the end, and
made some fevered predictions in print and on the air. But I was wrong. I
thought the 1989-92 credit crunch in the U.S. could have been the onset of
a generalized deflation, but once again the authorities proved ingenious
and the system, resilient. My earlier (mis)judgments were influenced by
Marx's comments in vol. 3 of Capital, where he says a crisis can't be
solved by having one bank, like the Bank of England, bail out the
swindlers. Well, central bankers have so far proved him wrong, at least in
the post-WW II period. Though we've actually had more and worse banking and
other financial crises over the last 30 years than we did in the 19th
century, the real world fallout has been less severe - speaking for the
First World only; the Third World has been brutally deflated since the debt
crisis broke in 1982. That the Third World has been so deflated is an
instance of what the geographers call spatial displacement; people like
Patrick Bond argue that the credit system also allows for temporal
displacement, the postponement of the day of reckoning. That may be, which
is why I won't say that a deflationary collapse is impossible, but the
system has proven far more resilient than anyone might have imagined. Of
course each postponement only raises the stakes; plungers who are bailed
out get bolder in the next up cycle. Or as Minsky said, stability is
destabilizing. We'll see.

Doug





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