Home > Uncategorized > The reason 2008 was a momentous year

The reason 2008 was a momentous year

from Yanis Varoufakis

. . . . Trump trades on anger, weaponises hatred and meticulously cultivates the dread with which the majority of Americans have been living after the financial bubble burst in 2008. Obscenities and contempt for the rules of polite society were his means of connecting with a large section of American society.

The reason 2008 was a momentous year wasn’t just because of the magnitude of the crisis, but because it was the year when normality was shattered once-and-for-all. The original postwar social contract broke in the early 1970s, yielding permanent real median earnings stagnation. It was replaced by a promise to America’s working class of another route to prosperity: rising house prices and financialised pension schemes. When Wall Street’s house of cards collapsed in 2008, so did this postwar social contract between America’s working class and its rulers.

After the crash of 2008, big business deployed the central bank money that refloated Wall Street to buy back their own shares, sending share prices (and, naturally, their directors’ bonuses) through the stratosphere while starving Main Street of serious investment in good-quality jobs. A majority of Americans were thus treated, in quick succession, to negative equity, home repossessions, collapsing pension kitties and casualised work – all that against the spectacle of watching wealth and power concentrate in the hands of so few.

The Guardian

  1. Econoclast
    November 8, 2020 at 7:59 pm

    This is exceptional. For those who miss the link:
    i continue to read The Guardian (even though it has become too mainscream media) because of pieces such as this.

  2. Gerald Holtham
    November 10, 2020 at 7:53 pm

    Would Bernie Sanders have won the election if he had won the Democratic nomination? Conventional wisdom thinks not and the evidence tends to support that. Can Biden become a more radical President even if he wants to? Not unless the Democrats can win the Senate. The electorate that rejected Trump increased Republican seats in the House of Representatives and has not changed control of the Senate, yet at least. Varoufakis may think he knows what needs to be done but does he know how to get elected in order to do it? He didn’t succeed in Greece and he seems to have no wisdom to offer progressive politicians in the US on that score. The US is fairly typical. In the UK the electorate gave a large majority to the most incompetent government and unsuitable Prime Minister at least since 1956. The opposition had the most left-wing programme offered by any UK political party in 60 years, perhaps 80. Electorates have no confidence that state power can be used to improve their circumstances so they are happy to see it used to preserve their relative position by screwing those still less fortunate.

    • November 11, 2020 at 10:48 am

      I don’t think this comment entirely fair, although it is very much to the point: people don’t trust centralised government. What is also to the point is that they have very good reason not to trust decentralised government by big business, which seems to be the Trump/Johnson recipe with the “big business” clause well hidden and well-paid leaders stirring up ignorant vigilantes rightfully angry at the results of centralisation. Varafoukis I understand did get elected, but the system still being centralised government, his prime minister was able to let him down.

      The incompetent UK prime minister in 1956 was Eden, which fits. So does Gerald’s last sentence. That’s why in 65 years I’ve never voted for the Fabian Labour Party and advocate subsidiarity: “bottom up” community (local and cooperative business) government financed by credit card creation of our own money, merely coordinated and advised on what needs doing by central government. “Liberal” is the right word for liberating individuals, but not for central governments enforcing environmentally damaging international “free trade”. Boris seems to be singing my song but not its inconsistency with the “free trade” doctrines he learned as a child, nor with the need for a personal income he has always had, even when employment (in the sense of selling rather than giving one’s skills) is impossible. Hence the need for a universal credit accounting scheme paid back by giving. Learning from the Covid vaccine trials, keeping trade local until its safety is proven is vital for minimising environmental damage.

    • Yoshinori Shiozawa
      November 12, 2020 at 1:38 am

      Gerald posed a difficult problem of political economics. There are many “radical” economists who are prone to be politically radical but are in no way radical in their economics. I felt a similar problem when I read Craig and Iconoclast. They have no interest in economics. They are interested in policies and social reform. Their intention may be right. I do not doubt their good will, but they do not acknowledge that their lack of understanding how economy works may bring a serious damage on the human society like the case of communist movement in the 20th century.

      Most of “radical” economists are not radical in economics, because their economics is based most often on economics of old common sense, and in many cases on economics that turned out be wrong. They are not good economists at all. They seem to be romanticists. For the concept of romanticists, see Yoshio Inoue’s (Read i.no.u.e) book review on our Microfoundations of Evolutionary Economics.

      I doubt if they (“radical economists”) are good political scientists, because they do not observe how people’s political opinion moves. They only dream of the day when people accept their policy proposal. They are a kind of daydreamers.

      N.B. I am not blaming their good intentions. I am blaming their ways of thinking. They are not scientific, although they preach by the name of economics.

      • Meta Capitalism
        November 12, 2020 at 11:44 am

        America is on the precipice of degenerating into a failed democracy turned into a fascist state that is a Kulturkampf and it wasn’t communism that brought this about; it was a form of capitalism that America championed–market fundamentalism–that brought America to the precipice of its democratic demise. Only an ignorant fool who is an intellectual parrot could be blind enough to raise the boogeyman of communism in such historical times. Clearly, Shiozawa is utterly ignorant of what is happening in America let alone the world at large.

      • Meta Capitalism
        November 12, 2020 at 12:16 pm

        I am blaming their ways of thinking. They are not scientific …

        As for Shiozawa’s caricature of Ikonoclast’s complex arguments (he has made clear he advocates for the kind of democratic socialism that has a long proven track record of delivering a more just economic outcomes and ironically is akin to the Japanese economic system itself with its socialized healthcare) I will let another make clear the kind of scientism Shiozawa hawks on RWER:

        It is interesting to learn that, as an economist and social scientist, I must be in a “pre-Copernican” stage. Although what this means is not totally clear to me, I take it as revealing that our presuppositions about scientific practice differ. You claim to know what is the most appropriate way of investigating the subject I address, and that this way is the methods and tools of natural science. I claim to have devised a way which works, without knowing if it is the most appropriate, a thing whose decidability would seem to be quite problematic. And the way I have devised meets the conditions of a reflective epistemology of scientific practice, in natural science as well as in social science.

        Your presupposition is that the application of the methods of natural science is the yardstick for social science. This is scientism.

        — Robert Delorme, A Cognitive Behavioral Modelling for Coping with Intractable Complex Phenomena in Economics and Social Science. In Economic Philosophy: Complexity in Economics (WEA Conference), 12/1/2017, italics added.

        I think Ikonoclast has a better grasp of what science is all about than Shiozawa’s anachronistic ahistorical “whig history” does.

      • Yoshinori Shiozawa
        November 12, 2020 at 2:40 pm

        I am sad to know that Meta is showing by himself why American democracy is at the precipice of falling down. He does not know how to argue without labeling.

      • Meta Capitalism
        November 17, 2020 at 3:29 am

        I think you guys are making this too complicated. The starting point has to be “What is the economy?” and “What is the purpose of the economy?” The economy (in my view) is an interdependent network of knowledge, tradition, relationships, and cultural factors, probably too complex to model effectively. The purpose of the economy (again my view) is to assure every person a life-sustaining share of everything needed for a productive and secure existences. We don’t need better computers to understand this and we don’t need new theories. We need more compassion and clarity of thought. (John deChadenedes, RWER, 9/27/2019) .
        I do not know how you think about communism…. Compassion and clear thought may not necessarily lead our economy and society on a good track. This is one of reasons why we need good economics. (Shiozawa, RWER, 9/27/2019) .

        It is one thing to recognize that ideals must be informed by scientific and historical facts and knowledge, and something very different to hold the view that science is the only way of knowing or gaining knowledge about the world and then foolishly masquerading ideology as science. And that is what he is doing when he trots out he same old trope of the historical failures of communism and socialism while blindly ignoring the historical failures of capitalism (e.g., the Gilded Age and Great Depression and more recent Great Financial Crisis or Great Recession). Ideological minds view the word in black and white with no shades of grey in between:

        Late-Victorian economic doctrine answered the need for an intellectual response to the workers’ challenge, to trade unions, to socialism, to the land reform movement, and to Social Democracy. Liberal economists upheld the existing property order and its inequalities. In Western Europe, North America and Australasia, Social Democracy eventually prevailed over fascism and communism, established welfare states, safeguarded the structures of capitalism, and dominated policy during the first three post-war decades. It sustained economic growth and distributed it more equally. To do this, it had to challenge the assumptions of neoclassical economics, and sometimes to reject them. (Offer, Avner. The Nobel Factor (p. 6). Princeton University Press. Kindle Edition.) .
        In contrast to the competitive free-for-all of orthodox economics, Social Democratic parties in post-war Europe (and in the English-speaking countries) defined a cluster of collective aspirations:
        • Collective insurance against life-cycle periods of dependency, regulated and administered by government and paid for through progressive taxation.
        • Good-quality affordable housing, by means of rent control, new construction, mortgage subsidies, and public or collective ownership.
        • Secondary and higher education, land use planning, scientific research, culture, sports, roads and railways.
        • A mixed economy with extensive public services, some nationalized firms, but leaving private ownership to manage production and distribution.
        • A special concern for disadvantaged groups.
        The United States also went along with a good deal of this programme, and if it failed to provide universal healthcare entitlement, it did provide one for the old and the indigent. (Offer, Avner. The Nobel Factor (pp. 6-7). Princeton University Press. Kindle Edition.)

        Numerous times Shiozawa has revealed his stereotypical caricature view of history that is little more than “an exercise in antiquarianism”. He throws out the old canard and boogeyman of capitalism good vs. communism/socialism bad as though there is nothing in-between totalitarian socialism and market fundamentalism (see The Nobel Factor above). This trope becomes laughable in light of the current excesses and abuses of modern capitalism we are seeing in todays gross inequality emerging in countries like America. The use of labels like “communism” and “socialism” divorced from modern historical context is little more than ideological rhetoric.
        He tries to justify his confused muddled ideology because “Compassion and clear thought may not necessarily lead our economy and society on a good track.” (here) and in another post claims his book, being “pure theory” is the “result of deep human experience” and is “more proof against abuse of state intervention, because we know the limits or difficulties of controlling economies.” (here).
        Ironically Shiozawa sits in a country, Japan, in which the very government intervention he whines about assures he won’t go bankrupt because of a medical emergency, while in America millions go uninsured and find themselves underinsured and going bankrupt solely because of a specific form of capitalism–market fundamentalism. He remind me of the old foolish Tea Party boomers screaming “Keep government out of my Medicare!” while Obama was trying to create a form of affordable universal healthcare which Shiozawa enjoys here in Japan.
        He seems blind to the simple fact that the very totalitarian communism that he fears is embodied in China has been made a world-power, rebuilt its military, and is now threatening its neighbors, including Japan, by global capitalism which has no loyalty or concern for whether its social context is “socialism,” “communism,” “totalitarianism,” or for that matter “fascism,” “Nazism,” etc. The capitalism Shiozawa idealizes thrives just fine without those pesky “ideals” of democracy because it is has no ideals other than profit maximization–good old power and greed.
        And America today is making it very clear that capitalism does just fine without democracy and that democracy, unless it regulates and controls capitalism, has little chance of thriving or surviving.
        Shiozawa is revealing his “great lie” and antiquarian outdated Thatcher/Reaganism that government can provide nothing good; pure ideological balderdash. Ironically, here in Japan no one is going bankrupt because of medical emergencies and that is because of the government and everyone has affordable access to descent healthcare. That is just one example that exposes the insidious lie in Shiozawa’s ideological arguments masquerading as science when all he is really espousing is pseudo-science and rank ideological scientism. Governments like all things are largely what we choose to make them and they largely reflect the level of our own character.

  3. Ikonoclast
    November 13, 2020 at 12:51 am

    Trump is a disgraceful and obnoxious sociopath and would-be dictator. Trump did not win the election of course, even though the electoral college system and voluntary voting both operate in the Republican favour. Plus, the Republicans have worked over time to disenfranchise minorities using various strategies and tactics. Trump lost the election badly in the electoral college and in the popular vote. There is no evidence of widespread fraud and none yet proven in a court of law. These are the typical fabrications of right wingers and lunatic conspiracy theorists who prefer authoritarianism rather than democracy. Trump is endeavoring to become dictator-for-life and to start a family dynasty, perhaps like that of North Korea. That seems to be his governance model.

    We will see if the US people and system can defeat this attempt to stage a fascist coup in America. US democracy is far from perfect, however it still has some considerable strengths. The Democratic Party, as another party of unfettered capitalism, will change little to nothing in terms of American capitalism. It does however (its donors and apparatchiks) prefer plural oligarchic rule, in the old Whig fashion, to monarchical or dictatorial authoritarianism and tyranny. The US system is designed to stop kings and tyrants and yet to facilitate oligarchs, oligarchic families and corporations.

    In this struggle, we see old and new capitals (and capitalists) competing for the rule of the USA. Land owners, plantation owners and slave owners took control of the USA after the Revolutionary War from 1775 to 1783. Next, the American Civil War, from 1861 to 1865, was really a struggle between the nascent capitalists of the time, the northern industrialists, and the old land owners of the south with their plantations and slaves. That ended in a victory for northern industrial capital.

    Today, the new capitalists are the tech giants and tech billionaires, along with the media and internet empires. Old capitalists, old industrialists (and incidentally financialists), like the Koch brothers, are welded to the Republican Party and particularly to Trump. Capitalism itself is a revolutionary system in that it regularly revolutionizes the mode(s) of production. Each time a revolution in production occurs, a wider social and political revolution follows via the competitions of old and new capital and the re-alignments of social classes. In this case, Trump and a coalition of the reactionary classes (old industrialists plus red-neck and racist groups which are either and all of rural, religious fundamentalist, unemployed, uneducated working class and usually white supremacist), are attempting to push through a fascist coup to solidify their existing power and freeze, at a point in time, the movement of history. Ultimately, this attempt will fail but there are horrible ways (for all of us) for it to fail.

    If initially successful, this attempted fascist takeover by old capital in the USA will greatly accelerate the on-going collapse process of the USA. If the “progressive” (mostly a kind of tokenistic social-progressivism) tech and media capitalists win, via their bought-by-donations proxies in the Democratic Party, then they will continue with the current oligarchic and corporate rule of America. The USA will collapse more slowly but it still will collapse in the end under this form of capitalism. I think the USA is institutionally and in terms of “socially Imaginable change” at this point incapable of fixing itself. The majority of Americans still do not understand the dire trouble they are in and they find the necessary solutions (genuine democracy and socialism) still completely unimaginable. This will remain true unless and until there is a genuine democratic socialist revolution in the USA, which sadly looks as far away as ever. But when change finally comes, it can progress quickly like a phase change, so these things are hard to predict.

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