Fri Aug 15th, 2014 at 12:53:53 PM EST
Wolfgang Streeck, leading figure of the Frankfurt school of philosophy, has published an incisive and compelling analysis of the interplay between capitalism and democracy in the developed world over the past forty years or so : Buying Time : The delayed crisis of democratic capitalism.
Eurotrib having been offered a copy, I have undertaken to review it. I feel suited to the task because I have nothing but an autodidact's random smattering of economics, sociology and philosophy, and will mostly restrict myself to a naïve synthesis of Streeck's theses, leaving my far more erudite and insightful readers to do the serious work. I will resist quoting directly from the text because I wouldn't know where to stop; everything is eminently quotable, written with admirable clarity and humour, nicely translated, a constant pleasure to read.
The book, based on the 2012 Adorno lectures, was published last year in Germany, and the English translation (by Patrick Camiller) has just been published by Verso, an imprint of New Left Books. It can be ordered in physical form from the publisher, or electronically from Amazon, iTunes, or Nook. (Yes, it's buying "Buying time" time).
The three chapters correspond to the three lectures on which they are based. Despite the book's relative brevity (less than 200 pages, excluding the extensive bibliography and index) I propose to do a diary on each chapter; each one is of sufficient density to merit discussion.
front-paged by afew
Chapter one: from legitimation crisis to fiscal crisis
Capitalism and democracy were a powerful couple during the "trente glorieuses" post-WWII years. Expectations of economic growth, full employment and increasing prosperity became so entrenched that the fundamental antagonisms between the two were overlooked, or even deemed to have been definitively relegated to the dustbin of history. This, indeed, was the dominant view of the Frankfurt School during Streeck's formative years.
The book's introduction, "Crisis theory : then and now" deals with this historically embarrassing mis-analysis. Jürgen Habermas, in particular, developed the notion of the "legitimation crisis", postulating that people expect governments to intervene successfully in the economy to try and ensure economic prosperity, and that failure would cause the validity of the capitalist system to be questioned, thus undermining its legitimacy. Streeck presents his book as an attempt to rehabilitate crisis theory, explaining that the postulated legitimation crisis is now upon us... forty years later, having been pushed back by our governments' successive, and moderately successful, attempts at buying time.
In fact, the end of the post-war boom indeed led to a legitimation crisis -- but it was not the workers/consumers/electors who revolted. It was capital.
The notion of "Late Capitalism" has been around since the beginning of the 20th Century. But the predicted demise of capitalism is late, and keeps getting later. The error committed by the neo-Marxian Frankfurt thinkers, in Streeck's analysis, was to have considered capital as a resource, more or less biddable and accountable to democracy. Of course, as they should have known, capital is an actor, particularly in class struggle.
Streeck outlines several phases in the attempts by governments, more or less in unison, to buy time for their socio-economic model subsequent to the boom years :
In the 70s, productive investment started to fall short of what was required for full employment. Inflationary monetary policy was the first ploy to buy time, accommodating wage rises in excess of productivity growth. But the replacement of real growth with nominal growth lost its charm with stagflation in the late 70s, which put a squeeze on profits and threatened to lead to a capital strike.
- Public debt
The monetarist revolution of Reagan, Thatcher and imitators put capital back in the driver's seat. The recession they provoked, with its mass unemployment, did however require additional revenue to keep the wheels turning, and governments resorted massively to borrowing.
- Private debt
In the 1990s and 2000s, slashing of public services and reduction of public debt was accompanied by an explosion of private debt.
Each of these phases is seen by Streeck as a means of conjuring money out of nowhere, in order to enjoy the benefits of growth in excess of growth itself. The financial crisis of 2008 is seen as the final reckoning, the democracy/capital nexus being confronted with its contradictions.
According to Streeck, democracy and capital were forced by circumstances into an arranged marriage after WWII. But each successive crisis entailed the progressive emancipation of capital from democratic constraints. Self-regulated markets were alleged to function efficiently, and government intervention in economic matters was de-legitimised. This ideology is now so dominant that it is hardly even questioned after the massive nationalization of private losses which was imposed on the citizen/taxpayer as the price to prevent economic collapse in the recent crisis.
In chapter 2, "Neoliberal reform : from tax state to debt state" Streeck analyses the crisis of public finances and its origins (surfeit of democracy, or neoliberal transformation?). In chapter 3, "The politics of the consolidation state", European integration as a liberalizing machine is put on the grill. I intend to post diaries on each of these as time (and your interest) allows, and a discussion of his short final chapter, "Looking ahead" would be nice too...
Ladies and gentlemen, start your engines.
[ED Part Two is here]