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Review of Capitalism Unleashed

June 28th, 2009

Several years ago, Andrew Glyn sent me a copy of his new book, Capitalism Unleashed, which I promised to review. But with one thing and another, I didn’t get to it, and then I received the news of his premature death, which set me back still further. I promised myself that I would do the review as a tribute to Andrew’s memory, and now, I’ve finally managed to do it.

Of course the environment now is radically different to the one in which the book was written, and that means the review must be to some extent informed by the wisdom of hindsight. In the introduction, Andrew notes as the first of the big open questions thrown up by the unleashing of capitalism

Will the ever more complex financial system implode in a major financial crisis and bring prolonged recession

We all know the answer now.

But while this possibility is certainly present in the thinking that informs the book, it is rarely brought to the foreground of our attention. The primary focus is on the way in which global financial capital has broken the bounds of national regulation, and severely weakened both the trade union movement and the viability of socialist and social democratic ideas.

The book is a clear-eyed look, from a socialist perspective, at financial capitalism in its zenith. It covers the policy program of privatisation and deregulation, the explosive growth of the financial sector, and of the global economy more generally, the retreat of organised labour and the stagnation in wages and working conditions that accompanied this retreat, particularly in the US, and, finally the apparent achievement of macroeconomic stability, described by Ben Bernanke as the Great Moderation.

The book does a good job of pointing out the weaknesses of the dominant ideology – the failed promises of privatisation, the LTCM fiasco, derivatives as ‘financial weapons of mass destruction’, the growth in poverty and inequality and so on. But the overwhelming emphasis is on the strength of financial capitalism and on the massive obstacles facing any attempt even to mitigate its harshest features. Some countervailing tendencies are noted (for example, continued public support for egalitarian policies, and the relative resilience of the welfare state) but the overall trend is clear.

In the wake of the global financial crisis, it is certainly worth reading for those of us (myself included) who are arguing that the crisis provides a new opening for social democratic politics. Even with its prestige and ideological hegemony gravely weakened, and its size and profitability substantially reduced, the global financial sector is an immensely powerful force. So far at least, it has been successful in resisting any permanent controls that would fundamentally reduce its freedom or prevent another crisis like the present one.

Andrew Glyn was the ideal of an intellectual: thoughtful, lucid and committed to social justice. All these qualities shine through in this, his last book.

  1. SeanG
    June 28th, 2009 at 07:51 | #1

    ProfQ,

    How can you (or Andrew Glyn) broadly claim that povery has grown. Hasn’t China over the last ten years seen an amazing birth of a middle class? What about prosperity in Latin America after it’s “lost decade” of the 1980s? Placing humanity in a historical context: aren’t we are rich as we have ever been?

  2. jquiggin
    June 28th, 2009 at 08:12 | #2

    I wasn’t sure if I needed to clarify a second time that the discussion on this point focused on the developed countries, but obviously I do, so I’ve added.

    As regards the world as a whole, progress in most of Asia has been great, but not in Africa or (contrary to your suggestion) Latin America, which is only now recovering from the financial crises of the late 1990s, mostly caused by financial market blowups. And, even in China and India, economic progress hasn’t reduced poverty nearly as much as it should have.

  3. SeanG
    June 28th, 2009 at 08:15 | #3

    ProfQ,

    It has reduced absolute poverty but not relative poverty because economic development in Africa is horrifically slow while development in Asia, Europe and Northern America has been exceptionally fast. Relative poverty is a moving target but it always gives policy-makers something to aim against.

  4. Rationalist
    June 28th, 2009 at 08:35 | #4

    Oh god… he is a Marxist author.

  5. jquiggin
    June 28th, 2009 at 08:45 | #5

    Actually, Sean, the number of people in absolute poverty has increased in both Africa and (with a much higher, but still absolute, poverty line, set in 1963) in the US.

  6. SeanG
    June 28th, 2009 at 08:55 | #6

    Two things.

    Firstly, I stated that “economic development in Africa is horrifically slow” actually agreed with you that Africa is suffering from endemic and growing poverty. I had to study development economics and it is heart-breaking to see a continent of such opportunity being wasted.

    Secondly, absolute poverty across the world – increasing or decreasing? Whose fault is that?

  7. June 28th, 2009 at 10:56 | #7

    Pr Q says:

    In the wake of the global financial crisis, it is certainly worth reading for those of us (myself included) who are arguing that the crisis provides a new opening for social democratic politics.

    Social-democratic politics needs to fix itself up before it fixes up the world. And the developed world needs to get economically worse before the social democratic hole in the political landscape gets big enough to work.

    Social democracy is still infected with the cancer of post-modern liberalism in its cultural elitist politics. Just look at its heartland: the EU. When Pr Q first suggested his “hole in the political landscape” theory of social democratic opportunity I, in “self-hating social democratic” mode, pointed out that the big social-democratic hole in the EU political landscape was currently filled by “parties of the Centre-Right”.

    Since then that political hole has deepened and shifted further to the anti-liberal Right. The decline of the once proud German SDP is especially poignant.

    The Centre-Right parties have cleverly positioned themselves to the Economic Left whilst capitalising on the popularity of Right wing cultural policies. The Times reports on the success of this form of cross-wired politics:

    “Right-wing parties are talking about how to regulate markets and how to intervene to save jobs, as well as reform social welfare systems,” said Sara Hagemann, policy analyst with the European Policy Centre in Brussels. “The Centre Right has said this more forcefully and more visibly.”

    The tactic was exemplified by President Sarkozy, who marginalised the already divided Socialists by inviting senior centre-left politicians into his Government and pushing state intervention and protection for vulnerable French industries — while refusing to countenance Turkish membership of the Union.

    I would prefer the Centre-Left parties to adopt a decaff version of the Right’s cultural policies whilst making a principled Left-wing stand against financial capitalism. But what do I know? I only predict political moves, I dont make them.

    Pr Q says:

    Even with its prestige and ideological hegemony gravely weakened, and its size and profitability substantially reduced, the global financial sector is an immensely powerful force. So far at least, it has been successful in resisting any permanent controls that would fundamentally reduce its freedom or prevent another crisis like the present one.

    The US financial sector has gradually been shifting its political support towards the DEMs over the past couple of electoral cycles. This political bet-hedging makes a lot of sense since the REPs will do for free what the DEMs have to be bribed to do. As I pointed out in NOV 2008:

    On financial regulation my gut feeling is that Obama will go soft on the Big End of Town. The financial industry supports the DEMs with alot of money and kudos. A WaPo article shows that Obama got a large hunk of money from the very same guys who are responsible for the US’s kleptocratic financial regime:

    Democratic presidential candidate Barack Obama ran ahead of New York Sen. Hillary Rodham Clinton (D) and former New York mayor Rudolph W. Giuliani (R) on their home turf in the first quarter, raising cash from the biggest investment banks on Wall Street.

    The figures reflect giving from the employees of Bear Stearns, Citigroup, Credit Suisse, Deutsche Bank, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch and Morgan Stanley, as well as Goldman and UBS. Goldman employees gave about 50 percent more to presidential hopefuls than the next-highest set of givers, at Citigroup.

    I dont see a canny political tightrope walker like Obama rocking that boat too much.

    I concluded April 2009, after the Geithner plan, “the bail out was not the first stage of re[form]. It was the last stage of the rip-off”.

    I am not a big fan of Chernyshevsky. But I do see the sound political logic of his “worse is better” doctrine. As financial capitalism lurches from boom to bust crisis-managing governments invent or contrive more and more convoluted fiscal statist fixes. This puts off the day of reckoning and lets the guilty parties clean-up or settle accounts in the mean time.

    So there is no likelihood of major financial reform until there is a really bad economic crash that mobilises the (“pitch fork wielding, torch-bearing”) public. Humans are by nature conservative. They will not budge out of their comfort zone until it becomes uncomfortable. Think the US until Great Depression, Japan until Hiroshima, Sydney until the warming Harbour floods waterside mansions.

    AUS has avoided a financial crash largely thanks to Howard-Costello’s savvy/lucky economic management and a halving of the interest rate. The UK/US have managed to muddle through by printing more money.

    The hole yawns but no one has the balls or brains to fill it properly whilst its false bottom arrests a fall.

  8. Chris Warren
    June 28th, 2009 at 11:13 | #8

    O dear – Rationalist is irrational.

  9. June 28th, 2009 at 11:29 | #9

    Pr Q says:

    Andrew Glyn was the ideal of an intellectual: thoughtful, lucid and committed to social justice. All these qualities shine through in this, his last book.

    I’m sure he was a nice guy, obviously very smart and by the sounds of things an inspiring teacher. But some of this economic theories were not very well thought out. And some of his political commitments were hard to reconcile with “social justice”.

    I vaguely remember Glyn and Sutcliffe being recommended reading in an elective politics subject in the early eighties. It seemed a bit odd to me at the time to develop a Marxist theory of the “declining rates of profit” in the dying stages of the Soviet state and the early stages of a massive stock market boom.

    And what was he doing being an adviser to Arthur Scargill? And what was he thinking when he remarked that “the three greatest men who ever lived were Lenin, Trotsky and Charlie Parker. Not necessarily in that order.”

    I can imagine Pr Q’s schadenfreude if he dug up a Hayek quote that the “three greatest men who ever lived were Hitler, Rohm and Miles Davis.”

    Believe me, all I feel is exasperation at Left-liberal intellectual foibles and political follies.

  10. June 28th, 2009 at 17:34 | #10

    “Andrew Glyn was the ideal of an intellectual: thoughtful, lucid and committed to social justice” [emphasis added].

    JQ, do you sincerely not see that last as a distinct attribute that you are adding on the definition? That, say, Oscar Wilde was an intellectual who even looked at these areas in such things as “The Soul of Man under Socialism”, even though he was hardly “committed to social justice”, rather making “art” a priority?

  11. Alice
    June 28th, 2009 at 19:33 | #11

    Come on Jack – didnt you admit to being a communist sympathiser way back when it was terribly fashionable or terribly experimental or just terribly new to be one in Australia (and before the nastiness of extreme communism (or was it even that any longer?) really became outed?

    Never forget people like Edna Ryan – a long term member of the communist party and later a member of the womens electoral lobby who fought all her life for equal pay for women – if only because she was raised the poor daughter amongst a large number of offspring of a woman in pyrmont who worked as a cleaner on half the male wage before 1920? I dont give fig about her communist membership in the 30s or 40s or 50s – I look at her contribution to equal pay legislation and it was great that she was there in 1975 to hear passage of the legislation and crying.

    Jack and you are smarter than that.

    Give a man his due…Give Andrew Glyn his due. He worked hard for what he believed was right at different times in his life. Im sorry you didnt (or dont now) agree with him but I didnt expect such a put down from you. I welcome Prof Qs comments on Andrew Glynn as follows;

    “Andrew Glyn was the ideal of an intellectual: thoughtful, lucid and committed to social justice. All these qualities shine through in this, his last book.”

    And these words are right and just and respectful.

    We are more fire and not as wise in youth but less fire and wiser as we age….and it matters not what you believe or when (for these things can change Jack and you yourself acknowledge it) – its what value you add for others along the way.

  12. Tim Dymond
    June 29th, 2009 at 13:09 | #12

    ‘I can imagine Pr Q’s schadenfreude if he dug up a Hayek quote that the “three greatest men who ever lived were Hitler, Rohm and Miles Davis.”’

    This is an almost perfectly self-refuting blog comment. In the words of Pauli: ‘not even wrong’.

  13. July 1st, 2009 at 21:29 | #13

    John, lovely review. I met Andrew Glyn only a few months before he died, at a September 2007 conference in Seville organised around an inequality handbook to which we both contributed. He was sharp, funny, and engaging. We talked about him visiting Australia. It was such a shock when the brain tumor took him before Christmas.

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