WHEN MAINSTREAM economists shed the now outmoded aspiration of understanding the inner workings of capitalism and moved on to the more manageable task of justifying the continued existence of the market, the process spawned innumerable hanger-ons and yes-men. Careful and honest (even if reverent) critics were replaced by myth-making whiz kids tasked with developing arcane models to enrich their corporate masters and simultaneously confuse non-specialists. The end result has been to convince casual observers that the machinations of the market elude general comprehension.
Since the “Great Recession” unfolded in late 2008, these courtesans of the elite have produced scores of books, treatises, interpretive dance sequences, and everything in between, purporting to explain the origins of the crisis. Unsurprisingly, most of these attempts have been either deferential and stale, or so marred by obscurant jargon as to be impenetrable.
David McNally’s Global Slump: The Economics and Politics of Crisis and Resistance wipes away all this froth and presents an account of the financial collapse that is brilliantly accessible, even to those terrified by the thought of economic discussions. As he points out in the introduction, “this book is written in opposition to the mystification of modern economics. I insist that the most basic issues of political economy are readily understandable by anyone who can overcome their trepidation about them.”
McNally begins by taking us back to 2008 when all of the neoliberal nostrums and the sanctity of the invisible hand seemed to be evaporating. He describes the way that, as the panic spread, the high priests of finance quickly abandoned their insistence that crises could no longer happen and moved on to braying about the impossibility of foreseeing the collapse. As Alan Greenspan admitted to a “flaw in his ideology,” and the Financial Times ran features on “the future of capitalism,” it seemed as if the four horsemen of the financial apocalypse were in full gallop.
Yet, once the free fall was brought to a halt, we were quickly asked to forget about their terror. As McNally shrewdly observes, “having managed to halt the meltdown…our planet’s rulers are hurriedly sweeping their fear and panic under boardroom carpets.... All is well with the world, they declare.”
McNally’s analysis offers an important corrective to this swelling chorus of jubilant voices announcing the recession’s end. What all of their proclamations are careful to avoid is the scale of human misery continuing to expand despite the onset of the “official statistical recovery.” McNally points out that, though the major banks were pulled back from the abyss, and GDP has indeed begun climbing, all of this was accomplished “through the financial equivalent of a total blood transfusion.” The consequences are distended national budgets and ideological justification they give for our current “age of austerity.” In other words,
while the banks and multinationals have been rescued, there is no bailout for working class people, who can only expect more “pain” for years and years to come.… So blatant is the contradiction between what is happening to capital and what is going on with everyone else that even former U.S. Treasury secretary Larry Summers acknowledges we are in the midst of a “statistical recovery and a human recession.”
Elsewhere McNally has underscored the fact that we have a statistical recovery because of the human recession.
Global Slump goes on to document the ways in which the structural changes implemented under the heading of “neoliberalism” brought the system out of its last crisis—from the early seventies through the early eighties—and renewed economic expansion. McNally convincingly argues that by driving down working-class living standards, increasing the rate of exploitation, and restructuring global finance, capital was able to fuel a dynamic global boom and restore previously decimated profit rates. This argument is pitched in sharp contrast to other Marxists who see our current economic woes as but the latest phase in a crisis they claim stretches back to the early 1970s (for a more thorough elaboration of the importance and specific contours of this debate, see Lee Sustar’s review of Zombie Capitalism in ISR 77).
While he offers perhaps the most thoroughly developed rejoinder to this crowd, McNally also shows how the economic changes that dug the system out of one hole eventually landed it in another. Second mortgages were peddled like cheap corner store candy (offered at predatory rates) to subsidize decaying working-class living standards. Profit-hungry banks issued subprime loans to just about anyone able to print their own name. And so began the housing bubble that would become a leaden weight around the market’s throat once the speculative game had gone bust.
Careful, considered, and concise as his presentation of the origins (and implications) of the crisis may be, where McNally’s book truly stands out is in its integration of resistance into its portrait of the crisis. He makes clear from the start that the root cause of the financial collapse is not to be found in deregulation or financial mismanagement, but in the nature of capitalism itself.
It follows from this that nothing short of mass struggle will be able to prevent our financial masters from solving their crisis on our backs. Their solution is to shred the already fraying social safety net, whereas it would be in the interest of the vast majority to demand the ultra-wealthy be taxed to put the unemployed back to work. These two opposing sets of interests point toward two polar alternatives—the preservation of capitalism and its accompanying human tragedy on the one side, and its overthrow and replacement with a more just, equitable, and democratic society on the other.
As McNally is correct to point out, which of these two possible “solutions” will be pursued has very little to do with sound economics, and much more to do with which side is better organized to fight for their interests. Global Slump offers a survey of the growing wave of global resistance touched off almost as soon as the ink had dried on AIG’s bailout check, and the list of flash points alone is enough to show that working-class people the world over are unwilling to accept the further deterioration of their living standards for the sake of profit.
The book comes to a close with an extremely important discussion of what it will take to see these skirmishes through to victory, where in McNally points to the necessity of moving beyond spontaneous outbursts and short term palliatives—important as both of these things are—and on to the task of building mass anticapitalist movements with revolutionary aims.
If you read only one book about the economic crisis, make it David McNally’sGlobal Slump. Activists who seek to change the world will appreciate its accessible style and depth of analysis, its understanding of the role of working-class resistance in staving off the human costs of the crisis, and its case for raising that struggle to the level of challenging capitalism itself.