The common wisdom about the current economic crisis is summed up well in a recent speech by David Korten of YES! Magazine: "From the late 70s onward, Wall Street market fundamentalists mobilized to roll back the rules to unleash a consolidation of corporate power and de-link it from public accountability. Their right-wing social-engineering experiment allowed Wall Street to colonize the Main Street economy, decimated the middle class, undermined democracy and sense of community, reduced our national happiness index, and brought financial, social, and environmental devastation wherever it has reached." - David Korten, "Path to a Peace Economy", Oct. 31, 2009.
Korten's speech points in the right direction, but a deeper analysis of the current economic system is vital. For instance, he says, "Our economic institutions have been designed by Wall Street interests to secure personal economic and political power in the hands of members of a small ruling elite." Absolutely true, but could it be that there is something inherent to the capitalist system that requires a financial elite that behaves like Wall Street?
My purpose is not to criticize his vision, which I admire, but to suggest that his economic prescriptions don't attack the real problem. The economy of the 50s, 60s and early 70s seems like a golden age in hindsight, but there were some very concrete political reasons why "the market rules of the day protected the public interest." Unfortunately, he doesn't examine these reasons.
The corporate elite did not gladly acquiesce in strong labor unions because they were concerned with the public good. They were forced into it, kicking and screaming, by powerful social movements that wouldn't take no for an answer. The features that he uses to illustrate the wonderful economic climate of that time were the result of these same democratic forces. They did not arise naturally, but were the result of long, hard struggle by leftist activists. The right-wing forces that Korten bemoans were equally active in the 50s and 60s, but they weren't as free to enforce their ideology because of these opposing forces.
The distinction he makes between the Wall Street economy and the Main Street economy is a false one. Moreover, this distinction obscures the real forces at work in the Great Recession. The distinction contrasts the "real" economy of producing goods to satisfy people's need and the "false" economy of financial speculation. In fact, the whole point of capitalism is ever expanding financial circulation leading to higher profit margins. When the crisis hit, trillions were not poured into ensuring a vigorous manufacturing sector, but into the financial system. This was not some wicked Wall Street plot, but the very nature of the capitalist system. Obama and his economic advisors are correct, Main Street can't survive without the financial circulation provided by Wall Street. Too much of the "left" wants to live in the illusion that we can have capitalism with a human face.
What's deceptively seductive about this approach is that it supports the central task of the ruling ideology, which is to impose a narrative which places the blame for the meltdown not on the system itself, but on the abuse of the system by "corrupt" bankers and corporate executives. That's why the nightly denunciations of "Wall Street greed" actually help prop up the system. This is part of the "purging process" necessary to a healthy capitalist system. In this way, the system itself is protected as well-meaning liberals try to regulate it into health. The underlying message is that the capitalist system, while far from perfect, corresponds most closely to human nature, and as such provides us with the least bad of the various alternatives. Radical change will only make things worse.
And that is the ideology that is so rarely challenged by the left. We must indeed "change the prevailing stories about the nature of wealth" and measure wealth by the vitality of our children, the quality of life, and a thriving natural world. But this cannot be done by dreaming about the "local" economics of the 50s and 60s. Capitalism converts Earth's natural capital into toxic garbage because that's the fastest way to maximize profit. Once that monster enters the radar screen, then will the waiting at last be over.
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