beyond props for capital

by Allan Armstrong

Neo-liberalism and neo-Keynesianism – two options for capitalism

In the face of the deepening economic crisis enveloping the US and world economy, Alan Greenspan, former Chair of the US Federal Reserve and prime architect of Republican neo-liberalism was summonsed to a Congressional hearing on October 23^rd 2008.  Asked to account for the failures of the ‘free market’ he shamefacedly admitted, “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

Greenspan’s embarrassed admission highlighted the fact that unregulated ‘free market’ capitalism does not bring continued economic growth and prosperity in its wake.  For every upturn, there is a downturn.  Therefore, even before the final demise of the ailing Bush Presidency, his Republican administration, and the following Democrat President Obama, have been forced to adopt a programme of massive government bail-outs of failed companies, first banks, followed by key industries, such as Chrysler.

2008 : The spectre of Karl Marx returned.

From the Commune, May 2009, a view presented at the outset of the Great Recession.

 

In January 2007, the Financial Times, declared that emerging market economies would continue to power ahead. Capitalism was triumphant. The ghost of Karl Marx had been laid to rest. But then just when the progress of the unfettered market appeared unstoppable it spectacularly crashed.  Some of the world’s biggest banks collapsed. The housing and credit bubble burst. In September 2008, Northern Rock in Britain and Fannie Mae and Freddie Mac in the USA were rescued by governments with huge sums of tax payers money. The Bradford and Bingley building society was salvaged by the state and the Lehman Brothers financial empire fell to the ground. Alan Greenspan, former chairman of the federal bank, in the USA, confessed that his free market confidence in the self-interest of bankers had been wrong. (1)

Bourgeois politicians were forced to eat their words and stand on their heads. The mantra of government economic intervention bad, free markets good, heard for over two decades was replaced by nationalization of banks and government bailouts for failing capitalists and capitalism. In October 2008 the New Labour government, a champion of the free market for a decade, bailed out leading banks with £50 billion. This was only the first bailout. Another bailout followed only months later. The Neo-Liberal free market melt down was so shocking that The Times carried a portrait of Karl Marx with the words: ‘he is back’. (2)

 

capitalism, keynes, socialism

by Nathan Coombs

In reaction to the global economic crisis, in his cover story for the current issue of Prospect magazine Geoff Mulgan tantalisingly holds out the promise of what life would look like ‘After Capitalism’[i]. The only problem is that his hodgepodge of possible routes beyond capitalism – foremost the vague vision of “servant capitalism” – not only do not transcend capitalism, are not only being articulated by those with the greatest stake in promulgating capitalism (he even cites David Cameron as playing a part), but are even aspects of capitalism with us today: the same aspects to have played their part in inducing the global crisis that supposedly marks the beginning of a new epoch.

Amongst his suggestions of routes beyond capitalism he includes Keynesian investment in green industries, the pluralisation of company governance and the introduction of “personal welfare counts” (previously called the welfare state?) It does not take a whole lot of nous to work out that this is hardly a portrait of a world ‘after capitalism,’ but simply an extrapolation of contemporary trends within capitalism: precisely those trends that have historically prevented the possibility of any ‘after’.