June 19, 2013
Steve Fraser on the Crisis of Capitalism
Posted on Nov 6, 2009
By Steve Fraser
Socialists, of course, believed that, but what is worth remembering is that even in the United States, a broadly anti-capitalist culture—partly socialist, partly antitrust, partly populist and newly reinvigorated by the communist movement—was alive and well. It was ready to contemplate doing something more daring than rearranging the deck chairs on the Titanic. The Soviet Union still seemed an inspiring experiment in labor emancipation. Karl Marx was still a name to reckon with. For many, the proletarian metaphysic remained the animating logic of historical progress. Mainstream magazines like The Atlantic, Harper’s and Scribner’s placed capitalism on trial and seriously contemplated the immanent prospect of revolution. Talk of granting dictatorial powers to the new president to meet the emergency, some of it inspired by FDR himself, entered respectable conversation, looked upon favorably by people like Walter Lippmann. The vocabulary and grammar of the nation’s political culture still made room for notions of class conflict, plutocracy, “malefactors of great wealth” and “the money trust.” Speculators still gave off a sulfuric aroma. The horizon of political debate extended far enough to embrace Upton Sinclair’s “production for use” Democratic Party gubernatorial campaign to “End Poverty in California” and farmer-labor parties in the Midwest as well as the “Share the Wealth” populism of Huey Long, the flamboyant senator from Louisiana, and the Christo-fascism of Father Coughlin, the “radio priest” from Royal Oak, Mich., who mesmerized millions each week with his broadcasts denouncing Wall Street and eventually the Jews.
Rereading FDR’s first inaugural address in light of Obama’s is an exercise in moral numbing. Despite or perhaps because of his privileged social origins—descendant of Colonial-era Hudson River landed gentry—Roosevelt invoked a language of moral censure aimed at the country’s socially irresponsible financial elite. He excoriated the “money-changers” who “have fled from their high seats in the temple of our civilization” because “they know only the rules of a generation of self-seekers. They have no vision, and where there is no vision, the people perish.” He condemned the “mad chase of evanescent profits” and the systematic plundering of “other people’s money.” Despite or perhaps because of his quite different social origins, such morally charged, class-inflected rhetoric was largely missing from Obama’s first inaugural. Instead, there was a misdirected effort at collective blame for the country’s economic predicament and an uninspired invocation of national unity.
Rhetoric is only rhetoric. Recent histories of Roosevelt’s first 100 days by Jonathan Alter (“The Defining Moment”) and Anthony Badger (“FDR: The First 100 Days”) make clear that FDR, like Obama, worried about alienating big business. According to one congressional observer of FDR’s maiden performance, “The President drove the money-changers out of the Capitol on March 4—and they were all back on the 9th.” Still, rhetoric, especially when enunciated by the president, helps define the outer boundaries of the politically possible and permissible. That’s why for some, Roosevelt and the New Deal seem even now “socialistic.”
Keynes was not a socialist. “I can be influenced by what seems to me to be justice and good sense; but the class war will find me on the side of the educated bourgeoisie,” he once said. He was not even comfortable with nationalization, nor, as Robert Skidelsky points out in a new book (“Keynes: The Return of the Master”), did he contemplate large government deficits. However, what Keynes did offer was a general theory of capitalist collapse. It pointed to under-investment and under-consumption, aggravated by gross inequalities in the distribution of income and wealth, and further burdened by the exactions of a rentier class of financial and stock market speculators. Capitalism, Keynes argued, was inherently unstable, not a system tending toward some optimal equilibrium; rather the abnormal was normal. Moreover, even if there might be some absolute bottom to any economic depression, that did not mean that once reached, recovery would return the economy to its previous high point. On the contrary, without some deliberate contravening action, the reproduction of economic life could proceed at some considerably lower level for a long time. Those are words to conjure amid all the current sightings of “green shoots” of economic good times ahead.
Keynes cultivated a rich contempt for the whole notion of “economic man,” the obsessive love of money, the pursuit of wealth as a worthy end in itself. When Roosevelt took office and decried “the old fetishes of so-called international bankers,” Keynes pronounced him “magnificently right in forcing a decision between two divergent policies.” Another new book about Keynes, by Peter Clarke (“Keynes: The Rise, Fall, and Return of the 20th Century’s Most Influential Economist”), quotes the Cambridge don excoriating money lust as “a somewhat dispiriting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.”
Except for an occasional piety uttered in or out of church these days, such an attitude would be treated as embarrassingly wooly-headed by our temporizing techno-economic cognoscenti, or for that matter by much of today’s popular culture. Back then, however, Keynes’ moral-ethical criticisms didn’t seem so remarkable, not in a world that still took socialism, Christian socialism, papal condemnations of Mammon worship and Catholic corporatist theology seriously. Indeed, Keynes interdicted usury; not as some vestigial throwback to the Middle Ages, but as an intrinsic aspect of the savings glut that had, in his view, brought the global economy to its knees. He even believed in some notion of the “just price,” a measure of value connected to the production of useful things , rather than market exchanges whose prices were in the Cambridge economist’s views not necessarily “just.” So, too, Keynes enumerated all the tragic wastes that trailed in the wake of risk; how out of tune that now sounds given our own era’s infatuation with the “risk society.”
Questioning the viability of unadulterated capitalism endured for some time, past the point when it was already being put back together again. The labor movement, which provided much of the social energy driving the New Deal to the frontiers of social democracy, continued to do that during and for a few years following World War II. It struck en masse in 1945-46 and marshaled its forces to fight for universal health insurance, for an equitable national incomes policy regulating prices, wages and profits, and government planning, public ownership, and a guarantee of full employment. It was even so audacious as to propose a permanent role for the labor movement in the running of particular enterprises and the economy as a whole. Then it succumbed to the toxic atmosphere of McCarthyism in which the country came around to thinking of free speech, racial justice and economic equality as communism.
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