It’s a pleasure to welcome Ed Berger back to the XG comment box — it’s been a while. Ed has a few things to say about the previously mentioned Adam Tooze blog post, gestured to by someone on Facebook in support of the fact that “capitalist realism is ending”.
I was confused by this point mostly because I have not kept up with the US government’s response to Covid-19 and do not really understand the context.
Ed has done a great job here of explaining why certain government decisions may appear to echo what the left has long argued in favour of when not in the midst of a crisis but he also explains why such decisions are unsurprisingly, not unprecedented and also deeply worrying:
I find AK’s references to Tooze’s analysis as a means of illustrating the decline of capitalist realism to be rather confusing. [For the United States to] fail in comparison to more mixed or socially-oriented market economies isn’t a mark of the decline of ‘capitalist realism’ — it could instead reinforce it in perhaps its most virulent and braindead form.
The Trump administration has put in motion the specter of things that break with the sort of retrograde, finance-oriented mode of capitalist development that [we’ve] been stuck in for five decades (which brings to the static cultural formations that the CR concepts draw attention to the foreground): he’s invoked an act that allows the Federal government to potentially steer private industry to their own ends, the temporary quasi-nationalization of businesses needing bailout, hints of UBI, etc.
But in each case the opposite has emerged from each point: the Defense Production Act has been used only to seize goods that have been produced before [they] reach the destination of their buyers (see: the US seizing masks slated for Germany at the Bangkok airport), while in the case of the bail-outs the government has the option to take equity stake in the businesses in question, minus the voting powers that this would normally include. Finally, UBI has been turned into what is probably a one-time check of $1200. These latter two don’t break any new ground: they’re exactly the sort of responses that were mobilized in 2008. In the case of the DPA and seizures, this looks less [like] a dynamic overcoming and more like bitter state failure.
The Fed’s operations are interesting and as Tooze has shown in painstaking detail, go beyond (in terms of both structure and cost) what they did in 2008. But what is happening is that the Fed is trending towards becoming the ‘market maker of last resort’, where the central bank becomes the entity that keeps the dying economy artificially going. In cases where this is already the case — take Japan, for example — it’s clear that, while it can help hold off a deep collapse, it maintains the economy in a state of stagnation.
Between these two directions, the future here seems to be suspended between two paths:
1) The slow-churn of a horrifying Dead-Undead capitalism, lumbering monstrously along under the brrr of the Fed’s money printer.
2) The inability of these measures to prevent the really real threat of Depression, in which the US — and by extension, the rest of the world — is plunged into something truly nightmarish.
If the first path comes to fruition, measuring the failures of the US administrative state [against] the relative successes of social states won’t mean much of anything. At the macropolitical level, the capitols of capital — the US and the EU (and the UK?) will grind on. CR intensifies in the shadow of the long night of zombie capitalism. (Though there might be outliers where novelty may still emerge, but they won’t [be] liked by the left-liberal temperament: euroskeptic states, China…)
If the second path is what happens, then these social democracies will find their welfare programs and whatnot on the chopping block, much the way that the radiating spirals of economic contraction triggered by the Great Recession unleashed a regime of austerity against the world.