The U.S. economy in early March 2007 appears to be rapidly decelerating. Orders for durable goods in manufacturing dropped 8 percent in January and the manufacturing sector as a whole shrank during two of the last three months for which data is currently available (November–January), representing what is being called a “recession” in manufacturing, and raising the possibility of a more general economic downturn (New York Times, February 28, 2007).
What makes this contraction in manufacturing especially disturbing is that it is occurring at the same time as the bursting of the housing bubble, which has been the main stimulus to the economy over the last few years. “Seven years after the stock-market bubble busted,” the Wall Street Journal (March 5, 2007) notes, “the troubles in the housing market look strikingly familiar. In fact, everything is going according to the textbook—the textbook in this case being Charles Kindleberger’s 1978 classic, ‘Manias, Panics, and Crashes.’” In Kindleberger’s analysis speculative bubbles go through various stages, leading eventually to “revulsion”—and followed in the worst cases by selling panics and crashes. Says the Wall Street Journal: “Revulsion is where housing appears to be.”
The biggest worry of business observers is that the housing bubble’s burst will soon threaten consumer spending by decreasing the extent to which consumers can draw on equity in their homes at a time when consumer debt service ratios are rapidly rising and wages are stagnant, creating a severe consumer credit crunch. To say that financial markets are jittery under these circumstances would be an understatement.
Such problems are in fact normal in today’s economy due to the dual contradictions of stagnation and financialization (see the Review of the Month). The only rational response to this, we believe, is to begin organizing a genuine alternative to the capitalist status quo.
One of the intriguing aspects of Hugo Chávez’s Bolivarian Revolution in Venezuela, in which he is attempting to promote a socialism for the twenty-first century, is his indefatigable search for new ideas and inspiration. We are pleased to say that Monthly Review and Monthly Review Press authors have been among those he has drawn upon. In September Chávez gave his extraordinary speech to the UN Generally Assembly in which he lauded the work of MR and MR Press author Noam Chomsky for his book Hegemony or Survival (see “Notes from the Editors,” November 2006). More recently Chávez in January 2007 praised Albert Einstein for his article “Why Socialism” in Monthly Review (vol. 1, no. 1)—while the same (January 24, 2007) New York Times article that reported this also referred to Chávez’s deep “admiration” for István Mészáros’s Beyond Capital (Monthly Review Press, 1995).
On a couple of occasions—most recently in the context of his promotion of communal councils—Chávez has talked extensively on Venezuelan television (Aló President, April 9, 2006, and January 21, 2007) about Michael Lebowitz’s book Build it Now (Monthly Review Press, 2006), commending both chapter 5 (“Socialism Doesn’t Drop from the Sky”) and chapter 7 (“The Revolution of Radical Needs”). As Chávez says, Lebowitz “reminds us of one of Karl Marx’s theses, that socialism is built through practice, it has to be built through practice.” Chávez also went on to quote a passage in Lebowitz’s book referring to another celebrated MR author: “No one articulated better in the twentieth century the importance of developing new, socialist human beings than Che Guevara. He understood that if you try to build socialism with the help of the ‘dull instruments left us by capitalism (the commodity as the economic cell, individual material interest as the lever, etc.),’ the effect is to undermine the development of consciousness. To build the new society, he stressed, it is necessary, simultaneous with the new material foundations, to build the new man and the new woman” (p. 64).
For those wishing to learn more about the Venezuelan Revolution and Chávez we strongly recommend Understanding the Venezuelan Revolution: Hugo Chávez Talks to Marta Harnecker (Monthly Review Press, 2005). Important new contributions by both Mészáros and Lebowitz aimed at building socialism in the twenty-first century are to be found in the present issue.
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