We have been arguing in these pagesfor more than three decades that the dominant economic reality of advanced capitalism is a tendency toward stagnation of production accompanied by financial explosion. In an article on “The Centrality of Finance,” in the August 2007 issue of the Journal of World-System Research, MR and MR Press author William K. Tabb writes:
Real global growth averaged 4.9 percent a year during the Golden Age of national Keynesianism (1950–1973). It was 3.4 percent between 1974 and 1979; 3.3 percent in the 1980s; and only 2.3 percent in the 1990s, the decade with the slowest growth since World War II. The slowing of the real economy led investors to seek higher returns in financial speculation…. [I]increased liquidity and lower costs of borrowing encouraged in turn further expansion of finance. The coincident trends of growing inequality and insecurity…and the spreading power of rapid financialization do not suggest a smooth continued expansion path for a society based on increased debt and growing leverage. (http://jwsr.ucr.edu/index.php)
What this indicates is that there is a complex dialectic at work between the stagnating productive base of the economy and its unstable if exploding financial superstructure. As we write these notes, financial instability is once again creating widespread consternation in business circles threatening to engulf the entire economy. On July 26 the Washington Post declared that “the era of cheap money appears to be ending.” On that day and the day after the Dow Jones average lost 500 points.
The source of this financial maelstrom can be traced to the bursting of the housing bubble. Rising interest rates have resulted in growing numbers of unsold houses together with a crisis in subprime mortgage lending. This has now spread to major hedge funds that pooled and repackaged risky subprime mortgages and sold them “to pension funds, insurance companies, foreign investors, and others” (“Easy Money, Lifeblood of Economy, is Drying Up,” Washington Post, July 26, 2007). Prior to late July, the damage was generally thought to have been contained, limited to those borrowers and lenders directly involved in subprime mortgages. It now appears, however, that the contagion has spread to finance more generally and that the liquidity that fed the latest wave of speculative mania is evaporating. Several leveraged-buyout deals have failed due to the end of easy credit, causing the Wall Street Journal to bemoan the sudden deflation of “the leveraged buyout bubble” and the apparent demise of the private equity boom (see “Private Equity’s New World,” Wall Street Journal, July 28, 2007).
The chief fear at this moment (early August) is that the “credit meltdown” could turn into a full-scale “credit crunch,” squeezing even the most credit-worthy firms, and leading to a cascade of defaults with global repercussions (“Repricing Risk,” http://www.morganstanley.com/views/gef/archive/2007/20070730-Mon.html). No less ominous is the possibility that growing consumer defaults and tight credit will curtail U.S. consumer spending and generate a recession both in this country and worldwide. Further complicating the picture is the now universal conviction that high oil prices are here to stay. Paul Krugman in the New York Times (“The Sum of Some Fears,” July 27, 2007) spelled out the ramifications for workers as follows: “the economic expansion that began in 2001, while it has been great for corporate profits, has yet to produce any significant gains for ordinary working Americans. And now it looks as if it never will.”
Monthly Review Press has recently released two landmark books. The first, Jane Guskin and David L. Wilson’s The Politics of Immigration: Questions and Answers sets out with crystal clarity the information needed to defend in discussion and debate the immigrants now under attack in the United States. The question and answer format is not only useful for movement activists, but serves brilliantly in providing a comprehensive view of this critical issue. The key questions are all addressed, starting with “Who Are the Immigrants?” and ending with “Can We Open Our Borders?” There is no city, indeed no town, in the United States today where children do not go to sleep at night in fear of an immigration police raid that will take away their mother or father, or both. The Politics of Immigration: Questions and Answers is a tool, in fact a weapon, in a fight we must take up. It is priced affordably at $11.95, and discounts even larger than those available online (http:// monthlyreview.org/politicsofimmigration.htm) will be made for bulk orders. Read this book; we know that you will want to see it in the hands of every thoughtful person in your community.
The second book is Inside Lebanon: Journey to a Shattered Land with Noam and Carol Chomsky, edited by Assaf Kfoury. Based on a journey by Noam and Carol Chomsky to Lebanon just before the recent Israeli invasion, it addresses not only Lebanon and the Middle East as a whole, but also the general world geopolitical situation. According to John Pilger, it “illuminates brilliantly the true nature of voracious power.” See http://monthlyreview.org/insidelebanon.htm for further information.
The Commentary section of MR’s Web site contains a memorial tribute for Annette T. Rubinstein (http://www.monthlyreview.org/0607rubinstein.htm) who died on June 20, aged ninety-seven. A frequent MR contributor (and a strong supporter of this magazine since its beginning in 1949), Rubinstein was an editor of Science & Society and author of The Great Tradition in English Literature: From Shakespeare to Shaw in which she offered a pioneering exploration of the relationship of the literary canon to political and social movements. Active as both an educator and political figure, Rubinstein served as director of New York Mayor La Guardia’s Committee for the Care of Young Children in Wartime from 1941 to 1946 and was a key adviser to Congressman Vito Marcantonio. Monthly Review published a biographical essay on Annette by her friend, historian Gerald Meyer to commemorate her ninety-fifth birthday (http://www.monthlyreview.org/annetterubinstein.htm). Annette’s death is a deep loss to the entire MR family. There will be a memorial meeting for Annette on Sunday, September 23, 2–5 pm at the Brecht Forum at 451 West St. (between Bank and Bethune) in New York City.
Our good friend and MR supporter Donatella Mészáros died on June 13, 2007. Donatella was born on January 25, 1936. She and MR Press author István Mészáros met in Paris in 1955 and had a close union for fifty-two years, sharing absolutely everything. They had two children and three grandchildren. For those who knew her well, Donatella was the soul of socialism. István and Donatella were frequent visitors to the Socialist Scholars Conference in New York. István dedicated his magisterial work Beyond Capital: Toward a Theory of Transition (Monthly Review Press, 1995) to Donatella. Likewise his soon to be completed philosophical works, The Social Determination of Method and The Dialectic of Structure and History, are each dedicated to her. On June 19, Hugo Chávez, president of Venezuela, issued a public tribute to Donatella and to Vilma Espín (the wife of Cuba’s Raul Castro) who had died the day before, saying “let us continue the struggle” these “two great women” fought.
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