The historic testimony by former Federal Reserve Board chairman Alan Greenspan before the House Committee of Government Oversight and Reform on October 23, 2008, represented such a startling turnaround for an individual previously given such nicknames as “Maestro” and “Oracle,” that it might well have been entitled “The Education of Alan Greenspan.” Taken to task for the enormous and still growing economic disaster, Greenspan acknowledged that he was “shocked and dismayed” by the emergence of what he called a “once-in-a-century credit tsunami.” In his effort to account for the complete failure of foresight at the Fed, Greenspan explained that the supposedly sophisticated asset pricing models that he and others in the financial community had relied on had been based almost exclusively on the experience of the last two decades during a period of rapid financial expansion, and had failed to incorporate the negative shocks visible from a longer-term historical perspective. As Greenspan himself put it
“The first rule of central banking,” economist James K. Galbraith wrote recently, is that “when the ship starts to sink, central bankers must bail like hell.” In response to a financial crisis of a magnitude not seen since the Great Depression, the Federal Reserve and other central banks, backed by their treasury departments, have been “bailing like hell” for more than a year. Beginning in July 2007 when the collapse of two Bear Stearns hedge funds that had speculated heavily in mortgage-backed securities signaled the onset of a major credit crunch, the Federal Reserve Board and the U.S. Treasury Department have pulled out all the stops as finance has imploded. They have flooded the financial sector with hundreds of billions of dollars and have promised to pour in trillions more if necessary—operating on a scale and with an array of tools that is unprecedented.
British subordination to the United States, the so-called special relationship as it is optimistically known in London, is so taken for granted that it is seldom subjected to critical scrutiny. Why is it that the British ruling class and its agents have since 1945 come to embrace a junior partnership in the U.S. empire so wholeheartedly? Most recently, the “special relationship” has seen the New Labor government actively support and take part in the invasion and occupation of Iraq in the face of a hostile public opinion. Indeed, the largest demonstration in British history, on February 15, 2003, was against British participation in this unprovoked war of imperialist aggression. The lying, dishonest pretext for the invasion together with
As far as scenic ruins go, the Pittsburgh metropolitan area sets a high standard. The natural beauty of the Monongahela Valley and the built legacy of deindustrialization make gorgeous scenery out of blue-collar defeat. Beauty is no compensation for lost jobs though. The old steel towns of this region have been imploding for decades. No place has lost a greater share of its population than Braddock, Pennsylvania, just outside Pittsburgh. This ravaged, near-empty stretch of abandoned homes, storefronts, and buildings was once a storied cornerstone of the industrial age. After losing 90 percent of its peak population, today it looks more like the nightmare at the end of the American Dream
Denise Bergman is the author of Seeing Annie Sullivan, poems based on the early life of Helen Keller’s teacher (2005), which was translated into Braille and made into a Talking Book. Her poems have been widely published. She conceived and edited City River of Voices, an anthology of urban poetry, and she was the author of Keyhole Poems, a sequence that combines the history of twelve specific urban places with the present. An excerpt of her poem “Red” is permanently installed as public art in Cambridge, Massachusetts
The great debate of social science for the last two centuries at least has been how to account for the extraordinary economic growth of the modern world. We all know the basic picture. The overwhelming majority of authors have argued that the story is that of the rise of the West. There have been, however, two opposing versions of this narrative. One is the Whig interpretation of history, which argues that it has been a story of steady social, intellectual, and moral progress whose explanation lies in some particular characteristic of the West (often just of England). In this version, the world is reaching its summit of progress today. The second version is Marxism, which has argued that the rise of the West is part of a larger story of steady dialectical and conflictual historical development. In this version, the present West-dominated world order will inevitably be superseded by another phase of historical development, in which capitalism will be replaced by communism
Reviewed: Michael Perelman, Railroading Economics: The Creation of the Free Market Mythology (New York: Monthly Review Press, 2006), 238 pages, paperback, $20.00.
Paul Krugman in Development, Geography, and Economic Theory contends that the reason some economic theories are not widely engaged by economists is because they cannot be modeled mathematically. He goes on to highlight many good ideas that cannot be modeled mathematically. Michael Perelman in Railroading Economics: The Creation of the Free Market Mythology argues that there is another reason that economists do not accept these theories: some theories are rejected for ideological reasons because in economics, the orthodoxy is the free market. Perelman quotes Francis A. Walker, the first president of the American Economic Association, who said that laissez-faire “was not made the test of economic orthodoxy, merely. It was used to decide whether a man were an economist at all” (102). In other words, to be an economist, especially in the post-Soviet era, requires one to agree with the free market—that is, to believe that the market allocates resources efficiently, and that the job of the economist is to get the prices right
In the Notes from the Editors for the September issue of Monthly Review (written in late July) we asked why, with the United States bailing out the financial sector of the economy to the tune of hundreds of billions of dollars, there was no public outrage. As we observed at that time, “In the end there seems to be no satisfactory explanation for lack of popular protest over a series of ad hoc grants showering hundreds of billions of dollars of public money on the masters of finance, collectively the richest group of capitalists on the planet. And that raises the question: Is this outrage present nonetheless, growing underground, unheard and unseen? Will it suddenly burst forth, like some old mole, unforeseen and in ways unimagined?” The collapse of Lehman Brothers on September 15, the resulting freezing up of credit markets, U.S. Secretary of Treasury Henry Paulson’s emergency plan for a $700 billion bailout of financial firms, offering “cash for trash,” i.e., proposing to buy up the toxic waste of virtually worthless mortgage-backed securities at taxpayer expense—quickly answered our question. When the U.S. Treasury got into the act with its bailout proposal, requiring Congressional authorization (previously the Federal Reserve had led the way in bailouts, to the point that treasury securities had sunk to just over half of the Fed’s assets, as we explained in September), all hell finally broke loose. Suddenly, the public outrage that had been growing beneath the surface burst forth. The U.S. capitalist class was abruptly confronted with a major political as well as economic crisis
The transition from capitalism to socialism is the most difficult problem of socialist theory and practice. To add to this the question of ecology might therefore be seen as unnecessarily complicating an already intractable issue. I shall argue here, however, that the human relation to nature lies at the heart of the transition to socialism. An ecological perspective is pivotal to our understanding of capitalism’s limits, the failures of the early socialist experiments, and the overall struggle for egalitarian and sustainable human development
Humans depend on functioning ecosystems to sustain themselves, and their actions affect those same ecosystems. As a result, there is a necessary “metabolic interaction” between humans and the earth, which influences both natural and social history. Increasingly, the state of nature is being defined by the operations of the capitalist system, as anthropogenic forces are altering the global environment on a scale that is unprecedented. The global climate is rapidly changing due to the burning of fossil fuels and deforestation. No area of the world’s ocean is unaffected by human influence, as the accumulation of carbon, fertilizer runoff, and overfishing undermine biodiversity and the natural services that it provides. The Millennium Ecosystem Assessment documents how over two-thirds of the world’s ecosystems are overexploited and polluted. Environmental problems are increasingly interrelated. James Hansen, the leading climatologist in the United States, warns that we are dangerously close to pushing the planet past its tipping point, setting off cascading environmental problems that will radically alter the conditions of nature