The grim state of the U.S. economy in early 2009 was brought into sharp relief by economic data released at the end of April. Industrial production in the first quarter of this year dropped by an annual rate of 20 percent, while manufacturing capacity utilization (the operating rate of manufacturing plant and equipment) sank to 65.8 percent in March, the lowest level since the Federal Reserve Board series was introduced in 1948 (industrial capacity utilization as a whole is currently at 69.3 percent, its lowest point since that measurement began in 1967). | more…
This issue of Monthly Review marks the sixtieth anniversary of the magazine. We are reprinting here Albert Einstein’s classic article “Why Socialism?,” written for volume 1, no. 1, of Monthly Review (May 1949). On Thursday, September 17, we will meet together at the Ethical Culture Society in Manhattan to celebrate and to promote a global socialism for the twenty-first century. We invite all our subscribers and friends. | more…
It is now universally recognized that the U.S. economy is experiencing a deep downturn unlike anything seen since the 1930s. Hence, the question continually arises: How close is this to a depression? One way of answering is to look at the unemployment rate. The Great Depression hit bottom in 1933 when unemployment peaked at 25 percent. Today the United States is losing jobs at the rate of 600,000 a month. But the official unemployment rate currently stands at 8.1 percent (seasonally adjusted, February 2009). This is the highest rate of official unemployment in a quarter-century, but hardly what is considered a depression-level rate, which is usually thought of as well into the double-digits. | more…
As we write these notes in late January 2009 the economic depression is worsening with each passing day, creating previously unthinkable conditions. Even as production sinks and unemployment soars in the “real economy,” the implosion of the financial sector remains at the center of the crisis. It is now widely acknowledged in financial and policy circles that nationalization of the U.S. banking system, under one or another description, is inevitable. The Obama administration still resists what is referred to as a “complete nationalization,” with the government wiping out the bank shareholders and taking over the running of the banks. But every other option on the table involves further steps in this direction. Already the U.S. Treasury has received shares and other securities from 314 financial institutions in return for $350 billion in government bailout money. | more…
In 1987, in the introduction to their Stagnation and Financial Explosion, Monthly Review editors Harry Magdoff and Paul Sweezy wrote: “We both reached adulthood during the 1930s, and it was then that we received our initiation into the realities of capitalist economics and politics. For us economic stagnation in its most agonizing and pervasive form, including its far-reaching ramifications in every aspect of social life, was an overwhelming personal experience. We know what it is and what it can mean; we do not need elaborate definitions or explanations. But we have gradually learned, not altogether to our surprise of course, that younger people who grew up in the 1940s or later not only do not share but also do not understand these perceptions. The economic environment of the war and postwar periods that played such an important part in shaping their experiences was very different. For them stagnation tends to be a rather vague term, equivalent perhaps to a longer-than-usual recession but with no implication of possible grave political and international repercussions. Under these circumstances, they find it hard to relate to what they are likely to regard as our obsession with the problem of stagnation. They are not quite sure what we are talking about or what all the fuss is over. | more…
This year marks the eightieth anniversary of the 1929 Stock Market Crash and the beginning of the Great Depression, the worst economic crisis in the history of capitalism. However, while the Great Depression has been very much in the news of late, this is not due so much to this anniversary as to the fact that for the first time since the 1930s an economic crisis has arisen on a scale and of a nature that invites direct comparison with that earlier deep downturn, which threatened the entire system and ended in the Second World War. | more…
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 | more…
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 | more…
The United States in the opening decade of the twenty-first century is dominated by a new imperial project that is affecting all aspects of its society. The most obvious manifestation of this (see this month’s Review of the Month) is the expansion of the military-industrial complex. However, another, in some ways even more insidious, manifestation, as Rich Gibson and E. Wayne Ross pointed out in a February 2, 2007, Counterpunch article entitled, “No Child Left Behind and the Imperial Project”, is the current assault on the nation’s public schools through the No Child Left Behind law enacted by the Bush administration with broad bipartisan support. As Gibson and Ross explained, “Any nation promising perpetual war on the world is likely to make peculiar demands on its schools…and its teachers and youth….NCLB [No Child Left Behind] is the result of three decades of elites’ struggles to recapture control over education in the U.S., lost during the Vietnam era when campuses and high-schools broke into open-rebellion and, as a collateral result, critical pedagogy, whole language reading programs, inter-active, investigatory teaching gained a foothold.” | more…
Just over a year since the beginning of the worst U.S. financial crisis since the Great Depression, and only six months after the federal bailout of Bear Stearns, the seizing up of credit markets continues. The failure of eight U.S. banks this year, including IndyMac, and the recent instability that struck the two government-sponsored mortgage giants, Fannie Mae and Freddie Mac, requiring a special government rescue operation, has had the entire financial world on edge. Mortgage-related losses by themselves “could cause a trillion dollars in credit to vaporize,” according to a special July 28, 2008,Business Week report. The downside effects of financial leveraging (the magnification of results associated with borrowed money) mean that each dollar lost by financial institutions could lead to reductions in lending of fifteen dollars or more, creating a shockwave so massive that it could reveal structural weaknesses throughout the economy. Already the economy is reeling, with faltering growth, a deep slump in housing, massive job losses, rapidly rising oil and consumer goods prices, and a falling dollar | more…
This number of Monthly Review is a special issue on “Ecology: The Moment of Truth,” edited by Brett Clark, John Bellamy Foster, and Richard York. In the present issue we concentrate on the planetary environmental emergency. In a later special issue, to appear this fall, the magazine will address the social and economic regime change that is necessary to save the earth as we know it | more…
The first third of 2008 should have been a wake-up call to those who, in the short-lived days of capitalist triumphalism, were inclined to lose sight of the immediacy of the internal contradictions of capitalism and of the resistance that the system continuously regenerates. The enormous extent of today’s combined world food-and-economic crisis is now patently obvious. Anti-imperialist and anticapitalist initiatives are once again mushrooming around the globe. | more…
The subprime mortgage crisis that emerged late last summer in the United States led to a massive seizure in the world financial system that has had capital staggering ever since. This has now carried over to the “real economy” of jobs and income. As reported in the Wall Street Journal on April 4, “The National Bureau of Economic Research probably won’t say this for months. But why wait? The U.S. economy fell into recession sometime in January” (“Job Market Hints Recession Has Started”). World economic growth as a whole is expected to decline sharply this year… | more…
