On the eightieth anniversary of the 1929 Stock Market Crash that led to the Great Depression, the United States is once again caught in a Great Financial Crisis and deep downturn of an order of magnitude comparable to the 1930s. At the center of this crisis is plunging consumer spending, caused by the destruction of household finance as a result of decades of wage stagnation and the piling up of debt. Consumer spending in today’s economy, dominated by giant firms, is significantly dependent on the sales effort, i.e., marketing as a whole, with advertising as its most conspicuous form. But the sales effort is also ebbing in the crisis, contributing to the general decline. So integral is the sales effort to the regime of monopoly capital that one cannot be understood without the other. | more…
For almost thirty years Turkish capitalism has taken the form of neoliberalism. Turkey’s subordination to the world neoliberal order started in the late 1970s and was pursued consistently after the 1980 military coup. The coup reflected Hayek’s contention that a transition to “free markets” may require a dictatorship.1 By dissolving political and social opposition, the coup provided the necessary political environment for the shift from the import substitution industrialization that framed economic policy since the 1960s to an export-oriented economics. During the interim regime (1980–83), Turkey experienced a fierce process of depoliticization, which limited the opportunities for an effective opposition against the launch of neoliberal policies. All segments of the labor movement that had made political gains in the preceding decade were banned from politics and the majority of prominent activists were imprisoned. The general elections held in 1983 were a farce. The military rulers banned all political parties that had organic links to pre-coup political organizations and that were in opposition to the coup and the interim regime, and allowed only three political parties to participate. | more…
“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. | more…
Amiya Kumar Bagchi, Perilous Passage: Mankind and the Global Ascendancy of Capital (Lanham, MD: Rowman & Littlefield, 2005), 395 + xxiv pages, hardcover, $76, paper, $34.95.
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 | more…
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 | more…
The United States is unique today among major states in the degree of its reliance on military spending, and its determination to stand astride the world, militarily as well as economically. No other country in the post–Second World War world has been so globally destructive or inflicted so many war fatalities. Since 2001, acknowledged U.S. national defense spending has increased by almost 60 percent in real dollar terms to a level in 2007 of $553 billion. This is higher than at any point since the Second World War (though lower than previous decades as a percentage of GDP). Based on such official figures, the United States is reported by the Stockholm International Peace Research Institute (SIPRI) as accounting for 45 percent of world military expenditures. Yet, so gargantuan and labyrinthine are U.S. military expenditures that the above grossly understates their true magnitude, which, as we shall see below, reached $1 trillion in 2007. | more…
This essay examines aspects of the global political economy that I hope will inform progressive governments and movements for social change. It evaluates the constraints and opportunities presented in the current conjuncture of world capitalist development by analyzing four areas of crisis in the contemporary world capitalist system. These are not the only contradictory elements in the contemporary conjuncture, but they are, in my view, the most salient | more…
The days of boom and bubble are over, and the time has come to understand the long-term economic reality. Although the Great Recession officially ended in June 2009, hopes for a new phase of rapid economic expansion were quickly dashed. Instead, growth has been slow, unemployment has remained high, wages and benefits have seen little improvement, poverty has increased, and the trend toward more inequality of incomes and wealth has continued. It appears that the Great Recession has given way to a period of long-term anemic growth, which Foster and McChesney aptly term the Great Stagnation. This incisive and timely book traces the origins of economic stagnation and explains what it means for a clear understanding of our current situation. | more…
For several decades following 1947, the modern large dam in India presented itself as a political conundrum, often voiced in strange, contradictory tones. In an oft-quoted speech in July 1954 Jawaharlal Nehru, India’s first prime minister (1947–64), likened the large dam to a “modern temple.” Later, in a less remembered speech before a gathering of engineers and technocrats in 1958, Nehru, as if in contrition, bemoaned the quest for big dams as a “disease of gigantism | more…
Heinrich’s modern interpretation of Capital is now available to English-speaking readers for the first time. It has gone through nine editions in Germany, is the standard work for Marxist study groups, and is used widely in German universities. The author systematically covers all three volumes of Capital and explains all the basic aspects of Marx’s critique of capitalism in a way that is clear and concise. | more…
Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism (New York: Metropolitan Books, 2007), 466 pages, hardcover, $28.00.
At the crossroads of Buenos Aires’s shopping district sits a posh mall called the Galerías Pacífico, a showcase for global brand names and a playground for Argentina’s rich. One day, a film crew descended to the basement. There they found an abandoned torture chamber, its walls still etched with names, dates, and messages from political prisoners disappeared under the military junta. In The Shock Doctrine, Naomi Klein goes digging deep into the basements of global capitalism, from the torture labs of Latin America to the oil fields of Iraq, unearthing the bodies and catching the culprits red-handed. In the process, she demolishes one of the great myths of our time: that free markets go hand in hand with free societies, and that globalized free enterprise brings peace and democracy. Instead, as Klein documents in this definitive history, the new world order is the product of three decades of free-market terror, torture, and shock. | more…
The United States and the world economy are now experiencing a major economic setback that began in the financial sector with the bursting of the housing bubble, but which can ultimately be traced back to the basic problems of capitalism arising from class-based accumulation (see the Review of the Month in this issue).…Things are clearly much worse, with respect to the general public understanding of these problems, here in the United States, the citadel of capitalism, than elsewhere in the world. We were therefore bemused by an article entitled “Europe’s Philosophy of Failure” by Stefan Theil, Newsweek‘s European economics editor, appearing in the January–February 2008 Foreign Policy. Theil writes of the “prejudice and disinformation” incorporated in French and German secondary school textbooks dealing with economics. Such textbooks he complains “ingrain a serious aversion to capitalism.” | more…
