Fed Papers Show The Extremes Of State Intervention During The Crisis

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Red Hughs
Fed Papers Show The Extremes Of State Intervention During The Crisis
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Fed Papers Show Breadth of Emergency Measures
http://www.nytimes.com/2010/12/02/business/economy/02fed.html?_r=1&hp

"Even bedrock corporations like Caterpillar, General Electric, Harley Davidson, McDonald's, Verizon and Toyota were forced to turn to the Fed program that supported the market for the short-term i.o.u.'s that corporations use. During the worst moments of the crisis, in the fall of 2008, even creditworthy corporate borrowers found that this source of financing had dried up."

I think one could argue that this shows that the entire economy was virtually nationalized during this period.

I would further argue there are "deep lessons" to be found here.

1) Despite the integration of state and private enterprise over the however-many years, private enterprise still relies on financial markets and these markets are inherently unstable.

2) The state will intervene whenever markets experience crisis.

Question: Does this mean that capitalist society has only the illusion of instability and that it only uses its crises against the working class?

My Answer: No. Capitalists certainly do use the crisis against the working class, capitalist function on crisis which work as a "whip hand" to increase exploitation and destroy any "reforms" favoring the working class or threatening capitalist domination. That is one important tendency BUT it is not the only tendency. Capitalists certainly "normalize crisis" but this process of normalization inherently produces the possibility of crises outside the (new) norm. When financial "outtages" become frequent, companies stop merely being part of any crisis stabilization process and will instead start to "game" the system. When the Fed needs to walk each week handing out money, the sincerity of those asking for the money will be different.

Basically, I can see right-now a world of "market churning" where state intervention and financial speculation rolls like a storm from country to country, quite likely being the largest "profit center" of the new economic regime.

What do you think?

 

KT
What are the issues?

To be honest, Red, I’m unsure what questions are being posed here (my problem) so I forward a few observations that may (or may not!) encourage further discussion because I think the “deep lessons” you raise and the issues behind them are indeed important.

I agree that the ‘Leaks’ are interesting in demonstrating the extent and depth of the Fed’s ‘bail-out’ which encompassed whole continents, countries, companies, financial institutions and even individuals.

On a global and historical level, this seems to confirm a) the resort to and role of state capitalism b) the pivotal role of the US in this process (still the world’s largest economy; still the world’s banker  and with the dollar still the world’s primary currency) and, perhaps most importantly, c) the fact that all this unprecedented ‘printing of money’, of resort to ever-more gigantic debt was necessary in the first place (ie it represents a basic failure of capitalism to overcome its historical contradictions) and that, two years on, it has largely failed to re-start production and has led to new and even deeper crises which are unfolding before our eyes.

From the above, I deduce that we must categorically reject (as you indeed do) any suggestion that capitalism “wants” this crisis, that, on a global level, it “profits” from it. The absolute contrary is the case.

Within this process, we see apparent contradictions: a) world-wide cooperation between countries, led by the US, to avoid the collapse of financial institutions, with all the accompanying social dislocation this implied; b) an intensification of trade, currency (not to mention imperialist) rivalries as each country tries to “beggar thy neighbour” as the old English card game is called.

The first is a contingent, momentary cooperation in a vain bid to maintain the conditions of the second, of ‘business as usual’ of capitalist competition. (The UK lends Ireland billions to stave off collapse because Ireland is an extremely important trading partner; the Chinese ruling class balks at US calls to stimulate domestic consumption and export less, yet knows that its investments and markets depend on a degree of ‘health’ in the US, Japan, Europe, etc).

This basic contradiction of the social nature of production implied and permitted by the growth of capital coming up against the private (at the level of nations) appropriation of the processes of production is at the core of the capitalist conundrum and is insoluble without a move to a ‘higher’, truly global mode of production.

So to see countries, companies and individuals seek to profit from “market churning” (such speculation itself being a testimony to the relative failure of the profitable production of commodities) is hardly a surprise. But it’s not a sign of the strength, or health of capitalism (and I’m not suggesting you see it as such). And I can’t see how anyone thinks all this is only an “illusion of instability”, even if it’s undoubtedly true that the ruling class uses its effects to hammer down the fundamental costs of production – ie the costs of maintaining the proletariat.

So apologies if I’ve not understood fully the questions you posed. For myself, I’m interested in attempting to understand the limits (assuming there are limits) to this ever-accumulating world debt: is this a social question (the resistance or lack of it, from the proletariat) or are there boundaries beyond which capital itself cannot stray without clogging up its mechanisms of finance, production and trade? What does this all mean for rising imperialist tensions and the threat of global war? Answers on a postcard, please!

And just as a PS, watching this “financial speculation roll like a storm from country to country” I wonder again at the role of the US and of the dollar: one (simplistic) description sees the US lend shed loads of speculative money to Ireland, Spain, Portugal, Greece, which then require ‘shoring up’ to ensure the profits of the US state/banks. And which US rival has to organise and pay the largest share of this ‘shoring up’? Germany. Thus one of the US’s greatest trade rivals with a current account surplus, is obliged to oversee what is in effect a vast transfer of wealth to the US (within the context of an overall shrinking of the global cake, of course, and most certainly on the backs of the world’s working class).

 

 

Red Hughs
For clarification, I'm more

For clarification, I'm more or less arguing with a variety of tendencies some (but not all) of which I've been somewhat close to in the past: Movement Communiste, Aufheben, the former-Wildcat London as well as Midnight Notes and their section of the "autonomist" movement.

All of these groups view capitalist crisis as being more or less instigated by the capitalist class as an effort to get more out of the working class.

Obviously, I would expect the ICC to see things differently. 

(more later..)

KT
OK

I get it. Ploughing through the Aufheben 'Decline of Theory' trilogy myself at present. Look forward to more from you: maybe you can help me make sense of it!  

d-man
KT, if you haven't already,

KT, if you haven't already, consider reading Aufheben's interesting 'self-criticism' of their trilogy:

libcom.org/aufheben/decadence

 

 

 

Red Hughs
I should mention I have

I should mention I have written a lot about the crisis.

This an article from five-six years that is still mostly how I view things.

This further updates my crisis understanding plus expanding the declining rate of profit argument.

This is libcom's huge crisis thread with a fair amount of contribution from myself as well as various ICC folks and libcom regulars. 

 

 

 

Alf
 I hadn't realised that

 I hadn't realised that Aufheben had done a self-criticism on their decadence series. They talk about the ICC quite a bit - perhaps we also need to do a self-criticism....I haven't read it in detail but certainly recommend it to KT.