@ CK MacLeod:

What I’ve been wanting to say is that, when a dude like Balakrishnan goes after CAPITALISM (to the relatively small extent that he does for a Verso author), he’s attacking something that’s not entirely the same as what you’re defending.

Since that’s what I’ve been trying to say too, maybe we’ve been complementing each other rather than talking past. Yeah, that’s our story.

That’s a supporting point to my main point, which is that I won’t argue “capitalism” on Balakrishnan’s terms, because the difference in his terms and mine matters tremendously.

One general point I would make is that derivative financial instruments have increased in sophistication, frequency, and apparent distance from “production” not because “that’s capitalism” but because technology has enabled them to. Their tether to an underlying productivity has never really been cut, though. And the greater the distance between the underlying productive activity and the derivative, the greater the inherent (as opposed to conditional) risk of the derivative. Derivatives are a cool way to make money, but they do, in fact, map back to underlying value that comes from productivity and nothing else.

A lot of individuals can make poor judgments about the risk of derivatives. But “capitalism” didn’t drive people to do that over the past 20 years. It was government’s choice to prop up derivatives with “low risk by fiat” that enabled a lot of lazy choices. And even so, many people (bank and financial investment managers) did NOT get overextended in inherently risky derivatives.

Government intervention is invariably at the heart of systemic weaknesses in an economy. It’s a fantastic rule of thumb: cherchez le gouvernement.

I’ll also say that, if I had more time, I’d try to go shorter – better organized, more succinct, better evidenced.

Amen, my brother. So would I.

Not entirely sure why, but I think we’re talking past each other, JED, and short of settling all questions with a duel – for which you’re no doubt much better trained than I – I’m not sure we’ll resolve our differences.

I’ll also say that, if I had more time, I’d try to go shorter – better organized, more succinct, better evidenced.

What I’ve been wanting to say is that, when a dude like Balakrishnan goes after CAPITALISM (to the relatively small extent that he does for a Verso author), he’s attacking something that’s not entirely the same as what you’re defending.

Maybe the difference is that when a guy like Professor B points to the stock market bubbles, the still unsettled real estate and finance/derivative bubbles, the Greenspan contribution, Fannie & Freddie, TARP, the bailouts and takeovers, Obama-Bernanke-Geithner economic inflatulence, 800 zillion in unfunded and theoretically unfundable liabilities, trillion dollar deficits, the dollar, foreign-held debt, etc., etc., he sees the whole complex as suggesting a systemic crisis within contemporary transnational capitalism. He then resorts to a largely Marxian analysis to explain – or maybe just to organize – the macro-level development of the crisis. The resultant critique doesn’t have much to do with supporting or opposing entrepreneurial capitalism, small business, the middle class responsibility and aspirations, many individual large businesses, consumers and so on – not that these and other groupings and actors don’t in the aggregate have a significant role economically and politically, just that they’re not the core problem.

Thus, for instance, I believe it’s fair to say that you and he both see the auto and bank takeovers as contradictory to capitalism. He’s perhaps more willing to take the Obamaist story (essentially that we have to destroy capitalism in order to save it) at closer to face value in the sense that the resort to corporatism, and public acceptance (at least til now) of the resort to corporatism, are symptomatic of how deep the problems in the system are. My personal opinion is that whether the failure of will or the failure of the employment, housing, and credit markets came first is a chicken and egg question, however.

From this perspective – the critique of financialized (you migh say “globally financed”) neo-liberalism – Bush’s compassionate conservatism, like Clinton-Gingrich centrism, like GHWB and late Reagan economic bipartisanship all would represent in general terms roughly the same axis of compromise – which has been diagnosed by ideologically diverse observers as unsustainable over the long term. You, as a liberty-minded conservative, and Prof B as an anti-statist Marxian, would also likely both be highly dubious of any “command economy” or “industrial policy” pseudo-answers to the predicament.

Where you might differ the most would be over what the real answers would be: You describe a revivified commitment to freedom – an accelerated withering away of the state, if you will – on the context of an unburdening of free markets and free enterprise. I think you’d probably acknowledge that the actual direction of American policy in the present period has tended even under Republican government towards greater aggrandizement of the state, leading finally to the Obamaist agenda which basically takes everything we’ve done wrong over the last 100 years or so and doubles down on it.

I’m not sure what Prof B’s absolute druthers would be, but I think he looks at the same history and roughly similar prospects, and concludes that what he might want doesn’t matter much – since no one’s asking now anyway. For all I know, he sees the same potential futures that you do, but, as an internationalist, remains more concerned about the friction and disruptions that would have to be undergone on the way to a new equilibrium; by the resistance put up by the same forces currently backing Obama-Geithner-Bernanke; and by the potentially very great costs displaced to other parts of the world.

What’s clear beyond that is that you both see the situation as amounting to a crisis: Just the other day, you were suggesting on your blog that the current debate over the direction of the country might be as consequential as any since 1860. If 1860 doesn’t qualify as a crisis, then what does? And, if the US is undergoing a once in a century crisis, and is the leading economic and political power in the world, and is a capitalist country, then, QED, we’re in the midst of a global crisis of capitalism.

So what would be left is a largely academic question of whether the crisis is a crisis that just happens to be expressed in the capital markets of the major capitalist countries, or whether there’s something about it that’s intrinsic and fundamental to capitalism itself (presuming there is such a thing). For my own part, I don’t think you have to be an anti-capitalist to concede that capitalist economies, today functioning within a relatively highly globalized economic system, under imperfect democratic republican governance, are subject to intermittent crises – just like all other complex dynamic systems. So in that sense, yes, I believe it’s fair to say that (democratic) capitalism’s current crisis, experienced simultaneously as an emotional or spiritual crisis, an economic crisis, and as a complex of international diplomatic and military crises, is “dictated by [the system]’s nature.”

What wouldn’t necessarily pre-destined is that this is a terminal crisis.

It’s when the system as a whole, the macro-system or system of systems, is seen to depend not just on debt, but at some critical margin on arcane manipulations of debt and debt-related instruments, based on nothing or less, piled up in such a way as to extract vapor profits, or, as now, to inflate asset bubbles of various types shored up against a continually deferred and re-deferred accounting, that the notion that something like a classic crisis of capitalism is under way gains credibility.

I’d argue, of course, that this “system of systems” is an artificial construct and not any underlying essence of “financialized neo-liberalism.” In some sense, it’s a parasite on financialized neo-liberalism, not an internal organ. Debt is a useful instrument of investment, but it is not in any sense necessary to assume excessive debt to leverage the power of capital-based entrepreneurialism. Nor is debt necessary to prosperity. Take away everything Americans have bought with debt in the last 30 years, and we would still be by far the most prosperous population on the planet.

Bottom line is that I don’t buy collective overextension in debt as the bathwater that the baby of individual liberty, economic or poltical, has to be thrown out in. I see no value in even couching the discussion in those terms, because it’s predetermined to come out badly for individual liberty.

The American enterprise has been affirming that individual liberty is an absolute good, and not conditional on corporate (i.e., group, or collective) outcomes. I know my reasons for believing that individual liberty remains an absolute good — and that all attempts to associate it with evil outcomes, as against the “corrective” of limiting and leveling centralized coercion, are freighted and suspect.

Liberty does not create a propensity to excessive debt, nor does collectivism “correct” the problems created for either individuals or a whole civilization’s economy by excessive debt. It’s not our freedom to access and wield capital that has created problems for us — this is not a “crisis of capitalism.” It’s a revelation of human weaknesses. But we can learn from and correct our weaknesses by our own action; and we do so most efficiently when central governnment is not trying to either shield us from some outcomes or prescribe for us others.

What we may be in the midst of is a crisis of will — a crisis of the spirit of our civilization. But there is no eschatalogical sense in which “capitalism” is experiencing a crisis dictated by its nature. (I’m sure you recognize that as really Marxist thinking.) Free-market entrepreneurialism has had decades’ worth of public burdens and morally-distorting assumptions overlaid on it – that is the problem we are dealing with now.

The question of forgiveness related to any imputed responsibility for the status of the wretched of the Earth – artisans or farmers, say, whose livelihoods may be annihilated by more efficient industrialized manufacture or agriculture. This isn’t a new story, of course.

Similarly, the Ponzi nature of high finance may be, at most, only secondarily a responsibility of individual debtors. (I’m not aware of any Marxist or Marxian statement on the morality of debt per se.) Rightly or wrongly, the decisions of individual citizens of the advanced industrialized nations aren’t terribly significant in a critique of Late Capitalism – whether you or I form a Global Warming non-profit or sell remaindered tennis shoes on eBay or get a normal job.

It’s when the system as a whole, the macro-system or system of systems, is seen to depend not just on debt, but at some critical margin on arcane manipulations of debt and debt-related instruments, based on nothing or less, piled up in such a way as to extract vapor profits, or, as now, to inflate asset bubbles of various types shored up against a continually deferred and re-deferred accounting, that the notion that something like a classic crisis of capitalism is under way gains credibility.

And I reiterate, there’s much in this critique that’s shared by non-Marxist, essentially non-ideological or at least unaffiliated economists and others. I don’t see anything in Balakrishnan’s bottom line that’s much more radical than you’ll see at a Tea Party or hear from Glenn Beck – or, with alterations in terminology and phraseology, in the op-ed pages of financial newspapers across the world.

How we react to the crisis, or act to fend it off, is something else. I don’t think there are many if any good answers to be found in the works of the Balakrishnans of the world, but at least they steer their readers away from the incredibly bad answers we’re getting from those to their right, our left.

@ CK MacLeod:

We are to be forgiven not just because we know not what we do, but because we don’t really, objectively have any other choice.

Of course, this is paramount only if the principal proposition relates to forgiveness (whatever may be assumed in that) as opposed to some form of effective decision-making.

Your statement of the proposition here is determinism in a nutshell. Producing a different outcome through the use of will and decision is assumed away; the operative goal is — whatever occurs to us, maybe forgiveness, maybe the release of moral constraints, maybe the relinquishing of hopes and objectives that, under a less deterministic mindset, we would think we “ought” to have. Escaping the discomfort of the “oughts” and “shouldas” is one of the longest-running projects of human philosophy.

It is, as I will reiterate one more time, not necessary to think in these deterministic terms. Whether we call it Marxist or Marxian, doing so is a modern refinement that was popularized by Marx and his holistic theory of the relation of man to the means of production.

Consider, for example, that the heavy borrowing against the future that you cite as a phenomenon of “late-capitalism” can be seen (and this is how I see it) as the product of numerous individual decisions that were made for various reasons, not all of which were poorly considered. There is nothing inherent in “capitalism” (or “financialized neo-liberalism”) that drives people to borrow money for purposes other than investment from which a return is expected. If you read the Old Testament you find that borrowing money to live on is an age-old practice; if you read the Code of Hammurabi you discover that the Babylonians administered breaches of contract relating to borrowed monies five millennia ago. Borrowing just to borrow is as old as bookkeeping.

Many, many people did not get overextended in consumption-oriented debt, over the past 50 years; how do we account for their very different decisions under the same conditions of “financialized neo-liberalism”? Many businesses have avoided overextension in debt as well, good or bad.

Equally informative, the world’s most abject and lowest-rated debtors are all nations mired in dictatorship and blunt, syndicate-like collectivism, whether that collectivism is overlaid with any serious swipes at an ideological covering or not. The potential for bad debt and bad credit is realized much faster under a suspicious and initiative-discouraging centralization than under financialized neo-liberalism, where the continuing fact of individual choice means that it never has to be realized at all.

Abstraction has its uses, but it really breaks down at the point where we want to suggest that people who have a genuine, actionable choice of occupation and lifestyle are fated in some deterministic fashion to borrow more than is good for them. Common sense must prevail here. Choice quite obviously does exist and is real: wherever people and institutions are not overextended in debt, it is being exercised.

I don’t mean to meander on saying the same thing over and over. The bottom line is that I don’t find deterministic theories interesting, because they have to dismiss too much that we know to be real — very often our own power of choice. Even Immanuel Kant, who made much of eschewing the tutoring of the ages in favor of a deck-clearing investigation of phenomena and noumena, acknowledged in the end that human choice is real, for every purpose within our purview. We are responsible moral actors. Our choices are not dictated to us by our relation to the means of production, or by how our system of monetary accounting is organized. Our economic behavior flows from our moral and political selves, not the other way around.

By their fruits ye shall know them (Matthew 7:20).

@ George Jochnowitz:
Who’s angry? I’m enjoying myself. I also don’t take responsibility for how the monsters you named interpret or interpreted Marx, just as I don’t take responsibility for how the Inquisition interpreted scripture, how Nancy Pelosi interprets the Constitution, or how John Hinckley Jr interpreted Jodie Foster.

@CK MacLeod:

Stalin, Mao, Castro, Pol Pot, Chavez, and Kim Jong-il all read Marx the way I do.

Why on earth does criticizing Marx make you so angry?