The Making of Global Capitalism by Gindin Sam & Panitch Leo

Author:Gindin, Sam & Panitch, Leo [Gindin, Sam]
Language: eng
Format: mobi, epub
Publisher: Norton
Published: 2012-09-25T05:00:00+00:00

10

The New Imperial Challenge: Managing Crises

There is nothing like a crisis to clarify things. Even if the discourse of neoliberalism obscured how much states were playing a crucial role in making globalization happen, it could not obscure the extent to which states were encumbered with the responsibility for keeping it going in the face of the financial volatility to which their economies were increasingly exposed. The American state’s fight against inflation in the 1980s had confirmed other states’ view of it as “responsible for managing the international financial system.”1 This was reinforced in the 1990s by the pivotal role it played in containing the financial crises that attended the growing international mobility of finance. Indeed, as it increasingly became clear that the US itself was not immune to such crises, the extent to which markets anywhere could be expected to be “efficient” in capitalist terms was largely determined by how effective were the interventions of the state most central to the realization of global capitalism.

In fact, just as the Treasury, together with the Federal Reserve, was in the forefront of advancing the rules of law for allowing global financial markets to flourish, so did the constantly chaotic and intermittently crisis-prone nature of these markets increase the scope, and the demand, for global discretionary intervention on its part. The Treasury’s structural position in global capitalism was largely based on the unique capability it demonstrated not only to intervene directly itself so as to limit the contagion of financial crisis, but also to orchestrate supplemental interventions by the international financial institutions and other states—and, as we shall see, by private bankers as well, at particularly crucial moments. What has been far too little appreciated in this respect is how pragmatic about this were the key figures at the head of the Treasury and Federal Reserve.2

They were under no illusions, in contrast to neoclassical economists, that globalization’s “extension of capitalism to world markets” only involved a movement from “one state of equilibrium to another”; thus, even the ideologically libertarian Alan Greenspan was quick to add to this formulation that “systemic breakdowns occur, of course.” He consistently justified the Fed’s indispensability as the main regulator and overseer of America’s payments system in terms of its being able to act quickly in the face of inevitable financial crises: the key thing was to have “flexible institutions that can adapt to the unforeseeable needs of the next crisis.”3 Treasury Secretary Robert Rubin sounded like he had been schooled by Hyman Minsky’s Stabilizing an Unstable Economy rather than Milton Friedman’s Capitalism and Freedom. Rubin’s “whole adult life experience” at Goldman Sachs taught him that capitalist finance could be understood as moving from one state of crisis to another: “[W]hen you have good times, there is an inherent tendency in markets, grounded in human nature and the pull of fear and greed, to go to excess.”4

The central theme of the main study the Treasury sponsored in the 1990s on the strengths and weaknesses of the US financial system

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.