Re: [xmca] US discovers capitalism doesn't work

I'm seeing one advance on the ideological front: It is now a commonplace
observation in the mainstream media that what we're seeing is a system in
which "profits are being privatized, while losses are being socialized."

As for Martin's observations on the consciousness of participants: It
reminds me of a class I had in law school in which the Professor
characterized as "Marxist" an interpretation that attributed market
failures to corruption and criminality (not acting according to the norms
of the system). I protested, of course, that such is ANYTHING BUT a
Marxist analysis. Marxism is more concerned with how capitalism operates
when the players ARE playing by its rules.

On Sat, 20 Sep 2008, Mike Cole wrote:

> Interesting analysis, Martin.
> Part of what fascinates me is watching the Republicans argue against raising
> taxes while coming up with a scheme to solve the problem that will make
> ordinary citizens pay for their profits..... but they will be out of town
> before anyone can deal with the situation effectively.
>
> A story on Yahoo today says for the first time, what is most worrisome about
> how this will effect the outcome of the upcoming election: The rascism of a
> large part of the electorate may well be sufficient to ensure a Republican
> victory even as them whats been the leaders in this long term disaster blame
> "Washington insiders." - A Stanford U poll study.
>
> mike
>
> On Sat, Sep 20, 2008 at 9:21 AM, Martin Packer <packer@duq.edu> wrote:
>
>> It seems to me that we ought to mark here the events of the past week in
>> the
>> US, as they throw light on the kind of social reality in which many of us
>> live. I'm certainly no economist, but this is what I think I've figured out
>> so far.
>>
>> A bunch of smart bankers figured out how to turn debt, especially mortgage
>> debt, into a commodity. They arranged to package it and label it as high
>> quality, with some dubious auditing. They arranged to market it to
>> individual and corporate investors. And then they set about mass producing
>> this new commodity, by exploiting the people whose debt they could
>> purchase.
>> They advertized easy credit to naïve would-be home owners. This pushed up
>> house prices, but this was fine because it created more demand for
>> mortgages
>> and these loans were for higher amounts, so the size of the debts was
>> doubly
>> increased. They sold credit with one hand while with the other hand they
>> sold the debt this created. A win-win situation, seemingly.
>>
>> Several things went wrong at the same time. The price of housing got so
>> high
>> that the demand to buy it dried up. The mortgage contracts turned out to be
>> so grossly exploitative that the people bound by them were simply squeezed
>> dry. So the value of the new commodities fell into doubt, and the banks
>> found they could no longer sell them. They were over-stocked with goods
>> that
>> were no longer wanted, and overnight a vast amount of value simply
>> disappeared. The banks woke up to discover that they could no longer pay
>> their own debts, to one another, to industry, or to investors. The country
>> woke up to find their savings disappearing, their currency falling, their
>> homes not worth what they paid for them, their credit revoked, and their
>> jobs on the line.
>>
>> So now the federal government has stepped in, and will buy these unwanted
>> commodities from the banks for a total of perhaps $500 billion. The banks
>> will get real cash in its place and will be able to do business again. The
>> government will hope to squeeze some value from the mortgage holders,
>> presumably on less onerous terms, in order to get something back for its
>> purchase. The wheels of capitalism will turn again, and the crisis may be
>> over.
>>
>> This at least is the picture that is now visible, on the basis of data
>> collected by government agencies and reporting by the media. But the
>> participants in all this were able to see only a small part of what they
>> were doing, and understood what they saw only poorly. Part of this was
>> wishful thinking and deception, but it was also a result of the positioning
>> of the various actors and the ways capitalist economies take on a life of
>> their own, escaping both the needs and the intentions of we who inhabit
>> them.
>>
>> It's a fascinating situation, enough for a dozen good dissertations.
>> Alexandra Michel and Stanton Wortham, who were at ISCAR, are publishing a
>> book based on their study of the contrasting cultures of two investment
>> banks. I hope they will extend their work to include what is going on
>> today.
>> To me it would be especially interesting to explore the psychological
>> dimension – how desires are created and manipulated, how perceptions of
>> risk
>> and probability are changed, how people act in a time of such instability.
>> But it also shows how modern society, civilized and modern and advanced, is
>> a house of cards.
>>
>> Martin
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>>
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Tony Whitson
UD School of Education
NEWARK DE 19716

twhitson@udel.edu
_______________________________

"those who fail to reread
  are obliged to read the same story everywhere"
                   -- Roland Barthes, S/Z (1970)

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Received on Sat Sep 20 17:48 PDT 2008