An economic recovery has begun.
- President Obama, Second Inaugural Address
President Obama’s optimism — baseless as it may be — was surely appreciated at the annual meeting of the World Economic Forum. For in what was described as the “most optimistic” meeting since 2007, 2,600 members of the global elite convened over the weekend at their exclusive Davos, Switzerland retreat to once again set upon “improving the state of the world.”
In a certain respect the cautious hopefulness of Davos 2013 was perhaps justified, as it was only a year ago when the retreat was preempted by warnings of a looming “period of evil” and the potential “collapse of the financial system” from no less than George Soros.
Yet, one year later, while optimism gains a foothold amongst the world’s elite, the evil doled out by global capitalism continues unabated.
According to a recent report by the International Labor Organization (ILO), “The number of unemployed worldwide rose by 4.2 million in 2012 to over 197 million.” And as the report goes on to warn, global unemployment could increase even further in 2013.
Global youth unemployment, meanwhile, remains particularly dire. According to the ILO report, nearly 74 million people between the ages of 15 and 24 are unemployed.
“Some 35 per cent of unemployed youth in advanced economies have been out of a job for six months or longer,” the report continues. “As a consequence, increasing numbers of young people are getting discouraged and leaving the labour market.”
And for those currently languishing in the global reserve army of labor, the forecasts for meager growth offer little hope for a reprieve.
According to the latest World Economic Outlook by the International Monetary Fund (IMF), global growth is projected to reach 3.5 percent in 2013. That is a downward revision of 0.1 percent from the Fund’s October outlook. But the outlook is much worse for the advanced economies.
The IMF projects the euro area to contract 0.2 percent in 2013, with contractions in Italy and Spain of 1.0 and 1.5 percent respectfully.
In France, where youth unemployment is already over 25 percent, growth is projected to register a measly 0.3 percent.
In Britain, it is the specter of a triple-dip recession that looms, after a contraction of 0.3 percent was seen in the last quarter of 2012. As the Guardian reports, “The economy remains 3.5% below its peak in 2007 and is not expected to regain its previous level for at least another two years, making it the longest recovery in 100 years.”
Growth in the U.S., meanwhile, is projected by the IMF to come in at 2 percent — a downward revision of 0.1 percent from the Fund’s October outlook. This, as inequality in the U.S. continues to worsen.
But even this rather bleak outlook for the world’s advanced economies may be too optimistic.
As the IMF cautions, “downside risks remain significant, including prolonged stagnation in the euro area and excessive short-term fiscal tightening in the United States.”
Indeed, as the Economist warns, “You might think that six years after the global financial crisis first broke, the downturn would be well behind us and the economy would be humming along. Instead, huge swaths of the world seem to be embarking on a Japanese-style experiment with long-term stagnation.”
This is precisely what Marxists scholars John Bellamy Foster and Robert McChesney argue in their latest book, The Endless Crisis.
Showing that the globalized system of monopoly-finance capital is characterized by a dangerous stagnation-financialization trap, Foster and McChesney argue that it is in fact stagnation that is now the norm — not growth. And this stagnant reality has left greater financialization as the only acceptable remedy for the global elite.
“Yet,” Foster and McChesney write, “rather than overcoming the stagnation problem, this renewed financialization will only serve at best to put off the problem, while piling on further contradictions, setting the stage for even bigger shocks in the future.”
Of course, figuring out how to put off the problem, while piling on further contradictions, is where the World Economic Forum comes in. After all, despite the pretentious claims of “improving the state of the world,” Davos is really little more than a posh mountain retreat held for global elites hell-bent on preserving their own privileged class positions. And as for that world they purportedly seek to improve, all Davos ever has to offer those beyond its pearly gates is the mysticism of invisible hands.
And in this sense, the growing talk of an “economic recovery” is but the byproduct of a world suspended in an illusion annually cultivated high up in the Swiss Alps. But for the global elite, that’s evidently grounds for optimism.
Ben Schreiner is a freelance writer based in Wisconsin. He may be reached at bnschreiner@gmail.com or via his website.
http://www.counterpunch.org/2013/01/28/elite-optimism-amid-endless-crisis/
The Endless Crisis
How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China
227 pages
Cloth (ISBN-13:
978-1-58367-313-3)
October 2012
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. The authors point out that increasing monopolization of the economy—when a handful of large firms dominate one or several industries—leads to an over-abundance of capital and too few profitable investment opportunities, with economic stagnation as the result. Absent powerful stimuli to investment, such as historic innovations like the automobile or major government spending, modern capitalist economies have become increasingly dependent on the financial sector to realize profits. And while financialization may have provided a temporary respite from stagnation, it is a solution that cannot last indefinitely, as instability in financial markets over the last half-decade has made clear.
The authors carefully develop a powerful case that the normal state of ‘really existing capitalist economies,’ increasingly dominated by multinational megacorporations along with associated financialization, is not growth with occasional recession, but rather stagnation with occasional escapes that have diminishing prospects. Hence an ‘endless crisis,’ endless in both time and space, including China. And a crisis that is heading towards disaster unless there is a radical change of course. This valuable inquiry should be carefully studied and pondered, and should be taken as an incentive to action.
—Noam Chomsky
In the distinguished tradition of Paul Baran and Paul Sweezy, Foster and McChesney here combine grim analysis with bleak prognosis, reminding us that monopoly power disappeared from the textbooks but not from real life. This is a useful book for anyone raised on the reflexive American optimism of the post-war years.
—James K. Galbraith, author, Inequality and Instability: A Study of the World Economy Just Before the Great Crisis
The Endless Crisis provides a compelling discussion of the central economic reality of our time: that the Wall Street collapse and Great Recession of 2007-09 was a human calamity whose effects are ongoing. Foster and McChesney explore the underlying causes of the crisis as a result of the normal operations of capitalism in its contemporary neoliberal variant. Their discussions on financialization, monopoly power, imperialism, and other topics all provide opportunities for us to think more clearly about what is wrong with the societies we live in and how to advance a transformative political project in behalf of equality and social justice.
—Robert Pollin, Professor of Economics and Co-Director, Political Economy Research Institute, University of Massachusetts-Amherst
The Endless Crisis goes beyond being thought-provoking, well-written, and interesting. In many respects it is chilling in its analysis of the evolution of global capitalism and the contours of the global class struggle. This book constitutes a polemic not only with neo-liberal theory but with those who believe that tinkering with the worst aspects of capitalism will resolve the crisis. Foster and McChesney take the reader into the world of the global monopolies and the plutocracies that they have spawned. When you finish this book you cannot but ask the question: ‘When do we get serious about a strategy for the Left to respond to the system of modern day robber-barons that Foster and McChesney so well analyze?’
—Bill Fletcher, Jr., BlackCommentator.com; author of Solidarity Divided and ‘They’re Bankrupting us’ And Twenty Other Myths about Unions
The most important book yet to appear on stagnation, the central problem of modern economic reality. Essential reading for serious liberal, heterodox, radical, and all open-minded economic thinkers.
—Gar Alperovitz, author, America Beyond Capitalism; Lionel R. Bauman Professor of Political Economy, University of Maryland
John Bellamy Foster and Robert McChesney’s The Endless Crisis very effectively integrates analysis of the development, character, and impact of monopoly-finance capital, which includes the now global and immense reserve army of labor, and with stagnation tendencies harder and harder to overcome. They also demonstrate well the urgency of working class organization on a global basis.
—Edward S. Herman, professor emeritus of finance, the Wharton School, University of Pennsylvania
The Marxist perspective, exemplified in a new book by John Bellamy Foster and Robert McChesney, is also useful. This argues that the strong western growth rates in the middle of the 20th century were something of a mirage . . . The result has been a declining trend rate of growth, and the increased financialisation of western economies as the surpluses have been re-cycled through the banks in a search for yield. Hence the Latin American debt crisis. Hence the sub-prime mortgage crisis. Hence the inability of the global economy to emerge from its torpor.
—Larry Elliott, the Guardian
John Bellamy Foster is editor of Monthly Review. He is professor of sociology at the University of Oregon and author of The Great Financial Crisis (with Fred Magdoff), The Ecological Rift and Critique of Intelligent Design (both with Brett Clark and Richard York), The Ecological Revolution, Ecology Against Capitalism, Marx’s Ecology, and The Vulnerable Planet.
Robert W. McChesney is the Gutgsell Endowed Professor in the Department of Communication at the University of Illinois at Urbana-Champaign. He is the author of The Political Economy of Media, Communication Revolution, The Problem of the Media, and Rich Media, Poor Democracy.
http://monthlyreview.org/press/books/cl3133/
http://cafe.daum.net/nowonenglish/99TZ/307