The following comes from a truly wonderful Jan. 25 essay by Charles Leadbeater at New Statesman titled “The best things in life are free.” No comment necessary, other than to express gratitude for such a lucid and moving exposition of a truth so crucial it hurts (and one that’s just as true for the U.S. as it is for Britain, whose situation is Leadbeater’s primary focus; when he talks about Thatcher’s promotion of a “money unbound” economic philosophy beginning in the 1980s, which led to apocalypse-level consumerism and a culture of ultra-debt-based recklessness, he may as well be talking about “Reaganomics”).
If 2009 was spent rescuing the financial system, the year ahead should be spent remaking it, and to do that we need to fashion a fundamentally different relationship with money.
The main lesson of the crisis this past year is that money has become a capricious and overbearing ruler of our lives — by turns threatening to discipline us, only to offer us liberation, on its own terms. Instead of hoping for a return to easy credit and rising property prices, we should put money in its proper place by reducing its footprint in society, limiting its reach, promoting alternative ways to account for what we value and finding less socially destructive ways to save and invest, lend and borrow. We need to see money less as a mystical religion or a drug and more as a tool.
….Thatcherism started life as monetarism, a critique of how Keynesianism had allowed government to become financially incontinent. Thatcher’s original crusade was to restore respect for the value of money through strict control of the money supply. This discipline did not last for long, however. From the mid-1980s, with monetarism cast aside, Thatcherism’s mission was to let money loose. Money was no longer a source of discipline, but an elixir, a source of liberation, freeing people to make their choices in the commercial democracy of the open market. Easier credit allowed a culture of debt and desire to overtake deferred gratification and modest self-sufficiency.
….As the Canadian philosopher Charles Taylor puts it in A Secular Age, his history of how religious belief adapts to the society around it, “The individual pursuit of happiness as defined by consumer culture still absorbs much of our time and energy, or else the threat of being shut out of this pursuit through poverty, unemployment, incapacity galvanises our efforts . . . and yet the sense that there is something more presses in. Great numbers of people feel it: in moments of reflection about their life; in moments of relaxation in nature; in moments of bereavement and loss; and quite wildly and unpredictably.”
….When money serves a “something more”, then consumption has a point. When the link is broken, modern, money-driven society loses its anchor. The challenge for politics ought to be to turn that insight into policy and politics by putting money in a more subordinate position in society.
As is obvious from my last few posts, I’ve decided to start keeping tabs here at The Teeming Brain on doomer-sounding economic news stories, essays, analyses, op-eds, and rants. Currently the media are presenting a veritable cornucopia of these things, and they seem likely to keep it up for a very long time to come.
What’s most interesting to me about the current crisis, aside from the fact that it has made economic news as gripping to read as a thriller novel, is the way it heralds a profound and far-reaching change in the world as we all know it. This fact has been pressing more and more heavily upon my thoughts in recent weeks. A number of items appearing in the mainstream media indicate that I’m not alone.
Two days ago Michael Mandel asked in an article for Business Week, “How Real Was the Prosperity?” The question refers to the unprecedented and explosive acceleration of economic growth that marked the past several years of American life. Naturally, this growth was accompanied by prominent signs and, perhaps more importantly, an overall sense of increasing material wealth. We all felt it, even the ones of us who didn’t necessarily share in the actual money and new toys. Life in America became like a giant carnival staged in a 24-hour, multilevel shopping mall. It seemed every last one of us got a cell phone, an iPod, digital cable, high-speed Internet, a MySpace page, a McMansion, designer clothing, a designer hairstyle, an SUV, a wallet full of credit cards, several home equity loans, and a shot for stardom on American Idol.
But now the carnival is over. Now we’ve slid into a period of acute economic turmoil, with last summer’s scary seize-up in the financial markets blossoming into today’s mounting credit and banking crisis, and with the epic real estate run-up of the past several years proving itself to be not just a bubble but the mother of all such bubbles, and with the whole mess being underwritten by profligate lending practices that were encouraged in the service of fueling exotic new investment vehicles that dispersed “toxic” debt throughout the entire financial world. And standing astride it all is the Colossus of the tapped out, indebted, and increasingly demoralized American consumer, whose spending has sustained not just America’s economic growth but also the rest of the world’s from the very beginning of this brave new era of globalization.
Now that this collective body of interconnected economic hokum has finally caught the flu — or maybe pneumonia is a more apt metaphor (or perhaps bubonic plague?) — the big banks and other financial industry players look to the American Fed to “cure” them via rate cuts and so on. “But,” says Mandel in Business Week, “the underlying problems that ail the markets and the economy cannot be waved away by the Fed’s magic wand. In truth, we’re at the beginning of a long, arduous process of figuring out how much of the post-tech bubble prosperity was real and how much was the result of a credit-induced frenzy. The answer will determine what we can expect.”
By “what we can expect” I think Mandel is referring to the specific, measurable economic outcomes of the present crisis. Obviously we cannot know in advance what these will be. Prophecy is a risky business. Only time will tell what new arrangements will emerge out of the swamp of our present problems. Personally, I expect bank failures and such, but these may not come to pass.
But even though it’s too early to know specifically what awaits us, I think it’s completely safe to say that we will witness, and are even now witnessing, a revolutionary transformation of the way America does business. And this will entail a still more profound transformation. Our fundamental way of life will not emerge unaltered from all of this craziness and volatility. All of the assumptions of economic neoliberalism and globalization that have dominated and shaped the past 30 years of life in America and elsewhere are now called savagely into question, and this means we’re looking at a real upending not just of the financial and economic worlds but of our collective cultural worldview and intellectual/emotional equilibrium.
As I said, I’m seeing this hunch mirrored in a number of recent media stories. The International Herald Tribune said three days ago that we stand “On the cusp of economic history.” The article bears quoting (with emphases added by me):
Is economic history about to change course? Among the chieftains of politics and industry gathering in Davos for the World Economic Forum on Wednesday, a consensus appears to be building that the capitalist system is in for one of those rare and tempestuous mutations that give rise to a new set of economic policies.
As the prospect of a U.S. recession overshadows a tense and drawn-out election campaign in the world’s most emblematic market economy, a corrosive cocktail of factors is eating away at old certainties: Power is steadily leaking from West to East. Income inequalities are rising in rich countries.
And signs of a protectionist backlash are multiplying as worries about climate change, the rise of state-run investment funds and the bursting of the recent credit bubble give novel ammunition to those in the West who question free markets and clamor for more shelter from globalization.
What exactly will emerge when the dust settles is hard to predict, economists and executives say. But this much seems clear: With the frontier between state and market once again up for grabs, the era of easy globalization is over — and big government in one form or another is back.
The article goes on to say more about growing income inequality and other issues that have called into question the foundational assumptions of globalization. Then it concludes with a hint of momentous, imminent change:
A year and a half ago, researchers at [Daniel] Yergin’s group [Cambridge Energy Research Associates in Boston] drew up a number of scenarios for the world economy in 2030. One of them, “Asian Phoenix,” saw a world in which protectionism was kept at bay and Asian economies kept underpinning swift global growth. The other, “Global Fissure,” was a troubled world economy with widespread economic nationalism and a backlash against globalization.
At the time, the latter scenario seemed to be the more remote. But that may be changing, Yergin said. “What seemed highly unlikely,” he said, “could become rather more likely.”
The Financial Times sounds a similar note in “Ins and outs of the ups and downs,” published just today:
There is a growing belief that this spectacular sell-off [i.e., the global stock rout of the past few weeks] portends more than just a periodic shift in the market cycle. Indeed, the events are now so dramatic that they are prompting many to call into question the entire capital market architecture that has emerged over the last decade, along with the approach the world’s financial authorities have adopted since the last big break in the market — the bursting of the internet bubble in 2000.
“We have to pay for the sins of the past,” says Klaus Schwab, founder of the World Economic Forum, which is currently holding its annual gathering of political and business leaders at the Swiss mountain resort of Davos. Or as George Soros, the legendary hedge fund manager, says: “This is not a normal crisis but the end of an era.”
“The end of an era.” And there’s the rub. Eras don’t often end peacefully on a happy note of felt security. A review of history and the eras into which we commonly divide it reminds us that the end of an era involves the end of a cultural worldview, and people don’t lightly bear this overturning of their basic assumptions about life.
That this historical tide, cultural eruption, economic reversal, bubble-bursting of an era, is occurring during a U.S. presidential election year, may prove to be of epochal importance. A significant article from yesterday’s New York Times titled “Voters Show Darker Mood Than in 2000” taps into this fact very perceptively, so I’ll quote it at length:
Obviously, Sept. 11 and its aftermath have changed the country in countless and irretrievable ways. But even beyond the emergence of war and national security as pre-eminent concerns, there has been a profound reordering of domestic priorities, a darkening of the country’s mood and, in the eyes of many, a fraying of America’s very sense of itself.
While not universal, that tone pervaded dozens of interviews conducted over the last week with Americans of all political stripes in 8 of the 24 states that hold primaries or caucuses on Feb. 5, as well as with historians, elected officials, political strategists and poll takers. As the candidates fan out to New York and California and here to the heartland, they are confronting an electorate that is deeply unsettled about the United States’ place in the world and its ability to control its own destiny.
Since World War II, the assumption of American hegemony has never been much in doubt. That it now is, at least for some people, has given this campaign a sense of urgency that was not always felt in 2000, despite the dramatic outcome of that race.
Several writers and historians remarked on the psychological impact of such a jarring end to the Pax Americana, just as it seemed that victory in the cold war might usher in prolonged prosperity and relative peace (save the occasional mop-up operation). Its confluence with an era of unparalleled technological innovation had only heightened the nation’s sense of post-millennial possibility.
Now, Americans feel a loss of autonomy, in their own lives and in the nation. Their politics are driven by the powerlessness they feel to control their financial well-being, their safety, their environment, their health and the country’s borders. They question whether each generation will continue to ascend the economic ladder. That the political system seems so impotent only deepens their frustration and their insistence on results.
….Susan C. Powell, a 47-year-old training consultant who lives in a Kansas City suburb, said that what she feels is not so much hopelessness as doom.
“I know plenty of people who are doing worse than they were,” Ms. Powell said, “and nobody’s helping them out. People’s incomes are not keeping pace with inflation. People can’t afford their homes. People in their 30s and 40s, middle-income, and they don’t have jobs they can count on or access to health care. How can we say that we’re the greatest country on earth and essentially have the walking wounded?”
This all resonates powerfully with my own personal observations. For a year now I’ve been noticing the vivid slide among my immediate network of family and social acquaintances into exactly the same mood of disturbance and despair described by the Times. Many of these people are ones I never would have expected to express such thoughts and feelings. They don’t go on about it like I do, and sometimes they tire of my unending philosophical focus on the matter, but all the same, they openly say in their respective ways that they feel America is in a bad place, and the economy is screwed, and the political system is broken, and most or all of the politicians are crooks and liars, and the news media are brain dead, and bad times are upon us, and even worse times await. Sometimes I grow amazed at hearing and witnessing this shift in mood. When did everybody become a pessimist like me?
What is all boils down to is this: The tone of human society is going to be affected as much by the psychological undercutting of our collective sense of stability, security, and orientation as by the actual material effects of whatever new economic order ends up emerging from the bubbling cauldron of current events. The reason is simple: It’s a profoundly troubling thing to be told that you’ve erected your way of life and your sense of self and well being on a pack of pernicious lies.
To begin with, a proviso: I probably don’t know what I’m talking about here. I’m certainly not a political scientist. I may not even qualify as a reasonably informed citizen. But anyway…
A little over a week ago, back on September 10th, the online arm of The Guardian published a long essay by Martin Amis titled “The Age of Horrorism,” about the rise of radical Islam and what Amis views as the West’s pathetically inadequate response to it. As the abstract at the start of the article puts it, “On the eve of the fifth anniversary of 9/11, one of Britain’s most celebrated and original writers analyses — and abhors — the rise of extreme Islamism. In a penetrating and wide-ranging essay he offers a trenchant critique of the grotesque creed and questions the West’s faltering response to this eruption of evil.” The essay is a fascinating read, and one which I heartily recommend. But only if you’re prepared to be bothered.
What’s really troubling and fascinating me at the moment is Amis’s explanation and analysis of the way the Egyptian intellectual Sayyid Qutb attended American universities in the 1940s and 1950s and then returned to his home country, where he laid the foundation for radical Islam’s guiding anti-Western ideology. I don’t mean I’m troubled by the way Amis presents Qutb’s story. I mean I’m troubled by the story itself. Qutb’s status as the intellectual father of Islamic extremism is hardly a secret in the West. Many of us Westerners have already learned of it through various means, such as an in-depth NPR story that appeared three years ago. I myself have brushed past Qutb’s story a time or two in my journeys through media culture. But I learned more about it from Amis’s essay that I had previously known, and it really got me to thinking.
In particular, I’m troubled by the fact that Qutb’s famous cultural criticisms of America and the West illustrate one of the great difficulties facing anybody who tries to confront radical Islam, namely, that many of these criticisms are built around a valid core insight. Inspired by Qutb’s voluminous writings, radical Islamists harp on America’s relative soullessness, its insanely idiotic pop culture, its overall cultural shallowness, its general degradation and decline under the influence of capitalism, celebrity worship, egoism, and the like. In so doing, they are singling out some of the very same things that many of our best homegrown culture critics — e.g., Daniel Boorstin, Neil Postman, Allan Bloom, Theodore Roszak, James Howard Kunstler, Morris Berman, Benjamin Barber, Lewis Mumford, C.S. Lewis — have gone on about for decades. Certainly, the Islamists take their criticisms to sometimes comical (or tragic) extremes. Their views are shot through with a virulent misogyny and what seems a positively pathological fear or hatred of sex and the human body. Equally as important, they frequently misread, misrepresent, or flat out misunderstand American history, as Amis trenchantly points out. But even so, it’s difficult to avoid concluding that in their moral horror at what the West has become under the economic, political, and military leadership of America, the Islamists are nursing a fundamentally sound grievance.
The dangers that stem from this are severe. In such a situation, it’s all too easy for many people to condemn or dismiss valid criticisms of America and the West because such criticisms sound suspiciously like something a radical Islamist would say. Allowed to run to its full extreme, this suppression of self-reflection would almost certainly lead us into culture death in the form of a dystopian society like the ones described in Fahrenheit 451 and Brave New World. On the other hand, it’s also possible to focus too much on the little bit that the Islamists have gotten right, and to let this arouse sympathy for them, and thus to lose sight of the fact that many of them really are hellbent on destroying and/or forcefully converting the West, and that they really do represent a danger so grave as to border on the apocalyptic. The likely outcome of this second approach is equally easy to forecast.
Amidst this confusion and difficulty, I continue to think that Benjamin Barber’s characterization of the clash of civilizations as Jihad vs. McWorld, i.e., tribalism vs. globalism, is the single most helpful expression and analysis of where we now stand, since it presents a forceful criticism of both sides of the conflict, and explains how both tendencies are hostile toward authentic democratic civilization. The opening paragraphs of his famous 1992 essay for The Atlantic summarize the matter perfectly, and seem positively prophetic in light of events that have unfolded over the past decade:
“Just beyond the horizon of current events lie two possible political futures — both bleak, neither democratic. The first is a retribalization of large swaths of humankind by war and bloodshed: a threatened Lebanonization of national states in which culture is pitted against culture, people against people, tribe against tribe — a Jihad in the name of a hundred narrowly conceived faiths against every kind of interdependence, every kind of artificial social cooperation and civic mutuality. The second is being borne in on us by the onrush of economic and ecological forces that demand integration and uniformity and that mesmerize the world with fast music, fast computers, and fast food — with MTV, Macintosh, and McDonald’s, pressing nations into one commercially homogenous global network: one McWorld tied together by technology, ecology, communications, and commerce. The planet is falling precipitantly apart AND coming reluctantly together at the very same moment.
….”The tendencies of what I am here calling the forces of Jihad and the forces of McWorld operate with equal strength in opposite directions, the one driven by parochial hatreds, the other by universalizing markets, the one re-creating ancient subnational and ethnic borders from within, the other making national borders porous from without. They have one thing in common: neither offers much hope to citizens looking for practical ways to govern themselves democratically. If the global future is to pit Jihad’s centrifugal whirlwind against McWorld’s centripetal black hole, the outcome is unlikely to be democratic.”