This is a Essay of Political Economics. The readings are in the same file regarding the topic. The question also ask for the reference of a page 114 that is also attached in the end after readings. Pl
Written Assignment
Length: Approximately 3500-4000 words (about 15-17 pages)
In their book, In and Out of Crisis: The Global Financial Meltdown and Left Alternatives, Albo et al. (2010, p. 114) argue that the time has come to move away from discussions about alternative policies and toward discussions of an alternative politics. What do they mean by this, and are their arguments convincing? Do the authors examined in (“The Revival of Critical Political Economy and the Future of Capitalism”) find the future of capitalism compelling? Why or why not? In your view, does the future of capitalism appear promising? Why or why not?
essay must include the following components:
a brief introduction that provides an overview of the topic to be discussed;
a main section that develops and substantiates the issues mentioned in the introduction;
a summary/conclusion section that pulls together or summarizes what your essay discusses; it should briefly outline the significance of the topic as well as any conclusions you may have reached; and
a “References” page that properly cites the source of the material referenced in your paper.
Readings
In and Out of Crisis
In its historical sense, to be radical means to get to the root of the problem. McNally (2011) reminds us that it is important that we “grasp the present as history” in order to situate and understand contemporary phenomena. He notes that “the present is invariably saturated with elements of the future, with possibilities that have not yet come to fruition, and may not do so—as the road to the future is always contested” (p. 1). Hence, this unit seeks to make use of the theoretical insights gathered to this point and apply them to an analysis of contemporary events. It does so by focusing on the global financial crisis or global slump that occurred in late 2007 and early 2008.
As McNally (2011) vividly describes, what began in the summer of 2007 as a housing crisis centered in the U.S. quickly spread throughout the rest of the world, and “by the fall of 2008 the global financial system was in full-fledged meltdown. Worldwide credit seized up . . . stock markets plummeted . . . global trade collapsed . . . banks toppled and corporations found themselves on the brink of bankruptcy” (p. 13). All across Europe, North America, and Asia-Pacific, capitalism appeared to be on the edge of disaster. Between 2007 and 2008, more than 3.5 million people in the U.S. lost their homes, $35 trillion in financial assets disappeared, unemployment skyrocketed, and the credibility of mainstream economists evaporated. How could they not have seen this disaster coming? For McNally, the answer lies in the failure of neoliberal policies to prevent economic instability and in the underlying reality of capitalism—profits come before everything, else regardless of the consequences.
However, just as capitalism was about to implode, the largest coordinated bailouts in history were initiated in an attempt to avert total disaster, at least in the short term. More than $20 trillion of public funds from governments around the world was deployed to halt the bank failures, to bailout bankrupt corporations, and to stave off cascading sovereign debt crises. As a result of capitalists’ reckless spending, a mismanagement of funds, and the obscure nature of several exotic-sounding financial instruments (e.g., derivatives, collateralized debt obligations, etc.), the public sector had to come to the rescue of the private sector. However, as McNally (2011) emphasizes, “the bad bank debt that triggered the crisis in 2008 never went away—it was simply shifted on to governments. Private debt became public debt. The economic crisis of 2008-9 did not really end. It simply changed form. It mutated.” (p. 4)
After having taken on private capital's bad debts, developed new subsidies, and undertaken a stimulus program to offset the recession, the economic downturn was redefined as one that began with the unions, overly generous social service programs, an inefficient government bureaucracy, and just about any user or producer of public services. Paradoxically, but perfectly logical in capitalist terms, the banks, corporations, and capitalist classes that precipitated the crisis were now demanding austerity measures.
Austerity refers to government cutbacks and retrenchment in services delivery, social programs, and public expenditures. It often includes reductions to education, social welfare, pensions, health care, public sector employment, and income security provisions. As a result of shifting the blame for the crisis from the private to public sector, it was estimated that at least a “decade of austerity” would follow. According to McNally, those who will suffer the most are the poor and the working-class people who had nothing to do with creating the crisis. Clearly those who pay for the crisis differ from those who profit from it. As McNally (2011) notes, “The ultimate purpose of all this is to preserve capitalism and the wealth and power of its elites” (p. 5).
According to the 2010 World Wealth Report by Capgemini and Merrill Lynch, millionaire’s assets have already rebounded to close to pre-crisis levels. In 2009, the value of Asia-Pacific assets grew 31 percent to $9.7 trillion (US), while the number of millionaires rose 26 percent to 3 million. The value of North American assets increased 18 percent to $10.7 trillion, while the number of millionaires rose 16.6 percent to 3.1 million. Assets in Europe climbed 14.2 percent to $9.5 trillion and the number of millionaires increased about 13 percent. Even in China, which was hard hit by the drop in world demand for commodities, increased the number of its millionaires by 31 percent. Finally, the net worth of individuals who had more than $30 million to invest, saw their wealth rise by 21.5 percent in 2009 (Capgemini & Merrill Lynch, 2010). The disproportional outcomes of neoliberalism have become even clearer, particularly in light of this latest Great Recession.
Over the past quarter-century, the erosion of income security policies and labour market protections has contributed to growing economic polarization in Canada. However, the strategies that have emerged as responses, or “exits” from the crisis will likely exacerbate these trends. For instance, in the 1970s, the wealthiest ten percent of the Canadian population received 23 percent of the total market income. This figured increased to 28 percent by the 1980s and to 37 percent by the 1990s. By 1999, the wealthiest ten percent of Canada’s families held 53 percent of the country’s wealth. Furthermore, between 1970 and 1999, the wealthiest ten percent saw their average wealthincrease by 122 percent, while the poorest ten percent saw their debts increase by 28 percent.
In 2009, income disparities in Canada had reached levels not seen since the 1920s (Yalnizyan, 2010, pp. 3-4). Canada’s richest one percent took home 32 percent of all growth in income from 1997 to 2007. Compare this with the situation in the 1950s and ’60s when the income share taken by the top one percent of earners was less than eight percent; by 2007 this number had grown to 13.8 percent. A significant contributing factor has been the continuing regressive overhaul of the Canadian tax system. For instance, in 1948, the top marginal tax rate for incomes of $250,000 ($2.37 million in today’s dollars) was 80 percent. However, by 2009, the top tax rate for incomes above $126, 264 averaged 42.9 percent across Canada. These measures eventually helped to produce a situation where 3.8 percent of Canadian households controlled $1.78 trillion of the financial wealth or 67 percent of the Canadian total (ibid). With the onset of the Great Recession, these historical trends have only intensified.
In the years since the recession, the quality of work in Canada has continued to degrade. Most new positions are part-time, temporary, or due to a lack of any other alternatives, self-employed. This situation has hit women, youth (ages 15-24), the elderly (age 55 and over), and racialized persons especially hard as long-term unemployment has surged from 15 percent prior to the downturn to nearly 25 percent since (Grant, 2011). The deteriorating quality of jobs as well as the mounting cost of food, utilities, and rents are significant factors in the increased dependence on food banks, particularly by single-parent households. Food bank usage has risen 28 percent since 2008 (Monsebraaten, 2011).
Between 2009 and 2010, Statistics Canada reports suggest that Canadians’ debt-to-disposable income ratio rose to 148.1 percent (an amount higher than in the U.S., which sits at 147.2 percent) along with a 6.7 percent increase in household financial obligations (Matthieu, 2010). There were also fears of a potential housing bubble in Canada as it had been estimated that houses were over-valued by anywhere from 10 to15 percent (CTV, 2011). Given the mounting debt-to-financial assets and rising numbers of bankruptcies, a sudden depreciation in the value of property could have disastrous implications as many households continue to substitute consumption from income with consumption from credit and/or debt (CGA, 2010; Macdonald, 2010).
This situation has left Canadian policymakers with a Herculean dilemma—their choices are to restrict spending by raising interest rates and risk hampering the recovery, or to do nothing and risk a cascading future economic crisis. Both options are complex. A sudden financial shock, such as sharp increases in interest rates, a drop in the value of homes, and/or deterioration in labour market conditions, could trigger unprecedented personal and corporate bankruptcies. It could also lead to a banking crisis similar to that which ravaged the U.S. and other global economies. As serious as many of these concerns are, the reality is that many other countries have suffered much worse than Canada (McNally, 2011, pp. 19-24; Panitch et al., 2011). However, it is important to emphasize the extremely unequal consequences of the recession and remember that “the rich have come through the recession with flying colours.” As McNally (2011) notes, it is instead the “children, the elderly, single-parent families, the homeless, the unemployed, and the underemployed—who will be hammered hardest by cuts to health care, education, and social assistance programs. Capitalism is attempting to right its ship at their expense, by punishing its victims for the system’s latest crisis” (p. 23).
As McNally (2011) and Albo et al. (2010) state, those under attack are the public and private sector workers and the unions that strive to defend the interests of labour. Amidst exceptional uncertainty and populist rage, neoliberals are regrouping in order to take advantage of this historic opportunity. As McNally’s (2011) introductory blurb emphasizes, “The crisis has been a transformative moment in global economic history whose ultimate resolution will likely reshape politics and economics for a generation” (p. 1). New waves of national and sub-national budget deficits, which have been the result of over three decades of neoliberal fiscal and monetary policy, are once again sweeping the globe from Tucson to Toronto, Ankara to Bangkok, and Rome to Johannesburg. Attacking the “lavish” lifestyles of “big labour” and “big government” has been a dishonest and insidious way of pitting public and private sector workers against one another in an all-out push for total privatization (Traub, 2010). Rescuing capital, then, has come at great costs. But what can be done about it? What are the alternatives to austerity?
If we are to do more than hope for the crisis to be over so we can return to a capitalism that didn’t address our needs earlier, and more than passively watch as capitalism narrows our lives even further, then a new historical project must be placed on the agenda. (Albo et al., 2010, p. 89, emphasis added)
Rather than producing a crisis of neoliberal legitimacy for capitalism, the capitalist classes have become recalcitrant and more emboldened throughout this Great Recession. In fact, the capitalist classes, supported in many instances by state-sanctioned legislation and policies, have reinvigorated their unconcealed efforts at undermining the collective bargaining rights of the unions. For Albo et al., this “employers’ offensive” is an attempt to further enshrine capitalist control over the workplace as it seeks to restrain wages and benefits, to increase precarious and marginal work, and to transform state policy so that populist pressures to extend workers’ rights and protect people’s investments are mitigated.
For Albo et al. (2010),
Unless unions develop new strategies and organizational strength, competition between firms will continue to fuel competition between workers. . . . Business and governments have used the crisis not just to roll back particular gains, but as an opportunity to try and weaken unions as the key working class organization and so more permanently weaken the ability of working people to defend themselves. For these reasons, resisting the attacks on past gains in the public [and private] sector is a crucial matter. (pp. 95, 98)
In their view, this is about more than protecting workers’ rights alone, it is also about extending such rights to the unemployed, the unwaged, and those who are denied a chance to work; it is about building a different society, one premised on social justice unionism.
According to Albo et al. (2010) for unions to do so, “entails democratizing the internal practices of unions, expanding education of members, encouraging rank and file activism in leading strategic orientations and struggles, and examining union practices on gender and race, and incorporating a diverse membership into an equally divers leadership” (p. 99). In a sobering assessment of the past shortcomings of unions, they go on to remind us that:
What unions face today is rooted in the way North American unions failed to organize themselves in much better economic times to prepare themselves for times like the present. Workers are now suffering for this lack of preparation. While corporations have become more radical and aggressive, the labor movement has become more cautious and defensive. The most important question for the labor movement is to come to grips with those past failures and the need to become as radical as the other side. If we don’t develop a vision that fundamentally questions the anti-social logic of capitalism, and build the collective capacities that can challenge corporate power, things won’t just stay the same. They are likely to get worse. (p. 100)
Rebuilding the labour movement, however, means more than just strengthening the individual locals or supporting labour organizations. It means building unions that form part of the working class as a whole, something that, if done, could be a way out of the present crisis.
For Albo, Gindin, and Panitch, it is necessary that we come to terms with the reality that a return to Keynesianism is unfeasible. This means that we must recognize the intimately, intertwined relationship between the state and the marketplace. In order to begin resisting austerity, Albo et al. (2010) believe that we must think ambitiously and begin acting independently of the logic of capitalism. First, they make a case for the provision of public services, particularly “those that should carry the largest strategic weight today pertain to health care, public pensions and public infrastructure, all of which have the potential to reduce working class dependence on markets and the private sector” (pp. 106-107). They argue that an emphasis on publically provided goods and services raises the prospect of democratic demands by workers and provides communities with affordable and extensive public transportation, access to public spaces, and so on.
Albo et al. (2010) also argue that in order to begin undertaking some of the initiatives they identified, it is necessary to democratize finance, that is, to bring it under public authority and control, especially as the private banking system is already publicly supported. They state, “This is also why it is so important to raise not merely the regulation of finance but the transformation and democratization of the whole financial system. What is in fact needed is to turn the whole banking system into a public utility so that the distribution of credit and capital would be undertaken in conformity with democratically established priorities, rather than short term profit” (p. 110). They go on to describe how such a transition has the potential to address other issues that fall outside of the logic of capitalism, such as making production capacities part of an ecologically sustainable future.
Albo et al. (2010) remind us that If democracy is a kind of society and not just a form of government, the economy—which is so fundamental to shaping our lives—will eventually have to be democratized. . . . The way forward is not to take one step first and another more radical step later but to find ways of integrating both the immediate demands and the goal of systemic change into the building of new political capacities. (p. 114)
This type of change inevitably requires moving from alternative policies to alternative politics.
They stress enhancing the capacity of the unions to fight against concessionary demands in several ways:
organizing movements inside the unions that lobby for enhanced democratic participation and control over the direction, content, and politics of the unions themselves;
developing a radically feminist, anti-racist, class struggle-oriented political praxis that engages with and supports the efforts of the broader community; and
enhancing educational efforts so as to produce a cadre of workers and activists that are both intelligent and politically active.
Albo et al. (2010) also stress the importance of establishing an “ independent infrastructure of socialist media that can contest the daily mainstream interpretation of events, sustain more critical analyses of capitalism, and articulate and discuss alternatives” (p. 119).
Finally, it is important to think about the critical insights articulated by Slavoj Zizek in his online lecture, What Does It Mean to be a Revolutionary Today? Zizek is dismissive of analyses that isolate particular effects of capitalism such as poverty, inequality, ecological degradation, and so forth. Instead, he stresses the necessity of understanding capitalism as a totality. In this regard, Zizek is critical of those who want to see “capitalism with a human face,” which he maintains is logically incongruent and environmentally and materially unachievable.
Like McNally and Albo et al., Zizek’s ruminations on the future of capitalism are dim. He sees the “four horsemen of capitalism” leading us to an ever-more unstable and insecure world, one that includes ecological catastrophes, a deteriorating politico-economic global architecture, the negative impacts of the biogenetic revolution, and social divisions leading to worldwide protest movements (Zizek, 2011). Indeed, for Zizek, unless we overhaul the capitalist system, the future of humanity and the eco-sphere itself are all in serious jeopardy. All things considered, perhaps it is best to recall the words of Karl Marx who reminds us that while the political economy theoretical and methodological perspectives remain important, “the philosophers have only interpreted the world in various ways. The point, however, is to change it.”
