THE GLOBAL FINANCIAL CRISIS Political Economy in the New Millennium University of Wollongong Week 12
AGENDA Harvey’s Usual Suspects:
Bad Apples Institutional Failures False Theory Anglo-Saxon Culture Misguided Policy
Stated Origins: Subprime crisis in the United States
My argument: The differential accumulation of capital is a contradictory
process. Oil shock crisis and the revolt of the 1%. Workers have been disciplined since the 1970s and the
global wage share has plummeted. Consumer credit spreads like wildfire. A Second Oil Shock and the Collapse of Capitalization Birth pangs of a general crisis of social reproduction.
HARVEY’S USUAL SUSPECTS Bad Apples
Not systemic, just a few greedy individuals who inhabited an ethical netherworld (human nature)
Institutional Failures Regulators were asleep at the switch
False Theory Too much Hayek and Rand
Anglo-Saxon Culture Preoccupation with home ownership
Misguided Policy Too much regulation of the wrong kind
STATED ORIGINS: SUBPRIME CRISIS Subprime Primer:
http://www.youtube.com/watch?v=q8hjUei-Nwo&feature=related
Understanding the Financial Crisis: http://www.youtube.com/wa
tch?v=qqUGoVez8xg&feature=related
MY ARGUMENT Differential accumulation is a contradictory process.
Business owners/capitalist/investors have an incentive to pay
workers as less as possible to cut costs and boost profits. The more power business has, the more likely this can be
accomplished (e.g.: capital mobility, busting unions etc…) There are of course some exceptions for ‘skilled’ labour.
But…wages are what people use to consume the goods and
services controlled by business and ultimately the source of profits.
So the problem of ‘effective demand’ or ‘demand backed by ability to pay’ is endemic to the system – nothing to do with ‘bad apples’. Capital is forced to break its envelope: sector, nation, conglomerate,
globe. Spatial dimension to accumulation.
OIL SHOCK CRISIS OF THE 1970S AND THE REVOLT OF THE 1% Stagflation is largely blamed on unions and
greedy workers in the global north, not the increase in the price of oil.
Business lobbies for greater mobility/power.
The debt crisis in the global south facilitates this ‘opening up’ of the global economy through structural adjustment programs.
As we know – neoliberal policies become more popular in the north and south – almost regardless of the political party.
DISCIPLINING WORKERS The fall of the Iron Curtain and the Bamboo Curtain
add 1.5 billion extra people to the global labour force. Great mobility through FDI/FPI liberalization allows
business to hire much cheaper and unprotected labour abroad.
Protected workers in the north become more
precarious workers and the wage share of global income declines in the traditional centres of consumption. Unionization and collective bargaining starts to decline as
production shifts offshore or threats are made that production will shift offshore if wages and benefits aren’t bid down.
BIRTH PANGS OF A GENERAL CRISIS OF SOCIAL REPRODUCTION Debt is mounting and we are in an
era of high oil prices…forever
Traditional monetary instruments are not working to stimulate the economy sufficiently
Growth is slowing, making it harder to pay back debt
Workers still face many uncertainties and pressures
Entering the age of plutonomy for some and recession for the rest?
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