Alberto Ganis
Department of Politics, University of California, Santa Cruz
According to the Merriam-Webster Dictionary (2019), crisis is defined as “an unstable or crucial time or state of affairs in which a decisive change is impending, especially one with the distinct possibility of a highly undesirable outcome” (Merriam-Webster Dictionary). As students of political economy and capitalism, it seems crucial to define the term crisis as it, according to the Marxist critique at least, is invariably connected to the expansion of capital and its support system. According to Panitch and Gindin (2012), the development of the American Empire has been intertwined with its means of production, as well as the financialization and internationalization of its capital investments. Through policies of economic nationalism of “promotion” of the capitalist ideals, the United States established itself as the economic, political, and military leader of the Western world. Its meddling with the political regimes of other countries in its sphere of influence was done under the guise of a “white-man’s-burden” like campaign of national and economic liberation. In truth, it worked to establish friendly trade environments based on the gold standard, low tariffs, and secure, inviting markets for private foreign investment (105).
Panitch & Gindin discuss several crises that happened throughout American history. For example, the great financial crisis of 1907, which signed a year punctuated by a Wall Street stock market crash, an 11 percent decline in GDP, and accelerating runs on the banks. This crisis was caused by the increasingly common “practice of trust companies to draw money from banks at exorbitant interest rates and, without the protection of sufficient cash reserves, lend out so much of it against stock and bond speculation that almost half of the bank loans in New York had questionable securities as their only collateral” (Panitch & Gindin 2012, 42). Economic crises in 1907, 1929, 2008, etc. can be categorized as crises of capitalism, a description that reflects an unraveling of the inherent contradictions within the system, a system in terminal decline. Panitch and Gindin also note that the crisis of Keynesianism/capitalism coincided with “a crisis of US imperial power in relation to the Third World. To be sure, the fact the revolutions in Cuba and Vietnam did not have a ‘domino effect’ was in good part due to US support for the dictatorships that emerged in Asia and Latin America’” (133). It seems clear that the foreign policy of the USA is linked to the growth of capitalism as much as internal affairs. Due to the deep connection between American (and not only) capitalism and its societal underpinnings, the crises end up spilling from the economic realm to all the other ones.
These structural contradictions of capitalism were studied by Antonio Gramsci, who developed the term “organic crisis” to describe the inherent, “natural” failings of capital and the hegemonic class connected to it:
A crisis of authority is spoken of: this is precisely the crisis of hegemony, or general crisis of the state. The crisis creates situations which are dangerous in the short run, since the various strata of the population are not all capable of orienting themselves equally swiftly, or of reorganizing with the same rhythm. The traditional ruling class, which has numerous trained cadres, changes men and programmes and, with greater speed than is achieved by the subordinate classes, reabsorbs the control that was slipping from its grasp. (Gramsci 1971, 210)
Here, Gramsci describes the societal magnitude of economic crises, and provides an alarmingly accurate depiction of the 2008 recession, which affected so much of society while the hegemonic financial class remained largely unharmed.
As mentioned, an economic crisis often leads to a crisis that is political, moral, and/or cultural. For example, Balibar (1991) sees the development of racism as a phenomenon, the more or less inevitable, more or less resistible crisis effect of an economic crisis. It is apparent that crises are needed to spark policy making, from citizenship laws to the association of economic trends and race-relations. Unsurprisingly, the crisis of Keynesianism in the US coincided with the anti–Vietnam War mobilizations, the explosion of African-American frustrations in urban riots, and the radicalization of black workers and unemployed youth (Panitch & Gindin 2012, 143). Marxist and Gramscian critiques of capitalism tend to normalize crises as “organic” parts of a failing system; this does not leave much room for considerations of crises’ discursive nature. The discourse of crisis is extremely important because it creates a sense of urgency that warrants extreme acts aimed at solving the crisis. For authors like …, the hegemonic class is able to utilize these tender times in their favor through legislation and scapegoating. In fact, by connecting weak economic realities to issues like globalization and immigration, the ruling class is able to shift the attention of the masses to other matters. This allows capitalism to hide its clear shortcomings and “buy” enough time to redirect its development in other social spheres. A compelling example can be found in Allan Pred’s writings regarding Sweden, where he discusses the economic crisis in the 1990s as a disruptor of the pillars of Swedish culture by questioning the certainties of social democracy and steady employment, therefore pushing Swedes to re-negotiate their identity. This included identification processes based on racist and nationalistic ideals (Euroscepticism, othering, etc.).
The field of political economy is often concerned with the analysis of economic crises as they pose peculiar hurdles in the making of economic theory.The development of capitalism means a development of its crises, which leads to a crisis of economic theory. Conventional economics proves ill-equipped to respond to its challenges. The example below shows how an older theory of crisis has “evolved” in order to adapt to modern society as well as modern political economy. Karl Polanyi’s work tries to make sense of the Great Depression, submitting that the root cause of the crisis was the collapse of the international economic system, which was exacerbated by the Great War and the subsequent treaties. Polanyi offers an understanding based on the dialectical process of marketization and push for social protection against that marketization, which in a utopian world, would find a balance between capital interests and dis-embedded social outcomes that manifests through labor laws, tariffs, etc. Polanyi calls this process the “double movement” and points the finger to the lack of balance between these two spheres as the cause of the above-mentioned crisis. He develops the idea of embeddedness of the economy within society. Polanyi’s (2001) groundbreaking work on crisis offers the basis for Nancy Fraser’s analysis of the recent Great Recession of 2008, which appears to be based on similar imbalances. Fraser (2013) also underlines some key differences of the crisis itself, as well as a new way to look at possible solutions. Both crises appear to be rooted in a common dynamic, called ‘fictitious commodification’ (119). In both eras, “free-market fundamentalists have sought to commodify all the necessary preconditions of commodity production. Turning labour, nature and money into objects for sale on ‘self-regulating’ markets, they proposed to treat those fundamental bases of production and exchange as if they could be commodities like any other” (ibid, 119).Unlike the double movement, she speaks of a triple movement that delineates a three-sided conflict among proponents of marketization, adherents of social protection and partisans of emancipation, which represent the forces that pull away from the market-society dichotomy (2013).
Note: The focus on crisis as a discursive/narrative device was informed partially by this Vox video: https://www.youtube.com/watch?v=Ln61AksUCjY
Bibliography
Balibar, Etienne. “Is there a ‘Neo-Racism’?” In Race, Nation, and Class: Ambiguous Identities. London: Verso, 1991.
Fraser, Nancy. “A Triple Movement?” New Left Review, May-June 2012, Issue 81. 2013.
Gindin, Sam, and Leo Panitch. The Making of Global Capitalism: The Political Economy of American Empire. Brooklyn, NY: Verso.
Gramsci, Antonio. Selections from the Prison Notebooks. Edited and translated by Q. Hoare and G. Nowell Smith. London: Lawrence and Wishart, 1971.
Merriam-Webster Dictionary. 2019.
Polanyi, Karl. The Great Transformation. Beacon Press, 2001.
Vox. “Why Every Election Gets Its Own Crisis.” 2018. [Online video] Available at: https://www.youtube.com/watch?v=Ln61AksUCjY. Accessed 2018.