Global Slump

• Book: David McNally. Global Slump: The Economics and Politics of Crisis and Resistance.

Review

Chris Carlsson:

"Dave McNally’s Global Slump is a thorough, critical analysis of the neoliberal capitalist counterattack and global economic restructuring that overcame the crisis of the 1970s, and its ending in the Asian crisis of 1997. Part of his snappy book’s mission is to debunk the platitudes repeated ad nauseum by liberals, blaming evil bankers or the failure of regulation for the current crisis. His critique is rooted in a solid Marxism in which crisis starts with a fall in profitability. That in turn leads to a shrinking of investment as the possibility for profits dries up. Once there is a shortage of investment capital due to prior overproduction and excessive investment and the fall in profits, speculative pyramids that depended on free-flowing money suddenly face the abyss and soon collapse. But to understand how this happens (and it’s fascinating how similar the process was in the collapses centered on railroads in the 1870s and 1890s), he carefully reconstructs the steps that brought U.S. capitalism from its last crisis in the early 1970s to the new century’s drama.

He goes back to the delinking of the dollar from gold by Nixon in 1971 as the key moment that opened the process of financialization that has gone through several booms and busts since then. Unlike many Marxist analysts, he doesn’t agree that the current crisis is just the most recent phase of an ongoing long crisis that started in the profit crash of the early 1970s. He does think there was a “great boom” from 1948-1971, but then it ended. He argues that the neoliberal restructuring started under Carter in the late 1970s when he appointed Paul Volcker to head the Fed and engineer a sharp economic contraction. This restructuring was fully embraced and extended by Reagan in the U.S., Thatcher in the UK (both centrally concerned with breaking unions, disciplining labor, and shrinking relative wages), and throughout much of the rest of the world by the IMF’s structural adjustment programs. This economic reorganization re-established the basis for profitability, mostly by pushing down wages while reining in inflation and solidifying the unique role of the U.S. dollar as the international currency.

So from 1982-1997 there was a real period of capitalist growth and profitability, but since 1997 there has been a crash in business investment because there’s been a collapse of profits in production, more or less corresponding to a classic crisis in Marxist terms. The system has pushed itself onward with the speculative booms in internet stocks, real estate, and other assets, but the wild expansion of credit and future claims on profits have finally come unraveled. Interestingly, McNally shows how typical economic growth rates from the 19th century to the present were much closer to the sluggish pace we’ve seen in the industrialized world since 1973, and that the rapid growth and prosperity of the 1948-71 period were the anomaly. “In short, during the neoliberal expansion, the periodicity of the business cycle returned to something approximating its ‘classic’ form, with recessions every seven to ten years, rather than every three to four.”

He has three main theses about the 25-year neoliberal period:

• Thesis one: Following the recessions of 1974-75 and 1980-82 and the launch of an offensive by the ruling classes in the North against unions and peoples of the Global South, severe capitalist restructuring generated a new wave of capitalist growth, albeit a much more uneven and volatile one than occurred during the Great Boom.

• Thesis two: The upward trend in profit rates from the early 1980s underpinned a wave of capitalist expansion that began to falter in 1997 with the crisis in East Asia.

• Thesis three: Alongside and interacting with these changes, a wholesale reorganization of capitalist finance occurred, stimulated by a metamorphosis in forms of world money. The end of the Great Boom was punctuated by a collapse of the gold-dollar standard, the emergence of floating exchange rates, heightened financial volatility and uncertainty, and a proliferation of new financial instruments designed to hedge risk in a context of unstable monetary relations. These risk-hedging instruments opened up enormous new fields for financial services and profits, while also creating an inordinately larger sphere for speculation.

McNally ends his book with a chapter called “Toward a Great Resistance?” and you have to give him credit for putting a question mark on that rather than treating it as a typical leftist exhortation (not that he isn’t partial to a bit of that too, in the chapter itself). I like a lot of his thinking (I had the pleasure of meeting him and hearing him present his argument at a Retort gathering in Berkeley earlier this year).

“In most of the Global North, of course, we are in the early stages of rebuilding infrastructures of dissent, not usually of leading mass struggles…” After detailing a bit of the dynamic within some recent upheavals (like the student movement in California, or the much larger mass strikes in Greece) he identifies the need for a sustained, long-term effort towards a new kind of revolutionary politics, consisting of

- “workers’ centers, solidarity coalitions, radical community groups, alternative media, union organizing drives, campaigns against racism and in support of non-status people, the creation of artistic and cultural co-ops, and much more. It will mean building the democratic spaces and practices that develop organizers who are in the struggle for the long haul. All of this is essential to overcoming the damage of the neoliberal period—the dispossession of memory, social fragmentation, and the destruction of solidarities, the political and cultural effects of a long period without sustained mass oppositional politics. Here a rich dialectic will come into play in which a New Left learns from the rich resources of struggle from the past without mimicry—by understanding that real mass movements for revolutionary change are strengthened by remembering the compelling legacies of those who struggled before us while not being confined by their horizons and experiences. While honoring past struggles, revolutionary movements also write a new poetry for the future. And that poetry—joined to the hard-nosed work of organizing—can only develop from the soil of real social struggle, not the concoctions of small groups.” (p. 178-79)

I think McNally gets at some vital aspects of the path ahead here. He also falls back on some ideas that border the tired clichés of the 20th century Left.