[p2p-research] meltdown of 2008

[Michel Bauwens]

Good summary of the causes by David Harvey:

"The current crisis originated in the steps taken to resolve the crisis of
the1970s. These steps included:

(a) The successful assault upon organized labor and its political
institutions while mobilizing global labor surpluses, instituting
labor-saving technological changes, and heightening competition. The result
has been global wage repressions (a declining share of wages in total GDP
almost everywhere) and the creation of an even vaster disposable labor
reserve living under marginal conditions.

(b) Undermining previous structures of monopoly power and displacing the
previous stage of (nation-state) monopoly capitalism by opening up
capitalism to far fiercer international competition. Intensifying global
competition translated into lower non-financial corporate profits. Uneven
geographical development and inter-territorial competition became key
features in capitalist development, opening the way towards the beginnings
of a hegemonic shift of power particularly but not exclusively towards East
Asia.

(c) Utilizing and empowering the most fluid and highly mobile form of
capital -- money capital -- to reallocate capital resources globally
(eventually through electronic markets) thus sparking deindustrialization in
traditional core regions and new forms of (ultra-oppressive)
industrialization and natural resource and agricultural raw material
extractions in emergent markets. The corollary was to enhance the
profitability of financial corporations and to find new ways to globalize
and supposedly absorb risks through the creation of fictitious capital
markets.

(d) At the other end of the social scale, this meant heightened reliance on
"accumulation by dispossession" as a means to augment capitalist class
power. The new rounds of primitive accumulation against indigenous and
peasant populations were augmented by asset losses of the lower classes in
the core economies (as witnessed by the sub-prime housing market in the US
which foisted a huge asset loss particularly upon African American
populations).

(e) The augmentation of otherwise sagging effective demand by pushing the
debt economy (governmental, corporate, and household) to its limits
(particularly in the USA and the UK but also in many other countries from
Latvia to Dubai).

(f) Compensating for anemic rates of return in production by the
construction of a whole series of asset market bubbles, all of which had a
Ponzi character, culminating in the property bubble that burst in 2007-8.
These asset bubbles drew upon finance capital and were facilitated by
extensive financial innovations such as derivatives and collateralized debt
obligations.

The political forces that coalesced and mobilized behind these transitions
had a distinctive class character and clothed themselves in the vestments of
a distinctive ideology called neoliberal. The ideology rested upon the idea
that free markets, free trade, personal initiative, and entrepreneurialism
were the best guarantors of individual liberty and freedom and that the
"nanny state" should be dismantled for the benefit of all. But the practice
entailed that the state must stand behind the integrity of financial
institutions, thus introducing (beginning with the Mexican and developing
countries debt crisis of 1982) "moral hazard" big time into the financial
system. The state (local and national) also became increasingly committed to
providing a "good business climate" to attract investments in a highly
competitive environment. The interests of the people were secondary to the
interests of capital, and in the event of a conflict between them, the
interests of the people had to be sacrificed (as became standard practice in
IMF structural adjustments programs from the early 1980s onwards). The
system that has been created amounts to a veritable form of communism for
the capitalist class.

These conditions varied considerably, of course, depending upon what part of
the world one inhabited, the class relations prevailing there, the political
and cultural traditions, and how the balance of political-economic power was
shifting." (http://mrzine.monthlyreview.org/harvey151209.html)


-- 
Work: http://en.wikipedia.org/wiki/Dhurakij_Pundit_University - Think thank:
http://www.asianforesightinstitute.org/index.php/eng/The-AFI

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