Protecting the banks and destroying the people: the politics of capitalist consolidation

Poster by Luba Lukova       paperinkvoice

 

I find this to be one of the most interesting texts on the crisis: it is an interview given by David Harvey, Distinguished Professor of Anthropology and Geography at the Graduate Center of the City University of New York, to Marco Berlinguer and Hilary Wainwright. It is titled Their Crisis, Our Challenge and was published in the British magazine Red Pepper back in 2009. I am posting some key excerpts below, while on the same subject you may also see the talk David Harvey gave at the RSA, titled The Crises of Capitalism.

One of [...] [the] basic principles [of neoliberalism] [...] was that state power should protect financial institutions at all costs. This is the principle that was worked out in the New York City crisis in the mid-1970s, and was first defined internationally when Mexico threatened to go bankrupt in 1982. That would have destroyed the New York investment banks, so the US Treasury and the IMF combined to bail Mexico out. But in so doing they mandated austerity for the Mexican population. In other words, they protected the banks and destroyed the people - and this has been the standard practice in the IMF ever since. The current bailout is the same old story, one more time, except bigger.

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Which means you're not going to come out of this crisis with a crisis of the capitalist class; you're going to come out of this with a far greater consolidation of the capitalist class than there has been in the past. 

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Many on Wall Street are thriving right now. Lazard's, because it specialises in mergers and acquisitions, is making megabucks. Some people are going to be burned, but overall it's a massive consolidation of financial power. There's a great line from Andrew Mellon (US banker, secretary of the treasury 1921-32), who said that in a crisis assets return to their rightful owners. A financial crisis is a way of rationalising what is irrational - for example, the immense crash in Asia in 1997-98 resulted in a new model of capitalist development. Disruptions lead to a reconfiguration, a new form of class power. 

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Whether we can get out of this crisis in a different way depends very much upon the balance of class forces. [...] Finance capitalism could survive the crisis, but whether it does depends entirely upon the degree to which there is going to be popular revolt against what is happening, and a real push to try to reconfigure how the economy works.

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The term 'national bail-out' is [...] inaccurate, because they're not bailing out the whole of the existing financial system - they're bailing out the banks, the capitalist class, forgiving them their debts, their transgressions, and only theirs.

The money goes to the banks, but not to the homeowners who've been foreclosed on, which is beginning to create anger. And the banks are using the money not to lend to anybody but to buy other banks. They are consolidating their power.

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What I think is happening at the moment is that they are looking for a new financial set-up that can solve the problem not for working people but for the capitalist class. [...] The only thing they would care about is if we rose up in revolt. And until we rise up in revolt they are going to redesign the system according to their own class interests.