Too Important to Let Slip. How the Crash of '08 Upended Your World.

If economist Yanis Varoufakis thinks it's important, chances are good it's important. Which is why I decided to post on a book review Varoufakis wrote for The Guardian last week. The book, "Crashed, How a Decade of Financial Crises Changed the World," sounds like a must-read. Varoufakis observes with a chilling insight into what awaits:

Every so often, humanity manages genuinely to surprise itself. Events to which we had previously assigned zero probability push us into what the ancient Greeks referred to as aporia: intense bafflement urgently demanding a new model of the world we live in. The financial crash of 2008 was such a moment. Suddenly the world ceased to make sense in terms of what, a few weeks before, passed as conventional wisdom – even McDonald’s, for goodness sake, could not secure an overdraft from Bank of America!

...Crashed: How a Decade of Financial Crisis Changed the World combines simple explanations of complex financial concepts with a majestic narrative tracing the prehistory and destructive path of the crisis across the planet (including long, apt and erudite chapters on Russia, the former Soviet satellites, China and south-east Asia). It also offers original insights into the nature of the wounded beast (financialised capitalism). Of the myriad unacknowledged truths that Tooze illuminates, some examples follow.

Many economies (Ireland and South Korea for example) that were run according to what the global establishment considered “best practice” (government and trade surpluses, light regulation of banks and employers) crashed the moment 90% of global money flows dried up. Why? Because the establishment’s prescription had skilfully left out the crucial truth that the main threat came from the banking system (not the state) and from private (not public) debt. ...Meanwhile, American and European politicians, who had grown used to a cosy relationship with the bankers, converted a crisis of (super-rich) creditors into one of (poor and middle-class) debtors, pushing the losses of the former on to the latter – also known as socialism for bankers and austerity for the many.

...Back in 1967, John Kenneth Galbraith described how capitalism had shifted from a market society to a hierarchical system owned by a cartel of corporations: the technostructure, as he called it. Run by a global elite that usurped markets, fixed prices and controlled demand, the technostructure replaced the New Deal’s full employment objective with that of GDP growth. Though Tooze does not mention Galbraith directly, he implores us to grasp how Galbraith’s technostructure extended, post-Bretton Woods, its realm by adding the black magic of financialisation to its structure (through, for example, turning car companies like General Motors into large speculative financial corporations that also made some cars!), magnifying by a dizzying factor its power and, ultimately, replacing the aim of GDP growth with that of “financial resilience”: enduring paper asset inflation for the few and permanent austerity for the many.

...In the end, the financialised technostructure was saved by two governments (America and China), while the neoliberal populist myth (that wholesale deregulation will make everyone’s dreams come true under the rule of democracy) is now dead. Is it any wonder that racism and geopolitical tensions are all the rage? Was it not inevitable, as some of us have been warning since before 2008, that a “nationalist international” would soon gain power, on the back of an explicitly xenophobic narrative – in the White House, in Italy, Austria, Poland, Hungary, the Netherlands, and shortly in Germany (once Angela Merkel is shoved aside)?

[The author] worries that, in this putrid political environment, the US and Chinese governments will never again be able to pull off a similar trick. To this I would add that the fantasy of apolitical macroeconomic management, promoted energetically by the technostructure, is the other side of the undeclared class war with which the establishment has been shifting all the risks and all the losses on to the weak, instructing them to “suffer what they must” – pushing them, in the absence of a progressive internationalist alternative, into the arms of a postmodern fascism. In his conclusion, Tooze draws a parallel between our present aporia and 1914, when an earlier illusion of some “great moderation” was shattered. On this I beg to differ. From where I stand, we are at a 1930 point – soon after the crash, and with a fascist moment upon us. If so, the pressing question is this: when will we rise up against the nationalist international bred across the west by the technostructure’s inane handling of its inevitable crisis?