[Marxism] "The whole idea of policy is bizarre"

[Louis Proyect]

http://www.monthlyreview.org/mrzine/wolff061108.html
Policies to "Avoid" Economic Crises
by Rick Wolff

Recently, economist Joseph Stiglitz called the current crisis 
"avoidable."   He blamed it on "ideology, special-interest pressure, 
populist politics, and sheer incompetence."  In tune with the norms of 
his profession, he proposed "policies" to fix the problem.  Debates over 
the worsening economic crisis increasingly turn on which "policies" to 
use to stop, reverse and "avoid" them.  Conservatives and liberals again 
rehash their old debates over their different policies as McCain and 
Obama did.  The crisis will deepen some more, and then a compromise 
policy will emerge from the new President and Congress aimed to "solve 
the problem."  Instead, we ought to question the very idea of policy; 
that questioning would be a real change from past practice.

The problem is this: today's economic crisis was caused by an immense 
accumulation of factors, far too many for any policy to manage.  Here is 
a partial list.  Workers' wages stopped rising since the 1970s; 
thereafter, they accepted rising loans instead of rising wages as 
compensation for their greater work and productivity.  Corporate profits 
exploded because they got ever more output per worker (via 
computerization, etc.) while not paying their workers any more. 
Corporations deposited their rising profits in banks who then loaned 
part of them back to workers, another part to investors for stock and 
then real-estate speculations, and yet another part to businesses for 
mergers.  Other factors included low taxes, expensive wars, and 
resulting US government deficits.  Then, too, China's industrialization 
flooded the US with inexpensive products as that country accumulated our 
massive dollar payments for them.  China then lent those dollars back 
into the US to finance the government's deficit and further increase 
banks' loanable funds.  All these very different factors helped build up 
the house of credit that has now crashed the entire economy.

Still other factors also shaped the crisis.  New mortgage brokerage 
practices and credit card promotions induced more debt than borrowers 
could afford.  Competition among rating companies yielded incorrect 
assessments of financial risks of trillions in newly invented financial 
instruments (derivatives).  This led to staggering global misallocations 
of scarce resources.  Homebuilders' competition yielded excess 
construction.  The Federal Reserve increased the money supply and 
lowered interest rates to offset the dot.com bubble burst in 2000.

Nor is this list of factors even nearly complete.  No policy emerging 
from deals between conservative and liberal legislators beset by armies 
of lobbyists could ever begin to control or manage the immense diversity 
of the causes of the current crisis.  Indeed, no policy of any kind -- 
whether imposed by a dictator, produced by democratic consensus, or 
anything in between -- can "fix the problem."  No policy ever did. 
There are just far too many causes of crises that one can see and list 
-- and too many more not yet seen.

The whole idea of policy is bizarre.  The "right policy" represents an 
absurd claim that this or that law or regulation can somehow undo the 
many different factors that cumulatively produced this crisis.  Policies 
are "magic potions" offered to populations urgently demanding solutions 
to real problems.  Whether cynically advocated for ulterior motives or 
actually believed by the politicians, promoters, and professors 
themselves, policy is the secular cousin of religion.

These days, the conservative policy amounts, as usual, to "let the 
private economy solve the problems" and "minimize state intervention 
because it only makes matters worse."  Conservatives protect the 
freedoms of private enterprise, market transactions, and the wealthy 
from state regulations and controls and from taxes.  The liberals' 
policy, also as usual, wants the state to limit corporate behavior, 
control and shape market transactions, and tilt the tax system more 
toward benefiting middle and lower income groups.

Both policies can no more overcome this economic crisis than they 
overcame past crises.  Historically, both conservative and liberal 
policies fail at least as often as they succeed.  Which outcome happens 
depends on all the factors shaping them and not on the policy a 
government pursues.  Yet, both sides endlessly claim otherwise in 
desperate efforts at self-justification.  Each side trots out its basic 
philosophy -- dressed up as "a policy to achieve solutions." 
Conservatives and liberals keep debating.  Today's crisis simply 
provides an urgent sort of context for the old debate to continue.  Each 
side hopes to win converts by suggesting that its approach will "solve 
the economic crisis" while the other's approach will make it worse. 
Thus the liberals displaced the conservatives in the depths of the Great 
Depression, the reverse happened in the recession of the 1970s, and the 
liberals may now regain dominance.  In no instance were adopted policies 
successful in solving the crises in any enduring way.  The unevenness 
and instability of capitalism as a system soon brought another crisis 
crashing down on our economy and society.

The basic conservative message holds that the current economic crisis is 
NOT connected to the underlying economic system.  The crisis does NOT 
emerge from the structure of the corporate system of production.  It is 
NOT connected to the fact that corporate boards of directors, 
responsible to the minority that owns most of their shares, make all the 
key economic decisions while the enterprise's employees and the vast 
majority of the citizenry have to live with the consequences.  The very 
undemocratic nature of the capitalist system of production is NOT 
related to crisis in the conservative view.  The basic liberal message 
likewise disconnects today's crisis from the capitalist production 
system.  Rather, each side insists that all crises would have been and 
would now be "avoidable" if only the right policy were in place.

Conservatives and liberals share more than a careful avoidance of 
connecting the crisis to the underlying capitalist system.  They are 
also complicit in blocking those who do argue for that connection from 
making their case in politics, the media, or the schools.  While 
conservative and liberal policies do little to solve crises, the debate 
between them has largely succeeded in excluding anti-capitalist analyses 
of economic crises from public discussion.  Perhaps that exclusion -- 
rather than solving crises -- is the function of those endlessly 
rehashed policy debates between liberals and conservatives.