There’s something bewildering about the headlines zinging around the world last night, announcing that the IMF is warning of a ‘”angoras new phase” for the global economy — and that is that it is as close as you could get to a news story of zero new content. It has a purity to it, a zen emptiness, it is a black hole. The gist? The recovery from 2008 may not have in fact occurred, there is no real growth to speak of in the global economy.
People above and below me in this edition will be analysing the minutiae of that announcement, but it’s worth stopping to look at it in a simpler fashion. The plain fact is, outside of Australia, the IMF announcement is not news because no one in the West ever believed the contrary. Does anyone in Britain, the US, or the wreck of southern Europe believe that there was a recovery? Can this person be found and interviewed on television? That offer does not include anyone from the Con-Lib government, because their protestations are even less than everyone in the street, trying to cheer themselves up.
The behaviour of the news and of public opinion appears to have diverged so completely on this matter as to mark some sort of new point of total media simulation. No one, but no one on the street in Britain thinks there has been any sort of recovery since 2008. Those who follow the stats may believe that a genuine depression was deflected into a mere recession, but no one really thinks that the process of “recovery” was anything but a stalling or slowing of the rate at which businesses were shutting their doors.
Nor does anyone expect the mood to change. That the IMF is talking of a “new recession” will surprise people who have been doing nothing but grimly hanging on since 2008. A new recession? But we haven’t done with the old one yet. Talk of double dips makes no sense because there was never a rise out of the first one. There is nothing to dip back into. The delusion that the combination of clearing bad assets and mild stimulus would have the economy leaping back into growth is one that is shared only by those indoctrinated into the idea that the economy proceeds autonomously.
Yet no one that I’ve spoken to, from any walk of life, has any belief that things will be back to “normal”. The attitude that has taken over is one of stasis — a belief that this combination of low growth, residual unemployment (and at a level much higher — 15-20% — than that officially recorded) is in fact, the “reality”. The boom times that led up to it are being reclassified, not merely as exceptional, but as delusional.
That happens in every recession of course, and is the cause of its prolongation. People get thrifty, and so the spending cycle stays contracted. The IMF talks of its fear that the West will suffer a Japanese “lost decade” — as Japan moves along nicely with the second one of those. Yet the whole notion of a lost decade is that something could be found that would have made it otherwise. The public attitude across large areas of the West seems to be that what we have is what it is.
That may well be a more astute judgment about the world than that of the pro forecasters, and more in accord with the notion of materialist economists such as Robert Brenner and David Harvey — that the West is tapped out, and cannot again grow in the neoliberal framework currently imposed on it. In its existing framework, the argument goes, neither free-market nor Keynesian approaches will work. Apply cuts to clear the balance sheet and restore confidence, and the collapse of demand will be so great that the economy will stall — and, something economists never consider, the social unrest from a new wave of poverty will destroy any nascent confidence anyway.
But they also turn on the Keynsians who believe that higher wages and public spending would refloat demand as it did in the postwar period. True, they say, but the aggregate effect, at national and regional levels, will be nothing like you hope. Local industry will not, of course, restart, the money will flow out of the economy to manufacturing sources in the East, and the endlessly promised growth in new sectors — services, etc — won’t eventuate.
Online shopping, automatic checkouts and myriad other automations (of service jobs — hamburger flippers — that it was once assumed would sop up those for whom manufacturing provided employment), narrow the employment base further, and push the poorly educated permanently out of the sphere of work. No public education or training program is in place to make them employable, and individual firms do not need to provide it.
Why is there such a critical assessment of the notion of boom and bust on the street? I suspect it has something to do with the centrepeiece of the “boom” from the ’90s onwards, discretionary consumer spending. In the postwar Keynesian boom, a sense of forward motion was around because people could see not merely consumption but production increasing. Factories reopened after the Depression and the war, cities grew based on rational lending and so on.
In this “boom”, people saw not an increase in production, but its dismantling. This occurred as — via franchising, chains, increased advertising presence — consumption spread into every available area of life. Housing became not more affordable but less so, as property prices became dizzyingly unreal, beyond any notion of merely paying for permanent habitation.
In other words, the boom always looked like what it was, a bubble. Its fantastical character was hiding in plain sight. At some level people knew that they were living through an unreality, and that the best thing to do was grab as much sh-t as you can while you can (the English riots were really a repetition of that, done at high speed and in dell’arte style).
Yet even if people were willing to accept this stasis, it is not possible to do so. The Western economy is boxed in. Slash costs? You would need to drive down pay levels, abolish the legally mandated minimum wage and usher in ever greater levels of inequality — effectively restarting large-scale class conflict. Stimulate production? What would be stimulated? What remains of the economic sectors that could grow fresh roots — only low-employment “services”, intellectual property rents and the like.
Stimulate consumption? You would deepen the debt reliance of Western economies whose savings levels are zero — and, culturally, simply extend a set of expectations of consumption that cannot be sustained on a mass basis. Indeed it is the near-total reliance on consumption that tells us how late in the day the ’90s/2000s boom-bubble was, how desperate its attempt to fill in the gap. Capitalism has always lived by holding something back — the fruits of people’s labour, and the promise of satisfaction chief among them. For two hundred years, the system has relied on two techniques — violence and ideology — to create compliance. After violence, the system was sold on the notion that a thrifty, modest life was a sign of virtue, that honest work was its own reward.
From the 1870s onward, Western capitalism had a demand crisis, and the modern science of demand creation — advertising, the shopping arcade/mall — dates from this time. Confined initially to a privileged class, such consumption was made general in the 1950s, and then — in the ’90s — was cut loose of any notion of rational accounting. That is surely, a very late, if not a final stage, of system maintenance by demand creation — and what makes the current era interesting is that we are now out the other side of it, and no one knows what to do about it. And everyone knows it.