[Marxism] The Philosophy Behind “Occupy Wall Street”

Louis Proyect lnp3 at panix.com
Mon Sep 26 08:48:53 MDT 2011

Counterpunch September 26, 2011
Against Finance Capital
The Philosophy Behind “Occupy Wall Street”

     “Speculators may do no harm as bubbles on a steady stream of 
enterprise. But the position is serious when enterprise becomes 
the bubble on a whirlpool of speculation. When the capital 
development of a country becomes a byproduct of the activities of 
a casino, the job is likely to be ill-done.”

     –  John Maynard Keynes, 1936.

The International Monetary Fund’s Global Financial Stability 
Report is typically very sober in its assessment of the world. The 
current report, released on September 21, warns that the world 
economy is entering a “danger zone.” The IMF downgrades its 
estimate for global growth from an already low 4.3 per cent  to 4 
per cent , with U. S. growth cut from 2.7 per cent  to 1.8 per 
cent . “For the first time since the October 2008 Global Financial 
Stability Report, risks to global financial stability have 
increased, signaling a partial reversal in progress made over the 
past three years.” In other words, all the measures taken to stem 
the hemorrhage caused by the global credit crisis of 2008 onward 
have run their course, and we are back to the day when Lehman’s 
shutters came down.

The IMF could not ignore the continued political and economic 
crisis in the Euro-zone, nor could it turn away from the credit 
downgrade of the United States. Nor indeed could the IMF blind 
itself from the turbulence of the financial markets (whose most 
dramatic victim was UBS, where its Delta One desk got run over by 
its short position on the volatility of the Swiss Franc). Three 
processes have sharpened the IMF’s report: first, the United 
States has been unable to heal the acute trauma in its housing 
market; second, the European banks are in an adverse feedback loop 
between balance of payments distress in Club Med (from Portugal to 
Greece) and their own reserves; and third, low interest rates have 
moved private finance away from the surface into the furtive world 
of the shadow banking system (hedge funds and so on).

Both Olivier Blanchard, chief economist at the IMF, and José 
Viñals, financial counselor at the IMF’s Monetary and Capital 
Markets Department, seemed a little more nervous than usual. 
Viñals knows the stakes in the Euro-zone. He used to be the Deputy 
Governor of the Bank of Spain, where the financial reserves look 
as bad as the water reserves in the Town of Dirt (Rango, 2011).

The mantra of the Atlantic world has been austerity. It is assumed 
that if government budgets are purged of social spending to 
balance budgets, growth will ensue. This is a strange kind of 
economics. A chronic problem is the lack of effective demand 
(“consumer confidence”), one that is indexed in the United States 
to the flatness of wages with momentary transfusions of 
“confidence” produced by cheap credit that has created an as yet 
un-burst bubble, personal debt; as of May 2011 that stands at $2.4 
trillion. The massive cutbacks of government spending will only 
flatline demand, and produce no hope for any growth in the short 
run. Austerity programs might not increase consumer confidence, 
but they do indeed create confidence among the financiers who love 
the idea of “sound finance.”

The IMF identifies the problem on the one hand, and then puts its 
other hand into the blender: the current crisis cannot be solved 
until the politics is managed. The “political leaders in these 
advanced economies have not yet commanded broad political support 
for sufficiently strengthening macro-financial stability.” 
Financial and monetary tools are strained. What is needed is a 
more effective communications strategy, to convince the public to 
go along with austerity measures to create sound finance, and to 
do so by bringing down the ideological rhetoric that alienates the 
people from  what the IMF sees as apolitical Reason. If only the 
hoi polloi could be made to see reason.

What the IMF and the governments of the Atlantic world do not 
acknowledge, for political reasons, is the class power of finance 
capital which controls the money markets where governments and the 
IMF must go to borrow if they wish to conduct stimulus spending or 
lending to distressed countries. The confidence of the financiers 
is a far more important emotion than the confidence of the consumers.

In a time of crisis, the humane approach would be to extend 
stimulus spending until such time as millions of people are not 
reduced to the condition of bare life. To do so, the governments 
must be willing, as the economist Prabhat Patnaik put it, to 
“exert adequate control over the financial system to ensure that 
public borrowing is always financed, so that the State does not 
become a prisoner to the caprices of financiers.” The debate 
between austerity and stimulus is carried on as if these are two 
rational positions held by two rational sets of people. Those who 
clamor for austerity are rather agents of the financial class, 
which is loath to see the value of its wealth decrease; those who 
call for stimulus are ethically correct, but absent a direct class 
challenge to the financiers, floundering on illusions. The only 
real solution to the north Atlantic crisis is, as John Maynard 
Keynes put it, to “euthanize the rentier.”

It is this impulse to challenge Wall Street directly that shows 
how reasonable and necessary is the Occupy Wall Street protest 
movement underway in lower Manhattan (not far from where George 
Washington was inaugurated President). Those who have decided not 
to leave their tarpaulin homes, and who are being brutally treated 
by the New York police department, have an instinctively better 
solution for the country than those who want to throttle demand 
further by austerity (the GOP) and those who want to call for a 
stimulus without any challenge to the financial mandarins who 
would rather send the U. S. economy into a swamp than lose their 
own power over the world economic system (Obama).

Absent a fight against finance capital: to call for austerity is 
an act of cruelty; to call for a stimulus is illusionary.

The IMF and the U. S. political class do not wish to challenge the 
financial class. Indeed, the IMF warns against “financial 
repression,” “With sovereigns under financing stress and economies 
struggling to deleverage, policymakers may be tempted to suppress 
or circumvent financial market processes and information.” This is 
to be avoided, says the IMF. They want the saviors to come from 
the Global South, which, the IMF notes, “are at a more advanced 
phase in the credit cycle.” What the IMF would like to see is 
China and India turn over their surpluses to the North as 
stimulus, for these countries to export less and import more.

What is so strange about this is that it was the IMF that acted as 
the spear of international capital when it advocated for India and 
China to become export-oriented economies and turn away from 
national-development policies. China is now retro-fitted to export 
cheap goods to the Atlantic economies, and its own problems with 
effective demand make it hard for its masses to buy Atlantic-made 
goods. Instead of having these countries turn their stimulus 
toward the creation of demand in their own countries (by lifting 
their populations out of poverty further, by infrastructural 
spending, by creation of new technological means to prevent 
ecological catastrophe), the IMF wants them to manage their 
“financial imbalances” by sending their money North. Nothing of 
the kind was asked of the North in the 1980s and 1990s, when the 
financial arrows pointed in the other direction.

The Chinese now say that they might help the Euro-zone out if 
Europe will follow some “conditions” set by the Chinese (the IMF 
language in the era of structural adjustment was 
“conditionalities,” such as the cut-back on human spending in the 
South during the 1980s as a precondition for loans). The Chinese 
want the Europeans to stop their law suits around market 
infringement, which is another way of saying that the Chinese wish 
to dent the intellectual property regime – one of the few 
mechanisms left that guarantee the jobless growth that sustains 
the United States. Why is China in a good way now? The IMF says 
that it is doing well because of its “policy-induced lending 
boom,” also known as its stimulus in 2009-10 that took place 
absent the overwhelming power of finance capital.

It is far easier to give China the evil eye than to point a finger 
at the financial class. All the talk about currency revaluation 
and barriers to trade are the pettifoggery of those with no real 
argument to make. Down at Wall Street, ordinary Americans have 
decided to stand up against finance capital. They have no need to 
take recourse in the drumbeat of economic xenophobia or of the 
illusions that the Buffets of the world are the forerunners of 
social justice. What they want is for the jackboot of finance to 
be lifted off the people of the world.

VIJAY PRASHAD is the George and Martha Kellner Chair of South 
Asian History and Director of International Studies at Trinity 
College, Hartford, CT His most recent book, The Darker Nations: A 
People’s History of the Third World, won the Muzaffar Ahmad Book 
Prize for 2009. The Swedish and French editions are just out. He 
can be reached at: vijay.prashad at trincoll.edu

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