DM: Let me start with the first part of that on how global this crisis has been, because of course early on the claim was, “It’s just a U.S. crisis.” And when Europe was tanking within a matter of months, they said, “It’s just a crisis in the Global North, the South is vigorous. China, Brazil, and India are going to keep the whole system ticking over.” And of course in the last while, it’s been clear that there are big problems in those parts of the Global South as well. This doesn’t detract from the fact that there are uneven rhythms to a global crisis—a crisis does in fact have to start somewhere. But if it were only a local crisis, then you would expect just an individual economy, or a couple of regionally connected economies, to go through a crisis. We’ve had crises like that: in 1997 there was the so-called “East Asian Crisis,” which didn’t go global. It stayed within one region of the global system. But this was different because a long wave of neoliberal economic expansion from about 1982 to 2007 was winding down due to over-accumulation. In that context, the whole system is vulnerable. Really, everybody is on the edge because it’s just not productive to keep investing when you’ve got already a global capacity to produce 200 million tons of steel more than anybody needs, and that’s where the world is at the moment. Once the crisis hit in the United States, it wasn’t long before it was a European crisis. Of course we now know that for a lot of interesting reasons Southern Europe was particularly vulnerable: Greece, Portugal, and Spain really stand out in that regard; Italy becomes part of that story. But not just Southern Europe, contrary to some claims: Ireland has been hit very hard and all the indications are that France is going to continue to just limp along. Those Southern European countries have unemployment rates around 50 percent for youth and about 25 percent of the workforce as a whole. That’s Great-Depression-style unemployment rates that most of Europe is experiencing right now. Right at the start of the crisis, China introduced a much bigger stimulus program than did the combined stimulus programs of Bush and Obama in the United States. China massively invested in airports, highways, bridges, hydroelectric stations, and so on as a stimulus response to the crisis, particularly in 2008 and 2009. They were really worried about losing their export markets. That did help stabilize the system for a period of time. Therefore the stories that China, India, and Brazil would be the new growth centers were plausible. Today, Brazil has been really sliding down for two years and all of a sudden when you read the business pages you see this incredible worry about China. They’re now talking about all the bad loans that the Chinese put out as part of their stimulus programs five years ago accumulating to a point where they don’t know if the central government can contain that crisis. The Chinese growth rate has already dropped by about a third, or 40 percent. But it’s happened unevenly and on a stretched out timeframe, so it’s easy for people to lose the interconnections across this process and understand the way in which it is one large global slump, which I’ve referred to on some occasions as a mutating slump. It may begin in one specific sector, say real estate, and then move into the banking system, and then when the banking system is able to contain it, it moves into an unemployment crisis. Its epicenter may move geographically: if the U.S. banks are bailed out, then the pressure may fall on the European banks; if China does a massive stimulus, they may postpone the day of reckoning, and so on. What we’re really seeing is that while the temporal rhythm is stretched out over many years, each time the crisis in one sector or one region sneaks back into other sectors and other regions. China’s turning down will now be very bad for all of those economies which export a lot to China, particularly for the huge building boom they’ve been in. All of those economies can expect to see a slowdown, which will be blamed on China’s slowdown rather than recognizing that China’s slowdown is just part of this wider pattern of a mutating slump that is changing form all the time as its center moves. It’s as if you have an illness that moves from one part of the body to another: it’s still the same organic illness at work, but it’s manifesting in different parts of the ailing organism. That’s really what we’re seeing and the organism in question here is the global economy. Different parts of it become the centers of pain or centers of distress in what is really one integrated global process.
Posted on: Sun, 29 Jun 2014 21:49:23 +0000
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