Tag Archives: london review of books

Wolfgang Streeck explains how to reform capitalism for a better 21st century

Summary: We have hundreds of ideas for small reforms of America, but few for radical reform of the capitalist system that runs it. As a demonstration of this problem, Wolfgang Streeck gives a profound critique of capitalism and Adam Tooze  one of the most powerful essays I have seen in a long time. This is part two; part one discussed how we drifted into this crisis of capitalism.

 

A General Logic of Crisis

By Adam Tooze,
London Review of Books, 5 January 2017.

Posted with his generous permission.

Review of Wolfgang Streeck’s How Will Capitalism End?: Essays on a Failing System.

Part two of two: looking at the end of capitalism, and beyond.

The publication of How Will Capitalism End?: Essays on a Failing System thus comes when Streeck has positioned himself as the leading intellectual proponent in Germany of a Gaullist vision of Europe from the left. Now that his cards are fully on the table it is a good moment to try to answer the question: how did Streeck turn critical theory into a vehicle for the assertion of the primacy of the nation?

In one respect at least the national turn has allowed Streeck to subsume what might once have been seen as a fatal weakness in his analysis into a consistent part of the argument. A truly remarkable thing about his work is that he discusses the future of capitalism entirely without reference to the place where the future of capitalism will surely be decided: Asia. That no doubt reflects the limitations of his professional specialisation – OECD industrial relations. China and India are beyond his ken.

But given the arguments he has been making, his Eurocentrism takes on a new meaning. If you are going to articulate the basic tension of the crisis as existing between a superficial, utilitarian universality on the one hand, and a ‘grandiose jointly produced diversity’ on the other, then Europe is, indeed, the classic terrain on which to make your case. Not that there isn’t nationalism elsewhere. But nowhere else has as many different nationalisms in such a tiny space and nowhere else has tried to merge them the way the EU has. India and China never subordinated themselves entirely to the dictates of neoliberalism, nor arguably has the United States: compared to the EU, Nafta was integration-lite. So if the EU stands for a peculiarly pure form of neoliberal capitalism – a basic contention of the Lexit camp – where better to make one’s stand than Europe? In rejecting the false capitalist homogeneity of the EU, one is saving Europe’s essence, namely its diversity. What could be a better expression of that grandiose diversity, after all, than the battle of Brexit, another round in the centuries-old cross-Channel struggle?

But Streeck is a political economist, so he isn’t content with civilisational arguments. He wants to talk about nuts and bolts, the real power behind the scenes. The particular vector of globalisation that has seized his imagination since 2008 is finance. As a somewhat surprised Martin Wolf remarked in the Financial Times, Streeck worries so much about debt you could mistake him for an Austrian economist. Debt, for Streeck, is an index of the unsustainable balance between democracy and capitalism. It’s the way the system borrows time. At times he takes this metaphor quite literally, describing credit as a mechanism through which ‘not-yet-existing virtual resources … are pulled forward from the future.’ Taken at face value that would suggest a very odd view of economic reality indeed.

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Wolfgang Streeck asks “How will capitalism end?”

Summary: Lost in the trivia of the daily news, we can easily lose sight of the great issues shaping our times.  Such as the future of capitalism, tested by demographic change, slowing growth, rising inequality, and political turmoil. Here is the first of two posts with insights by Wolfgang Streeck and Adam Tooze; one of the most powerful essays I have seen in a long time. This post examines how we came to this point, on the brink of great events. In tomorrow’s post they discuss the forces that will test and perhaps break capitalism.

 

A General Logic of Crisis

By Adam Tooze,
London Review of Books, 5 January 2017.

Posted with his generous permission.

Review of Wolfgang Streeck’s How Will Capitalism End?: Essays on a Failing System.

Part one of two: how we got here.

 

‘Whatever it takes.’ These words, spoken by the president of the European Central Bank, Mario Draghi, to a crowd of investors in the City of London on 26 July 2012, have come to represent the symbolic end to the acute phase of the global financial crisis. In the political sphere, by contrast, where words are supposed to be everything, we have not yet been able to draw the line. More than four years on, we know that in 2012 the political fallout was only just beginning.

It was in December 2011 that David Cameron reopened the European question by opting out of the new ‘fiscal compact’ drawn up by Angela Merkel and Nicolas Sarkozy with the aim of enforcing budget discipline across the EU. In the US in spring 2012, Mitt Romney emerged as the candidate from the Republican primaries, but the freakshow anticipated the Trump campaign to come. In Italy the ousting of Berlusconi in a backroom coup in November 2011 and the installation of the ‘unpolitical’ economist Mario Monti as prime minister set the stage for the emergence of Beppe Grillo and Five Star in the local elections of May 2012. In France as the fiscal compact began to bite, François Hollande’s presidency was dead almost before it had started.

Amid all these events, Germany can easily seem like a bastion of stability, with ‘Merkel über alles’ its anthem. But beneath the smooth surface, Merkel’s grip on the chancellorship has since she took office in 2005 been supported by three successive coalitions. And by early 2013 it was clear that her partners since 2009, the free-market, libertarian, liberal FDP, were in trouble. They were being outflanked on their right-wing by a new formation, the AfD, the Alternative für Deutschland, whose focus in 2013 was not immigration but passionate opposition to the euro. Like much of the German right the AfD was indignant not about austerity, but about the failure of Merkel to back an even harder line. The AfD didn’t break the 5 per cent threshold required to enter parliament at its first try, but it took enough votes from the FDP to drop it out of the Bundestag, leaving Merkel to form a new coalition with the Social Democratic Party (SPD).

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Does terrorism work? Richard English gives the answer.

Summary: A large literature discusses the effectiveness of foreign armies and their tools against insurgencies, but few ask about the other side. Does terrorism work for insurgents? A new book by Richard English fills that gap, with some surprising conclusions. Since terrorism is a key tool of 4GW, the dominant form of war in our time, the fate of the world depends on the answer.

 

By Any Means or None

By Thomas Nagel.
London Review of Books. 8 September 2016.
Posted with the author’s generous permission.

Review of Does Terrorism Work? A history by Richard English (2016).

 

When I am hit with news of yet another terrorist attack, I often wonder what these people hope to achieve. In a depressingly timely book, Richard English tries to answer that question for a number of important cases, in order to address the broader question of his title.

First, he has to specify what would count as ‘working’, and then he has to look at the historical facts to determine what the groups he studies have actually achieved. He devotes a chapter each to al-Qaida, the Provisional IRA, Hamas and the Basque separatist group ETA, and in a final chapter runs quickly through a score of other examples. While he emphasises that terrorism is also practised by states, his subject here is terrorism by non-state actors – specifically, non-state organisations that have pursued a campaign of terrorism over a significant period of time.

His aim is to interpret these campaigns so far as possible as the work of rational agents employing violent means to pursue definite political ends: the motives of lone-wolf terrorists are liable to be inchoate. All four of English’s main examples have been very explicit about what they want and how they hope to get it, and he observes that they have all failed in their main aims, as have almost all other terrorist campaigns, with a few important exceptions. But he also looks closely at the full range of their effects, to determine whether they have ‘worked’ in some more qualified sense.

He distinguishes three further senses, short of strategic victory, in which terrorism might be said to work: partial strategic victory, tactical success and the inherent rewards of struggle as such – and there are further subdivisions within these categories. (It seems to me that the last item doesn’t really belong on this list. If, as English reports, the members of the IRA and other groups have enjoyed the inherent rewards of comradeship, excitement and an ennobling sense of purpose, that is at best a beneficial side-effect of their terrorist activity, not a way in which it succeeds or ‘works’.)

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The third wave of Jihad begins. We will soon see its power.

Summary: Jeremy Harding at the LRB looks at the next big step by jihadists, and the amazing oddity of the West’s response.

Islamic Jihad

 

Introduction

Modern jihad has gone through several phases, each stronger and more virulent than the predecessor. First came Afghanistan’s Mujahideen, who burned out in internecine conflict (defeated by the Tailiban). Al Qaeda came next, destroyed in the years after 9/11. Then came ISIS, now being destroyed after its premature shift to phase three insurgent operations (per Mao’s schema: holding territory and waging conventional warfare). Now jihad takes a new step, resuming phase two operations (terrorism) — but expanding their operations into Europe.

We can only guess at what form this will take, and what jihadists learned from their previous failures. Here Jeremy Harding explains this stage in jihad’s evolution, and the great oddity of the West’s response. Red emphasis added.

Third Wave Jihadism?

By Jeremy Harding. Excerpt from London Review of Books. 15 July 2016.
Posted with the author’s generous permission.

Gilles Kepel, a specialist on ‘Islam and the Arab world’, wrote last year in Terreur dans l’Hexagone – a study of French jihadism – that the Charlie Hebdo killings were ‘a sort of cultural 9/11’. The jihadism that we’re now confronted with, he argued, is a third wave phenomenon, superseding the mujahidin in Afghanistan (the first) and emerging in the long twilight of al-Qaida (the second).

“The latest wave is specifically targeted at Europe, with its significant Muslim population (about 20 million in EU countries): the approach is ‘horizontal’, favouring networks rather than cells; disruption, fear and division are the tactics; the radical awakening of European Muslims, many already disaffected and marginal, is the immediate objective. The murders at Charlie Hebdo’s offices and the kosher store in Paris brought the third wave ‘to a paroxysm’, in Kepel’s view, just as 9/11 brought the second ‘to its pinnacle’. At the time of writing, no one has laid claim to the atrocity in Nice: more than 80 dead, 50 hospitalised (‘between life and death’, in President Hollande’s words, earlier today).

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Politics of the EU: “Vanity and Venality”

Summary: Today Britain votes on the same choice Americans face in November — choosing between a bad choice endorsed by ruling elites, and a leap into a probably worse unknown. Here’s a brilliant analysis of Europe by Susan Watson (from 2013, still the best brief I’ve seen about the EU’s politics). It reminds us why so many Brits want to leave the EU — and the role of the US government in its mismanaged crisis. Much of it reads as if written yesterday, showing how little reform the crisis has produced. No matter what the result today, the EU still serves its people poorly as its elites gather political power (reversing centuries of democratization) — and further crises lie in its future.

Flag of the European Union

Vanity and Venality

by Susan Watkins
London Review of Books
29 August 2013
Posted with her generous permission.

Books reviewed

All quiet on the euro front? Seen from Berlin, it looks as though the continent is now under control at last, after the macro-financial warfare of the last 3 years. A new authority, the Troika, is policing the countries that got themselves into trouble; governments are constitutionally bound to the principles of good housekeeping. Further measures will be needed for the banks – but all in good time. The euro has survived; order has been restored. The new status quo is already a significant achievement.

Seen from the besieged parliaments of Athens and Madrid, from the shuttered shops and boarded-up homes in Lisbon and Dublin, the single currency has turned into a monetary choke-lead …Why has the crisis taken such a severe form in Europe?

Part of the answer lies in the flawed construction of the European Union itself. Though Americans have been hard hit by the great recession, the US political system has not been shaken. In contrast to most European incumbents, Obama sailed through his re-election. Only in isolated pockets like Detroit has elected government been replaced by technocrats.

In Europe, private and public debt levels were generally lower before the financial crisis struck. But the polity of the European Union is a makeshift, designed in the 1950s to foster an industrial association embracing two large countries, France and Germany, with a population of about fifty million each, and their three small neighbours. It was then expanded, piecemeal fashion, to incorporate nearly 30 states, two-thirds of which adopted a shared currency at the height of the globalisation boom – a project aimed in part at preventing a significantly larger, reunified Germany from dominating the rest.

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Have sympathy for the political chaos in Brazil. It could happen in America.

Summary: Street protests and loss of support in parliament have brought down Brazil’s government through quasi-legal impeachment, without the bother of elections. Could this happen in America? The preconditions — the tinder — already exist here, awaiting only a spark. This analysis by Prof Perry Anderson of shows how quickly a seemingly strong and powerful political regime can unravel; the similarities to America are obvious. The results will be ugly for Brazil; as they will they be for us should US elites follow Brazil’s example.

View of the renewed Christ the Redeemer

AFP PHOTO/VANDERLEI ALMEIDA.

Excerpt from “Crisis in Brazil” by Perry Anderson

London Review of Books, 21 April 2016
Posted with his generous permission

Half-hidden, the roots of this debacle lay in the soil of the Workers’ Party’s {PT} model of growth itself. From the outset, its success relied on two kinds of nutrient: a super-cycle of commodity prices, and a domestic consumption boom. … Compounding the end of the overseas bonanza, domestic consumption hit the buffers.

Throughout its rule, the core strategy of the PT had been to expand home demand by increasing popular purchasing power. That was achieved not only by raising the minimum wage and making cash transfers to the poor – the Bolsa Família – but by a massive injection of consumer credit. Over the decade from 2005 to 2015, total debt owed by the private sector increased from 43 to 93% of GDP, with consumer loans running at double the level of neighbouring countries. By the time Dilma Rousseff was re-elected {as president} in late 2014, interest payments on household credit were absorbing more than a fifth of average disposable income. Along with the exhaustion of the commodity boom, the consumer spree was no longer sustainable. The two motors of growth had stalled.

In 2011 the aim of Mantega’s new economic matrix had been to kick-start the economy by lifting investment. But his means of doing so had diminished. …Offering preferential rates to leading companies that added up to a much larger subsidy than outlays to poor families, the ‘Bolsa Empresarial’ cost the treasury about double the Bolsa Família. Favourable to large commodity and construction firms, this direct expansion of public banking was anathema to an urban middle class in an increasingly violent anti-PT mood, with the local media – amplified by the business press in London and New York – vituperating the dangers of statism.

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Sociologist Wolfgang Streeck explains the politics of the migrant crisis reshaping Europe

Summary: This essay by German sociologist Wolfgang Streeck provides a look at the the political crisis of Germany — and Europe — created by its leaders open of their borders, and more broadly about the new form of political leadership in the West (as Bush Jr. demonstrated for America after 9/11). He provides a different perspective than we see in the US news media. It is brilliant (the title is sarcasm).

One way nations are re-shaped

Migrants to Germany.

Migrants enter Germany on 20 October 2015. By Christof Stache/AFP/Getty Images.

Scenario for a Wonderful Tomorrow

By Wolfgang Streeck
London Review of Books, 31 March 2016
Published with his generous permission.

About Merkel, a model 21stC politician and architect of the new Europe

Europe is falling apart, destroyed by its most devoted fans, the Germans. In the summer of 2015, having humiliated the Greeks by forcing another reform diktat down their throats, Angela Merkel started a new game, aimed at diverting attention from the economic and political disaster monetary union had become.

Abrupt changes of policy are nothing new to Merkel, who is best described as a postmodern politician with a premodern, Machiavellian contempt for both causes and people. Having made her party adopt a radically neoliberal, deregulationist anti-labour platform in 2003, she barely escaped defeat two years later at the hands of Gerhard Schroeder. When she became chancellor, she used her office and the Grand Coalition with the post-Schroeder Social Democratic Party (SPD) to purge her own party of neoliberalism and neoliberals, and social-democratise it beyond recognition.

In 2011, after the nuclear accident at Fukushima, which received extensive media coverage in Germany, it took Merkel, then known as the Atomkanzlerin, no more than a few days to order the immediate closure of eight nuclear power plants and to initiate legislation to end all nuclear power generation by 2022 at the latest. This was only a few months after she had, with much political arm-twisting, got the Bundestag to repeal the nuclear phase-out passed by the Red-Green coalition in 2001, and to extend the operating licences of German nuclear plants by an average of ten years.

The refugee crisis

Last year, the refugee crisis offered Merkel another opportunity to demonstrate just how fast she can change tack. Once again, media coverage influenced her decision-making, just as it would a few months later when smartphone videos of the New Year’s Eve riot at Cologne Central Station triggered another 180 degree turn in her policies.

In July a PR event, part of a government campaign to encourage cabinet members to meet ordinary citizens and listen to their ideas, went wrong. One of the young people invited to take part in a ‘dialogue’ with Merkel on the environment, the 14-year-old daughter of Palestinian asylum seekers, unexpectedly complained in front of the TV cameras that her family, who had been living in Germany for four years, might be sent back to the Lebanon at any moment. She asked, in flawless German, why she wasn’t allowed to stay in Germany ‘to enjoy life like everybody else’. Merkel said something like, ‘we cannot take in everyone, much as we might want to.’ The girl began to cry. Not knowing what to do, Merkel started patting the child’s head with a helpless expression on her face. {See the story here.}

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