Capitalism, the mini-series

Between reading the new translation of Dany-Robert Dufour's The Art of Shrinking Heads and getting caught up in coverage of the current capitalist market kerfuffle, it's a dizzying time. More on Dufour another day.

Over at Eurhythmania, you can find posted a piece published today by the previously celebrated Australian journalist/writer (I hedge bets here, depending on your predilections) Guy Rundle. He's over in America currently, covering the election for a few Australian outlets.

Before today, I had been sceptical about the meaning of this trumpeted crisis. On one hand, it seemed like leftist pants-wetting: 'the crisis is here, the crisis is here!' On the other, it seemed like a crisis provoked, diagnosed and (in theory) cured by outsized capitalists. Dennis Kucinich suggested as much on DemocracyNow! yesterday: "It seems to me there’s a possibility that this crisis has a little bit of manufacture to it."

This disposition on my behalf was a function, I think, of distance: in the sense of being, shall we say, disembedded from the most often mentioned, most deeply effected circuits -- I have no mortgage, no shares etc -- but also in the sense of being in Australia. It just did not seem to have hit as hard over here. (I speak specifically, by the way, of the past few weeks. There has been some noticeable, earlier fallout on mortgages etc. But even that seems relatively minor compared to the US disasters.)

But now, I think, there is something afoot. And Guy Rundle's piece gets at that.

But here is what is really, really important to understand about this current event is that this is not merely a financial system crisis – that is a mere ripple of a much deeper problem. Desperate to gain some political capital out of this, the right have been suggesting that the problem is over-regulation, which is mad. But no less illusory is the centre-left assertion that the problem is simply one of lack of regulation, and that if a proper framework could be put in place everything would be all right.

For the great truth of this mess is that the folks who designed the deregulation were, in a narrow sense, right -- if their goal was to give western capitalism another lease of life. What the market faced in the US at the end of the 90s, was a crucial lack of things to invest in, for the free money sloshing around the markets. By 2001, the dotcom bubble had burst and you couldn't shove $X billion into Ewidgets.com, and so there was a desperate need for another object that would keep the circus going. Mortgage backed securities was it – bricks and mortar, which looked like the most concrete investment was actually the most abstract, the notional capacity of people with no-deposit mortgages to repay.

Crazy, but what could you do? For the bitter fact is that without these pseudo-investments, the West is running on fumes. As China and the East roars ahead in classical 19th century high capitalist mode, the West runs on financial services, and rents – such as intellectual property, and debt and debt and debt.