Professor Keith Hart, author of the book The Memory Bank and proprietor of the blog of the same name, has graciously allowed AB to cross-post his 6,000+ word essay, A Human Economy for the Twenty-First Century.
Enjoy.
Our moment in history
Magellan’s crew completed the first circumnavigation of the planet some thirty years after Columbus crossed the Atlantic. At much the same time, Bartolomé de las Casas opposed the racial inequality of Spain’s American empire in the name of human unity. We are living through another ‘Magellan moment’. In the second half of the twentieth century, humanity formed a world society – a single interactive social network – for the first time. This was symbolized by several moments, such as when the 60s space race allowed us to see the earth from the outside or when the internet went public in the 90s, announcing the convergence of telephones, television and computers in a digital revolution of communications. Our world too is massively unequal and the voices for human unity are often drowned. Emergent world society is the new human universal – not an idea, but the fact of our shared occupation of the planet crying out for new principles of association. The task of building a global civil society for the twenty-first century, perhaps even a federal world government, is an urgent one.
The failure of the New York investment bank, Lehman Brothers, in September 2008 triggered a financial collapse whose ramifications are still with us. Predictions of the outcome of the ensuing global economic crisis vary widely. Following a sustained equities rally in mid-2009, some commentators now argue that the recession following Lehman’s demise is already over and the free market ready to assume its inexorable rise, while others talk of a double dip recession, persisting debt deflation and a recovery that could take 25 years.
From the beginning this crisis has invited speculation about the closest analogy in the twentieth century to our current experience. Most commentators were sure at first that we were entering a period unprecedented since the Second World War. Roosevelt, Keynes and the other principals of the Great Depression became familiar figures on the oped pages. Was 2008 like 1929? No. More likely, 1931 or 1933; some said 1938. Which was the greater threat, inflation or deflation? Cue in the history books once more, since deflation had been unknown since the 1930s. These comparisons lacked an overview of what led up to the Great Depression, namely three decades of financial imperialism that ended in 1913 with what Churchill called ‘The second thirty years war’ as its aftermath. No, world war is not now thought to be likely; but, after three decades of neoliberal globalization, when the science of free markets ruled for ever, the shock of the ‘credit crunch’ certainly renewed the interest of the chattering classes in history. Then suddenly the apparent recovery of stock prices emboldened even bailed out bankers to sing the praises of the market once more.
A break in economic history did occur in 2008. After the fall of the Berlin Wall, it was claimed that the world had entered a new stage of economic evolution to which all countries would eventually have to conform, where money flowed without political restriction and the market penetrated everywhere. There were a few doubters, of course, who identified the shaky foundations of the boom long before it crashed. But it took courage then to go against the prevailing orthodoxy that all was best in the best of all worlds. What happened next did change a lot, if not everything.
Economic growth can now be seen to have been sustained by a regime of cheap consumer credit, especially in the United States; many banks and other financial houses, notably the insurance giant AIG, exposed themselves to unacceptable levels of risk, particularly in the new market for credit derivatives; these became ‘toxic assets’ which were bought by taxpayers at huge cost in order to preserve the banking system as a whole; access to loans dried up overnight, despite these government subsidies; the leading exporters of manufactures, such as China, Germany and Japan, suffered massive reductions in demand for their products; the newly ‘liberated’ Eastern Europeans went into free fall, as did countries like Ireland (hitherto a ‘Celtic tiger’) and Spain, not to mention poor Iceland; despite governments printing money like there was no tomorrow, the threat of deflation was real; business bankruptcies and rising unemployment contributed to the economic malaise in rich and poor countries alike.
The economy, which had been understood as an eternally benevolent machine for growth, was suddenly pitch-forked into the turmoil of history. The market was now seen to require massive state intervention if it were to have any chance of surviving. The financial ‘masters of the universe’ quickly brought out the begging bowl and in some cases had to suffer nationalization. Anglophone governments who once claimed to be leading the world to a free market future, desperately embraced remedies they called ‘Keynesian’, incurring the risk of hyperinflation if the bond market collapsed. The French ‘social model’ suddenly looked a lot better than it had before, not least to its ex-Thatcherite president, Nicolas Sarkozy. After the dust settled, the so-called ‘emerging markets’, particularly China, India and Brazil, were seen to be doing not as badly as once feared. The global shift of economic power from the West to Asia has probably been accelerated by these events. It is all rather murky, but even at the best of times the present is like that.
Whatever place the ‘credit crunch’ eventually finds in economic history, one certain victim of the crisis has been free market economics. It is impossible any more to hold that economies will prosper only if markets are freed from political bondage. Attacks on the economists by politicians and journalists have become commonplace. Even the Queen of England asked publicly why none of them saw it all coming. The ideological hegemony of mainstream economics, especially since the 1980s, has been holed below the water. This is not to say that the free marketers have been silenced, but public acceptance of the notion that the economy is social, institutional and in need of political guidance is now commonplace. And Karl Marx, after being sidelined for decades, is once again a best-seller in Germany. All of this suggests to me that the crash has opened up a new terrain for thinking about anthropology, economics and history.
