Who explains the financial crisis?
Financial market analysis between market-radical and conspiracy theory narratives
By Silke Otsch[This working paper from the 9/6/2018 Darmstadt meeting "Taking Back Control: On the global financial crisis and controlling the financial system" is translated abridged from the German on the Internet.]
After the financial crisis, high expectations were prominent in civil society in contrast to many experts who warned of the financial crisis. Losers of the system would see and tackle their disadvantage. Theoretical economic paradigms like faith in the balance of the market were shattered. An overall social learning effect would bring about corrections of the system. That was the assumption.
Meanwhile, more academic studies confirm positions of critical civil society referring to financial market controls or inequality as crisis-drivers. However, social movements engaged for remedying deficiencies have little approval while nationalists and neoliberals mobilize. Persons positioning themselves as opponents of the system in the "new" rightwing camp are developing their presence.
Political actors derive justifications from interpretations of the financial crisis. This article investigates whether this assumption is correct. Which actors explain the financial crisis, and in what way? What justifications and conclusions do they draw from their interpretation?
Austria in Top-Dog Capitalism
By Silke Otsch[This article is translated abridged from the German on the Internet, www.academia.edu.]
In "The Great Transformation," Karl Polanyi describes how the society of the 19th century with its middle-class – pacifist and anti-imperialist ideas and the internationallyoriented economy turned to nationalist policies within a few decades. A protectionist economic policy instead of a balanced policy between different social groups is one example. Fascist discourses appeared in Northern- and Southern Europe, Germany, and Japan, and fascist groups were supported by conservative elites in the alliance against socialists. The problems ultimately escalated in the world wars.
One main cause of this collapse, according to Polanyi, was the institutional anchoring of the market principle in the 19th century that replaced need-oriented with profit-oriented economies, made work, nature, and money into commodities and set profit above other
social goals. Polanyi's analysis raises the question of whether models of history cannot be repeated when market institutions place different needs above society. In this article, I present the thesis that the right-wing pull is caught in a hegemonial crisis.
Right-wing authoritarians emphasize a hegemony crisis of representative democracy.
In other countries, there is also a tendency to deadlock or stalemate situations between political camps, an erosion, and division of established parties. Protest parties position or stage themselves as a movement. These developments have a long pre-history. In the 1960s, Otto Kirchheimer described the tendency to the Catch-all party where parties move to the middle and confrontational themes are avoided to win voters of the middle. The economic background of the 1970s was characterized by the de-acceleration of the growth of the postwar period and stagflation, the decontrol of exchange rates between currencies, and missing rules for international market actors.
Capital can avoid rules or exploit the newly-created legal frameworks of the offshore economy. Instead of confronting capital interests, politics reacts with location-policy, deregulation at the expense of stability, and expanded public and private indebtedness. The wealthiest part of society profits disproportionately from economic growth. Inequality increases radically. The wealth invested in financial markets exerts pressure on the real economy and politics. Through concrete (location) competition, the ecological capacities are exhausted or over-exploited.
With the adjustment to the conditions of the markets and the turn to New Labor, social democracy and green parties no longer stand for a comprehensive alternative policy. Trouble is also brewing for conservative or Christian-democratic parties because the neoliberal policies cannot stand the test and modernization of positions goes too far for the ultra-conservative camp. There are also tendencies of division in conservative parties.
Is there a connection between the underlying economic crisis and election decisions?
In his analysis of the motives of voters of right-wing authoritarian parties, Daniel Oesch disputes the thesis that the electorate was composed of modernization-losers confronted by the collapse of industrial production and offshoring in economic competition. For Austrian- and Swiss voters, the cultural separation of the community against liberal values and foreigners is crucial. According to Cornelia Koppetsch, material losses have less effect than the loss of status and privileges over other groups. Delimitation from other groups is a form of symbolic self-upgrading.
Stephan Lessenich sees a connection between the crisis provoked by the imperial lifestyle and voting decisions. In times of scarce resources, voters want to "quickly get a piece of the increasingly smaller cake." According to Arlie Russel Hochschild, members of the Tea Party are marked by the perception of not being treated justly despite their effort. Through field studies, she reconstructs a picture effective on a deep level and a situation where a throng stands in a long line to reach the American dream. While "normal"
citizens can journey for a long time and not arrive, newcomers (blacks, representatives of minorities, women) are admitted by representatives of the political system…
A recent analysis of the electoral successes of the National Socialists between 1930 and 1933 shows Bruning's austerity measures, and tax hikes led to members of the middle and upper classes voting for National Socialists while the unemployed preferred communists. Voters for right-wing populist parties were among the economic losers. Other observable factors – like the devaluation of foreigners or women – were not decisive.
How knowledge is organized and what actors channel and instrumentalize discontent is essential. Through a group of rich private persons, climate change deniers in the US show how organized campaigning can have a very harmful influence.
Organized right-wing populists organized their camp and diverted from the real problems, including the formation of an opposing elite that redefines terms. According to ideologues of the New World Order, a morally corrupt elite – depending on the context Anglo-Saxon, Jewish, communist or reptiloid – carries out conspiratorially a secret plan of oppressions or "re-peopling" (Umvolkung) – at the expense of the "people" or the Germans.
In everyday debates, right-wing populists include under the elite politicians, unpopular journalists, and scholars, representatives of workers, NGOs, or persons acting in public service. These groups do not de facto belong to the elites. Elite researcher Michael Hartmann describes these as persons "who influence social developments through their positions." Concretely, leaders now have prominent positions in the economy or are descendants of rich or noble families and top politicians… The elite category helps discredit political opponents as a counter-pole of their camp through their status as victims.
Functional mechanisms or regulations of capitalist institutions are only analyzed superficially in new right-wing discourse. Despite criticism of financial market capitalism, the populist right appeals increasingly to market-radical theoreticians like Hayek and the former banker Alice Weidel from the German nobility. Contrary to their superficial criticism of the financial markets, German and American right-wing populists champion deregulation of the financial markets and oppose tax redistribution.
The priority of the market and the community or family before the state is a unifying element. A conglomerate of ideas combines individualism, libertarianism, market radicalism, and self-government includes anarchist features from a superficial view. Forms of representative democracy are replaced by leaders. Business-friendly think tanks financed by rich private persons - the Hayek Institute, Agenda Austria, etc. –actively support neoliberal and conservative thinking. In Germany, the AfD (antiimmigrant Alliance for Germany) is planning a political party with over 900 members.
All this happens on the background of an increasingly post-factual discourse where knowledge is de-legitimated and hardly different from opinions that have the same authority.
After the last financial crisis, intellectuals and scholars largely neglected explaining the events and communicating to a broad public. Persons feel called to fill the gaps and utilize special alternative media.
Belief in the position s of one's camp replaces expertise and technical discourse. Common negotiating platforms do not exist anymore. Criticism in the smoldering economic crisis can be neutralized and dismissed as opinion.
The crisis of unregulated markets is expressed through increasing inequalities and excessive consumption of nature, resulting from the institutionalization of the competition- and profit-principle (instead of need) and only limiting the system for physical reasons. It is unclear whether and how long these symptoms can be hidden by distracting discourse (for example, about refugees). The missing answer to economic problems is the Achilles-heel of the right-wing that they cover up by authoritarian actions against opponents and the socially weak.
The question of how the trend to authoritarian populism or capitalism can be stopped is often answered with Chantal Mouffe's concepts. A left populism should create its antagonistic camp and use passion. Rediscovering fighting spirit is suggested to social democrats instead of being tactically oriented in the middle and ignoring necessary reforms. This approach is not realized now in Austria. Alternatively, further erosion of the once mammoth parties is undeniable.
The question is whether reorganizing economic institutions will succeed instead of only winning the next election and pursuing a symbolic policy. Corrective economic plans in the case of France under Mitterrand or in South Africa after the formal end of apartheid –were thwarted by monetary policy. Creating a leftist counter-hegemony is a more demanding project. Unlike right-wing authoritarian concepts, it opposes established economic interests and structures.
The implementation of watchdogs could be a first pragmatic step to counteract the shift of economic power to the right. NGOs observe the government's financial and economic practices and laws so citizens can be informed about misuse and right-wing authoritarians know that abusing power can have serious consequences. Movements, NGOs and intellectuals could fulfill a mediating educational function to communicate differences between right-wing authoritarian and pertinent interpretations and defining relevant problems (for example, in economic policy, money and financial markets). Education measures only reach a minority, and mobilization for financial- and economic themes is difficult. Therefore, the themes can be joined with narratives, setting the knowledge-particles in larger contexts.
Our time should be used to think "big" and reinvent institutions. No party currently has solutions and concepts that describe how the transition to a post-growth society can be tackled that is unavoidable because of ecological limits. It is time for discussing principles and working on a new hegemony. How can society or communities organize economics, so economics is embedded as need-oriented or democratically-defined and respects global limits? A new power described from experiences as a positive future utopia can be formed in the sense of a "positive- visionary mosaic" that is different from dystopian and past-oriented narratives of the right and market projects inspired by Hayek and a dogmatic-authoritarian left.
Polanyi's anthropological studies or confrontation with the forms of life and economy of other cultures could expand the possibilities of conceivable alternatives, generate possible solutions for the future. Market societies are an economic form dominant for around 200 years and not as "natural" as contemporaries believe.
The theoretical and technical work on a new hegemony can be accompanied by practical experiments in the laboratory and in the post-growth scene. Moreover, progressive forces in times of the rollback could switch or fall back to the non-natural, the local, and theoretically even on the European or international plane. On the regional plane, projects could be realized that redirect negative energies to desirable social projects. For example, these could include building a local supply infrastructure, environmental or district projects, transition towns, or forms of solidarity economy.
Tom Tomorrow – The Story So Far – June 1 - https://www.dailykos.com/blog/Tom %20Tomorrow/