INTRODUCTION
The financial sector extracts economic surplus produced in other parts of the economy. Its growth has increased inequalities in income, wealth, and political influence, and its tools of analysis and criteria for investment have imposed devastating damage on the planet. Such concerns are central to this study, as are the costs of the Great Recession, which vastly exceed the capacity of the financial institutions that crashed the economy to make reparations, had they been asked to do so. Rather, they were rescued by the Federal Reserve even as working people suffered as collateral damage from the events that had transpired. The theoretical discussion of the causes of financial crises analyzed here differs significantly from many other available accounts. It extends beyond the challenges that financial crises present for governments and central banks, and beyond the stabilizing efforts that are the topic of most studies, which do not delve into the cost of the finance accumulation regime that has been promoted by the Federal Reserve. This study focuses on the U.S. but also considers the impact of decisions by the Fed on the economies of other nations.
We begin our inquiry with a question that was asked at the London School of Economics (LSE) in 2008 by the Queen of England for the light it sheds on the understanding of economists regarding financial economics in the real world. The Queen famously wanted to know about the Global Financial Crisis: “If these things were so large, how come everyone missed them?” Explaining the origins of the crisis, Professor Luis Garicano, director of research at the management department of the LSE, told the Queen, “At every stage, someone was relying on somebody else and everyone thought they were doing the right thing” (Greenhill 2008). His observation was accurate to be sure, though hardly much of an answer – but then economists generally have not done well in responding to this question.
On a tour of the Bank of England four years later, Her Majesty received an unsolicited comment as she stopped at the gold vault. Sujit Kapadia, one of the Bank’s
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top financial policy experts, interrupted the Queen to say he would like to answer the question she had first posed at the LSE. “Oh,” she said, slightly taken aback. He told the Queen that financial crises are “a bit like earthquakes and flu pandemics in being rare and difficult to predict” (Neate 2012). However, perhaps to follow on Kapadia’s analogies, while their exact timing cannot be predicted, indicators do precede their occurrence, tremors before an earthquake, not feeling one’s best before it is clear that flu has arrived. As to being rare, this is a question of perspective. Financial crises are familiar events to economic historians (Kindleberger and Aliber 2005).
Former Fed Governor Tom Hoenig had warned about the consequences of asset bubbles for a decade before the Great Recession occurred (Leonard 2022). Others also had reason to foresee the coming crisis (Fullbrook 2010; Dyer 2021). As to the earlier answer the Queen had received at the LSE: if “everyone relies on everybody else and in doing so thinks they are doing the right thing,” it would be well for economists to understand why everyone doing the same thing for too long can offer a prediction of a coming crisis. In Chapter 6, “The Mainline Tradition and Endogenous Cycles,” the explanations given by Marx, Keynes, Minsky, and others will be offered to explain that in financial markets “everyone doing the right thing” often fails and leads to financial crises.
On June 17, 2009, the British Academy convened a group of prominent academics, journalists, politicians, along with past and present civil servants for a roundtable discussion to provide an authoritative response to the Queen. The chairman, Professor Peter Hennessy, explained that a purpose of the forum was to offer the basis for an “unofficial command paper” that attempted to answer her question. Hennessy and Professor Tim Beasley signed a letter addressed to Her Majesty which summarized the views raised in their discussions. It noted that “some of the best mathematical minds” were involved in risk management but that “they frequently lost sight of the bigger picture.” The writers concluded on behalf of the assembled notables that
failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.
(2009)
The collective imagination must do better. And the ways in which we can both understand the bigger picture and change that picture will be discussed.
Another group of U.K. economists wrote to the Queen that, while agreeing with many of the points made by the academy, they found the letter to be inadequate because it failed to acknowledge deficiencies in the training and culture of economists. While recognizing that models and techniques “are important,” they argued that given the complexity of the global economy, what is needed “is a broader range of models and techniques governed by a far greater respect for substance, and much more attention to historical, institutional, psychological, and other highly relevant
factors.” The Besley and Hennessy letter overlooked “the part that many leading economists have had in turning economics into a discipline that is detached from the real world, and in promoting unrealistic assumptions that have helped to sustain an uncritical view of how markets operate” (Hodgson 2009). These responses form the underlying assumptions for the present study, which rejects what has been the “be all and end all” criter ia for economists: market efficiency. It is the economists’ favoring market allocation with minimal regulation as “efficient” that has led to crises caused by “mistakes” that are better understood as risk-taking with other people’s money to such a dangerous extent that financial collapse becomes inevitable. The failure to see whose interest is guiding decision-making is a problem that extends beyond choices made by financiers, to those taken by government officials and functionaries of political parties.
During the 2008 crisis, senior members of the investment bank community defended the simpler “nobody could have known” story. When the Global Financial Crisis broke in August 2007, David Viniar, the CFO of Goldman Sachs, declared that his institution had experienced “25 standard deviation” events several days in a row. As John Kay writes of Viniar’s comment, “anyone with a knowledge of statistics knows that the occurrence of several ‘25 standard-deviation events’ within a short time is impossible. What he meant to say was that the company’s risk models failed to describe what had happened” (2015:100). We shall explore why such risk models are deeply problematic when it comes to predicting discontinuous events in the economy.
The next financial crisis, which followed a little over a decade later, was almost universally attributed to the onslaught of Covid-19 and its economic impact. The usual explanations for the crisis and the resulting inflation referred to the consequences of the pandemic on the labor force and supply chains as well as the impact of the war in Ukraine. However, it is helpful to contemplate a counter-history, one in which a financial crisis would have occurred without these contingent events as a result of the changed structure of the debt-dependent global political economy. The crisis threatened greater risk in a financial system in which deregulation and the continued low-interest policy of central bankers had allowed the overextension of credit in a slow-growth economy, a pyramiding of fictitious capital that would not have found a counterpart in the real returns necessary to repay or continue to finance the debt overhang. Even as growth slowed, global debt had risen at twice the rate of the global Gross Domestic Product (GDP). Investment notably involved financial assets rather than an increase in the output of goods and non-financial services.
After the new global downturn, Britain was back in the headlines and a new question was being asked in the U.S. Federal Reserve researchers and administration officials were questioning experts as to whether a market meltdown of the kind that had recently befallen the U.K. “could happen here.” The not very reassuring answer was that it probably could, even though it did not appear imminent. “While the shock was British-specific, the violent reaction has caused economists around the
world to wonder if the situation was a canary in a coal mine as signs of financial stress surface around the globe” (Smialek, Tangersley, and Rennison 2022). There was a lot of worry in the markets and for good reason, as will be argued here.
Debt levels had r isen remarkably in the 21st century, and not only in the U.S. Since the only strategy the Federal Reserve and other central banks had to confront a financial collapse was the creation of still more debt in the system, there had become a question of how long this can continue, especially in the face of the extreme inflation the world was experiencing. To fight inflation central banks needed to raise interest rates, which could bring on a sharp economic downturn. To prevent this central banks would have to buy more financial assets and so provide liquidity to markets. Could this be done convincingly, especially by weaker economies? Would there be blowback from failure in the many weakened emerging market economies impacting the U.S.? Even for the U.S., was it sensible to save a financial system that had long been growing in parasitic form on the rest of the economy? Soon, bank failures in the U.S. itself forced the Fed to guarantee deposits in excess of the FDIC’s $250,000 ceiling to avoid contagion. This too put pressure on central banks in other nations, even as it sent shivers of fear through the American banking system. The weaknesses of the financial system and its regulation became overwhelmingly obvious.
As the Federal Reserve raised interest rates in 2022 and 2023 to counter inflation and financial weakness became widespread, the International Monetary Fund’s global economic outlook and financial stability reports warned of “stresses and vulnerabilities” and the World Bank’s chief economist Intermit Gill declared “A lost decade could be in the making for the world economy” (Rappeport 2023). When this crisis came to pass, there would have been a great many premonitions of its arrival.
What is widely termed “financialization,” a concept to be defined and discussed in the following chapter, has produced problems in many areas in addition to the basic one of growth and stability, leading to a number of questions: How does it affect the broader economy? What determines financial fluctuations and shocks? What impact does the modern financial system have on the rest of us? Can governments make financial crises less frequent and less disruptive?
This book provides answers to these and other issues prompted by the centrality of financialization in the current stage of capitalist development. It suggests that given the secular increase of debt in the American economy and internationally, the contemporary high inflation that so worries central bankers, leading them to raise interest rates to an extent that threatens a new downturn on the heels of the last, should be understood as a structural crisis of the system that puts them in a very difficult position. They cannot responsibly follow the lead of Paul Volcker and raise interest rates until the inflation is beaten; the amount of debt in the system is so great that such a tactic will lead to widespread defaults, bankruptcies, and economic devastation beyond the damage that was done fighting stagflation in the 1970s when debt was at a far more modest level. This debt trap may be the most
consequential cost of the decades of the financialization of the American (and international) economy.
An Uncertain New Economic Era
“We don’t have a sense of the final destination,” chief economist of the International Monetary Fund Olivier Blanchard announced at the time of the 2008 crisis. “Where we end I really don’t have much of a clue. . . . We don’t have a clue of what financial stability actually means,” he declared (Porter 2013). It should be added that we do not know because the “end” is open, subject to contingent events and choices effected by the policy makers, the financial community, and the people. How causation is understood, how blame is allocated, and what alternatives are taken seriously in public debate will determine whether the system continues to be prone to costly crises.
“The long era of low inflation, suppressed volatility and easy financial conditions is ending,” stated Mark Carney (2015), a former head of the Bank of England, describing the global economy. In his view, “It is being replaced by more challenging macro dynamics in which supply shocks are as important as demand shocks.”
Fed chair Powell, responding to a question he was asked in early 2022, argued that “[f]or the last quarter century, we’ve had a perfect storm of disinflationary forces.” He agreed that “the old regime” had been disrupted by the Covid pandemic and that the shift to higher interest rates by the Federal Reserve (a response to the inflation unleashed by supply chain problems and the Russian invasion of Ukraine) was generating “untold” economic uncertainty. “As we come out the other side of that, the question is: What will be the nature of that economy?” he asked, expressing the indeterminacy that characterized the new period (Smialek 2022). The “other side” turned out to be further away than those who stressed the presumed temporary nature of the crisis had thought.
Inflation would persist, with the presumed only possible cure of higher interest rates available to central banks inviting pain for the majority in both the core and peripheries of the world system. Also, the impacts of global warming are no longer in some distant future. Moreover, the responsibility of those who have financed, and continue to finance, the misuse of the planet’s resources must be acknowledged and confronted. The expectation of large numbers of climate migrants, along with the worry of renewed Covid episodes as new variants come into existence, should not be allowed to supplant the high risk of a financially driven, deeply flawed economic system. Concern over rising inequality, tax avoidance, the lack of investment in physical and social infrastructure, the influence of money politics, and the burden of debt are other areas of concern requiring discussion.
The models that have prevailed among mainstream economists do not provide satisfactory answers even as the need to reflect on the system of 21st-century capitalism tout court has become more urgent. Such concerns are apparent at business schools that had embraced the teaching of the maximization of shareholder value
measured by quarterly returns but which now also teach both maximizing stakeholder value and ESG (environmental, social, and governance) priorities. “After decades of emphasis on financial markets and shareholder returns, business schools are trying to take on deeper philosophical problems – including, maybe, tentative questions about the means and ends of capitalism itself,” Molly Worthen (2022) writes; she recognizes that while society requires managers “who can grapple with uncertainty and operate in a culture divided over basic questions of justice and human flourishing, most business schools still emphasize specialized skills and quantitative methods, the seductive simplicity of economic and social scientific models.”
Faced with criticism of their actions and finding themselves pressured to take political stands by customers and staff, corporate leaders have been forced to enter the public arena in new roles to an extent they find uncomfortable, especially as conservative elected officials have attacked “woke” capitalists for responding to pressure to take stands on racism, the right to abortion, and the environmental crisis. Recognizing the need for a background knowledge in the relevant branches of history, political science, and sociology, corporate leaders understand that the best and the brightest of a more idealistic generation seek a personally fulfilling place in society, desiring to be engaged in jobs that allow them to work for the values they believe to be important.
There is also the wish to avoid the embarrassment that comes when clueless executives show public ignorance and contempt for ESG matters. Hence business schools teach courses, as does the Harvard Business School, on “Reimagining Capitalism.” This is because trust in capitalism and big business is weak. Anat Admati (2017), a professor at the Stanford University Business School, cites a Gallup poll revealing that only twenty-five percent of respondents expressed “a lot” or “a great deal” of confidence in big business; half said big business has excessive influence on society; low trust was especially evident among young people. In the pages of the Harvard Business Review, Admati (2019) stresses that the loss of faith in capitalism “goes hand in hand with the decline of trust in governments and in democracy.” For this reason, she argues that “before consigning society’s issues to big business, we must ask why governments appear dysfunctional and why politicians are not taking action.” Part of the answer, she maintains,
is that standard capitalistic success metrics, routinely taught in business schools, such as high stock prices, can create incentives to weaken or bypass governments. to achieve business objectives managers may do what they can to avoid taxes, lure capable individuals from the public sector, and lobby for outsized subsidies. (2019)
The financial crashes attributed to the behavior of the financial sector, the growing economic insecurity for most people, and the evidence of extreme income and wealth inequality have had political consequences. “Now that the evidence is in, is it any wonder that trust in elites and confidence in democracy have plummeted?”
Joseph Stiglitz (2019) asks. Responding to his rhetorical question he told an interviewer, “Nowhere was this intolerance greater than in macroeconomics, where the prevailing models ruled out the possibility of a crisis like the one we experienced in 2008. When the impossible happened, it was treated as if it were a 500-year flood –a freak occurrence that no model could have predicted.” But models do exist that predict such occurrences, if not their precise timing. Crises are not like a 500-year flood; rather they are endemic to capitalism, caused by speculative excess then followed by the collapse of asset prices that have grown to unrealistic levels.
Government in the era of global neoliberalism involves and enables – indeed encourages – a regime of accumulation that engenders asset bubbles and their collapse. Economic crises addressed by taxpayer bailouts to restore profitability to the financial sector have provoked public concern, raising the question of what the impact of the central bank’s response would be to the inflation that gripped the world from 2021 with its successive increases in interest rates. Would it allow for a soft landing, reducing inflation without causing a recession? Many at the time doubted it. William Dudley, the former president of the Federal Reserve Bank of New York and senior research scholar at the Center for Economic Policy Studies at Princeton University, was not alone when he offered the view that “a hard landing is virtually inevitable” (2022). Such a new crisis, perhaps of stagflation, invited political as well as economic impacts. During recent decades, critics within the profession have grown more insistent in pointing to the consequences of slower growth and stagnant working-class well-being in their questioning of the premises upon which a stilldominant macroeconomics has been built. Political observers suggested the rise of the hard right was to be an outgrowth of such economic failure.
The focus here is narrower, even as it illuminates a major failing of mainstream economics and of macroeconomics in particular (Batra 2020; Mitchell, Wray, and Watts 2019). The economic and political dominance of finance has reduced competition, leading to price increases in excess of the costs of inputs while slowing growth and increasing the share of profits in GDP. (In the U.S., after-tax corporate profits as a percentage of GDP rose from five percent in 1990 to over ten percent in 2021.) At the same time problems developed in the economy: secular stagnation, the extent of international financial weakness, the ways that globalization and financial deregulation facilitate tax avoidance and evasion, and the significance of extensive buybacks by companies of their own stock all pointed to problems to which that policy makers and regulators were not attending. The increases in interest rates engineered by the Federal Reserve devalued the holding of bonds that made up a large part of bank portfolios, throwing a number of banks into collapse as worried depositors withdrew their funds. These are all weighty factors that must be taken into account when evaluating a growth model heavily dependent on financialization without proper regulation.
Financialization is closely linked to a rapid increase in inequality, as discussed in Chapter 4, “Inequality and Financialization.” The focus is not on a moral condemnation of the dramatic and continuing escalation of income, wealth, and political
inequality but rather on its consequences for the economy. Inequality increases the funds available for asset speculation and elevates asset prices, which together produce still greater inequality. This process has been supported by actions of the Federal Reserve, which has developed a strategy of combating financial crises by increasing market liquidity through bond buying, including of toxic assets, to prevent a collapse. Such a policy greatly expands the balance sheet of central banks, a course of action that is difficult to reverse without damaging consequences, even when monetary policy turns to fighting inflation. As a result, the Federal Reserve takes control over the allocation of capital from the market and in so doing supports the survival of so-called zombie corporations, as is explained. The chapter also considers how accounting and legal conventions favor financial risk-taking, including the manner in which international capital mobility has harmed poor nations and emerging market economies, thereby further increasing global inequality.
Chapter 5, “Value Extraction and Financing Monopoly Power,” explains how financial firms appropriate the surplus created in other sectors of the economy and how financial investments made with borrowed funds raise stock prices, expand ownership claims, and substitute debt for equity in mergers and acquisitions. Such factors mean that many corporations have become part of massive portfolios of companies bought and sold by controlling firms, which exist as legal entities in order to raise money to buy, restructure, and sell them. The increased concentration and centralization of capital that have resulted impact suppliers, small retailers, workers, and consumers, generally reducing their well-being.
Chapter 6, “The Mainline Tradition and Endogenous Cycles,” rejects the macroeconomic theories that regard economic crises as a consequence of factors external to the economy. Heterodox explanations for endogenous business cycles, from those offered by Karl Marx to John Maynard Keynes and later political economists, recognize the growth of fictitious capital and the consequences of unfulfilled expectations to be central to business cycles – and to the collapse of the credit system (unless rescued by government intervention). Hyman Minsky and other heterodox economists articulate the understanding that modern capitalism is a money economy in which liquidity cannot be guaranteed and the animal spirits of investors matter. The chapter calls attention to the wide-ranging ideas of Keynes, discussing why many of them were rejected in the U.S. after World War II when the so-called Keynesianneoclassical synthesis became dominant.
Chapter 7, “Inflation in the Contemporary Conjuncture,” discusses the dramatic turn the economy has taken as a result of exogenous events. In this, it provides a sharp contrast to the preceding chapter, which explains how the internal workings of speculative finance create crises. It suggests that if the Covid pandemic and the war in Ukraine had not occurred it is likely financial markets would have produced a new crisis; however, the focus is on the slow response by the Federal Reserve to what it thought was temporary inflation, followed with a lag by its turnaround to raising interest rates quickly and dramatically out of fear of a wage-price spiral if expectations of inflation became entrenched in the public’s
thinking. The high cost of this response for the American economy and for other countries is explored. It is argued that there is an alternative strategy for confronting the inflation.
Chapter 8, “Finance and the Environmental Crisis,” investigates the role of the limited horizons which the financial sector brings to investment decisions and how such a strategy contributes to increased global warming, which threatens all living things – and even the financial sector, with those profiting from carbon-based fuels and their use striving to make as much income as they can before being prevented from doing so. As awareness has grown of what the world is facing, important voices among central bankers and the regulatory community demand that corporations transparently identify and communicate to investors the hazards that climate change threatens for their firm and the firm for the environment, along with what actions the company is taking to address them. The extent of corporate greenwashing is explored, since an unwillingness to relinquish profit opportunities provides a major impediment to forthrightly addressing the climate emergency. It concludes with a reflection on transformative proposals on current offer.
The last chapter, “Making the Future: Beyond Financialization,” examines the contemporary situation, reviewing measures that can replace the growth of selfexpanding financialization as an accumulation strategy. Forecasts based on historical data reveal that increases in the debt-to-GDP ratio amplify the likelihood of financial crises. Consequently, interest has grown in debt reduction to prevent a future economic catastrophe, even as there is considerable evidence that it may be too late to avoid a deep downturn under existing conditions with the overly conservative policy measures currently being taken. The chapter considers the desirability not only of re-regulation but of a comprehensive role for government in guiding the direction for growth. It offers guideposts for action, calling for a care economy, a Green New Deal along with a discussion of the desirability of extending the parameters of economic calculation in a return to the foundational commitment of political economy in moral philosophy. It concludes with a critique of the profession’s outdated assumptions and suggests how economists may more effectively contribute to building a new social structure of accumulation, one that promotes a future for Americans and for others sharing a planet that is currently threatened by a financial order dangerously out of control.
References
Admati, Anat R. 2017. “A Skeptical View of Financialized Corporate Governance.” Journal of Economic Perspectives, 3(13).
Admati, Anat R. 2019. “How Business Schools Can Help Restore Trust in Capitalism.” Harvard Business Review, September 3.
Batra, Ravi. 2020. Common Sense Macroeconomics. World Scientific. Carney, Mark. 2015. “Breaking the Tragedy of the Horizon – Climate Change and Financial Stability.” Speec h given at Lloyd’s of London, September 29. https://www.bis.org/review/ r151009a.pdf
Dyer, Nat. 2021. “Susan Strange Saw the Financial Crisis Coming, Your Majesty”: The Case for the LSE’s Great Global Political Economist.” Real-World Economics Review, 98. Fullbrook, Edward. 2010. “Keen, Roubini, and Baker Win Revere Award for Economics.” Real World Economics Review Blog, May 13.
Greenhill, Sam. 2008. “ ‘It’s Awful - Why Did Nobody See It Coming?’: The Queen Gives Her Verdict on Global Credit Crunch.” Daily Mail, November 5.
Hodgson, Geoffrey M. 2009. In Response: Our Letter to the Queen. https://www. geoffreymhodgson.uk/letter-to-the-queen.
Kay, John. 2015. Other People’s Money: The Real Business of Finance. PublicAffairs.
Kindleberger, Charles P. and Robert Aliber. 2005. Manias, Panics and Crashes: A History of Financial Crises. Palgrave Macmillan.
Leonard, Christopher. 2022. The Lords of Easy Money: How the Federal Reserve Broke the American Economy. Simon & Schuster.
Mitchell, William, L. Randall Wray and Martin Watts. 2019. Macroeconomics. Red Globe Press, Macmillan International.
Neate, Rupert. 2012. “Queen Finally Finds Out Why No One Saw the Financial Crisis Coming.” Guardian, December 13.
Porter, Eduardo. 2013. “Economists Agree: Solutions Are Elusive.” New York Times, April 23. Rappeport, Alan. 2023. “World Bank Warns of Global ‘Lost Decade’.” New York Times, March 28.
Smialek, Jeanna. 2022. “Fed Official Didn’t Reveal Full Extent of Trading.” New York Times, January 7.
Smialek, Jeanna, Jim Tangersley and Joe Rennison. 2022. “Could a Bust Like Britain’s Hit the U.S.?” New York Times, October 20.
Stiglitz, Joseph E. 2019. “The End of Neoliberalism and the Rebirth of History.” Project Syndicate, November 4.
Worthen, Molly. 2022. “Can Business Schools Really Reimagine Capitalism?” New York Times, May 5.
2 FINANCIALIZATION, ITS CONTEMPORARY SETTING, AND SIGNIFICANCE
Jeremy Rudd, a senior researcher at the Federal Reserve, has offered a critique of conventional macroeconomics, indeed of mainstream economics tout court. When his challenging essay appeared in the Fed’s own Finance and Economics Discussion Series in 2021, his views received wide notice. As he wrote, “everyone knows” that “[a]ggregate production functions (and aggregate measures of the capital stock) provide a good way to characterize the economy’s supply side”; that “The theory of household choice provides a solid justification for downward-sloping market demand curves”; and that “Over a sufficiently long span – specifically, one that allows necessary price adjustments to be made – the economy will return to a state of full market clearing” (2021). However, he found these assumptions in no way reflective of the real-world economy. Nor are they, as has been convincingly argued by other insiders for some time (Buiter 2009). Still, it appears that “everyone” does not know that what continues to be taught across much of the macroeconomic curriculum is of little value to policy makers in the actually existing economy.
Greater humility has developed in a profession that had been unable to offer satisfactory responses to the question of what has caused the serious downturns that have afflicted the U.S. in the 21st century: the tech bubble debacle at its onset, the subprime mortgage bubble and its disastrous collapse in 2008, and the recession coinciding with the Covid-19 pandemic from 2020. In each case, policy makers and regulators missed what was occurring in the economy to produce these sharp downturns. And they failed to recognize that the crises were a product of financial deregulation. The impacts should have been evident after the collapse of the savings and loan (S&L) banks in the decade from the mid-1980s to the mid-1990s. But even as estimates of the S&L bailout reached $1.4 trillion over forty years, the public was “curiously subdued” (Shaw 2019). Through this trauma the Fed’s promise to do what was necessary to preserve the financial system (after the S&P 500 Index lost ten
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percent of its value in the week ending October 16, 1987, and an additional twenty percent the following Monday) heralded the onset of what became more than three decades of liquidity, debt, and asset inflation, which exposed the American economy to frequent financial crises (Nygaard 2020; Popularis 2022). The subsequent downturns reveal a pattern of financial fragility and painful consequences that have had a profound impact on the public’s quotient of discontent and consequently on American politics. Economists have gotten better, in retrospect, at understanding finance in more critical terms. The macroeconomic pattern that continues should be difficult to ignore, even as its reality has to a large extent been obscured in public debate by the impacts of the Covid pandemic and the war in Europe.
Economists have been slow to revise their thinking regarding the macroeconomics of economic breakdowns. Neil Irwin writes of Rudd’s intervention that
In effect many of the key ideas underlying economic policy during the Great Moderation – the period of relatively steady growth and low inflation from the mid-1980s to 2007 that also seems to be a high-water mark for economists’ overconfidence – increasingly look to be at best incomplete, and at worst wrong.
(2021)
They are only accepted, Rudd himself suggests, because the economy is a complicated system “that is inherently difficult to understand, so propositions like these” –the “arrant nonsense” in question – “are all that saves us from intellectual nihilism” (2021). With the unexpectedly high subsequent inflation, dispute over its causes and what the Fed should do increased as basic debates over economic theory grew intense and disparate, with fervently held opinions often clashing. Some prominent economists acknowledged mainstream macroeconomics to be deficient, characterizing it as only in its scientific infancy. Adam Posen, president of the Peterson Institute for International Economics, writes that macroeconomics
behaves like we’re doing physics after the quantum revolution, that we really understand at a fundamental level the forces around us. We’re really at the level of Galileo and Copernicus . . . just figuring out the basics of how the universe works. It requires more humility and acceptance that not everything fits into one model yet.
(Irwin 2021)
Rudd’s essay was more pessimistic even as it offered a critique of what Thomas Kuhn termed “normal science,” the conventional wisdom of the profession. While yet to be formalized into anything as grand as the rejection of the Ptolemaic system by the Copernican Revolution (featured in Kuhn’s classic work), the broad intellectual upheaval occurring in economics announces the same type of scientific revolution of which Kuhn wrote, one produced by the challenges offered by a more convincing paradigm than the one that had previously dominated (Kuhn 1962).
Of course, economists are not being asked to determine how the universe works –although this may be the hubristic presumption of some of them. The most prominent case in point is the influential Becker and Posner (2009). The argument here, in Kuhnian terms, is that it is not a question of further developing the existing model, but rather of departing from it and providing a better one. Kuhn found that the issue involves the resistance of the accredited authorities of the science in question who, committed to the old way of thinking, refuse to entertain new explanations. This is the problem; it is why change typically originates in the work of younger scholars. However, the failures of mainstream theory have been increasingly recognized by many in the profession through the decades of hegemony of global neoliberalism; a number of commentators, many now prominent scholars who have made what are acknowledged to be important contributions throughout their careers, are outspoken in their critique of the questionable givens that continue to be accepted by the mainstream of the profession.
With regard to economics as a discipline, there are signs that a paradigm change is underway. While references will be made to such a Kuhnian revolution, it is not possible to do this broad topic justice here, given the focus on financialization, although comments reflective of this larger transformation will be made throughout this study, especially in the concluding chapter. Any reference to a Kuhnian scientific revolution must be deployed with care, however, as much of the work of the reformation of economics should include the contributions of ignored, dismissed, forgotten, or repressed perspectives from the discipline’s past that are relevant to the present. It will be suggested that some of these ideas usefully challenge conventional views of market psychology and monetary policy. The necessary scientific revolution in economics may have aspects of a counterrevolution.
Economies Evolve and Change
Since its beginning in the moral philosophy of the 18th-century political economy, a contest has existed in economics between what have been termed “the mainstream” and “the mainline” traditions of the discipline (Tabb 1999). The difference lies in the assumptions regarding how the world works and what they choose to regard as givens that economists adopt before they undertake research. The mainstream tradition focuses on the allocation of scarce resources among various and competing ends (Robbins 1932). It describes a market that is believed to assure that supply and demand reach an equilibrium at a competitive price, thus at a price that is fair to willing buyers and willing sellers. It does recognize that those not involved in a transaction or business decision may nonetheless be impacted, but it considers such occurrences to be “externalities,” marginal to the general optimality of markets. The cost of such a presumption has grown clearer. It is important to acknowledge that bias in terms of fostering and protecting financial institutions is also a political choice, one involving redistribution from the society to the financial institutions, their owners, and their top executives.
The mainline tradition recognizes the evolution of economies over time and the importance for markets of the power generated by political and legal interventions, institutional change, and discrimination based on ascriptive characteristics. It understands that collective action problems are extensive and best not regarded as externalities; in fact, they need to be addressed actively by government, overruling private, profit-oriented agents and institutions, being necessary to achieve what may be defined as social efficiency, the effective use of resources to meet the goal of an inclusive, sustainable economy.
The data that economists choose to stress and how they interpret them are hardly innocent of what Joseph Schumpeter has termed “their pre-analytic vision” (Schumpeter 1954: 41). This pre-analytic cognitive act on the part of economists surely cannot be ignored in a project such as this one. It forms the root of disagreements among experts. Economists have increasingly recognized that fiscal and monetary policies are themselves political in nature. For example, inflation reflects spending and saving patterns that are influenced by political choices; it is therefore fundamentally a political phenomenon (Coppola 2021).
Economists in the mainline tradition are often called heterodox, to distinguish them from the mainstream orthodox. For the purposes of this study, Thomas Palley’s view is accepted that heterodox economics
interprets financialization through the lens of political economy, whereby the economy constitutes a political economic system in which politics and political interests are intrinsic and inescapably present. The economy is a contested terrain and its structure is constructed by dominant interests.
(2021)
He explains that mainstream economics
resists recognizing the inevitable politically constructed nature of both the economy and policy. Consequently, mainstream economics struggles with the essence of political economy, and that shows up in the absence of a construct akin to financialized neoliberal capitalism.
(2021)
That is to say, the very project of the present study is absent from the dominant mainstream conversation, even as it exists in a lively discourse at the margins of the profession (Jo, Chester, and D’Ippoliti 2017).
Among Marxists one of the key aspects of financialization is the rise of financial securities as a dominant form of property, a form of fictitious capital – fictitious “not because they are not real or the income they provide is an illusion” but because they “are not really capital”; rather, they represent a contractual claim on future income that is ultimately produced with capital. In other words, they cannot be understood
without a consideration of financialization in relation to the class struggle on a global scale (Kaldor 2022).
The Metastasizing of Finance
John Maynard Keynes famously wrote the oft-quoted:
Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.
(1936: 80)
While highly profitable to some, the “job” that financialization has done in the era of global neoliberalism has cost the economy – and the society at large – a great deal. In recent decades, money centers have grown both in absolute size and in proportion to their national economies. As Servaas Storm argues, “[o]urs is, without a doubt, the age of finance – of the supremacy of financial actors, institutions, markets and motives in the global capitalist economy” (Storm 2018: 303). Numerous factors have created this reality: the confluence of a supportive ideology (neoliberalism); historical circumstance (the stagflation of the 1970s); the development of sophisticated mathematical tools for valuing financial assets; and the revolution in information technology, which lowered the cost and increased the speed of financial transactions, allowing for quick profits on miniscule price differentials. The finance, insurance, and real estate (FIRE) sector accounted for forty percent of domestic corporate profits in the U.S. by 2007, on the eve of the system-jolting Great Recession (as it is called in the U.S.) or the Global Financial Crisis (as it is termed elsewhere).
Financialization describes an expansion in the size and importance of the financial sector relative to the overall economy, one characterized by “the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies,” in Gerald Epstein’s telling (Epstein 2006: 3). Mike Konczal and Nell Abernathy add a political dimension, defining financialization as “the growth of the financial sector, its increased power over the real economy, the explosion in the power of wealth, and the reduction of all of society to the realm of finance” (Konczal and Abernathy 2015: 4). Lenore Palladino stresses corporate financialization, “the increasing share of profits earned from financial activity and the increasing flow of profits to shareholders” (Palladino 2018: 4). She understands corporate financialization as the mechanism for such a capture, specifically through the domination of financial activities within firms.
Luis Carlos Bresser-Pereira explains that his use of the term “financialization” “will be understood as a distorted financial arrangement based on the creation of artificial financial wealth – that is, financial wealth disconnected from real wealth or
from the production of goods and services. Neoliberalism, in its turn,” he maintains, “should not be understood merely as radical economic liberalism but also as an ideology that is hostile to the poor, to workers, and to the welfare state” (Bresser-Pereira 2010: 500). A great number of other definitions of financialization exist at different levels of analysis (Mader, Mertens, and van der Zwan 2020), but these frame the discussion here.
There are various methods of measuring the importance of financialization, each with strong and weak aspects (Karwowski, Shabani, and Stockhammer 2020). Marwil Dávila-Fernández and Lionello Punzo (2022) select employment. They describe a positive, long-term relationship between the share of financial employment and more equal income distribution and demonstrate the evolution of the proportion of financial assets to corporate total assets over the sixty years prior to 2020. In the 1980s, their data are divided into two periods. As they argue, it is in this decade that “there is a clear structural break.” They also identify a positive, long-term relationship between the share of financial employment and income inequality, as well as between financial assets and income inequality. Looking at the key trends in sectoral employment, Dávila-Fernández and Punzo find that around seventy percent of the reduction in industrial employment corresponds to a rise in the share of financial and business service employment. They conclude that in this sense, financialization “can be seen as a mirror to deindustrialization.” They also find a correspondence between the latter and the rise of income inequality in the U.S. (2022: 196 and 203–4; for a more extensive discussion of the relationship between financialization and GDP see Assa 2016; and between financialization and inequality, Godechot 2020).
Remzi Baris Tercioglu demonstrates that by considering expenditures on financial, healthcare, and professional business services, which rose disproportionately between 1947 and 2017 as intermediate consumption (that is, necessary but not final consumption, for reasons he argues), it is clear that the usual measure of well-being exaggerates the presumed improvement for the average household. This reclassification allows him to compare the widely used national income and products accounts, which he labels the conventional measures, with his own estimates, which he terms “alternative measures.” The dissimilarities between the two reveal rapidly rising costs of intermediate consumption, a deeper slowdown in growth from 1973, and a more moderate rise in consumption share after 1980, along with a sharper decline in the ratio of labor share (defined as compensation to employees) to GDP from 1985 to 2015. These differences are substantial. His conclusion is that the cost of basic requirement spending has increased (including the extractions of finance), reducing the standard of living for the working class by adding to the cost of basic provisioning (Tercioglu 2021).
Compatible with the significance of such a calculation is the view that neoliberalism “seeks to shift how human beings exist in the world, to change how we relate to each other and what we expect from life. Over time, we move from considering ourselves mutually responsible beings with a shared fate to isolated atoms liable solely for our own lives,” Lynn Parramore (2022) argues. “Gradually, we shift from empowered citizens to people destined for servitude to arbitrary economic
powers that [lie] well beyond our reach or understanding. Our humanity fades . . . in an invisible global economy ruled somehow by an invisible fist.” In more familiar specifics, “neoliberals dedicated themselves to protecting unrestricted global trade, crushing labor unions, deregulating business, and usurping government’s role in providing for the common good with privatization and austerity.”
Such a judgment would not be amiss in a profession guided by the moral philosophy found in the work of Adam Smith who wrote not only the book that economists cite if few have read, The Wealth of Nations (1776), but found in greater detail in a second important Adam Smith contribution, The Theory of Moral Sentiments published in 1759. There he established the groundwork for the desirability of a market economy to be embedded in a moral society (Tabb 1999: chapter 3). The opening words of Sentiments state: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.” Later in Part I he tells the reader that “to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature” (Smith 2002 [1759]: 11 and 30).
With increasing frequency, if usually without attribution to the father of economics, advocates and practitioners of progressive policy argue that a sense of morality must guide our programmatic suggestions, which should derive from our capacity to empathize directly and indirectly with other people, and that efficiency and competition should not be the be-all and end-all of economics. This understanding features prominently in the treatment here.
The ways in which finance impacts the larger economy and appropriates profit by its interventions and which categories of institutions and individuals benefit are both prominent aspects of ongoing investigations of financialization (Jayadev, Mason, and Schröder 2018). It is certainly the case that since the 1970s, American corporations have increasingly derived profits from financial activities. The important issue raised by the data concerns why profitability from the traditional production of goods and services made in the U.S. has not attracted greater investment. In fact, the rate of profit from such production has not recovered from the waning days of the National Keynesian era, when a profit squeeze was responsible for slowing economic growth (Kotz 2019). The new reality has involved disinvestment from production of goods and non-financial services; making money from money through asset speculation and forcing down real compensation, accompanied by speedups for workers have become prominent, all sustained by the greater power of capital in an era of trade union decline.
What must be explained, as Paul Sweezy argued, is how and why financial capital, “once cut loose from its original role as a modest helper of a real economy of production to meet human needs, inevitably becomes speculative capital geared solely to its own self-expansion.” He wrote of his realization that in “earlier times no one ever dreamed that speculative capital, a phenomenon as old as capitalism itself, could grow to dominate a national economy, let alone the whole world. But it has” (Sweezy 1994). Decades after Sweezy’s insight, there has been an acceleration of
leveraged buyouts by private equity and hedge funds relying on borrowed money to purchase control of large companies. This has been accompanied by greater pricing power in the now more substantially concentrated industries of the economy. As income has stagnated, the indebtedness of working-class families has become a more important source of bank and other financial firms profitability.
Financialization has not only redistributed income upward and increased inequality; it has also slowed growth. The phenomena are related (Stockhammer 2004). Barry Cynamon and Steven Fazzari demonstrate that even before the Covid outbreak, output may have been running ten percent below the demandled path that would have prevailed had the distribution of income between the bottom ninety-five percent of Americans and the top five percent been at levels consistent with what they were in the 1960s and 1970s (2015: 179–180). Business analysts have recognized this as well (Cynamon and Fazzari 2015). In a report to investors, S&P Capital IQ contends that “Higher levels of income inequality increase political pressures, discouraging trade, investment, and hiring.” Inequality is simply not good for the economy, the firm’s analysts insist. “Our review of the data, as well as a wealth of research on this matter, leads us to conclude that the current level of income inequality in the U.S. is dampening GDP growth” (Cynamon and Fazzari 2015).
That rising asset values are not correlated with growth or productivity prompts questions about “basic economic policy assumptions and their theoretical foundations,” as Julius Krein argues. Rather, different policy approaches are “required to achieve these distinct objectives,” and “the larger relationship between capitalism and development will need to be rethought” (McKinsey and Company 2021). The data support such concerns. In a 2021 report, the McKinsey Global Institute explained that the tripling of global net worth mainly reflected valuation gains in asset prices. The growth of what the analysts termed “investment in productive assets that drive our economies,” on the other hand, has been disappointing, even with government subsidization of consumer spending. A key finding of their report is that across ten countries that account for about sixty percent of global GDP (Australia, Canada, China, France, Germany, Japan, Mexico, Sweden, the U.K., and the U.S.), the historic link between the growth of net worth and the growth of GDP no longer holds. The researchers found that while economic growth “has been tepid” over the past two decades in advanced economies, balance sheets and net worth “that have long tracked it [growth] have tripled in size” (McKinsey and Company 2021).
Thus, divergence is caused by the dramatic rise in financialization – not, as might be expected, by the growing digitization of the economy, as some have suggested. While an important increase has occurred in the value of intellectual property, McKinsey focuses on “a glut of savings [that] has struggled to find investments offering sufficient economic returns and lasting value to investors.” It is not that intangible assets (intellectual property like R&D and software) are not playing an increasingly important role in today’s economy with their high expected return (McKinsey predicts twenty-four percent, the highest rate among produced asset categories), but that intangibles represent only four percent of total net worth.
Asset values in 2020 were nearly fifty percent higher relative to income than the long-run average. For every one dollar in new net investment over the past twenty years, overall liabilities grew by almost four dollars, of which about two dollars involved debt. Dividing the global balance sheet into three components – the real economy balance sheet, the financial balance sheet, and the financial sector balance sheet – the McKinsey researchers found that each amounted to roughly $500 trillion. What they term “the real economy” balance sheet comprised $520 trillion in real assets (such as machinery and equipment, infrastructure, buildings, natural resources, and intellectual property). In the financialized economy, the balance sheet of households, corporations, and governments amounts to $510 trillion in financial assets: stocks, bonds, pension funds, and cash and deposit. Financial institutions create and intermediate another $510 trillion in financial assets and liabilities. This tripart division allows for a better understanding of what net worth consists.
Financial assets represent wealth to sectors, institutions, households, and countries, but on the consolidated global balance sheet they do not increase net worth, nor do financial liabilities subtract from it. This is because financial corporations, designated as the intermediators of wealth, “mirror the assets and liabilities in other sectors” (Woetzel, Mischke, Madgavkar, Windhagen, Smit, Birshan, Kemeny, and Anderson 2021). That is, they hold financial assets: mortgages, public and corporate bonds, and equities, and they owe deposits, bonds, and pension assets, mostly to households.
What does this tell us? There are different ways to interpret the expansion of balance sheets and net worth relative to GDP. But it is useful to see that “what is essentially double counting invites a paradigm shift that could precede from the possible reversion to the historical mean, softly or abruptly” of the real economy balance sheet, as the McKinsey economists suggest. They argue that “[n]ot only is the sustainability of the expanded balance sheet in question; so too is its desirability, given some of the drivers and potential consequences of the expansion.” While this is certainly correct, the focus of their alternative, investing in innovation while pulling back on the dangers of financialization (a term they do not use), requires the redirection of investment to the real sector by government.
Two things are required. The first is the use of policy to reduce the pressure of what is a very large superbubble. The second calls for a decisive reliance on fiscal policy to spend on what is necessary to reduce global warming while expanding needed public goods as an alternative (and sustainable) growth path to replace financialization as the engine of growth. It will be demonstrated that the heterodox tradition both provides an explanation for the financial collapse that is implicitly premised in the conclusion to the McKinsey study and goes beyond its proposals for what is to be done.
Revisiting the Function of Banks and Finance
Governor of the Bank of England and Chairman of the Financial Stability Board Mark Carney (2014) was not alone in believing that “financial capitalism is not an end in itself, [but] a means to promote investment, innovation, growth and
prosperity.” He assumed that banking is fundamentally about intermediation, about connecting borrowers and savers in the real economy. But he worried that “when bankers become detached from end-users, their only reward becomes money.” This seemed wrong to him: “Purely financial compensation ignores the non-pecuniary rewards to employment, such as the satisfaction from helping a client or colleague succeed” (2014). Such satisfaction, a survey of financial world participant behavior suggests, is not uppermost in the minds of the financial wizards who judge success by how much money they make; consequently, they are not infrequently caught perpetuating socially costly schemes (Natarajan and Robinson 2019).
In contrast to Carney’s view in 2014, the most obvious aspect of financialization involves a dramatic change in the dominant business of banks. They have become part of a speculative network, one involving excessive risk-taking. Banks are themselves large borrowers from non-depositor sources. Rather than lubricating the economy by mediating between savers and those needing to fund productive investment, they have become focused on securitizing credit-card borrowing, collateralizing home mortgages, and since 2008 generating other, similar debt obligation products. This transformation of finance in the neoliberal era has created new products to facilitate the capture of financial rents from changes in the prices of securities, often financed through the overnight repo market. Such practices allow speculating with money borrowed short term and regularly rolled over by lenders – funds that finance not only the buying and selling of financial products but, as will be discussed, the buying and selling of companies.
One can certainly agree with Andrew Haldane that the maximum efficient scale of banking as traditionally understood, or the current style of banking if it were carried out without the huge government guarantees against loss and implicit subsidies, could be relatively modest and that the cost of great size comes with the inability of top management to evaluate risk as the size of the financial institution has grown, engorged by new subsidiaries. Of the bank mergers and acquisitions which had taken place by that time, Haldane, then chief economist and executive director of monetary analysis and statistics at the Bank of England, spoke at a conference in 2010; he asserted that the majority of the merged firm under-perform the market in the subsequent period. He suggested that the most likely cause was articulated by Austin Robinson in the 1930s:
Man’s mind and man’s memory is essentially a limited factor. . . . Every increase in size beyond a point must involve a lengthening of the chain of authority . . . at some point the increasing costs of co-ordination must exceed the declining economies. (1934)
In support of such thinking, he remarked that when Lehman Brothers failed, it had almost one million open derivatives contracts. Haldane reckoned that whatever the technology budget available, “it is questionable whether any man’s mind or memory could cope with such complexity” (Haldane 2010).
The largest single increase ever recorded in financial services output occurred in the fourth quarter of 2008, coinciding with the Lehman bankruptcy and the near collapse of other major banks. At the time Lehman was a 164-year-old firm and the fourth largest U.S. investment bank. Although its bankruptcy initiated the Global Financial Crisis, it was allowed to collapse because it was obviously badly run, deserved to fail, and provided no real services to the economy that were not available from others. It would not be missed, and it would serve as an example. But investors knew that Lehman’s bankruptcy threatened the financial institutions that owned its bonds; the risky business of Lehman was interconnected with much of Wall Street, and its demise would bring down others, as Washington policy makers soon saw as well.
It was not too big to fail. Rather it was too complex to be allowed to fail. Lehman had relied on the overnight financial market; when it could not meet its obligations, lenders panicked. The decision to let it go undermined the confidence in the entire financial system. If the deposit taking and lending to final borrowers for mortgages and business loans had remained separate, the financial conglomerates might have been allowed to fail. Indeed, if the separation had remained and the implicit protection had not been extended, few of the derivative products would have made sense to buyers. Separating trading from taking deposits would shrink finance and save the cost of the bailouts. But in the short run this would have to wait. Given the interdependencies, U.S. regulators cast about for some other entity or entities to take over Lehman, once again promising they would prevent a reoccurrence. Barclays ended up buying the U.S. operations of Lehman Brothers the day after it filed for bankruptcy, while Nomura purchased the firm’s Asian and European operations. Deregulation and the incentives of bank officials have changed the nature of banking over the past half century. In the 1970s the products that banks could offer were limited, as was their price. “It was almost like a public utility. There were no exotic securities such as credit derivatives to deliver exorbitant profits that put the whole economy at risk. Globally, fixed exchange rates and capital controls meant that bankers could not make bets against currencies and entire economies (Kuttner 2018: 102). By the second decade of the new century, however, it was clear that financial institutions “legally manipulated markets in plain sight by pushing their own share prices up with cheap money availed to them by the central bank that is supposed to regulate them,” as a former Goldman Sachs managing director explained (Prins 2017). The regulators allowed, indeed encouraged, such behavior. There were few economies to scale even as there was market power to be achieved. A study at the end of the 20th century showed that efficient banks appeared to operate with assets of less, perhaps much less, than $100 billion, and that putting the matter conservatively, “there is no strong evidence of increased bank efficiency after a merger or acquisition,” according to a conclusion based on a survey of over 100 studies (Berger and Humphrey 1997). By 2008, 145 banks globally had assets worth above $100 billion, with most of them being universal banks combining multiple business activities. Taken together these institutions account for eighty-five percent of the assets of the world’s top 1,000 banks. The U.S. government’s long-term
approval – indeed, often encouragement – of mergers between the mega banks and traditional smaller and midsized banks followed the Depository Institutions Deregulation and Monetary Control Act of 1980 and subsequent permissive enforcement practices with regard to mergers. It was the largest banks that accounted for the financial sector quadrupling its borrowing relative to the real economy between 1978 and 2007, with profits rising by 800 percent adjusted for inflation between 1980 and 2005 (compared to a profit growth of 250 percent for the non-financial sector).
Elected officials were major deregulators. Legislative deregulation, which had begun during the Carter administration, continued under President Reagan, who signed the Garn-St. Germain Act that deregulated S&L – which soon went into crisis, dragging the U.S. into the first of the financial crises it was to experience from the end of the 20th century. In 1994 under Bill Clinton, the Riegel-Neal Act had reinterpreted the Depression era Glass-Steagall Act, further allowing commercial banks to gain more of their revenues from activities that had previously been in the provenance of investment banks. In 1999, Glass-Steagall was replaced by the Gramm-Leach-Bliley Act, which allowed mega-mergers in finance, permitting a further step in what was a movement to deregulate banking. It authorized a single institution to act as a bank, a securities firm, and an insurance company. Its adoption further demonstrated the culture of risk-taking in finance that was gaining Washington’s imprimatur. The Commodities Futures Modernization Act of 2000 exempted financial derivatives such as mortgaged-backed securities from regulation. The appeal of derivatives is that they presumably distribute risk to those most willing to take it on, allowing others to buy insurance against risk. “Actually,” writes John Kay, “[i]ts purpose was not to spread risk more effectively by passing it to those better equipped to handle it, but [to] dump it on those who understood less about it. Risks were not more, but less, effectively managed as a result of the transfer” (Kay 2015: 69). The impact of the growth of derivatives was soon felt in the Great Recession of 2008.
In 1987 Alan Greenspan, an Ayn Rand disciple, was appointed by Ronald Reagan to head the Federal Reserve. The following year, Greenspan allowed Travelers Group and Citicorp to merge, forming Citigroup Inc., which would become the largest financial services company in the world. The Glass-Steagall Act of 1933 had prevented commercial banks from owning brokerage firms and insurance units, but the companies asserted at the time that they were taking a chance because they expected those laws to change in the near future. New York Republican Alfonse D’Amato, chairman of the Senate Banking Committee, noted that most legal obstacles to the Citigroup merger had already been eliminated (Schultz 1998). This was de facto true. In 1989, Greenspan allowed JPMorgan & Company, a commercial bank, to underwrite a corporate bond issue, which was understood by many as a violation of the Banking Act of 1933 that separated commercial banking from investment banking. Greenspan had served on the board of directors of JPMorgan & Company for a decade, but it may be that ideological loyalties more than ties to a former employer were responsible for his action.
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que soit ce morceau du lever du soleil, si varié, si brillant, si complet? Il consiste dans un simple accord d’ut, répété sans cesse, et auquel Rossini n’a mêlé qu’un accord de quart et sixte. En ceci éclate la magie de son faire. Il a procédé, pour vous peindre l’arrivée de la lumière, par le même moyen qu’il employait pour vous peindre les ténèbres et la douleur. Cette aurore en images est absolument pareille à une aurore naturelle. La lumière est une seule et même substance, partout semblable à elle-même, et dont les effets ne sont variés que par les objets qu’elle rencontre, n’est-ce pas? Eh! bien, le musicien a choisi pour la base de sa musique un unique motif, un simple accord d’ut. Le soleil apparaît d’abord et verse ses rayons sur les cimes, puis de là dans les vallées. De même l’accord poind sur la première corde des premiers violons avec une douceur boréale, il se répand dans l’orchestre, il y anime un à un tous les instruments, il s’y déploie. Comme la lumière va colorant de proche en proche les objets, il va réveillant chaque source d’harmonie jusqu’à ce que toutes ruissellent dans le tutti. Les violons, que vous n’aviez pas encore entendus, ont donné le signal par leur doux trémolo, vaguement agité comme les premières ondes lumineuses. Ce joli, ce gai mouvement presque lumineux qui vous a caressé l’âme, l’habile musicien l’a plaqué d’accords de basse, par une fanfare indécise des cors contenus dans leurs notes les plus sourdes, afin de vous bien peindre les dernières ombres fraîches qui teignent les vallées pendant que les premiers feux se jouent dans les cimes. Puis les instruments à vent s’y sont mêlés doucement en renforçant l’accord général. Les voix s’y sont unies par des soupirs d’allégresse et d’étonnement. Enfin les cuivres ont résonné brillamment, les trompettes ont éclaté! La lumière, source d’harmonie, a inondé la nature, toutes les richesses musicales se sont alors étalées avec une violence, avec un éclat pareils à ceux des rayons du soleil oriental. Il n’y a pas jusqu’au triangle dont l’ut répété ne vous ait rappelé le chant des oiseaux au matin par ses accents aigus et ses agaceries lutines. La même tonalité, retournée par cette main magistrale, exprime la joie de la nature entière en calmant la douleur qui vous navrait naguère. Là est le cachet du grand maître: l’unité! C’est un et varié. Une seule phrase et mille sentiments de douleur, les misères d’une nation; un seul accord et tous les accidents de la
nature à son réveil, toutes les expressions de la joie d’un peuple. Ces deux immenses pages sont soudées par un appel au Dieu toujours vivant, auteur de toutes choses, de cette douleur comme de cette joie. A elle seule, cette introduction n’est-elle pas un grand poëme?
—C’est vrai, dit le Français.
—Voici maintenant un quinquetto comme Rossini en sait faire; si jamais il a pu se laisser aller à la douce et facile volupté qu’on reproche à notre musique, n’est-ce pas dans ce joli morceau où chacun doit exprimer son allégresse, où le peuple esclave est délivré, et où cependant va soupirer un amour en danger. Le fils du Pharaon aime une Juive, et cette Juive le quitte. Ce qui rend ce quintette une chose délicieuse et ravissante, est un retour aux émotions ordinaires de la vie, après la peinture grandiose des deux plus immenses scènes nationales et naturelles, la misère, le bonheur, encadrées par la magie que leur prêtent la vengeance divine et le merveilleux de la Bible.
—N’avais-je pas raison? dit en continuant la duchesse au Français quand fut finie la magnifique strette de
Voci di giubilo
D’in’orno echeggino, Di pace l’Iride
Per noi spuntò
(Que des cris d’allégresse retentissent autour de nous, l’astre de la paix répand pour nous sa clarté.)
—Avec quel art le compositeur n’a-t-il pas construit ce morceau?... reprit-elle après une pause pendant laquelle elle attendit une réponse, il l’a commencé par un solo de cor d’une suavité divine, soutenu par des arpéges de harpes, car les premières voix qui s’élèvent dans ce grand concert sont celles de Moïse et d’Aaron qui remercient le vrai Dieu; leur chant doux et grave rappelle les idées sublimes de l’invocation et s’unit néanmoins à la joie du peuple profane. Cette transition a quelque chose de céleste et de terrestre à la fois que le génie seul sait trouver, et qui donne à l’andante du
quintetto une couleur que je comparerais à celle que Titien met autour de ses personnages divins. Avez-vous remarqué le ravissant enchâssement des voix? Par quelles habiles entrées le compositeur ne les a-t-il pas groupées sur les charmants motifs chantés par l’orchestre? Avec quelle science il a préparé les fêtes de son allégro. N’avez-vous pas entrevu les chœurs dansants, les rondes folles de tout un peuple échappé au danger? Et quand la clarinette a donné le signal de la strette Voci di giubilo, si brillante, si animée, votre âme n’a-t-elle pas éprouvé cette sainte pyrrhique dont parle le roi David dans ses psaumes, et qu’il prête aux collines?
—Oui, cela ferait un charmant air de contredanse! dit le médecin.
—Français! Français! toujours Français! s’écria la duchesse atteinte au milieu de son exaltation par ce trait piquant. Oui, vous êtes capable d’employer ce sublime élan, si gai, si noblement pimpant, à vos rigodons. Une sublime poésie n’obtient jamais grâce à vos yeux. Le génie le plus élevé, les saints, les rois, les infortunes, tout ce qu’il y a de sacré doit passer par les verges de votre caricature. La vulgarisation des grandes idées par vos airs de contredanse, est la caricature en musique. Chez vous, l’esprit tue l’âme, comme le raisonnement y tue la raison.
La loge entière resta muette pendant le récitatif d’Osiride et de Membré qui complotent de rendre inutile l’ordre du départ donné par le Pharaon en faveur des Hébreux.
—Vous ai-je fâchée? dit le médecin à la duchesse, j’en serais au désespoir. Votre parole est comme une baguette magique, elle ouvre des cases dans mon cerveau et en fait sortir des idées nouvelles, animées par ces chants sublimes.
—Non, dit-elle. Vous avez loué notre grand musicien à votre manière. Rossini réussira chez vous, je le vois, par ses côtés spirituels et sensuels. Espérons en quelques âmes nobles et amoureuses de l’idéal qui doivent se trouver dans votre fécond pays et qui apprécieront l’élévation, le grandiose d’une telle musique. Ah! voici le fameux duo entre Elcia et Osiride, reprit-elle en profitant du temps que lui donna la triple salve d’applaudissements par laquelle le parterre salua la Tinti qui faisait sa première entrée. Si la Tinti a
bien compris le rôle d’Elcia, vous allez entendre les chants sublimes d’une femme à la fois déchirée par l’amour de la patrie et par un amour pour un de ses oppresseurs, tandis qu’Osiride, possédé d’une passion frénétique pour sa belle conquête, s’efforce de la conserver. L’opéra repose autant sur cette grande idée, que sur la résistance des Pharaons à la puissance de Dieu et de la liberté, vous devez vous y associer sous peine de ne rien comprendre à cette œuvre immense. Malgré la défaveur avec laquelle vous acceptez les inventions de nos poëtes de livrets, permettez-moi de vous faire remarquer l’art avec lequel ce drame est construit. L’antagonisme nécessaire à toutes les belles œuvres, et si favorable au développement de la musique, s’y trouve. Quoi de plus riche qu’un peuple voulant sa liberté, retenu dans les fers par la mauvaise foi, soutenu par Dieu, entassant prodiges sur prodiges pour devenir libre? Quoi de plus dramatique que l’amour du prince pour une Juive, et qui justifie presque les trahisons du pouvoir oppresseur? Voilà pourtant tout ce qu’exprime ce hardi, cet immense poëme musical, où Rossini a su conserver à chaque peuple sa nationalité fantastique, car nous leur avons prêté des grandeurs historiques auxquelles ont consenti toutes les imaginations. Les chants des Hébreux et leur confiance en Dieu sont constamment en opposition avec les cris de rage et les efforts du Pharaon peint dans toute sa puissance. En ce moment Osiride, tout à l’amour, espère retenir sa maîtresse par le souvenir de toutes les douceurs de la passion, il veut l’emporter sur les charmes de la patrie. Aussi reconnaîtrez-vous les langueurs divines, les ardentes douceurs, les tendresses, les souvenirs voluptueux de l’amour oriental dans le:
Ah! se puoi cosi lasciarmi.
(Si tu as le courage de me quitter, brise-moi le cœur.)
d’Osiride, et dans la réponse d’Elcia:
Ma perchè cosi straziarmi.
(Pourquoi me tourmenter ainsi, quand ma douleur est affreuse?)
—Non, deux cœurs si mélodieusement unis ne sauraient se séparer, dit-elle en regardant le prince. Mais voilà ces amants tout à
coup interrompus par la triomphante voix de la patrie qui tonne dans le lointain et qui rappelle Elcia. Quel divin et délicieux allégro que ce motif de la marche des Hébreux allant au désert! Il n’y a que Rossini pour faire dire tant de choses à des clarinettes et à des trompettes! Un art qui peut peindre en deux phrases tout ce qu’est la patrie, n’est-il donc pas plus voisin du ciel que les autres? Cet appel m’a toujours trop émue pour que je vous dise ce qu’il y a de cruel, pour ceux qui sont esclaves et enchaînés, à voir partir des gens libres!
La duchesse eut ses yeux mouillés en entendant le magnifique motif qui domine en effet l’opéra.
Dov’è mai quel core amante (Quel cœur aimant ne partagerait mes angoisses), reprit-elle en italien quand la Tinti entama l’admirable cantilène de la strette où elle demande pitié pour ses douleurs. Mais que se passe-t-il? le parterre murmure.
—Genovese brame comme un cerf, dit le prince.
Ce duetto, le premier que chantait la Tinti était en effet troublé par la déroute complète de Genovese. Dès que le ténor chanta de concert avec la Tinti, sa belle voix changea. Sa méthode si sage, cette méthode qui rappelait à la fois Crescentini et Veluti, il semblait l’oublier à plaisir. Tantôt une tenue hors de propos, un agrément trop prolongé, gâtaient son chant. Tantôt des éclats de voix sans transition, le son lâché comme une eau à laquelle on ouvre une écluse, accusaient un oubli complet et volontaire des lois du goût. Aussi le parterre fut-il démesurément agité. Les Vénitiens crurent à quelque pari entre Genovese et ses camarades. La Tinti rappelée fut applaudie avec fureur, et Genovese reçut quelques avis qui lui apprirent les dispositions hostiles du parterre. Pendant la scène, assez comique pour un Français, des rappels continuels de la Tinti, qui revint onze fois recevoir seule les applaudissements frénétiques de l’assemblée, car Genovese presque sifflé, n’osa lui donner la main, le médecin fit à la duchesse une observation sur la strette du duo.
—Rossini devait exprimer là, dit-il, la plus profonde douleur, et j’y trouve une allure dégagée, une teinte de gaieté hors de propos.
—Vous avez raison, répondit la duchesse. Cette faute est l’effet d’une de ces tyrannies auxquelles doivent obéir nos compositeurs. Il a songé plus à sa prima donna qu’à Elcia quand il a écrit cette strette. Mais aujourd’hui la Tinti l’exécuterait encore plus brillamment, je suis si bien dans la situation, que ce passage trop gai est pour moi rempli de tristesse.
Le médecin regarda tour à tour et attentivement le prince et la duchesse, sans pouvoir deviner la raison qui les séparait et qui avait rendu ce duo déchirant pour eux. Massimilla baissa la voix et s’approcha de l’oreille du médecin.
—Vous allez entendre une magnifique chose, la conspiration du Pharaon contre les Hébreux. L’air majestueux de A rispettar mi apprenda (qu’il apprenne à me respecter) est le triomphe de Carthagenova qui va vous rendre à merveille l’orgueil blessé, la duplicité des cours. Le trône va parler: les concessions faites, il les retire, il arme sa colère. Pharaon va se dresser sur ses pieds pour s’élancer sur une proie qui lui échappe. Jamais Rossini n’a rien écrit d’un si beau caractère, ni qui soit empreint d’une si abondante, d’une si forte verve! C’est une œuvre complète, soutenue par un accompagnement d’un merveilleux travail, comme les moindres choses de cet opéra où la puissance de la jeunesse étincelle dans les plus petits détails.
Les applaudissements de toute la salle couronnèrent cette belle conception, qui fut admirablement rendue par le chanteur et surtout bien comprise par les Vénitiens.
—Voici le finale, reprit la duchesse. Vous entendez de nouveau cette marche inspirée par le bonheur de la délivrance, et par la foi en Dieu qui permet à tout un peuple de s’enfoncer joyeusement dans le désert! Quels poumons ne seraient rafraîchis par les élans célestes de ce peuple au sortir de l’esclavage. Ah! chères et vivantes mélodies! Gloire au beau génie qui a su rendre tant de sentiments. Il y a je ne sais quoi de guerrier dans cette marche qui dit que ce peuple a pour lui le dieu des armées! quelle profondeur dans ces chants pleins d’actions de grâce! Les images de la Bible s’émeuvent dans notre âme, et cette divine scène musicale nous fait assister
réellement à l’une des plus grandes scènes d’un monde antique et solennel. La coupe religieuse de certaines parties vocales, la manière dont les voix s’ajoutent les unes aux autres et se groupent, expriment tout ce que nous concevons des saintes merveilles de ce premier âge de l’humanité. Ce beau concert n’est cependant qu’un développement du thème de la marche dans toutes ses conséquences musicales. Ce motif est le principe fécondant pour l’orchestre et les voix, pour le chant et la brillante instrumentation qui l’accompagne. Voici Elcia qui se réunit à la horde et à qui Rossini a fait exprimer des regrets pour nuancer la joie de ce morceau. Écoutez son duettino avec Aménofi. Jamais amour blessé a-t-il fait entendre de pareils chants? la grâce des nocturnes y respire, il y a là le deuil secret de l’amour blessé. Quelle mélancolie! Ah! le désert sera deux fois désert pour elle! Enfin voici la lutte terrible de l’Égypte et des Hébreux! cette allégresse, cette marche, tout est troublé par l’arrivée des Égyptiens. La promulgation des ordres du Pharaon s’accomplit par une idée musicale qui domine le finale, une phrase sourde et grave, il semble qu’on entende le pas des puissantes armées de l’Égypte entourant la phalange sacrée de Dieu, l’enveloppant lentement comme un long serpent d’Afrique enveloppe sa proie. Quelle grâce dans les plaintes de ce peuple abusé! n’est-il pas un peu plus Italien qu’Hébreu? Quel mouvement magnifique jusqu’à l’arrivée du Pharaon qui achève de mettre en présence les chefs des deux peuples et toutes les passions du drame. Quel admirable mélange de sentiments dans le sublime ottetto, où la colère de Moïse et celle des deux Pharaons se trouve aux prises! quelle lutte de voix et de colères déchaînées! Jamais sujet plus vaste ne s’était offert à un compositeur. Le fameux finale de Don Juan ne présente après tout qu’un libertin aux prises avec ses victimes qui invoquent la vengeance céleste; tandis qu’ici la terre et ses puissances essaient de combattre contre Dieu. Deux peuples, l’un faible, l’autre fort, sont en présence. Aussi, comme il avait à sa disposition tous les moyens, Rossini les a-t-il savamment employés. Il a pu sans être ridicule vous exprimer les mouvements d’une tempête furieuse sur laquelle se détachent d’horribles imprécations. Il a procédé par accords plaqués sur un rhythme en trois temps avec une sombre énergie musicale, avec une persistance qui finit par
vous gagner La fureur des Égyptiens surpris par une pluie de feu, les cris de vengeance des Hébreux voulaient des masses savamment calculées; aussi voyez comme il a fait marcher le développement de l’orchestre avec les chœurs? L’allegro assai en ut mineur est terrible au milieu de ce déluge de feu. Avouez, dit la duchesse au moment où en levant sa baguette Moïse fait tomber la pluie de feu et où le compositeur déploie toute sa puissance à l’orchestre et sur la scène, que jamais musique n’a plus savamment rendu le trouble et la confusion?
—Elle a gagné le parterre, dit le Français.
—Mais qu’arrive-t-il encore? le parterre est décidément trèsagité, reprit la duchesse.
Au finale, Genovese avait donné dans de si absurdes gargouillades en regardant la Tinti, que le tumulte fut à son comble au parterre, dont les jouissances étaient troublées. Il n’y avait rien de plus choquant pour ces oreilles italiennes que ce contraste du bien et du mal. L’entrepreneur prit le parti de comparaître, et dit que sur l’observation par lui faite à son premier homme, il signor Genovese avait répondu qu’il ignorait en quoi et comment il avait pu perdre la faveur du public, au moment même où il essayait d’atteindre à la perfection de son art.
—Qu’il soit mauvais comme hier, nous nous en contenterons! répondit Capraja d’une voix furieuse.
Cette apostrophe remit le parterre en belle humeur. Contre la coutume italienne, le ballet fut peu écouté. Dans toutes les loges, il n’était question que de la singulière conduite de Genovese, et de l’allocution du pauvre entrepreneur. Ceux qui pouvaient entrer dans les coulisses s’empressèrent d’aller y savoir le secret de la comédie, et bientôt il ne fut plus question que d’une scène horrible faite par la Tinti à son camarade Genovese, dans laquelle la prima donna reprochait au ténor d’être jaloux de son succès, de l’avoir entravé par sa ridicule conduite, et d’avoir essayé même de la priver de ses moyens en jouant la passion. La cantatrice pleurait à chaudes larmes de cette infortune. «—Elle avait espéré, disait-elle, plaire à son amant qui devait être dans la salle, et qu’elle n’avait pu
découvrir.» Il faut connaître la paisible vie actuelle des Vénitiens, si dénuée d’événements qu’on s’entretient d’un léger accident survenu entre deux amants, ou de l’altération passagère de la voix d’une cantatrice, en y donnant l’importance que l’on met en Angleterre aux affaires politiques, pour savoir combien la Fenice et le café Florian étaient agités. La Tinti amoureuse, la Tinti qui n’avait pas déployé ses moyens, la folie de Genovese, ou le mauvais tour qu’il jouait, inspiré par cette jalousie d’art que comprennent si bien les Italiens, quelle riche mine de discussions vives! Le parterre entier causait comme on cause à la Bourse, il en résultait un bruit qui devait étonner un Français habitué au calme des théâtres de Paris. Toutes les loges étaient en mouvement comme des ruches qui essaimaient. Un seul homme ne prenait aucune part à ce tumulte. Émilio Memmi tournait le dos à la scène, et les yeux mélancoliquement attachés sur Massimilla, il semblait ne vivre que de son regard, il n’avait pas regardé la cantatrice une seule fois.
—Je n’ai pas besoin, caro carino, de te demander le résultat de ma négociation, disait Vendramin à Émilio. Ta Massimilla si pure et si religieuse a été d’une complaisance sublime, enfin elle a été la Tinti!
Le prince répondit par un signe de tête plein d’une horrible mélancolie.
—Ton amour n’a pas déserté les cimes éthérées où tu planes, reprit Vendramin excité par son opium, il ne s’est pas matérialisé. Ce matin, comme depuis six mois, tu as senti des fleurs déployant leurs calices embaumés sous les voûtes de ton crâne démesurément agrandi. Ton cœur grossi a reçu tout ton sang, et s’est heurté à ta gorge. Il s’est développé là, dit-il en lui posant la main sur la poitrine, des sensations enchanteresses. La voix de Massimilla y arrivait par ondées lumineuses, sa main délivrait mille voluptés emprisonnées qui abandonnaient les replis de ta cervelle pour se grouper nuageusement autour de toi, et t’enlever, léger de ton corps, baigné de pourpre, dans un air bleu au-dessus des montagnes de neige où réside le pur amour des anges. Le sourire et les baisers de ses lèvres te revêtaient d’une robe vénéneuse qui consumait les derniers vestiges de ta nature terrestre. Ses yeux étaient deux étoiles qui te faisaient devenir lumière sans ombre. Vous étiez comme deux anges
prosternés sur les palmes célestes, attendant que les portes du paradis s’ouvrissent; mais elles tournaient difficilement sur leurs gonds, et dans ton impatience tu les frappais sans pouvoir les atteindre. Ta main ne rencontrait que des nuées plus alertes que ton désir. Couronnée de roses blanches et semblable à une fiancée céleste, ta lumineuse amie pleurait de ta fureur. Peut-être disait-elle à la Vierge de mélodieuses litanies, tandis que les diaboliques voluptés de la terre te soufflaient leurs infâmes clameurs, tu dédaignais alors les fruits divins de cette extase dans laquelle je vis aux dépens de mes jours.
—Ton ivresse, cher Vendramin, dit avec calme Émilio, est audessous de la réalité. Qui pourrait dépeindre cette langueur purement corporelle où nous plonge l’abus des plaisirs rêvés, et qui laisse à l’âme son éternel désir, à l’esprit ses facultés pures? Mais je suis las de ce supplice qui m’explique celui de Tantale. Cette nuit est la dernière de mes nuits. Après avoir tenté mon dernier effort, je rendrai son enfant à notre mère, l’Adriatique recevra mon dernier soupir!...
—Es-tu bête, reprit Vendramin; mais non, tu es fou, car la folie, cette crise que nous méprisons, est le souvenir d’un état antérieur qui trouble notre forme actuelle. Le génie de mes rêves m’a dit de ces choses et bien d’autres! Tu veux réunir la duchesse et la Tinti; mais, mon Émilio, prends-les séparément, ce sera plus sage. Raphaël seul a réuni la Forme et l’Idée. Tu veux être Raphaël en amour; mais on ne crée pas le hasard. Raphaël est un raccroc du Père éternel qui a fait la Forme et l’Idée ennemies, autrement rien ne vivrait. Quand le principe est plus fort que le résultat, il n’y a rien de produit. Nous devons être ou sur la terre ou dans le ciel. Reste dans le ciel, tu seras toujours trop tôt sur la terre.
—Je reconduirai la duchesse, dit le prince, et je risquerai ma dernière tentative... Après?
—Après, dit vivement Vendramin, promets-moi de venir me prendre à Florian?
—Oui.
Cette conversation, tenue en grec moderne entre Vendramin et le prince, qui savaient cette langue comme la savent beaucoup de Vénitiens, n’avait pu être entendue de la duchesse et du Français. Quoique très en dehors du cercle d’intérêt qui enlaçait la duchesse, Émilio et Vendramin, car tous trois se comprenaient par des regards italiens, fins, incisifs, voilés, obliques tour à tour, le médecin finit par entrevoir une partie de la vérité. Une ardente prière de la duchesse à Vendramin avait dicté à ce jeune Vénitien sa proposition à Émilio, car la Cataneo avait flairé la souffrance qu’éprouvait son amant dans le pur ciel où il s’égarait, elle qui ne flairait pas la Tinti.
—Ces deux jeunes gens sont fous, dit le médecin.
—Quant au prince, répondit la duchesse, laissez-moi le soin de le guérir; quant à Vendramin, s’il n’a pas entendu cette sublime musique, peut-être est-il incurable.
—Si vous vouliez me dire d’où vient leur folie, je les guérirais, s’écria le médecin.
—Depuis quand un grand médecin n’est-il plus un devin? demanda railleusement la duchesse.
Le ballet était fini depuis longtemps, le second acte de Mosè commençait, le parterre se montrait très-attentif. Le bruit s’était répandu que le duc Cataneo avait sermonné Genovese en lui représentant combien il faisait de tort à Clarina, la diva du jour. On s’attendait à un sublime second acte.
—Le prince et son père ouvrent la scène, dit la duchesse, ils ont cédé de nouveau, tout en insultant aux Hébreux; mais ils frémissent de rage. Le père est consolé par le prochain mariage de son fils, et le fils est désolé de cet obstacle qui augmente encore son amour, contrarié de tous côtés. Genovese et Carthagenova chantent admirablement. Vous le voyez, le ténor fait sa paix avec le parterre. Comme il met bien en œuvre les richesses de cette musique?... La phrase dite par le fils sur la tonique, redite par le père sur la dominante, appartient au système simple et grave sur lequel repose cette partition, où la sobriété des moyens rend encore plus étonnante la fertilité de la musique. L’Égypte est là tout entière. Je
ne crois pas qu’il existe un morceau moderne où respire une pareille noblesse. La paternité grave et majestueuse d’un roi s’exprime dans cette phrase magnifique et conforme au grand style qui règne dans toute l’œuvre. Certes, le fils d’un Pharaon versant sa douleur dans le sein de son père, et la lui faisant éprouver, ne peut être mieux représenté que par ces images grandioses. Ne trouvez-vous pas en vous-même un sentiment de la splendeur que nous prêtons à cette antique monarchie?
—C’est de la musique sublime! dit le Français.
—L’air de la Pace mia smarrita, que va chanter la reine est un de ces airs de bravoure et de facture auxquels tous les compositeurs sont condamnés et qui nuisent au dessin général du poëme, mais leur opéra n’existerait souvent point s’ils ne satisfaisaient l’amourpropre de la prima donna. Néanmoins cette tartine musicale est si largement traitée qu’elle est textuellement exécutée sur tous les théâtres. Elle est si brillante que les cantatrices n’y substituent point leur air favori, comme cela se pratique dans la plupart des opéras. Enfin voici le point brillant de la partition, le duo d’Osiride et d’Elcia dans le souterrain où il veut la cacher pour l’enlever aux Hébreux qui partent, et s’enfuir avec elle de l’Égypte. Les deux amants sont troublés par l’arrivée d’Aaron qui est allé prévenir Amalthée, et nous allons entendre le roi des quatuors: Mi manca la voce, mi sento morire. Ce Mi manca la voce est un de ces chefs-d’œuvre qui résisteront à tout, même au temps, ce grand destructeur des modes en musique, car il est pris à ce langage d’âme qui ne varie jamais. Mozart possède en propre son fameux finale de Don Juan, Marcello son psaume Cœli enarrant gloriam Dei, Cimarosa son Pria chè spunti, Beethoven sa Symphonie en ut mineur, Pergolèse son Stabat, Rossini gardera son Mi manca la voce. C’est surtout la facilité merveilleuse avec laquelle il varie la forme qu’il faut admirer chez Rossini; pour obtenir ce grand effet, il a eu recours au vieux mode du canon à l’unisson pour faire entrer ses voix et les fondre dans une même mélodie. Comme la forme de ces sublimes cantilènes était neuve, il l’a établie dans un vieux cadre; et pour la mieux mettre en relief, il a éteint l’orchestre, en n’accompagnant la voix que par des arpéges de harpes. Il est impossible d’avoir plus
d’esprit dans les détails et plus de grandeur dans l’effet général. Mon Dieu! toujours du tumulte, dit la duchesse.
Genovese, qui avait si bien chanté son duo avec Carthagenova, faisait sa propre charge auprès de la Tinti. De grand chanteur, il devenait le plus mauvais de tous les choristes. Il s’éleva le plus effroyable tumulte qui ait oncques troublé les voûtes de la Fenice. Le tumulte ne céda qu’à la voix de la Tinti qui, enragée de l’obstacle apporté par l’entêtement de Genovese, chanta Mi manca la voce, comme nulle cantatrice ne le chantera. L’enthousiasme fut au comble, les spectateurs passèrent de l’indignation et de la fureur aux jouissances les plus aiguës.
—Elle me verse des flots de pourpre dans l’âme, disait Capraja en bénissant de sa main étendue la diva Tinti.
—Que le ciel épuise ses grâces sur ta tête! lui cria un gondolier.
—Le Pharaon va révoquer ses ordres, reprit la duchesse pendant que l’émeute se calmait au parterre, Moïse le foudroiera sur son trône en lui annonçant la mort de tous les aînés de l’Égypte et chantant cet air de vengeance qui contient les tonnerres du ciel, et où résonnent les clairons hébreux. Mais ne vous y trompez pas, cet air est un air de Pacini, que Carthagenova substitue à celui de Rossini. Cet air de Paventa restera sans doute dans la partition; il fournit trop bien aux basses l’occasion de déployer les richesses de leur voix, et ici l’expression doit l’emporter sur la science. D’ailleurs, l’air est magnifique de menaces, aussi ne sais-je si l’on nous le laissera longtemps chanter.
Une salve de bravos et d’applaudissements, suivie d’un profond et prudent silence, accueillit l’air; rien ne fut plus significatif ni plus vénitien que cette hardiesse, aussitôt réprimée.
—Je ne vous dirai rien du tempo di marcia qui annonce le couronnement d’Osiride, par lequel le père veut braver la menace de Moïse, il suffit de l’écouter. Leur fameux Beethoven n’a rien écrit de plus magnifique. Cette marche, pleine de pompes terrestres, contraste admirablement avec la marche des Hébreux. Comparezles? La musique est ici d’une inouïe fécondité. Elcia déclare son
amour à la face des deux chefs des Hébreux, et le sacrifie par cet admirable air de Porge la destra amata (Donnez à une autre votre main adorée). Ah! quelle douleur! voyez la salle?
—Bravo! cria le parterre quand Genovese fut foudroyé.
—Délivrée de son déplorable compagnon, nous entendrons la Tinti chanter: O desolata Elcia! la terrible cavatine où crie un amour réprouvé par Dieu.
—Rossini, où es-tu pour entendre si magnifiquement rendu ce que ton génie t’a dicté, dit Cataneo, Clarina n’est-elle pas son égale? demanda-t-il à Capraja. Pour animer ces notes par des bouffées de feu qui, parties des poumons, se grossissent dans l’air de je ne sais quelles substances ailées que nos oreilles aspirent et qui nous élèvent au ciel par un ravissement amoureux, il faut être Dieu!
—Elle est comme cette belle plante indienne qui s’élance de terre, ramasse dans l’air une invisible nourriture et lance de son calice arrondi en spirale blanche, des nuées de parfums qui font éclore des rêves dans notre cerveau, répondit Capraja.
La Tinti fut rappelée et reparut seule, elle fut saluée par des acclamations, elle reçut mille baisers que chacun lui envoyait du bout des doigts; on lui jeta des roses, et une couronne pour laquelle des femmes donnèrent les fleurs de leurs bonnets, presque tous envoyés par les modistes de Paris. On redemanda la cavatine.
—Avec quelle impatience Capraja, l’amant de la roulade, n’attendait-il pas ce morceau qui ne tire sa valeur que de l’exécution, dit alors la duchesse. Là, Rossini a mis, pour ainsi dire, la bride sur le cou à la fantaisie de la cantatrice. La roulade et l’âme de la cantatrice y sont tout. Avec une voix ou une exécution médiocre, ce ne serait rien. Le gosier doit mettre en œuvre les brillants de ce passage. La cantatrice doit exprimer la plus immense douleur, celle d’une femme qui voit mourir son amant sous ses yeux! La Tinti, vous l’entendez, fait retentir la salle des notes les plus aiguës, et pour laisser toute liberté à l’art pur, à la voix, Rossini a écrit là des phrases nettes et franches, il a, par un dernier effort, inventé ces déchirantes exclamations musicales: Tormenti! affanni! smanie!
Quels cris! que de douleur dans ces roulades! La Tinti, vous le voyez, a enlevé la salle par ses sublimes efforts.
Le Français, stupéfait de cette furie amoureuse de toute une salle pour la cause de ses jouissances, entrevit un peu la véritable Italie; mais ni la duchesse, ni Vendramin, ni Émilio ne firent la moindre attention à l’ovation de la Tinti qui recommença. La duchesse avait peur de voir son Émilio pour la dernière fois; quant au prince, devant la duchesse, cette imposante divinité qui l’enlevait au ciel, il ignorait où il se trouvait, il n’entendait pas la voix voluptueuse de celle qui l’avait initié aux voluptés terrestres, car une horrible mélancolie faisait entendre à ses oreilles un concert de voix plaintives accompagnées d’un bruissement semblable à celui d’une pluie abondante. Vendramin, habillé en procurateur, voyait alors la cérémonie du Bucentaure. Le Français, qui avait fini par deviner un étrange et douloureux mystère entre le prince et la duchesse, entassait les plus spirituelles conjectures pour se l’expliquer. La scène avait changé. Au milieu d’une belle décoration représentant le désert et la mer Rouge, les évolutions des Égyptiens et des Hébreux se firent, sans que les pensées auxquelles les quatre personnages de cette loge étaient en proie eussent été troublées. Mais quand les premiers accords des harpes annoncèrent la prière des Hébreux délivrés, le prince et Vendramin se levèrent et s’appuyèrent chacun à l’une des cloisons de la loge, la duchesse mit son coude sur l’appui de velours, et se tint la tête dans sa main gauche.
Le Français, averti par ces mouvements de l’importance attachée par toute la salle à ce morceau si justement célèbre, l’écouta religieusement. La salle entière redemanda la prière en l’applaudissant à outrance.
—Il me semble avoir assisté à la libération de l’Italie, pensait un Milanais.
—Cette musique relève les têtes courbées, et donne de l’espérance aux cœurs les plus endormis, s’écriait un Romagnol.
—Ici, dit la duchesse au Français dont l’émotion fut visible, la science a disparu, l’inspiration seule a dicté ce chef-d’œuvre, il est sorti de l’âme comme un cri d’amour! Quant à l’accompagnement, il
consiste en arpéges de harpe, et l’orchestre ne se développe qu’à la dernière reprise de ce thème céleste. Jamais Rossini ne s’élèvera plus haut que dans cette prière, il fera tout aussi bien, jamais mieux: le sublime est toujours semblable à lui-même; mais ce chant est encore une de ces choses qui lui appartiendront en entier. L’analogue d’une pareille conception ne pourrait se trouver que dans les psaumes divins du divin Marcello, un noble Vénitien qui est à la musique ce que le Giotto est à la peinture. La majesté de la phrase, dont la forme se déroule en nous apportant d’inépuisables mélodies, est égale à ce que les génies religieux ont inventé de plus ample. Quelle simplicité dans le moyen. Moïse attaque le thème en sol mineur, et termine par une cadence en si bémol, qui permet au chœur de le reprendre pianissimo d’abord en si bémol, et de le rendre par une cadence en sol mineur. Ce jeu si noble dans les voix recommencé trois fois s’achève à la dernière strophe par une strette en sol majeur dont l’effet est étourdissant pour l’âme. Il semble qu’en montant vers les cieux, le chant de ce peuple sorti d’esclavage rencontre des chants tombés des sphères célestes. Les étoiles répondent joyeusement à l’ivresse de la terre délivrée. La rondeur périodique de ces motifs, la noblesse des lentes gradations qui préparent l’explosion du chant et son retour sur lui-même, développent des images célestes dans l’âme. Ne croiriez-vous pas voir les cieux entr’ouverts, les anges armés de leurs sistres d’or, les séraphins prosternés agitant leurs encensoirs chargés de parfums, et les archanges appuyés sur leurs épées flamboyantes qui viennent de vaincre les impies. Le secret de cette harmonie, qui rafraîchit la pensée, est, je crois, celui de quelques œuvres humaines bien rares, elle nous jette pour un moment dans l’infini, nous en avons le sentiment, nous l’entrevoyons dans ces mélodies sans bornes comme celles qui se chantent autour du trône de Dieu. Le génie de Rossini nous conduit à une hauteur prodigieuse. De là, nous apercevons une terre promise où nos yeux caressés par des lueurs célestes se plongent sans y rencontrer d’horizon. Le dernier cri d’Elcia presque guérie rattache un amour terrestre à cette hymne de reconnaissance. Ce cantilène est un trait de génie.—Chantez, dit la duchesse en entendant la dernière strophe exécutée comme elle
était écoutée, avec un sombre enthousiasme; chantez, vous êtes libres.
Ce dernier mot fut dit d’un accent qui fit tressaillir le médecin; et pour arracher la duchesse à son amère pensée, il lui fit, pendant le tumulte excité par les rappels de la Tinti, une de ces querelles auxquelles les Français excellent.
—Madame, dit-il, en m’expliquant ce chef-d’œuvre que grâce à vous je reviendrai entendre demain, en le comprenant et dans ses moyens et dans son effet, vous m’avez parlé souvent de la couleur de la musique, et de ce qu’elle peignait; mais en ma qualité d’analyste et de matérialiste, je vous avouerai que je suis toujours révolté par la prétention qu’ont certains enthousiastes de nous faire croire que la musique peint avec des sons. N’est-ce pas comme si les admirateurs de Raphaël prétendaient qu’il chante avec des couleurs?
—Dans la langue musicale, répondit la duchesse, peindre, c’est réveiller par des sons certains souvenirs dans notre cœur, ou certaines images dans notre intelligence, et ces souvenirs, ces images ont leur couleur, elles sont tristes ou gaies. Vous nous faites une querelle de mots, voilà tout. Selon Capraja, chaque instrument a sa mission, et s’adresse à certaines idées comme chaque couleur répond en nous à certains sentiments. En contemplant des arabesques d’or sur un fond bleu, avez-vous les mêmes pensées qu’excitent en vous des arabesques rouges sur un fond noir ou vert? Dans l’une comme dans l’autre peinture, il n’y a point de figures, point de sentiments exprimés, c’est l’art pur, et néanmoins nulle âme ne restera froide en les regardant. Le hautbois n’a-t-il pas sur tous les esprits le pouvoir d’éveiller des images champêtres, ainsi que presque tous les instruments à vent. Les cuivres n’ont-ils pas je ne sais quoi de guerrier, ne développent-ils pas en nous des sensations animées et quelque peu furieuses. Les cordes, dont la substance est prise aux créations organisées, ne s’attaquent-elles pas aux fibres les plus délicates de notre organisation, ne vont-elles pas au fond de notre cœur? Quand je vous ai parlé des sombres couleurs, du froid des notes employées dans l’introduction de Mosè, n’étais-je pas autant dans le vrai que vos critiques en nous parlant de la couleur de
tel ou tel écrivain. Ne reconnaissez-vous pas le style nerveux, le style pâle, le style animé, le style coloré. L’Art peint avec des mots, avec des sons, avec des couleurs, avec des lignes, avec des formes; si ses moyens sont divers, les effets sont les mêmes. Un architecte italien vous donnera la sensation qu’excite en nous l’introduction de Mosè, en nous promenant dans des allées sombres, hautes, touffues, humides, et nous faisant arriver subitement en face d’une vallée pleine d’eau, de fleurs, de fabriques, et inondée de soleil. Dans leurs efforts grandioses, les arts ne sont que l’expression des grands spectacles de la nature. Je ne suis pas assez savante pour entrer dans la philosophie de la musique; allez questionner Capraja, vous serez surpris de ce qu’il vous dira. Selon lui, chaque instrument ayant pour ses expressions la durée, le souffle ou la main de l’homme, est supérieur comme langage à la couleur qui est fixe, et au mot qui a des bornes. La langue musicale est infinie, elle contient tout, elle peut tout exprimer. Savez-vous maintenant en quoi consiste la supériorité de l’œuvre que vous avez entendue? Je vais vous l’expliquer en peu de mots. Il y a deux musiques: une petite, mesquine, de second ordre, partout semblable à elle-même, qui repose sur une centaine de phrases que chaque musicien s’approprie, et qui constitue un bavardage plus ou moins agréable avec lequel vivent la plupart des compositeurs; on écoute leurs chants, leurs prétendues mélodies, on a plus ou moins de plaisir, mais il n’en reste absolument rien dans la mémoire. Cent ans se passent, ils sont oubliés. Les peuples, depuis l’antiquité jusqu’à nos jours, ont gardé, comme un précieux trésor, certains chants qui résument leurs mœurs et leurs habitudes, je dirai presque leur histoire. Écoutez un de ces chants nationaux (et le chant grégorien a recueilli l’héritage des peuples antérieurs en ce genre), vous tombez en des rêveries profondes, il se déroule dans votre âme des choses inouïes, immenses, malgré la simplicité de ces rudiments, de ces ruines musicales. Eh! bien, il y a par siècle un ou deux hommes de génie, pas davantage, les Homères de la musique, à qui Dieu donne le pouvoir de devancer les temps, et qui formulent ces mélodies pleines de faits accomplis, grosses de poëmes immenses. Songez-y bien, rappelez-vous cette pensée, elle sera féconde, redite par vous: c’est la mélodie et non l’harmonie qui a le pouvoir de traverser les
âges. La musique de cet oratorio contient un monde de ces choses grandes et sacrées. Une œuvre qui débute par cette introduction et qui finit par cette prière est immortelle, immortelle comme l’O filii et filiæ de Pâques, comme le Dies iræ de la Mort, comme tous les chants qui survivent en tous les pays à des splendeurs, à des joies, à des prospérités perdues.
Deux larmes que la duchesse essuya en sortant de sa loge disaient assez qu’elle songeait à la Venise qui n’était plus; aussi Vendramin lui baisa-t-il la main.
La représentation finissait par un concert des malédictions les plus originales, par les sifflets prodigués à Genovese, et par un accès de folie en faveur de la Tinti. Depuis longtemps les Vénitiens n’avaient eu de théâtre plus animé, leur vie était enfin réchauffée par cet antagonisme qui n’a jamais failli en Italie, où la moindre ville a toujours vécu par les intérêts opposés de deux factions: les Gibelins et les Guelfes partout, les Capulets et les Montaigu à Vérone, les Geremeï et les Lomelli à Bologne, les Fieschi et les Doria à Gênes, les patriciens et le peuple, le sénat et les tribuns de la république romaine, les Pazzi et les Medici à Florence, les Sforza et les Visconti à Milan, les Orsini et les Colonna à Rome; enfin partout et en tous lieux le même mouvement. Dans les rues, il y avait déjà des Genovesiens et des Tintistes. Le prince reconduisit la duchesse, que l’amour d’Osiride avait plus qu’attristée; elle croyait pour elle-même à quelque catastrophe semblable, et ne pouvait que presser Émilio sur son cœur, comme pour le garder près d’elle.
—Songe à ta promesse, lui dit Vendramin, je t’attends sur la place.
Vendramin prit le bras du Français, et lui proposa de se promener sur la place Saint-Marc en attendant le prince.
—Je serai bien heureux s’il ne revient pas, dit-il.
Cette parole fut le point de départ d’une conversation entre le Français et Vendramin, qui vit en ce moment un avantage à consulter un médecin, et qui lui raconta la singulière position dans laquelle était Émilio. Le Français fit ce qu’en toute occasion font les
Français, il se mit à rire Vendramin, qui trouvait la chose énormément sérieuse, se fâcha; mais il s’apaisa quand l’élève de Magendie, de Flourens, de Cuvier, de Dupuytren, de Broussais, lui dit qu’il croyait pouvoir guérir le prince de son bonheur excessif, et dissiper la céleste poésie dans laquelle il environnait la duchesse comme d’un nuage.
—Heureux malheur, dit-il. Les anciens, qui n’étaient pas aussi niais que le ferait supposer leur ciel de cristal et leurs idées en physique, ont voulu peindre dans leur fable d’Ixion cette puissance qui annule le corps et rend l’esprit souverain de toutes choses.
Vendramin et le médecin virent venir Genovese, accompagné du fantasque Capraja. Le mélomane désirait vivement savoir la véritable cause du fiasco. Le ténor, mis sur cette question, bavardait comme ces hommes qui se grisent par la force des idées que leur suggère une passion.
—Oui, signor, je l’aime, je l’adore avec une fureur dont je ne me croyais plus capable après m’être lassé des femmes. Les femmes nuisent trop à l’art pour qu’on puisse mener ensemble les plaisirs et le travail. La Clara croit que je suis jaloux de ses succès et que j’ai voulu empêcher son triomphe à Venise; mais je l’applaudissais dans la coulisse et criais: Diva! plus fort que toute la salle.
—Mais, dit Cataneo en survenant, ceci n’explique pas comment de chanteur divin tu es devenu le plus exécrable de tous ceux qui font passer de l’air par leur gosier, sans l’empreindre de cette suavité enchanteresse qui nous ravit.
—Moi, dit le virtuose, moi devenu mauvais chanteur, moi qui égale les plus grands maîtres!
En ce moment, le médecin français, Vendramin, Capraja, Cataneo et Genovese avaient marché jusqu’à la Piazzeta. Il était minuit. Le golfe brillant que dessinent les églises de Saint-Georges et de Saint-Paul au bout de la Giudecca, et le commencement du canal Grande, si glorieusement ouvert par la dogana, et par l’église dédiée à la Maria della Salute, ce magnifique golfe était paisible. La lune éclairait les vaisseaux devant la rive des Esclavons. L’eau de
