Commentary on Political Economy

Wednesday 13 July 2011

Comment on Martin Wolf's latest Column -

At the cost of sounding as if we are blowing our own trumpet, the major themes that Wolf reviews in this Column have been raised over at least the past year by Joseph Belbruno, first at the Martin Wolf Exchange and then at the Gavyn Davies Blog and (to a lesser extent) the Economists' Forum in the FT. (We will be posting some of these "interventions over the next few days at
Wolf is perhaps not as "dramatic" as Belbruno who has coined the phrase "Crisis-State" to describe the process whereby (as Wolf quite acutely and properly stresses) the role of the "collective capitalist" (the Crisis-State) has grown since Roosevelt's New Deal through larger budget deficits and government debt (something that Hyman Minsky was among the first to highlight), and whereby the line between "private capital" and the collective capitalist has been blurred to the point where clearly now it is the Crisis-State that, in attempting to ensure the control of economic growth, needs to expand or "grow" its control over most aspects of economic life.
The attempt by the Crisis-State "to reverse" this process with a massive manoeuvre of "privatisation" in the late 1980s (the Volcker revolution) and the 1990s (aided by the Great Moderation) resulted as we all know in the catastrophe of the Great Financial Crisis, whose latest developments Wolf summarises here. In other words, social capital cannot survive, let alone "grow" in any shape or form, except by "politicising" the process of this "growth" and thereby making it ever more "systemically risky" every time it seeks to re-introduce the "laws of the market".
And this is what Wolf means by "fiat justitia": In reality, it is not some pedantic atavism to "justice" that the Conservatives in the US and Europe hanker after: what concerns them above all is "the justice" of the laws of market capitalism, of private enterprise, that are collapsing before their eyes. All "progressive forces" need to be prepared for the coming Deluge - "pereat mundus".

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