Commentary on Political Economy

Sunday 14 August 2011

Clive Crook and "the Fracture"

This Column by Clive Crook is quite commendable and, I must say, surprisingly intrepid and perceptive even by his fairly high standards. Crook sees what few can see: - that the present crisis has all but paralysed the fiscal policies of governments and, on a different level, thrust central banks right into the role of "non-monetary" and therefore quasi-fiscal policy - a role that would require political (electoral) legitimacy (which they lack) and even appropriate statutory mandates that they simply do not have!

Crook perceives that central banks are having to take policy measures for which they have no proper political or legal mandate because "the economy" requires it! In other words, the technocrats in central banks are aware of the disastrous consequences that would follow if they were to remain as inactive as the divided elected bodies of Western capitalist democracies. For Crook, the economy requires necessary measures that "political institutions" are simply too divided and divisive to take!

Yet this is where Crook is wrong. It is correct to say with Crook that "the economy" requires certain actions of a fiscal nature, in terms of productive investment, that political bodies are not delivering. But he forgets that the political bodies are not delivering these measures precisely for the reason that they are NOT "economic" measures but much rather "political" decisions! The vice of orthodox economic analysis is to think that "economics" is an independent reality that can be "determined" more or less "scientifically". But this is not so!

It is not the case that central banks are taking the "economic" decisions that political bodies are too "factional" to take. The fact of the matter is that political bodies are "fractured" because there is a "fracture" right there at the heart of the "economy" - and therefore of "economics"! The "fracture" has to do with the real political obstacles that the operation of capital, its "profitability", that is, its ability "to command living labour" now encounters in our society of capital. This "inability", this decline of power - measurable in terms of "profitability", hence of investment and "growth" - is what requires a restructuring of the institutional asset of the capitalist State - of its role as "collective capitalist". Working out the implications of these exquisitely political developments is what we are doing at

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