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Capitalism Hits the Fan
A lecture by Richard Wolff (Unabridged Version)
I take it as my task this evening to try to present a sense of what is going on in the
American economy – and around the world – since the United States plays such an
enormous role in the world economy; to give you a sense of how we got into this
situation; and give you some help, I hope, in navigating where we go from here. And if
that suggests to you that you yourself are going to have to play some sort of role, then I
have gotten my thought across – since the people who are in charge are completely
without any idea of what to do, which if you pay attention, you will notice.
3 THINGS THE ECONOMIC CRISIS IS NOT
This is the most severe economic crisis of capitalism in my lifetime, which means, as I look
around the room, in yours as well. And it has to be understood and approached in that
framework if it’s going to be taken seriously and if people are going to have a reasonable
shot at coming out on the other end of this process in something less than a devastated
personal, social situation.
So let me start by suggesting to you some things that this economic crisis is not. It’s not a
financial crisis – not withstanding that that name is used all the time. To call it a financial
crisis limits it in ways that make no sense. As you will see, this crisis comes out of the
entire economic system we have here in the United States. It didn’t start with banking. It
didn’t stay in the realm of banking, and it will not be limited at any time and in any
significant way to the credit markets or to banking or insurance companies.
The second thing it isn’t is temporary, or fleeting, or short. That’s a wishful thinking, a little
bit like imagining the crisis is limited to finance is wishful thinking. Let me illustrate that
with two historical parallels to keep in mind. First, we had another great crisis back in the
1930s. Let’s remember what that was like, since the current one is rightfully being
compared to that one. That one blew, or exploded, in 1929. For the next 10 years, from
1929 to 1939, two presidents, Hoover and Roosevelt, tried a variety of monetary and fiscal
policies – many looking exactly like what you see today in Washington. And they didn’t
work. And for 10 years, we could not get out of that depression. And what finally lifted us
out was not some clever policy. It was a major change in the society called World War II.
And in case you think these kinds of long lasting recessions and depressions that are
immune to policy only happened long ago, let me give you another example. In 1989,
Japan, the second most important industrial country in the world, then and now, it
encountered a downturn. Severe. And here we are 18 years later, and the Japanese have
still not emerged from that depression, even though they tried every monetary and fiscal
policy in their repertoire, which includes everything that Mr. Paulson or Mr. Bernanke have
so far tried. So the notion that this is going to be a quickie, a short-lived one, a V-shaped
or a U-shaped turn, that’s all wishful thinking.
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