Bush made an extraordinary speech on 24th September 2008; one which reveals a lot about the capitalist response to these supposedly 'strange times'. An overriding theme of his speech is the 'abnormality' of this situation, employed to gain support for and trust in his efforts to restore 'normality'. Blunt as ever, he states: “These are not normal circumstances. The market is not functioning properly.” He proceeds to try to instill panic in the general public: “More banks could fail, including some in your community... The value of your home could plummet... Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college.”
While this panic appears to risk suggesting that your savings may be safer under the mattress than in the bank, it is, in fact, employed as a desperate attempt to garner trust in his administration, the state intervention he is pushing for and in the economic system he is trying to save. “We're in the midst of a serious financial crisis, and the federal government is responding with decisive action...This rescue effort is not aimed at preserving any individual company or industry. It is aimed at preserving America's overall economy.” For its restoration depends upon a conflation of the interests of the public with the 'economy'. This is what Bush is attempting with his collective 'we': “Our economy is facing a moment of great challenge, but we've overcome tough challenges before, and we will overcome this one.” Claiming that 'we' need to save the system, he tries to hide the unavoidable truth that his is the 'we' of the exclusive elite, the 'we' of unbridled power.
This crisis of capitalism, as with previous crises, has been caused by its own internal dynamic of inexorable expansion. To keep people spending but wages low, capitalism had to turn turbo. Spending levels increased, not primarily due to actual increased buying power, but by virtue of cheap credit. Aided by the neoliberal regime of financial deregulation, spearheaded by the Thatcher and Reagan administrations, the economic boom since the early 1990s has been based on massively increased levels of debt, incurred by corporations, banks, financial institutions, governments and consumers. To make things worse, these debts have been traded and speculated upon, ensuring a boom in property and finance, rather than in the growth of material production. But this is like a house of cards: the proliferation of new forms of profiting from purely financial transactions, short selling, derivatives, credit default swaps and so on, meant this phase of financial capitalism was particularly unsustainable.
Confidence is always related to the real frailties of the economy. When house prices fell and debt defaults rose, crunch on credit ensued as confidence in the loans, and in the investment institutions providing and ensuring them, crashed. Mervyn King, governor of the Bank of England, recently prescribed that the economy should adjust to “a more realistic pricing of credit.” Even though bankers were aware of the precarity of this process, they chose to take bigger and bigger risks, often spurred on by the prospect of large bonuses, in order to remain competitive and profitable.
The 'solutions' posed to the situation we now find ourselves in, as a result of the reckless behaviour of a minority, are all geared around maintaining capitalism. Capitalist expansion, sanitised as 'economic growth', has to continue if capitalism is going to. The underlying crisis is about where to find the next bubble, now that the credit-fuelled financial speculation bubble, enabled by decades of neoliberal governance, has burst. But currently the capitalist elites are in panic-mode, and most are reaching for the quick-state-fix option: state bail-outs of banks and legislation to sanction the contravention of competition laws to facilitate bank mergers, in the hope that this will make cheap credit available again. This policy boils down to governments gambling unprecedented amounts of public money to sustain the irresponsible credit policies of the banks. It is a desperate attempt by the capitalist establishment to save the current economic order and its increasingly unequal distribution of power and resources.
This striking example of capital having to fall back on its partner, the state, proves, once again, that the state is always required to manage capitalism, even in the most neoliberal regimes. Already we have seen the injection of billions of pounds of state money into the financial system, money which was supposedly unavailable to prop up other, less profitable, sectors in recent years, such as health and education. It is now even more clear that what the government is prepared to run up a huge national debt for are: the military and financial institutions. While being sold as anomalous behaviour from neoliberal governments, it is, in fact, business as usual: the state and the market are working together to ensure that the costs of capitalism are transferred onto the majority, whose economic and political power is kept low by a privileged elite, which claims to act in the interests of this majority.
The mainstream media's reaction to this 'crisis' is instructive. Rather than seriously analysing these deeper processes of capitalist reconstruction, most, if not all, of the mainstream coverage has been based on the unstated premise of 'how should we save capitalism?'. The basic issue seems to be how to avoid or mitigate the 'crisis', without an analysis of what this is really a 'crisis' of, or who this is a 'crisis' for. The Guardian website, for instance, had as the tag line to its coverage: 'Follow the debate on how to fix our teetering financial system', clearly indicating its allegiance to and support of the economic status quo.
Like political rhetoric, the mainstream media coverage has universally assumed that 'our' interests are met by 'saving' the current economic system, and not by developing alternatives to replace it. With flyaway phrases, such as "the markets responded anxiously”, the media personifies and humanises the market to encourage our sympathy, even empathy, with its 'suffering', rather than with those who suffer from it. It is typical for those with power (and that includes the media) to merge the interests of the public with the economic system to hide the fact that the economic system, and their power within it, causes great suffering. This suffering is usually rendered invisible by virtue of the fact that it occurs to people marginalised by socially constructed divisions such as class, race, gender, nationality, geography or incarceration. A recession will spread this suffering to people less easy to render invisible. However, the attempts to do so can already be seen. Contrast the coverage of bank bailouts, congressional debates, and debates on saving capitalism to that given to those subject to repossessions, chased by debt collectors, or made redundant. Conversely, when it serves the elite agenda, these marginalised groups are dragged into the limelight to be demonised and scapegoated. For example, before this summer's panic there was much media focus on those who defaulted on their debts. These people were not blamed as such, but it was implied that if only they had lived within their means and kept up with their payments the banks would have remained secure. More importantly, the mere mention of these people draws attention away from the real causes of the crisis, and blames the 'mistakes' of a few bankers rather than the structural contradictions of capitalist accumulation.
The system itself is simply not in the dock for the majority of the mainstream media coverage. That is not surprising, though, considering that the function of the media is to retain, and now restore, the public's belief in the economic and political system, in order to ensure compliance. The threats posed to the powerful by this crisis are well recognised. For example, in a leaked memo, Home Secretary Jacqui Smith revealed the fear that it might widen “the pool of those susceptible to radicalisation”.
Efforts to maintain the public's faith in this socially and ecologically damaging system rest upon ensuring that it is rendered invisible, unquestionable, and unalterable, as if life is impossible without it. This becomes increasingly difficult at times like this when the workings and consequences of the economic system are forced into the limelight for an increasing number of people. For instance, in the afore-mentioned speech, Bush is forced to name the system, and to actively deter people from looking for others: “Despite corrections in the marketplace and instances of abuse, democratic capitalism is the best system ever devised.” So the crisis is displaced as a problem in the way in which capitalism is managed, rather than the problem of capitalism itself. Purely irresponsible lending, financial deregulation, or neoliberalism are blamed, as if this was a crisis for capitalism, rather than a crisis of capitalism, and of the faith that it runs on.
But this is to be expected: at crisis times the troops rally round. In this case it is with supposedly unusual state intervention into the financial system, and wall-to-wall media obfuscation. It is vital to remember that this should only be a crisis for those who defend and profit from capitalism, yet the costs are being transferred to those with less material power: the most vulnerable will pay as a result of house repossessions, high inflation, loss of jobs and pensions. It is important that real solutions to the problem of capitalism are found, which is just as important now in this 'crisis' as it always has been. We have already seen demonstrations against the bail-outs in some of the global financial centres, including London and New York. Hopefully better alternatives will emerge from this crisis.