This is Part 2 of a two-part series; you can read the first part here.
When we last left off, we were hovering over the fact that we all knew, back in 2009, that there would be no bullet train in California. How did we know? Because we knew two things, or really two clusters of things about the political-economic situation.
The first is that the global downturn of 2008 was not a financial crisis, except in the sense that if your car is out of gas you could say that you were having a mobility crisis. “Financial crisis” is an appearance, not an explanation. In this case the financial system had seized up because of (and you will forgive the series of simplifications that follow) a solvency crisis in the real economy. The financial sector had been inflated in the first place to cover over an ongoing failure of manufacturing and industry, a collapse of profitability that begins at a global level maybe in 1973, maybe a bit earlier. On the one hand, productivity increases required by competition were displacing workers. On the other, the rise of high-productivity international competition, especially from Germany and Japan, meant that the market for many commercial goods was saturated and nobody could make much of a profit but neither could they get out of the market.
Lacking such opportunities for accumulation, capital goes seeking profits in financial schemes, insurance, real estate, places where values are nominal, expanding and contracting without any real growth. That’s what a bubble is. There was a commodity bubble, an asset bubble, a housing bubble at the end of the ride driven by the provision of cheap credit for sketch mortgages, anything to keep the market moving. But because there is no real growth in such a scenario, the people who have to pay these mortgages—which are inflating housing prices and inflating the value of mortgage-backed securities and inflating the insurance policies against these derivatives going bust—eventually cannot make their payments. So they default, the derivatives stop returning income, the insurance companies can’t cover the losses, which is just to say, the bubble turns out to be a bubble and then it busts, one sector after another, and it looks like it is happening in “finance” because banks stop lending, knowing they will not be repaid. But that is just how the underlying economic stagnation appears. So that is one thing: capital has to grow to remain stable, the same way a bicycle has to keep moving to stay upright, and aside from the very limited burst here and there, there has been no real economic growth since the seventies, just a series of bubbles.
The second thing, and it is almost the same as the first except projected into the future, is this: that when there is no outlet for profitable reinvestment of capital in the so-called real economy, the Keynesian solution doesn’t work. If you provide the stimulus via deficit spending, it will not start the economic engine again. That is Keynes’s metaphor: that a crisis is “magneto trouble” but the rest of the engine is fine and that if you inject a shot of money, it will turn over and start humming again, credit will be extended, people will buy, capital will be reinvested in various things including hiring, people will have money to buy, etc.
Alas, if you inject all that money into the economy it does not change the fact that it has to go toward the highest return on investment. Capitalism, to switch metaphors, is a pachinko game. It is often visualized via hydraulic metaphors but let me go with pachinko game for a minute. Most of our money goes toward buying staples, food and shelter and care, and that isn’t capital. Capital is money invested toward a return, that’s the pachinko game. You can loft your money into the system and invest it with all your hopes and dreams, and by you I mostly mean enterprises of various sizes from the family business to Goldman Sachs, and it can move along many different paths as it descends. But the pins are set to direct all capital toward profit, it cannot go any other way. When there is no reason for banks to lend it to low-profit enterprises, which is all of manufacturing; when there is no reason for enterprises to believe they can profit by reinvesting it in production; when there is no reason for them to set in motion all the unused capacity dotting the landscape of postindustrial wreckage—they are all likely to, I dunno, stash it somewhere it can draw interest without much taxation, or maybe go back to those same damn financial schemes.
That is exactly what happened in 2009 and after. The American Recovery and Reinvestment Act and TARP and TALF hucked an ungodly wad of dollars into the economy. Paul Krugman thought it was too
But don’t take it from me. Here is arguably the most distinguished economic historian of our time, Robert Brenner, in an editorial that mysteriously no longer bears his name (therein lies a tale for another time): “Since 1973, the economies of the advanced capitalist countries have performed ever more poorly. The growth of GDP, investment, productivity, employment, real wages, and real consumption have all experienced a historic deceleration, which has proceeded without interruption, decade by decade, business cycle by business cycle, to the present day.” How does this differ from the past? Historically, “in order to make profits for themselves, capitalists have generally had no choice but to hire workers and pay them wages, along with purchasing means of production.” There’s a but coming, isn’t there?
“But in the last thirty years or so, this cliché has ceased to hold—and the world’s capitalist classes no longer really proclaim it. During this period, the increase in income going to the capitalist class has resulted ever increasingly from the upward redistribution of income and wealth, rather than its production.” That is to say, because there is no way to enrich themselves by expanding the economy, they have simply used their power (over who has a job and who starves, mostly) to take a larger share of the dough in a zero-sum game. Now, you could hypothetically diminish their power, bust a few trusts, temporarily ameliorate maldistribution, etc. But that will not change the terrain for growth or make investment in manufacture and industry profitable. That is a distinct underlying problem. Given this, Brenner agrees that the Keynesian solution, of government-financed programs to restart growth, is no longer on the table. And bear in mind, Brenner’s comments are not about 2009. They are about now. Which brings us to the Green New Deal.
It is patently, fatally obvious that we (though I am prepared to fight you about who “we” is; it certainly does not mean to imply “US workers” or “US citizens” as it all too often does) need a massive transformation of how we do things if we are to save the potential for human flourishing rather than obliterating it and precious much else. Anyone who does not feel this keenly is on the side of death. Many of the goals envisioned in the nonbinding Green New Deal resolution introduced by Alexandria Ocasio-Cortez and Ed Markey are profoundly desirable, and speak at least in part to onrushing disaster. The resolution even gestures toward the ongoing entanglement of climate collapse, human die-off, and political catastrophe that finds its form in the fate of climate refugees set in motion on an overheating planet that is organized according to national husbandry of resources via border controls.
So far so good. And then you get to the part about how we are going to address this and suddenly it’s Keynesianism reduced to its crudest, most nostalgic, 8-bit basics: “Whereas the House of Representatives recognizes that a new national, social, industrial, and economic mobilization on a scale not seen since World War II and the New Deal is a historic opportunity . . .” Opportunity for what? you are saying. For three things: “(1) to create millions of good, high-wage jobs in the United States; (2) to provide unprecedented levels of prosperity and economic security for all people of the United States; and (3) to counteract systemic injustices.” The third is surely a matter of passionate agreement. But it seems to depend on the first two, and they seem to depend on the idea that the Green New Deal will work like the original New Deal purportedly did, spurring massive growth. I phrase it that way not because that is necessarily an accurate description of the New Deal but because the document uses this phrase, page 7, lines 23–24, “spurring massive growth in clean manufacturing in the United States.” You hear “clean manufacturing” and nod, though you are not entirely sure such a thing exists.
There’s more. It says “a Green New Deal will require the following goals and projects—(A) providing and leveraging, in a way that ensures that the public receives appropriate ownership stakes and returns on investment, adequate capital (including through community grants, public banks, and other public financing).” Shortly thereafter it specifies plans for “directing investments to spur economic development, deepen and diversify industry in local and regional economies, and build wealth and community ownership, while prioritizing high-quality job creation and economic, social, and environmental benefits in frontline and vulnerable communities that may otherwise struggle with the transition away from greenhouse gas intensive industries.”
By now we have a sense of how it works. There is going to be a list explaining what must be done and how it works, and that list will end with a moving demand for social justice, but before that, aired out a bit by vague language about public interest, is the persistent premise that the Green New Deal will lead to economic development, investment, job growth, prosperity, etc. It will not create these things by fiat; it is clear about that. The initial “mobilization” will spur, leverage, build this economic revival. It is not only going to save Miami, it is going to make America great again. Indeed, and this is the absolute crux of the matter, these depend on each other. The Green New Deal only happens if it succeeds in restarting the virtuous cycle of growth in ways that can in turn finance the great transformation.
It’s not going to happen.
It’s not going to happen more or less for the same reasons that the high-speed rail didn’t happen in California, not identical but similar. And it will not be a political problem, not an impasse caused by having the wrong president or congressperson. Pachinko game. The enterprises on which this plan depends will not direct the money they get along the imagined developmental course, will not start making use of unused capacity as firms began to do at moments after 1933 and then more ambitiously with the onset of war. They will not set the quiet factories in motion, will not draw those who have permanently left the labor force back into fulfilling work. Those profits are not coming back. There are no more New Deals forthcoming, it’s a nostalgia tour. Even if you thought the old New Deal was super cool and not a response to the threat of global communism and a massive wave of domestic labor and other unrest, “New Deal” is not just a feel-good couple-few syllables. It is not code for “the government will save us.” It is a particular political-economic project that depends on a dispensation that no longer exists.
Well maybe, a certain kind of optimist might wonder, we can assure these enterprises some profits by committing the government to purchase their solar panels and new buildings and new transportation networks and new energy grids, and then they’ll get in line? So: government gives money to enterprises, they make stuff, the government buys it. And now said optimist arrives at the infinitely obvious follow-up question: What’s the deal with the middleman? If all the money is coming from the government both to make stuff and to buy it, why bother having the private enterprise at all? Won’t this plan only work if there are in fact no private enterprises except in a sort of sham? And why exactly would we want to extend this sham, which is as we have seen not the way forward but the obstacle, squatting there in the way, needing to be cajoled and sweet-talked, absorbing a bunch of value that originates with the work of you and me?
Now we’re talking. Now we have arrived at serious matters. Because the Green New Deal is not serious unless we can do away with this pesky problem of the compulsions of capitalism, totally unmake the arrangement of the pins, leave the pachinko game altogether. Here we must be entirely clear. “Managed competition” will not do this, nor will other mild reforms proposed by democratic socialists. No matter how much hysteria the New Red Scare people can muster about the extremity of these “socialist” proposals, the plan on offer is . . . a return to the old New Deal, a leftish market-based solution, this time without the conditions for it to work. Moreover I am not sure that a massive centralization of state power is survivable, but that is a different discussion. Regardless, to achieve a transformation adequate to the scale of planetary catastrophe, we will need to stop having firms that are ruled by profit. People will say this is impossible, but this inverts the matter exactly: it is impossible to reverse the course of climate collapse within a framework that requires profitability, creation of wage labor, spurring massive growth. The underlying urgency around the Green New Deal is real, and it derives from the knowledge that it will take something extraordinary, unprecedented, if we are to save ourselves and the foxes and the phlox and the oxygen.
Here’s the thing. People talk about the Anthropocene as if we lived in an era where anthros, humans, did climate change. But they, I mean we, did not. Capitalist enterprise did climate change. And if we are doing away with it as we must, which is to say, if we are on the side of life—because those are the two sides, capital and life—then we will no longer need a Green New Deal. Because we will have just had a green something else. I am not worried about the name.