Meanwhile my new-economic-order resolution is to stop being so rude about everyone all over the blogosphere. Or at least to be rude about, you know, the right.

Take care…

Highlighting this and apologizing for the Democrats’ actions does not come across to me as strongly as it does to you and Jodi as an apology for the IRREFUTABLE capitulation to Wall Street that this bailout IS. Trying to buttress this apology with his “Main Street cannot thrive if Wall Street isn’t doing so well” remark would have that effect on me if I saw it playing a bigger role in the essay. The point for Zizek is not the legitimacy of the rationale (Main Street depends on Wall Street), but the appearance of State intervention on behalf of The People (as opposed to the ideal of a free-market) it sustains. This is where it stops. If you can convince me that the essay depends on this element and its actual legitimacy, then I’ll be more sympathetic to seeing Zizek as just spouting bullshit.

I see Zizek’s point about “what kind of State intervention?” as opposed to “State intervention or non?” as the key to the essay. I don’t see why you think he “implicitly accept the preposterous right-wing idea that criticism of the Paulson plan = rejection of state action to minimise the damage caused by the implosion of neoliberal capitalism,” considering he never mentions the criticism against the bill. From one view, this is a problem with his essay. From another, the one I’m suggesting, it doesn’t serve Zizek’s point. Of course, there was LOTS of talk about alternative State interventions, many of which fully accepted the at least partial demise of Wall Street. Not many if any of these were seriously on the table, in terms of being taken seriously by the media or the disputes over the bailout the first time it was defeated. Does that make them not legitimate? Well, no, but it does mean these are not the operative terms of the discussion, for the sake of which Zizek is writing this essay in the first place:

Maybe it is time to step back, think and say the right thing. True, we often talk about doing something instead of actually doing it – but sometimes we do things in order to avoid talking and thinking about them. Like quickly throwing $700 billion at a problem instead of reflecting on how it came about.

As for what he says about markets, I don’t understand your disagreement. Of course, there are material economic factors at play that aren’t addressed by this bailout, but I don’t know where you get the idea that anyone argued for it on those grounds. Everyone knew that the intentions behind this bailout were propping up the speculative economy, whose most “real” element is the debt industry, an economic force dominated by belief. We have seen the Market rebound from the sheer thought of the bailout, of course not making any substantial over-all gains, and this is what Zizek means by how the “bailout may work even if it is economically wrong.” Did you think that Zizek meant that the bailout would – when it “worked” – get rid of the core economic problems? Ajrun Appadurai wrote an excellent article at The Immanent Frame, “Welcome to the Faith-based Economy” that deals with these issues in a more concretely economic conversation.

Joe

P.S. Brilliant comments at Lenin’s Tomb regarding Wolff’s video-lecture. While I didn’t form the strong opinion about them that you did, I was weirded out by his comments regarding minorities and exported jobs, and also thought the “core analysis” was sound and pretty articulate. I was put off by the almost anti-State “corporate guild” or syndicalist rip he went on for the last ten minutes, which didn’t really question the logic of Capital, profit and private property.

“The standard ‘trickle-down’ argument against redistribution (through progressive taxation etc) is that instead of making the poor richer, it makes the rich poorer. However, this apparently anti-interventionist attitude actually contains an argument for the current state intervention: although we all want the poor to get better, it is counter-productive to help them directly, since they are not the dynamic and productive element; the only intervention needed is to help the rich get richer, and then the profits will automatically spread down to the poor. Throw enough money at Wall Street, and it will eventually trickle down to Main Street. If you want people to have money to build, don’t give it to them directly, help those who are lending it to them. This is the only way to create genuine prosperity – otherwise, the state is merely distributing money to the needy at the expense of those who create wealth.

It is all too easy to dismiss this line of reasoning as a hypocritical defence of the rich. The problem is that as long as we are stuck with capitalism, there is a truth in it: the collapse of Wall Street really will hit ordinary workers. That is why the Democrats who supported the bailout were not being inconsistent with their leftist leanings. They would fairly be called inconsistent only if we accept the premise of Republican populists that capitalism and the free market economy are a popular, working-class affair, while state interventions are an upper-class strategy to exploit hard-working ordinary people.” [my emphasis]

This is, of course, absurd nonsense – because it implicitly accepts the preposterous right-wing idea that criticism of the Paulson plan = rejection of state action to minimise the damage caused by the implosion of neoliberal capitalism. Yes, sure, we need political intervention. That’s pretty obvious. But as NP is arguing in the post we’re commenting on, what’s at stake at a time like this – when capitalism is undergoing a massive crisis-hastened systemic transformation – is the kind of political intervention that’s going to get implemented. In an article supposedly arguing that “The real dilemma is not ‘state intervention or not?’ but ‘what kind of state intervention?’” Zizek trots out exactly the kind of apologetics for simple state appropriation and upward redistribution of wealth that we’re seeing on Fox News.

On moral hazard, here’s a nice conflation: “The resistance was formulated in terms of ‘class warfare’, Wall Street against Main Street: why should we help those responsible (‘Wall Street’) and let ordinary borrowers (on ‘Main Street’) pay the price for it? Is this not a clear case of what economists call ‘moral hazard’?” Apart from the fact that that’s not the point of the Wall Street / Main Street distinction, comments about moral hazard pretty clearly do not equal class warfare. Complaining about upward redistribution just isn’t the same as complaining about increased appetite for risk. (Plus, on the moral hazard argument in general, the idea that after the events of the last few weeks and months, capitalists are going to be insufficiently aware of the dangers of high-stakes gambling strikes me as… odd.)

But the strongest objection to the Paulson plan isn’t that it’s unjust. The strongest objection is that it won’t work – and isn’t working. Zizek again:

“The debate about the bailout deals with decisions about the fundamental features of our social and economic life, even mobilising the ghost of class struggle. As with many truly political issues, this one is non-partisan. There is no ‘objective’ expert position that should simply be applied: one has to take a political decision.”

Well yes, one has to take a political decision. But that decision needs to be informed by the objective economic circumstances. It is not just a matter of (market) opinion. And the circumstances, as I say, are that the economies of the ‘developed’ world, and most of all the US, have been driven to a far too great extent for far too long by debt-fuelled consumption: private debt, caused by stagnant lower- and middle-class wages; and public debt, caused by the ‘developed’ world’s declining geopolitical power, and thus declining ability to appropriate the rest of the world’s resources. One cannot borrow one’s way out of debt. Any solution based on, in the short run, borrowing to give to banks, and, in the longer run, taking that money from taxpayers, i.e. consumers, is a perpetuation by other means of the economic logic that’s produced the mess. It may prevent systemic collapse in the short term – or it may not – but it completely fails to address the problem.

Yet Zizek quotes Keynes – of all people! – on beauty contests, and thereby suggests that as long as we can make stock-brokers feel better about each other, we’ll be fine.

Also, just as a snarky aside, when supposed radicals start quoting John Gray to support their arguments, I think they lose some credibility.

Were most of the objections (largely made by the GOP) sensible in this way though? Over-whelmingly I heard Republican representatives complaining that the bailout mitigated the just fine-and-dandy free-market in action from doing its thing. The “moral hazard” argument as Zizek calls it is a variation/extension of this attitude.

“since markets are effectively based on beliefs (even beliefs about other people’s beliefs), how the markets react to the bailout depends not only on its real consequences, but on the belief of the markets in the plan’s efficiency. The bailout may work even if it is economically wrong.”

But of course markets aren’t effectively based on beliefs – economic reality has its influence too. Sensible objections to the bailout plan were nothing to do with “moral hazard” – the objection is that you can’t resolve a crisis caused largely by the collapse of consumer purchasing power in the ‘developed’ world by taking money from taxpayers and giving it to banks.

I like Zizek’s response to this in a recent LRB article:

“The real dilemma is not ‘state intervention or not?’ but ‘what kind of state intervention?’ And this is true politics: the struggle to define the conditions that govern our lives.”

Yes, “the State functions in the service of the dominant class,” but what is at stake now is what kind of State interventions are made, and by extension who the dominant class really is.