How economic crisis is conceptualised today

Frank Furedi

February 2002

The title of the lecture should be 'how capitalism is perceived' rather than how 'economic crisis is conceptualised'. This is an important distinction to make as the contemporary discussions about recession/ business cycles/depression have little in common with conceptualisation of crisis – either theoretically or methodologically. They do not touch upon the structures of the capitalist system in the way that past debates about finance capital, monopoly, state intervention, mixed economy did. Today's discussions are far more shallow and less likely to move in the direction of a structural analysis.

That is why deliberations about crisis tend to be about factors that are exogenous to the capitalist system.

1. The lack of critical thinking - why should this be the case?

Why is the discussion today very unsatisfactory and unchallenging? As we noted previously the decline in critical thinking is linked to the dissolution of the subjective factor. Conversely, it has been true in the past that the high points of critical thinking have been associated with major upheavals in society and defined social conditions.

In one of his early works, 'Critical Marginal Notes on the Article "The King of Prussia and Social Reform"', Marx noted;

'But the community from which the worker is isolated is a community the real character and scope of which is quite different from that of the political community. The community from which the worker is isolated by his own labour is life itself... Therefore, however partial the uprising of the industrial workers may be, it contains within itself, a universal soul; however universal a political uprising may be, it conceals even in its most grandiose form a narrow-minded spirit'.

What Marx was saying was that contained within the struggles against the conditions of everyday life, no matter how partial, was a clearly definable universalising tendency, a broad and critical challenge to the status quo compared to the political uprising, no matter how grandiose. A clear distinction is drawn between a revolt against the very condition of existence posed by the wage labour capital relations AND a political critique which leaves the social foundations of the system untouched and remains restricted no matter how radical its rhetoric.

Today we can see the implication of this. Not only is there an absence of an uprising against the conditions of life, we also have a fairly superficial form of the political struggle even within the confines of bourgeois politics. What we've got is a situation with the most grandiose form of political rhetoric and the more this rhetoric expands you see its partial and limited character. For example, we live in an age of human rights - universal this and universal that - yet the rhetoric is far more partial and far more narrowly political (i.e. unconnected to the conditions of life) than traditional liberal or social democratic worldviews.

The expulsion of the subjective factor from the contemporary world has implications both for how the capitalist system works and the way it is perceived.

2. We know from previous discussions that a sense of crisis is bound up with perceptions of limits. Why is this?

From a sociological point of view, the theorisation of crisis was bound up originally with the understanding that the world was undergoing ceaseless and fundamental change. You cannot have a notion of crisis if you have no concept of change and live in a static world. The sense of change is perceptible once you have a world market and this stimulates the exploration of crisis theory.

In the case of Marx, this perception of change was developed towards the understanding that this process of change could be understood as the outcome of certain structural developments in the forces of production, and could only be realised through the class struggle

So in this theory, you not only have a theory of change (which is common in many 19th century theories) but also the theoretical understanding that capitalism is a transient system. His contribution was understanding capitalism as both transient and containing an imminent tendency towards crisis.

This insight was also underpinned by the notion that the system contained the capacity for an unprecedented level of expansion but at the same time continually threw up barriers and limits to its own advance.

The tension between expansion and obstacles could be resolved in one of two ways:

- provisionally through a ceaseless tendency to destroy, recreate, and
reorganise itself
- or through transcendence through a social revolution

So here we have a theory that is sensitive to both the system's strengths and weaknesses but which is oriented towards the conceptualisation of its contradictions.

In contrast to Marx - competing theories, such as Smith or Ricardo, were imprisoned within an ahistorical imagination that perceived the limits to capitalism through factors that were technical or external to it. Perceptions of the limits of capitalism are already evident in the 19th century but limits are understood as external such as:

- restrictions of the market
- or in a more fetishised form, such as in Malthus, limits are attached to certain technical and natural factors such as population growth or inability of agricultural production to continue rising.

So there was a grasp of limits and an intuitive understanding of there being a crisis but one that was not underpinned by notions of transience and transcendence. Such conceptions were shaped in part by the fear of instability and the class struggle, and crisis had a clear political dimension which saw the political realm as positing both solutions and problems. Ricardo, for example, attempted to understand crisis as a product of the class struggle through rising wages. The pressure of social experience forced people to explain problems but in ways that were technical and ahistoric.

3. How capitalism is perceived today

One of the consequences today of diminishing subjectivity is that the sense of limits is even more apologetic and philistine. Diminishing subjectivity is understood more naturalistically, ahistorically and asocially.

Why should it be the case that in the 21st century the level of discussion of social and economic life has a dark-age character to it? I would explain this as follows:

As capitalism expands it continues to erode the foundation of its existing institutions such as traditional forms of authority, religion, the weakening of local communities and even the family form. As it does this its ability to respond to crisis is continually hampered by the fact that it lacks the institutional framework within which it can manage and give meaning to change. The role and existence of these institutions is partially to give meaning and help internalise the response to change and change itself.

As a result:
1. It cannot consistently draw comfort and legitimacy from the positive
side of change.
2. Nor can it reconcile itself to the destructive side of change.

Where we see both sides of the coin - abundance and the destructive effects of the market - others can only see problems located within the political sphere - Which is why abundance is often seen as the product of greed and the destructive effects as an inevitable outcome of change.

Consequently capitalism is confronted with the problem of abundance and limits to which it has no answer. Its heightened sense of abundance is not legitimated. On the contrary it is experienced as in some sense responsible for a variety of problems - in particular it will wreak retribution in the form of a capitalist crisis.

What you have in the difficulty of overcoming the tension between abundance and limits is a convergence of views. For example, in most intellectual contributions, there is an obsessive focus on consumption from both right and left (consume more to avert recession OR consume less to avoid global warming).

This reflects a tendency towards the externalisation of the market and for leaving it unquestioned. The orientation towards discussions on nature, abundance, limits, consumption reflects this.

That is why we have a paradoxical situation where the market can be ruthlessly criticised and also left undefended.

The only time when it can be recalled that the market was so one-sidedly criticised was in the inter-war period when the capitalists in Europe called for nationalisation and this was due to the threat of the class struggle.

Today we can see the criticism of the market in relation to 11 September such as around where the left saw the issue of the privatisation of airport security as a key factor in the disaster. Even the capitalist class is worried about the fact that with so many private contractors in the defence and security industry it is vulnerable to terrorist attacks. There is an implicit critique of privatisation and the market even amongst its own defenders.

When we hear the market being criticised it is the market in its shallow and superficial way and what people object to is private ownership. The old social democratic argument about the advantages of state planning and the state sector rears its head in an indirect form.

What this tells us is that perceptions of crisis today are fundamentally shaped by the problem of assimilating change. With the suspension of class conflict, change is experienced as a purposeless transcendental force that is beyond human control. It often has a dramatic and metaphysical quality. Usually when people react to change they react to a particular outcome of change e.g. an innovation, a physical thing.

That is why every form of innovation invites scepticism and suspicion leading to the ludicrous proposition that technological advance makes society more vulnerable to destructive acts, again such as around 11 September. Increased complexity is seen to lead to dependency and is by definition a reflection of vulnerability. Technology is seen as a danger. Risk management has been enhanced as a consequence. The ruling class is worried about how vulnerable it is to the sabotage of its technology. Alternatively you have environmentalists that are concerned about the destructive impact of technology on nature.

We can now understand a number of apparently conflicting phenomena:

- the coincidence of anti-capitalist ideology with the eternalisation of the market precisely at a time when the market is unquestioned
- on the other hand you have the celebration of consumption and the promotion of individual choice with its very opposite - the conviction that individualism needs to be kept in check because of its destructive consequences.
- You also have an intense perception of crisis (crisis is an overused word) - with absolute political stability across the Western world

The routinisation of crisis thinking is driven by the overall problematisation of change so when crisis is discussed it is really about an aversion and repulsion to change itself as change is seen as destructive.

This even extends to the radical so-called anti-capitalist movement - whose main intellectual contribution is to offer a shallow critique of change, not of capitalism. This critique proceeds forward without even a perfunctory attempt to orient its perspective towards the future. All the tensions are mechanically resolved through the theory of globalisation - which is not a theory but a descriptive manifesto. This attempts to bring together these tensions in its all encompassing framework. What you have is an insipid attempt to bring together two developments:

- the acknowledgement of the market as a great integrator
- linked to the perception that it also a great atomiser that dissolves communities and fractures everyday life

Everyone can pick and choose bits that they like from the more global orientation to the most local - but what they all agree on is that human aspirations need to be kept in check. What you have is an intellectual attempt to avoid the limits of the system, not through changing, altering or restructuring it but through limiting the scope of human subjectivity. Avoiding the limits of the system is realised through limiting the scope of human subjectivity.

In this respect, in this respect alone - in a roundabout way they are right - by confining human subjectivity it will have the effect of maintaining the status quo and perpetuate a situation where crisis thinking can flourish without the threat of a social crisis.

If we can understand this development we can understand most developments today.