Table of Contents

The Great Financial Meltdown

The Great Financial Meltdown

Systemic, Conjunctural or Policy Created?

New Directions in Modern Economics series

Edited by Turan Subasat

The Great Financial Meltdown reviews, advocates and critiques the systemic, conjunctural and policy-based explanations for the 2008 crisis. The book expertly examines these explanations to assess their analytical and empirical validity. Comprehensive yet accessible chapters, written by a collection of prominent authors, cover a wide range of political economy approaches to the crisis, from Marxian through to Post Keynesian and other heterodox schools.

Chapter 7: The incubator of the great meltdown of 2008: the structure and practices of US neoliberalism as attacks on labor

Al Campbell and Erdogan Bakir

Subjects: economics and finance, financial economics and regulation, radical and feminist economics

Abstract

The Great Recession in the United States (US) triggered the most extended lethargic economic performance (for the majority of the population) in the developed world, and much of the underdeveloped world, since the Great Depression. This chapter will consider both what the specific structural changes were that created the condition for the post-2007 ongoing ‘slow-motion crisis’, and why US capitalism chose to adopt those changes over the course of the preceding three decades. This chapter discusses four changes in the operation of capitalism of central importance to its subsequent performance, eventually creating the conditions that led to the onset of the Great Recession and the following continued anemic performance. These issues are presented as interconnected aspects of the raison d’être of neoliberalism, an intensified attack against labor to drive down the value of labor-power to restore the rate of profit, beginning at the end of the 1960s. In addition to their structural importance, these issues are also central aspects of the deep popular dissatisfaction with today’s economy They have the potential to serve as starting points for explaining that today’s problems are not accidental but rather the results of conscious choices by capital acting in its own interests. The question of why US capitalism chose to carry out the neoliberal restructuring is addressed through two questions: first, why did US capitalism consider it necessary to abandon the structure that had served it so well before 1970; and second, why did it choose to create the specific structure by 2007 that was to lead to the Great Recession? The final important aspect of this chapter is its integrated treatment of the financial and real structural neoliberal changes. Too often the two types of changes are treated completely separately, or sometimes by progressives as simply (greedy) finance leaching off productive capital (with the implication that all that is really needed to return to pre-1970 capitalism is to re-regulate finance). This chapter to the contrary carefully notes in what ways the financial and real changes served each other to allow the overall attack against the growth of the standard of living of the working class (drive down the value of labor-power), the heart of the neoliberal project.

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