By Riccardo Bellofiore
The documentary by Terry Jones (member of Monty Python, director of many of the group's films and responsible for their “visual” style) and Theo Kocken (economist, professor of Risk Management for Institutional Investors at the VU University of Amsterdam), Boom Bust Boom, was shown in Bergamo on May 18th, the national premiere, in a screening reserved for students and staff at the University of Bergamo. These are some first impressions on seeing the film, requested from me by Marco Palazzotto (and I am indebted to Marco and Angelo of PalermoGrad for my initial contact with the producers of the film). They are a summary of comments I made in the debate with L. Randall Wray after the screening, which can be watched here.
The film has much to praise it and without doubt will become a classic of the 2007-8 crisis (which many, perhaps almost everyone, continues to call the 2008 crisis), on a par with the Inside Job. It has perfect rhythm, is visually effective and its ironic tone works well from start to finish: it is also a perfect didactic instrument. It will be enough to relate two lines from the film. One is by Irving Fisher, the theorist perhaps most well known for his quantitative theory of money: in September 1929 he claimed that the price of securities had reached a high plateau, where it would comfortably sit in the coming years; the devastating rebuttal came within a month. Fisher nonetheless regained respect in 1933 by publishing a now classic article on debt deflation as a fundamental characteristic of financial crises. The other line is from Paul Mason, the radical British journalist, who believes that little remained of dominant economic theory after the crisis: which unfortunately is only true conceptually, and not practically. It is quite likely that this permanent ability of dominant theory to survive as a zombie goes along with the categorical and political fragility of the alternative economic theories.
But the quality and quantity of interviews is noteworthy. Paul Krugman, James Galbraith, Steve Keen, Andy Haldane, John Cassidy, Steve Kinsella are just some of the names: some will be surprised to also find important voices such as that of the actor John Cusack, engaged with this among other matters. Above all, the film features the crucial presence of two “puppets”, brought back to life after the crisis, John Kenneth Galbraith and Hyman Philip Minsky: do not miss the dialogue with his son Alan (Minsky's puppet was transported from England as a paying traveller; and finding Minsky's last office at the Levy Economics Institute too modest, Jones decided that the conversation with Alan ought be filmed in a library in Manhattan).
Here, nonetheless, are the film's limitations. The interpretation of Minsky's theories provided is the most widely acknowledged, but erroneous (notwithstanding Charles Kindlerberger's authoritative legacy): that of the alternation between prosperity and depression across “bubbles” as psychological, shifting between euphoria and panic (as, indeed, the first edition of his history of financial crises was called in the 1960s). Wray is right: we have not seen so much a Minsky “moment”, but rather one which has been half a century long. Consequently, we need to search for a more structural interpretation. And actually another, more interesting, Minsky exists, despite the importance maintained for his hypothesis on financial instability (which nonetheless, it must be said, in the canonical account, provides no explanation of the dotcom crisis, nor the subprime crisis and everything that followed). The other Minsky is the one who revived a Marxian vision of long cycles from his teacher (and first supervisor) Schumpeter, as well as from a certain reading of Keynes, and inserted this into a reading of financially developed capitalist economies based on the intersections of different agents' balance sheets. This should come as no surprise: not only was Minsky a son of two “socialists”, and himself a member of the American Socialist Party, he also defined Keynes and Schumpeter as “conservative Marxists”. From this derived his reading of the new capitalism as “money manager capitalism” (and which I qualify as the capitalism of the real subsumption of labour under finance and debt). Hence his proposal to combine ‘New Deal’ policies and Keynes in a “socialising” renewal of investment and the entire economy.
Minsky saw very well that the crisis of so-called Fordism had began not in the middle of the 1970s, but already in the mid-1960s. And the capitalism which followed it was, again as Minsky saw quite clearly, a (very brief) monetarist reaction which died in 1982. What followed this in turn was not a capitalism which returned to the free market, but rather that reconstruction of subjectivity from on high which we incorrectly call Neoliberalism. Capitalism emerged from it ready to fight the depressive tendency within it, and to have a relatively vibrant dynamic, that which I have called elsewhere “privatised and financialised Keynesianism”. The reasons for its crises must be identified in the contradictions of the ascending phase, and therefore in the novelty of the relation between finance and production, a relation which for the most part eludes so-called heterodox economics. Instead of beginning from demand and distribution, as it does, such economics should start with finance and production (as Paul Sweezy and Augusto Graziani knew all too well).
Two themes emerge in the final part of the film. The first is an explanation of the crises in terms of the natural tendencies of human beings: the point becomes to “broaden” and “complicate” that anthropological vision provided by typical dominant economy (something which is, as Wray effectively put it at Bergamo, “impossible”). To me this thesis seems not just a little limited but basically wrong. It is a kind of inversion of the Marxian thesis. For Marx, capital has a “fetish character”, and this fetish really does have (powerful) social characteristics in determinate historical conditions: it is not actually an illusion; while “fetishism” is quite another thing, i.e. that which attributes social characteristics to things like natural elements. In the film, again, the crisis is attributed to an unchanging nature of human beings, only that they are not quite as “banal” as we have been told. I think that one ought rather to start not from the individual or from human beings as such, but from a “holistic” vision of the capitalist system, characterised fundamentally by relations of class and money.
The other theme to which I alluded is that of teaching economics. At the end of the film there is a series of interviews with some students who are part of the Rethinking Economics movement and various other initiatives for pluralism in economics (a small group of which, based in Bergamo, attended the premiere). To me, the demand for “pluralism” seems weak. The point isn't to make other voices heard, and then leave the students to choose: that way the mainstream will always win. The point is entirely different, namely that the dominant positions are wrong. The point ought be about reclaiming the plural nature, not pluralism, of economic theory: that is something else entirely. Keynes against Marshall, Schumpeter against Walras, Marx against Ricardo, each attributing to the other the “role” of antagonist to the claims of their own theory, nominating the candidate to fill the post of new orthodoxy. This is the battle. And in this battle, today, alternative economic thought is very weak, on the theoretical as much as political terrain.
(translated by Richard Brodie)
The documentary by Terry Jones (member of Monty Python, director of many of the group's films and responsible for their “visual” style) and Theo Kocken (economist, professor of Risk Management for Institutional Investors at the VU University of Amsterdam), Boom Bust Boom, was shown in Bergamo on May 18th, the national premiere, in a screening reserved for students and staff at the University of Bergamo. These are some first impressions on seeing the film, requested from me by Marco Palazzotto (and I am indebted to Marco and Angelo of PalermoGrad for my initial contact with the producers of the film). They are a summary of comments I made in the debate with L. Randall Wray after the screening, which can be watched here.
The film has much to praise it and without doubt will become a classic of the 2007-8 crisis (which many, perhaps almost everyone, continues to call the 2008 crisis), on a par with the Inside Job. It has perfect rhythm, is visually effective and its ironic tone works well from start to finish: it is also a perfect didactic instrument. It will be enough to relate two lines from the film. One is by Irving Fisher, the theorist perhaps most well known for his quantitative theory of money: in September 1929 he claimed that the price of securities had reached a high plateau, where it would comfortably sit in the coming years; the devastating rebuttal came within a month. Fisher nonetheless regained respect in 1933 by publishing a now classic article on debt deflation as a fundamental characteristic of financial crises. The other line is from Paul Mason, the radical British journalist, who believes that little remained of dominant economic theory after the crisis: which unfortunately is only true conceptually, and not practically. It is quite likely that this permanent ability of dominant theory to survive as a zombie goes along with the categorical and political fragility of the alternative economic theories.
But the quality and quantity of interviews is noteworthy. Paul Krugman, James Galbraith, Steve Keen, Andy Haldane, John Cassidy, Steve Kinsella are just some of the names: some will be surprised to also find important voices such as that of the actor John Cusack, engaged with this among other matters. Above all, the film features the crucial presence of two “puppets”, brought back to life after the crisis, John Kenneth Galbraith and Hyman Philip Minsky: do not miss the dialogue with his son Alan (Minsky's puppet was transported from England as a paying traveller; and finding Minsky's last office at the Levy Economics Institute too modest, Jones decided that the conversation with Alan ought be filmed in a library in Manhattan).
Here, nonetheless, are the film's limitations. The interpretation of Minsky's theories provided is the most widely acknowledged, but erroneous (notwithstanding Charles Kindlerberger's authoritative legacy): that of the alternation between prosperity and depression across “bubbles” as psychological, shifting between euphoria and panic (as, indeed, the first edition of his history of financial crises was called in the 1960s). Wray is right: we have not seen so much a Minsky “moment”, but rather one which has been half a century long. Consequently, we need to search for a more structural interpretation. And actually another, more interesting, Minsky exists, despite the importance maintained for his hypothesis on financial instability (which nonetheless, it must be said, in the canonical account, provides no explanation of the dotcom crisis, nor the subprime crisis and everything that followed). The other Minsky is the one who revived a Marxian vision of long cycles from his teacher (and first supervisor) Schumpeter, as well as from a certain reading of Keynes, and inserted this into a reading of financially developed capitalist economies based on the intersections of different agents' balance sheets. This should come as no surprise: not only was Minsky a son of two “socialists”, and himself a member of the American Socialist Party, he also defined Keynes and Schumpeter as “conservative Marxists”. From this derived his reading of the new capitalism as “money manager capitalism” (and which I qualify as the capitalism of the real subsumption of labour under finance and debt). Hence his proposal to combine ‘New Deal’ policies and Keynes in a “socialising” renewal of investment and the entire economy.
Minsky saw very well that the crisis of so-called Fordism had began not in the middle of the 1970s, but already in the mid-1960s. And the capitalism which followed it was, again as Minsky saw quite clearly, a (very brief) monetarist reaction which died in 1982. What followed this in turn was not a capitalism which returned to the free market, but rather that reconstruction of subjectivity from on high which we incorrectly call Neoliberalism. Capitalism emerged from it ready to fight the depressive tendency within it, and to have a relatively vibrant dynamic, that which I have called elsewhere “privatised and financialised Keynesianism”. The reasons for its crises must be identified in the contradictions of the ascending phase, and therefore in the novelty of the relation between finance and production, a relation which for the most part eludes so-called heterodox economics. Instead of beginning from demand and distribution, as it does, such economics should start with finance and production (as Paul Sweezy and Augusto Graziani knew all too well).
Two themes emerge in the final part of the film. The first is an explanation of the crises in terms of the natural tendencies of human beings: the point becomes to “broaden” and “complicate” that anthropological vision provided by typical dominant economy (something which is, as Wray effectively put it at Bergamo, “impossible”). To me this thesis seems not just a little limited but basically wrong. It is a kind of inversion of the Marxian thesis. For Marx, capital has a “fetish character”, and this fetish really does have (powerful) social characteristics in determinate historical conditions: it is not actually an illusion; while “fetishism” is quite another thing, i.e. that which attributes social characteristics to things like natural elements. In the film, again, the crisis is attributed to an unchanging nature of human beings, only that they are not quite as “banal” as we have been told. I think that one ought rather to start not from the individual or from human beings as such, but from a “holistic” vision of the capitalist system, characterised fundamentally by relations of class and money.
The other theme to which I alluded is that of teaching economics. At the end of the film there is a series of interviews with some students who are part of the Rethinking Economics movement and various other initiatives for pluralism in economics (a small group of which, based in Bergamo, attended the premiere). To me, the demand for “pluralism” seems weak. The point isn't to make other voices heard, and then leave the students to choose: that way the mainstream will always win. The point is entirely different, namely that the dominant positions are wrong. The point ought be about reclaiming the plural nature, not pluralism, of economic theory: that is something else entirely. Keynes against Marshall, Schumpeter against Walras, Marx against Ricardo, each attributing to the other the “role” of antagonist to the claims of their own theory, nominating the candidate to fill the post of new orthodoxy. This is the battle. And in this battle, today, alternative economic thought is very weak, on the theoretical as much as political terrain.
(translated by Richard Brodie)
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