Those interested in class, crisis and the law might find useful this short video summary of the crisis from a Marxian perspective that’s been making the rounds: David Harvey, Crisis of Capitalism, (April 26, 2010). Harvey identifies a few popular “genres” of explanations for the crisis — human nature, institutions, economic theory, policy, and culture. Though he agrees each has some truth, he draws on Marxian ideas to sketch out a fundamental problem underlying each: the conflict between capital and labor. Financiers’ gains ultimately come at the expense of overall well-being and leads to repeated crises that are never resolved but only moved around. He urges that academics subject to serious debate the value of a system in which hedge fund executives can make $3 billion in a time of financial crisis, while most of the world is subjected to austerity measures.
But despite its accessible and entertaining story of underlying class conflict, Harvey’s video doesn’t adequately counter the powerful stories rationalizing financial power being promoted by the right (and right-inflected “center”) in the U.S., whether by mainstream academics in law or from Congress, Fox News or hate radio. Harvey insists that the recent crisis has made bare excessive capitalist power, so that no longer can anyone credibly believe economic problems are a problem of labor excesses — workers have been so thoroughly disciplined since the 1970s. He makes no mention of the influence of the racial and cultural (and often gendered) story in the US that blames the crisis on irresponsible borrowers supposedly given excessive power by the Community Reinvestment Act or by other government housing programs and civil rights laws. Although this myth is perhaps too absurdly contrary to fact to deserve discussion, the fact is it has been enormously powerful in deflecting populist blame from finance capital interests onto progressive government and onto the usual suspects — the poor, people of color and the supposed cultural failings of family (marriage would allow struggling American families to be able to save instead of borrowing and driving up government spending).
Further, as a free-market counter-video emphasizes, the labor-blaming story still has enormous sway over popular imagination and public policy at least in the US: the counter video argues that excessive debt is a problem of egalitarian welfare state and the regulatory state policies. In this view, too much government social spending (especially on unionized public employees) is the problem — we’re not living within our means, so that’s why the economy is weak and volatile. And why have wages and jobs declined or stagnated so that people rely more on debt, both private and public? Well, this free-market counter-video argues both that declining job gains are a statistical error (because per capita income has risen, which conveniently doesn’t take into account the share of income going to labor) and also that declining job gains are a problem of excessive regulation and government “intervention” in the US (American workers would be doing well if it weren’t for minimum wage laws, social spending and high taxes) due to too much labor power.
In short, Harvey’s Marxian story of the conflict between elite capital and the rest of society needs a sharper focus on undoing the “market” story that makes the interests of finance capital naturally and necessarily seem to be the only route to prosperity, while making the interests of labor, and of equality and democracy more broadly, seem to be the main opposing force to economic growth. The free-market critique of Harvey’s video concludes by embracing the hedge fund executives’ $3 billion in gains, saying they only get paid that much because they give that much value back to the rest of us (who have freely chosen to give them that money)!
How have so many come to believe — both in popular press and in legal scholarship — that if we seriously restrict or tax financial executives’ compensation, and direct resources instead to — say, health care — most will be worse off?! Maybe it’s not that so many have “false consciousness” of their real interests (“preferring” the dream of Wall Street’s riches over the reality of lower-cost, higher-quality, life-sustaining medical care enjoyed by other developed nations), but that so many have perhaps realistically understood the depth of finance’s power in the current system — leaving little alternative but to appease that power and to hope for elusive promises of growth through increasing austerity. Law scholars can help by sketching out how alternative legal and economic institutions could resist that power.