ASA Globalog: Everyday life and business as usual

Everyday life and business as usual Bob Jessop In my first blog, I reflected on the return from panic in September-November 2008 to the appearance of business as usual some 12 months later. Wearing my political economist’s hat, I suggested that this was related in part to the role of economic crisis in facilitating the concentration of power in the hands of a few key decision-makers, in this case, the ‘usual suspects’ who knew where the bodies were buried because they had placed them there. In terms of the classical definition, this could be seen as a ‘dictatorship’ of limited duration, focused on crisis-management, and accountable to normal politics in due course. I might have added that such exceptional measures in response to an emergency were possible because the financial crisis had not been accompanied by a crisis in the state and a broader political crisis. The contrast between Weimar Germany and the United States in the Great Depression is interesting here. On some counts the economic crisis in the USA was more sudden and severe than in Germany but ‘normal politics’ prevailed and, eventually, institutional changes introduced through the New Deal (plus the demand generated by a war-time economy) enabled the US economy to return to prosperity. In contrast, an interlocking and mutually reinforcing series of crises in the state, political legitimacy, and class hegemony blocked ‘normal politics’ and created the conditions for a turn to dictatorship in the modern sense, i.e., a more durable set of political arrangements based on the suspension of normal democratic politics and a more expansive and extensive coordination of different institutional orders and social fields. I had intended to expand on these points in my second blog but have been diverted by a news item and an academic article that I have read in the past two days. First, the news item: reading The Wall Street Journal on a flight from Manchester to Hong Kong (and, yes, a propos my last blog, I did manage to get past the temperature monitors in Hong Kong airport after having signing a form about my incipient recovery from the flu), I learned that a Bank of England survey has show that: “the financial crisis and the recession that followed appear to have changed Britons’ attitude to debt and spending. … The BOE poll data showed that households increased their saving for reasons largely connected to concern about the economic outlook. Reasons frequently cited were fear of losing employment, a desire to reduce debt, additional personal commitments and extra money from lower mortgage payments or bills, as well as a desire to save for retirement or the future, and having extra cash from a new job or inheritance” (The Wall Street Journal, 14 December 2009, p 6). Similar reports could no doubt be found covering other advanced economies in the grip of, or newly emerging from, recession. And, of course, anthropologists, above all, don’t need to be told about the resilience of households and social networks in relation to crisis, whether in advanced economies or, even more importantly, in economies where informal employment and informal work more generally are significant. Second, the journal article: in the latest issue of Review of Radical Political Economics, there is a fine piece by three radical political economists, Dick Bryan, Randy Martin, and Mike Rafferty, on the topic: ‘Financialization and Marx: giving labor and capital a financial makeover’. They refer to a recent IMF paper on the crisis, which describes the household as the “shock absorber of last resort” in the current economic situation. In one sense, of course, this has always been the case in relation to emergencies, crises, and other forms of turbulence. But there is also something new in the present situation, which has been gathering speed for some time: the financialization of everyday life, reflected not only in changes in the practices of financial institutions but also in the practices of wage earners and households. The authors suggest that: In the language of finance, the household is increasingly to be seen as a set of financial exposures to be strategically self-managed. Calculations and decisions must now be made about a range of issues. Some such issues have emerged because the management of certain exposures is no longer undertaken by the state: there is now need for private calculation and decisions about such things as health insurance, education investment, and investment in an asset portfolio for retirement. There are also issues that have emerged with increasing competitiveness within the financial sector: decisions about the proportion of (expected) income to dedicate to home loan interest payments; the time profile of loans, fixed or floating rate loans, the management of consumer credit options; the preferred pension scheme. Finally, there is an emerging set of choices to be made in the face of new financial products, in particular the emergence of derivative products that permit people to hedge exposure to risks relating to their employment and the value of their home (Shiller 2003). In each one of these calculations there are (at least retrospectively) right and wrong choices, requiring the household to be financially savvy, not just in the sense of prudence, but in identifying the range of financial risk exposures and knowing how to manage them. Hence the new and emphatic push by financial regulators at all levels to generate programs for financial literacy, so that households can be assumed to have the strategic financial capacity necessary to understand the financial pressures they now face. The corollary … is that the (assumed) financially literate worker can morally and legally take responsibility for their own financial success and failure. Such observations are commonplace in work on consumption and I cite them here not only because they were the direct trigger for this blog but also because Bryan, Martin, and Rafferty relate them to a much more complex set of innovative arguments about financialization and class formation in contemporary capitalism. I don’t want to take us down this road here, however, but to relate these remarks to the return to “business as usual”. In contrast to the 1930s, whether in Germany, the USA, or other developed metropolitan economies, wage-earning households are far more heavily enmeshed in the circuits of finance capitalism as consumers of and, indeed, investors in, financial products and services. This is reflected in several aspects of the financial crisis. First, one significant line of explanation for the financial crisis has been that it is really the fault of greedy consumers who took out mortgages that they had no realistic prospects of repaying should the housing bubble burst, used equity in their homes to finance personal consumption, borrowed too much on their credit cards, and generally consumed as if there would never be a day of reckoning. Whilst blaming consumers is a useful distraction from other causes and has the added advantage in the USA that it can be linked, however dishonestly, to claims that state intervention forced banks to relax loan requirements in order to democratize access to the housing market, there is also a kernel of truth in this one-sided account of the crisis. This leads to my second observation: that, insofar as consumers were sucked into debt and now realized that they were ‘suckers’ for being so seduced, they have accepted some measure of blame for the impact of financial crisis on their present condition. The household has then kicked in as the shock absorber of last resort, the crisis has been normalized, accepted as a fact of life, and business as usual has been restored in everyday life. Moreover, third, because of the opacity of many financial innovations, which exceeded the abilities (one hesitates to say ‘even’) of financial innovators themselves to fully grasp, it is difficult for ordinary wage-earners and households to see where else the blame for the crisis might be located. This is reflected in populist rage against ‘greedy bankers’, mis-selling of financial products, and poor regulation but is not translated into effective grass-roots resistance to the complex web of financialization that has emerged in the last twenty years. In short, if one part of the story of the apparent return of ‘business as usual’ is the capacity of key financial decision-makers to dominate decisions over the financial rescue-package, another part is the self-responsibilization of households grounded in their integration into the circuits of financial capital, leading them to become shock absorbers of last resort in the current crisis. If the former aspect is ripe for further investigation as part of the political anthropology of the state and elite power, the latter is ripe for investigation into financial practices of everyday life and new practices of economic governmentality. None of these remarks imply, of course, that there these are the only two sets of causal factors or sites for further research.