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From Michael Roberts's blog:
"Tooze’s new book makes a massive contribution to the economic history of the global financial crash of 2008-9. Tooze shows what happened and how it came about that the great credit boom of the early 2000s eventually led to the biggest financial disaster in modern economies and the ensuing deepest slump in capitalist production since the 1930s.Someone in the comments asks for Michael Roberts's opinion on how we get out of this mess.
And he concludes that the way this was dealt with by ‘the powers that be’, namely through bailouts of the banks and the general saving of the wealth of the rich at the expense of the rest of us, has provoked the emergence of a ‘populist’ reaction against ‘capitalism’, whether leftist as in Greece or Spain, or rightist as with Trump, Brexit and the Liga in Italy.
So the legacy of the first ten years of 21st century capitalism is still with us in the second decade. And worse, the underlying problem of rising debt and an uncontrolled financial sector has not been resolved. The financial crisis of 2008-9 could well return.
There have been other intriguing analyses of the great financial crash before Tooze’s. The most popular was The Big Short by Michael Lewis (which was made into a movie). Lewis tells the story of the investment banks who sold ‘toxic’ mortgage backed bonds to their clients (mainly other investment banks and rich individuals, often from Europe), knowing full well that they were rotten. As the property bubble started to burst, these banks then secretly went ‘short’ (betting on a collapse). As Lewis puts in his book, “Goldman Sachs did not leave the house before it began to burn; it was merely the first to dash through the exit – and then it closed the door behind it.”
In my own book on this period, The Great Recession, which is a chronological account, month by month, of the crisis from 2005 to 2010, I describe how the big banks in particular completely escaped the consequences of this scam, thanks to the US government. Indeed, the whole ugly story of the activities of Goldman Sachs and other investment banks before, during and after the credit crunch and the Great Recession beggars belief.
But Tooze’s long book covers the significant financial crises of the previous ten years in much more detail than Lewis or me – and is global in scope. Its length does not mean it is boring at all, as he presents us with vignettes of the major players and their decisions. He shows how they ensured that the stronger and luckier big banks gained at the expense of the weaker and smaller; and how government intervention provided funding for the culprits of the financial disaster at the expense of the victims, working people, tax payers and small businesses.
It was ‘socialism for the rich and capitalism for the poor’: such is the stuff of the capitalist order."
"Do you write anywhere about what a socialist economy might look like and how a transition to such an economy might happen – and here I’m talking about the ‘economics’ rather than the politics of change?I await with interest any response - but we've never had one before. Not from any Marxist economist, not to single Roberts out.
In a world where everyone had agreed that need rather than profit should govern production, and given a political mandate to achieve that, what would you aim for and how would you engineer the change?"
One feels like a literate, educated inhabitant of the Roman Empire or any feudal state during one of their many dislocating crises. There must be a better way, you muse to yourself,.
But the historical preconditions are just not ready.
Truly, you say to yourself, there is no qualitative alternative on offer. Just hunker down and mitigate.
And don't do stupid stuff like the Venezuelans, things which would crash the economy .. and make Adam Tooze's account look like a picnic.
