On a Monday in early August, 2011, AIG (American International Group) filed claims in federal court against Bank of America alleging losses of $10 billion. The insurance giant claimed that the bank had intentionally disguised the risks of products to be insured. At the same time, Bank of America was already being sued for $82 billion in a multitude of other suits. According toThe New York Times, JP Morgan was also being sued for almost $40 billion, Wells Fargo was being sued for $35 billion, Citigroup for over $2 billion. All were alleged to have marketed securities as solid investments when at the time of the sale they knew that these representations were untrue. In legal jargon, when a person makes a deal based upon a fact that he knows to be false and intentionally disguises the falsehood, that is fraud. The giants of American capitalism were therefore this August in a hugely costly family quarrel, suing one another for throat-choking amounts of fraud.
Humongous enterprises are suing to protect their balance sheets because—contrary to the theory of capitalism—the free market has not made everything right. Worse, when the American congress decided on August 2nd that the way to solve the problem was for the government to spend less, resulting in less economic activity overall, the U.S. stock market in a few days lost 1,500 points. Not only were the giants of finance suing each other; they were losing confidence in the market as their security.
At the same time, French bank stocks were pressured on the fear of default spreading from Greece, to Portugal, to Spain. Further, U.S. banks hold huge loans interwoven with those French banks and as a result of the European scare in three days the U.S. stock market fell at first, 600 points. Then the gambling started and the market rose hundreds. By then marketeers were only betting against each other and the market fell again hundreds, rose again, fell again, in a game of guesses and risks, hubris and chicken.
America’s free market capitalism has, over the last 30 years, failed to put more income into the hands of more people, has failed the middle and lower classes driving them under water, and now is, for the first time, failing those at the very top. While they sue each other the stock market staggers and rises, staggers and rises, manufacturing stalls, people who already work two jobs cannot work more, or borrow more, and the governments of the U.S., Britain, France and Germany have all determined that they are going to help them less.
Capitalism provides no theory to explain why it is failing from top to bottom. The oligarchs are searching out more people to blame, more to sue, and different momentary heroes to elect to high office. Blame is, however, not a solution for bad economic theory. Someone is going to have to think new. Not just about stimulus. About corporations. About property. About plutocracy. About monopoly.
American government is also a mess. In the words of former republican congressman Tom Davis, “The political system, Republican or Democrat, over the last decade has delivered two failed wars, an economic meltdown, 20 percent of homes underwater, [and] stagnant wages.” (NYT, 8/8/11, The Caucus.) In other words, the American political system is also stalling out.
Anyone who has watched the minority party in the first two years of the Obama administration, and the stalemate of the last months over the debt ceiling will agree. The American political system is dysfunctional at best, failing at worst.
While capitalists sue capitalists and everyone blames the politicians for not being able to fix the capitalists, and while the capitalists spend billions to elect people who will prevent their being fixed, it is clear that this is a political and economic culture that is in deep trouble.
Some effort will be made to change politicians in 2012. But changing the incumbents in the congress or the presidency will have little effect if no one has a better story to tell, or something more promising than killing either government or corporations. They do not need to be just killed. They need to be newly understood and reframed in a world of scarcity, a world of limits to clean water and air, limits to growth, limits to greed, and limits even to the rights of property.
It is time to move beyond Adam Smith and Ayn Rand or misleading slogans like survival of the fittest. It is time to start over, and this time to follow some new instinct that appeals to the heart and not just the sword. Start over, and if the heart leads to feminine principles or to generosity and community, have the courage to follow on. Start over, and touch the earth and when we touch it try not to everywhere make it sore. Start over, as if life mattered, as if it mattered more than the fear of death. Start over as if to live for each other and as if the future mattered. Start over.