Inside Job

I managed to not see Inside Job (the 2010 documentary) until a couple nights ago.  Well, I guess I'm only a year behind, and for me that's pretty good.  Naturally, I want to write about my reaction to the film.

The film did a fairly good job at demonstrating the lack of separation between private and public, business and government.  Although this is in keeping with Marx's contention that the state is merely a tool of the capitalist class and not an independent entity, Inside Job suggested that this state of affairs is a sort of perversion rather than the norm.  In fact, just restricting one's attention to the United States, there has never been a time when business interests were independent from the state.  The country was founded by elite land owners, and has been run by people with business connections ever since.  That is the inherent nature of a state, not a perversion of it.

The film also showed how these business interests cut across the boundaries of individual presidencies.  It does not matter who is in office, Republican or Democrat, liberal or conservative.  That is more of a symbolic matter.  Behind the illusion of different personalities and disparate ideologies, there lies the same corporate elite making all of the decisions.

The primary argument of the documentary is that the root cause of the financial crisis can be traced back to the period of deregulation of the financial sector inaugurated by Reagan.

First, I think it is important to note that deregulation began under Carter's presidency, not Reagan.  Volcker, who they noted was a VP for Chase Manhattan bank (but failed to mention was the chairman of the Federal Reserve from 1979 into the 80s, and thus responsible for many of policies they decried), was appointed by Carter.  Once again, individual presidencies do not matter.  It was the VP of a major bank who was really calling the shots.

Second, it is also necessary to remember that financial deregulation was a response to global economic stagnation which set in at the end of the 1960s.  It's not like the economy was doing great before hand.  Yes, Keynesian strategies prevented any major recessions from occurring, but they did not resolve underlying stagnation (thus, "stagflation") or contribute to any growth.  Therefore, financial deregulation cannot be held as a root cause; it itself is a symptom of a broader crisis of overproduction.

This is all in keeping with a general pattern regarding periods of economic stagnation.  Such periods are always characterized by a shift in focus from productive activities (which no longer yield good returns) to high finance.  And the shift toward financialization is always the nail in the coffin, the thing that leads to ultimate collapse before global economic and political structures are eventually reorganized.  It is representative of the attempts of the wealthy elite to try to get as much out of the system as they can before it finally implodes.

Several of the interviewees in Inside Job made a good point:  the wealth that was created from the 1980s onward was imaginary:  it was not rooted in material or creative processes; it was spun out of thin air (out of debt, actually).  This is in keeping with my point in the last paragraph (that dependence on high finance is a last-ditch effort that is chosen when material/creative processes are declining in profitability), but it also illustrates a more general Marxist principle.  Marx insisted that economic processes could not be understood apart from material productive relationships.  When one forgets that profits, investment, monetary transactions, etc. only occur in relation to production - particularly the manufacturing sector - then one imbues statistics and economic indicators with a power they do not have.  For, if material productive processes are faltering, it does not matter how much stock prices are rising or asset values increasing, or income growing.  Because wealth can temporarily be spun out of thin air, but only temporarily.