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johnclough's review
4.0
Unusually long review...
jdcloughblog.wordpress.com/2018/07/08/wolfgang-streeck-buying-time/
I picked up Buying Time after reading a couple of chapters for one of my modules last semester and finding Streeck to be one of the stand-out authors included on that course. Streeck is a critical theorist writing in the tradition of crisis studies from the 1960s and 1970s, from which came the idea that we exist in a period of ‘late’ capitalism, and that the system is always on the brink of being toppled by a population increasingly alienated from the benefits of global capitalism. Streeck, however, totally reinvents and reinvigorates this theory by focusing on the power of market forces which earlier theorists like Habermas and Adorno had disregarded. In doing so, he describes how capitalism has clung on since the 1980s, and why it may now face crisis again. He also sets his sights on the EU and delivers a powerful argument from a left-wing perspective against the EU and particularly against the euro. While at times I felt Streeck’s arguments to be a little one-sided if not polemical, Buying Time is nonetheless an extremely powerful and passionate text that definitely got me stirred into a rage at times.
Habermas and Adorno had argued that the political system had become bound up with the economic system and that when the economic system failed to deliver on its promise of prosperity for all, this would not only discredit the economic system but the political system too. What would follow is a legitimation crisis, in which the existing paradigm becomes untenable in the eyes of the citizenry. This crisis should have happened around the early 1970s when the productivity increases that had seen unprecedented pay rises of the previous decades began to slow down. Streeck suggests that the capitalist system has essentially ‘bought time’ since then to prevent a crisis, in three artificial and essentially unmaintainable ways. The first of these was inflation, in which governments basically printed money to meet workers’ demands for pay rises above the level of productivity. This proved unsustainable in an economy that wasn’t returning to high growth, because the rapid inflation of the money supply was rapidly devaluing assets whose valuation was bound to pre-inflation levels, most importantly, government bonds. Inflation essentially devalues government debt. On the one hand, this is excellent as it makes the debt easier to repay, and indeed, national debts dropped rapidly in this period. Streeck focuses, however, on the fact that it can spook the market and lead to spiralling interest rates. Streeck’s reading of the so-called ‘stagflation’ crisis of this period, then, is that it may have allowed governments to ‘buy time’ from the citizens, but in so doing they alienated market forces. In response, these market forces began flexing their muscles, beckoning in the era of neoliberal deregulation through which we continue to suffer. While the factors Streeck identified certainly were central, and certainly credible in their own regard, there did seem to be a tendency for Streeck to focus too closely on his own narrow argument as though it was a total explanation for events. While he wasn’t attempting a comprehensive history of the stagflation crisis, his argument would have seemed more balanced if there had at least been more acknowledgement of the broader factors at play. In trying to rehabilitate political economy to critical theory, I think he may have gone too far and ignored social factors. Need we forget that Thatcher was swept to power by the electorate with an unprecedented mandate, suggesting the rise of neoliberalism wasn’t quite an anti-democratic coup.
It is following stagflation that Streeck’s arguments really come into their own, however. His core argument is that the monetarist, neoliberal paradigm that swept in across the West around the start of the 1980s at no point offered any genuine solutions to the fundamental issue that market capitalism was unable to deliver on its promise of affluence for all – the issue which threatened a legitimation crisis. Instead, for Streeck, what neoliberalism offered was a new toolkit of ways to placate the people, only this time in such a way that also enriched rather than alienated the capitalists. This toolkit essentially boiled down to bottomless credit, enabled by a deregulated finance sector. Streeck splits this into two stages. Firstly, the expansion of government debt, followed eventually by a massive expansion of private indebtedness, the latter of which really peaked in 2007 on the brink of the crisis of 2008. I found this element of Streeck’s argument quite convincing and also quite depressing. Neoliberalism is characterised as something of a reverse Robin Hood – take from the poor give to the rich. Wages became untethered from productivity, and pay increasingly concentrated in the hands of the top, while salaries at the top of the scale exploded. Streeck tells us (p. 53-4) that 93% of all new income in the USA in 2010 – $288billion – went to the top 1% of taxpayers. Moreover, 81.7% of the asset increase between 1983-2010 went to the top 5%, while the bottom 60% made a 7.5% net asset loss over the same period. Even as someone reasonably aware of the extent of inequality in modern economies, I found these figures shocking and deeply angering. It’s hard to imagine any justification of this merciless redistribution of wealth to the tiny minority of financial elites.
Streeck argues that the population has essentially been bought off with credit. What this equates to is that most workers get paid less so the top minority can get paid more, and that tiny minority then loans the shortfall back to these people to ensure that people are still buying stuff, both to keep the economy stimulated and to prevent them literally storming down Wall Street with violent intent. This argument Streeck essentially adapts from Crouch’s concept of ‘privatised Keynesianism’ in which it is private citizens, rather than the state, that incurs huge debt to ensure aggregate demand is maintained in the economy. Streeck suggests that the 2008 crisis indicates that the privatised debt paradigm is becoming increasingly unstable as a resolution for capitalism’s shortfalls. Moreover, Streeck suggests that the massive expansion of public indebtedness is not only symptomatic of a wholesale redistribution of wealth to the top, but a wholesale redistribution of political power away from democratic citizens and to the creditors. Creditors have enormous power over-indebted governments in terms of the interest they are willing to charge to continue lending to governments. If they believe that a government is no longer a safe investment, interest will shoot up, and governments who have relied on cheap credit to keep themselves afloat will quickly find themselves insolvent. Democratic citizens have no such equivalent power. Thus, all across Europe, the system driven by creditors’ interests has essentially imposed massively socially damaging austerity all over Europe, whether or not the people want it, as seen most vividly in Greece.
Indeed, Streeck then goes on to attack the euro, which he construes as a means for powerful exporting countries (read: Germany) to maintain their surpluses by constraining weaker countries’ ability to devalue their currency. One of the strengths that the UK and the US have over the eurozone is national ownership over their currency. This means that, if push comes to shove, they can print money to pay debts. This limits the total power of creditors, though there is still a culture of fear surrounding unlimited cash printing, as it can easily lead to spiralling inflation and decreased creditworthiness. If carefully controlled, however, devaluing currency also has the advantage of making goods a country exports cheaper, and imported goods more expensive. This means that it can create an equilibrium between countries, overcoming productivity gaps. This would be an extremely helpful trick for Greece, Italy, and Spain at the moment, as it could enable their export industry to return to health, but the euro prevents them from doing this, meaning German productivity advantage remains. The only way left for euro nations to improve competitivity is to slash wages. In countries already ravaged by years of employment strife, this is understandably not welcome news.
While I found his attack on the eurozone a powerful critique, I was a little less convinced by his broader attack on the EU as a whole. In short, he attempts to paint a picture of the EU as an anti-democratic, pro-market tool of neoliberal advancement, essentially attempting to undermine nationally implemented controls. There’s an element of truth in Streeck’s portrayal, especially when it comes to democracy. The EU really does suffer from a democratic deficit; the overwhelming majority of the power is held by unelected technocrats massively disconnected from the lives of the overwhelming majority of EU citizens. Streeck himself acknowledges that there is no easy solution to this; there are massive socioeconomic differences between EU member states that pose a huge problem for democratic rule. Herein lies a genuine issue for international relations in the coming decades; there is an ever-increasing need for cross-national cooperation, to tackle the issues of globalised markets, but the more disparate the threads that form the union, the less stable that union will be. The EU’s solution to this seems to have been to sideline democracy and consolidate their strength among their own elite. Streeck’s solution is continued cooperation but less of the consolidation. Neither of these options seems like they will yield the best result. The EU’s because it risks becoming increasingly antagonistic to democratic interests, Streeck’s because it risks watering down cooperation to a level below that which can deliver meaningful results.
Beyond the issue of democracy, it’s also somewhat questionable just how “neoliberal” an organisation the EU truly is. A great deal of how much this seems to be the case is determined by what country you happen to be in when considering the question. As was made clear around the time of the Brexit election, much of the EU’s influence in the UK has been regulatory restraint of the free market, and one of the main concerns about leaving the EU is that we may lose some of those regulatory protections. While at the bottom line, the free movement of labour, goods, and services that defines the modern EU are fundamentally motivated by free-market ideology, from a UK perspective it’s hard to see the EU as the nefarious enemy of the people that Streeck seems to wish to portray it as.
Nonetheless, as the length of this review in itself shows, I found Streeck’s text fascinating and engaging, not to mention provocative. It raises a lot of difficult to answer questions about the future of democracy in our increasingly globalised and capitalised world. It’s the sort of stuff that is going to shape the political and economic landscape for the decades to come, and so it’s absolutely material that needs engaging with.
jdcloughblog.wordpress.com/2018/07/08/wolfgang-streeck-buying-time/
I picked up Buying Time after reading a couple of chapters for one of my modules last semester and finding Streeck to be one of the stand-out authors included on that course. Streeck is a critical theorist writing in the tradition of crisis studies from the 1960s and 1970s, from which came the idea that we exist in a period of ‘late’ capitalism, and that the system is always on the brink of being toppled by a population increasingly alienated from the benefits of global capitalism. Streeck, however, totally reinvents and reinvigorates this theory by focusing on the power of market forces which earlier theorists like Habermas and Adorno had disregarded. In doing so, he describes how capitalism has clung on since the 1980s, and why it may now face crisis again. He also sets his sights on the EU and delivers a powerful argument from a left-wing perspective against the EU and particularly against the euro. While at times I felt Streeck’s arguments to be a little one-sided if not polemical, Buying Time is nonetheless an extremely powerful and passionate text that definitely got me stirred into a rage at times.
Habermas and Adorno had argued that the political system had become bound up with the economic system and that when the economic system failed to deliver on its promise of prosperity for all, this would not only discredit the economic system but the political system too. What would follow is a legitimation crisis, in which the existing paradigm becomes untenable in the eyes of the citizenry. This crisis should have happened around the early 1970s when the productivity increases that had seen unprecedented pay rises of the previous decades began to slow down. Streeck suggests that the capitalist system has essentially ‘bought time’ since then to prevent a crisis, in three artificial and essentially unmaintainable ways. The first of these was inflation, in which governments basically printed money to meet workers’ demands for pay rises above the level of productivity. This proved unsustainable in an economy that wasn’t returning to high growth, because the rapid inflation of the money supply was rapidly devaluing assets whose valuation was bound to pre-inflation levels, most importantly, government bonds. Inflation essentially devalues government debt. On the one hand, this is excellent as it makes the debt easier to repay, and indeed, national debts dropped rapidly in this period. Streeck focuses, however, on the fact that it can spook the market and lead to spiralling interest rates. Streeck’s reading of the so-called ‘stagflation’ crisis of this period, then, is that it may have allowed governments to ‘buy time’ from the citizens, but in so doing they alienated market forces. In response, these market forces began flexing their muscles, beckoning in the era of neoliberal deregulation through which we continue to suffer. While the factors Streeck identified certainly were central, and certainly credible in their own regard, there did seem to be a tendency for Streeck to focus too closely on his own narrow argument as though it was a total explanation for events. While he wasn’t attempting a comprehensive history of the stagflation crisis, his argument would have seemed more balanced if there had at least been more acknowledgement of the broader factors at play. In trying to rehabilitate political economy to critical theory, I think he may have gone too far and ignored social factors. Need we forget that Thatcher was swept to power by the electorate with an unprecedented mandate, suggesting the rise of neoliberalism wasn’t quite an anti-democratic coup.
It is following stagflation that Streeck’s arguments really come into their own, however. His core argument is that the monetarist, neoliberal paradigm that swept in across the West around the start of the 1980s at no point offered any genuine solutions to the fundamental issue that market capitalism was unable to deliver on its promise of affluence for all – the issue which threatened a legitimation crisis. Instead, for Streeck, what neoliberalism offered was a new toolkit of ways to placate the people, only this time in such a way that also enriched rather than alienated the capitalists. This toolkit essentially boiled down to bottomless credit, enabled by a deregulated finance sector. Streeck splits this into two stages. Firstly, the expansion of government debt, followed eventually by a massive expansion of private indebtedness, the latter of which really peaked in 2007 on the brink of the crisis of 2008. I found this element of Streeck’s argument quite convincing and also quite depressing. Neoliberalism is characterised as something of a reverse Robin Hood – take from the poor give to the rich. Wages became untethered from productivity, and pay increasingly concentrated in the hands of the top, while salaries at the top of the scale exploded. Streeck tells us (p. 53-4) that 93% of all new income in the USA in 2010 – $288billion – went to the top 1% of taxpayers. Moreover, 81.7% of the asset increase between 1983-2010 went to the top 5%, while the bottom 60% made a 7.5% net asset loss over the same period. Even as someone reasonably aware of the extent of inequality in modern economies, I found these figures shocking and deeply angering. It’s hard to imagine any justification of this merciless redistribution of wealth to the tiny minority of financial elites.
Streeck argues that the population has essentially been bought off with credit. What this equates to is that most workers get paid less so the top minority can get paid more, and that tiny minority then loans the shortfall back to these people to ensure that people are still buying stuff, both to keep the economy stimulated and to prevent them literally storming down Wall Street with violent intent. This argument Streeck essentially adapts from Crouch’s concept of ‘privatised Keynesianism’ in which it is private citizens, rather than the state, that incurs huge debt to ensure aggregate demand is maintained in the economy. Streeck suggests that the 2008 crisis indicates that the privatised debt paradigm is becoming increasingly unstable as a resolution for capitalism’s shortfalls. Moreover, Streeck suggests that the massive expansion of public indebtedness is not only symptomatic of a wholesale redistribution of wealth to the top, but a wholesale redistribution of political power away from democratic citizens and to the creditors. Creditors have enormous power over-indebted governments in terms of the interest they are willing to charge to continue lending to governments. If they believe that a government is no longer a safe investment, interest will shoot up, and governments who have relied on cheap credit to keep themselves afloat will quickly find themselves insolvent. Democratic citizens have no such equivalent power. Thus, all across Europe, the system driven by creditors’ interests has essentially imposed massively socially damaging austerity all over Europe, whether or not the people want it, as seen most vividly in Greece.
Indeed, Streeck then goes on to attack the euro, which he construes as a means for powerful exporting countries (read: Germany) to maintain their surpluses by constraining weaker countries’ ability to devalue their currency. One of the strengths that the UK and the US have over the eurozone is national ownership over their currency. This means that, if push comes to shove, they can print money to pay debts. This limits the total power of creditors, though there is still a culture of fear surrounding unlimited cash printing, as it can easily lead to spiralling inflation and decreased creditworthiness. If carefully controlled, however, devaluing currency also has the advantage of making goods a country exports cheaper, and imported goods more expensive. This means that it can create an equilibrium between countries, overcoming productivity gaps. This would be an extremely helpful trick for Greece, Italy, and Spain at the moment, as it could enable their export industry to return to health, but the euro prevents them from doing this, meaning German productivity advantage remains. The only way left for euro nations to improve competitivity is to slash wages. In countries already ravaged by years of employment strife, this is understandably not welcome news.
While I found his attack on the eurozone a powerful critique, I was a little less convinced by his broader attack on the EU as a whole. In short, he attempts to paint a picture of the EU as an anti-democratic, pro-market tool of neoliberal advancement, essentially attempting to undermine nationally implemented controls. There’s an element of truth in Streeck’s portrayal, especially when it comes to democracy. The EU really does suffer from a democratic deficit; the overwhelming majority of the power is held by unelected technocrats massively disconnected from the lives of the overwhelming majority of EU citizens. Streeck himself acknowledges that there is no easy solution to this; there are massive socioeconomic differences between EU member states that pose a huge problem for democratic rule. Herein lies a genuine issue for international relations in the coming decades; there is an ever-increasing need for cross-national cooperation, to tackle the issues of globalised markets, but the more disparate the threads that form the union, the less stable that union will be. The EU’s solution to this seems to have been to sideline democracy and consolidate their strength among their own elite. Streeck’s solution is continued cooperation but less of the consolidation. Neither of these options seems like they will yield the best result. The EU’s because it risks becoming increasingly antagonistic to democratic interests, Streeck’s because it risks watering down cooperation to a level below that which can deliver meaningful results.
Beyond the issue of democracy, it’s also somewhat questionable just how “neoliberal” an organisation the EU truly is. A great deal of how much this seems to be the case is determined by what country you happen to be in when considering the question. As was made clear around the time of the Brexit election, much of the EU’s influence in the UK has been regulatory restraint of the free market, and one of the main concerns about leaving the EU is that we may lose some of those regulatory protections. While at the bottom line, the free movement of labour, goods, and services that defines the modern EU are fundamentally motivated by free-market ideology, from a UK perspective it’s hard to see the EU as the nefarious enemy of the people that Streeck seems to wish to portray it as.
Nonetheless, as the length of this review in itself shows, I found Streeck’s text fascinating and engaging, not to mention provocative. It raises a lot of difficult to answer questions about the future of democracy in our increasingly globalised and capitalised world. It’s the sort of stuff that is going to shape the political and economic landscape for the decades to come, and so it’s absolutely material that needs engaging with.
reyastray's review against another edition
2.5
information but only understood a very small amount of this and also blargh
alli_ram's review against another edition
4.0
So this book was difficult for me but I think that’s mostly due to the fact that International Political Economy is not my area of expertise and the fact that this book is a translated work made it, at times, awkward. But once I got used to the writing style and took my time with the content, I enjoyed his argument and thought it was well-put.
joeri's review against another edition
5.0
This book was released in English under the title 'Buying Time: The Delayed Crisis of Democratic Capitalism'.
In this book Streeck convincingly shows how the market is increasingly, and more and more effectively, fenced of from democratic influences, by liberating it from many means of regulation. This is a development which started for more than four decades ago and still goes on today.
By organizing itself on a supranational level (in banks and institutions like the ECB and IMF), the market has succeeded in either circumventing or destroying national democratic institutions that in the past effectively protected us against an all too disproportionate grow of social and economic inequality. Now that the market dictates what governments do with their economic distribution, the gap between rich and poor is growing evermore larger. Due to all the crisis that ensued from the seventies onwards, the market has also been able to force countries to take austerity measures as a condition for financial support. As a result, governments have lost not only their ability to effectuate social justice, but also their sovereignty. Marketjustice, in the form of paying debts, now has priority over social justice: making sure everyone has an acceptable standard of living.
In the end of the book Streeck argues we have to find another way to organize the European Union by regulating the market in such a way that governments regain their ability to strive for social justice and soevereignty.
In this book Streeck convincingly shows how the market is increasingly, and more and more effectively, fenced of from democratic influences, by liberating it from many means of regulation. This is a development which started for more than four decades ago and still goes on today.
By organizing itself on a supranational level (in banks and institutions like the ECB and IMF), the market has succeeded in either circumventing or destroying national democratic institutions that in the past effectively protected us against an all too disproportionate grow of social and economic inequality. Now that the market dictates what governments do with their economic distribution, the gap between rich and poor is growing evermore larger. Due to all the crisis that ensued from the seventies onwards, the market has also been able to force countries to take austerity measures as a condition for financial support. As a result, governments have lost not only their ability to effectuate social justice, but also their sovereignty. Marketjustice, in the form of paying debts, now has priority over social justice: making sure everyone has an acceptable standard of living.
In the end of the book Streeck argues we have to find another way to organize the European Union by regulating the market in such a way that governments regain their ability to strive for social justice and soevereignty.
stephencampbll's review
Streeck’s account of the financial crisis and its aftermath posits that our current predicament is far from temporary. Democratic capitalism, Streeck argues, is suffering from a legitimation crisis. This legitimation crisis comes not from the discontent of waged-workers (as predicted by the crisis theories of the Frankfurt School) but from the discontent of capital itself. Though the Keynesian consensus temporarily benefitted capital with its promise of endless growth without boom and bust, capital was unwilling to continue paying so high a price to uphold its end of the social contract created after 1945. Government commitments to full employment ended the power of the sack and capital feared a ‘revolution of rising expectations’ it would be unable to satisfy without sacrificing its profits. This fear was fuelled by the wildcat strikes of the late 1960s.
To maintain profits capital had to wrest control of the economy away from national polities and democratic governments. The mechanism for this was ‘neoliberal’ economic reforms. Ironically, the neutralization of economic democracy required political allies – most notably Thatcher and Reagan – who were willing to trade mass unemployment for the return of ‘sound money’ after the inflation of the 1970s, and to crush the inevitable social resistance. However, far from freeing government of its responsibilities the return of an unfettered market economy required curative measures to assuage the damage (e.g. social benefits increased with the return of structural unemployment). Thus, though state revenue began to stagnate (due to tax cuts and the difficulty of collecting tax from increasingly mobile capital) expenditure continued to increase, and governments had to plug the gap with increasingly high levels of borrowing. The ‘tax state’ thus began transforming into the debt state.
Of course, the long-term debt-financing of governments made those with financial assets increasingly powerful. Streeck takes this argument as far as it can go, arguing that alongside national polities these creditors have come to represent a ‘second constituency’ of the modern state. Their control “appears alongside the democratic control of the state by its citizenry, with the possibility of overlaying it, or even […] eliminating it.” Economic crises are not technical disturbances in the market, but crises of ‘confidence’ from this group (who Streeck refers to as the Marktvolk – the people of the market). This means that “low growth and unemployment are the results of ‘investment strikes’” on a part of this group, “who could invest their capital but refuse to do so because they lack the necessary confidence.” But debt-financing can only continue while creditors are sure governments will be able and willing to repay their debts and so, in the endless quest to retain market ‘confidence’ (in the form of lower interest rates and new loans), the ‘debt state’ transformed into a state of fiscal consolidation to reassure ‘the markets’ that “in case of doubt their claims can and will have priority over those of citizens”.
This second constituency of the modern state obviously presents problems for the notion of democracy. Though Buying Time was written in 2013, once read it hard to view the 2015 Greek Crisis through anything but this lens. Individuals may have the opportunity to declare bankruptcy but even as sovereign debtors states such as Greece are ultimately forced to declare war on their own national polities in order to satisfy ‘the markets’. Despite the SYRIZA government’s ultimate capitulation, the Greek crisis nonetheless still represents an eternal nightmare for the Marktvolk – insofar as national governments are still determined by democratic elections, creditors can never be certain that a state will not unilaterally restructure or cancel their debt. The solution has been “to integrate national governments into a non-democratic supranational regime – a kind of international superstate without democracy”. This is represented by the European Union and especially the European Monetary Union, where national governments surrender any semblance of democratic control over their currency, and the debt state transforms into a system of international fiscal consolidation.
The main goal of Buying Time is to emphasis the increasingly widening gap between capitalism and democracy, and to offer a warning that the transformation of the European project into a post-democratic ‘neo-Hayekian regime’ is not only possible, but likely. This is a convincing argument. Indeed, one is struck by the fact that – despite lingering Cold War rhetoric – the relationship between capitalism and democracy is neither very old nor very strong. From the time of universal enfranchisement to the present day, the post-war period is the only period characterised by some semblance of democratic control over the economy (due to mass party membership, strong trade unions, and an institutionalised bargaining system to determine the proceeds of economic growth). By the 1980s this forced marriage of democracy and capitalism had run its course and neoliberal reforms began to insulate the economy from politics once more.
Buying Time has several strengths. Despite Streeck’s obvious (and confessed) political leanings his account remains nuanced enough to avoid painting a picture of capital merely imposing its will on a resistant public. To break out of the institutional cage of Keynesian bargaining and to ‘free’ the markets capital in fact rode a wave of enthusiasm for ‘alienated’ wage-labour as women flooded into the market to escape household drudgery, while the young welcomed the new ‘flexible’ working conditions on offer. Streeck also admits that the citizenry embraced the new ‘consumer society’ to a degree unimaginable in Adorno’s worst nightmares.
The book would have been all-the-more convincing for explaining exactly how and why financiers became more powerful than traditional industrial capitalists (i.e. due to advantages capital has over all other sectors due to its mobility, whereas flows of trade and labour face a multitude of barriers e.g. geographical, regulatory, physical, etc.). Nonetheless this remains a minor criticism – we do not need evidence of first-cause to recognise that this group has power, that they have had it for some time now, and that their power represents a significant distortion of democracy. In this sense Streeck’s diagnosis remains invaluable, and his greatest achievement lies in humanising our notion of ‘the market’. The market(s) are not naturally occurring phenomena: they are driven by human activity and hence subject to human desires, whims and moods – and this is especially true of the financial markets. Any successful diagnosis of the problem or suggestion of what is to be done must recognise this fact.
While works of political economy can often stray too far into one field or the other, Buying Time deftly analyses the economics while doggedly keeping things tethered to their political context. When it comes to the economics, Streeck’s analysis offers a refreshing antidote to the ‘varieties of capitalism’ approach of political economy. Though the varieties of capitalism approach is not without merit, it ultimately has little to tell us about the European crisis because, as Streeck argues, “the parallels and interactions among the capitalist countries far outweigh their institutional and economic differences.” Despite institutional variations, the underlying dynamic of capitalist economies remains the same, and any analysis of the European crisis must acknowledge as much.
Buying Time’s political analysis is also compatible with several trends found in wider political science research in recent years. For example Streeck argues that the ceding of democratic powers to the European level (and, by extension, economic power to ‘the market’) has come about due to a coalition of national governments and their middle-class voters who enjoy the rewards of freedom of movement and capital. Meanwhile turnout of poor voters – who do not enjoy these benefits and who instead lose the public services they rely on due to ‘fiscal consolidation’ – is in terminal decline as national elections exert less and less influence over the distribution of wealth.
Relatedly, Streeck’s argument that the Marktvolk prefer fiscal consolidation to be supported by both government and opposition (and especially by Grand Coalitions) to better ensure that newly elected governments will continue servicing their debts chimes well with Katz and Mair’s (2009) famous thesis of the cartelization of party politics. This thesis posits that political parties have become increasingly detached from civil society and evermore reliant on state funding for their own survival. If parties are more reliant on the state than the people for survival, it follows that they will be less responsive to the citizenry and more responsive to those who provide state funding – the Marktvolk.
I argue that Streeck’s account even helps to explain the rise of populist parties (of both the right and the left) in Western Europe. Whatever one thinks of the likes of e.g. the Front National in France, the appeal of such parties lies in the fact that they are not entirely wrong when they claim that the mainstream parties have collaborated to keep certain issues off the political agenda. This is but one example of how ‘ever closer union’ at the European level has often provided national governments with convenient excuses to avoid winning consent for neoliberal reforms which are unpopular at home (Thatcher, 2013).
Streeck manages to avoid a conspiratorial account of political elites unambiguously enthralled to the Marktvolk. Plenty of governments have at least partially sided with their populations and have proved unwilling to completely submit to the whims of ‘the market’. Where politicians do advocate neoliberal reforms as a panacea for economic crises, these are largely panicked tactical responses not attached to any higher Machiavellian strategy of robbing the people of democracy. This is an important observation – if only to help us recognise the power of institutional norms and how they shape policy responses. However this line of argument would be improved if Streeck offered a similar examination of the Marktvolk's motivations. Does the financial class act merely as atomised, autonomous individuals? Or are they – on some level, at least – aware of their particular class interest?
To speak of ‘class interests’ is to admit that the cornerstone of Streeck’s argument rests on little more than a reiteration of the traditional Marxist narrative of class struggle (albeit one distorted and abstracted by the labyrinthine nature of financialization). However, Streeck is certainly correct when he writes that, after 2008:
To maintain profits capital had to wrest control of the economy away from national polities and democratic governments. The mechanism for this was ‘neoliberal’ economic reforms. Ironically, the neutralization of economic democracy required political allies – most notably Thatcher and Reagan – who were willing to trade mass unemployment for the return of ‘sound money’ after the inflation of the 1970s, and to crush the inevitable social resistance. However, far from freeing government of its responsibilities the return of an unfettered market economy required curative measures to assuage the damage (e.g. social benefits increased with the return of structural unemployment). Thus, though state revenue began to stagnate (due to tax cuts and the difficulty of collecting tax from increasingly mobile capital) expenditure continued to increase, and governments had to plug the gap with increasingly high levels of borrowing. The ‘tax state’ thus began transforming into the debt state.
Of course, the long-term debt-financing of governments made those with financial assets increasingly powerful. Streeck takes this argument as far as it can go, arguing that alongside national polities these creditors have come to represent a ‘second constituency’ of the modern state. Their control “appears alongside the democratic control of the state by its citizenry, with the possibility of overlaying it, or even […] eliminating it.” Economic crises are not technical disturbances in the market, but crises of ‘confidence’ from this group (who Streeck refers to as the Marktvolk – the people of the market). This means that “low growth and unemployment are the results of ‘investment strikes’” on a part of this group, “who could invest their capital but refuse to do so because they lack the necessary confidence.” But debt-financing can only continue while creditors are sure governments will be able and willing to repay their debts and so, in the endless quest to retain market ‘confidence’ (in the form of lower interest rates and new loans), the ‘debt state’ transformed into a state of fiscal consolidation to reassure ‘the markets’ that “in case of doubt their claims can and will have priority over those of citizens”.
This second constituency of the modern state obviously presents problems for the notion of democracy. Though Buying Time was written in 2013, once read it hard to view the 2015 Greek Crisis through anything but this lens. Individuals may have the opportunity to declare bankruptcy but even as sovereign debtors states such as Greece are ultimately forced to declare war on their own national polities in order to satisfy ‘the markets’. Despite the SYRIZA government’s ultimate capitulation, the Greek crisis nonetheless still represents an eternal nightmare for the Marktvolk – insofar as national governments are still determined by democratic elections, creditors can never be certain that a state will not unilaterally restructure or cancel their debt. The solution has been “to integrate national governments into a non-democratic supranational regime – a kind of international superstate without democracy”. This is represented by the European Union and especially the European Monetary Union, where national governments surrender any semblance of democratic control over their currency, and the debt state transforms into a system of international fiscal consolidation.
The main goal of Buying Time is to emphasis the increasingly widening gap between capitalism and democracy, and to offer a warning that the transformation of the European project into a post-democratic ‘neo-Hayekian regime’ is not only possible, but likely. This is a convincing argument. Indeed, one is struck by the fact that – despite lingering Cold War rhetoric – the relationship between capitalism and democracy is neither very old nor very strong. From the time of universal enfranchisement to the present day, the post-war period is the only period characterised by some semblance of democratic control over the economy (due to mass party membership, strong trade unions, and an institutionalised bargaining system to determine the proceeds of economic growth). By the 1980s this forced marriage of democracy and capitalism had run its course and neoliberal reforms began to insulate the economy from politics once more.
Buying Time has several strengths. Despite Streeck’s obvious (and confessed) political leanings his account remains nuanced enough to avoid painting a picture of capital merely imposing its will on a resistant public. To break out of the institutional cage of Keynesian bargaining and to ‘free’ the markets capital in fact rode a wave of enthusiasm for ‘alienated’ wage-labour as women flooded into the market to escape household drudgery, while the young welcomed the new ‘flexible’ working conditions on offer. Streeck also admits that the citizenry embraced the new ‘consumer society’ to a degree unimaginable in Adorno’s worst nightmares.
The book would have been all-the-more convincing for explaining exactly how and why financiers became more powerful than traditional industrial capitalists (i.e. due to advantages capital has over all other sectors due to its mobility, whereas flows of trade and labour face a multitude of barriers e.g. geographical, regulatory, physical, etc.). Nonetheless this remains a minor criticism – we do not need evidence of first-cause to recognise that this group has power, that they have had it for some time now, and that their power represents a significant distortion of democracy. In this sense Streeck’s diagnosis remains invaluable, and his greatest achievement lies in humanising our notion of ‘the market’. The market(s) are not naturally occurring phenomena: they are driven by human activity and hence subject to human desires, whims and moods – and this is especially true of the financial markets. Any successful diagnosis of the problem or suggestion of what is to be done must recognise this fact.
While works of political economy can often stray too far into one field or the other, Buying Time deftly analyses the economics while doggedly keeping things tethered to their political context. When it comes to the economics, Streeck’s analysis offers a refreshing antidote to the ‘varieties of capitalism’ approach of political economy. Though the varieties of capitalism approach is not without merit, it ultimately has little to tell us about the European crisis because, as Streeck argues, “the parallels and interactions among the capitalist countries far outweigh their institutional and economic differences.” Despite institutional variations, the underlying dynamic of capitalist economies remains the same, and any analysis of the European crisis must acknowledge as much.
Buying Time’s political analysis is also compatible with several trends found in wider political science research in recent years. For example Streeck argues that the ceding of democratic powers to the European level (and, by extension, economic power to ‘the market’) has come about due to a coalition of national governments and their middle-class voters who enjoy the rewards of freedom of movement and capital. Meanwhile turnout of poor voters – who do not enjoy these benefits and who instead lose the public services they rely on due to ‘fiscal consolidation’ – is in terminal decline as national elections exert less and less influence over the distribution of wealth.
Relatedly, Streeck’s argument that the Marktvolk prefer fiscal consolidation to be supported by both government and opposition (and especially by Grand Coalitions) to better ensure that newly elected governments will continue servicing their debts chimes well with Katz and Mair’s (2009) famous thesis of the cartelization of party politics. This thesis posits that political parties have become increasingly detached from civil society and evermore reliant on state funding for their own survival. If parties are more reliant on the state than the people for survival, it follows that they will be less responsive to the citizenry and more responsive to those who provide state funding – the Marktvolk.
I argue that Streeck’s account even helps to explain the rise of populist parties (of both the right and the left) in Western Europe. Whatever one thinks of the likes of e.g. the Front National in France, the appeal of such parties lies in the fact that they are not entirely wrong when they claim that the mainstream parties have collaborated to keep certain issues off the political agenda. This is but one example of how ‘ever closer union’ at the European level has often provided national governments with convenient excuses to avoid winning consent for neoliberal reforms which are unpopular at home (Thatcher, 2013).
Streeck manages to avoid a conspiratorial account of political elites unambiguously enthralled to the Marktvolk. Plenty of governments have at least partially sided with their populations and have proved unwilling to completely submit to the whims of ‘the market’. Where politicians do advocate neoliberal reforms as a panacea for economic crises, these are largely panicked tactical responses not attached to any higher Machiavellian strategy of robbing the people of democracy. This is an important observation – if only to help us recognise the power of institutional norms and how they shape policy responses. However this line of argument would be improved if Streeck offered a similar examination of the Marktvolk's motivations. Does the financial class act merely as atomised, autonomous individuals? Or are they – on some level, at least – aware of their particular class interest?
To speak of ‘class interests’ is to admit that the cornerstone of Streeck’s argument rests on little more than a reiteration of the traditional Marxist narrative of class struggle (albeit one distorted and abstracted by the labyrinthine nature of financialization). However, Streeck is certainly correct when he writes that, after 2008:
“No one can understand politics and political institutions without closely relating them to markets and economic interests, as well as to the class structures and conflicts arising from them […] One outcome of historical developments is that we can no long say for sure where, in the effort to shed light on current events, non-Marxism ends and Marxism begins. Besides, social science […] has never really been able to do without recourse to central elements of ‘Marxist’ theories.”
Buying Time: The Delayed Crisis of Democratic Capitalism is a lucid, erudite and entirely convincing account of the European crisis. It provides us with indispensable tools for analysing the mutations of this crisis in future as democratic capitalism desperately tries to ‘buy’ itself more time. In framing the modern state as caught between their national populations and the international Marktvolk, it becomes easy to consider the Greek ‘OXI’ vote, Brexit and even the election of Donald Trump in the U.S. as the deafening roars of revolt from national populations against their governments’ submission to this financial oligarchy. And although Streeck rejects the notion that one should not bother to diagnose without offering a cure, the solutions he does tentatively offer – centred around a return to national currencies and therefore power over devaluation – echoes the famous words of John Maynard Keynes (1933):
“Ideas, knowledge, science, hospitality, travel–these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.”
boithorn's review
4.0
Very detailed look at the conditions that capitalist consolidation created that caused the 07-08 financial crisis. Particularly, he examines how capitalism (as influenced by Hayek) actively suppresses and undermines democratic control to make global markets free from regulation or oversight. Streeck writes with a level of clarity that should make this an engaging read for anyone somewhat versed in economic theory and history. The book takes a bit to get going (about 60 pages or so), so I would recommend that readers skip the long preface for the second edition, and go back to read it after you have finished the main text.
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