IN 1992, Francis Fukuyama published his taunting classic: The End of History and the Last Man. The central theme of the book was simple;
it was that liberal democracy and the unfettered market represented man’s highest form of development and more importantly, that the fall of the Berlin Wall three years earlier was proof of this triumphalism.
History, as defined in the movement of society from different phases, that is primitive communalism, feudalism and capitalism, had come to an end. Long live the market.
Fukuyama’s construction was taken up by a new breed of high priests of the market, the neo-conservatives (the neo-cons) who included, among others, Adair Turner and the pocket of over-educated scholars at Yale University.
The ascendancy of liberal democracy went on to create, among other things, the uncritical and unbridled champions of private property rights, the market and globalisation.
In the developed world, this translated into a hegemonic iron rule of unregulated finance capital. That philosophy was then imposed in the majority of countries in Africa and the third world through structural adjustment programmes (Saps) that preached the orthodoxy of non-intervention in the market and extremely small governments.
The net result was the celebration of a new era of neo-liberalisation and the neo-fascism of the market. In short, predatory globalisation and infectious accumulation. In that period, the Left, bewildered by the fall of state capitalism in Eastern capitalism, took a retreat and hibernated in university bars and nationalist ideologies.
The terrorist attacks of September 11 2001 should have woken the neo-cons to the false victory of liberal democracy. The crisis in Afghanistan, Pakistan, Iraq, Mexico (1994), East and South East Asia (1997), Russia (1998), Argentina (2001), North Korea and Iran and the continued collapse of economies in the third world should have removed any illusions but unfortunately didn’t.
However, many who were watching global markets knew that it was only a question of time before the world could witness the hurricane of the massive global financial crisis that would question the market fascism of the neo-cons.
Signs of decay in the financial markets as a result of predatory greed were there for all to see. Many of us will recall the fall of Enron, young Nick Leeson of Barings, John Meriwether of Longterm Capital Management and Robert Citron.
However, it is the present day global financial crisis that has brought the chickens home to roost. The world is currently experiencing the biggest financial crisis since the Wall Street crash of 1929.
The crisis has seen the crash of investment banks, mortgage lenders in America and Europe and a massive nationalisation of the banks by the state. The current edition of The Economist reports that the worldwide losses on debt connected to America’s sub-prime lending will reach US$1,4 trillion with banks, insurance companies and hedge funds writing down US$750 billion.
Across the globe, banks on their own have suffered US$600 billion credit-related losses. Only a week ago, the US Congress approved US$700 billion to be put into a troubled asset relief programme in respect of where US treasury will buy huge amounts of distressed debts in return for equity in the troubled institutions.
On the other hand, Gordon Brown has a three-pronged plan that will include the injection of 50 billion pounds to be given to banks in return for shares, secondly the provision of a 200 billion pound special liquidity scheme, and thirdly the availing of 250 billion of wholesale commercial paper to banks.
Despite these measures, markets across the globe have tumbled. Major economies are clearly now in recession and the simple question is whether that recession will graduate into a Depression.
The irony of the response of governments from Washington to Brussels has been to provide more debt where there is debt or, as others have put it, to reward greed with more toys for the boys.
This shoring up of the market with large-scale state intervention may in fact succeed. After all, as Karl Marx wrote many years ago, this is a system that is continuously arrested by cycles of booms and slumps but is capable of reproducing itself through massive devaluation.
However, for us in the third world, we find it ironic that so much money can be spent and yet the amount of money that has been given as aid to us is a pittance. The meagre sum of US$20 billion can virtually wipe out malaria as a killer disease on the African continent. Malaria, unlike Aids, is the biggest killer disease on the continent. A meagre sum of US$20 billion can virtually solve the budgetary constraints of Zimbabwe, Tanzania and Mozambique. But of course, the skewed system will not produce this.
However, this is not the point of this article. The point of this article is that history has had its revenge and the unbridled hegemony of the market has been exposed. Bonapartism, Keynesianism, market regulations and welfarism will from now onwards be critical and essential instruments in the management of any economy. In short, neo-liberalism is dead.
What should also die but will not die is greed. At the core of the current financial crisis has been the falling profits which global capital experienced since the end of the 1960s.
Although there was some recovery the rates of profits in the late 1980s and 1990s, that was not good enough. To prevent falling profits, the US Federal Reserve Board in the late 1990s flattered America and the world with cheap credit.
The era of vampire credit saw loans being dished out to a gullible working class that found itself living way beyond its means. Thus,
America’s national debt, which stood at US$3 trillion, had almost doubled to US$5,75 trillion by 2000 and currently stands at US$10,2 trillion.
However, it is elementary that you reap what you sow. As Fareed Zakaria argues in the latest edition of Newsweek: “There is no free lunch. If you want something, you have to pay for it.”
Things came to a head when interest rates were raised and workers defaulted on their mortgage bonds. One after the other, investment banks and mortgage houses began to collapse.
The neo-cons clearly have to go back to the drawing board. This is not a temporary convulsion as argued by Allan Greenspan. This is a fundamental challenge to the market and to the capitalist mode of production itself.
In short, history has not ended. It has just hit back!
By Tendai Biti : MDC secretary-general.