An additional factor worth considering is that the state, supported by capital more generally and not just the financial sector, has worked hard to erode the relative significance of fiscal policy in managing the economy and is reluctant to give that victory up.
The point is that fiscal intervention carries the dangers of it being inherently politicized since it brings into public discussion issues of taxes and tax distribution, of social priorities and of spending outside the direct purview of the private economy. Monetary management in contrast has the preferred advantages to elites of being carried out behind closed doors, with strict market-oriented mandates, and of operating through financial markets that discipline each of firms, workers, and states to the “apolitical” priorities of accumulation.
In this regard, the weakness of labor as a countervailing force reinforces the toleration of fiscal conservatism. Moreover, the persistence of austerity and restrained growth provides the state with an opportunity to further weaken labor.
As long as the slower growth doesn’t threaten the survival of the banks — something that has been carefully taken care of — austerity can be used to address the longer-term goal pushed by sections of the elite: consolidating the institutional defeat of private sector unions and moving on to match that achievement in the public sector.
From this perspective, the conservative fervor of the German state for austerity, even with pressures from the American state to go softer, is not just a matter of a historical legacy that is paranoid about inflation, but is also a dimension of the German state playing a leading role in consolidating European neoliberalism and “ratcheting down” to the weaker welfare state and greater labor flexibility the US already has.
American capitalism is currently characterized by both a greater role for financial markets and the weakness of the working class. The stock buybacks that Whitney points to add to existing financial volatility, and the potential of an asset bubble leading to a significant collapse in the stock market. And the political emphasis on the link between driving up stock prices and inequality, and the failure of corporations (and the rich) to invest at levels that justify their radically disproportionate share of society’s wealth, is surely right.
But we should not underestimate the resiliency of capitalism, and the staying power of the American economy. The working class and social movements remain in retreat, and such recent mobilizations as Fight for $15 and Black Lives Matter are limited without larger perspectives.
What we need to build and prepare for is not a capitalism on its last legs but one able to stumble on and to generate profits in spite of all the volatility and uncertainty. The tasks this sets for the Left is the longer term one of winning people over to rejecting capitalism even when it is, on its own terms, functioning “well.”
It is our inability to organize ourselves to address this challenge rather than of focusing on how to fix capitalism that defines the failures of the Left. It is this crisis that we especially need to be talking about.