AIG, Barack Obama, and other Spectacles of Stability

by zunguzungu

As we watch the “strong fundamentals” of the American economy collapse around us, it’s been striking to watch how carefully and reliably the powers that be have, to wax Orwellian, demonstrated the “special connexion between politics and the debasement of language.” It is, after all, pretty difficult for non-economists to make sense of what’s going on; as Matt Yglesias noted yesterday, we are seeing the delightfully absurd spectacle of George Bush carrying out a Leninist economic program, an out-and-out nationalization of a wholly private corporation that would, if it happened in Bolivia, be evidence that the ghost of Karl Marx had actually taken over the body of Evo Morales, and needed to be exorcized via cruise missles. What makes this weird is that, unlike Fannie Mae and Freddie Mac (which were sort of semi-public, semi-private), AIG is just a straight-up no-frills private insurance corporation, the 18th largest in the world, and the Federal Reserve (a public entity) has, with no apparent precedent for their actions, just assumed controlling interest in it. It’s not clear that what they did was legal; it’s not even clear how you would determine if it was legal.

But what has struck me, as a person hoping to one day have a secure income who is troubled by the sight of the stock market in free-fall, is the way all the various failing insurance corporations get called vague terms like “giant,” irregardless of where they sit along the private/public spectrum, how the answer to the “how big?” question seems to trump the “what is it?” question. I’ve spent a lot of time thinking about David Simon and The Wire, and the ways Simon’s use of the word “institution” lets him usefully misunderstand what a thing like a police department, a executive political office, a school, and a marriage don’t have in common, and I see something similar here when NPR commentators refer to Fannie, Freddy, Bear Stearns, AIG the same way, as some variation on “troubled giant.”

But actually, these troubled giants are very different from each other, which should (if you acknowledge it) lead you to expect the ways our government would respond to their distress to be quite different: while a public institution should be bailed out, a private corporation is a private gamble, right? But as someone recently noted, you don’t find atheists in foxholes, and you don’t find true free marketeers during a financial crisis. And so, to obscure the fact that–as Karl Polonyi long ago pointed out–a “free” market has never existed without massive state intervention (and the idea of a free market is really just a polemic attack on the government’s responsibility to ordinary people during economic downturns), we must, in times like this, carefully obscure the difference between private and public, since observing the difference would mean observing that free marketers in theory do not believe in a free market in practice.

I am not an economist, but I do have a special interest in the use of language “as an instrument for expressing and not for concealing or preventing thought.” And even more than that, as someone who’s trying to figure out what “modernism” is all about, I’m interested in how incredibly important it is, in this case, to produce the superficial appearance of solidity. This is a modernist trope par excellence, but seeing it play out not in a literary text but in an AIG advertisement or the New York Times gives us a unique perspective on the way “modernism” works in real life, how important it is for a particular class of people to utter transparent falsehoods like “the fundamental business of the country, that is the production and distribution of commodities, is on a sound and prosperous basis.” As Eric Rauchway and Paul Krugman noted, Herbert Hoover’s words are emerging these days from John McCain’s mouth (even if their origin was probably in Phil Gramm’s brain), and there’s something very interesting about the fact that the capitalist class’ reaction to an economic crisis in the heyday of the Fordist modern economy and the now in the postmodern, post-fordist, post dot.com Enron economy are so amazingly similar. More than that, it is telling that this spectacle, as people like Hoover and McCain conjure it forth, is so utterly disconnected from what the facts actually are about the situation: George Bush’s Federal Reserve chair, the man who succeeded Ayn Rand in the position, is taking direct control of the American economy, and wielding great power over it.

I have several thoughts about this. The first is that, as I’ve been arguing in the past few days, we need to better understand political spectacle, and the reasons why fantastic fictional representations of solidity have the power they do. If they didn’t have that power, John McCain and the NY Times wouldn’t be so hard at work trying to convince us that, however troubled, these pillars of the system are “giants,” nor would Marshall Berman be working so hard to convince us that All That Is Solid Melts Into Air. Whether or not these things are actually true-and without necessary reference to that empirical question-there is something terribly important at stake in that problem of representation, which might be a way into understanding how “modernism” is, as a literary genre, different than simply a reflection of the “predicament of modernity.” After all, modernization as a process is a system of incorporation; those who are modern and those who are not are equally part of the system; it is, in fact, precisely their incorporation within it that gives them that privileged or dis-privileged status. And as Frederick Cooper notes with reference to a book like Peter Geschiere’s The Modernity of Witchcraft, the problem with a “modernism” defined as an engagement with the modern world is that it is not clear how anything in the world could be other than modern. As he puts it, “Trying to escape from the false dichotomy of modern and traditional, we find ourselves with a concept whose main value is to correct past misuses of the word.”

To put this another way, “modernism” feels to me like the particular, contingent, and politically interested instrumentalizations of the predicament of modernity; the ways that your McCains talk about stability and your Bermans talk about flux would then be different parts of a singular discourse, just coming from opposite sides of the argument. And if it makes sense to connect Marx to neo-liberal economic doctrine, and say that it’s part of the same predicament of modernity, just different responses to it, then I get there through an interesting divergance: both through my frustration with for wrongly seeing modernism everywhere he looks (because he ignores all those who are submerged in modernity without being modern) and yet also through his insight that the predicament of modernization is a unifying factor, that it is the processes of imperial incorporation which have made the world into a “globe” (though I have to read him through Bayart to get to that). As David Harvey put it, a long time ago, post-modernism is just a particular crisis within modernity, and there have been many more (and different) versions of it across the globe.

But while the specter of my unwritten dissertation make me obsess about such spectacles of modernity, and the ways we see the world through them, I also find that this line of thinking points at the best reason to be optimistic about the election. As Jasper pointed out a couple days ago, Barack Obama is an unlikely person to come in and change the system: a longtime centrist, he’s appealed to the left because that’s the ways the political winds are blowing, and he’s an adept meteorologist. But that’s the power of spectacle, isn’t it? And when it’s the dance drawing the dancer through his steps, Auden’s question of which is which isn’t really relevent: the important thing is that, for whatever reason, something good can come out of an unlikely source. This was the case with the New Deal, which came from an unlikely source; FDR, despite what his enemies said of him, was no leftist, and the reform of capitalism came about as a means of saving it, directed by a branch of that capitalist class itself. But, you know what? I kind of like the New Deal. I’d like more of it. And if I can get it from a conservative democrat who adheres to a chicago school economic doctrine, well, I’ll take it, gratefully. After all, who would expect George Bush’s Federal Reserve to preside over the most radical expansion of regulation you can imagine in a financial market, the nationalization of a private corporation like AIG? Which has, if you think about, promising potental for what a less horrible government than his might do with it. As Yglesias put it “if the government directly controls major financial institutions, that would give the new administration extraordinary leverage over the national economy. Suppose the new CEO of AIG decided he didn’t want to insure assets of companies whose executives make unseemly multiples of the national median income? There are all kinds of crazy things you could do. And of course not all of them would be good ideas. But some of them would!”