The ongoing financial crisis is receiving enormous amounts of attention and a plethora of analyses every day. However, reports and opinions rarely reflect the historical underpinnings that reach farther than 2001, and remain mainly oriented on very recent years, wars, and presidents, especially G.W. Bush; the effect of neoliberal policies is often neglected as well. Remaining up-to-date and defying time, a book published in 2003—Robert Pollin’s Contours of Descent—offers a surprisingly refreshing analysis of the economic woes troubling us today (1).
shikeroku, shadow with green, 2005
Certains droits réservés.
The economy of the United States has recently taken a significant downturn. The stock market plummet and a number of failing financial institutions have called for massive government bailouts, all of which, in turn, have created a significant decrease in job security for an average taxpayer, as well as grounds for future tax increase. Considering the tax-cut policies, the bailout funds, and the million-dollar severance packages and bonuses received by heads of failing firms, the only ones benefiting from these problems seem to be the big businesses and the rich. We have seen a quite similar scenario about six years ago, with the stock market “bubble burst” in 2002 and recession that took place shortly after George W. Bush took over the U.S. presidency. The U.S. economy took the unhealthy turn for the average citizen, but benefited those at the top. Professor Robert Pollin of the Political Economy Research Institute at the University of Massachusetts at Amherst, wrote a book titled “Contours of Descent: U.S. Economic Fractures and the Landscape of Global Austerity,” in which he examined the economic policies under Clinton and Bush that led to the recession of 2002. The perspective this book offers is very important for a good understanding of the history of today’s global economic crisis; professor Pollin analyzes events and policies that were the moving force behind the currents of economic instability and shows that contemporary problems reach farther into history than is commonly thought.
Despite the popular belief that Bush is solely responsible for the recession of 2002, and for the global crisis afterwards, and that the Clinton era was the “golden age” of the U.S. economy, professor Pollin demonstrates otherwise. He claims that the root of the problem was planted in 1990s, with the rise of “bubble economy” under Clinton’s directive, which has been marked as the fastest and most alarming economic expansion in history (2); Pollin states that “the springs of economic growth under Clinton came from a levitating stock market setting off a debt-financed spending boom […] for the wealthy [… and] for corporations” (3). He further argues that the rewards of the economic growth flowed increasingly in the pockets of the wealthy while most workers faced stagnating or declining wages (4). This unhealthy financial boom made the economy appear as doing very well in spite of the fact that the issues of social inequality and financial instability worsened (5), until the times of crises began unraveling, even before Clinton left the office.
When the new administration of George W. Bush took over the presidency in 2001, it also became responsible for the economic crisis that was already in motion. It was up to the new administration to implement corrective measures to fight the crisis and get the economy back on the healthy path. Professor Pollin criticizes the way in which the Bush administration dealt with the problem, by arguing that his “overarching commitment [the unwavering agenda favoring big businesses and the rich], prevented him from advancing anything close to a serious program for either preventing a recession or shifting the economy toward a healthy growth track once the recession had begun” (6). Pollin also states that Bush’s tax cuts proposal for stimulating the economy was his most ambitious, even if disappointingly insufficient, initiative; and even this program was not to take effect in 2001, the year when recession was taking place (7). He also acknowledges the further economic hardship that was imposed by 9/11 terrorist attack, but again criticizes the way that Bush handled the problem: by increasing government military spending and cutting back on social programs.
The basic argument advanced in “Contours of Descent” is that the neoliberal economic model that favors the big businesses and the wealthy—implemented by both Clinton and Bush, as well as the International Monetary Fund—was historically shown to be a model that does not promote economic growth and prosperity, but rather increases inequality, altering employment security and financial stability for the worst. He also shows that the implementation of this “bankrupt” economic model in developing countries has had devastating results in terms of their overall growth, inequality, and poverty. Some of the attestations are the case of Argentina, where the implementation of this model ended in financial collapse, and the rise of poverty and sweatshop exploitation in Asia and Africa.
At the end of his book, Professor Pollin offers egalitarian alternative proposals to neoliberal policies, which focus on “increasing employment opportunities at decent wages and stable financial markets” (8), through increased regulation of labor and business. For the less developed countries, “renewing old policy approaches within a supportive global policy framework, as opposed to the current hostility of the U.S. government and IMF” would allow protection, security, and prosperity of their own economic systems (9). Pollin closes his book by referring to the thoughts of Adam Smith, father of modern economics: “a market economy will not be sustainable without a commitment to social solidarity as its undergirding” (10); he thus reveals his own inclination towards social justice.
Contours of Descent comes as a highly refreshing read; it shows the current economic conundrum from a more comprehensive perspective and inspires the reader to embrace a more humanitarian economic policy as a viable option, this time not as a mere utopian dream but as a valid product of sound arguments and analyses. Clearly, it took years for the global economic practices to culminate into the crises we witness today, and Pollin’s informed discussion of recent history will help the reader of every economic and political persuasion understand where, how, and why it all began. Contours of Descent dismantles the myth that only Bush is responsible for where we are today, persuasively adding Clinton to the list of the accused; the book also effectively counters the claim that the praised neoliberal economic model is beneficial for everyone. The book dismantles another, perhaps more important, myth: that continuing neoliberal practices will be beneficial in the future, in the long run, even for the big businesses and the rich. However, despite the fact that he sees no onset of change yet, Professor Pollin remains relatively optimistic; in 2004, during his lecture about Contours of Descent, he was asked about the possibility of his egalitarian economic approach ever being implemented. Here is what he answered:
Question: Wouldn’t the adoption of alternatives to neoliberalism proposed in Chapter 6 actually convert the current system to social democracy of some kind? Would that actually be possible in a crude capitalist country such as the U.S.?
Robert Pollin: I think it’s a fair characterization to say that the proposals in Chapter 6 would convert the current system to a social democracy of some kind. I try to show that, in strictly economic terms, this is entirely possible. Whether it would ever achieve the necessary degree of political support is another question. I actually think most people do favor this type of economic approach. For example, in Florida yesterday, 72% of voters supported a proposal to increase the statewide minimum wage by $1/hour and indexed to inflation thereafter. What could be more social democratic in spirit than that? Now, you may wonder, why then did Bush beat Kerry in Florida [in 2004 election]? That’s more into the realm of political speculation. But my guess is that, if Kerry had been more vocal in support of this measure that the 72% wanted, it might have even tipped the balance of the election (11).
References
(1) Pollin, Robert. Contours of Descent: U.S. Economic Fractures and the Landscape of Global Austerity. London: Verso, 2003.
(2) Pollin, 10.
(3) Pollin, 6, 86.
(4) Pollin, 61.
(5) Pollin, 10.
(6) Pollin, 4.
(7) Pollin, 4.
(8) Pollin, 177.
(9) Pollin, 188.
(10) Pollin, 193.
(11) Pollin, Robert. Visiting scholar lecture on “Contours of Descent.” Burlington, Vermont: University of Vermont, 5 Nov 2004.