Yesterday we argued for carrying the culture war into the heart of the American political economy. We made the very broad claim that a defining feature of our economic culture is the acceptance of limits. This might seem like a strange thing to say. Surely the last decade was marked not by limits but by a failure to acknowledge them. Individuals, businesses and eventually governments borrowed well beyond their means. That, so the story goes, was what created the credit crunch and the stagnant new normal. It is certainly the narrative behind the growing deal, in which Republicans appear to be ‘conceding’ on some tax hikes while Democrats accept 5-10% cuts to Social Security.
But that narrative exactly misreads the role of credit and consumption. The expansion of credit was largely an attempt to overcome the limits of capitalism within capitalism. As is now common knowledge, the expansion of consumer credit presupposed stagnant wages:
And, as the graph shows, it began with sagging profit rates of the late 1970s – perhaps most famously marked by Volcker’s revanchist announcement that “the standard of living of the average American must decline.”
(graph from Robert Brenner, see also Henwood.) What the expansion of consumer credit permitted, in other words, was the appearance that capitalism could accommodate the expansion of desires, the demand for ‘more,’ even while suppressing labor costs and increasing the expropriation of the expropriated.
The expansion of credit over the past thirty years was in a sense a massive bridge loan to cover the transition to a leaner set of arrangements, in which more jobs would be low-paying, part-time and insecure, labor would be less able to defend attacks on the standard of living, ‘job-creating’ capital would take home a larger share of the pie and then basically sit on it, and politicians could pretend serious economic issues could simply be managed by technocrats.
The major problem with the credit crunch was not the attempt to surpass existing limits to consumption, but with the implicit practical belief that credit could in any way rise above and compensate for the class defeats of the past twenty years. Just as Obama has frequently tried to rise above politics in the name of some abstract non-partisan unity, so too did the borrowing public hope it could rise above the real disparities in society, without having to face them directly.
To put it another way, the ‘fiscal cliff’ is not just a false emergency engineered by Republicans and Democrats, it is the culmination of decades of attempting to paper over the limits, not merely injustices, of the American economy. It is not just that both parties have joined the austerity bandwagon, they in the process are attempting to neutralize the only utopian moment of the past few decades: the satisfaction of desires that the current society cannot satisfy. The expansion of debt would have been unlikely to succeed had that desire not been there to sublimate.
Of course, critics may say that many of these desires took a form not at all challenging to a consumer society. That criticism has some teeth, and we will take it up in tomorrow’s post. However, moving too quickly towards anti-consumerism not only misses the utopian moment, but also blurs quickly into the bland and conservative narrative of arguing we should do more with less. The starting point for an economic culture war must be to reject the austerity party and its culture of low expectations. Any reconstruction of meaningful alternatives must begin by rejecting that piece of our economic culture. After all, the so-called ‘solution’ of a grand bargain is really just a an attempt to throw back on society the political class’s own lack of imagination and inability to deal with the problems it has inherited.
(to be continued)
thecurrentmoment 
Interesting take on the “limits” of society. I might add to the subject that the grand media and institutionalized educational spectacle of the past 100 years has generally attempted to limit “our” choices to what I call the “coke-vs.-pepsi” (false) dichotomy. In my opinion, modern capitalism has been dependent such consumer “choice” dichotomies on an innumerable scale to keep its mode of production operational within the limits of capitalist property and broader socio-economic relationships. The bill for all of this coke-or-pepsi-consumption was footed by gains in wages from the post-war era to the OPEC oil-shocks and then from, as you say, a massive “bridge loan” in the form of consumer debt. And now the question is, will we all have to dramatically reduce our living standards? Will he have to go back to the Dirty Thirties? Will he have to give up eating meat, stop buying new clothes, stop eating in restaurants etc.? For some on the left, the answer, ironically, is yes. The right would also likely answer yes, just that the ‘yes’ i.e., ‘limits’, wouldn’t apply to them.
Some on the left will have to come to understand that the [counter] culture war that you speak of can’t succeed unless most people REMAIN STUCK in the so-called “consumer mind frame”. If people don’t believe that they’re entitled to the choice between coke and pepsi, if they buy into the belief that they have to tighten their belts, then they would hardly make good advocates against austerity in a culture war. So, I agree with you, that “The starting point for an economic culture war must be to reject the austerity party and its culture of low expectations.” Raising expectations is the only solution.
Thanks for writing your blog, I enjoy reading it.