Thread by @thomas_lord

Let's put the new global ecomomic crisis in perspective - namely the perspective of GenX:

Nixon Shock, oil embargo, stagflation

savings and loan crisis (Reagan)

dot com implosion (Clinton)

sub-prime mortgage implosion (G. W. Bush)

housing and public helath crisis (Trump) 1>

"Under the hood", all of those are deeply related. We are not in "the second economic crisis young adults have known" - there has been a continuous global economic crisis for 50 years. The acute form of the crisis is volatile and changes its manifestation each time it pops up.>

What is the unifying theme of the past 50 years? Constant deflationary pressure, desperate interventions to try to stave it off (ever expanding government injection of demand), and growing ineffectiveness of Keynsian means of sustaining inflation (while deflating labor). >

Where does the deflationary pressure on capital come from? Supply and demand, baby. The value of capital rises and falls with the labor needed to produce it and when that is low (due to a high productivity economy), capital is excessively abundant. >

That super-abundance of capital has been a problem since ~1929. From ~1930 - ~1970 the "solution" was the injection of artificial demand by governments: Keynsianism. Why has this stopped working? >

High productivity means that, over time, the amount of labor employed by each dollar of demand falls. The same qty of demand employs fewer and fewer. To keep up and sustain (on paper) growth, gov't injected demand must outpace productivity - must grow every larger. >

Gov't demand has two noteworthy impacts: 1) It deflates labor - it lowers real wages. 2) It inflates capital assets. Notice that both (1) and (2) have limits. They can't go on forever. At some point, wages can fall no further, assets inflate no more. >

In the real world, at the moment, how does this look? It looks like wages that aren't even living wages (e.g. warehouse work, precarious gig work like driving for a "ride share" company). It looks like a housing crisis (e.g. real property bid up until unaffordable to most)>

Trump made a deal with capitalists. He turned on the spigots of gov't demand through tax breaks and direct spending, sending the already present stock and housing bubbles soaring. In exchange, big capitalists expanded very low wage shit jobs to get to "100% employment". >

The perverse Trump-era Keynsianism stands in contrast to the so-called mid-20th century "golden age" - before the wheels fell off due to high productivity. For workers, it is obviously harsh and insulting to dignity. It breeds free-floating resentment. >

For capital, it intensifies the division of national economies into a unified oligopoly and a single bourgeois politics. Capital competition is increasingly between nation states. >

This opens the door to a new, bourgeois-led virulent nationalism: the alt-reich and its urban companion, YIMBYism, for example. The people are to be made loyal to capital. Capital to hold out the promise of prosperity in a calamitous global market. Pressure towards war grows.>

The pandemic is an interesting twist, especially if it means shutting down whole national capitals for a year or 18 months. Suddenly, it has become obvious that most jobs are "inessential" and always have been. And suddenly, those deflationary pressures loom large. >

During this crisis people will start to figure out how to non-economically organize quite a lot of activity to replace what was formerly done only by buying and selling. Will they want to (try to) "go back"? >

And as one meme I've seen circulating observes: what happens now if those "essential workers" (in warehouses and grocery stores, for example) go on strike? Is the state going to (try to) force them back to work at gunpoint? >

In short, this isn't the "second crisis" in some of your young lives. It's a dramatic development in a crisis that's at least 50 years old, dating back to a structural breakdown in capital 90 years ago. Interesting times. />