Customer Reviews

Meltdown: The End of the Age of Greed

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Since the fall of 2008 I've bought and read 35 books on economic related subjects - most from Amazon here - and been scanning 17 blogs by experts such as Krugman and Simon Johnson in my attempt to understand what is really happening - how the current financial crisis evolved and where it is going.

This book gives Mason's (economics editor for BBC's newsnight) perspective in a comprehensive logical detailed way - backed up by 230 footnotes; and gives a logical explanation of where we are probably headed.

He explains how world forces are breaking the dominance of the US oligarchs and will probably force the US into having a responsible financial sector. He describes a future evolving as a struggle between the workers of China - versus the power structure of China - versus the class interests of the West.

It is by far the best explanation I've seen.

Mason's brief work (170 pps.) presents an incisive digest of a global meltdown that came with the kind of suddenness that left many of us asking, "What happened?". The first few chapters provide a week-to-week account of the meltdown itself, a helpful timeline of how the crisis unfolded. The next section looks at the more remote background events and assumptions behind the crisis, chiefly deregulation and neo-liberal policy. The last part may be the most challenging by examining the structure of neo-liberalism itself, mainly from the critical standpoints of Kondratieff and Minsky. The general conclusion is that neo-liberal policy is dead for the foreseeable future, and a more "socialized" banking system recommends itself as the best and perhaps only solution.

He writes in mid-February, 2009, and as of this moment in August, the Obama administration shows no sign of a major bank overhaul, let alone a successor model to neo-liberalism. By Mason's lights, this means a prolonged slump with a very murky future. Be that as it may, the book is a succinct and timely account for the layperson, and I particularly appreciate the inclusion of a glossary of terms. I sometimes think these high-level train wrecks occur because the general public is excluded by the arcane terminology of finance itself. Worse, it's the same public who then pay the price by having to survive amid the debris.

The title is of course wrong - There will never be an end to greed, and the idea that this represents the end of an age is now highly dubious. Still, the combination of on-the-spot journalism and great intellectual command makes this slim book a marvelous read and achievement. Paul Mason is a fine writer, and strong thinker, and since this was one of the most incredible economic happenings of all time, we need his voice to make sense of what is going on around our ears.

Paul Mason, the economics editor of BBC Newsnight, has written a powerful study of the crash. He surveys the financial meltdown, the decade that led to the disaster, and the life and death of neo-liberalism.

Gordon Brown told us in June 2007 that deregulating Britain's banks would be `the beginning of a new golden age'. The bankers lied that they took high risks so they deserved their high rewards. But they took the profits from industrial production and put them into finance, not back into industry: "the end result is that profits are funnelled from ordinary savers into the pockets of the rich."

The bankers created the credit bubbles in dotcom, housing and commodities. Speculators bought technologies, houses, oil, rice, wheat and soya, until all the bubbles burst, laying waste those parts of the real economy.

After the financial crisis, the governments bought the banks' debts as dearly as possible, so as not to penalise them, running up huge debts and printing money, to save the banks, whatever the cost to the economy. There are $10 trillions' worth of toxic loans, only $1 trillion of which has been written off so far.

The world's workforce has doubled since 1979 to three billion. This huge supply of labour has tilted the balance of power from labour towards capital. So now we need to fight smarter for higher wages, and for a different economy.

To do so, workers will have to reject what Mason calls the `low-level, non-ideological, anti-political culture' of the anti-globalisation movement. He points out, "In the same month that half a million American workers would lose their jobs, the main focus of the Non-Governmental Organisations leaflets was `Don't forget aid to Africa'." We should reject the NGOs' slogan `Think globally, act locally'. We have to act in our nation-states, in our national unions.

Mason observes, "Capitalism's tendency has been to expand the power of the market: to push for the maximum freedom for market forces and the destruction of all ties - family, clan, nation and class - not based on free exchange." So we have to save our nation and our class from destruction by the capitalist class.

Paul Mason is the economics editor of the BBC's flagship Newsnight programme. He explicitly says that this is a journalist's account of the current, and still ongoing, world financial crisis, and that makes for readability and impact. It is also the work of a competent and thoughtful economist, and that gives this book intellectual respectability. It is only near the end that Mason says in so many words that any 'pure' economic analysis or modelling is hopelessly deficient, and that economics without a political dimension is an illusion, but you will have gathered that without much difficulty long before. However the theme is primarily economics and not politics, and Mason's decided opinion that free-market economics is a busted flush is argued from the economic standpoint first. This conclusion will come into conflict with the political value-sets of many, particularly in America, but Mason proceeds - properly - via the track of arguments first and conclusions after. I could not say as much for the doctrine of Senator Phil Gramm, who may be quoting a voice that he has heard from heaven when he intones `...we have learned that government is not the answer. We have learned that freedom and competition are the answers.'

Trainwrecks can be exciting if well described, and the global economic supercrash is chronicled vividly but with sobriety and without preaching or sensationalism. As in his TV appearances, Mason's plain-man style goes along with a formidable communicative talent. The complexities of the economic reasoning, and in particular the opaque terminology, are set out here as clearly as you are likely to find anywhere. He is conspicuously fair-minded too, and he concedes that a `neoliberal' free-market regime of the kind to which he is vehemently opposed can work for a while, especially when it has the benefit of an upturn in the economic cycle. However Mason cites one particularly interesting slant on the question from Alan Greenspan himself. This sage came to a belated recognition that periodic cyclic crashes were inherent in the neoliberal model, something he had long denied. However he goes on to say, if I have understood him correctly, that we just have to put up with that for the sake of keeping the neoliberal model. This reasoning seems unpersuasive to either me or Mason, and perhaps the same voice from heaven has proclaimed the conclusion to Greenspan that inspired Senator Gramm.

It is the sheer monstrosity of the recent crash that confirms Mason's view that not only should things not go on like this, but that they are not going to. This obviously takes him from value-judgment into the more hazardous realm of prediction. He does not categorise the events as being merely bad judgment and improper application of a policy that is basically valid. The neoliberal regime is intrinsically unsound, he says, but I am not clear how the change that he thinks imminent is going to come about. The whole rottenness at the core, according to Mason, is a matter of inbuilt conflicts of interest, and the much-touted virtue of openness and transparency is a sham. However he himself obviously has to recognise the plain fact that despite swords fallen on, heads rolled in the sand and so forth, the institutional networks are still operating that like the conflicted interests too well to see everything changed without a fight. Perhaps if I were offered the kind of win-win deal that the investment banks have been given I would be tempted to think the same way; but although politics is ultimately powerless against economic forces, if the economic forces are misdiagnosed, as Mason thinks has happened, politics can put a stop to such abuses for a while. Not only does he envisage a future of heavily government-regulated banking and money-markets, he even senses that labour, resited to low-wage countries certainly but still around for all that, will be back using its collective global strength in wage-bargaining.

Throughout the book there is frequent use of the term `capitalism', and I am curious about how to interpret Mason's use of it. He certainly does not advocate any command economy, barter-based foreign exchanges or any more fanciful alternative. He proposes - indeed predicts - the replacement of `free markets' with strict supervision at governmental and indeed international level. This is only replacing one form of capitalism with another, and if (as I myself suspect) there is no real alternative to capitalism in some shape or form, should he not just be talking about `economics' instead? Mao thought that perhaps human nature could be changed, Deng Xiaoping understood economics and seems to have concluded that its laws were not subject to even revolutionary political changes.

Nor are they subject to turning clocks back, reclaiming this that or the next comic-book idealised past etc, as some current forces seem to imagine in America as they rail against the fading of the light while America's supposed traditional value-system becomes harder and harder to keep alive. Locking the gate and oiling the guns will not turn the tsunami back, says Mason. If we are looking to the past for inspiration, I am intrigued by the precedent of 1789 as I listen to the bankers arguing for the rightness of their bonuses and against the impropriety of opposing them. Basing an economy on debt and imaginary money may have played its last hand, but if someone is looking for a new and profitable business venture there may be a market for lamp-posts and tumbrils.

I think there's no better book in the market than this one about the current global financial crisis, and how it developed. Just buy it. Then savor it.