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LectureHop: The Economic Crisis Goes Down In History

How do you put the biggest economic meltdown in eighty years into historical perspective? Bwog Money Madame Anna Kelner went to Havemeyer tonight to find out.

Today’s economy is rapidly turning into the stuff of Shakespeare.  Headline after headline spells disaster, AIG is handing out multimillion-dollar bonuses, the federal government is bailing out household names like GM and Chrysler, and President Sarkozy is threatening to boycott the G20 summit. 

Such drama tends to blind, not illuminate, and on Tuesday night, the Columbia Undergraduate History Council sponsored a panel discussion aimed at demystifying the confusion.  At the dialogue between New School historian Robin Blackburn and Columbia professors Eric Foner, Alan Brinkley, and Carl Wennerlind, participants analyzed the crisis’ historical antecedents and offered suggestions for the future.

The discussion began on a disappointing note—Joseph Stiglitz, the Nobel Prize winner in Economics, University Professor, and the likely incentive for most of the audience to leave the warm spring evening and file into the nearly packed lecture room to hear about our failing economy—could not attend due to a scheduling conflict. 

After a collective sigh, the first presenter, Carl Wennerlind, presented the most jargon-heavy and esoteric speech.  A specialist in 17th and 18th century political economy, Wennerlind analyzed the first financial culture of credit and England’s resulting economic collapse from 1690 to 1720.  Wennerlind declared that “from its origin, the modern financial system has been prone to crisis,” and encouraged his audience to “look for the social relations underlying credit.”  Like many of the left-leaning panelists to follow, Wennerlind overtly revealed his political inclinations.  He concluded with a quotation from Marx that rained wrath on the heads of the AIG executives and the like: “capital comes dripping from head to toe, from every pore, with blood and dirt.”

Eric Foner reinforced Wennerlind’s radical message by issuing a characteristically liberal call to restructure the government’s relationship to the economy.  He analyzed the panic of 1837 and the period of economic downturn in the late 1890s, detailing the dramatic sequence of big business, bank collapses, labor strikes, and the rise of the Populist Party.  Even after offering a somber parallel to our current economic crisis, Foner expressed hope that such disaster can pave the way to new social relations.  Economic downturn, he warned, can produce “conflict not only between Populists and others, but also among racial groups;” however, it can also allow for the “consolidation of a new racial system in the US,” and inspire people to “think in new and creative ways about the relationship of our government to our economy.”

Alan Brinkley tempered the previous two speakers’ leftist biases by fastidiously evaluating the benefits and drawbacks of the New Deal, a possible remedy “very much in vogue today.”  In reasoned language reminiscent of every Columbian’s favorite US History textbook, Brinkley both exalted the program’s successes and argued that “we need to learn not only from its triumphs but also from its failures.”  He cautioned that the Second World War, not the New Deal, ended the Great Depression—“ a solution we have to owe is not the only one available to us today.”

The final speaker, Robin Blackburn, related the discussion to the present moment with a message far more extreme than those offered by Wennerlind and Foner.  He analyzed the period from the 1970s to 2007—a time that he sarcastically denigrated as one “dominated by the rise of so-called neo-liberalism and the dismantling of many of the regulatory controls.”  He continued to use a tongue-in-cheek humor to criticize the dying “culture of consumption, self-regard, and economic analysis,” arguing that pervasive inequality in both the domestic and global economy caused the financial bubble to burst.  Blackburn, though, reveled in the socialist possibilities offered by government bailouts. “We’ve stumbled into a completely unintentional collectivism,” he exalted, “and the next step should be nationalization, a classic recipe for overcoming crisis in the capitalist system.” 

Although these four historians offered definitively liberal views on the nation’s economic woes, their opinions lent the depth and sense of perspective that dramatic newspaper headlines lack.

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  • WTF is this... says:

    @WTF is this... …Fox News? Now Columbia students say “liberal” as a way to discredit reasonable points of view? These guys are among the most respected historians in the world; I think their reputations will survive. Maybe this BWOG writer needs to enroll in some of their classes and learn something.

    1. really? says:

      @really? i’m pretty sure the author did not mean to use liberal in a disparaging you. you kids need to get stop being so defensive; just because she didn’t write “all hail the incoming socialist uprising!” doesn’t mean that she is a palin supporter…

  • lame says:

    @lame that’s the lamest april fools “joke” ever…

  • wtf! says:

    @wtf! what happened to the “BWOG” headline on the page… why did it just briefly switch to say”a Blog”

  • *debt says:

    @*debt not det

  • i'm sure... says:

    @i'm sure... people came for more than stiglitz. those are history powerhouses. and wasn’t ngai moderating?

  • this post says:

    @this post seems to reflect the author’s biases more than anything else. historians have a different way of looking at the economy, and perhaps that is what some took to be so surprising.

  • yo bwog says:

    @yo bwog what’s the deal with these posters around campus advertising

    1. hm, your says:

      @hm, your genuine curiosity intrigues me – I will go to the website

      …oh wait, no I won’t because that was just a shameless/not-subtle advertising ploy: the candidates are seriously the only people who care about campus elections bud – enjoy that line on your resume but I shall not dignify what you & your equivalents do, by voting or otherwise participating in that whole meaningless charade

      as an aside, I see no reason to bombard us with fliers as I feel fairly confident that people of my persuasion are in the majority on this: I say you guys should have one Columbia website where you guys can all put up your nearly identical platforms for the (minority of) people who care about them and in so doing save paper, tuition dollars that fund these endeavors, and time to put them up and take them down – I think even people who care about the elections would say that the fliers don’t add anything other than some small quantity of awareness that isn’t worth the financial/environmental/time cost.

    2. the posters says:

      @the posters are stupid

  • come on says:

    @come on Poverty rates in 2000 were
    between one-third and one-half of what they were in 1970. There were between 250 and 500 million fewer poor in 2000 than in 1970. Income inequality fell during the 1980s and 90s.

    If you’re really going to talk about the 1800s and early 1900s, you’ve got to mention how economically insulated countries were from each other, how protectionist countries were, and how unsophisticated the capital markets were.

    For every act of deregulation these people diss, you can argue that there’s been a poor act of legislation/regulation that contributed to this crisis. If these academics want to talk about the financial and economic system, a) they need to have some economic credentials, rather than spewing their batty social qualms with capitalism (social relations and credit? What is this the Sharia now?)
    and b) they need to get some global perspective and address the fact that by and large, movements from protectionism and closed economies have yielded growth, prosperity, and a movement away from poverty for developing nations.

    Sorry to break it to you but fluid and efficient credit markets really are a key component of economic growth and development. You can counter all this stuff about the government running everything by arguing simply that the level of regulation in place was just not as sophisticated as the level of complexity of the industries being regulated. It’s possibly a ‘quality’ of regulation issue rather than a ‘quantity’ of regulation issue.

    1. Social Democrat says:

      @Social Democrat I think that’s a rather depoliticized manner to view the sources of the economic crisis. It wasn’t just that people got policy wrong because they didn’t understand complexity–financial institutions actively pushed for the gutting of the SEC, an institution that was really only equipped to deal with corporations that actually produced goods, rather than merely shuffling money around (I think Marx’s category of “fictitious capital” is remarkably apt here, whether one is a Marxist or not).

      I wish I knew exactly you meant by a “fluid and efficient” credit market–credit has been extraordinarily fluid in this country, and as it turned out, a bit more restriction on it would have been beneficial. You can say that it’s merely a quality over quantity issue, but that avoids the very real economic philosophy, which really only gained political power under Reagan and Thatcher, that asserts that regulation itself places us on the “road to serfdom.” Forget that the failure of a financial institution affects far more people than those who work for it; and forget that deregulation was never more than government interference in FAVOR of capital, and that the myth of a smoothly operating, free-from-government economy is just that: a myth.

      You present us with a simple dichotomy, autarky or uninhibited international markets, without addressing the fact that regulation in itself has nothing at all to do with protectionism. You shamelessly ignore the very real struggles faced by those under the austerity policies forced upon countries by global financial institutions. And income inequality in this country, at least, hasn’t shrunk, but grown, and the social guarantees established through the New Deal have been emaciated. This isn’t because things got more complex; it’s because the theory of privatization has grown stronger–and privatization is the theory with money.

      Ok, that’s all I have.

      1. shamelessly? says:

        @shamelessly? The only thing shameless here is the fact that these people talk about capitalism and the world as though the only economic prism through which to view things is the American case. America is a very polar case of capitalism, that of the market unleashed, and credit flowing like water. The point I was making was that these people talk about capitalism as though it has been a total failure. The right way to view things is to consider the movement away from autarky/high protectionism towards a freer market, and then consider whether that has led to largely good or bad things. In developing nations, the evidence is mostly positive.

        Much as you are disillusioned by Ameronomics, get some perspective. America’s unemployment rate is still extremely low by global standards. Inequality is high, but the standard of living of low-income people in this country is still far higher than that of similar demographics in other countries. Inequality in this country looks bad because it is such a relative measure, when in fact the absolute level of income/real income that the lower-classes enjoy in this country is still far higher than that of the rest of the world. Ultimately, the great success of this country has been its ability to provide a decent life and at least the opportunity to pursue an Ivy education to even those in the lowest income brackets. Privatization and a movement towards extending more credit to small businesses has much to do with that. So regulate better, but don’t go Marxist on me, don’t forget common sense, and don’t forget what brought you to where you are now.

        And you shamelessly have presented us with a very simplistic notion of this evil banking institution existing for greed imposing economic liberalization on the poor in return for money. The reality is that the IMF, World Bank and such are lenders of last resort that are usually called in after a government usually over-exerts itself in public sector economics and crowds out/scares away the flow of private credit. The medicine is usually austere, yes, but that is usually to curb hyperinflation and/or take countries from large deficits to balanced budgets, which ultimately is really all you can do if you are a developing country and nobody has faith in government det anymore.

        I’m not sure if you’re suggesting, with the SEC bit, that the SEC would have been able to avert this crisis if it were less biased and less influenced by banks. I don’t really think that’s the problem here; even if the SEC were completely de-politicized (and to be honest I don’t think banks have as much of an influence on them as you think), I don’t think they had the tehnical prowess to see this crisis coming, nor the mandate to do anything about it. That’s why the Fed’s oversight is now being expanded to monitor levels of systemic risk in the market place at any given time.

        1. Shameless says:

          @Shameless Ok, I have lots of shame, and I’m sure you do too, so I’ll get past that.

          I’m still not sure I follow you entirely. America is a polar case of capitalism–agreed. But I don’t think that makes it less useful as a model for analysis, especially given that you find some of the particularities of the American system to be good ones.

          I don’t think that the SEC is the only source of the problem, or that it was itself directly influenced by lobbyists. My point was that banking lobbyists were key in getting the legislation they wanted passed–including the Financial Services Modernization Act, which repealed Glass-Steagall and removed certain kinds of securities swapping from the SEC’s oversight. And many had asked the Fed to increase its role in preventing regarding predatory lending before the crisis, but they were ignored. Unlike the SEC, I do think the Fed has intimate ties with the banking industry. The failure in the 1990s to make it a more accountable institution was a grave one. There was a general shift away from command-and-control regulation to risk-based regulation, which was of course based on totally absurd notions of what the actual risks were. These weren’t just about the incapability of old institutions to deal with new problems, but were often deliberate steps advocated for by financial institutions to remove limits on the kinds of trades and loans they could make. For American investment banks, this was never about social good, but was instead about making money.

          As far as international banking institutions go, I never said that they were out just to make money. Of course, the IMF and World Bank were making investments to help flailing economies. I just think they didn’t really consider the immediate effects that the conditionalities would have for people on the ground, and that considerations of eventually getting returns on investment often overshadowed some concerns about living standards.

          Yes. The American poor are better off than the poor of sub-Saharan Africa. They are also probably not better off than their European counterparts. The move away from government provision of social services really has nothing to do with unemployment rates–here, you’d probably look more to the effects of organized labor (though I’m skeptical of those correlative arguments that claim that Germany’s high unemployment can be traced to the problem of unionization). The real effect of the post-1960s economic model, however, has been on the middle class in America. The poor always have gone by on a shoe-string, but now a medical crisis or paying for college can be devastating for a middle-income family, too. Yeah, I’m on financial aid–but guess what? I get government subsidized loans! And don’t think that my worries about my ability to pay these loans later in life don’t keep me (and my mother) up at night. But what the hell does my ability to go to an Ivy League school have to do with privatization? I got here in large part because the public high school I attended was well-funded (Massachusetts has pretty high tax rates, you know), because the government helped guarantee (somewhat) manageable loans for me, and because of the trends in society which opened up institutions like Columbia to a wider socioeconomic group (but let’s not kid ourselves too much: this is still a place overwhelmingly for the privileged), trends that have NOTHING to do with laissez-faire.

  • Wow says:

    @Wow Let’s hope no one takes Blackburn seriously.

  • Reaction says:

    @Reaction having taken wennerlind’s class, he is not a left-wing guy by any stretch of the imagination. he is a huge believer in hume and other moral sentimental philosophers. perhaps he is left of where the writer is – and that is fine – but even by columbia standards he is in the center or perhaps even on the right.

    1. yeah says:

      @yeah i agree with this

    2. LAHL says:



  • font says:

    @font new font no good

    1. James says:

      @James Apologies – fixed!

  • i believe says:

    @i believe wennerlind said “credit comes dripping,” not “capital comes dripping.”

    but yeah, that panel was absurdly left-wing. it sort of felt like a bat cave. what the people had to say was interesting, but i felt like i was getting one very skewed half of the story

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