Yann Moulier Boutang
Professsor of Economics
University of Technology of Compigne (France)
Finance, far from being a parasitic activity, has assumed an increasing key role in the appropriation of intelligence and cooperation (see paper of Andrea Fumagalli). The current crisis of credit which has started with the subprimes crisis (mortgaged assets market), has turned into a global crisis of the banking system and of the economy. The intervention of the central banking system (FED, ECB, BoE, BoJ, BoC) providing a huge degree of liquidity has been technically correct. It has not reproduced the mistakes of the lack of reactivity of central authorities in the Thirties.
However it has been quite uneffective in preventing the extension of the crisis to Europe and Asia and has prepared a serious recession in the economy, and has not reestablished trust or confidence in the markets, among the world of finance and between Wall Street and Main Street.
Why is that so ?
The paper will argue the following five points :
1- The financial new New Deal at a global level will cost approximately between 2 and 3 trillions USD or more. Funding such amount of money in the short run will increase the international debt of the US Treasury and raise the question of the value of the dollar as the hegemonic international currency.
2- Most of the analysts of the current crisis have blamed the excess of liquidity which to them have been responsible for speculation, and are standing for restriction of credit to borrowers be they households or firms. I stand for a completely reverse interpretation : speculation on housing industries backed by the financial system, has occured for two reasons : on the one hand the neoliberal system would not have been able to defeat the Left in the middle class including the working class and the new Ç creative class È without lending money to people that were not able to reimburse it. On the other hand, since the first crisis of energy, ecology and sustainable growth has not really been put on the agenda by the States.
3- The actual crisis is not anymore a crisis of liquidity, not yet a crisis of the dollar and of the Bretton Wood system, it is a crisis of truth and also of political confidence in the political system for increasing agency and empowerment of democracy. The crisis alludes to the impossibility of a consensus on the futures and of the prices of future growth, its nature, its intensity, its possibility taking into account the ecological constraints of the biosphere (Kyoto) but also the increasing weight of invisible assets that I call cognitive capitalism (Lisbon).
4- The kind of growth which is sustainable and which is the only thing that can restore confidence and get through the financial crisis implies not only a new financial New Deal, but an Ecological New Deal on the one hand and new Social New Deal closely linked to the role, the visibility and the protection of the new productive labour and activity in the increasing emergence of cogntive capitalism as well as the protection of a global society which includes the precarious labour in the North countries as well as the proletariat and working class in the South.
5. In our case, Europe, a new political New Deal needs a true federalization of EU blocked by the rebuke of the Constitution. Otherwise we shall have a cold New deal with all its defects without its advantages. It is the New Federal European Deal.