Reflections on Garden World Politics Douglass Carmichael

January 27, 2009 § Leave a comment

draft of “how we got here”

First, that the Obama team is likely to try and re-stabilize the banks so they look  much like they looked two years ago. “Save the financial sector”.  I think this will fail. There is too much debt in the system, assets are not clearly tied to debt, and nobody knows how tor price most assets. I sense that we are likely to get two rounds of the use of federal money to try that bank stabilization as return to past practice, and as they fail, treasuries will themselves become seen as less secure. (another euphemism).


How did we get here? First notice that the tendency is to blame someone. This gets in the way of understanding the system with a certain inevitability. Only if we see this can we effectively change it.


My view of what happened.


Background: rising population (we are a successful species), leads to wars, and energy dependence which leads to oil, which fuels growth and wars. WW1 and WW2 are part of a long struggle for social control that can handle money, status, land, technology and governance.


  1. The immediate background is ww2 (which of course also has a history)
  2. The promise of leisure as technology replaced work.
  3. He movement by owners of capital land and stocks, and upper level managers to make sure that profit in the system flowed toward them and not toward workers., culminating in Reagan firing all the air traffic controllers. The ideology was corporations exist to satisfy owners.
  4. The rich got richer
  5. They used he money to buy Stocks, real estate, large trophy houses and second homes
  6. Moved from CD’s to more speculative financial instruments, the repeal of Glas-Steagle by Clinton led to more financial freedom.
  7. The financial institutions obliged by creating new products for those with discretionary money. This was pure market.
  8. Greenson kept money flowing into the market, lowering interest rates.
  9. The middle class on down had to pay more for housing that was being bought by people with more money.
  10. The middle class was stretched and increased debt led to nervousness
  11. Which led to selling fewer financial  instruments.
  12. At the same time outsourcing was eliminating higher paid jobs.
  13. Thus the financial institutions started loosing fees.
  14. And we snowballed down, exacerbated by the banks and brokerage houses that wanted the public to keep up their funds flow and fees and profits.
  15. Obviously there are other factors, such as oil, China, foreign debt, Americans taking money out of the country. But these can be woven in to the fabric above.


I also sense that, since the old economy cannot be recreated, we need to think really differently about what we want to build instead. The pressure will be on for large organizations to dominate the “instead’ strategy. But local needs mean that local efforts will be creative and we may see the emergence of lots of small scale more local enterprises.


In the last few years I have worked on a book, GardenWorld Politcs (at which was aimed at providing an image of where I think most people would like to go.


I also have been involved inc reateing the Stanford Strategy Center and the off campus Palo Alto Strategy Center as places to have more systemic, historically and humanly grounded straegy conversations. In those ocnversation, we have become clearer that the alternative economy can be framed in terms of the loss of the idea of leisure that was prominent in the post WW2 period. The elite looked on the leisure problem and thought, we need to keep people working and harvest that potential leisure for ourselves. This was country club language for the neo-liberal assault on the economy that led to deregulation, derivatives and further adventures in the engineering of financial instruments., and the following concentration of wealth. A good book is David Harvey’s A brief History of Neocolonialism.


All this has come together for me as a sense of a new major and deep crisis that is not well understood. It is a n opportunity to rethink what wealth is for, who should have it, how is it made, and how is it paid for. The rehumanization of wealth, from money and machines to humans and quality of lived life, is a real possibility, and GardenWorld Politics provides a good frame for seeing that goal and discussing the unfolding of events. 


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