In this week’s London Review of Books, by a happy
juxtaposition, there is a review, by Thomas Powers, of two books on Joseph
Heller, and a review, by Andrew Cockburn, of Obama’s drone wars.
That America spent 2.59 trillion dollars on the military
over the last five years, and that the Obama administration, which has long
signaled its desire to get tough and cut America’s entitlements (medicare,
social security, etc.), proposes that we spend 2.725 trillion dollars on the
military over the next five years, exactly defines the place of liberalism in
American politics – as a zero. The zero is a crucial number. Perhaps the most
crucial number. The zero promises that anything can be quantified, including
nothing at all. Similarly, that post-Vietnam liberalism has exerted exactly
zero degree of power over American foreign and domestic policy, yet hold the
system together by providing a convenient domestic enemy, whose peacemongering
and welfare-for-all attitudes can be triumphed over again and again by progressive
pundits and policymakers who live “in the real world.” The liberals are the
dummies in the elaborate American “kill chain” – a felicitous phrase uttered by
the hero of Cockburn’s piece, one former Lieutenant General, David Deptula
(who, in a glorious swoosh of the revolving door, is now the chief executive of
MAV 6, a “provider of enhanced situational understanding of battlefields”.) MAV
6, we are told, is proud to have recently landed a contract with the Pentagon
(for a paltry initial 211 million dollars) to develop “Blue Devil Block 2”, a
350 foot long unmanned aircraft – because if liberty stands for anything, it
stands for offshoring the kill chain to unmanned and highly expensive drones.
Those drones, in turn, have proven themselves to be very successful machines –
although not on the battlefield. In the warzone, the drones are crap, and all
the stats show they actually worsen hostility situations, raise the rate of
guerilla attacks, and in general create counter-productive havoc. No, the zone
in which these drones have proven, without doubt, to be the world’s best weapon
is in D.C., where selling drone projects to the Federal piggy bank has raised
housing prices (as well as the price of a decent private school) for thousands
of employees of the war system, who profit from every scheme swallowed by the
Obama Pentagon. This is a kill chain to die for!… As so many human products do
in Somalia, Afghanistan, Iraq, Yemen, Pakistan and other exotic places.
Cockburn’s journalistic trick of tying the Bush-Obama
klepto-krieg to the irresistible rise of David Deptula is, perhaps, a bit
unfair, but it is good fun. Deptula is always in the background, it seems, when
money is shifting to one defense industry vehicle or another, automatizing the
hell out of the battlefield. And this, for those who know their Catch – 22,
throws us back on one of the prophetic figures in that book: Milo Minderbinder.
Milo is the man in Yossarian’s unit who sees the war as what it is – a market
interspersed by firefights – and relentlessly privatizes the unit’s supplies,
trading them in an increasingly bizarre bizarre for other commodities. The
bombing in Catch-22 – irrational and relentless – is the binary partner to
Milo’s all too rational quest for profit. The two sides converge in what Tom
Powers calls Catch-22’s central scene – the death of Snowden. Snowden, who is
the flattest of flat characters – we just know that he is young, perhaps a
teenager, and that he is a tailgunner – is hit by flak when Yossarian’s plane
is on a bombing mission. Yossarian proceeds back through the fuselage to patch
him up. He finds that Snowden has a large wound on his thigh, the size of a
football. Snowden is conscious and keeps telling Yossarian he is cold. So
Yossarian opens the first aid kit: “The twelve syrettes of morphine had been
stolen from the case and replaced by a cleanly lettered note that said: ‘What’s
good for M. and M. enterprises is good for the country. Milo Minderbinder.”
As it turns out, Snowden wouldn’t have been helped anyway. In
a scene that is probably being correlated in Afghanistan even as I type this,
deep in the comfort of the war on terror cocoon, Yossarian finds that repairing
the leg wound hasn’t helped: “Yossarian bent forward to peer and saw a
strangely colored stain seeping through the coveralls just above the armhole of
Snowden’s flak jacket. Yossarian felt
his heart stop, then pound so violently he found it difficult to breathe.
Snowden was wounded inside his flak suit. Yosarian ripped open the snaps of
Snowden’s flak suit and heard himself scream wildly as Snowden’s insides
slithered to the floor in a soggy pile and just kept dripping out.”
And the
beat goes on. Kill chains – every link is lovingly handcrafted by the men you can trust! Be a realistic, and remember - dronification is a small price to pay for the liberty we all enjoy so much.


Rather, I want us to go back and understand what contemporary inequality in the developed countries, and particularly in the U.S., is about. The place to start, of course, is the seventies. After thirty years, we are starting to recognize the form of the shift that began to occur then. And let me be the harpooner that points out the shape of that beast, the main points of which are 1., the crushing of the bargaining power of labor; 2., the de-manufacturing of America – which was partly connected to the fact that manufacturing workers were the most militant, and partly the inevitable effect of the ability of capital to find other, cheaper regions in which to place factories; and 3, the dissolving of traditional constraints on credit.
These events occurred in response to the most serious crisis in capitalism since 1945. Galbraith’s New Industrial state, the liberal Keynesian economy, had created structures that were supposed to resolve such crises. These included the management of aggregate demand by the state, the moderation of labors’ older, utopian demands for a slice of the power in return for a steadily rising paycheck, and management’s movement away from optimizing profits in exchange for lessened volatility. The Keynesian moment unwound for a number of reasons – labour, with increasingly less interest in the political dimension that originally animated unions, became much more vulnerable; the government management of aggregate demand, combined with the government dependence on War, had finally unleashed inflation; and the ROI of the Fortune 500 corporations was finally causing an investor revolt. However, of the three factors I am listing in the shift to the new, Reagonomic paradigm, one and three seem oddly disjoint. How is it possible to diminish the bargaining power of labor – which results in the stagnation of wages – and at the same time dissolve traditional constraints on consumer and other credit?
Of course, from the neo-classical point of view, that makes a lot of sense. Instead of the government actively managing aggregate demand, the private sector, with a freer credit market, can take over. And in fact, even if wages stagnate, household incomes rise. The house itself as an asset appreciates, for one thing; more investment vehicles are made available to the public, for another thing; and finally, there is the great entry of women into the labor market.
Credit, then, is the keystone. It is from this moment on that the financial services sector, which had been relatively unimportant in the Keynesian regime, returns in force. It is what I would call the mangle of inequality – playing on Andrew Pickering’s term, mangle of practice. Contemporary capitalism in America has to effect a straddle – the economy depends on consumption, and yet, the majority of the consumers engross less and less of the productivity gains accrued by the system. Freeing the financial markets had two effects – one was to re-vamp the consumer’s financial horizon. Instead of worrying about making a wage sufficient to live the good life, the consumer worries about making a wage sufficient to have a good credit history – which is the magical key to the world of cars, plasma screen tvs, houses, and all the rest. The other was to make the consumer a shareholder in the system. For simplicity’s sake, call this the 401k world – that stands at the symbolic center of a system by which the ordinary person was hooked into the market. And the market could, consequently, use vast flows of capital to keep easing credit. A virtuous feedback, so to speak.
It had another, symbolically resonant significance. The triumph of the state in the 20th century was in providing for retirement. The state successfully created, within a capitalist economy, a mass ability to finish one’s life without poverty or utter family dependence. It was the template for the structural goods that the state, in a mixed economy, could provide – when the demands of distributive justice could not be aligned with the price creating market in a good or service. Consequently, social security has earned a special hatred from the right. The American system of encouraging private investment was meant, on the surface, to complement social security, but the ultimate aim was always to replace it.
The mangle of inequality, then, was not – as in Marx’s time – a head to head confrontation between classes. It is a more complex machine, in which class interests are blent so that head to head confrontation is systematically differed. The political triumph of the system is that the blending disenfranchised populism, since it became unclear who would really benefit from populist practice.
Given this context, we should be posing different questions about the housing bubble - not the question, what caused it, but the question, why was it necessary? It is not as if the policymakers consciously intended a housing bubble. But they did consciously intend returning the Clintonian surpluses to the investor class. And when the 2000-2001 recession happened, they consciously intended to find a way to respond to it that did not involve the government "interfering" in the economy. Luckily for the policy makers, by this time the neo-liberal program of guiding money from the wage class into financial assets was nearly complete - whether on the individual level of the 401k or on the aggregate level of pensions - and thus the neo-liberal machine could be played like a slot machine - there was plenty of money, the market in secondary mortgages as well as the housing market (two things which intersect, but which are not the same) could now provide a collective speedball, and everybody was happy. Otherwise, policymakers would have to face unpleasant alternatives to the neo-liberal version of capitalism. As we have seen in the O. era, they simply can't do that. The conceptual set seals off all solutions that might put in question the neo-liberal mindset. Hence, the mangle of inequality is both a cause and an effect of the neo-liberal economic paradigm.