"10,000 Home Foreclosures Daily" prompt Saskia Sassen to call for a new economic model.

At this site, we've been mulling over the idea of economic models since last February and pondering the possibile need for a new one here in the USA. I just found what could be a seminal article on this topic, "Too big to save: the end of financial capitalism," by Saskia Sassen, a professor of sociology at Columbia University, New York, and at the London School of Economics. It appeared last April at Opendemocracy.com. It begins as follows:

The misnamed "Group of Twenty" (G20) meets in London on 2 April 2009 to discuss how to save the global financial system. It is too late. The evidence is in: we don't have the resources to save this system - even if we wanted to. It has become too big to save: the value of global financial assets is several times the size of global gross national product (GDP). The real challenge is not to save this system but to definancialise our economies, as a prelude to move beyond the current model of capitalism. Why should the value of financial assets stay at almost four times the overall GDP of the European Union, and even more of the United States. What do everyday citizens - or the planet - gain from such excess?

Sassen has a strong term to describe the predatory practices of the existing model of capitalism:

A defining feature of the period that begins in the 1980s is the use of extremely complex instruments to engage in new forms of primitive accumulation, with taxpayers' money the last frontier for extraction.

And here, says Sassen, is what primitive accumulation has been designed to do:

Finance has created some of the most complicated financial instruments in order to extract the meagre savings of modest households: by offering credit for goods they may not need and (even more seriously) promising the possibility of owning a house.

The outcomes of primitive accumulation, in Sassen's account, recall those of Aesop's story of the man who killed the goose that laid the golden eggs:

Thus in the United States - ground zero for these forms of primitive accumulation - an average of 10,000 homeowners have been losing their home to foreclosures every day. An estimated 10-to-12 million households in the US will not be able to pay their mortgages over the next four years; under current conditions they would lose their home. This is a brutal form of primitive accumulation: presented with the possibility (which is mostly a fantasy, a lie) of owning a house, many people of modest income will put whatever few savings or future earnings they have into a down-payment.

This, it would seem, is not how democracy should work. Let me interject a question. How would the Amerian people react today if President Obama were use language like this? Would citizens support him? Would he alienate the financial community and the U. S Chamber of Commerce? Getting back to Sassen, how true this observation of hers?

The difference of the current crisis [and prior ones] is precisely that financialised capitalism has reached the limits of its own logic. It has been extremely successful at extracting value from all economic sectors through their financialising. It has penetrated such a large part of each national economy (in the highly developed world especially) that the parts of the economy where it can go to extract non-financial capital for its own rescue have become too small to provide the amount of capital needed to rescue the financial system as a whole.

Score one scarcity, zero for abundance. But how does Sassen think this crisis can be solved?

The implication of the foregoing is that two major challenges need to be faced:
▪ the need to definancialise the major economies
▪ the need to move out of the current model of capitalism.

She calls for a transition, or bridge, to a new model:

If seen in this light, the financial "crisis" could serve as one of the bridges into a new type of social order. It could help all involved - citizens and activists, NGOs and researchers, local communities and networks, democratic governments - to refocus on the work that needs to be done to house all people, clean our water, green our buildings and cities, develop sustainable agriculture (including urban agriculture), and provide healthcare for all. This innovative order would employ all those interested in working. When all the work that needs to be done is listed, the notion of mass unemployment makes little sense.

This is not socialism. It's capitalism renewed and designed to meet the needs of all citizens, not just those dedicated to wealth generation.

Sassen was recently interviewed by Chuck Mertz on This Is Hell. Here's Chuck's hellish image. Don't be fooled. Despite the show's sometimes sophomoric format (e.g., a weekly hangover cure), this is the finest political talk show in America. Very left wing, but still by far the best: 30-minute interviews of splendid guests all the over the world for four hours every Saturday AM. Broadcast on WNUR, Northwestern University Radio, 89.3 on your radio dial and streaming live. Great program, great interview. And a great website with complete archives going back to 2001! Look for the Sassen interview in the Archives for July 4.