Patty Chayefsky’s film Network, an acid-laced spoof of capitalist media, reaches its climax when Chairman Arthur Jensen, leader of the fictional mega-corporation CAA, thunders his disapproval to the crazed but wildly popular anchorman, Howard Beale. Encouraging his viewers to protest CAA’s unpatriotic merger deal with Saudi Arabian capitalists, Jensen accuses Beal of having “meddled with the primal forces of nature.” Jensen proceeds to instruct his economically naïve employee that Beale is an old man who “thinks in terms of nations and peoples,” when in fact such things no longer exist. “There is only one holistic system of systems” proclaims Jensen, “the international system of currency which determines the totality of life on this planet.”
Of course, that currency is but the fuel that drives the real system that governs our planet, capitalism. Since the end of W.W.II the sanctity of that “currency” – it’s “security blanket” – has been the backing of US Treasury notes by US economic and military power. How then dare Joe Biden and Kevin McCarthy meddle with these “primal forces” by haggling over a debt extension bill? The security of US debt is no mere trifle. It is serious business. Capitalism, after all, is a system that thrives on fostering economic insecurity. It promotes an ever-present anxiety that most of us must live with every day – fear of having nothing to live on but income from jobs that can suddenly disappear. This is a precarity daily visited upon most of the planet’s population. But it is important to remember that capital visits insecurity upon itself too. Its repeated financial crises, rooted in the illusory values in which it trades, as we have shown in a previous essay, erupt suddenly, without warning. The awful abyss of economic catastrophe is omnipresent in capital’s ever-fluctuating values. In this nerve-rattling context, the apparent solidity of the US Treasury note – that is, the global impression of US power – is a factor of grievous importance. Yet now each day’s headlines describe harrowing negotiations between President Joe Biden and House Speaker Kevin McCarthy over legislation to extend a congressionally imposed debt-ceiling. If they fail to agree, the US will renege on required interest payments. The US will be in default and capital’s security blanket shredded.
The debt crisis is remarkable not only for being a self-inflicted wound. Debt extensions have been routine congressional moves for decades. They have only become hostage-taking situations in the last two decades of heightened partisan polarization. We’ll return to that point in a moment. But another aspect of the debt extension crisis deserves notice too – the totality and immediacy of its impact. For comparison, think of the nation’s recent electoral crises. Neither in the month-long uncertainty of the 2000 presidential election nor amidst the insanity of Trump’s refusal to yield in 2020 was Americans’ daily life affected in any material way. Political crisis did not translate into economic crisis. The debt extension crisis is very different. It threatens to unsettle capitalist expectations in ways that will almost certainly launch interest rates upward, undermine financial markets, de-stabilize investment, and fuel a major recession; or, given the current shakiness of the banking system, something worse, a repeat of the 2007-2008 financial collapse. No American, not even the billionaires, can be safely secured against the unpredictable knock-on effects of a US credit failure. Why then would politicians like Biden and McCarthy deliberately steer the Titanic into the iceberg?
The conventional answer is that the debt-crisis is simply a politically manufactured show. It’s an exercise in conspicuous gamesmanship designed to demonstrate to their respective “bases” how tough the party leaders can be on their bitter rivals. But it’s all really a charade. Each side knows a deal will be made in the nick of time. Pumping fear of failure in the media allows each side to justify the inevitable concessions that will assuredly anger segments of each party’s base.
But there is a less facile and more disturbing answer. And that is the reality of growing irrationality and failure in the US political system brought on by the paralyzing effects of partisan polarization. Arthur Jensen aside, there are still “nations,” and one matters a lot: the US. Polarization is a complex phenomenon. It reflects a host of US social and ideological cleavages. But as in 2011, when a similar debt-extension fight led to a stock market plunge estimated by the New York Times to cost $2.4 trillion in household wealth, failure to raise the debt limit before June 1 will damage every American family and millions more globally. In a real sense, the sustained abdication of governance by America’s vaunted two-party system is threatening the stability of capitalism in massively more immediate and dangerous ways than any Left movement ever has.
As the brilliant theorist Franz Neumann once observed, the capitalist state has always been as strong as it needed to be to assure capital’s viability. But the erratic behavior of mainstream politicians over the last two decades has significantly weakened the national government. As Business Week put it, “The US is undermining its status as an economic superpower” — and it is doing so willfully as its party leaders play “chicken” with capital’s US provided security blanket. No wonder that global central banks now hold less than 60% of their currency reserves in US dollars. Political irrationality in the hegemon — political leaders meddling with “the primal forces of nature” — is not supposed to be a significant variable in the calculations of capital. But today it is. Because this is a political crisis that will not leave society to itself. It will quickly translate itself into one whale of a planetary economic crisis.