Recession and Opportunism

The Dow Jones Industrial Average Since 1900

Recently, a reader asked me to summarize the current condition of the economy and to provide some thoughts on an anarchist approach to the situation. The exchange sparked by these questions allowed me to organize my thoughts on these matters clearly and thoroughly, and so I have decided to post them below. While this covers familiar territory for those of you that have been following the C.S.A. for a while, I think it helpfully consolidates scattered thoughts and posts and will help orient new comers. Readers are encouraged to post comments.

So here goes...

The U.S. economy is slowing down right now. It is not yet in a recession, which is defined as a decline in a country's GDP for two successive quarters. The economy is, in fact, still growing, it is just that its rate of growth is slowing. The prices of key consumer goods (food, heating oil, and gas most notable among them) has risen, inflation appears to be on the rise (meaning the real value of the dollar has weakened, which it has to historic levels against certain foreign currencies), and the job market is tepid. The stock market has risen a great in the last few years, but now it looks shaky and there are fears of a "correction." All of these factors together indicate that the U.S. economy has hit a rough patch after years of rapid growth; whether or not it will begin to decline is a subject of debate, but it certainly seems more likely today than it did a year ago.

Exactly how this happened is difficult to pinpoint, as it always is with capitalism's boom/bust cycle. The collapse of the mortgage market and the resulting "credit crunch" certainly had an effect on profits and confidence, but the bursting of the "housing bubble" does not account for everything. The mortgage collapse did lead to a tightening of the credit market, meaning that financial institutions have been less willing to loan money, and abundant credit is certainly a crucial component of growth. Not to be discounted is the dramatic rise in oil prices, which has raised costs in many fields and has thus cut into profits. Additionally, the weakening of the dollar (which was caused in part by the decades old and rapidly growing trade deficit the U.S. runs with the rest of the world) has made it more expensive to import goods, which significantly affects the U.S. economy since it is so reliant on foreign manufactured products.

The U.S. economy is the largest in the world and the extent to which it is connected to the economies of other countries is difficult to overstate. Most relevant to the current situation is the quantity of dollars held by foreign investors. Many countries and corporations keep their cash reserves in dollars since they are tied to the world's most powerful economy and are thus considered safe. The recent decline of the dollar has lead some to reconsider, since the value of their reserves have fallen dramatically.

Most notable among this group is China, which holds an enormous number of dollars in reserve. Were China to trade in their dollars for, say, Euros, the market would be flooded with dollars, thus sending their value plummeting. Such a "worst case scenario" is unlikely, but the public lack of confidence in the dollar by such powerful institutions is enough to strike fear into the hearts of many. Even a limited sell-off of the dollar would be a disaster for the U.S. economy. What protects the U.S. is the fact that a depression in U.S. would almost certainly lead to a global depression, which would harm all of those same institutions that traded in their dollars. Nonetheless, the specter of a major dollar sell-off is haunting the U.S. economy right now, and that has contributed to the current gloominess.

The economy "collapsing" is a term of art. A recession or even a depression does not mean the end of the economy as such, anymore than the death of a president means the end of presidency. The boom/bust cycle is integral to capitalism and that cycle will continue, regardless of whether or not there are people calling for an end to capitalism. The only question for anarchists is how to best take advantage of this inevitability.

The same approach applies to other activities. Take dumpster diving: of course dumpster divers "rely" on the system that produces waste, but their concern is how to best take advantage of an inevitable situation. Seeing the miserable reality we face, one in which eatable food is thrown away and faceless businessmen decide the fates of countless people, as a field of opportunity is, to my mind, the only strategically and psychology viable option for us.

Concretely, this means that an economic downturn should be scoured for opportunities to create anarchy, build networks of solidarity, and put forth an analysis of the forces that are mutilating peoples' lives. To put it succinctly: direct action, mutual aid, and propaganda. Economic downturns create new material needs as capitalism becomes temporarily incapable of providing for segments of the population that were previously integrated into the system.

So finding ways to meet those needs for ourselves and those around us outside of capitalism, with an eye towards expanding those relationships of mutual aid beyond the confines of temporary economic hardship, becomes the large-scale challenge for anarchists (I'd like to emphasize the word "ourselves" in that sentence because an economic downturn would not just affect other people in other places but would also create real hardships for many anarchists, even those at the margins of the capitalist economy.) This challenge can be combined with some forms of direct action and propaganda.

Take organized theft as an example. Theft can serve as a means of meeting material needs, it can target specific corporations for damage, and it can illustrate the absurdity of abundance in the face of unmet needs. That's just one example; direct action needn't meet an immediate material needs to be effective, nor do tactics for economic survivalism need to take the form of illegal direct action. The point is to respond to changing circumstances by applying our creativity and analysis to a situation created largely beyond our control.