If the books of our time tell us anything anymore, capitalism has jumped the shark. Not even its most erudite defenders and critics know what to say about its future—the sense of an ending saturates every sentence they write.
Lionel Shriver’s new novel, The Mandibles: A Family, 2029–2047, starts in Brooklyn, but not the borough you associate with hipsters, n + 1, and “Girls,” no, this place has been overtaken by catastrophic economic events beginning with the “Great Renunciation,” when the United States repudiated its national debt and the dollar became worthless. North America is now a fourth-world country, where scrounging for food, wiping your ass with recycled rags, and stealing each other’s shoes are everyday events. Money is plentiful—“It was literally a world of shit,” as Shriver puts it, in an unconscious parody of Martin Luther—but goods are not.
The extended Mandible family, gathered in Brooklyn by necessity, or rather by destitution, includes Lowell, a former Georgetown University economist who prattles on pointlessly about the unfolding events. He is earnestly but never hilariously clueless—he’s the stunt double for Paul Krugman, who already stands in for John Maynard Keynes. Lowell’s intellectual nemesis and eventual savior is Willing, the teenaged hero of the story, an autodidact American Adam who finally leads the family to Nevada, where the federal government’s thieving tax collectors cannot tread because the residents have built a wall and armed themselves.
Prospect Park is the homeless halfway point of the novel, the postmodern Hooverville where the huddled Mandibles decide to hike upstate to become farmers under the tutelage of Uncle Jarred. From upstate all Mandibles eventually go west, following the example of their 19th-century forbears from New York’s “burned-over district,” those entrepreneurial, evangelical types who heeded Horace Greeley’s advice avant la lettre: Deadwood, here we come. “I don’t know much about American history,” Willing says when trying to persuade his girlfriend to come along on the road trip to the final frontier, minus rocket ships, “But I do understand that a long time ago we ran out of new land, and the space program was too expensive. It’s never been the same here since there was nowhere to go. But it’s possible to get somewhere else by going backwards.” Frederick Jackson Turner couldn’t have said it any better. Nor Captain Kirk. Nor Evelyn Waugh.
Willing is the voice of reason in this story of redemption by way of escape from the clutches of civilization. Huck Finn was never so persuasive. But then he was a boyish man of fewer words, just headed for the territory, turning escape from a way of life into a way of life. Willing is much more purposeful, more literary. Still, like Huck, he’s always narrating, especially when he’s denying the worth of narration. In the attic of the house the Mandibles will soon relinquish to their neighbors at gunpoint, Willing’s aunt Nollie, the failed novelist—her unpublished manuscripts get burned, like firewood, to boil water—asks, “Will there be an ‘other side of this’?” He answers with oracular grace: “That’s up for grabs. But now isn’t a time for novels. Nothing made up is more interesting than what’s actually happening. We’re in a novel.” Indeed we are.
A novelist’s indirect style has many hints and shapes and recesses, of course. Characters aren’t authors, and vice versa. But Shriver completes this mysterious dialogue a page later with an authorial voice-over, a miniature treatise on money which convinces me that her truth, her strategy, and her anger are stranger than science fiction. An antic retelling of Atlas Shrugged would have to be, I suppose. Listen in, and you might think that, like Ayn Rand, Shriver gave up on fiction as such, where persuasion happens without argument. (Notice that these can’t be Willing’s thoughts because he’s been remanded to the third person.)
Wage earners like Willing’s mother thought [paper] money was real. Because the work was real, and the time was real, it seemed inconceivable that what the work and the time had converted into would be gossamer. They had been promised that they could store the work and the time, later to exchange it … But [paper] money was just a idea, and most people did not understand that natural forces also acted on the abstract: evaporation; flood, fire, and erosion; seepage, leakage, and decay. Most people liked the prospect of justice, and confused what was appealing with what was available.
Not in Nevada! On that new frontier, they’ve returned to the gold standard, and they don’t give a damn about the “prospect of justice.” When Wiling and Nollie cross over, the geezer who is the gatekeeper proudly announces just how primitive his renegade state is:
You bring in old people, you pay for old people [he refers to the aged Nollie]. No Medicare here. No Social Security. No Part D prescription drug plans. No Medicaid-subsidized nursing homes. No so-called safety net. Every citizen in this rough-and-tumble republic gotta walk the high wire with nada underneath but the cold hard ground. Trip up? Somebody who care about you catch you, or you fall on your ass.
So capitalism ends with a bang, not a whimper, but the arc of history doesn’t bend toward progress, toward a more perfect union—it runs backward, toward the pioneer individualism and the rural idiocy of the 18th and 19th centuries. Shriver herself might as well be an Augustan aesthete on the order of Alexander Pope or Joseph Addison, because she writes as if “money was just an idea” and as if justice is obviously unobtainable. Or rather, she writes as if Friedrich von Hayek and Milton Friedman got the last laugh on Keynes, as Willing gets the last laugh on Lowell. Hayek and Friedman famously argued that to tamper with anonymous market forces in the name of justice (read: equality)—as Keynes most certainly advocated—was to pour salt on the leveled site of freedom, whose permanent residence was found in those unknowable forces. A market society would remain free only so long as its proponents treated the market as an externality that was prior and impervious to social purpose.
Shriver has updated this savage argument, but not improved on it, except to demonstrate her own cruel devotion to the fates conjured by the market. Readers could, of course, say that she’s writing satire in 18th-century style, when Jonathan Swift turned to shit as a suitable subject of fiction and poetry. Except that there’s not a trace of irony or comedy in this bitter polemic. Shriver makes Rand sound like a down-home humorist from Kansas, an accomplishment I thought impossible until these times, when Paul Ryan plays the part of statesman. But then maybe the joke is on all three of them. When market societies became the norm in the 18th century, Fate—what the ancients knew as the will of the gods—gave way to Fortune, the inconstant, unfaithful female figure whose pseudonym was Credit.
What could be stranger than this ugly fiction? How about earnest nonfiction written by former high-ranking officials who predict the future, as if we’ve all been cast as characters in one big sci-fi novel that narrates the end of capitalism as we knew it?
They have no idea what the future holds, and so they fall back on 19th-century shibboleths. Can you blame them?
For example: Mervyn King, the former governor of the Bank of England—he was the equivalent of Alan Greenspan or Paul Volcker, who both presided over the Federal Reserve System—has written a large book called The End of Alchemy: Money, Banking, and the Future of the Global Economy. If I didn’t know any better, I’d say the man has lost his shit, because, like Shriver, he preaches regression to 19th-century norms, and advocates a pre-Keynesian program of monetary policy. Not only that. The obvious implication of his argument is that private control of bank deposits is at best irrational and at worst unjustifiable. But then the dust jacket is freighted with blurbs from Greenspan, Volcker, Niall Ferguson, Henry Kissinger, and Larry Summers, pro-capitalist heavyweights all.
What is happening here? Has the ruling class lost its faith in its ability to rule? Or its legitimacy as a ruling class? It seems so, either way. King argues that the “alchemy of banking” must end if the world is to avoid another financial crisis on the scale of the Great Recession. By alchemy he means the “transmutation of bank deposits—money—with a safe value into illiquid risky investments,” as if paper money wasn’t always a dubious repository of “safe value,” or as if banking as such wasn’t always predicated on this unpredictable line of liquidity, or as if money wasn’t always the perfect metaphor, the place where material circumstance and intellectual inscription meet. But the word alchemy is meant to conjure something more, the gold standard of Pax Britannica, the standard King believes bankers and economists have tried and failed to achieve by other means, like those medieval scientists who were always scheming to turn worthless metal into valuable coin.
Unlike Shriver, King doesn’t endorse a return to the gold standard because he knows it’s worse than stupid—it’s just silly. Like the rest of us, he’s pretty sure that the relation between the symbols we call money and the objects we call commodities can never be stabilized, not even by anchoring the quantity of paper money in circulation to the amount of specie in the vault. Truth works on a credit system, as William James put it, and crisis, whether economic or intellectual, comes when everybody wants to cash out. But King does invent a program as inane as a return to the gold standard of yore: a central banking device he calls the “pawnbroker for all seasons” (PFAS), by which he means an institution that allows you to borrow only if your collateral equals or exceeds the value of the loan you receive. Discounting—you know, like turning a tangible asset, a watch or a ring or a receivable, into cash—never had it so good.
To explain and justify this financial primitivism, this new urban idiocy, King, like Shriver, retreats to the 19th century. He cites William Leggett, the poet, journalist, and Jacksonian Democrat, who applauded the presidential veto that had recently foreclosed on the Second Bank of the United States, and who, like this former governor of the Bank of England, thought banking as such was a problem because its essence was credit—that is, the idea that every promise, every loan, was a bet on a future to be created by all parties to the bargain.
Inspiration for the principle of a PFAS can be drawn from the American journalist William Leggett, who wrote in an article in the New York Evening Post in December 1834:
Let the [current] law be repealed, let a law be substituted, requiring that any person entering into banking business shall be required to lodge with some officer designated in the law, real estate, or some other approved security, to the full amount of the notes which he might desire to issue … Banking, established on this foundation, would be liable to none of the evils arising from panic; for each holder of a note would, in point of fact, hold a title-deed of property to the full value of its amount.
You don’t have to work on Wall Street in the 21st century to know that this program makes banking as such unnecessary or impossible: if all we exchange is equivalents, there’s no such thing as a loan, or a panic, or a future that looks different than the present. Certainly Leggett himself knew this. Why then would a former central banker turned prestigious academic—with joint appointments at LSE and NYU—offer it as a solution to the current crisis, what we call the Great Recession? Why do arcane, even ridiculous 19th-century ideas now beckon to our contemporaries, our very own Masters of the Universe, with such siren force?
You got me—except that many of the 19th-century ideas that make sense of our times are derived from Marx. If I get to cite Marx on money, crisis, and corporations, why shouldn’t we let the former governor of the Bank of England deploy the ideas of William Leggett, William Jennings Bryan, and Jean-Baptiste Say as if they’re immediately relevant to our situation? Especially if such ideas are so contradictory, incendiary, and anticapitalist that the blurbers, among them the pathetic Niall Ferguson, didn’t even notice?
King cites Say’s Law so many times without attribution that he could be George Gilder—Reagan’s chatty salesman for supply-side economics—in disguise. Savings and thus investment have fallen too far to sustain growth because interest rates have been trending toward zero, King insists, in accordance with Say’s notion that interest rates must govern the distribution of income between investment and consumption, thus enforcing economic equilibrium by equating supply and demand. And yet he also invokes Ben Bernanke’s “global savings glut” to explain the current crisis. Which is it? You can’t have it both ways.
This Knight of the Garter, Mervyn King, can’t make up his mind, because, like Lionel Shriver—who wears sombreros rather than garters—he can’t come to terms with Keynes, the “old mole” burrowing beneath the bleak landscape mapped by both books. Neither can acknowledge the effects of A Treatise on Money, not to mention The General Theory of Employment, Interest, and Money, although the longest entries in the index of King’s book are devoted to Keynes.
So capitalism ends with a bang, not a whimper, but the arc of history doesn’t bend toward progress, toward a more perfect union—it runs backward, toward the pioneer individualism and the rural idiocy of the 18th and 19th centuries.
Sir John Maynard Keynes wasn’t the first to discredit Say’s Law. The empirical groundwork for that project was laid in the late 19th century by the American economist Charles A. Conant, whose books and essays were read with great profit by J. A. Hobson, the influential author of Imperialism (1902), and by Keynes himself. But discredit it he did. In the Treatise of 1930, for example, in essays for The Athenaeum and the New Republic, and in the General Theory of 1936, Keynes emphasized two new salient features of capitalism as it had developed, or devolved, in the 20th century. First, growth took place without private saving or investment. Second, as long as the banks offered an alternative to investing in something tangible—“holding an asset”—demand for goods could never equal the supply of goods: economic equilibrium as legislated by Say’s Law was a dream.
So it’s faith in the material force of fiction that binds The Mandibles and The End of Alchemy, making them both wonderful instances of a postmodern attitude that is immediately, and constantly, subverted by their desire for grounding in something like the material reality of a gold standard. Remember Willing, who says “We’re in a novel” after declaring that nothing could be more interesting than what’s actually happening? King says the same thing less compactly, but no less cogently: “Narratives play an important role in the coping strategies of investors. Under radical uncertainty, market prices are determined not by objective fundamentals but by narratives about fundamentals.”
Still, I think that King’s theoretical schizophrenia is more productive, shall we say, than Shriver’s, because he’s willing—uh oh—to go all the way back. All the way back to the 19th-century commonplace that because the supply of money is something that shapes every life in a market society, it ought to be subject to majority rule or popular control. He quotes William Jennings Bryan’s famous “Cross of Gold” speech from 1896 to make the point. Hello? William Jennings Bryan, the Populist candidate for president who almost beat William McKinley by running against the gold standard? King writes:
Most money today is created by private sector institutions—banks. This is the most serious fault line in the management of money in our societies today. In his “cross of gold” speech, William Jennings Bryan spoke passionately about the evils of the gold standard ... But almost forgotten was the most important sentence in the speech: “We believe that the right to coin money and issue money is a function of government. We believe it is a part of sovereignty and can no more with safety be delegated to private individuals than can the power to make penal statutes or levy laws for taxation … the issue of money is a function of the government and the banks should go out of the governing business.”
And then King asks, “Why have governments allowed money—a public good—to fall under private control?” His book is not a good answer, but his excellent question remains. That he asked it in the first place should tell us something significant about the state of discussion in the higher circles of high finance. These people are as confused and clueless as Lowell Mandible. They have no idea what the future holds, and so they fall back on 19th-century shibboleths. Can you blame them?
But King does write ruefully, almost gracefully, when it comes to the practical questions of the present, foremost among them the sovereign-debt crisis embodied by Greece. “As time goes by”—play it, Sam—“parallels between the inter-war period and the present become disturbingly more apparent.” He compares the current plight of Greece to that of Germany in the 1920s, and he quotes Keynes from The Economic Consequences of the Peace (1919) to make his affiliation plain. There will be debt forgiveness, or there will be blood.
Why then does Syriza make an appearance on this prosaic stage, but not Yanis Varoufakis, the man who, in his official capacity as the finance minister of the democratically elected Greek government, stood up to the Germans and the EU, saying all the while that austerity—stop spending, stop living, pay up right now—was not just a mistake, it was a recapitulation of the interwar monetary disasters that destroyed Europe? Mervyn King retired too early. He would have met his match in Yanis Varoufakis.
I have said that Keynes is the “old mole” who burrows beneath the belabored arguments of Shriver and King—like Hamlet’s dead father, he haunts their thinking. He comes to life in Varoufakis’s strange book, And the Weak Suffer What They Must?, as if Hamlet had been able to address the ghost directly, to say something like: “I know what is to be done, take my revenge now, but I just don’t know how to do it, because I live in a time when this debt to you has become irredeemable except by recourse to ancient savagery—the Orestian cycle I want to escape. Tell me, father, what would you do?”
I admit that Varoufakis borrows more from Thucydides than Shakespeare in making his case against the EU, but the Oedipal sources and connotations of his accounting are no less poignant. The miracle at the heart of this book is his accidental discovery, in Keynes’s library (by now a museum in King’s College, Cambridge), of a copy of The History of the Peloponnesian War in ancient Greek, where the young Maynard had marked the passage that informed his polemics of the 1920s, and that, these days, inspire Yanis’s arguments against austerity. The Athenians have conquered Melos, and, instead of offering a diplomatic compromise or concession, they reiterate the common sense of antiquity: “the strong actually do what they can, and the weak suffer what they must.”
Keynes knew that this posture, updated at Versailles for the purpose of punishing the Germans, would lead directly to disaster, but he didn’t advertise his alternative as morally superior. Neither does Varoufakis in arguing against austerity as now enforced by the Germans. For both men it was, and is, a practical question, a matter of consequences, not a moral problem.
The uncanny premise of Varoufakis’s book is that the actual beginnings and the possible endings of Western civilization—or rather, Europe—have narrowed down to Attica, this place now called Greece, where the EU has foundered on the shoals of economic crisis and the question of debt forgiveness. But the author is reversing every available narrative vector. He claims, rightly I think, that only recovery in Europe can salvage what is left of America’s leading role in the world economy, and that austerity for everyone under German auspices cancels any chance of recovery. In making this claim, he’s channeling not only the Keynes of 1944, at Bretton Woods, but also the planners at the US State Department who devised the Marshall Plan in 1948.
The palpable sense of an ending determines the form and the content of all three books. They are, accordingly, exhausting, even debilitating, because they reach backward, always farther backward, for answers to questions about the future. I threw one off my fifth-floor balcony into the poison ivy that covers the roof of the building behind me, hoping to never see it again. It was an empty gesture.
For we are, in fact, at the end of something. Mervyn King, the former central banker, feels this sense of an ending no less than his unlikely counterparts, Lionel Shriver, the serious novelist from the borderlands of bourgeois individuality, or Yanis Varoufakis, the unemployed finance minister from the outskirts of both Europe and intellectual respectability.
We all feel it. What happened? What’s next?