On the Abstraction of Contemporary Crisis
Or, Why Today Feels Different From the 1930s
One of the oddities of the ongoing economic crisis is its apparent separation from everyday life. Consumers still consume, luxury items are still produced. Starbucks is still filled with coffee drinkers, and Apple still sells its overpriced goods. Scanning the media, one finds its coverage devoid of lengthy soup lines or surges in tent cities. While most have had to cut back on their indebtedness, there hasn’t been a collapse on the scale of the Great Depression. This is in spite of some measures suggesting the current crisis is as deep in some ways.
Most obviously, the phenomenological severity of the crisis has been mitigated by the rise of the welfare state. Despite cutbacks over the past four decades, the current welfare state in North America and Europe still retains major advantages over the minimal states of the 1920s. Particularly in the more coordinated market economies of Europe, automatic stabilizers have dampened the worst effects of the crisis, allowing people to continue on with their lives in a relatively undisrupted way.
Yet even taking into account these moderating factors, there’s still a curious lack of any bodily experience of the crisis. The closest we approach is the now near-daily refrains about major market movements, with the stock markets providing a vicarious terror to replace any material manifestation. Headlines such as “Dow drops 500 points” still affectively feel like a freefall even if we know Wall Street is distinct from Main Street. But the stories about sovereign debt crises, liquidity evaporating in eurozone markets, bank reserve ratios, and stress tests all highlight the abstraction of contemporary capitalism. Few professionals can make intelligible the interconnections between these factors (witness debates over what to do with the eurozone crisis), and to many people they appear as symbols devoid of any meaning.
It is this financialization and subsequent abstraction of contemporary capitalism which is mirrored in the abstraction of contemporary crisis. The current economic catastrophe has its primary effects not on the immediacy of everyday phenomenology, but instead on the abstract structures of possibility that invisibly shape everyday life. In particular, two means of abstraction separate out the effects of the crisis from the everyday experience of them: first, the effects are often deferred into the future; second, the effects primarily shape what is possible rather than what is actual. The economic crisis is inflicting its havoc largely on future possibilities.
For instance, it is not that food suddenly disappears from shelves as agricultural production declines. Rather, the unseen inflation of commodities gradually raises prices and establishes barriers to more and more people. Likewise, pensions evaporate either in market fluctuations, or straightforward shifting of responsibility away from the public purse. It’s not that higher education is suddenly stricken from existence, but instead that the financial barriers to entry are raised beyond what many can afford. Moreover, the very debt that results from going to university isn’t immediately present, but instead deferred until a future post-graduation life. Life – for most intents and purposes – can continue on as it did pre-crisis, but now with added ties of debt. A similar operation occurs at the public level – the costs of bailing out the financial system, combined with the influence of automatic stabilizers that decrease tax revenues and increase unemployment and benefit costs, all contributed not to immediate reductions of government services (see the stimulus packages), but instead to thousands of smaller cuts being made to the public body over time.
Part of the uniqueness of the present crisis is therefore its abstract mode of destruction. The scope of what is possible in the future (and increasingly in the present) is narrowing in a way that isn’t immediately apparent in our daily actions. So while the welfare state plays an important role in moderating the phenomenological experience of crisis, the abstract structures of contemporary existence are shifting in just as significant ways. The objective forces of economic crisis require an outlet for their effects, and while government programs have managed to disperse some of their force, the remnants are winding their way through our global economy. In the words of James Galbraith, the current crisis may be significant not for its overt destruction but instead for “the pall it casts over life.”
 There are three important caveats to this claim. First, there is the obvious exception of many developing countries. The food crisis afflicting developing countries has been sharp and painful as a result of spiralling food prices led on by financial speculators. The continuing famine in Somalia is the most disastorous, but protests in Tunisia, Egypt, Uganda, India and many other places are also expressions of this same dynamic.
The second caveat is that there are some fragmented reports of tent cities and lengthening soup kitchen lines in America. Absent the more substantial welfare state of most other developed countries, it’s not surprising to see the effects of the economic crisis exert a more bodily shape here.
The third qualification is that this discussion is premised upon the current stage of the crisis, and things could get significantly worse when (not if) Greece defaults and the debt fallout comes back to haunt Germany (taking out Italy, Spain and possibly France in its path). A recent UBS report argued that Greece’s GDP would likely collapse by 50% in its first year of a post-Euro existence. Such drastic collapses would inevitably be too much to handle for any welfare state or any deferral and dispersion of the fallout. While the 2008 crisis had the fiscal room for major stimulus packages to smooth out the experience of economic collapse, any future crisis risks facing up to a situation where the political will for Keynesian solutions is rapidly diminishing, and where the economic means to implement such large packages are potentially limited.