THE HITCHCOCK OF LATE CAPITALISM
Doesn’t every Adam Curtis documentary disprove the claim that postmodernism / late capitalism cannot be represented visually? It has often been assumed, since manufacturing industry is generally no longer very visible in the West, that the economy is now so ephemeral as to be impossible to portray artistically. It is easy (given the requisite talent) to make an ironworks or a steam train appear sublime; it’s not so easy to do the same with collaterised debt obligations or capital flows.
In fact, Curtis solves this problem via that old modernist technique: montage. Splicing together footage of deserted stock exchange floors or long, lingering shots of Monica Lewinsky and Bill Clinton’s courtship with images from nature, he evokes the permanently weird, alienating effects of living in the 21st century. He takes our everyday reality, skews it a little, juxtaposes its contradictions and absurdities and plays us back to us, so that we see it for what it is: not quite right.
One of the reasons we generally feel unsettled is that we often cannot see the connections between events that we know, deep down, must be linked. The way that capitalism shifts money from place to place, account to account, in order to make it work for the investor often is tortuously complicated. We know from Enron, and more recently from sub-prime mortgage lending, that books are often cooked to hide fraud or unsustainable risk. But despite the abundance of sophisticated financial tools, the way capitalism works is really very simple.
Whenever the capitalist system comes across something which acts as a block to maximising profit, it must get rid of it. In the early 1970s, capitalism came up against two blockages, one big and one less big. The big blockage was hyperinflation in the prices of primary products (especially oil from the Middle East); the smaller one was the strength of organised labour, which had negotiated a compromise with capital for better wages and conditions. As we know from British politics in the early 1970s, the public debate centred around unions: it was their belligerence that was impeding Britain’s productivity.
But in fact, the reasons for the slowdown in global profits had little or nothing to do with unions. They could be found in the Middle East, where oil exporters improved their hand in the Arab-Israeli conflict by restricting supply and raising prices, and Vietnam, where the US had massively over-stretched itself and had run up a huge trade deficit. Unable to balance its budget, the US allowed the value of the dollar to be unfixed from gold, and the value of all currencies thus became determined by the market. In this period (early to mid seventies), all the major currencies of the world experienced galloping inflation – i.e. they lost value fast. This inflation (which in several Western countries, including Britain, was accompanied by stagnating growth) was blamed on workers’ pay rises, whereas in fact it was due to the opening currency values up to the money markets.
After the Bretton Woods agreement collapsed, the rules of balanced budgets no longer applied. During the 80s and 90s, the US could run up deficits as recklessly as it liked, which indeed it did. Having spotted openings in South East Asia, capital flowed at breakneck speed to develop markets where the cost of production would be cheaper than in the West. By the mid to late 90s, it became clear that too much capital was being invested into the Thai economy, and that its emerging export and weak domestic consumer markets couldn’t respond quickly enough. Investors panicked and withdrew their money. In a classic cycle of debt deflation, prices collapsed, firms went bankrupt, profit margins shrunk, unemployment soared and confidence in the South East Asian economy evaporated. The collapse of the baht spread to other Asian economies, which in turn decreased demand in those economies for primary products from Japan, which had struggled with its own overinvestment crisis for a decade already.
This is where Curtis picks up the story. The IMF offered to bail out the Asian economies, on the condition that they turned themselves into neoliberal economies – i.e. reduce state spending (on infrastructure, welfare etc) and open themselves up entirely to the free market. In other words, they must adopt the very model which had swallowed them up and spat them out. This worked in Thailand, but in Indonesia the dictator-President General Suharto refused to accede to the IMF’s demands. In order to generate a return on investment, US capital depended on temperate economic conditions in Indonesia, and Treasury Secretary Robert Rubin decided there was no alternative but to force Suharto from power.
Curtis intersperses a self-justifying interview with Rubin – who sat on the Boards of Goldman Sachs and Citigroup immediately before and after he became responsible for the US’s financial and monetary policies – with reports of the collapse of Indonesian political and economic life. Rubin repeatedly defends his actions by claiming to act in the interests of the “global economy” – but by global economy, he means the holders of capital, those few, wealthy people who hoped to get wealthier by restructuring Third World economies into profit machines.
Suharto gave in and the IMF agreed to the bail-out loans. But almost instantly, the Indonesian currency collapsed, losing 80% of its value. The same happened in Thailand and South Korea. Why did this happen? Why did huge injections of capital fail to stabilise these tottering economies? Because, as Curtis explains, the money that was paid into Indonesian and Thai and South Korean banks was immediately used to pay back the loans of Western lenders. The loans were never intended to help the countries, only to compensate the American financiers who had over-invested their capital into countries without the stability to withstand such rapid injections. The result was that these countries never saw the IMF loans, their economies collapsed, and their taxpayers were still faced with massive debts to pay back.
This is what I mean by the simplicity of capitalism. The need for capital to remain profitable trumps everything else. In the mid-90s, US capital came across the biggest blockage of all – it was locked into economies which were too fragile to generate a return. Whatever the human cost, however immoral the notion of the richest people in the world being bailed out by the poorest, this capital had to be set free. Curtis clarifies this situation beautifully (and by putting aerial images of Citigroup office-blocks side by side with street protests in Jakarta, ironically too) by finding a way into the story.
From the way that Curtis tells the story of globalisation (or, in The power of nightmares, of neoconservatism and Islamic fundamentalism), it is clear that he doesn’t believe neoliberalism was caused by the novels of Ayn Rand. This is a MacGuffin (in Lacanian terms we might call it the objet petit a): an otherwise unimportant device which nevertheless brings together a cast of characters and allows the viewer to find a way into the story. It may be true that dot com capitalists loved the books of Ayn Rand, or that Alan Greenspan was a friend of hers, but Curtis is careful not to blow her role out of proportion. But without drawing the story back to her, how else would you begin? 1997 has its causes in 1971; but 1971 has its roots in 1944 (the Bretton Woods conference), which in turn responded to the crisis of 1929 and even the October Revolution in 1917. A strict documentary might have begun in any of these places, but Curtis’s films are thrillers as well as documentaries. They rely on strange parallels and moments of tension.
Roll on episode 2.