William Tabb’s Primer for Occupy: ‘Restructuring Capitalism…’
The Restructuring of Capitalism in Our Time
Reviewed by Fred Block, a professor of sociology at the University of California, Davis, reviews William K. Tabb’s view of the 2008 financial crisis.
“The Restructuring of Capitalism in Our Time” by William K. Tabb, Columbia University Press, 2012, $35
This book wasn’t yet published when the Occupy Wall Street protests got under way, but The Restructuring of Capitalism in Our Time provides a solid foundation for that movement’s critique of the financiers who brought the global economy to the edge of collapse. William Tabb, professor emeritus of economics, political science, and sociology at the City University of New York, challenges those who claim that the 2008 meltdown was some kind of weird accident that could not have been anticipated. He sees the crisis as a logical consequence of policy shifts dating back to the early 1980s that prioritized the growth and profits of the nation’s financial industry.
Tabb’s book is intended to make the crisis understandable to readers without a strong background in economics. It isn’t an easy read like the latest Michael Lewis best seller, but those who persevere will be rewarded. Tabb draws heavily on the arguments of Hyman Minsky, a heterodox U.S. economist whose major works appeared in the 1970s and ’80s. Presciently, Minsky predicted that financial institutions would accumulate riskier and less stable portfolios with each economic expansion. He argued that strong government regulation — setting strict limits on both the quantity and quality of assets the banks acquired — was the only force that could offset this dynamic, and warned of disaster if the regulators were too timid.
Instead, American political leaders, starting with Ronald Reagan, chose to rebuild the U.S. economy around Wall Street’s financial engines. In the process, the financial-services industry acquired extraordinary political influence, which it retains today. It is thus unsurprising that the 2010 Dodd-Frank financial-reform legislation is, in Tabb’s informed opinion, not strong enough to protect us from another Wall Street-created tsunami.
Tabb notes that in earlier centuries, England and the Netherlands followed a trajectory alarmingly similar to our own: just as their periods of global dominance were waning, these nations shifted their economic emphasis from prioritizing production to making money through financial and commercial means. Tabb persuasively argues that, unless the 99 percent can muster the political will to impose fundamental changes on the financial system, the United States will likely suffer a similarly precipitous economic and political decline.
Reviewed by Fred Block, professor of sociology, University of California, Davis