A financial house of cards

By Mark LeVine

This massively unbalanced mechanism was not only rooted in the financial sector but the manufacturing and service industries as well. 

Richard Wolff, a University of Massachusetts economist, says the crisis "grows out of the relation of wages to profits across the economy. It has profound social roots in America's households and families and political roots in government policies".

Since the 1820s, the US economy has experienced steady gains in productivity.

This led not only to steadily increasing profits for corporations but also to rising working class wages and, with it, consumption levels. 

As wages and consumption rose, the "Protestant ethic" that had helped to generate capitalism's unprecedented economic power was discarded in favour of an ethic of commodity consumption.

People's identities were now increasingly defined by what they consumed rather than their religious beliefs or social actions. 

The size of one's home, car and flat-screen TV, or the price of one's clothes, mobile phones and holidays became of paramount importance.

This economic ideology - based on the possibility, and desirability, of limitless growth - created an ethos of rampant materialism and individualism....

...Obama's biggest challenge, then, will be to figure out how to create millions of jobs while steering the US economy away from the economically and environmentally unsustainable model of growth that helped generate the present crisis. 

To do this will require more than spending hundreds of billions of dollars on rebuilding crumbling infrastructure and encouraging "green" technologies.

It will require designing an architecture for a 21st century economy that much more equitably distributes limited resources among an expanding population than has the debt/consumption system that is now collapsing globally.

It is hard to imagine how such a system could be devised, and put in place with public approval in time to stop the projected loss of tens of millions of jobs globally that now seems the likely, if not inevitable, outcome of the current recession