Perhaps like me, you are watching the events in Egypt wondering if the popular forces in the streets and squares can develop the organizational force and political clarity needed to push out the existing regime and remake Egyptian society. Initially, it seemed that their number and determination would be enough. Now, it is less certain.
The elites within Egypt are showing great staying power and appear to have secured the support of elites in the U.S. and Europe. Increasingly, it appears that they are willing to sacrifice some of their own, in a civilized manner of course, and implement some reforms, to ensure the survival of the regime. Will that be enough to demobilize the people? How should the movement for change respond?
We in the United States faced our own moment of possibilities, although it passed so quickly and so quietly few remember. We had a huge economic crisis, a crisis brought on by an economic system that generated ever growing profits at ever greater social cost. People came out into the streets demanding change. There were calls for restructuring the financial system, the tax system, labor markets, trade policies, government spending priorities, foreign policy, . . . the list goes on.
But U.S. elites held strong and we never managed to develop the force and clarity necessary to move events in a progressive direction. The government quickly came to the rescue of the banks and other corporations, bailing them out at a cost of trillions of dollars of public money. As a consequence, the economy has stabilized (at least for the present), a few reforms have been made, and . . . well, the same economic structure remains in place.
The government tells us that thanks to its intervention things will soon return to “normal.” In short, there is no need for major change. Such a message conveniently overlooks the fact that this normal, marked by the period 2001-2007, was not very good for the great majority of people. Real income declined, economic insecurity grew, poverty increased, investment stagnated, debt exploded—the only positive was the rapid increase in profits captured by the top 1-5 percent. Should this really be our standard?
Given how little change has taken place, it should not surprise us that the economy is performing pretty much as it did before the crisis. The following three charts come from the Michael Roberts Blog. As the first chart shows, profits have recovered quite nicely since the crisis. Although the ratio of profits to GDP has not quite reached its pre-crisis peak, it is definitely on the way.
Unfortunately, much as in the pre-crisis period, this profit recovery has done little to support healthy economic growth. One indictator: The chart below shows that non-residential private investment remains at relatively depressed levels.
Another indicator: The chart below shows that labor conditions also remain depressed. The pink line shows the employment to population ratio. In many ways it is a better indicator of the employment creation potential of the economy than the unemployment rate. Despite the so-called economic recovery, this ratio has yet to show any meaningful improvement. The male participation rate, illustrated by the green line, continues to hit record lows.
The recent crisis was trigger by the collapse of the debt driven housing bubble. It was overcome largely because of massive government spending. Elites are now pressing for cutbacks in this spending. If they succeed, we will likely face a new downturn–and a new moment of possibilities.
While contemplating the options facing the Egyptian people, we would do well to begin thinking about how best to prepare ourselves for what lies ahead in this country.