a blog by Elisabeth Young-Bruehl

In the psychoanalyst Erik Erikson’s scheme of eight human developmental stages, the seventh, Middle Adulthood (ages 35-65), is characterized by a spectrum of possibilities for its main activity, called Care. These range from Stagnation (at the negative end) to (at the positive end) Generativity. If their lives have gone along in a reasonably healthy way earlier, people in this stage, many of them in the midst of raising children and establishing themselves in work situations, can organize themselves for supporting the next generation and making meaningful contributions to society, which is how Erikson defines generativity. A generative person is the opposite of a person of stagnating self-centeredness or (to use the technical psychoanalytic term) narcissism. A generative person can enter into the last stage of life, in which the main virtue can be Wisdom, avoiding the negative end of that stage’s spectrum, Despair, and working out of its positive end, Ego Integrity, the ground for thoughtfulness.

Psychoanalysts of different theoretical orientations have different attitudes toward Erikson’s stages schema, but I don’t think any would question the idea that generativity is characteristic of mature adults in a healthy society, which is a society in which caring for the next generation and caring for the health of the society are paramount. This idea is as old as Aristotle: “The parent gives the child the greatest gifts,” he had said in his Nichomachean Ethics (7.11.2), “its existence, but also cherishment and education (trophes kai paideias); and because the child receives, it owes the parent honor and helpfulness.” When people do not prioritize their children and give care to the world they are preparing for their children, and preparing their children for, there is something profoundly amiss, something inhuman, going on, and children understandably hold back honoring. The Wisdom of elders (including grandparents) centrally concerns the question ‘what is the best way to educate and prepare children for living in the world, and prepare the world we have in common for them?’ (The answer to the first part of the question is: set them a good example.)

This brings me to the first element of old age capitalism, which could be called “ecological self-centeredness,” or perhaps “economics as a weapon.” It is obvious to all but the most stagnate and despairing people that the human species as a species, that is, universally, is caught in a dilemma of its own making. The dilemma first became apparent in 1945, at the opening of the post-war era, when American planes dropped atomic bombs on Hiroshima and Nagasaki. The species, suddenly, was understood to be capable of species self-destruction and environmental devastation (then called “nuclear winter”). But this demonstration of “the unthinkable, “ although volumes have been thought and written about it, has prompted none of the emergency change of course that a suicide attempt by an individual would have prompted. Since then, the human capacity for self-destruction has taken other forms, chiefly environmental, and the means of self-destruction and environmental destruction have evolved. Rachel Carson emphasized chemical pollution. Others resource depletion, still others ecological disbalancing. The emphasis now is on global warming and climate change generally. Many people understand that what we have wrought with our economic system as our instrument is this war against other humans and against the earth, the ecosystem, which is a situation that is the opposite of prioritizing the health and well-being of children, of future generations.

A second element of old age capitalism is related: capitalism’s growth dynamic began in the early 1970s to reach a wall –the limitation of environmental destruction and damage was the visible sign of this, represented chiefly by the OPEC crisis of the early 1970s—but that wall was not and still is not being recognized by capitalists, who behave like an old person unwilling to admit frailty and finitude. Even while the resources that feed the system run out or become unusable and unrenewable, capitalist continue frantically to foster growth by pressing down the wages of workers, technologizing, globalizing, and internationalizing. Antagonisms between national capitalisms and world markets abound. But nonetheless the internationalizing economy –made up of private and national economies of different sorts slipping the harnesses of national governmental controls—creates vast income disparities and gobbles resources at an unprecedented pace, so that the growth has become more and more “unsustainable.” This word, promoted by the UN-appointed World Commission on Environment and Development, not by any national government or any far-sighted economist, came into common usage after the Commission published its analysis of the globalizing economy in 1987 under the title Our Common Future.

The Chair of that World Commission, Gro Harlem Brundtland, a physician, the first female Prime Minister of Norway, and later the Director of the World Health Organization, identified the challenge that unsustainable development posed politically: “Perhaps the most urgent task today is to persuade nations of the need to return to multilateralism. The challenge of reconstruction after the Second World War was the real motivating power behind the establishment of our post-war international economic system. The challenge of finding sustainable development paths ought to provide the impetus—indeed the imperative—for a renewed search for multilateral solutions and a restructured international system of co-operation. These challenges cut across the divides of national sovereignty, of limited strategies of economic gain, and of separated disciplines of science.” (This was a call for expanded international political co-operation; not world government, but world treaty-making for the common future.)

A fourth element of American old age capitalism is the extent to which it favors a very narrow part of the population. As everyone knows, we have –as we did to a lesser extent on the eve of the Great Depression—a superwealthy older age class that benefits from old age capitalism but contributes very little to the common future: it is undertaxed; its consumption is of luxury goods not part of the economy in which the majority live; its private investments are often off-shore; and it sequesters its children and shows no concern for the most obvious signs of social inequality –the highest rate of child poverty the country has ever known and a deteriorating public school system. The economy is full of wealth transfers to this group and subsidies of it.

A fifth element of old age capitalism became obvious in the 1980s, too late for it to be surveyed in the Brundtland Commission’s remarkable report. This element is now made up of a number of heterogeneous phenomena, but I think that the name “finance capitalism” is the best one to collect them and describe their commonality. In finance capitalism, markets split and multiply uncontrollably, and, specifically, markets in markets emerge and metastasize. These meta-markets are markets largely created by banking systems, which themselves metastasize beyond being saving and lending systems. Banks of various sorts have become speculators; they have become packagers and marketers of loans (this is the phenomenon we now know as derivatives); they have become “bubble” creators in different sectors (technology, real estate); they support unregulated “shadow economy” market-makers like hedge funds; they have become currency marketers, making markets for currency speculators. In general, the economy grows further and further away from being goods-and-production driven toward being about debt manufacture. Financial risk is tremendously increased, and highly complex banking strategies for “spreading risk” (ultimately, this means spreading it to tax payers) are now the norm. We worry about bank failures, but we ought to worry that money has become so worthless that it could never help in the event of a government failure.

Thinking about “finance capitalism,” I remembered reading an article with an unforgettable title, “The Casino Society,” back in 1985. (The date was easy to remember because I discussed the article with my psychoanalyst in connection with having purchased a house and taken out a mortgage for the first time.) The casino metaphor is hackneyed now, but then it freshly caught the multitude of ways in which the American government and the American people were beginning to live on credit. Many were chronic gamblers. I looked up that article yesterday (it was in the Sept. 16, 1985 issue of Business Week), and was interested to find that the editors could see our present financial crisis on the horizon. Considering the stock market, they remarked: “The volume of transactions has boomed far beyond anything needed to support the economy. Borrowing—politely called leverage—is getting out of hand. And futures enable people to play the market without owning a share of stock. The result: the system is tilting from investment to speculation.” The banking system responded: “Barred by law from underwriting mutual funds or commercial paper, the big banks have been retaliating against Wall Street’s incursions by offering corporate clients liquidity in the form of commitments—to make loans, to buy or sell foreign currency, or to guarantee the obligations of a creditor. Banks can charge tidy fees for making these commitments and yet not set aside capital to back them up, as they would loans. At the end of 1984 these “off balance-sheet liabilities” at the 15 largest banks totaled $930 billion, or about 8 percent more than their assets.” (The law mentioned, Glass-Steagall of 1933, was, of course, repealed in 1999, so nothing now restrains banks from becoming speculative except the brand new finance reform provisions, which are very weak.) “Although the emergence of the casino society,” the editors concluded, “coincided with the economy’s prolonged slowdown in the mid-197Os, nobody can demonstrate which is the chicken and which the egg. But clearly, slow growth and today’s rampant speculative binge are locked in some kind of symbiotic embrace.” Real growth braked and finance capitalism accelerated.

Why does this shift in the nature and function of banking matter so much? Because it increases instability, but also because banks are, in mature capitalisms of various national sorts, the locus within the systems of regulation and judgment about the worthiness (at least credit-worthiness) of enterprises and about risk. Bankers were the closest thing mature capitalist systems have to judges, and, as they have departed that role and turned more into executives—quite dictatorial executives, speculating without check–the judging role has come to be played entirely by national political regulators (without good laws and without an autonomous Federal Reserve). But politicians are not usually well equipped to make banking judgments and thus not very well able to regulate the bankers or the banks. One of the main reasons why the political regulators are so inept at checking bankers, other than lack of training, is that the speculators have purchased them. Or, ever more frequently, the political regulators are former bankers who direct the government to better serve banking. Of course, economic theories about self-regulating markets brilliantly serve the purpose of authoritarian banking, as they have served the purpose of corporate free-wheeling in pre-old-age capitalism’s chief mode of corruption, which was “crony capitalism”

In old age capitalism, there is hardly any space outside of the economic realm. When everything is the economy, stupid, there is nothing but the economy. The most obvious sign of this “economics bubble” is the mockery that is our electoral process now. Despite noise about campaign finance reform, there is no real campaign finance reform, and it has become much easier –thanks to the Supreme Court—for corporations, including, saliently, banking corporations, to buy or to front “politicians,” local and national. Campaigns, financed at fantastical levels, and lobbied at extraordinary cost, create advertisements that are purely propaganda, spreading disinformation and lies and fear of every disaster except the one that has bred them: the disaster of the disappearance of politics. Faux-political groups like the Tea Party (which are by no means “populist”) trumpet the horrors of Big Government, when our problem is Big Economy. Representative government hardly exists. The situation we live in is not a situation of Ego Integrity; not a situation for thoughtfulness.

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