ORIGINAL FRENCH ARTICLE: « Oui, le capitalisme américain est en crise »
by Jacques Coubard
Translated Wednesday 16 January 2008, by
The analysis of Paul Jorion, an academic in Los Angeles.
Paul Jurion is the author of a premonitory book published last year under the title Vers la crise du capitalisme américain ? (Towards the American Capitalism Crisis?) . He foresaw the US housing crisis and analysed the mechanism of sub-prime mortgages, sold to people who were not able to pay them back. He has lived in Los Angeles, where he taught, for the last ten years. An anthropologist and economist, Paul Jorion answers to L’Humanité during his visit in Paris.
HUMA: You added a question mark to the title for your book. Would you still use it today?
JORION: No, of course not. It is the financial sector as a whole that is undergoing crisis, and this will spread from the housing sector to the other sectors, since it is the backbone of the economy. Warnings were not listened to. Of course, there was the example of Enron, but that company was no more dishonest than any other. Everyone uses the same methods and I even took a stand against the way it was treated as scapegoat. Enron was not the only culprit.
In March of last year, I wrote that the economic calculations were rigged and that the truth was not obvious yet. Nine months ago, the crisis was already present. If we had deducted the money produced by the bubble, the economy was already failing. It was because people were spending the capital they had in their houses for daily needs that the recession was masked.
Today we have reached the stage of metastasis. It is true that recessions follow one another but this one reminds us of what we saw in 1929. Most of the finance markets are drying up one after the other. Complex financial mechanisms were allowed to proliferate, as a way to increase profits. Trust, or more precisely solvency, is disappearing.
HUMA: You have recently said during a conference at the École normale supérieure that this crisis is deepened by the increased disparities in income these past 20 years. Is the war budget another cause?
JORION: No, I think it is the disparities that are the most important. Since the seventies, the lowest incomes have dropped while incomes were rising. To make up for military expenses, they just need to print money; the USA knows very well how to overcome those situations. It is extremely costly, but on the scale of Wall Street, it can be absorbed.
The present problem for the army is recruitment. Iraq is no longer in the headlines. Today, people are more and more concerned by the economy and, when they think about economy, they think first about health insurance. It is their real concern. There are 47 million people without health coverage and this figure increases every day. Insurance cost is constantly rising. I devote half of my rent towards it. Medicaid and Medicare are the only things left for people living in poverty.
HUMA: Why are the economic crisis and the coming recession absent from the debates between presidential candidates?
JORION: What people want to hear is mainly what the candidates suggest for health issues. Hillary Clinton presented a social security plan when her husband arrived at the White House, but she completely failed. Financial power won out, with the opposition of the pharmaceutical industry and insurance companies. Insurance companies are among the main donors of Clinton’s and of her competitor’s electoral campaigns.
We are experiencing the consequences of the planned disappearance of welfare by deregulation. By strengthening the law of the strongest, the United-States is heading toward a disaster never seen before, which I can only compare to the one of 1929. There will be no other solution than to restore the welfare state, no matter who the elected candidate is. They must get out of the crises the way Roosevelt did.
What will the French president, who is inspired by American policies, say when he realises this path is abandoned because of its failure? Those who think the invisible hand of the market will bring solutions forget it works only when everything works well. The “American solutions” stopped working in the United-States eight years ago. Reductions in taxes led to a disaster. It is high time to draw lessons from that.
 “Recherches” Collection, La Découverte (The Discovery). Paul Jorion is writing a sequel to this first book which will be published in the spring.