Imperialism, Goldman Sachs Style
NEW YORK — Sooner or later, the Financial Crisis Inquiry Commission, created by Congress to investigate the causes of the recent and ongoing financial crisis, will no doubt examine the technical aspect of the financial collapse — low interest rates, credit default swaps, derivatives, cheap mortgages that ballooned and other factors that almost wrecked the global economy.
Probably among the many things the commission members will not do, however, is read “The Origins of Totalitarianism,” the 1951 book by the German-born political theorist Hannah Arendt, which at first glance would seem to be utterly detached from a crisis that took place more than three decades after the author’s death.
But the commission members, probably all products of a liberal education, would actually do well to read Arendt. Or, at least, that was the implicit argument of a group of political scientists, philosophers and even a couple of economists who gathered last weekend at Bard College, a bucolic spot about 90 miles, or 145 kilometers, from New York, to ask what Arendt’s writings could teach about the current crisis.
Quite a lot was the answer, though Arendt shared the stage with others from different places and times, most notably Thomas Hobbes, the 17th-century political thinker with whom Arendt closely identified.
The title of one panel — “Can Arendt’s Discussion of Imperialism Help Us to Understand the Current Financial Crisis?” — was typical of the conference, with its somewhat surprising assumption that Arendt, whose main concern was understanding the twin evils of Nazism and Communism, would have much relevance at all to a world dominated by what might be called Goldman Sachsism.
But what that panel discovered in Arendt’s writings on imperialism, which were part of her larger “Origins of Totalitarianism” work, actually echoes eerily and powerfully recent financial events.
The crucial point is that for Arendt, the era of imperialism, which she believed began in the 1870s and lasted until the outbreak of World War I in 1914, marked the moment when the economic principle of unlimited growth and expansion came to dominate politics. It was the point at which private people pursuing great wealth, in essence, seized political power and made the protection of their interests the policies of the state — and it’s not all that hard to see something like that happening today.
“After the disastrous financial swindles of the 1860s and ’70s, which were on a scale Bernie Madoff might admire, the need to protect their far-flung capital investments, and the huge profits derived from interest on them, inspired capitalists for the first time to ensure their enterprises, that is, to back them up with political power,” Jerry Kohn, the head of the Hannah Arendt Center at the New School for Social Research in New York, said in a paper he read at the conference.
Arendt was a German-Jewish scholar who escaped Nazism and spent much of her career teaching at American universities. She is probably best known to the general public for her phrase “the banality of evil,” which she coined while covering the trial of Adolf Eichmann in Jerusalem — her idea being that Eichmann’s evil illustrated not some sort of radical passion but rather a dull, bureaucratic obedience to authority.
But her career was spent in deep deliberation over the collapse of European civilization at the hands of both Nazism and Communism, and one of the key elements in that collapse was the replacement of the commitment to public virtue with the rampant pursuit of private interests. This led her, in her work on imperialism, to some statements that seem, in light of the financial collapse, to be remarkably prescient.
“For the first time,” she wrote, speaking of imperialism, “investment of power did not pave the way for investment of money, but export of power followed meekly in the train of exported money.”
Another conference participant, Tracy Strong, professor of political science at the University of California, San Diego, noted the attention Arendt paid to Cecil Rhodes, the British ruler of colonial southern Africa, who said he would annex the planet if he could. What the Bard conference did was draw the line from Rhodes to Goldman Sachs, Morgan Stanley, A.I.G. and others who were too big and central to the American national purpose to be allowed to fail.
As Roger Berkowitz, head of the Hannah Arendt Center for Ethical and Political Thinking at Bard, put it of the imperialist era, “The bourgeoisie in essence outsourced government to representatives who basically ordered the world in such a way that the bourgeoisie could pursue its interests.”
“Now,” he added, “you have much the same thing.”
Like their counterparts of the 1870s who ventured into faraway and hostile territories in search of fabulous wealth, and then had to turn to their governments for protection, the banks and investment houses of today want to maximize profits in risky ways and to be protected against risk at the same time.
What is remarkable in this as a historical process is the ease with which governments were persuaded to serve the private interests of the imperialists. Or, as Arendt put it, cited in this instance by Mr. Kohn: “The nations concerned were hardly aware that the recklessness that had prevailed in private life, and against which the public body always had to defend itself and its individual citizens, was about to be elevated to the one publicly honored political principle” — namely, the principle of national glory through imperial expansion.
Lest the comparison of past and present seem a bit too neat and tidy, one needs to remember that Arendt, as several conferees put it, was skeptical of historical analogies, writing in the preface of “Origins” that “no matter how much we may be capable of learning from the past, it will not enable us to know the future.”
Well, truer words were never spoken — and yet that comment about the recklessness of private life becoming, in practice, a publicly honored political principle suggests that she understood one aspect of the future, our present, very well.