‘Buying Time: The Delayed Crisis of Democratic Capitalism’ reviewed by Jay Starr

Buying Time: The Delayed Crisis of Democratic Capitalism

Translated by Patrick Camiller, Verso, London and New York, 2014. 240pp., £14.99 pb
ISBN 9781781685488

Reviewed by Jay Starr

About the reviewer

Jay Starr is a Philadelphia lawyer and former corporate executive. He is former Chairman of the …


Wolfgang Streeck’s informative Buying Time: The Delayed Crisis of Democratic Capitalism is data-rich and persuasive. It’s focused mostly on the EU: how the pressures of sovereign debt force debtor nations to give priority to the marktvolk, Streeck’s term for international creditors. He argues that as a condition of credit and to assure repayment, the marktvolk demand austerity. The debtor nation is denied the freedom to pursue social benefits and reforms. It’s a powerful argument.

Buying Time and Thomas Piketty’s Capital both focus on concentrated wealth and consequent inequality driven by an international elite untethered from national responsibility. A different view is that corporate money and the inexorable corporate objectives of profit and accumulation drive the wealth of a few and the impoverishment of the many. Although the phenomenon is global, the effect is local. History, culture and social relations press harder than sovereign debt.

The power of the marktvolk, either direct as holders of sovereign debt or indirect via international institutions such as the IMF or World Bank, has no foothold in America. Of US$17,490 trillion of outstanding Treasury securities in 2014, 65.9% were held domestically: American citizens and private institutions (29.2%), the Social Security Trust Fund (15.4%), the Federal Reserve (13.8%), the Civil Service Retirement Fund (4.7%) and the Military Retirement Fund (2.8%). China holds 8.2%, Japan holds 7%. Other nations hold small percentages. It’s difficult to imagine that foreign creditors could combine into a marktvolk bloc to pressure domestic policy.

The diminished state of American democracy results instead from choices by political elites subverted by American corporations through corporate lobbying backed by enormous amounts of money. The stresses on American democracy are specific to the organization of power within the federal system, localized among the fifty States and are a legacy of America’s history and circumstances.

The real limit to government action is military and national security spending. They constitute most of discretionary spending and handcuff political action. There’s always an enemy somewhere and a national interest to justify projecting hard power resulting in the demand for ever-expanding military and national security budgets. America doesn’t need marktvolk to influence its priorities. We’ve already screwed them up.

Tocqueville’s early observations of pugnacious American individualism captured the bedrock of our national character. Neo-liberal thinking among corporate and political elites reifies it into an ideology of all-absorbing selfishness idealized in the half-baked novels of the half-mad Ayn Rand. In Randian neo-liberalism, the social order is tied to the will of elite actors optimally self-motivated, utilitarian and unconcerned with society or responsibilities to others. Culture and society are of necessity the realization of their desires. Everyone else is a social parasite. Pace Proudhon: redistribution is theft.

The 113th Congress’ last piece of work before the advent of the new 114th Congress was a spending bill that, as usual, contained unrelated amendments. One of them eliminated a key piece of the 2010 Dodd­Frank Act, legislation regulating bank activities after the crisis of 2007.

The Act required banks to spin off certain trading activities into separate units prohibited from using depositors’ money thus avoiding pressure for a government bail-out. Jamie Dimon, CEO of JPMorgan Chase, personally lobbied Congress to eliminate the requirement. He succeeded: the big banks can gamble again. Risk again has been socialized to depositors, technically general creditors of their banks, and ultimately to taxpayers.

Recently, JPMorgan reserved $1 billion in expectation of government penalties. In the past two years, JPMorgan has paid $14 billion in penalties arising from an impressive range of malfeasance. At no time, did it admit or deny wrongdoing. In the same period, JPMorgan realized $39.7 billion of net profit. The penalties are little more than license fees, a manageable cost of business in the headlong pursuit of profit.

Similarly, last year, Credit Suisse AG pleaded guilty to criminally abetting thousands of wealthy American taxpayers to hide income and file false tax returns. The bank paid a $2.6 billion fine, a pittance given the bank’s size. Under federal law, its guilty plea bars it from managing government insured pension assets and plans. Credit Suisse AG has applied for a waiver and likely will retain its lucrative pension management business despite the law.

For Credit Suisse AG and JPMorgan, the law is no impediment to carrying on business as usual. In these cases, the laws and institutions to control both crime and excess exist but are neither observed nor enforced except as transactional negotiations between the state and the corporation. This is neither capitalism nor democracy. It certainly is not marktvolk pressure. It is, rather, cooption of subservient political actors and civil servants in thrall to financial and corporate power.

As a nation, we are blind to the root causes of our stresses and uncertainties. American capitalism is idealized as a level playing field and self-regulating market economy rewarding drive and creativity. Most Americans believe in it abstractly: that any of us or our children can work hard and become millionaires, a palpably diminished reality notwithstanding. The promise of self-made wealth earned by tenacious effort is an enduring dream-state almost impossible for most Americans to wake from.

What’s missing is consciousness of the direct link between corporate imperatives and the straitened circumstances of most Americans, to the point that half of our children live in poverty. Few acknowledge that corporate bad behavior is itself an organizing principle of American-style business and finance whether domestic or global in scope.

We are a nation of reformers. We have believed from our earliest beginning that we are perfectible as a nation; that each of us individually must strive toward personal and national exceptionalism. There is no obvious face of revolution except on the extreme right, which promises American-style fascism: a personal relationship with Jesus Christ, a full gun rack and a vast reservoir of half-hidden viciousness and inchoate violence. Even if things are bad, getting worse and the tipping point is upon us or just around the corner, radical change, absent a cataclysmic event, appears remote.

But there is one road to change implicit in the very power that Streeck argues has been rendered impotent by marktvolk. It’s the power of the vote. Every election is a contest of competing interests seeking power over the institutional structure of social relations through action legitimated by the vote. It is a battle for the allocation of priorities, money and resources. Money counts and will often persuade, but once a voter steps into the voting booth, all bets are off.

Nothing frightens elites more than suffrage: witness the clumsy attempts at voter suppression in the last US election. From the Progressive Era to the New Deal and the Great Society, huge electoral majorities were the actualization of demand for change. Women’s suffrage, labor rights, the social safety net and trust-busting all flowed from political action legitimized by voters. Issues of race, gender, gerrymandered congressional districts and voter access have always been battles about the power to engineer election outcomes. The fights still rage.

Laws and the institutions charged with their interpretation, management and enforcement exist. The issue always is whether elected and civil service officialdom accept the responsibility and have the will to make them work for the general good or will tilt them to a powerful few. It is a battle fought over and over since the Republic’s birth. When the privileged few argue that the will of the many leads to bad policies, they really mean that privilege and unrestricted accumulation are at risk.

The electorate constitutes a critical mass of potential and necessary actors embedded in and able to transform cultural-historical relations through pressure on elected representatives. Another word for it is politics. In stark contrast to the vote as culturally and socially transformative action is the fiction of the corporation as a person having the legal rights of an individual citizen. That fiction is the source of corporate power.

The reach and limits of the largest global corporations are not on Streeck’s radar except as marktvolk. He therefore doesn’t address the pervasive American influence on corporate status, organization and operations across the globe. He barely touches on the foundation of corporate power: the concept of corporate personhood that places a corporation on the same Constitutional footing as an individual citizen.

The American judicial history of corporate privilege is long. But no Supreme Court case has had the seminal consequences of an otherwise boring tax case, Santa Clara County v. Southern Pacific Railroad, 118 U.S. 394 (1886). There, Chief Justice Waite opened the argument stating, “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does.”

Waite’s comment appears nowhere in the written opinion. It has no force of law or standing as precedent. However, Davis, the court reporter, inserted a slightly altered version of it as one of the headnotes summarizing the opinion. Although Waite wrote Davis that “we avoided the constitutional question in the decision”, he didn’t object to the headnote. Curiously, when Davis was in diplomatic service, he was tasked with translating the Gotha Program and was criticized by Marx because of his liberties with meaning.

Two years after Santa Clara, in Pembina Consolidated Silver Mining Co. v. Pennsylvania, 125 U.S. 181 (1888), the Supreme Court transformed the headnote into precedent, holding, “Under the designation of ‘person’ there is no doubt that a private corporation is included [in the Fourteenth Amendment].” Since then, corporate personhood has been continually affirmed and enlarged.

Corporations were originally chartered for large public projects, encouraging subscription by limiting loss solely to an investor’s investment. They are still organized under specific statutory license. Every global corporation, notwithstanding how extensive its operations and complex its organization, has a headquarters company formed and operating under the laws of a specific nation-state or its subdivisions. Every corporate statute is subject to change by lawmakers.

To the extent that financial corporations constitute part of the marktvolk, then marktvolk power may be more limitable by electoral power than state power is limited by the marktvolk, at least within functioning democracies.

In Streeck’s analysis, the political economy of the post-war West has evolved from the Keynesian “tax state” to the “debt state” and is marching quick-step to “privatized Keynesianism”. “Privatized Keynesianism” is Colin Crouch’s label adopted by Streeck to stand for the substitution by an international marktvolk for the nation-state in the global credit regime. Streeck’s analysis makes sense as it applies to Europe and to many debtor states.

But privatized Keynesianism also requires and cannot function without active state participation. Crucially, it also requires opaqueness and secrecy lest the voters catch on. Nothing causes more anxiety among elites than the anger of an electorate angrily awakening to an issue.

Consider the Trans Pacific Partnership. The negotiations and drafts have been carried on in secret among participating nation-state representatives and multi-national corporations. No labor or NGO representation has participated or been provided with information directly. Details only have emerged through unauthorized leaks.

The TPP is touted as a free trade treaty. In fact, it has two principal objectives unrelated to trade: the elimination of nation-state impediments to the unregulated flow of money and labor and, second, a profound limit to the rights of signatory nations or their sub-divisions to act contrary to unrestricted corporate accumulation.

This last point parallels Streeck’s argument that marktvolk power limits democratic action. Here, though, global corporations, not marktvolk, would have the power. The laws of nations or their subdivisions such as workplace safety would be subject to challenge and decided by a panel of corporate lawyers. The panel would be empowered to award to the corporate plaintiff damages calculated on projected profits presumably lost through local regulation. Corporations would realize profits on operations never taken. Normal business risk would be irrelevant. It is theft by treaty.

As the TPP’s grim potentialities sink in, opposition in America is growing. The pressure of constituent voices has resulted in unusual alliances, however tenuous, between Tea Partiers and Progressives in Congress to oppose it. Ratification is by no means certain, particularly if elected lawmakers fear for their jobs as the election campaigns of 2016 take shape. Few things concentrate Congressional minds more than looming elections.

Thus for all the hand-wringing over the futility of organizing effective mass action, there is the voting booth. Nationalism has its sanguinary history, but it retains its force in society for compelling reasons. Local interests can prevail over globalizing pressures because they privilege the contest for power between political elites and the majority directly over external influences. In the long run, the vote is the truest expression of a distinct national voice. It’s revolution without bullets and will not be denied at the risk of social destabilization.

Marktvolk pressure also is less significant than corporate elites demanding profits and accumulation through local exploitation. These elites need their governments to ratify unrestricted extraction, exploitation of labor and to suppress protest and resistance. Government counts when interests must be served.

In a functioning democracy, people power is implicit in and arises from social relations shaped by history and material conditions. It is local. It may show itself in protests and resistance, but in any nation with a future, it shows itself most persuasively, most solidly, most enduringly in the primary institution of democracy: the vote. When we insist that our elected representatives attend to the will of the people, the marktvolk may hover, but they are no more than disembodied powerless wraiths. 

25 January 2015


  1. Starr’s colorful analysis of Streeck’s tome reads more like an editorial commentary than a book review. I surely have been educated about the complex factors that govern economy behind the scenes. As a public health professional, I can now see clear parallels between the scenario described and the factors that encourage our nation to remain obese and sedentary smokers, which, too, drive the same accumulation of wealth by the few.

  2. This is really thoughtful analysis and commentary — thank you. It does seem important to remember that political will is still relevant, and there are still ways to hold wealth and power to account (other than with more wealth and power).

  3. “Nothing frightens elites more than suffrage”: hardly. Maybe this hearkens back to conventional wisdom re: the Tax State, in which one may (supposedly) observe a link between taxation and political enfranchisement, but the common requirement of party politics (in the United States particularly) is market ideology.

    True, SYRIZA’s ‘democratic’ victory is of special moment, and certainly the marktvolk would seem to be frightened by this exercise in popular sovereignty … but this review centers almost entirely on the US w/ its insipid two-party system; odd because Streeck’s argument and empirical evidence alike concern the EU. Unscrupulous practices of JPMorgan are under discussion; but JPMorgan fares just fine under Republicans and Democrats alike. “Money counts and will often persuade, but once a voter steps into the voting booth, all bets are off.” I am baffled by this remark; how is one to meaningfully vote against corporate, let alone market, influence in America today? (This distinction is not persuasive to me.)

    Moreover, I am baffled by the suggestion that the collusion of state and corporation in so many “transactional negotiations” is somehow “neither capitalism nor democracy.” If anything, isn’t it typical of a national phase of capitalism whereunder the state intervenes politically on behalf of capital, in distinction from much-bandied about “neo-liberal” paradigm under which capital is politically secured by the non-intervention of the state? If the reviewer’s contention is that America is not under sway of the marktvolk, it could only be because it is more typical of an oligopoly, at least in the above description, as it is an order of heavy-handed corporate power rather than diffused market influence. Here the author’s insistence in the efficacy of the vote suggests that this is indeed a kind of democracy; we elect governments to negotiate transactions with corporate entities on our behalf, and may only hope that they do a better than unscrupulous job of it.

    This suggestion is patently not Marxist, it is liberal; which is to say nothing of its cogency: for although the author grants that the new-fangled ‘debt state’ “requires and cannot function without active state participation,” but then imagines this necessary state participation to be a means by which a people may meaningfully intervene in market negotiations, etc., insofar as they may find themselves represented in a given state.

    On these grounds we could think the conjuncture of the tax state and the market state, no? Further, it strikes me that there is a characteristic miscognition of the contemporary left operating here: where ‘capitalism’ is conflated with one timely iteration, such as the neo-liberal variant, one may be tempted by a nostalgia for friendlier, mythical capitalisms, such as a beneficent Keynesianism, where the logic of capitalism ought to be opposed in its every manifestation.

  4. I think Cam Scott mistakes argument for fatalism. My point about the vote, especially the fear of the “mob” by elites runs old and deep in America. James Madison, a primary author of the Constitution, voices it in Federalist #10. The debate and, frankly, acceptance by Northern interests, either willing or insensible of the “three-fifths clause” in Article 1 of the Constitution, was accompanied by gerrymandering (in UK speak, creating pocket boroughs by Southern agrarian elites to assure pro-slavery Congressional majorities by overloading the census of the slave population. The ante-bellum Missouri Compromise and Kansas-Nebraska Act resulted from Southern elites’ efforts to expand slavery to new States and therefore to assure a permanent electoral majority, not least based on the “three-fifths clause”. In the last quarter of the 19th century, the US witnessed the worst labor violence in the industrialized world and leading up to 1914, there was tangible fear among concentrated wealth that it was at risk from labor and left radicalism organizing masses of voters: Eugene Debs may have been most prominent, but Socialist mayors and a smattering of Socialist and left Progressive Congressmen were considered by many to be scary harbingers of the future. Teddy Roosevelt was considered a class traitor for busting the Trusts. Franklin Roosevelt’s four terms may have saved capitalism from itself, but his electoral majorities pushed his administration’s social and democratic agenda, best encapsulated in Roosevelt’s “Four Freedoms”. I also argued that the US doesn’t fit the idea of a “debt state” at least as Streeck conceives it. Rather, globalized American corporations are essentially localized in origin and have captured the political space Streeck reserved for the marktvolk. It is the inherent contradiction of global corporate interests, on one hand, and local and national legislative authority augmented by the judiciary necessary to retain corporate power, on the other hand, that creates the inchoate power of the vote in a functioning democracy. Re-reading my piece I detect no sentimental nostalgia for liberalism. Real miscognition is to hold fast to the old categories of left and right Marxism, to revolution versus reform, even if revolution itself encompasses a wide spectrum of action. The tedious arguments over transition from capitalism to socialism resulted in repeated political failure and irreconcilable schism with bloody consequences in the 20th century. Is Bernstein less of a Marxist than Trotsky? If we consider Social Democracy the first important phase of a longer process, then the vote holds its centrality as an engine of change. A lot of good Marxists of all stripes have fought long and hard and risked life and limb to get there.

  5. I’m puzzled by this writer’s lack of interest in Streeck’s argument. To align him with Piketty is simply not helpful and suggest a cursory reading. Streeck is not talking about wealth disparities and returns to investment vs. growth, but about a progressive hobbling of welfare democratic state capacity by capitalist elites. There may be much sense in this writer’s argument about the power of capital in other respects, but it’s not a reliable book review.

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