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Crushing Economics, Cheerleading Media And A Lofty Dismissal From The UK Sunday Times
Friday, 18 June 2010 05:17
by Media Lens

An essential role of corporate journalism is to shore up public confidence in an unjust, crisis-riven financial and economic system. Although plenty of gloom and doom is permitted, especially in the face of obvious crisis, the legitimacy of the system is rarely questioned.

For example, a recent Sunday Times article cited approvingly the views of Jim O'Neill, chief economist at Goldman Sachs. In a note to clients, titled ‘Why the World is Better Than You Think’, O’Neill tried to allay fears that the collapse of financial markets had made the world seem a “scary place”. It is not so bad; indeed, “global recovery” was underway.

The Sunday Times piece then quoted a hedge fund manager proclaiming “massively good profits in the US”, and beaming that “emerging markets [in Brazil, India and elsewhere] are still booming.” The article conceded “it could be a very nervous summer”. But for whom? The journalists certainly weren’t focusing on the pressing concerns of the general population – jobs, pensions, student loans. Instead, the principal “worry” was financial uncertainty “spooking the markets”. But despite the modicum of caution, the article’s message boiled down to “positive fundamentals for the global economy.” (David Smith, Kate Walsh and Michael Woodhead, ‘Merkel’s stab in the dark’, Sunday Times, May 23, 2010; http://business.timesonline.co.uk/tol/business/economics/article7133865.ece)

In the Financial Times, chief political commentator Philip Stephens was candid enough to warn of “austerity” and even a “ferocious fiscal squeeze” that “will bear down more heavily on those lower down the income scale.” (Philip Stephens, ‘Say goodbye to the politics of golly-gosh’, Financial Times, Published: May 24 2010 22:24 | Last updated: May 24 2010 22:59; http://www.ft.com/cms/s/0/db0a01f8-6764-11df-a932-00144feab49a.html). But he took at face value political claims of moves towards “repairing the public finances”, a key propaganda message throughout the corporate media.

In reality, politicians have misappropriated public money to prop up a corrupt and inherently unstable financial system. As George Monbiot reported last September, the most recent figures available from the Office for National Statistics showed that the government's interventions in the financial markets had already added £141 billion to public sector net debt. (George Monbiot, ‘One financial meltdown is, it seems, just not enough for Gordon Brown’, guardian.co.uk, September 7, 2009; http://www.guardian.co.uk/commentisfree/2009/sep/07/financial-meltdown-gordon-brown-g20)

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Stephens then made the absurd claim that “Mr Cameron has turned his party’s failure to win the election to the nation’s advantage.” The coalition government “looks as sensible and stable as most people could have hoped”. Cameron, we were told, was heroically “wrenching the Tories on to the centre ground.” The centre ground, presumably, is the very same “level playing field” promoted by the previous New Labour administration that saw corporate interests and financial elites prosper at the expense of almost everyone else; along with inflicting irreparable damage on ecosystems, species and climate stability. Policies enacted on this “centre ground” are supposedly “to the nation’s advantage”.

Meanwhile, the famously “impartial” BBC is relaying news that the Office for Budget Responsibility, the new UK fiscal watchdog, predicts a lower growth rate for the economy in 2011 than had been estimated in Labour's last Budget:

“The lower figure will likely increase the impetus of the coalition government to cut public spending, as lower growth means fewer tax revenues.” (BBC news online, ‘Fiscal watchdog downgrades UK growth forecast’, 14 June 2010 16:48 UK; http://news.bbc.co.uk/1/hi/business/10305906.stm)

The warning is being delivered ahead of Chancellor George Osborne’s “emergency budget” next Tuesday in which he has “pledged to cut public spending to reduce the deficit”. In her “Stephanomics” blog, the BBC’s economics editor Stephanie Flanders stayed on-message, pontificating with gravitas on percentage points, central forecasts, structural borrowing, trend growth and spare capacity. (BBC News blogs, ‘OBR UK growth forecast downgraded’, 14 June, 2011; http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/). The approach is technocratic, and seemingly blind to the very real suffering imposed by a crushing system of economics that rewards a small minority.

These are but samples of media coverage on the economic crisis. The dominant theme is that, although markets are “uncertain” and thus “tough” economic decisions lie ahead, the system itself can and will be stabilised; always with the presumption of such measures being for the benefit of all. By contrast, those analysts who point to the systemic instability of capitalism, and the fundamental inequalities of corporate globalisation, constantly struggle to get their views across to the public.

Beyond Corporate Propaganda

In his latest excellent book, ‘Beyond the Profits System’, the British economist Harry Shutt observes that one of the most striking features of the financial crisis has been:

“... the uniformly superficial nature of the analysis of its causes presented by mainstream observers, whether government officials, academics or business representatives. Thus it is commonly stated that the crisis was caused by a combination of imprudent investment by bankers and others [...] and unduly lax official regulation and supervision of markets. Yet the obvious question begged by such explanations – of how or why such a dysfunctional climate came to be created – is never addressed in any serious fashion.”

Shutt continues:

“The inescapable conclusion [...] is that the crisis was the product of a conscious process of facilitating ever greater risk of massive systemic failure.” (Harry Shutt, ‘Beyond the Profits System: Possibilities for a Post-Capitalist Era’, Zed Books, London, 2010, p.6)

In several books and articles, David Harvey, a social theorist at the City University of New York, has cogently written of how capitalism has shaped western society, risking and even destroying nations, populations and ecosystems. Not only are periodic episodes of “meltdown” inevitable, but they are crucial to capitalism’s very survival. The essence of capitalism is self-interest; and any talk of reforming it through regulation or by imposing morality – a kinder, gentler capitalism – is both irrational and deceitful.

The bankruptcy of investment bank Lehman Brothers in September 2008 triggered the latest crisis of capitalism. Drastic action was required to save the system. And so, observes Harvey, a few US Treasury officials and bankers including the Treasury Secretary himself, a past president of Goldman Sachs and the present Chief Executive of Goldman, “emerged from a conference room with a three-page document demanding a $700 billion bail-out of the banking system while threatening Armageddon in the markets.”

Harvey continues:

“It seemed like Wall Street had launched a financial coup against the government and the people of the United States. A few weeks later, with caveats here and there and a lot of rhetoric, Congress and then President George Bush caved in and the money was sent flooding off, without any controls whatsoever, to all those financial institutions deemed ‘too big to fail’.” (David Harvey, ‘The Enigma of Capital: And the Crises of Capitalism’, Profile Books, London, 2010, p. 5)

Shutt translates “too big to fail”, that over-used defence employed by capitalists and their cheerleaders, as meaning that a tiny super-wealthy clique recognised that they risked losing vast fortunes if the markets were allowed to take their course free of intervention from the state. Wholesale nationalisation of insolvent banks would have posed an existential threat to elite power; or even led to the collapse of the capitalist profits system in its entirety. Rather than accept such a fate, rich investors tried to ensure that their toxic assets be “largely transferred to the state, thereby adding unimaginable sums – officially estimated at $18 trillion world-wide – to already excessive public debt.” (Shutt, op. cit., p. 36)

As ever, the public were made to pay the price for private greed. In simple terms: it’s socialism for the rich, and capitalism for the rest of us.

Time To Grow Up. We’re Not Students Anymore

On May 24, we wrote to David Smith, economics editor of the Sunday Times, and lead author of the gung-ho-capitalist article highlighted at the beginning of this alert:

“Thanks for your articles in the Sunday Times; but your perspective is too limited, too skewed. For instance, why give such prominence to the views of Jim O'Neill, chief economist at Goldman Sachs - a major architect of the recent financial collapse? How about taking on board some of the arguments made by, for example, David Harvey in 'The Enigma of Capital'?

“1. The endemic problems of instability arising from financialisation, leveraging and surplus liquidity.

“2. Repeating systemic cycles of crises.

“3. Capitalism feeding off wars and conflict.

“4. Inevitable victims: billions of the world's population, ecosystems and climate stability.

“Food for thought, and newspaper columns aplenty?” (Email, David Cromwell to David Smith, May 24, 2010)

Two days later, Smith wrote back, adroitly dodging the question:

“Jim O'Neill is a good economist, irrespective of whether you like the company he keeps. David Harvey is not alone in seeing periodic crises for capitalism. So do the Austrian School or any number of economists brought up in the Keynesian tradition. What was interesting, to me, was Harvey's rather despairing conclusion, which appeared to be a tribute to capitalism's great resilience. He wrote:

“‘Capitalism will never fall on its own. It will have to be pushed. The accumulation of capital will never cease. It will have to be stopped. The capitalist class will never willingly surrender its power. It will have to be dispossessed.’” (David Smith, email, May 28, 2010)

But David Harvey is surely right. We might even recast the observation to make the same point about journalists in the profit-led media:

“The journalists of capitalism will never tell the truth on their own. They will have to be pushed.”

And although the Sunday Times journalist’s point about the resilience of capitalism is accurate, it is a red herring. We wrote back:

“But you've evaded my central question - why do you rarely, if ever, address the issues I put to you?”

His response was a lofty dismissal:

“Most of us get these things out of our system when we are students.” (David Smith, email, May 28, 2010)

And so when students graduate, they are supposedly mature enough to ignore capitalism’s victims and to be content with an appallingly unjust system of destruction and exploitation! This is the cold, heartless logic that seeps out from the symbiosis of capitalism and corporate journalism.


The goal of Media Lens is to promote rationality, compassion and respect for others. If you do write to journalists, we strongly urge you to maintain a polite, non-aggressive and non-abusive tone.

David Smith, Sunday Times economics editor
Email: david.smith@sunday-times.co.uk

Philip Stephens, Financial Times chief political commentator
Email: philip.stephens@ft.com

Stephanie Flanders, BBC economics editor
Email: stephanie.flanders@bbc.co.uk
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