James Heartfield Doug Henwood, After the New Economy
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1. Doug Henwood, The State of the USA Atlas, New York, Simon & Schuster, 1994

2. Doug Henwood, Wall Street: How it Works and for Whom, New York, Verso, 1997

3. Doug Henwood, After the New Economy - The Binge and the Hangover That Won't Go Away, New York, The New Press, 2003

Doug Henwood interview by James Heartfield about After the New Economy

Doug Henwood edits the long running and wonderfully critical Left Business Observer on Founded in 1986, this is an 8-page more-or-less-monthly newsletter on economics and politics in the United States of America and the world at large. He is the author of The State of the USA Atlas, (1) and Wall Street: How it Works and for Whom. (2) He hosts a radio show on WBAI, New York, covering economics and politics. WBAI is at 99.5 on the FM dial - and can be accessed via RealPlayer on James Heartfield interviewed him about After the New Economy - The Binge and the Hangover That Won't Go Away. (3) But first, the book review:


During the 1990s boom, we heard constantly about the New Economy. According to most pundits this was supposed to be a technological and organizational revolution that precipitated an unprecedented era of rapid productivity growth and rendered recessions as obsolete as rotary-dial phones. Mass participation in the stock market transformed workers into owners; the freewheeling US economy became the envy of the world; and “globalization”, whatever that is exactly, had rendered national borders obsolete. Or so it was widely claimed.

Some of the manic exuberance surrounding this story has disappeared with the bursting of the Nasdaq bubble and the scandals that emerged as the froth cleared. Though much of the rhetoric sounds ridiculous today, few analysts have explored how the New Economy moment emerged from deep within America's economic and ideological machinery. Instead, they've preferred to treat it as an episode of mass delusion, stoked by stock touts and creative accountants.

But what really happened?

Why did the stock market go on an eighteen-year tear? Was there really a technological revolution? Is the world as borderless as everyone says? Did class distinctions really erode? Was corporate malfeasance really a matter of a few bad apples - or was the rot far more pervasive than that? And what does the future hold in store? Economic journalist Doug Henwood answers all of these questions in After the New Economy.

After the New Economy offers an accessible and entertaining account of a less-than lustrous reality beneath the gloss of the 1990s boom, stripping bare the extravagant pretension of unrestrained entrepreneurial hubris, and revealing how it contributed to the making of a new anti-capitalist global movement.


James Heartfield - Doug, great book - what made you write it?

Doug Henwood - Thanks, glad you liked it.

I got the idea during the heat of the New Economy mania - it seemed so surreal and absurd I couldn't believe serious people were taking it seriously. Stock touts, sure, but I kept hearing people who should have known better going on deliriously about postmateriality. I couldn't believe some of the entitites - in New York alone, and come to mind - that got IPO and venture financing. Semioticians fresh out of Brown were getting web design jobs. I knew it was a bubble of truly historical proportions, but it wasn't an easy moment to be a skeptic.

Alas, for a variety of personal and professional reasons, I didn't get the book done until after the bubble burst, which means I don't get any points for being a prophet. But then after it burst, normal American amnesia combined with Bush's Fifty Year war made any serious consideration of the boom nearly impossible. And not only analysis of the boom, but of the longer-term features of U.S. politics and culture - like financial recklessness, techno-utopianism, and our penchant for unreflective optimism - that fed it. We like to think of ourselves as the real chosen people, and damn anyone who suggests otherwise.

You do a thorough job knocking down those who boost the US economy, but I cannot help but think that it is those who are knocking economic growth that are making the running these days.

You probably mean greens and their fellow-travellers. I think I fall between you and them on these sorts of issues. I'm quite a technophile myself; I abhor the neo-primitivism popular among some critics of economic orthodoxy. But I think the U.S. is too obsessed with quantity and not enough with quality. We have in this country near-Third World levels of poverty jammed right next to unimaginable luxury (and that's no exaggeration - one of the richest neighborhoods in the U.S., the Upper East Side of Manhattan, is right next to one of the poorest, East Harlem). Growth doesn't solve problems like that, and can make them worse. We need better and smarter, not more. Which isn't to say I'm against more - it's just not our most urgent priority.

And the folks really in control, Bush & Co., are the most reckless accumulators you could imagine.

What does the Bush presidency represent; is this capitalism red in tooth and claw? If so, are the Enron prosecutions significant?

The Enron prosecutions and such are minimal and barely qualify as symbolic. The Bushies in many ways are less pro-capitalist than the Clinton crowd was. In fact, quite a few of the intellectuals around Bush see the boom of the 1990s as decadent and mercenary, and look to military models of society as healthier and more disciplined. Internationally, during the 1990s, people like Robert Rubin travelled the world dismantling barriers to the free flow of capital. The Bush gang doesn't seem to care so much about that - the quality of their economic appointments, domestic and international, is very low. They just don't seem to give it much priority. They want to invade places and take them over - and I don't really understand to what end. I don't think they get much of an economic return for it.

They appear to be in the grip of some 19th century style lust to control territory. Bush is ready to colonize Mars, though there are a few financial and technical obstacles to be overcome first.

Does a Republican presidency make things easier for the US left? Taking on Clinton seemed to be more of a challenge, since outwardly he shared some of their social goals.

It's a mixed bag. In some ways it makes it harder for the U.S. left, becuase politics ends up to be about fighting to preserve some of the social gains of the 20th century - unions, minimum wages, a half-humane public sector. Under Clinton, you could complain about what he was failing to do, or do sufficiently. Also, there's a tendency to think of Bush and the Republicans as the problem, and not - to be old-fashioned - capitalism itself. Garry Wills argued in Nixon Agonistes that the 1960s happened because during the 1950s, liberals and leftists could say it was Eisenhower's fault, and once "our" guy got in things would be better. Well, "our" guy got in and things still sucked, so lots of people concluded The System was the problem. Something like that happened in the late 1990s with the explosion of the "Seattle" movement.

I look forward to it happening again, which is why I'm hoping some Democrat beats Bush. Not because I expect life to get that much better - though the Bush crowd is egregious even by the standards of American politics - but because I hope after a year or two people might start thinking Systemically again.

A few radical critics are talking about a new age of imperialism, like David Harvey and Ellen Meiksins Wood, but in After the New Economy you downplay the radical account of the First World plundering the Third.

There's no doubt that the U.S. abuses a lot of the so-called Third World, but I just don't know how profitable that abuse is. It's very hard to see what Leninists call the superprofits of imperialism; rates of return are no higher, and often lower, in the Third World than the First. I'm open to being convinced to the contrary, but I haven't heard any persuasive arguments yet.

What about the war on terror at home? How are civil liberties standing up to the preoccupation with security?

Badly. There are certainly precedents in U.S. history - Lincoln suspending habeas corpus during the Civil War, the Palmer raids after World War I (someone got six months in jail just for saying Lenin was a smart guy!), the McCarthy era. But it's bad - and not just the roundups of immigrants, the indefinite detentions without charge, and such, but also the private acts of censorship in the media. And the self-censorship that makes people feel frightened to offer a contrary view. That said, though, there's still an encouraging amount of dissent around. Chomsky's 9/11 book sold over 600,000 copies, and Michael Moore's a major star. So it's scary but far from hopeless.

Robert Brenner and others have emphasized the fragile character of the US economy, dismissing any talk of dynamism or expansion. Do you share the view that collapse is around the corner?

No. Crisis and collapse are always possible - I'd never say never - but I think big government and indulgent central banks make a 1930s-style collapse impossible. I do think however, that we're in a more troubled economic period than we saw in the 1980s and 1990s. The recovery is very troubled, and job growth almost nonexistent. This is the hangover of a major bubble, and it takes some time to work through. Also, just as inflation was the sickness of welfare/Keynesian capitalism, I think a tendency towards deflation and stagnation is the sickness of the neoliberal era.

On that point, is the trade deficit, and the dependence on credit evidence of a structural weakness in the US economy?

This is the major weak spot for the U.S. - the massive dependence on foreign capital, some $2 billion every business day. A country, not even a superpower, can run current account deficits equal to 5% of GDP forever. If the U.S. were a "normal" country, it'd be due for an IMF package. But the U.S. isn't a normal country.

So the big adventure of the next few years will be seeing how the U.S. gets its foreign accounts back into balance - slowly and relatively painlessly, intensely with some sort of financial panic, or somewhere between.

Any insights on Britain or Europe you want to share with us on your visit?

I haven't been in Britain in over ten years. When I was last there, it was late in the Thatcher years, and the place seemed shabby and dispirited. I'm very curious to see how things look today.


James Heartfield 28.01.2004

This interview was posted before Doug Henwood gave a talk and was questioned about After the New Economy on 28 January 2004 at 72 Great Eastern Street, London EC1.

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