On November 25, 1997, I wrote for Amazon.com the following review of the book
I think the text is of some interest considering the present worldwide financial crisis . It reads as follows:
This is an impressive book; well researched, written in a detached and scholarly way, yet full of humour, it convincingly shatters most of the myths that have shaped economic policy in the world since the mid-seventies.
Henwood claims, supported by a lot of evidence, that stockmarkets fulfill no useful purpose as far as production of real goods and services is concerned; we could abolish them with no loss for the economic well-being of society. More: he demonstrates that the enhanced power of stockmarket investors over corporations - a phenomenon that goes back to the mid-seventies, for until then American capitalism was content, for all practical purposes, to leave control to managers - had disastrous consequences for the standard of living of employees (i.e. most of the population): reduced growth and investment rates, massive layoffs, shrinking wages, etc.
This, of course, had already been stated in dozens of other books on the subjects of Wall Street, Corporate America, Reaganism,etc; but Mr. Henwood goes far beyond the mere "corporate trashing" shool of litterature. He introduces the hypothesis that the abandonement of Keynesianism - and the consequent adoption of monetarism - as the main doctrine in the academic and economic policy centers of the western word since the seventies was a direct consequence of a new political and ideological strategy of American and European elites: faced with the growing confidence of an increasingly restless and uncontrollable working class "pampered" by decades of growth, full employment and a welfare net that gave "them" a sense of security and empowerment, the ruling classes of the West slowly but effectively began to implement a cure of austerity. Clamping down on demand because of supposedly "high" prices, increasing interest rates, reducing deficits, striving to reach a "natural" rate of unemployment that meant throwing thousands on the dole queues - all in the name of the new economic ortodoxy of monetarism - slowly eroded the economic and consequently also the political power of non-elites.
No wonder then if the nineties have been a decade of undisputed rule by corporate and financial elites on both sides of the Atlantic. Mr. Henwood concludes his book with a few Keynesian prescriptions (do's and dont's) to overcome the present situation: don't privatise social security, tax wealth (like Switzerland presently does, as he reminds us), tax currency transactions and stockmarket investments, above all go for a policy of growth and full employment. There are, he says, no sound economic reasons not to follow this line of action, but of course elites will do everything in their (enormous) power to prevent a return to any form of Keynesianism, however mild.
Henwood's analysis and conclusions are thus really an Appeal to Reason: a world where the ideas of Keynes are seen by the establishment as a dangerous form of radicalism must no doubt be out of its mind.
© 1998
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