The foundations of the prosperity of the 1920s, as we have seen, were weak, even in the U.S.A., where farming was virtually already in depression, and money wages, contrary to the myth of the great jazz age, were not rising dramatically, and actually stagnant in the last mad years of the boom. What was happening, as so often happens in free market booms, was that, with wages lagging, profits rose disproportionately and the prosperous got a larger slice of the national cake. But as mass demand could not keep pace with the rapidly increasing productivity of the industrial system in the heyday of Henry Ford, the result was over-production and speculation. This, in turn, triggered off the collapse….
When the collapse came, it was of course all the more drastic in the U.S.A. because in fact a lagging expansion of demand had been beefed up by means of an enormous expansion of consumer credit. (Readers who remember the later 1980s may find themselves on familiar territory.) Banks, already hurt by the speculative real-estate boom which, with the usual help of self-deluding optimists and mushrooming financial crookery (Not for nothing were 1920s the decade of psychologist Emile Coué who popularized optimistic auto-suggestion by means of the slogan, constantly to be repeated: “Every day in every way I am getting better and better.”), had reached its peak some years before the Big Crash, loaded with bad debts, refused new housing loans or to refinance existing ones. This did not stop them from failing by the thousands, while (in 1933) nearly half of all home mortgages were in default and a thousand properties a day were being foreclosed.
–Eric Hobsbawm, Age of Extremes (pp. 100-101)
Readers living through the current crisis may also find themselves on familiar territory. However, as Hobsbawm continually stresses, political strategies and policy implementation during this period never let that defining moment of the 20th Century out of its purview: the successful Russian Revolution and the presence of actually existing socialism. That the USSR did not live up to its promises was besides the point: for capitalist governments, the threat of leftist revolution was palpable; for capitalists, it was terrifying; for left activists, it was energizing. Rooselvelt-era social programs, still beloved today for their proven ability to keep people from dying in the streets, owe a debt to the Bolsheviks. For all the resonance the contemporary moment has with Hobsbawm’s description of the Depression, one stark fact divides them: the lack of a credible socialist alternative means there’s nothing to restrain the ownership class (which everyone paying attention knows includes the Obama administration) from using the crisis as pretext for a huge wealth grab and a solidification of power.