Let us speculate By William Bowles

28 October 2008

There’s an awful lot of speculation going on right now, from both the left and right about where the latest crisis of capital is headed, chief amongst them is the notion that this signals the end of the US Empire, that the so-called uni-polar world is over, that a new multi-polar world, headed by China, Russia, India and Brazil is emerging.

The theory is based upon the fact that the US is no longer the world’s numero uno economic power and it’s true that even an overwhelming military force is dependent on the economics that fuels it. But how true is this idea and even if it is true, over what timescale are we talking about here?

Moreover, it’s only one of a number of possible outcomes, much depends on how the leading capitalist countries deal with the crisis. One thing strikes me most forcefully and that is with all the talk of trillions being needed to save capitalism from itself, the ease with which these vast sums have been conjured up, reveals a striking fact about the role of money namely that the value being assigned to it is totally ficticious.

After all, it’s just paper that has long ceased to represent real wealth given that it exists only in the imagination of those who allegedly run the system. Of course, to those of us who possess only nominal amounts of the stuff, out here in the real world, it has a very real value, but let us not confuse the world of finance capital with the one we live in.

The problem boils down to the fact that a tiny percentage of the world’s population has effectively sucked the real wealth out of the system and replaced it with a notional money, this is the one we’re stuck with and it’s called debt and debts only make sense if we agree to pay them and unlike the banks we don’t have governments that are sympathetic to our needs.

But let us return for a mo’ to the idea that the new multi-polar world that is emerging is headed by China, the world’s industrial powerhouse. The problem with this idea is that it’s the developed world that created this situation in order to reduce the cost of production by exporting manufacturing to countries like China. In turn, the markets for China’s stupendous productive capacity is directly linked to Western consumption and to products that are so cheap as to be virtually given away. Perhaps over time, China’s domestic consumption could ‘take up the slack’ but it’s doubtful given the the pathetically low wages being paid to China’s working class.

And already, literally thousands of China’s sweatshops are going belly-up, not only because of the global recession but also because (predictably) wages are slowly rising in China and as the situation gets worse, we can expect major labour upheavals to increase and, it must be added, the major capitalist countries are rapidly running out of cheap labour countries in which to relocate production, just as Marx predicted over 150 years ago.

Worse still, the vast surplus that China has accumulated is denominated in dollars, thus the fate of China’s economy rests entirely on the future well-being of US capitalism, and in turn, because we are all tied to the US’s coattails in this global financial sting operation, so are the rest of us! Thus, China too, is tied to the US’s coattails! China’s motto is no doubt ‘don’t rock the boat’ (anymore than it is already).

The reaction of the (marginally) more savvy of the developed capitalist powers in the EU is to reinstate what appears to be the same Keynesian economic policies that happened after the end of WWII, making the state once again the major capital investor but there are major differences between the post-WWII situation and that of today:

1) Unlike the 1940s where the state was not only the major investor but also, and this is crucial, directed the nature of investment via state-owned institutions, and it was investment in major social projects, housing, education, transportation, health care, energy and communications (I might add that these were projects that private capital was unwilling to invest in due to the long term nature of any return on investment). Today, by contrast, we see a ‘hands-off’ approach being used, the money is being handed over effectively as a ‘gift’ from ‘us’ to the crooks and fraudsters to do with it as they want;

2) Unlike the situation in the 1940s, which following the destruction of WWII and powered by the wealth accumulated by the US through financing the war, needed rebuilding, we now live in a world of global over-production, so where and how is this new environment of capital accumulation going to take place?

3) Much of the boom of the post-war period resided in retooling war production for the new world of consumerism led by the automobile, television, consumer goods and ironically, housing (setting aside for the moment the emergence of the Cold War and the military-industrial complex which skewed economic development in so many disastrous ways, that we still live, and die, with its effects).

There is no equivalent in the current situation (the ‘War on Terror’ is simply no replacement for the war on communism), thus in the short term (at least) we are entering a world that has more in common with the world leading up to the outbreak of WWII not the one that followed it; mass unemployment, even more massive cuts in social spending and, if capitalism runs true to form, the need for WWIII to trigger a new round of capital destruction and accumulation.

Some have pointed to the need for some kind of ‘New Deal’ but is this possible? Where will the money come from after bailing out the banks? Moreover, the major capitalist powers are no longer industrial power houses, most of the ‘wealth’ generated comes from two sources: 1) consumer consumption and 2) financial services, both of which are going down the tubes right now.

The other crucial difference between the post-WWII period and today is that socialism was seen by many as a real alternative to capitalism, indeed, not only were Keynesian policies seen as a way of bailing out capitalism, it was also the appropriation of essentially socialist economic policies but geared toward maintaining capitalism when the capitalists failed to do it themselves.

No such luck today however and largely because we have no organized and progressive working class to mount such a programme following the adoption of the so-called neo-liberal economic and political programme, which came about for precisely the same reasons as today’s meltdown, over-production and a falling rate of profit (let us not confuse the vast profits made by sleight-of-hand in the financial sector with the production of real wealth, health care, housing, education and so forth).

In conclusion, what can we say about the nature of the capitalists’ responses to this crisis? Firstly, because the state has decided to try and maintain the current status quo but with some nods in the direction of establishing some kind of global financial order, we are as they say, in the hands of the gods. And judging by the current responses of the G-7, some kind of global set of rules governing the financial markets is simply not on the cards. Remember, these national economies are all competing one against the other but at the same time are tied to each other by the globalized nature of finance capital. All they have done so far is muck about with the system without any idea of the consequences except to try and save capitalism from itself.

Second, these fiscal policies will result in mass unemployment running into the tens of millions and the collapse of the ‘good life’ or what’s left of it. And of course, mass unemployment will lead to the collapse of largely consumer-powered economies. Such a policy could of course, trigger a reawakening of class consciousness, but don’t bank on it, even if the civil servants of the British government envisage such a scenario (we should be so lucky).

The Middle Class Proletariat — The middle classes could become a revolutionary class, taking the role envisaged for the proletariat by Marx. The globalization of labour markets and reducing levels of national welfare provision and employment could reduce peoples’ attachment to particular states. The growing gap between themselves and a small number of highly visible super-rich individuals might fuel disillusion with meritocracy, while the growing urban under-classes are likely to pose an increasing threat to social order and stability, as the burden of acquired debt and the failure of pension provision begins to bite. Faced by these twin challenges, the world’s middle-classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest.” — ‘UK Ministry of Defence report, The DCDC Global Strategic Trends Programme 2007-2036’ (Third Edition) p.96, March 2007

The problem of course, is that for such a scenario to take shape requires not only time but the development of a coherent alternative to the current chaos. Slogans are all well and good when they represent the distillation of an existing economic and political alternative, but without such an alternative they will remain only empty slogans.

Thus I think it accurate to say that only the re-emergence of a revolutionary force composed of working people (whether they are so-called middle-class or the traditional working class) will be able to rescue us from this calamity.

See John Bellamy Foster, Postscript to ‘The Financialization of Capital and the Crisis’ (MR, April 2008)


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