In 2008, capitalism had its second
global spasm. The financial crisis set off a chain reaction that pushed Europe into a downward
spiral that continues to this day. Europe’s present situation is not merely a
threat for workers, for the dispossessed, for the bankers, for social classes
or, indeed, nations. No, Europe’s current posture poses a threat to
civilisation as we know it.
If my prognosis is correct, and we
are not facing just another cyclical slump soon to be overcome, the question
that arises for radicals is this: should we welcome this crisis of European
capitalism as an opportunity to replace it with a better system? Or should we
be so worried about it as to embark upon a campaign for stabilising European
capitalism?
To me, the answer is clear. Europe’s
crisis is far less likely to give birth to a better alternative to capitalism
than it is to unleash dangerously regressive forces that have the capacity to
cause a humanitarian bloodbath, while extinguishing the hope for any
progressive moves for generations to come.
.My
view on this dilemma has always been that the powers that be are never
perturbed by theories that embark from assumptions different to their own. The
only thing that can destabilise and genuinely challenge mainstream,
neoclassical economists is the demonstration of the internal inconsistency of
their own models. It was for this reason that, from the very beginning, I chose
to delve into the guts of neoclassical theory and to spend next to no energy
trying to develop alternative, Marxist models of capitalism. My reasons, I
submit, were quite Marxist.
.
Neo classical
economists recognise the mountain of debts and banking losses but neglect the
opposite side of the same coin: the mountain of idle savings that are “frozen”
by fear and thus fail to convert into productive investments. A Marxist
alertness to binary oppositions might have opened their eyes.
A major reason why established opinion fails to come to terms
with contemporary reality is that it never understood the dialectically tense
“joint production” of debts and surpluses, of growth and unemployment, of
wealth and poverty, indeed of good and evil. Marx’s script alerted us these
binary oppositions as the sources of history’s cunning.
From my first steps of thinking like
an economist, to this very day, it occurred to me that Marx had made a
discovery that must remain at the heart of any useful analysis of capitalism.
It was the discovery of another binary opposition deep within human labour.
Between labour’s two quite different natures: i) labour as a
value-creating activity that can never be quantified in advance (and is
therefore impossible to commodify), and ii) labour as a quantity (eg, numbers
of hours worked) that is for sale and comes at a price. That is what
distinguishes labour from other productive inputs such as electricity: its
twin, contradictory, nature. A differentiation-cum-contradiction that political
economics neglected to make before Marx came along and that mainstream
economics is steadfastly refusing to acknowledge today.
In the classic 1953 film Invasion of the Body Snatchers, the alien force does not attack us head on, unlike in,
say, HG Wells’s The War of the Worlds. Instead, people are taken over from within, until nothing is
left of their human spirit and emotions. Their bodies are shells that used to
contain a free will and which now labour, go through the motions of everyday
“life”, and function as human simulacra “liberated” from the unquantifiable
essence of human nature. This is something like what would have transpired if
human labour had become perfectly reducible to human capital and thus fit for
insertion into the vulgar economists’ models.
If
capital ever succeeds in quantifying, and subsequently fully commodifying,
labour, as it is constantly trying to, it will also squeeze that indeterminate,
recalcitrant human freedom from within labour that allows for the generation of
value. Marx’s brilliant insight into the essence of capitalist crises was
precisely this: the greater capitalism’s success in turning labour into a
commodity the less the value of each unit of output it generates, the lower the
profit rate and, ultimately, the nearer the next recession of the economy as a
system. The portrayal of human freedom as an economic category is unique in
Marx, making possible a distinctively dramatic and analytically astute
interpretation of capitalism’s propensity to snatch recession, even depression,
from the jaws of growth.
.
At a time when neoliberals have ensnared the majority in their
theoretical tentacles, incessantly regurgitating the ideology of enhancing
labour productivity in an effort to enhance competitiveness with a view to
creating growth etc, Marx’s analysis offers a powerful antidote. Capital can
never win in its struggle to turn labour into an infinitely elastic, mechanised
input, without destroying itself. That is what neither the neoliberals nor the
Keynesians will ever grasp. “If the whole class of the wage-labourer were to be
annihilated by machinery”, wrote Marx “how terrible that would be for capital,
which, without wage-labour, ceases to be capital!”
Marx has given me the
tools with which to become immune to the toxic propaganda of neoliberalism. For
example, the idea that wealth is privately produced and then appropriated by a
quasi-illegitimate state, through taxation, is easy to succumb to if one has
not been exposed first to Marx’s poignant argument that precisely the opposite
applies: wealth is collectively produced and then privately appropriated
through social relations of production and property rights that rely, for their
reproduction, almost exclusively on false consciousness.
In his recent book Never Let a Serious
Crisis Go to Waste, the historian of economic thought,
Philip Mirowski, has highlighted the neoliberals’ success in convincing a large
array of people that markets are not just a useful means to an end but also an
end in themselves. According to this view, while collective action and public
institutions are never able to “get it right”, the unfettered operations of
decentralised private interest are guaranteed to produce not only the right
outcomes but also the right desires, character, ethos even. The best example of
this form of neoliberal crassness is, of course, the debate on how to deal with
climate change. Neoliberals have rushed in to argue that, if anything is to be
done, it must take the form of creating a quasi-market for “bads” (eg an
emissions trading scheme), since only markets “know” how to price goods and
bads appropriately. To understand why such a quasi-market solution is bound to
fail and, more importantly, where the motivation comes from for such
“solutions”, one can do much worse than to become acquainted with the logic of
capital accumulation that Marx outlined and the Polish economist Michal
Kalecki adapted to a world ruled by networked oligopolies.*
Marx’s
first error – the error of omission was that he failed to give sufficient
thought to the impact of his own theorising on the world that he was theorising
about. His theory is discursively exceptionally powerful, and Marx had a sense
of its power. So how come he showed no concern that his disciples, people with
a better grasp of these powerful ideas than the average worker, might use the
power bestowed upon them, via Marx’s own ideas, in order to abuse other
comrades, to build their own power base, to gain positions of influence?
Marx’s second error, the one I ascribe to commission, was worse.
It was his assumption that truth about capitalism could be discovered in the
mathematics of his models. This was the worst disservice he could have
delivered to his own theoretical system. The man who equipped us with human
freedom as a first-order economic concept; the scholar who elevated radical
indeterminacy to its rightful place within political economics; he was the same
person who ended up toying around with simplistic algebraic models, in which
labour units were, naturally, fully quantified, hoping against hope to evince
from these equations some additional insights about capitalism. If I am right, Marx knew
what he was doing. He understood, or had the capacity to know, that a
comprehensive theory of value cannot be accommodated within a mathematical
model of a dynamic capitalist economy. He was, I have no doubt, aware that a
proper economic theory must respect the idea that the rules of the undetermined
are themselves undetermined. In economic terms this meant a recognition that
the market power, and thus the profitability, of capitalists was not
necessarily reducible to their capacity to extract labour from employees; that
some capitalists can extract more from a given pool of labour or from a given
community of consumers for reasons that are external to Marx’s own theory.
Alas, that recognition would be tantamount to accepting that his
“laws” were not immutable. He would have to concede to competing voices in the
trades union movement that his theory was indeterminate and, therefore, that
his pronouncements could not be uniquely and unambiguously correct. That they
were permanently provisional. This determination to have the complete, closed
story, or model, the final word, is something I cannot forgive Marx for. It
proved, after all, responsible for a great deal of error and, more
significantly, authoritarianism. Errors and authoritarianism that are largely
responsible for the left’s current impotence as a force of good and as a check
on the abuses of reason and liberty that the neoliberal crew are overseeing
today.
Even as unemployment doubled and then trebled, under Thatcher’s
radical neoliberal interventions, I continued to harbour hope that Lenin was
right: “Things have to get worse before they get better.” As life became
nastier, more brutish and, for many, shorter, it occurred to me that I was
tragically in error: things could get worse in perpetuity, without ever getting
better. The hope that the deterioration of public goods, the diminution of the
lives of the majority, the spread of deprivation to every corner of the land
would, automatically, lead to a renaissance of the left was just that: hope.
The reality was, however, painfully different. With every turn
of the recession’s screw, the left became more introverted, less capable of
producing a convincing progressive agenda and, meanwhile, the working class was
being divided between those who dropped out of society and those co-opted into
the neoliberal mindset. My hope that Thatcher would inadvertently bring about a
new political revolution was well and truly bogus. All that sprang out of
Thatcherism were extreme financialisation, the triumph of the shopping mall
over the corner store, the fetishisation of housing and Tony Blair.
The lesson Thatcher taught me about the capacity of a long‑lasting recession to undermine
progressive politics, is one that I carry with me into today’s European crisis.
It is, indeed, the most important determinant of my stance in relation to the
crisis. It is the reason I am happy to confess to the sin I am accused of by
some of my critics on the left: the sin of choosing not to propose radical
political programs that seek to exploit the crisis as an opportunity to
overthrow European capitalism, to dismantle the awful eurozone, and to
undermine the European Union of the cartels and the bankrupt bankers.
Yes, I would love to put forward such a radical agenda. But, no,
I am not prepared to commit the same error twice. What good did we achieve in
Britain in the early 1980s by promoting an agenda of socialist change that
British society scorned while falling headlong into Thatcher’s neoliberal trap?
Precisely none. What good will it do today to call for a dismantling of the
eurozone, of the European Union itself, when European capitalism is doing its
utmost to undermine the eurozone, the European Union, indeed itself?
A Greek or a Portuguese or an Italian exit from the eurozone
would soon lead to a fragmentation of European capitalism, yielding a seriously
recessionary surplus region east of the Rhine and north of the Alps, while the
rest of Europe is would be in the grip of vicious stagflation. Who do you think
would benefit from this development? A progressive left, that will rise Phoenix-like
from the ashes of Europe’s public institutions? Or the Golden Dawn Nazis, the
assorted neofascists, the xenophobes and the spivs? I have absolutely no doubt
as to which of the two will do best from a disintegration of the eurozone.
If this means that
it is we, the suitably erratic Marxists, who must try to save European
capitalism from itself, so be it. Not out of love for European capitalism, for
the eurozone, for Brussels, or for the European Central Bank, but just because
we want to minimise the unnecessary human toll from this crisis.
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*Austerity? Call it
class war – and heed this 1944 warning from a Polish economist
The single best guide to what
happened in Britain last week was published in 1944. Naturally, its author was
a Polish economist. Even economics students may not have heard of MichaĆ
Kalecki – but it's the discipline that got small, rather than his legacy. In
his time, Kalecki was recognised as having anticipated some of Keynes's most
important ideas, years before the Master published his General Theory, and he
exerted a big influence on such legendary Cambridge thinkers as Joan Robinson
and Nicky Kaldor.
His article, Political Aspects of
Full Employment, explains with an almost eery
prescience why the coalition is attacking our wages, our working terms and
conditions and our welfare state.
The tone is exhilaratingly brisk.
"A solid majority of economists" agree on how to solve a slump,
Kalecki says. The government borrows more and invests the cash either in
building schools and hospitals or in providing benefits and tax cuts; this
boosts demand and generates employment. Ta-da! Two pages in, and he has both
fixed the problem of recessions and despatched most of the arguments against
public borrowing that we have heard with such tedious frequency in the past
five years.
What if savers become wary of lending
to the state? Then, Kalecki says, the Treasury pays higher interest rates –
and, since most of its lenders are British (just like now), the money will
still flow back into the economy. But he notes that Churchill's war coalition
has run "astronomical budget deficits", while "the rate of
interest has shown no rise since the beginning of 1940". What if it
becomes too costly to keep on top of the national debt? Then ministers should
raise more funds, not by taxing ordinary pay or spending, which would slow the
economy, but with a levy on idle wealth.
That proposal, by the way, is tossed
out in a mere footnote on the second page; and, reader, if you can't love a man
who comes up with a novel way of soaking the rich in one short italicised
paragraph, then I fear we're never going to be friends.
Having rattled through the urgent
problems, Kalecki points out that a booming economy and healthy profits would
be good for the "leaders of industry", but that they will never
support such government intervention. And in a sentence that sums up post-crash
Britain, he identifies one of the principal sources of resistance as
"so-called 'economic experts' closely connected with banking and
finance" along with "big business".
The opposition posed by this
coalition of bosses and financiers is motivated by three factors. First, they
want as little government interference in the economy as possible; second, they
don't want the state expanding into new areas and so doing them out of
business. But the thing that really keeps the capitalists awake at nights is
the boost to workers' confidence that will be provided by a heathy jobs market.
They will demand more pay, better working conditions, perhaps even a say in how
their companies are run. Fully employed, well-paid Britons will have more cash
to buy things, so a healthy economy supported by the government is better for
corporate profits than a sick one. "But 'discipline in the factories' and
'political stability' are more appreciated by the business leaders than
profits". Rather an insecure and cowed workforce than a confident and
boisterous one.
But it's Kalecki's "political
business cycle" that sums up the world we're in now. Rather than opting
for public investment and a healthy recovery, Britain is stuck in a slump that
austerity and a blind trust in private-sector vigour is only deepening. But the
parallels don't stop there. Last week, the day after MPs voted through a bill
for real-terms cuts year upon year in benefits for the jobless and the
low-paid, newspapers led on government briefings that the butchering of the
welfare state would not stop there. Next, the FT reported, winter fuel
allowance would be for the chop.
Meanwhile, living standards for those
in work are also under attack: through wages that are falling further and
further behind inflation and government schemes to sacrifice workplace rights
in return for share options. For those slow on the uptake, there is always
William Hague, telling Britons to "work harder".
The rhetoric is also echoed in our
media. Last Friday, the Guardian's librarians went through all the British
tabloids and broadsheets since 2007. Up to 2010, they found that Fleet Street
was quite restrained in its use of the term "scrounger": a mere 46
mentions (when discussing benefits or welfare) for all of 2007. In 2010,
though, that shot up to 219 mentions, and last year 240 mentions. As for
shirkers v strivers, the false opposition du jour, newspapers did not use the
phrase at all until 2010. Last year, the total was 10. In the first two weeks
of 2013, the press had already racked up 30 mentions.
Whether from politicians or the
press, these justifications for austerity are getting more strident even while
evidence of austerity's failure is stacking up. It may be that Britain goes
into a third recession this year; it is certainly not going to enjoy a
recovery. And what was always evident in the coalition's spending plans issued
back in 2010 – that our welfare state and public realm were going to get
shredded – is slowly but surely materialising.
This assault on an entire social
contract, says Malcolm Sawyer, a leading expert on Kalecki, is what his subject warned about.
"The argument for dealing with budget deficits has provided cover for
attacking wages and benefits." And austerity is just code for the transfer
of wealth and power into ever fewer hands.