자본주의는 끝이 났는가? CWO 공개모임에 대한 보고서

[자유로운 영혼]

Is Capitalism Finished? Report on a CWO Open Meeting

We are publishing here the introduction prepared for the above meeting to make it available to a wider audience. In the introduction to the main speaker one of our comrades outlined the seriousness and the nature of the present crisis.

The seriousness of the crisis is recognised by the main spokesmen of the bourgeoisie, for example the governor of the Bank of England, who, in a speech in late October, put today’s crisis in an historical perspective by informing us that:

the financial system came closer to collapse in the first week of October that at any time in the past 90 years.

He confirmed that the bourgeoisie see the crisis as the worst since the end of World War I, worse, that is, than 1929. The crisis does indeed dwarf the previous financial crises. While, for example, the US Savings & Loans crisis in the early 90s saw $600bn of capital values written off, the present crisis has seen at least $2 trillion of write downs so far and these deval‎uations are by no means over. To date [1], $7.5 trillion has either been given or pledged to banks and financial institutions. A lot of this is pledged to purchase worthless assets and will also be written off. The globalisation of capitalism in the last three decades, particularly the globalisation of financial services, has ensured that this crisis has rapidly engulfed all the major centres of capitalism around the world. Meanwhile, the states which are taking over the bad debts, are becoming overwhelmed in debt themselves. The US government debt, for example, is now approximately 80% of its gross national product, and in the next few months the government needs to raise $1.3tn through new bond issues. Weaker states, such as Iceland, have proved incapable of supporting their financial institutions, have seen their currencies become valueless and had to turn to the IMF. Even the stronger states, such as the UK, are now under threat, and institutions such as the IMF and World Bank have insufficient funds to deal with a major national collapse.

We consider that today’s crisis is a devastating validation of Marx’s critique of capitalism. The turbulence in the financial sector is simply an expression‎ of the deeper problems in the sphere of production, problems which arise from the changing value relations in capitalism as it accumulates and which cause a tendency for the average rate of profit to fall. As Marx wrote:

The real barrier to capitalism is capitalism itself. [2]

After the talk there was a wide-ranging discussion which followed a number of themes which were taken up and dropped at different times in the meeting.

A World Marxist Workers’ Party Now?

The first issue raised was the need for the formation of the International Party. Now that the financial crisis has revealed the capitalist system is in total crisis, a comrade asked, was it not now the time to proclaim the formation of the World Marxist Workers’ Party? Our reply was two-fold. In the first place, although we are part of the International Bureau for the Revolutionary Party — as we make clear — we are not that party. Its emergence does not just depend on us and self-proclamation of the party would hardly rally many new forces to us. There have been many such attempts in the past but they have all ended in predictable failure. We did agree that a new period is opening up, but, as we made clear in the talk, this would not lead directly to a revolutionary situation but would arrive piecemeal as the impact of the crisis filtered through to its ultimate victims — the international working class. The meeting seemed agreed that the latest financial meltdown was opening up an unprecedented period of crisis but there was no mechanical guarantee that there would be a revival of working class resistance to its effects. The $62 trillion question was just how the working class would fight back but we expected new forces to emerge which would enter into dialogue with existing revolutionaries. We certainly did not want the party to be “a product of the last minute” (confirm‎ing what we have often argued), so we would be looking to work in and with any struggles that did arise in order to prepare the real conditions for the establishment of an internationally centralised proletarian party as soon as possible.

The same comrade also suggested that the IBRP website needed shorter statements and more leaflets on it as many workers (himself included) found it hard to wade through long texts. He wanted these now as he did not think workers would become revolutionary at the point when they were being sacked. We agreed with this, as we had already said in the introduction that historical experience shows that class resistance is not built on unemployment. Some of our comrades were already working on the issue of producing more short statements on the website but we did not think that this would make an immediate impact on class consciousness.

No Growth under Capitalism?

A second issue that was raised was by a comrade who stated that he agreed with everything in the introductory talk but thought that we had exaggerated the amount of stagnation in capitalism since the system entered the downward phase of the accumulation cycle in 1971. He pointed to the extraordinary growth of China and India as just two examples of how the system had grown, arguing that today the great weight of production workers is no longer found in the USA but in countries like Russia, Brazil, India and China (BRIC).

We replied that, despite the cycle of accumulation entering its crisis period 35 years ago, we had not said that there was no growth in this period. Cycles of accumulation in this imperialist phase of capitalism are not like the ten year cycles of nineteenth century capitalism. In those earlier crises, the deval‎uations required to restart accumulation were relatively small and the market could readjust relatively quickly. Today, deval‎uations of the swollen mass of capital need to be much greater and typically these have been done by war. Under modern conditions the state also plays a much greater role in capital formation (typically 40%) and this has the effect of making the cycles longer. Capitalism, even at the end of a cycle of accumulation, has to “expand or die” but the key question is has it expanded enough to restart a new cycle of accumulation? We don’t think it has, which is why the crisis has dragged itself out and not yet been resolved. One fact, though, that has been confirmed in the current global financial crisis is that the BRIC economies are not “decoupled” from the capitalist heartlands since they are suffering the pain of the lack of funding as much as the capitalist heartlands. We should also not read too much into the fantastic growth figures in places like China since now even The Financial Times is beginning to question the accuracy of Chinese state statistics. After twenty years of double digit growth China is still not in the top 100 states for per capita GDP earnings, and 66% of world commodity production (by value) is still carried out in the US, UK, the Eurozone and Japan.

Overproduction of Commodities and the Falling Rate of Profit

At this point a member of the International Communist Current (ICC) spoke to agree that the crisis was not the result of greedy bankers or deregulation or any other culprit. The problem was the system itself. The present crisis was not a cyclical one. There were no capitalist solutions which would work and the question of whether this was the end of capitalism was precisely what the capitalists were asking. He asserted that the real explanation of the crisis was overproduction and that this demonstrated that the crisis was terminal and capitalism was in its death agony.

We replied that the present apparent overproduction of commodities was simply how the real problems of capitalism, located in the tendency for the rate of profit to fall, expressed themselves. The expansion of credit generally precedes capitalist crises and is used to try and sustain production levels in the face of declining profitability. However, profits are only made through exploitation of workers in production, and credit, which goes into stimulating consumption, will not affect the profitability of capital. In fact, it decreases profitability since this capital demands interest which must be paid out of existing profits from industrial capital. When this credit is withdrawn, as is happening at present, consumption collapses and it appears as if there is an overproduction of commodities. Credit, for example, was extended in the US for the purchase of houses or cars and when this credit was no longer available, it appears as if there is an overproduction of houses and cars. The real problem is the decline in average profitability which affects industrial production and makes the production of houses or cars unprofitable or only marginally profitable. The ICC thinks extra-capitalist markets are required to realise all the surplus products destined for capitalist accumulation3. This is because, they think, the working class cannot provide a sufficient market to realise this surplus. Yet, how the system has managed to accumulate since 1914, when extra-capitalist markets were supposedly exhausted, has never been explained and indeed cannot be explained. The major wars which precede recoveries, and which we argue increase profitability by deval‎uing constant capital, cannot create any extra-capitalist markets. The ICC believes that credit is the means by which the bourgeoisie has managed to make up for the lack of extra capitalist markets [4]. Yet credit can only create capitalist markets, not non-capitalist markets. How this could possibly solve what they regard as the key problem of non-capitalist markets is incomprehensible.

Another member of the ICC spoke and appeared to agree with the point about non-capitalist markets but did not pursue this. Instead, he took up the question of the crisis and stated that capitalism had been in a permanent crisis since 1914 and the present crisis was the continuation of this. We replied that permanent crisis was something of a contradiction. It made discussion of capitalism’s crises meaningless since the recovery period after World War II in which capitalism achieved the largest growth and capital expansion in its entire history were just as much part of its crisis as today’s financial meltdown. Such “analyses” were simply ways of avoiding analysing the specifics of capitalism and avoiding direct questions which the non-capitalist markets theory cannot answer, but must answer if it is to be taken seriously.

In 1967, the ICC maintained that the crisis had arrived in all the fullness of its contradictions and now, four decades later, they are saying the same again. Yet how is the intervening period to be explained if the crisis is caused by lack of non-capitalist markets which lead to overproduction? How, for example, can one explain that world trade has grown at just under 8% per annum over the last five years, whilst world production has grown at just over 4%, if accumulation depends on non-capitalist markets which were all exhausted in 1914, or was it 1929, or was it 1967, or perhaps 2008?

 

Only the World’s Workers Can Finish Capitalism

In conclusion, the meeting demonstrated substantial agreement that the measures that the capitalist state could take to liquidate debt were limited. There was already a mountain of both private and public debt, so the idea of a New “New Deal” was a non-starter, since the New Deal in 1933 came after years in which state debt had been reduced. Now, private debt was being converted into state debt. There could only be one way this would be repaid, and that was by increasing exploitation and a reduction in living standards of the working class. The real solution was in the hands of the working class who create the surplus value which the capitalists want. The key will be in how organised the working class can be in fighting the inevitable attacks to come. Our task as communists is to ensure that we are rooted in the working class wherever we can be in order to be part of that fight and to bring back to the working class the lessons of its own previous history. Only when that process begins can we even think about proclaiming the world proletarian party.

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[1] This was on 1^st November 2008. Since then, a further $1tn has been pledged by the US Federal Reserve and European Central Bank alone.

[2] Capital, Vol. 3, Chapter 15.

[3] This is the position put forward by Rosa Luxemburg in her major work, The Accumulation of Capital.

[4] This is explicitly stated in International Review 133, p13.

Is Capitalism Finished?

 

In March 2006 we wrote in Revolutionary Perspectives 38 in the conclusion of an article on “The New Economy”

We have had to clarify how capital’s extortion of unpaid labour from the workforce is the real source of wealth and in so doing have found that, far from overcoming its accumulation crisis, not only has the ratio of the value producing workforce to the unproductive workforce increased dramatically but that the proportion of “national wealth” accounted for by financial assets which do not represent any new value is unprecedented. The situation of UK capitalism is not unique. It is indicative of the wider malaise of a global system which has an unprecedented supply of financial funds for speculation but fewer and fewer “opportunities to invest”. As The Financial Times worries about the news that “business investment sank to a new low as a share of national income last year” financial workers in the City gloat at the prospect of rising bonuses with the lucrative surge in mergers and acquisitions. The new economy is certainly wealth-generating for some. In the light of capitalism’s history, however, it has all the makings of a prelude to a spectacular crash.

The Real Culprit is Capitalism as a System

The current financial meltdown of the entire global banking system has come as a shock to some (not least our capitalist masters) but, as the quote above shows, it has hardly come from a clear blue sky. For us the real question was “why did it take so long to come about in the first place?”. Global capitalist growth over the last fifteen years has been largely based on two inter-related features — the exploitation on an enormous scale of cheap labour power in the so-called “emerging economies”, especially China, and the ever burgeoning sums of money produced in the global financial system which seemed to have less and less connection to the production of surplus value. We were using metaphors such as capitalism seems to be defying the law of gravity (as well as the law of value) in that more and more fictitious capital was being created which had less and less relation to the actual production of real commodities. However, like the cartoon characters who can run off cliffs and hang suspended in the air for a time before finally falling to earth, capitalism’s apparent defiance of the law of value has now come to an end.

There has been a lot of focus in the newspapers of the leading capitalist countries on whose fault it is. Governments, bankers, regulators, hedge funds, credit ratings agencies and even the poor sub-prime mortgage holders have all had the finger pointed at them. We have even had articles in the heavies saying that it is all our faults for taking on too many loans in our desperate search for the good life.

This blame game may fill newspaper inches but it is a superficial charade. Even posing the question as a mere “credit crunch” is like blaming the smoke for causing the fire. The real cause of the current financial meltdown lies in the capitalist system’s mode of operation, its way of reproducing itself. This introduction intends to explain why.

The real origins of the present crisis lie not in the extension of credit to people who had no hope of repaying it. It does not even lie with greedy bankers, and nor is it simply the result of the neo-liberal policies adopted (especially in the Anglo-Saxon countries) after 1986. For us, the origins of this crisis go back to 1971 when the cycle of accumulation on which the post-war boom had been built definitely entered its downward phase.

The signal for the crisis was the abandonment of the Bretton Woods Agreement which had underpinned the world economy. The keystone of this was that fixed currency rates would be based around the US dollar which in turn was based on gold ($35 being equivalent to an ounce of gold). But, by 1971, the world economy was already facing the fact that the law of the tendency of the rate of profit to fall was once again overwhelming its countertendencies and global production was slowing down. The US government realised that it could no longer cover in gold all the dollars that were now held in foreign countries and that any concerted claim on the US for these dollars would be ruinous. Thus the gold/dollar ratio was abandoned and, by 1973, we were in a world of floating exchange rates which have been the stimulus to so much of the speculative activity we have seen since.

But, before we get into that, we should perhaps explain a little about what we mean by cycles of accumulation brought about by the shift in value relations, which in turn are brought about by the law of the tendency of the average rate of profit to fall. Marx, too, identified cycles of capitalist production which were brought to an end by the law of the tendency for the rate of profit to fall. This he insisted was “the most important law from the economic standpoint” in analysing capital movements. For Marx capital is divided into two main components — constant capital (the capital advanced for factories, machinery and raw materials) and variable capital (the capital advanced for labour costs). But, as the source of all new value is variable capital (labour), there is a contradiction at the heart of the accumulation process. To increase profitability and make their capital more productive capitalists have a natural tendency to increase constant capital (more efficient machinery) and reduce the element of variable capital (wages expenses). As the increase in constant capital also increases over time, the basis for the creation of new surplus value to be invested as capitalist profit, decreases. Eventually (and Marx argued that the law of the tendency of the rate of profit to fall only operated over long periods — in his day 7-10 years), the amount of surplus value or capitalist profit is insufficient to fund a further accumulation. We are thus in a situation of overproduction of capital. At this point, the capitalists can go in for some tricks to try to evade the consequences of the operation of the law, but after a bout of speculation (often fuelled by credit: Marx actually wrote in Capital Volume 1 that “the extension of the credit system is only the form which hides the overproduction of capital”), the crisis breaks out and many firms go to the wall. The more successful firms, the ones which have avoided too much involvement in speculation, which invested earlier in the new constant capital, survive, and their weaker competitors collapse. The strong now buy up the weak on the cheap and rationalise production further. Capital values are destroyed in this process, and, after a period of depression, accumulation can begin again with workers paid less than before but operating more efficient machinery in a new more centralised capitalist operation. The cycle has begun again and continues until once again the overproduction of capital brings it to an end. This went on roughly every ten years throughout the nineteenth century and, as Marx and Engels catalogued it, it brought about the progressive centralisation and concentration of capital. By the end of the century this centralisation had gone so far that it had both created monopoly producers in various countries and, especially in Europe and the USA, increased the role of the banks since they now financed much of capitalist production. But such a centralisation of capital also meant that the state was increasingly the champion of the national capitalist interests abroad. It backed, often with military expeditions, the search for new investments, new sources of raw materials and new markets. We had entered the imperialist epoch. Cycles of accumulation still continued but not in the regular pattern of the nineteenth century. Cycles now tended to be longer and more uneven and there was a greater intertwining of economic and military activity. The signal that capitalism had now passed into a new phase in its development was the First World War, which, all commentators agree, was based on the fears of a new slump (and the working class response to it) in almost all European countries. We were now truly in the highest stage of capitalism — imperialism, the epoch of the decay and parasitism of capitalism. Cycles of accumulation were now cycles of boom, bust … and war. Capital deval‎uation did not take place by purely economic means but also by military ones. As every state sought to maximise the value of the capital it controlled, they plunged humanity into conflict and in the course of war unwittingly deval‎ued the very capital they were trying to defend. Thus, the Roaring 20s and the longest boom in capitalist history which occurred after 1945, were both predicated on the destruction of capital values in wars the like of which humanity had never seen before.

The End of the Third Cycle of Capitalist Accumulation in the Epoch of Imperialism

Which brings us back to the end of the post-war boom (or the third cycle of accumulation in the epoch of capitalist decadence as we call it). It was the onset of this crisis in the early 70s that saw the entry of communist left ideas into Britain (or rather their reappearance after 50 years). Our assumption was that this capitalist crisis was the springboard for the revival of a working class fighting for its own communist programme. Our idea was that the outcome of this renewed mass struggle against capital would be either socialism or barbarism. Today we have had over thirty years of this crisis but the issue has not been resolved. Nor have the capitalists been able to deval‎ue sufficient capital to increase profitability rates to the point where we can say a new cycle of accumulation has begun. Instead, what has happened is that the crisis has gone through a series of phases. We have already alluded to the 70s where the state tried to take over a more diect role in the economy as the working class fought for higher wage rises in their fight against massive inflation. Partially this was because the ruling class were at the time scared of the collective power of the working class and its capacity for solidarity. Capital is, after all, a social relation and the state has to consider the best means by which exploitation can be managed. At first governments considered it necessary to keep nationally strategic industries going, however unprofitable they were, both to defend the national economy and to maintain social peace. However, even before the end of the 70s this could no longer be sustained by many states, including some of the leading ones, like Britain and Italy. In Britain, obtaining loans from the IMF to maintain the balance of payments demanded the first cuts in state spending. These were implemented, not by Thatcher, but by Labour’s Callaghan and Healey in 1977 (the sums offered by the IMF seem derisory today). The working class resisted as it had done throughout the decade, and this eventually paved the way for the “winter of discontent” of 1979 and the arrival of Thatcher in Downing St six months later. Thatcher came in quoting St Francis but promoting the gospel of Hayek and Friedman. With Reagan, the Anglo-American model of reducing the role of the state in the direct running of the economy (whilst increasing its repressive role) ushered in the era of privatisation and deregulation. The working class in the US and UK as well as elsewhere in Europe fought back, but, in a situation where the decision to restructure industry or, as we would say, to deval‎ue huge swathes of the economy had been taken, the fight took place in a situation of weakness. There has never been a strong and united class fightback in conditions of mass unemployment. Once the Polish movement was conquered by nationalist/religious ideology and important sectors of the working class like the Spanish dockworkers, the air traffic controllers in the US and the UK miners were defeated, the battle had been essentially won by the capitalists. As we mentioned already there then began the real process of giving unregulated free rein to capital. The volumes of capital which now travelled the world looking for the highest short term returns was staggering and each state’s own annual GDP was now dwarfed by the sums exchanged on derivatives markets. States now competed to create the best environment to encourage inward investment. Some even posited that this new era of “globalisation” meant the end of state capitalism given the huge sums which now daily swirled around the planet dwarfing the annual incomes of all national states.

Today, it is no accident that the very economists who supported the monetarist free market neo-liberal approach first implemented in the Reagan-Thatcher era like of Professors Tim Congdon and Patrick Minsford are filling the letters pages of the papers with denunciations of the FSA and other regulators, saying that capitalism is not at fault, but the regulators let the system get out of control. But they cannot have it both ways. Back in the 1980s, Minsford had the ear of Thatcher and was urging that the state and over-regulation of the financial system was the problem. It was in 1986 that the Big Bang took place. Building societies were allowed to become banks in the same year. A second Building Societies Act in 1997 gave the green light to demutualisation which allowed the building societies to issue shares to savers. This set off the speculative investment fever which developed through the advanced capitalist world over the next decade. This deregulation became the economic orthodoxy which was used to blight the economies of Russia, Latin America and much of Africa.

Nor was the enthusiasm for untrammelled free markets confined to the capitalist Right. It was after all Clinton who took away the one sure piece of legislation from the 1930s which prevented investment banking and commercial banking endangering the economy by mixing deposits and investment. The Glass-Steagall Act (which was passed in June 1933 after 5000 US banks went bust) was repealed in 1999 the last year of the Clinton administration and its demise signalled the opening of a new burst of financial speculation based on the shadowy concepts of SIVs, CDOs and CDSs. Those who don’t learn from history are condemned to repeat its mistakes.

For the last decade or more, this financialisation of the global economy has been part of the phenomenon of “globalisation”, a supposedly new phase of capital development. In fact, globalisation was the expression‎ of the domination of US capital over the globe. It represents yet one more stage in the concentration and centralisation of capital which has been going on since Marx’s day. It is the zenith of US dominance. This was further reinforced by the collapse of the USSR which was also suffering from the stagnation brought about by the end of the cycle of accumulation. The collapse of the USSR and then the bankruptcy of the Russian state in 1998 led to one of the most rapid deval‎uations in capitalist history. This not only offered a new so-called emerging market for finance capital to invest in but also throughout the old eastern bloc provided low cost variable capital. Similarly, the financial crisis in Asia in 1997 led to the decision by the Chinese Communist Party that the future of China lay in building up production for exports. Billions of dollars from Western firms now flooded into China as local businesses were set up to exploit the abundant cheap local labour (initially with Western and Japanese capital) to provide the parts for electronic devices like mobile phones. Thus, the latest sophisticated constant capital which required no great training to use was put in the hands of some of the lowest paid workers on the planet. This secret of the Chinese boom was not particularly hard to fathom. Eventually, cheap Chinese commodities were battering down all obstacles to trade and would be used to disguise the decline in the real purchasing power of the wages of workers in the leading OECD countries. In the US, for example, during the Bush years the economy has grown nominally by 18% whilst even median incomes have declined by 1.1% or $2000 in the same period. Meanwhile, the speculators have gained obscenely. The top 10% had gains of 32% but the very top 0.1.% had gains of 425% on already very substantial incomes (see Edward Luce, “Stuck in the Middle”, The Financial Times, October 2^nd 2008).

But even this assault has not solved the crisis of accumulation and this brings us back to the current crisis. The driving down of variable capital costs around the world has not been offset by the massive extraction of surplus value from the Chinese or Asian or other “emerging nation” workers. Increased exploitation has still not provided the basis for a new cycle of accumulation. Hence, the huge speculative bubble which grew up from the late 1990s onwards. Marx, as we already stated, saw that speculation is the last stage of the crisis and we have no reason to think that this bubble any different.

What is different about it is its size. In truth, we may never find out just how big the bubble is since the creation of structured investment vehicles means that some creditors do not fully know the precise size of their future losses. However, according to The Financial Times last Wednesday, in mid-2007 the value of global derivatives stood at £516 trillion. As Jeffrey Sachs on the same page tells us, the world global economy is worth about $60 trillion, so speculative activity is worth about 8.5 times global GDP. And just to underline how financialisation has become the main feature of this stage in the crisis, global equity markets, which in 1980 accounted for a few billion dollars, now account for $60 trillion which means that they have gone from accounting for less than 1% of world GDP to being equivalent to over 100% of it. Martin Wolf in The Financial Times highlighted the danger for the US when he pointed to the fact that, even after the Tarp and other bailouts, the mountain of private debt is three times GDP and could “topple over into mass bankruptcy”, and thus provoke a complete slump. It is early days but unemployment is already on the increase. So far it is mainly in building, cars and financials. In the US 560,500 were laid off in the first nine months of this year but about 750,000 were laid off in the whole of last year. In Britain business failures were up 28% in the last quarter and this week an Financial Times business survey found that a quarter of all employers are going to lay off workers. And all this before the full impact of this collapse of capital values hits us.

False Solutions

Of course there are no shortage of false solutions to this crisis. Now we are told that governments will have to go back to Keynesianism. There is much nostalgia for Keynes although few actually know what he advocated. He was actually a lot closer to Milton Friedman than many care to admit. Keynesianism was actually developed by governments as empirical responses to specific problems caused by the inner contradictions of capitalism brought about by the law of the tendency of the rate of profit to fall. Keynes was haunted by the spectre of mass unemployment and sought ways to avoid it. He believed that, by a little deficit financing and the judicious use of interest rates, then capitalism’s worst cycles could be tamed. He argued that it was a lot better to cut wages through inflation rather than through wage cuts since the latter provoked open class warfare. There is some nostalgia for Keynes just now as the spectre of mass unemployment is already appearing and his name tends to be associated with the post-war boom. But as Paul Mattick brilliantly showed in his book “Marx and Keynes” even in the midst of this boom no amount of multiplier effects or demand stimuli can get round the fact that the tendency of the rate of profit to fall will bring about a crisis of accumulation when capitalists find it is no longer adequately profitable to enlarge and expand production. What people forget is that the world economic crisis did return just as Mattick (who was writing mainly in the fifties) predicted it would in the early 1970s. Keynesian policies were at first expanded as governments printed money to spend their way out of the crisis but this only created mass inflation and the working class fought back to try to hold on to their standard of living. Some industries in some countries were nationalised but this only added to government indebtedness and put up the cost of government borrowing. It also meant that when the working class in these industries went on strike it was a strike against the state and this had dangerous political implications. As we showed above, it was not Thatcher, but Callaghan who began the retreat from Keynesianism. Keynesian ideas of counter-cyclical expenditure were not completely abandoned but the state in every case recognised that it could not simply print money as a solution to the crisis.

Some regard the New Deal as the greatest example of Keynesian policy but, in fact, it had little to do with it. Now some including the journal Le Monde Diplomatique, which is ever anxious to reform capitalism rather than oppose it, think a New “New Deal” is needed, like that carried out by Roosevelt after four years of crisis had devastated the US and global economy. However, this suffers from two problems. In the first place, Roosevelt began from a balanced budget situation as his predecessors considered that restricting the money supply and cutting spending were the policies to restore the economy. Today, the crisis of the banking system means that the leading capitalist states start from huge national debts which are increasing. The future is already mortgaged and a new New Deal would only increase that burden to perhaps unsustainable levels. However, the other fact which LMD have forgotten, is that the New Deal might have prevented the class struggle from exploding in the USA but it did not solve the crisis of capitalist accumulation. Unemployment in the USA remained at around 20% until 1939, and it took the re-armament for a war and then the greatest deval‎uation in capitalist history in the massacre of second great imperialist conflict of the 20^th century for the hungry 30s to be put behind us.

For some of course the solution is simple. “Socialism”. Unfortunately what they have in mind is not socialism but more state capitalism. Typical of this was the Morning Star which in September was denouncing the Paulson bailout as “socialism for the rich”. For these unrepentant statists socialism is a bit like Robert Owen’s view of a paternal master who comes around deciding how we are all going to get basic food and living standards. The idea that socialism is something that must be created by all of us in which we actively participate in the creation of a new mode of production does not seem to occur to them. They also have not been paying attention. The state is not a neutral body which administers the economy to protect the weak. When it does protect the less well off it is because it fears the social consequences. And in the last few years it has been an active accomplice in the world of speculation. As we demonstrated earlier, it was the state which provided the legal basis for the deregulation of the banking sector but the state did not disappear. It hung around acting as lender of last resort. For example most of the subprime mortgages were actually taken out by the Freddie Mac and Fannie Mae which were known to have the backing of the state. At an earlier period when the US Savings and Loan or “thrifts” went belly up after lending out to people who could not pay, the US Government supported them and allowed two thirds of them to die in an orderly fashion between 1986 and 1995 at a cost of over $150 billions. Some have argued that this gave the green light for the derivative traders to home in on housing when their dot.com bubble burst. They thought that, whatever risks they took, they disposed of too much capital for the state to let them fail. And so it has transpired. Paulson’s TARP plan has made the US Treasury and Federal Reserve not just the lender of last resort to the USA but to the entire world economy. This week, credit lines of tens of billions of dollars have been opened by the US Treasury for “emerging economies”, so that they do not have to go to the IMF to beg loans on condition of adopting a Structural Adjustment Plan (the very plans which have impoverished millions around the world in the last 30 years). There is no doubt that those at the head of the US ruling class have been more aware of the consequences of this meltdown than many of their critics.

The Future

So what is the perspective for the immediate future and what are the prospects for the working class? We obviously have to be careful here, since, as Kierkegaard pointed out, one of the dilemmas of existence is that life has to be lived forwards but any understanding of it can only be gleaned by looking backwards. Even Alistair Darling showed a rare touch of humour, when asked if the rescue plan for British banks would work only replied “I think there has been too much speculation already”. The extraordinary bailout of the banks, unprecedented in capitalist history has, for the moment led to an end to the panic situation of August and September. An enormous amount of money has been written off already (Lehmann Bros alone have written off $32 billion — and that is just a drop in the ocean of money capital). It is not clear how much of real capital values have been written off since the stock markets depend on market sentiment as much as real value. Many financial commentators have been arguing that these have been inflated for years. There is also another contradiction at the heart of the bailout. If capitalist states had to abandon direct control of their own economies in the 80s as they had insufficient capital, how is it that they now have the capital to act as a lender of last resort? The answer is that they haven’t. If the so-called “toxic assets” are not sterilised, the total value of them would simply bankrupt more states (like Iceland, Hungary, and Ukraine which have already been bailed out by the IMF) and these would be big players on the world stage. If that happened, then the 1930s would look like a Golden Age. The UK, which depends for 6% of its GDP on banking services would be about the most vulnerable, which is why the government here is the greatest advocate of a Bretton Woods II to save the British economy. It is also why, despite a few wobbles, the world’s leaders have hung together. They fear being hanged separately.

They understand some of the lessons of the 1930s, such as cutting the money supply off, imposing high tariffs etc., are not the way to recovery. However, there are those in the system who don’t seem to learn at all. Of the $700 billion Tarp money from the US Treasury apparently the nine receiving banks have earmarked $109 billion for salaries and bonuses (i.e. virtually the same as last year despite the layoffs in that sector!). It is similar in the UK. In Britain Barclays are paying 14% interest on loans from Qatar and Abu Dhabi sovereign investment funds rather than accept the facility made available by the British Government on the grounds that this would stop them paying out fat bonuses to their executives (who just happen to have negotiated the loan). However, the good news is that British banks will only pay out about £4 billion in bonuses and salaries this year compared to double that figure last year. That is really punishing them!

And speculative activity has not ended there, as we saw with the shift into derivatives of oil price and food futures which created massive price rises in the summer. Now this speculative activity has shifted onto currency movements, which is forcing many countries like Iceland, Ukraine and Hungary to go to the IMF for loans to shore up their collapsing economies.

If the international bailout can continue to prevent a massive slump, and the deval‎uation of capital can be spread over a long period then that is not necessarily a bad thing. The alternative for us (an outright crash) would be much more difficult given the current low level of class organisation and struggle. An immediate crash would unleash all the forces of nationalism, imperialism, xenophobia and barbarism that lurk below the surface of capitalist order. We do not have to look far to see the dangers as the recent conflict in Georgia demonstrated and this is only one of a hundred possible flashpoints for imperialist rivalry. In the event of a sudden collapse the smart hedge funds would be betting on barbarism.

However, a long recession where unemployment grew more slowly would enable workers to fight a longer war. It would provide episodes in which some workers would give a lead and demonstrate that there was no inevitability about our fate. At the same time, too, the ideological equation is changing. Hitherto, the defeat of the Russian Revolution over 80 years ago has hung like a nightmare over any notion of a collective class solution to the crises of capitalism. The collapse of the USSR, though nothing to do with Marxist socialism, enabled the capitalist ideologues to hammer home the message that there was now “no alternative” to accepting the discipline of the market. Well, now the defenders of capitalism are on the defensive once again. They cannot claim that their system creates wealth (except for the gilded few), but, instead, the productive many will pay for the actions of the parasites who dominate this mode of production. Instead, the ideological dangers for the working class will come from those who peddle a false vision of socialism and that is a challenge that real revolutionaries will have to face.

The key, however, to any ideological victory rests in the development of a movement of the working class against the undoubtedly dire working and living conditions to come. This is more difficult to predict since there is no mechanical link between crisis and class struggle. Optimists can point to the fact that the proletariat today is a more global class, that exploitation is the same the whole world over, even if local living conditions are not. Pessimists can argue that the proletariat in the past had a separate cultural existence which the capitalist media had more difficulty in penetrating with their noxious propaganda. But in fact, to greater or lesser degrees, these features have always been with us. And with the present phase of the crisis capitalism would seem to have exhausted all its options. For all the massive deval‎uation of capital that has been undertaken, the indications are so far that this has not been enough to open a new period of expansion. To solve the crisis of speculation, the state is printing money (or issuing new forms of debt). Much of it will have to be paid back in various forms by increased exploitation of the working class. We now have a situation in which every immediate attack on the working class will be related to the crisis of the whole system. It might be populist to contrast the survival of the super-rich bankers with workers heading for dole queues but this will be in the minds of many in the months and years ahead. However, even if there is greater resistance than we have seen for 25 years (in February it will be that long since the miners strike started) the key question is how that translates into class conscious action. And this brings us to the role of the international proletarian party.

The International Proletarian Party

We have already spoken of the defeat of the Russian Revolution and we have also spoken about the fact that communist left ideas only re-entered the UK at the beginning of the current capitalist crisis more than 30 years ago. One of the legacies of the defeat in Russia was the tendency to see the political party, not as the collective consciousness of the most revolutionary workers, nor as the bearer of the lessons of all the struggles of the proletariat in the past, but as the architect of the state of the counter-revolution and the defeat of the working class. For many it was a major stumbling block and even poisoned some of the debates that went on in the early 70s.

It is still an issue today with many who seem to believe that socialism can be achieved spontaneously. The whole history of the class struggle demonstrates otherwise. We hold to the view that a minority cannot build socialism — it is the work of the immense majority and no-one else but the working class as a whole can create it. However, we do not live under socialism now and under the conditions of capitalist domination only some workers will come to the conclusion that capitalism has to be superseded in advance of a revolutionary outbreak. If we deny the need for those workers to form a collective instrument to fight for the communist programme within the working class we are denying ourselves the only political instrument that we have to combat all the false programmes that the capitalists will inject into the struggle. And the political party of the future is an internationally centralised one. One of the weaknesses of the working class on the eve of 1917 was that its international (which was not centralised) had collapsed. When the majority of the Second International went over to imperialism in 1914, the revolutionaries inside that international had to begin again, and in wartime conditions it was impossible to create a new international centre, When it was created, it was based in Russia and, from the beginning, the Russian party dominated it for the very good reason it had made a revolution. But this was the problem — the Russian party was the government and the International increasingly adapted to the needs of the Russian state. Had the Third International existed before the 1917 revolution, it would have remained free of belonging to any state. The leaders of the party would not be in any government since their tasks would remain with the Party to guide the world revolution. Government in any geographical area would be the task of the class wide bodies in any territory, even if within these party members fought to get the communist programme adopted. This is why the future party of the working class has to be centralised internationally.

The party is also more than a propagandist organisation but has to actively seek ways to organise its presence inside the widest possible layers of the working class whether in neighbourhoods or workplaces. This is why we advocate such bodies as factory groups and territorial groups which are not made up of just party members, but also those who, at different times and in different places, see the need to struggle, not only against open capitalist enemies, but also against those who pretend to be on the workers’ side. For us this at the moment largely remains an aspiration but it is an indispensable necessity. It is not a question of the party organising the class but of the communists organising themselves inside the class. Only when we have achieved this, will we have the authority, and the people on the ground, to constitute a real force inside the working class.

In conclusion, the short answer to the title “Is Capitalism Finished” is no, and the reason is that its demise will not come from this or that economic crisis, but at the hands of the international working class. As the collective producer class alone, through revolutionary action, can create a new mode of production which can rid us of exploitation, classes, national borders, wars and … money. Preparing for that revolution remains our enormous challenge but we have perhaps arrived at a turning point which makes such a prospect more realistic.

Jock

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뒷부분은 ICC와의 데카당스 논쟁에 대부분을 할애하고 있습니다. 축적/생산과잉/이윤율 하락/비자본주의 시장의 부족 문제등 .. 이번 엘시지 2월모임에서 데카당스 논의할때 포함시켰으면 좋겠습니다.