Critique Notes 75
Published: 28 July 2016
Critique Conference and Panel
The annual Critique Conference was held, as announced, at Student Central, the former ULU, in Malet Street London on 14 May 2016. Savas Matsas, Hillel Ticktin, Raquel Varela and Yassamine Mather spoke at the conference. The theme was on War and Capitalism in the context of the anniversary of the Russian Revolution in 1917. There was also a Critique panel at the annual Left Forum in New York, at which Michael Hudson and Hillel Ticktin spoke, and Suzi Weissman chaired the meeting. The theme was on the present stage of the global crisis. There was a substantial attendance at both meetings.
The Crisis of Capitalism and the EU
“An Italian exit from the single currency would trigger the total collapse of the Eurozone within a very short period.
It would probably lead to the most violent economic shock in history, dwarfing the Lehman Brothers bankruptcy in 2008 and the 1929 Wall Street crash”1
Both the vote for Brexit, and the minor crash of currencies and stock markets are more a result of the continuing crisis of the capitalist system, than particular worries about the UK. So-called markets and hence the ruling class are worried about the global effects and so the future of capitalism. There is a real possibility of the UK going, then other countries following in its wake, with the Euro project itself folding fairly quickly afterwards. The political-economic union of countries allows for a more sophisticated form of control over capital and labour. Modern capitalism has long gone beyond the nation state. The forces of production are global today and interaction, common planning, interchange and regulation take an international form for developed economies, dominated by finance capital and modern industry. Individual countries cannot stand outside such close relationships with other developed countries. The World Trade Organisation, (WTO) is the overarching body with aseries of regional bodies like the North American Free Trade Agreement (Nafta) but the EU and its core, the Eurozone, has taken the process to its logical conclusion. In fact, the WTO, on the other hand, has been unable to take its own process any further.
For labour, conditions are sub-optimal whether inside such an economic alliance or outside it, because the political economy of these agreements is based on the classical operations of Capital in subordinating Labour. The overarching rule in the EU that there should be free movement of labour is to ensure competition among workers to keep the price of labour down and keep unions under control. It is not surprising that some workers should see the EU as the enemy. Looked at from the point of view of human rights, on the other hand, individuals ought to have the right to move wherever they can find a niche to suit their talents and be reasonably rewarded. However, it is in the nature of capitalism to ensure that there is mass unemployment, with workers competing for jobs. Unfortunately, neither the left nor the trade unions are strong enough to prevent not only the exploitation of workers but their superexploitation under contemporary conditions.
Today, the end of Stalinism in the Soviet Union and Eastern Europe has been accompanied with the destruction of industry in those countries. Although industry in those countries was generally uncompetitive in the world market, often both out of date technologically and inefficient, the new pro-market governments assisted, advised and often instructed by ideologically driven free market enthusiasts refused to build up their own nationalised industries. Private enterprise often preferred to asset strip what was there than reform and reconstruct their industries. Such industry as there is there now is largely an assembly industry. The result has been to leave the Eastern European countries with large scale unemployment with little future for new generations. It is not surprising that a million people from Poland came to the UK, nor that one reaction to the situation in Poland is the emergence of a far right nationalist government.
Looked at in terms of the European Union, the absorption of Poland, Hungary, the Czech Republic, Slovakia, Rumania, Bulgaria. Slovenia and Croatia and the 3 Baltic countries with more to come was a major political project which could only alter the nature of the European Union itself. This was particularly the case with the unity of East and West Germany, which led to the deindustrialisation of East Germany and a flow of people from East to West Germany. However, in this instance, West Germany subsidized East Germany at the expense of the German working class through taxation, while accepting the inevitable flow of workers from East to West. It has kept the right wing in power in Germany, while moderating any increase in German wages. It thereby strengthened German capital against the other members of the European Union, most particularly France.
There have been two clear results of this process in the EU. Firstly, unemployment has been relatively higher than in earlier times, and wages contained in their rises within the EU as a whole. For many real incomes have dropped. Secondly, most workers do not understand why this has happened. They do not understand this process of the ending of Stalinism, the failure of the marketization, and the alteration in the nature of the EU itself. In part, the left is to blame for not counteracting the right wing propaganda, particularly that coming from the far right. The existing left wing structures remain heavily influenced by Stalinism, whether because of the personnel or because there is insufficient understanding of Stalinism and the subsequent developments. Thirdly, it has to be said that the reformist agenda which is put forward cannot work even at the most minimal level. The world has gone beyond that point. Such projects only make the left look utopian or worse. Only a direct plan for a socialist world can now work, when combined with a direct attack on the racism, xenophobia and rabid nationalism now spreading over the EU and beyond.
The EU has subsidized Eastern Europe, even as it presided over its failed industrial/ economic reconstruction. As a result, the right wing regimes in Eastern Europe are dependent on the Western ruling class both financially and ideologically. Even though a country like Poland has a far right Eurosceptic government it is bound to the EU in a way Western countries like the UK are not. At the same time, the ruling governments and elites do not want further meddling in their countries. They are fundamentally unstable and EU instructions can create major problems. That was clearly seen in the case of refugees.2
The development of this relationship has helped to move the EU from being a Franco- German alliance into a union with Germany at its centre, using the Eastern European countries as its hinterland. France has been in decline for some time. The UK was the other crucial power in the EU, but it was semi-detached, inter alia, not belonging to the Eurozone and outside the Schengen agreement. It was, nonetheless, very important to the balance of power within the EU, in balancing Germany and France. Its influence is described as being ‘liberal’, i.e. supportive of the free market. Since 1979, Conservative and Labour governments have not differed in their ideology, and consequently the UK supported the shift which took place in the eighties in the EU apparatus away from social democracy, towards support for finance capital. Hence the UK could support West Germany in its line towards the absorption of East Germany, which meant, in particular, the blocking of any possible force to the left of the East German regime. The removal of the UK, therefore, can be regarded from one point of view as shifting the political balance against the right politically. Of course, the political balance in the UK itself may shift to the left over time, which would alter this judgment, but for the time being one may argue that the leaving of the UK may weaken the right.
Of course, the actual exit of the UK has a considerable political economic effect, which is more powerfully felt by the EU as a body, than by the UK as a country.
That is because the Eurozone is threatened with breakup, as has been demonstrated by the recent events in Greece, and by the powerful far right movements in France, Holland, Austria and Italy. While the UK is only threatened with losing Scotland, its loss is less total, probably resulting in a de facto federal solution, even if it is independent. For the EU, the situation is different.
The Scottish National Party may be able to call and win a referendum on independence so breaking up the UK, but Scotland is closely tied into the UK economically and socially. The real reason why the demand for independence has such support lies in the fact that the population sees independence as the only way that they can move leftwards towards a more social democratic or indeed socialist society. In that respect, its comrades are in the movements in Greece, Spain, Portugal and Ireland and others yet to arise in Italy and France.
The Underlying Cause
Workers both migrant and native are confused by the rapid change and worried for the future of themselves and their families. This is not just because of the changes in Eastern Europe.
The post-Brexit phenomenon on Thursday 23-24 June 2016 onwards, was less about the UK, than about the world economy. The above quote on the first page of this article shows one commentator’s view of the perils of the contemporary global economy. It is entirely possible that Italy will either be forced to leave the Eurozone, or decide to do so voluntarily. It has a considerable government debt - over 130 per cent of GDP, no growth in productivity since 1999, high unemployment and high levels of discontent, not dealt with by the established parties, social democratic or conservative. This may well come to the fore in the October referendum, which if the government loses may precipitate the Italian withdrawal from the Eurozone or both Eu and Eurozone. The situation of Greece and the way it was dealt with is one of the reasons why people in the UK turned against the EU.
Another commentator, Gillian Tett, drew attention to the huge overhang of debt with negative interest rates.3This is what Fitch, the ratings agency, had to say when discussing it:
Fitch Ratings-New York-29 June 2016: ‘Investors’ flight to safe assets following the UK’s EU referendum on June 23 pushed the global total of sovereign debt with negative yields to $11.7 trillion as of June 27, up $1.3 trillion from the end-May total, according to new analysis by Fitch Ratings.’4The essential point is not that negative debt grew by around 10 per cent as a result of Brexit but that it was already at stratospheric levels. It is largely Japanese and German debt with $1 trillion of French origin. To hammer the point home Fitch talk of ‘Worries over the global outlook.’
Gillian Tett raises the question, step by step in her article, of ‘the west slipping ever deeper into economic stagnation.’ Bloomberg, the business news agency and publisher, talks of negative interest rates being a sign of desperation.5When the capitalist class refuses to invest its own profits and savings in the economy, or to borrow in order to accumulate more profits, and central banks go for a species of economic force in imposing a penalty in savings, then it is clear the system is in long term trouble.
Capitalism is now in the profoundest crisis. It goes beyond a question of Keynesian secular stagnation. Italy was only a forerunner of the more general decline in productivity in the USA, the UK etc. Today, the only reason that products are not filling the storerooms with unsold items is that firms are able to restrict their production and supply. The increase in consumption is limited by the slow to negative rise in wages and salaries. On the other hand, automation is beginning to speed up. The technical basis of overaccumulation is clear. That, however, is only part of a more general malaise. Capital is restricting investment as part of this process and Governments are imposing a policy of austerity when the market is cutting back. This is a vicious circle where governments refuse to act because they regard state investment as undermining capitalism and capital refuses to invest because demand is limited by lack of investment by government and private enterprise itself. The ultimate reason lies in the instability of the social order, where the working class cannot be controlled under conditions of full employment, but its central and long-term demand is for full employment. At the same time, continued austerity is not working, leading as it does to increased discontent, which is refracted through a series of forms of complex protests, like voting to leave the EU, seen as the main establishment enemy. While it is not the main enemy, it is an instrument of the main enemy. The immigrants are not the enemy or a direct instrument of the main enemy but part of the reserve army of labour, used to as unwitting instruments to contain other sections of the working class. The only way to deal with the latter is to invite them to join with the main body of the working class to fight capital. The denigration of the immigrants has created discontent in their home countries and among other sections of the British population.
When a social system is in crisis then the contradictions in the system come to the fore, and instead of the poles of the contradictions interpenetrating or interlocking they pull apart, and the divisions in the society show themselves. In other words, the contradiction between capital and labour shows itself in the direct and indirect conflict between capital and labour. The result can be open and clear class conflict or a combination of open and hidden conflicts. Under these circumstances, there can be more than one form of action. Some are a form of stand-off, others a retreat, temporary or otherwise, and still others partial victories. We continue to live in a period of transition between capitalism and socialism in which the productive forces continue to demand socialised control, and a planned society, while the ruling class does its best to enforce the ‘free market’, in ever less propitious circumstances. Without any co-ordinated strategy the opposition is taking on a spontaneous and often negative form. Disintegration is the clear objective alternative to a system in process of supersession.
Disintegration in Context
The transition period has seen the end of the European colonial empires, with indigenous forces fighting the imperial powers with some success after the Russian Revolution in 1917. The exact form differed according to the country and time. Imperialism has not vanished but formal colonies have. The logical end of the British Empire did involve the possible disintegration of the ‘home’ country. That happened first with Ireland and it is inevitable that parts of other European countries would try to break away as a quicker and easier solution to the failure of capitalism. The working class as a class is not divided by nations, but under conditions of uncertainty in some parts of the world and despair in others it has retreated into a left-nationalist position. Worse - it has lost its form as a class and or as a part of the former class and have turned to barbarism. Unfortunately, this has been the case in various countries of the former Soviet Union and Eastern Europe and in the Middle East.
Rosa Luxemberg’s slogan of ‘Socialism or Barbarism’ has unhappily been prophetic, most obviously from 1933-45, but also for the present time. Disintegration can separate parts of existing countries from the whole entity into its formative communities but it can also lead to chaos as we are now witnessing most obviously in the Middle East. A society can be enveloped by civil war in which one class takes power, but it can also lead to permanent low level civil war.
However, it is not just the Middle East. The irruption of millions of refugees into Turkey and Europe calling for help under conditions of endless civil war has been used by the right as a means of ideological and physical control. With the decline in the standard of living and the permanent very high level of unemployment across the world, those countries where the many do not have an adequate supply of food as in Brazil or South Africa can expect endless riots, before a genuine left movement arrives.
We should, therefore, regard the breakaway from the EU as part of a deviant method of dealing with the crisis. Discontent in the UK was not just about immigration, which in any case, was only the lightning rod for a population fed up not just with the Conservatives but with a right wing Labour Party, which is accused of doing little but throw occasional crumbs to their supporters. Hence the occasional news from the EU, as in the case of Greece, or EU veto on subsidizing ailing firms, reflecting its generally pro- free market orientation helped to add to the anti-EU mood. The fact is that the RMT (railway trade union) campaigned for Brexit, as did various left wing groups.
They may not have had much direct influence but the fact that parts of the left took this stance would have helped to make Brexit more acceptable. The issue is not Brexit but the drop in the standard of living, in prospects for the future, and concretely for pensions, housing, and university fees. Workers took their revenge.
The fact is neither Brexit nor remaining in the EU is a left wing stance. However, the bourgeoisie generally wanted and needs to remain in the single market. The forces of production have gone far beyond the nation state and that means that it is not just a question of trade but of close interdependence in manufacturing, in services, in training and in planning. It does involve free movement of capital and labour. However, when looked at from the point of labour, the rules are being made by officials with a free market ethos, rather than a social democratic viewpoint. The result is somewhat worse than it was before 1979 or so.
What will happen?
There is no doubt that the exit of the UK from the EU is not in the interest of Capital, Big Business, or the economy under capitalism. The alternative on offer, however, is a less vigorous capitalism, with less change, and so less advanced and with fewer immigrants. There is no reason to assume that the British government will give more money to the National Health Service, housing, transport or welfare provision, education etc. Even if wages are not undercut they may not rise with inflation, given mass unemployment. This is not a viable capitalism.
On the contrary, without entry to the single market, British firms will be in trouble. This is not because there will not be trade, or because there will be tariffs. It is that the single market ironed out the various obstacles to competition which allowed firms to sell, or set up branches to sell, their goods and services. This required numerous regulations, inspections and agreements. Their effect was to make it much more straightforward for firms to set up a head office in one country and operate in all the other countries. This process allowed large firms like the Japanese car companies to set up their factories in the UK, with the intention of selling throughout the EU, something which required dealers throughout the EU, common advertising, common standards for emissions and other features. This is not a simple matter. Most small to medium size firms work for large to very large firms, whether supermarkets or industrial concerns, which are supranational if not multinational. As the forces of production are global, this trend can only continue. Education itself is increasingly international. The only alternative, within capitalism is backwardness. What is being offered is a reactionary utopia.
The Crisis Again
The Eurozone, as every commentator agrees, cannot continue if the disparity in income continues among its members. Germany cannot continue to accumulate an ever greater surplus taken from the other countries of the EU, without generating a
revolt. At the same time, Germany is refusing to underwrite the budget or balance of payment deficits of other countries. Some might argue that Germany does not want to become the imperial power within the EU, because of its history. Certainly Greeks made much use of the Nazi past in 2015, but this does not seem to be the real reason for their refusal to grant a Marshall Aid scheme to the Southern countries of the EU. After all, the Germans had no problem in appearing to be as vicious as possible to the Greeks, and by implication to anyone who was in a similar position. Schauble, the German finance minister, made it crystal clear that he, German economists, and the German cabinet believed that debts had to be paid. He is a true believer in the importance of ‘the free market’, which he made clear in the absorption of East Germany over a quarter of a century ago. One might also surmise that the German bourgeoisie does not want to reduce its profits and also ensure that the standard of living of the German proletariat is sufficient to avoid them moving to the left. Whether it is the right wing ideology, the question of profits, or the need to maintain stability or all 3 aspects Germany is holding firm to its refusal to subsidize other countries. The considerable EU subsidy to Eastern Europe is clearly acceptable, although it comes in some part from Germany. The present European Central Bank process of quantitative easing in the Eurozone also involves buying of bonds from deficit countries so effectively subsidizing them. In other words, it seems unlikely that Germany will change its policy officially, but it is possible that there will be a form of compromise in the name of the EU. If one agrees with Munchau, a crisis could break out, the like of which has never been seen, were Italy to leave the EU, then one would expect that the German bourgeoisie would retreat assuming, that it had the time to retreat.
The gravity with which the ‘markets’ has taken the British exit, would seem to indicate more that a break-up of the EU is regarded as a major concern, rather than worry over the UK’s prospect. Furthermore, that break-up is looked at as a further development of the existing crisis. The consistent failure of countries to pull out of the downturn while following an austerity policy, had already led the IMF to issue a series of reports calling for investment in infra-structure. Now the UK is reducing its austerity policy and proposing a reduction in corporation tax. These are straws in the wind, indicating that the ruling class has realised that it has to begin to retreat, if it wants to avoid much worse. The rise of the left in the Labour Party, and of Sanders in the USA, together with a series of labour struggles in France etc. plus the election results in Spain, Portugal and Ireland have indicated what may come.
Lenin famously had three conditions for revolution. First was that the ruling class could no longer rule in the old way. That is clearly the case, but the class is not yet a class, i.e. a collectivity, and there is no party to lead them. However, we are witnessing a weakening and disappearance of older parties and the formation of new parties, even if like the Grillo party in Italy it is a right wing party claiming mass support. The polarisation of the political spectrum is clear in Spain and Portugal, but asymmetrical in most European countries with the formation of mass far right parties, without a parallel development of a mass left wing party. The left remains divided into numerous sects and parties, in part a hangover from a Stalinist past with Maoists and old time Stalinists still around, but also a failure to find a form which will relate to the working class as a whole.
There is no revolution in immediate prospect, but we might expect that events like the minor earthquake that has hit the world economy today will be magnified in the future.
The Transition Period
The past 10 years since the mortgage crisis in the USA triggered the current long term downturn, whatever its terminology, have made it clear that we are in for the long haul of economic depression combined with massive struggles. In the period since the 1917 Russian Revolution there has only been a very short period when the world was not at war, in a Cold War or in a depression. For parts of the world there has been nothing but Stalinism and depression.
At the same time, the hope sparked off by the Russian Revolution remains alive, in whatever form. There are many more versions of Marxist thought than there are right wing ideologies, and now that there is no Stalinist threat, Marxism is less bowdlerized, demonized and more accessible on the internet. The emergence of a socialist candidate for election in the USA, Bernie Sanders, has appeared as a wholly unexpected beacon to the world. Most people had written off the USA as the last country in the world to respond to a socialist appeal. More importantly, the white working class responded to his appeal, though not in the South.6Obviously, Sanders is not a revolutionary, although he talks of a political revolution, nor is the USA about to move to the left as a whole. However, it is a signal in the wind that the world-wide shift to the left is beginning.
The transition period has until now been characterized by Stalinism, Fascism, War, depression and what may be called a political and economic void. Since the thirties there has effectively been no left of any significance. Stalinism cannot be regarded as being part of the left, given its physical liquidation of the left in the USSR and elsewhere, let alone the nature of the rest of their actions and policy. The social democrats are no longer even social democrats- for some time indeed. The impossibility of socialism in one country is being driven home in Cuba and Venezuela, unfortunately for their citizens, and that aspect of history is coming to an end.
We can regard the last 100 years or so as one in which the ruling class used three forms of defence. First, a defeated form of the revolution which had mutated into a defensive nationalist bureaucratic non-market shell, which spawned its own enemies internally and externally. Stalinism was the most wonderful enemy to ensure the survival of capitalism, ideologically, economically and in a Cold War. Very few in the ruling class understood its role by the end of the twentieth century.
Secondly, the introduction of a welfare state in developed countries, while maintaining the reserve army of labour in the third world, combined with a peasant agriculture. Thirdly, a shift of industry to that third world, when the Cold War was coming to an end.
The other aspects which are much trumpeted in sociological texts, like the role of the ‘middle class’, the consumer culture, class divisions like misogyny and racism, and the consequent lack of a revolutionary working class consciousness were secondary if important phenomena. This period is coming to an end. In the Luce article cited above7, workers saw themselves as working class, not middle class.
It is no surprise that a section of the ruling class would seek to intervene with their own interpretation of this phenomenon, by seeking to blame immigrants. In very general terms, it is the recrudescence of racism without the phenomenon of colour. In fact, the invention and use of ethnic divisions has been present from the time of the birth of capitalism. The forms are not identical; racism, anti-Semitism, chauvinism, but they are all means of diverting the attention of the oppressed and exploited away from the source oftheir poverty. Whereas the earlier forms began with the coming into being of capitalism, today it is the decline of capitalism which forces sections of capital to support these divisions.
Capitalism, in its essence, in its most mature form, is, in principle, colour and gender blind as it wants efficient workers operating to the best of their ability. Whether that has ever existed for any length of time, is open to question, as Capital in its various locations and at various times, has always had its troubles. Ethnic discrimination, however, in its most organised form is a feature of a decadent capitalism, as shown in Imperialism, Fascism and in the contemporary scene.
The crisis is showing that it has no end in capitalism, but that there will be sporadic eruptions as particular contradictions show their evolution. At the present time, the EU, and the Eurozone in particular is on a road to disintegration. Whether it will actually disintegrate will depend on whether the bourgeoisie will have the unity and sense to transfer income from Germany to other countries not just in Eastern Europe but to Western Europe also. In doing so, they may find that the class struggle in Germany intensifies. On the other hand, the British bourgeoisie will do its best to avoid leaving the EU, but whether it will manage to do so, given their internal relations with the lesser capitalist class plus discontented workers is not clear. Whatever happens, this picture is the background to the developing class struggle developing over the world.
- 1.Wolfgang Munchau, ‘Italy May be the Next Domino to Fall’, Financial Times, London, 26 June, 1.55pm, https://next.ft.com/content/009468b0-3b89-11e6-8716-a4a71e8140b0
- 2.Neil Buckley and Henry Foy, ‘Central Europe Wary of Deeper Integration’, Financial Times, 1 June 2016, p.6. The article brings out how the UK is seen as the ‘voice of reason’ particularly in Hungary and Poland. Effectively the method of control over the population is endangered through EU interference. However, I would argue that the subsidy and military umbrella of Nato integrates the countries involved.
- 3.Gillian Tett, ‘Now Watch the Interest Rate Outlook Shift’, Financial Times, 30 June 2016.
- 4.Fitch, ‘Brexit Vote Pushes Negative-Yielding Debt to $11.7 Trn’, 29 June 2016, https://www.fitchratings. com/site/pressrelease?id=1008156
- 5.Bloomberg, Jana Randow and Simon Kennedy, ‘Negative Interest Rates Less Than Zero’, updated 6 June 2016, 9:08 AM UTC, http://www.bloomberg.com/quicktake/negative-interest-rates
- 6.Edward Luce, ‘The New Class Warfare in America’, Financial Times, 20 March 2016, http://www.ft.com/ cms/s/0/63b061be-ecfc-11e5-bb79-2303682345c8.html#axzz4Dctrcd3j