By Ed Walsh
Irish Socialist Network
October 20th, 2010
I’ve
always found the economic side of Marxism to be a bit of a chore,
really. Whether it’s the great bearded one himself or such notable
followers as Rosa Luxemburg and Ernest Mandel, I’ve tended to skip the
weighty volumes they delivered with Capital or Capitalism in the title
and go for the sparkling political essays that don’t mention the organic
composition of this or the falling rate of that. Every now and then I’d
dig out one of the books recommended as an accessible primer on Marxist
economics, struggle my way through it and forget much of what I’d read
within a few weeks.
Eventually I decided it was time to get my
head around this stuff properly and clear up my ignorance of what’s been
happening to global capitalism over the last few decades. Handily, I
had started to get my teeth into it just when the great financial crash
began. If anyone tries telling you that nobody predicted what was going
to happen, don’t listen: the Marxist economic analysts whose work was
derided or simply ignored by the wise men of the mainstream had their
eye firmly on the ball. Here’s one random example from an essay
published in 1999 by the Spanish economists Jesús Albarracín and Pedro
Montes:
“The magnitude of the financial problem surpasses that of
any preceding historical period, including the years preceding the
crash of 1929. Considering present conditions – capital’s
internationalism, decomposition of the international monetary system,
deregulation of markets – the house of cards erected through financial
and credit expansion is highly unstable and runs a risk of collapse
which is not easy to dismiss. Before the initiation of another expansive
cycle similar to that of the 1980s and above all before the initiation
of a lasting phase of recovery, a cleansing of the system which destroys
part of this financial capital seems necessary. No firm recovery can
take place with the burden of the current financial hypertrophy and
degeneration.”
Not bad for “dinosaurs”, eh?
Now that the
crisis has actually hit us, it might be a good idea to check out this
deeply unfashionable school of economic thought, among whose
English-speaking vanguard the authors of In and Out of Crisis and The Enigma of Capital rank very highly.
In
their short, accessible primer, Leo Panitch and Sam Gindin set out to
dispel some naïve and woolly thinking about the crisis on the Left. They
challenge the common view of neo-liberalism as an ideology pure and
simple, describing it instead as a class project which aimed to
reinforce the social power of capitalist elites in the global North.
This brings into question the idea that 2008’s meltdown – and the
massive state intervention which followed – marked the demise of
neo-liberalism. The ideology has certainly been rendered laughable, but
then, it was never meant to be carried out in practice. Reagan, Thatcher
et al never had a problem with state intervention as such. In fact
their project required it, on a vast scale. It’s not a question of
whether or not states should intervene in the economy, but how and on
behalf of which social interests.
Panitch and Gindin also
question the widely-urged remedy to the financial joy-riding which has
marked recent economic history: more and better regulation. Such calls
overlook the class nature of the state in a capitalist society, which
renders it unsuitable for the task of bringing finance capital to heel:
“The
fundamental relationship between capitalist states and financial
markets cannot be understood in terms of how much or little regulation
the former puts upon the latter. Neo-liberalism brought a change in the
mode of regulation, but there wasn’t less regulation. Moreover, freer
markets often require more rules, if nothing else to protect the
property owners who are in the market, to lay the rules under which they
can sue each other and go to court when they are not able to make their
obligations. It is certainly possible to say that the regulatory
agencies should have developed forms of controlling some of the rampant
speculative and fraudulent activities. But regulatory agencies weren’t
interested in that. Their role was developing the kinds of regulations
that would promote financial innovation. And the resultant financial
speculation has been central to the kind of dynamic globalisation that
capitalism produced to the cost of a great many people around the
world.”
There will have to be a major renewal of working-class
political organisation if this comfortable relationship between
capitalist states and capitalist markets is to be challenged; Panitch
and Gindin have some useful reflections on the impasse of North American
trade unionism which can easily be linked with experience on this side
of the Atlantic, and conclude with “strategic considerations” for the
Left and ten theses on the crisis that deserve careful study.
Like
Eric Hobsbawm and Frederic Jameson, David Harvey has managed the
impressive feat of establishing himself as the pre-eminent scholar in
his field despite remaining loyal to Marx throughout a resolutely
anti-Marxist age. Harvey’s reputation is founded on an awe-inspiring
grasp of factual material and social theory, in tandem with a lyrical
prose style that recalls the best of Marx himself. Try this for a
taster:
“If we could somehow map the movement of capital
occurring in different places across the globe, then the picture would
look something like the satellite images taken from outer space of the
weather systems swirling across the oceans, mountains and plains of
planet earth. We would see an upswelling of activity here, becalmed
zones there, anticyclonic swirls in another place and cyclonic
depressions of various depths and sizes elsewhere. Here and there
tornadoes would be ripping up the land and at certain times typhoons and
hurricanes would be coursing across the oceans posing imminent dangers
for those in their paths. Refreshing rains would turn pastures green
while droughts elsewhere leave a scorched earth brown.”
The Enigma of Capital
is a remarkably clear and readable analysis of the factors that cause
capital to break its cycle, generating the crises that have wreaked
havoc across the globe since the birth of industrial capitalism. There’s
no point trying to sum up Harvey’s argument in a few sentences: I’ll
just concentrate here on one of his points about the origin of economic
crises. Marxist economic theory has often been divided into camps
grouped around three “crisis theories”: “The profit squeeze (profits
fall because real wages rise), the falling rate of profit (labour-saving
technological changes backfire and ‘ruinous’ competition pulls prices
down), the underconsumptionist traditions (lack of effective demand and
the tendency towards stagnation associated with excessive
monopolisation).” Harvey believes that we need a more pluralist approach
to crisis theory that combines the insights of different schools:
“The
analysis of capital circulation pin-points several potential limits and
barriers. Money capital scarcities, labour problems,
disproportionalities between sectors, natural limits, unbalanced
technological and organisational changes (including competition versus
monopoly), indiscipline in the labour process and lack of effective
demand head up the list. Any one of these circumstances can slow down or
disrupt the continuity of capital flow and so produce a crisis that
results in the devaluation or loss of capital. When one limit is
overcome accumulation often hits up against another somewhere else. For
instance, moves made to alleviate a crisis of labour supply and to curb
the political power of organised labour in the 1970s diminished the
effective demand for product, which created difficulties for realisation
of the surplus in the market during the 1990s. Moves to alleviate this
last problem by extensions of the credit system among the working
classes ultimately led to working-class over-indebtedness relative to
income that in turn led to a crisis of confidence in the quality of debt
instruments (as began to happen in 2006). The crisis tendencies are not
resolved but merely moved around … it is also vital to remember that
crises assume a key role in the historical geography of capitalism as
the ‘irrational rationalisers’ of an inherently contradictory system.
Crises are, in short, as necessary to the evolution of capitalism as
money, labour power and capital itself.”
John Waters of the Irish
Times recently launched a particular ignorant and senseless (even by
his standards) attack on “gobshite-Marxism”. While we have to admire his
pioneering use of the word “gobshite” as an adjective, it’s hard to
avoid the conclusion that Waters just didn’t have a clue what he was
talking about. There’s been plenty of gobshite-neo-liberalism in the
Irish media since the crisis began, however. It would be nice to imagine
one of the pundits who froth at the mouth when talking about
public-sector workers delegated the task of rebutting Harvey’s argument,
on pain of losing their access to the opinion pages and having to go
around in public with a trade union pin on their jacket if they can’t
get to grips with it. We’ll be waiting a long while for that to happen,
of course. But in the meantime, do yourself a favour and check out both
of these books: even though they barely mention Ireland, you’ll learn
more about where we might be headed than a year’s subscription to the
Irish Times or the Irish Independent would divulge.
Back to Greg Albo’s Author Page | Back to Leo Panitch’s Author Page | Back to Sam Gindin’s Author Page