Saturday, December 06, 2008
A few points on the crisis
I just wanted to outline some arguments gleaned from today's 'mini-Marxism' event. The gathering, featuring István Mészáros, Tony Benn, Moazzam Begg (who consistently impresses one with his erudition, wit and gravity) and a bunch of others, was an attempt to provide socialist answers to the current economic crisis.
1) The economic crisis expands the spectrum of political possibilities. A year ago, or even a few months ago, only the far left spoke of nationalising the banks. Now, Mervyn King - the governor of the Bank of England and free market ideologue - is suggesting that it may be necessary to do so. For years now, official neoliberal ideology has resisted intervention to defend jobs on the grounds that the state cannot afford such intervention. Now, it is a perfectly orthodox view that the state should intervene to defend jobs. Moreover, since the ruling class is in such flux (an ideological confusion reflected in the opinion pieces of the FT and The Economist), the greatest likelihood is of even more surprising developments in the future. The expansion of the financial sector and its current role in capital accumulation means that the credit crunch has a way of detonating unacknowledged and unseen charges. It does not simply affect 'speculative capital' - all capital is speculative, and those investors in the service or manufacturing industries who have borrowed heavily based on the strength of the financial sector are now severely exposed. As a result, we are seeing big job losses in consumer outlets like Woolworths, in service providers like Cable and Wireless, and in manufacturing sites such Tetley in Leeds, or GlaxoSmithKline in Durham.
2) The range of probabilities is somewhere between a crisis on a par with the 1970s (stats released yesterday show US unemployment rising at the fastest rate since 1974, with over half a million jobs lost in a month) or one equal to that of the 1930s. This means hard times for the advanced capitalist societies, but catastrophic times for everyone else. This occurred to me this morning while reading about the horrifying collapse of Zimbabwe's basic institutions of health and welfare and the dreadful poverty that people have been forced into. The dishonest attempt to reduce this to Zimbabwe's corrupt and authoritarian government (Gordon Brown appears to be calling for 'humanitarian intervention') both obscures any real understanding of how Mugabe has remained in power (Mamdani has performed a useful evisceration of liberal moralising on the topic), and neglects the most crucial point, namely the neoliberalism to which Mugabe and Zanu-PF committed themselves very early on. And of course, global economic trends can intersect with domestic political crises in much more deadly ways, as in Rwanda.
3) Partly as a corollary of the previous point, tensions between powerful states are likely to increase, and protectionism of an old-fashioned kind is once more on the agenda. The struggle between the US and Russia over control of energy supplies in Central Asia have recently been complemented by a new Sino-American contest over the devaluation of the yuan. China's rulers want to increase their exports since the American export market has shrank so catastrophically, causing the loss of thousands of factories in the Pearl River delta alone. Henry Paulson has consistently urged the Chinese to let the yuan continue rising against the dollar in order to help stimulate US exports, and the Chinese elite was prepared to go along with this for a couple of years. Not no more. This would seem, in the short term, to indicate a trade war. American capital has so far profited immensely from the surplus value produced by the expanding Chinese working class. This helped fund deficit spending and war, while providing a temporary illusion of abundance for many Americans. But it is no longer in the interests of the Chinese ruling class to just let that take place. And to add to this, there is the prospect of a confrontation between India and Pakistan, with the US implicitly backing India. Whoever carried out the slaughter in Mumbai, the beneficiaries have been those significant constituencies in both countries that favour war. South Ossetia showed that the largely illusory unipolar era was decisively finished. Kashmir may come to represent another lesson: that the era of proxy wars is far from finished. Within the EU bloc, there are now arguments between Germany, and France and the UK, with the former accused of beggar-thy-neighbour policies, refusing to take serious measures to address the crisis while relying on stimulatory policies elsewhere in Europe to support German exports. The whole world system becomes more chaotic and dangerous as a result of this crisis.
4) The argument (from Polly Toynbee, Ken Livingstone, et al) that 'New Labour is Dead', while appealing, is also misleading. The projected cuts in public spending following this curt stimulus are far more substantial than anything achieved by the Thatcher government. New Labour is banking on a quick resolution of the crisis and a recovery sufficient to fund such a huge contraction in public spending on pain of raising the national debt to incomprehensible levels. Economists speak of a V-shaped recession, in which the economy bounces back rapidly; a U-shaped recession in which the economy rebounds more slowly and with more difficulty; and an L-shaped recession, in which the economy stagnates for years on end. Few are betting on 'V' right now, and this means that either a New Labour or Tory government will subject the public sector to intense pressure to shed jobs, cut wages and reduce services.
5) Socialists must be flexible in their responses to this crisis. In the interests of maximum unity, one strategy is to find a minimum programme and try to interest a broad coalition in supporting it. However, the difficulty is that the crisis will impact in an uneven and unpredictable way. The traditional bases of the Left might not be the most militant sectors of society, for example. They may even be comparatively conservative, particularly if they are won over by the argument that it is time to defend the Labour Party. And such a minimal programme may end up lagging behind the needs of situations as they arise. Resistance is not necessarily going to flare up most along traditional trade union lines, or even as a direct response to economic crisis (it may be mediated in various ways). Flexibility is therefore essential.
That's enough montage. I'll get back to you in the morning.