Friday, April 03, 2009

Acting awfully bored, I loaned a buck from Henry Ford/Broke a date with John D Rockefeller*

It has been said that neoliberalism is experiencing a prolonged death rattle. Perhaps it is. But there is little evidence of it in the G20's announced deal. And this makes sense, as the neoliberal settlement has boosted capitalist class power enormously: this is what is euphemistically referred to when commentators discuss 'rising inequality', since the concentration of money wealth represents nothing other than the accumulation of surplus value (stop me if I'm getting too technical). Why overhaul a system that has been so effective, if you can get it running again for another decade or so? Gordon Brown claims that "the old Washington consensus is over". What the $1 trillion stimulus amounts to, in fact, is another component of the effort to save the Washington consensus, this time by making global growth dependent upon massive borrowing from the IMF (with the usual extortionate conditions attached thereto). As Graham Turner writes, when the IMF was sent in to the collapsing south-east Asian economies in the late 1990s, it imposed harsh fiscal restrictions that resulted in a deeper recession. The proposed regulations do contain some minimum necessary measures, but do not substantially break from the 'light touch' approach of the past thirty years. Take the tax havens. Brown says there is to be an 'end to tax havens' that don't share information. Now, that is already to concede that the rich can go on hoarding their wealth, avoiding taxes, and depriving states of billions in revenue. But in fact, there is to be no 'end': the proposition is simply to 'name and shame' the havens that don't share information. I'm sure they're terrified. They'll be raking in the billions but they will look, and feel, terrible. In toto, the financial system will emerge much as it was before.

As Larry Elliott points out, the $1 trillion stimulus, isn't even a $1 trillion stimulus. Not all of the money will be spent. In its best light, it might temporarily boost world demand, but it is highly unlikely to produce anything like that global 4% growth envisaged by the communique. The G20's growth claims are based on the IMF's consistently optimistic projections. While global growth is going to contract by 1.7% this year according to the World Bank's estimate, the first decline in world output since WWII, the IMF actually foresees a rise of 0.6%. The business press is anxious to talk up the prospect of a speedy recovery in the financial markets, in world demand (thus in trade volume) and in overall GDP growth. There have been numerous bear market rallies on the stock exchanges, and each time there has been a chorus of Polyannas anxious to see the light at the end of the tunnel, or the corner turned, or whatever equivalent metaphor is ready to hand. The most comical of these was a Financial Times video commentary on Timothy Geithner's ridiculous 'put' scheme (essentially another massive handover of public wealth to the banks), which strained desperately to be optimistic but concluded that "if the plan works, the crisis may be over, but if it doesn't, it isn't". The predictive power of bourgeois economics! Recently, the slight improvement in the US housing market after months of calamitous decline has been taken as an omen that 'the worst is over'. The ruling class needs to believe in that 'v-shaped' recession, because otherwise the basic structures of the neoliberal system that they are struggling to retain intact will have to be more than modified.

Lookit: the US government has been so determined to rescue finance capital and maintain its royal prerogative over fiscal policy that they have blown about $11.6 trillion on the banks, or just over 80% of total GDP in 2008. All of that will be paid for by the 'fiscal hawks' reaching into medicare, social security and so on. Obama's budget planners are reportedly giving serious consideration to a GOP plan to reduce social security entitlement. Indeed, the recession is being taken as an excuse to eviscerate the system. The US government have also signalled that they are prepared to let the car industry go under, thus further eroding the manufacturing base, and taking down one of the few remaining strongholds of organised labour in the process. And the dominant thinking on both sides of the Atlantic appears to be that the sooner this stimulus can be withdrawn, and fiscal austerity introduced, the better. None of this looks like a break with neoliberalism: quite the contrary. If there was to be a break with neoliberalism in the US, there would surely be a well-funded insfrastructural development programme, a boost to local state treasuries to fund vital services, the full nationalisation of most of the banking system and its subordination to public need, debt relief, house-building, interest-free loans, etc etc. Just for a start. But there is none of this, and nothing to restore the huge loss of wealth experienced by the working class, and the African American working class in particular, bar a paltry tax cut. The size of the much-vaunted "public works" programme, supposedly intended to create 2.5 million jobs and hailed as the biggest since the 'new deal', was $80.9 billion, or about 0.6% of total GDP - by comparison the Public Works Administration was funded with about 5.9% of GDP in 1933. The so-called stimulus package mostly consisted of tax cuts for those who didn't really need them.

So, wherein lies the rumoured crisis of neoliberalism? Despite Gordon Brown's formal renunciation of its tenets, no alternative vision has emerged among the ruling classes - and the working class movement is not as yet organised and militant enough to impose its own solutions. If the magnificent movements taking place in Greece, Italy, France, Ireland and Iceland don't spread; if the factory occupations in the UK don't spark off a wave of working class revolt; if the American working class doesn't explode in apocalyptic fury, then there is absolutely nothing to say that a new Frankenstein version of neoliberalism, with more Keynesian nuts and bolts, will not become the new dominant orthodoxy. I'm not expressing pessimism here, by the way. I think a renewed socialist ideology can emerge in the near future. In the meantime, however, we have to expect a certain lack of coherence. One of the most redundant, and condescending, complaints about the G20 protests was that "they don't know what they want". Of course there is not yet unity around a way forward, or what outcome should be obtained. There has been plenty of intellectual labour dedicated to exploring possible post-capitalist scenarios, but these remain dry, academic exercises in the absence of a movement capable of realising them. The best ideas, and the best perspectives about the means to get there will emerge precisely in the context of struggles over day-to-day issues.

*From Gotta Get up and Go To Work [.ram] by the California Ramblers.