Karl Marx’s alternative to capitalism – part 13 Mandel vs Warren

neoliberalismnCertain aspects of the debate between Mandel and Warren obviously reflect the period in which it occurred, particularly post-war social democracy, Keynesianism and the accepted role of the state in economic policy.  Some of this would appear to have been misunderstood as simply due to the power of the working class in defining the priorities of society; as opposed to the socialisation of capital and production noted by Marx as a developmental law of capitalism, with an increased role for the capitalist state in this process.  In this development the priorities being asserted were primarily those of capital and capitalism.

The period commonly called neoliberalism has demonstrated both that the working class does not shape economic and social policy through the capitalist state but against it, and that even when it has been unable to assert its interests as much as previously, the welfare state may have reduced and become more strict and punitive but it has not been abolished.

The economic role of the state despite the rhetoric has continued to be large and no one now should be confused that this somehow signals the presence in its operation of the predominance of social priorities set by the working class.  All this should be apparent from the experience of the last 50 or so years, at least with hindsight, although the renewed appearance of a Labour Party left demonstrates the need to learn these lessons again.

This period has also demonstrated that the need for capitalist profitability conflicts with the social needs of working people and that Mandel is surely correct that there are limits to the extent which the latter can be accommodated within the former without instability and explosive conflict.

While both Mandel and Warren are keen to emphasise the political nature of the means by which capitalism will transition to capitalism – class struggle and revolution in the case of Mandel and class struggle and reform, particularly of the state (within limits set by capitalism) in the case of Warren – both appear to take for granted that the productive forces and relations of production have laid the grounds for their particular approach.

Except however that Warren does integrate the development of the productive forces into his analysis of the development of socialism out of capitalism better than Mandel, for whom they are simply a precondition already achieved.  Warren envisages their further development, which has been the case since he wrote, but suggests a means by which this can be the growth of the socialist alternative within the capitalist system.

He argues that socialism will not be the result of a revolution, which must provide its own grounds for success, but from the working class developing itself and its role, to be the leading class in society based on the growth of the productive forces.  Mandel is correct that ultimately working class direction of these forces is not compatible with capitalism, the working class cannot be hegemonic within capitalism, but Warren is correct that the working class needs to develop its social and political power in advance of a political contest for state power.  How far this might go is not predetermined even if its limits are.

Warren is wrong to have seen the developing role of the state as reflecting the increasing role of the working class and its priorities within capitalism but not wrong to see that the latter could take place.  The working class must seek to take a greater and greater conscious role in directing society, within capitalism, firstly by creating and directing its own organisations – its trade unions and political parties.  Its imposition of reforms upon the capitalist state is entirely secondary.

But it should also seek to direct the forces of production themselves through worker-owned cooperatives.  In this way it begins to challenge the capital-labour relationship even if only, as Marx says, to be its own exploiter.  In doing so it becomes its own boss, it raises the horizon of cooperation outside the cooperative enterprise as well as within it – in other words a cooperative economy, and it raises the need for a state that can defend, extend and advance workers ownership, a workers’ state that really does reflect working class priorities.

Otherwise the desire to control society upon which a socialist revolution is predicated is presumed to arise from a pure inability to have any control whatsoever; from disempowerment and failure of capitalism.  But the failure of capitalism to do what?  To deliver the goods in terms of standard of living?  But both Mandel and Warren agreed that this will not be the case, at least not in terms of immiserating the working class.

The case for workers’ cooperatives, as also with trade unions, is not reduced but can actually be strengthened during periods of capitalist prosperity.  Their possibility is not reliant for credibility or purpose purely on capitalist crises, which, Marx noted, are not permanent.  The growth of such cooperative production thus does indeed place the working class in a position to more and more become the leading, hegemonic class in society, even if this must be consummated by capturing political power, an objective to be fought for by a mass working class party.

Of course, it is extremely unlikely that either the capitalist class or its state will facilitate or allow the development of workers’ ownership and of a cooperative sector within the economy that would grow to such scale that it determines the overall dynamic of society’s productive forces and its productive relations; that simply needs completion by creation of a new workers’ state for there to be a new working class mode of production, one that is the direct road to socialism.  But such capitalist opposition is testament to the objective role of the growth of cooperative production in digging the grave of capitalist production.

In all this however it is clear that it is the development of political consciousness that is key.  Only through its development will workers become active makers of their own future, seeking greater and greater control over their lives and thus greater and greater control of society.

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Marxists believe that it is material conditions that generate consciousness and the purpose of the last number of posts in this series has been to argue that it is not at all clear that conditions of crisis can generate socialist consciousness.  They have not done so in Ireland and some of the first posts on this blog were a record of how previous capitalist crises generated reactionary solutions.  The growth of xenophobic and racist solutions today are testament to this.

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Karl Marx’s alternative to capitalism – part 12 Mandel vs Warren

mandel3In 1969 the Belgian Marxist Ernest Mandel wrote an article for ‘New Left Review’ that discussed the question “when, why and how will the great majority of the American working class (the white working class) revolt . . . by making a socialist revolution.”

He went on to say that “in the history of the world socialist movement, there are only three fundamental answers to this question. One is the answer given by utopian socialists, and various propaganda sects of very different colours and origins, who all agree on one basic point: that the working class (or mankind for that matter) will never move towards socialism as long as it has not ‘seen the light’—i.e. let itself be persuaded by the particular creed of the particular sect in question.”

“The second answer, diametrically opposed but parallel to the first one (and as fundamentally wrong) is that ‘when objective conditions are ripe’ (when ‘the productive forces have ceased to grow’; or when ‘misery has become unbearable’; there are many variations of fatalism), the ‘workers will become socialists’ and ‘make a revolution’.”

“The third and correct answer, that of the classical socialist movement, perfected by Lenin, says that workers will make a revolution when (a) socialist consciousness has been introduced in their midst by an organized vanguard; (b) this consciousness merges with a growing militancy of the whole class, which is a function of growing social contradictions, and (c) that militancy emerges into an objective situation of sudden and extreme instability of the ruling class (a ‘prerevolutionary situation’, a ‘revolutionary crisis’).”

I don’t agree with this third answer.  Experience has been that point (a) has been very much like the first answer; that (b) is just a restatement of the second answer and that (c) is an inadequate basis for socialist revolution, as this series of posts on capitalist crises has hopefully demonstrated.

The introduction of socialist consciousness by an organised vanguard can only be something more than a propagandistic sect if there is some material basis for the generation of socialist consciousness among the working class.  By the latter I mean recognition that workers must own the means of production, not capitalists and not the state, and that they need to rule politically, through their own state.  A small propagandistic group cannot generate and convince millions and a vanguard would need to be so large that it needs explanation itself and is not an explanation.

Militancy is necessary arising from social contradictions but this militancy is never without purpose so the nature of the contradictions on which it is propelled plays a large role in determining this purpose, in channelling the militancy along certain lines, towards certain solutions and with a certain consciousness and political understanding appropriate to it.  Militancy usually takes the form of action around the role of the workers as seller of his or her labour power – over wages, conditions or the inability to sell labour power at all and suffering from unemployment.

Since the key to socialist consciousness is rejection of labour power as a commodity, the ‘wages system’, there is a qualitative leap in consciousness required from such militancy. Reformist politics which simply seeks better terms for the sale of workers’ labour power is normally better placed to represent and capture such consciousness, whether this reformism genuinely seeks to achieve the aims of the militancy or not.

So whatever contradiction exists within capitalism that brings to the fore workers’ lack of ownership of the means of production is best placed to provide the soil and nourishment for the socialist consciousness out of the militancy generated by this contradiction.

So a better definition of the conditions conducive to socialist revolution would involve, if we take Mandel’s approach: (1) a socialist vanguard which is a mass movement that is derived from a fundamental objective feature of capitalism committed to the conscious building by workers of a mass party plus (2) a wider militancy that is based upon a contradiction of capitalism that points to socialism as the resolution. These are two expressions of the same process with different levels of consciousness characterising different layers of the working class arising from the relevant capitalist contradiction, which is necessary for (3) any crisis of class rule, which is to lead to socialist revolution.

The key is not therefore the crisis or, as Mandel puts it at the end of the article: “these subjective factors, reacting from the social superstructure on class relations, cannot be the main cause of a new mass radicalization of that working class. The main cause can only be found in a change of material conditions. The growing crisis of American imperialism can only transform itself into a decisive crisis of American society through the mediation of a growing instability of the American economy. This is our key thesis.”

Crises are an intrinsic part of capitalism; like troubles, we do not have them to seek.  What we do have to seek is the objective contradictions of capitalism upon which a subjective socialist movement of workers can be built.  And like crises, the contradictions of capitalism are also not hard to find. The creation of a workers movement that seeks their resolution in socialism is the task and not a vanguard that can lead workers to take advantage of episodic crises, which are not permanent, to seize political power without first having established that for the working class itself this is what its objective should be.

Just as capital is both a thing and a social relation; money, commodities, machinery and factories etc. while also the relation of the exploitation of workers labour power to create more value than that which they are paid; so the movement that overcomes capital will be both a thing that demonstrates the objective overcoming of capitalism and also the relation of workers breaking from capitalist exploitation through breaking the monopoly ownership of the means of production.

In 1974 Mandel engaged in a debate with Bill Warren, a writer with quite different views, about the capitalist crisis that had developed at that time and about what the crisis meant for the strategy for a working class conquest of power.

Warren argued that capitalism and its development of the productive forces was less and less effective in responding to the social needs of workers which the system itself had developed.  This incapacity of capitalism was reflected in the increasing role of the state which carries out roles of economic distribution that allocation through the market cannot.  The working class develops new aspirations for itself and becomes a decisive factor in the direction of this increasing state control.

Warren therefore writes that “It therefore seems to me that the long-run strategy of the working class must be to centre the struggle around the control of economic policy. To put it somewhat differently: if the working class is to develop as the leading class within society, as a hegemonic class, it must itself become a leading class within capitalism before it conquers state power. . . it seems to me that the present characteristic of Western capitalism is not one where the working class can rely on stagnation, slump or decline in order to conquer power, but, on the contrary, must rely upon its ability to increasingly lead society in such a way as to control the economy in a fashion more relevant to social need.”

Mandel disagrees and comes straight to the point:

“I would agree with Bill Warren that the case for socialism should not be based on the fact that capitalism produces increasing misery, or even a decline in material wealth . . . I do not think that the working class can become the leading class in society before it has taken political and economic power. I think that the very characteristic of the capitalist economy is that you cannot run that economy on basic lines other than those of capitalist interest. That is to say: on the lines of profit.”

Warren’s reply is that the British economy had already changed dramatically since the 19th century, that a large proportion of the population was employed in non-profit sectors and a large part of investment was state led.  This is a process that had taken a long time but one which had gradually been able to impose working class social priorities on capitalism.  The problem has been that the working class had not attempted to carry out these changes within capitalism as a leading class, as a class leading society in order to bring about its social priorities.

Nevertheless, despite the fact that it has not acted as a dominant class within society, but rather as a subordinate class, it had nevertheless brought about extremely fundamental changes in capitalist society. What’s more to the point, it had been able to bring these changes about without any major disruption in the ability of capitalist society to continue to work relatively effectively. These extremely fundamental changes had been compatible with the operation of the profit motive.

He went on to argue that “The kind of process that I am invisaging, in other words, is one in which the working class actually intensifies class struggle over the imposition of social priorities, but does so in a way which is consistent with a realistic way of keeping the capitalist economies operating. This has already happened in the past.”

Mandel concludes by recognising that “the might of the working-class movement has enabled it to realize through society, to impose on the capitalists, a certain number—I would be much less optimistic than he in my assessment of its achievements—but a certain number of social priorities. That is the main contribution which the working-class movement has made up to now, through the improvement of the situation of the working class and to the change in social conditions in general. There is no dispute about that. People who dispute that would dispute the very existence of more than 100 years of mass organization of the working class. But I would strongly deny the possibility that this process can grow in an unlimited way without bringing social and economic contradictions within the capitalist system to an explosive point.”

to be continued

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Karl Marx’s alternative to capitalism part 11 – crises and contradictions V

paris-communeWhen we consider the role of capitalist economic crises in the creation of a new society we are not short of guidance.  Capitalism has had so many crises that there have been innumerable opportunities to investigate just how such crises prompt or accelerate the socialist alternative.  In Ireland, the economic crash of 2008 destroyed the credibility of the main capitalist Party, Fianna Fail, whose Finance minister had hailed “the cheapest bail-out in the world” before it bankrupted the state and brought in the IMF, European Central Bank and European Commission to determine the state’s response to the crisis.

Yet this enormous crisis and exposure of the credibility of the economic and political system did not lead to any qualitative increase in the power of the Irish working class or of those political forces seeking to replace capitalism with socialism.  Indeed there appears to be a greater chance of more or less the same economic and political crises happening again, with an overheated property market, massive debt, and the working class responding only to the rhythms of the capitalist boom and bust, currently by attempting to make wage gains during the boom but without any perspective for the bust.

In this its short-sightedness is understandable and so is that of the left that claims to be far more far-seeing and which would claim that, like Marx, “in the movement of the present, they also represent and take care of the future of that movement.”

But only if the left learns that it must properly prepare for such crises and not simply await them, hoping that they push workers into its arms, will it have learnt something.  The experience of previous generations of socialists should be drawn upon to see what lessons must be learned.  It is clear that Marx himself learnt from crises and from the role they could play in ushering in or assisting workers’ revolution.

Even as a young man Marx understood the need for patience and preparation – “we must expose the old world to the full light of day and shape the new one in a positive way. The longer the time that events allow to thinking humanity for taking stock of its position, and to suffering mankind for mobilising its forces, the more perfect on entering the world will be the product that the present time bears in its womb.”

A few years later Engels made a similar observation:

Question 15: Do you intend to replace the existing social order by community of Property at one stroke?

Answer: We have no such intention. The development of the masses cannot he ordered by decree. It is determined by the development of the conditions in which these masses live, and therefore proceeds gradually.

The point is not that both Marx and Engels sought to delay revolution but that they understood its prerequisites.  At this time they believed that not all countries were ripe for social revolution, which would depend mainly on the fate of Britain.

Even in the democratic revolution in Germany in 1848 Marx was clear that revolution could not be decreed, even if certain lines of march could be advanced:

“We do not make the utopian demand that at the outset a united indivisible German republic should be proclaimed, but we ask the so-called Radical-Democratic Party not to confuse the starting-point of the struggle and of the revolutionary movement with the goal. Both German unity and the German constitution can result only from a movement in which the internal conflicts and the war with the East will play an equally decisive role. The final act of constitution cannot be decreed, it coincides with the movement we have to go through. It is therefore not a question of putting into practice this or that view, this or that political idea, but of understanding the course of development. The National Assembly has to take only such steps as are practicable in the first instance.”

Marx also believed that capitalist prosperity could rule out revolution, which could only come from crisis:

“Given this general prosperity, wherein the productive forces of bourgeois society are developing as luxuriantly as it is possible for them to do within bourgeois relationships, a real revolution is out of the question. Such a revolution is possible only in periods when both of these factors – the modern forces of production and the bourgeois forms of production – come into opposition with each other. . . . A new revolution is only a consequence of a new crisis. The one, however, is as sure to come as the other.”

But this does not mean that out of each and every crisis would come revolution and it is apparent that as he got older Marx became less sanguine about the impact of crisis itself as the harbinger of workers’ revolution.  The recent biographer Jonathan Sperber notes that “after the disappointment of his hopes of revolution to follow in the wake of the global recession of 1857, Marx rather downplayed the importance of crises for the end of capitalism.” (Karl Marx, a Nineteenth Century Life)

Marx was aware that revolution was not merely an exercise of will and might need decades for the working class to train itself for the exercise of power.  His attitude to the situation facing French workers in 1870 when the Prussian army had defeated France is instructive of his serious attitude to revolution and his understanding of the conditions for success.  He noted that in relation to the new French republican Government that “any attempt at upsetting the new Government in the present crisis, when the enemy is almost knocking at the doors of Paris, would be desperate folly.  . . . Let them calmly and resolutely improve the opportunities of Republican liberty, for the work of their own class organisation.”

Nevertheless, when French workers rose up and created the Paris Commune Marx leapt to its defence, explaining the attitude that all sincere socialists take when workers enter struggle: “World history,” he wrote, “would indeed be very easy to make, if the struggle were taken up only on condition of infallibly favourable chances.”  As Engels noted of the events in the 1848 revolutions:

“A well-contested defeat is a fact of as much revolutionary importance as an easily-won victory. The defeats of Paris in June, 1848, and of Vienna in October, certainly did far more in revolutionizing the minds of the people of these two cities than the victories of February and March. The Assembly and the people of Berlin would, probably have shared the fate of the two towns above-named; but they would have fallen gloriously, and would have left behind themselves, in the minds of the survivors, a wish of revenge which in revolutionary times is one of the highest incentives to energetic and passionate action. It is a matter of course that, in every struggle, he who takes up the gauntlet risks being beaten; but is that a reason why he should confess himself beaten, and submit to the yoke without drawing the sword?”

We cannot always pick our battles, but if we can we should, and it is on the basis of what we want that we should plan and prepare, what we should build for and base our politics on.  As Marx said of the First International:

“The political movement of the working class has as its object, of course, the conquest of political power for the working class, and for this it is naturally necessary that a previous organisation of the working class, itself arising from their economic struggles, should have been developed up to a certain point.”

“On the other hand, however, every movement in which the working class comes out as a class against the ruling classes and attempts to force them by pressure from without is a political movement. . . .  On the other hand the movement to force an eight-hour day, etc., law is a political movement. And in this way, out of the separate economic movements of the workers there grows up everywhere a political movement, that is to say a movement of the class, with the object of achieving its interests in a general form, in a form possessing a general social force of compulsion. If these movements presuppose a certain degree of previous organisation, they are themselves equally a means of the development of this organisation.”

“Where the working class is not yet far enough advanced in its organisation to undertake a decisive campaign against the collective power, i.e., the political power of the ruling classes, it must at any rate be trained for this by continual agitation against and a hostile attitude towards the policy of the ruling classes.”

In speaking of the results of the Paris Commune Marx noted that:

“The working class did not expect miracles from the Commune. They have no ready-made utopias to introduce par décret du peuple. They know that in order to work out their own emancipation, and along with it that higher form to which present society is irresistably tending by its own economical agencies, they will have to pass through long struggles, through a series of historic processes, transforming circumstances and men.”

dead-communards

It would be wrong to see this prognosis as out of date, made archaic and obsolete by almost 150 years of intervening history.  This is obviously not the case.  The working class of today is very different from that of the late 19th century, with the many struggles the latter gained consciousness from a matter of history and not lived experience.  In many ways it has to painfully learn lessons previously acquired through bitter and desperate struggle.  It has also to “pass through long struggles” and “through a series of historic processes” through which it will be transformed and be transforming.

In terms of economic and social development the objective grounds are today much more favourable across the world.  In terms of the social and political power of the working class, in many countries it is no more stronger now than it was 100 years ago or 50 years ago.  This is a glaring contradiction and it is one that requires explanation, although not only that.

As Marx famously said  “the philosophers have only interpreted the world, in various ways; the point is to change it.”  So it is not so much explanation as practical solution that is required, which necessitates increased organisation and heightened political consciousness.  Crises throw up the need for this and do not offer solutions but simply opportunities to face the challenges that either success or failure in developing this organisation and consciousness make workers more or less ready for.

In the next post I will look at a couple of Marxist contributions to this problem written in the late 1960s and mid-1970s.

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Forward to part 12

 

 

 

 

 

 

 

 

Karl Marx’s alternative to capitalism part 10 – crises and contradictions iV

aaeb3f49f0044521a0b0904c2599b84b_18In 1921 Leon Trotsky argued that “If the further development of productive forces was conceivable within the framework of bourgeois society, then revolution would generally be impossible. But since the further development of the productive forces within the framework of bourgeois society is inconceivable, the basic premise for the revolution is given.”

I will argue against this view but it should not be taken that by this Trotsky believed that any particular country had to have fully developed capitalism before socialist revolution could succeed because obviously his theory of permanent revolution argued precisely that this was not the case. The argument just presented is a view of the world taken as a whole and not any particular country.

In his view capitalism could break at its weakest link but this is not Marx’s theory of the transition to socialism.  For capitalism not only to break but be replaced by socialism it is necessary that capitalism be broken not where it is weakest but where the working class is strongest, and the two are not the same.

The view that the productive forces have to have exhausted themselves has been a default view of much of the Marxist movement since 1938 and the writing of the Transitional Programme, which was called ‘The Death Agony of capitalism and the tasks of the Fourth international’.  Adherence to this view means accepting that we have been living during a period of capitalism’s death agony for the past nearly 80 years.

It is this that justifies the view that objective conditions make the world ripe for socialism and that what faces socialists is a crisis of working class leadership. The task is simply to fight for leadership of the working class as it presents itself; its objective position and situation within society is relevant only in so far as it lends itself to gaining such leadership.  Since capitalist crises cannot be definitively solved by capitalism then such crises provide the opportunity for Marxists to win this leadership.

Those who have read earlier posts in this series will know that I reject the view that the productive forces of capitalism have stagnated.  This view was certainly challenged by the post Second World War economic upturn.  Crisis conditions in the 1970s and 1980s might have revived the view that capitalism was in long term crisis but the period since has seen huge economic growth.

Again the view that capitalism is in crisis might be bolstered by the financial crash in 2008 and the secular stagnation following it that has been posited by some writers but such crises do not amount to the long term crisis of capitalism suggested by Trotsky and secular stagnation has yet to be demonstrated.  If it were, it would still not amount to the long term crisis of capitalism that has been claimed, except that stagnation is not compatible with capitalism and if it existed it would create conditions of crisis.  

In previous posts I noted that capitalism had continued to develop the productive forces over the last century, including the expansion of the working class, its health and education and also its living standards.  Of course this does not mean that the next century will follow the pattern of the last.  This is as unlikely as the twentieth century following the pattern of the 19th, but it is at least necessary to appreciate what has already happened before thinking we are qualified for the much more hazardous task of speculating on what will happen in the future.

Incheon01

A recent article in ‘New Left Review’ notes that:

“Our available economic resources are greater than ever before. Between 1980 and 2011 world GDP per capita (in constant prices and purchasing power parities) increased 1.8 times, the IMF reports. As a comparison, we may remember that between year 1 and 1820 global product per capita is estimated to have increased 1.4 times, and from 1870 to 1913 1.7 times. More reliable are figures for 1950–73, 1.9, and for 1973–2003, 1.6.”

In his book ‘Postcapitalism a Guide to Our Future’ Paul Mason quotes figures that show global GDP per person rising by 162 per cent between 1989 and 2012 and in the developing world by 404 per cent.  It rose by ‘only’ 33 per cent in the 100 years after the ‘discovery’ of the Americas and by 60 per cent in the fifty years after 1820.

Of course, this is not to deny the growth of inequality and ecological threat arising from the capitalist nature of such growth, how could it be otherwise?  Paul Mason notes that while the real incomes of two thirds of the world’s people rose significantly, as did that of the top 1%, the majority of people in America, Japan and Europe had no real increase and some a decline.  As the article in New Left Review notes:

“Furthermore, the conventional norm of progress obscures the unequal distribution of its opportunities. Almost half, 46 per cent, of the world’s income growth between 1988 and 2011 was appropriated by the richest tenth of humanity.  In the US, since the late 1990s, there has been a progressive decoupling of GDP per capita—advancing with short-lived fallbacks—and the family income of four-fifths of the population, which has been stagnating and recently declining, above all from the median and below. The spread of the Anglo-American financial crisis of 2008 has meant a substantial decline in the income share of the bottom 40 per cent in the recession-hit European countries, from Greece and Ireland to the UK and Spain.”

One Marxist[i] makes a persuasive case that the official figures underestimate the growth of specifically capitalist production because they ignore the conversion of the Stalinist states to a new economic system.  These figures treat the production in these states prior to the introduction of capitalism as if it were already capitalist but this ignores the boost to specifically capitalist production of the acquisition of productive forces on the cheap and the availability of huge pools of labour power that can now be exploited to further the accumulation of capital:

“In 1991 the centrally planned economies had a population that was 35 percent of that in the market capitalist economies. The restoration of capitalism in them massively increased the world’s working class that could be exploited by capital, while at the same time the world’s capitalists paid almost nothing to privatize the assets of entire economies. . . .By 2006 China, now the second largest capitalist economy in the world, employed 112 million industrial workers (Bannister 2009), not including millions more in the former USSR and CEE.”

“During the 1990s capitalist production of electricity rose 44 percent, aluminium 45 percent, hydraulic cement 60 percent, steel 39 percent, automobiles 21 percent, and GDP 42 percent, with the rate of increase accelerating the decade after. This is particularly significant as this period extends to 2010 and so includes the period of the credit crunch recession after 2008. The growth of output in the emerging markets has been combined with the accelerated decline of industrial output in the West, but this is a transfer of production, not its disappearance. By 2010 the transition economies as a proportion of total capitalist production produced 29 percent electricity, 52 percent aluminium, 65 percent hydraulic cement, 53 percent steel, 30 percent automobiles, and 26 percent of GDP.”

It is hardly credible that the objective and subjective conditions for socialism could be bifurcated for so long – that the problem is simply one of mis-leadership – while the social and political power of the capitalist class over the working class, effected by the enormous development of capitalism, reflected also in the ideological hold of the former over the latter, can be considered a secondary matter.

That this continuing subordination of workers by capitalism for decades, without challenge in any fundamental respect, could be considered not to have affected the consciousness of new generations of workers, were it true, would prove Marxism false.  The idea that the fundamental problem is simply one of working class leadership is not credible.

Marxists are always keen to assert that they do not seek crises and do not welcome the attacks on workers which large crises inevitably result in, including unemployment, wage cuts and attacks on workers’ democratic rights to organise.  But if crises do provide the opportunity to replace capitalism, and the grounds for socialism already exist, then this would be something of a puzzle.

In part we have already noted the answer – that crises openly express capitalism’s contradictions and posit the need for an alternative.  However, it matters not whether socialists wish or do not wish for crises, capitalism will see to it that they erupt anyway.  It is not workers who create economic crises but the contradictions of the system itself.

Socialists do not welcome crises in themselves because they become opportunities to overthrow capitalism only under certain conditions.  Since capitalism has had many crises and we do not have socialism we can infer that these conditions are rather restrictive, or have been so far.  Is there anything in Marx’s alternative that explains why this has been the case and therefore what might we change to address our failures so far?

An answer to this means going beyond seeing capitalist crises as simply the opportunity to overthrow capitalism without understanding what makes them such an opportunity, as opposed to an opportunity for capitalism to resolve its contradictions at workers’ expense.  The answer does not lie in the illusion that capitalism is a system in permanent crisis or is in an epoch of revolution. Crises there have been and even revolutions but clearly this hasn’t been enough for Marx’s alternative to have flowered.

The last 100 years has witnessed many revolutions.  The most important at the beginning of the last century were carried out under the banner of socialist revolution but they nearly all failed very quickly.  Later revolutions that destroyed capitalism did not usher in socialism or even societies controlled by workers taking decisive steps towards socialism.   The belief was widespread that socialist revolutions would be complemented by national liberation struggles which would lead to democratic revolutions, but again there were numerous democratic revolutions, few overthrew capitalism and none of them brought about socialism.

Since the decline of such struggles the most important revolutions have involved the overthrow of Stalinism and the concomitant reintroduction of capitalism while the Arab Spring has not resulted in any fundamental reordering of society, except in the sense that in some societies it has led to their disordering and collapse.

There have been plenty of revolutions but the changes have been mainly one of political regimes without fundamental changes to class rule, at least in the sense of the working class ruling society.  Such glimpses of a new worker-controlled society have been brief and fleeting.

Marx’s prognostication was that “the bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society. Conservation of the old modes of production in unaltered form, was, on the contrary, the first condition of existence for all earlier industrial classes. Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones.” 

The history of modern revolutions is testimony to this.  The absence of working class revolution is not.  Ironically, if you seek to reduce Marxism to a task of resolving a crisis of leadership you weaken its explanatory power, its guide to political intervention and its appeal.

Marx was aware that sometimes decades of political development are necessary for a working class to make itself capable of ruling society.  This is true now for reasons that Marx could not be fully aware of.  What he did do however was provide analyses of capitalism that may help socialists appreciate why we have failed so far.

[i] On the Alleged Stagnation of Capitalism, William Jefferies, available on the net.

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Forward to part 11

Karl Marx’s alternative to capitalism – part 9 crises and contradictions iii

economic crisisCapitalism’s crises are the expression of its contradictions, among which must be those that provide grounds for resolution through working class creation of a socialist society.  While the absence of crisis at any time does not mean that the system’s contradictions have been removed, it signals that they must at least have been temporarily contained or limited while continuing to develop, without erupting into violent disruptions of the system. Marx reacted to the return to some sort of prosperity following a crisis as a signal that socialist revolution was for the time being off the agenda.

For capitalism the eruption of economic crisis is also the means by which the contradictions of capitalist accumulation are (temporarily) resolved, by reducing the costs of raw materials and machinery etc.; destroying competitors by making the least efficient firms go bust; increasing unemployment, so putting pressure on workers to increase the pace of work and reducing wages; and by prompting the state to lower legal protections for workers or lower corporate taxes etc.

Only in a crisis does it seem obvious that capitalism is unable to cater for the needs of the majority, and to a degree that stimulates mass resistance and opposition, so what then may result is a political crisis of its rule.  There is less reason to expect the working class and other oppressed parts of society to seek an alternative to the system if it is not in some sort of difficulty.

On the other hand if workers are not prepared to react to crises by defending gains and can’t be radicalised sufficiently to achieve overthrow of the system, or have the social and economic power to do so, then socialists must accept that the limits placed on the scope of working class action at such times do not yet include the system’s overthrow.

While economic and political crises signal the possibility of an alternative and a possible opportunity to create one there is no longer a view that they point to the inevitable triumph of socialism.  Crises can awaken workers to politics, can propel them to political organisation, push them to fight and make them seek out alternatives but if this is true of the vast majority and such development only takes place on the eve of revolution then it is only a minority who enter the fight with some idea of what that fight is, about how it might be won and what constitutes victory.  These are rather weak grounds on which to expect success.

As I noted in the last post – what attitude workers take to crises, how they understand them, who they blame and what solutions they seek are strongly conditioned by their previous experience prior to and outside capitalism’s difficulties.  This strongly determines the outcome of crises

“There are no permanent crises” Marx said, which means that such crises in themselves cannot be the grounds for socialism since these grounds must be continuous and persistent conditions within the capitalist system.  Crises therefore cannot be confused with the contradictions of capitalism that provide the source for anticipating its replacement.

So if not permanent crises, is it the nature of the stage of capitalism that warrants the claim that the possibility of socialism exists, as Marx claimed.  It would appear that for the majority of Marxists the answer is yes: we have been living within the highest stage of capitalism for the last one hundred or more years, set out most famously by Lenin in his short book – ‘Imperialism, the highest stage of capitalism’.

Further to this, the other Marxist leader of the Russian revolution wrote a political programme for his supporters in 1938 in which he clearly characterised the nature of the epoch during which he lived:

“The economic prerequisite for the proletarian revolution has already in general achieved the highest point of fruition that can be reached under capitalism. Mankind’s productive forces stagnate. Already new inventions and improvements fail to raise the level of material wealth. Conjunctural crises under the conditions of the social crisis of the whole capitalist system inflict ever heavier deprivations and sufferings upon the masses. Growing unemployment, in its turn, deepens the financial crisis of the state and undermines the unstable monetary systems. Democratic regimes, as well as fascist, stagger on from one bankruptcy to another.”

“All talk to the effect that historical conditions have not yet “ripened” for socialism is the product of ignorance or conscious deception. The objective prerequisites for the proletarian revolution have not only “ripened”; they have begun to get somewhat rotten. Without a socialist revolution, in the next historical period at that, a catastrophe threatens the whole culture of mankind. The turn is now to the proletariat, i.e., chiefly to its revolutionary vanguard. The historical crisis of mankind is reduced to the crisis of the revolutionary leadership.”

This political programme, The Transitional Programme, became the guiding strategy for those Marxists who rejected the distortion of socialism by Stalinism in the Soviet Union and who stood in the revolutionary tradition of Marx.

The view that socialism was retarded not so much by capitalism itself, or the political forces that defended it, but by other factors can easily be appreciated in a world in which the most powerful forces claiming to be Marxist ruled over vast parts of the globe. In these countries workers held no political power except through a bureaucracy that ruled in its name and unilaterally claimed to be its leadership.  As long as this was the case the struggle for genuine socialism had to counter the claims of Stalinism that the degenerate bureaucratic dictatorships in the Soviet Union and Eastern Europe were the future socialist society which Marx foresaw.  In this sense, the view that the crisis facing socialists boiled down to who was able to claim the mantle of leadership might seem to have not a little currency; if only because if Stalinism was socialism then the majority of workers and many Marxists weren’t interested.

Trotsky’s predictions of catastrophe should also be viewed in light of the headlong march towards world war, a war that would exceed the death and destruction of the Great War that had ended only twenty years before.  In fact this second world war had already begun with already catastrophic results for the Chinese people.  When we consider that the possible number of deaths due to World War II is as high as 80 million people it is no exaggeration to have stated in 1938 that “a catastrophe threatens the whole culture of mankind.”

What matters today is whether the context in which this happened now prevails, or has prevailed ever since it was written in 1938; in other words that “the economic prerequisite for the proletarian revolution has already in general achieved the highest point of fruition that can be reached under capitalism.”

If this were so then the series of posts of which this one is a part, dealing with Marx’s alternative to capitalism growing out of capitalism itself, would have little need to go beyond a political analysis of the class struggle and specifically how and why the working class still allows itself to be politically led by political forces opposed to the revolutionary overthrow of capitalism.

to be continued

Back to part 8

Forward to part 10

Karl Marx’s alternative to capitalism part 8 – crises and contradictions ii

A view common among Marxists is that socialism will arise out of a crisis of capitalism.  This is believed for a number of reasons.  The most fundamental is the view that socialism will arise from the contradictions of capitalism and these contradictions give rise to repeated crises; crises of overproduction, of profitability and of class relations.  Economic and political crises point to the inevitable triumph of socialism as every such capitalist difficulty signals the possibility of an alternative and the opportunity to create one.

A more common sense way of understanding it is that if capitalism continued to deliver the goods then why would anyone fight to change it?

These contradictions include the contradiction between capital and labour in which capital accumulates and grows through augmenting itself with the value created by labour for which labour is not remunerated in wages.  These contradictions also include the tendency for the development of the forces of production to conflict with the relations of production within which they develop.  The productive forces of machinery, technology and other means of production and productive relations determined by the ownership of these means of production by capitalists and the exclusion from ownership of those who create and work with these means of production, the working class.

The contradictions are the tension between the more and more effective socialisation of production and its private capitalist appropriation. Production is more and more subject to a division of labour with hundreds if not thousands of components produced and shipped from all over the world before final assembly in one location.  This final product such as a computer can then join thousands of other products in creation of another final product such as a car.  The workers who produce this final product likewise consume commodities created from all across the world which are themselves assembled from products created across the globe.  A vast meshed network of companies, of communications and transport has been created by capitalism that requires an enormous degree of co-ordination and planning by millions of workers to ensure this all takes place, and takes place profitably.

Yet this production is sold on a market in competition with other similar products from other companies or in competition with very different goods that could equally be bought instead.  Only after the fact is it recognised whether the labour employed in producing these goods has been wasted.  If the prices obtained for them do not result in sufficient profit the capitalists will close down, reducing production and reducing the market for goods generally as workers are laid off and supplier companies equally reduce employment.  If this happens on a big enough scale economic crises result.

Were imbalances in production to arise in an economy under workers’ collective ownership this production would be rebalanced without making workers suffer for any misallocation.  It would be in the interest of everyone to reallocate this labour to produce goods or services for which there is more need.  With capitalist appropriation however, despite the socialised nature of production, despite the enormous cooperation and scale of planning required, it is only the private profit of individual capitalist companies that counts.  And if this means closing down productive assets, wasting resources and creating unemployment well . . production is only for profit under capitalism.  It is competition not cooperation which predominates, competition between companies for sales of commodities and competition between companies to extract the maximum surplus from their own and other workers.

For Marxists this global economic result arises from the very nature of the commodity itself and its simultaneous existence as a use value and as a value.  As a commodity it must have usefulness for it to be purchased by anyone but it must also have a value that can be exchanged with other commodities and money.  At the end of the day it is the value in exchange that matters for the capitalist because it is from this aspect of the commodity that profit is derived.

A more common way of describing this is that production is for profit and not for use; commodities are produced only in so far as they procure a profit but which are only purchased in so far as they are useful.  Goods and services are produced which are profitable but which only a tiny minority of the world’s population find useful while goods useful to millions are not produced because they are not profitable.

The craziness of this has been on display in Ireland, which has had an enormous economic boom largely built in its last years upon housing and other property production. A boom that eventually turned to bust not because everyone had a decent home, or the commercial fabric of society had been completely renovated, but because the prices demanded by developers and construction firms could no longer be afforded by those expected to buy or rent. Prices collapsed, building firms went bust sacking tens of thousands of construction workers; developers went bankrupt, their loans could not be paid and the banks that lent them the money then also went bust, unable to remain solvent given the scale of the bad loans on their books.

The capitalist State then stepped in to assure the banks’ solvency by guaranteeing their loans and when it was proved that it could not afford to do so it too went bust; so the European Commission, European Central Bank and the International Monetary Fund also stepped in to ensure that the State could make good its guarantees to the banks – in exchange for the State cutting the tripe out of state services, increasing taxes, lowering public sector wages and reducing public sector employment.  The State survived all this by spreading its debts across the generations so that even in 2050 the children and grandchildren of the boom generation will be paying for the boom and the bust.

At the peak of the boom 90,000 houses a year were being built by employing around 274,000 workers. Last year fewer than 13,000 new homes were built while demand is running at 25,000 a year.  There are over 1,000 families homeless compared to 400 at the beginning of last year while there are an estimated 90,000 families on waiting lists for social housing.  But this is happening in a country that has 230,000 vacant homes, some in “ghost estates” in far-flung towns where few Irish people now wish to live — if they ever did.

This is reported in Ireland and elsewhere as if this was a peculiarly Irish problem, but not only have there been property booms across the world but housing and property booms are only the most visible manifestations of classic crises of overproduction that have been a feature of capitalism for almost two centuries.  Visible because the commodities overproduced sit there staring everyone in the face for years.  This is not an Irish problem, although it has to be said that the Irish are very good at doing it with houses, but is a classic capitalist problem of desperate need not being addressed because to do so would not deliver the requisite profit.

housing 1
It has been reported by the Society of Chartered Surveyors in Ireland that it costs €330,000 to provide a standard family home, a figure that appears to have changed little despite the deep recession!  Construction costs account for less than half of this figure with the rest made up of fees, levies, site acquisition costs, finance costs, and tax and profit margins.  Developers would rather hoard land they over-paid for in the boom because to do otherwise would mean them accepting a loss.  This would then hit the banks who everyone is pretending are now fine and no one wants a repeat of the 2008 crash.  So the process of the previous boom and bust is repeated for the sake of avoiding another one.
Housing 3

But very few people can afford houses at these prices and single people and those on even average incomes can’t afford them and would drown in a sea of debt if, or rather when, interest rates increase (although of course no one is thinking of this now). Instead the solutions put forward by the Government include grants to first time buyers, which will simply increase prices by the amount of the grant, or subsidies to developers, who will probably pocket the money while maintaining their asking price.  In short, the same policies pursued during the boom.  As the table below shows the huge debt already built up is a big constraint on any solution that seeks to stuff working class people with even more credit.

Housing 2

The solution is to build affordable houses by expropriating the land holdings of developers and re-employing many of the construction workers who were made unemployed in the crash.  However, this calls for a radical break with the prerogatives of private property which is a more entrenched religion in Ireland than theCatholic Church.

From the point of view of our look at Karl Marx’s alternative to this sort of mess there is another striking question that arises.  Just how do such crises lead to replacement of the system that produces them with a new one called socialism?

Yes, capitalism leads to these crises and yes, they would not arise within a socialist society, but what is the mechanism by which this contradiction leads from the former to the latter? What leads workers from recognising there’s a crisis to understanding that it’s a result of capitalism and agreeing that socialism is the answer, and then fighting to introduce it?  All while their starting point is not so much a very conscious rejection of socialism so much as a recognition/acceptance of capitalism because it is the system that actually exists, works (however badly) and places them in a subordinate position within which, by and large, they are powerless to effect very radical change, either as individuals or even as individuals that are part of collective organisations.

A lack of understanding of what socialism actually is and little confidence that the world can be changed, or that they must do it themselves, are not even the first condition of this problem but the result of the more basic conditions within which workers live.  Is there a contradiction at this more basic level of workers’ everyday lives that can provide the experience that they can learn from either directly or indirectly; that capitalism does not have to be accepted and that an alternative can actually exist, already exists even if in an underdeveloped form that must be developed further?

In all this it is clearly the development of political consciousness that is key.  Only through its development will workers become active makers of their own future, seeking greater and greater control over their lives and thus greater and greater control over society.  But Marxists believe that it is material conditions that generate consciousness and it is not at all clear that conditions of crisis can generate socialist consciousness.  They have not done so in Ireland.  Some of the first posts on this blog were a record of how previous capitalist crises generated reactionary solutions and the growth of xenophobic and racist solutions today are testament to this.

Marxists do not believe that the rational superiority of socialism on its own will lead to socialism.  Or rather, to be more precise, Marxists do not believe that rational argument about the superiority of socialism over capitalism will bring it about.  It plays a vital part in the work of socialists in the workers’ movement but rational argument is ultimately only powerful if it corresponds to the rational development of capitalism itself.

If capitalism tended more and more to a state antithetical to socialism, to a position that was further and further away from the possibility of collective workers’ ownership of the means of production, then ultimately no amount of rational argument about the putative superiority of socialism would matter because it could not arise in the real world. And if it could not arise in the real world the argument as to its superiority would not be rational either. A world built on unqualified love between all members of humanity may appear a rational argument, as opposed to the hate and oppression of the existing one, but it is not rational because we all know such a society cannot exist.

Crises are ephemeral, they are the means by which capitalism resolves its contradictions, even if only temporarily. They generally weaken the working class and its movement and they often present opportunities to disorient them.  They invite immediate solutions when many workers generally experience capitalism as individuals or are not grouped in organisations that are by their nature capable of providing answers.  What attitude workers take to crises, how they understand them, who they blame and what solutions they seek are strongly conditioned by their previous experience prior to and outside capitalism’s difficulties.  Generally this experience does not prepare them for taking conscious control of society, which is the essential challenge posed by the greatest crises.

Capitalist crises therefore give expression to the contradictions of capitalism but are not themselves the contradictions upon which the alternative higher form of society will arise.  History is replete with subordinate classes’ willingness to fight against their oppressor classes, such as the countless rebellions by Chinese peasants against their ruling dynasties or medieval peasants against their feudal lords.  But even when the contradictions involved in their class antagonism burst through in successful rebellion no stable society was created by these victorious oppressed class because the class contradiction evoked no mode of production resting on the unified class interests of the victorious class.

Even when the class of feudal lords disappeared from history it was not a peasant mode of production that was eventually built on the bones of their feudal rule.  Similarly, when the working class in Russia succeeded in overthrowing the Tsarist state and the capitalist economy in Russia it failed to create a new socialist society because the material conditions would not allow a new socialist mode of production to grow and develop.

So basing the alternative to capitalism on the crises of capitalism is not enough.  Developing consciousness of the need for an alternative is not even enough.  The contradictions that exist must contain within them the potential for a new socialist society to arise out of them.  In other words, it is not enough that there is contradiction but that the contradiction is resolved, in this case in a new and higher form of society.  And for this to be the case the nature of the contradiction has to contain the potential for this to occur.

It is not that the contradiction creates a clean slate upon which something new can be built but that the new arises from within the development of the contradiction itself.  Clearly the nature of this is therefore key, for its development must not only contain the end of the old but the beginning of the new at one and the same time.  Consciousness by the working class of the necessity for a new society is necessary for it to happen because it must be its creation but this is only possible if the process exists in reality.

Back to part 7

Forward to part 9

Karl Marx’s alternative to capitalism part 7 – crises and contradictions i

white-america-1-e1448033371744Last year an academic paper noticed that there has been a marked increase in mortality among white middle aged men and women in the United States between 1999 and 2013.  The effect of this has been dramatic: if the previous decline in mortality among this group of people had continued as before there would have been almost half a million fewer deaths during these years.

There has also been an increase in morbidity among this section of the population, reflected in increased self-reporting of poor health, pain and psychological stress.  Nor can this be put down to the well-known increase in obesity among some sections of the American population because this decline in the health of middle-aged men and women has affected both the obese and non-obese, with the former accounting for only a small fraction of the overall deterioration in health.  This worsening has particularly hit those with a poorer education, those with only a high school degree or less, and is primarily the result of increases in the rates of suicide, drug and alcohol poisoning and chronic liver disease and cirrhosis.

fd2a8a276c172deed75f43e23ef7b229The significance of this is even more noteworthy because this segment of the US working class was part of the embodiment in the middle of the twentieth century of the American dream and therefore of the capitalist vision epitomised during the American century.  Visions of white families in suburbs, owning automobiles and domestic appliances, in new homes with pretty gardens and white picket fences were a domestic ambition so strong it fired the imagination not only of American workers but millions of the poor across the world who wished to become American.  An ambition millions succeeded in achieving.

In the twenty first century this dream is collapsing amid widening inequality, stagnant wages, deindustrialisation and an increase in economic insecurity, with precarious employment and pensions reliant on the vagaries of the stock market.  It is reflected in large increases in disability; falling participation in the labour market, particularly among women and addiction to prescription painkillers where for every death in 2008 due to addiction there were 10 admissions for abuse, 32 emergency department visits, 130 people who were abusers or dependent and 825 non-medical users of the drugs.

I remember seeing a programme on the collapse of the Soviet Union which noted that a French researcher had predicted its fall due to an increase in infant mortality.  No one is predicting the collapse of US capitalism but things are really bad when people stop living longer and start dying earlier.

In my previous posts in this series on Marx’s alternative to capitalism I have noted the prodigious development of the capitalist system across the globe and its achievement of what Marx called its ‘civilising mission’.  This, I showed, was evidenced by increasing life expectancy, better health, higher levels of education, higher living standards and the sheer increase in numbers of the working class and the world’s population. In fact five out of six of my posts were an attempt to substantiate the argument that the civilising mission of capitalism continues into the twenty first century.

But surely this is now blown apart by this example of the death of the American dream, something inconceivable 60 years ago?

A few years ago I met an American socialist who I believe was from Detroit who was not so much arguing but simply incredulous that anyone could believe other than that capitalism was in crisis and failing badly

But world capitalism is not Detroit.

Accepting this point however, is it not the case that socialists should be pointing out the failures of capitalism, its crises and its contradictions?  After all, if capitalism is to be overthrown and replaced it must be because in some way it has failed.  Surely a capitalism that keeps on developing and retains a ‘civilising mission’ is not one that will suffer this fate? 

Should socialists not criticise capitalism and certainly not heap praise on it and its achievements?

Marx himself, although he praised capitalism’s prodigious development of the productive forces and the human capacities it had unleashed, hardly spared it his condemnation. Development brings industrialisation and the goods and services that change peoples’ lives for the better but it is built on exploitation of humanity and degradation of the planet’s resources and ecosystem.  Capitalist industrialisation brings the capitalist phenomenon of periodic or partial unemployment on a massive scale – “it makes an accumulation of misery a necessary condition, corresponding to the accumulation of wealth.” (Marx)

So the International Labour Organisation estimated that there were 218 million unemployed workers in 2009 and that of the 1.4 billion wage workers in 2011 many are only employed part time or precariously employed and a further 1.7 billion are “vulnerably employed”, being “own-account” workers (including street workers in poorer countries or those engaged in subsistence agriculture) and “contributing family workers” (those who worked unpaid in the home).  “In most of the world, open unemployment is not an option; there is no safety net of unemployment compensation and other social welfare programmes.  Unemployment means death, so people must find work, no matter how onerous the conditions” (Michael Yates, all quoted in ‘The Global Reserve Army of Labour and the New Imperialism’)

So why the series of posts on capitalism’s ‘civilising mission’?

The short answer is that the arguments set out above are mistaken.  The slightly longer answer is that they are wrong because they are one-sided.  The longer response again is that the whole answer is not simply an addition of capitalism’s achievements and its failures, of its successes and crises, or more simply of its good bits and its bad bits.  Even to understand its contradictions is not to think of a good side and a bad side in opposition.

To seek simply to condemn capitalism requires a standard by which it should be judged to have failed – it must have failed against some criteria.  Even if there were ‘good bits’ to capitalism to weigh in the balance against its ‘bad bits’, which together would allow one to make a judgement, some measuring criteria would be required by which to determine the relative weight and importance of its good and bad aspects.

But what would these criteria be?  They could be derived from what capitalism itself claims to defend, uphold and promote – economic growth, political equality, equality of opportunity, individual freedom, efficiency, modernisation and progress.  It would then be possible to, indeed socialist regularly do, expose these claims as hypocritical, false, misleading, one-sided and often simply untrue.  But this would be to limit one’s case to the criteria that capitalism’s defenders themselves identify as important and socialists usually find themselves making arguments that go beyond what capitalism can accommodate and what its supporters will consider legitimate.

Appeals to loftier ideals such as justice or fairness beg the question of how such things are to be defined and how realistic or practical any definition is, given the real world we live in.  A definition of justice that cannot possibly exist in the real world is not just because these criteria must apply to a world which is possible.  A just and fair world that cannot exist is neither just nor fair.  The civilising mission of capitalism is therefore not one of the ‘good’ sides of capitalism against which the bad must be weighed.  This civilising role of capitalism is itself grounds on which the alternative to capitalism rests.

I have tried to make this easier to appreciate by pointing out that the amazing economic growth of capitalism has produced an ever larger world working class without which, obviously, there can be no socialism.  And without a working class that has developed a relatively high cultural level we cannot expect socialism either.  The civilising mission of capitalism has created both.

This is generally understood among some Marxists only in the sense that unless the productive forces have developed sufficiently there will not be the level of resources necessary to ensure that inequality will not breed class divisions after any successful socialist revolution.  If society cannot develop sufficient levels of consumption to satisfy the needs of everyone then class divisions will re-emerge.  Society’s productive powers will be distributed so that these are owned by a separate class because society as a whole cannot address the needs of everyone. 

Leon Trotsky explained how this laid the foundation for the development of Stalinism after socialist revolution in Russia in 1917:

“The basis of bureaucratic rule is the poverty of society in objects of consumption, with the resulting struggle of each against all. When there is enough goods in a store, the purchasers can come whenever they want to. When there is little goods, the purchasers are compelled to stand in line. When the lines are very long, it is necessary to appoint a policeman to keep order. Such is the starting point of the power of the Soviet bureaucracy. It “knows” who is to get something and who has to wait.

A raising of the material and cultural level ought, at first glance, to lessen the necessity of privileges, narrow the sphere of application of “bourgeois law”, and thereby undermine the standing ground of its defenders, the bureaucracy. In reality the opposite thing has happened: the growth of the productive forces has been so far accompanied by an extreme development of all forms of inequality, privilege and advantage, and therewith of bureaucratism. That too is not accidental.

In its first period, the Soviet regime was undoubtedly far more equalitarian and less bureaucratic than now. But that was an equality of general poverty. The resources of the country were so scant that there was no opportunity to separate out from the masses of the population any broad privileged strata. At the same time the “equalizing” character of wages, destroying personal interestedness, became a brake upon the development of the productive forces. Soviet economy had to lift itself from its poverty to a somewhat higher level before fat deposits of privilege became possible. The present state of production is still far from guaranteeing all necessities to everybody. But it is already adequate to give significant privileges to a minority, and convert inequality into a whip for the spurring on of the majority. That is the first reason why the growth of production has so far strengthened not the socialist, but the bourgeois features of the state.” (The Revolution Betrayed)

So there are two reasons why socialists in particular should welcome the development of the productive forces that capitalism is responsible for – the material foundations for socialism in terms of sufficient consumption for everyone in society and the growth of the working class that develops as these productive forces develop.

To these are added the civilising mission of capitalism through the productive forces developing new and higher needs that lead to a higher cultural level among the working class, on which basis it becomes more and more fit to become the ruling class of a new society.

The development of the productive forces must also be welcomed for other reasons which we shall come to in future posts.  What is important for the argument here is that the development of capitalism’s productive forces is necessary for the future of socialism.  As Marx explained in a letter written two years before his death:

“The doctrinaire and necessarily fantastic anticipations of the programme of action for a revolution of the future only divert us from the struggle of the present.  . . . Scientific insight into the inevitable disintegration of the dominant order of society continually proceeding before our eyes, and the ever-growing passion into which the masses are scourged by the old ghosts of government – while at the same time the positive development of the means of production advances with gigantic strides – all this is a sufficient guarantee that with the moment of the outbreak of a real proletarian revolution there will also be given the conditions (though these are certain not to be idyllic) of its next immediate modus operandi [form of action].”

In this quote Marx does not seek to place class struggle and the development of the productive forces, which can only mean the development of capitalism, as opposites but welcomes both as positive factors leading to socialist revolution.  Yet many socialists cannot think how the development of capitalism assists its eventual overthrow and can only conceive that capitalism must be in perpetual crisis, feeling that without this not only is there no prospect for socialism but no rationale for it either.  But if this were true then the prodigious development of capitalism over the last two centuries or so would have proved the advent of socialism impossible.

It is enough to recognise that such a viewpoint, which leads to denying capitalism’s continuing growth, divorces socialists from some of the concerns of workers who experience its reality, its ‘good’ and ‘bad’ sides, without ideological blinkers. If it were indeed true that only capitalism’s failures or crises were grounds for socialism then we would have to recognise that those grounds are not enough.

So, the marked increase in mortality among white middle aged men and women in the United States between 1999 and 2013 is all the more remarkable because it contrasts sharply with the experience of other demographic groups.  Mortality declines among Hispanics and black non-Hispanics continued to decline, as they did for this segment of the population in France, Germany, UK, Canada, Australia and Sweden.

mortality

All-cause mortality, ages 45–54 for US White non-Hispanics (USW), US Hispanics (USH), and six comparison countries: France (FRA), Germany (GER), the United Kingdom (UK), Canada (CAN), Australia (AUS), and Sweden (SWE).

Back to Part 6

Forward to Part 8

Greece Crucified

ws jimagesAlexis Tsipras justified his humiliating U-turn, and commitment to imposition of austerity worse than he had just rejected, by saying that he had no mandate for Greece to exit the Euro.  Very true.  But he had just claimed that the referendum a week before had not been about the Euro.  By 61 to 39 per cent he has no mandate for austerity, which is what he said the referendum was really about.

He came into office promising an end to failed bail outs and has ended with a third one bigger than the first.  He called for debt reduction and now seeks support for debt inflation.

Such is the scale of the crushing terms of the latest ‘bailout’ that no one is attempting to say that it is nothing other than complete humiliation for Greece.  Even the Eurozone bureaucrats stated the truth behind the unpalatable words spewed out by their leaders – Tsipras had been subjected to “mental waterboarding” and had been “crucified”.

What has been mental torture for Tsipras will be brutal and catastrophic austerity for the Greek people.

I could write a whole blog on the capitulation of Tsipras and what looks like the majority of Syriza, and there would be good political reasons for doing so.  The policy and strategy of Syriza has been endorsed by Irish opponents of austerity such as Sinn Fein and these now lie in tatters.

In fact in my own view Sinn Fein is not even as radical as Syriza and this is an easy claim to substantiate.  It has already implemented austerity in the North of Ireland while hiding behind opposition to some welfare cuts.   In the South it supported the fateful decision to make the debts of corrupt banks and property speculators the burden of Irish workers and in doing so made the struggle against paying this odious debt much more difficult.

But there will be plenty of voices pointing out that what radical politics Sinn Fein has to offer have been trialled in a real life laboratory and been found wanting.  The capitulation of Syriza is in principle no greater than the Republican’s own acceptance of British rule in Ireland, acceptance of partition, surrender of weapons and dissolution of the IRA.  But that is all now a history that no one wants to talk about.

What is more important therefore is to try to understand what has happened and whether it could have been any different.  Not that it must be accepted that the ‘coup’ against Greece cannot or will not be resisted.  It can and will but it would be blindness to reality not to acknowledge that under Syriza the fight against austerity has suffered a demoralising defeat.

As that new aphorism says: it’s not the despair, I can take the despair.  It’s the hope.  Syriza gave hope.

Working out what has happened is not easy. For the man or woman on the street they see television reports of quantitative easing by the Eurozone involving the figurative printing of  millions of Euros by the European Central Bank, yet this same institution is involved in the vindictive pursuit of Greece for sums it could easily accommodate.

The proposals of the conservative leaders of the EU seem equally hard to understand or justify.  In fact for many they seem stupid, if not crazy. So draconian are they that they seem designed to achieve the very opposite of what they claim to be for.

The imposition of yet greater austerity when this austerity has demonstrably failed might be explained by ideological blindness.  And the humiliation involved might seem to invite rejection while being another attempt to remove Syriza from office.  But many commentators have explained that Syriza may possibly remain the only force that can push austerity through without complete chaos and collapse.

This humiliation is perhaps not just a message to a small and weak Greece but an unmistakeable one to a larger Italy and France: that the development of the EU will be under a model defined by Germany and its allies.  Yet even here the degree of malevolence can only invite small countries with parties equally blinded by reactionary ideology as Germany to wonder just what fate would befall them in an EU with such a definition of ‘solidarity.’

So while ‘good’ reasons might be found for what would appear to be ideological blindness the proposal for a “timeout” exit by Greece from the Euro appears as simply stupid; unless of course it is also a means of pushing Greece out permanently. But then it is such a stupid idea as justification that its purpose might only seem to be how open the imperial bullying can become, ‘pour encourager les autres’.

For the Greek people the surrender of even nominal control of their affairs is way beyond what has gone before.  The original proposal to ring fence €50 billion of Greek assets under German control,  to be sold at the discretion of its creditors, was such an open declaration of debt bondage as to render the humiliation utter and complete. What is yours is no longer even yours to sell.  Now it is reported it will simply be wasted on insolvent Greek banks with the needs of financial capital once again talking precedence not only over people but over real productive activities.

Thus in many ways, its failure to actually work being the first, its effects on undermining the legitimacy of the EU second and materially weakening the incentives to solidarity among its members third, all make the bailout deal a defeat for the idea of a European Union.  This is not even a European imperialism to rival the US, Russia or China but an imperial core and vassal periphery.

The price being paid seems so unnecessary because the main demand of Syriza – in order to give hope and reduce the impact of austerity, i.e. debt forgiveness, will be given and is already hinted.  Not in the shape of outright reduction but in the form of postponing or extending repayments and similar measures on the interest due.  After all, what cannot be repaid will not be repaid.

What matters however to the right wing conservative leadership of Germany, the Netherlands etc. is that their strength, and by extension that of the European imperialist project, is not diluted by the weak European nations and that the Euro remain in position as a world currency and not a vehicle for default and certainly not by what is considered an advanced nation.  Greece must be bled dry in order that the Euro remains strong and the pretensions of the EU remain in place.

The vision of a united Europe is not being abandoned by Germany etc, but it is one in which austerity is the bond that unites. It can be claimed that austerity will be inflicted on German workers if crisis hits the German banks; except of course that Germany has broken the rules before and would do so again.  It is easier to be ideologically blind when the price is paid by someone else.

Could it have worked out differently?    Syriza had hoped that enlightened self-interest would have combined with pressure from the US and the legitimacy gained by the referendum to mitigate the demands for austerity by Germany, The Netherlands and all the other little right-wing led states that curry favour with the powerful.  They have been rudely disabused of their illusions.

The more fundamental reason for this outcome is the weakness of the alternative at an international level.  Where were the left wing Governments calling for debt forgiveness, an alternative to austerity or even its reduction?  Where were the mass movements pressurising their Governments to accede to Greek requests?  Greece could not push back the demands of much stronger states on its own but on its own it was.

The demand for a revolutionary socialist alternative seeking the destruction of the Greek capitalist state and take-over of the Greek economy by its workers fails to provide any sort of immediate alternative, which is what we are discussing, for two rather obvious reasons.

Such a strategy relies on the aspiration and activity of the working class and the Greek working class neither desires nor is organised to destroy the existing state, create its own and take over the running of Greek production.  The anti-capitalist ANTARSYA for example got less than 1 per cent of the vote and Syriza, it should not need to be said, is not a revolutionary party.  How does a revolution arise out of this except through a long and painful process of learning lessons and making advances on this basis?

I was recently reading an article entitled ‘Marxism and Actually Existing Socialism’ written, what seems like a long time ago, before the collapse of the Soviet Union, and which defended Marx’s theory and politics.  In it the author wrote that:

“Marx envisaged that socialism would come first in the most advanced industrial societies of Europe, and it has not done so. Arguably, however, Marxism is capable of comprehending this fact. In any case, this is a matter of detail, even if an important one; and it seems difficult to resist the conclusion that, in its broad and general outlines, Marx’s account of the historical tendencies of capitalism has been remarkably confirmed by historical events.”

But of course the coming of socialist revolution not to the most advanced countries is not a detail, not even an important one.  It has been fundamental to the development and future possibility of socialism and has led to the very definition of socialism being distorted and disfigured.

Socialism is not possible in Greece alone any more, and certainly less, than it was in Russia not least because it is too weak and poor.   It is obvious that no other working class within any other country in Europe is at a stage of development where it could either join or support working class rule in Greece.

This does not mean Syriza should not have taken office or that it should not have engaged in negotiations with the Troika. Its strength however derives fundamentally from the class consciousness and organisation of the working class and not from any superior moral position.  The building of an international European party of the working class, of a militant current within the working class movement including trade unions, and of international workers’ cooperatives is the only road to creating the foundations for a successful conquest of political power.

On the other hand capitalist economic and political crises and socialist propaganda are, respectively, simply the occasion for such a conquest and the means of spreading word of the need for it.

As I have said before: the worst result would be Syriza implementing austerity.  It should now reject the bailout, call fresh elections on such a platform and if elected pursue an alternative.  If in opposition it should develop a movement as set out above.

The alternative it should pursue is that which the Irish should have carried out in 2008.  Let the banks go bust and let its owners and lenders take part in a ‘bail-in’ in which they pay the price for their investment in insolvent companies.  This is sometimes known as capitalism.

A radical Greek Government would encourage Greek workers to turn the banks into cooperatives that would shed their bad debts into a ‘bad bank’ (like NAMA in Ireland, in theory if not in its practice) and guarantee deposits that would fund development of worker owned enterprise.

The Greek debt would thereby suffer default and the reactionary gamblers Merkel, Juncker, Schäuble, Draghi and Dijsselbloem would see where the chips fall.

The blogger Boffy has suggested that a solution to the currency problem would involve electronic Euros that would allow circulation of money without the requirements for additional notes etc. from Brussels.  While this could work for the domestic economy I cannot see how it could function as a means of payment for international trade and, while Greece is a relatively closed economy, it cannot function without it.

In any case the leadership of the EU would, on current form, expel Greece from the Euro and introduce its own capital controls on the country.

Greece would be forced into issuing a new currency, a new Drachma, which the people do not want.  This could not be done quickly or without significant disruption.  It has been asserted that the argument that this would result in devaluation and a massive reduction in Greek living standards is false because the catastrophe predicted has already happened.  ‘Internal devaluation’ has already achieved what external devaluation of the new currency would otherwise have done.

I am not convinced by this argument but this too might be academic if the EU decided that Greece would no longer be part of the Euro.

The strategy suggested therefore provides no guarantee of success.  There is no ‘technical’ solution or answer in this sense.   And why should one be expected?

I have said that socialist revolution depends on the prior creation of a working class power consisting of an international party, international trade union action and development of workers’ cooperatives on an extensive scale.  What on earth could substitute itself for these?

What is suggested is a strategy for struggle and not a ‘solution’ but we have reached the stage where not even the leaders of the EU can present false promises on this with any credibility.  Austerity will continue not to work.  Struggle is what we have.

 

Why have the Irish not revolted? Part II

imagesausterityIn my first post I qualified the view that there was something particularly weak in the resistance of Irish workers to austerity but argued that nevertheless an explanation is needed.  To develop this further we need to ask what this austerity has involved.

Some commentators would have a ready explanation.  In terms of the share of taxation in Gross Domestic Product (GDP), in terms of the share of Government spending in GDP and overall deficit as a percentage of annual value added there has not been ‘savage austerity’ so there has been nothing to rebel against.

Here unfortunately we have no choice but to enter the world of economic statistics where only the naive can expect clear objectivity and accuracy.

A post on the Irish Economy blog records that (adjusting the statistics for the well-known effect of foreign multinationals in the Irish State significantly overstating economic performance) living standards measured in GDP per person (in Purchasing Power Parity values) declined by 14 per cent from 2007 to 2011.  This is a bigger decline in living standards than in Portugal where the fall was only 1.6 per cent, in Spain where it was 4.9 per cent and Greece where it was 8 per cent.  In terms of national income (another measure) the drop was bigger – 20 per cent – and it will have fallen further since then.  It would appear that the relative quiescence of Irish workers needs additional explaining.

But does it?

Any Irish statistic that uses GDP is immediately suspect for the reason above but not only because of this.  GDP is a measure of value added which means the 2007 figure will include property produced at vastly over-inflated values.  Houses and offices built and priced at one value will have been shown subsequently to have been worth 50, 60 or 70 per cent less, or sometimes to be completely worthless.  A moment’s thought reveals that this is not a characteristic simply of Irish statistics but of measures of capitalist production everywhere.

When we think of the effects of the banking industry on measures of economic growth we again see that this measure is seriously distorting, not only because of the difficulties of capturing accurately what is happening, but because of the nature of capitalist production.  This takes place through the production of commodities whose real value is only realised after production. The value of these commodities is elaborated through the workings of the market which reveals the socially necessary value of output in a cyclical fashion.

For economists wedded to capitalism recessions are always the result of exogenous shocks outside the system or of purely irrational behaviour within it, which amount to the same thing.  For Marxists the cycle of boom and bust is how the values of commodities are established and then re-established in a constant process.  By nature therefore there can be no precise measure of value produced at any one point in time or over any one period.

In figures for GDP the distinction between use value and exchange value is absent never mind any accounting for how really ‘socially useful’ the use values produced are – ghost estates and weapons compared to commodities actually consumed by workers. This is to be considered on top of the well-known criticisms of measuring living standards by GDP.

There are alternative measures we can review but before we leave behind this discussion we should appreciate that what we have been looking at is not simple mismeasurement of economic activity but one form of the appearance of real contradictions within the system.

From the point of view of our particular investigation we can make two points.  That a critical review of some of the figures means the boom was not as boomier (to quote Bertie Ahern) as some statistics might appear to show and the recession not as sudden and complete a reversal as might first appear.  The expectation of more or less immediate revolt might therefore be less justified?  Other evidence however might suggest that such a view should be considered a relatively minor factor.

Secondly, the constant reporting of such economic statistics plays an ideological role such that workers must accept real changes to their lives on the basis of these statistics.  Workers are subject to such pressures not just in the recession but also in the boom – encouraged to get into unsustainable debt for example.  To the extent that they do the latter they are then under ideological assault to accept that they, along with everyone else, ‘partied’ and went on a ‘mad borrowing’ frenzy, as Taoiseach Enda Kenny has put it.

Some commentators might argue that a recognition of ‘guilt’ has played a role in short-circuiting resistance but the existence of such undoubted views is as much a result of demoralisation as a cause of the lack of resistance.

There are other statistics we can look at to see if there are material reasons for the lack of opposition apart from this particular ideological one.

What appears a more relevant statistic is called Actual Individual Consumption which encompasses goods and services consumed by households including government services such as education and health provision.  This would appear to show that between 2008 and 2011 living standards in the Irish State fell more than in Spain and in Portugal but less than in Greece or Iceland.

Actual Individual Consumption

State

2008 index

2011 index

Percentage fall

Ireland

109

100

8.3

Spain

99

94

5.1

Greece

104

94

9.6

Portugal

84

82

2.4

UK

123

118

4.1

Iceland

122

107

12.3

 

This measure is made up of a component of GDP so is subject to some of the criticism above.  We have already seen that three different measurements of living standards result in reductions in living standards of 20 per cent, 14 per cent and over 8 per cent, depending on dates and the measurement adopted.

What we can say with certainty is that living standards fell abruptly and significantly due to the crisis and it is not obvious that the severity of the fall in any country determined the relative extent of opposition to austerity.  It is necessary before drawing any conclusions to look at what might be at least some of the components of the fall in living standards, not by any means only a result of the effects of Government austerity policies.

By one measure unemployment in the Irish State increased from 3.4 per cent in 2007 to 10.4 per cent in 2012, a tripling of the rate in only five years.  The economically inactive, which must contain many who have given up hope of getting a job, increased from 27.5 per cent of the population aged 15 to 64 to 30.8 per cent.

Using a different measurement unemployment in the Irish state was 13.5 per cent in January 2013 compared to 17.8 per cent in Portugal, 26.8 per cent in Spain and 27 per cent in Greece.  Clearly the crisis has hit the latter countries much harder than Ireland.  It is by no means clear that higher unemployment breeds resistance since its function under capitalism is to facilitate increased exploitation of the working class.  The mobilisation of the unemployed is not always for progressive reasons, which is one reason we have noted before that economic crises often breed reactionary movements.

Once unemployed some workers face the prospect of hardship and one measure of this defined as deprivation, or being without two or more basic items, has increased from 11.8 per cent of the population to 24.5 per cent in 2012.  The possibility of this is affected by the level of welfare an unemployed personmight rely upon and this is measured by the net replacement rate, or the payments due to the unemployed as a percentage of previous net income.  This obviously depends on whether the person has children or is married etc.

Net Replacement rates 2011

 

No children

2 children

Country Single person One earner

Married couple

Two-earner Married couple Lone Parent One-earner married couple Two-earner married couple
Republic of Ireland 50 81 75 64 75 81
Greece 49 54 75 58 63 80
Spain 79 76 90 77 75 89
Portugal 75 75 92 77 76 91

 

The table shows that Greece has significantly lower replacement rates than the other selected countries for most categories but that the Irish state’s is generally lower than Spain’s and Portugal’s.  It would not appear that the prospect of a more significant loss of income as a result of unemployment has spurred opposition in Ireland relative to that in Spain or Portugal.

The other obvious way workers cope with periods of unemployment is falling back on any savings that they have accumulated.  The following table shows the movement in net financial assets per person (€) in the various countries:

Country

2007

2011

Republic of Ireland

23,634

26,279

Spain

21,698

16,328

Portugal

19,950

19,750

Greece

19,681

10,105

Euro area (17 countries)

37,289

36,201

 

The table shows the Irish State to have the highest level of financial assets (though much below the Euro area average) and that this even increased between 2007 and 2011!  Since these figures say nothing about the unequal distribution of wealth and we know that many have suffered unemployment, cuts in wages or tax increases, it is clear that certain sections of Irish society are bearing up quite well.  In the other countries financial wealth fell and in Spain, but particularly in Greece, fell quite dramatically.

Such average figures hide as much as they reveal.  Average household disposable income in the Irish state fell from €49,043 in 2008 to €41,819 in 2011 but this was still significantly higher than in 2004 when it was €38,631.  Right wing commentators have often made the observation that incomes have often just gone back to such and such a date and we are all much better off than before the boom kicked off in the first half of the 1990s.  This is undoubtedly true for many but doesn’t provide an answer why as a class Irish workers have resisted austerity so weakly, unless the argument is that expectations have very quickly reduced.  Is this however another result of defeat or a contributing factor to it, or both?

Averages can obscure because it is precisely the unequal incidence of the effects of capitalist crisis that can have decisive political effects.

Unemployment has increased dramatically but its incidence is not uniform.  Employment in construction has collapsed, from 258,000 at the start of 2008 to 102,000 at the end of 2012, a fall of over 60 per cent.  Over the same period employment in the state sector fell from 417,000 to 381,000, a fall of 8.6 per cent.  The pitting of private sector workers against those in the public sector was a clear strategy of the Government, the employers and the media and it was quite successful.

But this has not been the only divisive effect of the crisis.  Rates of unemployment among young people in Ireland, just like other countries, have been much higher than the general rate.  In the Irish state the rate of unemployment among those less than 25 years old was 26.6 per cent in April this year while it was 42.5 per cent in Portugal, 56.4 per cent in Spain and 62.5 per cent in Greece.  These are truly staggering figures.  The rate of long term unemployment has increased from 29.2 per cent of total unemployment at the start of 2007 to 45.5 per cent at the end of 2012.  What this should remind us, is that unemployment is a divisive imposition of the effects of capitalist crisis that impacts not only on those without a job but also those in employment.  Emigration has returned and is continuing to increase, up from 87,100 in the year to April 2012 to 89,000 in the year to April 2013.

None of these figures illustrates the hardship caused by tax increases and public expenditure cuts that can affect the most vulnerable the most.  They do not include the effects on people’s experience of negative equity, the full effects of which have yet to hit home.  Here again it is younger people who are more likely to be in negative equity and to be in arrears in their mortgage payments.  And of course the figures do not tell us that the results of the crisis and austerity are to be here for a long time.

Over 32 people were unemployed for each job vacancy in 2012, while the figures for Spain and Portugal were 72.6 and 90.4 respectively.  The General Government Debt as a percentage of GDP was 117.6 per cent in 2012 while the 2012 EU Fiscal Compact stipulates that where this is above 60 per cent it must reduce by 1/20th per year.  In 2012 the in-year Government deficit was 7.5 per cent which means the debt was not getting smaller but getting bigger.  Normally optimistic forecasters are predicting that unemployment, as measured by the International Labour Organisation methodology, was only to reduce from 14.7 per cent in 2012 to 13.9 per cent in 2014.

So what are we to make of all these figures?

The fall in living standards has been significant even if not so sudden or large for some sectors of society as others and not on the same scale as some other countries such as Greece.  Certainly the disproportionate effects on young people and rise in emigration have blunted resistance but these factors exist on the same or greater scale in some other countries in Southern Europe where resistance has been greater.

It is not therefore the effects of the crisis themselves that explain the response even if these act to weaken certain social and political reactions.  The left wing economist Michael Taft has claimed that the ‘squeezed middle’, the 4th to 8th deciles of income earners, suffered declines in direct income in the five years leading up to the crash, gaining only as a result of social transfers.

During the boom the level of trade union organisation fell relatively as union density dropped from 46 per cent of the workforce in 1994 to less than a third in 2007, and only 16 per cent in the private sector.

Thus even during the most favourable circumstances, when workers are best placed to protect and advance their living standards, they were unable to do so with their own strength.  During recession such weakness is exposed.

Now they are subject to the vicious laws of the capitalist market and, as we said in the first post, short of overturning the system there is a limited amount workers can do about this without challenging the system itself.

During this post I have said that workers have not resisted austerity but in truth the great mass of unemployment, insecurity caused by mortgage arrears and negative equity, and the drop in personal consumption are not so much the result of the austerity policies of the Government, which of course have made things worse, but of the capitalist crisis.  This crisis can in certain circumstances be postponed or ameliorated by the State but it cannot be suppressed and certainly not by a State in bankruptcy.

When even during the boom large number of workers dependency on this state increased rather reduced and rather than their developing their own independent power, it can be little surprise that when the state turns round and kicks them in the teeth they are unprepared.

Some socialists argued again and again during the boom that social partnership, the vehicle by which the Irish trade unions hitched themselves to the State, was to be opposed not mainly because it prevented workers making gains in their living standards that they should but because it rotted away their independent organisation.  This has not just organisational consequences but political and ideological ones and it is to these that I need to look at next.

‘Sins of the Father’ by Conor McCabe – a book review

downloadThis book sets out to explain why the banking crisis in the Irish state developed the way it did and how property and financial speculation has been so prominent a feature of its economic development.  It is therefore an argument against the view that the crisis has been the result of some sort of moral collapse in certain sections of society.

Along the way the author, Conor McCabe, disposes of some common beliefs about the role of property in the Irish psyche, convincingly demonstrating that property ownership is not hard-wired into the Irish but has been consciously and repeatedly promoted by the state and employed as a means of strengthening particular class interests.  Thus the first Cumann na nGaedeal government promoted – as a solution to the notorious condition and shortage of decent housing for the working class – better housing for the middle class!

In an earlier version of the recent bailout of the banks he notes that helping the middle classes and property speculators with state money was the way the first Government decided to deal with tenements and slums.  As if proving there is truly nothing new in the world he notes the development of Dublin suburbs in the 1930s with little or no infrastructure or amenities.

The effects of this over the decades was to create a situation in which if you wanted a house you needed to buy one.  Public housing was neglected, a choice of last resort, and the earlier desire of workers to rent was blocked.  Even so the relatively recent and rapid rise in the proportion of home ownership is surprising, rising from 25 per cent in 1961 to 75 per cent in 1986. So much for property ownership being in the DNA!  In fact, as the author shows, it has been consciously promoted as a means of preventing “social unrest”, “revolutionary change” and because “there is no greater barrier against communism.”

McCabe points to the argument that the property boom at the turn of the century crowded out investment in productive activities and shows that State tax breaks helped fund the speculation that fuelled it.  Just as the State helped pump up the bubble it then stepped in to prop up the same interests that were behind it when it burst.  In this sense the State’s response to financial collapse was no turning point.  He effectively shows that British landlordism of the 19th century was replaced by a native version for the 20th and 21st.  Government policy helped create huge overproduction: in 2010 the number of empty housing units was counted as 302,625 – excluding holiday homes!

Conor is aware that all this is a description of the property boom and bust but is not an explanation (see page 56).  To do this he then presents a fuller history of Irish economic development.  It is not the case however that further, fuller and more complete description is explanation either.

If particular and contingent historical factors are not the explanation of the deeper causes of the boom and bust, but rather the concrete form in which the underlying contradictions played out, then it is only these fundamental processes which can provide a satisfactory explanation.  Or at least one that seeks to advance an argument that the causes of the crisis were in some way more than accidental.  Being more fundamental they can explain similar phenomena in more varied, concretely different circumstances – in countries as different as Japan, Spain, the USA and UK.  In fact the very variety of situations giving rise to similar symptoms of crisis point to systemic contradictions.

What the book does do very well however is show the particular features of Irish economic development, including the weakness of an economy which was governed as if it was still a region of Britain but which was cut off from the potential supports that this might have involved.

Nor did this change with the election of a Fianna Fail government in 1932, which introduced tariffs: at this point the State was described as virtually the last free-trading economy in the world.  There was no introduction of a separate currency or Central Bank and parity with Sterling was maintained.  In important ways the economy remained a region of Britain no matter the declaration of a Republic after World War II.

The resulting failure led to the new policy of promoting multinational investment, which was seen by the State as the least disruptive way of responding to international pressures to develop while protecting the existing class structure and minimising economic change.   McCabe emphasises the limits of multinational investment and the fact that money flows from it enter and exit the State with relatively modest impact. He quotes an assessment that this foreign investment did not develop a manufacturing base ‘comparable’ other small countries and argues its real importance lay in the opportunities provided to native property developers and financial and banking interests which service the investment.  This process fed into a property bubble in the 1960s which burst in the 1970s, again fuelled by state tax incentives but also state demand for the property developed.

He gives examples of the extraordinary tax incentives given to foreign investment and how State policy allowed the companies involved to do more or less what they wanted including at Bantry Bay where, in 1979, over 50 lives were lost in an oil explosion.  It transpired that the necessary safety measures had not been implemented and Gulf Oil had been allowed to regulate itself.  The Treaty Ports had been returned from the Brits but the Irish State had connived in the creation of another; all under the banner of economic development.

The policy was held up as a success but it was still recognised that it was a qualified one and accepted that indigenous industry had failed to create self-sustaining industrialisation.  Foreign investment remained largely divorced from local industry and the government sponsored Telesis report noted that only 8 per cent of components and sub-assemblies in the foreign engineering sector were sourced locally.  However, like inquiries and reports before it (and after) the Telesis Report was “greeted with fanfare and followed with silence.”

The major innovation came instead in the financial services sector where State policy had always been to maintain the parity link with sterling.  For Conor McCabe parity also meant poverty: the value of the Irish currency was maintained at too high a level to facilitate the development of competitive industry.

He does not delve into what a lower level would have meant for Irish workers as a lower valued currency would also have meant lower wages and a lower standard of living, all else being equal.  All else not being equal would have depended on the Irish State having a successful policy of state-led industrial development, not just throwing tax breaks and grants at private capitalists. In part his history is designed to show the strength of those class interests in the State who made their money through agriculture, property and banking and for whom all this would have been, at best, an unnecessary experiment.

That this ultimately was a feature of continuing imperialist domination – expressed in the relatively weak native capitalist development; in state institutions and policy and in other cultural traits – is not developed in the book.  The book is relatively short so this is not a criticism.  This subject raises political questions that have bedevilled an understanding of the relationship between ‘national oppression’ and capitalist exploitation and it is no criticism that this is not gone into.  It was not the purpose of the book. The State maintained the link with sterling until joining the Exchange Rate Mechanism but devaluation drove home the lesson that the link was more than just a policy decision but reflected a deeper economic relationship.

The book repeatedly shows the linkage between State policy and class interests.  Conor shows that the setting up of the Irish Financial Services Centre (IFSC) represented no exception to the state’s patronage of banking and financial interests, or a radically new economic development, and accepts the case that the IFSC is a tax haven, reporting its reputation even before the crash as the “wild west of European finance.”

He records the almost forgotten fact that the bank bail-out of 2008 was not the first and that tax payers had already bailed out Allied Irish Bank (AIB) before – in 1985.  While it has become fashionable to excoriate Anglo-Irish Bank at least it only went bust once.  The Fine Gael led Government of the time included Alan Dukes who, in the latest banking disaster, reprised his role by impersonating a Director of Anglo-Irish supposed to represent the public interest.  In 1985 AIB was saved from going bust by the tax payer who then watched seven days later this same bank announce unchanged dividends to its shareholders!  There followed years of law-breaking by the whole banking industry for which not one banker paid any penalty.  Put into context, the bail-out of 2008 becomes both more shocking and less surprising.

The book pulls together the various aspects of Irish economic development to show how the State’s policies, especially tax breaks and almost non-existent regulation, came together in the 2008 crisis. Property speculation fed on a limited boom partly fuelled by foreign investment which, boosted by state policy, became super-charged by credit speculation.  It was, in this sense, not at all new but rather the culmination (until the next time?) of the sins of the father. And the sins were many.

The book ends too summarily and in doing so appears to endorse more state spending on infrastructure as part of the solution: a liberal, Keynesian answer to the crisis.  One is compelled to ask in what way this is an alternative to what has gone before.  In so far as construction paid for by the state is designed to boost private capitalist investment there appears no major difference. (This is by no means the only similarity.) It is yet another tribute to the forces and policies described in the book, the power of the existing system and status quo, that those who are popularly viewed as its most vocal critics often simply echo it.

In the conclusion Conor McCabe notes that the new state did not have an independent economy.  What he has done is give a good account of the internal structure of this subordination and the class and state that constituted its structure.  But this is obviously only half the story.  If the economy was not independent a full description or analysis would have to describe and explain the much stronger international forces on which this subordination rested.

This itself would only be possible by recognising, as we have said, that the Irish State was not the only one to suffer a financial crisis and that, whatever its peculiarities might be, other crises in the US and Spain and before that in Japan, and perhaps tomorrow in China and Britain, point to a systemic crisis; in other words a crisis of capitalism.  Explaining how the Irish crisis took the form it did is impossible to do fully without also explaining why there was a crisis in the first place, one shared with other countries with a very different historical development.

Although beyond the scope of the book it is nonetheless a necessary task for Irish socialists.  Conor McCabe is not to be criticised for not doing what he did not intend and which others have not done.  Rather it is to be hoped that he can play a significant role in this collective task.  It will therefore be interesting to see what he writes in future because while the bad news is that the first edition of ‘Sins of the Father’ has sold out the good news is that the second is on its way.