Yet Again, A Crisis


That old, stock-phrase of the left, "crisis of capitalism", unheard for so long, is now common currency once again. Except that now it's being thrown around with so much abandon by the panic-stricken capitalists themselves. Everywhere banks have fallen, stock markets have shed value at a ferocious pace, asset prices have collapsed, and millions of workers have lost – and continue to lose – jobs all over the world. It's as if an Act of God has broken in on our post-industrial idyll; a world of endless – if modest – economic growth; a world shorn of all class antagonisms and struggles.

Already the demise of this Golden Age is shrouded in myth. Greedy bankers, irresponsible lending, the poor or black people naively (or duplicitously) taking out mortgages they couldn't hope to pay off – notions smuggled in from dead moral philosophy to avoid actually explaining anything. Nothing less should be expected from the Establishment and its mouthpieces. Whether it's Harriet Harman or George Osborne – or umpteen figures the world over – intoning against bankers' bonuses, it is clear that capital's representatives, elected or otherwise, want to deflect popular anger and bewilderment away from an examination of the system itself.

These stories of moral decay form part of the ruling-class ideologies attending the capitalist system; they're the flip-side of the idea that capitalism encourages 'worthy', 'industrious' behaviour, be it hard physical work or 'entrepreneurial' intellectual labour. They highlight the strange fact that though capitalism ultimately serves big-bourgeois interests, its 'spirit' is perfectly adjusted to the level of an ideal petit-bourgeoisie, hard-working and morally Lutheran. It's this spirit that addresses us from the front page of the mass-circulation newspapers – organs which disseminate and domesticate this ideology amongst the wider population while generating profits for giant corporations. It's the voice that attacks those both richer than and poorer than the ideal petit-bourgeois: those who are idle because they are rich and those who are poor because they are idle. Everywhere a story of moral degenerates abusing a good-natured system!

We should bear this in mind when we on the Left advance certain slogans, or attempt to explain the current economic crisis. "It's the bankers' fault", "we won't pay for their crisis", calls for better banking regulation, for caps on bonus payments – none of these take us one inch beyond either capitalist ideology or the Establishment's own demands; none of them offer even a vulgarised explanation of our current situation. Ruling-class ideology won't be broken by weighing it against a spurious ethical or moral yardstick; it can only be overcome by looking squarely at the capitalist system for what it is and examining its 'laws of motion'.


Many people are by now familiar at least with the sound of phrases like 'hedge fund', 'venture capital', 'private equity', 'collateralised debt obligation', 'credit default swap', 'sovereign wealth fund' – even if the exact meaning of these terms eludes them. Such financial instruments have existed for decades now, and yet the public is only just becoming familiar with them. In this simple observation the whole movement of post-war capital is at once concealed and described.

For decades before and after World War II the capitalist firm was usually owned and run by an industrial baron and his dynastic successors (Rockefellers, Cadburys, Krupps, Tatas...) ploughing their personal fortunes into directly productive enterprises. By the 1970s, however, this model was in terminal decline. Rates of profit in every branch of industry (the 'general rate of profit') were falling rapidly. Within the developed capitalist states, worker organisation and militancy was very high: every subsequent industrial dispute has brought cries of 'the bad old days of the 1970s'. Capitalist control internationally was also in decline: the 1970s were the last great decade of liberation in the former colonial states (as late as 1980 in Zimbabwe's case); it also saw the overthrow of regimes hitherto compliant with the international rule of capital (Ethiopia, Portugal 1974; Vietnam 1975; Afghanistan 1978; Iran, Nicaragua 1979).

The falling rate of profit is the single phenomenon that has driven all the subsequent transformations and turmoil in economic, political, and social life. The ultimate consequence has been that the stock-market and finance have taken on an overwhelming importance in capitalist production as a whole.

Capitalist firms have swallowed one another up – whether amicably or aggressively – in order to concentrate ever greater sums of money in ever fewer hands. Entire areas of industry are now controlled by gigantic companies. In the UK, for instance, in 1999 British Aerospace merged with Marconi Electronic Systems to create BAE Systems. It now virtually owns the defence and security market; its subsidiaries produce everything from handcuffs to surface ships to advanced electronic command and control systems. In an entirely different field, Diageo (created 1997, from a merger between Guinness plc and Grand Metropolitan plc) is now the world's largest beer, wines and spirits company. Where once the propaganda of capitalism overwhelmingly demanded 'free competition', it now openly celebrates such mergers and takeovers as signs of commercial vigour.

After all, these monopolies secure more stable profit rates, since they effectively eliminate competitors; and where, like the oil 'supermajors', they control entire chains of production (raw material extraction, processing, retail/distribution), they are insulated from, and can even benefit from, falls in commodity prices.

With these developments comes an exponential rise in the power of the banks. People are accustomed to thinking that a bank's purpose is to protect their (usually modest) savings, but this is a gross misconception. Like a primitive tribute system, the banks suck in money from depositors and offer it up to capitalists to finance their schemes for generating profits. They also act as middlemen in the making of payments between capitalists. There is not a single company merger that takes place without masses of capital being provided by a bank. Effectively this gives banks an ownership stake in a bewildering range of concerns and areas of business.

The recent market collapse has revealed quite how extensive this ownership actually is: not only do they own millions of properties in the form of mortgages; in some parts of the world they own entire economies. Icelandic banks, to loud acclaim from the financial press, aggressively financed takeovers both domestically and around Europe. The second these banks collapsed, though, Iceland as a state had to declare bankruptcy. In the Baltic states, capital was briefly available on tap from a handful of Scandinavian (particularly Swedish) banks; since the crisis erupted, these states overwhelming fear is that those banks might 'foreclose' on their economies. Similarly, in Hungary, the entire economy is in hock to a handful of giant Italian banks.

The colossal amounts of capital now awash within the system simply cannot be put to profitable use either in the traditional forms of company, or in directly productive enterprises. Thus there has been a proliferation of forms of company whose sole raison d'etre has been to generate interest on capital invested on the stock-market. The mortgage portfolios of banks have been transformed into vehicles for high finance and investment in other companies' stocks and shares. Similarly pension funds, both state provided and privately held. 'Hedge funds', 'private equity', 'venture capital' are the most obvious means by which financial capital is now integrated with industry: they are the current names given to what was once called the financial oligarchy.


The exhaustion of profit also added renewed vigour to the antagonism between employers and workers. Every capitalist is a profit maximiser: when his margins are squeezed, he squeezes those whose labour he exploits. The fall in the general rate of profit has everywhere resulted in a forceful downward pressure on wages, in the form of below-inflation pay scales, mass-unemployment, or its modern equivalent, mass-underemployment. The latter not only pushed down wages, it also atomised workforces and broke down established practices of proletarian class solidarity and identification.

The real level of wages is now well below that of the 1960s. Everybody clearly feels this, whatever statistics may be manipulated to tell them: where once a nuclear family could be supported on a single income (though not necessarily very comfortably), now the same household can barely scrape by on the combined incomes of every member of the family.

The most devastating blows have been aimed at the social wage. State pensions now amount to less than a pittance and are anyway intended more for propping up the stock-market. Social housing is almost non-existent; private companies are 'encouraged' to provide affordable housing, but it's rarely affordable to most people. Education has again become a function of how much you can afford to pay; higher education is increasingly the preserve of children of the rich. Health services are increasingly farmed out to private companies. We don't yet pay up front, but it can't be long now.

The same thing everywhere: railways, water companies, electricity and gas companies, the postal service – all the way up to government departments and government property (the Inland Revenue some years ago sold all of its buildings to a private company and now rents them back from the same). Every single conceivable aspect of life is now subjected to market relations, to the insatiable drive for profit.

It is this complex of phenomena which constitutes imperialism as a distinct phase of capitalist production. Imperialism is not primarily a question of foreign policy, though the profit motive is also extended to international relations: the invasions of Iraq and Afghanistan were about nothing else; Yugoslavia was dismembered the better to be penetrated by western (primarily German) capital.

Indeed every great period of empire in the capitalist age has witnessed precisely these developments: the East India Company and the South Sea bubble are inextricably linked to the birth both of the stock-market and of Britain's overseas empire; the 1860s all the way up to the 1930s were one long period of financialisation and political reaction, whose staging points included the transformation of France and Germany into empires; Bismarck's anti-socialist laws; the crushing of the Paris Commune; the Scramble for Africa; the Great War; the Great Depression; and fascism, which is one particular form of imperialist political economy. And now we can add another period, beginning in the 1970s and extending at least up to the present day.


We aren't usually encouraged to think about capitalism as a specific historical and economic system, and the moralising tone we've already mentioned is just one aspect of its self-presentation as a natural phenomenon, as merely human nature. But with every economic crisis, people are taught to fear the collapse of the system and encouraged to get on their knees and pray for its salvation.

This ideology is so powerful that it's even reflected in the measures proposed by the Left. These rarely go beyond standard demands for reprioritising or increasing government spending and nationalisation of certain industries and banks. The fact that governments around the world couldn't wait to buy equity in the banks as a means of refloating their share prices seems lost on them. As is the fact that nationalisation within capitalist economies has almost always been a means of strengthening the capitalist state and bourgeois class. None of these prescriptions offers the slightest challenge to the capitalist economy. To do so would require genuinely radical measures: the cancellation of debts for certain strata, (those living on incomes below a certain threshold, single mothers, long-term unemployed, senior citizens...); the suppression of pawn-shops and the national lottery (which prey on the poor); cancellation of rent arrears: all measures, be it noted, passed by the Paris Commune.

We do not pray for capitalism's salvation. Neither do we pretend to offer solutions that will deliver us to an allegedly sustainable form of capitalism. It isn't just the present form of capitalism we oppose, but capitalism as such. It isn't just superprofits we oppose, but ALL profit, generated from the appropriation of surplus labour.

Imperialism provides the very means for superseding capitalism. With the concentration both of capital and of entire areas of business – the creation of monopoly – production becomes more and more socialised. Ever greater numbers of people and strata of the population become involved in production: capitalism strains towards its opposite. But appropriation remains private: the value produced by the labour power of thousands – of society as such – remains the private property of a handful of individuals. Production is socialised; distribution is rapidly becoming socialised (retail relies on enormous and complex communication networks); it only remains to socialise property: the means of production, up to and including capital.

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