01.09.2010

Not so green shoots

Capitalism will survive until it is consciously overthrown, writes James Turley

The end of another quarter of another financial year has left the capitalist world in a state of all-round confusion as to the prospects for economic recovery.

This should really surprise nobody - after all, no major imperialist government, barring the US to an extent, has any clue as to how to get out of the present economic rut. In Britain and elsewhere in Europe, the only answer being touted by our ‘leaders’ is public spending cuts raised to the level of autocannibalism. The level of cuts demanded will ravage infrastructure and impoverish the population - not the well-trodden path to economic recovery in anyone’s book, yet somehow sold to the general population as a necessary corrective to years of ‘imprudent’ overspending.

In Britain, we have the unedifying spectacle of Philip Green, a high-street clothing mogul, wielding the axe - presumably on the basis that his tacky wares must be distributed ‘efficiently’. (Perhaps he will start by cutting back on his own shameless tax evasion - but, in economics as in everything else, we should not expect miracles.)

Sure enough, it seems that the accession to power of various bloodthirsty austerity governments has not jolted the world economy into a tremendous turnaround (though no economist or politician was stupid enough to suggest it would, anyway).

On the sunny side, much is being made in Britain of a small hike in ‘consumer confidence’ on our shores - this is supposed to raise hopes of getting through the present economic turmoil without facing the dreaded ‘double dip’ recession.

The headline figure here is the cryptically named GfK NOP consumer confidence index (that’s ‘Growth for Knowledge National Opinion Poll’), yet another of those quasi-scientific quantitative measures that vulgar bourgeois economics has made it its mission to crunch endlessly - it has risen 4.1 points. This rigorous datum of knowledge was produced by ... asking 2000 British consumers how positive they felt about their personal financial circumstances. (Wisely, under-16s are excluded, since it would take a nuclear armageddon to dent their ‘consumer confidence’.)

Taken together with a “surprisingly robust” 1.2% second-quarter growth rate this year, the way is open for all manner of facile economic optimism.^[1] Of course, one does not have to be a Marxist to be unimpressed by such thin evidence of recovery - especially taken with ominous news coming from the other side of the Atlantic.

The US economy has grown by 1.6% in the same quarter - one may borrow The Guardian’s faint praise and call this “surprisingly robust” as well, since most analysts expected it to be around 1.3%. Yet nobody is pretending this is good news; while the holiday season consumer boom managed to drive growth up to about 5% in the autumn, it is clear that the US is not out of the woods. The BBC suggests that a minimum of 3% is needed just to stop unemployment figures rising, at a time when the best part of 10 million Americans are jobless - and that is just the official figure, which is routinely fiddled by capitalist governments.^[2]

Where the US leads, in economic health as in most other things, the capitalist world as a whole is pulled behind it. Panic over US figures led to lurches on the Japanese stock markets, when the Japanese government’s new stimulus package left investors, in another choice phrase from The Guardian, “underwhelmed”^[3] - that is, underwhelmed to the point of a 3.6% drop on the Nikkei stock index. Markets in Britain and western Europe experienced their own shocks. So much for ‘consumer confidence’ counting for anything.

In a sense, what we have here are two stories with the same ending. The US - along with Japan - has consistently attempted different kinds of stimulus measures since the crisis bit, albeit with a rather lukewarm attitude to the whole thing. Billions of dollars have been spent on, or earmarked for, new nuclear power plants, for example; General Motors and Chrysler, two of the big three American automobile companies, received government bail-outs from the new Obama administration, and the third, Ford, was offered a line of government credit if it was needed.

Meanwhile, as we have noted, European governments are simply going straight in for cuts and austerity; balancing the books, it is argued, is necessary to prevent cuts in sovereign credit ratings and, subsequently, enormous hikes in interest rates on state debt. Weekly Worker readers will be more than aware of the devastation promised us by Cameron and Clegg; if not, they need only look to Greece, Spain and Ireland.

Yet the US economy continues to falter - two years since the collapse of Lehman Bros, and three since the subprime mortgage market, the first domino in a long chain, began to fall. So, likewise, do the economies of western Europe. In America, this does not bode well for Barack Obama and the Democrats - having managed to please none of the people, none of the time over healthcare reform, triggering an ugly rightwing backlash and mass alienation of their core support simultaneously, now they must go into a delicately poised mid-term congressional election with all-too-visible economic woes hanging over their heads.

Both Britain and the US can at least claim that their economies are growing. Yet Marxists cannot take headline growth figures for granted - after all, they have been propped up for years by finaglings in high finance, which had long turned to the creation of fictional money values through inordinately complex trading of debts and derivatives. The financial system managed to hide this basic fact in an incomprehensible fog of utterly useless activity - its success in this is almost admirable - and put the inevitable crash off by years.

The problem, however, is even more complicated. The truth is that, contrary to many authors in the Marxist tradition, finance capital is not simply a parasite on productive activity, or a strange sort of ziggurat erected atop it (an idea derived in the last instance from anti-Semitic literature, which attempted to draw a substantial distinction between honest trade and ‘Jewish’ usury). Large-scale investment banks are needed to provide credit, which in turn is necessary because different companies turn over on different timescales. With easily available credit lines, capital can be invested in the most efficient manner - a failure to sell stock fast enough can be overcome by the use of advanced supplies of money from banks.

So all this fictional capital cannot but have had effects in nominally ‘productive’ sectors of the economy. In Britain (and, indeed, in the US, where the sub-prime mortgage crash began), this is most obvious in the housing boom of the last decade; absurdly spiralling house prices, bought and sold on a mostly speculative basis, led to a boom in the construction of luxury accommodation.

Once credit dried up, so did mortgages - which were being handed out in much the same free-spirited way as the sale of stocks and shares ‘on the margin’ (that is, with up to 90% covered by bank loans) in the run-up to the 1929 Wall Street crash. Now, in the most incongruous locations of the most incongruous British cities, there stand high-rise blocks of luxury apartments, vapidly designed and sparsely occupied.

So is there a way out for capitalism? Not in the positive sense - that is, it is difficult, with the balance of class forces being what it is, to imagine a determinate government policy, even one imposed on the world by the US hegemon state, that can overcome all this chaos. Keynesian stimulus measures gave the world a long boom after World War II and, coupled with conscious class organisation, indeed improved the quality of life of the working classes in the imperialist world. But this ‘ransom’ had to be paid, in the last instance, out of the overall global surplus product - which meant it relied, and continues to rely, on super-exploitation of the non-imperialist world.

That said, capitalism will survive until it is consciously overthrown - or until it drives itself into a terminal crisis (the “barbarism” of Luxemburg’s “socialism or barbarism”). The consequence of long-term economic chaos is that capital is destroyed - which leaves capitalism the opportunity to produce it all over again. From the historical perspective of the interests of the human race, this activity is profoundly wasteful and useless; but it works wonders for headline GDP growth figures.

The left has to provide a serious alternative to all this - not, as it tends to, propose basically Keynesian measures with a pro-worker twist, which is simply a capitalist parlour trick of a different kind, but the political economy of the working class.

Notes

1. The Guardian August 31.
2. www.bbc.co.uk/news/business-11112364
3. The Guardian August 31.