Letters

Not waving

Mike Macnair says: “There is no clear solution to this crisis within the framework of the charter of the United Nations: ie, the existing system of state sovereignties” (‘Has capitalism reached the end?’, November 17).

Not true. The technical solution to the crisis is straightforward. First, neutralise the sovereign debts of those economies whose current and potential growth means they are unsustainable. Second, the European Central Bank to act as lender of last resort, not just to the financial sector but to the EU state. Third, issue EU bonds, backed by the fiscal power of all euro zone states and the ECB. The problem is political: to get agreement for such a programme from national governments and nation-states.

Mike quotes the cases of Austria and Hungary as instances of other countries where there is suspicion of inability to repay sovereign debt, but no-one doubts that Austria could pay its sovereign debt. Like the Netherlands, whose bond prices have also fallen this week, it is one of those core northern European states that has emphasised fiscal responsibility. They are under attack rather because of their inability to print money, because of their falling growth, and because, as small economies, if the euro were to fail, it would be devastating for them. It is an indication of how capital is using its normal methods to force governments to quickly resolve this situation.

Mike puts forward Carmen Reinhart’s argument that monetising the debts of the peripheral economies would require “financial repression, forcing banks and savers to hold state debt at rates of interest below inflation”. He sees this as an argument against my own advocacy of monetisation of the debts. But it is not much of an objection. What characterises current conditions is the large amount of money hoarding already taking place. It’s estimated there is $15 trillion sitting in bank accounts in the US alone, waiting for current uncertainty to subside before it is invested. The same is true throughout the globe. Not only is no such repression required to convince owners of this money to keep it on deposit at virtually zero interest rates, but a look at global bond markets shows a considerable willingness to purchase bonds in places, such as the US, UK, Japan and Germany, with yields already way below inflation.

In the UK, it is difficult to get a deposit account paying much more than 3% gross, implying a net loss, given 5% inflation, of around 3% per annum. When the government put out an inflation-linked savings certificate, paying 0.5% above retail price index, earlier this year, it sold out within a couple of months. Bank of New York Mellon is charging its clients to deposit their money with it! No sign of repression required there.

I didn’t argue for monetising the whole of the euro zone debt. Back in 2009, I suggested that quantitative  easing could be used in the UK to stimulate inflation so as to depreciate the value of the debt. The fact that the Bank of England has been happy to accept inflation at more than double its target rate for three years confirms that this method is indeed being used to deal with UK debt. When the Greek debt crisis arose in 2010, I also argued that the other euro zone economies could simply absorb this debt, paying it off, and thereby avoiding a default. As I pointed out then, a condition for that would necessarily be that those countries insisted upon some kind of fiscal oversight, which could only come from fiscal and political union.

Markets are very useful tools. They tell us what people are actually thinking and what they believe, not what they say they believe. About a week after I had put forward this argument, a solution something like it was put forward in the first Greek bailout. Markets throughout the globe soared. It transpired that, in return for the bailout, the Greeks would have to implement austerity, and the money printed by the ECB to buy Greek bonds would be sterilised by withdrawing an equal amount from elsewhere in the system. Markets crashed. We have seen something similar recently. In August and September, global markets fell sharply as the debt crisis re-emerged. In October, with a growing belief that a solution was to be found via the European Financial Stability Facility, and a move towards fiscal and political integration, and QE, markets once again soared. Now, as the politicians seem to be delaying in bringing that about, the markets are falling.

Given the vast amount of money hoarding, and the clear willingness of the owners of this money to place it on deposit anywhere they feel safe - ie, backed by a stable, solvent state and a central bank prepared to print unlimited amounts of money to buy bonds where necessary - it would not be at all difficult for an EU bond to attract sufficient capital to cover existing sovereign debts (not all of which needs to be covered anyway), and to facilitate the recapitalisation of European banks, where necessary. The ECB might have to buy up 20% of those bonds, but that is not at all the same as printing sufficient money to simply monetise the whole of the euro zone’s current sovereign debt.

Mike is also wrong in his analysis of the 1970s. Stagflation was not the consequence of this policy, but was the consequence of attempts at Keynesian intervention in conditions when the long-wave boom had ended. Moreover, if Mike thinks the problem is tax havens, he is wrong. If capital can put in place technocrats in Italy and Greece, it will have no problem imposing its will on Switzerland or the Cayman Islands. I think Mike is taking a far too legalistic and parliamentary view of the way capital operates here. This is the problem with his refusal to understand the nature of the conjuncture within the long wave. Rather like the catastrophists of the Marxist movement in the post-war period, he refuses to accept the facts about the current condition of capitalism, preferring to stick with the 80-year-old dogma that capitalism is in its death throes. So he now argues that the long-wave boom from 1949-70 was abnormal. But there have been as many such abnormal periods of capitalist growth since 1780 as there have been periods, such as that from 1974-99, where growth has been below trend.

In the periods of upswing such as now, Keynesian and other technical solutions are possible, as means of cutting short cyclical recessions. In the periods of downswing they are not. Furthermore, Mike talks about the need for “the working class to take over the process of making the fundamental decisions about investment and economic activities”. But, were they to do so, then as a solution to many of the problems of Europe at the present time, many of the policies that would be needed would indeed look very Keynesian! Simply allowing workers to make the decisions does not abolish the law of value or change the nature of the problems facing European economies competing in a global capitalist economy.

Not waving
Not waving

Drowning

The debate with Arthur Bough has essentially led to two opposing views. The first view, propounded by Arthur, is based on Kondratiev’s long-wave economic theory and argues that the global capitalist economy is at the initial stages of a new wave of economic growth and prosperity (Letters, November 10). The second view, based on MK Hubbert’s peak oil theory and supported by myself, is that the global capitalist economy is reaching the end of growth.

Arthur’s claim that he broadly agrees with Hubbert is either fraudulent or opportunist, because he accuses me of putting forward Malthusianism, since Malthus and Ricardo both had their own version of peak oil in the form of peak land. To me, this clearly suggests that Arthur is only vaguely familiar with Hubbert’s theory, or is simply unable to grasp its relevance. The rational side of Malthus’s arguments were always hidden by the reactionary side. Malthus’s theory of population growth outpacing the ability of land to produce enough food did not come true - not because his reasoning was necessarily wrong, but rather because industrialisation of agriculture, resulting from the discovery of oil and gas, made it possible to increase food production, which Malthus could not have foreseen.

The end of growth thesis does not claim that no growth anywhere will ever take place from now on. It simply means that today growth will be secondary, limited and weak, while stagnation and will be primary, and long-term.

Drowning
Drowning

Too Russian

Ben Lewis was right to point to the success of the Historical Materialism conference, with more Marxists than you could poke a stick at (‘Debating the republic and extreme democracy’, November 17). I don’t really believe that 750 people would fit into the Brunei lecture theatre for the Arab revolutions, but it was certainly a very good session and Adam Hanieh’s material on the Gulf was a revelation. However, there were certainly that many enthusiastic people for David Harvey’s Isaac Deutscher prize lecture.

It all does point to a resurgent interest in a wide variety of Marxist or marxisant thinking. The feel was very international. There was a good range of ages. And, although some of the papers were undoubtedly very abstract or difficult and academic, there were plenty of signs of an interest in engaging with the real world. In particular, the Socialist Register plenaries were very useful - a good advertisement for the last (2011) and new (2012) editions of the book - and I would point to the strong and electrifying performance of Costas Lapavitsas arguing for a Greek withdrawal from the euro.

The HM conference is now the major international gathering for Marxists (or at least ‘Marxist intellectuals’) and the HM editorial team should be congratulated for the work they put into it.

The Socialist Workers Party showed that they still have far more intellectual capital than other groups on the left. It’s not just the strong connection between members of the SWP and the journal, from its origins up to now - and indeed it now looks like the journal is being edited by a productive alliance between members of the SWP and various autonomists. Rather, the SWP has sufficient weight of its old cadre (many now retired, so I guess that’s the 1968 generation), together with young academics and PhD students. OK, they might not be horny-handed sons and daughters of toil, but that’s the modern class composition in a period of mass higher education for you.

The rest of the organised left was marginal. The Fourth International has some international heft and I had a pleasant sighting of Martin Thomas, Ben Lewis himself and ‘so that’s James Turley’, while Workers’ Power stuck close to the Comintern sessions so they could give their party line a nice exercise. We all really need to shape up and take part in some of the arguments being put forward at HM.

Ben, I thought, demonstrated much patience in his session and generosity in his report. Three members of the SWP who spoke in the session, including the chair, just couldn’t resist the temptation to be humorously dismissive of Ben’s politics and his association with the Weekly Worker. And I was myself amused by one of the SWP comrades clearly getting cross that someone could say something positive about Kautsky without spitting (and maybe crossing themselves, just in case they get infected by ‘rotten politics’).

The deeper point for me isn’t about the importance of the ‘democratic republic’, but the role of the Russian Revolution and the traditions that spin out from it and the lessons to be learnt. That was why having such a strong strand of discussion on the Comintern was important. The Comintern meetings looked like the pursuit of generally oldish men (Ben and a few others apart), so it raises the question of whether the new generations of Marxists are going to be as obsessed as we are. The whole ‘Russian question’ needs debate - have we been too ‘Russian’?

Too Russian
Too Russian

Bewildered

Labour Party Marxists’ motion met with bewildered incomprehension at the Labour Representation Committee’s annual conference last Saturday. It was the only motion which was voted down. But when LRC chair John McDonnell MP moved the national committee statement, reminding us that the New Labour government had paved the way for the Con-Dem coalition, he seemed to be endorsing our point - that Labour governments are not automatically a good thing. If they are loyal to capitalism and “the existing constitutional order”, we said, they “create disillusionment in the working class” and “lead to Tory governments”. Obvious.

Instead of careerist bourgeois politicians hungry for the perks of office, the representatives the working class needs are committed socialists, champions of extreme republican democracy, willing to make do on a skilled workers’ wage, put themselves under the discipline of the party, and play a leading role in mobilising and strengthening the workers’ movement until it is strong enough to divide and defeat the capitalist ruling class and its state. Where a principled opposition will strengthen the workers’ movement, an Ed Miliband government intent on a ‘less quick, less deep” austerity programme in the interests of British capitalism will only weaken us.

The LRC conference, however, was overflowing with nostalgia for 1945 and welfare state reforms, like the NHS and council housing, supposedly “won by Labour”. No, comrades, those reforms were won by the working class, whatever government ‘delivered’ them. The ‘welfare state’ was not a Labour Party invention, in any case. Didn’t Bismarck concede male suffrage to a militant German working class? Didn’t Liberal prime minister Lloyd George launch the beginnings of the UK welfare state in 1906? Wasn’t the architect of the 1945 concessions a certain Liberal, Lord Beveridge? And the Tory governments from 1951 did not dare to dismantle the welfare state. In fact, they built more council houses than Attlee’s Labour government.

What counts is the organisational and political strength and combativity of the working class. That will be strengthened by principled opposition to a capitalist government, or weakened by Labour participation in a capitalist government.

Bewildered
Bewildered

Odd

I attended the Labour Representation Committee’s AGM at the weekend and several things struck me. One was the nagging suspicion that even in my late 30s I probably count as a ‘youth’ member of the LRC, with the exception of the two comrades who also attended as delegates from the fledgling Labour Party Marxists. The second was the apparent lack of leadership. Having previously seen SWP and Socialist Labour Party conferences, I was waiting most of the day for the party line to come down from the stage when it came to the various resolutions; but it never did.

This was most odd and outside of my experience of the left. The LRC’s leader, John McDonnell MP, just seemed to disappear after doing his 10 minutes. What followed was a series of motions being presented quickly - the sense of the clock ticking and business to be done in an office pervaded. To work this quick has its advantages - debates are certainly short - but, given the importance of subjects, would it have been too much trouble to book the hall for a couple of days?

The first motion of the day about fairness in cuts surprised me when it passed. These folk were supposed to be the left, weren’t they? Including delegates of organisations that are overtly and unmistakably from the communist camp. How exactly you can decide it is fair to cut one aspect of public expenditure over another? That can only be achieved via some kind of means testing, a practice loathed by those who experienced it in the 1930s, many of whom were probably in the room. The rest of the morning’s motions largely passed me by as I was still trying to take in the first one!

Lunch time was an opportunity to do some eavesdropping on the conversations of various groupings around the building. Sadly, they revealed nothing newsworthy, except that the Morning Star’s bookstall had a copy of the infamous forgery and work of anti-Semitism, The protocols of the elders of Zion for sale. The bookstall was a rather bizarre affair, to be fair. Most of the books for sale were ‘antique’ - the sort of thing historians would love to fall upon but very little of current relevance.

In the afternoon, things got interesting. The New Communist Party (34 years on and still ‘new’?) had a motion up with Gaddafi sympathies. The speaker moving the motion mentioned a whole bunch of other dictators - ‘good’ dictators, of course! - and called on that most revolutionary and communist of organisations, the United Nations, to “protect small nations”. This was so wrong, it had to fail, as there is no such thing as a good dictator, whatever he did in power, that could be called ‘progressive’ - not even his funding of certain left groups (perhaps they were on both ends of the ice-pick). Comrades from the Alliance for Workers’ Liberty and LPM spoke against. After the votes came in, my skin crawled as the motion passed. We may all be comrades, but there are indeed some comrades whose comrade I’d like to say I wasn’t.

The commitment of the LRC and its affiliates to democracy was further put to the test by LPM’s motion, humbly suggesting that, if a Labour government were to be successful in implementing a socialist programme, it would need the support of the majority. That motion stands out as it was heavily defeated.

So are the LRC a dictator-loving bunch, dedicated to coming to power as a minority, which apparently doesn’t have a leadership that cares enough about the resolutions to stick around all day and attempt to bureaucratically stitch up the membership? All in all, an odd experience.

Odd
Odd

Step forward

So we have “six weeks to save the Morning Star”. The financial crisis of the left’s only daily socialist paper is not unexpected. For example, it is less than a month since the socialist weekly, Tribune, only narrowly averted closure.

The days of hard-copy printed versions of socialist newspapers are numbered. The only role for hard copies of the newspapers of leftwing organisations is to advertise their websites, during demonstrations and strikes, etc. The internet is the future. Many corporations are now ‘paperless’. Leftwing organisations should take a leaf out of the capitalists’ book and convert to online as soon as possible.

For example, in 1998, the International Committee of the Fourth International could see which way the wind was blowing, when they launched the highly successful World Socialist Web Site, which has 20,000-plus visitors each day. Green Left Weekly in Australia combines a lively weekly magazine with a website which is updated daily. Perhaps a weekly Morning Star magazine would be worth considering.

In most UK cities, capitalist daily newspapers are being changed into weeklies - the progress of the internet, in the face of the rapidly rising costs of newsprint and distribution, being unstoppable. I can see the Morning Star staggering on for a few more weeks or months; possibly kept going by a last-minute cash injection by Stalin’s granddaughter. However, it will only put off the inevitable. The closure of the Star, as a front for the Stalinist ‘tankies’ of the Communist Party of Britain, would be a major step forward for genuine communists.

Step forward
Step forward

Barking dog

On November 19 it was my dubious pleasure to attend the Korean Friendship Association’s international public meeting, celebrating the 100th anniversary of the birth of the ‘great leader’, Kim Il Sung. It was international in the sense that three of the attendees were Spanish and one German, and public in the sense that bemused pedestrians were gawping at us from the window of the community centre in which it was held.

Attendees were mostly KFA members, along with a handful of New Communist Party members and a journalist from The Independent, who appeared to be feeling somewhat out of place. The speaker of the event was Alejandro Cao de Benós, a Spanish-born Korean citizen, member of the Korean People’s Army and the only foreigner ever to work as an official of the government of the Democratic People’s Republic of Korea. Dressed in neat Mao suit, complete with a picture of the great leader pinned to his chest and sporting an extremely nice Rolex, Alejandro enthusiastically retold the history of North Korea, sticking so well to the official version that I was almost able to mouth along, having heard the same speech in many a documentary on the hermit kingdom.

The speaker then went on to explain the philosophy of Juche, or ‘self-reliance’, talk up the state of the Korean army (apparently equipped with the most advanced weaponry available and capable of nuking any city in the USA!) and discuss the fluctuations of relations with South Korea since the ‘sunshine policy’ ended with the death of president Kim Dae-jung (Alejandro claimed there had been a cover up of a US-backed assassination - “We have spies everywhere”).

The session concluded with questions and answers. Real discussion was mostly eschewed in favour of glowing reports on North Korean production (very efficient), technology (highly advanced) and its economic progress on the road to becoming an Asian tiger (any day now). Alejandro rattled off the basics of socialism in one country, complained that Marx was “too atheistic” and confirmed that Korea was following an independent path: “We have a slogan in Korea. The dog may be barking, but the train goes on. It means that the outside world could change 100 times but Korea will stay exactly the same.”

Of that I am in no doubt.

Barking dog
Barking dog

Paranormal

Tony Papard chastises James Turley for making “the typical leftist mistake of dismissing as ‘loopy’ all things described as paranormal” (Letters, November 10). I would rather use James Randi’s dismissal of the supernatural and the paranormal as “flim flam”! Randi, a world-renowned psychic investigator, has written many books which expose all such phenomena - including UFOs - as not being verifiable when subjected to scientific tests. Some years ago Randi set up a foundation which promises $1 million to anyone who “can show, under proper observing conditions, evidence of any paranormal, supernatural or occult power”. To date the prize remains uncollected.

Tony claims that that the existence of UFOs “is a well-known, documented fact”. The evidence refuting their existence is, however, far more compelling. Carl Sagan has contributed much such evidence in his many books, including The demon-haunted world.

Tony’s experience of cold reading appears impressive. Many others’ experiences do not impress but suggest that mediums are mainly charlatans. I was the victim of a cold reader who was able to give me details, including my age, health, profession, how my father died, his political leanings and mine, that my wife was a foreigner and that I drove a red car. The medium only got the last two details right; my wife - who has a German accent - booked the appointment by telephone, and I had parked my red car in clear view of the charlatan’s surgery!

I would suggest that it is Tony who “buries his head in the sand and refuses to examine the evidence”. I would recommend that he reads the works of the authors mentioned above, as well as Richard Dawkins, Christopher Hitchens et al. I would especially recommend Victor J Stenger’s Physics and psychics: the search for a world beyond the senses, from which I offer an apposite quote: “If [a scientific theory’s] prediction fails to be verified, the theory is discarded. How different from theories of the paranormal, which make no predictions that can be tested and are never discarded!”

Paranormal
Paranormal

Homework

Could I suggest that Heather Downs (Letters, November 10) stops sounding off on the subject of the human revolution until she has found time to do a little reading?

Homework
Homework