Journal of Socialist Theory

Critique Notes 45

This issue of Critique is entirely devoted to issues and questions around the events of 1968. It follows the Critique conference on that subject held on March 21st 2008. A number of papers from that meeting are printed in this issue.

The news media and various academics are telling us that we are at an unwelcome turning point in the history of humankind and of the earth itself. In the last editorial it was argued that we are at a turning point but of a very different nature- one in the history of capitalism. Those who see capitalism as a permanent feature of human society have always argued that economic forces are outside human control. Wherever possible they try to argue that social institutions, like the market, are inevitable and its consequences, such as the so-called business cycle, an unwelcome but necessary feature of the only possible economic system. This is, of course, part of what Marx called the fetishism of the commodity.

Today we have new versions of this old tale. We are told that the high prices of oil and other raw materials are a result of an inevitable shortage of resources. The shortages, or high price, of food resulting in riots in over 30 countries, are also seen as natural result of a rising global population and a shortage of land, water and other necessary supplies for agriculture. Poverty and hunger are seen as inevitable results of a scarce resources. Whereas in an earlier period this meant that people could not get access to the water or food, today they can see the food or water but they cannot afford them.

The truth is that much of the world was hungry or malnourished before prices rose so spectacularly but little was said about the subject, because the issue was not so politically pressing. The Malthusian view that the population would grow geometrically while the food supply would only grow arithmetically has long been disproven. In any case, the populations of countries like Germany and Russia are declining. Whereas in the latter case it is partly to do with the failure of the economic system and its consequences, in other countries of Europe it has more to do with universal education, the increasing economic independence of women, and relative prosperity. The logical consequence is that the population will reach a steady state when most of the world has reached the level of Western Europe. Nor is it the case that there is a genuine shortage of resources. Advances in desalination make the supply of fresh water less of a problem, for instance. However, the nub of the argument concerns the real reason for the rise in prices of oil, raw materials and food.

It is no accident that these prices have risen so spectacularly in parallel with the present downturn. The price of oil rose somewhat earlier but a considerable part of that rise had to do with the decline of the dollar. The price of oil has doubled over the period of less than one year. It is common ground that speculation has played a crucial role in the determination of the price. Oil producing countries are afraid to increase production in case the price falls through the floor. After every trivial setback in this or that oil producing country the price tends to rise. The downturn has meant that demand for oil and other raw materials has begun to turn down but the price of oil has continued to rise. By now a fall in the price of oil will be another disaster for a series of financial operators. It is no surprise that such as Goldman Sachs predict a price of 200 dollars a barrel, since they are believed to be locked into that scenario. The price of crops has fallen though not back to what it was two years ago, partly because of predictably better harvests.

By now, there is a conflict between the interests of the US state in supporting a reduction in the oil price and the interests of US capital, which has gambled on ever increasing oil prices. Clearly, it is not in the interests of the USA that oil producing Venezuela, Russia and Iran should be to protect local or national capital against foreign investment or give support to anti-American regimes. On the other hand, capital worldwide has a shortage of investment outlets. One result has been the vast expansion of investment in financial outlets, particularly derivatives.