Critique Notes 60
Published: 20 April 2012
Critique held its annual conference at LSE, this year, 2012, as usual on the last Saturday of February, (25/02/2012). There were around 60 people attending. The discussion was lively around the theme of the current progress of the global crisis. Michael Cox and Hillel Ticktin discussed the more theoretical aspects of the crisis, and touched on the issue of whether it was terminal, while Yassmine Mather spoke on Egypt and the Middle East, Ben Backwell on Venezuela and Chavez and Savas Matsas on the Crisis and Greece. Critique also held a panel discussion on whether the present crisis was terminal at the Left Forum on March 18th 2012. Bertell Ollman, Hillel Ticktin and Michael Hudson discussed the topic.
Discontent and Movements
Politically, the chief feature of the past few months has been the continuing series of demonstrations and revolts. China appears to have ever more protests; such that the total number of demonstrations, strikes etc. most exceed those of the rest of the world put together. At some point, the restraining bonds will break, no doubt, though no one knows when that will be. The demands in the Middle East have had results of a kind. In Russia, the so-called middle class has been active, without changing reality. In the developed world, the Occupy Movement and various demonstrations and protests have forced the ruling class to accept that the rising level of inequality constitutes a political-economic danger to the system. There have been a rising number of strikes including a general strike in Spain at the end of March.
The third world or emerging economies seem to be demanding civil rights, while the rich world is clamouring for egalitarianism. This is only the superficial appearance of the situation. The slogan adopted in the fifties, ‘Not by Bread alone’ taken from Dudintsev’s book was never real. The fact was that the first demand in the Soviet Union was indeed for food, even for bread. I was myself in the USSR in the early sixties when there was a bread shortage, not that food was ever an easy purchase in most of the USSR. The demand for civil rights is fundamental but not to be separated from the immediate material everyday requirements, which people want and cannot obtain. In that respect, the theoretical separation, between political and property rights put forward by some theorists is simply nonsense.
However, the reality at the present time is that bankers are being reviled in the first world and the political system in much of the third world. Unlike a century ago, the popular movements are not demanding socialism. The system is clearly malfunctioning, the rich are getting richer even now in the 5th year of the crisis and the poor poorer, and yet the overthrow of the system is not on the cards. In some countries, like the United States and France, right-wing and even extreme right-wing parties or sections of parties are obtaining mass support from the white working class. In other countries, religious sects of the most reactionary kind have increased in strength. Nationalism, or rather post-nationalism, has increased its hold in countries like Hungary, Russia and China and in the Middle East.
As we approach the removal of capitalism and its replacement by a rationally planned society, the subjective becomes more and more important. Given the failure of Stalinism, and anti-imperialist nationalism, the obvious alternatives for the masses remain religion and a disintegrative nationalism, until socialism can make its way again, both objectively and subjectively. However, nationalism has been discredited by the way in which the national elites and bourgeoisies have enriched themselves, as in the Middle East and Africa, while disfranchising the majority, leaving the field to the religious right, which uses anti-imperialist and anti-colonial slogans to assume the emancipatory mantle. In the first world, racism and anti-Semitism has risen once again, but the legacy of the Second World War helps to prevent it assuming major proportions.
The Working Class
The disintegration of the ‘middle class’ has not led to its shift to the far right. Rather, it is sections of the manual working class that have moved in that direction. Unlike the thirties when the petite bourgeoisie supported fascism and the employed working class supported the left, the workers have yet to form a class. Instead they are divided by multiple differences: national, religious, skill, gender or ethnic differences. Today in the developed countries the majority of the class are effectively skilled or highly skilled white collar workers. It is among this section, which is increasingly proletarianized, that we are seeing a potential militancy. Public sector white collar workers, most of whom are female, are often poorly paid and are likely to be the hardest hit by the on-going austerity measures. The unions organising this group of workers are by and large ineffective, even if they are being forced to the left. They are routinely taken to task by the generally right wing press, in a charade, worthy of a satirist of early times. Everyone recognises that the union bureaucracy is doing the minimum possible in the circumstances, but they can only restrict themselves to that minimum if the right criticises them for extremism. There is no party of the working class, not even a reformist party.
It is not surprising that the first outlet for the working class has been spontaneous riots of different kinds, particularly in the UK. The Occupy movements have had little organisational effect but it is generally accepted that they have changed the mood of the population, as noted in previous Critique Notes. The question, therefore, is whether the workers can form as a class and establish their own party, or will the contemporary divisions overwhelm the class.
Ideology and the Right
On giving seminars on the current crisis, people often ask this question, not because they have become pessimistic but because they seek re-assurance in an analysis which will provide a discussion of the forces involved. The good news is that the right is as divided as the left and if we look at the Republican Party in the USA, then it appears to be in total disarray. The bourgeoisie is itself divided between those who want more austerity and those who want less austerity and more growth. It is divided between finance capital and industrial capital, between the bourgeoisies of different countries and between big capital and so-called SMEs (small and medium size capital). It is divided between the managerial bourgeoisie and the investing bourgeoisie.
Buffett wants higher taxes on the rich, while others among the wealthy want lower taxes, or even no taxes basing themselves on the absurd Laffer curve. However, there is also a political division on the extent of pay to their managers, and to the ‘middle layers’, which is crucial. The conservative parties are playing a racist game in which they demonise immigrants, as in the UK and France, Italy etc., but they also recognise the dangers of so-doing. The result is the formation of new successful racist/anti-immigrant parties as in Holland and Finland. While one can only look at the rise of such racism with dismay, it is more likely to cause trouble for the ruling class than for the left. The ruling class cannot permit a second Fascist wave, with one or more of its own sections being victimised, as bankers, for instance. Already, Holland and Finland are problems for the EU, with the potential threat of the breakup of the EU.
There is a big difference between the era of the Russian Revolution and today in the degree of cohesion of the ruling class. At that time, the British Empire was intact, with other imperialist countries either subordinated or in close alliance. Colonial and semi-colonial control over much of the world allowed a high rate of return on capital and protected British interests during the 1929-40 depression. Finance capital ruled.
In other words, the weakness of the left finds itself mirrored in the situation of the right. The difference is that there is actually no way out for the bourgeoisie and hence its disarray. At the present time it can continue to make money, and profits are rising. The amounts held in banks for administration are continuing to rise, but they have nowhere to invest.
The Crisis and the Crisis of Ideology
The debate over the situation of the economy and its future continues. The Conservatives of different countries point to budget deficits which need to be reduced to avoid sovereign bankruptcy, as in Greece. The reply that is made by such as Lord Skidelsky and Joseph Stiglitz is that growth is what is needed, and governments are cutting the public sector, so reducing employment and incomes, leading to lower demand, lower growth and so lower tax returns and higher benefit payments.
Governments reply to this point by cutting taxes on the rich, as in the UK, in the latest budget, where the highest marginal rate of 50 per cent has been reduced to 45 per cent. At the same time, they save money on those least able to afford it; pensioners and those receiving welfare benefits. Then they provide tax breaks and subsidies for corporations, arguing that this will allow the companies to expand and permit growth. So governments make the rich still richer and the poor even poorer, all the while arguing that they are compassionate and skilled in economic planning. As argued many times before in these columns, this cannot work under conditions where there is a superabundance of money in the hands of the capitalist class, precisely because they do not want to invest under present conditions. The observable profit rate is high but the risk is perceived as even higher. Contrary to economics textbooks, the capitalist class does not like to lose its money, or to put it correctly, it reduces its risks to the minimum. It is no coincidence that Apple should be the most profitable company in the stock market. Its products are largely toys, whether executive or teenage, which sell on the basis of what amounts to a cult, and the goods themselves are made, though not designed, in China, by low paid workers. In other words, Apple investment is quickly rewarded, unlike the kind of infra-structure or innovative investment goods required to raise growth and living standards more generally.
They have to defend themselves to the population today, so we have a curious game played by the media outlets, which defend the concessions to the rich and powerful, arguing that they are necessary to provide the incentives for the rich to invest in the most efficient way possible. The alternative, that of conscious planning, is held to be inefficient, and wasteful, as in the USSR, under a Stalinist system. A non- Stalinist system is considered utopian, which can only degenerate into dictatorial inefficiency.
At the same time, the increasing critique of income inequality, with company CEO’s getting millions in income, while the majority get around one per cent of those figures, is hard to refute. The Occupy Movement have been remarkably successful in bringing this to the fore. There can be no rational justification for anyone to get an income more than two to four times the average wage. Such arguments as are put forward are risible. The work of a manager is not more skilled, it is not more intellectually demanding, and it does not require more hours of the day than the work of a professor of physics (let us say) and yet the latter’s pay is a tiny fraction of that of the manager. If the capitalists and managers of the economy were all wiped out by an influenza virus, caught while attending some international conference, the economy would continue without much change, assuming there were no political upheavals. They would be replaced by their deputies or if there were none, by foremen, who would quickly learn the job. Where there is a continuous class war, as in modern capitalism, managers do play a crucial role of control but if management were elected and were responsible to their workers, the nature of the job would change. It is hard to believe that the capitalist economy needs to pay its managers ten to twenty times as much today as it did thirty to forty years ago.
These points are obvious to all. As a result, the standard argument in defence of the enormous salary eschews substance for the view that the top managers would leave the country for another which does pay the required sum. Although there is a limited truth for some countries, for most it does not apply. Most people would not leave their homeland, and uproot their family for the sake of the money involved. In any case, it is hard to believe that it is impossible to train people to take their place. Only if one argues that the modern capitalist manager has to deploy a cut and thrust approach, a ruthless competitive edge against his rivals and there are very few with the necessary genes could one even provide such an argument. It is effectively implied in most discussions and it is flawed. We do not live in a world of nineteenth century competition. There are seldom more than a few firms competing. Very often there is one dominant firm, but even where there is not, there is effective if implicit collusion. The contemporary absurdity of ‘branding’ is little more than an attempt to establish a particular monopolistic niche.
In the end, the defenders of the status quo are left holding a view in which they are announcing to the world that capitalism is a cruel and inhumane system which requires strong, ruthless and viciously competitive men (and sometimes women) in order to raise productivity and force employees to work, and that those kinds of people are in short supply, so we should be grateful to them. At least, if it were a true description of the world today, it would make sense. The world, however, has progressed since the nineteenth century and the world no longer needs such a system to raise productivity.
As the conservatives are afraid that they are losing the argument, they are trying to find supplementary reasons for austerity. They argue that, in Europe, the population is ageing and hence fewer people will be supporting pensioners, who will be living longer and longer. Since the issue is a projection over decades, it is more of mood music than a real argument. It is obvious that if the population is aging, with fewer younger people being born and more people over retirement age, then fewer resources will go into training younger people, while those who are living healthy longer lives can work at least part time. In any case, if the economy is stimulated to grow rather than stagnate productivity will raise to a sufficient level to support such a population.
There is a further line of reasoning critical of contemporary ruling class propaganda. Modern society is not just wasteful in the way it is seen by ‘greens’, but the nature of its economy is so geared to the needs of the rich that much of what is produced absorbs or wastes huge quantities of resources. There are a series of kinds of waste in this regard. Firstly there are the costs of policing the system. The repression of discontent requires a police force, an army and surveillance operations. Secondly, there is the structure of the economy which is partly based on what the wealthy want, partly as a means of maintaining stability, rather than providing what people need. Thirdly, most people are not doing what they want to do or at best doing what they have to do in order to survive. The result is that their talents are either not developed at all or underdeveloped. The place of work is itself repressive and consequently the output is far below what could be produced. Fourthly, there are an increasing number of branches of the economy which could be dispensed with in a rational society. Such are finance capital and advertising. The latter goes beyond billboards or newspaper advertisements. Products are deliberately altered in order to sell, irrespective of both cost and safety.
Austerity as a Control Mechanism
The demand for austerity must, therefore, be seen as a temporary means of control, rather than compliance with a necessity. The shift towards a lesser austerity under so- called socialists or social democrats in Germany, France and Italy etc., if elected in the next year or two, will open the pressure valve to avoid an explosion, but the pressure is clearly building up. The electorate has become more volatile and mavericks are being elected. At first, the shift has appeared to both left and right, but the semi- fascist right, whether the National Front and English Defence League in the UK or the more powerful supporters of Le Pen in France etc. have probably reached their limits. The left has yet to show itself. It is only to be expected that right-wing newspapers and journals like the Economist will deride shifts to left as antediluvian. After all, the left, socialism and Marxism have always been accused of being utopian, laughable or outdated, even before they were developed or formulated over 150 years ago. As indicated above the right has no reasonable argument in favour of inequality, unfairness, maldistribution of income, waste of resources on wars, police and forms of control, forms of economic force and the increase of mass poverty with the crisis. Hence derision is its only verbal weapon, combined with the operation of an atmosphere of permanent insecurity and the fear of falling into the abyss.
Russia and the evolution of Stalinism
The situation in Russia remains complex. The demonstrations taking place against Putin are not, in the least sense left-wing. On the contrary, they include far-right movements, and the actual organisation for the demonstrations seems to be done by movements which might be happy to have the equivalent of someone like the Conservative British Prime Minister as their leader. Indeed Nemtsov, a former deputy prime minister under Yeltsin was received by the US embassy after a demonstration. Russian nationalist figures are also prominent. With an implicit or explicit programme to suit their leadership, these demonstrations have little in common with the others around the world, which have been triggered by the depression (now officially named the Great Recession by authority), even though such left as exists may have taken part in the demonstrations.
There can be no doubt that the elections in Russia are manipulated, but then so were the earlier ones under Yeltsin, even if in a different manner. Today they claim that the means of communication are dominated by Putin but the same was true before Putin, in that the newspapers and television tended to support the market or market fundamentalism, ignoring the very real impoverishment of the population. Western elections are open to the same critique in that the media are generally, though not exclusively, owned by powerful magnates, like Murdoch or Berlusconi, and the real choice before the electors is limited to two parties of the centre, so-called. There can be no question that the Russian elite in government and out of government is enriching itself at the expense of the working population. Industry has continued to decay, while the oligarchs and their state backers siphon off billions. Some 84 billion dollars left Russia in 2011. The problem for the organisers of the demonstration is that they have no real alternative. It is the market itself which has brought about the present impasse. More market will only make things still worse for the majority, with the real danger that Russia itself will disintegrate. That is why Putin still has real support, in that he is holding the country together by force and providing a modicum of stability. As a result, the demonstrations are actually providing a rationale for supporting Putin for those who are not part of the elite or so-called ‘middle class’, because they threaten to bring about chaos or what looks like a void in history.
It is clear, as commentators have pointed out, that Putin’s future is limited. He was lucky enough to come to power at a time when the price of oil and raw materials was rising by substantial amounts, allowing the standard of living of the majority to rise to the relatively low levels last seen in the eighties. Given the global depression, that cannot repeat itself. Although fluctuations up and down are inevitable, a real decline in the oil/gas price is quite possible. The fundamental problem of transition from an industrialised Stalinist country to an industrialised capitalist country now looks insoluble. Instead we have the spectacle of a Russia heavily dependent on the production and export of raw materials, with much of the money earned remaining outside the country, in order to maintain the wealth and lifestyle of the new capitalist class. Re-industrialisation in competition with the West and China is not possible without, firstly, state direction plus a high tariff and, secondly, an incentive system which functions. Stalinism lacked the latter, whether in the USSR or Cuba. The market, however, is manifestly authoritarian and unjust to those who are not born into it, and hence its incentives are either blunted or so resented that they cannot be fully implemented. The former, state economic control with tariffs, is strongly opposed by Western capitalism and so the World Trade Organization (WTO), Organisation for Economic Co-operation and Development (OECD), and the full panoply of global bureaucratic bodies. There is, however, no sane alternative, as shown by the failure of the market in the Yeltsin years and the relative success of the Chinese road to capitalism. The result, in Russia, is a pragmatic compromise pursued by the contemporary Russian ruling elite, with Putin as their front man. However, under conditions of a globally declining capitalism, it is an ever evolving compromise of its own kind, which must break down at some point. The same is true of the Chinese situation itself and now that Cuba is gradually going the same way as the USSR, it will be possible to watch another temporary solution and its ultimate failure.
For socialists there can be only one solution, to replace the present regime in the countries of the former Soviet Union, with one which moves towards international socialism. At this point it is clearly not on the cards. One can speculate that there might have been an opening in the last years of the eighties, but there was no one there to lead it. Today, Russia will follow what happens in the West. If the socialist movement grows powerful in the West, it will quickly follow in the East as well. For the first time in almost a century there will then seem to be some hope of a better world.
Decline and Incompetence
Finally, the present period has become one in which many people find it hard to believe that the right can be quite so inept, incompetent, and ideologically absurd. The Tea Party and the Republican Party in the USA has provided a rich source of humour. Sarkozy in France, and Berlusconi, until his downfall, have been heads of government who have caricatured themselves to an unbelievable degree. In the UK, the chief ministers, who seem to come exclusively from rich and powerful families, appear to have managed to demonstrate their background in the most blatant way possible, by patently reducing taxes on the rich and increasing the tax on poor pensioners. Although they have justified themselves by arguing that the sums are not what they seem and they are ideologically clean, as it were, they have been so inept in presentation that they have lost the argument.
When a system is in decline, its leaders and policies tend to appear inferior to earlier periods. They show themselves unable to deal with the tasks with which they are faced. The concessions of the Cold War period provided a brief interregnum during which the ruling class was able to cope. Those days are over, and it will make the task of a marginalised, divided left somewhat easier.
- Robert Skidelsky, ‘Does Debt matter?’ Project Syndicate, http://www.project-syndicate.org/commentary/skidelsky49/English (accessed 14 March 2012).
- Joseph Stiglitz, ‘The American Labour Market Remains a Shambles’, Financial Times, London, 13 March 2012, p. 11.
- ‘France in Denial’, The Economist, 31 March 2012, London, p. 15. The editorial argues that the French government must take strong right-wing measures to deal with France’s ‘dire economic straits’. Left wing measures are impossible. On the Front Cover the editors call the French Election in April, ‘The West’s most frivolous election’.
- Charles Clover, ‘Unsustainable Support’, Financial Times, London, 23 March 2012, p. 9
- Ibid. ‘During those 11 years (2000-11), oil prices quadrupled, budget expenditure rose nine times in real terms and real wages almost trebled’. The comparison to the eighties is not made in the FT article.
- Economist, 24 March 2012, ‘Special Report: Cuba, Revolution in Retreat’, after p. 52, pp. 1-12. It provides an account of the move to the market, without a limited analysis of its likely success or failure.