Journal of Socialist Theory

Critique Notes 76: The Ruling Class Turns?

The last Critique Notes discussed the continuing capitalist crisis in terms of the effect of Brexit. The issue has widened. It is becoming clearer that the process of the UK leaving the EU is both a symptom and a part of a turn in the immediate crisis of capit­alism. These notes are considerations on the political situation today. (For a short account of my view of more general changes in contemporary political economy see my article, The Period of Transition, in the Weekly Worker.1)

The Group of Twenty countries meeting, the IMF, the European Bank, and the Pre­sident of the European Council, and various editorials, have made clear that the ruling class is worried. They have got the point that the population is discontented with high real unemployment and low wages, in sharp contrast with an apparently very wealthy ruling class. The situation is not immediately threatening. However, the demon­strations in France against the labour laws, the elections in Portugal and Spain and the USA, and the rise of the new leadership in the Labour Party in the UK all show a shift to the left. The growth of the far right in France and Germany has the same roots, at least in part. Brexit in the UK is regarded by the ruling class as part of the same phenomenon of a discontented working class finding there is no established way out of their troubles.

The ruling class has responded by calling for a U-turn, in form, if not in substance. In the UK it has taken the Brexit message seriously. The Prime Minister has pro­claimed a new era without calling it such.2Permanent austerity is at an end, the budget deficit will be allowed to rise and infrastructure spending will be substantial. Lawrence Summers has been writing articles for some time proving this clear point—that government expenditure will raise the level of employment and so the total of wages and salaries plus profits. Tax receipts will therefore rise.3One does not need Keynesian economics to know something even an unsophisticated ruler would know, of course, but Summers has the prestige to get the argument furtherpublicity and the command over bourgeois economics to make it acceptable. He has buttressed his views with a commentary on IMF research showing that middle class incomes in the USA have declined by three percentage points.4Given the nature of the USA, this actually means that white collar workers incomes have gone down, which is hardly a surprise, but one proof of the process of increasing proletarianisa­tion. The earlier decision to move in the opposite direction, with the equally obvious results, was not based on stupidity or phantasy but on the need to deliver a blow to the working class in order to contain it for some time. The restoration of com­modity fetishism and the reserve army of labour as in the pre-First World War period is the only way capitalism could function with an ‘economic’ mode of control. Without those constraints, the logic of the proletarianisation of the ‘middle class’ and interna­tionalisation of the means of production must lead to a series of initial ‘disturbances’ fragmentation of the global political system, and gradual shift to a demand to over­throw a dysfunctional socio-economic system. In the UK, Theresa May’s political line has been interpreted as moving from supporting the very poor to assisting the downwardly mobile ‘middle class’.

It is worthwhile reflecting on the deception practised on the electorate by so-called centrist parties, conservative and social democratic, when they speak of inequality and the need to help those people trapped in lower parts of the income distribution curve. Thus, for instance, the Labour right rejects the abolition of university fees on the dubious grounds that it helps the better off and penalises the poorest. It is a ploy of the rich to concentrate on the very poorest sections of the society for redistribution, and so propaganda, purposes. They, thereby, both create a division in the working class and save themselves many billions by choosing a relatively small layer of the population, rather than the majority whose lives are often blighted by their restricted opportunities and low incomes. This kind of ploy is a general feature of capitalist countries, and is particularly obvious in the USA in the case of the Tea Party and the campaign of Donald Trump for President.

This is not to downplay the reality of a layer of unskilled and semi-skilled workers who have lost out in the period of so-called globalisation. The shift of industries to countries where labour is paid at lower levels than in the ‘West’, has undoubtedly hit sections of the workforce in countries where they were accustomed to regular employment. These are layers which had been protected by the nature of Western Imperialism. This statement turns the ‘aristocracy of labour’ theory on its head. Lenin had argued that the skilled working class was protected by the profits of imperi­alism, and hence took a conservative line. In fact, during the First World War, they took a more critical line, going on mass strikes, so the characterisation has appeared dubious. Today it seems even more so, when colonialism has ceased to exist, even though imperialism has not. However, there is good reason to doubt that the issue is as simple as the unskilled or semi-skilled working class protesting. After all, in the UK, the mass migration of some 1 million Poles was of a highly educated youthful layer of the Polish population. The limited degree of competition involved with indi­genous workers, given the minimum wage, is clear. In the USA, less skilled white workers in the USA supported Bernie Sanders, even if some of them supported Trump. However, polls showed that Trump supporters tended to be wealthier than the average voter.5

The new UK government, in other words, has recognised that the effective decep­tion practised by a very right wing government has reached its limits. What this will really mean is not clear. However, Theresa May directly negated the previous Conser­vative economic line founded on Thatcher’s view that there was no thing as society. In her speech to the Conservative conference she spoke of helping one another, social interaction and the state helping the citizenry.6

Martin Wolf has argued in the Financial Times that this change in policy marks a new era or epoch to be compared to the change induced by the Labour Government of 1945 and its reversal by Thatcher in 1979.7The question is whether British policy will go beyond rhetoric and through which highways and byways. In my view, Martin Wolf is correct, though the course will not be determined just by the intentions of the British Prime Minister or the next US President. The political shift under Reagan/Thatcher, the current and previous global imperial powers, was not voluntarist or dependent on elected conservatives. There was already a shift to finance capital, and so-called ‘monetarism’ had already conquered the economics profession.

The Economy Today

The ultimate basis of such a movement is more fundamental in the increasing socia­lisation of the means of production and indeed of all aspects of the society. In spite of the attempt to talk up competition, the fact is that the economy is run and governed by a small number of very wealthy firms. The fact that there is limited competition among them means little. They have considerable power over the market and hence over when, where and how to introduce new technology, and how much money, if any, to invest. The market today is not what it was in the nineteenth century. Indeed, the argument that follows is that it has taken a more and more deeply monopolistic turn very recently, particularly since 2011.

Today, the United States is the hegemonic power, in a manner befitting its time. It is the global finance capitalist power and the overarching military sovereign. It is also in decline, having assumed the role during the Second World War, although it was in preparation for that situation during the 1920s. It, therefore, leads the process of socia­lisation in itself both within the USA and abroad. Its companies and its market plays the crucial role in the global economy. Its finance capital, firms like Goldman Sachs, Morgan Stanley and JPMorgan Chase and its private equity are critical.

A very recent series of articles in The Economist argues that there is a new assertion of ‘monopoly’ power within the world economy. ‘A small group of giant companies are once again on the march, tightening their grip on global markets, merging with each other to get even bigger, and enjoying vast profits. As a proportion of GDP, American corporate profits are higher than they have ever been at any time since 1929.’8Further in the same issue they point out that the three biggest asset management funds in the USA, Blackrock, Vanguard and State Street hold the largest shareholding in 40 per cent of firms listed on the stock exchanges, which in turn ‘account for nearly 80% of the market.’9We have witnessed according to the Economist a double change- a turn to monopoly among firms in general and an increasing degree of control over firms. In fact, this leads to the conclusion that the USA is basically controlled, in econ­omic terms by a very few people, fewer indeed that most conspiracy theorists might have supposed.

The argument that this marks a major change in the global control over capitalism is simplistic. It was Lenin, basing himself on Hilferding who raised the whole question of political economic control, pointing to the importance of monopoly and its imperialist nature. Later during the thirties, under Franklin Roosevelt the Temporary National Economic Commission (TNEC) produced a report which included the point that there were some 8 families/conglomerates who played crucial roles in the American economy: Rockefeller, Du Pont, Mellon etc. Paul Sweezy worked for it and wrote his own essay on the subject, broadening it to produce a theory of monopoly capital. The post-war period reverted to the growth of industrial capital with finance capital being secondary and research on control over the economy concen­trated on the inter-relations between corporations which were consequent on inter­locking holdings. Rockefeller family holdings, for instance, remained important. The period after the seventies saw the restoration of finance capital to a controlling position within the US economy in particular, and its globalisation. This is the time of Reagan and Thatcher, to which Martin Wolf refers.

That period was effectively put on hold by the crisis beginning in 2006, or even earlier. It would be inevitable that under conditions of crisis and limited but controlled investment there would be a change in form and structure. The overall strategy adopted by the capitalist class and hence most governments was one of ‘austerity’, involving restricted government budgets, reduced welfare benefits and the acceptance of permanently high unemployment. This was the restoration of the reserve army of labour and an attempt to restore the market to the point of full commodity fetishistic control. It was, in effect, an attempt to complete the ‘revolution’ of ‘Thatcher-Reagan’. Increased levels of monopoly were probably inevitable, particularly when the crisis struck.

In the first paragraphs I pointed to the change in ruling class policy in reply to the opposition now showing itself in more or less inchoate forms, such as Brexit, or the US election, but also less indirectly in Southern Europe from Greece to Portugal. From the standpoint of the changing nature of the economy, the new bourgeois line appears as chaotic as the opposition. Concessions require more than a limited retreat. In the UK, the reduced squeeze on benefits and greater expenditure on infrastructure are not enough to assuage the grievances of the population. The government would have to reverse its reductions in state employment, deliberately subsidize new industries and remove student fees, as well as restore state benefits for the less well off. This would require a substantial increase in taxes for the better off. They clearly will not do it both because the ruling class does not want to pay more tax but as importantly it would give more confidence to the working class, less controlled by a reserve army of labour and commodity fetishism.

The Limited Solution and its Likely Failure

The intention of the ruling class, therefore, is no more than very limited concessions confined especially to examples which have been highlighted by the press or direct opposition. That does not, however, mean that Martin Wolf is not right that we are in a new era, within the overall decline of capitalism. Clearly permanent, if slightly weakened austerity, is a permanent feature of the modern globalised economy. Finance Capital has suffered a blow in the crisis and although it has a high level of ownership of the economy, it remains restricted by the effects of its crash, including greater regulation by the state. The era of ‘globalisation’ is over in the sense that more industries will not easily be shifted to China, or East Asia given the opposition to that process.

On the other hand, the situation in the third world is getting more and more acute. The Chinese crisis needs a chapter to itself but the super rapid growth was partly illu­sory and partly necessarily time limited. The effect on the third world has been con­siderable in view of the drop in raw material prices and purchases. The political situation in countries like South Africa and Brazil is unsustainable for long. In both the latter countries the ruling parties claimed to be on the left. The South African situ­ation is one in which the Communist Party has played a central role in the ruling party, the ANC, since it became important sixty years ago. Its failure puts South Africa in a comparable though not identical situation to Eastern European countries today. Brazil is more complex, but the removal of the left wing President by the right, under conditions where she has limited popular support also raises the question of a genu­inely socialist party. It may be surprising that the ruling class sees a more right wing political party as some kind of solution for these countries, given the patent failure of the market in much of the world.

In Eastern Europe the de facto political failure threatens the EU as a whole both through migration and the increasing level of nationalist demands. It is a paradox that the Eastern European countries should be dependent on EU aid, including from the UK, while they object to the supra-national form of the European Union. As noted in the last Critique Notes, Brexit is partly a consequence of their economic failure. The Stalinist inheritance makes it difficult to attract support for a genuinely left wing party. In a sense this applies to the whole world, but that barrier is beginning to fade in the West. That was most particularly shown in the USA where Bernie Sanders attracted mass support.

The Present Form of Capitalism

The present form is not identical to what existed at the time of Hilferding and Lenin. The United States is the global economic hegemon. Its finance capital is globally domi­nant. Its industrial capital is primary and although crucial it shares its industrial role with Germany and Japan. However, the US market itself is primary in the global economy. In the second place, it is effectively being challenged by Chinese capital but it is actively preventing it from being global. It had already done the same to Russian capital, but the latter was weaker.

As part of the switch in the form of global control, capital changed its global work­force to East Asia, primarily China. It retained its dominance through finance but also through the retention of technological leadership in industry. That was partly through its primacy in research but also through aggressively retaining its patents and prevent­ing Western firms falling into the hands of the Chinese.

The basis of US hegemony rests on another crucial economic relationship- that of labour productivity. The US retains global leadership in this respect even though growth in productivity is currently static. In other words, it is not just monopoly and non-economic operations that supports US hegemony. This is less a result of US actions than of the failure of other countries. One aspect of this is that Stalinist pro­ductivity levels were abysmal and Russia has inherited that economic relationship. It is also true that Chinese economic productivity, even with the same technology, is inferior to the USA. This is where the market has delivered. It is an elementary truth that economic force works better than political force.

It is no accident that the potential competitors like Japan, Germany and South Korea were supported by the USA, albeit as part of the Cold War. There are still US troops in those countries. China served another purpose, that of so-called globa­lisation- the shift of industry from the existing workforce to a more controlled, lower paid one. The ruling class did not anticipate the very rapid pace of growth or the relative intransigence of the Chinese ruling group. The Chinese agreed, whether implicitly or explicitly, to go the whole way in the introduction of the market, to the point of full privatisation, but clearly have no intention of carrying it out. As a result, there is friction with the Western capitalist class and a rise of Chinese nationalism

The overall tendency, the growth of monopoly and the still powerful role of finance capital had helped accelerate the increasing integration of the parts of the global economy. The different treaties to this end, for East Asia and for Europe are now in trouble. The Transatlantic Trade and Investment Partnership, TTIP, and The Trans-Pacific Partnership, TPP, were specifically targeted in the US Presidential elec­tion. Thus we are told by the United States that ‘The TPP facilitates the development of production and supply chains, and seamless trade, enhancing efficiency and sup­porting our goal of creating and supporting jobs, raising living standards, enhancing conservation efforts, and facilitating cross-border integration, as well as opening domestic markets.’10The question of supply networks is critical, as it is in the case of Brexit.


From this point of view, Brexit is going in the opposition direction, towards disinte­gration. In its economic incarnation, the European Union is precisely about the insti­tutionalisation of supply networks. It has set up bureaucratic structures in order to regulate the network of supplies to the major industries and outlets in the EU. The forces of production drives towards internationalization in structure, production, workforce and supply. Competition is necessarily limited and sometimes non-existent.

On the other hand, both the compulsion driving this process and the increasing uncertainty following the counter-revolutionary process from the seventies onwards combined with the real crisis from 2006 onwards have unsettled substantial layers of the population. The removal of permanent jobs, the need to change towns, countries and even continents in order to survive is enough of a threat to reject the apparent future. The socialist alternative is real, putting the human being first, planning for a humane future but then the working class is not yet a class. To be a class it has to be international and internationalist, conscious of its history and its task. Instead, demoralised, parts of the class have turned to immediate instruments such as xeno­phobia, nationalism, anti-immigrant attitudes.


The present turn to ‘nationalism’ in Europe is of a different character to its earlier incarnation. It is not clear that it is the same phenomenon. Today, we are speaking of two kinds of nationalism, one, as in Catalonia or Scotland which is part of the

politics of disintegration, consequent on the crisis. It starts from a politics of despair at the possibility of a socialist victory, either in the immediate future or forever. It is a deliberate attempt to ignore and attempt to overcome the demands of the forces of production. The increasing depth of the division of labour, the increasing integration of the global economy and socialisation of the means of production make indepen­dence of the global hegemon impossible. Its logical antithesis is that of a global society in which the citizens of the world have the greatest possible control from below, which includes a high level of devolution. The fact, however, is that the USA exercises economic, financial and military control. No country is independent of it. Within that structure there are nation states which are part of larger regional struc­tures, all subject to the global capitalist form headed by the USA. Secession from the immediate controlling form of the nation state may achieve a degree of cultural autonomy and in the case of a richer region a greater degree of prosperity, particularly for the local ruling class. Every case is particular, but there is no guarantee that workers will be better off.

The nationalism of Eastern European states began as an action of people in despair at the apparent absence of a successful alternative to Stalinism. The turn to the far right initially in Croatia, now taken up in Hungary and Poland, cannot last very long. Nationalism is necessarily exclusive and historically inevitably belligerent as has been seen in Armenia-Azerbaijan, parts of the former Yugoslavia, and in earlier times in Europe. However, the earlier form was propelled by a nascent or successful capitalism needing to establish itself and expand. The present form as described above but also in the West has different roots. It is defensive and carried by sections of the white and blue collar working class.

It is worthwhile noting that in England the anti-immigrant nationalism is not based on any reality. Up to one million Polish immigrants have settled in the UK, but they do not conform to the stereotype of an unskilled, uneducated worker supposedly compet­ing with the lower manual English working class. There are issues around queues to get into schools and hospitals/surgeries but they could be dealt with and in any case are time limited. Instead we have to understand that the anti-immigrant psychosis has been deliberately fostered by the far right and used by the governing party. It is note­worthy that the Conservative deliberately fostered an anti-Scottish English national­ism in order to be elected. This nationalist ethos is closer to the form of Nazi nationalism used to victimize the Jewish population.

To sum up, in large part, contemporary nationalism, as in the case of Brexit, is a reflection of a demand to withdraw from the increasingly integrating world, and in this process demonizing immigrants and other parts of the population, real or imaginary.


The nationalism being used by Donald Trump at one level seems to conform to this picture of white, less skilled, poorly paid workers responding to American nationalism, but as indicated above studies seem to indicate that his supporters are generally better off than the average voter. It is clear that the unemployment level is several orders of magnitude higher than officially proclaimed. It is equally clear that wages and salaries of the majority have been stagnant since the seventies, while the current crisis has intensified the economic difficulties of the majority, white or blue collar workers. The political form of contemporary capitalism has gelled into a rigid structure in which elections provide limited choice. Knowledge and the media are generally controlled by the wealthy or sometimes by the state and less wealthy finan­cial groups, education is kept in a centre-right consensus. There really appears to be no alternative, other than one of upsetting the applecart, as it were. Those on the left find themselves having to climb an enormous mountain of consistent failures to find a successful alternative, at least superficially. This is not helped by the fact that in the USA there are still Stalinist type groups which claim to be on the left. It is hardly surprising that demagogues on the right should find an audience. The positive side of Trump is that he has shown that the present undemocratic form is broken.

Bernie Sanders is the first left wing candidate in the overall nomination process to reach mass support. Clearly he could not have been allowed to win, and he did not do so. The right will not be taken by surprise next time, whether it is the Democrats or the Republicans. However, it is not clear how long the present structures can last, whether in the USA or elsewhere in the West. Looking back, as it were, it appears inevitable that the left would find a way of using existing structures to show its appeal. That is what has happened in the UK. Given the fact that there seems no way the present crisis will end, one might anticipate that the old centre-left structures will either self-destruct or re-incarnate as a genuine left. There is no longer any meaning to be given to the suc­cessors to a dead social democratic formation. The members of the House of Repre­sentatives, or of the House of Commons at the present time are largely career politicians rather than people serving to fulfil the needs of the population. Few would say that they have betrayed their constituents or fulfilled their missions since most people regard them as having no other purpose than to do their best for them­selves and those in power. The ruling class does in fact recognise this situation and appears to be retreating in order to stabilize the situation, as in the rhetoric around Brexit in the UK.


The rise of the far right parties, as in France, and far right governments as in Poland and Hungary has raised the question of whether Fascism is possible or even on the order of the day. The rise of the far right party in the UK, the UK Independence Party (UKIP) and Donald Trump, US presidential candidate add salience to this concern. None of these parties or individuals are actually Fascist, but the question has been nonetheless raised.

One characteristic of pre-war Fascism is showing itself in Hungary and Poland and that is anti- Semitism, and anti-Semitism is more generally on the rise. The present crisis has brought it out. Simon Kuper brings out some of the examples in the world at the present time but argues that such anti-Semitism is weak.11He is generally right in the sense that another holocaust or mini-holocaust is unlikely. That the Jews were or are blamed for the crisis is one thing but action in any sense is unlikely. Nonetheless it is important that a substantial section of the population should be anti-Semitic and so adopt a non-rational explanation for the crisis. The fact that Zionists may have an interest in raising the levels of anti-Semitism above reality does not mean, on the other hand, that it is not rising. It is, however, highly unlikely that the ruling class will turn to anti-Semitism as a form of rule or even sanction it in association with a far right group.

A primary characteristic of Fascism has been its corporatism, as in Germany and Italy. The Nazi party saw itself as a necessary intermediary between worker and capi­talist in order to establish corporate harmony. It effectively controlled the working class by force while imposing itself on the ruling class. For this purpose, it established a thoroughgoing police state and tried to atomize the population. In fact, the latter was limited. The ideology was patent nonsense based on nationalism and anti-Semitism. It was accepted by the German ruling class under chaotic conditions, as their least bad alternative. The peasantry and petite bourgeoisie voted for Hitler. However, the stab­ility of the Nazi state was ultimately a military one. This meant that military spending was used to end the economic crisis and Nazi power was then based on the conquest of neighbouring countries followed by a wider expansion. This ensured the relative pros­perity of the German population, with the exception of political dissidents, Jews, dis­abled, Roma etc. who were killed or incarcerate or both.

While it is possible to imagine conditions which might predispose the ruling class of a particular small country towards such a dictatorial form, Fascism would not work even for them at the present time. Nonetheless, the increasing discontent of the popu­lation, increasingly in the form of a working class, blue and white collar, will need to assuaged. The existing forms of control are losing their potency. Divisions within the class will not be enough whether in terms of pay, prestige or social mobility. Repres­sion within the system is inevitable but it will be limited, without removing basic bour­geois-democratic forms.

There are some groups on the left who expect world war as the last throw of the ruling class. There is no question but that war has been intrinsic to the stability of capitalism over the last two centuries. However, although possible, it is unlikely as nuclear war is unlikely as neither side can win. Conventional war other than between two highly developed military powers will not provide a sufficient economic incentive. However, such powers will possess nuclear weapons which will limit the war. It is also the case that full scale non-nuclear wars between such powers will most likely completely destroy both powers.

State-Capitalist Forms

China has a police state and penalties are severe for those who threaten the state but it has a core peasant population, which is relatively stable and hence it does not need another basis yet. Furthermore, there does not seem to be an obvious alternative. While Stalinism still provides a barrier to the acceptance of socialism, the clear failure of the successor states to the Soviet Union is a barrier to the acceptance of market capitalism also. In the meantime, the present regime can continue but the thousands of strikes and demonstrations combined with the increasing industrialis­ation and urbanisation of the country make change inevitable.

The failure of the capitalist class to understand its own limitations has been the chief reason for its failure to absorb the former Soviet Union states and the difficulties in Eastern Europe. Instead of accepting the economies as they stood, to begin with, they effectively destroyed them. That left these countries without an indigenous indus­try apart from raw material derived industries. Those without raw materials to sell, were left impoverished, having to accept Western assembly firms. They are effectively unviable without subsidies.


We have argued that we are living in a new turn within a declining capitalism. The ruling class is confused both objectively and subjectively in its strategy. It is clear that it has to make concessions, but it is not prepared to make any real change. None­theless, moving between the extreme economic repression in Greece and concessions to Portugal and Spain it has shown some flexibility. For them the choice is between further forms of private enterprise and chaos in economic terms, and concessions and repression. In spite of Keynesians like Summers, the political economic crisis can only continue, given the nature of the class relation. The working class still needs to find its revolutionary form both objectively and subjectively, but conditions are moving in that direction.