Critique Notes 86
Published: 05 Aug 2019
Critique held a conference on 1 June 2019 at the Marx Memorial Hall 12.30–4pm. The two speakers were Hillel Ticktin and Mick Cox. The theme was around the question of the nature of the transition period at the present time. Those interested can use the details in the footnote to connect to it1:
The transition?
We live in a time of confusion, when society is moving inexorably if unconsciously towards greater integration, collectivity and planning. The demand for control from below and for a conscious change of the society in the interests of the great majority rather than a few rich men is widespread but consciously and successfully distorted. Even as the base for socialism is being formed the superstructure appears blocked.
The world appears mired in a transition period which appears never-ending. The end of Stalinism, with the termination of the Soviet Union in 1991, appeared to provide an opportunity for the left to repudiate the horrors wrongly attributed to it; they might have moved forward without the sabotage of the ‘Communist’ Parties. In fact, Russia and much of Eastern Europe have embraced the far right, but the left or far left remain with very limited support in most of the world.
For the majority of the population in most countries it is difficult to distinguish among the left, far left and pseudo-left. In South Africa, the South African, African National Congress, a party de facto built up by the South African Communist Party and still supported by it, won 582 per cent of the vote as against the less than 1 per cent for the emergent far left.3 It has been responsible for the privatisation of elements of the South African economy. The ambiguity of the regime is also shown by the fact that the new President, Ramaphosa, has had to deny that he supported the shooting of the Marikana strikers.4
South Africa, Venezuela, Cuba, and Viet-Nam illustrate one aspect of the transitional nature of the world we live in and hence its confusion. Russia, China, Iran and much of Eastern Europe show similar symptoms from another perspective.
In terms of the transition itself, there are a number of phases which the left has yet to go through before it can be said that it has returned to its own path. In the first place there needs to be a full understanding and eradication of Stalinism and all its forms. With the end of the USSR that process is under way. Stalinist parties, however, archaic and absurd remain, however. The full damage done by Stalinism has still not been fully and sufficiently widely understood. In the second place, the left has not yet been able to turn itself into a believable fully socialist alternative to capitalism. Until it is able to do so, the present global turmoil will continue.
The far right
Donald Trump has emerged in this world, it might appear in order to help the far right realise its opportunity. Logically the respectable right has reached the end of its road. With theorists like von Hayek, and modern acolytes like Milton Friedman eulogising ‘profits’, and a modern world looking better described as defined by the extraction of surplus value by the few, new forms are clearly necessary for the bourgeoisie, even if they ape the old.
We have mass unemployment, the description of which is carefully re-engineered to appear as its opposite.5 Some are underemployed, others recast themselves as self-employed, even if that encompasses very little work, others retire at earlier ages. Women may become full time housewives and men and women may take drugs or imbibe quantities of alcohol, doing occasional jobs on the side. The destruction of jobs often involves a decline in income, friendship, self-respect. The Trumpist sneer at respectable authority and its demand for restoration of the status quo ante in coal mines, etc, appears as if in a dream.
The far right has shown the world its capacity for destruction, but for some there appears to be no future anyway. This is evidently true for much of the Third World, but it is becoming truer of the first world today.
Despair
It is this despair that the far right has latched on to. There appears, to many, little alternative to their racist, anti-semitic and misogynistic views if there is to be a substantive change. Putin in Russia, the new regime in Brazil together with Le Pen in France and Salvini of the Northern League in Italy make up a substantial force together with Trump. Britain may well go the same way with Boris Johnson and the Conservative Party.
The conditions of the twenty-first century are not those of the 1930s when Stalinism had taken over the USSR and the Communist Parties did not oppose the rise of Fascism. There is no threat to the bourgeoisie coming from the left, leading them to support or allow modern Fascists to take power.
Nonetheless, objective conditions do seem to be ripening. The IMF/Rubini predictions of a downturn look likely. Growth rates in China and the EU are low. The depth of such a downturn is not clear. It is certain that the European Bank the Federal Reserve Bank of the USA will reduce interest rates and probably go further. It is not long since quantitative easing was ended and it would not be difficult to revive if necessary.
At the same time, there has been no boom to be punctured, so it may be that the downturn will be a mirror image of the low upturn. In fact that is the most likely scenario since the ruling class in the USA and Europe let alone China does not want mass unemployment spilling over into the streets.
This kind of non-movement can only cause increasing frustration among a substantial proportion of the population who cannot find long term employment at good wages. The far right then can take advantage. Trump has shown the way.
The split in the US ruling class
Class forces will be determined by more profound movements in social relations in the coming period. The increasingly close socio-economic and political relations across the globe are subordinated to the hegemony of the United States ruling class both directly through its economic and political activities and indirectly through international institutions.
For reasons still to be elucidated, a section of the US ruling class has become discontented with the existing form and has decided to place its own particular interests first above that of the United States as global hegemon. Trump has become its instrument, though it is not clear what he thinks he is doing.
The US ruling class has made it very clear even before now that it will brook no substantial opposition from the political-economic activities of another power. This was made very clear in the fall of the Soviet Union and its replacement by 15 states and statelets. As has been argued in these columns before, the USA effectively ensured that rising Russian companies could not be allowed to become global entities at the same level as US companies. While there are a series of global companies which are not controlled by the USA, they are limited to particular countries, particularly former imperial powers in their own earlier time. Japan and South Korea have been given a special licence as having a ruling class which subordinated itself, during US occupation, in a period of the Cold War.
The US became the Imperial hegemon in visible form after the Second World War, although the UK had already conceded the position after the First World War. However, it was not until 1945 that the US was actually in a position to take over. The UK decolonised in the period 1945–70 following up with entry to the EU. That suited the USA which preferred to deal with a united EU led by a close long term ally. France, after all, had refused to accept what it called a Trojan Horse.
What then has changed for the UK to cease performing as the US agent in the EU? Why does the US want to subordinate the UK further to itself?
There appear to be two main aspects to this question. In the first instance, it is clear that the USA as global hegemon has different needs and gets different results from this situation as compared with simply acting as a friendly power which sees itself as an equal, acting only to provide an equal, non-exploitative relationship. In the second place, it is also clear that a non-exploitative relationship is not what Trump wants. He wants the usual investment and trading relationship which will favour the USA.
The usual relationship between an imperial power and 3rd World country is one in which the imperial power invests in the particular country to set up a company extracting resources to be sold to the first country or to that country and other 1st world countries, with the profits sent to the corporation situated in the Imperial power. That results in employment for some in the population of the third world country’s inhabitants. It is essentially exploitative and has left much of the third world, at best, no better off. Investment by the USA in a developed country ought not to take this simple form. Trade union recognition, employment legislation and quality rules have to be observed unless special rules are applied as agreed through trade pacts.
Trump is essentially trying to alter the balance of power between countries more in favour of the US corporations. This stands opposed to the overarching need to establish a Pax Americana, where American corporations are welcomed in the developed world because their insertion helps at little if any cost. That reduces the friction which might otherwise arise and develop to costly levels. It also allows foreign corporations, experts and highly skilled workers to merge easily into the American economy and help keep it ahead both technically and in terms of the global economy.
Monopolistic competition
This is all the more the case with the further development of ‘monopoly corporations’. European countries, France in particular, are now introducing a special tax for monopoly corporations such as Amazon, Google/Alphabet, Microsoft, Facebook, Netflix, Apple etc. It is clearly no coincidence that all these corporations are American. Someone coming from another planet might not have expected that the dominant computing companies: Dell, HP, Microsoft and Apple would all be American. They are all effectively various kinds of monopoly. There is still limited competition of a kind but it remains monopolistic competition.
In fact, this applies to the nature of the modern capitalist economy. The examples given in the last paragraph are effectively examples of the logical development of the American corporation. Trump is operating in this context, and he is supporting these companies in their fight against the levying of taxation on them in other countries than the USA.
In reality the whole nature of the US economy is increasingly monopolistic. As pointed out in an earlier Critique Notes, the three largest Asset Companies, Blackrock, Vanguard and State Street can effectively control, if they wish to, up to 80 per cent of the shares on the New York Stock exchange.6
The shift away from full employment, government regulation and provision combined with a welfare state has led step by step back to a situation not too different in some respects, though not all, from the period before the First World War.
The nature of the economy
It is interesting to note that Mohammed El-Erian7 has written a brief article making clear that the austerity policy in the United States has been operated from the point of downturn to the present on a more or less empirical basis. The staff of the US banking system were not expecting to be left with the sole instruments capable of dealing with the crisis once the banking system itself had been stabilised by the US Congress. ‘The Fed knew it had no power to promote genuine economic recovery directly via fiscal policy, ease structural impediments to inclusive growth, or directly enhance productivity’.8 The rest of the article goes into detail over the period to the present.
The essential point is that Congress blocked growth or structural and industrial expansion by taking a non-expansionary budget viewpoint. The Republican Party took a firm line, which Trump has undone, but only up to a degree. What was done in the United States, was emulated, by and large, throughout the world.
The result was that the movement of the economy was essentially governed by the banking system, which is the point of the article cited. Given that Trump is doing his best to get the Federal Reserve Bank to reduce the interest sufficiently to get a boom going, the issue is topical. Clearly, Trump is hoping that an upturn or at least no downturn will be helpful in his election. The article is arguing that it is not the task of the banking system to push growth on the economy, but rather that of government. Right wing parties and governments are continuing to push for austerity, even if it is called by another name outside the UK.
The overall issue is the crucial one of our immediate time, but it is also a more long-term question, of course. Lectures, TV and radio broadcasts and general propaganda are now making the point that there has been no downturn since the crash of 2008, as noted above. The capitalist economy has wondrously managed to maintain growth for two decades, it is said. Clearly, it is not true of all countries, (like Brazil for instance), but it has been the case in the USA and for that matter China, but the latter is not a classic capitalist economy. Other developed countries have been similar, like Germany, which, however, has had trouble recently, largely because of Trump’s protectionist policies. Over that period there have been a number of predictions of earlier downturns which have been proved wrong. As it stands, Critique Notes have pointed to such predictions in the last issue. Given that Trump wants to be re-elected without too much difficulty, as suggested above, we may expect the US economy to be pump primed to the point that the downturn, if there is one, occurs at least a month later than the election.
In this regard, Michael Roberts very recently argued that: ‘The G20 may offer a brief respite for financial markets, but it will not alter the general downturn that the world economy is now experiencing, with the likelihood of a new slump in global production, trade and investment getting ever closer’.9
The predictions are less interesting than the reality of the last decade. To return to this point again, there has been no real downturn, substantial or otherwise, no recession, since 2008 but the growth rate has been low, and even lower at certain points. Growth in productivity which had already turned down after the move away from full employment has slumped in the post 2008 period. It is clear that huge sums are being saved or not invested. I have quoted the 33 trillion dollars being held in custody by the Bank of New York Mellion in Critique, a number of times, to show the reality of the situation. The fact is that there is nowhere to invest beyond the limited opportunities now extant, unless there is a real upturn.
One could argue that under conditions where growth has been so feeble over such a long period, a downturn, and certainly a recession, might not have meant much. Given the definitions used for the items included in the calculations and the choice of items themselves, there may not be much difference between an official recession and low growth for non-orthodox economists.
That could be true for more than one reason. In the first instance, any dip might be more easily countered in individual countries, when the change was relatively small, under conditions of low growth. In the second place, China’s growth continued, powered by continued massive investment in the Chinese economy, which allowed China to develop further and in particular to a close relationship with Germany. In the third place, the overall penalty paid by the system itself, for allowing a recession would be considerable. Capitalism could be rendered even more unstable.
One conclusion that one can draw from the last paragraph is that in spite of all the propaganda about private enterprise the system is more in need of and amenable to central direction than is understood or acknowledged. It also remains the case that large scale infrastructure projects are off the table, much talked about though they are. The provision of adequate housing for whole populations has remained a distant goal since the time that Frederick Engels wrote on the question in the 1840s. In other words, it would be perfectly possible to have a boom and bust but it has been deliberately avoided.
In other words, the system is deliberately, in an unplanned way, maintaining low growth so ensuring a level of temporary stability, while maintaining control. The question is not whether there will be a downturn at this or that point, but whether there is any possibility that the system will go for growth and hence risk the possibility of a real downturn or so-called recession. It makes far more sense to see the present as a depression, in which the controls are better understood than before and one that is more amenable to control.
The argument has led me to this point and it necessarily leads to the conclusion that modern capitalism is both amenable and subject to an increasing degree of subjective control. Clearly, this is between certain limits, but it is not clear where they lie, nor with whom the control really lies. Trump has been clear in his demand for lower interest rates, and he does represent a section of the Republican party, but that does not end the chain of influence or command. The Cold War effectively compressed the chain of command, meaning that there are both factions and a hierarchy in a more extended form, which changes fairly quickly depending on events.
We are in a period similar though not identical to the two previous depressions. The last two depressions only ended with the UK etc invading other countries in an imperialist drive after 1870 and with the UK going to war with Hitler.
Trump’s introduction of protectionism for the USA may not last longer than his Presidency, but it does represent the influence of one or more of the factions. As argued above, there is a contradiction between the interests of a global capitalism headed by US Capital, with some concessions, and the interests of a national US Capital doing its best to prevent other countries out competing it. In the first instance, US finance capital dominates the world, with the UK as its junior partner and limited franchises extended to a few other developed countries. Crucial areas of the market and of production are dominated by US firms in a wide range of industries and spheres. The logic of Trump’s protectionism is a concerted protectionism attempted by everyone else. The one from which the US could lose out considerably is that of the more limited use of the US dollar as the global currency. The EU and China are both trying to introduce an alternative.
At the present juncture, every step that the global capitalist power takes, it is torn between its local individual interests and its interests as the country of the global finance-capitalist system. It is hardly surprising that an extreme, well organised section of the capitalist class has been able to influence the political process.
Trumps crudity
The deliberate shift to a racist stance by Trump is another expression of the split in the ruling class, whereas one section prefers to expand and incorporate, albeit at a cost for those involved, the far right prefers to separate and divide. At the same time, another section of the ruling class is using a false anti-semitism both in the UK and the USA to attack the left. The falsitude of the one has the same aim as the racism against people of colour by Trump, essentially to attack and weaken the left.
False Anti-semitism has become a powerful instrument in the hands of the right. It is being extensively used as an instrument of the right of the Labour Party and there are attempts to use it in the United States. It is interesting to see how many people sympathise with the real victims of the false anti-semitism campaign and important to help them.10 History will certainly brand the right wing of the Labour Party with its true responsibility. It will be a major crime if the left is displaced as a result of the false campaign.
The British constitution undermined
However, the right has made at least one mistake that will not be forgiven. When Trump denounced a leaked internal British diplomatic report critical of the state of the Trump government, he set off a train of events which might allow the British constitution to take a few steps forward, in exposing its limits.
It is an axiom of the British diplomatic world that civil servants are appointed by the Crown and make reports, recommendations and have discussions among themselves, within their departments quite frankly. In the case of the British Ambassador to the USA his report was leaked, and it was highly critical of the US administration. What was extraordinary was the failure of the future Prime Minister, Boris Johnson, and others to support the Ambassador. The point is that the civil servants are trusted state employees who act for all elected parties. In the USA and various other countries, it is usual for ambassadors to be chosen for service given to the party, knowing their views. Parts of the civil service are replaced when the President changes. In the UK, the civil servants are chosen to be able to perform the job of serving their masters, whatever the party. There is an account of the emergence of modern British democracy which is generally taught and accepted. The left has its well-known, and less well-known differences with the official history.
In reality, nobody can be genuinely neutral but as long party differences are within a certain range, it is quite possible for someone to be an expert over the extent of the subject. However, it is hard to believe that civil servants could, in fact range from fascist to Marxist. Until now they have not needed to do so, of course. The implication, however, is that they might need to in future.
From the point of view of the left, the internal ruling class battle has made clear the limits of the British constitution for the working class in two ways. There has always been some doubt that the civil service would carry out instructions of left-wing ministers. It is not impossible that the civil service may be carried along with a change in mood in the population, which would be necessary for the left to come to power. But, If not, what then? In other words, the present fracas has made clear that there are different interpretations of reality and the civil service is not neutral but guaranteed to carry on the existing unwritten support for the ruling class, albeit in a manner which hides that reality.
The whole structure of top government is really carried by the civil service. In a recent article, the above paragraphs, were reinforced by an article in the Financial Times,11 in which the author points out that for ‘nearly 170 years Britain’s civil servants have operated under the principles set out in 1854 by two Victorian Statesmen’.12 These principles involved political neutrality, non-partisanship and telling the ‘truth to power behind closed doors’.13
The issue is a crucial part of the unwritten constitution, of which conservatives and liberals are so proud. The author of the article goes on to point out that the director of the (British) Institute for Government is worried by the view of leading members of the Labour Party that the civil servants have to be re-educated away from ‘neo-liberal’ thinking.14 British culture is seen as under threat.
This—openly expressed—one-sided view of democracy where the population essentially can only have a choice between two kinds of liberalism, in which the civil service is well educated, is, of course, not unknown. It is also not confined to elections or governments. It is true of the society as a whole as one would expect. Education in schools and universities have had parallel limitations, although it varies a lot both in time and place.
It is clear, however, that a system, which maintains these controls when they have lost support, is in grave trouble. Obviously a Marxist or socialist could have said that a century ago, but the United Kingdom was the overarching global power until the thirties, progressively losing its colonies and economic and political role since the Second World War. Brexit was not in principle a left/right issue nor did it need to be very important, since it was just a re-alignment of developed capitalist countries.
Finally, it may be said, given the way the ‘unwritten constitution’ has been ‘ damaged’, it may be that it is irreparable at an ideological and real level. In which case, it will add to the forces undermining the capitalist state.
Brexit
I have tried to grapple in previous Critique Notes with the reasons why Brexit has, indeed, become a major political issue. The bourgeoisie has been opposed to Brexit but it was not over-worried by it, since they expected to change its nature and course in due time. The result has been that the issue has been fought over by the far right, small business, plus the semi-employed outside the main cities and a reluctant Parliament. For good or ill, this group of people, ‘lower middle class’, in declining towns, former proletarians, unemployed and those with low incomes have clung to a despairing hope in a future dissociated with Europe but tied to the USA. The rise of English nationalism with which it is associated helps to alleviate the danger that they might move to the left once the UK leaves the EU.
However, this has meant that the far right has taken over in the Conservative Party and shown their importance in that party in electing Boris Johnson. In a sense, the ploy itself has succeeded too well in that it could never have delivered more than a formal victory. Instead, it has probably ruined the Conservative Party, created a mess in international trade for the bourgeoisie and reduced the role of British capital internationally.
The main question, however, might be whether or not the Jeremy Corbyn wing of the Labour Party might succeed in winning the next election. Put another way, will these proceedings work to restore the Labour Party to its form before 2015, by creating a much larger group of disaffected voters, with no loyalty to socialism or to the Labour Party. There has clearly been a concerted attempt to turn politics and the analysis of modern British society into a simplistic Brexit issue, in which the Labour Party appears hopelessly muddled. On the other hand, a programme rejecting austerity promising a high rate of growth, full employment and the abolition of fees for all post school education has a good chance of leading to the election of the Labour Party.
Notes on Contributor
Hillel Ticktin is a Professor of Emeritus of Marxist Studies at the University of Glasgow, Scotland, UK. He is the author of books and articles on Marxist Political Economy, Crisis theory, Finance Capital, the USSR, Trotsky, and South Africa.
Notes
1. Part 1: https://www.facebook.com/yassamine.mather/videos/10100305348568051/?notif_id=1559389873227677; Part2: https://www.facebook.com/yassamine.mather/videos/10100305403637691/
2. https://www.bbc.co.uk/news/world-africa-48211598.
3. https://en.wikipedia.org/wiki/Socialist_Revolutionary_Workers_Party_(South_Africa)
4. https://www.thesouthafrican.com/news/marikana-what-did-cyril-ramaphosa-do/
5. David G. Blanchflower, Where Have All the Good Jobs Gone? (Princeton, NJ: Princeton University Press, 2019).
6. One of either Blackrock, Vanguard, or State Street is the largest shareholder in 88% of S&P 500 companies. They are the three largest owners of most DOW 30 companies. Jacob Greenspon, ‘How Big a Problem Is It That a Few Shareholders Own Stock in So Many Competing Companies?', Harvard Business Review, February 2019 (February 19, 2019; Updated: February 22, 2019). https://hbr.org/2019/02/how-big-a-problem-is-it-that-a-few-shareholders-own-stock-in-so-many-competing-companies.
7. Mohammed El-Erian, ‘Are Central Banks Losing their Big Bet’, Project Syndicate, 19 July 2019.
8. Ibid.
9. Michael Roberts Blog, ‘Michael Roberts and the Cold War in Technology’, 1 July 2019, https://thenextrecession.wordpress.com/.
10. Tony Greenstein, ‘BBC’s War on Corbyn’, Weekly Worker, 18 July 2019, p. 8.; William Sarsfiel, ‘A New Mood Dawns’, Weekly Worker, 18 July 2019, p. 4.
11. James Blitz, ‘Whitehall Fears Brexit Backlash from a Johnson Government’, Financial Times, 19 July 2019. Microsoft relayed the article in its news service.
12. Ibid.
13. Ibid.
14. Ibid.