Wednesday, October 2, 2013

The Reformism of Maurice Coakley

Below is a piece from me criticising the interview with Maurice Coakely concerning his recently published book   Ireland in the World Order: A History of Uneven Development? The interview was published on the website on March 28th 2013.

Maurice: It argued that the Irish capitalist class had been shaped by this structural underdevelopment and showed no inclination to develop an independent industrial base. From the 1960s onwards it sought to insert Ireland into transnational networks – above all by making it a conduit for US capital investment orientated towards the European market. Some of this was manufacturing industry that created real employment but much of it was fraudulent, with the Irish state becoming complicit with tax evasion on a massive scale. While the country significantly increased its average standard of living, it also made itself deeply dependent upon foreign capital.

Paddy: Maurice’s above use of the concept “underdevelopment” is questionable. This is because in the course of his interview he suggests that a sufficiently strong popular resistance movement can create conditions within Ireland that liberate the Irish people from conditions of oppression. Since such liberation from oppression, in its very nature, means an end to “underdevelopment”, for Maurice then, the latter is not necessarily a socio-economic condition that prevents independent development. For Maurice too the creation of these conditions does not involve the abolition of capitalism. Given this his concept of “underdevelopment” is of no historic significance.

Maurice: The radical left has long argued for greater workers’ control at the level of manufacturing industry but we also need to think through what needs to be done in other sectors of the social order. The workings of government and its many institutions should be transparent to the citizens and should be subject to democratic supervision. That would necessarily involve participation and consultation not only with the workers in any given institution, but also with citizens involved with them, like patients, commuters, residents etc.

The minimum measures necessary to defend popular living standards and the welfare state will face fierce opposition from the ruling elites. If a pro-worker government is to succeed in these very modest goals, it would need to achieve a deep popular mobilisation, and a politicisation of the populace.

Paddy: The above indicates his conception is tantamount to suggesting “structural underdevelopment” can be significantly modified or even dissolved within the framework of imperialism. But the notion of “underdevelopment” is based on the assumption that it is a necessary and unavoidable aspect of world capitalism. Consequently  “underdevelopment” can only be eliminated by eliminating capitalism. This being so there is no room for Maurice’s  brand of reformism within this theory.

To claim that this Irish capitalist class  showed no inclination to develop an independent industrial base” suggests that this indigenous class has had choice as to how the Irish economy was to be structured. This then means that, for Maurice, “underdevelopment” is not an inevitable outcome of world capitalist development but a product of the subjective choices of the Irish capitalist class. This then suggests that the Irish capitalist class is not  dominated by imperialist capital (British capitalism). But this must is evidence that Maurice is contradicting the very nature of “underdevelopment”.  This implies that the Irish bourgeoisie has been a subjectively lazy or unenterprising class. Laziness, then, not “underdevelopment” or foreign capital,  is mistakenly the ultimate source of the problem for Maurice.

The economic development of Western Europe in the aftermath of the Second World War was largely determined by US capitalism. These Western economies were in an extremely dependent state. Yet it would make little sense to describe Britain, France and Germany as in a state of “underdevelopment” as a consequence of its then subordinate relationship to US capitalism. Even today there obtains a relationship of subordination between US imperialism and Western Europe. Indeed Maurice’s claim that the capitalist world is composed of a hierarchal state system suggests that there different degrees of structural development with regard to individual states.

To historically link social resistance in Ireland to a striving for national independence makes little sense. If Ireland’s condition was that of “underdevelopment” then there obtained no possibility of national independence been achieved. However the conditions existed for the realisation of social rights or reforms within “underdevelopment”. Catholic Emancipation was, in a sense, realised within the context of underdevelopment as was the land question. Yet these movements of social resistance were not necessarily linked “to a striving for national independence.” The conditions of nationality entails the existence of an emerging indigenous bourgeoisie free from conditions of “underdevelopment”.  Given Maurice’s perspective such an Irish bourgeoisie must be non-existent because of underdevelopment.

The character of the Irish economy in relation to global capitalism is not a result, as Maurice implies, of the subjective actions of its capitalist class. The Irish capitalist class cannot subjectively determine Ireland’s economic structure. If it could it would then constitute an independent capitalist class involving an independent nation state.

Maurice resorts to petit bourgeois morality when he claims that much of US investment has “a fraudulent nature”.  It is no more fraudulent than the exploitation of labour power. Collapsing economic and political phenomena into morality merely obfuscates reality and obscures the way forward.

The Southern Irish state did not make itself dependent on foreign capital. The objective processes inherent in world capitalism made it dependent on foreign capital. All capital is ultimately dependent. Dependent on the industrial working class as the source of value (capital). Neither foreign nor indigenous capital are morally better than each other. One is as bad or good as the other. The point is that they are both sources for the extraction of surplus value from the modern worker.

Maurice: At a more general level the book argues that uneven development is intrinsic to the capitalist system. This is not just a matter of the laws of the capitalism system working themselves out unevenly - though there is an element of that - but also that patterns of development are heavily shaped by politics. Global capitalism is a hierarchal system, and states play a central role in moulding that hierarchy,

Paddy: Maurice’s claim that “global capitalism is a hierarchal system” is a questionable  and rather undialectical claim. The USA was originally a British colony and then in the 18th century was a relatively weak nation state. Yet it was to eventually become the strongest capitalist state in the world. Germany was slow to emerge into an independent state. Yet today  Germany is, arguably, the strongest state within the EMU. We see then that the strength and weakness of states is a somewhat fluid matter.

Maurice: The failure to the Irish state to pursue a course of independent economic development has made the Irish economy exceptionally vulnerable in the event of crisis. The Irish state found itself with very limited leverage to negotiate with the institutions of global and regional governance.

Paddy: An individual state cannot freely choose to follow a course of independent economic development.  It is not a subjective matter. It is a historical matter grounded in objective processes that transcend, albeit involve, mere subjectivity. Otherwise any state could freely choose to follow a course of independent economic development. If a country, such as Maurice claims Ireland to be, is in a condition of underdevelopment then this is even more so the case. States don’t have the power to subjectively determine the character of their economies. Furthermore capitalism is international in character which means that Irish capitalism is driven by global capitalism.

Maurice: To make matters worse the political elite has become closely interwoven with a rentier/financial oligarchy whose interests are very removed from any development project, or from the needs of the wider population. The Irish elite as a whole has become characterised by a mentality that combines dependency and fraud, a combination not uncommon across much of what is called the ‘developing’ world.

Paddy: Capitalism, including Irish capitalism, is a class based system –not an “elite”  based system. The Irish state is a capitalist state that ultimately serves the interests of the capitalist class. Thereby this system never existed, as Maurice suggests, to serve “the needs of the wider population”.  The category “wider population included all classes obtaining in a specific social formation. Neither can it be one of “mentality”,  as Maurice suggests. Psychology is not the driving force of societies. A different “mentality” cannot free Ireland from dependency and “fraud”.
Maurice: There has been a radical change in the balance of forces between capital and labour – to the detriment of labour – over the last few decades and this has been one of the defining features of contemporary capitalism. Other significant changes have also occurred.

Over the last few decades, global capitalism – especially in the North Atlantic economies – has been characterised by a massive expansion of the financial sphere, a process known as financialisation. Behind the financial upsurge are some wider changes in the global economy.

Paddy: The post-war world followed on the heels of the massive defeat of the world working class at the hands of both capitalism and Stalinism. Yet, in the aftermath of the war,  the Western working class experienced, to a large extent, radical improvements in both its working and living conditions. So Maurice’s claim that changes in the balance of forces against the working class necessarily involves falls in its living standards is not supportable by the evidence.

Maurice: One is the presence of global over-capacity in production which inhibits investment. Too many goods are chasing too few customers. Many corporations don’t see any way that they can achieve profitable returns by investing in new production lines so they are either hoarding their profits or looking for speculative fields to put their money in. In the old core zones of global capitalism, investment rates have been falling for decades.

Paddy: If the above comments  are true then the recent industrial development of  China could not have taken place on such an enormous scale. To suggest that profits are being hoarded makes no sense. Hoarding profit (surplus value) can only mean the contraction of profits. If surplus value, in the form, of profit is hoarded then it ceases to function as capital. It thereby must contract.  Even if industrial corporations invest their profits in a bank they are still not being hoarded. Banks cannot make profits by hoarding. Over-capacity in capitalist production cannot, given capitalism’s nature, constitute a sustainable process. Over-production of capital occurs at a particular stage in the business cycle. Over-production is followed by stockpiling of commodity capital and the eventual devaluation and destruction of capital itself. This entails the increased centralisation and concentration of capital. The consequent capital adjustment brings about an end to this over-accumulation of capital.  But this  cyclical process can be softened, even interrupted, by progressively increasing public expenditure. The latter ultimately constitutes a deduction from surplus value. But there is a limit to this process. This is why the 2008 crash and the Euro crisis took place.

There cannot persist in a sustained way, as Maurice is claiming, too many goods chasing too few customers. The goods, the commodities in question, then cease to be goods (commodities). Too many goods chasing too few customers is based on false underconsumptionist assumptions which conflict with Marxist political economy.

Maurice: In this context financialisation was useful because more people could buy goods on credit, but the huge debt which was built up from the 1990s ultimately became unmanageable and the financial system imploded. We are living with the consequences of that. Most of the world’s banks are underwater, and have only survived because of massive infusions of public money from governments around the world.

Paddy: Huge debts are a relative matter. The accumulation of huge debts does not necessarily, as Maurice claims, become unmanageable leading to the implosion of the financial system. The debt tolerance of capitalism is a function of the scale of surplus value produced by its valorisation process. Debt tends to cause problems when the valorisation process is producing insufficient surplus value relative to debt.

Maurice: Because workers could not afford to buy the goods produced, the credit system was vastly expanded to cope with this but it ultimately collapsed under the weight of the huge levels of debt which had accumulated. The crucial point is this: capital will not be able to resolve the crisis this time by further assaults on labour. This does not of course mean that they won’t try. But even if they are successful in their efforts, it will not end the systemic crisis. On the contrary, it will deepen it because ordinary people will be even less able to afford the goods being produced.

Paddy: Expanding credit excessively is capitalism’s  means of seeking to escape from its profitability problems. The enormous burgeoning of credit had a universal character in the West. To claim that “assaults on labour”  involving further cut-backs in the price of labour power will not help resolve the crisis is ludicrous. To claim that such a development leads to further underconsumptionism demonstrates Maurice’s ignorance of the nature of capitalism. If there obtains a sustained accelerating accumulation of capital then falling wages do not necessarily lead to falling demand.

Maurice: Marx spoke about the ‘over-accumulation’ of capital. We usually think about this as an economic process, but it is also a social one. The huge wealth and power that capital has built up over the last three decades has become an obstacle to the capitalist system itself

Paddy: But if, as Maurice claims, growth and profitability have been falling then it cannot be the huge wealth and power of capital that is the cause of the crisis.  If profitability is falling then the scale of capital is correspondingly contracting. To suggest, as Maurice does, that capital would be rational if it followed a certain programme is to misunderstand the nature of capital. The only way capital can be rational is by its self-negation.  The very nature of these aspects make such rational action impossible under capitalism.

Maurice: If capitalism was a rational system it would have imposed harsh sanctions on the bankers and the brokers, and ensured that sufficient resources went into social services and into the creation a sustainable energy system. It would also make a serious effort to ensure that the general population would be able to buy the goods being produced by capital. But capitalism is not a rational system, or rather what is rational for the individual capitalist – or the individual state – becomes irrational for the system as a whole.

Paddy: Maurice is again engaging in contradictions. If, as Maurice claims, capitalism is not rational then it is inconsistent of him to call for a programme involving the public ownership of the credit system since this would constitute a futile attempt to render capitalism more rational. Yet he has already claimed that the capitalist system is not rational.

Maurice: If a substantial popular and democratic resistance to neo-liberal polices does not emerge, we are likely to see a deepening of destructive and irrational trends, alongside more imperialist adventures, across the globe.

Paddy: Popular and democratic resistance is not the issue. The issue is the emergence of a global communist movement that successfully overthrows capitalism. Neither is it, as Maurice suggests, a matter of mere resistance to neoliberalism but the mounting of a sustained offensive against the capitalist class. Maurice’s  antiliberalism suggests that there is a good and a bad capitalism: defeating bad capitalism in the form of neo-liberalism while restoring the previous good form of capitalism. The only way to eliminate neoliberalism is to eliminate capitalism.

Maurice: To many people, including many trade unionists, this seemed like a good deal. It is only with the global financial crisis that the downside of the deal has become more evident. Suddenly, Ireland was being demoted to the status of a ‘peripheral’ state, albeit a periphery of the world’s second major core region. One of the reasons why resistance in Ireland has been muted so far is because people are afraid that resistance could be counterproductive, that deeper confrontations could damage Ireland’s position in the global system. The EU leaders and the debt collectors are aware of these fears and use them to their advantage.

Paddy: The problem is, not simply, as Maurice suggests, the failure of the Irish working class to seriously challenge the cut backs. The problem is that the cut-backs cannot be successfully challenged within a national framework. Only the European working class, including the Irish working class, can successfully challenge the cut backs by transforming itself into a working class communist movement. On its own the Irish working class, no matter how radicalised,  is objectively too weak to destroy capitalism in Ireland.

Maurice: While many are beginning to realise that there may be a heavy price to pay for having so lightly abandoned national sovereignty, they see no easy way to regain it.

Paddy: It is ironical that Maurice should suggest that Ireland had (before the fall) national sovereignty given that he claims it has been in a state of  “underdevelopment”.  Ireland’s has been surrendering its national sovereignty over many years.  To a certain extent it has been the further loss of sovereignty, as a result of becoming part of the Eurozone, that has led to the southern Irish economy’s current disastrous economic condition.  Indeed it is questionable as to whether Ireland has  ever  been  an authentic sovereign country.

Maurice: The argument put forward by the European Commission and the European Central Bank – that cutting public spending will rejuvenate the private economy by making it more competitive – is simply not credible... It is clear that the austerity programmes are not only having a disastrous social effect, but are also damaging the capitalist economies in the affected countries. Not only are these deprivation programmes socially and economically harmful but they have also significantly eroded the position of the political establishment in these states.

Paddy: Austerity does work. Indeed an austerity programme is needed for Western capitalism as a whole. The reason as to why  the Western capitalist class has not faced up to its problems is because of fear of the working class. Divisions within that capitalist class is another reason. If widespread austerity was introduced it would lead to the demise of the weaker sections of the capitalist class. It is this component of the capitalist class that may be more sceptical concerning an austerity programme. For capitalism to recover there needs to be enormous cut backs made in the living and working conditions of the working class together with the elimination of less  productive forms of capital.

Maurice: To make matters worse, they are now forcing austerity policies on their neighbours, ignoring the evidence that these are thoroughly counter-productive. As an economic strategy, this was bound to crash because if the peripheral economies are on their knees, who then is going to buy German goods?

Paddy: Above is the false underconsumptionist rubbish repeatedly spewed out by much of the radical left. If German capital is to continue to accumulate it needs to export both commodities and capital to other parts of the EU. To achieve this it needs to maintain and increase profitability. Exporting capital is one of the chief means through which to achieve this. This means keeping costs down including both the price of the commodity labour power and social benefits. The imposition of EU wide austerity can help prevent German profits from falling. This is done by reducing the price of labour power and the elimination of weaker forms of capital. The latter is largely sustained by state spending of one sort or another. The biggest danger confronting the West European bourgeoisie, concerning this, is the potential challenge from the European working class. However because profitability conditions are so bad West European capital has no other option but to take action that may lead to historically significant challenges by the working class. However current working class weakness is encouraging it to impose radical austerity.

Maurice: More than that, it would appear that as capitalism becomes more mature, it can only be stabilised by more and more public spending. Without that, these economies go into reverse gear. This is what is happening today across the European periphery.

Paddy: The opposite is the case. Because of capitalism’s growing maturity public spending needs reduction to a necessary minimum. It is enormous public spending that largely constitutes a deduction from surplus value leaving less room for the accumulation of capital.

Maurice: One way of overcoming Europe’s debt problems would be to simply write off the debt. This happened to German debt in 1953, with the blessings of Washington. Were the European Union to do this, it would be a massive blow to the interests of financial capital, and it would probably force the European states to take public ownership and control of the credit system. Another solution would be to print money to inflate away the debt. This would damage both the interests of financial capital and also of savers, who would see the real value of their savings reduced. It is considered to be politically unacceptable to the German government. Instead, the ECB, the EC and the Berlin continued to push through austerity programmes that they know are self-defeating. This whole policy is incoherent and behind the arrogance of the European leadership one can detect more than a hint of panic.

Paddy: It is not the job of the working class to assist capital in its effort to resolve its problems. Much of the Irish radical left have been repeatedly engaged in this treacherous exercise. It is a reactionary exercise which deceives the working class. The class interests of workers is not advanced by announcing ways to save capitalism from itself.

Anyway the European Union won’t write off debts because this means a reduction in total surplus value accruing to its capital –particularly the capital of its strongest economies. It will only engage in such undertakings when left with no alternative. The other solution promoted by Maurice is “to print money to inflate away the debt.” Inflation is an anti-working class measure involving consumer price rises which tend to reduce working class income. Excessive money printing can destabilise capitalism.

Maurice: Some of the points that the Keynesians make are valid enough. There is a necessity to increase public spending in both social and physical infrastructure. We are, however, not likely to see a return to the high growth rates of earlier decades, nor is it clear that high growth would be a good thing. The Keynesians have yet to get their heads around the global ecological crisis. Endless economic growth is simply not possible, nor is it ecologically viable. The global environment is much too fragile for that. If we are to establish a viable economic model, it has to include an agenda of moving towards a sustainable energy system.

Paddy: Public spending means more debt. Excessive debt has been a key source of the problem. Calling for a “pro-worker government” under capitalism is tantamount to calling for more credit and public investment independently of its profitability. Yet more credit, contrary to what Maurice claims, only intensifies the problem.

Maurice: Given that a return to high growth rates is impractical, it is difficult to see how a social compromise between capital and labour of the sort that existed in the post-war decades could be revived. At a very immediate level, the private banking system is a massive obstacle to economic revival because it represents claims on future production. These claims are strangling investment projects. This private financial sector needs to be closed down, and the credit system should be turned into a public utility system, like electricity, water or transport. A publically owned, democratically structured credit system would enable the population to determine where investment should go and what forms it would take. Such a programme would not, in itself, abolish capitalism, but it would significantly re-structure the system and shift the balance of power from capital to labour.

Paddy: The nationalisation of credit means more debt. Given the global character of credit its nationalisation by a little Irish state is impossible. In fact the public finance that is being injected into the world banking system is a form of nationalisation by the back door. This enormous financial cost is being undertaken at the expense of the working class.  Bank nationalisation would prove an even greater burden on the working class.

If the financial system was to be made public on a popular democratic basis in such a way as to enhance the interests of the working class the capitalist class would challenge this attempted restructuring of capital.  The capitalist state then could not, by its very nature, support such nationalisation. The nationalisation of finance is just not possible under capitalism. Finance capital is by its very nature private. Capitalism cannot be managed in the way that Maurice suggests, A managed capitalism constitutes  the negation of finance capital.

Neither is capitalism going to shift what Maurice calls “the balance of power” against itself. The state is an organ of class power that cannot thereby serve the interests of the working class. Furthermore given the global character of finance capital a puny Irish state lacks the power to successfully challenge it. Neither capitalism nor its state are rational which means a rational capitalism cannot exist. Popularly determining where resources are to be invested means that profit is no longer to be capital’s driving force. This is to fly in the face of the law of value. This an historic impossibility.
Maurice: The crucial arena for establishing a modicum of self-determination is the financial one. The debt burden imposed upon the population is not only immoral, it is also impractical. It effectively condemns the state to extended stagnation, which will be accompanied by a gradual but accumulative reduction in social spending and social rights.

Paddy: The above piece makes no sense. Immorality is not the issue. Morality is not an economic policy. The category  population includes capitalists, petty capitalists, the industrial working class and lumpen elements. In this context it is a term of great ambiguity even  suggesting that Ireland is not a class society. Maurice’s conception suggests that the state is a neutral force that can be used by either working class or capitalist class.

Maurice: The details of what policies a progressive government would need to introduce would have to be worked out collectively and these would change over time depending on circumstances. In the 1930s trade policies were considered more central than they would be now, but that could change again. A lot of good work has been done by people like Michael Taft, the Anglo Not Our Debt campaign, and the Irish Left Review.

Paddy: There can be no such political institution as a progressive Irish government. If such a government were possible then there is no reason as to why Fianna Fail, Fine Gael or the Labour Party would not have formed one. These parties don’t act in a reactionary way because they sadistically enjoy punishing the working class. The point is that they cannot  function as government without being compelled to implement policies that serve the interests of the capitalist class both in its indigenous and foreign forms. Their policies are not a product of subjective factors but of objective ones. Furthermore the EU would obstruct the existence of a progressive Irish government.

Michael Taft is a reformist nationalist who sees the solution as a reformist one that is confined within the Irish national framework. This is a utopian solution.

Maurice: Any political advance towards a more just society must begin from where we are now. In the case of western Europe, a defence of social rights and the welfare state has to be the starting point for launching a political challenge to the existing order, at least for the foreseeable future.
Paddy: “A more just society!” Is this The Just Society programme promoted by the Fine Gael Party in the second half of the 20th century? It is not a matter of a defence of social rights and the welfare state. Capitalism has launched an attack on the working and living conditions of the Irish working class because it is left with no real choice. Why else would it engage in such an exercise? Why is the state currently engaged in this exercise on such a scale? The current government is not engaged in a severe austerity programme because for the pleasure of it. It does not willingly promote a programme that makes it increasingly unpopular. The point is that it has no real choice under present circumstances.

Maurice: However, a strategy that is based solely of making demands on the state and expects that the population, or the working class, will become radicalised when these demands are not met, is hardly credible. Politics has moved on over the last century and the ruling class now appeals directly to the population – mainly through the media – arguing that while certain social rights may be desirable, they cannot realistically be granted or maintained because the state cannot afford them.

Paddy: Appealing to the population mainly through the media is not to appeal directly to the population. The bourgeois mass media is a reified form. It itself forms a part of the problem.

Maurice: If the left is to defend the earlier gains achieved by workers and the wider population, it needs to explain how these social rights are to be paid for. It is not good enough to say: “that’s their problem”. It is our problem too.

Paddy: This above means that there is essentially no difference between “the left” and the two political parties currently in government. Both “the left” and the government are then arguing for policies within the narrow constraints of the national capitalist framework. The point is that the problems of the working class cannot be solved within the constraints of a national capitalist framework. Consequently the left cannot “explain how these social rights are to be paid for” under capitalism. This is because they cannot be paid for under capitalism. The bourgeois political parties are right when they make this claim. Again it has to be wondered what Maurice means by “the left”. Is this left to include the variety of different groups that are considered to be “the left”: ranging from Stalinism to Trotskyism. Is it possible for such a left to subscribe to the same programme (“socialism in one country”)?

Maurice: Re-distribution of income is only one part of a programme of transition to a more equitable society. Another crucial aspect is control over the credit system. This would involve not only having capital controls but also a publically owned credit system.

Paddy: It is questionable as to how the above programme of action can be successfully realised within the framework of the EU. The EU is not going to passively sit by while this programme is implemented. A publicly owned credit system used to benefit the working class is a contradiction. The credit system forms a necessary part of finance capitalism. It exists to serve the interests of capital as opposed to labour power. It exists to sustain and increase the exploitation of labour power. Consequently it cannot be designed to benefit the working class.

Maurice: The radical left has long argued for greater workers’ control at the level of manufacturing industry but we also need to think through what needs to be done in other sectors of the social order. The workings of government and its many institutions should be transparent to the citizens and should be subject to democratic supervision. That would necessarily involve participation and consultation not only with the workers in any given institution, but also with citizens involved with them, like patients, commuters, residents etc. This kind of project would need to be accompanied by the development of new democratic media.

Marx is often criticised for failing to outline a comprehensive plan for a socialist society, but this is arguably a strength of his position rather than a weakness. We have to begin from where we are and work from there. The minimum measures necessary to defend popular living standards and the welfare state will face fierce opposition from the ruling elites. If a pro-worker government is to succeed in these very modest goals, it would need to achieve a deep popular mobilisation, and a politicisation of the populace.
Paddy: The above piece is grossly misleading. However the problem is that many workers are deceived by such ramblings. There cannot exist a “pro-worker government” under capitalism. To argue for a “pro-worker government” is to paradoxically argue for a pro-worker (capitalist) state. Should such a society be realisable there would be no need for communist society.





Tuesday, July 23, 2013

The Great Recession

Appearances contradict reality!

The current global crisis is a manifestation of a fundamental problem in the process of the accumulation of capital. The problem is the lack of surplus value production. This contradiction has been  concealed by decades of accumulating debt. Burgeoning financialisation involving bull runs  since the 1980s have helped disguise the long-term  weakening of the advanced capitalist economies. Economic performance in the United States, Western Europe and Japan has deteriorated  since about 1973. The years since the start of the current cycle, which originated in  2001, have been worst of all.

The declining economic dynamism of the advanced capitalist world is rooted in a major sustained fall in profitability, caused primarily by the secular over-accumulation of capital. This problem goes back to the early 1970s. By 2000 in the United States, Japan and Germany, the rate of profit of private industrial capital had yet to make a comeback, rising no higher  than that of the 1970s. With reduced profitability, capitalists had smaller surplus value to add to their labour processes. The perpetuation of reduced profitability since the 1970s has led to a steady falloff in accelerated capital accumulation across the advanced capitalist economies. The economic interventionism of the capitalist state have obstructed the realisation of the conditions for the necessary radical devalorisation of capital. Consequently  economic downturn has not been precipitous enough to bring about a full recovery involving a restoration of profitability. The outcome is sustained stagnation.

   To counter this persistent stagnation states, led by the United States, have been forced to underwrite ever greater volumes of debt through ever more varied and exotic financial forms. Initially, during the 1970s and 1980s, states were obliged to incur ever larger public deficits to sustain growth. But while provisionally keeping the economy relatively stable these deficits also rendered it increasingly stagnant. They thereby promoted the continued stagnation of capital by preventing capital proceeding through its “natural” cycle involving sharp downturns. This interventionism obstructed the return of accelerated capital accumulation. The state is now securing progressively less growth for any given increase in borrowing.

States, in the early 1990s,  sought to overcome the problem by a budget balancing policy. Deficit reductions brought about by budget balancing resulted in a significant fall in aggregate demand. Consequently during the first half of the 1990s both Europe and Japan experienced devastating recessions that turned out to be the worst of the post-war period. The U.S. economy, itself, experienced the so-called jobless recovery.

Since the middle 1990s, the United States has been obliged to resort to more powerful and risky forms of stimulus to counter the tendency to stagnation. This is why public deficits were replaced with private deficits and asset inflation. In the great stock market run-up of the 1990s wealth on paper, fictitious capital, massively expanded. This development entailed a record-breaking borrowing increases. Consequently a powerful expansion of financial capital and consumption was sustained.

Government financial policy together with the general neo-liberal agenda of the bourgeoisie led to the historic equity price bubble of the years 1995-2000. Equity prices rose as a response to the law of the tendency of the general rate of profit to fall. New  investment, free from significant technical composition of capital increases, exacerbated the prevailing over-accumulation of industrial capital. This was followed by the stock market crash and recession of 2000-2001.This development depressed profitability in the non-financial sector to its lowest level since 1980.  

Greenspan countered the new cyclical downturn with another round in the inflation of asset prices. By reducing real short-term interest rates to zero for three years, he facilitated an historically unprecedented explosion of household borrowing. This contributed to and fed on rocketing house prices and household wealth. The world housing bubble between 2000 and 2005 was one of the biggest of all time. It made possible a steady rise in consumer spending and residential investment which together drove the expansion.

Bush’s budget deficits together with record household deficits succeeded in obscuring  the weakness of the underlying economic recovery by creating the appearance of sustained economic prosperity. The rise in debt-fuelled consumer demand as well as super-cheap credit superficially and provisionally revived the American economy. It also led to a new surge in imports and the increase of the balance of payments deficit to record levels.

Simultaneously, instead of increasing investment, productiveness and employment to increase surplus value, individual capitals sought to exploit the hyper-low cost of borrowing to improve their own and their shareholders’ position by way of financial manipulation — paying off their debts, paying out dividends, and buying their own stocks to drive up their value. This financialisation created a fictitious prosperity The same sort of things had been happening throughout the world economy — in Europe and Japan. In the United States and across the advanced capitalist world since 2000, the contradiction has been as follows: The slowest growth in the “real economy” since the 1970s and the greatest expansion of the fictitious economy in U.S. history.

Just as the stock market bubble of the 1990s eventually burst, the housing bubble eventually deflated. As a consequence, the house-driven expansion during the cyclical upturn moved into reverse. Just as the positive wealth effect of the housing bubble drove the economy forward, the negative effect of the housing crash drove it backward. With the value of their household residences declining and household borrowing  collapsing households were forced to consume less. The sub-prime crisis arose as a direct extension of the housing bubble. Because of the ensuing enormity of the banks’ losses credit froze up at the very moment of the slide into recession.

It is clear from the above argument that it does not necessarily follow, as held by much of the Irish Left, that stimulus provided by the capitalist state to the domestic economy is not a prescription for providing a way out of recession. Indeed the argument above teaches the lesson that “artificial stimulus” can constitute a factor that sustains or encourages recession. Most of the Irish Left, including the less passive trade union UNITE, focus its efforts on campaigning for a solution within the framework of capitalism through the medium of the capitalist state which they misidentify as an eternal nanny state. They thereby sustain the illusion that capitalism is potentially a system that can serve the interests of the working class. If this utopianism of the Left were true then there would be no need for communist society.

The Euro crisis is a general a product of the conditions that contributed to the Great Recession.

After the crash of 2008 the contradictions of the Euro grew increasingly visible. Consequently the market increasingly discovered its shortcomings. This manifested itself in the growing economic and financial problems of the so called peripheral states within the Euro zone. States such as Greece, Portugal and Ireland. These economies were running growing budget deficits. This meant that they were compelled to increasingly borrow on the financial markets. But because of the worsening economic conditions under which they were forced to do this, together with other factors, the interest rates at which borrowing was possible for them became increasingly usurious. No longer were they really in a position to borrow on the bond market. This meant they were left with merely two options: a bailout from the EU or default. In this way the economic crisis for these states became a growing problem for the EU itself culminating in a collapse of the Euro and its banking system.

One thing needs to be made clear. The Irish economy did not collapse because of irresponsibility regulation, banking and unscrupulous bankers. Pinning the blame on the aforementioned is a form of populism that distracts the attention of the working class from the real problem –the contradictory limits of capitalism. It is because the generation of surplus value within the reproduction process was the central problem facing the Irish economy that the bubble was created involving vast amounts of debt. To compensate for the absence of economic growth based on profitable industrial production bubble conditions were created that inevitable burst.

The banks of the core Euro zone were bloated and sitting on mountains of toxic debt collected from its periphery and elsewhere (the United States included). Consequently the core was vulnerable to collapse too. Because the core members were not prepared to let their banks collapse they imposed draconian conditions on the states that received financial help from them. This forms part of an attempt to protect its banks by rescuing funds from the periphery that was owed to the core of the European banking system. But the real aim of the markets was not merely to force the peripheral states into default. The underlying aim was to collapse of the Euro itself thereby bringing about the reconfiguration of the European capitalist system.

Ultimately the source of the Euro crisis is not, as some argue, its flawed architecture, rampant financialisation nor the Great Recession itself. Nor was the Euro crisis itself due to reckless spending by both the public and private sectors of Greece, Portugal and Ireland.

These latter factors  and the Euro crisis are the result of the failure of the valorisation process to produce surplus value on a scale sufficient to provide accelerated accumulation of capital. Because of this failure capitalism has been compelled to conduct itself in a way that has led to massive financialisation involving copious credit culminating in financial crisis, crash and economic recession. Debt is not indefinitely sustainable when there obtains abject failure by the system to produce surplus value (profit) on a sufficiently large scale. As I have indicated before, the failure of capitalism to bring about an adequate restoration of profit during the 1974/75 crisis marked a turning point that resulted in the sustained stagnation of capital. The 74/75 dip was not sufficiently deep to overcome the crisis of capitalism. Consequently even if the ECB was to currently dish out mountains of Euro the problem would only partially sort itself out in the short term. In the long term it would lead to a much more acute problem.

Public nor private debt is not the problem. Public/private debt is a product of the problem of profitability. Because of the lack of profitability debt has ballooned thereby reinforcing the problem.

For capitalism to economically recover a very deep depression involving massive reductions in the value of wages and social welfare spending is a necessity. The only other (authentic) option is communist revolution.

Wednesday, July 3, 2013

World War Two Was Not A Conflict by the Allies Against Fascism.

The Second World War was not, as is popularly thought, a people’s war or a war fought by democracy against fascism. The Allies were not essentially concerned as to whether the Axis was fascist or not. However the Allies were concerned about the threatening character of the capitalist Axis to their economic and commercial interests. As with the First World War the Second World War was an inter-imperialist conflict. It was a war fought by Britain, France and the USA against a coalition of powers led by German and Japanese imperialism. 
Britain and other Western powers fought the Axis ultimately in the interests of US imperialism. Washington was prepared to lend and lease the necessary resources to its Allies in order to defeat German imperialism. America did not wish to see German domination over Europe growing as a rival to it. As A.J.P. Taylor wrote in his work The Struggle for Mastery in Europe:

“No one state has ever been strong enough to eat up all the rest; and the mutual jealousy of the Great Powers had preserved even the small states, which could not have preserved themselves. The relation of the Great Powers have determined the history of Europe.”

According to AJP Taylor:

“the balance of power survived Napoleon’s challenge to it almost unscathed. The French bid ended in 1870. A new balance followed; and only after thirty years of peace did it begin to appear that Germany had stepped into France’s place, as the potential conqueror of Europe. The First World War was, on the part of Germany’s enemies a war to restore or preserve the balance of power; but, though, Germany was defeated the European balance was not restored. If the war had been confined to Europe Germany would have won; she was defeated only by the entry into the war of the United States.”

This quasi proxy strategy of Washington’s meant that World War Two was fought by US imperialism at a fire sale price. It ensured that, where possible, European soldiers died instead of American ones. Washington’s strategy largely resembled 19th century Britain’s: ensuring that no single European power dominated Europe. For hegemony over Europe by a single European power meant its rivalry and even its mastery of the world. This is why Washington resolutely sought an enduring power balance within Europe. By a balance of power obtaining between the Soviet Union and the West European capitalist powers no one European power could exclusively dominate Europe and thereby pose a global threat to US capitalism. Through the stratagem of the Cold War Washington hoped to isolate the Soviet Union from Western Europe thereby preventing either European side from gaining hegemony. Western Europe hoped to piggy back its way to prosperity on the back of America prosperity by means of the institutional form of the European Union. This delicate and anomalous power balance has tenuously provided sustained relative post-war stability. The EU has been the institutional form too by which the West could facilitate the economic development of capitalist Germany while institutionally constraining it in such a way that it never posed a mortal threat to the West. We see then that the war against Fascism had little to do with the political character of the Axis powers. However since the collapse of the Soviet Union we have been in transition to a new epoch in the life of world capitalism. The global financial events of 2008 have established this new epoch.
However the extension of Stalinist Russian into the heart of Europe complicated things. Consequently Washington sought through the strategy of the Cold War to isolate and weaken the Soviet Union as a European and global player. In this way it has been able to maintain an anomalous balance of power in Europe. These were the conditions that helped America maintain itself as the leading world power.

The European Union was the strategic form by which Washington hoped to maintain control over Germany while allowing it room to commercially expand without posing as a threatening force strangling Washington and indeed France and British interests. Western Europe, as the EU, hoped to piggy back its way to prosperity and power on American interests. This state of affairs has been largely successful and has prevented the break out of serious inter-imperialist war for the last sixty or more years –some achievement for capitalism it has to be said.

Churchill’s calculations were based on the exclusively strategic interests of British Imperialism and the need to defend the British Empire. In addition he had not given up hope that Russia and Germany would mutually exhaust themselves thereby creating a stalemate in the East. This outcome would relatively strengthen Britain’s hand. The interests of US imperialism and British imperialism were contradictory in this respect. Washington, while formally the ally of London, was all the time aiming to exploit the war to weaken the position of Britain in the world and particularly to break its grip on India and Africa. At the same time it sought to halt the advance of the Red Army and gain control over a weakened Europe. This explains US haste to open the second front in Europe and Britain’s lack of enthusiasm for it. Britain’s delaying tactics may have prolonged the war. However the relentless Soviet advance obliged Churchill to reconsider his strategy.
Britain would probably have preferred a weakened, yet relatively strong, Germany as a counter weight to the Soviet empire. The divisions between London and Washington arose because the interests of British and US imperialism were different and even antagonistic. American imperialism did not want Hitler to succeed because that would have created a powerful rival to the USA in Europe. On the other hand it was US imperialism’s interests to weaken Britain and its empire. Its aim was to replace Britain as the leading power in the world after the defeat of Germany and Japan. The decision to open a second front in Italy was dictated mainly by the fear that following the overthrow of Mussolini in 1943 the Italian Communists would take power. While Churchill’s attention was fixed on the Mediterrean it became clear to the Americans that the USSR was winning the war on the eastern front and that if nothing was done the Red Army would just roll through Europe. This is why Roosevelt pressed for the opening of a second front in France while Churchill argued for delay. This led to friction between London and Washington. The second front had been mooted for 1942. The Mediterrean operations were a sideshow compared to the colossal battles on the eastern front.

In addition the Americans had their own reasons for wanting to satisfy the demands of the USSR to open the second front in Europe. They were involved in a bloody war with Japan in the Pacific where their troops had to conquer heavily defended islands, one by one. They realised that to take on the powerful land armies of Japan on the Asian mainland would be a formidable task in the absence of the Red Army also launching an offensive against the Japanese in China after the German army has been defeated. This was a weighty reason for Roosevelt to agree to Russia’s demand to launch Overlord and overrule the objection of the British.

The Soviet Union’s role in the war was basically one of self-defence against imperialism. Stalin was prepared to engage in any degree of opportunism to safeguard the Soviet State. This is why he could zig zag in his relations with the two imperialist camps. Initially his preference was for a grand alliance with the democratic imperialist powers. However they did not appear to be too interested in such an arrangement. Given that Germany, Japan and Italy had formed an Anti-Comintern Pact and that Japanese forces had attacked Soviet forces he agreed to a non-aggression treaty with Hitler. The USSR and Germany was to divide up Eastern Europe among themselves including Poland. Germany wanted to invade Poland with the support of the USSR.
Internationally this meant that Stalin shifted the policy of the Comintern from involvement in a crusade against fascism to one involving the absence of active support for any imperialist powers involved in future conflict whether they are members of the Allies or Axis. This was an about turn that many elements within the Comintern found difficult to accept. The shift from calling for an anti-fascist front to declaring the conflict as inter-imperialist constituted a staggering turn around. Communist parties were not to take sides. These parties were to focus on the class struggle against the bosses. Neither was a revolutionary workers’ government to be seen to be a possibility. Consequently a popular front government included a government of Stalinists and reformists etc. Indigenous communist parties were not to seize power but join in popular front governments.

But in June 1941 Hitler broke his agreement with Stalin invading the Soviet Union. Consequently a Grand Alliance was not formed consisting of the USA, Britain and the USSR. The Comintern instructed its parties to support every anti-Nazi government and join every anti-Nazi resistance movement. Workers were no longer to go out on strike in countries supportive of the Grand Alliance. Instead they were actively to support Allied governments. As a result of this about face the communist parties around the world increased their popularity.

The point is that that World War Two was an imperialist war. It had nothing to do with democracy. Britain, France and even the USA has colonised and repressed peoples around the world. There was no democracy at work here. Parts of the world were direct undemocratic colonies of Britain and France. A war for democracy against fascism could not be fought by Empires that maintained such colonies.

The principled position of revolutionary communism concerning World War Two is that it was an inter-imperialist conflict involving the unavoidable military engagement of Stalinist Russia in the interests of protecting from destruction by imperialism. Consequently communists were left with no option but to call for the mounting of a popular principled campaign against the war as a means of defeating capitalism thereby replacing it with communism.


Fodderless Farmers And Begging Bowls

Attacks are being mounted against the public sector worker as part of an attack on the working and living conditions of the Irish working class. At the same time the Irish state actively promotes and subsidizes the farming community. The working class must highlight this contrast. The privileging of the Irish farming community by successive governments is a practice that is obscured and hardly highlighted by the bourgeois media.

The farmers are moaning again. Looking for financial and other assistance from the Irish state because of the dearth of cattle fodder available to farmers. Already the latter are given annually over a billion euro. Revenue from taxation pays most if not all of this. They also obtain help in other forms. Then many of them engage in creative accounting to make their income appear to be less than it is. Some of them have investments outside of farming and lines of work.

Pat Kenny, on his show, was interviewing the Minister of Agriculture and an IFA official on the issue of the lack of fodder for cattle farming. He never raised any challenging issues with them despite the fact that Pat consistently challenges trade unionists interviewed by him on his show. He never points out that any added help offered to Irish farmers is paid for by revenue from taxation. Irish farmers, like the banks, are a privileged social category within Irish society. They virtually escape criticism by the bourgeois mass media. Farming is portrayed as a commercial activity. Yet when adversity confronts them they go begging from the state. And the state is only willing to subsidize them. Yet the representative body of farmers is the IFA. This is a body that is anti-working class in its stance concerning wage agreements and other matters that directly concern workers.

The current Minister of Agriculture is forever defending the farming community while his government are forever attacking the Irish working class. The farming community must be exposed as a parasitic category

The Irish Bus Workers' Dispute

The Bus Eireann workers have gone out on strike to challenge the state’s attempt to significantly cut pay and extend working hours.
There is little or no chance of this strike being successful unless the striking workers are in a position to endure a sustained strike lasting several months. The most that can be expected from this struggle is a compromise involving some modification of the cost-cutting plan.
These NBRU workers have not generally gone out on strike because they are communists seeking the replacement of capitalism with communism. The most that can be said for them is that some of them are reformists of one sort or another. In other words they believe that capitalist society can evolve into a society in which their conditions of work and living standards of can be ultimately enhanced. Many of them don’t even possess a reformist culture. They simply believe that their living standards should be protected and even enhanced. Even if these workers are to win the strike it will not follow that their consciousness will be transformed into a communist character. If anything it will only reinforce their already existing prejudice that capitalist society is a natural and acceptable social form.

The Bus Eireann workers cannot see that capitalism is not progressive and is not designed to necessarily improve the living conditions of the working class. Consequently to simply mount a campaign against cutbacks is to promote the contradiction that capitalism can still exist while serving the interests of the working class. Capitalism is an obsolescent exploitative system. Consequently the only way that the class interests of workers can be advanced is through revolution --the replacement of capitalism by communism.

The correct strategy for the Bus Eireann strikers is one in which a popular campaign is mounted against cuts in living standards within the overall context of the abolition the capitalist state as a means towards establishing communist society. The Bus Eireann workers must fight against its employer within an overall struggle against all cutbacks on the living standards of the working class. In this way their action programme provides the principled basis for active support from the rest of the Irish working class. This is the principled basis for class unity.

But the key problem is that there exists no revolutionary communist party to provide leadership in the class struggle. The Socialist Party, the SWP and the People Before Profit are merely reformist organisations that seek to provide a more benevolent capitalism. In this sense they are Utopian and seek to inculcate illusions within the working class.