Even people like Adair Turner, Baron Turner, head of the Confederation of British Industry, had to face the reality of capitalist malaise

Even people like Adair Turner (Baron Turner), head of the Confederation of British Industry, had to face the reality of capitalist malaise and attack ‘unfettered markets’

The piece below is the text of one of the talks given back at the end of 1997, at a weekend Marxist educa-tional conference organised by revolution magazine in Christchurch; almost 20 years on, it is a mark of the political impasse in society – and the stagnation of much of the left – that it remains relevant.

by Philip Ferguson

At the very time that capitalism has returned to its ‘normal’ features of recession, poverty, social breakdown and war, Marxism is being proclaimed dead by academic commentators, sections of yesterday’s leftists and bourgeois pundits generally.

The latest discovery of the Marxist corpse has been a product of the demise of the Soviet bloc. Genuine Marxists, however, welcomed the implosion of Stalinism, a system and philosophy which had been for sixty years a major bloc to the development of the revolutionary project of human liberation. Its collapse means that one of the key props of capitalist ideology and the West’s ally in maintaining an unjust world order no longer holds power. Today, capitalism has to justify itself on its own merits – and is having an increasingly hard time doing so. Even such a capitalist ideologue as Michael Novak admits that capitalism is getting a bad press now (Christchurch Press, March 18, 1995).

In fact most capitalist commentators, certainly the more sophisticated ones overseas, are decidedly downbeat about the system. Their prognostications are a long way from the triumphalism of the period when the Soviet bloc imploded. Back then an essay called “The End of History” by an obscure figure called Francis Fukuyama was published in the National Interest. It basically argued that the market and liberal democracy had triumphed over all their rivals. The essay summed up the moment for the Western elite and made Fukuyama famous. Subsequently his book, The End of History and the Last Man was an international bestseller. Yet, mirroring the changed moment of the Western elite, his second book, published last year, Trust, is rather more pessimistic. It has to deal with the socially disintegrative trends of a free market system let rip.

Today, then, the concept of the end of history – so recently a cause for celebration in elite circles – has taken on a quite different meaning. It’s more that an historic impasse has been reached, a kind of terminus point where capitalism itself is exhausted materially and therefore bereft of any big new ideas, inspiring visions for the new millennium, and has instead turned in on itself. Some of the main trends which this has given rise to are dealt with in sessions this weekend – the collapse of left and right in politics, the rise of postmodernism and cultural relativism and invention, moral panics, irrationalism and so on.

What I want to do in this opening session is look at how this impasse has arisen out of the workings of capitalism itself and therefore how we cannot go ‘beyond’ the impasse, ie to solving the problems, within the framework of the existing order.

I want to start by looking at the state of the world and life in New Zealand today, beginning with some comments about what has led us to the current impasse.

Back in the 1960s and early 1970s, liberal thinkers proclaimed that Marxism was no longer relevant. Marx’s theories about capitalist economic crises, the immiseration of the working class, the reserve army of labour, the nature of the state and so on were pronounced disproven.

On the surface, such claims seemed to have some validity. There was a long economic boom period following World War 2, and workers’ conditions of life improved significantly in many countries. Productivity reached record levels. Unemployment, the scourge of the 1930s, dropped to negligible proportions. The state appeared not as a weapon of ruling class power, but as a reforming institution of society as a whole. Yet such a view, like all bourgeois ideology, was very superficial.

Contradictions remained

Beneath the surface the fundamental contradictions of capitalism remained and the very expansion of capitalist production during the postwar boom created the conditions for recession in the 1970s. Since 1973-4 there has not been any protracted period of growth. Instead we have had “booms” of a year or two, usually artificially created by credit extension and other non-productive activities, followed by a collapse. Speculation in stocks, shares, futures, property, currencies and so on has become an increasing feature of capitalism. Such economic activity produces no actual goods and therefore no real wealth; it inevitably implodes as what is happening in the real economy reasserts itself.

Each partial recovery is weaker than the last, each recession cuts deeper than the previous one. This is the story of the last 20 years; it has been true under both highly-regulated welfare-state capitalism (or “Keynesianism”) and the so-called alternatives of monetarism, the “free market”, deregulation and so on.

In recent years unemployment has reached levels not seen since the 1930s. This is structural joblessness rather than some passing phase.

Impoverishment

In many countries, including New Zealand, real wages have declined, social benefits have been slashed, and the ruling class have employed the full force of the state to reorder society. State intervention takes place to back up the bosses in any serious industrial dispute. State assets have been sold off at bargain basement prices, amounting to a massive social welfare handout to the capitalist class.

Tens of thousands of New Zealanders now rely on foodbanks, clothesbanks and other charities. A whole section of society has been forced onto the margins of existence. For people in employment it is now necessary to work 70 hours a week to sustain the kind of standard of living possible with a 40-hour workweek in the 1960s. Figures from revo 1.

Indeed, throughout the Western capitalist world, there is, for the first time in modern history, a generation growing up which will be worse off than its parents. Let’s take, for instance, two quite different groups of young people: white middle class and Maori working class. White middle class young people are building up huge amounts of debt at university, often beginning working lives with $20-30,000 debts, and with no certainty of employment, while their parents’ generation walked out of university with no debts and jobs aplenty. Half of Maori youth, overwhelmingly working class sociologically, are unemployed, and in many parts of the country the statistics are probably much worse. Although Maori were at the bottom of society in the boom years as well, at least in those days school leavers could find work in the meat plants, car plants and in transport; today these industries lay devastated.

In the first issue of revolution we pointed out how fragile the so-called recovery is and how insecure paid employment is with some statistics from the Social Policy Agency not widely published. An SPA survey showed that 900,000 people – ie a sizeable majority of the workfroce – had been dependent on ebenfits over the past few years of the ‘recovery’. More recently, Brian Easton has noted, “In just under a five year period from 1988, over 750,000 workers registered with the New Zealand Employment Service. Thus almost half of the total labour force was sufficiently unemployed to use the state employment agency.”

While we hear a great deal about the ‘recovery’. Needless to say, the cuts in the dole, DPB, widows’ benefit and so on in the 1990 budget have not been restored. Some recovery! Indeed, the weakness of the “recovery” means that the capitalists will continue to strive to restructure class relations in this country in order to boost profitability. The pain will go on, and the gain will continue to be for the capitalists alone. In fact the recovery is so fragile that there only needs to be a minor blip in interest rates or a minimal change in any economic indicator and the capitalist pundits themselves announce that the recovery is threatened. Colin James wrote in the Far Eastern Economic Review back in 1994, for instance, that “New Zealanders have never had it so good” and then went on to say that wage increases over one percent would wreck the recovery!

In fact the levels of unemployment, longer work hours for those in paid jobs, and the worsening conditions that have accompanied the Employment Contracts Act show how hollow the capitalist ideology of the 1960s really was – the notion, for instance, that automation would take over and give us all plenty of creative leisure time and lots of resources to make use of it.

Well there is certainly a great number of people with more ‘leisure’ time – the great army of the unemployed, although perhaps Winston Peters and Jack Elder will yet see that abolished with their work-for-dole and into-the-Army schemes.

Increased regulation of people

Where the authority of the government has been challenged – as during the massive protests around the 1981 Springbok tour – the state has resorted to violence and repression on a level not seen since 1951. More and more restrictions are being placed on people’s rights and human activity. These range from laws restricting workers’ right to take effective strike action and rights to picket, public speech and free assembly to the pernicious conventions of political correctness which are used to close off the kind of open-ended and free-ranging clash of views needed today more than ever.

At the same time that individual rights are supposedly being enshrined in legislation such as the Human Rights Act, the reality is a growth of formal and informal controls. The ability of employers and the state to gather information on people is greater than ever. Today, it is impossible to even get casual on-call work for a firm like Whitcoulls without consenting to having a private security firm check you out. At the same time, many government jobs still require people to fill in forms asking them whether they are or ever have been a communist or if they have any relatives or friends who are communists.

While outright repressive legislation reflects the ruling class’ need to restructure class relations and maintain social control, political correctness and the promotion of moral panics, which also facilitate social control, are the typical middle-class response to the uncertainties of modern capitalism and their class fear of the rest of us. Thus we have panics about crime, porn, child abuse, date rape, safety on campus, Satanic abuse, murderous and criminal children and god knows what else – all designed to create a situation in which we fear each other, see other individuals as the problem and are thereby prevented from acting collectively to change the world. Such fears are also, of course, used to validate greater state intrusion into our lives.

Maori, Pacific Islanders and women

The failure of New Zealand capitalism is clearly evident in the position of Maori, Pacific Islanders and women. Even in the boom period, NZ capitalism failed to transform the conditions of life for Maori urban workers and rural poor. Over the past 20 years, while a ‘cultural revival’ has been implemented as a sop and created a new Maori elite, the living conditions of most Maori have deteriorated. The gap between Maori and pakeha average income is greater than ever, and unemployment among Maori is several times higher than the national average. Maori youth, who are among the most powerless people in the country, are victimised as an ‘underclass’ to be kept under control.

Pacific Islanders in this country remain on the receiving end of racist immigration controls, raids and deportations, while international capital, including NZ capital, keep their home countries trapped in poverty. The only use capitalism has for the Pacific Islands is as a source of cheap labour and raw materials. In times of protracted slump, it can’t even offer the marginal advantages of work in New Zealand and launches attacks on the right of Pacific Islanders to be in this country.

Women in New Zealand, meanwhile, live under one of the most restrictive abortion laws in the world. Along with the incapacity of capitalism to create day-care centres, provide decent public health and care for the aged, this

means that the lives of most women, especially working class women, are severely circumscribed. The weakening of trade unions, the growth of part-time employment at the expense of real jobs, and the cuts in benefits such as the DPB, keep women economically dependent. In fact, for many women today life is harder than it was twenty years ago – and getting worse.

Ex-Soviet bloc

While the developed capitalist world languishes in slump, the situation in the ex- Soviet bloc and so-called Third World is even worse. Although the collapse of Stalinism is welcome, as it was an obstacle to real workers’ power and human liberation, the resurrection of the market in Eastern Europe over the past ten years has actually worsened the conditions of life of peoples in those countries. A decade of market reform in that part of the world has achieved mass unemployment and poverty, ethnic conflict as different groups are forced to fight for control over resources in an anarchic market, social disintegration and general breakdown.

The bubonic plague has even reappeared in parts of the ex-Soviet bloc. The much-vaunted capitalist investment boom in the old Soviet bloc has not eventuated. Instead there has been a plundering of a few valuable resources, while most of this immense area of the globe has simply been left for dead.

Africa, Latin America and Asia

Africa remains a marginalised continent, as poor and underdeveloped as ever. Capitalism remains incapable of transforming it. Latin America, which has “enjoyed” all sorts of capitalist economic experiments, complete with military dictatorships, also languishes in mass poverty and underdevelopment.

The economic collapse in Mexico, recently held up as the new capitalist powerhouse in the continent, points up the inability of the market to bring real growth and prosperity.

In Asia, the so-called “economic tigers” have also stalled. South Korea and Taiwan have been hit by falling growth rates and decreasing profitability.

In China rapid growth rates were possible thanks to the intense exploitation of the working class, police-state repression and the availability of foreign capital. A shoe factory on Virgin Island examined in Foreign Correspondent (May 27, 1994, taken from the BBC’s The Money Programme) gives an indication of what the reintroduction of capitalism means in China. Seven thousand young women, recruited from the countryside and confined in dormitories, work 60 hours a week in the factory for about $NZ20. Over the past decade, 90 million workers have been moved out of rural areas to create a new urban reserve labour force available at poverty-level wages. But even in these “ideal” conditions – ideal for capital, slavery for labour – a series of new economic problems have emerged, with growth rates slowing.

Imperialism rampant

As the slump continues and, along with the demise of the Soviet bloc, brings in its wake a collapse of many of the old certainties in the West, we are seeing a massive increase in western militarism. Riven by slump and uncertainty the regimes of the main western powers are unable to solve problems in their own countries so shore up their authority by waving the big stick in the Third World. Panama, Somalia, Haiti, Rwanda and Yugoslavia have all recently been on the receiving end of violent western intervention, while Iraq has been devastated.

New versions of the old “white man’s burden” are being concocted in what has been termed the “moral rearmament of imperialism”.i This seeks to draw a line between the civilised West and the uncivilised “other”, the third world. Western intervention is thereby justified. For instance the US invasion of Somalia was carried out under the name “Operation Restore Hope” and presented as a mercy mission. Unfortunately much of the left has fallen for the moral rearmament of imperialism, just as much of the old labour movement in the main capitalist countries supported the “civilising mission” of imperialism in the late 1800s and early 1900s. Today, such people actively encourage the West to bomb the Serbs and intervene elsewhere as well.

The end of the Cold War not only means more hot wars in the third world, but also trade and political wars in the west itself as all the suppressed conflicts among the western powers themselves come to the surface too. Not only do the western powers play out their rivalries in the third world, but they are increasingly dividing into blocs waging trade wars against each other. Despite the propaganda about free trade, there is really an intensification of trade disputes and fights over access to markets in the west as well as raw materials and investment opportunities in the third world. Far from disproving Marx or rendering his theories obsolete, the world today looks increasingly like the slump-ridden, militaristic place so clearly laid upon the dissecting table by Marx and then Lenin.

In fact, the 1960s promise of liberation through automation and technological development, the 1980s promise of lifting all boats through deregulation and market policies, and the post-Stalinist claim of a ‘peace dividend’ and global prosperity were never possibilities under capitalism.

Marx’s theories

The fact that the superficial and fragile recovery in New Zealand has been at the expense of the working class, and that this pattern is repeated globally, shows that the interests of capital and the market are irreconcilable with the interests of the vast majority of humanity.

Marx’s theories about the state, unemployment and the reserve army of labour, pauperisation, the inherent contradictions of capitalism and its tendencies towards economic crisis, the causes of racism and oppression of women, and Lenin’s views on, for instance, imperialism, are far from being outdated. They are in fact crucial to understanding what is going on today.

In order to understand this it is necessary to examine the inner workings of capitalism. In a session like this it is only possible, of course, to make some brief points.

The material basis of any society is the way in which it uses its human, human-made and natural resources to produce the things people need in order to live, and for society to exist and reproduce itself. Under capitalism, there are two key processes at work within this framework.

1. There is a labour process which produces the things we need (use values). This is typical of all societies and is a universal aspect of human existence; it occurs in all human societies.

2. There is a valorisation process which produces value/exchange value. This is typical of capitalism and takes priority over the first.

In other words, capitalism is not primarily about producing to meet human need, but about producing to realise a profit.  Profit rules over production for human need.

Bourgeois economist, and in fact bourgeois social scientists generally, however, only see the first aspect because they take capitalism as a given, as something natural rather than historically specific. At best, they regard the two processes as one and the same.

To take a rather crude example: in her book My Journey, Donna Awatere argues against the labour theory of value which holds that the value of commodities is determined by the socially necessary labour embodied in them. She says the labour theory of value makes no sense and reduces value to the same thing as price – so the value of banana custard, the example she uses, is whatever people are prepared to pay for it.  While correcting Marx – and, indeed, Smith and Ricardo! – she simply shows her inability to distinguish price and value.

Awatere’s simplistic view cannot explain, of course, why some things which people really need are not produced and why, for example, things like speculation in shares, currency exchange, futures and so on, have increasingly replaced the production of real goods, real wealth. Nor can such nonsense explain things like the perpetually shakey nature of financial markets.

Marx’s methodology is contained above all in his most important and rarely-read works, and provides keys to understanding the current protracted slump: Theories of Surplus Value, theGrundrisse, and Capital (all volumes).

Crucial to Marx’s method are concepts such as historical specificity and totality. Marx does not begin his analysis by taking capitalism for granted, but by seeing it as historically specific and transient, as arising out of a specific set of preconditions – for instance the prior separation of producers from the means of production, creating a potential working class, on the one hand and the accumulation of wealth, through things like the slave trade, creating a pool of potential investment funds, on the other hand. His analysis does not start from the working class and then go on to derive an analysis of capitalism from this – for instance, the way feminists begin their analysis, starting from the position of women and then constructing a model of society; Marx begins by analysing capitalism as a totality and derives the position and role of the working class from this.

Marx shows that under capitalism the value of commodities is determined by the socially necessary labour time embodied in them.  Under capitalism labour-power itself becomes a commodity but, unlike other commodities, has the ability to generate new, expanded value.

Machines and technology simply transfer the value already contained in them to the new commodities.

As capitalists compete they raise the organic composition of capital – more constant capital in relation to variable capital. They can produce more goods, but the value contained in each is less. Over time there is therefore a trend for the rate of profit to fall, the law of the tendency of the rate of profit to fall being described by Marx as “the single most important law of modern political economy”.

Marx noted a number of counteracting tendencies such as the fall in the value of constant capital, the cheapening of the necessities of life, the export of capital and the use of foreign trade generally, the intensification of exploitation and, in extremes, the driving down of the price of labour-power below its value.

These appear to have largely been exhausted.

What we have now is increasingly speculative activities and the growth of the artificial economy, although the capitalists are also certainly continuing to hold down wages, including below the value of labour-power.

Interestingly, during the discussion on the stock market hoo-ha over the past two weeks, economics experts pointed to the money markets being seen as ‘more reliable’ than the stock exchange. Given that the stock exchange at least includes companies which produce actual goods, this is a telling indicator of the exhaustion of capitalism.

(In the last talk a speaker will be going into the failure of Keynesianism, monetarism and so-called ‘new right’ policies to pull things out of the slump and establish a new boom at all comparable to the post-WW2 boom.)

Slump and loss of Soviet bloc

One of the worst aspects of the current situation for the Western elites is that the economic impasse coincides with the end of the Soviet bloc. For most of this century, the existence of the Soviet Union has provided an organising focus for the West. In particular for the forty-five years after WW2, the existence of the Soviet bloc cohered Western societies. The ‘containment of communism’ was the organising principle of the global policy of the West and gave the Western elites a real focus. Anti-communism not only held the Western powers together behind the leadership of the USA, thereby over-riding their own rivalries and disputes, but it also united each society around the interests of the ruling class. Kiwi nationalism and its concomitant anti-communism were the ideological glue which bound workers in this country to our own ruling class, for example.

The unseemly implosion of the Soviet bloc, and the distressful ramifications this would have in the West, was seen relatively quickly by some of the more insightful Western policy analysts. Indeed as early as August 1990, John Meirshemier wrote an article in Atlantic Monthly called “Why the West Will Miss the Cold War”. If anyone doubts this is the case, take a look at the in-house journal of the US foreign policy establishment, Foreign Affairs. Ever since the demise of the Soviet bloc, its pages have featured a whole series of essays trying to find a new foreign devil to take the place of the Soviet bloc and provide an organising point for the Western powers, in particular the USA. So far, the demons haven’t been very convincing – usually they are impoverished Third World states which cannot even fire a lethal missile at Western forces.

The failure of Western economies to respond to the various types of medicine, and the way that these have tended to compound the illness rather than cure the patient, along with the loss of an external threat, have led to an impasse of bourgeois society. It seems, to the elite perhaps more than to anybody else except Marxists, to be going nowhere.

As society has lost its momentum and turned in on itself there has been a growth of all kinds of irrationalist trends, which we will explore in other sessions. To quote Gramsci, “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear”.

Our task is to analyse all these trends and show their material roots in the exhaustion of capitalism as an historic system.

 

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