Beyond Capitalism, under Trotsky’s Shadow

by Pham Binh on March 25, 2013

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Beyond Capitalism by Simon Hardy and Luke Cooper is an ambitious attempt to contextualize the crisis of the international left, a left that has proved unable to stop austerity. Following Mark Fisher, author of Capitalist Realism, Hardy and Cooper lay heavy emphasis on socialism no longer being viewed as a credible alternative. They argue that Margaret Thatcher’s “there is no alternative” mantra has infected the outlook of Britain’s Labour Party and union leaders to such an extent that these forces continually capitulate to neoliberalism rather than act as bulwarks of resistance. Meanwhile, the left that rejects capitalist realism — the notion that capitalism is the only realistic or possible social system — is dominated by competing sects, from the thousands-strong but now disintegrating Socialist Workers Party to the dozens-strong Communist Party of Great Britain (CPGB), none of whom can mobilize the necessary forces to get around the Labour Party and the union leaders.

This conundrum forms the backdrop for the formation in 2012 of the Anti-Capitalist Initiative (ACI), of which Hardy and Cooper are leading members. They helped launch ACI after leaving the Trotskyist League for a Fifth International’s British section, Workers Power, which participated in ACI but got going once the going got tough.

Beyond Capitalism covers so much topical ground that it is difficult to write an adequate book review. For example, Hardy and Cooper make passing remarks about consumer culture in the West in several areas of the book without fully developing or exploring the political implications of their remarks, making a summation of their views almost impossible. Their discussion of the Labour Party’s long-term shift rightwards is similarly underdeveloped. They speak of a “far reaching transformation that has taken place in the heart of the Labour Party” (51) but then point to financial figures indicating that “the Labour Party as a whole has become highly dependent on the unions” (52). The reader is left to guess what this “far reaching transformation” consists of, whether this means that it is impossible for the party to move back to the left, whether yet another left-of-Labour party needs to be built, or whether Labour even remains a workers’ party in the authors’ view.

In the chapter “Working class; old and new,” Hardy and Cooper discuss the rise of what is popularly known as the precariat, a proletariat stripped of its economic security by temp agencies, freelancing, outsourcing, contract work, and home work. These practices undermine unions at the grassroots level by replacing the solidarity engendered by daily struggles with management and mutual, collective exploitation on the job with the struggle of individual workers against one another for hours and pay. With the rank and file of unions crippled, the relative weight of conservative, highly paid union bureaucracies increased. These bureaucracies proved unwilling to venture down the risky and dangerous path of militant (illegal) struggle to defend the status quo, instead preferring the path of quiet, slow destruction despite the occasional token strike or demonstration. As a result, unions have been all but wiped out in Britain’s private sector.

cooper

Luke Cooper

Hardy and Cooper’s remedy for this dismal state of affairs is a militant rank and file movement. How such a movement could begin to develop given the changed terms and methods of exploitation that the authors claim have created a “new” atomized, individualized working class is a question they do not explore. How can the precariat fight temp agencies and contract work? Is such resistance even possibile? Instead of confronting the questions that logically arise based on their own analysis, the authors fall back on generalities and truisms about rank-and-file worker activism.

The other problem with this chapter is the complete absence of any empirical analysis regarding shifts in employment. It is commonly believed that employment in the retail, health care, and education sectors as a proportion of the labor force has increased over the past four decades in the West and declined in heavy industry, mining, and industrial mass production — is this the case? If so, what does it mean for union organizing and workplace struggle? How has the global division of labor changed during the neoliberal era? No historical discussion of class structure is complete without examining how the changes in the relations of production, distribution, sale, and consumption are related to changes in the forces of production, distribution, sale, and consumption.

Two Crises

The bulk of Beyond Capitalism is focused on two interrelated crises, that of the capitalist social order and that of the left. Oddly, Hardy and Cooper contend that “the decline of left wing politics” is “a problem for capitalism” (1). They quote Italian Marxist Antonio Gramsci at length to describe this dilemma:

In every country the process is different, although the content is the same. And the content is the crisis of the ruling class’s hegemony, which occurs either because the ruling class has failed in some major political undertaking for which it has requested, or forcibly extracted, the consent of the broad masses (war, for example), or because huge masses …  have passed suddenly from a state of political passivity to a certain activity, and put forward demands which taken together, albeit not organically formulated, add up to a revolution. A ‘crisis of authority’ is spoken of: this is precisely the crisis of hegemony, or ‘general crisis of the state’. It 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. (16)

To claim that there is a crisis of ruling class hegemony or authority in the current political moment is mistaken. Like much or perhaps most of the Marxist left since 2008, Hardy and Cooper talk about the crisis of world capitalism as if 2008 never ended, as if the trillion-dollar bailouts did not stabilize the system, as if capital did not force labor to bear the cost of saving insolvent institutions from bankruptcy, as if uncompetitive units of capital were not wiped out and restructured.

In Gramsci’s terms, ruling classes the world over did not fail “in some major political undertaking”; they succeeded. As a result, tenuous profits and tepid growth have returned. Greece, Ireland, Italy, and Portugal are the exceptions to this rule. While these nations are in the midst of being forcibly restructured and will likely play a calamitous role in the next slump, the demands of protesters in Athens, Dublin, Milan, and Lisbon “taken together” do not “add up to revolution.”

Although the 2008 crisis cracked capitalism’s consensus ideologically, nowhere was or is capitalist rule (hegemony) in danger. The “decades of austerity” that the authors tell us “will be the norm in a number of Western countries” (2) are not signs of the capitalist system’s weakness and fragility but of its strength. The 1% are riding high and robbing the old, the sick, the pensioners, and what remains of the unions not because they must but because they can. “The strong do what they can and the weak suffer what they must,” as Thucydides put it.

This is not to say that austerity and neoliberalism are arbitrary policy choices driven by personal greed or vindictiveness. But to view both as life-or-death matters for capitalist rule is to repeat Trotsky’s catastrophist mistake of declaring the “death agony of capitalism” in 1938. Within a decade of Trotsky’s obituary, capitalism expanded in an unprecedented way, and workers in the West were able to win (or were granted) reforms previously thought to be beyond the system’s capacity such as Britain’s National Health System.

If there is only one lesson Marxists should learn from the experience of the 20th century, it is to never underestimate the enemy’s ability to adapt, to reform, to concede this or that battle for the sake of winning the war.

While Hardy and Cooper’s catastrophism is mild and subtle where Trotsky’s was ridiculous and obtuse, overestimating the severity of the 2008 crisis (a phase that is now behind us) means underestimating capitalism’s resilience and denying the possibility of significant reformist advances. The latter error leads them to dismiss the government of Hugo Chávez in Venezuela as “left populism” that “merely superficially obstruct[ed]” capitalism, one of many “false dawns” for the socialist movement (129). This characterization is misleading. The changes wrought by Chavismo were not “superficial”:

  • The extreme poverty rate fell from 23.4% in 1999 to 8.5% in 2011 while unemployment was cut in half.
  • Democratic reforms such as the Bolivarian Constitution enshrined rights for workers and the oppressed and subjected the Free Trade Area of the Americas (FTAA) to a democratic vote, creating a legal hurdle that proved insurmountable to FTAA.
  • Chávez’s democratic and economic reforms intensified Venezuela’s class war, and the masses struck back against the elite’s coup attempts and lockouts to defend and extend these reforms, leading to a transformation in mass consciousness. First elected in 1998 with 3.7 million votes, Chávez’s vote doubled in 2006 to 7.3 million, and in 2012 reached 8.2 million; the respective eligible voter participation figures are 63.76%, 74.69%, and 80.52%, a staggering achievement in terms of mass participation in a revolutionary process.

Hardy and Cooper go on to claim that the Chávez government’s “distinctiveness simply lay in the fact that so few states globally still had the view that a degree of state planning is important to the healthy functioning of a market economy,” (129) as if Chavismo was an ideological aberration rather than part of a broader trend all over Latin America of center-left and left governments reversing the tendency towards greater and more draconian austerity measures. Consider the achievements of the Evo Morales government in Bolivia, elected as the Movement Towards Socialism candidate in 2005 on the back of successful mass mobilizations to nationalize the country’s gas resources:

Between 2005 and 2011, Bolivia’s poverty rate declined by 26% (from 61% to 45%). The extreme poverty rate fell even more, by 45%. An estimated 1 million people joined the ranks of the ‘middle class.’ The World Bank has officially recognized Bolivia as a lower-middle income country, a ranking that affords more favorable credit terms.

Between 2006 and 2011, Bolivian workers’ purchasing power increased by 41%, as compared to 17% between 1999 and 2005. The minimum wage has risen 127% since 2005, far exceeding the rate of inflation.

If this is “neoliberalism reconstituted” as socialist scholar Jeffrey Weber claims, we need more of it.

The experience of Latin America’s left governments shows that austerity can be systematically stopped only when left forces win elections and govern within the framework of the capitalist state, the key institution responsible for neoliberal policies. Daring to win against austerity necessitates confronting the enemy inside the enemy’s lair, the state. Refusing to govern in our interests means allowing them to continue governing in theirs.

The second pertinent point about Chavismo that poses a problem for Hardy and Cooper’s analysis concerns the ramifications of Chávez’s ideology. Although he spoke of “socialism for the 21st century,” he was not a Marxist nor a proponent of proletarian revolution:

I don’t believe in the dogmatic postulates of Marxist revolution. I don’t accept that we are living in a period of proletarian revolutions. All that must be revised. Reality is telling us that every day. Are we aiming in Venezuela today for the abolition of private property or a classless society? I don’t think so. But if I’m told that because of that reality you can’t do anything to help the poor, the people who have made this country rich through their labour – and never forget that some of it was slave labour – then I say: ‘We part company.’ I will never accept that there can be no redistribution of wealth in society. Our upper classes don’t even like paying taxes. That’s one reason they hate me. We said: ‘You must pay your taxes.’ I believe it’s better to die in battle, rather than hold aloft a very revolutionary and very pure banner, and do nothing … That position often strikes me as very convenient, a good excuse … Try and make your revolution, go into combat, advance a little, even if it’s only a millimetre in the right direction, instead of dreaming about utopias.

In other words, Chávez qualifies as a capitalist realist from an orthodox Marxist standpoint. This is significant for Beyond Capitalism for the following reasons:

  • It means that rejecting capitalist realism is not a necessary precondition for successfully resisting austerity.
  • The failure of Labour Party and trade union leaders to resist cannot be attributed to their fealty to capitalist-realist ideology.
  • Most importantly, while the reformist utopia of a kind, gentle, humane capitalism is obsolete for us as Marxists, a less brutal, less barbaric, and less inhumane capitalism is not obsolete for the tens of millions of fighters around the world who mourned Chávez’s passing. The growth of reformist consciousness on a mass scale in the West along the lines of Chavismo would be a welcome development, an undeniably positive and tremendous step forward from the “apathy and cynicism” that Hardy and Cooper acknowledge permeates mass consciousness today (18).

Despite deriding Chavismo as “left populism,” Beyond Capitalism is positively glowing about the “left populism” of Occupy. Perhaps this is because Hardy and Cooper felt and tasted Occupy’s revolutionary impulse for themselves when it reached Britain’s shores, while the Bolivarian revolution remained foreign to them due to geographic, linguistic, and cultural barriers. Whatever the case may be, their eagerness to learn from and incorporate the positive lessons of the Occupy experience into left practice is a breath of fresh air compared with the usual Marxist obsession with its failures and shortcomings. Harley Filben of CPGB berated the authors for assessing Occupy’s Global May Manifesto positively, writing:

Several pages are dedicated to discussing the ‘Global Mayday manifesto’, a document promoted by some Occupy activists, which the authors wish to take as some kind of model – or at least a serious starting point (pp. 98-101). In reality it is an end-point – a verbose headstone on Occupy’s grave, the latter movement having already devolved in the US into the array of liberal campaigning organisations that gave it birth, doing no doubt useful activism around issues such as house foreclosures.

Such crowing in hindsight is reminiscent of Menshevik wiseacres who seized on the Soviet government’s difficult position in the 1920s to justify their hostility to the October Revolution. That Occupy would be unable to outgrow its bureaucratic horizontal process after the evictions rendered that process unworkable was not something that could have been known in advance. No one embarks on a strike, struggle, occupation, or revolution knowing exactly which turns to make at what moment beforehand. Marxism is not Mapquest. Hardy and Cooper readily admit this throughout Beyond Capitalism, and the CPGB would do well to learn from them.

The Road Ahead

The last two chapters of Beyond Capitalism concern the way forward for the radical left. They begin discussing this topic by surveying the fire last time — the wave of protests against global capital beginning with the 1999 World Trade Organization meeting in Seattle. Curiously, they argue that “the depth of the radicalisation we witnessed in the early 2000s actually went far beyond anything that we have seen since Lehman Brothers collapsed in 2008” (137). This assertion is untenable given that the post-Lehman radicalization has led to over 20 general strikes in Greece, set the stage for the Arab Spring, and spawned Occupy which propelled “capitalism” and “socialism” to the top of Merriam-Webster’s most looked-up definitions in 2012. Surely this last fact is relevant to an analysis that depends so heavily on the concept of capitalist realism.

Simon Hardy

Simon Hardy

From there, the authors turn to the experience of new left parties — Rifondazione Communista in Italy, Die Linke in Germany, Left Bloc in Portugal, P-SOL in Brazil, SYRIZA in Greece, and NPA and Left Front in France — and warn that “attempts to suspend the strategic divergence between reform and revolution indefinitely are ultimately ill-fated” (142). They argue further that such attempts are not only ill-fated in the long-run struggle between capitalism and socialism but in the short-run struggle over “how we choose to resist capitalism,” which “can drive a sharp wedge between reformists and revolutionaries, one which threatens the unity of a unitary party” (142).

The myth that reformists and revolutionaries cannot be in the same party is the political cornerstone on which “Leninist” sects are built. The authors broke from and explicitly reject the “Leninist” model throughout Beyond Capitalism, but apparently they still accept many of its premises.

How revolutionaries should deal with reformism is a topic that needs fresh thinking given that Rosa Luxemburg’s Reform or Revolution was not a hands-on organizing guide but an ideological polemic against Eduard Bernstein’s heresy that the workers movement had no need for the socialist movement. The notion that reform or revolution is an operative either-or principle in most situations is wrong. Such a dichotomy rules out the possibility of a militant, combative reformism, a reformism that seeks a compromise with capital and the state but on terms that capital and the state will violently resist, a reformism that will not shrink from forcing the enemy into making such detrimental compromises.

This blind spot makes it difficult for Hardy and Cooper to assess SYRIZA properly. They claim SYRIZA’s leadership “ultimately stands for austerity-lite politics,” (150) but then a few lines later they criticize ANTARSYA for refusing to join its ranks, arguing that SYRIZA is “promoting an end to austerity” (152). So revolutionaries should join, promote, and support a “very far from … normal reformist party” (152) since it includes revolutionary grouplets despite its “austerity-lite politics” (150) and the fact that SYRIZA “will attempt to negotiate new compromises — a new social contract — in conditions where capitalism cannot afford such a settlement” (104)? From ANTARSYA’s point of view, the inclusion of revolutionary elements in SYRIZA would appear to be a classic case of reformists co-opting the revolutionary left, thereby validating Hardy and Cooper’s earlier warning that attempts to unify the two trends into a single party at this juncture are “ill-fated.”

Hardy and Cooper are on much firmer ground when they contend that new left parties should avoid a primarily or exclusively electoral focus (144) and instead have one foot in the electoral arena and one foot in the streets. SYRIZA is just such a party, a fact they laud:

Upon their electoral breakthrough in May 2012, SYRIZA called for local assemblies and the base of the party expanded outwards into vast outdoor local meetings, so the impact of the election was to inspire mobilization that, if it was consciously extended could, in principle, lay the basis for a profound transformation towards direct democracy. (151)

Unfortunately, Hardy and Cooper do not dwell on SYRIZA’s inner- and extra-parliamentary character even though such positive examples are hard to come by. SYRIZA arose organically out of years of cooperation between its Trotskyist, Maoist, and eurocommunist components in the anti-globalization, anti-Iraq war, and Social Forum movements of the early 2000s. The activism of its rank and file during the student movement in 2006-07 earned it its first major electoral success on the eve of the 2008-09 economic crisis that paved the way for its breakthrough into mainstream politics.

If SYRIZA gains a majority and forms a government, will it betray its supporters as Hardy and Cooper predict (104)? Must it begin creating organs of “direct democracy” almost immediately upon assuming office, as they claim (103), to avoid selling out? Time will tell. The leadership’s refusal to water down SYRIZA’s anti-austerity stance for the sake of forming a unity government with pro-austerity parties in 2012 is a strong indication that it will try to implement its program upon taking office as Chávez did rather than capitulate as Hollande did immediately after the French election. Left governments in Venezuela and Bolivia have shown that people power working in tandem with capitalist state power (and the democratic legitimacy and legal authority that comes with it) can defeat the 1%’s coups, lockouts, and sabotage. There is no reason to assume that the same combination of parliamentary and extra-parliamentary forces in Greece will be any less potent against the inevitable resistance of the banksters, big business, and big powers, especially when Europe’s workers and students are already in motion on a scale not seen in decades. SYRIZA assuming office and beginning to roll back austerity would inaugrate a new stage in the Greek and European class struggle, a more complicated, difficult stage fraught with peril but a stage that promises to be deeper, broader, and more intense as well.

Minimum, Maximum, and Transitional Programs

The last problematic element running throughout Beyond Capitalism is the notion of transitional demands/program as opposed to minimum demands/program. At different points in his life, Trotsky held that the distinction between social democracy’s minimum and maximum programs, between a radically reformed capitalism and a global classless society, was either obsolete or an impediment to revolutionary change. In 1938, he expanded on this notion and claimed that “transitional demands” could form a bridge between battles for higher wages and ending wage-slavery, that is, between reformist and revolutionary struggles. Capitalism’s inability to satisfy these transitional demands would cause the working class to wage a revolutionary fight to overthrow capitalist state power and establish socialism as a mean of obtaining said demands.

Following Trotsky, Hardy and Cooper eschew minimum demands because their supposedly reformist, un-radical content fails to address Rosa Luxemburg’s famous dilemma “betwixt and between” “the day-to-day struggle” and “the social revolution.” They write:

[W]e need to find a means through which to build social strength and power over time – the “war of position” – and simultaneously through our own “offensive” actions against the seemingly perpetual insurrection against working-class living standards. In the communist movement of the 1920s and later amongst the Trotskyists of the 1930s, the tactical-strategic answer was conceived along the lines of “transitional demands.” These were policies that when taken up by large sections of the working class brought them into conflict with capital, for they challenged its monopoly over the running of the “economic sphere,” with demands for workers’ control in industry and the abolition of business secrecy. In the absence of the labour movement establishing a new type of state that could render these gains permanent by generalizing democratic control of the economy across society, then such demands were temporally circumscribed because ruling capitalist elites would not tolerate this interference over their informal monopoly over all aspects of economic life for any length of time. But they would open up an antagonism between labour and capital through which the true nature of the system might be exposed, laying the way open for social revolutionary change. (154-155)

The demands advanced by a struggle or political force do not determine its reformist or revolutionary character. Karl Marx co-authored a program for the French Workers’ Party calling for a six-day week instead of a five-day week; this did not make him a reformist. Demands are always contextually specific; who is raising what demand and why? Who is opposing this demand with that one? Who stands to gain or lose from implementing said demands? Do these demands enjoy broad and growing support, or do they fail to resonate and lead to a struggle’s isolation and defeat? There is no one-size-fits-all answer to these questions. Demands have no power independent of the people and organizations raising them and cannot transform a reformist struggle into a revolutionary one or constitute a bridge between a reform struggle and a revolutionary struggle because revolutions depend on the consciousness, organization, and militancy of living people, on how far they are willing to go, on how many millions have been stirred to stand up and fight, and last but not least, on what price they are willing to pay to win what they want. The masses are the “bridge,” not the demands.

The failure of transitional demands to ever gain a hearing, become popular, or be “taken up by large sections of the working class” (155) since Trotsky invented them in 1938 speaks to the fact that socialism cannot be achieved by manipulating or tricking the masses into launching a fight they are not ready for by getting them to adopt “special” demands supposedly beyond the bounds of capitalist social relations. Furthermore, revolutionaries should not push for demands in opposition movements in order to expose “the true nature of the system” (155). That would be the same stale propagandism that Hardy and Cooper warn against (122).

Conclusion: Marxism for the 21st Century

Although this book review has focused on areas of significant disagreement, broadly speaking Hardy and Cooper could not be more right that the left – and the far left in particular – needs an overhaul in order to become an effective force. It is hard to disagree with the central points of their chapter, “Drawing Conclusions”:

  • The crisis of the left is still the crisis of the sect.
  • The drive to new political formations … is a response to a reality that a sect-ridden left is a left that will inevitably fail.
  • Strategy beyond the sects – an evolving process.
  • A pluralistic Marxism is required.
  • Practice-informed strategic thinking is required.
  • Reclaim democracy as a left-wing idea.
  • A credible extra-parliamentary politics.
  • Build grassroots movements from below.
  • Labor struggle is always a social struggle. (155-159)

Beyond Capitalism’s strong point is its rejection of the politically bankrupt and intellectually sterile sect model over its inability to practice pluralism, embrace progressive elements of prefigurationism, seamlessly integrate Occupy-style creativity, and boldly experiment with new ideas and methods. Hardy and Cooper’s forward-looking, anti-dogmatic, and reality-based approach in Beyond Capitalism is what Marxism for the 21st century needs if it hopes to thrive and not simply survive.

{ 131 comments… read them below or add one }

bill j March 25, 2013 at 4:39 pm

Fair point that capitalism is not in crisis. But its a cheap shot at Trotsky – writing in 1938, in the midst of the Great Depression and the year before World War II. If that wasn’t a catastrophe what is?

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Pham Binh March 25, 2013 at 4:48 pm

Yes, it was a catastrophe. That is not what I’m criticizing Trotsky for. He went further then that and claimed 1) that no further expansion of the productive forces was possible under capitalism and 2) the system could not afford to grant reforms. Both were dead wrong even in 1938.

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Ben Campbell March 25, 2013 at 5:14 pm

Bill,

Yes I agree entirely about the Trotsky thing. However, I strongly disagree with both you and Binh that “capitalism is not in crisis.” Indeed, it says so on our “About” section (which I drafted). I entirely disagree with Binh that the crisis of 2008 has ended and that the system has been stabilized. Maybe one portion of the crisis has “ended,” but the symptoms of the larger crisis are manifested globally, shifting from one country to another. A hole is plugged one place, and yet a leak breaks out somewhere else — taken globally, capitalism remains in crisis, and will continue to be for, indeed, decades (it has already been half a decade).

The severity of this crisis (and perhaps the definition of “crisis”) is apparently a point of differentiation between Binh and I. I think one problem is that “Trotskyists” “cried wolf” far too many times in the period of 1945-2008, overestimating the severity of every recession, often as THE terminal crisis of capitalism. I think that this can cause others like Binh to make the opposite mistake and thus downplay the severity of 2008. I don’t mean to endorse N.N. Taleb, but just because no black swans have been discovered doesn’t mean all swans are white. There is often a dismissive tone towards “catastrophists” (e.g. Lilley’s book) that seems to often reduce to a, frankly, liberal critique of the radical left.

Anyways, I can’t write more now, but this is an issue that needs more debate around here. I’ve read the book and will offer some more thoughts later (either in these comments or as a separate review),

Ben

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Pham Binh March 26, 2013 at 3:35 pm

Crisis and stability are relative terms. Has the system returned to a pre-2008 stability? No. At the same time, we now know that pre-2008 stability was built on a housing bubble.

The “hole” of 2008 was huge, took down entire units of capital like Lehman, AIG, and eventually nations like Greece. The holes that exist today are much smaller and are more scattered. The system as a whole recovered from 2008-2009 and moved on. A sense of crisis and panic no longer pervades ruling circles as it did in 2008, which reflects the system’s stability for the time being.

Really we ought to be looking at the contradictions and fault lines for the next crisis. The housing bubble was pretty obvious back in 2004-2006, and we ought to be looking to see if there are similar bubbles in the world system instead of trying to prove that capitalism’s current state/last crisis is somehow permanent or decades-long.

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Ross Wolfe April 6, 2013 at 5:47 pm

It could well be argued that capitalism is nothing other than permanent crisis. But this emphasis on the overarching generality of crisis tends to obscure the specificity of individual crises. “Crisis” traditionally denotes a turning-point, however. Right now it’s not even clear whether neoliberalism is at an end.

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Louis Proyect March 25, 2013 at 6:23 pm
AJW September 26, 2014 at 1:31 am

Fuck off and die, Louis Proyect, you vicious propagandist for US imperialist barbarism.

Reply

David Berger March 25, 2013 at 10:33 pm

PHAM BINH: It is hard to disagree with the central points of their chapter, “Drawing Conclusions”:

DAVID BERGER: Actually, it’s extremely easy to disagree or, at least, to have some serious reservations.

HARDY & COOPER: The crisis of the left is still the crisis of the sect.

DAVID BERGER: Two problems (at least) here. (1) It ignores the historical context of the rise of sects: making the sects an ahistorical phenomenon. (2) It ignores the fact that the crisis of the left, sects and all, is taking place in a crisis of capitalism.

HARDY & COOPER: The drive to new political formations … is a response to a reality that a sect-ridden left is a left that will inevitably fail.

DAVID BERGER: This may well be true. However, (1) it ignores, once again, the historical context that gave rise to sects. And (2) it ignores, here it comes comrades, the positive aspects of sects. (a) In Europe and North America, at least, the sects have kept alive the Marxist tradition of struggle. (b) Up until very recently, there were no other credible alternatives to the sects. (c) Maligned as they are around here, they have often played a positive role as recently as in the Occupy movement. (d) Don’t confuse the RCP and the Sparts with Socialist Action of the ISO.

HARDY & COOPER: Strategy beyond the sects – an evolving process.

DAVID BERGER: Everything in the universe is an evolving process. This says nothing.

HARDY & COOPER: A pluralistic Marxism is required.

DAVID BERGER: True. However, beyond letting a hundred flowers bloom, I would not be overjoyed to see the resurrection of social democracy, stalinism, maoism, etc.

HARDY & COOPER: Practice-informed strategic thinking is required.

DAVID BERGER: There’s a word for that: praxis. It’s supposed to be a hallmark of Marxism.

HARDY & COOPER: Reclaim democracy as a left-wing idea.

DAVID BERGER: No argument there, both in society and within the various mass movements. One of the problems in the writing about the Occupy movement that I have seen by various people who post here is the fact that they ignored the lack of democracy that actually underlay the fabled “horizontalism.”

HARDY & COOPER: A credible extra-parliamentary politics.

DAVID BERGER: Sure, but how about the theoretical discussion of electoral action?

HARDY & COOPER: Build grassroots movements from below.

DAVID BERGER: Again, this is a truism. Who wants movements built from above? However, this begs such questions as movements developed by the labor movement, “from above.” Are we to abstain from union organizing drives that are initiated by the union bureaucracies?

HARDY & COOPER: Labor struggle is always a social struggle. (155-159)

DAVID BERGER: Sure, but the corollary is also true: social struggles should be labor struggles. To engage in mass movements and not attempt to move them towards the working class is, in my opinion, a non-Marxist approach.

Just for openers, comrades.

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negative potential March 26, 2013 at 9:43 am

“To engage in mass movements and not attempt to move them towards the working class is, in my opinion, a non-Marxist approach.”

But what does this even mean in societies when wage-dependent laborers constitute the overwhelming majority of the population? Most protest movements by their sheer composition tend to be working class movements!

I have the feeling that a lot of Marxists have a conception of the working class that is still rooted in the 19th Century, when the working class was still something of a statistical exception in overwhelmingly agricultural societies.

Or often, “the working class” is basically a synonym for “labor unions.” I noted on another thread that I completely understand why a lot of US leftists prioritize union activity; the absence of a social democratic or labor party in the US means that the unions are among the few institutions explicitly devoted to defending the interests of wage-laborers. However, I think this often leads to the faulty assumption that only “union” or “workplace” activity is “real” politics, and everything else is just fluff.

Such a conception insufficiently considers capitalism as a totality.

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David Berger March 26, 2013 at 11:46 am

DAVID BERGER: To engage in mass movements and not attempt to move them towards the working class is, in my opinion, a non-Marxist approach.

NEGATIVE POTENTIAL: But what does this even mean in societies when wage-dependent laborers constitute the overwhelming majority of the population? Most protest movements by their sheer composition tend to be working class movements!

DAVID BERGER: A mass movement, even one that has a majority working class membership, is not a working class movement unless it has a program oriented towards the interests of the working class and which is oriented towards the working class as a prime mover.

NEGATIVE POTENTIAL: I have the feeling that a lot of Marxists have a conception of the working class that is still rooted in the 19th Century, when the working class was still something of a statistical exception in overwhelmingly agricultural societies.

DAVID BERGER: I think that your “feeling” is entirely wrong. If anything, there is something of a lag in realizing that the classic industrial proletariat is no longer the overwhelming majority of the working class in the West.

NEGATIVE POTENTIAL: Or often, “the working class” is basically a synonym for “labor unions.”

DAVID BERGER: I don’t think that left groups make that mistake.

NEGATIVE POTENTIAL: I noted on another thread that I completely understand why a lot of US leftists prioritize union activity; the absence of a social democratic or labor party in the US means that the unions are among the few institutions explicitly devoted to defending the interests of wage-laborers.

DAVID BERGER: Correct. It also means we spend a lot of time in movements like the antiwar movement, which are not working class movements, trying to orient them towards the working class.

NEGATIVE POTENTIAL: However, I think this often leads to the faulty assumption that only “union” or “workplace” activity is “real” politics, and everything else is just fluff.

DAVID BERGER: Frankly, I just don’t see US groups making that mistake. What I do see is the opposite: groups or individuals either claiming that non-working class activity is working class activity, or completely giving up on working class activity.

NEGATIVE POTENTIAL: Such a conception insufficiently considers capitalism as a totality.

DAVID BERGER: Just so long as it’s understood that not all radical or left-wing activity is per se working class activity. A good example is the Occupy movement, which was not a working class movement but which many leftists tried, with some success to orient towards the working class.

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bill j March 26, 2013 at 3:28 am

“Both were not dead wrong in 1938”. Actually both were dead right in 1938, not only did the war start 12 months later, but there was a massive destruction of the productive resources in it. Trotsky’s perspectives weren’t right in 1948. But Trotsky wasn’t writing about 1948 in 1938.
Capitalism is not in crisis today – and it doesn’t become so just because someone wrote it was in an “about” section.
The crisis of the left is that there is no crisis of capitalism, but they pretend there is as it makes them feel better. Not very materialist is it?

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Ben Campbell March 26, 2013 at 7:40 am

Bill,

It is also “not very materialist” for you to make assertions about the state of the global economy without any level of economic argumentation. But if you would like to have a productive discussion about this, you could begin by defining “crisis.” It seems probable that we are using the term differently.

Ben

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Pham Binh March 26, 2013 at 1:28 pm

When I have a chance, I’m going to look up the growth in U.S. GDP in 1936-1940 and the UAW wage increases for that period to prove my point.

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PatrickSMcNally March 26, 2013 at 4:20 pm

Although that could be interesting in itself, it won’t invalidate the main argument. By 1936-40 the world was clearly looking ahead to a future global war. This also would have had some impact on wage contracts and like, leading to more demands for labor. But the war too was itself part of the crisis of capitalism. From our perspective today it is easy to see how World War II came and went and they all lived happily ever after. But at the time this would have seemed like a looming crisis which might have spelled doom for capitalism.

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Pham Binh March 26, 2013 at 4:35 pm

Trotsky’s argument in 1938 was that the productive forces could no long expand under capitalism:

“The economic prerequisite for the proletarian revolution has already in general achieved the highest point of fruition that can be reached under capitalism. Mankind’s productive forces stagnate. Already new inventions and improvements fail to raise the level of material wealth. Conjunctural crises under the conditions of the social crisis of the whole capitalist system inflict ever heavier deprivations and sufferings upon the masses. Growing unemployment, in its turn, deepens the financial crisis of the state and undermines the unstable monetary systems. Democratic regimes, as well as fascist, stagger on from one bankruptcy to another.”

The very process of rearmament expanded said productive forces, proving him wrong.

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PatrickSMcNally March 26, 2013 at 4:57 pm

The statement can be easily modified as follows:

In the first sentence, attach at the end the words “barring a world war.”

In the second sentence, attach at the end the words “in peacetime.”

In the last sentence, attach at the end the words “and lurch towards war as a solution.”

If someone had suggested such changes to Trotsky at the time, he probably would have seen this as a distinction without a difference. In retrospect we know that it was a bit more than that. But it really wouldn’t have seemed as significant then as it does now.

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Pham Binh March 26, 2013 at 7:14 pm

Hey, if Dick Cheney had said “we will be greeted as occupiers” instead of “liberators,” he would’ve been just as right as Trotsky was in 1938. Not a useful method.

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PatrickSMcNally March 26, 2013 at 7:48 pm

Replacing “liberators” with “occupiers” changes the whole thrust of the phrase. That is not the case with the few additions that one can make to Trotsky’s paragraph.

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Pham Binh March 26, 2013 at 7:56 pm

The point is throwing caveats into absolutist statements decades after the fact doesn’t alter the fact that those statements were wrong from the jump and should have been rejected/criticized when it might have mattered in 1938.

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billj March 26, 2013 at 7:43 am

Let’s take the USA; Rate of profit at record highs, mass of profit at record highs, private sector employed up 6.5 million in three years, government budget deficit down by half, mortgage debt burden down by a trillion dollars in three years, exports exceed previous highs, industrial production exceeds previous highs, you want me to go on?

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Ben Campbell March 26, 2013 at 8:26 am

If your arguments in this comment thread are just going to be appeals to “common sense,” and the mainstream “recovery” narrative, then I suppose I will have to be the one to make the detailed argument in a reply to Binh’s review.

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Brian S. March 26, 2013 at 2:20 pm

As always, trends depend on baselines. You are taking the 2010 low point, which demonstrates that the economy has been recovering. But if you take the 2008 pre-crisis high point what they show is that the recovery is far from complete (e.g. civilian employment down 2%). As I understand it, most recent indicators point to the US recovery stalling, with 4th quarter GDP figures registering a small decline.

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David Berger March 26, 2013 at 9:50 am

BILL J: The crisis of the left is that there is no crisis of capitalism, but they pretend there is as it makes them feel better. Not very materialist is it?

DAVID BERGER: If you think there is no crisis of capitalism, I suggest you visit Greece, Spain or the nearest working class neighborhood.

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billj March 26, 2013 at 1:53 pm

See this is where metaphysics gets you. A crisis of capitalism is determined not by the USA, China, Japan or Germany, but Greece and Spain. I live in a working class neighborhood, so I don’t need to visit one.

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negative potential March 26, 2013 at 1:59 pm

Explain to me exactly why conditions in Greece, Spain, or the nearest working class neighborhood are indicative of capitalist crisis?

This is where Marxist scholasticism lands people: a fundamental misunderstanding of the aims of capitalism. The aim of capitalism is the valorization of value.

The aim of capitalism is *NOT* to improve the living conditions of workers.

Yes, austerity is being imposed upon Greece and Spain. Yes, the human costs of capitalism are horrible. Guess what? They’ve been horrible for centuries. That say *nothing* about the vitality of the system.

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Pham Binh March 26, 2013 at 2:22 pm

Berger is confusing the system’s crisis and with the dire straights working people find themselves in as the result of a successful ruling class offensive. A common problem.

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David Berger March 26, 2013 at 2:54 pm

PHAM BINH: Berger is confusing the system’s crisis and with the dire straights working people find themselves in as the result of a successful ruling class offensive. A common problem.

DAVID BERGER: Pham Binh is confusing advances in the stock market in the US as the end of a crisis. If you really think the capitalist crisis is over, Binh, you really need to check your understanding of the term “capitalist crisis.”

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Pham Binh March 26, 2013 at 3:12 pm

No one said anything about the stock market. Another strawman on your part.

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Brian S. March 26, 2013 at 2:31 pm

@ negative potential: The current situation is not any sort of “final crisis” but it is more than just a normal cyclical downturn and more than just the eternal inhumanity of capitalism.

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billj March 26, 2013 at 2:52 pm

It was more than a normal cylical downturn, it isn’t anymore.

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David Ellis March 26, 2013 at 10:31 am

Trotsky was at pains to point to the possibility of a new extended period of capitalist boom especially if the US were able to impose its hegemony over the warring imperialist powers after the war which, thanks to Stalinism, it was able to do but not before conceding half of Europe, China and South Asia to `communism’. Trotsky warned than a new extended boom period would pose the greatest threat to the Soviet Union and so it proved.

In actual fact now there are no prospects of capitalism emerging from the current crisis. Under US tutelage it became thoroughly globalised and was taken as far as it could ever go. There is no imperialist super power waiting in the wings to sweep aside the current sclerotic political economic arrangement, which in any case would take a major global conflagration dwarfing WW2 even if it were possible. Those who think China or India are waiting in the wings are in cloud cuckoo land. They are staring at a rapid return to full semi-colonial status and dismemberment as the spending power of the West collapses. Capitalism is finished, it has run its course, it is a dead parrot. There is no catastrophism in that, it is pure analysis coupled with an understanding that everything dies which doesn’t always mean it is fruitfully replaced.

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billj March 26, 2013 at 1:53 pm

More metaphysics.

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David Ellis March 27, 2013 at 9:07 am

I think you’ll find Bill that my position is the opposite of metaphysics. I said everything dies but you seem to think capitalism can reproduce itself indefinitely. That is metaphysics: death merely signifies a rebirth and so the cycle goes on. You should be carefull when pointing fingers cos there’s always three pointing right back at you. It’s called projection.

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Brian S. March 26, 2013 at 2:28 pm

Dismemberment?

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billj March 27, 2013 at 9:10 am

Dismembered projection.

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negative potential March 26, 2013 at 2:04 pm

P.S. A lot of the idiocy about inevitable capitalist collapse is rooted in a total misunderstanding by Marxists of Vol. III of Capital, due to no small extent to Engels’ extremely problematic editing.

The April issue of Monthly Review will have a longer article by Michael Heinrich about Marx’s crisis theory, using the MEGA2 project to show that there is no single “Marxian crisis theory”, that Marx did not hold with a theory of inevitable capitalist collapse, and that he grew increasingly doubtful concerning the supposed “law” of the tendency of the rate of profit to fall.

I doubt this will have much of an impact upon most “orthodox” Marxists, who tend to take incomplete manuscripts that were never ready for publication as gospel, but it might be of interest to those with a less dogmatic mind-set.

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billj March 26, 2013 at 2:52 pm

Fair point, except about Engels’ editing, which was excellent.

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negative potential March 26, 2013 at 3:10 pm

No, Engels created a lot of problems. It’s not like that reflects poorly upon him as a person; it was a nearly impossible task. But a lot of misconceptions — such as the notion of a historical era of “simple commodity” production — can be attributed to Engels.

Here’s an older article on some of the problems: http://web.archive.org/web/20070821233824/http://www.oekonomiekritik.de/303Engels%20Edition%20Engl.htm

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bill j March 26, 2013 at 8:15 pm

No Engels idea of simple commodity production was simply the mirror of Marx’s simple commodity circulation, except better, for as Marxists we all know circulation rests on production.

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bill j March 26, 2013 at 8:24 pm

When you consider the mountain Engels had to climb in compiling the manuscript out of Marx’s assorted notes then he did a fantastic job. After reading the tiny number of largely marginal points made in the above article, my original view is confirmed.
BTW Rosdolsky thought so too, and Engels views on simple commodity production are repeated in a long passage from Marx – that Chris Arthurs – in line with the above author similarly dismisses. Bad.

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David Ellis March 27, 2013 at 9:10 am

Wow NP please direct us to examples of Marx’s `increasing doubts’ about the `supposed’ law of teh tendency of the rate of profit to fall.

Orthosox Marxists can tell a non-Marxist when they see one.

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negative potential March 27, 2013 at 12:05 pm

No, read the article yourself when it comes out, I’m not going to do your homework for you.

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Ross March 26, 2013 at 3:50 pm

Ben Campbell is right. If the entire argument that the crisis is over depends on figures of growth and rate of profit, clearly there is a lack of understanding of basic political economy, and particularly what, if anything, is meant by a crisis. Growth rates are mostly meaningless, especially given the extreme inequality of the “recovery”–might seem good to capitalists in the short term, but they can only be a signal of severe instability in any kind of actual productive economy. Rates of profit, on the other hand, are in the current climate more of a sign of bubbles than anything. The housing collapse was foreseen definitively at least as early as 2006, while rates of profit were soaring. A similar bubble is occurring in China right now, possibly on a much larger scale than in the US, precisely because it is insanely profitable. It was China’s stability, and not the ridiculous attempts at “stimulus” which allowed the system to continue as is after 2007. The global economy couldn’t have handled a Chinese collapse before then, and it certainly couldn’t now. Even an attempt at a globally coordinated rescue of China would portend such a massive political shift that it is difficult to overstate it’s implications. “The crisis is over” is more superstition than analysis.

The austerity project can in no way be said to have “succeeded” in the present moment, when the euro’s viability is still very much in question, nobody can seriously entertain what would succeed it (save for depression and possibly social chaos), the effects of the Arab Spring on commodity politics and trade are extremely uncertain, all of the bubble pressures have been shifted to East Asia, and the global economy is increasingly defined by debt and imaginary assets over commodities and production.

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Brian S. March 26, 2013 at 4:15 pm

China is not in a “bubble” (implying it could “burst” in the forseeable future). It has sustained high growth rates for the last 30 years, and these have started to ease off, reaching an all time low of 7.4% last year. This reflects shifts in the global economy and the maturation of its own development path. There are multiple sources of instability in Chinese society but nothing like a “collapse” in the offing.

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Pham Binh March 26, 2013 at 4:41 pm

Apparently Chinese capitalism has been in “crisis” every year for the last 30 years then. Any day now, the collapse will happen, you’ll see!

This kind of analysis is more akin to a broken clock being right twice a day than anything else. I don’t get why people cling to “the system is in crisis” thing like it’s an article of Marxist faith.

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Pham Binh March 27, 2013 at 12:56 pm

So growth and profits are irrelevant and income inequality is a problem for capitalism, and I’m the one who lacks a basic understanding of political economy?

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Ross April 4, 2013 at 12:34 am

I said there’s a housing bubble in China. Look it up.

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negative potential March 26, 2013 at 5:04 pm

All this talk of rates of profit and growth as merely attributable to bubbles is typical Ricardian Marxism. Pham is absolutely correct about this “stopped clock” mentality. Every recovery of the system is always explained away as an artificial life support provided by finance, as if finance was not a constitutive element of capitalism.

Doug Henwood nailed this kind of thing:

“As James Crotty has said, Keynesians have historically emphasized finance at the expense of production, and Marxists production at the expense of finance; many Marxists have treated production as fundamental, and finance as epiphenomenal, a curious replication of orthodoxy. While this is a basically accurate characterization of much of the Marxian tradition, it’s not really true of Marx himself. Though Marx’s writings on finance are mostly fragmentary and undeveloped, they are richly suggestive, and it’s clear he considered it central to his analysis.” – Wall Street

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Ben Campbell March 26, 2013 at 6:22 pm

You guys can call it a “stopped clock” mentality all you like, or other such dismissals that lump together all “catastrophists” as “orthodox Marxists”, or Trotskyists, wishful thinking leftists, etc.

I, for one, have made exactly one economic prediction in my life (before becoming a “Marxist”, yet alone “orthodox”): that the United States had a giant debt bubble — manifested largely in housing — that was bound to crash the U.S. economy. It happened. Sorry that I don’t have links to this prediction, but it’s nothing special — a lot of us saw it coming. So, thus far my personal “catastrophist” prediction rate is 1-for-1, not “broken clock.” (Edit: actually, I have also been calling the Canadian housing bubble to burst for some time now — that hasn’t happened yet, but the parallels are amazingly similar, that it barely seems “catastrophist.”)

The point is that the same fundamentals that resulted in the 2008 crash, remain. The giant debt bubble remains. Capitalism cannot keep expanding on credit for ever. Or can it? You tell me — I would sincerely be interested in hearing your reasoned economic argument why it can to elevate this level of debate from name-calling (on both sides). If you would prefer, we would love to publish it as a submission — as well as something from the other side.

Again, I apologize that I do not have more time right now to comment in this thread — but I would also like to hear from others and keep an open mind.

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negative potential March 26, 2013 at 6:25 pm

Unfortunately I don’t have time to write anything, since I’m busy with a lot of translation projects, but there is a nice debate here between Robert Kurz and Michael Heinrich (and some others) that I think represents the two fundamentally opposed positions quite well:

http://www.principiadialectica.co.uk/blog/?p=5893

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Pham Binh March 27, 2013 at 12:58 pm

Thanks for posting this. Heinrich was on the money. The others struck me as fantastical.

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Brian S. March 26, 2013 at 6:52 pm

To illustrate Binh’s point, Ernest Mandel made a detailed analysis of the excessive growth of credit in the US economy and predicted the 2008 crash quite accurately – the only problem is that he did it about 1964.

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bill j March 26, 2013 at 8:18 pm

Capitalism has not basically expanded on credit. It has basically expanded – during the period of globalisation anyway – on the back of the restoration of capitalism in the former centrally planned economies. The greatest one off expansion of the world market in history.

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Ben Campbell March 26, 2013 at 9:43 pm

Yes, there’s that. And credit. What’s your point?

This nitpickery needs to stop, because it is preventing productive debate around here. People should really interpret the arguments of others charitably, instead of assuming that they are fools or religious zealots.

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C. Derick Varn April 4, 2013 at 1:39 am

“This nitpickery needs to stop, because it is preventing productive debate around here. People should really interpret the arguments of others charitably, instead of assuming that they are fools or religious zealots.”

50 years of habits die hard, but it isn’t exactly nitpickery to introduce complicating factors. But I agree it isn’t helpful to see them as trumping over factors. We tend to be over-reductive in our thinking here. It’s a sad habit.

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Brian S. March 26, 2013 at 6:46 pm

@negative potential. Yes, but this hypertrophy of finance looks to me like a transformation of quantity into quality: ie a significant structural shift in the capitalist dynamic.

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negative potential March 26, 2013 at 5:08 pm

Here’s Doug responding to a query on whether the crisis is over:

“Absolutely. There are some sectoral exceptions – Walmart hasn’t been doing so well because its customer base has been so badly hammered. But overall, capitalists are pretty happy.

“As long as things remain quiet on the political front, that is.”

http://mailman.lbo-talk.org/pipermail/lbo-talk/Week-of-Mon-20130311/000521.html

Notice the last sentence. I think leftists like to take comfort in theories of inevitable collapse so as to avoid the tough work of making sure things aren’t quiet on the political front.

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David Ellis March 27, 2013 at 9:16 am

The Fed are printing $85 billion a month and have been for some time. Whilst this has propped up the bankrupt banking sector for now the resulting inflation is destroying the purchasing power of the population. They are robbing the people to pay out the bankers creditors to whom they owe over $35 Trillion. America is bankrupt. The only people with any money are the giant corporations who are hoarding it because there is nothing profitable to invest in not even Ponzi Bonds though between them, QE and the bail out gamblers they are creating a miniature bubble on the Stock Markets. We have just passed the usual up tick in the ten year cycle and it was barely noticeable. Where once each crisis fortold a new boom now each cycle is just a spiral into the pit.

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Pham Binh March 27, 2013 at 12:13 pm

This is the “analysis” put forward by the Ron Paul crowd; even the rhetoric is the same.

Nothing profitable to invest in? Have you looked at Google’s quarterly earnings lately?

And no boom? I guess the BRICs and other emerging markets don’t exist in your world?

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PatrickSMcNally March 28, 2013 at 7:34 am

The Ron Paul analysis is that a “restoration of the gold standard” (there never really existed a functioning gold standard, it was territorial expansion on the Western Frontier which sustained the economy of the 19th century) will somehow fix things. That obviosly has not been claimed here. I haven’t yet seen an outbreak of inflation which is proportional to the injection of money into the economy. But there is a calculated risk of such in the policies which have been followed thus far. That isn’t Ron Paul. That’s just Econ 101.

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Richard Estes March 28, 2013 at 12:45 pm

one of the key metrics in regard to inflation is plant capacity utilization, which I consider more relevant than pointing to how many billions and trillions have been poured into the global economy

my understanding is that, in the US, it is still fairly low

in the 4th quarter it was just over 70%

https://www.census.gov/manufacturing/capacity/

85% is apparently considered optimal

what this suggests to me, along with the still high unemployment, is that the government has had to run enormous deficits to avoid a deep recession, if not depression, that would last for a long time

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billj March 28, 2013 at 12:53 pm

The appropriate graph is here

http://www.calculatedriskblog.com/2012/06/industrial-production-down-in-may.html
“This graph shows Capacity Utilization. This series is up 12.2 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 79.0% is still 1.3 percentage points below its average from 1972 to 2010 and below the pre-recession levels of 80.6% in December 2007.
Read more at http://www.calculatedriskblog.com/2012/06/industrial-production-down-in-may.html#IEY7TFES4lyUxmoC.99

calculated risk has an excellent set of graphs on the US economy.

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PatrickSMcNally March 28, 2013 at 1:26 pm

Yes, the potential for inflation has been counter-acted by a very strong tendency towards unemployment. If employment were to seriously rise, then policy-makers would have to suddenly be on the watch for inflation. What does that have to do with Ron Paul?

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Pham Binh March 28, 2013 at 3:22 pm

The gold standard is the only element of the Paultard program missing from Ellis’ comment. Thanks for pointing that out.

[Edit: this was a reply to PSM, not Richard Estes.]

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Aaron Aarons July 5, 2013 at 11:02 am

Re: “[Edit:”: It’s interesting that Pham Binh and, presumably, a few others have the ability to edit their comments after they are posted. What about the rest of us?

Actually, I don’t advocate for the ability to edit one’s remarks after they have been posted, and certainly not after others have replied to them, since that is unfair to others who may have already replied or be in the process of replying. However, there should certainly be the possibility of previewing one’s comment before it is irrevocably posted.

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Joe Vaughan March 29, 2013 at 1:22 pm

My instinct is to agree with Binh that the specific and immediate crisis of 2008 is, as far as capitalism is concerned and for the time being, resolved, at least in the United States. There may be more of a continuing crisis worldwide than Binh seems to acknowledge at this point. But that strikes me as a matter that could be resolved or clarified by constructive research and discussion, given Binh’s undogmatic approach.

What this means, however, depends not only whether Marxist thinkers, as I see Binh as doing, continue Marx’s generally Ricardian reliance on statistics and data –that is, his perhaps dialectically distasteful reliance on what appear–however distressingly–to be understood as “facts”–but also on the question of whether there is a fight left in the working classes.

This in turn resolves to the question of whether and how they are really fighting while philosophers debate the theory of the matter.

My take on both the Arab Spring and Occupy was that in those revolutionary situations the movement was something created not–as the liberal media narrative had it– by well-heeled petty-bourgeois entrepreneurs with iThings in Internet cafes, but rather by the people acting as a body. In other words, by the masses, which resolves to the workers–while the politicians, the media, the organizers, and the theorists struggled to keep up.

The people led the advance, at least at the beginning. If there have subsequently been steps back, that does not mean that the momentum is lost. And momentum in a movement is the sign of the people’s leadership.

When Occupy put forward the much-trumpeted 99% vs. 1% story, they weren’t only bringing to public light the previously unutterable theme of social inequality, and therefore the reality of class struggle; they were also asserting the leadership role of the masses.

I think that Binh’s idea–Ricardian or not–that a good place to start with a view of the economic situation would be a better grasp of the economic facts is certainly in tune with Marx’s mature approach as exemplified in Capital. Moreover, Binh’s general approach seems to allow for rational disagreement about statements like, “The crisis of 2008 is over.”

But if The People Yes really aren’t fighting ahead of the thinkers or won’t fight back or don’t wish to fight back at all in the class war, even unconsciously–then for all practical purposes Marxism is wrong or is purely academic, and whether we like it or not, we must either give up the struggle, embrace “wise eclecticism,” look for another theory, or be happy writing fairytales and winging them at each other’s heads in harmless debate.

It’s easy to lose sight of this.

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Pham Binh March 26, 2013 at 7:53 pm

Response to Ben: There are a number of separate problems/issues here.

1) Debt did not crash the economy, but it did magnify the crash many times over and brought down huge chunks of the system along the way.

2) Not all bubbles end the way the housing bubble did in 2008. Sometimes they don’t pop but instead “deflate,” so to speak.

3) At what point in time do you decide your record is 1 for 2? How long will the Canadian housing bubble continue bubbling before predictions are modified in light of experience?

4) Capitalism always creates credit and debt to fuel its expansion. There’s nothing new or unique about that. Nor is there any inherent limit to that process; conceivably (meaning in the abstract) it could go on forever since debt and credit are social relationships and not a finite particle in the universe.

5) Catastrohpism — a term that has been abused in this thread because there is no agreed-upon meaning. I use it to refer to any talk of a final/unsolveable crisis, of extremely dire and drastic consequences in the near future if X doesn’t happen, or other forms of millenarianism whether it’s Trotskyist, Maoist, Jehovah’s Witness-ist makes no difference to me.

6) Trotskyism — you can be a Trot without being a catastrophist.

7) Trotsky’s lifelong habit of mistakenly declaring certain things to be ruled out in advance — Russia’s peasantry would never create its own party, liberation of the colonies would never happen except unless the proletariat did it and went straight to socialism, Stalin would never hang onto power because he’d either be overthrown by Hitler or the USSR’s workers — I think got worse with old age and turned into catastrophism (which in 1938 didn’t seem so unreasonable given the catastrophe of WWII that was underway in Asia and with fascism marching from strength to strength in Europe).

The same thing happened to Tony Cliff when he got old. He declared the 1990s to be “the 1930s in slow motion” and that we lived in an era of “reformism without reforms”; after Blair, our turn!

The reality is that capitalism is probably going to outlive all of us, barring a nuclear war which would make a catastrophist perspective a realistic one and end all opposition to that line of thinking. it seems that when Marx wrote that the workers would have to go through 20, 30, or 40 years of civil and national wars to become ready to rule, he may have been off by a factor of 10.

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Ben Campbell March 26, 2013 at 9:19 pm

Binh, correct me if I am wrong, but you still have not defined “crisis”. So, even if we grant that a housing “bubble” could “slowly deflate” that would just mean decades of slumping for the economy in question (in this case Canada), conventionally called a crisis, at least in the stuff I read. A “crisis” does not have to manifest in something so severe as Lehman. I suppose I should have been more careful with the word “burst” with respect to the Canadian housing bubble — “deflate and drag the economy into recession” would have been a more accurate assessment of my views.

At what point would I admit that I was wrong about the Canadian housing bubble? This is a good question, and I admit it is subjective — yet I insist that predictions are not useless just because one cannot state the precise conditions under which you would consider them falsified (I could turn the same types of arguments around on your predictions). That would be a naive empiricism.

Some subjective factors that would cause me to reassess would be: when the global economy clearly “recovers” from the state it has been in the last five years. I don’t want to get into the metrics right now, so to be brief, I do not share your take on the Eurozone at present. Also, since you yourself have referenced ruling class confidence, I would probably consider my Canadian housing bubble prediction wrong if the Canadian ruling class were to stop openly worrying about the situation for any extended period of time.

Binh you are of course correct about social relations and the ability of capitalism to grow indefinitely if accommodated by those social relations. But, so what? Yes, our current social relations are part of the present crisis of capitalism. If we all just accepted the austerity, and did whatever was necessary to accomodate capitalist growth, then yes, there would be no “crisis” — ever. That entrenched social relations are not easily adaptable to the current requirements of capital is part of the crisis.

But this disagreement is not going to be resolved this way. It requires economic argumentation, which I hope we can continue at a later date.

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Brian S. March 27, 2013 at 9:44 am

We also don’t have a definition of a bubble. According to the Economist Canadian house prices doubled over the decade to 2012; UK prices on the other hand rose considerably faster (160%) in the 9 years preceding 2008. There were widespread predictions of a 30%+ collapse, as there are now in Canada. But in fact the decline peak-trough (2009) was only 17%, and was followed by a slow recovery, with house prices now only 11% down on on 2008. And while the UK economy is in a serious recession, the end of house price inflation is only one (and a pretty minor) contributory factor.

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David Ellis March 27, 2013 at 9:26 am

`Debt did not crash the economy, but it did magnify the crash many times over and brought down huge chunks of the system along the way.’

Overproduction crashed the economy as always. Debt/credit was supposed to cure the problem of overproduction and get us all spending again (loadsamoney) when Reagan and Thatcher launched their global private sector Ponzi Scheme in the 80s to overcome 70s stagnation though they assured us that `enlightened self-interest’ would prevent the private financiers from allowing the supply of money to outstrip its demand. Result the multi-trillion creation of counterfeit money and claims on social wealth which has all come crashing down and to which America is being sacrificed. Western imperialism is as stagnant as it was in the 70s but this time it’s also completely and unretrievably bankrupt as well. It is finished with no prospect of paying its debts having moved everything to China.

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Joe Vaughan March 30, 2013 at 2:41 pm

“[C]apitalism is probably going to outlive all of us …”

What makes this “probable”?–dialectics, statistics, both, or merely emotion and an illusion of perspective?

Can you quantify the probability? If not, what? If there is no “objective” way of determining this, how can anyone know that you are just telling the story that satisfies your narrative sense for reasons of which you may not even be consciously aware?

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Pham Binh March 30, 2013 at 3:27 pm

Its overthrow on a world scale and the creation of a global classless society within my lifetime (assuming I live to be Proyect’s age) is improbable given current the state of working-class militancy, consciousness, and organizational muscle on a global scale versus the militancy, consciousness, and organizational muscle necessary to totally abolish the system. You are welcome to disagree, it makes no practical difference one way or the other at this time.

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Joe Vaughan March 30, 2013 at 3:59 pm

Those are large assumptions that may say more about your present state of mind than they do about the “objective” situation.

In any case, if my disagreeing is of no consequence then neither is your original argument.

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billj March 30, 2013 at 5:27 pm

It’s pretty likely that the long wave of globalisation will expire within the next ten years.

http://www.bloomberg.com/news/2013-03-26/foxconn-plant-in-peanut-field-shows-labor-eroding-china-s-edge.html

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Joe Vaughan March 30, 2013 at 5:27 pm

Not that I actually do disagree. I merely question the usefulness of that particular assertion as states, which seems to me too vague to admit of either agreement or disagreement to any purpose.

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Pham Binh March 27, 2013 at 12:36 pm

Second response to Ben: I think two quarters of negative economic growth is a good starting point for defining what constitutes as crisis for capitalism, as are falling/negative profit margins. I agree that not all crises involve Lehman-style blow ups.

The reason I asked about the time frame for your prediction about the Canadian housing market and economy is because good predictions are like milk cartons — they need to have an expiration date or some type of cut off point to retain any validity, otherwise they are as useless as timeless talk about socialism’s “inevitability.” Even the weatherman has a five-day forecast. Saying “it will rain…. eventually” doesn’t tell me whether I should leave my umbrella at home.

As for the Eurozone, I didn’t know I had a take on it to disagree with since I said nothing about it my review or in the comment threads. It’s a question I haven’t studied in any great depth, but I will say the Marxists who have been predicting the Euro’s imminent demise non-stop since 2009-2010 are wrong and need to take a chill pill and a fresh look at their errors.

So what? The reason I brought up social relations is because your previous comment seemed to imply that debt caused the 2008 crisis and you also asked if capitalism can expand forever on credit. it’s unclear based on your comments why you think the 2008 crisis happened and why debt is a problem for capitalism.

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Ross April 4, 2013 at 1:25 am

“I think two quarters of negative economic growth is a good starting point for defining what constitutes as crisis for capitalism”

This is actually the typical definition of a recession among mainstream economists. A crisis is not the same thing as a recession. There have been many recessions which were not crises, but a crisis can last after a recession is over. They are not the same thing. You’ve said you haven’t studied the problems of the eurozone in detail. That is probably why you think the crisis is over. There is no political consensus on how to prevent more and more countries from needing bailouts, and each bailout has been a tightrope walk among the political factions of the ruling class. A couple quarters of maldistributed growth means very little compared to what would happen if a major euro country defaults without a bailout, yet that is becoming more and more likely, not less. The euro as a currency would not survive, and every country that uses it would have severe repercussions. The crisis will not be over until the eurozone is stabilized (i.e. no more bailouts), and no sooner. US austerity on the EU level or a housing crash in China are still not unlikely scenarios, and then who knows?

This is all very different from talking about whether capitalism will be overthrown, inevitability, or any of that. For my part, I find it all to be hagiographic nonsense. But if “the crisis is over” is a major part of your argument, whatever it is, you’re on very shaky ground.

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C. Derick Varn April 4, 2013 at 1:35 am

What is the technical definition for a crisis in capitalism?

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Pham Binh April 4, 2013 at 3:31 am

A starting point and a definition are two different things. The specific thing I argued in this piece is that the 2008 crisis is over. They won that round, and we lost. A new boom has begun to emerge out of the ashes of the bust.

Do you agree/disagree?

When I said I hadn’t studied the Eurozone crisis, I was referring to the underlying economics. You are talking about something related but different — the superstructural crisis that was set into motion by 2008. There’s no doubt that the Euro is facing difficulties and challenges, but I don’t like to call it a crisis or claim that it is unstable because it is a galacial phenomenon; I also don’t like to be alarmist or messianic unless there is good reason to be. The fact of the matter is that Greece has had negative growth every year since 2009, but that hasn’t dragged down the rest of Europe into recession. To me, that indicates that most European economies are in decent shape and that the Euro is not going anywhere soon.

Bailouts don’t always take the form they did in 2008 because economic crises are rarely as severe; Bush Sr. if I’m not mistaken bailed out the savings and loan industry in the early 90s and hardly anyone talks about it now because in the big scheme of things it was just a tiny blip. Bailouts are a tool to manage and overcome crises and not just a metric for determining whether there is a crisis.

What makes you say that defaults without bailouts are becoming more not less likely?

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C. Derick Varn April 4, 2013 at 4:06 am

“What makes you say that defaults without bailouts are becoming more not less likely?”

The complications of Cypress seem to indicate that investors patience is running out except for economies on a scale larger than say Italy, perhaps? I don’t know if that is what Ross is thinking of, but I suspect that is a complicating factor.

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Ross April 5, 2013 at 1:36 pm

It doesn’t make sense to talk about “underlying economics” while saying the superstructures within which economies function are “related but different.” The superstructural crisis is the underlying economics, while growth rates and currency values in a given quarter or year are only informative on the most superficial level. It’s not that recession in Greece should cause recession in the other eurozone countries, but that using the same currency as the eurozone countries is fueling the recession in Greece. The euro itself is a contradiction under which the normal capitalist rules of economics don’t want to play along, and that’s a big part of why 2008 hit Europe so much harder than the rest of the world. The markets treat Greece like a failed business that ought to be dissolved and absorbed into the successful ones. That can’t happen to a nation state short of invasion, but austerity is the next best thing. Greece’s recession is being actively maintained by the rest of the eurozone for the purpose of alleviating negative pressures on the other weak, too-big-to-fail member states.

No one has seriously entertained the idea of a bailout in Italy or Spain on the scale of what happened in Greece. There is almost no question that the euro could not exist after that. Bailouts happen so long as Germany thinks having the euro is worth the cost. And yes, Cyprus has shown that even a very small country with no major economic sectors can still pose a huge challenge in negotiating a bailout, and that the Troika hasn’t really got a formula down yet. The whole point is to avoid at all costs a default in one of the bigger economies, because nobody knows what would happen in that situation. Austerity is part of that plan, and yes it serves the broader political agenda for ruling elites, but the main purpose of austerity in this moment is to make further bailouts of governments and/or national economies, particularly the large ones, less likely. The fact that the casino finance that caused the crisis is intact, and where much of the “recovery” is focused, while the only solution pursued by ruling parties is austerity, makes defaults more likely, and many of those countries could not realistically be bailed out, at least not without reopening the crisis wound. And yes, I would say the crisis is scabbed over but not scarified yet. That to me means it’s not over by a long shot. It’s not a question of who won, the ruling classes always win when there isn’t a coherent counterstrategy. As long as the left is as crippled and self-defeating as it’s been for so long, developments depend a lot more on capitalist fuckups and spontaneous uprisings than on any kind of coordinated attack.

But there is not a new boom cycle to be busted yet. There is limited evidence of one starting up, but the triggers for the bust are still the ones of the last cycle, namely crushing debt and unemployment, which could trip up a real recovery before it gets off the ground. I can’t stress enough how little value GDP has for any kind of analysis. It literally provides no data other than itself. A 5% growth rate in China would be a bigger disaster there and worldwide than a 2 or even 3% shrinkage in the US. Just pointing to growth rates and making sweeping characterizations about the health of the economy is exactly what politicians and commentators did in the run up to the crisis, and why they didn’t see it coming.

I have been right more than once, but I am not in the business of making predictions, and certainly not marxist ones. But saying Capital has everything under control isn’t much better than saying sit back and watch the proletariat come to power.

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Pham Binh April 5, 2013 at 2:18 pm

“The superstructural crisis is the underlying economics, while growth rates and currency values in a given quarter or year are only informative on the most superficial level.”

This is the methodological crux of our disagreement then. To me, the capitalist economy is not identical to the political superstructures that (so to speak) stand on top of, grow out of, interact with the economy. Growth rates and currency values are superficial if you look at them in isolation, quarter by quarter, year by year, which is why you have to look at the trends 2-5 years out. Years and years of largely uninterrupted growth indicates a boom of some type rather than a slump.

Of course “No one has seriously entertained the idea of a bailout in Italy or Spain on the scale of what happened in Greece” because they do not need bailouts — yet. You also seem to discount the idea of the U.S., Russia, and China teaming up (through the International Monetary Fund perhaps) to bailout one of the E.U. countries, which I think is a mistake. The capitalist classes of those countries would be desperate to avoid a collapse of the Euro — much of China’s growth is dependent on exports to Europe.

My view is that the 2008 crisis is over economically but it left permanent marks on the system. A new boom, a new period of growth is underway, and these periods of upswing usually last roughly 10 years or so (2008; 1998-1999; 1991; 1982 — all U.S. recession years).

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Ross April 5, 2013 at 8:27 pm

I do not discount the possibility of bailouts from outside of Europe (China after all has already offered no-strings bailout money to Greece, and Russia has tried to save Cyprus), but in a larger economy that would be the same thing as not getting a bailout as far as the eurozone is concerned: it’s finished. The reason austerity is so closely attached to EU bailout money is because it is coupled with threats of expulsion from the zone. Outside help (there is virtually no chance of US bailouts of European governments btw) would mean a way out of the euro without the pain of a forced exit. As Greece shows more and more what austerity means to the European population as a whole, there will be a growing consensus around the idea that leaving the euro and facing the short term consequences would be better than facing permanent recession to stay in. The euro is not a sustainably viable currency in its current state. It will remain heavily traded and profitable as long as German and French governments maintain that the currency must be preserved, but that is how bubbles are made in the first place. A shared currency among extremely rich and very poor countries is inherently a market distortion which is hard to overstate. The contradictions of finance capital mean either the euro has to go or its weaker members have to leave. Austerity is the middle ground, partly because even Germany didn’t play by the euro’s rules before 2008, so booting Greece out is not a politically viable solution.

There is also still confusion about the terms recession and crisis. There was no crisis in any of the recessions you listed before 2008 (nor was there a crisis in the recession of 2002-3 which you didn’t mention). There was a crisis in Japan caused by a massive asset bubble starting in 1989 and from which it has still not recovered, a crisis in Korea and Southeast Asia in the 90s caused by currency distortions which required massive structural adjustments, and the global crisis in 2008. Recessions are mostly self-correcting, with small to medium size firms getting absorbed back into the system through consolidation. Crises are not self-correcting, and they are defined by this difference. Crises don’t just “end” and they don’t have readily available solutions (at least not within the political terms of the ruling class). They leave a mark on an entire generation of people who will develop different working and spending habits than their parents. They produce “lost decades.” To say that the crisis is over because growth rates have gone up is to say there was no crisis. This distinction is actually crucial to understand what has been happening the past 5 years.

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Richard Estes March 27, 2013 at 7:25 pm

I can’t follow the ins and outs of Marxist predictions about the US and global economies, but I can say this: Sacramento seems to be on the verge of a recovery. Housing prices are skyrocketing (fueled, as usual, by money and people from the Bay Area), and investors are putting hundreds of millions into the construction of a new sports arena near my office that also entails a massive redevelopment of the central city. Sacramento was hammered by the 2008-2009 recession but we seem to be coming out of it.

I’ve lived through the collapse of capitalism about 3 or 4 times in my life. It is, in my view, premature to expect it until one of these crises adversely affects the ability of capital to accumulate the surplus of worker labor. Of course, our experience has been that these crises have actually increased the ability of capital to do so. That makes sense, it is trying to compensate for the falling rate of profit. In the long run, it can’t succeed, but in the short run, it can. But the short run can last quite a long time, long after we are gone. Observe, for example, how social media and the exploitation of previously private aspects of our lives have provided tremendous capital accumulation opportunities, ones that didn’t previously didn’t exist.

Marx was clear that we are responsible for making our own future. Just as it was not inevitable that the proletariat was going to eventually take power, nor it is inevitable that capitalism is going to collapse anytime soon. Economic determinism is not the way start mobilizing people to resist.

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Pham Binh March 27, 2013 at 8:58 pm

You raise an important point that is often missed in these debates — capitalism’s ability to commodify and monetize ever-more things and phenomena. This process does a lot to undercut the much-vaunted tendency of the rate of profit to fall since there are always brand new industries where the ratio of living to dead labor is much higher than in old industries. One more reason I don’t buy talk of capitalism’s terminal decline or unending crisis.

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PatrickSMcNally March 27, 2013 at 9:18 pm

Just from an ecological viewpoint, there are fundamental limits to how far one can go in creating new industries with new products. The only thing that would negate that point would be if the Starship Enterprise or the Millenium Falcon were to really enable humans to expand across the stars the way that Euopeans once roamed around the globe. If that were to really be possible, then any further gabbing about socialism would be made redundant. Barring that, the planet Earth is already reaching limits which dictate boundaries to what is possible, needed and can be produced in response to real demand. Those limits are difficult to define with precision, but it is clear that we are approaching that point.

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Wayne Price March 27, 2013 at 7:31 pm

Pham Binh makes the same basic error as Trotsky. They both make no distinction between “the epoch” and “the period.” Trotsky was in agreement with Lenin, Luxemburg, and the Left Communists in believing that capitalism had enterred its epoch of decline, around the beginning of the 20th century, fulfilling Marx’s expectation that this would happen. But he did not sufficiently consider that the destruction of WWII, following decades of working class defeats on a world scale, might result in a temporary period of relative prosperity (the post-WWII “Boom”). Although he did speculate about this possibility once or twice during the 20s. This period of relative prosperity–build on destruction, “primitive accumulation” and looting of the environment, military spending, and massive growth of fictious capital, lasted until about 1970. The system has been in decline ever since, as the ills of the epoch of decline reassert themselves overtly. The conjunctural crisises will only get worse over time.

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PatrickSMcNally March 27, 2013 at 9:06 pm

WP touches on a crucial matter of terms here when speaking of “decline” rather than “crisis” as others have. Capitalism has been in steady unbroken decline now for more than 4 decades. The crisis which erupted in 2007-8 may be more or less over, though I remain undecided.

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bill j March 28, 2013 at 3:46 am

Not so at all. Of all the Marxists writing inter war Trotsky was the one to distinguish between cycles and periods. Read his critique of the Comintern from 1927 and he makes it quite clear that there can be a new period of upswing, general advance he calls it.
In the transitional programme 1938 he emphasises the catastrophe facing humanity, quite right too, this was not an academic treatise but a manifesto issued the year before the barbarism of World War II.

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Joe Vaughan March 30, 2013 at 3:52 pm

Good point. Binh’s assertion that the ’08 crisis is over might be right in a limited sense. Even so the interval of that crisis may well be nested within other intervals, leaving the larger pattern still to be understood.

Among the seeds of future crisis is the fact that a “recovery” now will be understood as a vindication of austerity and the current state of virtual dictatorship in the so-called democracies.

Surely this will lead to more austerity and more dictatorship and all the problems that they bring with them. Will a state of perpetual war waged by drones and mercenaries be sufficient to silence all dissent?

Are people just going to roll over and swallow the austerity pill out of fear of worse? Indeed, might not a degree of “recovery” remove some of the prevailing fear and provide resources for more, rather than less, revolt?

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negative potential March 28, 2013 at 10:58 pm

“This period of relative prosperity–build on destruction, “primitive accumulation” and looting of the environment, military spending, and massive growth of fictious capital, lasted until about 1970.”

In other words: “capitalism should have been in decline after 1945, but it artificially lived on on by being capitalism. Then, after 1970, it started acting even more like capitalism, and that’s the sign that it’s in decline.”

Sorry, but that’s the banality of this sort of analysis: capitalism is always in a state of terminal decline, except when it isn’t. But even when it isn’t, it *really* is.

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Brian S. March 29, 2013 at 11:37 am

You’re right in your characterisation of these sorts of arguments -but we shouldn’t let it blind us to the fact that the 1970s were a period of crisis for capitalism that resulted in a structural shift (towards a dominant neo-liberal “mode of regulation” to borrow a phrase); 2008has ushered in another such period, whose outcome is still up for graps. “Crisis” understood in this sense (and I think its the most useful one) is a process that is likely to occupy a decade, and is not incompatible with various cyclical movements- positive and negative – in the economy in the course of it.

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Pham Binh March 29, 2013 at 12:05 am

What is “fictitious capital”?

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Richard Estes March 29, 2013 at 12:31 pm

Fictitious capital are instruments that make claims on income from future production, stocks, bonds and other securities, that sort of thing.

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Pham Binh March 29, 2013 at 3:36 pm

I suspect that is not what Price is referring to.

Stocks, bonds, and securities were nothing new in the WW2-1970 period and I don’t know of anyone who has argued that such instruments played an outsized role (“massive growth”) in capitalism’s expansion during that period. Most commentators assert that this phenomenon (usually called “financialization”) started in the 1970s.

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Brian S. March 29, 2013 at 6:21 pm

“Fictitious capital” is a term used (and I think coined) by Marx to describe the transformation of financial instruments from means to facilitate the circuit of capital (M-C-M) into objects of financial transactions for their own sake. e.g in In discussing the trade crisis of 1847, he notes that “bills were no longer drawn because commodities had been sold, bu rather commodities sold in order to draw bills which could be discounted”. This is the foundation of speculative transactions in financial instruments, which have been amplified by successive financial innovations – the joint stock company; derivatives etc.
I think Price’s reference is just a rhetrorical anomaly – I don’t think the post-war period saw a ” massive growth of fictious capital” – somewhat the contrary: post-war US corporations tended to be self-financing (generating capital from their profit flows).

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Arthur March 27, 2013 at 11:52 pm

Again, too many topics for one article!

Re crisis:
1. I broadly agree with Ben Campbell.
2. Needs an ongoing regular series of economic themed articles. Won’t be quickly settled in one.
3. Need to clearly distinguish between theory of a “final crisis” and Marx’s explanation of CYCLIC crises.
4. I don’t think we’ve had a full scale cyclic crisis since the 1930s. The present phase seems to be a continuation of something that became visible in the late 1970s. The intensification since 2008 has not resulted in any “resolution” and restructuring through crisis like the 1930s.
5. In particular actual deflation is being postponed primarily by historically unprecedented levels monetary measures. As well as postponing this also makes the underlying imbalances bigger than ever so when the crisis does come it can be expected to be bigger than ever.
6. None of us has any capability for short term economic forecasting. Anyone that did could very rapidly make a fortune on derivatives markets.

PS Apologies for non-participation in this and several earlier threads I should be responding to. Am flat out with exams looming in numerous free online courses. On the plus side I’m now seriously studying bourgeois finance and economics. Strongly recommending others do so too.

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Brian S. March 29, 2013 at 6:43 pm

Hi Arthur: have you found a worthwhile finance course? The ones I have located looked to me like rather arid exercises in mathematical model building.

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Arthur March 29, 2013 at 11:08 pm

Unfortunately finance courses ARE exercises in mathematical model building. Intrinsically arid although more advanced models slightly less arid. This is necessary for understanding. Basic principle is the arid framework that money grows randomly on trees and can be harvested more efficiently by diversification.

The subject is intrinsically boring and the lecturers are stereotypically dull and uninspired compared with those in other topics. That is the price for studying actual capitalism.

I’ve done all the Coursera finance courses so far (plus one from Stanford Venture Lab) and intend to continue. Start with the most elementary that has the least mathematical modelling:

https://www.coursera.org/course/introfinance Next session July.

Lecturer’s personality is more tolerable if you view with Google Chrome at 2x speed.

More advanced courses have lecturers with far worse – Stanford Venture Lab lecturer was some sort of unanimated android robot.

Meanwhile brush up on statististics courses. Necessary for advanced finance and for many other things.

BTW “economics” and “business” are distinct subject areas and less “arid”. Also doing most of economics and some busiess courses.

Coursera course list now sorts by categories, start dates etc.

https://www.coursera.org/courses?orderby=new&cats=economics

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Pham Binh March 28, 2013 at 9:45 pm

An interview with SYRIZA leader Tsipras that echoes a lot of what I argued here: http://links.org.au/node/3272

I’m surprised no commenters argued against me on reformism, that revolutionaries and reformists don’t have to be separate parties, or that the method underpinning the transitional program is wrong. Maybe I misjudged where The North Star‘s readership is at.

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Brian S. March 29, 2013 at 12:42 pm

@Binh. The discussion has diverted itself into other issues around the “crisis” theme – so I wouldn’t take that as an acceptance of your views on these matters. A discussion on the revolutionaries/reformists question might provide a healthy shift of topic.
A “party” (even if we don’t use the term in a restrictive “Leninist” sense) is more than a united front or trade union organisation: it needs to combine proposals to address the immediate needs of the working class and oppressed with a critique of the existing structures of power, a vision of an alternative way of organising society, and a programme which can connect the two, in some way or other.
That formula might satisfy SOME “revolutionaries”, who others would call “reformists”; but I don’t see it encompassing many people who would describe themselves as “reformists” or who I would describe in that way.
If you take Tsipras formula from your link: “The political programme that SYRIZA puts forward presents a complete hegemonic project. It is not just about winning elections and forming a government; it is about gaining power and moving Greece in a democratic socialist direction.” Is that “revolutionary”,” reformist”, or something else? Whatever, it ticks all my boxes (although I’d want to watch those who expound such a formula very closely to make sure they meant it!)

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David Walters March 29, 2013 at 2:58 pm

Thinking out-loudly on the productive forces: their expansion, stagnation or shrinkage, was always one of the points about the “progressive” aspect of capitalism, at least for the historic social-democracy and communist movements.

There is a passage in Trotsky’s 1925 report to the CP CC’s Plenum…later titled “Whither Russia” where he notes the expansion of capitalism most notably in and around the Ruhr valley in Germany that the productive forces were expanding and that we “had to reconsider” the implications for this regarding our traditional understanding of Imperialism…

I think Pham falls into the same problem as others have when discussing this, while not actually disagreeing with him, with regards to WWII…exactly *where* did the productive forces “expand”? This is a valid question when one moves beyond the solid confines of Fortress America. Did they expand in the UK? France? China, Japan, Germany? How about Austria? In fact in these countries the “productive forces” meaning both plant, equipment and of course the most important, labor, were virtually obliterated.

Did the huge expansion in the “Destructive forces” in the US outweigh the destruction in these other countries? Pham somewhat flippantly argues that Trotsky was even wrong about 1938? Maybe…but care to prove it because auto and steel production, along with associated labor forces didn’t even get back to pre-1928 levels until 1943 or so, and from a civilian conversion perspective…1952 or so. 1938 was *worse* than 1928. The productive forces had declined, in fact and didn’t recover *in the U.S.* until the war and afterward.

The real issue if the relative expansion or stagnation of the productive forces to the population as a whole. Are the productive forces expanding at a rate fast enough to provide the vast majority of the *planet’s* working and peasant classes a higher or lower standard of living? It is not a statistical aggregate one looks for in the productive forces but the ability of those productive forces under capitalism to expand enough to provide a rising standard of living. Nor is it “China” or “India” one should look at abstract from the Imperialist system as a whole. If one thinks that (Pham doesn’t go to this point and I will not suppose that he does) that the productive forces have in fact expanded *relative the population as a whole*, I think it needs to actually be shown it does.

David Walters

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Arthur March 29, 2013 at 11:17 pm

In order to convince yourself that the productive forces have in fact expanded relative to the population as a whole simply open your eyes and do a little reading and thinking.

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Pham Binh March 30, 2013 at 3:30 pm

But 1928 levels were the peak of the boom and therefore not useful as a baseline or a basis for comparison. That would be like arguing that the U.S. housing market today is not in recovery because home prices have not reached their 2005-2006 high.

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Brian S. March 30, 2013 at 6:46 pm

Accordng to my source (Angus Maddison) , the peak year for GDP was 1929, and it was surpassed in 1940.

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Pham Binh March 30, 2013 at 8:25 pm

A mere two years into its alleged “death agony”? Too bad folks defending Trotsky’s error won’t look at these numbers. God forbid the Prophet Outcast make a mistake.

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bill j March 31, 2013 at 3:14 am

Maddison aggregates the output of the central plan and capitalism, so his figures need to be taken with a large pinch of salt. Never mind the stupidity of the assertion that WWII was a period of general capitalist growth and prosperity. Lies, damn lies and statistics.

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Brian S. March 31, 2013 at 8:40 am

@bill j Re Maddison: All statistical estimates of complex aggregates are going to have wide margins of error and in that sense need to be taken with a pinch of salt – but that doesn’t falsify them. My explicit reference to Maddison above was to his figures for the US – so your point doesn’t apply. You are on better ground about my comments below on trends in global per capita output, which are partially based on Maddison – but a quick check suggests that the inclusion/exclusion of the FSU makes little difference (in fact it very slightly increases the growth figure, as you would expect.)
I don’t follow your point about “the stupidity of the assertion that WWII was a period of general capitalist growth and prosperity. ” If this is a reference to Maddison it is simply wrong – his data don’t show that at all. What they do show are very variable experiences – depending on the growth of war production and the extent and timing of war destruction. So, of course , the US economy in which the first was massive and the second absent grew very rapidly: almost trebling output at the wartime peak. Germany on the other hand collapsed – but only at the end of the war.

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billj March 31, 2013 at 8:56 am

There are two issues, one around margins of error for national income statistics applicable to capitalist economies, second around the erroenous application of national income statistics to non-capitalist centrally planned economies.
Maddison was good on the first, terrible on the second.

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Brian S. March 31, 2013 at 9:16 am

Trotsky’s views in this period are strangely divergent from his more balanced appreciation of capitalist dynamics in earlier times, which others above have noted. He seems to have based himself heavily on the downturn in the US economy in 1938 which he read as the exhaustion of the New Deal and the onset of renewed crisis. But this was a small reversal in what was otherwise quite strong period of recovery that began in 1933/34, and was a uniquely US phenomenon not mirrored in Europe (so there was also a strange absence of internationalism in Trotksy’s perspective at this point).
I can’t help but think that the explanation is more psychological than economic.

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billj March 31, 2013 at 9:32 am

Not at all. By 1938 the USA had only just reached the level originally reached in 1929. That is a period of stagnation. The Great Depression saw a drop in output by a third. Trade did not recover until the 1950s. Considering the world as a whole the inter war years were ones of stagnation, exhaustion of the productive forces, ceaseless crisis, etc.

Basically Pham’s view is semantic nonsense, the war was a catastrophe. No one slags Marx off for in 1848 saying the bourgeoisie feared the impending social revolution.

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Pham Binh March 31, 2013 at 10:39 am

It’s foolish to use 1929 as any kind of baseline because it was the peak of a bubble. Would you use 2005-2006 as a baseline to determine whether the U.S. housing market is in recovery? Surely not.

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billj March 31, 2013 at 10:44 am

Its not foolish.
The recovery begins before the previous peak is reached. But it is at the point at which the previous peak is surpassed that recovery is complete.
US housing is recovering pretty rapidly, but is still pretty low in historical terms on most metrics.

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Pham Binh March 31, 2013 at 12:34 pm

So then by 1938 the recovery was complete. Not sure how that squares with “death agony.”

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bill j March 31, 2013 at 2:25 pm

Simple, it was the year before the war. Shows why a narrow focus on economic statistics doesn’t show the whole picture.

Brian S. March 31, 2013 at 3:01 pm

It was not a period of “stagnation”, it was a classic” boom and bust” cycle followed by a period of strong but more gradual recovery, through to the start of the war. Using Maddison’s figures, US economic output declined c.30% peak to trough (1929-33); then rose by 43% to 1939 (when it passed the 1929 level); and then rose a further 8% in 1940, taking it to 10% above the level of 1929.
The figures for the other major world regions follow different patterns but all exhibit positive growth over this period, so the picture for the world economy was almost certainly similar.

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billj March 31, 2013 at 3:54 pm

It was absolutely a period of stagnation. When else in the history of the world has output declined by 30% over three years? According to your own example, the USA took 10 years to recover from the crash and only then due to re-armament – hardly the development of the productive resources so much as the destructive resources. As you say all of the other major regions followed the same pattern.
The same pattern of stagnation then rearmament that is.

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Brian S. March 30, 2013 at 6:36 pm

Real world per capita product grew by c.250% between 1950 and 2010.

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Pham Binh April 6, 2013 at 3:58 pm
Pham Binh April 6, 2013 at 9:38 pm

Andy Newman on Blairism and the Labour Party. He does a much more thorough job looking at the changes and continuities between the two than Hardy and Cooper, to say nothing of his policy overview of the Blair government:
http://socialistunity.com/the-radical-liberalism-of-tony-blair/

Newman on Britain’s changing class structure:
http://socialistunity.com/the-changing-class-nature-of-britain/

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Pham Binh April 10, 2013 at 12:05 pm

” [A]fter a peak in 1966 (coincidentally the year of the first serious credit crisis since the 1930s), the rate of profit declined hard through the miserable 1970s into a trough during the deep 1981–82 recession. But the class war from above, led by Volcker, Reagan, and the Shareholder Rebellion, succeeded in breaking labor, cutting costs, and speeding up everything. With that came a long upsurge in the profit rate, rising to a peak in 1997. This rise was the fundamental reason behind the great bull market in stocks of the 1980s and 1990s. The market kept rising after the profit peak, but then came crashing to earth. It recovered rather quickly, coming close to the 1997 highs in 2005, then turned south. Note that in both cases, 1997 and 2005, the profit rate peaked well ahead of the economy—three and two years, respectively. (Note too that the tax code became more corporate-friendly: the 1997 and 2005 peaks after taxes were much closer to 1966 levels than the pretax measure.) And the 1966 peak was well ahead of the troubles of the 1970s.

“While many lefties pronounce neoliberalism a failure, on this measure it looks like it accomplished just what it set out to accomplish: raise the profit rate back to its glory days. The subsequent peaks were a little short of 1966, before everything collapsed into inflation and diminished expectations, but not by much. To say that the rate of profit stopped rising in 2011—which is quite plausible, is to underplay the sharp recovery from 2009′s depths. And given the propensity of the profit rate to lead by several years, it’s quite possible that this crappy recovery could stumble on into 2014.” — Doug Henwood. http://lbo-news.com/2012/06/26/profitability-high-and-maybe-past-its-peak/

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Richard Estes April 10, 2013 at 12:32 pm

Neoliberalism has been a success for the reasons mentioned in your quote, and the left, with the exception of the peoples of South America, has been unable to organize an effective resistance to it. In the US, as a consequence of the collapse of the housing bubble and conscious Obama policies, millions of people have been foreclosed out of their homes, with many of them taken over by private investor funds and converted into rentals. Oakland is a good example of this, with further gentrification being the next step.

Now, the US, the EU and Canada are seeking to implement authority for “bail-ins”, whereby future “too big to fail” bank rescues would be involuntarily funded by the savings of depositors instead of the government. There is a theme that runs through this, and it is the destruction of any security established through home ownership and savings. The economic assault upon the lower and lower middle classes that commenced with Reagan and Thatcher is now being directed gainst the middle class as well. It is tempting to believe that the success of these policies would accelerate the decline of capitalism, but, as you observe, there is no indication of that to date.

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Pham Binh April 10, 2013 at 12:53 pm

Bail-ins is an important reason why I don’t agree with Ross’ arguments in this thread that Ireland et. al. will be “too big to bailout” and therefore the E.U. is basically doomed. They haven’t even gotten started cleaning our clocks.

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PatrickSMcNally April 10, 2013 at 1:22 pm

It clearly has accelerated the decline of capitalism. What is at issue is if guarantees a real crisis in the near future. “Crisis” implies something that is directly threatening to major sectors of capital, the way that Fannie Mae & Freddie Mac seemed to portend just a few years ago. That crisis does appear to be over. But “decline” relates precisely to things like status of a middle class. The reason that so many people regarded the quarter-century after WWII as a great bloom of capitalism was precisely because it seemed to auger a time when capitalism would deliver general prosperity for all. A decline of capitalism has been clearly marked over the last 4 decades by the fact that more and more people are faced with a precarious situation and much less chance of settling in the suburbs. The question is over when will such decline culminate in a further crisis? I can’t answer that one.

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Richard Estes April 10, 2013 at 3:02 pm

“A decline of capitalism has been clearly marked over the last 4 decades by the fact that more and more people are faced with a precarious situation and much less chance of settling in the suburbs.”

At the risk of coming across as pedantic, your comment suggests that capitalism cannot flourish under conditions of precarity. Or, to put it differently, that the ideal form of capitalism provides prosperity for a large middle class, and that other instances noted for varying degrees of precarity are deformed versions of it. Of course, at some point, precarity becomes so extreme as to threaten the system, but there may be a range of precarious alternatives that can persist indefinitely, no less so than a more prosperous middle class one.

The declining rate of profit is the underlying issue. My understanding is that it has been trending downwards since the early 1970s, despite the periodic upturns noted by Pham. Would policies that preserved the middle class have resulted is less of a decline? From what little I know, the Marxist answer is possibly, but it wouldn’t have arrested the downward trend. Hence, precarity is a symptom of this problem, and not a defining feature of a capitalist system.

Upon surveying the ability of governments to create incomprehensible amounts of money to assist financial institutions and corporations, the profits associated with armaments, surveillance and private military activity and the colonization of everyday life through social media, I don’t perceive a crisis anytime soon. But I could be wrong, like you, I can’t answer the question as to when another crisis will happen, either. On the other side of the ledger is the hoarding of money by finanical institutions, that is a troubling sign. Trillions of dollars have been released into the global economic system (the Bank of Japan just did so the other day), and the impact upon demand has been anemic.

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Pham Binh June 3, 2013 at 2:52 pm

Another sign of recovery/boom, this time in housing: http://finance.yahoo.com/news/homebuilders-struggling-workers-070400392.html

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PatrickSMcNally June 3, 2013 at 3:37 pm

“A lot of our workers are immigrants and they went back to their home countries…”

The traditional reason for hiring immigrant labor was that it was cheap. Mexicans who snuck across the border were less likely to demand a minimum wage. So they’re saying that they would like to have more cheap immigrant labor, but the immigrants who used to provide have gone back home. That doesn’t really sound like evidence of a boom anywhere.

It should be controversial to agree that I was fully expecting an eventual recovery of some sort from the first signs of recession in 2007. It never crossed my mind that this was decisive crisis. What we are seeing is further evidence of long-range decline in capitalism. The St. Louis Federal Reserve has recently delivered a report that the recovery has been very heavily tilted towards the 1% and that average citizens have not shared in the bulk of this recovery. That is not contradicted by the report that some builders would like to have more cheap immigrant labor on hand.

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Pham Binh June 3, 2013 at 3:48 pm

More construction -> greater demand for labor -> more immigrants and/or higher wages as capital chases labor. More construction is a sign of a recovery/boom (those two terms that are relative and not absolute).

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David Berger (RED DAVE) June 4, 2013 at 9:04 am

I wouldn’t jump for joy that the recovery is quite here yet. For the bourgeoisie, it has certainly arrived. But for the working class, it’s not so clear.

Below are some comparative figures. For April of each year, from 2001 to 2013. For each April, we have the U-6 unemployment rate and the Dow Jones Closing for the last trading day of the month.

Two sets of figures are especially interesting: 2009 and 20013
2009 –
U-6 unemployment rate: 14.2%
Dow Jones Closing/Last day: 8,076.29
2013 –
U-6 unemployment rate: 13.9%
Dow Jones Closing/Last day: 14,712.55

So for the last four years, the Dow, a reasonable indicator of bourgeois recovery, has gone from 8,076.29 – 14,712.55. A very nice recovery indeed for the 1%. However, the U-6 has gone from 14,20% – 13.9%. Not so nice for the 99%.
__________

APRIL 2001 –
U-6 unemployment rate: 7.4%
Dow Jones Closing/Last day: 10734.97
APRIL 2002 –
U-6 unemployment rate: 9.7%
Dow Jones Closing/Last day: 9946.22
APRIL 2003 –
U-6 unemployment rate: 10.2%
Dow Jones Closing/Last day: 8480.09
APRIL 2004 –
U-6 unemployment rate: 9.9%
Dow Jones Closing/Last day: 10225.57
APRIL 2005 –
U-6 unemployment rate: 9.3%
Dow Jones Closing/Last day: 10192.51
APRIL 2006 –
U-6 unemployment rate: 8.4%
Dow Jones Closing/Last day: 11367.14
APRIL 2007 –
U-6 unemployment rate: 8.4%
Dow Jones Closing/Last day: 13120.94
APRIL 2008 –
U-6 unemployment rate: 9.2%
Dow Jones Closing/Last day: 12820.13
APRIL 2009 –
U-6 unemployment rate: 14.2%
Dow Jones Closing/Last day: 8,076.29
APRIL 2010 –
U-6 unemployment rate: 17.1%
Dow Jones Closing/Last day: 11,008.61
APRIL 2011 –
U-6 unemployment rate: 16.0%
Dow Jones Closing/Last day: 12,810.54
APRIL 2012 –
U-6 unemployment rate: 14.5%
Dow Jones Closing/Last day: 13,228.31
APRIL 2013 –
U-6 unemployment rate: 13.9%
Dow Jones Closing/Last day: 14,712.55

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Pham Binh June 4, 2013 at 11:34 am

But you said we should ignore the Dow figures when discussing these issues. “Pham Binh is confusing advances in the stock market in the US as the end of a crisis.” — Dave Berger. http://www.thenorthstar.info/?p=8095#comment-43728

Since you can’t agree with yourself, I would really like to see something along the following lines:

DAVE BERGER: “Pham Binh is confusing advances in the stock market in the US as the end of a crisis.”

DAVE BERGER: “I wouldn’t jump for joy that the recovery is quite here yet. For the bourgeoisie, it has certainly arrived. … For each April, we have the U-6 unemployment rate and the Dow Jones Closing for the last trading day of the month.”

Have at it comrade!

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