Sep 25, 2008

Capitalism in Crisis?

the following is from a larger discussion between different individuals and organizations on the nature of fascism and the potentials and limitations of anti-fascist organizing. that discussion will be published in the near future, however, with the last few days events we wanted to put up this piece from D. Hamerquist.
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M. included this observation in his remarks on the current fascism discussion:

“The history of the left is littered with groups that have ended up in the metaphorical ditch after having hitched their ride to a supposedly impending crisis in the functioning of capitalism. It’s true that the past is often no guide to the future, but I’m highly skeptical of claims that capitalism is currently headed toward a major crisis.”

Despite M.s “highly skeptical” view, the events of recent days certainly look like a capitalist crisis and spokespeople for the system are commonly describing the situation in apocalyptic terms. Perhaps he thinks that it is just not a “major” crisis – only a slight “downward economic adjustment” in our corner of the global capitalist system, a momentary hiccup that we should look beyond. However this doesn’t explain why the major spokespeople for capital, accompanied by the flock of professional commentators on its workings, are uniformly describing the situation as a looming disaster for the entire global capitalist financial system and are bitterly debating the proposed remedies. Should they all relax? Has M. found some underlying limits on the problems that all of them have overlooked? Is this emerging bailout remedy that will cost a minimum of half a trillion dollars of public funds a stupid over reaction to some minor glitches? Is the palpable panic part of a massive attempt to confuse the more gullible sections of the people, including the small circles of revolutionaries and cover up some “adjustment”(s)? If so, what adjustments…and why cover them up?

There is no evidence of capitalist complacency in the current situation – but there is a good possibility that many left radicals will relax and snooze their way through it. I recommend that those who see the current situation as just “capitalists just being capitalist” make sure they understand the concept and the function of “leverage” and then google - ‘collateralized debt obligation’ and ‘credit default swap’. This should provide some recovery therapy for business as usual disorders on the left.

The essential problem is not that M.’s view has been overtaken by events - although it has. In my opinion his position was wrong when he wrote it some months ago as the current situation was just developing. Similar positions have resulted in similar mistakes since this type of argument became fashionable on the left some decades ago. I’m not arguing that an objective analysis of capitalism is unnecessary, but that analysis must look for the breaks and transformations in the structure of capital that will determine the environment for radical political work and set the potential for insurgencies. By emphasizing the elements of stability and continuity in capital and discounting the current financial panic as a planned manipulation, M. removes the imperative to develop a popular radical position for the issues of the day and tends towards confining strategic options to that long march through the institutions which has destroyed so much radical footware – perhaps he would spice it up with a little parecon.

This is not to deny there are some elements of validity in M.’s position. I assume it is a reaction against the strand of economic/historical determinism in the left tradition, particularly the self designated Marxist component, that ‘scientifically’ predicted the dual inevitabilities of the fall of capitalism and the success of communism. The mechanism to expedite the inevitable transition from capitalism to socialism was commonly located in the “boom/bust” capitalist business cycle. This supposedly would result in increasingly serious crises culminating in THE CRISIS where capitalism essentially collapsed. (I realize there are some more sophisticated expressions of the process, but this is its essence.)

Gramsci dealt with this issue in his criticism of Bukharin’s popularized ABCs of Communism, describing it as marginally useful as a morale booster for a working class movement that has experienced the class struggle as a string of defeats, but as“imbecilic optimism” for a revolutionary project that must create a future through organized and conscious struggle. (I love that term and will never miss an opportunity to use it.)

This crude economist notion of crisis was incorporated into the stage theory which defined imperialism as the final phase of capitalism, and saw WWI and the Bolshevik revolution as demarcating the “General Crisis of Capitalism”, the immediate prelude to international revolution. History developed differently. Official communist doctrine struggled with its crisis theory for a time, creating various subdivisions of the general crisis to explain the delay in its appearance. Following a brief resurgence during the 30s depression, the grand crisis theory faded into obscurity and was supplanted by the simple notion that capitalism would eventually succumb to an increasingly appealing “socialist” alternative. Of course we know what has happened to this pile of crap.

Crude determinist views of this sort reappear from time to time and present easy targets for ridicule by more sophisticated leftists. I’ve taken some shots myself. However, there is a potential for large mistakes in this reflexive criticism. Paradoxically, it can lead to a similar political posture to the one it criticizes, complacent reformist gradualism. The “imbecilic optimism” that treats eventual victory as guaranteed because time is on our side finds a functional equivalent in incremental reformism that hopes to hold on until capitalism bores itself into senility.

In its last years, STO attempted to develop an understanding of the restructuring of the capitalist labor process that was becoming evident in the U.S. and Europe. This involved taking another look at the issue of capitalist crisis. We began to draw a distinction between two notions of crisis, both of which can be located in Marx. The first was the cyclical boom/bust character of capitalist development. This has traditionally been the focus of the left which treated it in ways that parallel the treatment of the business cycle in official economics. The second notion of crisis, infinitely more important in my opinion and not included in official economic curricula, is the conception of crisis as a secular consequence of capitalist production approaching the limits of the law of value. It is important to recognize that neither of these notions equated crisis with collapse. The former notion was cyclical and to some extent self correcting. The secular crisis creates the conditions for development of countervailing forces on the left and the right, but does not ensure their success. Nor does it contradict the potential for various types of capitalist recovery. Following the Chairman, unless it is pushed, capital will not fall – where the broom does not reach the dust will remain. So let’s push a bit – and stay alert for other broom wielders.

At the time, Marx’s Grundrisse had only recently become available in English. Its extended “Chapter on Capital”– specifically pages 699-712 – was our primary reference point. I’ve referred to this material elsewhere, for example in the section on crisis in my piece of fascism – page 22-28 - and don’t want to repeat it here. Perhaps I should say that of the very few comments on that piece, a number singled out this passage as being rather useless. Nevertheless, I still think it is helpful to check out the Grundrisse passages, keeping in mind that they were written about capitalist limits as a global system at a point in time when capitalism was hardly even regional, barely developed in most areas and only clearly hegemonic in a few European countries.


I’d like to approach the problems with a quote that is very different from the one of M.’s that topped this piece. After citing the Grundrisse, Negri argues:

“This restive character of capital constitutes an ever-present point of crisis that pertains to the essence of capital itself; constant expansion is its always inadequate but nonetheless necessary attempt to quench an insatiable thirst. We do not mean to suggest that this crisis and these barriers will necessarily lead capital to collapse. On the contrary, as it is for modernity as a whole, crisis is for capital a normal condition that indicates not its end but its tendency and mode of operation.” (Negri & Hardt, Empire, p. 222).

In this view, as in mine, “crisis” should not be reduced to capitalist collapse, it is the new normality when capitalism has become global and no longer effectively has an “outside”. Of course, saying crisis is a “normal condition” is hardly sufficient, but Negri improves on M.’s position by focusing our attention on contradictions, paradigm shifts, disequilibriums, and transformations as the “normal condition” of the political terrain. This sets a much more productive framework for further analysis.

Let me make a brief excursion. Martin Nicolaus now is probably best known as the translator of the Grundrisse into English. Before this he had a brief flame out career in the New Left, starting with Weather and working through the BARU; RCP, CPML and some more exotic Maoists. (You can detect the Maoism in his introductory material for the Grundrisse.) I have no idea where he’s been for over a quarter of a century – probably some type of liberal like so many others. In any case, in the late sixties he had a widely read debate with Ernest Mandel, the Trotskyist economist and head of the 4th International. The topic was one of the ‘Where is X Going’ sort that Trotskyists favored. Nicolaus argued that colonial conditions were being imported into the metropolis and that the proper strategy was to bring the national liberation movement along with it. It fit with his thirdworldist Weather position of the period. We frequently used his essay in educationals as an illustration of a political mistake for not dealing with the contradictions within the U.S. working class, specifically the white skin privilege, and for essentially denying that the working class was a potential revolutionary agent in advanced capitalism. Of course, we regarded Mandel’s Eurocentric and economist trade unionist perspective as pure crap.

I’ve frequently thought since that there was more substance to the Nicolaus argument than we realized – possibly more than he realized. It fits very closely with the argument in Negri’s Empire”

“The Third World does not really disappear in the process of unification of the world market but enters into the First, establishes itself at the heart as ghetto, shantytown, favela, always again produced and reproduced. In turn, the First World is transferred to the Third in the form of stock exchanges and banks, transnational corporations and icy skyscrapers of money and command.” (Negri, Empire, 253-254.)

I think this notion of capital globalizing as both a cause of, and a response to the incorporation of the periphery is useful. In the first place it points to the mobility of capital, its increasing lack of ties to a definite place. In the second place it points to the exacerbation of political fractures that previously could be exported - remember the Cecil Rhodes comment that imperialism was essential to prevent 40,000,000 Englishmen falling into “bloody civil war” – it points to the import of populations and problems that previously could be externally quarantined.

Ultimately, I think, that the tremendous international mobility of labor will become the crucial element in the political conjuncture. This is where the working class is potentially on the offensive and where the ingredients of an internationalist perspective can find a social base. This is also one of the fault areas where fascist movements will emerge. Again, not conflating crisis with collapse, it is apparent that this labor mobility provides an element of the capitalist crisis. It challenges traditional methods of governing and labor discipline and any attempt to deal with it will necessarily undermine some aspect of capitalist hegemony or profitability.

However, the immediate manifestation of crisis is on the other side of the process, the internationalization of capital. There is a contradiction between the growing elimination of obstacles to the free movement of capital and the national state framework which still must mediate and arbitrate differences within capital to advance its overall class interests. Somehow this contradiction must be negotiated without undermining capital’s ability to respond to potential class challenges emerging from the mobility of labor and without providing too much fuel for an already existing challenge from the political right.

In the current case, global capital has created mammoth financial processes – consider the market in credit derivatives – that are largely opaque, immensely profitable, and also very risky. They are also outside the range of any national regulatory structure. Yet when they overreach, as they have, the problems must be confronted through fiscal (taxes) and monetary (credit expansion) policies through the existing state structures. When and if, as is certainly not unlikely, the problems and their solutions result in mass protests, the police and military response to them will also be administered through nations. (I’ve made this point elsewhere concerning the “War against terror”.) There is a tension between the political and economic interests of global capital and the national frameworks that field armies, raise taxes, and print money. This will result in recurring crises that must be countered by a radical left, not because capital will be collapsing into a revolutionary situation, but because it quite conceivably might be strengthened by dealing with its dilemmas and/or because a radical challenge from the right might preempt the historical stage.

I was going to write a bit more but I want to catch the Bill Marr show to see how Naomi Klein forces a situation that refutes her book into a substantiation of it.

D. H.

For further discussion of this piece on Three Way Fight, see the "Comments" below and also separately posted replies by Dave Ranney (posted October 2, 2008) and Juan de la O (posted December 27, 2008).

3 comments:

Nick Paretsky said...

With regards to Hamerquist's distinction between two notions of crisis: By "cyclical boom/bust" crisis I presume he is referring to the old falling rate of profit/rising organic composition of capital theory. I think he too quickly dismisses the importance of this kind of crisis in relation to the secular crisis. And the two notions of crisis are not in contradiction (I know he's not saying they are.) There's some overlap with business cycle theory, to be sure, such as the idea of "creative destruction" of capital necessary for accumulation to resume. I know there is much contention among marxists about the validity of this theory, of what it even means. But Marx seems to be talking about big breakdowns of capital accumulation, where massive devalorization of capital occurs, of the Great Depression variety, which become increasingly severe as capitalism develops. (Although admittedly, "big breakdown" is kind of vague.)
"Explosions, cataclysms," "the most striking form in which advice is given [capitalism] to be gone and to give room to a higher state of social production" is how Marx describes, in the Grundrisse (pp.749-750), the crises called forth by the falling rate of profit. "These regularly recurring catastrophes lead to their repetition on a higher scale" (p.750). (Marx also concludes this sentence by saying that the crisis lead to capitalism's "violent overthrow," which can be fairly criticized as being an argument of the automatic collapse/revolution variety.) All this is something I'm not sure is seen as "normal" to capitalism in business cycle theory.
I think it can be argued that there can be a convergence of the falling rate of profit notion with the secular crisis idea. Marx is getting at the notion of there being historical limits to the capitalist mode of production in his description of the progressively worsening character of these crises. Hamerquist says the conventional form of crisis is "self-correcting," but the last big one, the Great Depression, wasn't solved by the normal operation of market forces. It required a world war. Alfred Sohn-Rethel says something along these lines in his book on German fascism. I'm not saying world war is approaching. Rather, more generally, that state power is increasingly required to manage these crises. This overlaps with the aspect of the secular crisis theory that a "strong state" becomes a permanently necessary feature of capitalism to keep the law of value going.
Incidentally, I highly recommend Mike Davis's book, Planet of Slums, which has an account of contemporary capitalism that very much fits the secular crisis notion, at least with regard to mass marginalization. (Although Davis rejects what he calls "silicon determinism," in explaining marginalization.)
Sorry for the very long and academic-sounding post.

Nick Paretsky

Nick Paretsky said...

Holy cow. Just read the post about the redeployment of troops inside the U.S. for domestic counterinsurgency.

Well, anyway: Long-term ruling class strategies in wake of the financial meltdown

The immediate ruling class response is the bailout. There’s been talk in the business press about how the bailout signals the end of the neo-liberal, “free market” policy regime of the last 30 years or so. So far, it just looks like a huge, lumbering state capitalism, without any clear underlying paradigm shift in ruling class policy. But if the bailout is not successful at preventing implosion of the financial system, or even makes the crisis worse, as the Hudson piece argues, major ruling class debates may be in the offing over long-range strategies for managing the system, one issue being the role of the state in economic policy. As has been said many times before by others, their strategies have implications for what leftists do. And divisions within the ruling class can be an opportunity for a mass, radical left movement. (Hamerquist has written in the past about capitalist policy alternatives for dealing the crisis, such as a traditional reformist, social democratic approach vs a conservative “strong state” which intervenes in the economy without a popular, working class base, in the context of his theory of the secular crisis of capitalism.)

It might be useful to map out different positions emerging within the rc on dealing with the crisis, in event the financial meltdown really does require the ruling class to make a break with past policies. Among other things, this means looking at discussions taking place within the ruling class network of policy planning organizations, think tanks, research institutes, foundations, etc, which has played an important role in the past in the formation of state policy. These are organizations like the Council on Foreign Relations, Trilateral Commission, American Enterprise Institute, Business Roundtable, Institute for International Economics, and so on.

For example: Is this another “New Deal moment”? K. Phillips doubts it is, in the American Prospect article cited in the Bill Moyers interview. If this is true, reformist left politics will have tough sledding. But I think some sort of state interventionism is on the rc agenda.

Some rc ideologues are in fact talking in a “New Deal,” “social democratic” vein. They see this as chance to reassert the power of productive capital (industrial capitalists) with respect to the financial sector. NYT columnist Thomas Friedman is a visible spokespersons for this camp. His writings have been cited by some contributors to this forum as important rc statements on globalization. In recent columns he has been advocating the rebuilding of the U.S. manufacturing base using energy conservation and “green technologies.” For example, his Sept 28 op ed, “Green the Bailout.” His proposals are reminiscent of the reindustrialization” idea debated within rc circles during the late ‘70s and early ‘80s, in which the state would channel capital into the retooling of industry and rebuilding infrastructure; this time it is a “green” reindustrialization. I believe Friedman is involved with a number of policy formation organizations representing the internationalist wing of the rc, such as the Trilateral Commission, Council on Foreign Relations, and Bilderberg. So his utterances may reflect the views of a larger grouping within the ruling class, composed of real capitalists with power, and not just newspaper reporters. These would also be capitalists which have ties to specific geographic places, at the same time that they are at the helm of large multinational corporations with operations spanning the globe. This “green” reform program may go nowhere. Reformist policy options may face objective limits in the nature of contemporary capitalism. A “unitary executive” which uses force to restructure capital and society, without reformist “class compromise” politics, may be more likely. But the Friedman program is an example of a ruling class analysis of the crisis which revolutionary leftists should pay attention to.

Having just read the Army News article about a permanent domestic military presence being established under the authority of NorthCom for purposes of controlling “civil unrest,” I am reminded that a lot of ruling class strategizing for general management of the system is now taking place within the Pentagon and the other organs of the National Security State, alongside the older network of “civil society,” “private” capitalist think tanks which formulated and transmitted policy to the State. Mike Davis has said something similar in his writings on “the planet of slums.” I’m also further jolted into realizing that things are heating up and getting closer.

Nick Paretsky

M. said...

Don caught me, and I didn't even realize it: as he suggests, I was improperly conflating "crisis" with "collapse," where in fact these are rightly two very different concepts, even when the former is printed in all capital letters. I find Don's elaboration of the difference between the two to be quite convincing, and it seems to me that my skepticism is better focused on claims of immanent collapse. (I do think that Don is not always clear about distinctions at this level of subtlety, but I take my share of responsibility for this misunderstanding.)

I especially like Don's closing comments on the conflict between the interests of global capital and the continuing function of nation-states, both because this analysis matches my own, and because it offers, as Don indicates, an opening -- however small -- for a revolutionary response. It also speaks directly again to the potential for emerging variants of fascism, including those that are not "white" in any meaningful sense.