Marxist Moments

NEWS FLASH

          Daily Telegraph for 6.10.16 (Tim Wallace):

          ‘Global debt record risks economic stagnation.

          ‘IMF report issues chilling prospect of populist politics sending world economy into reverse.

          ‘Global debt has hit a record high of $152 trillion, weighing down economic growth and adding to risks that the economic recovery could turn into stagnation or even recession, the International Monetary Fund has warned.’

          There is also the fear expressed in this report that ‘populist politics’ would reverse globalisation, ‘with protectionist politics hitting international trade, investment and immigration, sending the world plunging into a prolonged period of economic torpor.’

          ‘Recovery’, as always in these financial reports, means the ‘recovery’ of capital profits. There is no way of defining what ‘recovery’ under capitalism would be otherwise. It can’t mean the general well-being of people in a permanent high-wage, high-spend economy since wages are drawn from employers’ profits, and higher profits must invariably come from lowering wages. Low wages mean either no-spend or high personal debt in order to spend.

          If this dependence on labour for profit were not so, why the IMF’s concern for the consequences to business of controls on immigration? The source of profit is the value accruing from unpaid labour time and into which wages make inroads the higher they become. This necessitates drops in wage levels as a given period passes its economic peak. So the cheapest possible labour is needed at this time to get the economy ‘on the move’ again. And that means immigration as a necessary component of the labour market. Meanwhile a problem arises when employers skimp on both investment in more modern and efficient machinery and on labour costs: a decline in the level of productivity. This is happening all over the world and is of major concern to economists. Lower productivity is not mentioned in the IMF report, but it should be, although it is not very clear what can be done in practical, realistic terms to raise it.

‘Recovery’ to the capitalist means the recovery of profits through the lowering of wages, ‘flexibility’ in the labour market (i.e. no secure  jobs), the undercutting of wages through the mass employment of immigrants: hence immigration controls pose a threat to the free movement of labour and thus to globalisation  and the maximising of profit. (And high profiting must be maintained to offset the steady lowering of the overall rate of profit.) The IMF here urges governments to push ‘to keep borders as open as possible’. Unfortunately this invites the wrath of workers fearing that their wages will be undercut by the influx of cheap labour. And with this that it will lower their buying-power even further, not to speak of their job security.

          Capitalism can only come out on top if the world buys back all that it has produced, in capital goods as in direct consumption. But if demand is threatened by the erosion in the real value of wages, then debt will ensue. Debt works its way from individual consumers into businesses that have invested through borrowing and into banks that have loaned. IMF: ‘At 225pc of world GDP, the global debt…is currently at an all-time high. Two-thirds consists of liabilities of the private sector, which can carry great risks when they reach excessive levels.’ Meanwhile:

          ‘The political climate is unsettled in many countries. A lack of income growth and a rise in inequality have opened the door for populist, inward-looking policies’ which make the job of preventing ‘a gradual slide into economic and financial stagnation’ very problematical, to say the least.

          What the IMF doesn’t openly admit, although it more or less states it, is that ‘populist politics’ are not a contributory factor but are the effect of the very globalisation, free-market system that the IMF seeks to save. The political response to ’a rise in inequality’ and to wages deterioration in the restoration of profit is the very reason for the ‘unsettled political climate’ in the first place. Which the urged measures will only intensify. Capitalism is its own worst enemy. There is a disconnect in this latest report between cause and effect. You have this factor here and you have that factor there, but meanwhile you turn a blind eye to how these factors interrelate and create each other. And that is because you are trying to save a system in which the chief barrier to capital realisation and accumulation is capital itself. It is a contradiction. And so only an argument on behalf of a contradiction must be blind to its own logic, or lack of expressing it. Economic and financial commentary from the fundits is not notable for the logic of its analysis because the system is so illogical and irrational that any kind of logic applied to it will take on the mantle of a critique of it.

          Capitalism superseded feudalism because feudalism came to stifle possibilities of economic growth through over-regulation of one sort or another in the maintenance of the feudal order. Over the centuries we have come full circle: capital itself is stifling its own continuing expansion, which is what capital is required to achieve in order to be. Time for a change?