A Marxist
will return to the movies further on…
CRISIS? WHAT CRISIS?
Although there is not a lot of
competition, one must treat Jeremy Warner with respect as a Daily Telegraph
financial commentator. He has both an authoritative portrait on display in the
paper as well as years of experience in the defence of capitalism from within
that mighty citadel. Nor does he gloss over unpalatable prospects, as in the
headline for his Telegraph article of 20th September 2017: ‘Another
financial crisis is certain. The only question is when and how.’ This is hardly
likely to soothe potential investors.
But is capitalism itself in crisis? That depends on your context. In one
sense all of capitalism is in crisis all the time, not merely on the economic
front but on all fronts of world society. In another sense it is not, so I
believe, as a Marxist, in terminal economic
crisis just now. Perhaps not until the expropriators get a move on. Meanwhile,
let’s have a bit of Shock Doctrine (Naomi Klein, in the sense of a capitalist
pick-me-up). As Warner says: ‘Like flowing water, finance finds a way around
whatever obstructions may be put in place, and creating new hazards,’
suggesting that whatever the hazards, finance will find a way out of new ones
as well. There have been many crises in finance and Warner enumerates them
punctiliously:
- The breakdown of the Bretton Woods fixed exchange regime in 1973
- The UK secondary banking crisis of 1975
- The two oil price shocks of the 1970s
- The UK fiscal crisis of 1976, culminating in an IMF bailout
- Numerous emerging market defaults in the mid-1980s
- Mass failures in the US savings and loan sector, late 1980s/early 1990s
- Various Nordic financial crises, late 1980s
- The bursting of the Japanese stock and property bubbles, 1990
- Various emerging market shocks/devaluations, 1992
- The Mexican tequila crisis, 1994
- The Asian crisis, 1997
- The Russian and LTCM crisis, 1998
- The dot.com crash, 2000
‘Nor did
it end with the Global Financial Crisis of 2008-09. This was quickly followed
by the Eurozone sovereign debt and banking crisis. It is almost as if financial
crisis is now the world’s more natural state.’ Warner has been drawing from ‘a
new analysis by the markets team at Deutsche Bank…’ which received extensive
coverage in the self-same Telegraph Business Section in the same week. Calling
it ‘an old-fashioned view of the underlying causes of this rising tide of
financial instability’, Warner indicates a scintilla of scepticism over all this gloom-and-doom. But the list by
itself makes fairly sobering or joyful reading depending on your point of view,
and it does not seem that Warner is disputing the facts. Perhaps he is dissatisfied
with it because absolutely none of these crises was the doing of workers,
unions or Marxist organisations. They were capitalism feeding on itself.
To a Marxist, Warner/Deutsche provides
a convincing portrayal of an undead system in crisis that thrives on crisis. Derivatives,
after all, make it possible to hedge against almost anything: the steeper the
risk, the greater the profit. We can invest our way through crisis and out the
other side becoming ever richer in the process – as seems to have been the case
with the escalating fortunes of the ‘1%’ since 2008-09. The only problem may be
when the lower-downs become fed up, but presumably they can be relied upon for
internecine war amongst themselves (fascists-versus-reds, Blairites against
Corbynistas, natives against migrants). These battles might even be able to get
out of control if we can continue cutting down on police force numbers. A lawless
state is a rich one. For some – think
‘oligarchs’, ‘drug barons’, the Koch brothers: the USA is making progress here.
Deutsche is worried that spiralling
debt levels, by being nourished through ‘stimulus’ ( quantitative easing and
low interest rates encouraging borrowing) is putting off the ‘creative
destruction’ – a term coined by the great Austrian Joseph Schumpeter – that purges
the weaker capitals and cleanses the system by leaving only the stronger ones
standing. And thus able to continue pursuing ‘destructive creation’ – I borrow
here from Istvan Meszaros. Perhaps this is the ‘old-fashioned’ element Warner
refers to: it is more fashionable to believe these days that massive crises of
a destructive nature overall are a thing of the past.
Warner, seeking an authority other
than fuddy-duddy Deutsche, then cites the Governor of the Bank of England Mark
Carney (who could be more modern and sleek?) who refers to Brexit as an example
of ‘de-globalisation’. Carney acknowledges that Brexit for its supporters is
seen as ‘an opportunity to enhance trade with the rest of the world’. There are
bound to be hiccups before we reach the sunlit uplands, and ‘for a while,
Britain will become a somewhat more closed economy’. Thus, for Warner, Carney’s
cautious words offer a new hope for Britain through Brexit (the Telegraph is,
of course, a vigorous Brexit supporter).
Now, Labour sees Brexit as an
opportunity to introduce legislation, currently difficult under neoliberal EU
law, to re-build the nation’s crumbling infrastructure and bring about
something more like economic equality in a country presently weighed down by an
ever-growing gap between the richest and the poorest. It is here that the
sharp-eyed Warner sees the danger ahead: ‘In itself, the sort of
Brexit-inspired deglobalisation Carney talks of would be very unlikely to
trigger a financial crisis.’ (Three cheers for Brexit!) ‘But mix it with the
hard left policies of Jeremy Corbyn’s Labour, and all the ingredients for a
catastrophic loss of international confidence in the UK economy would be in
place. Brexit and Corbyn together would be a particularly toxic combination.’
In other words, Brexit will only work
if worker exploitation is maintained, intensified and prolonged while social
services, public health and the like go down the drain. Small prices to pay for
profit!
And finally, in Warner’s words, ‘All
Labour governments are eventually destroyed by fiscal and financial crisis.
With Mr Corbyn, it would at least be swift.’
(‘Fiscal and financial crisis’ are code-words for capital flight in the
event of a Labour election victory. Recall Wilson’s complaints about ‘the
gnomes of Zurich.’) So at last we can get a 'Marxist' thing into a discussion of financial crises!
Never mind that Tony Blair’s New
Labour (elected 1997, 2001 and 2005) did not fall through fiscal and financial
crisis by being ‘hard left’. New Labour reached an accommodation with capital, convincing
large sections in it that they would flourish better with ‘moderate’ New Labour
than with the socially-divisive Conservatives. Latterly – when prime minister –
Gordon Brown worked with some success on the international scene to contain the
Great Crisis of 2008-09 – a crisis spawned by reckless lending on a grand scale
that had nothing to do with Labour being in power at the time, since it
originated within banking and other forms of finance in the USA. Unfortunately
through the years when New Labour was courting the City it lost 5 million
Labour voters (and Scotland in 2015). This is a more accurate picture of the
last fall of Labour.
This blog has previously stated that
the plans of Corbyn and McDonnell are no ‘harder’ left than was Clement Attlee
now frequently cited as the most effective prime minister after World War II. The
NHS was created, along with new social services provisions, public housing and
nationalisation, and the stars did not fall from the sky. All these, presumably,
Mr Warner hates and loathes like the plague.
Alas, however, Mr Warner is probably
right. These days a British Brexit fatally compromised over the limitless
expansion of world capital promises domestic hardship, though those now
dependent on food banks and desperate for shelter (where they are not already
spending two-thirds of their income on accommodation alone, as in London) won’t
notice the difference. Those who will notice the difference are those presently
coining it, but numerally more significantly, also those in the ‘squeezed’
middle classes who fear for their small businesses and mortgages in the likelihood
of even gentle rises in prices, taxes and interest rates. Say that Jeremy
Corbyn is as ‘moderate’ as Attlee: the world system is so steeped in crisis
that even modest reforms are seen by such as Warner to be dangerous. These days
David Lloyd George would be too radical to vote for. Did I not say that undead
capitalism thrives on crisis? That is, by vanquishing opposition through fear?
Only via expropriation will capital
ever get a stake through its heart. Until then it can stagger on, spreading
dread within everyone within reach.
More and more people, however, are
becoming politically radicalised, which makes things difficult. Crises for the
1% will become less fun. Brecht may have been right in saying that what those
in power really need are a new people. Perhaps Mr Warner agrees.
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