In November 2009, a year into the Great Recession, the lead article in the Guardian Weekly did not hesitate to proclaim that ‘the capitalist dream is dying a painful death’. A year and a half later such excited talk had largely disappeared from the press. Instead, stories suggesting an ongoing economic recovery sat side by side with accounts of Greece’s slide towards default on its national debt, with Portugal, Spain and Great Britain possibly soon to follow. On occasion this double vision appeared in a single story, as in the New York Times piece about the newly instituted Homeless Prevention and Rapid Re-Housing programme responding to ‘a swelling group of formerly middle-class Americans’ who ‘are at risk of slipping permanently into poverty, even as economic conditions improve’.1
Undeniably, economic affairs picked up somewhat in the United States and elsewhere in the course of 2010. To what extent was this simply the expectable result of government stimulus money, following the bailout of financial institutions? This was clearly the case with the massive state-and debt-funded infrastructure projects underway in China, but it seems just as true for the United States, despite the modest level of state expenditure there. The official theory remains the Keynesian one, that once the pump is primed the economy will shift to a higher level of activity, allowing the market once again to work its allocative magic. The flimsiness of this official theory, however, is demonstrated by the constant expression of worry that the cessation of government spending will allow the ‘recovering’ economy to ‘slip back’ into recession. In the same way, and as a warning parallel, it is commonly asserted that Roosevelt’s turn from stimulus to budget-balancing in 1937 nipped a burgeoning recovery in the bud, whereas surely the more straightforward explanation of the recession that followed immediately is that profitability remained too low to stimulate significant investment, a condition temporarily masked by government spending.
Even aside from the problems inherent in growing state deficits, it is as hard today as it was in the past to imagine how further infusions of government debt, aside from helping out the occasional deserving millionaire, would be able to save the world economy. What will the financiers invest in, as they become solvent again? This is the big question that is neither asked nor answered. So far, the chief option seems to be, besides the ‘financial products’ of yesterday’s bubble economy, the bonds representing governments’ growing and unredeemable debt.2 If debt expansion for purposes of speculation could bring prosperity, we’d already be living in a new golden age. Similarly, the re-regulation of finance touted by governments and pundits as a preventive against future financial crises – even if it should go beyond the narrow limits that seem the most likely outcome of the current political brouhaha – will not solve the problem of claims on investment income far exceeding the actual money flowing to meet them, any more than pouring more freshly printed dollars into bank vaults will.
As we saw in previous chapters, the prosperity made possible by the economic and physical destruction effected by the Great Depression and the Second World War was even at its highest point, the late 1950s, insufficient to obviate the need for government stimulus. When the post-war Golden Age came to a definitive end in the mid-1970s, the massive increase in government spending that avoided a return to depression conditions then was another step on the way to today’s increasingly problematic deficits. Government debt was joined by soaring amounts of corporate and private debt, making possible the apparent prosperity of the last two decades. But debt must eventually be validated – repaid – out of money made by the profitable production and sale of goods and services. Instead, the failure of the non-financial parts of the economy to expand sufficiently showed itself in 2008 in the collapse of the whole Rube Goldberg device constructed, under government auspices, out of CDOs and similar ‘financial products’.
Of course, the limits of the post-1970s expansion were there to be seen all along, in the mounting unredeemable debt of Latin America and Eastern Europe, and in the millions of unemployable human beings accumulating in the slums of Africa, South Asia and Latin America, as well as in the former Soviet Union and its satellites, now liberated into the embrace of the free market. According to the UN’s Human Development Report 2004, ‘an unprecedented number of countries saw development slide backwards in the 1990s. In 46 countries people are poorer today than in 1990. In 25 countries more people are hungry today than a decade ago.’3 In 2010 the spectre of mass poverty became inescapable in the richest nations as well: a new Japanese government acknowledged an official 16 per cent poverty rate in that fallen global number two, while growing rates of poverty, hunger and homelessness in the US demonstrated – or would have, if anyone had been interested – the utter failure of the War on Poverty fought in the waning years of the Golden Age. But such phenomena seemed then as now, incomprehensible elements of paradox, given the (business-cycle inflected) growth of GDP and the growing wealth of the minority at the top. Thus Paul Krugman, noting ‘a remarkable disconnect between overall economic growth and the economic fortunes of most American families’ in 2005, found this impossible to explain and pronounced it ‘a mystery’.4
But it is only a mystery if we ignore the centrality of profit-making to the capitalist economy, and the origin of profit in the productive work performed by the employees of businesses beyond the quantity needed for their own reproduction. As far from the observable facts of economic life – the ‘numbers’ reported by economic specialists and journalists – as these considerations are, they are all too well confirmed by recent decades of low investment growth. If in the past it was depression itself that, by cheapening the costs of capital investment, made possible a revival in profit rates and so renewed prosperity, it is not surprising that the debt-fuelled postponement of depression should lead to stagnation, outside of the kingdom of debt, of the financial sector itself (and even here avoiding collapse has required continued infusions of government money and increasing levels of risk). If this way of looking at the economy’s workings is correct – and the whole earlier history of capitalism suggests it is – there can be no real solution to the difficulties so dramatically manifested since 2007 other than the deep depression whose avoidance has been the main goal of economic policy for the last forty years.
Ignoring for the moment both the costs of economic catastrophe in human suffering and the threat this suffering might pose to what the bureaucrats call ‘social cohesion’, it is conceivable that such a development could lead, as in the past, to a new wind for capitalism. Deflation and bankruptcy would, as earlier in history, lower the cost of production goods, while wages would be driven down and further vast quantities of debt written off to lay the groundwork for an increased rate of profit on capital investment. The process described in this short sentence might take decades of turmoil. It would certainly involve a radical reconfiguration of the global economic system, just as the revival of capitalist prosperity that followed the deep depressions of the late nineteenth and early twentieth centuries involved the displacement of Great Britain by the United States as the dominant economic power. A world war was fought over Hitler’s effort to create a unified European economy able to compete with America, and Japan’s attempt to establish a similar power centre in East Asia, goals only realized, under different political auspices and with America’s cooperation, after the war. The ongoing stag nation of the so-called Western economy points to similar geo graphic shifts if capitalism is to continue.
Most commonly this future is currently identified as emerging in China and India. In the excited words of an article for Business Week in 2005,
even America’s rise falls short in comparison to what’s happening now. Never has the world seen the simultaneous, sustained takeoffs of two nations that together account for one-third of the planet’s population. For the past two decades, China has been growing at an astounding 9.5% a year and India by 6%. . . . Barring cataclysm, within three decades India should have vaulted over Germany as the world’s third-biggest economy. By mid-century, China should have overtaken the US as No. 1. By then, China and India could account for half of global output.5
Indeed, in 2010 China overtook Germany as the world’s leading exporter. On the other hand, the Business Week article admits that at the moment ‘China and India account for a mere 6% of global gross domestic product – half that of Japan’. More than half of all Chinese manufactured exports are produced by foreign-owned multinational firms, just as in India multinationals account for two-thirds of all sales in the leading information and computer technology sector.6
China’s growth, in short, remains closely tied to that of the developed countries of the West, even while its importance grows as a regional hub in East Asia, where it now serves ‘as the final processing and assembly platform for a large quantity of imports going from other Asian countries to Western countries through China’.7 India, where the majority of the population still consists of poverty-stricken rural workers, is even further from being an independent economic power. Indeed ‘most of the trade of the Indian and Chinese economies is still in the form of re-exports of finished or semi-finished products or services manufactured by multinational firms which are based in Europe or the US’.8 And in both countries economic dynamism is based on external trade. Contrast this with the case of the United States, where the foundation of economic growth ‘in the years 1860–1920, as in the years that followed, was a vast domestic demand’ and the role of foreign trade was ‘very much reduced’, normally coming to no more than 4 or 5 per cent of GNP, after the Civil War, when America began its climb to industrial capitalist pre-eminence.9
Beyond the current, relatively undeveloped state of these possible future engines of capitalist renewal lies an even more important issue: the size of the existing capital concentrated in America, Europe and Japan, which China – and whichever other of the BRIC nations might emerge as new centres of capital accumulation – would have to drag behind them. Although Business Week speculated breezily about a possible ‘troika of China, India, and the US’, the workers of the Asian countries would have to generate the gigantic quantities of profit necessary to validate investment holdings in the rest of the world, unless the latter were simply to be written off while the restructuring of capital required for a new global prosperity brought even more radical cuts in living conditions and higher long-term unemployment in the West than those now predictable as results of the Great Recession.
Thinking of the future development of the economy in this fashion, in terms of the global accumulation of capital by private enterprises, ignores an important feature of contemporary capitalism already discussed under the heading of fiscal deficits: the increasing part played by governments (and the international organizations that act for them) in economic affairs. Recent decades have seen unrelenting efforts to undo this by privatization, self-imposed in developed countries and imposed by them (through organizations like the IMF) on developing ones. In the United States, to take an extreme example, not only has the mail service been largely moved from government to private corporate hands, but even military defence functions are now carried out to a notable extent by privately hired mercenaries. Of course, the most dramatic privatizations have been those of entire societies: the transformation of the state-directed economies of the USSR and its satellites, and with greater caution, of China, into largely market-regulated systems.10 In the West, even apart from conscious institutional efforts toward privatization, as a useful study of the question notes, there has been an increasing
failure of most governments to discharge those very basic functions for which the state as an institution was created – the maintenance of civil law and order, the defence of the territory . . . the guarantee of sound money to the economy, and the assurance of clear, judicially interpreted rules regarding the basic exchanges of property between buyers and sellers, lenders and borrowers, landlords and tenants.11
At the same time, as this author also points out, the share of GDP appropriated by the state has increased, along with ‘the intrusion of governments into our daily lives’.12 Even while more powers are abandoned by the state to profit-oriented corporations,13 government funds, for instance in various forms of subsidy for favoured areas of business, remain essential to the operation of the economic mechanism. If it is more than an ironic turn of phrase to speak of a privatization of the state itself, as it becomes increasingly both a form of enterprise for the enrichment of its practitioners and one devoted to the servicing of dominant economic interests, it remains true that those funds represent a cost to the capitalist economy of which they have become a fundamental part.
The difficulty of lowering these costs testifies to an important fact about the evolution of society since the Great Depression: the inability to discharge state debts and the difficulty of dismantling the welfare state register the decline of the private enterprise economy as a system. Despite its dynamism and the gigantic increases in the productivity of human labour that it has achieved since the early nineteenth century, and despite the disappearance of political and social barriers to its spread in the course of the twentieth, capitalism has not been able to generate the quantities of profit required to incorporate much of the world’s population into its modern industrial form. Instead, more and more profit must be diverted from capitalist purposes to feed the starving, attempt to pacify the rebellious and manage the insufficiencies of accumulation even in the developed countries. The very idea that companies like AIG, the Bank of America or Citicorp are ‘too big to fail’, and must be supported by government funds, amounts to a declaration of the failure of the market economy. Competition was supposed to eliminate inadequately managed firms, leaving the most productive (of profits) to prosper and thereby (according to the economists) optimizing social well-being. Blocking competition’s operation amounts to admitting in practice the obsolescence of capitalism itself, just as the replacement of profitability by national income as central to economic theory represents a conceptual accommodation to this situation.
The masters of capital could, of course, act on the talk about balanced budgets and return to a strictly capitalist economic policy, instituting a true privatization. But they have not dared to do this in the period since 1945, both because of the institutionalized involvement of the state in capital as presently constituted and, in many countries, for fear of uncontrollable popular responses to the mass misery that would produce. An extreme example is provided by the neoliberal policy, guided by the anti-Keynesian theories of Milton Friedman, imposed on the Chilean economy after the military overthrow of the Socialist government in 1973: radical cuts in public spending and mass privatizations rapidly produced an economic contraction of 15 per cent and a rise of unemployment from 3 to 20 per cent. In 1982, facing hyper inflation, exploding debt and 30 per cent unemployment, and despite its police-state powers, the Pinochet government (like its sponsor to the north at the same time) was forced to ignore ideology and nationalize many newly created private companies (Codelco, the state-owned copper producer that provided 85 per cent of Chile’s export revenues, had never been denationalized). Today as well, efforts in the direction of fiscal discipline have run into barriers both in the form of large-scale public protest and in that of the de facto dependence of the economy on a certain level of government spending. Despite the incoherence of the resulting policy moves, however, the working-class majority will pay for whatever mix of stimulus and respect for market freedom governments decide upon, with lower wages and benefits or greater unemployment – in fact, as we can already see, it will be with both.
According to the 2009 OECD ‘Employment Outlook’, the recession had already driven the unemployment rate in the OECD area to 8.5 per cent by July of that year (Spain registered the highest rate, at 18.1 per cent), ‘the steepest increase in the post-war period’. According to the same document, ‘people 54 or younger are losing ground financially at an unprecedented rate’, with youth unemployment a particular problem: the OECD predicted that the rate for workers between 15 and 24 years old would rise in Spain to nearly 40 per cent by 2010, in Italy and France to about 24 per cent, and in the UK and US to around 18 per cent.14 As the New York Times noted early that same year, potential Asian ‘smugness at having escaped losses on American subprime debt has been erased by growing despair over a plunge in sales among major exporters’, leading to sharp increases in unemployment in Japan, China, Taiwan, Indonesia and other East and South Asian countries.15
But more significant for an understanding of the future is the likelihood, forecast by the OECD study and other analyses, that the jobs, benefits and social spending being eliminated during the recession will not come back, even with the expected recovery. Speaking of the American situation in particular, Don Peck began a long, gloomy article in The Atlantic by noting that while ‘the Great Recession appears to be over . . . [a] return to normalcy seems far off’, with unemployment not expected to fall from its current official (and certainly understated) rate of 10 per cent even by 2014. And Peck was reporting the expectations of economists, with their deep-rooted belief in the essentially upward dynamism of the market economy.16
Journalistic shock at the advent of long-term significant unemployment reflects lack of acquaintance with earlier recognitions of the phenomenon, in the wake of the end of the Golden Age. As a specialist on the topic observed more than a decade ago, the ‘perceptible rise in unemployment in the mid-1970s marked the beginning of a new phase’ in which ‘elevated unemployment rates are the reflection . . . of the definite decline of the epoch of full employment’.17 The editor of the collection of studies in which this observation appeared introduced it by remarking that ‘unemployment rates have come to depend only partly on the economic cycles’, with the 1980s demonstrating that under current circumstances ‘economic growth can go hand in hand with high unemployment’.18 As a result, unemployment has come to be, to use Enrico Pugliese’s word, ‘nonexceptional’. ‘The novelty is that people today have learned to live with unemployment rates of 10 percent and in some areas – indeed, sometimes vast areas – with even higher rates’, so that high unemployment does ‘not necessarily produce socially critical situations’, as in the 1930s.19 This is, of course, due not only to the long-term continuance of the situation but also to the buffers against privation furnished by government programmes, along with the fact of larger family incomes, which can cushion the blow of individual job loss.
Now it seems that American workers are going to experience the steady high joblessness that Europeans have known for 30 years, with a rather lower level of government assistance than in most European cases. Will this state of affairs become ‘the new normal’, as it seems to have in Europe in the recent past? As the OECD Employment Outlook noted in the 2009 report:
Most countries have scaled up resources for labour market and social policies to support the rapidly growing number of unemployed, but additional funds are often rather limited and governments are facing difficult choices on how best to respond to the different demands.
Long-term, structural unemployment has now intersected with the return of large-dimension cyclical crisis, at a time when the choices imposed on governments by their over-stretched budgets lead more and more to the dismantling of social safety-nets and cuts in state employment. The result has already been ‘protests in countries as varied as Latvia, Chile, Greece, Bulgaria and Iceland, and . . . strikes in Britain and France’,20 not to mention China, the current world centre of labour unrest. These protests have taken different forms, involving greater or lesser degrees of control by political-party and trade-union organizations, for instance, and different levels of violence, and have posed varying levels of threat to the existing political system. They are all indicators of the unpredictable consequences of further moves in the direction of austerity.
Such events recall the social struggles of the 1930s, when even the relatively apolitical United States saw groups of the unemployed, sometimes mobilizing large numbers of people, taking direct and on occasion violent action to prevent evictions or loot grocery stores and distribute food, as well as demonstrating nationally and locally for government relief and supporting strikers by manning picket lines (American employers found it remarkably difficult to recruit strikebreakers even at the height of the Depression).21 Nevertheless, as an observer and analyst who was himself an unemployed worker and activist in the 1930s has observed, ‘despite the enormous unemployment the movement of the unemployed did not succeed in giving rise to real mass organizations or in activating the masses of jobless people for a long period of time, or in transforming their often spontaneously erupting expressions of dissent into political actions in the style of the labor movement’.22 Most significantly, the social struggles in the rest of the world were no more than in the United States able to counter the drive of the dominant nations’ ruling classes towards a new world war.
On the other hand, as the author just cited also contends, ‘the story is fundamentally different when the misery of unemployment is accompanied by the rapid growth of general misery’.23 An interesting recent example is to be found in the social movements that broke out in Argentina in 2001, when the working class – and much of the population as a whole – rejected the austerity imposed on them by the IMF in response to an extreme sovereign debt crisis. Unemployed organizations played an important role in driving successive governments from office.24 But their activities took their significance from the context of a general social collapse, involving such radical measures as workers’ seizure and operation of enterprises deserted by their owners. Such events, while isolated elements of the unfolding of the socio-economic disaster of which the Great Recession is the latest and so far most serious instalment, evoke the history of attempts to forge new social structures of production and distribution that in the not so distant past seemed to be part of a unified phenomenon that called itself the Left.
The development of capitalism since the nineteenth century has involved (as Marx long ago predicted it would) the continuing transformation of the labouring population in every area of the world into wage-earning employees of capitalist firms. Although the ups and downs of the business cycle brought sometimes improvement, sometimes worsening of their working and living conditions, capitalism, given its foundation on the extraction of profit from the productive activities of workers, continually reproduces a basic conflict of interest between the working and employing classes, a conflict more recently accompanied by ecological and military threats to the continued welfare and even the existence of the human race as a whole. But the social movements and organizations that once competed or cooperated to shape that conflict into a struggle to abolish capitalism and create a new form of society in which productive labour would be free from exploitation are largely gone.
The Left that began with industrial capitalism in the 1800s, grew through the nineteenth century and reached its greatest development during the first quarter of the twentieth, no longer exists. This fact has been given recognition under many different descriptions: as the ‘end of ideology’, and the supposed disappearance of class as a social principle, celebrated by American sociologists in the 1950s; as the advent of ‘one-dimensional man’ lamented by prominent voices on the left in the late 1960s; in a particularly muddled fashion, in the 1980s, as ‘post-modernism’; after the fall of Communism in the intellectually weaker form of the ‘end of history’. However it is described, it is obvious that the old organizations of the Left, both larger political parties and smaller, generally more radical sects, have lost all significance as agents of social transformation, and that even the ideologies and slogans of the past have decreasing purchase on people’s imaginations.
It used to be believed – this was the first great idea of the Left – that capitalism inevitably produced a working-class opposition to the system as such. Some saw this opposition as arising on moral grounds, as a response to the obvious injustices of capitalism. A more convincing idea was Marx’s: he saw capitalism as a social system inherently at odds with itself, as the mechanism of money-mediated market exchange geared to the institution of private ownership of productive resources and the competitive extraction of profit clashed with the increasingly social character of production and distribution, most visible when the very success in raising the productivity of labour led to economic crisis and depression. Taking as a model the revolutionary transformations of the seventeenth and eighteenth centuries that established the social and political dominance of capitalism, he thought in terms of a conflict between the existing system, in which institutionalized social power was held by the owners of capital, and a future system of consciously socialized production existing embryonically ‘within the shell’ of the present. This conflict would be given conceptual form in the political consciousness of ruling class and rebellious proletariat. It would be given institutional form in working-class organizations that would ultimately contest social power with the capitalist state. As the evolution of the economic system took it from crisis to crisis, these organizations would finally be led by the experience of periodic immiseration and continual exploitation to transform themselves from structures of resistance to agents of revolution.
The idea of organization was the second great idea of the Left, shared by all ideological factions. It was embodied variously in the social-democratic party, linked with great trade unions; in the anarchist ‘syndicate’ or the One Big Union of the American IWW; and in the elite sect, called by history to manipulate and lead the masses of workers, common to Bakuninist anarchism and Leninism. The validity of this idea seemed visible in the spread and growth of working-class parties and unions. It was not hard to believe that struggles for reform could develop into an effort to overthrow the system as a whole, just as May Day, originally the date set in the United States for demonstrations for the eight-hour day, quickly became an international revolutionary holiday. History seemed to be moving towards the abolition of bourgeois society, as a result of its very growth; this was held by many to be visible in the transformations of capitalism itself in the direction of centralization and concentration of capital, the separation of ownership and management, and the attempt by huge national and international economic units to control aspects of the market, taken by some to pre-figure the democratic regulation of the economy to come.
The illusory character of this picture was indicated by the First World War, when giant socialist organizations, fresh from pledges of international class solidarity, plunged into the war effort. This miserable debacle demonstrated that traditional workers’ politics had turned out to be not a harbinger of the overthrow of capitalism but an aspect of its development, fulfilling the need for the normalization of a new mode of social relations by way of organizations capable of negotiation and compromise. It foretold their disappearance as elements of a Left in the course of the twentieth century, when the developmental phase in which they had their place – roughly, that of the initial growth of the free-enterprise system – came to an end with the growing need for state intervention.25
And still, the war led to revolution, in Russia, Central Europe and even in Germany, the heart of the workers’ movement. These uprisings, which ended the war and threatened the radical restructuring of society, were rapidly crushed. In Europe, this was a result of the war-weary majority’s unwillingness to engage in the violent defence of their interests against governing authorities; in Russia, the party dictatorship that took on the task of modernizing an underdeveloped country quickly destroyed attempts at working-class self-rule. Revolution had no place in a North America just rising to the summit of world economic power (though even here the 100,000-strong Seattle General Strike of 1919 ‘was seen, by both participants and opponents, as part of a process through which workers were preparing themselves to run industry and society’26). Yet the radically constructive activities unleashed by the disaster of the war, however short-lived, showed the independence of the revolutionary impulse from the traditional political and trade-union structures.27
The collapse of the world economy into massive depression a decade later led not to revolution but to a new world war, which as we have seen opened the way to a new period of capitalist expansion. In this process what had remained of the Left was swept away: into the politics of the welfare state, into sectarian insignificance or into some combination of one (or both) of these and service to the needs of the Russian state. The year 1989 brought the final disappearance of the illusion of opposition to capitalism supported by the last of these. Today, surviving elements of the Left are recognizable in such phenomena as the efforts of the Greek Communist unions to maintain a place for themselves on the political scene by controlling and channelling working-class protest, or the attempt to base a meaningful parliamentary organization in Germany on remnants of the old East German Communist Party, but nowhere do they present themselves as the potential founders of a new social world. In most countries, ‘Left’ has come to mean simply those political forces advocating Keynsian and income-distributed policies; and today even this wretched remnant of the historical Left is reaching its limits. In the course of this evolution, the United States, whose lack of socialist and labour movements was for so long a puzzle for commentators, has come increasingly to seem not exceptional but a precursor of today’s capitalism without a Left.
The transition to capitalism, the shock of which on earlier modes of life helped give rise to the social movements of the nineteenth century, has been accomplished in much of the world. This system appears now, where it is well implanted, not as trampling on ancient ways and rights but as itself a natural order. What was once claimed polemically by Enlightenment philosophers like Adam Smith – that man is by nature a marketing animal, that individuals are endowed by their creator with inalienable individual rights to privacy and property, that with the achievement of a society based on market relations history would have reached its goal and would come to an end – has by now entered into the general consciousness as self-evident truths. Though people are as aware as ever that they live in a class society marked by oppression and exploitation, this is perceived as the natural order of things, alternatives to which appear as impossible dreams.
But although today’s capitalism is in many ways a much transformed version of its nineteenth-century self, this transformation, as the Great Recession is here to remind US, has not brought an abatement of the systemic problems diagnosed in that century. If anything, the crisis looming before us is likely to be more terrible than the Great Depressions of 1873– 93 and 1929–39. The continuing industrialization of agriculture and attendant urbanization of population – in 2010, it is estimated, more than half the earth’s people have come to live in cities – have made more and more of the population dependent upon the functioning of the market mechanism to supply them with food and other necessities of life;28 the existence on or over the edge of survival experienced today by the urban masses of Dakka, São Paulo and Mexico City will be echoed in the capitalistically advanced nations as unemployment and government-dictated austerity afflict more and more people not just in the developed world’s Rust Belts but in New York, Los Angeles, London, Athens and Prague. And let us remember that, as we have seen, the rapidly developing crisis of sovereign debt suggests that the Keynesian card, as even a temporary solution to the problems of capitalism in crisis, has already been largely played. The new circumstances in which humanity will have to deal with capitalism’s afflictions include the exhaustion of one of the main methods capitalism has found to deal with its difficulties, underlining the disappearance of the Left.
Left to its own devices, capitalism promises economic difficulties for decades to come, with increased assaults on the earnings and working conditions of those who are still lucky enough to be wage earners around the world, waves of bankruptcies and business consolidations for capitalist firms, and increasingly serious conflicts among economic entities and even nations over just who is going to pay for all this. Which automobile companies, in which countries, will survive, while others take over their assets and markets? Which financial institutions will be crushed by uncollectable debts, and which will survive to take over larger chunks of the world market for money? What struggles will develop for control of raw materials, such as oil or water for irrigation and drinking, or agricultural land? All governments attack protectionism today (or at least they did yesterday) and call for mutual support and free trade, but in practice even a relatively integrated economic union like Europe is breaking down under the strain of divergent interests, while yester year’s globalist cheerleaders today solemnly intone the need to Buy American.
Capitalism exists today as a world system to an unprecedented degree, especially since the breakup of the Soviet empire and the integration of the formerly centrally planned economies into the world market. Largely escaping the control of national governments, massive flows of money for both investment and speculative purposes link the fate of national economies. While this has strengthened capitalism as a system, that is internationally minded given its basis in the drive to expand money holdings by any means possible, it also means that serious problems for the system’s institutions are rapidly transmitted around the globe. Any solutions to the difficulties capitalism creates for itself will likewise have to be international.
War is the traditional means to find such solutions. Will the world’s people be willing to march off to war again, as in the last great crises, to secure better terms for national business interests? Europeans, whatever their governments may be planning, show every sign of having finally learned their lesson in this regard,29 while the American popular acquiescence in war seems to have been weakened by the series of defeats and stalemates suffered in Korea, Vietnam and Iraq, and soon to be experienced in Afghanistan. Nonetheless, war continues to be a daily fact of contemporary capitalism, accounting for a major part of government budgets, and in one way or another shaping the economic, social and political existence of the global population.
Gloomy though such considerations are, they leave out two paradoxically related factors which promise further dire effects for the future of capitalism: the coming decline of oil as a source of energy and the global warming caused by the consumption of fossil fuels. ‘Despite massive investments in new technologies of oil discovery and recovery’, a student of the fossil-fuel system points out, ‘conventional oil production [in] non-OPEC countries has been steadily falling for the past decade or more while the large OPEC producers have been unable in recent years to significantly boost their own production’.30 This is an extremely serious matter, as fossil-fuel-based technologies have been at the heart of capitalism’s expansion as a social system since the industrial revolution of the turn of the nineteenth century. It was first coal and then oil that fuelled the mechanization that raised the productivity of labour in both agriculture and industry to historically unprecedented levels and so made possible the profit to be accumulated as an increasingly massive stock of capital. Today more than ever
Global energy inputs play an absolutely key role in keeping this vast array of machinery, transport systems, computers, lights and electricity grids going. Without a constant flow of such energy capitalist accumulation would grind to a halt.
It should also not be forgotten that oil and natural gas byproducts ‘are used as a feedstock in a wide variety of consumer goods, including synthetic clothing and plastic household goods, and also for a range of industrial applications as well as for power generation’,31 not to mention synthetic fertilizers and pesticides central to contemporary agriculture.
The failure seriously to address the problems implied by such facts is due in part to the technical difficulty of finding new sources of energy: most of the world’s hydropower resources have already been developed; nuclear power is expensive to develop, limited by supplies of uranium and produces highly toxic waste; and the ‘sources of energy that are seen as the foundation of the new “green economy” – wind power, geothermal, biofuels and photovoltaic solar energy – account for a mere 0.3 per cent, 0.2%, 0.2%, 0.04% respectively of world net energy production’.32 It is due also to the short-term, profit-oriented nature of capitalist planning. The current economic slowdown itself, by causing a decline in oil consumption, has lowered oil prices and so both driven smaller producers out of business (notably in the US, where 20,000 oil industry employees lost their jobs in the year after 2008) and discouraged the investment required to bring new sources into development. It is clear that future generations, and that future is not too distant, will be faced with increasing difficulty in maintaining the flow of energy needed by capitalism’s industrial mode of production. In the long term, this guarantees a declining productivity of labour unless – and perhaps even if – the whole system of production and distribution of goods is radically restructured. In the meantime, we can expect potentially destructive struggles among existing and emerging industrial economies for control of fuel supplies, such as the ongoing and so far inconclusive conflict over the particularly rich and relatively undeveloped oilfields of Iraq.
Maintenance of the existing energy regime, and increasing use of highly polluting fuels like coal and tar-sand oil as access to high-quality oil declines, will only exacerbate the ongoing climate change now generally accepted as caused by co2 emissions. Anthropogenic climate change is the result not of something as general as ‘human activities’ but specifically of capitalist economic growth. Population increase as such, for instance, has no statistically discernible effect on atmospheric concentrations of CO2, but there is strong ‘evidence that the annual increase in [world] GDP has a statistically significant and practically important effect on the annual change in co2 atmospheric concentrations’; specifically, ‘a trillion dollars increase in WGDP raises CO2 concentrations by a quantity of about half a [part per million]’. Thus the growth of WGDP ‘is currently an index of the extent to which economic activity damages the environment’.33
But even if continuing stagnation should slow greenhouse gas-caused climate change, the damage already done is extremely serious; a soberly informative account by a journalist not given to exaggeration was called Field Notes from a Catastrophe.34 The melting of glaciers threatens not only Swiss views but the water supplies of whole populations in such areas as Pakistan and the Andean watershed; droughts have ravaged Australian and Chinese agriculture for years now while floods periodically devastate the low-lying South Asian homes of tens of millions of people. The rolling parade of disasters is, unfortunately, only getting started; it will accompany a stagnant economy and only be exacerbated by a return to true prosperity.
What both of these ongoing social stresses promise is that the decline of the economy, however cyclically inflected, will simply be the lead-in to a crisis of the social system as such, which, because it is based on the laws of physics and chemistry, will transcend strictly economic issues.35 If the peaking of oil supplies and the catastrophes of climate change do not provoke a major transformation of social life, then it’s hard to imagine what could. This idea may seem unreal today to those of us who still live for the most part in what remains of the material prosperity wrought by postwar capitalism, much as the misery and terror of the inhabitants of war-torn Congo are hard to grasp for the inhabitants of New York or Buenos Aires. But this demonstrates only imagination’s weakness, not the unreality of the challenges in store for US, as local disasters like the flood of oil that poured out from BP’s drilling rig into the Gulf of Mexico in 2010 will perhaps make it easier to understand.
The biggest unknown in contemplating the future of capitalism is the tolerance of the world’s population for the havoc that this social system’s difficulties will inflict on their lives. That people are able to react constructively in the face of the breakdown of normal patterns of social life, improvising solutions to immediate problems of physical and emotional survival, is amply demonstrated by their behavior in the face of disasters like earthquakes, floods and wartime devastation. Charles E. Fritz, who as a captain in the US Army was stationed in Britain during the Second World War, studied the reactions of German civilians to the terror bombing of German cities by the Allies and in 1950 became associate director of the University of Chicago’s Disaster Research Project. In his writings Fritz emphasized the socially and psychologically positive reaction of people to disasters, observing that:
The widespread sharing of danger, loss, and deprivation produces an intimate, primarily group solidarity among the survivors, which overcomes social isolation, provides a channel for intimate communication and expression, and provides a major source of physical and emotional support and reassurance . . . Disaster provides a form of societal shock which disrupts habitual, institutionalized patterns of behavior and renders people amenable to social and personal change . . . People see the opportunity for realizing certain wishes that remained latent and unfulfilled under the old sysytem . . . [such as] the possibility of wiping out old inequalities and injustices.36
Observing that the ‘traditional contrast between “normal” and “disaster” almost always ignores or minimizes [the] recurrent stresses of everyday life’, Fritz recognized ‘a historically consistent and continually growing body of political and social analyses that points to the failure of modern societies to fulfill an individual’s basic human needs for community identity’.37 As Rebecca Solnit, who rediscovered Fritz’s work in the course of her own studies of people’s reactions to disaster, observes:
An economic disaster is on the face of it not at all like a natural disaster. What has been wrecked is immaterial and abstract, but its consequences are more than tangible: it creates hardships, even emergencies, upends everyday life, throws people together in unexpected ways, changes their status, and often prompts them to take collective action.38
It is clear that people are going to have adequate opportunity to explore such possibilities in the near future, if they wish to better their conditions of life in the concrete ways an unravelling economy will require. While at present they are still awaiting the promised return of prosperity, at some point the newly homeless millions, like many of their predecessors in the 1930s, may well look at foreclosed, empty houses, unsaleable consumer goods and stockpiled government foodstuffs and see the materials they need to sustain life. The simple taking and use of housing, food and other goods, however, by breaking the rules of an economic system based on the exchange of goods for money, in itself implies a radically new mode of social existence.
The social relation between employers and wage-labourers, one that joins mutual dependence to inherent conflict, has become basic to all the world’s nations. It will decisively shape the ways the future is experienced and responded to. No doubt, as in the past, workers will demand that industry or governments provide them with jobs, but if the former could profitably employ more people, they would already be doing so, while the latter are even now coming up against the limits of sovereign debt. As unemployment continues to expand, perhaps it will occur to workers with and without jobs that factories, offices, farms, schools and other workplaces will still exist, even if they cannot be run profitably, and can be set into motion to produce goods and services that people need. Even if there are not enough jobs – paid employment, working for business or the state – there is plenty of work to be done if people organize production and distribution for themselves, outside the constraints of the business economy.
Such vast alterations in social relations would naturally en counter resistance from those who economically and politically dominate the existing system. They have concrete powers and privileges to lose, even if in a general way the end of capitalism would ultimately improve life for all. (‘In the long run’, as Keynes famously observed, ‘we are all dead’.) Rebecca Solnit, in her study of reactions to disaster, notes the recurrent opposition of state authorities to citizens’ efforts to organize mutual aid in the face of disaster. Even when the goal is simply survival, and not the radical transformation of society, governments send in police and military forces to prevent the elaboration of grass-roots self-help organizations. As in totalitarian states, so also in democratic ones the formation of popular authorities poses an immediate threat to the powers that be, however limited the ambitions of the people concerned. Threats to the economic order will certainly be met with repression, going beyond the military and police violence already mobilized in recent years against anti-austerity demonstrators in Athens, striking government workers in South Africa, students in London and elsewhere and the growing number of activists produced by brutal employment conditions in China.
On the other hand, the ‘other world’ whose possibility poses such a threat to the rulers of the present one is not just a nice idea, but has a real basis in the existing social system. In the world capitalism has created, as Adam Smith pointed out in 1776, when it was just getting under way, the well-being of each individual is systematically dependent on the activity of others. This web of interdependency now operates through the market exchange of goods for money, but it exists equally in the very mechanics of a system in which production technologies require steady flows of raw materials, energy and workers from other units in the system to produce vast quantities of goods and services for what is ultimately a global mass of consumers. What nineteenth-century social visionaries called the ‘commonwealth of labour’ actually exists; but this existence is obscured by the network of market exchanges that both duplicates and obscures the physical system of production and distribution.
When the financial shit hit the fan in late 2007, everyone with access to the media, in the United States at least, from the President to left-wing commentators like Doug Henwood of the Left Business Observer, agreed that it was necessary to save the banks with infusions of government cash lest the whole economy collapse. But, aside from the fact that the economy declined into depression anyway, the opposite is closer to the truth: if the whole financial system fell away, and money ceased to be the power source turning the wheels of production, the whole productive apparatus of society – machines, raw materials and above all working people – would still be there, along with the human needs it can be made to serve. The sooner people come to understand this, the better, because confronting the disasters inherent in long-term economic stagnation, or worse, especially in combination with ecological catastrophes, will eventually require no less than the construction of a new system for producing and distributing goods and services.
In relation to such possible developments, there is a positive aspect to the disappearance of the Left historically; Left organizations, seeing their own existence and influence as central to the success of any revolutionary struggle, typically obstructed the exploration of new ideas and modes of action by activated masses of people. But, in any case, the main forms of organized Left activity – the parties, unions and radical sects that had roles, sometimes important ones, to play in the development of modern capitalism – have lost those roles. People will therefore have to develop new forms of organized activity, if they are to respond to the ongoing collapse of capitalism by constructing a new social system. Nineteenth-century names like ‘socialism’, ‘communism’ and ‘anarchism’, tied to the now-defunct Left whose inspiring visions have been historically entwined with conceptual in adequacies and institutional monstrosities, may no longer be useful for naming this new system, the other world anti-globalist protesters call for, which is as necessary for human welfare as it is possible. Whatever it is called, it will need to begin by abolishing the distinction between those who control and those who perform the work of production, by replacing a social mechanism based on monetary market exchange (including the buying and selling of the ability to work) with some mode of shared social decision-making adequate to a global economic system. Even if the economic difficulties inherent in capitalism would thus be obviated, the ecological problems capitalism has created would of course remain, requiring full application of the creative human energies a radical social transformation would unleash. But it is clear that the precondition for a desirable human future requires us to move beyond the increasingly dysfunctional system, subordinated to the imperative of private profit-making and capital accumulation, through whose most recent crisis we are now living.