Friday 29 February 2008

The Beginning of the End?

Prediction in the social sciences is always a fraught enterprise, and especially so for Marxists. As Dave Osler recently quipped, British Trotskyism predicted 12 of the last two recessions. But this time round, gloom and doom predictions of economic crisis might be on the money. The press has been filled with the dire consequences of the US credit crunch and what it's likely to mean for the rest of us. Bourgeois house journals such as The Economist and the Financial Times are well aware the driver of global growth, the conveyor belt of commodities and cheap credit between China and the USA, is not sustainable in the long term. Fear has sewn the seeds of doubt among the ruling class and some are beginning to look beyond neoliberalism.

The close of neoliberalism is the topic of a recent Compass article by Jonathan Rutherford, where he examines Technological Revolutions and Financial Capital, by Calota Perez. For Perez there have been five stages of capitalism associated with five key technological revolutions - the age of steam and railways; of steel; of electricity and heavy engineering; of oil, the automobile, and mass production; and finally telecommunications and IT.
The first ‘installation' period of each stage lasting three to four decades begins in a state of economic stagnation and falling profitability. The ‘Age of Information and Telecommunications' began in Britain in the 1970s. As the old model of mass industrial production fell into crisis, new information and communications technologies (ICTs) began to revolutionise the generation, processing and transmission of information, turning it into a fundamental source of productivity. Finance plays a crucial role in developing the economic potential of the new technologies. Credit is essential to break the old industrial trajectories and make radical changes. Alongside the rising power of finance is growing inequality and unemployment caused by attempts at rationalisation and the introduction of the new technologies. Economic growth is uneven and wreaks social havoc.
There follows a second ‘frenzy phase' of the installation period. This is the phase New Labour has presided over. A casino economy takes shape, ramping up speculation and financial bubbles, and creating a super rich elite. Individualism flourishes. There is significant levels of migration from poor to rich areas. New markets are created, some old industries are rejuvenated, others wane and die. The productive sphere is restructured . Growing structural tensions in the system make it unsustainable.
Perez says that the transition from the old order to the new requires two or three turbulent decades, after which a recession or depression marks a turning point. This turning point is a time for rethinking and reconsidering, and leads to the ‘deployment period'. Conditions are ripe for political forces to regulate the financial markets, redistribute wealth, and create institutions of social cohesion. Economic sustainability and a politics of individual well-being become feasible possibilities. Alternatively, political forces supporting the status quo can try and reinstate the selfish individualism of the ‘frenzy phase'. Whatever the outcome, the turning point will define the particular mode of growth over the next two or three decades of the ‘deployment period', when the conditions are favourable for the full flourishing of the new capitalist paradigm.
Rutherford asks whether we're now at the point where neoliberalism is disassembling and something new is on the horizon. On the first point, I would agree neoliberalism has become exhausted. As a macro-level capital accumulation strategy it has been successful in generating profits and driving the development of information technologies. But as David Harvey has illustrated in his short book, A Brief History of Neoliberalism, it is socially regressive and decadent. For example growing profits have not been funded by the expansion of the productive forces, but rather by what he calls accumulation by dispossession. The forced enclosures of land, the continued sell off of state-owned assets, the export of jobs, the introduction of markets into public services, and erosion of progressive income tax regimes has redistributed wealth from the poor to the rich. That is to maintain current rates of accumulation and buttress the power of the ruling class, capital has resorted to consuming those very social relations that had sustained it in the near past. By subordinating greater proportions of the social field to market imperatives capital may be undermining its capacity to reliably reproduce itself.

The tide of neoliberalism may just be breaking on its social limits, but it has long been swamping the natural limits of capitalism. Writers such as John Bellamy Foster, Vandana Shiva, Ted Benton, and Derek Wall have noted how the planet's ecology and geology interact with human activity to make possible the existence of capitalist civilisation. But in its amoral pursuit of profit, capital develops the productive forces and pollutes with scant regard to natural systems. Environmental despoliation, generally speaking, is bad news to biological organisms, and therefore is a threat to social organisms too.

All the three main British parties have fully imbibed the common sense of neoliberalism. Initially their response to crisis is likely the creation of new markets - this has certainly been the strategy of the Tories and New Labour up until now. This has framed everything, from solving the "crisis" of the public services to climate change. But there are alternatives. From the debates over carbon emissions a consensus is emerging around the need for international regulatory mechanisms, of a mix between market-based solutions and governmental planning. In other words, a kind of green neo-Keynesianism with more of a global dimension than its post-war manifestation may come to be favoured by capitalist states. Less likely would be a return of social democracy in Britain. As Rutherford notes, this country's dependency on finance and the service economy gives it less room to fall back on hi tech manufacturing as compared with those continental countries who haven't exported their industrial base. But if, in the crisis of declining neoliberalism, class struggle erupts with a greater ferocity than has been the case these last 20 years then British capital could be forced to concede progressive reforms and more state interventionism.

At this stage though there's no sense pretending socialism is on the agenda. The crisis of neoliberalism will present the left with opportunities to organise fresh layers of workers and make the socialist case, and I have every confidence we will manage to do so. But we have to straighten ourselves out now so we're ready for whatever will be thrown up. The recent crisis of the left in Scotland and the splitting of Respect don't exactly inspire confidence in the left's seriousness, but cooperation on the ground and the planned Convention of the Left in September shows the prospect of meaningful and lasting unity isn't dead yet.


blackstone said...

Trots are always claiming capitalism is in a crisis or recession is coming or effect, so i don't think its fair to say they predicted any recessions. :)

Dave Riley said...

Interesting post in New Zealand today:
History calls for a Broad Left party