Sunday 21 February 2021

Late Capitalism, the Tories, and the State

In Ernest Mandel's Late Capitalism, his chapter on the state makes some interesting observations. In a quick overview of the then state-of-the-art (remember, the English edition was published in 1975), he argues Marxism has thoroughly analysed the two dominant aspects of the state. Its repressive character was explicated by the likes of Marx, Lenin, and Luxemburg, and people like Lukacs and Gramsci were responsible for theorising the state's articulation of the politics of persuasion and consent. An authoritarian state resting on force of arms only is a naked state, and not as well protected as it might think. Mandel then goes on to note a third characteristic of the state: the part it plays in the general maintenance of production. This comes in two flavours: the reproduction of the technical basis of the society, and then the social conditions (preservation of markets, the currency, wage labour, etc.). The state is also largely responsible for the training of the increasingly important intellectual labour that makes its reproductive strategies possible.

To cut a long chapter short, this third characteristic of the state has grown in importance over time. Its assumption of more social responsibility is a consequence of rising social pressures from mass democracy and the strength of labour movements, and social necessity. The provision of social security is beneficial to capital-in-general, despite efforts made by the right to force the floor lower. However, because the state does control social spending, is the first line of crisis management, and the guarantor of capitalist relations of production the owners of capital have a collective interest in its policies and strategies. Because of the separation of politics from economics, underlined by the hidden character of exploitation, the state has a certain autonomy, and the development of the state in the post-war period only saw this freedom grow more expansive. But the autonomy is only relative, which leads Mandel to ask the simple question: how adequate is it as an instrument of the bourgeois interest?

This "guarantee", which our late comrade Ed Rooksby was interested in was, for Mandel, a complex of relationships: capital's economic dominance over the state in terms of credit supply, capital mobility (and the threat of capital flight), financial relationships to the governing parties, the bourgeois backgrounds/integration argument around decision-making state personnel (the old Ralph Miliband argument), and, crucially, the overlooked behind-the-scenes relationships between politicians, the civil service, and capital.

These relationships assume greater importance in the age of liberal democracy. Mandel suggests in the 19th century legislative bodies served well for the clearing houses of competing bourgeois interests, and the limited/managed democracies of the time ensured the state's autonomy was kept within certain parameters. But the rise of labour, social democratic and later, communist parties meant parliaments grew to be dominated by issues around population management and demands from below. With this declining efficacy of official politics for determining common bourgeois interests, new axes of articulation outside of politics became more important. As, simultaneously, competition passed over into monopoly and capital concentrated into fewer and fewer handfuls of firms, the formalities of democracy were bypassed and direct relationships between the key decision makers in the state - government politicians and top civil servants - increasingly became the norm. Mandel here singles out the importance of lobbyists. These organisations, whether independent businesses in their own right or wholly-owned subsidaries of multinationals speak directly to government about their interests and offer inducements/bribes/favours to get them looked after. The revolving door between the Cabinet, boardrooms and lucrative consultancies shows this remains the case. Another avenue was the virtual fusion of offices of state with large companies. It is routine in the British system, for example, to not only have staff seconded to key politicians from big firms, but for them to fund the think tank research, input directly into policy, undertake reviews on government's behalf (a favoured tool of Margaret Thatcher's), take over functions via outsourcing, and so on. And while politicians will come and go, the permanent cadre of decision-making civil servants remain and with them the direct line to big business.

This is pretty much the common sense when it comes to Marxist approaches to the state, so what's the point of disinterring it now from Mandel's famous if, nowadays, little read book? It was this centralisation and bypassing of formal politics that interested me. Since 1975, the politics landscape has shifted. Neoliberalism was a fringe idea, though its foregrounding had been present for years, and the labour movement was, arguably, the rising power in the land. An ocean's worth of difference separates 2021 from 1975, yet the core argument offered by Mandel about the withering of official politics has remained a constant throughout this time, regardless of Prime Minister, regardless of party. Yet, since 2015, establishment politics has been in profound crisis. For an interregnum of four years, capitalist realism suffered a major defeat in the Labour Party. To all intents and purposes the Liberal Democrats were destroyed. The British state faces the real prospect of losing Scotland. Brexit won and has damaged the soft power of the state and its class on the world stage while compounding the country's economic decline, and the Tories have proven disastrously short-termist and serially, structurally incompetent. And this is without the recklessness of the May/Johnson governments on Brexit and the ticking time bomb of long-term decline.

Is there something deeper to the question of the overt authoritarian turn in Tory politics since May took over? As discussed here a fair few times, the neoliberal governments from Thatcher onwards have used the state to smash opponents to impose its normative imaginary and the insitutional relationships supporting it. This involved gutting civil society, centralised strategic governance in government and, perversely, rendered the Prime Ministerial position more vulnerable and accountable as the decision-maker in the last instance. Too many questionable decisions and failures, authority evaporates and they're done. Such has been the case of each occupant of Number 10 since Thatcher was forced from office. It stands to reason Prime Ministers since are obsessed with preserving this authority, which handily explains Boris Johnson's behaviour since entering office. Might Mandel have something to add to this?

Possibly. Given the recent crisis, the splits in capital, the dysfunctionality of the Tories, and the Corbynist reminder that Labour is always suspect from the standpoint of bourgeois interests, no matter how right wing it gets, might this have spurred more articulation of those extra-parliamentary avenues of influence along Mandel's lines? I.e. A closer reationship between offices of state and offices of CEOs? This is a question requiring further investigation. For example, is the (ostensible) roll back of NHS marketisation an application of the "what works" principle, or a power grab by Matt Hancock consistent with Tory statecraft, or is there an added layer of serving up sections of the NHS to the party's backers on an even less transparent basis than the market nonsense of the 2012 Health and Social Care Act? Additionally, in the context of Covid-19, the government's losses in the courts, and the egregiously corrupt handing out of procurement and supply contract, is this the usual cronyism or symptomatic of the bypass of formal politics? It's one thing to point out the business pushed disproportionately to Tory donors, but how many of them lobbied government and made use of informal channels. Quite a few if mates of Dom (remember him?), mates of Hancock, and other friends of friends are walking away with lucrative deals.

The evidence is anecdotal, and we'll have more once Johnson fires up his "blue Jerusalem." If we see the same arbitrary dishing out of contracts, then the answer is yes. The risk for Johnson and the Tories is by embracing and acting more on the basis of their extra-parliamentary relationships, the greater the scrutiny they attract, and the more pungency the odour of corruption acquires, a stench that might make Johnson's authority grow sickly and become vulnerable. All the more reason to attack these practices now. The questions raised by a contemporary reading of Late Capitalism in regards to the state aren't scholastic then, as interesting as some might find them. They reveal the possible contours of Tory strategy, and should allow the Labour movement time to formulate its response.


David said...

Unfortunately the last sentence is not quite right. You mean:

They reveal the possible contours of Tory strategy, and would allow the Labour movement time to formulate its response.

In a despond today.

Duncan said...

Phil, many thanks for your blog - it is always really good to read your analysis, particularly from a sociological perspective on politics. I am really looking forward to buying and reading your book!

On Tory authoritarianism, this last week's announcement (buried in other news) that the government is pushing ahead with voter ID laws - where the details in the plans are that the only valid ID that is mandatory in voting will be either a passport or drivers licence (no other ID will be accepted), is clearly a trick the Tories have to shore up their vote. Around 11 million don't possess either form of ID, and people who don't have either will have to contact their local authority to prove their identity (which will - perhaps they hope - depress turnout further through it being too much of a hassle).
This law should be heavily amended to include a free voting photo card that places such as Canada provide, as the electoral commission suggests and recommends. (Preferably the status quo should be maintained and voting should be made far easier for everyone - but the government are set on this law sadly.) Over to you Labour and the opposition parties...

Boffy said...

The underlying material condition determining these relations under late capitalism is this. The state must act as the defender of the dominant property form in each society. It must do so, because it is the fate of that property upon which the future of the state itself depends. Under late capitalism, the dominant property form is large-scale, multinational, socialised, industrial capital.

However, the collective owners of this capital - the associated producers, i.e. workers and managers, as described by Marx in Cap. III, Ch 27 - do not control it. That control is exercised by shareholders, and is everywhere enforced by laws - even if in places those laws also give a nod in the direction of shared control and codetermination.

But, as Marx also describes in Cap.III, Chap 22-27, the interests of shareholders are contradictory to the interests of the real capital over which they exercise this control. They seek more in interest/dividends, whereas the socialised capital requires less interest/dividends to enable greater capital accumulation. Today, the search for capital gains by perpetually inflating asset prices has replaced the search for yield/interest/dividends.

However, this requires that interest rates be kept at ever lower levels, because rising rates cause falls in capitalised values of revenue producing assets, as Marx describes. So, now, profits are used to buy back shares to inflate their prices, states print money to buy bonds and shares to reflate their prices, they introduce measures to hold back collapsing property prices, and encourage property speculation, including paying out £30 billion a year in Housing Benefit to landlords and so on.

But, they also introduce austerity to hold back the economic growth that would also cause wages and interest rates to rise - as happened prior to 2008 - which would cause asset prices to crash. As Marx describes the interests of this fictitious capital and of real capital increasingly diverge, with the latter becoming merely a question of speculation and gambling.

The state undertakes these measures, because the ruling class is now the owners of this fictitious capital, and its views permeate the state. For a time, it appears the state can be financed out of capital gains rather than revenues too. But, as Marx sets out its not sustainable and ultimately, the state has to meet the needs of real capital for accumulation without which profits do not rise, and so asset prices will crash anyway.

This is the dilemma the state has faced since 2010, and the lengths it has gone to hold back the collapse in asset prices have reached total madness, with the state now holding the large part of bonds in central banks, and their prices pushed up to such levels that much of it has negative yields, reflecting the failure of the revenues to rise proportionally. It represents the heightened contradiction between socialised capital, the property of the associated producers, and dominant form of property, as against the interests of fictitious capital, the property of the ruling class.

Boffy said...

First a correction. I should obviously have said, "the former" rather than "latter" becomes increasingly a matter of speculation and gambling.

A further problem for the state today is this. In the 1970's and 1980's, the main threat to the ruling class came from the working class, and organised labour movement. That is not the case today. The main threat to the ruling class comes from a large, reactionary petty-bourgeoisie, hence Brexit and Trump.

The normal process of capitalist development is that concentration and centralisation increasingly marginalises the peasantry and petty-bourgeoisie, the large majority of whom sink into the proletariat, out of which a new progressive, professional middle class of managers, trades union officials and civil servants arises, which forms the social-democratic layer that ensures the interests of the dominant form of property is advanced.

But, in the 1980's and after, the drive to inflate asset prices led to the growth of socialised capital being slowed, at least in the advanced economies. The process of combined and uneven development saw it grow much faster in China, Asia, Latin America and so on. It meant that rather than petty-bourgeois being proletarianised, the opposite happened. Lots of workers unable to get permanent employment became self-employed - white van man - and so were turned into reactionary petty-bourgeois, with a whole social layer around them. The most acute form is of course, the petty criminal/drug dealer etc, who is the epitome of the individualist self-employed petty-bourgeois.

This much enlarged petty-bourgeoisie (though to a similar extent impoverished petty-bourgeoise, rather like the subsistence peasant, became the fuel for the growth of the reactionary elements that took control of conservative parties in Britain, the US and elsewhere. As Marx described in the 18th Brumaire, this petty-bourgeois/peasant layer is large but amorphous. It can express what its against, but not what its for. But, as in 1848, its that which leads it to look to strong Bonapartist leaders to give it discipline from above.

It is these organised reactionary elements that pose the biggest threat to the ruling class today, as seen by Brexit and Trump. The question is how the state then deals with them without showing its hand, in the way it does when seriously threatened by the working-class. It is forced to use the inbuilt bureaucracy of the capitalist state to thwart them, to hold them back via the courts, and so on. But, I guess in coming weeks we will see a much more visible sign of the response of the state, in the US, as it begins to round up the fascists and close down their organisations involved in Jan. 6th, and as its courts start to bring criminal charges against Trump and those associated with him, there, here, and elsewhere.

Boffy said...

Another point on he contradictions between fictitious capital and real capital, and its manifestation within the state.

Back In 2009, I suggested that the government would pay for the debt run up as a result of the financial crisis would be via, inflation, i.e. printing lots of additional money tokens. Indeed, they were already doing that, and the years since have shown that the suggestion was spot on, with money printing going to astronomical levels via QE. It resulted not just in inflation, but an hyper inflation of asset prices. The DOW Jones today is nearly 4 times the level it was at at its low point in 2008/9. And, after 2010, the Bank of England repeatedly failed to act when CPI was over 5%, or more than double its 2% target.

This hyperinflation at a time when the real economy has been held back by austerity, to keep down interest rates has continually butted up against reality and the laws of economics and of capital. As Marx sets out in Cap. III, Ch. 23, its impossible to continually throw more money into the sphere of money-capital whilst not employing it as real capital, because the money-capital becomes depreciated, and whole layers can no longer survive on the interest payments. When the interest becomes negative that is even more obvious.

Yet, despite money token being gushed into the purchase of financial assets and property, to try to prevent the collapse in their prices, since 2010, reality has continued to impose itself. Property prices in the US, Ireland and many EU countries fell by 60% after 2008/10. In Britain they fell by 20% in 2008, before state intervention reversed it. But even with unprecedented state intervention, UK property prices fell by 30% in the years after 2010, and are still massively overvalued against their historic average, waiting for a further fall, as interest rates rise.

In 2018, as global economies again began to grow despite austerity and QE, US financial markets dropped by 20%. Only Trump's trade war and brexit, along with renewed QE slowed that down. Lockouts and the associated slowdown have inflated financial markets again, over the last 9 months, but as lockouts are seen as ending, the inevitable is also now happening.

China which began growing again rapidly a few months ago is sucking in raw materials and foodstuffs. Its exports to the US have pushed up the shipping rates on the Baltic Dry Index to new highs, with shortages of ships appearing. Oil prices have risen by 50% to over $60 a barrel.

Copper, has risen nearly 50%. Platinum, has more or less doubled to $1300. Iron Ore, has doubled. Wheat prices have risen from $500 to $650; Soybeans have risen from $800 to $1400; Beef has gone from $14 to $20. Inflation is rising sharply, and bond prices are falling sharply.

The US 10 Yr. Yield has trebled since August, much of the rise coming in recent weeks. The UK 10 Yr Yield has risen 7 fold, and so on. The ability of the state to protect the interests of fictitious capital has run out, and it will now have to advance the interests of the real capital upon which the state itself rests, with the consequent impact on those asset prices.