Wednesday 28 September 2022

Incompetence or Malevolence?

As Labour Party conference came to close with little controversy and positive coverage , the economy has been falling apart. On Monday the pound sank to all-time lows and key mortgage lenders said they were suspending their products. Late on Tuesday, notorious Bolshevists the International Monetary Fund criticised the Tories for reckless spending and turbocharging inequality. And today government bonds fell significantly in value. This forced the Bank of England to buy them up to stabilise their value, in the process bailing out pension funds and saving many from insolvency. Despite the pathetic claims made by Daniel Hannan and tax avoidance artist, Lord Ashcroft, Labour's plans to renationalise the trains and set up a publicly owned energy supply company didn't spook the markets: Liz Truss and Kwasi Kwarteng's naked Toryism has.

Capitalist economics aren't just "economics": they are power relations and cannot be divorced from the exploitation at their heart. Capital meets labour to produce something, and that something - the commodity - has to find a market and get sold on. This is the only way of converting the surplus labour expended in the process of production into surplus value and, after the necessary deductions, generating profit and further accumulating capital. Along with the discursive, disciplinary, and coercive means states employ to maintain the wage relation, they are also authors, regulators, and guarantors of the circuits of capital: the social settings of the selling and buying of commodities. What we like to call markets. In advanced capitalist societies, this gets increasingly elaborate as the web of regulation tries to capture the mounting complexity of markets, the development of which establishes patterns of commerce many times removed from the exchange of a physical product. Exploding abstract property forms like shares, debts and futures become "products" and are the bread and butter of global finance. They are the most volatile, unstable, and easy to scare markets, precisely because they are dependent on speculation and have an autonomy removed from the so-called real economy. But they have real world consequences. Crisis and disaster here can mean crisis and disaster for businesses as credit dries up, share values tank, dividends evaporates, debts are called in or, worse, go unserviced. And currencies slide, pushing up inflation. And because this process is the milieu of some capitals, they develop their own individual competitive and shared interests.

Ignorance of these basics of capitalist economics is what makes most economists and economic commentators superficial observers - capable of divining the direction of capital and the prospects of growth, but incapable of explaining it. Hence over the last few days we've seen people at a loss to explain the Chancellor's fiscal statement. And we have those who act as walking, talking press releases on behalf of the government. Crisis? What crisis? As pension funds risked insolvency and inflation was stoked further. They assume the Chancellor is a technocrat disinterestedly occupied by technocratic goals. 12 years of of division and disaster is yet to disabuse friendly journalists and economists of this notion.

As argued here previously, it's difficult to sustain the Tories are ignorant/they know not what they do line, which remains popular for some. This disaster for us is a benign environment for them, and by them I mean the networks of capitals especially close to the Truss government. Hedge funds and currency speculators have made their packets betting against the pound. Proof the Tories treat patriotism as a mugs' game. The volatility today has pushed down the value of UK assets - swathes of commercial and financial capital, traditional backers and beneficiaries of the Tories, are getting shaken down for short-termist profits while capital tied to the real economy is getting a beating from soaring inflation. And not-at-all coincidentally, following a crisis manufactured in Downing Street public services are being expected to pick up the tab for Truss's experiment in open class rule. An opportunity for the outsourcing giants to parasitise more state money that might otherwise do something socially useful.

Truss and Kwarteng have been invisible today, and indeed the Prime Minister has more or less been a rumour since her last appearance in the Commons on Friday. This is no accident. Having lit a torch beneath the interests of so much of the capitalist class to benefit a minority section of the City, as well as risking the incomes of the Tory pension-drawing base, the potential for cacophonous opposition from their own side was something to be avoided. There's no political pressure if you hunker down and refuse to engage. What Truss is doing parallels the behaviour of the late and unlamented Boris Johnson. He bulldozed through convention and scandalised polite opinion by refusing to play the established game. His dogged refusal to take responsibility and resign demonstrated how the much-vaunted constitutional checks on an authoritarian leader were fictions. It was only strike action by ministers that forced him from office. Truss is to economics what he was to politics. Things we were told were toast for governments - emergency Bank of England intervention, IMF warnings, new lows for the pound - are proving to be nothing of the sort. These calamitous happenstances do not automatically grind out the downfall of Prime Ministers and Chancellors.

Looking at the week's carnage, all of it could be foreseen and indeed was anticipated. Truss and Kwarteng chose to ignore it. Not because they don't know how to do their jobs, or because they're blinkered by "ideology". They have used the clout of the state to weaken British capital as a whole, and threaten further the economic wellbeing of tens of millions. And all so a minority of a minority can be enriched and further enriched. The right word for this is not incompetence. It's malevolence.


Anonymous said...

It's also, arguably, a potentially winning strategy.

Look! We're anti-establishment! The Bank of England doesn't like us! We're rebels, not like the rest of them! Let us go forward together (Truss's face photoshopped, topped with a bowler-hat and holding a machine-gun to beat off the evil Communist Russians)!

What is Labour going to say in response? "We are much more capable at wrecking the economy and losing unnecessary wars!"?

Robert Dyson said...

To Anonymous - It's the economy stupid !
The government gang have just trashed the modest economic expectations of many people. Even those Tory party members who voted for Truss will not like it when their offspring lose their homes because they cannot pay the mortgage and want to move back in with mum & dad. Those same people who thought themselves thrifty with savings will find their savings evaporating away - and their state pension will not rise with inflation as promised, and they will have picked up that their private pensions just about fell into a black hole, stopped by the BoE.
Finally, they loved 'Boris', he could waffle without a break and deflect any point put to him - what a naughty joker. By comparison Lizz Truss is not even an amateur performer, she is hopeless with not even a joke to break the silences when she is trying to think up something to say. I hope she destroys the Tory Party for a long time to come.