This book was panned in the Times Higher for its ‘persistent anti-capitalist tone’ – reason enough for it to be given further consideration here. ‘risk management’ has become a central feature within the administration of contemporary capitalist society and has correspondingly assumed a new significance within its academic disciplines, particularly economics, politics and sociology. It is fittingly so. In an earlier era the anarchy of the capitalist market was meant to resolve all problems.
Adam Smith’s invisible hand ensured that all resources were put to best available use and that general betterment resulted – even if weaker capitalists were trampled under foot and workers exploited. Marx himself saw this as the secret of capitalism’s dynamism. But, as Marx also foresaw, this competitive dynamism had its limits. Growth through competition would ultimately produce its opposite: monopoly. And monopoly would dislocate markets, generate fictitious capital and demand intervention by the capitalist state to manage the resulting crises.
‘Rrisk management’ is the tacit acknowledgement that markets can no longer resolve all economic and social problems. The complex interaction of monopolistic investment, financial engineering and manifold interventions by the state apparatuses of competing countries results in a dangerous and unpredictable environment for capitalist enterprises – and even more so for those employed by them.
The strength of this study by Beck and Kewell is that it stands outside the discipline of risk management itself and seeks a critical understanding of its wider social context and historical origins. It is not explicitly Marxist. But a Marxist understanding informs much of its argument – hence its ‘persistent anti-capitalist tone’.
The first chapter takes the pre-history of the mathematics of risk from the ancient world to the early modern period. Based on games of luck and the calculation of chance, the complex mathematics developed in ancient Greece were carried forward in the Arab world, rediscovered in the Renaissance by Cardano and reworked by Pascal and others in the seventeenth century. In the Enlightenment the resulting mathematics gave substance to the belief that large scale data, on populations, births and deaths, on prices and output, could predict future outcomes and establish order and regularity. Such statistics were able to record, comfortingly, the overall progress arising from apparently anarchic markets.
Chapters two and three document what might be described as the pathology of uncertainty and risk in the early twentieth century. They move from the genre of disaster novels (the stereotyping of military enemies and of racial threats) to the misuse of statistical information to defend social policies of ethnic cleansing and control: class differentiation justified by ‘intelligence’ testing; eugenics and crusades for racial purity sustained by similar scientific rationales. Chapters four and five examine the use of statistical chance and game theory, particularly in the United States, to rationalise the interaction between, first, the state and the corporate development of technology, and, second, the state and what were considered to be external threats posed by foreign powers. Social scientists became the handmaidens of Pentagon in games of probability that determined the fate of millions in Vietnam and potentially many more during the Cuban missile crisis. Similar calculations underlay the development of nuclear energy, pharmaceuticals and the safety of oil installations.
The final chapter would be of particular interest to readers of this journal. It examines the dynamics of capitalist risk, in the larger sense, in the twentieth century. It begins with the theorists of imperialist expansion, from Hobson, Hilferding and Lenin to Sweezy, Magdoff and Perlo, and contrasts them with the theorists of global risk, Giddens and Ulrich Beck. The former demand some form of collective action for social change; the latter, particularly Giddens, present such risk as an existential crisis for the modern individual and one ultimately requiring some form of Hobbesian contract with globalising state institutions.
Hans Modrow was born in the Weimar Republic, grew up in Nazi Germany, served in the Wehrmacht and was a prisoner of war in the Soviet Union until 1949. Joining the Socialist Unity Party of Germany (which united the Social Democratic and Communist parties) he became an energetic and effective political leader and rose to become party secretary in Dresden.
He became prime minister of the German Democratic republic at the point at which the Soviet guarantee of the GDR’s sovereignty was jettisoned.
These reminiscences describe how – as an exemplar of the hard working, disciplined cadres who who staffed the GDR state and party – he formed close relationships with his opposite numbers in the Soviet Union and other socialist countries and developed a sharp critique of the top leadership of the GDR.
The great strength of the book is Modrow’s frank and revealing account of the inner life of the GDR apparat; the practical and political problems that accompanied the construction of a socialist economy and the shaping of a socialist consciousness; the accumulation of contradictions in these processes and the protracted crisis that gripped and then paralysed the socialist bloc.
Most interesting is his detailed account of the political and diplomatic processes in which working class political power and socialist relations of production were dissolved in what proved to be a largely peaceful transition from socialism to capitalism.
Modrow is most centred on the travails of the GDR but from his exceptionally privileged viewpoint he reveals much about the dismantling of the Soviet Union. Gorbachov emerges as a political failure and a much diminished man.
In Modrow’s account the demise of the Soviet Union derived from a failure to create new types of socialist relations of production with over-centralisation in planning and management, bureaucracy, lack of responsibility and a reduction to only two forms of property: state owned and co-operative.
His sense of the Soviet political system runs on conventional lines. He asserts that was ‘deformed’ with ‘the roots of the phenomenon of Stalinism’ only described but not ripped out.
‘Attempts at reform had no complexity and ended without consequences’ he argues.
He quotes approving the Hungarian leader Kadar’s view that the communists had had to pass two tests – living through terror and persecution perpetrated by the reactionary forces, which in his view the majority had passed, but the other, was the test of power, and this one most communists had failed.
Modrow emerges as an honest and principled communist with the great virtues of his generation and the priceless fund of knowledge and experience in building socialism and exercising working class power.. His insights command respect and attention. However, as sometimes it seems with communists whose political experience is gained within socialism there seems a certain underestimation of the intensity of imperialism’s inescapable imperatives.
Hans Modrow was an active participant in the events that ended in the dissolution of working class political power in the GDR. Unlike some others, he worked hard to defend the gains of socialist construction in circumstances where an armed defence of political power would have had disastrous consequences and, it seems, little chance of success.
His account raises questions that have so far escaped a comprehensive theoretical answer – how is it that working class political power can be surrendered in the absence of serious armed conflict but bourgeois political power, it seems, cannot be surrendered without it?
This book was written in 2009. Events have confirmed the accuracy of his analysis that: “The Soviet Union as a former winner of the Second World War – this is a bitter truth – belatedly lost the war. It was demolished and Russia’s influence ended henceforth far behind the former borders of the USSR; the Warsaw Pact collapsed and NATO expanded eastward. I would not go so far as to say that the 28 million Soviet citizens gave their lives in vain in the Great Patriotic War, but the ‘reward’ for having freed half of Europe from the scourge of fascism seems, considering the present situation, unreasonably low.”
This book sets out to unmask the ways in which mainstream neo-classical economics has been misrepresenting economic realities, ‘systematically marketing falsehoods’ – ‘fakeconomics’ as Weeks describes this.
‘Fakeconomics’ has taken over, he argues, squeezing out alternative approaches to economics, including Marxist economics, in the process. This has profound consequences, as the book goes on to demonstrate, convincing people that there can be no alternatives to neo-liberal policies that benefit the richest 1% at the expense of the remaining 99%.
Each chapter takes up and develops discussion around a particular theme – exploring the flaws within’ fakeconomic’ assumptions. So there are chapters unpacking the notions of markets, market worship and assumptions of perfect competition, along with chapters on finance and criminality, on myths associated with notions of supply and demand and on the notion of ‘free trade’. Marx Memorial Library readers may find the later chapters on lies about the role of governments, budget deficits, austerity policies and what Weeks describes as the great ‘Euro scam’ particularly relevant in terms of their implications for current policy debates.
The book concludes with a final chapter on the economics of the 99%. Weeks makes the case for economics in a decent society where governments would be focussing upon maintaining full employment and tackling poverty and discrimination rather than promoting austerity policies that benefit the richest 1%. This is not, he argues, ‘an antimarket polemic’ but for markets to be ‘regulated through a democratic process for the collective good, not when they are left “free” to concentrate riches in the hands of a few’.
Whilst the book challenges economic theories, the approach is very accessible. The style is punchy – and very humorous. Weeks is convinced that we have been indoctrinated into believing that the workings of the economy are too complex for any but experts (i.e. economists themselves) to understand. On the contrary, in his view, we can both understand and challenge their arguments. Governments do not have to balance their budgets in the same way as households and austerity policies do more harm than good for the vast majority of the population. Higher wages and better working conditions do not necessarily mean fewer jobs and the unemployed are not to be blamed for their joblessness. Quoting Attlee, Weeks argues that ‘The price of so-called economic freedom for the few is too high if it is bought at the cost of idleness and misery for millions’.
A thought provoking read, in summary, a book that should provoke interest and discussion amongst MML readers.
The Contradictions of Austerity brings together a collection of studies on the impact of the 2008 crisis on the Baltic republics of Estonia, Latvia and Lithuania – all of which introduced austerity policies early and before the rest of the EU.
The champions of neo-liberalism have used the example of the Baltic states to claim that austerity works. The studies collected here demonstrate it does not. Still more important, they analyse the emerging social consequences. These findings are of major importance and stand as a warning to workers across the rest of the EU.
Much of the story is familiar. After joining the EU the Baltic republics saw property-based booms fuelled by easy money and low interest rates. The 2008 financial crisis killed this and precipitated massive contractions in the economy. Output in Latvia fell by 18 per cent, in Lithuania by 15 and Estonia by 14 per cent. The response of the internal elites was to impose what is described as ‘internal devaluation’. This was not a currency devaluation. Under the cover of preparing for euro entry, the moneyed elites refused to countenance any reduction in the international value of their wealth. Instead what was imposed was a massive cut in salaries, pensions and the social wage.
Champions of neo-liberalism in the EU heralded the results as justifying the austerity then being imposed elsewhere. The Baltic states saw 2 per cent growth in 2010 and 5 per cent by 2011 as investors sought to take advantage of cheaper labour. This growth rate was considerably more than what was then being achieved across most of the rest of the EU – but in reality only a very small gain compared to the loss of output in 2008-09.
The costs for the populations of the Baltic states were, however, massive. They went far beyond a sharp drop in living standards and involved a deep remoulding of social relations and the labour market. The four main changes were: the removal of most contractual safeguards for a majority of the workforce, a massive growth in precarious, part-time employment, the ballooning of a black economy in which workers had no rights at all (30 per cent of total employment in Lithuania by 2011) and unsustainably high levels of emigration for skilled and educationally highly qualified workers. Up to 5 per cent of the workforce has been leaving each year. Wages in Sweden are now four times higher than those in Estonia and five times those in Lithuania.
The authors document an initial resistance by the trade unions, particularly in Latvia and Lithuania. But it was not sustained. A refusal by the governments to respond, the use of increasingly authoritarian methods against any protest, the increasing scale of unemployment and emigration left trade unions weakened and politically marginalised. The result was the growth of what the authors call an ‘austeriat’, a majority workforce that was only marginally employed and the creation of disabling divisions within the working class. As local workers left, employers began the process of bringing in other workers from southern Europe or Thailand willing to work at even lower wages. This in turn has strengthened a historic legacy of xenophobia.
The authors argue that these consequences, now seen dramatically in the Baltic republics, are likely, to some extent or other, to be duplicated across large parts of the EU. They also note that this flexible, mobile and individualised workforce, increasingly uprooted from any supporting social or national institutions, is what the authors of the Single European Act required for their economic model to work. Market forces will infallibly dominate – ending any pretence of a Social Europe. While this will not stop the European Commission issuing document such as ‘Strengthening the Social Dimension 2013’, the longer-term social and political consequences are likely to be fatal to the EU itself: ‘the ultimate failure of the European Union’s project is more likely to be a question of when rather than if.’
The hardback edition is expensive and for library purchase only (hopefully a cheaper paperback edition will be produced). But the book is important nonetheless. The authors are experts in their fields, academics from the Baltic states themselves, from Britain and the US. They are fully sensitive to the differences between the Baltic states. But they also paint an overall picture which the British labour movement cannot afford to ignore
As the editors of this important collection of essays explain, when the Socialist Register was launched, back in 1964, the aim was to provide annual volumes of socialist analysis and discussion.
This was in the belief was that ‘the possibility of fruitful discussions is now greater than for a long time past’, a belief in the contemporary relevance of socialist analysis and discussion that the current editors share. By definition, then, this volume sets out, like its predecessors before it, to stimulate socialist analysis and debate and to explore the implications in terms of the more immediate political concerns of the day.
This fiftieth volume is particularly useful on two counts. Firstly, the collection includes essays that explore the Socialist Register project’s history in relation to previous debates on the Left, over the past five decades. And secondly this collection provides a more contemporary focus on social class in the context of ‘the spread and deepening of capitalist social relations around the globe that has been increasingly marked by growing social inequality’.
The chapters on the lineage of the Socialist Register explore the origins in relation the development of the British New Left, with a critical account of debates around the New Left’s class analysis, including reflections on the contributions of thinkers such as E.P. Thompson and Raymond Williams, Stuart Hall, Perry Anderson and Tom Nairn. This sets the context for the following chapter exploring debates on class and politics over the Socialist Register’s five decades, including debates around the Marxism Today project and debates with Socialist Feminism. (For some reason these chapters are placed at the end of the book – some readers may find it more helpful to read these first, as background to more contemporary debates).
Whilst some of the chapters focus upon more theoretical debates, such as the chapter critically engaging with what the author describes as the ‘cul-de-sac of postcolonial theory’ others are more focused upon exploring the implications for current issues for the labour and progressive movement. For instance, the chapter on the ‘Walmart working class’ explores the growth of precarious employment in relation to theoretical debates on the changing composition of the working class. Other chapters focus upon the implications of debates on the composition of the capitalist class in the context of neo-liberal globalisation (demonstrating the continuing significance of struggles at national as well as at international levels). The chapter on’ Left Unity or Class Unity’ provides a particularly thought -provoking discussion of the flaws in arguments for setting up a new political party of the Left, in Britain. And the chapters on Brazil include a critique of the so-called ‘Brazilian spring’ pointing up the need for such critiques, rooted in class analyses, when it comes to considering so-called ‘springs’ and popular uprisings in the Arab world, Ukraine, Thailand and elsewhere.
Overall then, this book comes as highly recommended reading for Marx Memorial Library readers. The collection is well worth reading for the chapters on contemporary issues with added value provided by the final chapters’ reflections on earlier debates. Readers will also be interested to learn more about the particular role played by Ralph Miliband, who made such key contributions to launching and editing the Socialist Register, over many years.
“It is precisely because the money form of value is its independent and palpable form of appearance that the circulation form M…M’, which starts and finishes with actual money, expresses money-making, the driving motive of capitalist production, most palpably. The production process appears simply as an unavoidable middle term, a necessary evil for the purpose of money-making. (This explains why all nations characterised by the capitalist mode of production are periodically seized by fits of giddiness in which they try to accomplish the money-making without mediation of the production process).” Karl Marx Capital Volume Two
“The return of politics is one more cause for concern” Neil Hume Financial Times in 2010
THE WORLD economy is entering the sixth year of the slump caused by the greatest “fit of giddiness” within the living memory of all but the very oldest. From a boom built on paper to a bust measured in jobs lost, social services swept away, wages cut and poverty entrenched and intensified for millions, the consequences of humanity’s toleration of the capitalist mode of production have seldom seemed so stark.
The capitalist crisis of the 21st century has been rooted precisely in the elements described by Marx and Engels all those years ago – the dialectic of M…M’ , the rush by the “masters of the universe”, to be found above all in London and New York City, to make more (and still more) money from money without troubling to make anything else in between, a process which was left uninterrupted to run its course until the entire world financial system stood on the brink of collapse only to be rescued by decisive, if belated, intervention on the part of the capitalist state, acting as always as the final guarantor of a system which, in the ideology of its most purist champions at any event, should have no need for any such role for governing institutions.
From that crash, which instantly pushed businesses of all kinds towards bankruptcy even as the banks were placed on taxpayer-funded life support (as Wall Street was rescued in mid-2009, US unemployment officially hit 17% and one-third of capital equipment was left idle), the crisis flooded out to inundate states themselves, from Dubai to Ireland, which suddenly found that their public finances would no longer be underwritten by the international money markets, the same people whose casino-style speculations had piled up the mountain of fictitious capital in the first place. In the name of placating the bondholders, a savage regime of austerity has been imposed on the working people of one country after another. Greece, Ireland, Spain, Portugal and Italy have been sanctioned under the authority of the holy trinity of the world bourgeoisie – the International Monetary Fund, the World Bank and the European Union. Elected governments have been swept aside as the paper facades for capitalist class power that they are, with in their stead open dictation by the “troika”. In Britain, the services of the troika have been otiose. The Coalition government cobbled together after the 2010 election has forced a regime of austerity on the country directly, at the bidding of none but its own class interests, through the agency of a Conservative Party bound to the potentates of the City of London and Canary Wharf by a million golden threads.
So now real wages are falling for millions “in the national interest”, the poor are being forced from their homes through the Bedroom Tax and benefit cuts “to ensure economic credibility”, young people above all are being left without jobs, homes or hope “to get the country back on its feet.” And all the siren slogans of the capitalist parties find their echo in the muted mumblings of social democracy in Britain and the rest of Europe alike, in the policies of reformists who have long forgotten how to reform anything at all. It was none other than Gordon Brown, presiding genius of the neo-liberal agenda of the last Labour government as much as Tony Blair was its neo-conservative avatar, who told the gathered gilded magnates of the City in 2007, even as the storm clouds were gathering, that over his time as Chancellor “the City of London has risen by your efforts, ingenuity and creativity to become a new world leader…an era that history will record as the beginning of a new golden age for the City of London. The financial services sector in Britain…shows how we can excel in a world of global competition. Britain needs more of the vigour, ingenuity and aspiration that you already demonstrate.”
History has a habit of taking its revenge on those who lightly invoke its judgement in self-justification, but seldom so swiftly and unequivocally. As to whether Brown or the bankers he was addressing are now held in lower popular esteem is a point of precedence not worth settling, as Samuel Johnson would have it. The best that can be said of Gordon Brown is that he was of his time, a post-reformist social democrat adapted to the political climate of the era when, in the words of a Financial Times writer in 2006 “…the intellectual victory of capitalism...has deprived the political elites of independent power and placed them in the service of the financial markets.” Indeed, Brown and the entire last Labour government in Britain were in the service of financial markets body and soul , both when rescuing the City in 2008 and when politically underwriting its undetectable virtues and achievements a year earlier.
That was then. As noted in the quotation at the head of this article, the Financial Times has been singing a different tune more recently. The article by Neil Hume noted sadly: “Over the past couple of decades political risk has not been something investors have had to really worry about. Markets have been driven by light-touch regulation, laissez-faire economic policies and globalisation rather than by politicians. All that has changed…politicians are already making their presence felt and with mainly negative consequences for markets.”
If politics is indeed flexing its long-atrophied muscles once more, to what end? The great majority of the world’s people would like it to be in the direction of profound social change. A worldwide opinion poll published at the end of 2009 found that 51% of the globe would support what might be broadly called a radical social-democratic response, in line with traditional reformism – “the regulation and reform of free market capitalism, including nationalisation and income distribution,” while 23% would prefer an entirely new system altogether. It is unlikely that the last four years of dismal economic performance will have changed the numbers significantly.
Opinion polls are one thing, of course, but the real imposition of political change is something else. When capitalist oracles fret about “political risk” they are really using the word as a polite euphemism for class struggle, just as “hard working people” stands rhetorical duty in place of the working class, and “free market” substitutes for capitalism, as if calling things by their real names would summon them from the shadows into actual motion.
The almost universally-unacknowledged truth about the contemporary world crisis is that it is an exercise in class power. The global elite which led the world into the economic calamity of 2008 onwards – the same elite which has launched one lawless war after another in the course of this century – might well be anxious about its social position. They have piled up this misery, and now they expect their system to be dug out from under it intact, so that the whole dance of capital accumulation can resume once more. To that end, control of politics is vital, the end to which other temporary interests and sectional concerns must be subordinated (it was the Marxist economist Ben Fine who acutely observed years ago that, in extremis the bourgeois class will temporarily forego profit in order to preserve property, and will even temporarily part with property in order to preserve its power). Austerity has not been introduced, with all its attendant risks, simply in order to make workers poorer – it is because the reassertion of capitalist class power requires nothing less.
This is a tricky business, for sure – take it from Francis Fukuyama, the neo-conservative (yet thoughtful) ideologist who famously proclaimed the end of history (another euphemism for class struggle) as the world socialist system imploded in 1989-91. Surveying the wreckage of the imperialist elite’s two big ideas of the 21st century – the “export of democracy” and “unfettered capitalism” he observed in 2008 that the lasting effect of the crisis might be the “damage that the financial meltdown is doing to America’s ‘brand’”. Two of the other great purveyors of middlebrow mush to the middle class masses struck the same note – Fareed Zakaria (then of Newsweek now of Time) lamented the passing of the days when the world “listened to American policymakers with respect, even awe. Today they wonder if these officials know what they are doing”; while Philip Stephens (Financial Times ) was even more apocalyptic “…for more than two centuries the US and Europe have exercised an effortless economic, political and cultural hegemony. That era is ending.”
In this decay of the neo-liberal norms of governance resides the fear of the “return of politics”. These forebodings of the passing of a golden age were expressed so sharply more than five years ago. Evidently, the bourgeoisie remains in the saddle today, and its class rule has nowhere been seriously threatened, even in those countries bearing the brunt of the bankers’ social aggression. Indeed, the general shift in the political mood, outside the USA to a limited extent, has been to the right. Yet uneasy lies the head. The continued power of the capitalist establishment owes nothing whatsoever to its economic or social achievements, nothing to an optimistic view of the future under its hegemony and little even to its political skill and cunning. Inertia and habit plays a part, as does the generally deleterious effect of prolonged slump on all classes and communities, damaging their cohesion and social confidence. But by far the greatest reason for the continuing power of the capitalist class is the weakness of the world working class, both as a present political actor and as the bearer of the possibility of an alternative future for humanity.
The main hopes of the capitalist class for seeing the crisis through intact therefore rest on maintaining the perception that there is no alternative – no alternative social system possible, and no alternative rulers other than the incumbents. The signal gain of the thirty-year neo-liberal onslaught, the radical diminishing of the power of the labour movement, extending to the drastic erosion of any counterweight to unbridled capitalist power is, if maintained, the guarantee that any return of politics need not be too troubling. That secured, the elite can continue imposing austerity and wage cuts until capital accumulation can speed up again and the champagne corks can openly (they have never really stopped) be popped in the City once more.
The balance sheet in that respect is not unambiguous. Politically, the struggle for the future direction of the labour movement is not yet within sight of a resolution. Ed Miliband has incrementally edged the Labour Party away from the most brazen aspects of his “new Labour” predecessors’ embrace of imperialism and finance capital. With whatever vacillations, his stand against a war of aggression against Syria in summer 2013 was a historic step forward. His announcements that he would cap energy prices for a period, would force the pace on house building, would end the “bedroom tax” and would restore the fifty per cent tax rate on the very richest have been greeted with howls of outrage from the ruling class, as if the fundamentals of human civilisation had been violated. That these measures, which would hardly have registered as social democratic thirty or forty years ago are now regarded as if they were Bolshevism reincarnate merely shows how far the terms of political debate have drifted.
Yet one has to set against even this limited – but highly popular – move towards addressing the people’s concerns the continuing determination of the front bench to stick to the Tories’ austerity programme. Shadow Chancellor Ed Balls remains ideologically enslaved by the City, a man for whom “economic credibility” means not credibility with the people, but with the bond markets. The plan to return the budget to surplus by 2020 may be music to the ears of the denizens of the dealing rooms, but it almost certainly can only be purchased at the price of a continuing war on the poorest. For many in Labour’s leading ranks, the City remains simply too powerful an interest to be challenged. Rather, Labour’s social and economic plans must be adapted to accommodate the imperatives of big capital.
Labour policy is only one axis of advance along which the progress of the recomposition of the working-class movement needs to be considered. The restoration of the fighting capacity of the trade unions and the broader movement is as significant. Here, again, the recent record has been mixed. The one-day strike against government pension cuts in November 2011 was a landmark step forward, as where the two massive demonstrations against austerity organised by the TUC – far bigger protests than the movement ever organised when trade unions had far larger membership. And some important disputes have been won in the private sector too – at London Buses, in construction and elsewhere.
The Peoples’ Assembly movement has united the main organisations of the working class with wider elements in communities under attack, with the potential to develop a broader fight for social justice. Nevertheless, the overall balance is not particularly favourable – the Grangemouth dispute highlighted the untrammelled power of big business, and the unwillingness of politicians to seriously address it. And despite organising gains in some sectors, which has certainly slowed and possibly arrested the decline in trade union membership, there is as yet no sustained sign of a reversal, and of growing organisation, across the movement as a whole. Socialists remain ideologically disoriented to a significant extent, organisationally fragmented and too often diverted into marginal initiatives estranged from the interests and focus of the mass of working people, although here again the Peoples’ Assemblies can provide a context for overcoming this relative isolation and can take the first steps towards uniting in campaigning an alliance of a broad range of people around the working class.
Trade unions will also need to carefully evaluate the changes introduced into the federal structure of the Labour Party by means of the Collins review, itself the product of ill-judged and near-hysterical attacks on Unite the union’s political activity in July 2013. At time of writing, the passage of these “reforms” seems certain. They have been welcomed by those who wish to see trade union engagement in politics reduced still further, and the control of democratic processes further entrenched in the hands of a small City and Westminster elite, unaccountable and unchallengeable.
However, debate about these changes, important as they are, should not distract from the urgent task of the next year, which is to see the present Coalition government defeated at the General Election, and a Labour government elected as the only feasible alternative. Such a result would give the opportunity for the working-class movement to regroup for advance, to press for policies that can stabilise prospects in working-class communities, and thereby lay the basis for a more far-reaching challenge to the dogmas of neo-liberalism.
Such a victory is within grasp. The government, faced with the bankruptcy of its policies, clutches at straws. Certainly, Osborne and Cameron are celebrating the return of an anaemic rate of economic growth – yet still the British economy is £40 billion a year smaller than it was in 2008. A new housing bubble is being assiduously inflated, exacerbating an already chronic shortage of homes while flirting with a further debt crisis. While taxes have been reduced for the richest, only now, and in the coming months, will the full effects of the cuts in public expenditure be felt at the sharp end. Ministers reserve their energies for resisting any proposal for tougher regulation of the City from international bodies, while remaining mute in the face of, for example, the growing scandal of the systematic sale of adulterated or mislabelled food and drink to the public (mainly the poorest) by the great food monopolies. Cuts in the inspection regime have without doubt allowed this abuse to flourish, just as similar cuts have gutted the bodies responsible for curbing gangmasters’, enforcing the minimum wage, or organising defences against flood.
On a broader canvass, the world economic crisis is not so much ending as migrating – just as it moved from being a banking crisis to a sovereign debt crisis it is now being reborn as an “emerging market” crisis, with instability sweeping Hungary, Brazil, Turkey, Argentina, South Africa and Indonesia. Behind them stand still bigger dominoes – Russia and China, the two major powers left relatively unscathed by the original “credit crunch”. Such markets now account for by far the greatest part of cross-border capital flows, as the endless search for not just profit but super-profit redirects to a smaller number of available arenas. In finality, we can see the fresh impetus given to world capitalism by the victories of the neo-liberal offensive (the collapse of the USSR and the other socialist countries, the opening up of China, the integration of India into the world market etc) exhausting itself at every turn.
That, of course, is far from the end of the story. The present situation is often compared to the 1930s, so it is worth recalling that the worst aspect of the 1930s crisis was not the vast economic slump with all its attendant miseries, nor even the shift by the bourgeoisie towards fascist forms of rule, but the fact that it ended in a second great war, sprung from the interstices of imperialism. Today, as the great powers probe each other in the Pacific and the Far East; as they jockey for advantage over the broken bodies of one Arab state after another; as they jostle for resources across Africa and Central Asia, as leading statesmen openly invoke the spirit of 1914 as being abroad in the world once more; it is clear that the danger of a fresh mighty conflagration and redivision of the world is escalating.
But if this century to date has exposed the unchanging, crisis-raddled, nature of capitalism, and the general unfitness of the bourgeoisie to rule, it has also shown the vast potential of the mass of people to mobilise against war and for social justice. Even the Ministry of Defence admitted, in a report published in The Guardian in January 2014, that public opinion was inhibiting their capacity to engage in foreign wars. Likewise, fear of a public backlash can circumscribe the austerity drive of the Coalition. Events are opening the breach. If the working class can guard, and socialists’ establish, their unity, then the days when overcoming the logic of Moloch the Market, of a society enslaved to M…M’ are surely much closer than the desiccated talking heads of the Westminster bubble can imagine.
HOW DID the momentous Bolshevik revolution affect art and artists? It did so at every level: art education, production, patronage, distribution and reception were all transformed. Fierce debates about the form and function of art in the new worker state raised fundamental issues; from these stemmed so rich a flowering of the visual arts that it’s influence is still alive.
The revolution was itself partly the work of artists. Some had worked towards social and/or political change since Russian artists had taken the role of social critic in the nineteenth century. In the 1870s the Wanderers’ paintings had exposed social injustice in daily life.
By the early twentieth century a well-informed Russian avant-guard was in touch with Paris and Munich, the epicentres of innovatory art. Embracing modernism it debated how to transform and modernise Tsarist Russia. Some, like Natalia Goncharova adopted the vivid colour and formal simplifications of ‘primitive’ Russian peasant art, rather than those of African art favoured by the French and Germans. Russian Futurists engaged in antibourgeois activities. By 1913 Malevich had rejected all representation as antiquated, arguing that his revolutionary abstraction equated modern times.
October 1917 brought radical cultural change. No longer for bourgeois and aristocrat, art would now be for the people. The art market was abolished and museums nationalised; the worker state became art’s patron. Initially, most avant-guard artists welcomed the revolution because Lenin’s idea of a political avant-guard as an agent for social change legitimised their own calls for radical action to combat conservative attitudes to art and society.
For Marxists like Vladimir Tatlin, here was an opportunity to make real and meaningful change. He recalled: “To Accept (sic) or not accept the October Revolution . There was no such question for me. I organically merged into active creative, social and pedagogical life’. Others, like Wassili Kandinsky were not sympathetic to Bolshevik politics, but welcomed the artistic freedom which it brought, while aesthetically or/and politically conservative artists feared a loss of private patronage and critical status.
Contrary to western propaganda, no artist was sent to the salt mines: Lenin and Lunacharsky, (Commissar of Enlightenment 1917 - 1929) pursued a pluralist arts policy. Nevertheless for the first time in the world, the avant-guard was appointed to positions of power. Despite the material hardships and shortages of War Communism (1917-1922) it launched into a dynamic transformation of art and its institutions.
Tatlin headed IZO, the visual arts section of Lunacharsky’s commissariat. Recognising Kandinsky’s international status as an innovator, IZO gave him the important role of reorganising art education and museums. Together with the younger Alexander Rodchenko he founded 22 provincial museums and acquired the important collections of Russian avant-guard art which now grace museums in Russia and the ex-Soviet republics . Tatlin, Kasimir Malevich, Kandinsky, Marc Chagall, Lyubov Popova, Varvara Stepanova , Rodchenko, El Lissitzky and others taught at the newly created VkHUTEMAS, SVOMAS and other art schools where they pioneered innovatory teaching methods which were to influence the Bauhaus.
The debates about the role of art and artists raged on. Malevich and his UNOVIS group argued that the researches of innovatory artists would act as prototypes for practical application in architecture and design. Others took a less social view: Chagall continued his poetic depictions of his personal response to life, while Kandinsky pursued his investigations into the communication of heightened spiritual states of mind via colour, line and form.
Viewing such work as bourgeois self-indulgence, the politically engaged left heeded Mayakovsky’s dictum: ” the streets are our brushes the squares our palettes“. They created ‘agit-prop ’ (agitation and propaganda) using their talents to decorate propaganda trains and boats, make Rosta street posters and organise public pageants and events. For example in 1920 Natan Altman and other artists involved 2,000 members of the Petrograd proletariat in the re-enactment of the storming of the Winter Palace which included decorating buildings with gigantic abstract banners and using factory sirens and arc lights.
Some Marxists, led by Tatlin and Rodchenko called for the abolition of the art object which they saw as an exchangeable commodity belonging to the bourgeois past. Artists must leave their ivory towers and construct the new Socialist state alongside other workers by putting art at the service of the revolution. They became known as the Constructivists and put the experiments conducted in the new art schools to practical use by designing posters, books, ceramics, theatre sets, etc. for the masses. Under the slogan ‘Art into Production’ artists were to go into the factories to create modernist, mass produced designs because the new social order demanded new materials and new forms. For example, Popova and Stepanova designed textiles printed with the abstracted motifs of modernity : the zigzag of electricity, the whirl of aeroplane propellors, the cogs and wheels of trains and tractors. Popova, who had begun her life as a painter is reputed to have said: ’ No artistic success has given me such satisfaction as the sight of a peasant or a worker buying a length of material designed by me.’
Meanwhile, artists such as Alexander Deineka argued that modernism was inaccessible to the masses. This was indeed often true. Abstract street decorations were said to frighten the horses. No less committed to the revolution, they argued for a representational art which would carry revolutionary messages. Seen as reactionary by the Constructivists they were the forerunners of Socialist Realism. The dilemma of creating innovatory art which is also accessible to the masses has yet to be resolved.
FIVE YEARS ago the banking system in the United States and Britain nearly collapsed. It was saved by massive government interventions; it was capitalism that almost broke down and was rescued by the state. If governments have to intervene to save big financial institutions that means, by definition, that markets have failed. That means that capitalism has to be propped up by the state.
One would have thought that in these circumstances, Karl Marx, the most effective critic of the capitalist system, would have some perspectives to offer. Instead, ironically, we see the publication of a book proclaiming the irrelevance of Marx’s ideas to the present-day conditions – and receiving much praise in reviews in several journals and newspapers.
I am referring to the book Karl Marx: A Nineteenth Century Life by Professor Jonathan Sperber who teaches history at the University of Missouri, the United States. Professor Sperber’s principal contention is summed up in the ‘Introduction’ to the book. He writes: ‘... it is time for a new understanding of him [Marx] as a figure of a past historical epoch, one increasingly distant from our own: the age of the French Revolution, of Hegel’s philosophy, of the early years of English industrialisation and political economy stemming from it. It might be that Marx is more usefully understood as a backward-looking figure who took the circumstances of the first half of the nineteenth century and projected them into the future than as a sure-footed and foresighted interpreter of historical trends. Such are the premises underlying this biography.’
What Marx meant by ‘capitalism’, Professor Sperber writes, was not the contemporary version of it, and the bourgeoisie Marx dissected was not today’s class of global capitalists. According to him Marx ‘certainly did understand crucial features of capitalism, but capitalism that existed in the early days of the nineteenth century, which both in its central elements and in the debates of political economists trying to understand is distinctly removed from today’s circumstances.’ Capitalism, according to Professor Sperber, has changed so much that Marx’s insights into the working of capitalism are irrelevant to our understanding of the present-day conditions.
Capitalism has certainly undergone some major changes since Marx’s day. In Marx’s time the typical business was family owned and family managed; its size was not such that its failure would have dire economy-wide repercussions. Today we have enterprises whose reach extends across the globe – think of the large oil companies, the banks, Google, Microsoft, large automobile manufacturing companies, and so on. And the failure of one bank can bring down the banking system and with it the economy. In Marx’s day the business and the state were distinct; today the state is almost interlocked with big business. One could go on.
From around 1844-45 until his death Marx’s theoretical endeavours were aimed at understanding the working of contemporary capitalism. In this work he attempted to identify certain long term trends or tendencies in capitalism. Some of these tendencies arose from the very nature (‘essence’) of capitalism, others were contingent on a number factors that could possibly go one way or the other. In this short essay, I am concerned with the first type that are fundamental to the validity of Marx’s analysis of capitalism. And I direct attention to two insights into the same tendency which, I claim, provide invaluable help in understanding the working of the capitalism of the 21st century. The first of these insights refers to what Marx called the ‘the Industrial reserve army’. Capitalism, for its expansion, requires a large reservoir of cheap labour; unemployed or under-employed labour on which it can draw so that wages are kept low, high profits can be maintained, and capital accumulation can proceed without any hitches. Imagine what will happen if in an economy (isolated from rest of the world) labour is fully employed. Any expansion would have to depend on the increase in population to satisfy the demand for of an expanding economy. Generally, increase in population will not be enough for meeting the increasing demand for labour. Shortages of labour will develop, the bargaining power of labour will be greater, wages will rise, and that will have an adverse effect on profits and investment. An expanding capitalist economy, if it has to keep expanding, needs supplies of ‘surplus’ labour to keep the bargaining position of workers in check, and to keep wages at a level that do not threaten profits and accumulation. That is in simple terms Marx’s idea of the reserve army of labour.
Looking at this phenomenon historically, Marx observed that in the early and initial phase of European capitalist development, that is, before widespread factory production, capitalist industry, as it expanded, could draw on unemployed and under-employed labour that was found in agriculture and traditional activities. That labour – potential source of cheap labour – constituted the industrial reserve army. Modern industry as it expanded drew on this reservoir of cheap labour and in this way wages were kept low, profits were kept high and a high rate of capital accumulation was maintained.
With continued expansion over time a point was reached when this source of cheap labour dried up. Now with modern factory production and rapid developments in technology, the capitalist economy developed a response to deal with the problem. This response was increasing mechanisation. It was not the case that before this period there was no mechanisation. The difference between the two situations was that now this procedure played a greater role than before. It came into full play. Economists have a word for this, ‘capital-labour substitution’. That is, when wages rise relatively to profits producers find it profitable to invest in new methods that ‘save’ on labour. According to Marx, the capitalist economy now created unemployment, recreated the reserve army of labour.
Associated with this phenomenon – relative reduction in the demand for labour – is another. Periods of rapid growth in the economy tend to be followed by a set-back; there is decline in profits and therefore reduction in investment and, as a consequence, reduction in the demand for labour. This is the phenomenon of booms and slumps or recessions. During recessions, with high unemployment, the bargaining power of workers is sharply reduced.
This is how the capitalist system works to keep in check workers’ wages and to maintain profits and rate of accumulation. This insight of Marx’s (I will put it no stronger than that) is still relevant.
After the Second World War this phenomenon took an international dimension. European economies had been devastated by war and faced the task of reconstruction. Domestic supply of labour was not sufficient for the task. The mechanism of ‘capital-labour substitution’ could not work in this situation. The reservoir could not be created at home. But there were large reservoirs of cheap labour in less developed countries. Thus, Germany imported labour from Turkey, Britain from India, Pakistan, the West Indies, and France from North Africa. (The Germans invented a rather nice word for their imported labour – Gastarbeiter, Guest Workers. Note that guests are expected not to over stay the hospitality of the host.) The mechanism of the industrial reserve army worked quite effectively during this period.
But there was a limit to how many ‘guest’ workers could be accommodated and imported from countries with vast reservoirs of cheap labour. From the late 1970s, the international dimension of the industrial reserve army took a different, extended form. If more and more Bangladeshis could not be imported into the developed world, then capital from the developed world will go to Bangladesh. (Of course there are other considerations- apart from cheap labour – that influence foreign investors’ choice of the location for their operations.) Thus, we see that an enormous amount of manufacturing industry – and services (call centres, for instance) – from developed countries has been transferred to ‘labour-rich’ countries to utilise the reservoirs of cheap and docile labour. Jack Welch, a former CEO of the American company General Electric put it nicely when he said: ‘Ideally you would put your manufacturing plant on a barge so that it could move around the world as wages and currencies fluctuate.’
I think I have said enough to show that the insight Marx provided in his discussion of the reserve army of labour is as valuable for understanding the working of capitalism today as it was when he discussed it. (The idea of the reserve army is discussed in volume one of Marx’s Capital, chapters 25 and 26.)
The second insight of Marx into the working of modern capitalism relates, as indicated, to the same phenomenon as the first, the drive of capitalism to expand. They have been discussed separately for ease of exposition. The phenomenon is what we today call ‘globalisation’; this is the same thing as the expansion of capitalism across the world.
According to Marx capitalism is a system that is dynamic and it cannot be conceptualised without its international dimension. The subject was discussed the first time when Marx and Engels presented the material conception of history in a comprehensive manner. (In fact, this is the most comprehensive statement that exists.) This was in the volume with the title German Ideology written in 1845-46 – Marx was 28 years old and Engels two year younger. The book was not published until 1932.
Let me quote from this volume. About the first phase of capitalist development, they wrote: ‘Intercourse with foreign nations was the historical premise for the first flourishing of manufactures ... Manufacture and the movement of production in general received an enormous impetus through the extension of intercourse which came with the discovery of America and the sea-route to the East Indies. The new products imported thence, particularly the masses of gold and silver which came into circulation, had totally changed the position of classes towards one another, dealing a hard blow to feudal landed property and to the workers; the expeditions of adventurers, colonisation, and above all the extension of markets into a world market, which had now become possible and was daily becoming more and more a fact, called forth a new phase of historical development...’
The expansion of commerce and with it of manufactures accelerated the accumulation of capital; created the big bourgeoisie, first of merchants and then of manufacturers. The old methods of production concentrated in guilds crumbled in the face of competition from manufactures.
It is not necessary here to go into a detailed discussion of the stages through which the process of globalisation underwent. It has been proceeding since the earliest development of this mode of production. There have been interruptions caused by European wars and economic recessions or depressions, particularly the one that occurred in the 1920s and the 1930s. The process became rather subdued during the Cold War, but as the great stagnation set in in the Soviet Union, during the Brezhnev era, the pace quickened. Towards the end of the 1970s and early 1980s, with the deregulation of financial institutions, privatisations of public assets, the process of globalisation achieved a momentum not seen since the early period of capitalism that witnessed the beginning of European colonial expansion across the globe. The late 1970s is of course also the time when the Communist Party of China changed course. This gave an enormously powerful boost to the process.
As suggested, Marx’s insight into the process of globalisation arises out of the manner in which he conceptualised capitalism. In every class society labour produces a surplus of output over and above what it consumes (and raw materials, etc.) This surplus product is appropriated by the ruling, propertied class. In pre-capitalist societies this surplus product was, generally speaking, used for the luxury consumption of the propertied class, wars, etc. Capitalism was different from these earlier societies in a number of respects. But let us direct attention to two of these (which are related to each other).
First, capitalism was a rational system in its methods of production; this in the sense that capitalist producers operated on the basis of a careful calculation of costs and benefits of their methods of production, and aimed at maximising the surplus product, increasing labour productivity and profits. This approach to production required a different – scientific – way of thinking that looked at traditional ways of doing things critically. (This rational approach to production then spread to other spheres of life).
Second, producers (capitalists) re-invested a large proportion of the surplus product to expand production and increase the productivity of labour by adopting new methods of production. This was capital accumulation, a unique feature of the capitalist mode of production, a new phenomenon in the history of mankind. Capitalists were driven to accumulate as a result of competition among themselves. It was a world of the survival of the fittest, the principle of individualism taken to its limit. (On this principle, see the article in viewpointonline.net, no. 152)
It was this way of conceptualising capitalism – seeing it as dynamic and expansive – that led Marx to his theory of capitalism. The tendency for the individual capitalist enterprise to grow in size and then go across its national borders in search of new markets and raw materials is built into the structure of capitalism. This tendency has of course been intensified since the technological developments since the 1980s. If the large capitalist enterprise today straddles the world, it is not simply because its leaders are ambitious for themselves, and they want to earn more money for themselves. It is a tendency they cannot escape. If today they earn annual incomes measured in millions of pounds, it is not just greed; it is fundamentally because the turnovers of their businesses run into billions of pounds. (The manager of the Chelsea football club was reported in the Guardian newspaper to earn 8.5 million pounds annually. Football is big, international business).
The notion that capitalism has an inherent tendency to become international, global was restated with great force in The Communist Manifesto, published in 1848: After referring to the discovery of America, the rounding of the Cape, colonisation, etc., it added: ‘The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.’
In a nutshell: The tendency for capitalist enterprises to expand and increase in size rests on the fact that there are clear advantages in being large, in terms of costs, in terms of market power, and in the struggle with competitors; it is, to repeat, the world of the survival of the fittest. Over time as these enterprises grow in size, they find that domestic markets are too small for their operations. They are thus led to find markets – and resources – in other countries. And these considerations lead them to locate their operations across the world.
I hope I have said enough to show that Marx’s observations on certain aspects of capitalist development are as relevant to our understanding of the world today as they were when The German Ideology and The Communist Manifesto was written.
BOB CROW’S shocking early death on 11 March 2014 at the young age of 52 deprives RMT members of the most inspirational and effective leader in the trade union movement at a time when workers across the world face economic attacks and imperialist aggression to an extent not seen since the 1930s.
Marx Memorial Library mourned the loss of a firm friend, long standing member and supporter of the Library at our General Committee meeting in March.
Bob Crow’s family, friends and RMT comrades have been deluged by messages expressing solidarity, condolence and almost inconsolable sadness from workers’ representatives from Cuba to Iraq and all points in-between.
This was no media-concocted, emotional frenzy. Bob’s brilliance as a media performer, whether as a panellist on BBC’s ‘Question Time’ or his mercurial press conferences before each TUC Conference (the only events that hardened Conference hacks wouldn’t miss), was based on an instinctive, razor-sharp intellect and a direct honesty that got straight to the point.
He had no airs and graces. Not a trace of pomposity attached to him, and as anyone who had the privilege of hearing him address large meetings of trade unionists could testify his powers of communication were exceptional. I have not heard any trade union or political leader since Arthur Scargill at the peak of his powers, who could speak to an audience with the power of Bob Crow. On occasions I have seen him reduce audiences to tears of anger and uproarious laughter both at the same time.
Last year in September Bob was honoured to address SIPTU’s biennial conference in the Round Room of Dublin’s Mansion House, on the centenary of the Dublin Lockout, the only British trade union leader to be invited.
Paying tribute to the men and women of the 1913 Lockout, Bob Crow apologised for the failure of British trade union leaders to support them at the time. However he paid tribute to the “rank and file members” of the National Union of Railwaymen who raised funds for Dublin’s workers and organised waves of unofficial sympathy strikes across the north of England and South Wales carrying out the call that Jim Larkin made to them.
Bob Crow had a deep respect for the history of struggle of the Irish working class and his great hero was James Connolly whose collected works had pride of place in his office.
In December last year Bob was pleased to see the publication of MML’s Desmond Greaves archive as ‘James Connolly and the Reconquest of Ireland’ by Dr John Callow, co-sponsored by RMT, GMB and SIPTU, which is a magnificent addition to the literature on Connolly and permits a great insight into the development of his thought following the Lockout.
The vast expression of grief and loss at his early death by class conscious workers and politically progressive people around the world are an acknowledgement that we have lost a true comrade of rare talent and power.
One of Bob’s greatest friends, John Samuelson, President of the Transport Workers’ Union Local 100, which organises New York public transport workers wrote:
“Bob’s death is a crushing blow to Britain’s and the world’s labor movements. He was without question the most important and profound voice for industrial unionism and the working class in the world.” This is a measured assessment.
The RMT he leaves behind is so much stronger than the one he took over in 2002 when we elected him our General Secretary. Although Bob Crow’s legacy will be felt around the world wherever workers organise, it finds its concrete expression in the pride, combativity and solidarity of his RMT members in the transport and offshore energy industries, which will go on from strength to strength.
As Bob told audiences on many occasions when embarking on struggles against job losses or pay cuts: “They say that fear is contagious. But there is something more contagious than fear. And I’ll tell you what that is. It’s courage!”
WE CAN say first of all that this was a global crisis. If you look at the data, towards the end of 2008 all mature economies dived together. So, there is no question this was a global crisis, although it affected mostly mature capitalist countries rather than newly emerging ones.
The second thing we can say is it was systemic. Clearly, it was something to do with the way finance, production and distribution were woven together. It wasn’t an accidental event. It wasn’t an isolated event. It was systemic and it was structural as well. Something was deeply wrong with the accumulation of capital and how the financial system interacted with the accumulation. That was clear.
The next thing we can say about the crisis is that it emanated from the financial system. This wasn’t a crisis that emanated from the productive sector. There’s no evidence during that period that we had some major malfunctioning of production. There are plenty of things wrong with production, of course, and I will mention them, but the crisis emanated from the financial system, the US financial system in the first instance, and the British financial system and other major financial systems closely related to the US.
Next, and things are now becoming increasingly strange, the crisis came out of loans made to the poorest section of the US working class. These were loans made to people without any assets, without any income, without any credit history, who were often black or Latino and lived in urban areas of the United States that were previously off-limits to banks and credit.
That’s a very strange development. Never before has a global crisis of capitalism emerged connected to loans made to the poorest section of the working class. It would have been unthinkable to Classical Economists or Marxists that something like this could ever have taken place.
The last thing we can say about the crisis is that it was fed by enormous financial speculation, financial innovation as they call it, but really speculation. It was the creation of paper on the back of paper, to create even more paper, to result in profits not from lending, but from dealing in paper, from transacting in paper, from buying and selling paper among the financial institutions to generate fees, commissions and all the other profits that the dealers in these financial assets secure for themselves as they trade in the markets.
How was the crisis dealt with? Think about it. Who dealt with it? The state. Quite clearly in the absence of the state there would have been total collapse in the summer of 2008. There wouldn’t have been a major bank standing in the United States and quite possibly in this country too. Whether the banks were directly involved in the speculation that I mentioned, or not, there wouldn’t have been a major bank standing because healthy banks also fall when problematic banks go under.
So the crisis was dealt with through intervention by the state. And it is this intervention that requires thinking about, because it shows how the state and contemporary capitalism are connected. What was the major thing that the state did? It drove interest rates down to zero. That’s the most decisive policy undertaken by the state.
I know it isn’t obvious, so let me explain why it’s so important. The state drove interest rates down to zero through the central bank – by using public resources. The rate of interest that was driven down to zero is that charged by the central bank, a public rate of interest. By driving it down to zero what the state did was to create profits for the commercial banks. The reason is that commercial banks borrowed at next to nothing – at zero-rate – from the central bank, and then they on-lend to private borrowers and could make a secure profit. In this way, the state subsidised the banks and ensured that the banks could make secure profits. This was the biggest intervention by the state, a massive public subsidy to banks through the rate of interest.
The second thing that the state did was to give to the banks vast public funds. Particularly in the United States, an enormous system of public funding for the banks was instituted and banks were effectively buttressed with tax income. Tax income was mobilised and passed onto banks to make sure they didn’t go under.
The third thing that the state did was to create liquidity for banks. Not to give them public funds (or tax money) but fresh money created by the central bank that was lent to the banks. And this allowed banks to continue their normal business and not to go under, because in a crisis banks are typically short of liquid funds. So the state created the necessary liquid funds for the banks.
In these three key ways public intervention rescued the banks and saw to it that the worst of the crisis was confronted. Public resources, public credit-worthiness, public liquidity were mobilised to rescue the private banking system that had created the crisis in the first place.
The fourth part of dealing with the crisis of course related to working people. For working people, however, the conditions that prevailed were the opposite of those for banks. To working people were given austerity, fiscal retrenchment, and cuts in welfare expenditure. What the state was giving with one hand – the largesse towards the financial system to rescue it – was actually taken back by cutting, restraining and restricting welfare spending – austerity in other words – and at the same time wage restraint. That was a clear demonstration of the class character of the modern state, of where its priorities lie.
If we sum up the aims of public policy in dealing with the crisis what we have are the following priorities: first, rescue the banks and restore financial profitability; second, pass the costs onto working people through austerity and wage restraint; and third – just as important, although it wasn’t immediately obvious in 2008/2009 and only became clear in 2010/2011 – avoid any major institutional change in finance. Once profitability had been restored and the costs passed onto working people, it became clear that the underlying concern of the state was to avoid serious institutional transformation of finance.
Figure 1 shows financial profit in the United States, the country for which we have the best data – unfortunately this calculation is impossible to make with similar accuracy for any other mature capitalist country. It shows financial profit, by which is meant the profit of financial institutions and is actually a very narrow part of financial profit, because there is also financial profit that is not financial institution profit, not bank profit. What is shown in Fig. 1 is essentially the profit of banks from 1945 to 2011, and shows financial profit as a proportion of total profit. That is, the curve shows the proportion of the total profit of the US capitalist class that is actually attached to finance, and particularly to the financial institutions, mainly the banks.
There are basically three periods in this. The first runs from 1945 to about 1970 when the proportion rises steadily. The second is when the proportion goes flat, from about 1970 to about 1990. And then third is after 1990 when it shoots right up. For a roughly decade and a half financial profit as a proportion of total profit increased very fast. When you look at 2003 it is clear the financial profit as a proportion of total profit is phenomenal: roughly 40 per cent. The figure depends on how you calculate it and what I am showing you is quite a conservative calculation, but it still is very high: 40 per cent of total profit came out of banks.
This proportion began to decline in 2003 and for about four, five or six years. These were the years of the bubble. As profit began to decline, the banks went mad. They tried to make returns out of paper dealing and mortgage lending to the poorest sections of the US working class. Then the crisis came and financial profit collapsed. At which point the intervention by the state took place. And what did the intervention by the state do? It made financial profit bounce right back. This was the objective of state intervention. Financial profit has not reached the level of 2003, but it is quite healthy even as we speak. The state in the United States and elsewhere saw to it that financial profit recovered quickly. That was a key focus of public intervention in dealing with the crisis.
Is this a crisis of over-accumulation? In a general sense it is. In the sense that profitability and production and accumulation have not recovered the vigour that they had in the 1960s and the first part of the 1970s, there is no question at all about it. However, bearing in mind what I have presented to you, I think we need to be more precise and factor in all the changes that I’ve outlined.
To me the crisis that broke out in 2007 is a crisis of financialisation. It should be seen as a crisis of financialisation, of the structural, historic transformation that has taken place in mature capitalism during the last three to four decades. Financialisation is best understood as an epochal transformation of capitalism and I’ll now discuss how it has worked.
First, financialisation is an epochal, historic transformation in the simple sense that during the last three to four decades the sphere of circulation, including finance, has grown enormously and much faster than the sphere of production. There has been asymmetric growth of circulation relative to production, which is characteristic of financialisation.
Second, financialisation is an epochal, historical transformation in that it represents the second bout of the rise of finance in advanced industrial capitalism. The first bout was the period of imperialism that Hilferding, Lenin and others wrote about at the end of the 19th century and beginning of the 20th century. Financialisation represents the second bout of the rise of finance; it is similar, but also different to the first bout.
As a concept, financialisation originates in Marxist political economy. The first reference to it that I can find is associated with Monthly Review and with Paul Sweezy. For Sweezy, modern capitalism is characterised by the ceaseless growth of ‘surplus’ which cannot be easily absorbed productively and tends to be used unproductively. A crisis emerges when the ‘surplus’ is so great that the economy becomes inundated with it and tries to find other ways of dealing with its excess.
Sweezy thought that finance could be one of these ways in which the surplus could find some kind of profitable use. When the crisis of 1973-74 broke out and the long post-war boom finished, Sweezy was the first to argue that from now on we are likely to see a period of steady growth of finance because that is where the surplus will end up. So the Monthly Review tradition is where the first intimations and first analysis of financialisation can be found, and it continues to produce valuable work on this issue.
Important to the theory of financialisation are also the ideas of Giovanni Arrighi, who was connected to world systems analysis and to Braudel’s view of the historical evolution of capitalism. Arrighi wrote in the early 1990s on this issue and saw financialisation differently from the Monthly Review current. For Arrighi financialisation was a historical development. Arrighi wanted to understand the historical evolution of capitalism and, as it were, the cyclical motion of hegemony in the world market.
Arrighi thought the world market must have one hegemonic power, which was Genoa in the old days, then Britain, and then United States – a succession of hegemonic powers. Financialisation for Arrighi was the period of decline of the hegemonic power. The hegemon emerges and dominates production and trade. When the hegemon begins to move into finance and into lending, then the hegemonic power declines and a new hegemon begins to emerge. That’s how Arrighi conceptualised financialisation, ‘the autumn of capitalist power’ in the world market. You can see the connection that Arrighi wanted to draw with the United States. If the United States financialises, it means that the United States is actually declining in the world market. Again, there is a Marxist aspect to this view in terms of its broad analysis and approach.
Then we have people associated with the French Regulation School, Aglietta, Boyer and the others who also discussed financialisation later in the 1990s. For them financialisation ought to be approached differently. The Regulationists understand capitalism as operating through a regime of accumulation and a mode of regulation, which is essentially the institutional framework through which capitalism works. For the first post-war decades that regime was, as is well known, described as ‘Fordism’, and it was the system through which capitalism did so well in the 1950s and 1960s. Namely, mass production, mass consumption and real wages rising systematically and in line with productivity. When ‘Fordism’ came to an end in the 1970s, capitalism began to look for a new way of regulating its affairs and it is in this context that financialisation emerged, as far as the Regulation School is concerned. Aglietta and others who have developed this approach began to argue that contemporary capitalism is regulated through finance, regulated through the stock market. The financial system has become the new mode of regulation for contemporary capitalism. Again, there is a Marxist aspect to this approach to financialisation, not a traditional one, but Marxist nonetheless.
In addition to the Marxists, or to those who come from Marxist currents, we also have post-Keynesians who have been developing the concept of financialisation. Post-Keynesians economists are basically radical Keynesians who are able to converse with Marxism in terms of its analytical ideas and concepts. For post-Keynesians, financialisation is a characteristic feature of contemporary capitalism. They are the theorists who invented the term ‘finance-led capitalism’. What is characteristic of post-Keynesians is that they think of financialisation as a type of capitalism in which the rentier has reappeared. In this regard they take their cue from Keynes but also, to a certain extent, from Marx.
The rentier is a type of capitalist who holds a lot of money, but doesn’t want to invest directly in production and makes the money available for loan. ΑAs you probably know, Lenin talks about rentiers, as does Marx occasionally. Post-Keynesians argue that contemporary capitalism is rentier capitalism and that’s what drives financialisation. To be specific, financialisation is determined by government policy and policy is determined by the rentier interest. I will come back to this point later in my talk.
The last bit of theory on financialisation that I want to mention is that by economic sociology, economic anthropology, and economic geography. They have analysed financialisation in very interesting and informative ways. There’s a lot of work from these perspectives, but it lacks the common disciplinary core of the other approaches that I have mentioned.
To wrap up, the concept of ‘financialisation’ has Marxist origins, although non-Marxists also use it extensively. The approach that I am proposing to it, however, is based on classical Marxism, and in particular on Hilferding and Lenin. And it is on this basis that I want to argue that financialisation represents a historic, epochal change. Also, we have just come out – or still living through the tail end of – a vast structural crisis, a crisis that has been associated with the financial system and certainly reflects the extraordinary growth of finance. Our analysis of financialisation must be related to that.
My argument is that we should analyse financialisation in the same way that Hilferding and Lenin went about characterising their own period. We should use their approach and method, but we should keep our eyes open to see how their conclusions and arguments fit with the current period. And we should be ready to adapt our explanation.
The first point to stress is that, if financialisation is characterised as an historic transformation, its roots should be associated with the behaviour of productive capital, the behaviour of banks and the behaviour of workers and households. Think of how Hilferding and Lenin defined the rise of finance in their own time. What was that characterised the period of imperialism? Finance capital. This is the term that captured that period, the period of imperialism. And what is finance capital? It is a new form of capital that emerges because big productive capital – big business – is increasingly dependent on big banks for loans to finance investment. The more that big business depends on big banks, the more dominant that big banks become over it. As banks become more dominant, big banks and big business become intertwined with each other, and become one. They become finance capital. This is the form of capital that basically drives imperialism, the highest stage of capitalism as Lenin called it.
This is how they went about it and I suggest we follow the same approach and see how financialisation can be thought of as rooted in the process of accumulation itself. In this connection we can say immediately that the post-Keynesians are not right: the financial system is not run by rentiers and financialisation is not simply a result of government policies to promote finance. It is much more deeply rooted in the structures of contemporary capitalism, as I will show you.
Let me start then with productive capital, or more specifically, industrial and commercial capital. Let’s see how big business behaves today in relation to financialisation. I’ve got two observations to make on the large corporates, the big business of today.
The first observation is that, unlike the period of finance capital, unlike the period of Hilferding and Lenin, we do not see a growing fusion between industrial capital and banking capital. What we find is that there is space opening out between large corporates and large banks. To put it differently, there’s significant independence between large banks and big business, not increasing dependence between them, although there are significant variations among countries. Still, the tendency toward greater independence of big business from big banks can be observed in all mature capitalist countries.
The second observation is that large industrial and commercial businesses tend to financialise, even though they are more independent of banks. In other words, big businesses take part in financial transactions on their own account, and make financial profits by playing financial games independently. They actually have established sections that look like banks and which operate within the confines of large corporates.
We have a complex motion between industrial and banking capital, not an increasing fusion of the two. There is no finance capital today in the historical sense, and actually some space has opened up between large commercial industrial enterprises and large banks. However, there is also increasing financialisation of industrial and commercial enterprises, and an increasing generation of profit through financial activities rather than through production, by playing games in the stock market, or in the derivates markets, or in other financial markets generally.
Let me show you a little bit of evidence from my book. Figure 2 shows, again, the USA, the country for which we have the best data, although on this issue we have good data from other countries too. What I have done here is to show how industrial and commercial capital – taken as a whole – finances its investment on a net basis. Financing investment is obviously the main reason that businesses seek access to credit.
What you will see for the United States, obviously with variations, since this is from 1945 to 2010, the entire post-war period, is that the funding of investment occurred largely with retained funds. During the years of financialisation, in fact, the funding of investment was pretty much 100 per cent through retained profits. It is worth stressing the point: Big business relies on retained profits to finance investments on a net basis, not on banks. Of course, big business also uses banks, but on a net basis its investment is financed through its own funds.
Not only this but when you look at the 2000s you see that retained profits actually shoot right up as a proportion of investment. In other words, big business in the last 10 to 15 years has been sitting on enormous amounts of cash far exceeding its investment needs. Large US corporates do not depend on banks; on the contrary, they’ve got a lot of money and they play games in the stock market with it, or they play games in financial markets with it. They have financialised.
Let me show you Britain: Figure 3. It is the same pattern, except shown from 1985 to 2010 – roughly the years of financialisation. What you see is again fluctuations around the 100 per cent line, that is, British big business similarly finances its investment through retained profits. And again similarly to the United States, what happens in the 2000s is that British big business has been sitting on enormous amounts of cash. The line shows that retained profits rise to 150 per cent of investment needs on a net basis, funds which are not used for investment but in various ways often associated with the financial system.
To sum up, large industrial and commercial enterprises are not increasingly dependent on banks, certainly not on this evidence. They’ve got enormous amounts of cash from retained profits and that’s how they finance their investments but also financialise. In other words, they’ve developed independent capacity to play financial games and to make profits out of their own presence in the financial markets. Financialisation, then, is a historical tendency based on this transformation of the productive sector that I have just outlined.
What about banks? Well, put two and two together. If banks are doing less business with large industrial and commercial capital, then banks have to reinvent themselves. Banks have to begin to make profits some other way. Which other ways? Well, lending to other banks, or playing games with other banks, transacting with other banks and making profits out of financial transactions, rather than lending. Profits made in financial markets out of transactions do not necessarily involve lending. They can be profits from financial buying and selling, from fees, commissions and spread trading. Banks have moved towards making profits out of these transactions with other banks and other financial players.
But banks have also moved towards lending to households and individual workers. If you can’t make a profit out of lending to big business, start looking for profit out of lending to households and to working people. And that is one of the most characteristic features of contemporary financialisation – the shift of banks towards households and individuals, to which I will come back in a minute.
Let me show you a little bit of evidence for banks too from the United States. Figure 4 runs from 1951 to 2009, and the purple line shows bank lending for commercial and industrial purposes. You will see it rising up to 1977 and then declining. At present US banks don’t lend particularly for commercial and industrial purposes; they do lend for this purposes, of course, but proportionately less. Who do they lend more to? Look at household mortgages: there is a vast jump. Look also at commercial mortgages, which have also increased. This shift in the activities of US banks is very clear.
If you look at Britain you will see similar things, although, I repeat, no two countries are exactly the same. I could have shown you Japan and Germany too, but I don’t want to tire you with numbers and figures. The tendencies also hold for those countries, with variations. If you look at Britain in Figure 5 [PP15] you will see that lending by banks to private corporations declines. British financial institutions do not lend to productive, private corporations as much as they used to. Indeed they lend more to other financial institutions, to banks.
With variations, then, British banks are behaving similarly to US banks and not that dissimilarly to German banks or to Japanese banks. Banks have in a sense financialised. I know it sounds ludicrous to use the term financialisation in this context because banks are finance in and of themselves. But banks have transformed themselves in this way
Let me come now to ‘households’. I would have liked to speak about ‘workers’, of course, but Flow of Funds data doesn’t give ‘workers’ as a category, so I cannot do that. I can only use ‘households’, which is the category that the data gives me, which isn’t the same as ‘workers’, but it is a reasonable proxy for ‘waged people’. Though, I must stress that even that, once you begin to look close to the figures, includes various people who work for investment banks who get remunerated in the form of wages but what they receive is not wages – it is profits accruing as salaries.
In any case, let’s use households in the way in which the data gives it to us and see what can be said about financialisation. What do we see? A couple of key things, actually. First, we see that household borrowing has increased tremendously and that is the most staggering feature about financialisation. This rising indebtedness, I have to stress, because people on the left often get this wrong, is not unsecured borrowing. It’s not mostly borrowing to live, or to consume. Often people on the left make an easy connection: ‘wages are not high enough, therefore people borrow to make up the shortfall, therefore, they end up more indebted.’ This also happens but it’s a small part of aggregate household indebtedness.
Households borrow mostly for mortgages, not to consume on a daily basis. Before I examine this fact more closely, though, I wish to stress another point about household financialisation. It is not just indebtedness that has increased for households, but also the holdings of financial assets. These are very important because they are basically pensions, insurance and all the various other things that working people need today to survive. They are the counterpart to debt. Financialisation also applies to assets not just for debt. It’s very important to remember this. Banks can make a profit out of lending money to you but also out of handling your pension funds. Financialisation works on both sides for the household.
Why, then, has the financialisation of the household increased? It is not simply because wages are not rising. Wages have not risen, to be sure, and in the USA real wages have been flat for decades. That’s important, but that’s not the only reason of financialisation, or not even the main reason. Indeed, the main reason why financialisation of the household has become so prominent in the last three to four decades is more complex and has to do with public provision. What we observe in the last three to four decades is the retreat of public provision: in housing, in education, in health, in a whole range of areas that are fundamental to working life. As public provision has retreated, private provision has taken its place. And who mediates private provision? Private finance. The private financial system has emerged as the mediator of private provision. Banks have emerged as key agents in solving the housing problem, the health problem, the education problem, whatever other problem households might have. Without any notable skills in confronting this task, or any reason to believe that banks know how to deal with it. But that’s how things have unfolded.
Financialisation of the household is actually a complex result of these processes. Banks make profits out of lending to households but also out of handling household assets too. Let me show you a little bit of evidence again. This is the United States, Figure 6 [PP 17] and it shows household debts as a proportion of GDP from 1945 to 2009. It’s the household debt mountain basically. Household debt as a proportion of GDP in the United States just went through the roof, particularly from about 1980 onwards – the period of financialisation. What’s the biggest part of that debt? It’s the blue line, that is, mortgages. Other debt also increases, including consumer credit, but it is not at all the dominant part. I know that a certain part of mortgages is consumer credit masquerading as mortgage debt, and it is impossible to tell what proportion that is, but, nonetheless, the biggest part of US household debt is mortgage debt.
If you look at Britain it’s not that different. Figure 7 shows British households from 1987 to 2009. The British people became more indebted as a proportion of GDP, and certainly from the middle of the 1990s the ratio went right up. The bulk of the debt is of course mortgage debt. Unsecured consumer borrowing is also there but it isn’t the biggest part. British households have thus become financialised in this way, and for the reasons that I have explained to you.
Let me now bring these analytical strands together and state that financialisation of mature capitalist countries is an epochal change in which finance has penetrated the most fundamental areas of capitalist accumulation. Finance has found new fields of profit in household income and in transactions in open financial markets. In this way finance has become an incredible source of profit for the capitalist class as a whole. These transformations have contributed to the gigantic crisis that we have been going through. They have led to the crisis in a structural way, not because policy making has been captured by the financial interest and is shaped by it, although the latter cannot be denied.
I want to finish by saying a few words on what to do about financialisation. The first thing to stress is that if it is a historical transformation, which I think it is, if it is a historical period of capitalism, then it has deep roots and foundations, which I have discussed. It follows that confronting it, changing it, cannot be simply a matter of government policy. Policy is certainly necessary, but those who think that by changing government, introducing a raft of laws and bringing in a new institutional framework of finance they would be able to deal with financialised capitalism are simply over-optimistic. Such an approach does not quite appreciate the depth of financialisation and its structural aspects. This is not so much an issue in the UK, but in the United States where there are many people who think that if they introduce regulation and change government policy, they would deal with financialisation. But I doubt it.
Financialisation is a historical transformation that has deep roots and requires a systemic and deep confrontation to be dealt with. Let’s think about it for a minute. Socialists typically say capitalism develops the forces of production, revolutionises material and social life, but it does so in a problematic, exploitative, oppressive and crisis-ridden way. Therefore, what we need to do is retain what is progressive, retain the technical and other advances and do away with the social relations of capitalism that create the social problems, the conflicts and so on.
Can we think of financialisation in this way? The answer is no. Financialisation doesn’t represent a significant social benefit to humanity. What exactly is the gain from the expansion and the explosive growth of finance, from financial markets being able to set financial prices across the globe in a fraction of a second? So what? Let’s take a few seconds more. Let’s take hours. Let’s take days. Why should we be mobilising incredible resources, highly trained physics graduates to deal with computers that deploy advanced programmes to allow people to trade derivatives across the globe constantly? Why? Let’s never do it.
The net benefit to humanity from financialisation, seen generally, appears to be negligible. The first thing that has to be said about financialisation, then, is that it has to be reversed. The growth of finance has to be reversed. Humanity gains very little from this incredible explosion of financial capabilities, institutions, mechanisms and markets. Reversal of financialisation is the order of the day, not take financialisation as given and trying to do something with it. There’s nothing, or very little that we can do with it. It’s in this context that we should be thinking of policies to confront financialisation, and then the meaning will become clear.
How, then, do we reverse a historical transformation that is so deeply rooted? It isn’t simply a matter of regulation, nor simply a matter of policy. First, we have to start with the industrial and commercial enterprises and stop their involvement in finance in the first place. Stop them from financialising. How to do that? Well, one way is to adopt a strategy of public investment, together with policies that limit the financial activities of enterprises and changes, including the way in which they organise their internal affairs. That’s where we have to start, if we are going to confront financialisation in a structural way.
Then what? Well, then we need to do something about banks. Private banks operate in the way which I have explained and create crises; they have basically failed and have relied on the state to rescue them. So how do you we deal with them? We need public ownership and public control over banks. To me it is obvious. Not only nationalisation, because nationalisation by itself doesn’t mean anything very much. The capitalist state can nationalise banks; RBS is nationalised after a fashion. We need public ownership and public control over banks. We need a new spirit of public service and new mechanisms to run these institutions in a public way detaching them from what they have doing the last few decades.
And what about households? There I think that things become even more complex. If we are going to remove financialisation from the sphere of households, then we need to reintroduce public provision in housing, in health, in education. For that we need to insist that public are better than private methods. And under no circumstances should private finance be mediating provision to households, because private finance is not equipped to do so. When it is put in those terms, it is clear that confronting financialisation required innovative, communal and associational policies of household provision to come into play.
These policies to confront and reverse financialisation would obviously reject austerity and wage restraint, which is the way in which the state has dealt with the current crisis. And they would be accompanied by measures of profound income and wealth redistribution. It is clear, then, that reversing financialisation requires steps that are inherently anti-capitalist and open up fresh avenues towards socialism. This is the kind of socialism that we need for the 21st century, the kind of socialism that meets the needs of the current era, and begins to speak to people in the here and now about what the world ought to be like. I think that this is the task we have in front of us and the sooner we begin to develop these ideas, the better for all of us. n
WELCOME TO this inaugural edition of ‘theory & struggle’. Our new publication continues the Marx Memorial Library and Workers’ School journal formerly published as ‘Praxis’. It is our aim to develop a Yearbook serving both as a contribution to writings on Marx’s ideas and to provide reviews and commentary on contemporary marxist writings and on studies of the development of the working class movement world-wide.
The contents of this edition reflect our determination to uphold the Library’s founding principles for ‘advancement of education, knowledge and learning by the provision of a library of books, periodicals and manuscripts relating to all aspects of the science of Marxism, the history of Socialism and the working class movement’.
The founding of Marx Memorial Library at a conference in Conway Hall on 11 March 1933 was described by Robin Page-Arnot as ‘a fitting memorial - a centre of working class education - to the greatest thinker and revolutionist of all time in the city where he lived and worked for the greater part of his adult life’. It took place in circumstances as inauspicious as any up until recent times.
1933 saw Hitler’s appointment as chancellor in Germany, first on 30 January in a coalition government, then with plenary powers from 24 March when the Centre Party and Conservatives in the Reichstag voted for an Enabling Act to rule without parliamentary consent or constitutional limitation. Book-burnings and attacks on so-called ‘degenerate’ art, design and culture meant all progressive ideas, especially those of Marx, were under threat.
The response of the socialist and trade union movement in Britain to imperialist crisis and fascist reaction was to reffirm and deepen their committment to educate the working class movement in the ideas of Karl Marx.
The resolution carried unanimously at the founding conference was moved by WE Baldwin of the National Union of Railwaymen declaring ‘the best memorial to Marx in London would be a Marxist Library, workers’ school and educational centre’.
The work of the Library and Workers’ School in its early years concentrated not only on amassing books by and about Marx, Engels and Lenin, then hard to come by in English translation, but also commenced an ambitious series of classes and public lectures aiming to provide high quality education in marxist ideas on history, philosophy, sociology and art that was above all accessible to working people.
Tom Mann, a towering figure of the labour movement and close friend of Eleanor Marx and Friedrich Engels gave the inaugural public lecture, “The Life of Marx” on 5 November 1933.
But, as well as famous speakers, accessibility meant delivering classes that workers could attend after their working day. MML tutors were sent out to evening classes all over Britain, following the pattern established by the Plebs League and National Council of Labour Colleges 20 years earlier.
Today’s Marx Memorial Library and Workers’ School stands fully in the tradition established by our founders.
During 2013-14 we have hosted regular and continuing public classes on the classic works of marxism, political economy for trade unionists, marxism and science as well as piloting online learning, which will be developed as a distance learning course in the coming months.
This inaugural edition of our journal reflects the highly successful public lectures MML hosted over recent months.
John Douglas, President of the Irish Confederation of Trade Unions delivered the annual Marx graveside oration on 16 March, reproduced here. We are very grateful to John for also addressing our public meeting to celebrate publication of ‘James Connolly and the Reconquest of Ireland’ by Dr. John Callow, which utilises previously unpublished papers from MML’s Desmond Greaves archive to show the critical development of Connolly’s thought on imperialism and the national question between the Dublin Lockout and his murder in April 1916.
Costas Lapatvitsas, a prolific teacher, writer and journalist on contemporary capitalist crisis, delivered our annual Marx Memorial Lecture in February this year, reproduced below. Our main hall was full to overflowing with members of the public keen to hear and discuss the implications of Professor Lapatvitsas’ proposition that we are living through a crisis of financialisation, understood as ‘an epochal transformation of capitalism’.
Eric Rahim has contributed a companion piece emphasising the relevance of Marx’s writings to an understanding of capitalist globalisation.
Christine Lindey delivered two stimulating lectures on revolutionary art and the Bolsheviks, demonstrating the broad audience that exists for marxist theories of art criticism and art history. Her exposition of the use of art as a transformative popular technique is also reproduced below.
Andrew Murray writes on the crisis confronting the socialist and trade union movement in Britain in the aftermath of global financial crisis and in the midst of austerity policies dictated by ‘the holy trinity of the world bourgeouisie – the IMF, the World Bank and the European Union’.
Why are such difficult questions important today when many people in Britain are facing real and immediate hardships from government cuts and falling real wages
MML’s founders in the 1930s understood precisely that only the working class held the possibility of transforming their society, defeating fascism and building a socialist society in Britain and internationally. In order for the working class to fight for its interests, workers must first of all perceive those interests clearly and understand the origins and circumstances of their exploitation under capitalism.
We hope that you find ‘theory & struggle’ a useful contribution to the great struggle of the liberation of humanity