Chaotic capitalism

All that is produced must ultimately be consumed/destroyed. This takes time, because production goes through multiple stages and some of the final products have long lives. But, with the possible exception of “art” that is only looked at, things that are made are destined to be used up. This prosaic reality is contrary to the ethics of capitalism, which considers accumulation to be the highest virtue. More land, professed the early conquerors, more gold, echoed the merchants, more machines, preached the industrialists, more liquidity, assert the bankers. More stuff that lasts and can be added to the pile.

The passion for accumulation is sometimes comforted, sometimes ridiculed, but the urge never wavers for long. Bubbles inflate and burst, crowds are fleeced, poverty persists and the glittering circus sets off for a new adventure. Private property of the means of production presents itself as both progressive (get rich!) and conservative (work and save!), rags to riches and life insurance, the best of possible worlds and TINA. This ideological myth built up new momentum in the 1980s, swept the planet in the 1990s and peaked around the new millennium. The last decade of the last century was a jaunty rush, partly fuelled by alcohol and cocaine. Billionaires were springing up all over the place, by presidential decrees in Russia, by mass hard labour in China and by financial poker in the US/EU. The dotcom crash in March 2000 dampened spirits, but the post-9/11 warmongering conveniently brought a renewed high, a new cycle of war and a revitalised hubris with its accompanying discourse. This was followed by the subprime and derivatives explosion, a credit crunch, a liquidity hole and the banking bailout. Since 2008 the system has been in panic mode, frantically printing money and ruthlessly eliminating resistance. Governments are doing their utmost to preserve the wealth of the obscenely rich. They are just doing what they are paid for, but the fantasy of governing for the people has seldom been so transparent. And when regimes lose the power of words they have recourse to force against their subjects, against ethnic and social minorities at home (never the 0.01% of course), and against any rebellion abroad.

As the brave new world of liberal capitalism falls apart, the dark horsemen raise their ugly heads and ride out. A modified atmosphere and oceans full of trash, a tottering financial structure, a decomposing monetary system, a multiplication of insurgent foci, yesterday’s certainties are no more and they leave a vacuum that draws in dangerous irrationalities. The New World Order is disorder, chaos and anarchy. This is the nature of capital in private hands, of “free” markets, of (big) dog eat (small) dog. When rulers shed the mantle of social concern, when the apex of society lives above the clouds like Olympian gods, the propaganda machines can no longer hide what is happening. They can only distract and intoxicate with celebrity, corn syrup and fear. Surrounded by servants, admirers and political lap-dogs, private capitalism has no contact with the world of people and has no future prospect other than grasping the next billion or trillion and making weapons to protect them. Will civilised society reject this nihilistic attitude, or is it too submissive to react and must be drawn down into the pit of savagery once again? The alternatives are more for a few or better for all, but the few hold the gun.

Reaping the Whirlwind

When the fighting stopped on the Western Front at the end of 1918 – it would continue on the Eastern Front for another three years – the victorious powers decided to redraw the maps of Central Europe and the Middle East. The vanquished empires (Germany, Austria and Turkey) lost their possessions. In Europe new nation-states were given borders, and elsewhere sovereignty changed hands with mostly British and French mandates. The new European frontiers brought together ethnic, linguistic and religious differences in a struggle for majority rule. The question of minorities and what to do with them became an increasing source of tensions during the 1920s and 30s. There were also large numbers of stateless people who had fled or been driven out by civil war and oppression. Western Europe saw an influx of refugees from Russia, Turkey, Hungary, Italy and, finally, Germany and Spain. Minorities and the growing flow of stateless refugees created conditions that were instrumental in the build-up to war. Hannah Arendt described this extensively in The Origins of Totalitarianism, and her words have an astounding resonance.

The second great shock that the European world suffered through the arrival of refugees was the realisation that it was impossible to get rid of them or transform them into nationals of the country of refuge. When the example of the first Russian and Armenian waves proved that neither way gave any tangible results, the countries of refuge simply refused to recognise statelessness in all later arrivals, thereby making the situation of the refugees even more intolerable. (1)

The reason for this desperate attempt at promptness was the fear of all governments that even the smallest positive gesture “might encourage countries to get rid of their unwanted people and that many might emigrate who would otherwise remain in their countries even under serious disabilities”. (2)

The stateless person, without right to residence and without the right to work, had of course constantly to transgress the law. He was liable to jail sentences without ever committing a crime. More than that, the entire hierarchy of values which pertain in civilised countries was reversed in his case. Since he was an anomaly for whom the general law did not provide, it was better for him to become an anomaly for which it did provide, that of the criminal. […] The same man who was in jail yesterday because of his mere presence in this world, who had no rights whatever and lived under threat of deportation, or who was dispatched without sentence and without trial to some kind of internment because he had tried to work and make a living, may become a full-fledged citizen because of a little theft. (3)

Not only were people expelled from country and citizenship, but more and more persons of all countries, including Western democracies, volunteered to fight in civil wars abroad even when this meant cutting themselves off from their national communities. This was the lesson of the Spanish Civil War and one of the reasons why the governments were so frightened by the International Brigade. (4)

Arendt’s book was first published in 1951, by which time the “Iron Curtain” announced by Churchill in 1946 had divided Europe along new lines and provoked new movements of populations.

No paradox of contemporary politics is filled with more poignant irony than the discrepancy between the efforts of well-meaning idealists who stubbornly insist on regarding as “inalienable” those human rights, which are enjoyed only by citizens of the most prosperous and civilised countries, and the situation of the rightless themselves. […] The postwar (WW2) term “displaced persons” was invented during the war for the express purpose of liquidating statelessness once and for all by ignoring its existence. Nonrecognition of statelessness always means repatriation, i.e., deportation to a country of origin, which either refuses to recognise the prospective repatriate as a citizen, or, on the contrary, urgently wants him back for punishment. (5)

Today the displaced are labelled migrants, which suggests a flock of birds that comes and goes. Something of no concern, except when the numbers get out of hand, or when the flock sets up residence. Mass migrations are the harbingers of troubled times. When the flow of people from the periphery to the imperial heartlands becomes a torrent, it is no longer the attraction of power and wealth that drives them. When throngs of people flee their native land, it means their life is threatened if they stay. The unsolvable dilemma of minority communities within the nation-state that plagued Europe after both World Wars has spread to all the other artificial constructions of its colonial past. By drawing lines on maps and imposing nationhood, Europe put the world on course to follow its own deadly path. Across the Americas, Africa, the Middle East and Asia, minorities are struggling for survival. To avoid annihilation they are migrating or they are in armed rebellion. The apparent solution is to gun-down the rebels with sophisticated war machines and to place the migrants in camps and detention centres. Is this still viable when the whole planet is moving and fighting? And, as it escalates, what impact will it have on the privileged minority world and what will a prolongation of Euro-American supremacy cost? In 1967 Arendt wrote:

[…] in retrospect one is tempted to look upon the last two decades as the time-span during which the two most powerful countries of the earth jockeyed for position in a competitive struggle for predominance in more or less the same regions in which European nations had ruled before. In the same vein one is tempted to look upon the new uneasy détente between Russia and America as the result of the emergence of a third potential world power, China, rather than as the healthy and natural consequence of Russia’s detotalitarization after Stalin’s death. And if further developments should validate such tentative interpretations, it would mean in historical terms that we are back, on an enormously enlarged scale, where we started from, in the imperialist era and on the collision course that led to World War I. (6)

That confrontation has occurred. Now the vanquished contender is building up for a second round, with his opponents floundering in recession, submerged by waves of immigrants and bogged down in counterinsurgent operations, and with the third protagonist biding his time. Technological evolution changes conditions and ideas, and prevents history from repeating itself in an identical manner, but an extreme concentration of power and wealth provokes the same devastating results again and again. Who knows how destructive the storm will be in a digital age?

1. The Origins of Totalitarianism, part two, chapter nine, (Harvest Book) page 281

2. p. 281, note 31

3. p. 286

4. p. 282

5. p. 279

6. Preface to part two, p. xviii

Supply or demand is not the question

Nationalism had overshadowed both World Wars and would then spread to the rest of the planet. Independence was sought after energetically, though alignment with one of the two military super powers was inevitable. Only France, the birthplace of chauvinism, pretended to go it alone. During the war years and for post-war reconstruction governments had come to dominate the economies of the developed world. It was a period of demand economics, with the state as the major consumer. It was also a time of tariff and currency barriers, and of monetary inflation, rising wages and historically low income inequality.

Capitalism had taken a beating with the 1929 Crash and the ensuing depression. Demanding support from the state and the public purse was the only survival strategy, but it required some concessions to labour and the promotion of national unity. By the end of the 1970s global trade and foreign investments were changing the prospects of capitalism and reducing its dependence on a national base. Corporations became multi-national, producing and selling their goods and services worldwide. This led them to put states and labour forces in competition with one another, with the consequence of reduced taxes and stagnant wages. Consumption remained a problem that was resolved by credit, mortgages and Treasury debts. This solution is reaching its limits.

Eighty years ago the New Deal saved capitalism and set it on course for another cycle of expansion. Now that the curve is waning, where will salvation come from? So far the policy has been to encourage supply and to transfer large sums into corporate pockets. The argument was that investments would generate jobs and hence demand. The reasoning was fallacious as production capacity largely exceeded actual output, but the money was accepted and went straight to the stock exchange, making the rich that much richer. So demand stands still, and deflation discourages production, investment and employment.

Ismael Hossein-Zadeh argued recently that “public policies are more than simply administrative or technical matters of choice, they are class policies”. (1) The interests of the 1% obviously dominate government strategy. The rest is the hot air of demagogues seeking election. As for the law, a New York banker toasted the Supreme Court in 1895: “I give you, gentlemen, the Supreme Court of the United States – guardian of the dollar, defender of private property, enemy of spoliation, sheet anchor of the Republic.” (2) But this small very influential group has its own historic contradictions that are the sharing of surplus value between rent, interest and dividends.

When private property of the means of production started to replace feudal vassalage, nobles became land owners with control of raw materials and armed might, merchant-bankers protected by their off shore activities controlled trade and credit, and artisans possessed secret procedures that gave them control of manufactured products. For a while the landowners dominated, making the law to their convenience and enforcing it. Then, as trade developed in Europe and around the world, and as credit became essential for waging war, bankers also influenced legislation and its execution by governments. War also encouraged the industrial production of muskets and uniforms, of ships, cannons and sails. And the acceleration of movement brought by the steam engine soon put industry on a par with land and credit for a share of profits that were multiplied by ever faster manufacturing techniques.

The means of production were the property of three groups opposed by their particular interests and their social origins. Landowners were aristocrats and gentry who held sway over the judiciary and the army. Bankers were cosmopolitan and could muster gold but not troops. Industrialists were middle class and employed a host of workers. The first group was ideologically and politically conservative and reactionary, the third group was liberal and progressive, while the group in between, the intermediary of all their transactions, remained neutral or sided with the strongest of the other two. This situation was the basis for bipartisan forms of government where power is held alternately by both sides.

Capitalism’s origins have blurred with time, as have its early divisions. The incomes from land, commerce and industry are still distinct, but their beneficiaries have the anonymity provided by investment and pension funds, by insurance and banking services, by financial institutions that mix everything up and distribute odourless cash. Capital has reached its pure indeterminate stage, where the intermediary has the power. Land, commerce and industry are completely dominated by complex manipulations played out on the global market for a maximum return. Algorisms have replaced money, and this dematerialisation makes its presence seem more ubiquitous than ever and breaks down all barriers to its multiplication. Wealth has distanced itself from the material world to become an abstraction. The median human income is about $5 a day, which makes a total at the age of sixty of $100 000, the price of a car for some. And what is that for someone who measures wealth with ten digits? Capital must face its ultimate contradiction, the one it was destined to confront from the outset, with production and consumption on one side and finance on the other. Having multiplied the production of wealth at an ever increasing rate for two centuries, industry is the subordinate of finance. The material world of producing and exchanging is ruled by ethereal money.

Government needs consent. This is obtained by controlling education and media outlets and by patronage. It can be minimal, the army and security organisations or just the later, but the generally accepted consent is between a third and a half of the votes counted. The rule of finance means that the divisions between conservative and liberal has lost its signification. They are the residue of a power struggle that no longer exists, as both are held in the same grip and have the same dependency. The real confrontation is between the capacity of human hands and minds to transform the planet and the inhuman law of profit, between all productive forces and the totalitarian tyranny of money. The financial house of cards is on the verge of falling apart, and the task of survivors will be to find another resolution to the trilogy of land, industry and exchange.

1. http://www.counterpunch.org/2014/08/26/keynes-is-dead-long-live-marx/

2. Mentioned by Howard Zinn, A People’s History of the United States, chapter eleven, (Harper Perennial) page 254