The same as it ever was

“.... it really seems as though old Hegel, in the guise of the World Spirit, were directing history from the grave and, with the greatest conscientiousness, causing everything to be re-enacted twice over, once as grand tragedy and the second time as rotten farce.” Friedrich Engels, a letter to Marx of 3 December 1851

(Wikipedia)

To make a profit capital takes more value out of the market than it puts in, and that extra value must come from somewhere. Over a century ago Rosa Luxemburg came to the conclusion that it was obtained by colonial plunder (1). Since then things have moved on. In a post-colonial system, capital exchanges its surplus consumption, weapons, luxury goods, food, for investments, mostly raw materials. Instead of supplying a colonial administration, capital supplies a local one, and the plunder continues unabated. This transformation of consumption into investments realises some of capital’s profits, but is far from enough. The rest is realised with credit and debt, which in turn charge interest. So debt pays for profits and interest. As debts accumulate, the payment of interest grows and leaves an ever dwindling share for the payment of profits. This means there must be more and more borrowing for the same amount of profit.

Finance and production (interest and profit) divide the plunder and compete over who gets the larger share. These conflicting interests evolved out of those that opposed the landowning aristocracy to the merchant bourgeoisie. Then as now they determine the political division of society. One party favours bankers and the other favours bosses, and neither represents the people. However, bosses have far more employees than bankers and, by claiming that workers and employers have shared interests, this can give their party an electoral advantage. On the other side, bankers do not have to put pressure on their work force to extract surplus value – they get interest and other financial gains – which allows their party to voice a more liberal discourse than their opponents. The political struggle is about sharing the plunder between profits and interest, never about reducing or stopping the looting. And both governing parties, whatever they may say to differentiate themselves, agree on the maintenance of the system as a whole.

In an interesting article for the Monthly Review (2), Utsa and Prabhat Patnaik consider that the actual reactionary trend may have points in common with what happened in the 1920s and 30s, but that it cannot reach the apotheosis of the 1940s. A totalitarian regime presents everything external to itself as an enemy. And the nation it rules over must be protected and isolated from dangerous outside elements. The Patnaiks argue that today’s global financial network dominated by the US dollar would not allow that to happen. What is not taken into consideration is the possible collapse of world finance, crushed by too much debt. Or the fact that America under Trump is itself on an isolationist path. Nothing is foretold but, with the added stress of climate disruption, the farce may end up more barbaric than the tragedy.

1. The Accumulation of Capital

See this previous posting: https://lelezard.blogspot.com/2017/09/rosa-luxemburg.html

2. https://monthlyreview.org/2019/07/01/neoliberal-capitalism-at-a-dead-end/