A perilous conjunction

In 1973 and ’79 sudden sharp rises in the price of crude oil, decided by OPEC, resulted in high inflation, a slump in production and rising unemployment. It put an end to the post-WW2 period of strong economic growth, and coincided with the end of America’s murderous war in South-East Asia. After the riotous 60s, the 70s were a decade of disillusions and questioning. This loss of direction opened the door for Thatcher and Reagan, and facilitated an ideological turnaround. The World War had greatly increased state control in every domain, and had given meaning to working-class unity. The returning victorious warriors demanded and obtained a larger share of power, wealth and education. Unions were strong, jobs were secure and a single income could finance a mortgage, run a car and cover various credits. Education was of quality and free. The 1970’s wrecked all that, and the 80s and 90s remodelled societies on a very different basis. Individuality was promoted over unity. Education became increasingly costly. Trade unions were demonised and attacked by repressive legislation. The income gap widened drastically. And more and more households needed two wage earners to make ends meet. Women had long wanted to join the work force on an equal footing. Quite suddenly they were obliged to, but the gender equality was a long way off.

During the dismal 70s and individualist 80s, working families kept their heads down and projected their aspirations on their children’s futures. In the 90s computers became personal, and a new era was promoted. But the actual result was the mass destruction of middle-income jobs. Programed machines began replacing whole categories of labour. By the end of the millennium, the start-up nations were in full swing. And the dotcom bust in 2000 did not dismay the propagandists of personal responsibility over common solidarity. Success or failure rested entirely on individual intent. Society in general and government in particular should be perfectly neutral actors. The part-time and seasonal work that had been the reserve of students and migrants progressively became the norm. Ephemeral and gig employment spread to numerous sectors and became more or less the standard. Millions found themselves unable to plan beyond their next pay cheque. This led to a lot of subprime lending and to a mortgage crash in 2008. Since then people have seen their living conditions deteriorate. Their futures are bleak, and those of their children are overlaid with pending catastrophes, both financial and environmental.

After forty years of being told that there is no alternative to profit capitalism and market forces, the result of those policies is so horrific that the confidence people have in those who promote them is at an all-time low. The ruling classes have accumulated vast wealth and have brought the world to a deadly tipping point. They have no exit strategies and are unable to conceive any, as the present system is the only one they can imagine. And the brain washing has gone so deep that this also applies to many of those they rule over. But a growing number of people have doubts. Climate disruption, where freak events become habitual, is beginning to impact the general consciousness and highlights all the lies that have been propagated. The disconnection between the stock market and the real economy is increasingly apparent, as is the monstrous wealth and income differences it has generated. A growing number of people no longer trust their representatives, who are seen as a bunch of show-girls and boys, playing parts they have not scripted, in a spectacular promotion of the status quo. Walk and talk instead of song and dance, but it is just entertainment for the masses. The real decisions are made before or after each presentation. The people who elected Trump saw a political outsider who might bring change. And his uncouth manner masked his inherited connection to the class of property and wealth. He predictably failed them dismally, but last November they were still convinced he was a better choice than the ultimate insider, Biden.

Some time ago (2006), Warren Buffett claimed the rich were winning their class war against the poor. And the proof is that his personal fortune has probably doubled since then. This contemptuous attitude is shared by the ruling classes. The “deplorable” should stay in their place, in tents and cardboard boxes, and when necessary treated with teargas, Tasers, batons, rubber bullets and live ammunition. The show and use of force cannot pacify society. The tepid cower and the ardent are strengthened. Force does not bring consent, at best submission. Ruling classes never relinquish power. They have it taken from them. This means a greater force must be mobilised than the force they dispose of and necessarily involves the military, who are obliged to take sides, not always uniformly. When a ruling class can no longer cover up its incompetence and money-lust, it is doomed. And after a token struggle, it is commonly replaced by an authoritarian military regime. Liberalism, old and new, represents freedom, but it is the freedom to plunder the planet, exploit labour for profit and accumulate wealth. Those freedoms divide society into some who have and many who have not. When that division becomes too extreme, it provokes social and political unrest, and a surge of radicalism. The reaction is brute naked force, martial law and, on occasion, a partial or total military takeover of government, finance and industry.

With its back to the wall the ruling, owning class always chooses to submit to the military rather than the plebe. That is because the privileges of rank and wealth are very similar. Generals and corporate chiefs decide the fate and actions of thousands without any consultation, as unions are just shadows of their former selves. And then there are the revolving doors between the military, government and corporations, along with all the lobbying for legislation and contracts. In 1799 the French bourgeoisie preferred Napoleon to the sans-culottes. As a class, the bourgeoisie have never been interested in equality. It is contrary to their ideal of accumulation and transmission. They are an aristocracy of wealth without lineage, the new class of imperial expansion. They have learned that consent can be obtained by debilitating entertainment and cheap food, bread and circus games. And the military are kept happy with generous provisions and some war making. But all this needs to be fuelled, and at some point the system runs out of gasoline. At some point there is no longer enough plunder to supply accumulation, welfare and military might.

The tax reductions that favour profits and the accumulation of wealth result in governments being unable to balance their budgets. They must borrow and reduce their expenses. And that brings spiralling debt and a widening of the class divide. The borrowing benefits financial capital, and cuts in social spending increase poverty.  The military mainstay, the foundation of the system, is not restricted. Growing poverty contradicts the terms of popular consent. The trickling down of wealth and the tide that lifts all boats, big and small, do not function. Deteriorating living conditions expose the lies that have been told. The social contract is seen as a scam that advantages the wealthiest few. The ruling class then distracts the popular anger by accusing immigrants and ethnic minorities of being the cause of the problem. Their presence brings down wages, competes for jobs and devalues neighbourhoods. In fact they are part of capital’s reserve army of labour. Something it must have to be able to hire and fire as the need arises, and to use as a constant rebuttal of pay-rise demands. Large working-class families once supplied the working hands, but in developed nations the natality rate is under two and falling, thereby making capital all the more dependent on immigrants for its labour reserve. But then, in the 1990s, capital began to outsource production from the developed countries to less developed ones, where costs were low and environmental precautions less restrictive. The job losses increased the labour reserve and heightened ethnic tensions. They also forced a pay freeze on those still working, and a pay drop for those employed in the new gig economy. Instead of unifying, the workers of the world had been set up to compete with each other in a downward movement of less and less.

At the start of this vast transfer of productive capital, the pain was lessened by cheaper goods, generous credit and the remains of post-WW2 welfare. That did not last long, however, and zero-hours contracts mean juggling two or three jobs and being available 24/7, just to afford the essential necessities for a hand-to-mouth existence. This situation is untenable, and responsibility for it must be laid somewhere. There is the supremacist path that has often been followed, where a majority blames minorities for its woes and tribulations. This attitude is encouraged by the ruling class as it distracts the anger away from its real cause, which is the bourgeoisie’s unlimited accumulation of private capital. The fact that must be carefully hidden is that when some accumulate wealth others are condemned to poverty. The private property of the means of production is the only genuine division of humanity, that of capital and labour, employer and employee. The rest is an invention devised to split labour into as many competing groups as possible, gender, language, race, ethnicity, white/blue collar, sexual orientation, etc. This hierarchy of servitude has been effective throughout history, and must be exposed as an ideological fiction. That all women and men are born equal in rights, opportunities and duties could be more than just words written down here and there, and sometimes extolled by demagogues. But equality means ending the class structure of capital and labour. When a few have wealth and power, and the rest have little or nothing of either, equality cannot flourish. It remains an empty word, except for mathematicians and accountants.

The accumulation of capital by exploiting labour, practicing usury and plundering the planet has the backing of nation-states. This means the cost of policies is paid by all nationals, whereas the profits go to just a few. And, as capitalists compete for markets and resources, nations provide the military might that supports that competition. So nations are drawn into confrontations that concern very few of their members, and too often into open warfare. By the beginning of the 20^th century the planet had been divided up by the industrial powers, but the late-comers, Germany, Italy and Japan, felt left out, and instead of resigning themselves they turned aggressive. This resulted in a first world war followed by a second even more destructive one. The ensuing Cold War was ideological. It was about winning hearts and minds and eliminating opposition, more than markets and resources, though capital’s interests were never neglected and shaped many strategic moves. These motivations were veiled by the supposed battle between the free world and totalitarianism. Communism was equated with forced labour, arbitrary arrests, torture, assassinations and starving populations. All of which was being replicated by capitalism under the cover of local potentates financed and advised by capitalism’s agents. Since the end of the USSR, ideological masks have fallen, and national capitalisms are again in open confrontation. Comparisons with the early 20^th century go beyond the similar wealth gaps. Nationalism, urged on by capital, is reviving everywhere as it did then. The internet has acquired national borders and even the global pandemic has not brought the major powers together for a united front. While attempts at reducing greenhouse gas emissions to limit climate disruption have still to materialise as a coordinated effort.

The world is ruled by the rules of capitalism, which are profit and accumulation. Nothing must stand in their way, least of all life. More is the craving of an addict, and wealth is as addictive as the strongest narcotics. Having drained the planet’s riches, the wealthy are obliged to prey on one another with their national backing. Capitalism is a predatory force that leaves death and destruction in its path. It requires constant growth and must take more and more to achieve it. But at the present stage of human history, future abundance will not allow the continuation of past growth, which doubled world income every twenty years. All resources are already being exploited to the utmost. The exceptions are wind and solar energies, but the plan is to use them to replace fossil fuels, not to double energy production alongside existing processes. So far the replacement is not perceptible, as fossil fuel consumption has continued to rise. (Though methane gas is slowly replacing more polluting coal, greenhouse gas emissions are nowhere near abating, even if the COVID restrictions on air travel did provoke a small dip.) World economic growth is stagnating, and national growth can only be detrimental to that of other nations, hence the strain on international relations. Putin, Xi, Bolsonaro, a growing number of others and Trump in the past tense are representatives of this strengthening competition between national capitalisms. And there are no signs that the Biden administration intends to reverse the trend, except a probable reinforcement of the NATO alliance. Access to limited resources and markets, climate disruption, COVID-19 and debt overload are coming together in a dangerous way. Will reason prevail or will they result in escalating violence? Can capitalism rise up once again from the rubble of war, or is it running the last lap of its murderous course?

Time for a change

The events of the past few months have disrupted just about everything. And governments have poured freshly minted money into what seems to be a bottomless hole, though a considerable portion has made its way onto the stock market, pushing prices up to constant new records. This certainly cannot continue indefinitely. It will grind to a halt in the not too distant future, even if Treasury debts backed by central banks and their monetary creations have no precise limits. This could be Modern Monetary Theory, where governments spend freely and, when there is too much money sloshing around and pushing up prices, they take back the surplus by taxation. Firstly, the overspending has been Gargantuan, and secondly, the only ones still able to pay higher taxes are the very rich. The MMT scenario does not seem credible, unless there is a fundamental transformation of political actions and property rights.

If humanity is to survive into the next century, it will have to change its paradigm of personal property and profit, for one of common wealth and solidarity. As this is unlikely, considering the military power and ideological control of property owners, those few who may outlive the coming upheavals will be those who have realised that transformation. Nations are held in the grip of profit capitalism, but some communities might be able to build different social relationships. Time is running out, but events will accelerate decisions, often in the direction of more power and control. Some will manage to break that fatal bond, most probably among people who have kept traces of ancient social unity. The global south may survive the destruction of the global north. When finance and technology fail, they will have a head’s start, on condition that global warming does not make the tropical regions uninhabitable.

The pandemic, devastating storms and unprecedented droughts are forewarnings of things to come. Still pending is the unravelling of financial structures. Stupendous amounts of future incomes have been and are being spent, at a time when their future materialisation is increasingly uncertain. All that credit – more than three times the world’s yearly income – is circulating in the system as cash, undistinguishable from actual incomes. And central banks are providing that liquidity by their capacity to create money out of thin air. It is impossible to predict how far credit can go before loss of confidence takes hold and brings its continued expansion to a halt. The probable mass defaults on debts in the wake of the pandemic, along with the impossible insurance against increasingly destructive meteorological catastrophes, could provoke the rupture sometime this year. When lending dries up, so will demand, production and incomes in a terrible downward spiral. The first signs will be a deflation of share and real estate prices. The speculative zeal will fade when governments slow down their money pumps and, hopefully, restrict their arms race to concentrate on the essentials of feeding and housing their populations, and providing them with health care.

Share prices go up and down, but only a small fraction of the total number of shares are bought and sold on a daily basis. And the price of a transaction determines the value of all other identical shares. The sale price of 1% (or much less) sets the price of the other 99%. This means that the value of shares is hypothetical. Their real value can only be established when they are sold. And that will depend on supply and demand. Most of the transactions on the share market are just money moving around. Some prices go up and others go down, as certain shares are favoured over others. For a general rise, more money must come onto the market from elsewhere. It can be company profits or debts used to buy back and write-off their shares. It can be income diverted from spending on travel, apparel, outings and entertainment. All added to the regular inflow from institutions and the wealthier public. A general drop occurs when money leaves the market. This happens when there is a widespread need for cash, such as property and income tax payments, or when incomes are failing, or when confidence wanes and cash seems a safer prospect. When share prices rise, everyone is happy, except those who had predicted the contrary. All share-holders feel richer. When share prices drop there is a reverse effect.

More money on the market pushes up prices, and that attracts more money. When money leaves the market prices drop, and that convinces or forces more money to leave. Both movements provoke emulation. However, company shares are the property of just a few. In the US the wealthiest 10% own more than 80%. This social class has been obliged to reduce its consumption by the pandemic, but their incomes have in general been maintained. These disposable incomes are probably part of the inflow of money, resulting in an even greater concentration of ownership. The popular “Robinhood” platform that opened stock market gambling to a wider public also contributed to the rising prices with millions of small inputs. These two sources seem to be fuelling share indexes in their constantly record breaking rise. Neither is inexhaustible. Over the past nine months those higher bracket incomes have been paid by government hand-outs, and no one knows how long that can last. The “Robinhood” phenomenon mobilised savings, possibly some credit and probably a part of the government’s stimulus cheques. That modest boost could not last long. The stock market fireworks are in the final spectacular stage, those moments that precede the end of the show.

Constant accumulation of personal wealth on a limited planet can only benefit a few and be detrimental for the many. The system has reached a point where it has spent its future, both financially and environmentally, leaving a chasm of nothingness. And, as it plunges, it is capable of taking most of humanity with it. The promise of a post-pandemic return to pre-pandemic normality is based on ignorance or wishful thinking, or it is a smoke screen to hide a known reality and avoid a general panic, or an insurgency. Americans own vast numbers of weapons, and the Capitol invaders seem to represent a fairly wide section of the working and lower-middle classes, not unlike the 2019 Yellow Vests movement in France. Last week’s relatively small, determined numbers were less supporting The Donald than they were attacking the ruling class. By emptying Congress they symbolically realised Trump’s un-held promise to “drain the swamp”. And the swamp reacted predictably with blurbs about the Constitution and Democracy being imperilled, and calls for more control and greater repressive measures. But if the MAGAs and BLM, the Proud Boys and Boogaloo, and many others all join up: Is that noise a revolt? No your Majesty, a revolution.