The dangerous final stage of capitalism

Capital extracts more value out of the system than it has put in, by rent for land and housing, interest on credit and debts, and profit from commerce, industry and services (1). These three forms of remuneration should have the same proportion to the capital that generates them, but various risk factors constantly perturb that equilibrium and constant re-evaluations of the corresponding capital are necessary to re-establish it. If, for example, profits drop while interest and rent are unchanged, then the price of shares will go down, whereas the price of bonds and real-estate will rise, until the two movements find a new common balance between capital and its remuneration. Profits fluctuate up and down, rents tend to rise and bonds pay what is written on them. Company profits vary and can be very different from one year, or even one quarter to the next. Rent seems secure, but earthquakes, hurricanes, flooding, fire, a pandemic or economic activity moving elsewhere will halt it, even if the capital is somehow insured. Bonds, especially Treasury ones, seem guaranteed, their value and their yield are there in print, but these numbers represent a currency that can be subjected to unpredictable bouts of high inflation.

Investments are never completely secure, and some are regularly written off as a loss. Nevertheless, financial organisations are accustomed to making profits, except when their constructions fail and they call for help. Lending is profitable if the scale is big enough to cover possible defaults, and if it does not sink into “subprime” adventures. But speculating on stock, bond, currency and commodity markets can be even more beneficial. Here again size is an advantage, as is the hyper-speed of transactions. These are not investments in the strict sense of the term, where a return as dividend, rent or interest is expected. They are just about buying and selling, and gambling on prices going up or down. In fact, the various markets are increasingly perceived as casinos, with the hazards of supply and demand instead of dice, cards or a roulette wheel, and each play lasting a tiny fraction of a second. And just like casinos the house always wins, because traders take a levy on every transaction whatever the outcome. The stock market in particular has become a game, where share prices have little to do with a company's production and financial situation, and just follow speculative trends.

World finance has become a gigantic bubble, debt levels are stratospheric and equity prices are vastly inflated. And even the COVID damper has not had much effect. Monetary creations are counted in trillions, and stock market indexes are still going from record highs to new record highs. Just as greenhouse gas emissions are tipping over into unimaginable climatic disruptions, so the emissions of debt will soon tip over into indescribable financial disruptions. The private property of the means of production, based on profit and debt, has plundered the land and oceans to exhaustion and extinction, and has reduced most of humanity to a slave-like dependency on the next pay cheque. At the same time it has developed weapons powerful enough to destroy whole cities, and even all life on Earth, along with surveillance systems that watch every move, listen to every word and predict every thought. But all that might and control will not save capitalism from financial collapse and meteorological disasters. Though it may preserve a totalitarian hierarchy to the bitter end. Without some truly radical change, humanity is headed for a very nasty short-lived future.

1. See this previous posting:

https://lelezard.blogspot.com/2019/11/capital-accumulation-and-credit.html

Politics and property

Political systems and their governments rule over the nations of the world. It is the political structure that chooses the executive and orients the policies it dictates to the nation. That structure can have a wide range of different forms, but it is basically the control of armed force and property. Its role is to enforce the rules of ownership, whatever they may be, both nationally and internationally. Politics is the age-old struggle between capital and labour. It began with the land ownership that comes with conquest and constitutes the primary form of capital. Then came trade and financial capital. And finally there was the emergence of industrial capital, notably during the last two centuries with the invention of machines driven by fossil fuels and electricity. These three kinds of capital function together, but they also compete for the surplus value extracted from labour. These struggles between capitals and between capital and labour are arbitrated by the power invested in government. Most governments favour capital over labour, as that is where the money is, but this support often prioritises some forms of capital more than others. Agriculture, banking and industry jostle for power and unite against labour.

The style of politics is shaped by the owners of capital. If state property is preponderant, politics will tend to be totalitarian. If the military control capital, they will often impose an armed dictatorship. If capital is privately owned, dialogue is necessary. It is the private property of capital that demands and gets representation. Landowners and industrialists constituted the political divide, with bankers dithering in the centre and dealing with both sides. The ownership of land - be it for agriculture, stock raising, mineral extraction or real estate - on one side, and the transformative industries on the other, were the nations employers, whereas the financial sector, stock exchanges, banks and insurance, had relatively few employees. And a sector’s interests were perceived by employees as their own. Landowners, with their increasing dependence on immigrant workers who do not have political rights, are at a disadvantage. And out-sourcing industry has also reduced that traditional support. Historic political divisions have lost their meanings in a world of part-time, ephemeral jobs in the ballooning “services” sector. And the capital behind this new social dimension could unite to form a separate political force. So far it has backed existing systems, but compulsive legislation may oblige it to act in the political arena as an autonomous party.

Can one imagine the heavyweights of the digital gig economy putting some of their fortunes into the foundation of a socially oriented and environmentally concerned coalition? The more visible personalities show no signs of such an intention, being still totally concentrated on expanding or consolidating their empires. However, these new forces are already challenging the existing system economically, and the reaction will make their present uncompromised position untenable. They have plethoric funds and followers, the two fundamentals for political action. But capital does not create political parties. It gives its support to the party that best represents its particular sector, and often hedges its bets. Just like the industrial revolution of the 19^th century, the digital revolution is creating new economic and political forces that will have to confront and contest the existing power structures. The struggle will be over the control of the web, by and for the people or against them. The easy path is stricter, tighter state surveillance and censorship. But this denial of a changing political landscape cannot prevail against reality. Maintaining things as they are is not a realistic option. A possible alternative would be a wide coalition of progressives, a charismatic leader and the new economy’s financial backing, in that order. As ever, the first step is organising, educating and building alliances. Some of this is underway, but the movements are disparate and seem unable to coalesce. Occupy Wall Street, Me Too, Black Lives Matter and Extinction Rebellion have mobilised large numbers in the streets quite separately, as though the power of finance, sexism, racism and climate disruption were not parts of the same problem. Even the MAGA and yellow-vest crowds – who are not all poly-phobic white male supremacists and mostly just feel abandoned by the system (the swamp) – should be solicited for the largest possible union. This can only be a class struggle, and everyone must become conscious of which side they are on.

The millennium coincides with a turning point for humanity. Its fossil fuel economy is destroying life on the planet with toxic wastes and greenhouse gases. Its political structures and its property rights have rifted the wealth and incomes gap. And its financial system is spending the future. This is a “highway to hell” for all, except the tiny few who live in Olympian clouds and do not see or care about what is going on. Something will have to happen soon to deviate this noxious path. It will be reasoned and organised, or it will be chaotic and destructive. In either case there will be violence, as there will be no sudden change of heart among the 1%. They will resist, but if whole nations rise up against them, their efforts will be futile. And COVID lockdowns have shown that everything can be brought to a standstill by just staying at home. A planed nation-wide lockdown could be more effective than street protests, which systematically serve as a pretext for police violence and thereby discourage a majority of potential marchers. What is unclear is the position of internet providers. A really generalised movement would need them, to take form and to coordinate. They might be obliged to side with their users, the people. But then governments have the power to interrupt communications, though that would disrupt things even more than the home sit-in.

There is a vast desire for change. Political parties have demonstrated that they are two faces of the same coin. Representation has lost all meaning as electoral mandates are never followed. And the unlimited accumulation of wealth is seen as “a somewhat disgusting morbidity”, J.M. Keynes (1). Nations live and thrive by the actions and imagination of all its citizens. Governments are at the helm, and their function is to steer the path approved by most, if not all, of the governed. The same goes for companies, executives and their employees. But governments and executives have similar class interests and steer in favour of them, more wealth to the wealthy and more power to the powerful. This collusion between state and capital against the people is what defined Italian fascism under Mussolini. It came back in a more subtle form – without the jackboots, the salutes and the uniforms – in the Thatcher-Reagan era, with reduced taxes and social services, more for the rich and less for the poor. It promoted the concentration of wealth and power, plunged a growing number of households into relative or absolute poverty, and crippled all labour organisations.

Government by and for the few needs a strong repressive apparatus, but it must also propagate an ideology of inequality. The social divide it installs can only be justified by proclaiming that some are inherently superior to others. This is basically a racist attitude, but it includes any opposition that can be crushed without remorse.  Totalitarian governments have been and are still monopolised by one political party, to the exclusion of all others. Nevertheless, two or more party systems can agree to alternate in power, and perhaps advantage alternatively some capital over the rest, while maintaining the illusion of distinct differences in their policies. This masquerade, where liberals and conservatives pretend to fight for control of government, is losing its credibility, as both sides become increasingly interchangeable. Government and corporations are so close that they seem to merge. To paraphrase Charlie Wilson, CEO of general Motors and soon to be Secretary of Defence (1953), “What’s good for the United States is good for Chevron, Lockheed, Walmart and Co. and vice versa”. This confusion of government and capital leans towards fascism when the state takes control of capital. When political power dominates economic power, the way is open for totalitarian power. The 20^th century witnessed the materialisation of this power in various forms. The Italian experience was different from the Russian one, which in turn was different from the German, Chinese, Japanese, etc., and even war-time UK and US were not far from it in the 1940s. Think of Orwell’s “1984” written in 1948, and Senator McCarthy’s paranoid witch hunts.

Fascist regimes take over in times of crisis, when civil society has lost its bearings and when the confrontation of labour and capital intensifies. Even when it is not conducted by the military, its model is military obedience to the commands of the hierarchy, and ultimately to those of the supreme commander. But this absolute compliance seems increasingly outdated in modern armies, and how much more so in the government of a nation. It is the guarantee of economic and social regression as it enforces monopolies and constant policing, which extinguishes innovation and initiatives. Totalitarian governments can last a long time, but they get left behind by the rest of the world. Their continuation in “developing” countries such as Myanmar, Honduras or Syria, and their resurgence in China and Russia, go against the 21^st century’s global concern over toxic wastes, greenhouse gases, debt and the ongoing pandemic. But then, these events may come together to create a major crisis favourable to them.

Fascist regimes rule by naked brute force. Might is right, which means that police and military play a prominent role. Some fascisms are civilian and rely more on police, and some are military and rely on the army. Both have special units, praetorian guards, accountable only to the supreme leader or commander, or whatever. Without going too far back, the classic forms of fascism came in the wake of the First World War, when disillusioned soldiers from disbanded armies were recruited against workers and peasants. This was facilitated by propaganda, as ever, and by the antagonism between those doing the fighting and those insuring production in the rear. The German SA and the Italian Fasci were originally constituted of war veterans. In both nations, the sudden end of the war had left the military hierarchies in disarray. Presently, in its twentieth year of war, the US has accumulated a fair number of combat zone veterans, some of whom were present in Washington DC on January the 6^th, and the comparison with Europe in the 1920s, with Mussolini’s successful march on Rome in 1922, or rather Hitler’s failed coup in Munich the following year, may seem appropriate, but an essential element is missing. In the US, the military command and those of the intelligence agencies and police have a firm hold on their troops, who are there for a career under contracts and oaths, and are all generously funded. There is no room for armed thuggery to go beyond the habitual norm of organised crime.

Since 1945, the common form of fascism has been military dictatorship. The examples are too numerous to enumerate, but they have in common the control of government and capital by the military, as a separate class or cast. So far this plague has been confined to the developing world and has heavily hindered their development. In the industrial nations military government is history, though retired generals have governed not that long ago (Eisenhower, 1960, de Gaulle, 1969). In those nations the higher echelons of the military are integrated into the structure of politics and property. And the armed forces allow social ascension more than elsewhere, thereby upholding the meritocratic myth that anyone can make it to the top through hard work and unfailing intent. Very, very few actually do, but these exceptional examples sustain and somehow justify the hierarchical levels of command, because the GHQ brass is the best in an open competition. These generals have neither the inclination nor the competence to control government and capital. They occupy a cosy niche, and may retire to even cosier ones in civilian dress.

The fascisms of militias and military coups need not be considered in the developed world, but a repressive police state of total surveillance is in place. All citizens are being watched and listened to by their own smart phones and other connected appliances, just as police might and impunity is constantly growing. Meanwhile women, alongside ethnic and sexual minorities, have won legal rights, and cannabis is slowly obtaining the same status as alcohol. But these liberal concessions in no way question the hierarchy of wealth and power, even if they perturb its masculine dominance. And all laws can be cancelled by the stroke of a pen. All advances can be reversed when the struggle weakens. The demands of women and minorities, valid as they are, distract from the class war that really contests the structures of power. Sex and drugs do not concern the social divide of capital and labour or the class control of government. Women and minorities have claimed the same rights as white heterosexual males, each according to her or his class status. By the hazards of inheritance, the ruling classes have experienced women of property and power throughout history, without it contradicting male primacy in the use of force. Men went off to war or work, while women were busy with domestic tasks and child care, but in upper-class households this work was carried out by servants, allowing women to have other activities. Ruling class women have shown competence in the past, and are showing it now in politics and as corporate executives. However, competing with men does not question class privilege. It may even strengthen it with a sense of cohesion. Among the middle and working classes, the competition for jobs has stultified most wages, and has played a part in the regression of class consciousness and the growing undercurrent of misogyny. Demands by minorities have followed similar paths, with upper-class integration and increasing strife and ill-feeling for the rest. It has often been noted that the ruling class only concedes things that do not disrupt its power. Gender and minority equality has in fact split the working class in two and into multiple subsections. The demands for rights, not as workers but as members of an identifiable group, have created divisions and pitted all groups against each other in a contest for rights. Attention has focused on upper-class integration, the first woman CEO, the first ethnic minority minister, the first ethnic minority woman vice-president, etc. Meanwhile working conditions and pay have gone downhill for the employed masses of all genders and origins.

The division between the owners of the means of production and those who labour for them is clear-cut, but a general working-class consciousness has always been more of a hope than a reality. This is because the ruling classes have always kept a scale of pay and privilege among their employees, hence the voluntary servitude of the middle class and the forced servitude of the working class. However, these distinctions are sometimes attenuated. The working class may obtain rising wages and have a life-style similar to the middle class, as was the case in post-WW2 industrial nations. Alternatively, the middle class may be submitted to shrinking incomes and a life-style similar to the working class, which has been happening over the last few decades, and has accelerated since 2008. The first resulted from the levelling of society by total war. The second is the consequence of an extreme accumulation of wealth at the summit of the social hierarchy. Upward social mobility pacifies class conflicts, though minorities and immigrants are often excluded, and though the Cold War, with its fallout in South-East Asia and elsewhere, provoked considerable mass protests. Downward social mobility is the cause of unease and disillusionment, and the source of cross class rebellion. When the middle class is déclassé, it is forced to join the ranks of the working class and abandons its voluntary servitude. This primarily hits the lower middle class, many of whom were the first or second generation to have moved up socially, which heightens their distress and sense of failure. The system that seemed to favour them has let them down. Its promises have not been held, and the resulting anger is all the greater. The union of petite bourgeoisie and proletariat is the usual prelude to rebellion. Marx criticised it, noting that the proletariat was always abandoned and crushed in the end (2). Unfortunately, working class leaders are few and far between, and those who do emerge are either corrupted or killed. Whereas the middle class has superior education and is crowded with would be ideologues and clever orators who just have their own interests in mind. Their instinct is to climb the social ladder. They have been raised and educated for that, and cannot conceive a classless society. The working classes are just troops at their disposal. Send them to the barricades and make deals behind their backs.

There is a new urge, not to say urgency, for socialism, or at least a more equal distribution of property, income and political decision making. That minimum can be achieved – it has been in the past – but a classless world will probably remain an unreachable horizon. The primitive communism of Marxist literature, where land is held in common by all members of the clan or village, is too far removed from the vast complexities of a nation-state to be a model, though existing public ownership of land does have the appearance of communal property. In fact, governments dispose of it in the interests of capital, too often in ways that are detrimental for the people. That communities should have their say on the usage that is made of their environment seems fundamental. But as things stand, even in liberal democracies, this would require a reconstruction of property rights and electoral mandates. Land owners and politicians should no longer be allowed to do as they wish, once they have acquired these positions. A constant overview by the people should be compulsory, and would need complete transparency. Property and politics are the two pillars of power. Both have done their time in their present forms, and both will have to be broken before they can be rebuilt differently.

1. In this short piece, titled “Economic possibilities for our grandchildren” and written in 1930, the timetable was somewhat optimistic.

The whole paragraph reads as follows.

“There are changes in other spheres too which we must expect to come. When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard.”

https://www.marxists.org/reference/subject/economics/keynes/1930/our-grandchildren.htm

2. With comments such as this: “The phrase which corresponded to this imaginary abolition of class relations was fraternité, universal fraternization and brotherhood. This pleasant abstraction from class antagonisms, this sentimental reconciliation of contradictory class interests, this visionary elevation above the class struggle, this fraternity, was the real catchword of the February Revolution. The classes were divided by a mere misunderstanding.”

https://www.marxists.org/archive/marx/works/1850/class-struggles-france/ch01.htm