I feel vindicated in a grim way. A couple of years ago, I griped on this blog that the left ignores political economy at its peril. Now, it's not Marxism that's reasserted economics, it's capitalism. The Washington Post writes, "Credit, the lifeblood of capitalism, ceased to flow. An economy based on the free market cannot function that way." We are facing a major challenge to the orthodoxy that's ruled the globe for a generation. A critique of discourse or culture didn't put the question of capitalist power on the global agenda - capitalism's own internal contradictions did. If we don't understand them, then we have nothing to say to the billions of workers who are going to suffer.



That suffering makes the working class open to socialist ideas in a way they weren't before. But we face a unique situation: never before has neoliberal capitalism been so discredited, and yet the left has never been more marginal. The current discontent has been captured by what looks like an emerging coalition of corporatists: the Central Banks, Democrats in the U.S. and Tories in Canada & the UK, who want to re-regulate financial services, and float the whole system at our expense.

There's no use moaning about how the response could've been different if we'd been larger. There have been some admirable anti-bailout demonstrations but the left is in no position to change the course of events. As it is, what can we do with our limited resources? I'd suggest making the following arguments:

1) This is a crisis for us.
The central banks have already stolen $700 billion from US workers, the Europeans billions more. There was no target; the Treasury just wanted "a really large number." This is to pay off debts that were made on absolutely false premises: that poor people could pay ever-increasing amounts for their mortgages. Those debts got repackaged and sold through exotic mechanisms, and the accompanying expected returns got bigger. But no new value was being created - just the expected value these workers were supposed to generate. Since some analysts found a new way to screw the poor, and it didn't work... well, the poor get screwed anyway, paying more in taxes and losing their homes.


Time to return it to its rightful owners

2) This is not a crisis for them.
Sure, some bankers will lose their jobs, though the biggest will get a $250 million bailout. More importantly, recessions help the rich. It's simple: those without deep pockets go bankrupt first. Their assets get devalued. Then the bigger ones can purchase the smaller ones. It's already happening: for example, British billionaire Philip Green was in Iceland Friday checking out the bankrupt retail sector for bargains. As Marx says, the point of credit is

to develop the incentive of capitalist production, enrichment through exploitation of the labour of others, to the purest and most colossal form of gambling and swindling, and to reduce more and more the number of the few who exploit the social wealth.

3) Revolution, not regulation.
Commerce & treasury secretaries are turning into instant Tony Benns, nationalizing banks like socialism was suddenly fashionable. But this only shows how the capitalist state is not a neutral tool for wealth redistribution, unlike in social democratic fantasies. The ruling class, the 'bickering band of brothers', comes together when it's under any serious threat, even one of its own making.

Some leftists have said we have to 'critically support' bailouts, because failed banks will drag the entire system down, and then workers will suffer. I think this is a tactical mistake. A 'people's bailout' - using the money to establish new, secure credit institutions that give cheap loans to mortgage-holders and cooperatives, and a living wage guarantee to the rest of us - might be a good call. But supporting the mass transfer of money from the poor to the rich, so that the rich might give a little back to us, is madness. It's not our job to try and solve the ruling class's problems for it.



4) A credit crisis is inevitable.
Regulation can slow credit, but its expansion is not an optional extra for capitalism. It allows 'risk-takers' to make investments with other people's money and expand production. Sometimes those investments pay off, and sometimes - now, for instance - they don't. Marx called it over 100 years ago (Capital Vol 3, Ch. 30):

In a system of production, where the entire continuity of the reproduction process rests upon credit, a crisis must obviously occur — a tremendous rush for means of payment — when credit suddenly ceases and only cash payments have validity.

Credit has suddenly ceased. Marx goes on to discuss the disconnect between money, the value expropriated from the working class; and credit, which is much bigger and more unstable, including "unsuccessful speculation with the capital of other people" and "plain swindle." It's insoluble:

The entire artificial system of forced expansion of the reproduction process cannot, of course, be remedied by having some bank, like the Bank of England, give to all the swindlers the deficient capital by means of its paper and having it buy up all the depreciated commodities at their old nominal values.

But that won't stop them from trying.


Poor people may have to find their own food

5) It's about capitalism, not credit.
Regulation can't stop crisis, because Marx is describing symptoms, not causes. The root of the mess we're in isn't actually credit. It's overproduction:

The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit.

The profit expected by capitalists can never be realized by workers, who earn - and therefore spend - less than the value they create.

Even consumption from other sources - business-to-business and the government - are not enough. Only workers create value: the state and corporations are simply recirculating the wealth they've appropriated from the workers. If they don't have enough to spend, the system eventually crashes.

6) We could do better.
The next time someone says there's no money for welfare, for education, public transit and free Pocky for all, ask them where the $700 billion went. We could mitigate global warming in an instant, putting the kind of capital behind new technologies necessary for their development. More importantly, we could create real development in poor regions of the world, so they wouldn't have to rely on coal or deforestation as energy sources.

But that would require spending money on people's incomes - verboten under capitalism, where you have to sell yourself to the boss to survive. No cash for the poor, and a pittance for the environmental catastrophe that may destroy us. Money so the banks can regain confidence, to start lending to businesses, to create jobs, to steal value from our labour power, to give a little bit back to us? Sure, take as much as you need!


Damn straight.

The working class didn't cause this crisis, but it's being asked to pay for it. Even from our marginal standpoint, socialists can explain how a system of democratic production, for human need, would do away with crises. Often we talk about social justice and equality. Sometimes we talk about anti-capitalism. Rarely do we get a chance to talk publicly about socialism. Now's our chance.

Labels: capitalism, credit crisis, overproduction, socialism