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Monday, December 31, 2012

UNDERSTANDING THE CRISIS




For a student of Marxist political economy, one of the last year’s highlights was the seven-part discussion of the global economic crisis, its causes, and consequences which was featured in Socialist Voice, the excellent monthly publication of the Communist Party of Ireland. Beginning in January with the review of a book on the crisis, two interlocutors—identified as NC and NL-- surveyed the landscape of radical and Marxist explanations of economic crises and their meaning for the working class movement.

Several features of the discussion were remarkable.

First, the discussion was conducted in a comradely and respectful manner. Much of the academic “Marxist” dialogue is about scoring points and splitting hairs. The SV exchange, on the other hand, sought to construct and unify.

Second, the articles were free of jargon and pretension. Too often self-styled Marxist economists feel compelled to package their views in fashionable or “sophisticated” language to create an aura of profundity.

Third, the dialogue owes little to bourgeois economics. Outside of a few distinguished Marxists like Maurice Dobb, Ronald Meek, and Victor Perlo, in the English-speaking world, training in mainstream bourgeois economics has been more of a hindrance than a help in grasping and advancing Marxism. Likewise, formalism—the fetish of mathematical and logical constructs-- has elevated issues like the so-called transformation problem or the “Okishio Theorem” to center stage at the expense of pursuing and elaborating the insights of Marx, Engels, and their successors. In most cases, the formalists and academicians would be well advised to return to a study of the opening chapters of Capital, an exercise that would render much of their exercises pettifoggery.

The Socialist Voice contributions cover briefly, but clearly and seriously, the theories of crisis ranging from the tendency-of-the-falling-rate-of-profit through underconsumptionism, stagnation, long cycles, and the general crisis of capitalism. They draw on a diverse group of theorists from Andrew Kliman and the Monthly Review adherents through Nikolai Kondratiev and Hans Heinz Holz.

The articles are to be found in the January, April, May, June, October, November, and December issues of Socialist Voice or online at:     http://www.communistpartyofireland.ie/sv/index.html.

I urge everyone interested in Marxist political economy to read them. Hopefully, this discussion will generate further research and debate over the many issues addressed. Developing a clear and full Marxist account of the current crisis is a work in progress. My own thoughts, offered in the same comradely spirit, are below:

SYSTEMIC CRISIS
1. Capitalist economic crises are of two types: cyclical and systemic. In the course of capitalist economic activity, imbalances occur between various departments of production, between suppliers and producers, between production and consumption, etc. These imbalances result in slumps or slowdowns in productive activity. Bourgeois economists refer to these as “business cycle” events, meaning that they are cyclical or self-correcting; recovery is on the horizon, perhaps the distant horizon, but on the horizon. Generally, bourgeois politicians apply conventional nostrums—interest rate adjustments, state spending, incentives or inducements—to adjust these cycles to their political ends. Even though these are episodic events, the ensuing damage generally falls on the backs of working people.

2. Systemic crises, on the other hand, are reflective of deep contradictions inherent in the capitalist system. As such, they are not subject to either patience or the usual menu of remedies. Capitalism, like a perpetual motion machine, violates the laws of nature. A system cannot continue forever that depends upon increasing complex social interactions while awarding the riches produced by those interactions to a few who are dissociated from the same social processes. In the long run, the accumulation of private, concentrated wealth tends to choke off the further accumulation of that wealth.

3. Systemic crises do not pass, but are temporarily suppressed or resolved through transformative change. That is, policy makers may blunt or postpone the harshest consequences of systemic crises, but eventually systemic changes are necessitated to exit the crisis. For example, despite New Deal boasts about resolving the Great Depression in the US, the Depression’s demise only came with the vast systemic changes that accompanied a world war— socialist-like economic planning, organization, investment, and production in war supplies and the massive destruction of material assets. In our time, the full impact of the 2001 technology crisis was suppressed only to exacerbate the 2008 crisis. The underlying dynamics of capitalist crisis remained, and still remain. 

4. Systemic crises are, in the final analysis, crises of accumulation. What cripples the mechanism of capitalism most decisively is the inability to generate sufficient profit. Conversely, those factors which restrain the growth of accumulation-- retard the rate of profit-- largely account for systemic crises. Thus, broadly speaking, crises are caused by a tendency within the system for the rate of profit to fall.

5. Basing systemic crisis on failing accumulation and not imbalances or unrealized consumption has the following political consequence: it cannot be overcome with liberal or social democratic panaceas. Wealth redistribution, public sector jobs programs, social insurance etc. will not directly restore profitability unless these programs are actually subterfuges for surplus transfer. Only the restoration of profit growth will stabilize the economy. We saw this in the US after mid-2009 when profits rebounded sharply (generated by intensified exploitation!). But even then earnings began to recede again by mid-2012. Thus, for the working class, the choice is really only between helping the capitalists restore profit or working to eliminate the capitalist system!

6. Paradoxically, the crisis exists because the accumulation process is overwhelmed by the huge pool of surplus in the hands of the few, the owners of the means of production, distribution, service, and finance. Just as before the Great Depression, investment opportunities in productive activities are outstripped by the sheer weight of accumulated surplus. The rate, as well as the expected rate, of profit sinks against the aggregate capital held by corporations, banks, and the rich.  They turn to speculation in scarce resources, property and financial schemes, the ever-active “hunt for yield.” And they take on debt which amplifies the folly of this ceaseless search for a return on available capital.

7. The systemic crisis should not be understood as foretelling an ultimate breakdown of the system. Henryk Grossmann’s pioneering work on Marx’s tendency of the falling rate of profit—because of its strict logical exposition—mistakenly led some to believe that capitalism would implode by its own logic. Similarly, academic Marxists divorced from the working class movement lean heavily on projected stagnation to force the departure of capitalism from the world stage. But capitalism always has extreme measures to fall back on for its self-preservation: a re-shuffling of the cards through war, forced-march capitalism through fascism, and many forms of direct and indirect enslavement. The only escape from capitalism is through the efforts of the most advanced, organized elements of the working class armed with an understanding of capitalism. 

MONOPOLY AND STATE-MONOPOLY-CAPITALISM

1. The theorists at Monthly Review are correct to persistently point to the never-ending concentration of capital into fewer and fewer hands as evidence for the rise of monopoly capital. Mergers and acquisitions, bankruptcies, and integration ensure that leading corporations grow stronger and fewer. At the same time, they understate the resiliency of capitalism to create and re-create new arenas of competition. Frederick Engels stated it well in the very first Marxist tract on political economy (Outlines of a Critique of Political Economy): “Competition is based on self-interest, and self-interest in turn breeds monopoly. In short, competition passes over into monopoly. On the other hand, monopoly cannot stem the tide of competition—indeed, it itself breeds competition…” It is this seemingly small point that eludes the “Monopoly Capital” (MC) school associated with Monthly Review.

2. Even in a hugely capital-intensive industry and a paragon of monopoly like automobile production, competition persists with new producers entering the industry through new technologies (e.g., electric cars) or national initiatives (Japan, Korea, and today China and India). While price competition persists (contrary to the MC school), competition is also expressed through technological features, fuel consumption, performance, warranty protection, and a host of other differences. Moreover, these differences are based in the techniques of production and costs of production and not merely sloughed away as “the sales effort” as Sweezy and Baran do in Monopoly Capital. They equally sidestep the competition between old and new, mainstream and alternate industries.

3. Despite the persistent concentration of capital, competition among capitalists and the thirst for a return on capital stocks will always steer the system towards systemic crisis.

4. Of greater use to the working class movement is the theory of state-monopoly-capitalism. While monopolization may bend, but not break the logic of capitalism, enormous monopoly corporations have succeeded in merging their interests with the functions of the state. The enormous power and reach of monopoly enterprises have commandeered all organs of the state and harnessed the state’s actions to the promoting of capital accumulation. While the theory of state-monopoly-capitalism has been dismissed in left circles since the demise of European socialism, the priority by the state given to the US/European bank bailouts surely underscores its validity and makes the critics pause to reconsider. The theory is an essential tool for understanding the behavior of EU and US policy-makers through the course of the crisis.

“FINANCIALIZATION” AND DEBT

1. “Financialization” is an unfortunate term—fashionable, but adding little light to our understanding. The growing role of finance has been noted since before the time of Lenin. The process culminated in finance accounting for over 40% of corporate profits in the US by the early twenty-first century—in part by its increasing absorption of stampeding surplus and in part by the decline and departure of manufacturing that formerly accounted for a far greater share of US profits.

2. Unquestionably finance took on a leading role in the US, the UK, and a few other advanced capitalist countries with the creation of a vast new pool of low-wage workers available to manufacturing after the destruction of Eastern European socialism, its socialist-oriented allies and the PRC’s opening to global markets. This reflected the new national division of labor in the global economy— manufacturing and export in the East and South and finance, management, and services in the West and North.

3. As the leading financial center, the US became the Mecca for those with pockets overflowing with cash and fewer investment opportunities in an era of low interest rates and cheap money.

4. Unlike in the world of commodity production where value is produced in real time, finance offers opportunities to appropriate future value through contractual instruments like mortgages, bonds, futures, and, in our era, even more exotic creations. These instruments trade in future value, hence challenging capitalism to find even more marginal investment opportunities to absorb surplus and potential surplus.

5. Debt—the offspring of easy credit and low interest rates—serves as an amplifier of financial investment, the critical bridge to ever-more reckless speculation. Thus, finance served up its many “innovations” designed to absorb the ocean of surplus accumulated over decades and in search of another round of accumulation in an environment of diminishing returns. In this manner, the tendency for accumulation to retard its own re-production found its expression in the financial crisis that broke out in the US in 2007-2008.      

OTHER CRISIS THEORIES

1. Wave theory-- the notion that economic activity exhibits a wave-like trajectory from boom to bust and back to boom again—enjoys an almost mystical, spiritual attraction for many. Associated with the views of Nikolai Kondratiev in Marxist circles, the theory of a regular, periodic wave—long or short—is flawed for two distinct, but fatal reasons.

2. From an empirical perspective, it is impossible to settle on those features of economic history that are decisive in expressing the upturns and downturns of regular cycles. That is to say, the dependent variables are illusive and hazy. Moreover, when they are clearly stipulated—GDP, labor productivity, profits, etc—no incontrovertible pattern is revealed. Instead, only intuitive patterns are seen by those already disposed to see them.

3. From a theoretical point of view, there is no candidate for an independent variable that demonstrates a consistent and regular wave-like behavior throughout economic history (or the history of capitalism). Neither technological innovation, cultural or demographic change, nor any other candidate for the cause of cycles exhibits the kind of wave-like nature that would account for regular, periodic waves in the historic record. And where we find wave-like motion in nature (eg. Lunar cycles), there is no obvious causal connection with economic life.

4. In short, long cycles are impossible to discern without appealing to Rorschach-like impressionism and impossible to explain without assuming what it sets out to illustrate. When you want to see a face on the moon, you’ll see one.

5. We owe a great debt to Hans Heinz Holz, the late German Marxist philosopher, who brought new life to the long-standing Communist concept of the General Crisis of Capitalism (GCC). As Holz points out, Soviet social science mechanically and empirically attached the GCC to the historical stages ushered in by the Bolshevik revolution and the Second World War. This was a misleading interpretation dissolved by the setbacks to socialism.

6. Holz is correct in rehabilitating the GCC as a truly general crisis generated by capitalism’s internal mechanisms independently of important, but external events. He is correct to conceive of the GCC as a total crisis, not limited to the economic sphere but including social life, culture, ideology, and all other human relations.

7. Thus the GCC is not a theory of economic crisis. Instead, the systemic crisis of capitalism is one element—one causal element-- in the General Crisis of Capitalism.

8. Much more work needs to be done in developing a full theory of the GCC with its consequences in every aspect of everyday life.

Zoltan Zigedy
zoltanzigedy@gmail.com

Tuesday, December 11, 2012

It’s Back!!!




Red-baiting lives!

Actually it never waned. Like most evils, it lurks in the shadows and under rocks until it is called on again to serve the rich and powerful. Like racism, red-baiting is a tool of division and distraction. It is designed to separate those who are weak or wavering from those determined to change a malignant political and social system. Red-baiting harnesses fear to tarnish those seeking social justice. Red-baiters sow cynicism, dampen ardor, nurture doubts and dissolve unity.

A renewed and virulent strain of anti-Communism has surfaced in the US, stretching from the imbecilic film Red Dawn to the rabid media bashing of Oliver Stone’s ten-part television series, The Untold History of the United States.

Red Dawn, currently showing in hundreds of theaters, has grossed over $31 million in revenue through December 2. Based on a moronic plot of an invasion of the Pacific Northwest by troops of the Peoples’ Democratic Republic of Korea, the movie postures young patriots as forging a resistance movement against their Asian aggressors. Only in Hollywood could writers craft a plot that features a relatively poor country of twenty-five million people mounting a naked, distant aggression against the most economically powerful country in history with well over ten times the population. What next, an invasion of the Southwest from Nicaragua?

Oh, sorry, that movie was made in 1984! Actually, the current Red Dawn, found its dubious inspiration in the Reagan-era movie with the same title and an equally virulent commitment to red-baiting. We have John Milius, and his equally demented Hollywood colleagues, to thank for the fear-mongering of Red Dawn I.  Screenwriter/Director Milius bears responsibility for such stupid --though less politically dishonest – movies like Magnum Force and Conan, the Barbarian. But where those movies only enshrined ugly politics and employed right-wing icons, Red Dawn I advanced the political agenda of US imperialism and crudely served to prod domestic reaction. At a time when the struggle for international peace and détente was at a critical juncture, the film was heartily welcomed by opponents of rapprochement.

Today, Red Dawn II emerges not as a counterforce to the left, but as a pre-emption of a feared rising of the left. Even with most of the US left’s leaders chained to the Democratic Party or mired in opportunism, the rich, the powerful, and their minions recognize that the profoundly wounded economy and the dysfunctional political system provide both the seeds and fertile soil for a powerful peoples’ movement. And they hope to pollute it with red-baiting before any sprouts arise. Even with its crude, wildly implausible plot, Red Dawn II is meant to discredit any “red” or even “pink” movement before it matures.

Likewise, Oliver Stone’s new TV series on Showtime has been met with furious bashing on the part of the professional anti-Communist toadies of the mainstream media. Setting out to correct the “official” high school civics class histories of the Cold War period, Stone and his historian collaborator, Peter Kuznick, produced a ten-part serial that challenges knee-jerk anti-Communism and seeks to balance the slanders of Cold Warriors. The Untold History of the United States proposes a counter history, an account built around a number of “what ifs…” that chart a different historical trajectory absent a rapacious and predatory military-industrial complex and a destructive CIA.

Of course this does not set well with the rabid guardians of the anti-red canon. As Peter Kuznick chronicles in a recent appeal to Historians Against the War, the red-baiters are out in force.

Ronald Radosh – famous for crafting a career from equating Reds or “fellow travelers” with NKVD or MVD agents—makes an astonishing leap to connect Stone and Kuznick to the long-departed Soviet security agencies. He claims to detect similarities just short of plagiarism (leaving his claim just short of libelous) between The Untold History and a book by the late Carl Marzani, We Can Be Friends. To square his circle, Radosh proffers that Marzani “…told this very story in We Can Be Friends. A secret member of the American Communist party who had worked during the war in the OSS, Marzani later was proved by evidence from Soviet archives and Venona decryptions to have been a KGB (then the NKVD) operative. His book was published privately by his own Soviet-subsidized firm. It was the first example of what came to be called “Cold War revisionism.”

Thus, by association—a favorite tactic of red-baiters—Stone/Kuznick becomes linked to the KGB through the alleged operative, Carl Marzani. Others have shown how fast and loose Radosh has toyed with the charges of “operative” or “agent” based on the thin evidence of “association.” But Marzani’s “secret” or open identification with Communism in 1952 is of no relevance to the truth conveyed by We Can Be Friends or The Untold History. Marzani argues for the following:

The next step to peace is to sit down around a conference table and negotiate. Negotiations, it should be emphasized, do not require friendship. Negotiators can sit down unsmiling and bargain grimly, yet both sides are aware that a settlement must be reached. (p.369)
If Marzani’s simple, but sane formula for improving US/Soviet relations was inspired by the NKVD, then credit to the NKVD!

We Can Be Friends was published by Topical Book Publishers. For those Reds with something to say in 1952, self-publication was often the only route. In the teeth of McCarthyite repression, leftists could not get mainstream publishers to even consider their manuscripts. Outside of the exceptional renegade publishers like Cameron and Associates, left-wing authors were forced to turn to funding a few hundred copies, as did Howard Fast with his now celebrated historical novel, Spartacus. The dark ages of the 1950s were certainly made brighter, if it was necessary for the NKVD to subsidize these fine books!

The quality of Radosh’s scholarship can be judged by his emphatic claim that We Can Be Friends “…was the first example of what came to be called ‘Cold War revisionism.’” A casual glance at my tattered old copy reveals a bibliography that cites earlier writers like Frederick L. Schuman and I. F. Stone who decisively rejected the Cold War canon well before Marzani’s book arrived on the scene.

Following Radosh’s lead, other rabid anti-Communists like Michael Moynihan joined the fray in attacking Stone and Kuznick. And to its shame, The New York Times unleashed its slime merchant hireling, Andrew Goldman, to mount a bizarre ad hominem against Oliver Stone. Goldman had just served his four-week suspension for publicly inquiring of two female interlocutors whether they had slept their way to the top of their professions. Sadly, this attack well represented the level of integrity shown by most of these ruling class courtiers.

To these professional red-baiters must be added the host of professors who peddle lurid books on the “Evil Empire.” Most active is Anne Applebaum, journalist turned academic, who authors books portraying the Soviet and socialist Eastern European experience as wholly oppressive and thoroughly unpopular. Her current book, Iron Curtain, enjoys wide circulation and copious publicity from the corporate media. Applebaum’s ideological bias (her husband is Minister of Foreign Affairs in the ultra-nationalist Polish government) and selective scholarship are seldom challenged by her colleagues.

Applebaum’s work indirectly suggests that Soviet “evil” is on a par with Nazi evil or, as she and her ilk crudely put it, “Stalin’s crimes were the same or worse than Hitler’s crimes.” Yale professor, Timothy Snyder, shares no such hesitation. His popular book, Badlands, boldly embraces the equation of Hitler and Stalin. Indeed, his current career seems based upon his widely speculative, broadly calculated, and poorly evidenced victim calculation. For Snyder, there would seem to be no natural deaths in the Soviet Union or socialist Eastern Europe. In his energetic counting, victims of the Warsaw insurrection in 1944, urged by the Polish government-in-exile to rise, arguably belong on the Soviet side of the ledger since the Red Army didn’t rescue them. Of course the victims of natural famines are also laid at the Soviet doorstep. Snyder pursues his head counting with an almost perverse determination and a theological certainty.

The revival of open and widespread red-baiting is ignored by liberals at their own peril. Like the inquisitions of old, the immediate object may be the dissidents, the ideological deviants, but the real design is to terrorize the majority into submission and conformity. In the US, anti-Communism and its counterpart, racism, directly target ideological and ethnic minorities, but prove to be of even greater use in fracturing, distracting, and deluding the majority. Rampant racism and rabid anti-Communism serve the rich and powerful well by closing avenues to unity and social justice. Surely the red-baiting charges of “socialism” leveled at right-centrist Obama underline this point and send a clear message to liberals of the dangers lurking in accommodating the alarm of “Reds!” 

Zoltan Zigedy
zoltanzigedy@gmail.com