Liam redux

To hell with the X Factor. Has anyone seen the subjective factor?

On page 10 of the current issue of Socialist Resistance comrade Phil predicts “While growing unemployment is likely to be a disciplining factor it is highly likely that we shall see in the next period a big increase in strike action, particularly in the public sector.” It all depends what you mean by “period” perhaps.…

Liam
3–5 minutes

image On page 10 of the current issue of Socialist Resistance comrade Phil predicts “While growing unemployment is likely to be a disciplining factor it is highly likely that we shall see in the next period a big increase in strike action, particularly in the public sector.” It all depends what you mean by “period” perhaps. The National Union of Teachers (NUT) is not going ahead with strike action despite a majority vote in favour, admittedly on a smaller endorsement than last time and with some areas outside the big cities voting against. The turnout was just under 30% with 51.72% voting for action and 48.28% opposing.

The PCS has suspended for four weeks its long running action in support of a pay rise for the lowest paid grades of civil servants. It will use the time to negotiate with the government. A quick search for “job cuts” on the Financial Times site reveals that The Independent is getting rid of a quarter of its journalists. This is quite an achievement since for the last few years it has given the impression of not having very many. The Royal Bank of Scotland intends to make 3000 people unemployed, JCB 380. BMW and Argos are getting rid of 5000 temporary staff, a group which will be the low hanging fruit for every company wanting to get rid of people.

Maybe the bourgeois media is part of a conspiracy to make everyone believe that all these people are simply accepting unemployment and financial insecurity meekly. Perhaps there have actually been dozens of strikes, occupations and protests and they have been covered up. It seems that the awful reality is that there has been virtually no active resistance to any of the layoffs. That’s worrying. Conventional wisdom is predicting two million unemployed by Christmas and that is Thatcher territory.

So much for the objective situation. How is the subjective factor (the active participation of the working class in the historical process) looking in Britain? At this point a quick comparison with France might be helpful. This week’s Economist puts the rhetorical question “Is Sarkozy a closet socialist?” He’s taken to saying that the “age of laissez-faire capitalism is over”, will nationalise banks that don’t lend enough to companies and claims he will create 100 000 state-subsidised jobs. Maybe yes. Maybe no. The Economist suggests that this may be part of an attempt to put a spoke in the wheels of Olivier Besancenot’s fledgling anti-capitalist party but it has not been enough to stop strikes by Air France pilots (a pretty privileged bunch), train drivers, teachers, students and postal workers. If that were happening here I can think of at least three organisations that would be calling it a pre-revolutionary situation. For the rest of us it is what a working class does when it has not had a traumatic defeat a generation ago.

It is a sign of how debilitated the left is that an economic situation which is giving central bank governors the world over has found very little resonance in terms of activity. The level we are at is that if Respect wins a council by election Thursday it equals seriously good news because it is an electoral defeat of New Labour. Of course it’s good news but it’s pretty small beer. None of the other left of Labour alternatives can even manage that. I wish they could. Inside Labour it’s even worse. The shrinking band of class struggle socialists in there is not growing as a result of the meltdown and while everyone can make propaganda no organisation is in a position by itself to give leadership. There is a dynamic connection between the absence of a credible political force outside Labour and the deep passivity of the unions but that is a discussion for a separate piece.

Blindly assuming that a bad time for capitalism is a good time for socialists is self-evidently daft. A quick survey of British politics and unions tells you that. Agreement on the causes of the current dilemma is almost universal – the pounding working class organisations took in the Tory years and while I’m all in favour of making arguments against capitalism it hardly makes an adequate replacement for rebuilding militancy and confidence. A bout of electioneering last week was strong proof of that.

You would need to be a special kind of fool to make a firm prediction as to what kind of resistance will develop to the capitalist offensive and coming up with a heartwarming anecdote about how someone at the bus stop was really cross is a substitute for thinking.  It looks like wages won’t be the trigger. Maybe it will be job cuts, pensions or something we haven’t even thought of or maybe it won’t come at all. The hard fact is that until some event or process happens that starts a fight the coming year is going to be a hard one.

 

 

21 responses to “To hell with the X Factor. Has anyone seen the subjective factor?”

  1. David Ellis Avatar
    David Ellis

    It is difficult to see how a fight will be started that is very true particularly given the vice-like grip of the TU bureaucracy on the movement. The recession needs to be politicised I think and built perhaps like a stop the war style movement to begin with which somehow gets round the bureaucrats. I have written a short item here on how this might possibly be done in the light of the breakdown of the Labour/Tory consensus on the correct approach to the crisis:

    http://thetroublewithcentrism.blogspot.com/

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  2. David Ellis Avatar
    David Ellis

    Liam,

    I posted a short comment which had a link in it which must have fallen into your spam filter.

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  3. bill j Avatar
    bill j

    But its not only the subjective factor. Reflect a moment on the results of Gordon Brown’s recent policy changes;

    interest rates have been slashed knocking £150 a month on average off half of mortgages
    Northern Rock and the other banks have been instructed to go easy on repossessions
    He’s about to go on a massive Keynesian spending splurge – giving tax payers quites a few hundred pounds extra and increasing public spending
    inflation – is over and deflation threatens

    Certainly unemployment is rising, house prices falling, repossessions increasing all that is true. But its not simply a case of everyone suffering together. Certainly not yet.

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  4. charliemarks Avatar
    charliemarks

    On Sarko – it’s partly about trying to beat off (no pun intended) the charming postal worker but it strikes (no pun intended) me that this won’t work. I mean, if it’s socialism your after, why vote Tory?

    This conversion to Keynesianism has a lot to do with the fact that the state doles out welfare to all sorts of big companies these days – private investment in public healthcare and education and welfare provision, as well as the military side of things…

    I think Cameron’s lost his nerve because of the poll ratings. So it’s back to the true blue Tories openly blaming the poor / unemployed / repossessed for their misfortune and calling for cuts in spending. All of which helps out New Labour in electoral terms.

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  5. bill j Avatar
    bill j

    Actually I think the conversion to Keynesian is much more significant than that. It signals a break with the neo-liberal orthodoxy which has been the prevailing bourgeois ideology since the 1980s. Paradoxically possible as, the recovery in profit rates with globalisation means that the government is indeed not short of money. It does have room to manoeurvre, it has no need to engage in desperate actions to confront the working class, as a class, in the short term.
    Hence the quite different policy being adopted by the world’s imperialisms than that anticipated by the left.

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  6. David Ellis Avatar
    David Ellis

    What conversion to Keynesianism? Keynesianism is another word for a loose money supply. The only time Keynes was abandoned was for a couple of years under Thatcher at the start of her reign. The short lived period of deflation we are getting now demonstrates that the crisis is ultimately driven by over-production and not the revisionist Keynesian analysis of under-consumption.

    The only reason there hasn’t been a full on onslaught on the working class yet is because of the split this crisis had brought about in the ruling class between finance capital and industrial and petty capital. A full-on onslaught on the working class to save finance capital would require the total destruction of the UK economy. The working class must take advantage of this split. The tories have worked out that ultimately inflationary policies will lead to guess what inflation and possibly a 1930s style German collapse and they want to be there to pick up the pieces and say I told you so. They represent much more completely the interests of finance capital (after all most of their school chums run the banks).

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  7. David Ellis Avatar
    David Ellis

    Sorry, forgot to say: read my short piece `Recession: Socialism the middle ground?!’ and maybe we could have a discussion about the way forward instead of how awful things politically are or how they are not so bad economically. (click on the name).

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  8. bill j Avatar
    bill j

    I didn’t say things weren’t bad economically. I simply pointed out that there impact on the working class had been uneven.
    Many workers will be better off as a result of the recession so far, falling interest rates, easier mortgage rates, relationary tax cuts etc. fine ignore that if you want, but it may have something to do with the mutued response so far.
    Sorry if that’s inconvenient for your schema.

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  9. Jim Monaghan Avatar
    Jim Monaghan

    I think it is natural that the initial response to the crisis is fear esp. in the private sector. It will change when people see that passivity does not help but it will atke time.In Ireland there is not one person in say Intel or Dell who thinks their jobs are secure till after Christmas. What is needed is to build the unions so that when the workers are ready there are organistaions. In many places there are no unions or they are moribund. How many of us know of agms with less than 5% of the members in attendances. Better losing a vote at a well attended meeting than winning a useless victory at a sparcly attended one. It think we are at the patiently organise stage of struggle.

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  10. prianikoff Avatar
    prianikoff

    The subjective factor also applies to the Government.
    Brown’s policy of disaster mitigation has been quite bold so far.

    I suspect that there may have been a few “behind the scenes” threats to the oil companies and supermarkets. – Along the lines, “cut your prices, or we’ll tax your profits”

    It’s much better for capitalism as a whole, if they aren’t seen to be doing it under compulsion.
    With food and petrol prices falling and no one actually having lost their savings yet, there’s no particular reason for mass protest.

    The real question is how long can the government meet all the obligations its taken on without running out of money?

    The UK is now “leveraged” to the tune of 400% of GDP, which is only half the level which brought down the Icelandic economy.
    This is a much worse position than the USA and the real movement of sterling reflects this.
    Since the UK is no longer reliant on exporting manufactured goods, but does need to attract wholesale bank deposits, this isn’t a desireable trend.
    – Hence the rap over the Tory’s knuckles by Brown, for “talking down sterling”

    Tax cuts and low interest rates may temporarily stimulate demand, but they have to be paid for somehow. New Labour policy means that it won’t be the rich that pay.

    The most likely way will be through increased unemployment. So the unions should be enforcing a 40 hour working week policy as a minimum demand.

    If Brown’s policies don’t stop the slide to recession, the government might have no option but to simply print bank notes and bonds, hoping they can all be paid for out of future taxation. Which means that the current policies could equally well give way to renewed inflation and tax increases within a year.

    Either way, the failures of Keynesianism by the 70’s were one the main reasons for the growth of monetrarism in the 1980’s and there’s no particular reason for believing capitalism has suddenly found the magic bullet to its inherent contradictions.

    For a good antidote to underconsumptionist theories, take a look at Henryk Grossman’s writings.

    http://www.marxists.org/archive/grossman/index.htm

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  11. bill j Avatar
    bill j

    But what is the emphasis on debt if not underconsumptionist? Yet it pretty much defines your analysis as described above.
    Working class indebtedness is not a problem per se, as it reduces wages and increases profits, but it is a problem if it is securitised against speculative assets when the underlying ability of workers to meet their repayments is obscure. Hence the current banking crisis.
    There certainly will be and indeed is now increasing unemployment, and the government may have no option but to do any number of things.
    But at present the point is that the “crisis” is real, but its effects are far from even. And in terms of its ability to destroy the commodities boom, bring down prices and therefore increase living standards, is by no means injuring the working class in its majority yet.
    This when combined with the lower mortgage rates and interest rates consolidates this interesting dichotomy.
    In other words simply relying on “crisis” to resolve the subjective problem is never going to work, not least as at present, the crisis, is in large part raising workers living standards.

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  12. prianikoff Avatar
    prianikoff

    The question is, how did the growth in personal and national debt arise?

    Historically low interest rates and the plethora of loan capital during the boom can be seen as symptoms of “absolute overproduction of capital”.

    This means continued accumulation leads to the devaluation of capital and a sharp fall in the rate of profit. ‘Globalisation’, ‘neo-liberalism’ and the credit boom was a response to that situation rather than its cause.
    But the form that investment took in the West was largely unproductive, fuelling the property and commodity booms, the rise in price of fine art and the stock exchange hedge-fund frenzy.

    The onset of recession indicates what Marx calls “the limits in which capital can realise itself as capital”.
    Which means simply artificially boosting demand, but not challenging capitalist ownership and control won’t work.

    Quite a practical issue in terms of the US car industry I would have thought?

    Either way, all the data suggests that unemployment is rising quite sharply, so it will be important to address that issue politically.

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  13. bill j Avatar
    bill j

    Actually not so. Low interest rates are coincident with a super abundance of profits – when money is freely available it is cheap. When money is not it is expensive. Hence the low interest rates of the turn of the millennium until 2007 where reflective of the very high rates of profit available then.
    Profits peaked in 2006 and falling more sharply through 2007 until now. As they have done so interest rates have risen.
    BTW I’m not saying there isn’t a crisis, unemployment is obviously rising and quite fast. And neither can state measures abolish the crisis, but they can ameliorate it, and the ability of the capitalist state to do so is fundamentally dependent on how rich they are, or prevailing levels of profit, which have significantly recovered from the low points of the 1970s/80s, albeit they have declined from 2006 onwards as the business cycle peaked.

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  14. bill j Avatar
    bill j

    See here for proof;

    “if we observe the cycles in which modern industry moves — state of inactivity, mounting revival, prosperity, over-production, crisis, stagnation, state of inactivity, etc., which fall beyond the scope of our analysis — we shall find that a low rate of interest generally corresponds to periods of prosperity or extra profit, a rise in interest separates prosperity and its reverse, and a maximum of interest up to a point of extreme usury corresponds to the period of crisis.”

    http://www.marxists.org/archive/marx/works/1894-c3/ch22.htm

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  15. prianikoff Avatar
    prianikoff

    Looking at rates of profits using the US economy:-
    They recovered from a post-war low of 10% in 1980 up to14% by 2004.

    But never reached the average of 22% that prevailed during 1947-66.

    This recovery was heavily dependent on overseas cheap labour a.k.a Globalisation. As well as the huge influx of overseas capital into the US, which accounted for a whacking 80% of international capital outflows.

    The whole boom period was characterised by huge and growing imbalances in the international economy.
    Not to mention the high degree of speculative, unproductive investement.

    – All signs of Over-accumulation and the underlying difficulty of realising surplus value in production.

    Projecting these tendencies into the future led to crazy results:

    Sustaining the boom would have required a loan rate of *minus*10% and the US debt to rise to 20x GDP!
    Clearly this was a Rock that had to be avoided.

    So from 2004 until this summer, the US Federal Reserve raised interest rates from 1% to 5.25%.
    (Which, includes the period when you show company profits were highest.)
    Leading to the Hard Place of failed loans, banking failures and doom for the US auto industry.

    BTW, It’s not strictly accurate to directly correlate low interest rates with a period of boom.
    After all, Japan had zero percent interest from 2001 while it was in prolonged recession.
    Marx’s view on this was actually more complex.
    He regarded it as a quite unusual situation for an abundance of loan capital and industrial capital to coincide.

    See Capital Vol. III Part V, Chapter 30 ‘Money Capital and Real Capital’

    extract: “On the whole, then, the movement of loan capital, as expressed in the rate of interest, is in the opposite direction to that of industrial capital…..at the beginning of the industrial cycle, a low rate of interest coincides with a contraction, and at the end of the industrial cycle, a high rate of interest coincides with a superabundance of industrial capital.”

    The current reversion to low interest rates looks like a desperate attempt to stave off the recession.

    Therefore I wouldn’t make any long term prognostications from these moves.
    There are clearly strict limits to the efficacy of Keynesian policies.

    In fact, I find it hard to believe that capitalism will be able to expand again without a massive assault on working class living standards. The situation in the US Car Industry needs looking at closely.

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  16. bill j Avatar
    bill j

    I don’t know where you’ve got your figures from for the rate of profit, if you could let me know the source, that would be good. Robert Brenner’s figures, usually sited by Chris Harman, only go up to 2001 and do not include financial profits. Given that financial profits have doubled over the last two decades, much of the nominal stagnation in non-manfuacturing profits simply ignores the increase of financial profits in the same period, more than offsetting it.
    Obviously every crisis is one of over-accumulation. Just saying that doesn’t actually get us anywhere, especially if you want to claim that over-accumulation, i.e. a too much capital for the prevailing quantity of profits, has existed since 2000 at least.
    This would seem to imply that the boom from 2003-2007 didn’t happen. If this period was also one of the “overaccumulation of capital” then this is evidently a meaningless phrase useless in practice.
    Low interest rates are related to boom. You are confusing the government or treasury rate with the actual rate. The Fed raised interest rates through 2004 onwards, but interest rates offered by banks and finance house fell, through the use of introductory offers, teaser rates and so on. The Fed cut interest rates from 2007 onwards, but the interest rate has barely fallen, in fact this year it has increased, as profits have declined.
    As for you “massive assault on working class living standards” well maybe, but that certainly isn’t the policy of the capitalists now, who are increasing working class living standards to maintain effective demand.

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  17. prianikoff Avatar
    prianikoff

    “IS THE U.S. ECONOMY HEADED FOR A HARD LANDING?” by Fred Moseley

    Table 1
    http://www.mtholyoke.edu/courses/fmoseley/FIG1.XLS

    ….also explains the countervailing measures which capitalism has used to stem the decline in the r.o.p.

    Henryk Grossman explained Marx’s concept of overaccumulation thus:-

    quote

    “The fundamental idea underlying Marx’s scheme is the immanent contradiction between the drive towards an unlimited expansion of the forces of production and the limited valorisation possibilities of over -accumulated capital.

    Precisely this is the necessary consequence of Marx’s schemes of reproduction and accumulation. Because Luxemburg transformed these limited valorisation possibilities into a limited capacity for consumption she could find no trace of that immanent contradiction in the scheme itself.

    Against this Marx shows that: the self expansion of capital based on the contradictory nature of capitalist production permits an actual free development only up to a certain point, so that in fact it constitutes an immanent fetter and barrier to production”

    endquote

    The credit system attempts to break through this barrier, but this can’t stop the onset of serious recessionary crises when this mechanism fails.

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  18. prianikoff Avatar
    prianikoff

    regarding working class living standards:-

    The prevailing Keynesian methods that Brown & Obama have introduced are an attempt to avoid a recession within the framework of capitalist ownership.

    But there will certainly be pressures on overall working class living standards. Even if unemployment is counteracted by public investment, it will be on the basis of disciplining the work force to accept tighter labour discipline and lower wages.

    In the USMake no mistake, there’s a big showdown looming over the fate of Chrysler, Ford and GM.
    The US govt. will require tough measures on productivity and pensions before releasing money for a bailout.

    Alternatively, if they’re forced to file for Chapter 11 bankruptcy, not only will it mean a deep and generalised recession in the US, but also the beginning of a massive assault on unions, wage levels and pensions.
    As happened in the case of the former GM subsidiary Delphi Auto Parts in the 90’s where workers were re-hired on 2/3rds pay.

    Honda in Swindon will shut down for 2 months in the New Year due to falling orders, which will mean a pay cut for the workforce. Similar measures can be expected in other UK manufacturers and retail companies.

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  19. bill j Avatar
    bill j

    Well yes we are in a recession. And I’ve read Moseley’s article as well, which btw conflicts with your own position as it explains how profit rates have been restored in the USA over the last two decades.
    Grossman’s theory is terribly mechanical and in my view useless. Of course you didn’t explain where you got your figures from for the rate of profit. Or indeed if you recognise that there was a boom between 2003-2007.
    If the world economy has been suffering from the over-accumulation of capital for the last two decades, how come its grown so much and profit rates have been restored? Or is everything always stagnant for you? Crisis is perpetual and the business cycle does not exist?
    Obama and Brown aren’t attempting to avoid a recession. There already is a recession. The UK and USA are in it now.
    They are attempting to limit its effects.How far they are able to do so remains to be seen. Certainly it seems very unlikely that any of the big three will be allowed to fail, nationalisation is more likely.

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  20. prianikoff Avatar
    prianikoff

    At this point it comes down to having to me having to reiterate what I’ve already said and deny things I haven’t.

    I don’t hold any of the positions you’ve ascribed to me.
    There a numerous counter-tendencies to the falling rate of profit, but these don’t invalidate the law, as pointed out by Grossman (and Marx).

    It’s not a question of an endless boom-slump cycle, but a historical trajectory in which it becomes increasingly difficult for capitalism to grow.

    These countermeasures have failed to restore the US R.O.P to the levels from ’47-66.
    While Marshall Aid and the dynamism of the US war economy rescued capitalism then, it will be much harder now – the US is a debtor nation.

    Therefore wages, pensions and employment will be under threat.

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  21. bill j Avatar
    bill j

    Well you can re-iterate them all you like. But you can’t prove them can you?
    You can’t prove that the rate of profit hasn’t been restored – the one source you site Moseley says it has.
    You can’t prove the downward historical trajectory – that’s not surprising either – it doesn’t exist.
    You don’t have to prove that wages pensions and employment are under threat. It would be a strange recession were they weren’t. Although it seems unclear if you think there is actually a recession given that you imply that Brown and Obama can avoid it.
    So enough of vapid generalisations, proof please.

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