the commune

By Eric Chester

     The global economy is mired in the worst crisis since the Great Depression of the 1930s, and yet capitalism has always been characterized by instability and insecurity. An economic system that operates without an overall plan, and in which powerful economic forces act on the basis of maximizing short-run profits, is a system that is inherently unstable. Marx predicted a collapse of capitalism leading to a revolutionary upsurge as early as the 1850s.[i] This would appear to be one of his predictions that has been contradicted by the course of history, but in fact the global economy has been plunged into one crisis after another.

     The unpleasant reality we confront today is that although capitalism is constantly changing, the impact of these changes is, on balance, overwhelmingly destructive. Indeed, as capitalism grows and expands, it destroys everything in its path. As the system unravels, more and more workers become permanently displaced from the workforce; income and wealth differentials widen within the already industrialized societies, as  an increasing number of countries are added to the list of “failed” nations; and ecological catastrophe threatens the continued existence of the planet as we know it. We are at a crossroads. Either the working class acts as a class and wrests power from the capitalist class, or the system will disintegrate into a catastrophic freefall.

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Post World War II capitalism was able to afford social democracy, says duvinrouge. Profit rates were high after the capital devaluation & destruction of the Great Depression & war. Cheap oil enabled great advances in productivity. In Marxist terms the rate of exploitation increased. This means a larger percentage of the value created by workers was going to the capitalists. But because of the productivity increases, in material terms the workers were actually getting better off (at least in the West) even though they were being exploited more. This enabled the creation of a welfare state: state-funded healthcare, education, pensions & unemployment benefits. Western societies became more equal. With such improvements in living standards there was little reason for the workers to overthrow capitalism.

These improvements began to be tested in the late 1960’s. In 1967 the £ was devalued & at the same time the US$ was coming under increasing pressure, eventually leading to Nixon removing the convertibility to gold in 1971. It may be that these difficulties were based upon a falling rate of profit at the time, but even if this was just a crisis of overproduction, the authorities seemed determined to avoid a re-run of the 1930’s, particularly at the height of the Cold War with the Soviet Union. Keynesian fiscal stimulus seemed to only create inflation. The Phillips Curve gave way to stagflation. With the major currencies threatened with debasement a solution was needed. Neo-liberalised seemed to offer this. Attacking trade union power was seen as the best way to deal with the ‘enemy-within’ & perceived cost-push inflation. Alongside this came the demand to end capital controls so finance capital could overcome restrictions put in place by the now ‘independent’ ex-colonies. A new phase of multi-national globalisation directed by the bankers was beginning. This renewed power of finance capital largely came from financialisation, itself a product of the new fiat currency regime. The wider provision of mortgages & the selling off of social housing, enabled those in the West who still had work, to continue to give credence to the conservative dream of a property-owning ‘democracy’. With the fall of the Berlin Wall & the collapse of the Soviet Empire, the ‘end of history’ & the triumph of capitalism was celebrated, even China was now conceding defeat & turning to capitalism. This offered the ‘masters of the universe’ the opportunity to deindustrialised the West on an even greater scale by exploiting Chinese former peasants at even lower wages. The printing of US dollars in the form of US Treasury Bills bought by rich Arabs & the Chinese keen to keep their currency competitive, enabled the West to live on credit, buying cheap goods from Asia. How could this ever go wrong?

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What’s happening in Cyprus is hugely significant, says duvinrouge. Cypriots are having the money in their bank accounts taken by the government. The question people are now asking is if it can happen in Cyprus, can it happen anywhere?

To understand what is happening requires an understanding of the nature of the crisis, the crisis of overproduction. Capitalism is based upon commodity production: things are produced for sale, to sell for money, not for immediate consumption. Furthermore, the price must be higher than the costs of production for a profit to be realised. Profit is the objective, not the satisfaction of human needs. But the problem with commodity production is the commodity that acts as the universal equivalent – money – must grow in line with commodity production in general for all the commodities to be sold. If money gets hoarded, e.g. capitalists refuse to invest because profit rates aren’t high enough, then we have stagnation, even a depression. This hoarding of money is what most Keynesians, and some Marxists, see as the cause of the current crisis. Hence they argue that the government must step in with fiscal stimulus until the capitalists return to their senses and start investing again. Crises due to hoarding are possible, but this is not overproduction and not the current crisis.

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