I did something I very rarely do today, and bought the Morning Star, the English-speaking world’s only daily socialist newspaper. I rarely but it partly because it is a hard paper to come by, and partly because its politics sometimes baffle me, especially its line on Northern Ireland, which more often than not reads like a nationalist press release rather than a socialist analysis. At the same time, it’s important that such a paper exists, and it does often contain interesting material. Although it remains the publication of the Communist Party of Britain, it has in the last number of years attempted to open itself up to the broader left, mainly as a matter of survival. Its columnists now include George Galloway for example. It’s a good place to go to for international politics and the story of trade union activity in Britain.
Today it included alternative plans for restarting the economy, including from the civil service union PCS which were interesting in themselves, and exactly the sort of thing that the trade union movement in the UK and the Republic should be doing, given the inability of the parties of the left to produce detailed alternative policies due to their weakness. But the most interesting article came from John Foster, the CPB’s International Secretary, and discussed how Marx was essential to understanding the current financial crisis. Its title ‘Let’s Get Technical’ says a great deal about the argument that followed.
Foster acknowledges that the standard analyses offered by financial journalists so far have some validity – the bonus culture and irresponsible investments, the absence of sufficient regulation, and the trade imbalances between debtor and creditor countries. Naturally, he does not, however, accept that addressing these issues will solve these problems.
More profound processes are at play. Only the term state monopoly capitalism, conceretely applied, provides a full understanding.
State monopoly capitalism? I nearly choked. Except of course, the word monopoly marks us off clearly from the world of Tony Cliff and the SWP. “State monopoly capitalism brings together two interlinked developments – the evolution of the capitalist market and the way that our ruling class organises that market to sustain capitalist profit.” Foster points out that Marx identified the tendency of capitalism to monopoly, and its effects on credit transactions and the dislocation of markets. Lenin, he says,
used the term state monopoly capitalism to describe the stage where this dislocation of the competitive capitalist market demanded state intervention in the interests of capitalist stability. But he stressed that this state intervention was no more neutral than that of the capitalist state in general, except that, in these new conditions, it defended the interests of the great concentrations of capital against small business as well as against workers. As a result, the capitalist class was increasingly divided against itself
Foster points out that the conflict between the increasingly narrow appropriation of profit and the socialised character of production remains today; as does the pattern of periodic crises. He identifies changes in the precise mechanisms, however. The state had to step in to revive production during the Depression of the 1930s, on the terms of big business, financing it via inflationary finance, at the expense of small businesses and other non-monopoly strata and workers.
Growth revived, but only on the basis of a redistribution of income by the state to monopoly and the still closer interlinkage between monopoly capital and the state apparatus. Hence the term state monopoly capitalism.
Essentially, this was how governments maintained growth for the 30 years after 1945. Keynesian politics called for the injection of liquidity whenever the economy slowed. The business cycle was smoothed and the growth of big business accelerated. But all this came at a grave cost to others.
Developing countries were further exploited, Foster argues, while proletarianisation was accelerated among the rural populations of advanced countries. The Keynesian consensus was broken by the oil producers striking back in the 1970s and the demands of the labour movement for a greater share in the wealth produced, and the response of monopoly capital, especially in the US and UK, sowed the seeds of the present crisis. The response, he says, sought to transform the framework of the market in four ways that now make up neoliberalism. Firstly, an assault on organised labour, and the creation of a “flexible” workforce, i.e. one more easily exploited. Secondly, privitisation of utilities and services to provide big business with a direct income stream. Thirdly, capital movement was freed to allow for the export of capital to more profitable regions, and transforming the City of London at the expense of deindustrialisation. Fourthly “and most critical of all for understanding the current crisis, workers’ savings for pensions, insurance and housing were transferred into the private sector.” This created “the key new mechanism for the extraction of superprofit.”
Foster argues that although there remains an element of monopoly pricing, the bulk of capital in public companies and high street banks now comes from pension funds and the savings of employees and non-monopoly strata, who have fallen in number. They provide the basis for the array of financial instruments (merchant banks, hedge funds and the like) and speculation used by the very wealthy to secure further profits.
This system was no more immune from capitalism’s contradictions than its predecessors. The accelerated accumulation of capital placed pressure on average profit. The export of capital to countries like China and India generated immense imbalances in trade and currency reserves.
Fatally, the system fell prey to the inequality and poverty which it had created. Workers could no longer afford to buy all the goods produced.
So, to keep the money wheel spinning, governments and banks between them colluded in the creation of massive levels of sanctioned debt, above all in mortgages. In the hands of finance capital’s investment specialists, this became the credit required for one last round of leveraged speculation in property, commodities and private equity buy-outs.
Then the bubble burst, leaving working people facing unemployment and repossession.
Foster puts the reality of the situation at its most naked:
It’s not a matter of bonuses. It’s about state power – state monopoly capitalism. Change will require the creation of an alliance that can budge that power by uniting all those who are suffering the consequences.
To restore the economy, he demands that savings, pensions and insurance are taken under public control, which means state-owned banks, not subsidies for finance capital. It means an end to speculation, tax havens – more than half of which are controlled by Britain – PFI and more taxation of wealth. “If enough people understand the real cause of the current crisis, these are demands that no government could deny to an angry, mobilised majority.”
This is why the Morning Star is valuable. It gives space to these ideas. It is important that the blunt reality of the situation is made clear. The reality of economic organisation in a capitalist society. The true class nature of the state. The need for ordinary people to organise politically behind a class-conscious and militant party of the working class. And this is also why, although I have problems with it, I will be buying the Morning Star more often.