Sunday, 8 January 2012

The anti-capitalism of Republicans.

The Ironies of Capital.

The appalling spectacle last year around the debt-ceiling debate had an ironic side to it which slipped by the noses of snooty liberals, but not the sharp mind of David Harvey. The Republican machine and the Tea Party took a position to block any further debt-creation, had it been pursued would have led to the end of capitalism. Mind you the Tea Party and the Koch Brothers are just as oblivious as the Republicans are blind in all of this. It has long been a hope of socialists that the working-class might go ape and actually bring down capitalism to a long-awaited thud. The workers have failed to do so thus far, though it looked as though the GOP might actually succeed where the American worker failed. This would have brought a smile to Karl Marx's face. After all Marx was onto something when he noted that the capitalist could feasibly undertake actions in their own self-interest and bring down the system in doing so.

To answer the conundrum of where the extra effective demand would come from so that the profits can be extracted Karl Marx presented a simple model of a capitalist society - it featured two classes, the capitalists and the workers. The capitalists initiate the process at the beginning of the day because the workers do not have the extra money to do so, but the capitalists must supply the necessary demand to close it out at the end of the day. There is the problem of how capitalists can consume and pay for the surpluses they have been instrumental in getting labour to produce. The surplus can be consumed either in personal consumption or through investment in expansion, which may take the form of hiring more workers and buying more means of production. The latter implies perpetual growth and accumulation of capital over time. Conveniently the demand for expansion tomorrow can absorb the surplus product created yesterday.

The expansion takes place the next day and it does not generate profit in money form until the end of the day, so only after the money is needed to purchase yesterday's surplus. The only answer to this problem is credit with the promise of future expansion of surplus production. This is what allows the circle to be squared, in Harvey's words, which depends on whether or not future expansion comes about. In the event that it fails to do so, then we may face a crisis in which the debt cannot be paid-off. This is where we can see capitalism as one gigantic speculative machine, where the accumulation of capital and wealth runs synchronous to the accumulation and expansion of debt. The relationship is not just simple dependency as the two feed on and support each other. But this doesn't mean that there can be no crises. We have seen a debt crisis in Greece because of the imbalance which emerged between capital and debt. So we find that the Eurozone crisis comes out of the failure to find a new way to expand the surplus through reinvestment.

Of course, this is disingenuous anti-capitalism and we shouldn't fool ourselves that it would have led America down the road to socialism. In fact it would have more likely dragged the US into fascism as the system imploded and the right-wing forces mobilised by the Koch Brothers run amok. The Republicans are especially cynical in rhetoric when in opposition, any cause will do to bash the Democrats and it will be abandoned as soon as it was picked up. Fiscal conservatism is an old joke at the expense of the American tax-payer, Newt Gingrich knows it all too well and it is hardly a mystery to the American political class. You can piss away as much cash as you like to feather the nests of the rich. Once a crisis emerges then you attack public services and go after anything that helps the poor all in the name of cutting the deficit. As the ignominious Dick Cheney observed "Reagan taught us that deficits don't matter".

The Republicans have the potential to trash the system in the short-term, probably for the benefit of an opulent minority and leave the American people to pick up the bill. This is the extreme end of the Republican programme which gave you policies with names like "starve the beast" and "trickle-down". The capitalists buy now and pay later, credit fills in the gap in between and the Republican Party is thoroughly embedded in this arrangement. David Harvey refers us to Mark Twain when he said "We have the best congress money can buy." So it is very strange that the Republicans would threaten the entire system in this way. It may be indicative of the distance from power that the Republicans are enduring. The capacity of the system for self-destruction is the reason that Marx thought it might end in the "common ruination" of all classes. As Karl Marx noted, the contradictions of capitalism move in mysterious ways.

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