Will Putin fall?

The combination of economic sanctions and oil prices have led to the currency crisis in Russia mutating into the greatest crisis for Putin to face. The question which observers should be pondering is whether or not Putin will survive this storm. This is why I felt it necessary to write on the new crisis in Russia:

Putin’s brand of national capitalism, not to be confused with a neoliberal market economy, faces the greatest challenges in its short history. Economic nationalism meant the combination of a flat tax regime, land privatisation, state management of resources and protectionist measures to maintain industry. Oil revenue allowed Russia to secure growth and pay off its Soviet-era debt. But the nationalist push against international capital inevitably comes up against the limits of its own barriers.

Russia has a strategic interest in keeping Ukraine out of the EU-NATO orbit, but this doesn’t mean it produces results for its economy. On the contrary, the invasion of Ukraine and annexation of Crimea led to diplomatic and economic pressures being brought against Russian institutions. The sanctions converged with the collapse of oil prices, as OPEC maintains output, confident that it will break even sooner rather than later. The rouble is unstable, sanctions are beginning to cripple international trade, and the economy is logically contracting.

The full article can be read at Souciant.

In memory of Charles Keating.

I actually missed the news that Charles Keating had given up the ghost. The old man will be remembered as the brain behind the savings and loans crisis. Let alone his attempt to have bank regulator Bill Black murdered. Above I have embedded the video of Black's having his say about this man and his dealings and his personal crusade against his adversary. What will be forgotten by many is that Keating was a good swimmer and as a right-wing Catholic he actively campaigned against pornography (among lots of other things). He saw smut everywhere and wanted it all censored. So when Gore Vidal came to write Myron (1974) he decided to be sensitive to such concerns and used 'Keating' as a euphemism for shit.

Debtors of the World, Unite!

With City Hall in the hands of Boris Johnson, an anti-political clown if there ever was one, it would seem that the intransigence with which the state opposes the demands of trade unions. There has been talk for a while now of taking the workforce out of the tube completely, replacing them with automated machines. It would be a popular move in the London City-State, where any kind of inconvenience equates to an outright assault on one's basic liberty. The tube unions are the last bastion of working-class power left in this country and this is precisely the reason that the forces of reaction are out to destroy them. No doubt it's part of the same process that has rolled back the state in public services and even more so today. After all the tube is mostly to get people out there to be rinsed at work and in the shops, think surplus value. Thatcher could only dream of doing what Cameron is doing today. The Tories themselves have been caught saying this, though we all know it.

The Tories handed over a lot of public money to banks from 1992 onwards as part of the Public-Private Partnership, which sold-off public aid and gave greater power to bankers. As Michael Hudson wrote "The financial giveaway had the effect of increasing prices for basic infrastructure services by building in heavy financial fees – guaranteed for the banks, who lent the money that banks and property owners used to pay in taxes in more progressive times." The theory goes that the banks will create jobs as they invest the funds in British infrastructure, specifically public transport, but it was really a way for real estate speculators to get even richer. The extension of the Jubilee Line to Canary Wharf cost £3.5 billion as it raised property values along the route by £13 billion. The public investment in transport could pay for itself simply with a tax on the higher rent-of-location and the site value. But the government would rather the banks rake in the cash.

As Chomsky has pointed out when politicians prefer to talk about 'jobs' than even utter the filthy word 'profits'. The allies of the super-rich then moved to sell-off British Rail and saw to it that the railways carry an over-flowing gravy train for the wealthy. It is standard practice in a privatisation for the state to make sure the buyers are well served with comfy pillows stuffed with the taxes of working-class people. Last year that blond gannet Richard Branson gobbled up £18 million of tax-payer's money as the system underwent a multi-billion state upgrade. The privatisation opened up a space for private ownership safeguarded by public investment and, even as standards of service have slipped, there has been no attempt to re-nationalise the railways. The government contributes £4.6 billion to the railways as the private sector pays just £459 million into the set-up, most of which goes towards stock rather than anything in the real world.

Since the 70s we have seen a process of de-industrialisation and financialisation. Thatcher sold-off an awful lot of things and broke the backs of major unions as part of a policy that amounted to the destruction of entire industries. Production was taken abroad where there was a ready workforce desperate enough to work for a $1 a day or whatever. The businesses of the country began invest overseas and import much more from abroad. The back of the industrial working-class was smashed in the 1980s leading to a massive unemployment level. So the threat of unions to the power of the wealthy had been significantly diminished. The people were left in a position where they could easily be squeezed dry by businesses, working-class people suffered some of the biggest wage-cuts in 1990. You would've thought that this would've held down the ability of people to spend, spend, spend. But a lot of credit had been freed up as the constraints that had kept banks in check were removed.

The shock of the assault on the living-standards of the working-class left them in an increasingly dependent position on debt. To make up for the loss in wages people turned to their credit cards, there was a much greater need for loans and mortgages than ever before. This is the basis of the explosion of household debts in the last 30 years. A lot of these debts are concentrated in housing markets because the system is pushed to find profitable investments in order to grow. We're talking about a minimum of 3% compound growth. The desperation to find new investment opportunities for over a trillion dollars has led to greater investment in the control of assets. We might want to think that the banks take unused funds from our bank accounts and use them to help some family to buy a home somewhere. Instead, what we've seen is the emergence of a huge property bubble and the concentration of enormous sums to feather the nests of a very few.

The banking system is built on the knowledge that not everyone will come into the bank and want every last penny of their money. Of course, when a run on the bank happens it's newsworthy for this reason - remember Northern Rock. The odds are calculated in the favour of greater lending and accumulation. The presupposition is that there being enough money to keep the bank going, so that there is enough there for people to pay the bills and put food on the table. The tendency here is to lend out more and more money to accumulate in order to cover itself. This is how the system pushes itself at the ground level. Everyone knows that banks aren't what they used to be. There used to be a time when the pound sterling was symbolic of a pound of silver somewhere. Now that's gone with the advent of fiat currency much to the chagrin of nostalgic right-wingers. It's much more important that the financialisation of the economy has made financial crises likely.

The household debt in Britain is set to rise from £1,560 billion to £2,126 billion in this time of austerity. I would assume there is something similar going on with household debts around the world given the attempts of government to patch up the system as it is. Household debt in the US was at 115% in 2011 down from 135% in 2008, the dip is probably the result of the crisis. In the years of the bubble, 2000 to 2007, households doubled their debt to almost $14 trillion while personal consumption shot up by 44% from $7 trillion to nearly $10 trillion. Over a period of 5 years American households ringed $2.3 trillion of home equity loans and cash-out refinancing from their homes. That's an injection of nearly $500 billion into the economy every year. So you can see why Obama's so-called "stimulus package" was a cop-out, $787 billion for 2 years doesn't cut it! Especially when it's left to the sort of self-glorified bureaucrats who would rather cut than spend.

There is actually an opportunity in this. It might seem that the working-class movement is finished because it has been de-industrialised and, at this point, unions have been reduced to xenophobic suspicions of anymore foreign rivals coming over here. That extends to the opposition of trade unions to European integration, these are supposed to be organisations that are internationalist. It's fine to propose unionisation of workers on a European scale. We're wrong to confine the prospects of unionisation to traditional industries that have been wiped out. Follow the money, grab the vampire by the balls before you drive in the stake! The formation of debtors into unions on a cross-continent scale could potentially give the working-class a way to yank at the banks. A straight refusal by the majority of people with debts to make the payments unless the rates of interest are cut could work. It could also be a way to repudiate the debts altogether.

There are flaws here, but it is a way forward. It would definitely need to be well organised and coordinated to ensure that it was a mass-scale action that would have an impact. Generally the major flaw of the trade union is that the relationship between capital and wage labour can be taken for granted. The priority is to improve the conditions for workers within that relationship, which is fine but the relationship is the fundamental problem. The capitalists have the upper-hand to the workers in this relationship, so victories can only be temporary. It's true that the debtor union would only be active in pushing for a better deal for people who need to fall back on credit cards, loans and so on. But it's striking at the centre of the system and we forget that banking is actually more susceptible to social democratic compromise than labour-intensive industry was. If the bankers think they have to pay-off socialism that's exactly what they'll do.

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.

The Vote to End Capitalism

The End of Capitalism?
The Greek Tragedy 
Obamarama - the Republican Drama
The Republican Hypocrisy on the Debt Ceiling
Perhaps Newt Gingrich filched his Bright Ideas from Europe
Ha-Joon Chang on Trickle-Down Economics
Stoking the Beast

Blizzards of Shame!

How long must this go on?

You may have heard of the recent discovery the long lost Bulldog spirit has been found finally as it was manifested in Mr Cameron when he said "No!" to Merkozy. It was not national interests David Cameron was defending, it was the interests of banks who don't want to be taxed or be regulated that he was defending. The revolting servility this filthy Tory has shown has nothing to do with patriotism, though it is symptomatic of the whorish relationship between the Conservative Party and the financial colossus in the City of London. The fact that this can even be considered patriotic is the sign of the crass state of the political discourse in this country. The nationalist Right are experiencing something of a resurgence amidst this economic turmoil, so there's nothing to lose in a bit of flag-waving especially after a round of shit-flinging on the Continent. The choice we face is between Brussels and Washington, but European integration cannot be anti-democratic as it is right now. Cameron is no democrat for standing in opposition to the treaty, the politics of Cameron have a great deal of commonality with Angela Merkel and Nicolas Sarkozy.

David Cameron seems to embody the Progressivism of Victorian liberalism, at once a creature of the market forces as well as a cultural puritan and a proponent of history as progress. The crisis is just a cyclical phenomenon to him, in the long-term it is a blockage to the path of the march towards a utopia of the free-market. The theoretical doctrines of monetarism have been replaced by a pragmatism which cuts through theory to the reality, where the old state system of health-care and education has to be discarded. The debt has to be managed through a deficit reduction which will thereby enable us to circumvent this obstacle. The key elements here feed into one another: the market is perfect so the crisis is cyclical not structural and will pass in time, therefore there are no grounds to justify state intervention to create jobs and the deficit is the real issue. The regulation and taxation of financial institutions has to be stopped then, as the problem will pass as the structures of finance are adjusted through the reforms being implemented already.

In the light of Mr Cameron's transformation from Etonian Toff to British Bulldog, the talk of Christian values is quite interesting. David Cameron has listed the following as Christian values: responsibility, hard-work, charity, compassion, humility, self-sacrifice, pride in working for the Common Good and honouring the social obligations to family and community. This is where Mr Cameron's edge in public relations (which used to be called 'propaganda' in more honest days) comes across in his presentation. The man knows how to dress an agenda and not just the monkey he keeps for a deputy. Cameron can spin the line on it's head and roll out commonsensical rhetoric at just the right moment. No one opposes the basic concepts Cameron endorsed and for this reason they do not require endorsement. What matters most about the endorsement relates to the standards he has set in office already. For instance, the banks clearly are not about "self-sacrifice" as made evident by their refusal to tolerate even modest levels of progressive taxation and regulation.

It shouldn't be a surprise that Cameron is looking after the principle constituents of the Conservative Party. This cultural conservatism is superstructural to the economic base which it has the potential to undermine and may be threatened by itself simultaneously. In other words, the endorsement of Christian values amounts to an outgrowth of market liberalism. The particular appreciation of charity in Cameron comes out of the harsh Victorian hatred of the undeserving poor as it posits a deserving poor, which should be helped and has been shafted by the welfare state. Compassion should be rationed then. Humility too, only applies to the poor who should know their place. Of course, the banksters have no time for responsibility and any hard work which actually produces things has largely declined in this country. And yet the masses are meant to be committed to sacrifice themselves for the super-rich. These supposedly Christian pronouncements by Cameron reveal a profound hatred for the working-class in this country.

Can you taste the Irony?

The liberal philosopher John Locke provided a theoretical justification for private property, market relations and bourgeois conceptions of freedom. But it was the Whig circles in which Locke moved that would eventually bring down the King and in turn provide the incentive for Locke to provide such a justification in the first place. Locke was a close friend of Lord Shaftesbury who founded the Whig Party, though Locke did not share the Paganism of Shaftesbury and a number of the aristocrats of the day. The ruling-class feared that the Catholic King was loyal to the Vatican, so there would be a forced rival of Catholicism in the country which would mean violent upheaval. The violence that it would take to the reverse the process which established the Church of England and Protestantism would inevitably undermine the power structure. So the Pagan ruling-class conspired to overthrow a Catholic King in order to install a Protestant King and maintain the status quo.

Shaftesbury's friend John Locke was eager to provide a philosophical justification for the replacement of King James II with William of Orange. The foundations of liberalism were laid with a Christian gloss in the defence of the interests that the English ruling-class had vested in property. Christianity was for the poor and the ruling-class remained Pagan in Britain until the 19th Century. The liberal pronouncements of John Locke gave the coming market system a language of natural rights and freedoms. After feudalism had crumbled it ceased to be the 'natural order' and from then on capitalism would be considered in accordance with human nature. The irony is that the nationalism behind Cameron's veto comes from the old Pagan logic and not any kind of Christian value. Here we find a return to the Paganism of the British ruling-class as opposed to the Christian poor. In Christian love there is no hint of the Pagan logic that we must privilege our own clan above the rest.

An even greater irony is that the decision to veto the treaty may have actually maintained the limited democracy we endure in this country. The move was made to secure the interests of banking and finance, not out of any Bulldog patriotism. So the enemies of social democracy may have saved the possibility of a return to Keynesianism in Britain. As the treaty enshrines balanced budgets, near zero-deficits and has effectively abolished expansionary public spending in doing so. This shouldn't be a surprise to anyone as the European Union was a right-wing project from the very beginning. This was just the latest attack on social democracy and a testament to the appalling state of affairs in Europe. We have only to turn to the unconscionable vandalism of Greece - a country which should have been allowed to default - to find an even more telling instance. The European elites are stopping at nothing to use this crisis to tear apart the welfare states created after WW2.

Not only would it seem that this is a time of creative destruction, but the social democratic model of yesteryear cannot save itself. We are caught between a giant douche and a turd sandwich, to borrow from South Park, in that we face a choice between Washington and Brussels. The reason that European integration should be pursued along lines which are democratic and offer an alternative model to that of predatory American capitalism. Meanwhile the Right will continue to shout as though the choice is between Whitehall and Brussels. There can be no referendum on the capitalist system and so we have to take a stand together as Europeans. There is a long way to go in this area, as we have yet to establish trade unions which can represent the European workers as a whole of entire industries. The kind of national discourse available in the United States is not available in the European Union yet. Complete withdrawal is just a nationalist delusion that has already been ruled out by globalisation. The more fundamental struggle is a fight against capitalism.

See also:
The Left must call the Right's bluff
Class Warfare

Democracy is not a given

Solutions for whom
We cannot abandon Euroscepticism to the Right

The Eurosceptic Reaction.

"Angela Merkel is an unfuckable lard-arse." - Silvio Berlusconi 

As the crisis hit the Eurozone we have seen the usual wing-nuts of the Conservative Party go ballistic on the question of EU membership once again. It has led to amusing spectacles of toffs talking tough, with Jacob Rees-Mogg spitting out with references to Shakespeare's Henry V not to mention Bagpuss. John Major has labelled the plan a "heat-seeking missile" aimed at the City of London. It is interesting to find that the defence of banking and the matter of national sovereignty converge in the hollow heads of Conservative politicians. The possibility of a financial transactions tax across Europe is well overdue, actually it is a decent step towards a tax on international banking as a whole. The Eurosceptics are opposed to any move on the part of the state to tax the wealthy, while they muddle up the intervention to save the mega-rich from higher taxes with some kind of patriotism. Unsurprisingly, the banks have pumped £42 million into the Conservative Party since 2005. Some might think these people want to pull-out of the EU so our country can become a plaything of international finance.

Meanwhile good old-fashioned Europhiles like Michael Heseltine are still standing by the Euro, for we should not forget that the Euro was always a right-wing project and the European Central Bank does not care about unemployment. It was the old Tory position which was held by everyone from Churchill to Heath. It was renegades like Enoch Powell who were so vehemently opposed to integration with the Continent. It is no coincidence that the same opposition within the Conservative Party, as well as from UKIP, comes from admirers of Powell. This is the irony of the situation, David Cameron has a lot in common with Angela Merkel. Both of them are conservatives in leading states, not to mention deficit hawks, who are suspicious of the French. The nationalism of Powellite thought provides easy answers to the problems festered by the untrammeled forces of the market. It is no coincidence that Enoch Powell stuck to his line on immigration as Thatcherism, which he supported, broke the back of the working-class.

The answer to the Eurozone crisis is not withdrawal and British schadenfreude is neither wise nor appropriate in a time of such turmoil. The parochial attitudes of nationalism are most unbecoming for the UK, whether it be the resentment with which foreigners are greeted; the deluded view of our own past or the suspicion of our neighbours. It is convenient for the dispossessed, and even more for those who dispossessed them, to spread the lie that the EU is the source of everything wrong with Britain. The people of this country have been fucked over by the mega-rich and their allies, we deserve answers and we look for them. Sadly in the wrong places often. The despair at Whitehall has been channeled towards Europe, benefit scroungers and immigration, so that the fears of working-class people might converge with the elite interests. We have seen the lowest voting turn-outs in Britain since the establishment of the vote. Only fear can drive people forward in this supposedly post-political age.

The position of 'national sovereignty' has a convenient blind-spot, from where we can't see Trident is a part of the American nuclear-command system. Not one of these people seem to care that the British foreign policy is just an extension of the American foreign policy. The last independent decision on foreign policy was over 40 years ago when Harold Wilson refused to support the criminal war in Indochina and send British troops to die in Vietnam. US foreign policy has often trumped the decisions of British policy-makers. It was Dean Acheson who remarked at the peak of the missile crisis in 1962 "Britain is our lieutenant, the fashionable word is partner." The British ruling-class prefer the fashionable word to the blunt truth. At the height of the missile crisis in 1962 US planners treated Britain with utter contempt, keeping the UK government in the dark as they took actions which could have led to the destruction of Britain in a nuclear exchange with Russia.

The so-called "special relationship" is mostly an illusion generated by the close proximity of interests that the British elites share with the American ruling-class. This is the reason it is only "special" on this side of the pond. The Common Good does not enter into this at all and the working-classes of both countries are mere playthings. At the same time the British elite experience a duality of interests, torn between the US and the EU, as well as a fear that the UK might lose its position as Uncle Sam's lieutenant in Europe. If you want to see a real special relationship look at American relations with Israel. Still it has to be said that the miserable liars who govern us have relationships of convenience with American Presidents. Think of the millions Tony Blair is currently shoveling into his pockets as he rubs salt into the wounds of people devastated by US foreign policy. The Medal of Freedom has been awarded to Tony Blair, John Major and Margaret Thatcher for their subservience.

In the Cold War a united European state had the potential to stand as a social democratic bloc independent of the US and the Soviet Union. The superpowers could have been balanced off against this bloc. Now there is only the American empire, with emergent powers in the East, to which Britain has become a mercenary state without the political grandeur of Israel. We shouldn't kid ourselves with referenda: the choice is not Whitehall and Brussels, it is between Washington and Brussels. Europe still has the potential to emerge as a bloc of independence from American power, there is still a long way to go before the EU is perfect of course. The democratic deficit in Brussels is an embarrassment, but the democratic deficit in Washington is a disgrace and only the American people can solve that problem. We have yet to build a solid European labour movement and organise a serious push for a greater standard of living in Europe. The struggle will be a difficult one granted, but there is no future with the Americans.

No Society, No Alternatives.

The Iron Lady.

 

In the General Election of 1979 the Conservative Party came out on top with Margaret Thatcher as Prime Minister. For Thatcher any attempt to manage the economy would lead to disaster and the catastrophic crash of 1973 was caused by Heath's attempt to control the economy. Instead Thatcher decided the state should be "rolled back" and power be handed over to the markets, a wave of deregulation and privatisation followed. The idea was that the unhindered power of the free-market would reconstruct industry. Heath removed exchange controls and opened up the UK economy to the international financial markets, money could now be moved in and out of the country at will. The banks could now raise huge amounts of capital from anywhere in the world in order to finance the purchase and sale of a vast number of companies. The banks could now target a company, finance entrepreneurs to buy that company and then strip the company of its' assets. The point was to increase profits and maximise return to the shareholders.

Private Vices for Public Benefits.

We might understand Thatcherism as a combination of monetarism and rational expectations, which suggested that the changes in policy could only be managed if the public were convinced that the government would stick to it regardless of what happens. Of course, the cuts in public spending required a determination to confront and smash the labour movement. This went as far as sicking the right-wing elements inside MI5 on Arthur Scargill and the NUM. Thatcher provoked a strike with the announcement that there would be a wave of pit closures and redundancies on the grounds that it was cheaper to import coal. The Thatcher government went after one union after another in a bid to sweep away the remnants of the post-war settlement which had empowered working-class people. The country was opened up to foreign investment and competition, which further undermined the trade unions and destroyed industries like steel, cars and shipbuilding.

After the fall of the Heath administration in 1974 it was clear to the elites that the labour movement had to be broken. It was the only way to turn back the tide as the working-class made significant gains in the standards of pay and working-conditions. One of Thatcher's economic advisers Alan Budd has since conceded that in his most pessimistic moments he suspects that his ideas had been ruthlessly used. Furthermore that the ideas of monetarism served as a theoretical cover for the Thatcherite policies, which could not have been implemented otherwise. The capitalist class had simply seen in the ideas a way to instigate a crisis of capitalism which would smash the trade unions and leave the country immersed in unemployment. It would be easy to hold down wages from then on and profits could skyrocket once again. The rise of Thatcherism might then be attributed to the structural needs of the system for a much more timid working-class that could easily succumb to exploitation and domination.

The Road is Clear.

In the 1980s there was a decline in wages for working-class people and unemployment increased rapidly as the benefits system came under fire from the government. To supplement the loss in demand the need for a fast-track line of credit emerged, the debt economy was pushed to its limits as households across the country fell back on credit cards, loans and mortgages. The privatisation of social housing in Britain at first appeared as a gift to the working-class as it made it possible for them to buy an asset, at a relatively low cost, which might make them rich one day. The housing market was seized upon by speculators, eventually pushing low-income earners out to the outskirts of cities as house prices skyrocketed. The old industries were swept aside to make way for the new era, in which money would be made from money and not much else in Britain. After 11 years of Thatcherism manufacturing in the UK had been virtually destroyed, employment in manufacturing plummeted by 30%.

The deregulation of the financial colossus in London led to the currency crisis of 1984 - speculators had begun to sell pounds and buy dollars because of high exchange rates in the US - and the government just had to stand back and watch. It was the early signs of what would come in later years. In 1987 the Thatcher government retained power for a third election just as the country was hit with an economic crisis, as a wave of panic swept the stock market, as it turned out that shares which had risen in value for 4 years were over-valued. The global markets were soon infected by the contagion of fear and the governments were powerless in the face of such chaos. The rise of a rapacious financial sector had been the works for a long time, now it surfaced and went on to stumble into a devastating crash in 1992 and an even more destructive crash in 2008. As the political class had unleashed the forces of finance they had bound themselves as slaves to the financial colossus in the City of London.

The Long March, to Where?

The fall of Thatcher in 1990 came after the Poll Tax demonstrations descended into riots in Trafalgar Square converged with internal tensions in the Conservative Party. By then unemployment had reached around 7%, working-people had been by some of the biggest wage cuts in the world as inflation began to rise into double figures once again. John Major looked to reassert control over the market for the purpose of setting limits to the fluctuations of the exchange rate. Of course, it was too late for the Grey Man as the old forms of political control and planning had been obliterated as options. So under Major, Britain became a part of the Exchange Rate Mechanism and the pound was fixed to the Deutschmark in order to liberate the currency from the speculators. The currency markets then took on the British government, to force Major to devalue the currency and to abandon the Exchange Rate Mechanism. It began with the sale of billions of pounds on the foreign exchanges.

The marketisation and systematic privatisation has brought destruction to major industries and has significantly undermined the welfare state as it was in the post-war era. The workers' share of GDP in wages reached its highest points in the 70s, Thatcherism succeeded in the reversal of this trend and the policies which she first implemented in the 80s have become the orthodox for British governments. Between 1997 and 2009 wages for working-class people increased by 45% while the wages of high-earners increased by over 300%. Today we live in a society which is more unequal than it was 40 years ago, the top 10% get 31% of income, while the bottom 10% get 1.3% of income, this is the same 10% of the British population who sit on £4 trillion in wealth. On top of this, the end of the Cold War signaled the beginning of a supposedly post-political era in which only managerial politics remain and Thatcherism has taken the place of the social order it aimed to dissolve. We live in an era without ideas, where no alternatives are imaginable and where even the suggestion of 'society' is suspect. It was the collapse of the post-war settlement under the weight of its own contradictions which has left us in this state of affairs, now we need a new settlement.

Capitalism is Dead.

The Monstrosity of Capital.

To report the death of capitalism is to exaggerate, to say the least, given we find ourselves subject to austerity measures as the global economy stumbles from one crisis to another in a little under 4 years. In the past capital has been likened to a vampire insofar as it is parasitic in its relation to labour. But it is no longer a suave count as capital is seemingly dead when it comes to the suffering of ordinary people. At the same time it is still capable of violent bursts of energy and it is mindlessly destructive in the pursuit of it's sustenance. So it seems appropriate to describe the current order as zombie capitalism, it requires a minimum of 3% compound growth in order to continue and that translates into a need for profitable investments of $1.5 trillion. In the future the system might demand even more, maybe $3 trillion in growth and we are struggling to find $1.5 trillion right now. One day the banking sector could be so big that it cannot be saved and we will be dragged into the abyss as it collapses. For us to gauge where we are today, and where we might be heading, it is important to remember the causes of the Crash of 2008.

A Popular Capitalism?

As David Harvey has noted, this crisis can be understood if we go back to the crises of the 1970s when organised labour posed a threat to capital. To the extent that the workers' share of GDP peaked in 1967. The unions had demonstrated a capacity to undermine the Establishment in Britain with the fall of the Heath administration in 1974. So the need for a broken labour movement emerged, which gave rise to Thatcher and Reagan to impose such discipline on the working-class. With the full-on assault on organised labour and its political allies came the mobilisation of a global labour surplus; the development of labour-saving technology and increased competition as neoliberalism emerged. The consequence was a sharp decline in the share of wages in total GDP almost everywhere, an enormous disposable labour reserve emerged and survived under marginal conditions. In fact some of the biggest wage-cuts in the world were endured in the US in 1985 and the UK in 1990 which was a direct consequence of the way trade unions were crushed.

The structures of monopoly power was undermined, with the state-monopoly capitalism being displaced in the meantime as the system was opened up to fearsome international competition. Ultimately the intensity of global competition led to lower corporate profits in non-financial domains. The early signs of a hegemonic shift of power towards East Asia came as uneven geographical development and inter-territorial competition had become key factors in capitalist development. The most fluid and mobile form of capital was utilised to reallocate capital resources at a global level, which led to the deindustrialisation in traditional heartlands of industry whilst new forms of industrialisation and resource extraction began in emergent markets. The character of these new forms might be labelled appropriately as ultra-oppressive, for instance in the Congo around 4 million people have been killed for the extraction of coltan. The ultimate aim was to enhance the profitability of financial corporations, thus the need for new ways to absorb risks through the creation of fictitious capital markets.

There is No such Thing as Society.

Accumulation by dispossession became a means to increase class power for the ultra-rich and so a new round of primitive accumulation - against indigenous and peasant populations - was in order to augment the asset losses of the working-classes in the developed world. We have only to turn to the African-American victims of the sub-prime housing crash. The mass-privatisation of social housing in Britain, which took place in the 1980s, appeared as a gift to the working-classes as it enabled them to convert from rental ownership at a relatively low cost to the control of a valuable asset which might make them rich. Speculation soon took over the housing market, eventually pushing low-income earners out to the outskirts of cities. David Cameron is about to further this process as part of a bid to recreate the property boom. It used to be that the capitalist invested in production. But for the last 30 years the economy has underwent financialisation as the capitalist has invested heavily in making money out of money rather than out of anything productive.

The increase of sagging effective demand was accomplished by pushing the debt economy - in governmental, corporate and household spheres - to its limits. This became standard method in the West, so it should be no surprise that in the US the household debt relative to income doubled from 1982 to 2007. By 2007 the ratio of financial assets to GDP had doubled since the early 80s. Incidentally the household debt in the UK was around £1,560 billion in 2010 and may rise to £2,126 billion by 2015 as a result of the cuts. The compensation for anemic rates of return in production came in the construction of a whole series of asset market bubbles and culminated in the property bubble that burst around 2007. Each of these asset bubbles drew upon finance capital and were facilitated by extensive financial innovations, specifically derivatives. The control of assets and resources at the heart of international finance became central to the system in the last 30 years. We no longer make things, we just make money out of money.

There is no Alternative.

The way that the crisis of the 1970s was circumvented led to nearly 16 years of growth in Britain from 1992 to 2008. It led to Gordon Brown claiming that Boom and Bust had been abolished. The current crisis has to be circumvented somehow, in the past that has required the enforced destruction of productive forces, the conquest of new markets and an even more thorough exploitation of old ones. So British manufacturing went into a decline from which it has yet to recover under Thatcher, employment in that area plummeted by 30 years from 1979 to 1990. The very means by which the system regenerates itself typically paves the way for even more extensive and destructive crises, as the means whereby crises are averted are diminished in doing so. The financialisation of the economy led to the financial crises of the last 30 years. The infinite capacity of capitalism to regenerate itself at the expense of the majority of the population should not be underestimated, but with each recovery the foundations for another crisis are laid.

The pressure is on for the ruling class to crank out profitable investments for $1.5 trillion, so it can meet that minimum of 3% growth for the time being. The state's reaction to the crises has opened a door which we're being led through and we don't yet know what is on the other side, it is just a mysterious darkness to us right now. This is nothing new, with the Crash of 1929 came such an opening and we all know what happened in Europe as Germans were marched into the darkness. Then there was the crisis of 1973 in Britain as a result of the oil crisis, which led to the collapse of the Heath government then the pathetic reign of a weak Labour government and then the emergence in 1979 of Thatcherism. This is not cheap fear-mongering, it doesn't seem realistic that either of these will emerge but we have to keep in mind what is possible. We might take comfort in the fact that when the Americans were marched into the same abyss it was the New Deal which emerged and not National Socialism. But it is not necessarily the case that history is on our side.

We're All in this Together.

"Weather Cock" Cameron.

What's in the Blue Bag?

Stewart Lee once called David Cameron the "Weather Cock" because, first of all, Cameron spins in the prevailing wind of public opinion and secondly it's not clear whether David Cameron has a cock or not. Perhaps we might describe the political era, in which we are held hostage, as Thatcherism without the penis.

Appropriately in this case, the Prime Minister has taken to pandering to the moral panic that surrounds the riots and has listed the underlying 'causes' of the moral collapse of British society:

* Irresponsibility.

* Selfishness.

* Behaving as if your choices have no consequences.

* Absent fathers.

* A lack of discipline.

* Reward without effort.

* Crime without punishment.

* Rights without responsibilities.

* Communities without control.

And yet we find the economy exhibits the following characteristics:

* Irresponsibility and Recklessness.

* Self-interest and Greed.

* Externalities (behaving as if your choices have no consequences).

* The absence of power for working-class people.

* A lack of regulation combined with incentives to take unnecessary risks.

* Bank bonuses and a sense of entitlement among the business class (reward without effort).

* An epidemic of 'white-collar' crime unpunished.

* Rights without responsibilities.

* Capital flow without control.

The Media's Greek Myths.

 Greedy, Lazy and Venal.

The narrative which has sprung up around the crisis in Greece has taken a ethnic-cultural line, just as the French claimed that the financial crisis was an "Anglo-Saxon disease" which has nothing to do with the Continent. Now we hear that the Greeks are "venal" as well as "lazy" and "greedy" even from the commentariat and not just from the Right. We are told that the protests are really about keeping the "Greek Gravy Train" flowing, you will have no doubt heard of the rail workers who are paid £60,000 a year and the shameful way hundreds of professionals are being allowed to retire at 50 - though the average retirement is actually 62. What you won't read about is the way that a lot of Greeks have not been paid in months and even more are unemployed. The same goes for the other racist claims, the Greeks are supposedly a "lazy people" and yet they work around 2,120 hours a year compared with about 1,712 hours a year in Britain and 1,473 hours a year in Germany. Out of the OECD countries Koreans are the only people who work longer hours than the Greeks.

The "out of control" spending in Greece amounted to 44.6% of GDP from 2001 to 2007, which was not a huge deviation from the European average for most of the decade. The relatively high level of public debt in Greece, before the crisis, goes back to the 1980s when the country was still recovering from the military junta that ruled the country from 1967 to 1974 with the support of the US. There is a genuine fiscal weakness in Greece and it is not in public expenditure, it is the low level of tax revenue which was exacerbated by the recession that has led to a consequent fall in tax revenues as the level of unemployment rises. So it should not be a surprise that tax revenue is a lot less than predicted as the cuts hit ordinary Greeks. As the crisis hit Greece there was a jump in spending to 50.4% of GDP in 2009 and that is still the average expenditure in Europe. From 2001 to 2007 the total spending of the EU amounted to 50.7% of GDP, out of the 27 member-states 13 had spent more than Greece.

Then there is the line that the greedy Greeks have eaten the bailout funds and have continued to live in an excess of luxury. It is as if these are the spoiled brats of Europe who must be knocked in line with the rest of us! The austerity measures introduced previously have reduced public spending by €700 million than the IMF and the EU had demanded. €110 billion was handed over to European banks and Greece has been saddled with still more debt and rising interest payments. A bailout is not intended to pay for Greek welfare, it is intended to stabilise the European banking system and drive the Greek economy into meeting austerity targets. The impact will be no growth in Greece for years to come and a significant fall in the standard of living. The Greeks are expected to sign on for a €12 billion loan installment which will prevent a default for the time being, the preconditions for the loan are the austerity measures that were only just passed despite popular opposition.

Greece has not been bailed out, but the banks have been and the European country that has defaulted more than any other in the last century is Germany. Germany was excused from reparations to countries that it had invaded. The loans and occupation costs Germany had pressed out of the countries it had occupied in World War II were not paid back. Especially not to the Greeks. Germany didn't even pay back the US for the loans that were used to pay the reparations levied on Germany after World War I. As Albrecht Ritschl said, Germany was the biggest debt transgressor of the 20th Century. The decision on Greece has been delayed on the next bank bailout in the EU, the package could be around €160 billion which is meant to further the cuts that have already bled public services dry in the country. But it is true that a default on the debt is inevitable, it is only a matter of when and how at this point. The default should have come earlier rather than later, which is what is most likely to happen.

It is undeniable that the Greek government has some responsible for the mess, especially in regards to the collection of taxes, but the links of the crisis to the Greek national character and culture are nonexistent. The crisis is an economic one, it is international in scale and the responsibility of all Western politicians. We should keep in mind that it is Sweden that spends the most out of the European countries and yet there is no debt crisis. The reason being that the tax system is a lot better in Sweden, the same is true of France and Denmark. Greece was welcomed into the Eurozone with open arms before being encouraged to give up the Drachma for the Euro. The situation seems to confirm that a monetary union requires fiscal and political union, whilst the average Greek is being forced to pay for the errors of politicians and the recklessness of the European banking system. Naturally the Right has jumped at the opportunity to use this crisis as a stick to bash the European Union with. 

The Greek Tragedy.

European Tough Love.

The banks are opposed to a Greek default in order to avoid a cash haemorrhage, which is the same reason that the financial institutions are opposed to regulation and taxation, in one way or another. The natural option is austerity, the rape of the Greece, it only costs the poor who are mostly too disillusioned to participate in politics and the mega-rich are left unscathed whilst near a majority can be persuaded it is all necessary if the fear of deficits is just ramped up. The austerity measures will fail and only succeed to turn Greece into a basket economy. And yet no bank or financial institution has been allowed to fail. With the exception of Lehman Brothers which was losing around $8 million a minute at one point and then Dick Fuld walked away with $500 million from that year alone. Just think of the millions of American homeowners, many of which are black and poor, have lost their homes or have been left desperate to save a mortgaged property. We might think of it as tough love, love for the rich and tough for the poor as Noam Chomsky once noted.

It was clear before the vote that Greece is the point of a showdown between the people and the banks, even if it is still unclear what is going to happen in Greece and Europe as a whole. The general strike in Greece lasted two days and it was accompanied by huge demonstrations in opposition to the vote for €78 billion worth of spending cuts and privatisation stipulated by the European Commission. As the country is about to raped by the banks, the right-wing press ramble on about the "Greek Gravy Train" and the "flaws" in the Greek character which led to the crisis, a suspicious line of thought indeed. It isn't over yet, but the future does not look bright. For around 10 or 15 years there will be little economic growth in Greece, if any at all. The standard of living for the average person will go into steep decline and in the end the country will still have to default. No doubt Portugal, Ireland and Spain will be affected in just the same way. Unsurprisingly, the Eurosceptics are filled with the glee that is particularly devoid of compassion for the people affected.

The destructive consequences of the 1929 Crash laid waste to entire countries. Today there is the potential for serious political turbulence, no one should forget that it was back in 1967 that the Greek state was seized by a military junta which ruled with the support of the US for several years. Nor should we forgot the ways Fascism came to power in the midst of the economic and political crises of the 1920s and 30s. Though I am not saying that as a direct result of these measures we will live to see the resurgence of Fascism. The devastation may not be on the same scale as the Great Depression, which is a result of the bailouts, but the cuts will hit ordinary people hard and the reaction is not easily predicted. The core of democratic institutions are under threat in Greece from Big Finance. The Greek people took to the streets and have been on the streets fighting, but so should the people of Europe take to the streets against the measures that are hitting each economy. As Richard Murphy pointed out, there was no real choice in this instance.

The impact of economic factors on politics should not be underestimated. When we look back in history we find that the opening for democracy in Greece, the first of it's kind in the world, came about as a result of the advent of iron-based equipment which converged with popular struggle. The landowners had sought expansion through debt-bondage, which trapped small farmers into arrangements that would leave them without land or freedom if they could not repay the loan. It was the abundance of iron and the simplicity of the production process increased the availability of iron tools and weapons in Greece. The small farmers were able to form militias, for which peasants could serve as infantry and rowers on warships. All of which enabled popular uprisings which brought down the dictatorship and the aristocracy before going on to defeat the Spartans who took the side of conservatives in the country. Just as bronze had empowered only an aristocracy, iron had the potential to empower the masses and now we find that finance has the potential to empower a new aristocracy.

The different genres of narrative around the 2008 financial crisis typically exclude systemic risk, the contradiction internal to capital accumulation. As David Harvey points out the problem back in the 1970s was the excessive power of organised labour which necessitated the repression of unions through legislation and that in turn led to stagnant wages for many people. All the while the financialisation of the economy picks up speed and really accelerates in the 1980s. It is important to keep in mind that financial innovation is at the heart of the capitalist system, which is the reason for the greater focus on innovation and that focus has the potential to empower financiers at the cost of others. The insufficiency of demand which would result from the stagnation of wages is bypassed through credit, which would explain why the debt per household has exploded over the last 30 years. A huge amount of that debt is within the housing market, with absurd results in the US and ultimately the finance crisis was half-solved at the expense of a sovereign debt crisis.

In Franco-German financial institutions, where much of the Greek debt is held, there are hopes it can consistently profit regardless of the socio-economic consequences and even significant losses incurred by the systemic mania. In the case of a Greek default the French and German banks holding the debt could easily go under, which would necessitate another round of bailouts for the banksters. We should also note that the amount of trade between Greece and Germany increased dramatically after Greece joined the Euro. Germany has done very well out of exporting to Greece, where several industries have been decimated by the influx of German goods. Rationally, the Germans should bailout Greece in the way that the US bailed out Germany for free after it defaulted just after the Second World War. In fact, Germany is the country which defaulted in the last century more than any other country in Europe and in each instance the Germans were bailed out.

It used to be that the interest rates on loans were the only kind of insurance as it were, then people like Nigel Lawson came around to tweak the regulations and guarantee that the bank would be able to get its money no matter what. It might seem time to call for no bailouts, the banks are not too big to fail and so on. The problem there is that the banks generated a speculative housing bubble and when it all came crashing down the people who flip the bill are not the masters of the universe. To willingly fling open the door to the black abyss and then leap into it would not be advisable. You should keep in mind that the people calling for this are the same people who don't believe in universal health-care and the provision of any kind of safety-net. American and British banks gambled with equity on other peoples' homes and created imaginary capital in doing so, the most appropriate way to deal with this within the system is to impose regulations and restructure the financial sector.


Greece has not been bailed out, but the banks have been and the European country that has defaulted more than any other in the last century is Germany. Germany was excused from reparations to countries that it had invaded. The loans and occupation costs Germany had pressed out of the countries it had occupied in World War II were not paid back. Especially not to the Greeks. Germany didn't even pay back the US for the loans that were used to pay the reparations levied on Germany after World War I. As Albrecht Ritschl said, Germany was the biggest debt transgressor of the 20th Century. The decision on Greece has been delayed on the next bank bailout in the EU, the package could be around €160 billion which is meant to further the cuts that have already bled public services dry in the country. But it is true that a default on the debt is inevitable, it is only a matter of when and how at this point. The default should have come earlier rather than later, which is what is most likely to happen.

A Party for the Grafter.

Yesterday Ed Miliband began his speech with a couple of wearisome anecdotes that had been chewed for him by a public relations team, and then spat into his mouth, only for him to unload such trite in front of the British public. The first of these pre-chewed tales featured a father living on incapacity benefit, who had not worked since he was injured 10 years. Miliband stresses that the injury was real and that he was a good man, but only to strengthen his point that there was a job out there for this man. According to Ed Miliband it is not right for the tax-payer to support a man who was injured and has not been able to find work for a decade. He then moves on to the story about Southern Cross care homes, which left families betrayed and elderly people at risk and treated as commodities whilst millions could be pilfered. This is an obvious attempt to use two emotionally charged examples, there is a great deal of anger about both cases thanks to the mass-media.

For Miliband the story of Southern Cross and the story of the man on benefits are linked by an absence of social responsibility. Too many people see the Labour Party as representative of the people ripping off our society, Miliband is referring to bankers as well as benefit claimants. So the Labour Party has to change, though not to crackdown on an out-of-control financial sector. The "change" will come in the form of more cuts to benefits, because people who have been injured and out of work for 10 years are just lazy feckless cunts. The incisions to welfare being made under the Coalition were drawn up by an investment banker under the Labour government. We hear 'Red Ed' speak of a corporate culture which rewards wealth creation and not failure, don't forget this is the same line spewed on a regular basis from the politicians of the established Left and Right. So we know what it means, it means responsibility for poor people and not rich people.

You don't have to be a rabid communist to be pissed off about what happened in the Southern Cross care homes, which the right-wing press has demonstrated well. We heard from Peter Mandelson that New Labour was "intensely relaxed" about people getting rich and now we hear Ed Miliband say he "applauds" people who get rich. In the background lurks the trickle-down theory, these people generate wealth and jobs so we should be ever so grateful for the crumbs they're willing to throw to us. Though Miliband has some words to say about executives paying themselves huge bonuses, it all boils down to a lack of "responsibility" a the bottom. When he says "we will be a party that rewards contribution not worklessness" Miliband is really saying he will shower the mega-rich with tax-cuts, loopholes which can be used to avoid even more taxes and plenty of subsidies. For the poor Miliband has essentially promised the prescription of cuts drawn up under Gordon Brown and now being implemented under David Cameron.

Ed Miliband wants to make Labour the Party of the Grafters. The problem here is that the bankers, Miliband refers to early on, are just individuals who have adjusted to the conditions of the financial system. So to use the term "grafters" as distinct from the archetypal "greedy banker" is ridiculous, as the character of the banker has little to do with the way in which the financial sector works. The contradictions inherent to capitalism and the chaos of market forces cannot be overcome by the virtue of "responsibility" among individuals. And still Miliband goes on about Fred Goodwin. The system is about business-oriented individualism with self-interest as a key value, to hold the poor to the standard of altruism within this system is a complete double-standard. Especially as "responsibility" for the rich has nothing to do with acknowledging the huge disparity between rich and poor in this country, let alone even trying to deal with that inequality.


There is no real reason that this speech could not have been made by David Cameron. It sounds familiar, like the twaddle pumped out by Maurice Glasman which has now been recycled by the Conservatives in order to appear more moderate. The Nasty Party have become Red Tories. The platitudes of Miliband's speech are indicative of the ongoing trend of Blue Labour within the Party. The Labour Party has to play the game of appealing to a plurality of constituencies, to win over the middle-classes and the wealthy whilst holding onto the working-class vote. For a long time the Party has taken it's working-class base for granted, in power New Labour tossed some scraps to the poor - e.g. the minimum wage, working tax credits - whilst keeping to the status quo established in 1979. The relaunch of conservative rhetoric about "social responsibility" is an attempt to win over the middle-classes and eventually win back support from Canary Wharf.


Although the Labour Party was founded as the Party of organised labour, it was literally born out of the labour movement at the end of the 19th Century, it did manage to garner the support of the mega-rich and even the likes of Rupert Murdoch under the leadership of Tony Blair. The call for "responsibility" for the rich will appeal to the traditional base of the Labour Party whilst more serious calls for "responsibility" for the poor will appeal to Big Finance. The long-term aim of Miliband's speech is to organise a convergence of support for Labour, from bases which are in conflict, in order to propel the Party to victory in 2015. It probably will fail. It may even be a sign that the attempts to drive out the unions by Peter Mandelson will be taken to an even more thorough level in years to come. Though the Labour Party might always be the mainstream party to throw more crumbs off of the table, in terms of major decisions the Party might never differ greatly from the Conservatives.