The real looters

The coalition government has placed an emergency army battalion on standby and is considering authorising the use of water cannon and tear gas to quell disorder and looting around the country.

But the threat of a mailed fist is a desperate response to an out-of-control social and political crisis. It cannot possibly solve the deeper issues that lie behind the anger and contempt for authority seen in British cities since Saturday night.

The looting of sportswear and plasma screens from high street shops shrinks to insignificance in comparison with the havoc wreaked in the global economy by those in charge. The hard men and women who have come to the aid of the ailing capitalist system have their own economic wrecking ball.

Governments in the United States, Europe and elsewhere have sought to resuscitate growth and bring about a recovery of production following the 2007/8 credit collapse. But their attempts have precipitated a new, far deeper crisis as the debt tsunami engulfs the world’s richest nations.

The truth now emerging is that a return to profitable growth is impossible without imposing equally impossible intolerable conditions of exploitation. ‘Austerity’ doesn’t even begin to describe what must follow if capitalist society is to survive.

It’s not only government cuts that will hurt people. Over the last seven days alone, £200 billion was wiped from the market - and about £300 billion in the past month, drastically reducing people’s pensions and savings.

The United States, still the world’s biggest economy, is no longer able to inspire confidence in the global financial markets. On Friday it experienced a humiliating downgrading of its debt. Standard and Poor, one of the credit rating agencies which speak for the gamblers, speculators - so-called ‘investors’ - whose interests seem all-powerful today, expressed their contempt for the outcome of the US political process and are driving the crisis into a new, more dangerous stage.

President Obama whistled in the dark when he responded on Monday to the historic downgrade of US debt. “No matter what some agency may say, we have always been and always will be a triple-A country,” said the President, as he tried to reassure the investors whose power commands governments.

But whether or not Obama believed that his words could unite the warring factions amongst Democrats and Republicans into accepting his demand for slashing cuts to Medicare and tax increases, they failed to halt the world’s stock markets plunging into the darkness.

The Federal Reserve’s despairing decision to hold interest rates at historic lows for two years cannot restore the US economy any more than it has in the UK in the last two years or in Japan in the last decade. The towering edifice of fantasy credit and debt has to be eliminated, and as a consequence the capitalist economy will contract. Surplus productive capacity has to be physically destroyed.

The nature of the capitalist system is the heart of this crisis – a system first revealed around 150 years ago when Karl Marx published the first volume of Das Kapital, his analysis of the capitalist mode of production.

The words of a critic were incorporated into an afterword to the second German edition in 1873. “The scientific value of such an inquiry” he said “ lies in the disclosing of the special laws that regulate the origin, existence, development, death of a given social organism and its replacement by another and higher one. And it is this value that, in point of fact, Marx’s book has.”

Resolving the current crisis by replacing the present system with a democratised economic and political form of society is on the order of the day.

Gerry Gold

A World to Win economics editor

Getting it right about Marx

Mounting street-level opposition to the capitalist G20 governments London gathering prompted the Evening Standard to observe this week that the impact of the combined financial and economic crises is making Karl Marx’s analysis of capitalist society attractive to a rapidly increasing number of people looking for explanations and solutions.

With a pretence of balance the ES wheeled out two writers to present the case for and against Marx. Francis Wheen, author of Marx's Das Kapital, which tells the story of the 20-year struggle to complete his seminal analysis of capitalism, is in the red corner. Wheen, to his credit, draws attention to Marx’s profound analysis of the underlying capitalist profit-seeking alternating but worsening cycle of growth, overproduction, bust, and destruction and its mutually-dependent relation with credit and debt.

But to use Wheen as Marx’s defender is a deliberate trap for the unwary. As we have shown elsewhere, Wheen’s real mission is to undermine Marx by reducing him from a revolutionary to an acute observer, saying: “Marx's vivid portrayal of the forces that govern our lives will never lose its resonance, or its power to bring the world into focus.” Calling on financier George Soros, for help, Wheen shows that Marx was right about the inherent instability of the system but can’t resist adding: “The fall of the bourgeoisie and the victory of the proletariat have not come to pass.”

In the blue corner, defending capital, is Emma Duncan deputy editor of The Economist claiming that “the central idea in Marxism — that the interests of the workers and owners were separate and opposed — is no longer true”. Her facile argument is that anyone who has a pension or life insurance “owns part of the means of production because the pension funds and life insurance companies are the biggest owners of shares in companies in the world”. Astoundingly she concludes that as a result, the class war “which Marx thought would bring the system down is over”.

Despite Duncan, the two social, class forces set in opposition to each other by capitalist society continue to express themselves. Peter Brabeck, the head of Nestlé, the world’s largest food company, and vice-chairman of Credit Suisse, said yesterday that the company is confident that it can weather the general decline in global consumption. In the developed, rich, overstuffed countries with a mounting proportion of obese adults and children, quantitative limits of “caloric input” have been reached and are giving way to quality.

But it’s OK for Nestlé. They are so big that they cover every aspect of the business, and will make their profits from whatever food people buy. And, even better, based on current projections, world population is predicted to rise from 6.5 billion to 9 billion - more mouths to fill with profitable (if sometimes dangerous) food products! Nestle owns the Chinese company that was lacing children’s milk with poison last year.

The global trade union body ITUC published its own broad-based assessment of the food crisis on the same day. It shows how investors fled from the credit crisis last year, transferring their funds to speculate on commodity futures. This has resulted in higher prics, putting even subsistence foods beyond the reach of many. As a result 150 million more people have been driven to and beyond the brink of starvation. Global estimates put the number facing acute hunger at over 1 billion.

So much for the alleged identity of interests of workers and capitalists that Duncan muses about. As to Wheen’s passive, one-sided, non-revolutionary view of Marx, we should simply repeat what Marx himself wrote in his Theses On Feuerbach in 1845: “Philosophers have hitherto only interpreted the world in various ways; the point is to change it.”


Gerry Gold
Economics editor