Covid-19, Supernovas, Capital Implosion

3 Apr

I agree with John Smith, author of the award winning Imperialism in the twenty-first century, on many things. For instance that capitalism’s once progressive aspects – liberating humanity from feudalism/slavery and advancing labour productivity to the point where, for the first time since the neolithic age, it would be possible to end the tyranny of poverty – had by 1850 hit the tipping point all previous forms of class rule had sooner or later arrived at.

Feudalism and slavery outlived their usefulness but did not wither and die. They had to be done away with. Like guests who outstay their welcome they had to be evicted – a French Revolution here,1 an American Civil War there – to allow the productivity gains of capitalism. But this same capitalism is itself now the guest refusing to go. Its dysfunctional relations of production stand in the way of progress – worse, their logic poses mortal and planet-wide threats – yet its prime beneficiaries hang on for dear life. Why would they not when their control of the narrative, and of armed might should that prove insufficient, lets them do so?

We’ve both looked beyond surface forms, John more thoroughly than I, to see capital’s logic as intrinsically incompatible with the welfare of humanity (and other species arrogantly viewed as expendable). And we agree that one reason, perhaps the most important at that, so many in the West fail to see this truth is that we’ve been shielded from the full extent of its insanity by way of a social contract premised on super exploitation of a global south referred to, disingenuously or naively, as the ‘developing world’.

We disagree on one or two things, it’s true, but the differences are not of fundamental analysis. Rather, we differ in degree of optimism. John’s view of the possibility of revolutionary change is more sanguine than mine. I hope he’s right in that. In the meantime my greater pessimism, and more specific conclusions derived from it, puts us at odds over the Middle East in general, Syria and the Kurds in particular.

But when I recently posted, approvingly, a video of Yanis Varoufakis speaking on opportunities created by the covid-19 virus, he rightly rebuked me in an emailed response containing this:

… Varoufakis, who capitulated to the EU imperialists and sold Greek workers down the river, now calls for a ‘magic money tree’ social-democratic alternative to the EU’s ‘mistaken’ policies. He criticises the US Fed for not extending dollar swap lines2 to Europe, as they did after 2007 – in fact they have done this: https://www.economist.com/finance-and-economics/2020/03/21/why-americas-financial-plumbing-has-seized-up. Amazingly, apart from a fleeting mention of China, he has nothing whatsoever to say about the nations and continents oppressed by US/EU imperialism and Europe’s responsibility to them in this pandemic (not to mention the impossibility of conquering CV19 in Europe while it rages in Africa, Asia and Latin America – even the above Economist article has some substantial reference to this.

While I’d be kinder on Varoufakis3 (and Corbyn, also assessed harshly in that email) than John is, I can’t fault his assessment. Corbyn and Varoufakis sought sincerely if quixotically to change for the better the lives of those who trusted them. Their failure is ultimately down to limitations of a reformist worldview doomed to fail because its assessment of capitalism is plain wrong.

(This by the way is an example of what I meant in a recent aside on “matters of fact erroneously held to be matters of opinion”.)

My reply to John contained these words:

Fair points all. I’m clutching at straws. I wouldn’t know where to begin building the mass movement of genuine, class based opposition to capitalism in its advanced imperialist phase.

Which sums up the predicament I’ve been in for a decade. I have no faith in either reformist or revolutionary roads to a socialism which must come if we are to avoid barbarism. But enough of my gloomy thoughts.4 Here’s John Smith in a must-read piece, Why coronavirus could spark a capitalist supernova. Posted on Open Democracy four days ago, and already translated into Arabic, Chinese, French, Russian, Spanish and Turkish, it begins:

Capitalism now faces the deepest crisis in its several centuries of existence. A global slump has begun that is already devastating the lives of hundreds of millions of working people on all continents. The consequences for workers and poor people in Asia, Africa, and Latin America will be even more extreme than for those living in Europe and North America, both with respect to lives lost to coronavirus and to the existential threats to the billions of people already living in extreme poverty. Capitalism, an economic system based on selfishness, greed and dog-eat-dog competition, will more clearly than ever reveal itself to be incompatible with civilisation.

Why is supernova – the explosion and death of a star – an apt metaphor for what could now be about to unfold? Why could the coronavirus, an organism 1000th the diameter of a human hair, be the catalyst for such a cataclysm? And what can workers, youth and the dispossessed of the world do to defend ourselves and to ‘bring to birth a new world from the ashes of the old’, in the words of the US labour hymn, Solidarity Forever?

To find answers to these questions, we need to understand why the ‘global financial crisis’ that began in 2007 was much more than a financial crisis, and why the extreme measures taken by G7 governments and central banks to restore a modicum of stability – in particular the ‘zero interest rate policy’, described by a Goldman Sachs banker as “crack cocaine for the financial markets” – have created the conditions for today’s crisis …

Read the full piece here …

* * *

  1. The ripples of 1789-94 went far beyond France. Britain’s more peaceful transition to capitalism from feudalism is often attributed to a phlegmatic ‘Anglo-Saxon outlook’. I favour the less idealistic assessment of a ruling class, heeding the lessons across the Channel, minded to make limited concessions in such as the 1833 Reform Act.
  2. A definition, outlining of purpose and examples of swap lines are given here.
  3. Since the bargaining power of Syriza vis a vis the ECB stood in 2015 at zero, its sole alternative to ‘selling Greek workers down the river’ was to walk away. The problem with that being a fascist Golden Dawn waiting in the wings. Which is why, however correct our assessment in theory, we who sit on the sidelines do well to observe a modicum not just of caution but humility before rushing to judgment.
  4. My ‘gloomy thoughts’ on the prospect of avoiding barbarism stem from absence of a mass revolutionary party and a plethora of revolutionary sects in a non revolutionary age. I do leave room though for the possibility that things could change rapidly. Which is where Smith’s talk of supernova explosion (or as I say, implosion) comes in.

14 Replies to “Covid-19, Supernovas, Capital Implosion

  1. The virus does seem to me to herald something unprecedented in our time and I mean more than the obvious traumatic effect it has had in terms of the lockdown. Or, to be more precise, that very trauma (people stuck in their houses, unable to engage in the most basic social norms, anxiously cut off from their livelihoods etc.) is a fertile ground for upheaval. When people are deprived of their focus i.e. what kept them busy, then even the most complacent start to think and wonder. Especially when they see sneaky little alterations that are supposed to be temporary but which they know the managers have been desperate to introduce all down the line. In my own case, it is the shutting down of day centres for the disabled and the redeployment of the staff into the community. This move has been strenuously resisted by the local community but desperate times grant opportunities.

  2. I just read over the linked article. I admit that I have trouble understanding the peculiar mutations of capital (David Harvey’s work, despite being readable, often confuses me). It seems that the gist here is that, as I suspected, the 2008 crisis will repeat but this time there is no “fix”. And part of the consequences is that the global south is being callously abandoned.

    But the unbelievable arrogance of this struck me:

    “10-year US Treasury bond interest rates spiked upwards. According to one bond trader, “statistically speaking, [this] should only happen every few millennia.””

    Millenia? Capitalism has only existed for a few centuries. This seems to indicate a financial model totally dependant on the most magical projections which have no reference to the real world at all.

    • John Smith is seriously at odds, rightly so IMO, with David Harvey over the nature of modern imperialism. Imperialism in the twenty-first century (not to be confused with a book of the same title but “21st” as opposed to “twenty-first”) goes into this at some length in the chapter on dependency theory.

      FWIW my summary is that Harvey sees capitalism as having given way in parts of the global south to more primitive forms of accumulation, including feudalism, asiatic and indeed slavery. I had a long but courteous 3-way debate with bevin and BigB on this. Harvey seems to forget that all sources of profit (including workerless factories) depend crucially on surplus value being extracted from human labour at the point of wealth creation somewhere on the planet.

  3. Thanks for the link. Smith is always interesting, I followed your advice and bought his book. I’m inclined to agree with his assessment both of the Debt and of the danger that this crisis – which some idiots persist in asserting is concocted by the ruling class (except they don’t call it a class) – brings to capitalism and, in particular, imperialism.

    Regarding feudalism and the want of a Revolution in the UK- didn’t EP Thompson deal with this in “The Peculiarities of the English” ?

    Both the Civil War and the ‘Glorious Revolution’ were part of the bloody transition from feudalism to capitalism, which, in England was much more thorough than it was in France in, for example, the transformation of peasant agriculture into capitalist commodity production. As Cobbett, who would have agreed with Smith, came to understand the rural poor emerged from the French Revolution a lot better off than their opposite numbers on the other side of the channel.

    • I wouldn’t argue over your going back further, bevin. My rough and ready assessment is of industrial as opposed to mercantile capitalism beginning around 1750 but there are those, including self-styled “capitaloscene” exponents of a particular take on climate change, who trace it back as far as a “long sixteenth century”.

      As for French peasants doing better from the transition than their English counterparts, well, to this day they eat better!

    • “….this crisis – which some idiots persist in asserting is concocted by the ruling class (except that they don’t call it a class)”

      I presume that refers to the ones I label skeptics represented by e.g. Off Guardian. And it is certainly true that you have very little Marxism there. Hardly anyone refers to class.

      On reading John Smith’s essay, it seems we are dealing with a crisis of vast proportions in which the virus itself is almost incidental. (I have a vision of some far future generation studying history books about the great depression of the early 2020s where the virus may appear as a side note.)

      The basic division between that skeptic approach and the Left then is the former’s notion that the ruling class (not so called by them) is like the grand conspiracy theorist’s notion of an all-powerful elite that can control everything. (And I use “grand conspiracy” to denote that Ickean notion of attributing precisely such omnipotence to the rulers.) The Left approach is to see the ruling class as naturally trying to exploit the virus for their own ends (as they attempt to do with everything else) but certainly not as being in control. And indeed as potentially losing it all in increasingly desperate measures.

      • I can’t speak for bevin but I draw a sharp distinction between genuine sceptics – like those featured on OffGuardian, their epidemiological/clinical credentials beyond reproach – and the ‘idiots’ I assume bevin refers to. (Coincidentally, in another email, John Smith opined that I’m “too kind to those idiots”!) The latter see a grand hoax cooked up – by such long established criminal partnerships as (sarcasm alert) Beijing, Havana, Moscow, Washington – to snatch ancient liberties. As I said in a recent post, such claims fail cui bono and/or Occam’s razor tests.

        Other than its use of “skeptic approach”, your final paragraph echoes my own assessment of the difference between conspiracist and marxist understandings. That said, I have in the past made the non sequiturial error of (unconsciously) concluding that because we can explain class rule and the dynamic of capital without assuming conspiracy, it follows that any given conspiracy theory must be false. I’ve grown wary. The ice we tread, above a lake of uncertainty, is thin in places and it behoves us all to leave room for the possibility we have it wrong.

  4. It seems reasonable to observe that Capitalism’s ability to exploit – in whatever terms are applicable (“at the point of wealth creation”/ “create surplus value ” – take your pick) is largely dependent upon its ability to continuously renew itself.

    On its own terms (the way it describes itself and how it operates/works) this does not seem to be happening. Granted nothing described in theory operates entirely that way in practice. However, taking as a reference point the attempt made by the former Soviet economist Kondratiev in the 1920’s/30’s to describe and map out the renewal process over time in terms of cycles of renewal, we are well overdue.

    This was something Mason picked up in one of his books a few years back and, regardless of any personal opinion on the author, the criteria has to be based on the merits of the observation rather than those of the observer.

    One of the key driver components of the observed cycles seems to be energy technology – a renewal phrase of the cycle from, for example, steam power to electrical power based, again, on carbon based energy sources (oil/gas). Despite discovery advances in nuclear, solar, wind and so on, along with alternatives to oil based plastics for packaging etc over a period getting towards a century or so, there has been no anticipated renewal transition from one old (previously new) cycle to the next .

    Whilst this is a testament to the power of the oil/gas lobby it also represents one example, among others which seem to exist, of vested interests – whose interests are largely based on rent seeking rather than the productive “creative destruction” inherent in the cycle – acting to prevent any transition. Attempting to freeze in time a lucrative model based not on the way capitalism has, to date, continually renewed itself as a system, but on unproductive rent seeking.

    The artificially induced growth of sectors based on a rent seeking model in economies compared to the the sectors necessary for renewal seems to suggest a number of observations worth discussion and debate. Particularly for those of us floundering about in the dark trying to make sense of the external input coming in from various sources and by varied means.

    The most obvious one being whether this may or may not be responsible for the collapse or demise of capitalism as a workable/operational system?

    Another is whether or not, using the terms Capitalism and its adherents/proponents use to describe its key functional features, structures and processes, what we have can be properly described as Capitalism at all?

    I don’t know anywhere near as much as I reckon I should on previous models – like Feudalism. Though Phil’s observations on that subject in this piece generated the thought that in view of the rise in unproductive rent seeking (across a whole range of sectors, institutions and industries) in potentially removing the means for Capitalist renewal as to whether such systems, or variants of them, were ever completely removed or went away?

    Hopefully, the above will serve to stimulate some worthwhile debate (for a given value of “worthwhile”) with an emphasis on light rather than heat.

    • Food for thought as usual Dave. Capitalism is a hugely complex system made more so by the weight of its internal contradictions. You touch on one such with the antagonism of finance/rentier capital to the value production on which it depends. This leads some – not, to be fair, Mason – to say we no longer have capitalism but something new. (Or that we do have capitalism but it is not the problem. Rather, a parasitic financialisation is the problem: as though the latter were possible without the former, and as though the former did not house within its dynamic the seeds of the latter!) I say the law of value operates as it did in Marx’s day. For financialisation to exist in the dizzying, systemically suicidal forms Smith speaks of, labour power must be exploited to extract surplus value somewhere on this earth. That ‘somewhere’ being overwhelmingly the global south.

  5. Polanyi also drew attention to Kondratieff’s ‘cycles.’
    A few quotations from Karl Polanyi’s The Great Transformation. Polanyi would have been puzzled and astonished by the return, in the form of neo-liberalism, of the system whose demise he had celebrated, On the other hand the ‘supernova’ would have been exactly what he would have anticipated.

    “Our thesis is that the idea of the self-regulating market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his his surroundings into a wilderness.”

    “…But the peculiarity of the civilisation the collapse of which we have witnessed was precisely that it rested on economic foundations. Other societies and other civilisations, too, were limited by the material conditions of their existence-this is a common trait of all human life, indeed of all life, whether religious or nonreligious, materialist or spiritualist. All types of societies are limited by economic factors. Nineteenth century civilisation alone was economic in a different and distinctive sense, for it chose to base itself on a motive only rarely acknowledged as valid in the history of human societies, and certainly never before raised to the level of a justification of action and behaviour in everyday life, namely, gain. The self regulating market system was uniquely derived from this principle….”

    “The Industrial Revolution was merely the beginning of a revolution as extreme and radical as ever inflamed the minds of sectarians, but the new creed was utterly materialistic and believed that all human problems could be resolved given an unlimited amount of material commodities.”

    “No society could, naturally, live for any length of time unless it possessed an economy of some sort; but previously to our time no economy has ever existed that, even in principle, was controlled by markets. In spite of the chorus of academic incantations so persistent in the nineteenth century, gain and profit made on exchange never before played an important part in human economy. Though the institution of the market was fairly common since the later Stone Age, its role was no more than incidental to economic life.
    We have good reason to insist on this point with all the emphasis at our command. No less a thinker than Adam Smith suggested that the division of labour in society was dependent upon the existence of markets, or, as he put it, upon man’s “propensity to barter, truck or exchange one thing for another.” This phrase was later to yield the concept of Economic Man. In retrospect it can be said that no misreading of the past ever proved more prophetic of the future.”

    “…. Herbert Spencer, in the second half of the nineteenth century could, without more than a cursory acquaintance with economics, equate the principle of the division of labour with barter and exchange, and, another fifty years later, Ludwig von Mises and Walter Lippmann could repeat the same fallacy. By that time there was no need for argument.…”

    “In point of fact, Adam Smith’s suggestions about the economic psychology of early man were as false as Rousseau’s were on the political psychology of the savage. Division of labour, a phenomenon as old as society, springs from differences inherent in the facts of sex, geography, and individual endowment; and the alleged proclivity of man to barter, truck or exchange is almost entirely apocryphal. While history and ethnography know of various kinds of economies, most of them comprising the institution of markets, they know of no economy prior to our own, even approximately controlled and regulated by markets.”

    • The society Polanyi speaks of is one of generalised commodification. Generalised in that, with virtually all wealth produced for exchange, commodities no longer exchange on the basis of subjective appraisals of their ‘worth’ but in relatively stable ratios based on some objective and quantifiable property. That property being human labour: the abstract labour, simple or compound and measurable in hours, ‘socially necessary’ to produce them.

      And generalised in that human labour is itself now a commodity, its own value set by the abstract labour, simple or compound and measurable in hours, ‘socially necessary’ to produce it.

      Flawed though they were, arguably because they wrote before capital’s logic had fully unfolded, the disinterested scientific inquiries of Smith and Ricardo gave way, as the industrial revolution picked up speed and capitalism broke free of feudal fetters, to normative intervention and apologetics. This compelled its defenders and apologists to deny any such thing as an objectively grounded value. In short, an ideologically driven need to deny or obfuscate the origins of profit has caused mainstream economics to forfeit all possibility of understanding its own subject!

  6. For me the most telling phrase from Mr Smith is ‘the Imperialist Left’ – and this at a time when it’s hard to raise awareness of the power relations and mechanisms that generate inequality and poverty in England, never mind across the world. The last general election campaign here hardly touched on ‘foreign affairs / foreign policy’ and when it did it was entirely focused on the impact of ‘the other’ on ‘our way of life.’

    We have a long way to go in increasing understanding of the nature and impact of imperialism and, if Mr Smith is right, not very long to do it in. Any suggestions?

    • Fraid not, Bryan. I fear left reformists like Corbyn and Varoufakis misjudge capitalism. But I also fear that advocates of a revolutionary party underestimate military, intelligence and other ruling class options for maintaining their rule – options that make events in Russia 1917, or Cuba 1959, seem to me like palace coups.

      As I indicate with John Smith, our differences of optimism on capitalism’s overthrow by a mass revolutionary party translate into sharper divisions on such as Syria, and whether a Kurdish ‘nation’ inside its current borders could ever be more than a beach head for contnuing a century old imperialist rule of the middle east. They also lead me to question what options Syriza truly had in their 2015 shafting by the EU.

      Covid-19 has opened up another division. Libertarians lambast both the revolutionary and reformist Left for failing to prioritise critical scrutiny of mainstream narratives on the virus. Experts they cite raise valid questions. I’ve alerted readers to OffGuardian, which has consistently given a platform for sceptics we cannot ignore since they include leading epidemiologists and clinicians.

      How bad is this virus? What evidential basis informs the measures now being taken, which deprive us of liberties more easily surrendered than regained? I don’t know and, as a friend put to me yesterday, “I don’t know” is a good response to uncertainty, but a poor basis for changing the status quo in the ways we are now experiencing.

      Apologies for starting to address a question you never asked. Perhaps I should have stopped after paragraph 2!

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