Capitalism's Depleted Reserves: Recognizing and Preparing for Systemic BreakdownBen Peck I Social Economics I Analysis I April 27th, 2016
The capitalist crisis of 2008 was rescued by an enormous transfusion of public money into the banks. The system has been on life-support ever since.
Despite this, the bourgeois see little prospects of a recovery for their system. Rather, they wring their hands and impotently grimace in anticipation of another slump. Many consider this now a question of "when", not "if".
An organism in crisis will begin to burn off its reserves of fat in order to survive. Austerity has been capitalism's economic equivalent of this process. The system has eaten deeply into its reserves, particularly in the advanced capitalist countries. All the accumulated reforms conquered by the working class in the preceding historical period; relatively decent wages, the welfare state, pensions, etc; in order to pay for a system in crisis have been, or are in the process of being, burned away.
One particularly rich reserve has been Chinese capitalism, which has been heavily depleted. In the wake of the crisis the Chinese pumped half a trillion dollars into their economy. It was one of the greatest Keynesian interventions the world has ever seen. Rather than merely propping up the banks, the intervention contributed markedly to the real economy. According to the former US treasury secretary Larry Summers, between 2010 and 2013 China poured more cement than America did in the whole of the twentieth century! Up until last summer a city the size of Rome was being built in China every two weeks. This intervention gave a clear impulse to the Chinese and world economy.
However, the Chinese reserve is now near exhaustion and the effects of the stimulus are turning into their opposite. Debt has ballooned from $7trn to $28trn - 282% of GDP. Imports and exports are falling. The massive economic stimulus has ended up in a massive crisis of overproduction, provoking a world-wide crisis of steel. In Redcar and Port Talbot in Britain steel works are closing, destroying communities. On the other side of the world, the same course is being taken in China itself.
The depletion of these "economic reserves" has had a corresponding effect on capitalism's "political reserves", which are also being burned away. The old political arrangements are falling apart, including many of the traditional workers' parties. According to a report in The Economist recently, the social democracies in Europe stand at their lowest level of support for seventy years.
The classic example is PASOK, which commanded forty-five percent of the electorate in Greece prior to the crisis. On the basis of its complete capitulation to the Troika and the collapse of the Greek economy it has been reduced to a mere four percent. PASOK is now hanging on to a place in parliament by its fingernails.
In Europe in 2015 the social democrats lost power in Denmark and recorded their worst ever results in Poland, Spain, Finland and also came very close in Britain.
In France the so-called Socialist President, Francois Hollande, is the most unpopular leader in seventy years. By attacking the labour laws his government has provoked a mass movement, which on March 31st carried out a general strike involving 1.2m French workers united against the socialist government.
The strike involved a significant participation of French youth, who now compose a very class conscious vanguard of the struggle. These youth did not go home, but stayed out in an occupation of the squares, the "Nuit Debout" movement, which is reminiscent of the Syntagma and Indignados movement in Greece and Spain. These movements were the basis for the rise of parties which have since supplanted the social democracies. It is not difficult to imagine the same process developing in France.
People are turning away from the social democrats in their droves everywhere, laments The Economist. The explanation is not complicated. Where the social democrats offer no alternative to austerity, but instead work hand-in-glove with the bosses to implement it, they completely undermine their reason for existence in the eyes of the working class.
Even in Britain, the two-hundred thousand-strong movement behind Corbyn is not necessarily enamoured with the Labour Party. In Greece, support for Syriza has collapsed to sixteen percent following its betrayal of the OXI movement and its resumption of the austerity programme of its predecessors.
This crisis of Social Democracy is part of the general crisis of bourgeois democracy, which is fast expending its political capital. This is a dangerous development for the ruling class, as noted by the Financial Times' Martin Wolf on February 2nd in an article entitled "Bring our elites closer to the people":
"...we already face the danger that the gulf between economic and technocratic elites on the one hand, and the mass of the people on the other, becomes too vast to be bridged. At the limit, trust might break down altogether. Thereupon, the electorate will turn to outsiders to clean up the system. We are seeing such a shift towards trust in outsiders not only in the US but also in many European countries."
The reference is to the Trump-Sanders phenomenon in the US, which was anticipated in Europe by the rise of Syriza, Podemos, the SNP and Corbyn on the left, and also the French NF and, more recently, the AfD in Germany, on the right. Class polarisation is tearing at the seams of capitalism's political veneer.
Consciously or unconsciously, when the bourgeois start to worrying about "outsiders" interfering in their system, what they actually express is the fear of the working class taking an interest in the way society is run, and interfering in their affairs.
When the next global downturn arrives, the period between that crisis and 2008 will mark a watershed period in the history of the capitalist system. It will be characterised as one in which the system, far from developing, burned away many of the reserve layers at its disposal, economically, socially and politically, which had acted as "cushioning" in 2008.
This will give the class struggles of the not-too distant future a far sharper character. The struggle on the part of the bourgeois will be far more desperate. The struggle on the part of the working class will take place after a period in which sick and enfeebled capitalism has been able to do nothing to solve its fundamental problems. Illusions that previously existed have been burned away, many defenders of the old system discredited. This is something we must prepare for, and intervene in, to build the forces of Marxism.
Originally published at In Defence of Marxism.