Book Review: Bas van Bavel, “The Invisible Hand?”

One of the most positive trends in the social sciences in the last 30-40 years or so has been the renewed interest of economic historians in long-run analysis. Under various monikers such as ‘global history’, ‘world history’, and even ‘deep history’, the comparative study of economic and social change in the long run has offered some profound perspectives on the origins of our times. Generally, however, the guiding question has been the one at issue in the ‘rise of the West’ debate and the adjacent topics of Eurocentrism, imperialism, technological progress, and colonial ideology. That is to say, much of the discussion has been primarily concerned with the question “how did Europe come to dominate the world?”, and to some extent also the followup question, “when did, whatever it was that allowed this to happen, begin? “.

Bas van Bavel’s recent book, The Invisible Hand?, asks a very different kind of question. This book is not concerned with the rise of the West, but with the underlying economic framework that most mainstream economic historians use in understanding the long-run socioeconomic patterns that they study. Although the specifics differ by author, of course, most of the economic historical mainstream still presents the story of economic history, and with it the difference between poor and rich today, as that of the ‘unfolding’ of the free market. The main disagreements consist of what kind of institutional order was necessary to make that free market flourish in Western history, and to what extent such an order as the Western world has could be adopted by developing nations as a matter of policy. Although there are exceptions, for the most part the working assumption is still that more markets, freer markets, and strong property rights – read: strong enforcement of the power of property owners – were the core ingredients that the Western nations achieved and by which they prospered. Whereas others, failing to achieve such an institutional order, suffered and still suffer stagnation and poverty. It is in this light that these economic historians also read such historical sources on markets and merchants as we have: as analytical and political defenders of what Adam Smith called the ‘commercial society’. Continue reading “Book Review: Bas van Bavel, “The Invisible Hand?””

Comments on renewing the left in Britain

Since the electoral success of the left social-democratic Syriza coalition in Greece, and the immediate challenge to austerity and the rule of finance capital in Europe that it represents, many people are understandably keen to consider how this could be repeated in the UK. While it is clear to everyone that Syriza is not presently a revolutionary outfit and not seeking to become one in the short term, it is equally clear that for a sustained left challenge to the politics of the last few decades to emerge from this countermovement requires a deepening of political organization of the left across Europe. The northern European left has an important role to play here because of the very real possibility of isolating a left confined to Greece alone, or even just Greece, Portugal, and Spain. If we are to break the back of the intellectual coalition between the neoliberal social imagination and the economic policies of austerity and debt enforcement, it is of the greatest importance that the left in the creditor countries makes a priority of making the enforcement of such regimes by their own governments impossible – not just domestically, but internationally. In the current European context, internationalism is not just a desirable principle but an absolute precondition for success.

Continue reading “Comments on renewing the left in Britain”

Book Review: Richard Seymour, “Against Austerity”

It’s easy to be against austerity and neoliberalism; it is less easy to say something meaningful about it, and to take stock of the Western situation in a sober and critical way. To do this is the purpose of Against Austerity, the most recent work of the hand of Richard Seymour, blogger at Lenin’s Tomb and (ex-)member of various radical groups in the UK. Although the cover blurbs present it as a strategy for defeating austerity and reviving the left, most of the book by far is actually concerned with analyzing what austerity is, how it relates to neoliberalism, state and class strategies, ideology, and economics. While these topics are by now fairly well-trodden ground in left analysis, there is perhaps a need for a popular synthesis of the various theories and interpretations offered in the literature, and this book helps fill that gap. Combining — as is Seymour’s wont — Poulantzian/Gramscian state and class theory with the economic interpretations of the crisis offered by the school of Panitch & Gindin and Duménil & Levy, this work offers a (brief) political economic reading of the crisis that is fully integrated with a strategic and political conception: neoliberalism as a class offensive of financial capital and its state integration to recompose the state-economy relationship and indeed the very structure of ‘the market’ and its society itself. As Seymour puts it: “what we are witnessing, under the auspices of austerity, is not just spending cuts. It is a shift in the entire civilisational edifice of capitalism, deepening an equivalent shift that began in the 1970s” (3-4).

What does this shift consist of, according to him? The author discusses a fairly broad range of phenomena, and the discussion of the crisis and its strategic meaning ranges from economics to class, to state, and to ideology. Let’s take the economics first. The general thesis of the crisis interpretation may be summed up as the Panitch-Gindin-Duménil-Levy school. That is to say, the view that neoliberalism entails an intensification of existing trends towards ‘financialisation’, seen as the dominance of finance capital over other capitals and its stranglehold on the state; an attendant rise in inequality and more open class warfare, as opposed to the welfarist compromises of the boom period when manufacturing capital was in charge; and a shift from consumption to an investment orientation. When it comes to the state analysis of neoliberal economics, however, Seymour (in my view rightly) takes his cue from Philip Mirowski: the neoliberal state presents itself as a ‘small government, free market, individual responsibility’ type liberal regime of familiar sort, but in reality neoliberalism means an enormous increase in the state’s repressive authority and even in its reach over all aspects of life. The difference is that the state is now used to create markets and market dependence where none existed before, or where it was attenuated by welfarist ‘obstacles’. The neoliberal state is a regime of (re)imposing market relations into the fabric of everyday life wherever possible, and it is in this context only that the combination of increasing authoritarianism (at least compared to the 60s-70s) with the new conservatism and the drive to (anew) outsource and commodify all labour can be understood.

Financialization also comes into the class analysis. After all, one of the characteristics of neoliberalism (all agree) has been the increasing indebtedness and financial ‘enmeshing’ of Western workers. Also, the centrality of finance and the finance-state alliance in the United States to the workings of the international economic system since the end of Bretton Woods, as documented by Gindin and Panitch in The Making of Global Capitalism (London/NY 2013: Verso) has generated (or imposed) similar alliances elsewhere in the Western world. The upshot of this is that, on this interpretation, finance has become the central nervous system of capitalism and that financial capital has become the leading sub-class (hegemon) within the ruling class alliance. Unpacking Seymour’s Gramscian-Poulantzian jargon, the social relation that is the state is always in some sense a reflection of the struggle of different classes and class forces. In this particular case the alliance between corporations, banks, political parties, civil servants and so forth that dominates the UK is led by finance capital and its direct or indirect representatives in politics: the often-observed City-Westminster nexus.

Yet in the state analysis, Seymour rightly emphasizes that the neoliberal austerity alliance is not an impregnable unity. On the contrary, neoliberalism is as any movement an alliance of different ideas and forces and has a fragmentary nature. If cohesion is created by the dominance of the particular interest of finance over the whole, even other sectors of capital, the strategies pursued on this basis also entail risks and potentials for division. The wholesale attack on the conditions of social reproduction as they have grown in the postwar era more aggressive and sweeping than even in the Reagan-Thatcher years, and this means that either Marx’s ‘moral’ historical element in the reproduction of labor will be pushed down to a systematically lower living standard for the Western working class; or it could mean sufficient disruption and resistance that this social reproduction itself is threatened and the attack has to be called off. The former appears to be happening now, but the latter was the picture of the earliest wave of neoliberalism in the 1970s, and this shows the importance of organized labor resistance to raising the risks of an austerity strategy for the ruling class.

Similarly, the pursuit of debt reduction, cutting government expenditure, public employment and so forth makes sense from the viewpoint of financial capital — as it strengthens credibility and therefore creditors — but it threatens through the ensuing conflict and contraction the position of weaker elements of capital, such as manufacturers and those dependent on international trade. Such state intervention as exists in the economy is explicitly to defend finance capital at all costs, hence the bailouts, but there are also other elements of the ruling class alliance and global stability to keep in mind, not least politically. Hence Seymour rightly notes that “the divisions among elites over whether to proceed with austerity reflects both the risks of the project and divergences of short-term interests” (94). This solves the riddle of whether austerity is ideological madness or whether we should adopt the ‘rational choice’ view that this ruling class must be right about its own interests: it depends on what segment of the alliance we are talking about.

This brings us to the question of ideology, which perhaps more than anything else (unless it is the decline of unionism) defines our current era. Here, Seymour is perhaps at his best. As is obvious to all, but often handwaved away in the wishful thinking that passes for much left analysis, the situation ideologically is very grim. In the UK, fewer people now support the old ‘welfare’ set of views than even at the height of the ‘winter of discontent’ in the late 1970s that inaugurated Thatcher’s rule. The new ‘common sense’ imposed by decades of virtually unchallenged neoliberalism and the demise of the Soviet Union — the latter a factor Seymour barely mentions — has quite successfully imbued the current generation of young people with an ethos of individual careerism, of identifying with the discipline of the market. While this generation is much more progressive than the previous on questions of gender, sexuality, race and so forth, it is also much more neoliberal in terms of the relationship of individuals to society and its political economy — a trend visible throughout the Western world. In addition, Richard Seymour gives due attention to the counterpart of this common sense: the increasing violence and authoritarianism against those who resist or transgress the new discipline of the market and its inequalities and exploitation. From forced labor to obtain benefits to the escalation of police tactics, it is especially the women and people of colour of the Western world who make up much of the working class that bear the brunt of this offensive. The rhetoric of ‘scroungers’ and benefit dependence only legitimizes this new ‘liberalism without a human face’, and the more the state and its remaining welfare system present themselves as modes of exercising neoliberal authority, the less they are seen as universal achievements of citizenship in a high-wealth society. Seymour brings out this vicious cycle of our current times quite well.

There is much to like about this book. It is a clear and well-structured read: it starts off rather blocky and posturing in the beginning (for which I am just not the right audience) but improves over time with an at times fairly detailed analysis of the relationship between the rule of finance capital within the neoliberal state and the concrete strategies, alliances, and ideological ‘strong redescriptions’ this entails. Refreshing especially are two important things about this work: firstly, Seymour’s resistance to wishful thinking and hand-waving optimism. He describes the utter weakness of the left’s resistance, the decline in unionism and the small likelihood of its recovery, and the increasing neoliberalization of the Western common sense in no uncertain terms. Secondly, he rightly points out how identifying neoliberalism simply with ‘free marketeers’ and seeking a restoration of the old welfare capitalism and union alliances to combat it is an illegitimate and impossible exercise in old union worker nostalgia and doomed to collapse before it ever gets off the ground. He emphasizes how much unions have now come to rely on public service workers for their base, the last relatively privileged and secure bastion against the labour market, and how the neoliberal offensive on this point is destroying even that base as we speak — without any clear counter-strategy to be seen. The spirit of ’45 is an obscene display of delusional nostalgia, and should be rejected wherever it appears, and Richard Seymour does not indulge it — which is rare among the left in the UK, although such politics of nostalgia is much less evident in the United States. On the whole, this book does what should be the starting point of any Marxist analysis: it describes with sober senses how bad the radical left’s strategic position is, unhindered by the shibboleths or blinders of sect strategy.

Admittedly, I have some disagreements with the analysis as well, both larger and smaller in nature. Although these are all points on which people can reasonably disagree, I’ll mention a few points of difference here. One is that I think Seymour still concedes too much to the existing union structure, despite his justified emphasis on the need for a ‘new unionism’. The Owen Jones argument that unions are still the ‘biggest democratic institutions in the UK’ and the like simply does not convince, and masks the real issues of organized workers in the West. Firstly, if we criticize liberal democracy for being a sham democracy in some respects, being structurally set up to favour the elites and by demobilization and abstention excluding much of the working class, then this goes a fortiori for the unions. Even in the United States general elections will reach a 50% turnout or so, whereas union leadership elections are often decided on a turnout of about 15%. That does not bode well for an argument about their democratic content. Moreover, the dependence of Western unions on public sector workers. While the conditions and makeup of the public sector workforce is increasingly like that of private sector work, the strategic position is different. Public sector workers are more subject to the neoliberal ideological resistance to the state apparatus, making them seem ideal examples of wasteful obstacles and parasites to be cut; they’re often, as state representatives, in ambiguous relationships to workers (think of teachers or social workers); and they depend way more than private sector workers do on a general reserve of public support and solidarity. In Chicago, the CTU managed to triumph on this basis, but in most cases the long-term trend is not good for public sector-heavy unions.

Finally, there is also a certain analogy between the ‘Labour is defined by its members, therefore should be supported’ and the ‘unions are run by workers, therefore democratic’ arguments: both ignore the way the structure of membership is set up to prevent the use of that instrument for any anti-capitalist purpose under current conditions. A new unionism would mean a radical reformation of the existing union structure just as it would require a doing away with Labourism (something Seymour does agree on). It is worth noting that in various polls, from the US to Australia, people systematically indicate that unions are among the least trusted and liked institutions in the West — comparable to big business and parliaments, in fact.

Another point concerns the economic analysis. While I do not want to go into too much technical detail that will likely bore or confuse a general left audience, it is at least worth noting that some of the economic reasoning that underpins the book is disputable. While I readily agree with Seymour’s analysis of neoliberalism in the Mirowskian style, i.e. as the imposition of markets by a stronger (and even sometimes bigger) state rather than a classic free market offensive, I am less enamoured than he is of the Gindin-Panitch-Duménil-Levy approach to the crisis. Everyone can agree that the proximate cause of the crisis lay in the financial system and its particular overexposure to bad debt, and that this bad debt in turn has its roots in the stagnation (though not necessarily decline) of worker compensation. But it does not follow from this that long-term financial trends are the dominant ones in explaining global capitalism since the neoliberal turn of the 1970s. The argument that opponents of this school do not take finance to be a ‘real’ part of capitalism is misplaced; while indeed the populist narrative sometimes leans towards seeing finance as merely parasitical on capitalism, none of the Marxist economic literature on the crisis does this. It is clear that the credit system and finance are central to capitalism, as one can find in Capital volumes 2 and 3. But it is also clear that if finance is essential to capitalism, it is equally incapable of generating new value in the system, and this — rather than its circulation or the imposition of competition and productivity increases for their own sake — is the lifeblood of capitalism at a global level. This does not make finance irrelevant, fictitious, or parasitical, but it means that a purely financial explanation of longer term trends in capitalism is less plausible within a Marxist economic analysis, because less ‘microfounded’ (as the neoclassical economists would put it). Perhaps, of course, such Marxist analysis is wrong — post-Keynesian theory, for example, does indeed give good reasons to support a wholly financial explanation of long-term crisis tendencies, relying on the interaction of expectations and demand, and this is something we find repeatedly in Seymour’s book next to the Marxist literature.

This points to some of the inconsistency of the economic analysis proposed by some of Seymour’s narrative. He attacks those who see declining rates of profit (identified by Marx himself as one of capitalism’s most important crisis tendencies) as central to the long-term analysis of crisis trends in capitalism by using two arguments: 1) that profits have been at a record high before and after the crisis; and 2) that such an argument is teleological and implies there is a ‘final crisis of capitalism’. Neither of these is convincing. The first is a common reply to the ‘rate of profit’ literature on the crisis, as in Andrew Kliman and Michael Roberts, but it rests on a conceptual misunderstanding. The historically high profit rates Seymour cites are, besides being uncorrected for inflation (!), stocks of profit. What determines investment in Marx’s theory, however, are rates of profit — returns on investment. Not absolute amounts, but returns as a percentage of a capital invested. If capitalist A invests $1000 and gets $100 back, and capitalist B invests $100 and gets $50 back, then it is A who will be outcompeted, not B. A should have invested in B’s production process (or finance, or trade, or whatever) and made $500 instead of $100 on his capital, and it is precisely the role of finance to make such distributions of investments happen, and thereby to equalize (and maximize) the rate of profit. It is precisely these rates of return that are advertised in all the financial literature and that play the same role for capital as the ’200 or 500 a year’ in rents (or interest) did for the Mister Darcy types in the Austen and Brontë novels. In fact, Seymour himself notes that “what matters to capital is the rate of profit on investment” (69)!

Why does this matter? Because whether or not Kliman and Roberts are right in their statistical analysis, it seems evident that a rate of profit analysis can explain why despite all the neoliberal offensives and despite 500 billion bailouts and the governments more or less begging capital to invest (as Seymour notes in his book), no investment is forthcoming. The left is no serious opposition; the unions are moribund; the government gives capital all it wants; and it does not invest. This baffles the Obamas and the Osbornes, who have only neoclassical economics to go by. The high-profit view also has no explanation of this, but the low rate of profit view does. There lies the relevance of this debate among Marxists.

The second counterargument should also be addressed, because it applies to the broadly SYRIZA-type strategies proposed by Seymour. While I think he is probably right that this kind of Eurocommunist ‘broad alliances’ and ideological offensives are about the best we can achieve at the moment, I think we should recognize that this is a position of weakness. The liberals are winning, and while a long-term offensive of ideology may hit the neoliberals where they are weakest, it is not likely to reverse the arrangement of forces in the short or even medium term. It is therefore very nefarious when nostalgic analysis substitutes for sober senses in this regard, as Seymour observes. But this applies also to the strategic implications of the inconsistency mentioned above, between emphasizing the need for investment and accumulation on capital’s part on the one hand, and simultaneously insisting this requires more consumer demand on the other. This is a fundamental mistake. Contrary to the Keynesian analysis underpinning this argument, according to Marx’s economics it is not the case that capital accumulation requires high worker consumer demand, nor therefore does it require the state to intervene on this basis to guarantee it.

The state does indeed often, since the Great Depression, intervene to prop up — in various ways, according to the class configurations in charge — the consumption levels of the working class. But this is for political reasons, and defended as such: Roosevelt and LBJ alike were worried about riots, uprisings, and revolutions, not about ‘multipliers’ (in fact Roosevelt famously campaigned on an austerity agenda). If this seems implausible, remember that capitalism accumulated quite fine in the Victorian age, even if regularly wracked by crises, despite the subsistence level (or lower) consumption of the workers, and the same thing is true for capital outside the West — a dimension Seymour barely mentions at all in his discussion of the political economy of the crisis. (I could here go into the relevance of the global dimension for the strategic problem of whether we should prioritize the living standards of Western workers in the face of globalized value flows, and also the absence of a discussion of the transnational capitalist class in this work. But arguably that would go too far for a review of a popular book mainly concerned with domestic strategy.) The importance of this argument rests in this: 1) that it would be wrong to think that the liberal state cannot go beyond a small bandwidth of austerity and repression; 2) that it would be wrong to think that any form of ‘demand side’ politics would do better than austerity at overcoming the crisis from the standpoint of capital.

The mistake here is a common one, and by no means limited to Seymour, but it entails confusing the needs of capital accumulation with the needs of the working class. It is precisely Marx’s point that the two are disjoined under capitalism. The conditions of capital accumulation are determined by the rate of profit and the variables that constitute it; whereas Marx pointed out that saying a crisis consists of insufficient demand is a tautology. (It must be noted this is recognized by some post-Keynesian literature as well.) The upshot then is that we must resist the urge to promote Keynesian solutions as an alternative to austerity ones for growth, i.e. capitalist accumulation, although of course we can and should defend the welfare state, good public services etc. on other grounds. It also means that we should not think that austerity is irrational or a mistake on the part of the ruling class compared to the possibility of a Keynesian alternative, as most of the center-left suggests. Not to suggest Seymour is one of them, but there is perhaps an unexamined tension between his interpretation of the economics and the most important observation in the book: that “if we attempt to ground our criteria in terms of the dominant criteria of what is good for capitalism, we cannot win” (159, emphasis omitted).

If I seem to spend exaggerated attention to the economic discussion in this book — which is only a part of the whole — I apologize; this just happens to be my main subject of interest at the moment. But the relevance of economic analysis of the crisis remains important to any strategy as well, as I’ve hopefully shown, and that is a major concern of this book. That said, I think on the whole this is a readable and useful guide to the interrelationship between austerity, neoliberalism, and the state at the level of strategy and ideology, and these are perhaps the book’s main foci in any case. It will disappoint the more ‘left communist’ skeptics, in its Eurocommunist-Gramscian approach, but this is itself a product of the limitations of our times. Aside from the usual minor errors — Alex Andreou is not called ‘Alex Alexandreou’ (102n56); Krugman is not ‘marginal within his profession’ (126) — the book has much to offer in terms of a sober and nuanced analysis. This goes especially in the UK where the trend towards nostalgia, wishful thinking, and resisting empirical and strategic reconsideration is so strong. As Richard Seymour puts it in the conclusion: “if this book has been intended to do anything, it has been to find a way to drop those fetishes… assimilate the reality of our present situation, and soberly assess the challenge posed by austerity, without losing sight of the objective — which is to navigate our way out of this impasse” (152). To that aim this book is certainly a worthwhile contribution.

Mandela and Socialism

The passing of Nelson Mandela, undoubtedly one of the greatest national liberation figures of the 20th century and one of the world’s great inspirations in the struggle against white supremacy and other forms of oppression, has naturally led to an outpouring of commentary and analysis. It is hardly necessary to add to this yet another overview of his life and accomplishments: his forging of the alliance between the ANC and the SACP – of which he was a Central Committee member when he was imprisoned for treason – is well known, as are his roles in the founding of the militant anti-apartheid organization Umkhonto we Sizwe and his heroic resistance against all attempts to bribe or suborn him during his long imprisonment. These accomplishments have nothing to do with the image of Mandela as a hero only of pacifism and reconciliation. While Mandela and his comrades rightly did not choose lightly to engage in violence, they did not spurn it when the needs of the day required it either.

That Mandela has undergone a process of modification akin to that long ago achieved with Martin Luther King, that is to make both seem as much more friendly, conciliatory, and moderate than they really were, is precisely a testament to the strength and effect of their actual militant efforts: these have been so powerful that even their very enemies are unable to simply oppose them, but must pretend that their own aims and those of Mandela or King were always reconcilable. As Bob Herbert writes in Jacobin, “the primary significance of Mandela and King was not their willingness to lock arms or hold hands with their enemies. It was their unshakable resolve to do whatever was necessary to bring those enemies to their knees. Their goal was nothing short of freeing their people from the murderous yoke of racial oppression. They were not the sweet, empty, inoffensive personalities of ad agencies or greeting cards or public service messages. Mandela and King were firebrands, liberators, truth-tellers – above all they were warriors. That they weren’t haters doesn’t for a moment minimize the fierceness of their militancy.” Continue reading “Mandela and Socialism”

Book Review: Sheila Rowbotham et al., “Beyond the Fragments”

The collection of socialist feminist arguments and lectures collected in 1979 under the title Beyond the Fragments is due a re-read in our present times. After the crisis in the SWP and the lengthy debates on the relationship between Marxist organisation and the ‘social movements’, often as vituperative as they have been inconclusive, the need to go beyond the fragments of each individual movement and find resources for a common purpose is as great as ever. What is striking about this collection is therefore how little dated it is – the occasional reference to the influence of the CPGB or the rule of Callaghan’s Labour aside, most of it reads like it had been written last week. For this reason, it is worth revisiting especially the opening essay by Sheila Rowbotham, which takes up most of the book. While the other two essays, by Lynne Segal and Hilary Wainwright, emphasize also the practical and organisational significance of the women’s movement on the politics of the radical left, it is Rowbotham’s essay that most thoroughly gives a theoretical exposition of the flaws and failures of that radical left in taking up these lessons. Continue reading “Book Review: Sheila Rowbotham et al., “Beyond the Fragments””