Some of you may have been present at our meeting in this building in May this year, when I recalled what I had said to Lucien Goldman in Paris a few months before the historic French May 1968. In contrast to the then prevailing perspective of “organized capitalism,” which was supposed to have successfully left behind the stage of “crisis capitalism” — a view prominently asserted by Marcuse and shared also by my dear friend Lucien Goldman — I insisted that, compared to the crisis we were actually heading for, “the Great World Economic Crisis of 1929-1933” would look like “the Vicar’s Tea Party.”
In the last few weeks, you had a foretaste of what I had in mind. But no more than a foretaste, because the structural crisis of the capital system as a whole, which we are experiencing in our time on an epochal scale, is bound to get considerably worse. It will become much deeper in due course, invading not only the world of more or less parasitic global finance but every single domain of our social, economic, and cultural life.
The obvious question we must now address concerns the nature of the globally unfolding crisis and the conditions required for its feasible resolution.
In the supposed diagnoses and corresponding remedies of the current crisis that have endlessly been repeated over the last two weeks, one word stands out, overshadowing all others. That word is confidence. If we could get a ten-pound note for every occasion when that magic word was offered for public consumption all over the world in the last two weeks, we would be all millionaires. Our only problem would then be what to do with our suddenly acquired millions. For none of our banks, not even our recently nationalized banks — nationalized to the tune of no less than two thirds of their capital assets — could supply the legendary “confidence” required for safe deposit or investment.
Even our Prime Minister, Gordon Brown, presented us with a memorable phrase last week: “Confidence is the most precious thing.” I know the song — and probably most of us do — which tells us that “love is the most precious thing.” But confidence in capitalist banking being the most precious thing? That is utterly perverse!
Nevertheless, the advocacy of this magic remedy now seems to be universal. It is repeated with such conviction, as if “confidence” could simply rain out of the sky or grow in great abundance on capitalistically well-manured financial trees.
Three days ago (on the 18th of October), the BBC’s flagship Sunday morning interview programme — the Andrew Marr programme — wheeled out a very distinguished elderly gentleman, Sir Brian Pitman, who was introduced as the former Head of Lloyd’s banking business. To encourage the viewers, he introduced a great conceptual innovation into the confidence discourse by saying that our troubles were all due to some overconfidence. And he immediately demonstrated the meaning of “overconfidence” by saying, more than once in a short interview, that there can be no serious problem today, because the market always took care of everything. Even if sometimes it went unexpectedly far down, later it always went up again. So, it will do so again this time, and also in the future. The present crisis should not be exaggerated, he said, because it is much less serious today than what we experienced way back in 1974. For in 1974 we had a 3-day working week in Britain (even if nowhere else), and now we do not have it. Do we? And who could argue with that irrefutable fact?
Thus, we now have the magic explanatory word for all our troubles not standing alone like an unhappy orphan but as part of something like a Fukuyamized pseudo-Hegelian triad: confidence, lack of confidence, and overconfidence. The only constituent missing from this magic explanatory discourse is now the real foundation of our perilous banking and insurance system which operates on the ground of self-serving confidence tricks that sooner or later are bound to be (and from time to time actually have been) found out.
In any case, all this talk about the absolute virtues of confidence in capitalist economic management is much like the explanation offered in Indian mythology about the supporting ground of the universe. In that ancient vision of the world, it is said that the universe is carried, most reassuringly, on the back of the elephant. And the self-evidently powerful elephant? you might well ask. No one should think of that as a difficulty. For the elephant is, even more reassuringly, supported on the back of the cosmic tortoise. But what about the cosmic tortoise itself? Don’t you presume to ask such a question, lest you might be fed to the tigers of Bengal, before they are extinguished.
Luckily, The Economist is a little bit more realistic in its assessment of the situation.
In the context of our painful subject, the now acknowledged worsening economic crisis, I am going to give you exact quotations, including some damning figures of no longer deniable capitalist failures, taken mainly from such well-established and unashamedly class-conscious bourgeois newspapers as The Economist and The Sunday Times. Quoting them meticulously word by word not only because they are prominent in their field but also in order to avoid that they should accuse us of “left-wing bias and distortion.”
Marx used to say that on the pages of The Economist the ruling class is “talking to itself.” Things have somewhat changed since those days. For now even in the specialized field of “economic expertise,” the ruling class needs a mass-circulation propaganda organ for the purpose of general mystification. In Marx’s lifetime the ruling class had plenty of “confidence,” and also a great deal of unchallenged “overconfidence,” not to need that. Thus, under the present less cocky circumstances, the London-based mass -distribution weekly paper, The Economist, — the self-righteous mouthpiece of the annual U.S.-dominated “Davos Jamboree” — is well advised to concede that the crisis we are facing today is concerned with the difficulties of “Saving the System,” according to the cover of its October 11, 2008 issue.
We can grant, of course, that nothing less than “saving the system” (or not) is what happens to be at stake in our time, even if The Economist‘s discussion of this problem is rather strange and contradictory. For in its usual way of trying to present its highly partisan position as an objectively “balanced view,” by using the formula of “on the one hand and on the other hand,” The Economist always succeeds in reaching its desired conclusion in favour of the established order. Thus, also on this occasion, The Economist asserts in its lead article of the 11th of October that “This week saw the first glimmer of a comprehensive global answer to the confidence gap.” Now, thankfully, the “confidence gap,” although reprehensible in itself, is expected to be remedied thanks to a somewhat mysterious “comprehensive global answer.”
At the same time, on the more realistic side, the London weekly also acknowledges in the same editorial article that
The damage to the real economy is becoming apparent. In America consumer credit is now shrinking, and around 150,000 Americans lost their jobs in September, the most since 2003. Some industries are hurting badly: car sales are at their lowest level for 16 years as would-be buyers are unable to get credit. General Motors has temporarily shut some of its factories in Europe. Across the globe forward-looking indicators, such as surveys of purchasing managers, are horribly gloomy.
They do not say, though, that “the confidence gap” may have something to do with such facts.
Of course, the apology for the system must prevail in every article, even if it must be presented as the unquestionable word of pragmatic wisdom. In this sense, “saving the system” for The Economist amounts to the journal’s totally uncritical identification with, and uncontestable advocacy of, unlimited economic rescue operations — by no means to be accomplished by the customarily most dogmatically glorified “market resources” — in favour of the troubled capitalist system. Thus, even the most cherished and well-tried propaganda tenets (of a not only non-existent but never-in-reality-existed free market) can be now thrown overboard for the noble cause of “Saving the System.” Accordingly, we are told by The Economist that
The world economy is plainly in a poor shape, but it could get a lot worse. This is the time to put dogma and politics to one side and concentrate on pragmatic answers. That means more government intervention and co-operation in the short term than taxpayers, politicians or indeed free-market newspapers would normally like.1
We have been treated to similar sermons by President George W. Bush before. He told his television audience two weeks ago that normally and instinctively he is the believer in, and passionate supporter of, the free market, but under the present exceptional circumstances he must think of other ways. He must begin to think under these difficult circumstances, full stop. You cannot say that you have not been warned.
The sums involved in the recommended “pragmatic” solution, sweeping aside the “normal likings” of the “taxpayers and free market newspapers” (that is, the solution advocated now means, in truth, the necessary submission of the great masses of people to increasing tax burdens sooner or later), are literally astronomical. To quote The Economist again: “in little more than three weeks America’s government, all told, expanded its gross liabilities by more than $1 trillion — almost twice as much as the cost so far of the Iraq war.”2 “American and European banks will shed some $10 trillions of dollars.”3 “But history teaches an important lesson: that big banking crises are ultimately solved by throwing in large dollops of public money.”4
Tens of trillions of dollars of public money “thrown in,” and justified in the name of the alleged “important lesson of history,” and of course in the service of the unchallengeable good cause of saving the system, that is certainly quite a dollop. No High Street ice cream vendor could ever even dream about such dollops. And if we add to that magnitude the fact quoted on the same page of the London paper, that in the course of last year alone “The Economist’s food price index jumped by nearly 55%,”5 and “The food-price spike in late 2007 and early 2008 caused riots in some 30 countries,”6 the dollop in question becomes even more revealing about the nature of the system which now finds itself in ever deepening crisis.
Can you think of a greater indictment of a purportedly unsurpassable system of economic production and societal reproduction than the fact that it — at the height of its productive power — is producing a global food crisis and the suffering of countless millions inseparable from it all over the world? That is the nature of the system which is expected to be saved now at all cost, including the currently “dished out” astronomical economic cost.
How can one make some tangible sense at all of the wasted trillions? Since we are talking about astronomical magnitudes, I addressed this question to a close friend who is Professor of Astrophysics at London University. His answer was that I should point out that one trillion alone is roughly one hundred times the age of our universe. Now, on the scale of the same magnitude, the regularly understated official figure of the American debt, on its own, amounts in our days to more than 10 trillion. That is, one thousand times the age of our universe.
But let me quote you a short passage from a Japanese publication. It reads like this:
How much speculative money is moving around the world? According to a Mitsubishi UFJ Securities analysis, the size of the global “real economy”, in which goods and services are produced and traded, is estimated at $48.1 trillion. . . . On the other hand, the size of the global “financial economy”, the total amount of stocks, securities and deposits, adds up to $151.8 trillion. The financial economy thus has swollen to more than three times the size of the real economy, growing especially rapidly during the past two decades. The gap is as large as $100 trillion. An analyst involved in this estimation said that about half the amount, $50 trillion is scarcely necessary for the real economy. Fifty trillion dollars are worth well over 5,000 trillion yen, too big a number for me to actually comprehend.7
It is indeed very difficult even to comprehend, not to mention to justify, as our capital-apologetic politicians and bankers do, the astronomical sums of parasitic speculation accumulated to the magnitude corresponding to 500,000 times the age of our universe. If you wish to have another measure about the magnitude involved, just imagine an unlucky accountant from Roman times, who is asked nothing more than simply to chalk up on his blackboard the figure of 5,000 trillion yen, in Roman numbers. He would be in total despair. He simply could not do it. And even if he had at his disposal Arab numbers, which he could not have had, even in that case he would need as many as 17 zeros after the number 5 in order to write down the figure in question.
The trouble is, though, that our well-heeled politicians and bankers seem to think only of the zeros, and not of their substantive linkages, when they present these problems for public consumption. And that approach cannot possibly work indefinitely. For one needs much more than zeros to get out of the bottomless hole of the global indebtedness to which we are condemned by the system which they now want to save at all cost.
As a matter of fact, Gordon Brown’s newfound popularity has a great deal to do with zeros in more ways than one. His astonishing new popularity — which, on second thought, might well turn out to be rather ephemeral — was illustrated last week by a front-page newspaper headline: “From Zero to Hero.” The article in question suggested that our Prime Minister actually succeeded in “saving the system.” That is how he earned the high acclaim.
The reason why he was hailed in that way, as a hero, was because he invented a new variety of nationalizing capitalist bankruptcy, to be adopted with untroubled “free market conscience” by other countries as well. That made even George W. Bush feel less guilty about acting against his own proclaimed “passionate instinct” when he nationalized a huge “dollop” of U.S. capitalist bankruptcy of which one single item — the liabilities of the giant mortgage companies of Fannie Mae and Freddie Mac — amounted to 5.4 trillion dollars (that is to say, the sum required for 54 years of running the Iraq war).
The “pragmatic novelty” — as opposed to “dogma and politics” in the words of The Economist — of the recent nationalization of capitalist bankruptcy by “New Labour” is that the taxpayers get absolutely nothing (in other words, zero-zero-zero as many times as you like to write it down, even seventeen times) for the immense sums of money invested in failed capitalist assets, including our two-thirds nationalized British banks. This kind of nationalization of capitalist bankruptcy is somewhat different from the earlier versions, instituted after the Second World War when the Labour Party’s “Clause 4” — advocating the public control of the means of production — was still part of its Constitution. For in 1945 the nationalized bankrupt sectors of the capitalist economy were transferred to state control (at least for the duration of being generously fattened up again from general taxation for the purpose of proper “privatization” in due course).
Even Conservative Prime Minister Edward Heath’s 1971 nationalization of the bankrupt Rolls Royce Company followed the same embarrassing pattern of state-controlled nationalization. In our own days, however, the beauty of Gordon Brown’s solution is that it removes the embarrassment while multiplying manifold the wasted billions invested in capitalist bankruptcy. Surely that fully deserves his promotion “From Zero to Hero” as well as the highest accolade of “Saviour of the World” conferred upon him by some other newspapers, on account of his great modesty of being satisfied with absolute zero in exchange for our — not his — generously dispensed billions. But can this kind of governmental remedy be considered a lasting solution to our problems even on a short-term basis, not to mention its required long-term sustainability? Only the fool could believe that.
In truth, the recent measures adopted by our political and financial authorities only attended to one single aspect of the current crisis: the liquidity of banks and mortgage and insurance companies. And even that only to a very limited extent. In reality the huge “dollops thrown in” represent no more than paying the deposit only, so to speak. Much more will be required in the future, as even the still unfolding disturbances on the world’s stock exchanges continue to underline it.
However. beyond the problem of liquidity, another dimension of the financial crisis concerns the near catastrophic insolvency of banks and insurance companies. This fact becomes clear once their speculatively and irresponsibly assumed, but nonetheless existing, liabilities are actually taken into account. To give you just one example: two of our big banks in Britain have liabilities amounting to $2.4 trillion each, acquired on the adventurist assumption that they will never have to be met. Can the capitalist state successfully bail them out of that size of liability? Where could the state possibly borrow the money of such magnitude for the rescue operation required for the purpose? And what would be the necessary inflationary consequences of simply printing the money called for such truly gigantic rescue operations in the absence of other solutions?
Moreover, the problems are by no means exhausted by the perilous state of the financial sector. Even more intractably, the productive sectors of capitalist industry are also in serious trouble, no matter how highly developed and favoured they might appear to be, enjoying their competitively advantageous position in the global pecking order of transnational capital. Due to our limited time, I must confine myself again to one, but one very significant, example. It concerns the United States’ motorcar industry, greatly humbled in the last few years, despite all the subsidies received from the most powerful capitalist state in the past, counted in many billions of U.S. dollars.
Let me quote from an article on Ford Corporation and its globalizing fantasies, published way back in 1994 in The Sunday Times. This is how our distinguished financial journalists painted their rosy picture in those days:
Full globalization is being attempted by multinationals. . . . “This is definitely Trotman’s baby”, said one American source. “He has a vision of the future which says that, to be a global winner, Ford must be a truly global corporation.” According to Trotman, who told The Sunday Times in October 1993, “As automotive competition becomes more global as we get into the next century, the pressure to find scale economies will become greater and greater. If, instead of making two engines of 500,000 units each, you can make 1 million units, then the costs are much lower. Ultimately there will be a handful of global players and the rest will either not be there or they will be struggling along.” Trotman and his colleagues concluded that full globalization is the way to beat competitors such as the Japanese and, in Europe, Ford’s arch-rival General Motors, which retains a cost-advantage over Ford. Ford also believes it needs globalization to capitalise on fast-emerging markets in the Far East and in Latin America.8
Thus, the “only” thing Alex Trotman — the British-born Chairman of Ford Corporation at the time — forgot to consider, despite his impeccable arithmetical skills of knowing the difference between 500,000 and 1 million, was this: what happens when they cannot sell the 1 million (and many times more) motorcars, despite the company’s strategically envisaged and enjoyed cost advantage? In the case of Ford Corporation, even the massive differential rate of exploitation which the company could impose worldwide as a huge transnational company — that is: paying, for exactly the same work, the workers of, say, “Ford Philippines Corporation” 25 times less than they pay their workforce in the United States of America — even this unquestionable advantage could not be considered sufficient for securing a way out of this fundamental contradiction.
This is where we stand today, not only in the case of the badly humbled Ford Corporation but also in that of General Motors, irrespective of its cost advantage once deeply envied even by the former.
Note how the unhappy current situation of the U.S. automotive industry — even after a recent deal which had the American state provide major subsidies to the country’s giant motorcar companies — is described in one of the last issues of The Economist: “the deal [in question] means that car companies — blessed with the government guarantee — should get loans with an interest rate of around 5% rather than 15% they would face on the open market in today’s conditions.”9
However, no amount of subsidy of any kind can be considered satisfactory enough, because the “Big Three” companies — General Motors, Ford, and Chrysler — are on the brink of bankruptcy, despite the fact that Trotsman’s dream baby is now a fully grown teenager. Thus The Economist must admit that
Once industrial subsidies like this begin to flow, it is difficult to stop them. A recent study by the Cato Institute, a rightwing think-tank, found that the federal government spent some $92 billion subsidising business in 2006 alone. Only $21 billion of that went to farmers: much of the rest went to firms such as Boeing, IBM and General Electric in the form of export-credit support and various research subsidies.
The Big Three are already complaining that it will take too long to dish out the [state] money, and they want the process speeded up. They also want a further 25 billion, possibly attached to the second version of the Wall Street rescue bill. The logic of bailing out Wall Street is that finance underpins everything. Detroit cannot begin to make that claim. But, given its successful lobbying, can it be long before ailing airlines and failing retailers join the queue?10
The immense speculative expansion of financial adventurism, especially in the last three or four decades, is of course inseparable from the deepening crisis of the productive branches of industry and the ensuing troubles arising from the utterly sluggish capital accumulation (and indeed failed accumulation) in that productive field of economic activity. Now, inevitably, in the domain of industrial production, the crisis is also getting much worse.
Naturally, the necessary consequence of the ever deepening crisis in the productive branches of the “real economy” (as they are now beginning to call it in contrast to speculative financial adventurism) is the growth of unemployment everywhere on a frightening scale and the human misery associated with it. To expect a happy solution to these problems from the capitalist state’s rescue operations would be a great illusion.
This is the context where our politicians should really begin to pay attention to the “important lesson of history,” instead of “dishing out large dollops of public money” under the pretence of “the lesson of history.” For as a result of historical development under the rule of capital in its structural crisis, in our own time we have reached the point where we must be subjected to the destructive impact of an ever worsening symbiosis between the state legislative framework of our society and the material productive as well as financial dimension of the established societal reproductive order.
Understandably, that symbiotic relationship can be, and frequently it also happens to be, managed with utterly corrupt practices by the privileged personifications of capital, in business as much as in politics. For, no matter how corrupt such practices might be, they are fully in tune with the institutionalized counter-values of the established order. And — within the framework of the symbiosis prevailing between the economic field and the dominant political practices — they are legally quite permissible, thanks to the most dubious and often even clearly anti-democratic facilitating role of the impenetrable legislative jungle provided by the state.
Fraudulence, in a great variety of its practicable forms, is the normality of capital. Its extremely destructive manifestations are by no means confined to the operation of the military-industrial complex. By now, the direct role of the capitalist state in the parasitic world of finance is not only fundamentally important, in view of its all-pervasive magnitude, as we had to find out with shocking clarity during the last few weeks, but also potentially catastrophic.
The embarrassing fact of the matter is that the giant U.S. mortgage companies, Fannie Mae and Freddie Mac, were corruptly supported and generously supplied with highly profitable but totally undeserved guarantees by the American state’s legislative jungle in the first place, as well as through the personal services of unpunished political corruption. Indeed, the capitalist state’s ever more dense legislative jungle happens to be the “democratic” legitimator of institutionalized fraudulence in our societies. The editors and journalists of The Economist are in fact perfectly well acquainted with the corrupt practices whereby, in the case of the giant American mortgage companies, receiving outrageously preferential treatment from their state (here I quote The Economist)
allowed Fannie and Freddie to operate with tiny amounts of capital. The two groups had core capital (as defined by their regulator) of $83.2 billion at the end of 2007; this supported $5.2 trillion of debt and guarantees, a gearing ratio of 65 to one. [!!!] According to CreditSights, a research group, Fannie and Freddie were counterparties in $2.3 trillion-worth of derivative transactions, related to their hedging activities. There is no way a private bank would be allowed to have such a highly geared balance sheet,11 nor would it qualify for the highest AAA credit rating. . . . They used their cheap financing to buy higher-yielding assets.12[Moreover,] With so much at stake, no wonder the companies built a formidable lobbying machine. Ex-politicians were given jobs. Critics could expect a rough ride. The companies were not afraid to bite the hands that fed them.13
The “hands that fed them” refer, of course, to the American state legislative body. But why should the companies be afraid? For such giant companies constitute a total symbiosis with the capitalist state. This is a relationship corruptly asserting itself also in terms of the personnel involved, through the act of hiring politicians who could serve them preferentially, with a mind-boggling “gearing ratio of 65 to one” and yet the AAA credit rating, according to the reluctant confession of The Economist.
The gravity of the present situation is underlined in a characteristic way by the circumstance, reported in these words by The Economist: “traders in the credit-default swaps market have recently made bets on the unthinkable: that America may default on its debt.”14 Naturally, traders react even to events of such character and gravity as we are experiencing today in the only possible way they can: by squeezing profit out of it.
The big trouble for the global capital system is, though, that the default of America is not unthinkable at all. On the contrary, it is — and it has been for a very long time — a coming certainty. This is why I wrote many years ago (in 1995, to be precise) that:
In a world of financial insecurity nothing suits better the practice of gambling with astronomical and criminally unsecured sums on the world’s stock exchanges — foreshadowing an earthquake of magnitude 9 or 10 on the Financial “Richter Scale” — than to call the enterprises which engage in such gambling “Securities Management”; . . . When exactly and in what form — of which there can be several, more or less brutal, varieties — the U.S. will default on its astronomical debt, cannot be seen at this point in time. There can be only two certainties in this regard. The first is that the inevitability of the American default will deeply affect everyone on this planet. And the second, that the preponderant hegemonic power position of the U.S. will continue to be asserted in every way, so as to make the rest of the world pay for the American debt for as long as it is capable of doing.15
Of course, the aggravating condition today is that the rest of the world — even with the historically most ironical massive Chinese contribution to the balance sheet of the American Treasury — is less and less capable of filling the “black hole” produced on an ever growing scale by America’s insatiable appetite for debt financing, as demonstrated by the global reverberations of the recent U.S. mortgage and bank crisis. This circumstance brings the necessary default of America, in one of its “more or less brutal varieties,” that much nearer.
The truth of this disturbing matter is that there can be no way out of these ultimately suicidal contradictions, which are inseparable from the imperative of endless capital-expansion — arbitrarily and mystifyingly confounded with growth as such — irrespective of the consequences, without radically changing our mode of social metabolic reproduction by adopting the much needed responsible and rational practices of the only viable economy,16 oriented by human needs instead of alienating, dehumanizing, and degrading profits.
This is where the overwhelming impediment of capital’s self-serving interdeterminations must be confronted, no matter how difficult it must be under the prevailing conditions. For the absolutely necessary adoption and appropriate future development of the only viable economy is inconceivable without the radical transformation of the established socioeconomic and political order itself.
Gordon Brown recently voiced his displeasure with “unfettered capitalism,” in the name of totally unspecified “regulation.” You may remember that Gorbachev, too, wanted a kind of regulated capitalism, under the name of “market socialism,” and you must also know what happened to him and to his grotesque daydream. British Conservative Prime Minister Edward Heath’s expression, a very long time ago, for the same sin of “unfettered capitalism” was “the unacceptable face of capitalism.” And yet, “unfettered capitalism,” despite its “unacceptable face,” not only remained “acceptable” all these decades but — in the course of its further development — has become much worse. The causal foundation of our ever more serious problems is not the “unacceptable face of unregulated capitalism” but its destructive substance. It is that overpowering substance that must resist and nullify all efforts aimed at restraining the capital system even minimally — as, indeed, it actually succeeded in doing so in the form of metamorphosing social-democratic “Old Labour” in Britain into neoliberal “New Labour.” Accordingly, the periodically renewed fantasy of regulating capitalism in a structurally significant way can only amount to trying to tie knots on winds.
But the last thing we need today is to continue to tie knots on winds, when we have to face the gravity of capital’s structural crisis, which calls for the institution of radical systemic change. It is most revealing about the incorrigible character of the capital system that even at a time like this — when the immense magnitude of the unfolding crisis cannot be denied any longer even by the system’s most devoted ex-officio apologists, a crisis described a few days ago by no less a figure than the Deputy Governor of the Bank of England as the greatest economic crisis in all human history — nothing can be contemplated, not to mention actually done, to change the fundamental defects of an ever more destructive societal reproductive order by those who control the economic and political levers of our society.
In contrast to the recent illumination by his own Deputy, the Governor of the Bank of England, Mervyn King, had no reservations at all about the soundness of the cherished capital system, nor did he have the faintest anticipation of a coming crisis when he praised to the sky Martin Wolf’s capital-apologetic book with its complacent, peremptorily assertive title: Why Globalization Works. He called that book “a devastating intellectual critique of the opponents of globalization” and a “civilized, wise and optimistic view of our economic and political future.”17 Now, however, everybody is forced to have at least some concern about the real nature and necessarily destructive consequences of dogmatically hailed capitalist globalization.
Naturally, my own attitude to Wolf’s book was very different from that of Mervyn King and others who share the same vested interests. I commented at the time of its publication that
the author, who is the Chief Economics Commentator of the London Financial Times, forgets to ask the really important question: For whom does it work?, if it does. It certainly works, for the time being, and by no means that well, for the decision makers of transnational capital, but not for the overwhelming majority of humankind who must suffer the consequences. And no amount of “jurisdictional integration” advocated by the author — that is, in plain English, the tighter direct control of the deplored “too many states” by a handful of imperialist powers, especially the biggest one of them — is going to remedy the situation. Capitalist globalization in reality does not work and cannot work. For it cannot overcome the irreconcilable contradictions and antagonisms manifest through the global structural crisis of the system. Capitalist globalization itself is the contradictory manifestation of that crisis, trying to overturn the cause/effect relationship in a vain attempt to cure some negative effects by other wishfully projected effects, because it is structurally incapable of addressing their causes.18
In this sense, the recent attempts to counter the intensifying crisis symptoms, by the cynically camouflaged nationalization of astronomic magnitudes of capitalist bankruptcy, out of the yet-to-be-invented state resources, could only highlight the deep-seated antagonistic causal determinations of the capital system’s destructiveness. For what is fundamentally at stake today is not simply a massive financial crisis but humanity’s potential self-destruction at this juncture of historical development, both militarily and through the ongoing destruction of nature.
Despite the concerted manipulation of interest rates and the recent vacuous Summits of the dominant capitalist countries, nothing has been lastingly achieved by “throwing gigantic dollops of money” into the bottomless hole of the “crunched” global financial market. The “comprehensive global answer to the confidence gap,” as wishfully projected by The Economist and its masters, belongs to the world of (not so pure) fantasy. For one of the greatest historic failures of capital, as the long established mode of social metabolic control, is the continued dominance of potentially most aggressive nation states and the impossibility of instituting the state of the capital system as such on the basis of the structurally entrenched antagonisms of the capital system.
To imagine that within the framework of such antagonistic causal determinations a harmonious permanent solution could be found to the deepening structural crisis of a most iniquitous production and exchange system — which is now actively engaged in producing even a global food crisis, on top of all of its other crying contradictions, including the ever more pervasive destruction of nature — without even attempting to remedy its grievous iniquities is the worst kind of wishful thinking, bordering on total irrationality. For, self-contradictorily, it wants to retain the existing order despite its necessarily explosive iniquities and antagonisms. And the so-called “jurisdictional integration of the too many states” under a self-appointed few, or one, as advocated by some capital-apologists can only suggest the — equally self-contradictory — permanence of potentially suicidal global imperialist domination.
This is why Marx is more relevant today than ever before. For only a radical systemic change can offer the historically sustainable hope and solution for the future.
1 All these quotations are taken from the same editorial of The Economist, 11 October 2008, p. 13.
2 The Economist, 11 October 2008, special section, p. 3.
4 Ibid., p. 4.
6 Ibid., p. 6.
7 Shii Kazuo in Japan Press Weekly, Special Issue, October 2008, p. 20.
8 Andrew Lorenz and Jeff Randall, “Ford Prepares for Global Revolution,” The Sunday Times, 27 March 1994, Section 3, p. 1.
9 “A Bail-out That Passed: In the Slipstream of Wall Street’s Woes, the Big Three Land a Huge Subsidy,” The Economist, 4 October 2008, p. 82.
10 Ibid., p. 83.
11 Lehman Brothers, one of the principal private merchant banks, had a gearing ratio of 30 to 1. That is bad enough!
12 “Fannie Mae and Freddie Mac: End of Illusions,” The Economist, 19-25 July 2008, p. 84.
13 “A Brief Family History: Toxic Fudge,” The Economist, 19-25 July 2008, p. 84.
14 “Fannie Mae and Freddie Mac: End of Illusions,” The Economist, 19-25 July 2008, p. 85.
15 “The Present Crisis,” quoted from Part IV of Beyond Capital (published in London in 1995), pp.962-3. (In Spanish in Más allá del capital, Caracas: Vadell Hermanos Editores, 2001, pp. 1111-12.)
16 See “Qualitative Growth in Utilization: The Only Viable Economy,” Section 9.5 of my book The Challenge and Burden of Historical Time, New York: Monthly Review Press, 2008, pp. 272-93 (published in Herramienta, Numbers 36 and 37).
17 Mervyn King’s endorsement, on the back cover of Martin Wolf’s book Why Globalization Works, Yale University Press, 2004.
18 In “Education — Beyond Capital,” Opening Lecture delivered at the Fórum Mundial de Educação, Porto Allegre, July 28, 2004. In Spanish reprinted in La educación más allá del capital, Rio de Janeiro: Siglo Veintiuno Editores / Clacso Coediciones, 2008. See also the chapter “Why Capitalist Globalization Cannot Work?” in my book The Challenge and Burden of Historical Time, New York: Monthly Review Press, 2008, pp. 380-398; Spanish edition: El desafío y la carga del tiempo histórico, Caracas: Vadell Hermanos Editores / Clacso Coediciónes, 2008, pp. 371-389.
István Mészáros left his native Hungary after the Soviet invasion of 1956. He is professor emeritus at the University of Sussex, where he held the Chair of Philosophy for fifteen years. Mészáros is author of Beyond Capital, Power of Ideology, The Work of Sartre, Marx’s Theory of Alienation, and The Challenge and Burden of Historical Time. This article is based on the text written for the lecture delivered at a meeting held in Conway Hall, London, on 21st October 2008 and first published in Herramienta on 3 November 2008, edited for republication here. A Spanish translation will soon appear in Herramienta. Click here for a Portuguese translation: “A crise em desdobramento e a relevância de Marx.”