In and Out of Crisis (2010)
It is impossible not to look sceptically at neoliberal claims that liberalising markets will lead to prosperity for all, or that the “third way” variant of this, that the introduction of markets to public services will make them more efficient and thus protect them. It is equally unconvincing now to argue that financial self-regulation and innovation will increase economic stability by spreading risk, or that flexible labour markets and de-unionised workplaces will improve job security. And even the belief that increasing dependence on capital markets means a parallel increase in democracy, freedom, and equality is no longer credible. The crisis has shown these neoliberal claims to be ideological rubbish.
The importance of the U.S. state to the marketing of neoliberalsim and the world market as it exists today should already have once and for all dispelled the illusion that capitalist markets can thrive without state intervention. It was through the type of policies the U.S. advanced to promote free capital movements, international property rights, and labour-market flexibility that the era of free trade and globalisation was unleashed. And this era has been kept going as long as it has by the repeated coordinated interventions undertaken by central banks and financial ministries, under the leadership of the Federal Reserve and the American Treasury, to contain the periodic crises to which such a volatile system of global finance gives rise.
Since at least the election of Ronald Regan in 1980 [Margaret Thatcher 1979), the US and other states [countries] have embraced an ideology of scaling back the role of government in economic life and letting the invisible hand of the unfettered market work its magic. Rhetoric notwithstanding, this has not meant a withdrawal of the state from regulating economic activities nor from an active role in managing class relations. Instead, it has signalled the institutionalisation of public policies and state regulations directed at increasing the power of the dominant capitalist firms in industry as well as financial markets and an enhanced role for markets in determining income distribution and public priorities. This political project has become associated in all parts of the world with the term neoliberalsim – a term now of general derision amongst vast swaths of the world’s population.
Neoliberalsim should be understood as a particular form of class rule and state power that intensifies competitive imperatives for both firms and workers, increases dependence on the market in daily life and reinforces the dominant hierarchy of the world market, with the U.S. at its apex.
The financial crisis of the first decade of the 21st century afforded an opportunity for a genuinely radical government to nationalise the banks and turn them into a democratic public utility. This opportunity was wasted.
Of all 20th century industries, the auto sector had best captured the sway of capitalism and the rise of American dominance over the world market.
At mid-century, with Europe and Japan emerging from the devastation of the war, 80 percent of the world’s cars travelled on North American roads. In this context, catching up with the U.S. example became a common aspiration across the developed capitalist countries.
In the seventy-seven years before the fateful events of 2008, General Motors was the largest of the large in the auto industry.
The humbling of General Motors as an icon of American culture and power raises various questions and an especially common one has been whether this represents a failure specific to GM and the U.S. auto industry, or speaks to the decline of U.S. manufacturing more generally and with it, American economic power. But, as we’ll argue, a more important issue – because it is so central to the challenging of U.S. power both at home and abroad – is the extent to which the losses imposed on the auto unions reflected a momentous defeat of the broader working class…
Capitalist competition implies winners and losers and a constant restructuring of not just work, jobs and communities, but of class relationships. While competition destroys individual businesses, and may include a period of crisis in particular sectors, and the end of the day capitalists as a class have emerged more powerful out of this process.
For the working classes, however, greater competition meant something quite different. Global ‘competitiveness’ has been the greatest disciplinary force confronting workers (directly in the private sector, indirectly in the public sector): ‘compete or lose your job and livelihood: compete or our country won't be able to afford social programs.’ As the competition between companies was translated into competition between workers, workers were pushed to identify with their own employer, whilst undermining each other in the desperation to hang on to their jobs. Competition consequently fragmented the working classes. It eroded their one ultimate strength – solidarity.
A crucial part of the strength of U.S. capital and the U.S. state lie in the weakness of its labour movement, which provides, as this crisis has sadly shown, the U.S. elite with the flexibility it needs to solve its problems on terms favourable to it. Had the U.S. workers demonstrated a capacity to limit concessions or foreclosures, to demand a democratisation of the banks rather than simply ‘fixing’ them, to insist on a radical correction in the gross inequalities that emerged on the way to this crisis, to focus on rebuilding social infrastructures and cities rather than simply ‘stimulus,’ the crisis would have had confronted much deeper uncertainties – and a more ambitious and far-reaching set of alternatives might have reached the public agenda.
If we are to more than hope for the crisis to be over so we can return to a capitalism that didn't address our needs earlier, and more than passively watch as capitalism narrows our lives even further, then a new historic project must be placed on the agenda. And if this is to happen, organised labour will have to be one of the central agents in advancing it.
It is only through a great deal of ideological obfuscation and re-writing of history that market freedoms can be equated with the development of political freedoms.
But militancy by itself won't be enough. Public sector unions and services have been under attack for thirty years now and no effective response has developed during that time. That failure is most evident at this moment: given the financial crisis has exposed the spectacular failure of the market and neoliberal governance, it is not the public sector workers who should be on the defensive. It is absolutely necessary to avoid the notion that the ‘new reality’ means that public sector workers must now accommodate and work more closely with the employer to solve the budgetary problems. This is a dead end: it essentially means the unions giving up. The relationships public sector unions need to deepen are not with governments as employers, as that will only further divide working people. New relationships need to be built with other workers and social movements.
What unions face today is rooted in the way North American unions failed to organise themselves in much better economic times to prepare themselves for times like the present. Workers are now suffering from this lack of preparation. While corporations have become more radical an aggressive, the labour movement has become more cautious and defensive. The most important question for the labour movement is to come to grips with those past failures and the need to become as radical as the other side. If we don't develop a vision that fundamentally questions the anti-social logic of capitalism, and build collective capacities that can challenge corporate power, things won't just stay the same. They are likely to get worse.
This is why it is so important to raise not merely the regulation of finance but the transformation and democratisation of the whole financial system. What is in fact needed is to turn the whole banking system into a public utility so that the distribution of credit and capital would be undertaken in conformity with democratically established priorities, rather than short-term profit.
If democracy is a kind of society and not just a form of government, the economy – which is so fundamental to shaping our lives – will eventually have to be democratised.
Reducing the number of hours people work every day, week, and year, as a way of avoiding layoffs and opening up new jobs can be very important in certain sectors and is also a valuable solidaristic principal. But the greatest significance lies in the recognition that effective political participation demands the time to do it – the time to read, think, learn, attend meetings and events, debate, take part in strategising, and engage in organising others.
However deep the crisis, however confused and demoralised the financial elite inside and outside the state, and however widespread the popular outrage against them, this will require hard and committed work by a great many activists.
- The financial meltdown of 2007-2008 has to be understood in the terms of the historical dynamics and contradictions of capitalist finance in the second half of the 20th century.
- The spatial expansion and social deepening of capitalism in the last quarter century could not have occurred without innovations in finance.
- The competitive volatility of global finance produced a series of financial crises whose containment required repeated state intervention.
- The close linkages between finance and the state was central to both the making of the U.S. housing bubble and its profound global impact when it burst.
- The crisis revealed the centrality of the American state in the global capitalist economy while multiplying the difficulties entailed in managing it.
- The crisis vividly demonstrates one of Marx’s great insights in The Communist Manifesto: while capitalism is international in substance, its reproduction remains national in form.
- Looking for alternatives in a return to the good-old pre-neoliberal days misunderstands the connection between then and now, and ignores the extent to which the working classes have been integrated into financial markets.
- Alternatives must begin with people’s immediate material needs, but must at the same time be oriented to strengthening poplar capacities to act independently of the logic of capitalism.
- Since democracy is not just a form of government but also a kind of society, then the economy – so fundamental to the shaping of our lives – will eventually have to be democratised.
- The severity of the global economic crisis once again exposes how states are enveloped in capital’s irrationalities and the need for building new movements and parties to transcend capitalist markets and states.