The reaction to John McDonnell’s announcement that he would aim for a balanced current account, whilst maintaining borrowing for capital investment, revealed a recurrent fault line within left-wing economic thought. At its most banal McDonnell was accused of signing up to George Osborne’s ‘austerity charter’, whilst more sophisticated critics argued such policies would weaken demand and harm economic growth. This article will not address the technicalities of figures and whether Labour should borrow limited amounts rather than aim for a balance (see a critical account here). Instead we will focus on the key political division the fallout from this announcement has revealed, and what it says about the character of ‘Corbynomics’, and the barriers it faces.
During the last thirty years of political setbacks, socialist economic policies have taken a particular battering. This has been very apparent in the predominant responses to the onset of austerity since 2008. Rather than proposals for a fundamental restructuring of the economy, the main left response has been both defensive, and grounded in an argument for why “ideological” cuts are unnecessary and harmful. Invoking mainstream Keyensian economists such as Joseph Stiglitz and Paul Krugman, the argument has gone that government could stimulate an economic recovery through borrowing at cheap rates. Insofar as it went this was welcome, but it was a more or less passive argument that could unite trade unionists, and political forces of the ‘centre-left’ from Labour, to the SNP and Plaid Cymru. At best, the Keynesian approach amounts to a tepid intervention and stimulation of demand. Read the rest of this entry »
From The World Socialist website:
The scandal at Volkswagen (VW) over the manipulation of emissions readings from its autos in the US has plunged the firm into a major crisis. The company, which along with Toyota is the world’s largest auto producer, faces the threat of up to $18 billion in fines, along with massive costs related to the recall of almost half a million vehicles and huge compensation claims. The US Justice Department has launched a criminal investigation and a congressional committee has announced plans for a hearing on the scandal.
VW has already acknowledged that accusations by the US Environmental Protection Agency (EPA) are valid. It has admitted that it deliberately deceived American customers and government authorities.
“Let’s be clear: our company was dishonest,” said VW’s American head Michael Horn at the unveiling of the new Passat model in New York. “We totally screwed up.”
In a calculated manner, VW broke the law in order to manipulate emissions readings. In diesel models sold in the US, the company installed specially developed software to enable the vehicles to determine when they were being tested and automatically switch to a mode that reduced the emission of pollutants. After the test, the cars automatically switched back to the normal mode, increasing their release of poisonous oxides between 10- and 40-fold.
VW used the low emissions test rates as a selling point for the US market, where diesel cars comprise just one percent of total sales, a far lower percentage than in Europe. Many US buyers decided to purchase a diesel car from VW or Audi because, in contrast to hybrid vehicles from Asian producers, which have low emission rates but are cumbersome, the German models were considered both environmentally friendly and sporty.
The ultimate scale of the scandal is not yet known. The suspicion is that VW manipulated emissions figures not only in the US, but also in other markets. Germany, Switzerland, France and South Korea have all announced investigations into diesel vehicle manipulation. Read the rest of this entry »
The leading American Trotskyist, James P Cannon spoke at a memorial meeting in New York for Leon Trotsky on 22 August 1945. The atomic bombing of Hiroshima and Nagasaki had just taken place (August 6 and 9), and Cannon used the occasion to express his outrage at the atrocity:
What a commentary on the real nature of capitalism in its decadent phase is this, that the scientific conquest of the marvellous secret of atomic energy, which might rationally be used to lighten the burdens of all mankind, is employed first for the wholesale destruction of half a million people.
Hiroshima, the first target, had a population of 340,000 people. Nagasaki, the second target, had a population of 253,000 people. A total in the two cities of approximately 600,000 people, in cities of flimsy construction where, as reporters explain, the houses were built roof against roof. How many were killed? How many Japanese people were destroyed to celebrate the discovery of the secret of atomic energy? From all the reports we have received so far, they were nearly all killed or injured. Nearly all.
In the [New York] Times today there is a report from the Tokyo radio about Nagasaki which states that “the centre of the once thriving city has been turned into a vast devastation, with nothing left except rubble as far as the eye could see”. Photographs showing the bomb damage appeared on the front page of the Japanese newspaper Mainichi. The report says: “One of these pictures revealed a tragic scene 10 miles away from the centre of the atomic air attack”, where farm houses were either crushed down or the roofs torn asunder.
The broadcast quoted a photographer of the Yamaha Photographic Institute, who had rushed to the city immediately after the bomb hit, as having said: “Nagasaki is now a dead city, all the areas being literally razed to the ground. Only a few buildings are left, standing conspicuously from the ashes.” The photographer said that “the toll of the population was great and even the few survivors have not escaped some kind of injury.”
In two calculated blows, with two atomic bombs, American imperialism killed or injured half a million human beings. The young and the old, the child in the cradle and the aged and infirm, the newly married, the well and the sick, men, women, and children — they all had to die in two blows because of a quarrel between the imperialists of Wall Street and a similar gang in Japan.
This is how American imperialism is bringing civilisation to the Orient. What an unspeakable atrocity! What a shame has come to America, the America that once placed in New York harbour a Statue of Liberty enlightening the world. Now the world recoils in horror from her name.
One preacher quoted in the press, reminding himself of something he had once read in the Bible about the meek and gentle Jesus, said it would be useless to send missionaries to the Far East anymore. That raises a very interesting question which I am sure they will discuss among themselves. One can imagine an interesting discussion taking place in the inner circles of the House of Rockefeller and the House of Morgan, who are at one and the same time-quite by accident of course-pillars of finance and pillars of the church and supporters of missionary enterprises of various kinds.
“What shall we do with the heathens in the Orient? Shall we send missionaries to lead them to the Christian heaven or shall we send atomic bombs to blow them to hell?” There is a subject for debate, a debate on a macabre theme. But in any case, you can be sure that where American imperialism is involved, hell will get by far the greater number of the customers.
What a harvest of death capitalism has brought to the world! If the skulls of all of the victims could be brought together and piled into one pyramid, what a high mountain that would make. What a monument to the achievements of capitalism that would be, and how fitting a symbol of what capitalist imperialism really is. I believe it would lack only one thing to make it perfect. That would be a big electric sign on the pyramid of skulls, proclaiming the ironical promise of the Four Freedoms. The dead at least are free from want and free from fear…
Long ago the revolutionary Marxists said that the alternative facing humanity was either socialism or a new barbarism, that capitalism threatens to go down in ruins and drag civilisation with it. But in the light of what has been developed in this war and is projected for the future, I think we can say now that the alternative can be made even more precise: the alternative facing mankind is socialism or annihilation! It is a problem of whether capitalism is allowed to remain or whether the human race is to continue to survive on this planet.
We believe that the people of the world will waken to this frightful alternative and act in time to save themselves…
This has been causing some excitement in liberal-left circles, as it apparently means would-be lefties can just wait for “post-capitalism” to happen, while working in retail management or small business:
The red flags and marching songs of Syriza during the Greek crisis, plus the expectation that the banks would be nationalised, revived briefly a 20th-century dream: the forced destruction of the market from above. For much of the 20th century this was how the left conceived the first stage of an economy beyond capitalism. The force would be applied by the working class, either at the ballot box or on the barricades. The lever would be the state. The opportunity would come through frequent episodes of economic collapse.
Instead over the past 25 years it has been the left’s project that has collapsed. The market destroyed the plan; individualism replaced collectivism and solidarity; the hugely expanded workforce of the world looks like a “proletariat”, but no longer thinks or behaves as it once did.
If you lived through all this, and disliked capitalism, it was traumatic. But in the process technology has created a new route out, which the remnants of the old left – and all other forces influenced by it – have either to embrace or die. Capitalism, it turns out, will not be abolished by forced-march techniques. It will be abolished by creating something more dynamic that exists, at first, almost unseen within the old system, but which will break through, reshaping the economy around new values and behaviours. I call this postcapitalism.
As with the end of feudalism 500 years ago, capitalism’s replacement by postcapitalism will be accelerated by external shocks and shaped by the emergence of a new kind of human being. And it has started.
Postcapitalism is possible because of three major changes information technology has brought about in the past 25 years. First, it has reduced the need for work, blurred the edges between work and free time and loosened the relationship between work and wages. The coming wave of automation, currently stalled because our social infrastructure cannot bear the consequences, will hugely diminish the amount of work needed – not just to subsist but to provide a decent life for all.
Second, information is corroding the market’s ability to form prices correctly. That is because markets are based on scarcity while information is abundant. The system’s defence mechanism is to form monopolies – the giant tech companies – on a scale not seen in the past 200 years, yet they cannot last. By building business models and share valuations based on the capture and privatisation of all socially produced information, such firms are constructing a fragile corporate edifice at odds with the most basic need of humanity, which is to use ideas freely.
Third, we’re seeing the spontaneous rise of collaborative production: goods, services and organisations are appearing that no longer respond to the dictates of the market and the managerial hierarchy. The biggest information product in the world – Wikipedia – is made by volunteers for free, abolishing the encyclopedia business and depriving the advertising industry of an estimated $3bn a year in revenue.
Almost unnoticed, in the niches and hollows of the market system, whole swaths of economic life are beginning to move to a different rhythm. Parallel currencies, time banks, cooperatives and self-managed spaces have proliferated, barely noticed by the economics profession, and often as a direct result of the shattering of the old structures in the post-2008 crisis.
…read the whole article here
A comrade comments:
“It’s complete nonsense; not only utopian in the worst sense of the word but also depressingly gradualist and reformist (its central claim is that ‘post-capitalism’ will just sort of emerge as the result of a proliferation of… well, I don’t know what exactly: file sharing?).
“The ‘would-be lefties’ drawing the conclusion that they can ‘wait for post-capitalism to happen’ – i.e., without having to think, or organise, or act, or struggle in any meaningful way at all – seems to me an entirely faithful reading of the article.
“It’s like the worst bits of Owen and Proudhon repackaged for the digital age and dressed up as some amazingly innovative, novel theory. But at least those people (even Proudhon, who was basically a reactionary) had a bit of fighting spirit about them, wanted to build a movement (of sorts), and wanted people to fight the system (in however distorted or misguided a way). What does Mason want us to do? Surf the web?
“It’s actually quite sad from a guy who probably ought to know better, and who only a few years ago was writing books about how the key aspect of contemporary capitalism was the globalisation of the working class. He seems now to have decided that this isn’t really that important after all.”
By Camila Bassi (reblogged from Anaemic On A Bike):
“The Yankees have invented a stone-breaking machine. The English do not make use of it, because the ‘wretch’ who does this work gets paid for such a small portion of his labour, that machinery would increase the cost of production to the capitalist.” (Marx, Capital: Volume One)
My recent visit to Shanghai was the last of nine in which I have glimpsed urban development ‘the China way’. My photo story captures themes present in each of my visits that have haunted me. The former Chinese Communist Party leader, Deng Xiaoping, who hailed in the era of ‘opening and reform’, famously said: “Development is the only hard truth.” If capital is akin to a monster, then a gigantic monster was set loose in Shanghai from 1990, and has gluttonously and mindlessly trampled over people and eaten up land ever since – commodifying and extracting surplus-value at a reckless speed. Over the years, the sight of low-rise alleyway, working class living that is half demolished, with people still residing within it, has been less and less prominent in downtown Shanghai, simply because more and more of the demolition has been completed. The working class have been largely moved out of the centre to the isolating high-rise apartments of the suburbs – placed within new tower blocks that have been as quickly put up as old homes have been destroyed, and which signify urban regeneration that will fast degenerate. Shanghai is urban dystopia. It is a city of hardware, with no regard for software: culture, civil society, freedom to pause, and to think, and to question. If one sits in a taxi at night driving through the dazzling skyscrapers of Pudong, the Special Economic Zone just over the river from downtown Shanghai, one feels like one has entered Ridley Scott’s Blade Runner. It’s an uncomfortable feeling.
The scale of Pudong is a frightening mash-up of the might of global capital and the muscle of Chinese totalitarianism – this is urban development, the China way. It is the subtle sights of Shanghai that have always struck me the most, and the absences too: where are the poor? Space and place is so controlled in Shanghai’s centre that one can stroll from Starbucks to Starbucks, visiting global retail chains in between, and simply miss the missing population. What we call gentrification in the West appears on such a vast scale in Shanghai that what one can actually see – if awake enough – is capitalism at its most naked. There’s the next, near-erected skyscraper, such as the one I walked passed once by the Bund at midnight, with orange sparks against a black sky right at the top, generated by welding, as rural migrant workers toil for little pay and no health and safety protection. And there’s the rural migrant workers digging holes in roads and pavements with pick axes and shovels, such rudimentary equipment which once puzzled me. Yes, labour in China is that exploited, it is cheaper to employ workers to dig into concrete with pick axes and shovels than it is to employ a worker and a digger.
This is where you will get the best information and analysis (from a social democratic angle):
Labour is lucky this global story blew up in a week already dominated by a tax avoidance row: it was a Tory blunder to put up the Monaco-dwelling head of Boots to call Labour a “catastrophe”, when his company pays a fraction of the UK tax it did before switching its base to Switzerland. Timing is important here: the HSBC revelations haven’t emerged on Labour’s watch. Both Eds have frequently – and rightly – apologised for Labour’s feeble regulation of banks pre-crash, while always reminding Cameron and Osborne that they called loudly for less banking “red tape” in those days.
Ms Toynbee isn’t always a favourite with us here at Shiraz, but the piece quoted from above is a hum-dinger, and well worth reading in full.
Left Foot Forward‘s Ruby Stockham, meanwhile, has put 4 questions to David Cameron that should be repeated ad nauseam between now and the election.
But it’s worth remembering that the crimes of HSBC under Stephen Green (aka Lord Green of Hurstpierpoint and minister for trade and investment between 2010 and 2013) were not restricted to colluding in tax fraud: they also extended to money-laundering.
In 2012, HSBC agreed to pay a $1.9 billion fine for money laundering for clients that the US authorities said included Mexican drug cartels (as well as providing services to lenders in Saudi Arabia and Bangladesh though to include supporters of al Qaeda).
The Daily Telegraph‘s David Hughes reported on July 17 2012:
While the Treasury select committee is giving the third degree to Mervyn King and his chums over the Libor debacle, a potentially much bigger banking scandal is breaking in the United States. The US Senate has launched a coruscating attack on HSBC for its slapdash approach to money-laundering regulations. The bank could face a $1 billion fine.
According to Senator Carl Levin, chairman of the US Senate Permanent Subcommittee on Investigations, “the culture at HSBC was pervasively polluted for a long time.” Just how polluted was revealed in the Senate report into the scandal. For example, between 2007 and 2008, HSBC’s Mexican operations moved $7bn into the bank’s US operations. According to the report, both Mexican and US authorities warned HSBC that the amount of money could only have reached such a level if it was tied to illegal narcotics proceeds. This is explosive stuff for the “world’s local bank”, as HSBC calls itself.
As these other, perhaps even more serious, scandals from the noughties have not been widely reported in the last few days (except by the FT‘s excellent Jonathan Guthrie), here are a couple of links to articles from July 2012:
David Hughes’s Telegraph piece (quoted from above), here
The Telegraph‘s report on the US Senate’s findings, here
Ned Simons at the Huffington Post (which mentions the alleged al Qaeda funding) here.