Thursday, February 23, 2012

Paul Mattick

Clear economics, weak politics

Mike Macnair reviews Paul Mattick 'Business as usual', Reaktion Books, 2011, pp126, £12.95

This little book should be very widely read. It can be bought from Amazon for £8.80, or from some of the discounters who list on Amazon for under £6 (less than the average price of a couple of pints of bitter, according to the Good pub guide). In 75 pages, it gives beautifully clear Marxist outline accounts of the current economic crisis (chapter 1); of the history of crises and depressions, and theories of the business cycle (chapters 2-3); of the post-war 'golden age' and how it came to an end (chapter 4); and of the uselessness of mainstream solutions, and reasons for believing that it is unlikely that governments will return to large-scale 'Keynesian' demand-stimulus (chapter 5). The final chapter offers thought-provoking ideas about the future of capitalism and the possibility of an alternative.

I recommend Mattick's book for its brevity and clarity. Andrew Kliman's The failure of capitalist production (London 2012), which takes a similar line, is twice as long and a much harder work to read. Robert Brenner's The economics of global turbulence (London 2006) which in some ways reaches similar conclusions, is nearly twice as long as Kliman's book and lacks the theoretical coherence. I have not yet been willing to buy Guglielmo Carchedi's Behind the crisis (Brill/Historical Materialism 2010) in hardback at just under £90 from Amazon (it will be out in paperback in May). Most other Marxist books on the crisis are framed by 'underconsumptionist' theories of crisis or in other ways promote Keynesianism as a real alternative. Mattick's is a great book for a broad audience.
Caution

I have one substantial caution about the analysis. The long-term explanation which Mattick shares with Kliman and Brenner, albeit on different grounds, is that real profitability in productive industry never recovered from the decline of the late 1960s (which emerged into crisis in the form of 'stagflation' in the 1970s). If sufficient capital had been destroyed by a real slump, profitability in productive industry could have recovered. But instead what has happened is that states have borrowed and printed more money to bail out firms and the economy as a whole in and after the successive crises that followed (the 'Volcker shock' in 1981-82, 1987 and its aftermath, the 'east Asian crisis' in 1997-98, the 'dot-com crash' in 2001, and the current crisis).

Though consumer price inflation has not followed, there has been a very large capital asset price inflation, and this has allowed large paper profits in the financial and related sectors, which have given the appearance of a revival of aggregate profitability. In this account the process did not merely become a Ponzi scheme in its later stages (which is generally accepted): it has always been a Ponzi scheme, dependent in the last analysis on the ability of states to borrow and, hence, to lend at low interest rates, thus allowing capital asset prices to rise without a growth in real productive investment sufficient to generate profits on the scale of the 'golden age'. Hence the enormous growth in debts and in financial operations, and hence the turn to 'austerity' in the immediate past and currently, as it became apparent that there are limits to the creditworthiness of even the 'core' states.

This explanation is, quite properly, violently debated among Marxist students of political economy. Its correctness depends in part on the sort of detailed empirical-analysis arguments made by Kliman. A partial critique at this level has been offered by Deepankar Basu and Ramaa Vasudevan.[1] I would not pretend to have the skills to be able to assess the rival arguments at this level.

There is, however, a more fundamental and simpler criticism of the methodology. This is that the arguments are characterised by methodological nationalism. That is, that for the sake of getting clear numbers they focus down on the 'US economy' - or, in Brenner's case, the 'advanced capitalist economies' - as if these were 'closed economies' in which international trade and global financial flows could be disregarded for explanatory purposes. In reality, since World War II there have been enormous changes in centres of industrial production outside the 'advanced capitalist economies'.

Now it may be that the argument for an ultimate failure to recover from the profit decline of the late 1960s is in fact sound if the evolution of the global economy is properly addressed. But Mattick does not address it, any more than Kliman or Brenner, and the argument cannot be proved (or, indeed, disproved) on the basis of the study simply of the domestic production numbers for the US or for a group of countries (Brenner).

It might be the case - for example - that the relative stagnation of the US productive economy after the 1970s is analogous to the relative stagnation of the Dutch productive economy in the 18th century,[2] and results from relocation of the US's position in the world economy towards the role of rentier; and/or that large capital losses in Latin America and elsewhere in the 1980s enabled a new growth of productive industrial investment in China, leading to a real rise in global industrial profitability, merely appropriated in a financial form in the US. I put these suggestions forward not as firm objections to the thesis, but merely as speculative hypotheses of a sort which need to be countered to establish it.

This methodological choice is linked to the political background of the authors just cited. Paul Mattick, aka Paul Mattick Jr, is the son of the Paul Mattick Sr (1904-81) who was a prominent 'council communist', and shares the fundamentals of his father's politics. Andrew Kliman is associated with the Marxist-Humanist Initiative, one of the splinters of Raya Dunayevskaya's News and Letters group. Robert Brenner is associated with Solidarity, the current descendant of (primarily) the left-Shachtmanite International Socialists (which had a long-term relationship with the British IS before the Cliffites in 1977 split the US IS to form the International Socialist Organisation).

There are two related links of these political choices to 'methodological nationalism'. The first is that both 'state capitalist' and 'bureaucratic collectivist' theories of the Soviet-bloc regimes ex hypothesi suppose that you can have, in spite of the global character of capitalism, a distinct social order in a single country. Both approaches in fact refuse any real explanation of the contradictory unity of the Soviet bloc and the 'west'. It then follows that capitalism has to be explained in terms of its national components rather than the global capitalist order.

The second and perhaps more important link is that 'official communism', Maoism and most of post-war Trotskyism all downgraded the significance of direct class struggles in the central capitalist countries relative to the phenomena of imperialism and forms of revolutionary nationalism in the 'periphery' countries. This was a legacy of the strategic line of the Platform of the Communist International, the Twenty-one conditions, and the Second Comintern Congress Theses on the colonial and national question. For 'official communists' and Maoists it was directly linked to the theory of the people's front; for Trotskyists it was more animated by the 'revolutionary' character of political movements in the 'third world' and the obvious conservatism of the socialist and communist parties. 'Third camp' lefts reacted away from this line by downplaying the significance of imperialism - though their political ancestors in the left wing of the Second International had played an important role in elaborating the theory of imperialism in the first place. This choice, too, played towards emphasising the political economy of single countries.
Future

In the light of this political background it is perhaps unsurprising that the last chapter of the book (on 'The future of capitalism'), while thought-provoking, contains its weakest elements.

The introductory part of the chapter (pp83-88) makes the correct points that a sufficiently deep depression and destruction of capital in the next period could restore the conditions of profitability, as the 1930s depression and World War II did in the past; but that China and India do not look like independent economic powers. The second section, 'Limits of capital' (pp89-95) similarly makes strong points: about the fact that privatisations and so on have not in fact rolled back the frontiers of the state, though states have become less good at fulfilling elementary functions; and about the endemic, as opposed to cyclical or artificial, large-scale unemployment, more than a mere 'reserve army of labour', in the late 20th-early 21st century world.

The third section, 'After the left' (pp95-100), argues that "The left that began with industrial capitalism in the 1800s, grew through the 19th century and reached its greatest development during the first quarter of the 20th, no longer exists" (p96). Mattick argues - correctly - that Marx believed that working class organisations would contain the elements of socialised production within themselves, and would be driven to contest for power. He goes on to claim that August 1914 showed that this perspective was false: "workers' politics had turned out not to be a harbinger of the overthrow of capitalism, but an aspect of its development" (p98) - that is, its initial development. With the growing need of capitalism for state intervention, "what had remained of the left was swept away: into the politics of the welfare state, into sectarian insignificance or into some combination of one (or both) of these and service to the Russian state" (pp98-99).

This argument has a certain superficial attractiveness. Mass organised workers' movements were indeed usually created in the period in which, in any country, the working class as a class was formed out of dispossessed peasants and artisans. But it is a lot less plausible in Britain than it is in the United States.

The reason is that the mass Labour Party, cooperative movement and so on of the late 19th to early 20th century in Britain were not products of the immediate formation of the British proletariat as a class, which had taken place at least three quarters of a century - if not more - before. The British equivalent of the mass workers' parties which reflected the initial formation of the class was Chartism. After Chartism failed in 1848, and all the more after the concessions of 1867-71, British workers' movement politics was dominated by narrow trade unionism and an attachment to the Liberal Party very similar to the attachment of US workers to the Democratic Party today. A movement in the direction of independent working class politics emerged in response to the long depression after the 1873 global crash, and 'took off' when the economy again began to move forward in the 1890s-1900s. This can happen again.

Mattick's final section, 'The future of humankind' (pp100-09), offers further reflections on the limits to capitalist solutions. These include, first, possible difficulties in mobilising people for large-scale war as a solution; second, 'peak oil'; and, third and related, global warming. The overall result is that large-scale economic disaster is likely. Mattick's wager is that such a disaster will produce among broad masses reactions of solidarity and self-organisation of the type that are seen in (some) natural disasters, but promptly repressed by states. To quote at length from his positive conclusion:

"People will therefore have to develop new forms of organised activity, if they are to respond to the ongoing collapse of capitalism by constructing a new social system. Nineteenth-century names like 'socialism', 'communism' and 'anarchism', tied to the now-defunct left whose inspiring visions have been historically intertwined with conceptual inadequacies and institutional monstrosities, may no longer be useful for naming this new system the other world, anti-globalist protestors call for, which is as necessary for human welfare as it is possible. Whatever it is called, it will need to begin by abolishing the distinction between those who control and those who perform the work of production, by replacing a social mechanism based on monetary market exchange ... with some mode of shared social decision-making adequate to a global economic system" (p109).

The problem with this line of argument is as follows.

First, Mattick is undoubtedly correct that we need to replace the monetary mechanism with "some mode of shared social decision-making adequate to a global economic system". He is also clearly correct that this has to involve overcoming "the distinction between those who control and those who perform the work of production".

Second, however, these are transparently problems of the political ordering of collective decision-making; and it does not have to wait for an economic disaster on the scale of a natural disaster for us to begin to work out proposals for solving them.

In fact, it would be an extraordinary Bakuninist leap into the kingdom of freedom if we were to believe that we could leap into cooperatively managing the world economy - without either the least practice in cooperatively managing our own organisations under capitalism, or carrying on now an agitation against the political dictatorship of capital and for alternative forms of decision-making.

Third, the "new forms of organised activity" can all too easily turn out to be the same old 'tyranny of structurelessness'.[3] That has been the obvious fate of decision-making in a lot of direct-action initiatives. In the social forums movement around the turn of the century the 'new forms' produced the behind-the-scenes domination of particular large political parties - the Brazilian Workers' Party in the World Social Forum, Rifondazione Comunista in the European Social Forum, etc.

In this context, Mattick's rejection of the repulsive character of the dominant forms of the organised left - and the workers' movement, which exists in the form of trade unions at least in the US, and wider movements elsewhere - fails to recognise that the organised movements have not disappeared and will tend to hegemonise the unorganised movements of solidarity when they go beyond the immediate, even in spite of the enormous weakness of the organised left. If not by the organised left, unorganised mass movements will be hegemonised by other organised forces - Islamists, Christians or whatever.

Mattick's argument for the impossibility of renewing and rebuilding the workers' movement and the left disregards the late 19th century British counter-example. His wager on spontaneity disregards everything that has happened in large-scale crises and in smaller spontaneous (and spontaneist) movements not only before but also after 1991.

The problem is not to 'wait for Lefty' in the form of an economic disaster which will bring forth mass spontaneity. It is to fight to transform the existing left and workers' organisations from an obstacle to the workers' movement, which they now undoubtedly are, into an instrument to rebuild collective solidarity which can indeed - as Marx argued - foreshadow a future alternative to capitalism.

mike.macnair@weeklyworker.org.uk


Notes

1. 'Technology, distribution and the rate of profit in the US economy: understanding the current crisis': www.umass.edu/economics/publications/2011-32.pdf.

2. J de Vries, A van der Woude The first modern economy Cambridge 1997, chapter 13.

3. J Freeman The tyranny of structurelessness (1970): www.jofreeman.com/joreen/tyranny.htm.

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