Your new book about the economic crisis is called Zombie Capitalism. What is this?
Some commentators are using the term “zombie banks” to describe a situation in which the banking system is seizing up and having adverse effects on everything around it.
A zombie bank is worthless but it continues to operate because of government support. So the dead are having a terrible effect on the living.
I thought it was appropriate to use the term “zombie capitalism” to describe the system as a whole.
My new book looks at how the theories of Karl Marx can explain why crisis is endemic to the system.
Marx referred to capitalism as the domination of the dead over the living, the past over the present. He described how the products of people’s labour come to dominate their lives and the lives of those who follow them.
Workers have no control over what they produce, how they produce it, how much they produce or what happens to the goods once they have been made. So the products appear as alien with a power all of their own.
Zombie capitalism is a particularly apt term to use in the current period.
When industrial capitalism began 250 years ago it was a fantastically dynamic system that went on to engulf the whole world. It has always experienced crises.
But since the mid-1970s it has been going through a long phase of crisis, in which booms are interspersed by deeper and deeper slumps.
Capitalists have not been motivated to invest all their profits on expanding production, because the rate of return they get on their investments has been low.
They have cut workers’ wages to try to maintain their profits. This has led to an increase in borrowing and debt. But the banks and financial institutions loaned more money than they would ever get back.
This sparked the “credit crunch” of two years ago and the crisis we are now in.
What caused this crisis?
Most mainstream economists said that this was just a problem of finance.
This is not the case. It reflects a much deeper, more fundamental problem in the system.
Marx identified crisis as a central feature of capitalism.
Competition drives the system forward. But because each capitalist competes to grab as much of a market for themselves as possible, there is always the danger that the total that is produced is more than can be bought.
Two things can help to overcome this tendency. The first is that workers can spend their wages on a certain proportion of the goods produced.
The second is that capitalists can invest their profits in new factories, buying up other goods that have been produced in the process, such as iron, steel, oil and electricity.
If either of these sources of demand collapse then the economy can go into crisis.
Overproduction causes strains in the system. If goods can’t be sold then factories lose money and sack workers. This means that those workers can’t buy goods produced by other factories, and these factories then sack workers, leading to deeper problems.
In the current crisis, governments have poured vast sums of money into the system. What will the effects of this be?
No one knows. Each multinational and bank keeps their level of debt a secret because they don’t want their competitors to have an advantage over them. And capitalists exaggerate their profits because they want their stock exchange value to rise.
So no one knows what the real profits, or losses, of the system are.
Governments are trying to use money to fill a huge hole, but no one knows how big it is. At some point in the near future they will try to get their money back – but they will try to take it from ordinary people, not the bankers.
In this situation, some governments are better positioned than others. For instance, the US is the world’s biggest economy and can probably afford to postpone the moment of truth for a time. But eastern European states such as Latvia are in dire straits.
Britain is in an intermediary position. It is still one of the world’s most powerful economies.
Many mainstream economists are saying that the British government will have to get the money they have ploughed into the banks back through either huge tax increases or attacks on public services, or probably both.
The Tories and Labour are having an argument over the level of public spending cuts needed. Labour wants to make the cuts but pretend they’re not happening while the Tories have openly admitted they’ll make the cuts.
Has the economic crisis had an impact on the ideology of neoliberalism, the free market policies that have dominated the world for the past 30 years?
Neoliberalism is an ideology primarily used to justify attacks on workers. Despite the rhetoric of non-intervention in the free market, governments have continually moved to support big business.
But this was always done behind closed doors. The difference today is that they have had to do it in broad daylight.
This means that it is much easier to argue that this crisis has been caused by capitalism than it was during the crisis of the 1970s. Then the turmoil was blamed on the trade unions and the oil sheikhs.
Most people today can see that the banks were a major part of the problem.
That does not mean that the arguments against the system can be won automatically. Every day sees a new attack in the right wing tabloids against asylum seekers, “benefit scroungers” or migrant workers.
The idea that “bosses and workers are in it together” is still there. The aim of this sentiment is to argue that we all benefited in the “boom” years so now we all have to suffer in the slump.
This idea has concrete effects. The Balpa pilots’ union, for example, has recommended pay cuts and longer hours for workers at British Airways to “help” the company.
But ordinary people did not benefit from the economic boom. Many had to borrow massively just to get by.
In any crisis people are thrown onto the defensive and can accept the idea that we’re all responsible.
But at the same time they can be angry about the worse conditions they’re living under.
Socialists have to put forward the arguments against the system and for uniting all workers.
Workers will listen to these arguments most when they’re involved in struggle and they begin to see clearly that there’s a divide in society along class lines.
There has been a revival of interest in Marxist ideas as a result of capitalism’s problems and a revival of Marxist economics among academics.
The mainstream economic periodicals, such as the Financial Times and the Economist, have had to switch from talking about the prophets of the free market to taking about John Maynard Keynes, an advocate of state intervention.
In the process they couldn’t avoid talking about Marx as well. And if anyone wants to understand the dynamics of capitalism they should look to Marx.
Are there signs of a recovery?
‘In recent weeks, a number of commentators have said that the economy should now start to recover. This shows how these people have no ideas. The stock exchanges have grown again by about 20 percent in the last four months – after falling by around 50 percent.
It’s still a long way from where it used to be. But if you’re trying to make a quick buck by gambling on the stock exchange, you can again.
Some say that “inflection point” has been reached. They don’t mean that the recession has ended but that the economy is not declining so dramatically.
They don’t know whether the vast amounts of money thrown into the system will bring the crisis to an end.
If the economy does start to recover, the impact for ordinary people will not be felt for some time. There will be a lag in terms of unemployment beginning to fall, for example.
Our leaders haven’t solved the root of the crisis. If you take ibuprofen when you have influenza, your headache goes away for a few hours, but it will come back later.
So if the bosses do get out of this crisis, they will have created the preconditions for an even deeper crisis to come.’
Zombie Capitalism is a new book by Chris Harman. It is available from Bookmarks, the socialist bookshop.
Go to » www.bookmarksbookshop.co.uk or phone 020 7637 1848 to order a copy