The economy has crashed but is this really a ‘crisis of capitalism’?
For more than four years the whole world has been trapped in an economic crisis. It is the worst since the Great Depression of the 1930s and there is no real sign of recovery.
All “official” economic forecasts show Britain’s economy shrinking this year. The average prediction for next year is negligible growth of just 1 percent. So we can expect more attacks on workers’ living standards.
There is continuing stagnation across the world. Even China, the most successful economy of recent times, is slowing down.
As the revolutionary Karl Marx argued, instability is an inherent part of capitalism. The system always goes through booms and busts—economic peaks and troughs.
But the roots of this crisis date back decades. As the boom that followed the Second World War came to an end, bosses’ profit rates started to fall.
For many years this decline in profitability was masked by a huge credit bubble. It was easier for capitalists to make money by lending their funds through the financial system rather than by investing directly.
But that credit bubble couldn’t keep expanding forever. And when the bubble burst five years ago, the entire global banking system broke down. Since then it has been bailed out again and again. But it still hasn’t been fixed—because the capitalists have no idea how to fix it.
Isn’t it just that the wrong people are in charge of the economy?
It’s certainly true that the wrong people are in charge. In Britain it’s the arrogant, greedy Tory toffs who despise working people and are busy making the rich richer and the poor poorer.
They and their cuts agenda are truly appalling and should be got rid of as soon as possible. But unfortunately, the Tory shower is not the root of the problem.
The global economic crisis began before the Tories came in back in 2010—and it started in the US on Wall Street, not in Britain.
True, in America the wrong people were in charge too—George Bush and the dreadful Republicans. But the replacement of Bush with Barack Obama didn’t solve the crisis or make things better for ordinary people.
In Greece, Pasok, a party like Labour in Britain, was in office from 2009 until 2012 without making the slightest difference. It was the same story in Spain where the PSOE (Spanish Socialist Party) governed from 2004 until 2011.
In France, millions voted for president Francois Hollande, believing him to be a great hope for the left. But he has continued the policies of austerity.
It is already clear that a Labour government in Britain led by Ed Miliband would do the same. Getting rid of vicious right wing governments is a good first step—but it is not enough in itself.
But what if governments stopped pushing neoliberal austerity policies?
There are many on the left who argue the problem is that all the parties, including Labour and similar parties across the world, have adopted the outlook and policies of what is known as neoliberalism.
Neoliberalism is the idea that all aspects of society should submit to the harsh laws of the market—of profits and capitalist competition.
It argues that the markets can be left to themselves and will ensure the most efficient use of economic resources. If the government tries to help people cope, it just makes matters worse. “You can’t buck the markets,” as Margaret Thatcher used to say.
This was a deliberate ruling class project to try to get out of capitalism’s crisis of profitability by increasing the share of wealth going to the rich.
Opponents of neoliberalism, like many on the left of the Labour Party, point out that this leads to ever growing inequality and poverty. They add that austerity only makes the crisis worse by decreasing ordinary people’s spending power.
This is all true. But it is usually followed by proposing a solution, Keynesianism, that won’t solve any of the economy’s basic problems.
Can’t governments spend their way out of the crisis?
The idea of increasing government spending to get out of a recession is known as Keynesianism. It is named after the economist John Maynard Keynes, who argued for a huge programme of public works to stop the depression of the 1930s.
The Eton-educated Lord Keynes himself was an anti-working class snob. But his ideas were enthusiastically accepted by most economists, until they switched to neoliberalism.
Today his ideas have been taken up by some on the left, including the majority of the union leaders, who want to protect working people.
As socialists, we have some things in common with people who want to invest for growth. They want huge building projects such as schools, hospitals and housing—and so do we. The difference is that we don’t believe these things will restore the system’s profits.
We want working class people to have jobs—and we want to build things because they would be useful for ordinary people. Keynes wanted to be a doctor to capitalism, healing the system when it was feeling poorly.
But his arguments to boost economic demand don’t even work on the system’s own terms. Crisis begins in production, not with demand.
Capitalism only knows how to recover through inflicting the pain of a crisis on ordinary people. And Keynes certainly can’t help us get rid of the rotten system for good.
But isn’t capitalism the best we can hope for?
There have been many economic systems in world history. And capitalism is certainly more powerful than the feudalism it replaced.
As Marx himself said, capitalism has “accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts and Gothic cathedrals”. Just think of the level of complexity behind an airport or a computer.
Yet capitalism also generates mass misery. A generation of young people in Britain are on the scrapheap as youth unemployment stands at a million.
The picture gets dramatically worse when we look at the world as a whole. There are nearly a billion people going hungry.
Most shocking perhaps is the obscene level of inequality. According to the World Bank, the richest 1 percent of people in the world own as much as the bottom 57 percent. The three richest people in the world have wealth that exceeds the total amount produced by the 47 poorest countries.
Capitalism brings all sorts of other problems as well. The crisis has intensified the drive for competition. This gives rise to racism, the threat of fascism—and ultimately the horrors of war.
That’s not to mention the threat of climate change, caused by capitalism’s systematic plunder of the planet’s resources for short term gains. To tackle these problems we need to overthrow capitalism.
Will we ever be able get rid of capitalism?
It’s not as far fetched as it sounds. Capitalism has only been around for a few centuries—and there’s no reason to think it won’t itself be replaced in the future. And it’s workers that have the power to do it.
Workers’ labour produces everything under capitalism—including the bosses’ profits. Whether you work in a factory, an office or a shop, if you’re not a boss then you’re part of the working class. The whole system rests on your work.
Of course from day to day it doesn’t feel like that. Working class people can often feel downtrodden and bullied, and feel as though we have no power at all over society. This is what the system does to us.
But when we fight back we get a glimpse of how things could be different. Mass marches such as the one in London this weekend can show us how much power we have.
More importantly we can see it every time workers strike. A strike, workers collectively withdrawing their labour and shutting their workplace down, proves that without us the bosses are nothing. It points the way to how workers could bring about a socialist revolution.
Is socialism possible?
The 1917 Russian Revolution was one of the greatest events in world history. Unfortunately however the revolution failed to spread, opening the door for a new elite of privileged bureaucrats to take over.
Instead of workers’ control over society, the Soviet Union into a state-run form of capitalism. When we say “socialism” we mean something very different. Socialism is about workers themselves creating a new society.
It is about the working class democratically planning production and distribution, based on human need instead of the drive for profit.
Today we’ve seen mass revolutions bring down dictators in Tunisia and Egypt. Their struggles show that revolution is far from an impossible dream.
Whether it’s food, housing or any of the other things needed for a decent life, there is already more than enough in the world for everyone. We live in a world of plenty—the problem is that it’s in the hands of the rich.
In a socialist society there would be no need for anyone to go without. That really would be a future that works for us all.