Mark Carney warned last week that politicians had to tackle the growing “isolation and detachment” that working class people feel towards capitalism. The Bank of England governor is just the latest figure in the ruling class to feel the ground shifting beneath his feet.
With a salary of £480,000, plus housing benefits, Carney is hardly motivated by any real concern for working class people. He sits at the top table of global capitalism, which has devastated ordinary people’s lives through endless free market “reforms” and austerity.
But Carney’s speech does point to the unease among his ilk for their global order. “Public support for open markets is under threat,” he warned. “Turning our backs on open markets would be a tragedy, but it is a possibility.”
After more than half a decade of slump, a political crisis means the “discontent and detachment” can erupt in both left and right wing directions.
We saw this in Britain when millions backed leaving the European Union (EU) on 23 June, a popular revolt against the establishment.
For Carney, we’re living through the “first lost decade since the 1860s”. A time of “real wages falling for a decade and the legacy of searing financial crisis weighing on confidence and growth” will sound familiar to many.
But Carney is so at pains to defend capitalism that he can’t acknowledge how deep the problem goes.
He noted that the 1860s was also the time when “Karl Marx was scribbling in the British Library”. Perhaps he ought to have popped in and read those scribbles to help him explain why we have seen a “lost decade”.
For Carney free trade and technological change are the reasons why “globalisation is associated with low wages, insecure work and striking inequalities”.
This puts the free marketeer Carney in a rather uncomfortable position. He’s desperate to defend the market, but is forced to admit how the brutalities of capitalism fuel popular discontent.
The right wing Donald Trump has made hay over the North American Free Trade Agreement (Nafta) destroying jobs.
Carney said, “The fundamental challenge is that alongside its great benefits every technological revolution mercilessly destroys jobs and livelihoods.”
He then swiftly slaughtered another of capitalism’s sacred cows—free trade.
Since David Ricardo was writing in the 19th century, capitalist economists have maintained that free trade benefits everyone. Now Carney has admitted that free trade “does not raise all boats” and that the “benefits are unequally shared”.
Free trade and technology have had an effect on jobs and wages, but they do not represent the limits of the problems with the system.
Manufacturing jobs in Britain peaked during the First World War, long before neoliberalism.
Capitalists invest in more efficient technology to get ahead of their competitors. By doing this they can increase production and cut the number of workers.
This process of always accumulating more and more is good for the profits of individual firms. But it drags down the “rate of profit” across capitalism as a whole. That’s because profits are created by workers’ labour, not machines.
This gets to the nub of the problem behind Carney’s “lost decade”.
At the end of the 1970s, capitalism ran up against a serious crisis of profitability. Bosses tried to squeeze more and more out of workers with attacks on wages, working conditions and trade union rights to get around it.
That’s why workers suffer falling real wages, job insecurity and rocketing inequality.
That crisis of profitability is also the reason behind the global crash and why capitalism remains mired in slump.
Carney’s speech showed that our rulers know this will continue to fuel the anger against them.
That anger can go to the left or be dragged in a right wing, racist direction.
The left’s challenge is to make sure the anger is used to give Carney and the capitalist system a stuffing.