Miles from Marx

Some good leftists have been critical of those G20 protests. Shuggy says, acutely, that they “served a therapeutic rather than a political function.” And Hangbitch says they were irrelevant to ordinary people.
I agree. What they showed for me, though, is just how very far we are from any Marxist notion of revolution. I mean this in three senses.
1. Those clamouring for change have, as Shuggy says, no power to overthrow the system. The protestors have gone home and nothing’s changed.
Indeed, what this crisis has shown is that power still lies firmly with capitalists. Why have governments given billions in bail-outs to banks whilst doing little to support workers sacked with no notice or redundancy pay? It’s because banks have power - if they collapse, so does the economy - and workers don’t. And governments respond to power and threats, not to pleas for justice.
This is, of course, not what Marx envisaged. He thought there’d come a time when those with grievances - workers - would have the power and motivation to overthrow capitalism. So far, so wrong.
2. The Left is not proposing any viable alternative to capitalism. Whereas vulgar libertarians have their Econ 101, the protestors have nothing, bar a few money cranks and moralistic bleating about greed.
What’s unforgivable here is that there are alternatives. But no-one’s interested. Why don’t we hear about market socialism, or the real utopias project, or the work of Equality Exchange, or issues of ownership, or a basic income, or the democratization of finance, or left libertarianism or the superiority of co-operative forms of ownership?
Most of the Left is more interested in smug self-righteousness than in economics.
3. The debate about what to do now is conventionally framed in terms of the state versus (actually existing) markets - that is, as one set of bosses versus another. The possibility that people can organize themselves - through either genuinely free markets and/or through democratic co-operation - doesn’t arise. But it’s this spontaneous free organization  that is the Marxist ideal.
We are, then, a million miles away from the end of capitalism, in any acceptable sense. I say all this in sorrow, as one who’s proud to call himself a Marxist. 

Comments

[MikeSC]

A good number of our workforce is made up by little kids abroad, who are in no position to revolt. Most of the workforce at home is busy attacking members of the workforce born in other countries or with different coloured skin. Leftist theoreticians attack the extremist fringe "free market capitalism", which never really existed (just look at how quickly capitalists abandoned it), rather than Capitalism as it exists.

Start picking capitalism apart, rather than aiming at mythical free-marketism and saying "the enemy of my enemy is my friend," and allying with state capitalism. Free Marketism is exactly as morally abhorrent as any capitalism, but the problems we blame it for are actually the problems of mainstream capitalism.

[Clive King]

I learned a lot and was also entertained on a train trip from Shrewsbury to London (so you need 6 hours) by the podcasts which can be found at http://www.markthomasinfo.com/section%5Faudiovideo/.

Well worth a listen and many positive suggestions on what can be done to really make things better if the great and the good wished.

Maybe being great and good is mutually exclusive?

[James Schneider]

Money cranks have a point when we approach the question of credit from an analysis of power. Banks are privileged by fractional reserve banking in that they can lend money they don't have. Thus they can receive returns on investments others make with their loans (interest)on capital they never actually held. This capability (to receive rent on 95% of our money supply) was achieved and is perpetuated by a closeness to other political and economic power.
There may be many money reformers who are conspiracy theory loons, but that shouldn't discredit all of their analysis.

[CharlieMcmenamin]

1. I think you've misread Shuggy: he's only critical in the sense that the anti-G20 protests seemed unfocused to him, not wrong per se.

2. It is absolutely true that the left has no default economic model to counterpose to capitalism. It hasn't really had one since the collapse of the Eastern bloc. As Andrew Glynn said,
"Old certainties, which I shared, that economic problems would be readily solved once free market logic was supplanted by a planned economy operating according to production for need, now seem far too abstract to carry much conviction or political credibility."
3. Staying purely on the issue of alternatives, I'm surprised you restrict yourself to market socialism models. There is also the whole challenge of the post-Marxist model of parecon http://en.wikipedia.org/wiki/Participatory_economics. But I do accept that neither of these alternatives is widely discussed or understood on the left.
4. This may not be unrelated to another silence in this otherwise extremely acute article; the problem of social agency. It's been said that the problem of marxism is not that History has lost its' object (socialism), but that it has lost its' subject (the working class). One doesn't have to accept this in its entirety to harbour real doubts about the capacity or suitability of a honourable but decomposing labour movement to provide any kind of challenge to capitalism - or even to capture the complexity of 'working class' economic experience in the current institutional framework.

[kinglear]

Chris - delighted you are a Marxist. I am too - my favourite was Chico...

[Luis Enrique]

If banks do have power, I don't think its source is the ability to "lend money they do not have", something which is quite compatible with competition between banks erasing excess profits. If competition does not erase excess profits, which it evidently does not, the reason lies elsewhere. There are lots of people complaining about bonuses; fewer are asking why the banks make so much money in the first place.

A popular placard at the G20 was some variant on "we will not pay for your crisis" or something objecting to bailing out the banks. Now of course the justification for bailing out the banks is to lessen the extent of the recession, to save jobs etc. so really "we" are bailing out "ourselves". But of course while that's the purpose of the bailouts in theory; they needn't achieve that in practice. I have not seem many on the left in the UK really getting into the details of whether the bailouts will alleviate the recession, or not, and at what cost.

Another popular line is that the bailouts represent a transfer from the poor to the rich (from the taxpayer to the bankers). Now it is certainly true that if the terms of the bailout are overly generous or otherwise badly designed, then the bailouts might represent an opportunity for the rich to further enrich themselves. I think it's notable that lots of left-inclined bloggers in the USA have been poring over the details of the bailout to ask whether that's the case. I haven't seen many lefties in the UK bother themselves with such questions. It's a shame, because some well informed lefties could bring some pressure to bear on the UK govt, in the same way that the Geithner plan is getting a going over in the US.

I think the response to the crisis by the left in the UK has been dismal. Empty sloganeering.

[ortega]

Daniel Finkelstein, writing on The Times a few days ago about Edmund Dell's book, made a quite good summary:

'The main protagonists of the movement are convinced that there is a form of economic organisation that is based on co-operation, can be rationally planned, abolishes war, is commonly owned and ensures social equality. But they can't quite work out what their rhetoric means. Every step they take towards their goal, sees it move further away. They try nationalising things and discover that this isn't any more co-operative or equal or rational.'

[sean]

I am right out of pop up tent stock and dont know what to do with the surplus cash, as ive reordered from China at an even better price.

Bank stocks look good, Barclays and HSBC particularly. Power to the people comrades.

[dearieme]

"power still lies firmly with capitalists": empty-headed rubbish, Mr Dillowbert. The power, it turns out, lies with the executives not the shareholders. It's a form of workers' power, but with the power limited to a small subgroup of the workers. So it's a million miles from Marx. Wakey, wakey!

[phil jones]

I wish someone would give me a good argument against the money reform cranks.

The world seems to be full of trained economists who tell me that Fractional Reserve Banking *isn't* a problem, and that people worrying about where money comes from are the lunatic fringe.

But they never seem able to explain why. It looks awfully like an article of faith to me that being obliged to grow the money supply each year has no bad side-effects. (Eg. biasing government policy towards economic-growth over sustainability or fair distribution.)

[Luis Enrique]

Phil,

This is not actually something I know about, but I'll have a crack at it. I may be about to embarrass myself ....

If by money reform, you mean constraining banks to lend out only what they have in deposits, you would then be constraining the quantity of credit available to equal the quantity of savings. So imagine a firm with a positive net present value investment opportunity approaches a bank which is at its credit limit. The bank has to attract new savers before it can lend - it must raise the interest rate on savings. That means it has to raise the interest rate on lending too, and raising the cost of capital reduces the set of positive net present value investment opportunities. When banks can lend out a multiple of their deposits, because the returns from many loans "cover" the interest paid on savings, that means the banks can charge lower interest on the loans and pay higher interest on the savings (relative to the cost of borrowing) than they'd otherwise be able to.

that's one argument anyway.

[Innocent Abroad]

Luis, it works fine the first few times around. Perhaps the problem is that the fraction is held constant - if the larger a bank's debt the higher the portion of it that had to be asset-backed, this might constrain the system from spiralling out of control as it has.

But hey, I'm not an economist. Thank God.

[Luis Enrique]

Actually, I think I've got this all wrong. If you don't like fractional reserve banking, then presumably that means you don't want the banks lending out any of the money deposited with them (otherwise, as soon as they lend some of it out, they'd only have a fraction of the deposits left in reserve). So I think everything I wrote above, about banks only lending out what they have deposited, is utter rubbish. See, I did embarrass myself.

So presumably if you don't like fractional reserve banking, you want banks to be lending out their own (i.e. their investors') money, and not touching deposits at all. In which case, why would banks take deposits in the first place? I guess they'd have to charge for chequeing accounts. And how would they pay any interest to savers? Presumably, savers would have to be explicitly investors putting up risk capital in the bank, funding loans, without the right to withdraw their money at will. Is that it?

[john b]

...and this is why people who want to abolish fractional reserve banking are described as 'cranks', 'insane', and/or 'clueless gibbering fucktards'.

[Innocent Abroad]

As I implied earlier, I don't wish to abolish fractional reserve banking in principle, but want it more tightly regulated (as indeed will happen).

There is however surely a case for tweaking the system so that the clearing banks are not the recipients of first resort of small savers (most of us). The government is prepared to guarantee the first £50k of savings. As a short-term measure, that was probably necessary. But it could announce that it was going to withdraw that guarantee from say 1 January next and mail every household in the country advising them of this, and recommending National Savings/Giro instead.

It won't of course because people don't like to take the consequences of their actions when they can use political leverage to run away from them. I know of no one, myself included, of whom this is not true.

[Luis Enrique]

IA

umm, that sounds rather to me like something that would encourage people to empty their savings accounts, which would force the banks to call in their loans ... which doesn't sound very helpful.

And once all the small savers had shifted from private sector banks to National Savings, who would firms borrow from?

[James Schneider]

Luis Enrique,

Money reforms tend to want one of two things.
1. The ability for competitive currencies to be made and to lower the barrier to entry for banking. A complete free market in money and banks.
OR
2. For full reserve (or a low rate of fractional reserve) banking in which the people (Government) creates the money supply. Money would then come from the Government not from debt (as 95% of it is now).
There are interesting ideas about, but they (rightly or wrongly) tend to get shunned by orthodox economists (who puts their total faith in them anyway?).

[raivo pommer-eesti.www.google.ee]

raivo pommer-www.google.ee
[email protected]

EURO KRISIS

Der Kurs des Euro EURUS.FX1 hat sich am Mittwoch im Nachmittagshandel stabilisiert. Zuletzt wurden für die Gemeinschaftswährung 1,3242 US-Dollar gezahlt, nachdem der Euro im frühen Handel noch bis auf 1,3145 Dollar gefallen war. Die Europäische Zentralbank (EZB) hatte den Referenzkurs am Mittag auf 1,3231 (Dienstag: 1,3255) Dollar festgesetzt. Der Dollar kostete damit 0,7558 (0,7544) Euro.

Zunächst hatten schwächelnde Aktienmärkte den Euro belastet. "Als die Aktienkurse im Zuge der Bekanntgabe der ersten Ergebnisse für das erste Quartal 2009 ins Trudeln gerieten, nahm die Risikoaversion zu und schon ging es für den Euro abwärts", erklärten die Experten der HSH Nordbank die Kursentwicklung. "Möglicherweise hält das Protokoll der letzten Sitzung des geldpolitischen Ausschusses der US-Notenbank Fed noch etwas Neues bereit", so die HSH Nordbank und hofft auf eine Begründung für den Ankauf von 300 Milliarden Dollar an Staatsanleihen. Die Auswirkungen auf den Devisenmarkt sollten sich den Experten zufolge allerdings in Grenzen halten.

Devisenexperte Klaus Gölitz von M.M. Warburg verwies ebenfalls auf die Aktienmärkte als Impulsgeber. "Derzeit ist Euro/Dollar ein Spiegelbild des DAX und des Futures auf den Dow Jones . Mit der Erholung der Aktienmärkte ging es auch für den Euro wieder etwas nach oben", sagte Gölitz. Insgesamt sei die Grundstimmung aber relativ ruhig. Die Positionen auf dem Devisenmarkt seien seit dem G20-Gipfel relativ ausgewogen und die Volatilität sei vor dem langen Osterwochenende deutlich zurückgekommen.

[Mark]

The target of money reform is the private monopoly over the creation of money, not fractional reserve banking per se. In fact there are some money reformers (not myself) who don't have a problem with fractional reserve lending under highly regulated conditions. Fractional reserve lending happens to be the way the private banks do their business.

An important part of the solution to our political problems--reclaiming money creation and credit as a public utility--would rebuild our monetary system on a publicly accountable basis, and eliminate the colossal rent intake that allows the FIRE sector to control the global political system.

When that happens, "fractional reserve banking" simply becomes a historical oddity... See webofdebt.com

[rolex datejust]

And a lot of it reflects a switch from bank deposits to securities; foreigners “other investments” in the UK, http://www.watchgy.com/ mostly bank deposits, fell by £143.2bn in Q1. And of course there’s no guarantee such buying will continue.
http://www.watchgy.com/tag-heuer-c-24.html
http://www.watchgy.com/rolex-submariner-c-8.html