As It Happens is a current commentary on international relations and developments in British politics.  It also carries updates on the TPPR Group of companies and associates.  Clients can access  bespoke advice on political, cultural and ideological developments relevant to their specific interests in the form of regular reports, private briefings or research projects. 

Entries in Economic Crisis (2)

Monday
Dec142009

Slavoj Zizek - A Marxist & His World

Today's short suspension of the Copenhagen Summit talks, after protests from the G77-China bloc, may be little more than political theatre but it raises interesting questions about the relationship between the Western centre-left and the interests of the developing world.

The Next Phase of the Crisis

One of the curious aspects of the current economic crisis is the lack of impetus that it has given to the traditional Left. If anything, so far, it seems to have pushed Western populations towards the safe centre-right or, at worst, a form of managed populism.

On the other hand, we may merely be in the phoney phase of crisis with the real pain yet to come and perhaps new forms of politics will arise to deal with that pain.

If 2008 was the year of the Lehman Brothers collapse and of Governments moving to transfer tax funds to shore up the private sector, events at the end of 2009 suggest that the primary concern next year will be the economic survival of nations.

Iceland is one thing. Dubai another, but at least three countries within the European Union are now on the global watch list - Ireland, Greece and Latvia - with the United Kingdom and Spain ready to slip into the economic query basket on their own account.

Greece was already facing some very serious political disruption before the latest news of massive budget cut-backs, being made to please the international economic community. All eyes are now on the balance of revolt and repression in Athens and what it will mean for Europe.

A Marxist Writes

One of the last of the serious philosopher kings of Marxism is the Slovenian Slavoj Zisek who shuttles between London and Ljubljana. Recently, the Financial Times published his short list of five conditions for the return of communism and it is worth setting them out here as markers for our own analysis.

He does make one preliminary point that is worth repeating - that the assumptions that we are at the end of history in which liberal-democratic capitalism will be the dominant form and that a progressive can now only dream of 'global capitalism with a human face' are made far too easily.

Neither he nor we know the future but, whether Zisek is right on his five preconditions for communism or not, the human condition is not one of stability. Innovation in information exchange and communications means that current conditions are unprecedented. Change is more likely than not.

Coming from the Hegelian tradition, Zizek finds it difficult not to think in terms of 'antagonisms' or what an older generation of Marxists would have called 'internal contradictions'. Let us list them here ...

  1. The 'looming catastrophe' of ecological crisis - he likes the word 'looming' and uses it twice.
  2. The tension between the commons and private ownership of intellectual property - the implication is that shared knowledge will transfer power from the private to the public sector.
  3. The new sciences of genetic manipulation and the tension between socially created communities of 'genetically superior' individuals and being free and autonomous but 'flawed' (our terms).
  4. The growing use of walls, borders and boundaries to keep 'threats' from the developed world, recreating the Berlin Wall along its borders as a block to economic migration.
  5. A somewhat mysterious and abstract sense of apocalypse in the air - that things are changing in ways that will mark out what went before from what is to come.

All this begs a lot of questions. Books could be written not only in defence of Zizek's propositions but in opposition to them and we could add many other potential 'antagonisms' but these five points of tension are all worthy of consideration as markers for increased global political stress.

On Hope

What these 'antagonisms' have in common is that each (except the fifth which is general) represent a sharpening differentiation between those who have and, on the other side, not so much those who have not as those who want what those who have have.

When growth is expected to be eternal and infinite, as the naive right-Hegelianism of (say) Francis Fukuyama might suggest, then the 'haves' can relax. 'Trickle down' will eventually spread freedom and prosperity to everyone who wants it - eventually.

The 'eventually', of course, might be awkwardly distant - hundreds of years - but a sufficient drip-feed of prosperity and, above all, the reasonable hope of prosperity will not only pull the dangerous class of educated outsiders inside the system but it will allow hope to be used a political tool.

This thing called hope is not to be disrespected. Hope of revolution to deal with economic distress fuelled communism in its heyday. When hope went, communism collapsed. The Christian message depends on hope ... if Christian hope disappears, Christianity disappears.

The US in particular has been able to use 'hope', alongside faith and charity, as a driver in building its own constituency in the rising middle classes. President Obama might be regarded as epitomising that mentality. But what happens when the hope goes and the world's middle classes begin to despair.

A Health Warning

This brings us back to Zizek's five preconditions but with a health warning. Zizek is of the Left and wants change. We always have to be careful of Marxist normative statements based on desire being confused with reality. Marxists have always underestimated the resilience and adaptability of conservatism.

Our caution lies not only in the historical fact of conservative resilience but two other 'truths' of history. The first is that the thesis-antithesis model of Hegelian analysis is really not so clear cut in practice and the second is that the world certainly never splits into 'sides' in quite the way democratic politics do.

Each apocalyptic vision of his must be set against the fact that we know that there may be an apocalypse and so we adjust. Our adjustments have a tendency to mean that history rarely results in what we expect and that real threats and surprises will often appear out of the blue.

The vast majority of the world's population will not surge over the West's boundaries and seize what it wants like latter-day German tribes. In practice declining empires can be kept going for a very long time by suborning the leaders and special interests at their periphery.

Class war requires leaders and leaders require ideologically educated followers. Without faith or hope of success, leaders are unlikely not to be suborned into compliance with the ruling order in the long run if they cannot be killed or marginalised. What Zizek wants to offer is hope in this context.

The Countervailing Tendencies

Unfortunately for hope, in each of the areas outlined by Zizek, there is a countervailing tendency that favours the conservative position.

  1. Starving people are in no fit state for class war. The technological differential between the West and the developing world means that all the West has to do is retreat behind its walls and adopt draconian measures against economic migration and to conserve its own resources to survive.
  2. In the war between the commons and the private sector, a private corporation's ability to lobby a government is far superior to the commons' ability to organise a successful revolt that threatens the survival of a Government - at least to date
  3. The control of genetic manipulation is wholly in the hands of the West. If there is turn to genetic enhancement that benefits an elite at the expense of the poor, be sure that it will be offered to developing country elites as a form of suborning them to the West's interest.
  4. Walls and borders are unpleasant but they may well work to the degree that the public in the West approves draconian (again) measures to meet their needs. We see few street protests in defence of migrants' rights and liberal regimes tend to promote migration only by stealth.
  5. Placing the Mayan prophecies of 2012 aside, in any 'apocalypse' that is social, the likely division is between a West in its laager and the rest of the world surviving as best as it can.

This is too dark a critique because there are two further factors to take account. The rising nations of the new global economy have no interest in class war. They will take on some of the social and policing responsibilities of the West. The Chinese are already beginning to take on that role at Copenhagen.

Similarly, Western values do not easily permit a return to fascistic thought patterns. Although there is a surge to the 'selfish' centre-right, it is a centre-right committed to democracy, human rights and even a humanitarian foreign policy. This moderates tendencies to populism and 'draconian' autarchies.

But Zizek may be right about the strains on the system. The world may well be dealing with major ecological problems, an arms race between population and corporate states over property rights, serious ethical challenges, increased insecurity and a climate of fear and uncertainty.

However, his hopes for a return to 'communism' depend on actual political reactions to these events. There is no intrinsic reason why any population will be minded to give up its instinct for freedom to permit bureaucracies or cadres to allocate resources and set social standards.

The Fate of the Left

Zizek himself agrees that 20th century socialism is dead. The centrally planned economy and social democratic welfarism based on the nation-state, even if desirable, are no longer achievable. The Left should 'begin from the beginning again'.

He does not tell us what that beginning may be but it is clear to see what he is referring to - the construction of a progressive agenda of developmentalism, international solidarity, environmentalism, the commons (rather than communism as we have known it) and enthusiasm (the 'hope' factor).

There are a lot of people out there who are committed to this strategy and they are organising as we speak through the internet, in localities and through NGOs.

This is the New New Left, imbued with a Marxist spirit but transmuted into something softer, almost religious, with its appeal to the 'planet' (from where it elides into the wealthy bourgeois politics of Zac Goldsmith), to sustainability and to indigenous and localist solutions.

But will it get anywhere? Or has it already peaked? And is it really the best tool for dealing with growing unemployment and the cutting of welfare services in the West. Zizek mentions none of these nor the massive contradictions within the progressive Left.

In The Final Analysis

The Copenhagen Summit may come to be seen as a last ditch attempt of this New Left to dominate the ideological and intellectual agenda of the West through the soft corporatism of working with Government and through NGOs - and history will probably judge that it failed.

This Left does speak for the developing countries but it has not mobilised the peoples of the developing world because that would be far too difficult and dangerous. To promote sustainability, democracy and human rights and development sets up multiple internal contradictions before you even start.

Peoples under economic pressure are just as likely to be traditionalist and contemptuous of liberal values as supportive of social programmes of redistribution and sustainability. It is no accident that liberals more concerned with democracy and human rights are rapidly shifting to the 'right'.

The ideals of the intellectual and progressive Left have captured many friends at the soft end of the Western elite, right into the very heart of some centre-right parties, the churches and the consumer or new economy-driven corporations but it has lost the frightened and deprived of the West itself.

The Decline of the Left

The Left is not dead but it is like Christianity after the Enlightenment - powerful enough not to insult, able to fight a rearguard action and hold ground in places but ultimately doomed as a hegemonic force, and increasingly obliged to get its mass support on the periphery of the heartland where power lies.

As time goes on, its profile is also like that of the modern Church - a mix of tribal loyalties in uneasy relationship with idealistic enthusiasm, the same very volatile mix that is at the heart of the failed New Labour experiment. As idealists, the churches, the NGOs and progressives are now in the same camp.

Zizek is right that something new is on the way - 'the present state of things cannot go on indefinitely' - but he has not identified what it is. The chances are that change will arise out of a struggle between states and peoples in the West rather than between the West and the rest.

If this results in a victory for the people in the West, then, to the consternation of Left-liberals, this may mean less political leverage for the states of the developing world and so for the global vision of progressives.

Tuesday
Mar102009

Re-considering Capitalism

The main topic of conversation in international economic policy circles is 'global stimulus'. In a few weeks, we have the London Summit. The US is getting very irritable that it has pumped billions of dollars into its economy yet few others have matched the scale of its neo-Keynesian commitment.

This is serious stuff because if the rest of the world - most notably Europe and China - do not follow suit, it will be increasingly hard to hold the line within the American political class against 'America First' protectionism-lite.

For the Franco-German led EU and China this may not be quite so disastrous as we may think. Both are theoretically big enough to rely on domestic production and consumption after a painful adjustment but the UK and Japan are island states built on trade - and it is trade that threatens to collapse now.

There is an air of desperation in messages coming out of the Treasury and vectored through the economic liberal media in London. What London and Washington want is improved co-ordination of several countries’ currently highly variable commitments to neo-Keynesian pump-priming.

The Financial Times on March 9th reported a public call by Larry Summers (Obama’s chief economic adviser) for just such a co-ordinated programme that would issue public money on a global scale in order to tip the scales from deflation towards recovery.

The Financial Times & 'The Crisis of Capitalism'

The role of the Financial Times in the current crisis continues to bear some scrutiny. It is independent, of course, but it is also implicated in the ideology that led to the current crisis and it represents the voice of those determined on preserving the Atlantic economic system at all costs.

The newspaper has just started a major series on the future of capitalism with the remarkable implication (from the FT's banner headlines) that we should consider alternatives. No, not an alternative to capitalism, of course, but alternatives within capitalism.

What seems to be going on is a quite subtle and anxious shift back to managerial capitalism and even ‘soft’ corporatism in a pre-emptive strike against any democratic rejection of global market economics. The political implications of ‘another ideological god (that) has failed’ [Martin Wolf] worries its editors.

Driving recovery through state action has now (it would seem) overridden even the structural issue of global imbalances as the central concern of policymakers in order ‘to save the market system from its own excesses’.

The first contribution (by Martin Wolf) in what appears to be a long series of articles sets the scene – in essence, the Reagan-Thatcher project lies in shreds, the role of Government will increase and the era of free-wheeling finance capital has ended.

To anyone with a sense of history, this must be interpreted as a rearguard action to preserve both globalisation and capitalism by shifting power from finance back to managers (where it largely lay in the previous great cycle from the 1930s to the 1970s).

The impending collapse of trade and the need to create a framework for economic growth (in defiance of two possible challengers, neo-nationalism and low growth environmentalism) clearly requires a new if lightly administered corporatism.

Figures for manufacturing output in Q4 2008 tell the real story which is one of industrial capital, and the services sector dependent on it, wanting ‘auctoritas’ to command markets. Only China saw an increase in industrial value-added – collapses in South Korea, Japan and Brazil were devastating at over -30%.

All this has to be seen in the context of the Financial Times’ self-appointed role as ideological guide as world leaders move towards the April 2nd Summit. For a few weeks, it appears to itself as having global historical importance. We should not get over-excited.

The Financial Times is not a government. The UK is only one of several players in the coming game so the FT’s opinion should not be taken as deliberative of how things will happen but only of how the economic elite in the Atlantic economy may want things to happen.

As of today, there is still no agreement on co-ordinated stimulus nor on the framework for government global regulation. There are formidable national political and practical barriers to both.

The Financial Times and the economic liberal elite now want to draw a line under the era of dominance of finance capital (for which they were the claque for thirty years) and create the possibility for changes in market-based globalisation to save itself from itself and continue safe and sound through the next cycle.

The Problem of Democracy

The problem is, bluntly, democracy. The Financial Times’ editorial of March 9th lets the cat out of the bag. Politicians need to be given political cover to do what is necessary – “a united front is, therefore, essential.”

The aim of policy should not be, it suggests, the creation of grand schemes for global regulation or the investigation of ‘minutiae’ such as tax havens and bankers’ pay. It should deal with the fact of recession on the ground.

Politicians will then earn the authority to make the necessary changes in the economic framework for the next cycle. The policy prescriptions are fairly simple – a massive co-ordinated stimulus of course but also state re-capitalisation of the credit system and a significant shift of resources to the IMF.

We can almost see the naked fear in economic liberals’ eyes. Politicians are already engaged in populist campaigns over the symptoms of crisis but this is mere flummery. Similarly, grand schemes are of no intrinsic interest to the electorate.

The liberals' assessment is that globalisation (more than markets) is at threat because, if the recession does not turn into recovery soon, weak pro-capitalist governments will fall and strong capitalist governments will have to become nationalist or populist to survive. This is a race against time.

A massive stimulus will create equally massive burdens on subsequent generations and so must succeed in creating a recovery that helps remove this burden within a reasonable period of time.

The use of voters’ funds to ‘reward’ the bankers who led us into the mess constantly undermines the credibility of government as representative of the people’s interest.

And it is hard to see how any government can now divert resources from emergency welfare and job creation to help save jobs in faraway countries.

Economic liberals in Washington are fighting a rearguard action against political liberals in Congress. London is fighting a rearguard action against European caution and rising anger at home. This is why Gordon Brown's speech to Congress was of such importance. It was a call for Atlantic unity.

Whistling in the Dark

All in all, the Financial Times’ contribution to the debate on capitalism indicates an economic elite, the one that we have termed 'Davos Man' elsewhere, that is a bit frightened, whistling in the dark, deeply worried about the London Summit becoming no more than a talking shop of populist communiqués.

It is terrified that global dithering will remorselessly force the major blocs – NAFTA, the EU, China - into various forms of de facto protectionism. Worse, national capitalisms may discover that they can potter along quite nicely without the levels of global trade fuelled by the global credit boom.

Now this is the point where those who do not like theory should leave but the Financial Times, to its credit, is raising some important issues, albeit from its own ideological perspective, and we need to respond.

We should all consider what sort of world we want in the wake of this crisis because things are not going to return to 'normal' in the sense of what has been normal for the last thirty years. Electorates and businesses need to try and control the agenda or they will see themselves controlled.

When the history books are written, the crisis will probably be put down to group-think amongst the self-interested and to the excessive complexity and opacity of late finance capitalism.

The reassertion of the public interest and of transparency, responsibility, basic competencies and, even more important, comprehensibility and accountability are clearly required. All a bit obvious really …

Editorials in economic liberal media are becoming increasingly shrill in saying that markets are not at fault but that leaders are. This is, in our view, naive. A Board appointed Sir Ken Goodwin within a regulatory and legal structure created by successive governments. His demonisation is a red herring.

If you plant a person in a system, that person will work the system according to the rules laid down by others. The human race is not made up of saints and there is many an ordinary bloke who would have fitted in without malice to the national socialist or communist systems of their day.

The flaw is within human nature. There is nothing alien about this crisis when set against past bouts of Schumpterian creative destruction.

What we have to ask is why our leadership was ignorant of how markets worked and whether it wilfully chose to ignore what it should have known for reasons of self- or special interest. Markets themselves may be the first problem, weak leaders the second and selfish or corrupt individuals only the symptom.

Basically, we seem to have been faced with a stark and unnecessary choice – to accept the boom and bust of markets because people en masse are who they are or to consider restraints on human nature which, at their worst, might lead to the excesses of national and international socialism.

The 'Third Way'

Could there have been a ‘third way’ in which the realities of markets and of human nature might have been squared through good government, managed through moderately sized nation states rather than through trading empires?

This was not to be. The ‘third way’ presented in 1997 to the British electorate was nothing of the kind. Rather it was a council of despair about the ability to find a workable ‘one nation/social democratic’ national consensus within the prevailing 'group think' about markets promoted by economic liberals.

There was a determination within New Labour to try and ride the tiger of globalisation and hope that those economic dimwits who believed that tulips would continue to rise in price eternally might be right.

The point to be made (as the Financial Times ably reminds us today) is that the current crisis is not unique. It is standard fare, only bigger, for how capitalism works in practice – and we appeal in this matter to the pessimistic Schumpeter rather than to the optimistic Marx.

Capitalism is not about concentration and inevitable collapse but progress and innovation through waste and a brutal punctuated equilibrium. What does that sound like? Yes, just like evolutionary biology - a godless process of waste and disaster but also a progression to 'higher' forms of life.

The real cost of markets and of evolution without government intervention in economics and healthcare might be as awful (if we were but to know it) in terms of misery and death as any of the crimes of Stalin.

The point is that our leaders and our media were all surprisingly stupid when ordinary folk might have expected them to have read their economics and history as a condition of their employment.

The Financial Times, whose analyses are often the triumph of hope over experience, does get it right sometimes. The March 10th editorial refers to a ‘mindset that ignored markets’ instability [and] relieved policymakers of responsibility’. Precisely.

Failing to understand markets as managable social forces is as irresponsible as failing to understand natural forces when seeking to irrigate land or to plant crops. Perhaps the current crisis will be to the market what the Lisbon Earthquake was to the eighteenth century belief in a benign God!

There will be market believers who will welcome creative destruction, a periodic cultural Ragnarok, because it will renew and revitalize. At the other extreme, there will be those who want to concrete over human nature because it is messy and prefer the planned car park to the managed green park.

Between these two is where we should be – with a deep respect for the human condition whose wants express themselves through the market and through sexual selection but which accepts intervention to ensure that society remains co-operative and non-exploitative.

Praising the depression that wipes out businesses and jobs because it is innovative is like worshipping the asteroid that hurtles towards us from space because it allows new life forms to develop. That is anti-human.

The real third way is one of a human-scale and a respectful management of both markets and nature. Economic libertarians and deep greens now need to move to one side while the rest of us create some sort of balance in the world.

www.tppr.co.uk

www.pendrywhite.com

Recent Client Notes [Subscription Only]

Global

04.03.09 - Political Strains in Europe from the Right
05.03.09 - Update on the Global Economic Crisis
05.03.09 - Update on West Asia
05.03.09 - The ICC Indictment of Al-Bashir
07.03.09 - Grand Strategy As Obama Rewrites The Rules

Domestic

04.03.09 - Update on UK Conditions
10.03.09 - Update on Uk Conditions