Commentary on Political Economy

Monday 4 July 2011

The Debt Ceiling And The Fracture In The US Crisis-State

The task of a theory is to cut a path through the maze of reality: its purpose is not merely to predict events, but to explain why they occur in the first place. As we have argued repeatedly even on this Blog, the moment of "crisis" in a capitalist economy, and wider still in its society, is when all the old equilibria, the old certainties, the very "Sekuritat" of social life in a capitalist society are threatened and undermined. What we have sought to explain is that "crises" do not occur as "externalities", they do not explode as "shocks", they do not reflect mere "weaknesses" or "asymmetries" in the organisation of capitalist society. Rather, social and economic crises such as the one we are experiencing, far from reflecting "technical difficulties" that can be "adjusted" or better still "fine-tuned" with some optimal "economic management" - far and against all this, 'CRISES" such as these are symptomatic of the breakdown - seismic and profopund - of the old "political settlements" and equilibria that allowed the capitalist economy to run almost smoothly and so predictably as to be capable of "fine-tuning" and central-bank management (even inscribed in legal mandates enshrining their "independence" from political "interference").

It is at times like these that the "technical skills", the "regular instruments" that were adopted hitherto to measure and to predict the past and future "normal path" of "the economy" - all these instruments tools and expertise break down together with the economy and call for new ways that clearly and courageously confront the reality of capitalist social relations, grapple with it, and suggest fresh approaches and new solutions. That is what we are seeking to do at by outlining a new framework of analysis of the capitalist economy - one that so far (as many may be aware) has yielded spectacular results.

Participants will recall that over the last few months even on this Blog we have faithfully predicted, and are now being vindicated with, the developments that Gavyn Davies so insightfully identifies and skilfully summarises. The chickens are coming home to roost: in a nutshell, you can see what the strategy of the US Administration is: to recover the dynamism of its capitalist economy by expanding the monetary base, inducing inflation on "export-dependent countries" such as China and Germany, reinvigorate its export and manufacturing sectors, revive employment and all the time reorganise its military asset with a focus in the South China Sea to counter a fast-declining and dangerous Chinese dictatorship. That further quantitative easing may be called for goes without saying. The US Administration is following what Roosevelt did and achieved in the 1930s. The Republican Reactionaries are trying to halt this process, but will fail miserably - because the interests of society, both from the capitalists and from us the producers, stand insuperably against them. And we shall prevail.

In a comment to Clive Crook's Column today in the FT we deplored and lamented the fact that even an intelligent analyst such as Crook can attribute the current "crisis" of the American ruling elite (in the instance, relating to the Administration debt ceiling) to a puerile and churlish question of "psychological atavisms" - with the Republicans in particular allegedly harking by the old values of the Founding Fathers. It is obvious that if indeed we have reached such low levels of puerility and wanton, derelict analytical incompetence, we are absolutely justified to look elsewhere for explanations - for real efforts that rise to the height of the times, to the demands of our precarious social reality.

For months now we have insisted (long before Krugman and Eichengreen took up this insight) on the growing "fracture" in American elite politics between progressive and conservative forces that reflects significant and perhaps unbridgeable gaps in the conception and vision of the role of the machinery of State in the preservation (first of all) and possible expansion of capitalist social relations. This fracture or schism or split merely reflects the real antagonisms that are emerging and exacerbate daily in American and even European society in the manner in which the irreducible conflict between the vast majority of society - the "producers', the people like us who "make" this society and allow it to reproduce and grow - of how "our inter-esse", our common being and interests are running counter and into catastrophic opposition to the interests of capital - of the "owners" of social resources whose need to preserve the "profitability and integrity of their "capital" or "ownership" come into growing and utterly irreconcilable conflict with our need to grow, to work, to fulfil and expand pour human needs in harmony with the ecosphere.

And the "machinery of State" is becoming central to this struggle - because the only way in which capital can preserve its "ownership of social resources" is by "controlling the process of economic growth". But doing so on strictly "private bases is proving to be entirely impossible - because we, the producers, impose our needs on capital in such a way that they cannot be "monetised" and certainly not in a way that is "profitable", that can be "re-invested" to realise greater social resource ownership that can be used to control our living labour. The "control of growth" turns then through the "Crisis-State" into "the growth of social control" - but its "restriction" and limitation to preserving "capitalist profitability of investments" means that greater control from the Crisis-State results either in greater repression or in greater emancipation of us, the producers.

And this, to bring a long post to a close, is where "the fracture" lies, where it runs through and across the entire foundations of capitalist society. The Progressives believe that it is possible to reform the machinery of State, to emancipate society and still retain its essentially capitalist character. Whereas the Reactionaries believe that only the retreat of the State to a limited sphere of enforcing property rights will preserve the "values" of competition and entrepreneurship that will allow a renewed assault by capital on the irrepressible needs of the producers. This reality is so blindingly obvious, its outlines so clear, that it is remarkable how bourgeois analysts simply fail to appreciate the importance of this development.

Let us issue a reminder: the century of revolution in Europe, the period that runs from the English Civil War to the French Revolution was based on precisely such social and political "fractures" at the highest levels. The question for all of us Progressives is to know whether we have the courage, the resolve, and the wisdom of vision to seize the moment. The fate of humanity hangs on it. Cheers to all.

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