‘This house believes that capitalism has failed’

CS member Ben Lewis was invited to the Durham Union Debating Society to debate the above motion with various establishment thinkers (and the Stalinist Harpal Brar). These are the edited notes for his speech1.

Trying a hard reboot

Even a cursory glance around our world is enough to see it is in serious trouble. Many of the tensions and contradictions within capitalism analysed by Marx and other Marxist thinkers are obvious for all to see. To take a few examples:

  • Despite neo-liberalism’s mantra that wealth would ‘trickle down’ from capital to labour in the Western world, since the financial turn of the late 1970s we have seen living standards either stagnate, fall in relative terms or even fall in absolute terms. And the crisis has merely exacerbated this: UNICEF now estimates that 40,000 children are starving in Greece, and up to 10 million Americans face foreclosure on their houses, whereas the rich literally have too much money to turn into capital and invest. One US bank, New York Mellon, is sitting on over 20 trillion dollars in administration, and charging its super-rich clients a princely sum for doing so.2 The capitalist class is effectively on strike, but you don’t see venomous articles in the press attacking them for this. This situation leads the IMF, hardly regarded as a cabal of Marxist philosophers, to predict that we are unlikely to see any real growth in the world economy until 2018.
  • We live in a world that is in a constant state of war and conflict. Today, any notion of a “peaceful capitalism”, where the invisible hand of the market peaceably distributes goods and services between nations is but a sick joke. The only year that British forces have not been involved in military operations abroad since 1945 is 1968 – one single year since the end of World War II! Wars provide an almost unrivalled way for capital to waste money.
  • And talking of waste: unproductive, useless, wasteful economic activity abounds today in advertising, financial services and so on. In their attacks on the unemployed, the US and UK political establishment wax lyrical about not wanting to “reward those who do not contribute anything useful to society”. But can anybody seriously claim that a stock market short-seller or a hedge-fund speculator actually contribute anything to society at all?
  • More fundamentally, capital’s unceasing, vampire-like quest for further expansion and accumulation of ever greater surplus-value is putting our precious relationship with nature under more and more strain. The need for constant growth is running dangerously close to our planet’s natural limits, with potentially devastating consequences for the future of our species. Capitalism treats nature as a free good, not something to be cherished, preserved and indeed expanded upon for future generations.

For Marxists, capitalism is crisis. Thus the crisis of 2008 which is now spreading across the globe, toppling governments and decimating living standards came as no big surprise. But the confusion amongst the establishment concerning both the origins of this crisis and how to get out of it says much about the nature of modern capitalism. Even those who purport to be running the system do not seem to understand how it works. With a crisis of the economy comes a crisis of ideas.

Ruling class at a loss

When Elisabeth Windsor asked a group of leading economists at the London School of Economics why they had not seen the crisis coming, their astonishment was something to behold. What a shock 2008 was for those drunk on the dogma that it was impossible to buck the market, that money could somehow magically make money, and that there was no alternative to neoliberal capitalism. And even – poor old Gordon Brown – that the days of boom and bust were a thing of the past, the preserve of outdated class-war professors donning tweed. For Alan Greenspan, former chair of the US Federal Reserve, the crisis “put him in a state of shocked disbelief”, as he “had been working on the assumption that this kind of thing worked for the last 40 years.”3

That level of intoxication must leave those like Greenspan with hangovers far exceeding those of your average Fresher. Continuing the metaphor, one investor points out that our sore-headed economists are divided over whether the best hangover cure is another shot of whiskey, or a low-calorie diet of fibre and veggies4. Contemporary mainstream economics exhibits an extreme theoretical poverty. But you hardly need to have read the collected works of Smith, Ricardo and Marx to realise that the austerity medicine handed out in the West can only make the patient more ill: the IMF estimates that £1.30 is lost for every £1 cut made.

All the confusion should hardly surprise us however. We are certainly dealing with a crisis of the entire capitalist system that is on a par with the ‘Long Depression’ of the late 19th century and the Great Depression of the 1930s. But the tools used to deal with those crises and recover from them, namely the turn to colonialism, world war, and the Post-1945 Keynesian military settlement, are no longer available today. World War is not on the immediate cards and the colonies are now largely run by proxy. The success of a Keynesian solution would likely entail a destruction of capital on the level of the Second World War, and would certainly require dismantling the post-1979 global economic order, and reintroducing instruments of financial repression such as exchange controls. I.e. the de facto abolition of the offshore system. Fat chance of that.

That is not to say that a solution will not be reached. Capitalism is not a technical relation but a social one, reflecting the real interactions of human beings. What ultimately decides is the class struggle, and the balance of forces between the warring classes in a struggle over where the costs of the crisis will fall. At the moment the capitalist class is attempting to respond with increasingly authoritarian measures, attempting to reverse the gains won by the working class at the expense of capital in the past 150 years. Not only does this include social welfare and provision, which were actually crucial to the survival of capitalism after 1945, but also basic political rights- like the right to elect your own government, without it immediately being declared void and replaced by technocrats.

Marx is back

Faced with near meltdown of the system in 2008, one of the US’s most influential banks, J P Morgan, issued a statement to the effect that Marx may indeed have been right after all. Despite Marx’s ideas being extremely marginal at the moment, it seems that his spectre still very much haunts establishment thought as it scrambles around for answers and solutions. But why?

Marx’s critique is rich and compelling because it is not a moral critique, but a scientific one. It does not simply look at manifestations or appearance phenomena of capitalism (greedy bankers, tax-dodging Starbucks etc) but seeks to grasp the root of the problem. It seeks capitalism’s contradictions and tendency to crisis in its very laws of motion. As such it locates crisis as something innate to capitalism and its expansion, not due to external factors like government intervention, restrictive regulation, foreigners, trade unions, ‘benefit scroungers’ or whatever.

Most importantly, Marx sought to place capitalism in its historical context, as a specific way of society producing to meet its own needs that had developed over the course of human history. This implies that, like feudalism and slavery, with their own particular social dynamics, capitalism and its laws go through a period of birth, maturity and decline. Capitalism is not a society that has existed forever in an unchanging fashion, and as such it does not have to last forever either.

The prescience of Marx’s method in understanding capital is such that even during the 1840s, when capitalism was blossoming and expanding across the globe, transforming the world in a way that no previous mode of production had, Marx could both marvel at this system and predict that this very success would sow the seeds of its own destruction, and that the nature of capital accumulation would tend towards monopoly. He argued that capitalism would create its own gravedigger – those with nothing to sell but their labour-power. This was a radical social idea, but in terms of his political economy, Marx was developing, and drawing social conclusions from, the theory of classical political economy, the work of Adam Smith, David Ricardo and others. Adam Smith neatly summarises the basis of capitalist value production – the exploitation of labour – as follows:

“Though the manufacturer (ie the worker) has his wages advanced to him by his master, he, in reality, costs him (the capitalist) no expense, the value of those wages being generally restored, together with a profit, in the improved value of the subject upon which his labour is bestowed”.5

Unlike any previous society, in capitalism money is put into production solely to make more money. Capital’s law is self-expanding value, and labour, as Smith recognises, is the special commodity that produces value above and beyond its own value. This is what Marx deems the law of value, that organises labour and resources in capitalist society. All must bow to it or face marginalisation, poverty and exclusion.

All else is secondary, which leads to obvious problems for capital realising the purchase of what it endlessly produces. When the cycle of capital accumulation starts to falter, there is crisis. Historically, credit, fictitious capital, war and government intervention have helped to delay this process. Sometimes for decades at a time. But as we see now, they cannot prevent crisis, they cannot overcome capital’s contradictions. As Marx once quipped, “the real barrier of capitalist production is capital itself.”6

Declining laws of motion

Unlike the regular business cycles of the 19th century, crises today are extremely complex: governments are more closely involved than ever, particularly because we have effectively nationalised money. This explains why the class struggle is so key in determining what measures are adopted in times of crisis, and why Western governments have fought hard to take control of the money supply out of the tos and fros of the electoral process.

Of course, “perfect competition” only exists in A-Level economics textbooks and the heads of delusional paid-up representatives of the Adam Smith Institute. But there was competition in the past, which was derived from the law of value I have just outlined.

It says something about modern capitalism that monopoly and government intervention are so dominant. We live under monopoly capitalism, which of course retards competition, innovation and productive development.

But monopoly capitalism evolved out of capitalism’s laws of motion. At least since 1914 we have seen the law of value and value production decline, and increasingly we see governments pursuing measures which are negative, bureaucratic anticipations of a future, rationally and democratically planned society, emerging within capitalist society itself. Often, decisions to increasingly plan production – at the expense of the law of value – has resulted from the need to give the failing system another lease of life, and prevent the possibility of a higher form of society. (Most obviously with the post-WWII Keynesian consensus.)

So we have seen interpenetrating phenomena of capitalist decline, and the becoming of socialism: legal restrictions on working hours, universal suffrage, compulsory primary and secondary education, free health provision, unemployment and housing benefit, public transport, minimum pay levels etc – these are all negative anticipations, because socialism is emerging within, and remains bound up with, capitalism.

But a hybrid system is also a malfunctioning system. Chronic waste and a ballooning and alienating bureaucracy are the results. Even with the ‘Thatcher’ revolution of privatisation, government regulation in many ways actually increased. Some have pointed out the ‘Market Stalinism’ of Ofcom, Ofgem, Oftel etc.

The point is that it is utterly utopian to argue for a return to the supposedly halcyon days of capitalism, ie more ‘free markets’. It is similar to arguing that we need some kind of return to feudalism. Those, like the opponents of this motion, who think the market can decide, might ask where global capitalism would be today were it not for trillions of dollars in bailouts, for example. Not saving the banks after Lehmann would be like the capitalist class collectively taking cyanide: the destruction of their own cherished system, wealth and privilege.

No viable alternative to capitalist realism … yet

Capitalism, therefore, has failed even on its own terms. Today we live in a declining system that is a world apart from the ascendant capitalism of Smith and classical political economy. While some opposing the motion may in part recognise this by bemoaning the influence of the state and so on, what they cannot do is explain this as a failure of the system, because of the gradual decline of its own laws. This is because, for them, capitalism assumes the status of a fetishised deity, an ideal to which they pray on a regular basis and not a product of human history with its own historical specificity and systemic limits.

As we have heard from mainstream commentators as diverse as Charles Moore and the Pope, the spectre of Marx still haunts the establishment. However, as long as they are able to keep their system staggering on, a zombie seeking bailout blood, the capitalist class has no real cause to be concerned yet. I stress yet. Objectively the system is in a big hole. But the subjective factor, the working class, is still a long way from coming to power, a long way from filling in this hole and burying the system once and for all.

One major reason for this is that Marxist political organisations and ideas still toil under the long shadow of Stalinism and its idea of ‘socialism in one country’- a completely anti-Marxist philosophy. The same is true of the bureaucratic mismanagement of the capitalist system at the hands of social democracy.

The failed transition to socialism in the 20thcentury is real, and weighs down like a nightmare on the present: it is all too easy for establishment thought to say: “capitalism might not be perfect, but change capitalism and you get Stalin and unfreedom.”

This view is held even by many people who abhor capitalism and its anarchic production. Some, like comrade Harpal Brar, even positively desiresuch an outcome. For thinkers like Brar, the Soviet Union represented the apex of human civilisation.

But this point of view is absurd: how can Marxism win millions to its banner if we excuse what happened? Nobody will take us seriously, and quite rightly so. It was not just that millions died in the Soviet Union, or lived under extremely alienating conditions of state repression. It is that this route towards socialism patently did not work.7 Without democracy at all levels of society you cannot plan anything. The Soviet economy was an utter disaster. Attempting to break out of the dictates of the global division of labour within the confines of one country actually represents a long and painful road back to capitalism.

Little wonder, then, that for the vast majority of people today it is often easier to imagine some kind of ‘end of the world’, apocalyptic scenario than a viable, credible alternative to capitalism.8 This is in many ways a failing of the Marxist left, and we have to show that Marxism does not mean Stalinism and terror, but the conscious self-emancipation of the majority9. Marx had a nice expression for the kind of bastardised “socialism” that resulted from the counterrevolution against the Russian Revolution of 1917: “barracks room socialism”. Those who equate Marx’s vision of a post-capitalist society based on the “freely associated producers” with the horrors of Stalinism, those who say that we Marxists want to hand over everything to the state etc, merely reveal their own ignorance of Marxism, and indeed of modern day capitalism itself!10


To conclude, capitalism has failed because failure and crisis are in its DNA. This malfunctioning system cannot fulfil human needs because it is not designed to. Even leading capitalists are becoming aware of the system’s failure. But as of yet there is no viable, rational alternative to which people can turn: no mass working class parties with a vision of a society beyond capitalism.

In essence capitalism knows nothing other than self-valorisation. To a limited extent, government intervention can offset the deleterious effects of such an anarchic logic and save the system. But only democratic planning and rational social organisation can overcome the madness of this system. That is why the working class needs democracy at all levels of society if it is to win – and hold onto – state power.

Marx’s enduring contribution is to show that it is vital to positively supercede the capitalist mode of production, building upon the groundwork it has laid- the immense productive capacity which could liberate humanity. This has to be on an international scale or it will fail. With planning and democracy at all levels of society, working hours and conditions could be dramatically reduced and human needs met in an ample and sustainable way: raising living standards and setting free humanity’s potential.

Getting there is the biggest challenge facing humanity. It means taking seriously capitalism’s most profound critic, Marx, building on and rearticulating the Marxist political method in today’s conditions, and becoming politically active to rebuild the institutions of working class socialism as the only genuine alternative to capitalism. I am confident that this can happen relatively quickly. And I believe that this is the task to which it is worth devoting one’s life: one’s time, energy, intellect and talent.

Many thanks for inviting me.

Ben Lewis, Communist Students.

1. I was on the panel speaking in favour of this motion, along with Harpal Brar, chair of the CPGB-ML. Edward Lewis from the New Left Project pulled out and was replaced by a speaker from the Durham Union Debating Society. Speaking against the motion were Dr Eamonn Butler, Director of the Adam Smith Institute; Michael Brindle QC and Mark Littlewood, Director of the Institute of Economic Affairs. I have added a number of footnotes in response to some of the more dubious ‘arguments’ offered by the opposition during the course of the debate.

2. ‘BNY Mellon to charge on $50m-plus deposits’, Financial Times August 4, 2011. According to Wikipedia, Bank of New York Mellon has $1.2 trillion under management and “25.5 trillion assets under custody and administration”. Thanks to Professor Hillel Ticktin for drawing my attention to this.

3. Greenspan – I was wrong about the economy. Sort of. The Guardian, October 24 2008.

4. Quoted from ‘The Dilemma of the Mainstream’ on Michael Roberts’s blog: http://thenextrecession.wordpress.com/2012/10/17/the-dilemma-of-the-mainstream/

5. An Inquiry into the Nature and Causes of the Wealth of Nations, Book II, Chapter III, p. 430.

6. K Marx Capital, Volume III, Chapter 15: http://www.marxists.org/archive/marx/works/1894-c3/ch15.htm

7. For an excellent critique of this point of view, see J Conrad ‘Dead Russians’, Weekly Worker760: http://www.cpgb.org.uk/home/weekly-worker/760/dead-russians

8. This theme is succinctly explored in Mark Fisher’s book, Capitalist Realism (Zero Books, 2009).

9. It also means that the Marxist left needs to offer something other than Keynesianism and minimal demands. For too long we have limited our politics to inoffensive left platitudes (‘tax the rich’, ‘fund the NHS’) or pretended to be left labourites in the name of ‘making a difference’. Richard Seymour of the Socialist Workers Party neatly sums up this failing, so-called transitional method:  “In practice, we are all pursuing “left reformist” agendas, in the hope that the ensuing class struggles and crises will provide the means (popular self-organisation, workers’ rebellion) to turn them into tools for transition.” (http://www.isj.org.uk/index.php4?id=854&issue=136) We need to break with this method and constantly foreground the need for an alternative social order – socialism.

10. All speakers opposing the motion levelled this accusation at those proposing in the motion. Harpal Brar can speak for himself, but “nationalising everything” is certainly not Marx’s conception of socialism. Nor did I defend such an outlook from the platform. Bizarrely, however, many of these very same people then go on to praise … China, where all the central means of production are owned by the state! One wonders whether good old Adam Smith would have even recognised such a society as “capitalism”.

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