Jun 11 2020

CRISIS AND THE NEED FOR CONFLICT

Mike Macnair makes the case for seeing current political developments in the world as a move from neo-liberalism proper to nationalist rivalry. This is similar to the case Allan Armstrong has made on this blog about the switch from neo–liberal hegemony to Right populist ascendancy.

 

CRISIS AND THE NEED FOR CONFLICT

 

Here’s my boy – America First, Britain Second!

What we are seeing today is a situation where the United States is lashing out towards Iran and in the Middle East more generally, as well as China and Russia.

Alongside this there is the continual growth and ascendancy of rival nationalisms. As far as I can see, the turn in this direction – towards rival nationalisms and away from neoliberalism proper – is something that has taken place in different countries at different times. The election of Vladimir Putin in Russia in 1999 symbolised this shift. In Poland the Law and Justice  Party moved sharply to the right – again away from neoliberalism and towards nationalism – when it was in opposition after 2007. Viktor Orbán in Hungary had been a straight neoliberal, but in the early 2000s became a nationalist. Narendra Modi took office in India in 2014, while Recep Tayyip Erdoğan  became president of Turkey in 2014. Erdoğan, starting as a ‘liberal Islamist’, had adopted a more nationalistic version of Islamism in 2012-13. And so on.

More recently we have had victory for the Brexiteers in the UK referendum on the European Union, followed by the fight in the Tory Party over the terms on which Brexit should happen; the victory of the Trump administration in the United States over the neoliberal, centre-right Democrats; and, of course, in Italy the victory of the Lega and the far right – now the polls are showing that the Lega is a long way ahead. In France Emmanuel Macron’s party, La République en Marche, is breaking up (no surprise – it was never more than a structure to support his Bonapartism), making it a real possibility that the next French president could be Marine Le Pen, with the left way down in terms of support.

Where does this general tendency towards rightwing nationalism come from? The short answer is that it comes from the untruths in the claims of neoliberalism, as well as of marginalist economics. There was no ‘great moderation’. The recyclical return of financial crises is endogenous to the regime and in fact the beginning of this shift towards rightwing nationalism was not the crash of 2008: it was the ‘Long-Term Capital Management’ hedge fund collapse, together with the Russian debt crisis of 1998 and the east Asian crisis of the same year, and then the ‘dot.com’ crash of 2001. Among other things, that wiped out the Hungarian economy, which had become desperately enmeshed in borrowing (which had been encouraged by the neoliberals in the 1980s) – acute damage was caused when the 2001 crisis took place.

Orbán was a neoliberal in the 1990s, but became a nationalist-populist. Similarly Law and Justice in Poland emerged from a neoliberal Christian Democratic commitment to the same kind of nationalist-populist politics. So this dynamic predates the immediate past. It is a product of the false perspective offered by neoliberalism and free-market economics from the 1990s and the fact that that perspective was proved to be false through the economic turmoil beginning in 1998.

The first response to the ‘Long-Term Capital Management’/Russian/east Asian crisis of 1998 was to the left, in the shape of anti-globalisation and social forum movements, etc, round about the turn of the century. But they demonstrated no ability to escape from the framework of neoliberalism, or from that of bureaucratic management. That is visible in what happened to the Brazilian Workers Party, to Rifondazione Comunista in Italy and to the general loss of direction and sense of any serious alternative project. It took some time for the consequences of the 2008 crash to feed through, but, although there were street demonstrations (‘Occupy!’), there was nothing even with the minimal organisational strength of the previous anti-globalisation and social forum movements: merely a flash in the pan.

So the dominant response to the failure of neoliberalism could be seen first with the election of Putin in 1999: i.e. the shift to the nationalist right. Why should this be the case? I think we are going to see more of this – indeed, probably a sharp escalation of it – in response to the coronavirus crisis, so we need to consider the reasons. In essence what governments have done in response to this crisis is to crash the economy. What they have not done is what is necessary in order to escape from such a crash: i.e. to make lenders bear the cost of losses, so that they fall on landlords and creditor interests in general.

The consequence of this – which is most acute in the case of Covid-19, but was already clear with the 2008 crash – is that unavoidably the state plays a bigger role in managing the economy. That results in it building up nationalism around itself. The idea of solidarity is transposed into a state-led chorus of ‘We’re all in it together’: in other words, ‘We Brits are all in it together’ (or perhaps, north of the border, it is ‘We Scots’).

And the consequence of ‘We’re all in it together’ is geopolitical conflict. We can see this very clearly in the European Union. It is quite likely that the EU – or at least the euro zone – will break up in the next year (the British government is, of course, encouraging that idea). It is reasonably clear that, as soon as there is a crash of this sort, the choice has to be made between radical redistribution enacted against creditors and landlords, and radical redistribution in favour of them.

If debts and liabilities are not cancelled, many small businesses and some large ones will collapse, and people who are cash-rich or have connections with the government will be able to pick up assets on the cheap, while the middle class and the upper part of the working class are impoverished.

The paradox of this is that it is not true that economic crises are driven in the first place by austerity regimes and underconsumption. Mass underconsumption is common to all class societies and has existed for at least three millennia. Economic crises as a recurrent phenomenon started in the later 18th century, after the 1763 Peace of Paris signalled the decisive victory of capitalism.

On the other hand, it is true that if, once you are in crisis, you try and get out of it by dumping the losses on the relatively poor, and in particular on the working class, while the rate of exploitation is increased, the fact that there is a large debt overhang and a contracting market means that firms are forced to ‘cash’ this increased rate of exploitation by lowering their prices to maintain market share, resulting in a cycle of deflation. Objectively, the only way out of this is through events that will cause a crash of capital asset values. That can happen either by states in general knifing companies that are also the major contributors to political parties, and imposing default on lenders (a ‘haircut’, as it is sometimes called) – that happened in 1720, when the legislation was passed preventing the recovery of any more than two-thirds of any debt contracted in the bubble period. Alternatively, it has to lead to war, and subsequent state defaults.

It was not Keynesian measures that got the world out of the great depression. It was a combination of war and in particular the fact that something between half and two thirds of all public debt was defaulted in the aftermath. The sheer scale of that default in 1946-48 – plus the fact that the UK had to hand over a lot of assets to the United States – cleared away the inflated creditor claims.

In 1914 politicians across Europe were all thinking that it would be a good idea to have a short (victorious) war, to help free themselves of their internal problems, including the threat of an insurgent working class – war is the way out. But that is not what is happening now. Trump is hardly likely to fall at the hands of a powerful workers’ movement.

There is, however, an objective need within the economy for large-scale defaults, which can only be achieved through war. And, as we have already seen, crises and crashes delegitimise the free market. There is an objective need for non-market collective actions. In the absence of a strong workers’ movement and a left which poses a strategic alternative, the collectivism that is needed necessarily takes the form of rightwing statism and nationalism. As a result of that, there is a drive towards war.

There are some in the US who have been advocating a US war on Iran – as revenge for 1979-81 and also because it looks like a soft target – but largely it will not be a war of pure voluntary choice. The underlying drive towards it is one which is created by the dynamics of the capitalist economy itself. If it does not occur in the Middle East, then it will be somewhere else.

30.5.20

 

This article was first posted at:-

https://weeklyworker.co.uk/worker/1302/no-war-no-sanctions/

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also see:-

FROM BLATCHERISM TO MAYBYNISM

and

https://allanarmstrong831930095.files.wordpress.com/2020/06/right-populism-2.pdf

 

 

 

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