A Capitalist Criticises Capitalism (1999)

Book Review from the April 1999 issue of the Socialist Standard

“The global capitalist system . . . is coming apart at the seams”. So declared arch-speculator George Soros before a US congressional enquiry on 19 September last year. He has since expanded on this in a book entitled The Crisis of Global Capitalism. What has he in mind?

By “global capitalist system” Soros doesn’t mean what we would understand by the term, i.e. capitalism as a world-wide system of production for profit, but the more restricted sense of present world financial arrangements which allow the more or less free movement of capital throughout the world:

“The global economy is characterized not only by free trade in goods and services but even more by the free movement of capital. Interest rates, exchange rates, and stock prices in various countries are intimately interrelated, and global financial markets exert tremendous influence on economic conditions. Given the decisive role that international financial capital plays in the fortunes of individual countries, it is not inappropriate to speak of a global capitalist system” (Introduction).

It is these arrangements—this single world financial market—that he is saying is in danger of disintegrating; which of course would not at all be the same thing as the collapse of capitalism that has sometimes been mistakenly predicted by some writers in the Marxist tradition.

Unstable system 

Soros, following, consciously or not, a distinction made by one school of anti-imperialist thinkers in the 1970s and 80s, divides the “global capitalist system” into a centre (US, Western Europe, Japan) and a periphery (Asia, Latin America, Russia, East Europe, Africa). Under this system capital flows from the centre to the periphery and back, supposedly to the mutual benefit of both. He sees the danger of disintegration coming from countries on the periphery taking steps to stop the free flow of capital in a bid to avoid the negative effects of the system’s instability on their economies and populations:

“To put it bluntly, the choice confronting us is whether we will regulate global financial markets internationally or leave it to each individual state to protect its own interests as best it can. The latter course will surely lead to the breakdown of the gigantic circulatory system, which goes under the name of global capitalism” (p. 176).

So what Soros means by the “breakdown” or “disintegration” of global capitalism is not the collapse of the world-wide system of production for profit based on the exploitation of wage labour, but only states coming to adopt measures that impede the free movement of finance capital.

Soros does not believe this to be an inevitable process. As the quote above makes clear, he thinks it can be stopped if appropriate measures are taken at international level; global institutions must be created to lay down some basic ground rules for the operation of global capitalism.

For Soros is no free marketeer. In fact part of his book is a devastating attack on those he calls the “market fundamentalists”, the followers of Von Mises, Von Hayek and others, who advocate that market forces be given complete free rein and who came into intellectual prominence in the time of Reagan and Thatcher. Soros levels two charges at them. First, that they think that markets have an in-built tendency towards creating a stable situation through supply and demand being in balance, while this is not the case. Second, that they preach that the market is the best way to regulate all human activities.

Writing from his own experience, admittedly not of the real economy but only of financial markets, Soros challenges the equilibrium theory:

“Market fundamentalists have a fundamentally flawed conception of how financial markets operate. They believe that financial markets tend towards equilibrium . . . Financial markets are characterized by booms and busts and it is quite amazing that economic theory continues to rely on the concept of equilibrium, which denies the possibility of these phenomena, in face of the evidence. The potential for disequilibrium is inherent in the financial system; it is not just the result of external shocks” (Introduction).

The external shocks which the market fundamentalists invoke are usually, of course, government interventions of one sort or another. According to them, if governments just stood aside and let the magic of the market operate, there would be no slumps just continuous, smooth growth. But there is no evidence for this. Throughout the 19th century British governments pursued a policy of laissez-faire yet slumps still occurred on a regular basis.

The fact is that the market system does have a built-in tendency towards creating booms and busts rather than stability and smooth growth. As Marx pointed out, this applies to the real world of market-oriented production and not just to financial markets. Soros is even prepared to give Marx some credit here:

" . . . the capitalist system by itself shows no tendency toward equilibrium. The owners of capital seek to maximise their profits. Left to their own devices, they would continue to accumulate capital until the situation became unbalanced. Marx and Engels gave a very good analysis of the capitalist system 150 years ago, better in some ways, I must say, than the equilibrium theory of classical economics” (Introduction).

He claims, however, that thanks to “countervailing political interventions in democratic countries” Marx’s “dire predictions did not come true”. This is based on a misunderstanding of Marx’s view. The “dire predictions” that Soros mentions were not, as he seems to assume, that the unregulated profit-seeking of capitalists would lead to the collapse of the capitalist system but simply that their competitive struggle for profits meant that steady, smooth growth was impossible and that growth proceeded by means of booms and slumps.

Capitalism has not collapsed because it was never going to, not because of government intervention Marx didn’t foresee. And government intervention has not been able to eliminate the boom/slump cycle which Marx saw was an unavoidable feature of capitalism.

Creeping marketisation

Soros sees himself as continuing the political philosophy of Karl Popper. As expounded in books such as The Open Society and Its Enemies Popper argued against the idea of trying to establish a “perfect” society in favour of accepting an “open” society as one subject to permanent improvement by piecemeal social engineering, by which he understood capitalism with a political structure involving elected institutions, the rule of law and pluralism, i.e. more or less what the West has had for years.

For Popper the main enemies of his “open society” were the totalitarian ideologies of fascism and “Marxism” (which, for him, was not just Marx’s own views but those mixed up with Lenin’s and Stalin’s). Soros adds a third which he says has come into prominence since the collapse of “communism”: uncontrolled capitalism. Hence the subtitle of his book “Open Society Endangered”, though he had already expressed this view in a famous article “The Capitalist Threat” that first appeared in The Atlantic Monthly in February 1997 and which was widely reproduced.

Soros sees the danger coming from the penetration of market values into all aspects of life, leading to social disintegration. “Monetary values”, he writes, “have usurped the role of intrinsic values and markets have come to dominate areas of society where they do not properly belong” (p. 206). He is in fact quite forceful in his criticism of this aspect of global capitalism:

  “The functions that cannot and should not be governed purely by market forces include many of the most important things in human life, ranging from moral values to family relationships to aesthetic and intellectual achievements. Yet market fundamentalism is constantly attempting to extend its sway into these regions, in a form of ideological imperialism. According to market fundamentalism, all social activities and human interactions should be looked at as transactional, contract-based relationships and valued in terms of a single common denominator, money. Activities should be regulated, as far as possible, by nothing more intrusive than the invisible hand of profit-maximising competition. The incursions of market ideology into fields far outside business and economics are having destructive and demoralizing social effects” (Introduction).
   “A transactional society undermines social values and loosens moral constraints. Social values express a concern for others. They imply that the individual belongs to a community, be it a family, a tribe, a nation, or humankind, whose interests must take precedence over the individual’s self-interests. But a transactional market economy is anything but a community. Everybody must look out for his or her own interests and moral scruples can become an encumbrance in a dog-eat-dog world. In a purely transactional society, people who are not weighed down by any considerations for others can move around more easily and are likely to come out ahead” (p.75).

Soros does not realise just how fundamental a criticism of capitalism this is. Although he rightly says that “a purely transactional society”, in which the only links between people would be monetary, “could never exist”, the market fundamentalists are equally right to insist that the logic of capitalism is to work towards this—they are just crazy in thinking that this nightmare situation is the ideal form of society.

Soros’s mistake is to think that you can have capitalism and somehow keep its money-commodity relations from spreading everywhere. The history of capitalism is the history of the continuous spread of such transactional relationships—i.e., the market—into more and more fields of human activity. It is a process that cannot be stopped within capitalism as growing marketisation is just as much a feature of capitalism as capital accumulation; indeed the two go together.

Soros, however, is a supporter of capitalism:

  “I want to make it clear that I do not want to abolish capitalism. In spite of its shortcomings, it is better than the alternatives. Instead, I want to prevent the global capitalist system from destroying itself” (Introduction).

We doubt whether he has given serious consideration to the alternative of a global society based on the common ownership of the world’s resources and production directly to satisfy human needs. Not that we would really expect him to. Some of his fellow-capitalists already think he has gone too far in his criticism of their system.

Adam Buick

Worldwide is the only way (1999)

Editorial from the April 1999 issue of the Socialist Standard

Tommy Sheridan surely put his finger on it when he said, in a letter to the Glasgow Herald (10 February), that the "the problem is that wealth is owned and controlled by a tiny minority of society in an undemocratic and unaccountable fashion".

This obscene concentration of wealth in a few hands lies at the heart of all major social problems which confront us today. Far from being irrelevant, as some argue, the property question is the most important social question of the modern age. It cries out for a solution.

What, then, is Sheridan's solution? By his own account, it is "the collective ownership and democratic control of the means of production throughout Scotland".

This won't work. Scotland is only a small part of an economic system which embraces the whole world. It could never enjoy any real autonomy or self-sufficiency in the face of the world market. From day one it will be buffeted by hostile economic forces entirely beyond its control.

In no time at all, Scotland will be faced with two choices—either total ruin, or the complete restoration of capitalist economics. Councillor Sheridan's "independent socialist Scotland" would be neither independent nor socialist.

We completely share Tommy Sheridan's disgust at what capitalism does to people. We can readily understand his impatience for an end to poverty in all its hideous guises. But we think he has allowed his impatience to get the better of him, to lead him down short-cuts that go nowhere.

There is no sense in dodging the issue. Since the property problem is in its essence worldwide, the solution to that problem must also be worldwide. That is why the Socialist Party insists that the socialist transformation of society must be carried out on a worldwide basis. Quite simply, nothing less will do.

"Socialism in one country" is an illusion. That is the lesson of history. If the Soviets could not manage it, we fail to see how the Scots could.

Seeing beyond the particular (1999)

Theatre Review from the April 1999 issue of the Socialist Standard

A Month in the Country by Ivan Turgenev. Royal Shakespeare Company, touring.

Standing in the queue for interval refreshment I couldn't but overhear the conversation. "Isn't she awful?" said the woman to her friend. "Terrible," came the reply, "simply terrible. She's so selfish."

At one level this seemed an appropriate reaction. Natalya Petrovna, wife of wealthy Arkady, is self-centred, scheming and manipulative; a woman only too aware of her power and influence, and with a ruthless inclination to use both for her own ends. And predictably, because this is a nineteenth century Russian drama constrained by the conventions of the time, having decided that she is in love with her son's tutor, she sets in train a series of actions which are to have calamitous consequences for most of the household.

Put like this Brian Friel's adaptation of Turgenev's play sounds much like a trite Mills & Boon paperback: a view which is encouraged by the synopsis given in the programme. "Both Natalya and her ward Vera fall in love with the young man: Natalya entranced by his youth and energy but deeply confused by her own reaction, Vera awakening to her first adult emotion."

Fortunately Friel's dialogue is much more weighty and substantial than this kind of hushed tone would suggest. Full of irony and no little cynicism it paints, for those inclined to look beyond the immediate, a mordant picture of a society hastening towards instability: of landed gentry who live shallow, empty lives; local dignitaries trying to ingratiate themselves with their lords and masters; and of apparently feckless servants. As Natalya and her household pursue their dull, impoverished lives, a crippling sense of listlessness is evident. It's a picture of bourgeois life that Chekov was later to paint even more vividly in such plays as The Seagull, Uncle Vanya and The Cherry Orchard.  

It is often observed, I think validly, that people's reaction to experience—whether the shock of being declared redundant, a newspaper photograph of some member of the royal family skiing in Switzerland, or—in this instance—a play about a family of Russian landowners in the 1840s—will depend upon what they bring to the experience. Thus a trade union negotiator going to see the redundancy of some union members in the context of local and national demands for labour, the state of the economy etc; a particular employee is going to view his or her redundancy as a personal calamity; and a member of the Socialist Party is likely to place both points of view in the context of an over-arching understanding of how capitalism works.

So, too, Turgenev's play. It is suspect that some of the audience saw the play almost exclusively in terms of a "human interest story"; the particular tale of a wife of a wealthy Russian landowner, her ward, and her son's tutor. Others in the audience, familiar with other plays by Turgenev and Chekov, perhaps saw in the lives of Arkady and Natalya much that reinforced a more general picture of life in Russia in the nineteenth century. Whilst those disposed to analyse events on stage in the light of other perspectives might have reflected further. About the way that nineteenth bourgeois life imprisoned not only the working class, but also—at the level of being usefully involved in life, and of using their skills and talents to achieve personal satisfaction—many of the bourgeoisie, men and women alike. About the similarities between Natalya and some of Chekov's and Ibsen's heroines, and the way that women's abilities were demeaned by bourgeois life. (Natalya's only task is, seemingly, to choose the menu for dinner.) And about the way that capitalism breeds selfishness, as surely as a tropical swamp breeds mosquitoes.

This is the second time that Brian Friel has adapted Turgenev for the stage. I remember seeing Friel's play of Fathers and Sons, "after the novel by Ivan Turgenev", when it was produced at the National Theatre in 1987. On that occasion Friel, so it seemed to me, managed to place his characters in a much more multi-dimensional context, so that the audience couldn't but be aware that in some significant sense the various protagonists were not only speaking for themselves, but also as representatives of particular classes and groups. I judge Friel to be less successful on this occasion. In spite of a quite magnificent cast and an admirable production, the audience—encouraged by the programme note—was apparently being invited to see the play in uni-dimensional terms. As a result I concluded that whatever the two friends I heard talking at the interval paid for their admission and refreshments, they were finally being short-changed.

Michael Gill

Exit Oskar the pink (1999)

From the April 1999 issue of the Socialist Standard

In March the man the Sun once called the most dangerous man in Europe resigned as Germany's Finance Minister. The Sun—or rather Rupert Murdoch as a capitalist himself—didn't like him because they thought he had plans to increase direct taxes on profits in Britain up to the same level as in Germany.

Oskar Lafontaine was chairman of the German Social Democratic Party (SPD) which returned to power in October after years in opposition. Politicians who are out of office for long periods often loose their grip on capitalist reality—that governments must nurture profits and provide an environment in which they can flourish since they are what makes capitalism go round—and imagine that governments can work wonders simply by political will.

Sometimes, when returned to power after years in the wilderness, they try to put this mistaken idea into practice. The classic example was the French leftwing government, with Communist Party participation, that came into office when Mitterrand was first elected President in 1981. They really believed that they could "relaunch the economy" by "increasing popular consumption" and so they brought in measures to increase the minimum wage (which in France affects all wages since they are tied to it) and social benefits.

The result wasn't long in coming. Instead of economic growth being relaunched, inflation increased, leading to three devaluations of the franc in as many years. Within a year the new government adapted its policies to capitalist reality; they clawed back the reforms they had introduced and imposed austerity as a means of shifting the balance back from consumption to profits. They had learned the hard way that you cannot run capitalism in the interests of the excluded majority.

Since, with Kohl winning election after election, the SPD had been out of power for fifteen years, the big question after their September 1998 election victory was: would they make the same mistake as the first Mitterrand government, especially as they were in coalition with the Greens who also had ideas which if seriously pursued would threaten profits?

Oskar Lafontaine had written a book in which he proposed, as a way of getting Germany out of the current crisis, that wages and salaries should go up in line with productivity. He repeated this in newspaper articles and interviews after the SPD election victory. Since this would result in wages and salaries going up faster than they had been, it was equivalent to the policy pursued by the 1981 French government. And the thinking behind it was the same: if wage and salary earners had more to spend this would create more markets, so stimulating the economy to grow again.

In the event this turned out to be just another electoral promise but it earned Lafontaine the reputation of being "Red Oskar". Red used to signify revolutionary and has always been the fetish colour of Socialists. But there was nothing revolutionary about Lafontaine's ideas. He was merely putting forward the orthodox Keynesian nostrum that in a period of economic stagnation you should increase spending. Of course by the end of the 1970s Keynesianism had proved to be an utter failure on this point, as Marxists had foreseen years previously. But it is a measure of the very narrow margin of manoeuvre of reformists these days that even milk-and-water Keynesian reformism is denounced as "revolutionary" and "red".

Although, as Finance Minister, Lafontaine never tried to implement his idea of tying wages and salaries to productivity he did introduce some new direct taxes on profits and he kept on calling on the European Central Bank to reduce interest rates. He believed that this would help Germany out of the crisis (even though in Japan interest rates are less than 1 percent and they're still in the economic doldrums). For a Finance Minister to repeatedly call for a lowering of the interest rate was seen as out of order or even counterproductive. The ECB, which fixes the minimum short-term lending rate for the whole of Euroland, had to refuse such calls just to prove it did not give in to political pressure.

It was this that was the immediate cause of Lafontaine's downfall. The interest rate reduction which he and the rest of the German government wanted was being held up by his political interference making it difficult for the Bank to do this. So pressure was bought to bear and he left politics to spend more time with his family. Yet another reformist politician bit the dust. Good, or rather good as long as it helps workers in Germany and elsewhere realise that reformism is a dead-end.

Adam Buick

The Postmodern Marx? (1999)

Book Review from the April 1999 issue of the Socialist Standard

The Postmodern Marx by Terrell Carver, Manchester University Press, 1998.

Carver, Professor of Political Theory at the University of Bristol, wants us to take seriously the techniques of textual and narrative analysis within what he calls "a mild form of postmodernism". By treating Marx's work as an open text, with "multiple Marxes" and no authoritative version of Marx or Marxism, this is said to encourage further critical engagement between the reader and Marx. Above all, the chief concern is to avoid dogmatic "closure" in terms of what to think about Marx.

We in the Socialist Party have some disagreements with Marx, but more often than not, just very different interpretations of Marx than the usual academic interpretations and total opposition to the regimes around the world which claim to be Marxist. To our critics (on the left especially) this position is sometimes portrayed as idiosyncratic. Yet Carver and our critics oversimplify: between Carver's almost anything goes and the dogma of the leader-fixated Left the Socialist Party has to work for consensus in a democratic, leaderless organisation with a shared socialist objective. In the Socialist Party each member has to come to terms with what Marx said, but any implementation depends on democratic agreement being reached. 

The Postmodern Marx?

Controversially, Carver argues that Marx was a philosophical idealist (the view that concepts construct or determine reality) and subscribed to methodological individualism (the analysis and explanation of the actions of socially constructed individuals). He is factually incorrect in saying socialism is a stage between capitalism and communism; Marx simply did not make that distinction. However, Carter is quite clear that the former "Marxist" dictatorships of Eastern Europe had no claim on Marx "because they never abolished money nor even attempted to secure any genuine break, voluntary or otherwise, with the history of commodification" and if the advocates of "market socialism [sic] intend to accept the monetary economy, however cooperativised and democratised, then they had better come clean as social democrats and welfare liberals" and not as socialists. Because: "if we have money, we have to deal with the characteristic dynamics of capitalist or so-called market societies, and socialist ideals are necessarily incompatible with this." This is so very true, but it does rather contradict the whole point of this book.

Incidentally, Carver recounts an acquaintance between Andrew Johnson, a translator of art books, and Marx. In October 1852 Marx wrote to Engels: "If you have to write to me on important matters, do it under the address: A. Johnson, Esq., Bullion Office, Bank of England." What a wonderful (postmodernist?) irony that Marx should want to use the Bank of England as a postal drop.

Lew Higgins

Direct Action (1999)

From the April 1999 issue of the Socialist Standard

Fly posters pasted up in Norwich invited members of the public to a Direct Action Forum. Stair, a comrade, asked me if I was interested in going along. I wasn't. But something told me I should get out there and become au fait with what people are thinking, though what people are thinking I often find perturbing. I had done it all over the years and now found it heart-sinking to know that there are still people who believe that cutting wires on perimeter fences and swinging about in the branches of trees is going to change anything. From experience I knew that one-day participants in these activities would grow weary of what they were doing and look for a job, return to their studies or take up a career. I recalled the nights spent in my house in London many years ago talking animatedly with friends about the class struggle. I was not to know then that some of those very same people would, in later years, go on to become MPs, trade union officials or have other establishment careers. For them the class struggle became a distant memory.

By the time we arrived at the pub where the meeting was to be held about forty people had already gathered. By 8.30 the small meeting room was filled to over-capacity with sixty, maybe seventy, eager, bright-eyed young people raring to go. I admit to a stab of regret that the word "socialism" would not have had half the appeal for those present as the words "direct action" obviously had.

The suggestion was made that we should break up into smaller groups to discuss what kind of action we would be interested in taking. I must confess that at this point I was feeling a distinct disinclination to join in this discussion. In fact the only direct action I could imagine myself taking was that of getting the hell out of it and going home. But Stair was enjoying himself. He kicked off by giving the group a short account of his own political history which was half as long as mine but which contained some of the same ingredients. He requested other members of the group to do the same. Like Stair they were young but they did not easily use the word "capitalism". They wanted to get involved, they said. They had social consciences and knew there was much wrong with society. The car culture, chemical factories, nuclear weapons, genetically modified foods and cycle lanes were among the subjects the direct actionists got excited about. One man announced that he intended to set up a peace camp in Norwich. They said "Nice one" and "Yeah!" to show him he had support in this. No-one thought to ask where in Norwich or even why. Giving some very good examples of why he thought the way he did Stair explained to the group that direct action was a misdirection of energy.

His analyses of the contradictions intrinsic in direct action did not go down very well. Mouths sagged open in disbelief, protests rose from fevered lips and (hopeless, this) psychological deafness set in. "But we've got to do something," they cried. We told them they could become socialists. Their psychological deafness increased.

When we regrouped the spokesperson for our group reported back to the main body of the meeting that there were people in his group who saw no point in direct action. Here Stair interjected with "You're just pissing about with capitalism." There was a puzzled silence but no-one took him up on this. And then it was business as usual.

After the meeting Stair was optimistic. He said he felt we may have sown a few seeds. The thought uppermost in my mind was that I would be loath to attend any other direct action forums in the future. The spectacle of all those youthful faces aglow with enthusiasm for something so tenuous caused me to experience an emotion akin to sorrow. All that wonderful energy going into little more than thumbing noses at capitalism. What a shame.

Heather Ball