Zombie Capitalism Global Crisis and the Relevance of Marx

Zombie Capitalism Global Crisis and the Relevance of Marx

Zombie Capitalism

Zombie Capitalism Global Crisis and the Relevance of Marx

Chris Harman

H Haymarket Books Chicago, Illinois

First published in July 2009 by Bookmarks Publications.
Copyright © Bookmarks Publications.
This edition published in 2010 by Haymarket Books
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ISBN: 978-1-60846-104-2

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Cover design by Josh On.

This book was published with the generous support of Lannan Foundation and the Wallace Global Fund.

Printed in Canada by union labor.

Library of Congress Cataloging in Publication data is available.

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Contents

Introduction 7
Part One: Understanding the System: Marx and Beyond
1 Marx's Concepts 21
2 Marx and His Critics 41
3 The Dynamics of the System 55
4 Beyond Marx: Monopoly, War and the State 87
5 State Spending and the System 121
Part Two: Capitalism in the 20th Century
6 The Great Slump 143
7 The Long Boom 161
8 The End of the Golden Age 191
Part Three: The New Age of Global Instability
9 The Years of Delusion 229
10 Global Capital in the New Age 255
11 Financialisation and the Bubbles That Burst 277
Part Four: The Runaway System
12 The New Limits of Capital 307
13 The Runaway System and the Future for Humanity 325
14 Who Can Overcome? 329
Notes 353
Glossary 394
Index 403

About the Author

Chris Harman (1942-2009) was a leading member of the Socialist Workers Party (www.swp.org.uk). He was the author of numerous books including A Peoples History of the World (Bookmarks 1999 and Verso 2008), Revolution in the 21st Century (Bookmarks 2007), The Fire Last Time: 1968 and After (Bookmarks 1988), The Lost Revolution: Germany 1918 to 1923 (Bookmarks 1982). He was the editor of International Socialism, a quarterly journal of Marxist theory (www.isj.org.uk).

The Socialist Workers Party is linked to an international network of organisations, for further information go to ww.swp.org.uk/ international. php

Introduction

An unstable world

We live in an unstable world, and the instability is going to increase. It is a world where a billion people feel hungry every day, and the hunger is going to increase. It is a world which is destroying its own environment, and the destruction is going to increase. It is a violent world, and the violence is going to increase. It is a world where people are less happy, even in the industrially advanced countries, than they used to be,1 and the unhappiness is going to increase.

Even the most craven apologists for capitalism find it hard to deny this reality any longer, as the worst economic crisis since the Second World War continues to deepen as I write.

The world's best known banks have only been saved from going bust by vast government bail-outs. Thousands of factories, stores and offices are closing across Europe and North America. Unemployment is shooting upwards. Twenty million Chinese workers have been told they have to return to the villages because there are no jobs for them in the cities. An Indian employers' think tank warns that ten million of their employees face the sack. A hundred million of the world's people in the Global South are still threatened with hunger because of last year's doubling of grain prices, while in the richest country in the world, the United States, three million families have been dispossessed from their homes in 18 months.

Yet just two years ago, when I began this book, the message was very different: "Recent high levels of growth will continue, global inflation will stay quite subdued, and global current account imbalances will gradually moderate," was the "consensus" among mainstream economists, reported the Bank of International Settlements. The politicians, industrialists, financiers and commentators all agreed. They toasted the wonders of free markets and rejoiced that "entrepreneurial genius" had been liberated from regulation. It was wonderful, they told us, that the rich were getting richer because that provided the incentives which made the system so bountiful.

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Trade was going to obliterate hunger in Africa. Economic growth was draining the vast pools of poverty in Asia. The crises of the 1970s, 80s, 90s and 2001-2 were memories we could put behind us. There might be horrors in the world, wars in the Middle East, civil wars in Africa, but these were to be blamed on the shortsightedness of essentially honest politicians in Washington and London who may have made mistakes but whose humanitarian intervention was still needed to deal with psychopathic maniacs. The words of those who saw things differently were ignored, as the media poured out candyfloss layers of celebrity culture, upper middle class self-congratulation and senseless nationalist euphoria over sporting events.

Then in mid-August 2007 something happened which began to sweep the candyfloss away to provide a glimpse of the underlying reality. A number of banks suddenly discovered they could not balance their books and stopped lending to each other. The world's financial system began grinding to a halt with a credit crunch that turned into a crash of the whole system in October 2008. Capitalist complacency turned to capitalist panic, euphoria to desperation. Yesterday's heroes became today's swindlers. From those who had assured us of the wonders of the system there now came one message: "We don't know what has gone wrong and we don't know what to do." The man who not long before had been treated as the supreme genius overseeing the US economic system, Alan Greenspan, of the Federal Reserve, admitted to the US Congress that he still did "not fully understand what went wrong in what he thought were self-governing markets". 2

Governments have been throwing hundreds of billions to those who run the banks-and tens of billions to those who run the multinational car firms-in the hope that this will somehow stop the crisis. But they cannot agree among themselves how to do this and even whether it will work or not.

Yet one thing is certain. The moment any part of the global economy begins to stabilise they will forget the hundreds of millions of lives that have been shattered by the crisis. A few months when banks are not collapsing and profits are not falling through the floor and the apologists will be pumping out candyfloss once again. Their futures will seem better and they will generalise this to the world at large with renewed talk about the wonders of capitalism and the impossibility of any alternative-until crisis hits again and throws them into another panic.

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Introduction

But crises are not some new feature of the system. They have occurred at longer or shorter intervals ever since the industrial revolution established the modern form of capitalism in Britain fully at the beginning of the 19th century.

The poverty of economics

The mainstream economics that is taught in schools and universities has proved completely unable to come to terms with such things. The Bank of International Settlements recognises that:

Virtually no one foresaw the Great Depression of the 1 930s, or the crises which affected Japan and South East Asia in the early and late 1990s, respectively. In fact, each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a "new era" had arrived.3

Nothing sums up the incomprehension of those who defend capitalism as much as their inability to explain the most significant economic episode in the 20th century-the slump of the 1930s. Ben Bernanke, the present head of the US Federal Reserve and supposedly one of mainstream economics' most respected experts on economic crises, admits that "understanding the Great Depression is the Holy Grail of macroeconomics"4-in other words, he can find no explanation for it. Nobel economic laureate Edward C Prescott describes it as "a . . . pathological episode and it defies explanation by standard economics" .5 For Robert Lucas, another Nobel Laureate "it takes a real effort of will to admit you don't know what the hell is going on in some areas". 6

These are not accidental failings. They are built into the very assumptions of the "neoclassical" or "marginalist" school that has dominated mainstream economics for a century and a quarter. Its founders set themselves the task of showing how markets "clear"-that is, how all the goods in them will find buyers. But that assumes in advance that crises are not possible.

Introduction

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