Review: Hegemony and Socialist Strategy

The main challenge with this book is wading through the opaque philosophical style in which it is written. Laclau & Mouffe do however make some interesting points.

At it’s core the book seems to be a rejection of a mechanical and deterministic versions of Marxism. The emphasis is on the development of the concept of ‘hegemony’, and the first part of the book traces its use through thinkers from Luxemburg to Lenin to Gramsci. Laclau and Mouffe seek to develop the concept further into something which can be used to underpin a modern approach to politics.

The key point is that society is not structured in monolithic economic classes whose existence determines how ‘superstructural’ elements are constructed. On one level this seems sensible. It is common sense that political action is built on coalitions, and that any successful revolution will be the same.

That an economic ‘base’ does not mechanically determine a social ‘superstructure’ is surely obvious and I think Laclau and Mouffe are wrong however not to see this already in Marx. There is a divide between his theoretical work, in which her operates at a high level of abstraction to make the underlying ‘laws of motion’ clear. Conversely in his political work such as “The Civil War in France” and “The Eighteenth Brumaire of Louis Bonaparte” Marx uses his theory for more practical analysis. In theory, Marx presents society as containing just two classes to simplify the analysis. In practice he understands that it is more complicated than that.

In fact, developing this theory of hegemony leads the authors to remove the class based element from their analysis almost completely. And that doesn’t seem correct either. They make what seems to me to be a theoretical justification for the ‘third way’ approach and identity politics. What they propose is that people fit into society through a range of different and often conflicting identities which are not determined by economic class, and that this complexity is growing in modern capitalism. The role then of progressive politics – in the absence of an apriori class conflict which has been removed from the analysis – is to stitch together “coalitions of the willing”. In pursuit of what goal, if the liberation of the oppressed class cannot be the goal, it is not clear.

I say ‘seems to’ though because the mode or expression is very challenging indeed. I’m sure this seems reasonable to the authors but it does not help with deciphering what it is the they are trying to say.

In short, this is a book with a lot of value in thinking about what sort of progressive alliances are likely to be necessary if the left is to be successful under modern capitalist conditions. But hamstrung by removing the theoretical underpinning provided by Marx and the analysis of how the ‘laws of motion’ of the economy interact with society to constrain what it is possible to achieve. In the absence of this underpinning it becomes unclear what the goal of progressive politics is, and ends up being a justification for the ‘third way’ approach of Clinton and Blair.

Laclau, Ernesto and Mouffe, Chantal Hegemony and Socialist Strategy: Towards a Radical Democratic Politics (Verso, London, 2014)

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Financialisation and Modern Capitalism

“Financialisation” is an insightful concept when thinking about the modern economy, and how it has changed over the course of the last fifty years. It is something discussed in particular in Greta Krippner’s book “Capitalizing on Crisis” (Krippner 2011).

According to Krippner “financialisation” is associated with a post-industrial economy, and means:

“a broad based transformation in which financial activities… have become increasingly dominant… over the last several decades.”

(Krippner 2011, p.2)

Krippner outlines an example of this process in practice analysing changes in the US economy from the 1960s to the 2000s. Successive policy changes in response to developments in the real economy led to the highly developed financial economy of the 2000s.

In practice this means the corporations come to rely on increasingly on the income from financial investments for their profits, and less on the return on investment in productive industry. Krippner quotes a 2006 study of the Ford Motor Company generating profit primarily by selling loans to purchase cars rather than from the sales of the cars themselves (Krippner 2011, p.3).

This is a fundamental change in how the economy functions, reducing investment in production as companies instead chase profitable financial investments. The system becomes increasingly disconnected from the ‘real’ economy and prone to oscillation and crisis. It’s a process that Marx touches on in Volume 3 of Capital when he describes ‘fictitious capital’, speculation, and the credit system. As more money is invested, the banks use it to create more ‘fictitious’ capital to create more investments and so as the system begins to spiral out of control. It was a process like this which drove asset prices for ‘subprime’ US real estate to unsustainable levels leading to the global financial crisis of 2007-9.

Michael Roberts takes up a similar theme in his analysis of the economy since 2007. His focus is on how companies need to search for different sources of profit as they try to survive a declining rate of profit overall, something which is a standard part of Marx’s analysis of a capitalist economy.

“After 2000, the rate of profit based on net worth remained under the rate against tangible assets for the first time on record, suggesting that the “financial” part of the assets of the capitalist sector became a significant obstacle to the recovery in capital accumulation.”

(Roberts 2016, p.122)

“Profit margins for the large companies are near all-time highs and cash reserves have accumulated, but there is little corresponding investment in the real economy; instead, it is in dividends, stock buybacks, and speculation in financial assets—and, of course, a revival of the property markets.”

(Roberts 2016, p.144)

There is little doubt that weak productive investment is driving poor ‘real world’ economic performance. Analysis by the UCL Institute for Innovation and Public Purposes suggests that “at the root of the UK’s weak economic performance is a low rate of investment“.

“The UK banking sector has largely retreated from funding productive activity in the real economy, and is instead focused on financing and trading existing assets.”

(MacFarlane 2018)

Krippner’s view that individual policy decisions designed to tackle an isolated problem have resulted in long term and fundamental changes to the functioning of the economy  also complements David Harvey’s view on how capitalism handles crises.  For Harvey, building on Marx, capitalism is an inherently unstable system with a number of points where crises can form for different underlying reasons. When a crisis occurs, the response tends to address the immediate short term problem by moving the point of tension elsewhere in the system to re-emerge later.

This is exactly the process that Krippner describes in the US. Policy responses developed in reaction to a present crisis put the economy on the path to the next pinch point and the next crisis, each widening and deepening the influence of finance on the economy as a whole.

“Financialisation” then is a concept that helps the analysis of the modern debt-laden economy both as a response to the tendency of the rate of profit to fall (Roberts) and as a means to avoid an incipient crisis while unintentionally preparing the ground for the next (Harvey).

 

Krippner, Greta Capitalizing on Crisis (Harvard University Press, Cambridge Massachusetts, 2011)

Roberts, Michael The Long Depression (Haymarket Books, Chicago, 2016)

Harvey, David Marx, Capital and the Madness of Economic Reason (Profile Books, London, 2017)

Macfarlane, L State investment banks as a source of patient strategic finance in the UK (online) (UCL Institute for Innovation and Public Purpose, https://www.ucl.ac.uk/bartlett/public-purpose/state-investment-banks-source-patient-strategic-finance-uk, accessed 19 January 2018)

Marx, Karl Capital Volume 3 (Penguin, London, 1981)

Review: Capitalizing on Crisis

This is a technically complex work of sociology unpicking and analysing trends in US society, economy, and politics over the course of forty years from the 1960s to the 2000s.

Krippner’s basic thesis is that successive policy decisions over the course of this period, each in response to immediate challenges, have ‘financialised’ the US economy. In other words, have shifted the focus of profit making from investment in productive activity to the ownership and exchange of financial instruments. Even major industrial companies come to make significant portions of their profit from activity in the financial market. This shift has significant implications for how the economy is managed, and the location of future crises.

Krippner demonstrates this through a detailed analysis of economic data and a systematic review of policy shifts during this period. Although this is somewhat dry in places the case is convincing. She defines three separate phases. First the deregulation of the domestic financial market as an attempt to get to grips with the social crisis of the 1960s and 1970s, offering policymakers a ‘reprieve from difficult political choices’. Second the response to the fiscal crisis of the late 1970s and 1980s with growing government deficits which altered the relationship between the domestic and global markets driving a ‘dramatic expansion of credit in the US economy’. Finally on the realisation relying on market mechanisms offered in fact very little restraint on consumers, corporations, or governments how approaches to monetary policy developed incrementally in the period up to 2001 to control the demand for credit through interest rates (as opposed to regulation of the supply).

Although the book was first published in 2011, Krippner stops short of the 2007-9 financial crisis, indicating in the introduction that she considers this to represent a separate stage of development that requires a separated analysis. That said it is clear that the ‘depoliticisation’ of economic decision making that Krippner outlines is a significant factor underpinning the later crisis. As Krippner explains, in making this change the expectation had been that the market would impose a discipline on economic behaviour that political actors were unwilling to do. In fact this has turned out not to be the case at all. The market has promoted and validated a lack of restraint particularly in relation to credit which has left us more exposed than ever to the risk of financial crisis.

Although this is not Krippner’s intention, her analysis is a neat fit for the Marxist view of the long term tendency of the rate of profit to decline (see writers such as Robert Brenner and Michael Roberts). The declining profit possible in productive industry leads to speculation in what Marx called ‘fictitious capital’. This growing financialisation becoming increasing unstable and leading inexorably to crisis. The picture here is one that provides a deep-seated explanation for the financial crisis of 2007-9.

So this is a fascinating book with many implications for further analysis. If a touch dry in places, it is detailed, well researched, and a thought provoking discussion of what underpins the modern economy.

Krippner, Greta Capitalizing on Crisis (Harvard University Press, Cambridge Massachusetts, 2012)

Review: How Will Capitalism End?

Wolfgang Streeck may not in fact answer the question that he poses in the title of this book, but it is still a superb read.

How Will Capitalism End” consists of a set of essays and speeches from the German sociologist published previously in New Left Review (and elsewhere) and organised around the theme of the challenges to capitalism. Each is a thoughtful and valuable contribution to the analysis of modern capitalist, it’s impact on society, politics, and environment, and what our options for the future might be.

The opening essay sets the tone. It poses the suggestion that capitalism has so successfully eliminated all opposition to it’s conquest of politics and society that it’s destructive nature now has free rein without constraint from organised labour or political control. The end result will be the long slow death of capitalism’s ability to deliver for the majority of its inhabitants, without the prospect of its replacement by a different system which can pick up the baton as Marx originally envisaged.

The remaining essays work around similar themes. The emphasis is on the impact of the neoliberal project to disconnect the management of the economy from political and social control. This can be seen in Streeck’s characterisation of the changing nature of the state leading towards the current “consolidation” state where having passed successively through private debt then public debt stages now exists to ensure that we reliably meet our obligations to asset holders.

Another theme of Streeck is the divide between social rights and free markets. Where the democratic state prioritises providing public services for its citizens identified through elections. By contrast the “consolidation” state prioritises the contractual claims of creditors and the servicing of debt. The tension between these two has been a major driver for social and political change since the second world war.

This is a thought provoking and very readable set of essays which should be of interest to anyone who doesn’t accept the orthodox economist world view.

Streeck, Wolfgang How Will Capitalism End? (Verso, London, 2016)

Rosa Luxemburg and the Communist Manifesto

After reading Rosa Luxemburg’s “The Accumulation of Capital”, included in Verso’s second volume of her complete works I wrote a post covering her analysis that accumulation could only proceed on the basis of there being sufficient space outside the global capitalist system for it to expand into.

I recently re-read Marx’s and Engels’ Communist Manifesto (thanks to my wife, who gave me the best possible Christmas present for a radical). This was written in 1848, that is before Marx began his economic work. It is interesting therefore that Marx and Engels also point out in the Manifesto the importance of the non-capitalist economies to the growth of capitalism itself.

For example this comment on the importance of the discovery of America on the initially explosive growth of capitalism:

“Modern industry has established the world market, for which the discovery of America paved the way. This market has given an immense development to commerce… This development has, in its turn, reacted back on the extension of industry.”

(Marx and Engels 2010, p. 22)

Marx and Engels seem to have a similar mindset to Luxemburg in her analysis that capitalism needs to grow into the space outside itself in order to expand.

“The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe.”

(Marx and Engels 2010, p. 25)

Along with the points Luxemburg makes about capitalism drawing even those parts of the globe that are not part of the capitalist world into its orbit.

“The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country.”

(Marx and Engels 2010, p. 25)

“The bourgeoisie… draws all, even the most barbarian, nations into civilisation… It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst… it creates a world after its own image.”

(Marx and Engels 2010, p. 26)

As I wrote in my earlier post I don’t think that this is the end of the story, that their are other important factors both supporting and driving the expansion of capital. But it is interesting to see support for Luxemburg’s analysis in this earlier work of Marx and Engels.

Luxemburg, Rosa The Complete Works of Rosa Luxemburg Volume II (Verso, London, 2016)

Marx, Karl and Engels, Friedrich The Communist Manifesto (Vintage, London, 2010)

Review: The Meaning of Marxism

This is not a terrible book. But it is a limited one. As a basic introduction to a lot of the basic concepts in Marxism it has some merit. D’Amato sweeps across the range of Marxism from the economy to exploitation to the state to the revolutionary party, covering each at a basic introductory level. What then is the problem?

Partly it is that D’Amato’s treatment is quite dogmatic. He discusses Marxism as a fairly monolithic source of truth without acknowledging debate or variation other than to condemn Stalin and Mao as dictatorial and not true Marxists. But Marxism is not a monolithic entity, certainly not anymore. It’s use in the modern world must surely be as an analytical toolkit to prompt debate and the exploration of alternatives to the neoliberal capitalism. This requires the sort of argument that doesn’t form any part of this book. On top of this, D’Amato’s own (undeclared) viewpoint is sectarian Trotskyist, a fairly specific clique within modern socialism.

It doesn’t feel like D’Amato engages with modern uses of Marx’s analysis at all. He doesn’t mention such thinkers as David Harvey or Wolfgang Streeck, both of whom make intelligent use of Marxist thinking to break down modern society and economy. Jodi Dean is mentioned only to attack her as not adhering to the true nature of socialism. Yet these writers (and I’m sure others that D’Amato doesn’t mention) are all critically engaged with Marx and Marxist thought.

In fact this book feels like a simple restatement of a revealed truth. D’Amato quotes Marx and Trotsky extensively, and often follows this up with an assertion that whatever point is being made remains relevant to the modern world, without attempting to actually apply the analysis to the changed world. And it is important to remember that the capitalist world has changed since Marx was alive and we cannot simply treat his work as truth. It is telling that D’Amato quotes the Communist Manifesto extensively, written before Marx began his economic work and while it has value doesn’t reflect the depth of his later work.

It does not feel like D’Amato is trying to reconstruct a modern left progressive movement that can take on the world of capitalism. He is simply reasserting the world view of Trotsky in the 1930’s and D’Amato’s belief that it remains relevant to today.

Finally the bibliography is limited and strongly slanted towards Trotsky and with very few recommendations of modern writers. While it does reference Capital, it doesn’t really provide a guide to getting further into Marx’s analysis (for example D’Amato doesn’t reference key works by Harvey, Michael Heinrich, or Ben Fine that can help ease the difficulty of getting to grips with Marx’s economics).

In short this is a limited book. It does have value, it is written in clear language and covers a wide range of subjects. It is by no means a definitive introduction to the basics of Marxism.

D’Amato, Paul The Meaning of Marxism (Haymarket, Chicago, 2014).

Beauty and the Beast

Over Christmas this year I watched the Disney live action version of “Beauty and the Beast” with my family. I was fascinated by two specific parts of the film which are revealing about US politics and Disney’s place as a prop for the status quo. It’s easy to believe that Disney promotes a reactionary view of society through its depiction of women, gender, and the family. In Beauty and the Beast we are presented with a right wing view of political economy as well.

At the beginning of the film we are presented with an aristocrat whose lifestyle brings down on him the curse of the Enchantress which turns him into the beast. His most important crime is given as impoverishing the villagers by imposing too much tax.

This is the world view of Trump and his tax cutting bill. The prince stands in place of the state and the film gives us the morality of the Tea Party, where the state is considered too intrusive and all tax is bad. Nothing else is said about where the prince’s wealth might have come from or how it will be sustained once it is no longer derived from ‘taxes’.

At the end of the film the prince is released from the curse. His position in society, and therefore presumably also his ability to extract surplus value from the villagers is reinstated. The film ends with a party where the villagers celebrate the return of the prince and his engagement to Belle. Having realised the folly of his earlier life, the prince is now keen to include the villagers. In their turn they no longer present themselves a supplicants or workers but as well dressed and middle class, they fit seamlessly into the etiquette of the castle in both dress and behaviour.

In other words it is not the prince that has changed, but the villagers who no longer seek to challenge the prince’s behaviour but rather accept it and seek to fit in. This is a standard charge by the status quo against those who seek progressive change, the attempt to change the prince was simple the “politics of envy“. The villagers ought to accept that the prince’s lifestyle is one they should aspire to achieve themselves (presumably in competition with each other).

This film then brings a very specific world view to its depiction of the life of the prince and the village. In some ways this is similar to Downton Abbey in its embodiment of conservative values.

I didn’t watch the film closely, but these two fragments stood out to me. Perhaps it is not surprising that a major film studio should reflect the current status quo, and Disney is well known for conservative “family values”. But I must confess that I was surprised to see the political economy of the neoliberal right as well.