The Dilemma’s of Capitalism apropos of ‘Trump’ and ‘Brexit’

Posted on by A Free Retriever

Crisis– Conflicts – Struggles – Populism (I.)

In A Free Retriever’s Digest Vol.2#4 (August – September 2018) we have published the introductory section of this article: “Trump and Brexit: A new economic and imperialist orientation?” that sets out the question treated. Hereafter you’ll find the integral article, including its main dish: an introduction into the concept of capitalism’s successive “productive orders”. From this angle of attack reflections are developed on the characteristics of the present period and its perspectives. As the author has revised his overview table of capitalism’s four main productive orders, we include the updated version as an annex.

Trump and Brexit: A new economic and imperialist orientation?

The arrival to power of Margret Thatcher in England (1979) and Ronald Reagan in the United States (1981) were indicative of both an economic and imperialist turning point in the early 1980s: economic with the end of post-war Keynesiano-Fordist prosperity and the establishment of the neoliberal productive order; imperialist with the end to peaceful coexistence and the relaunch of the Cold War aimed at bending the Soviet bloc (“Star Wars”…). Combined with the internal crisis in the Eastern bloc and its loss of legitimacy following the mass strike in Poland in 1980, this offensive led to the collapse of the bloc in 1989 (The “fall of the Berlin Wall”, gradual fall of many countries of the Soviet glacis into the American sphere of influence, etc.).

Similarly, one may wonder whether the election of Trump and ‘Brexit’ in these same two countries would not constitute a new turning point:

  • An imperialist turning point, illustrated by a resurgence of tensions between the United States and its main partners: sanctions against Russia, unilateral policy towards Europe on the Iranian nuclear issue, etc., but also by a resurgence of all-out war interventions: Syria, Iran…
  • An economic turning point, marked by an unprecedented American aggressiveness towards its main partners since the end of the Second World War: unilateral protectionist policies, a desire to reindustrialize and weaken its direct competitors by explicit calls for the dismemberment of Europe, by economic and imperialist retaliatory measures against China (taxes on Chinese products, revival of ties with Taiwan…), etc. Generally speaking, we are witnessing a unilateral withdrawal by the United States and/or an implosion – at its initiative – of multiple multilateral agreements of all kinds to replace them with new bilateral agreements resulting from an imposed balance of power: on climate, the nuclear treaty with Iran, NAFTA, the Asian Pacific…

This reorientation of these two key players of the international ruling class is all the more understandable as the latest economic crisis (that of 2008-09)marks a patent exhaustion of the neoliberal productive order that has now been raging for nearly 40 years. Indeed, since 2009, the heart of the capitalist economy has not really recovered, while the next crisis is already knocking at the door, despite the massive injection of liquidity and an explosion of debt to try to support activity. In other words: are the policies advocated by Donald Trump and Theresa May at odds with the economic and imperialist logic of the neoliberal productive order and do they announce new orientations, or are all these phenomena merely the manifestation of an irrationalizing capitalism, generating irresponsible political apparatuses that would act even against the interests of the ruling class at the heart of the great imperial powers?

This question is all the more legitimate as the political milieu, and in particular the Communist Left groups – too much imbued with their political certainties, missed the neoliberal turn and its implications in the early 1980s. We must therefore go beyond the commonplaces we can read in the very general positions of the internationalist micro milieu:the current situation would be a “sign of the seriousness of the terminal crisis of world capitalism in its decomposition phase”, “the mark of a moribund social system” and/or “the choice of the march to generalized war”, etc.

This question of a possible economic and imperialist reorientation is terribly complex,because it involves a conjunction of factors – themselves evolving and fluctuating – both economic, inter-imperialist and inserted in a given force relationship between the classes. It will therefore be a question of trying to develop some guidelines at the level of the crisis (its gravity, the competing powers…), hegemonic tendencies on the international scene, and the state of the force relationship between the classes. To do this, we believe that a pertinent answer can only be found within a coherent analytical framework that provides good keys for reading reality. This series of articles, the first part of which deals with the analytical concept of the productive order, will be devoted to the implementation of this framework.

To ensure its extended accumulation, capitalism must meet a series of imperatives: producing with sufficient profits, selling the commodities it puts on the market, guaranteeing the reproduction of the employees and proportionality between its economic sectors and aggregates, etc. However, contrary to an idea commonly conveyed, both by the dominant ideology and in the Marxist camp, there is not one optimal way to ensure these imperatives, and one only, but there are several ways, which, moreover, may differ from one historical period to another or from one country to another. Thus, throughout its history and in different geographical areas, capitalism has several times redefined its mode of functioning, enabling it to ensure the conditions for its viability. These redefinitions have varied according to political, social, economic and technical contexts. The various arrangements of conditions allowing for enlarged accumulation extend over a variable period of time – from 35 to 60 years up to the present: we call them “productive orders” (their historical succession is described below).

Like cars can run on petrol, diesel, hydrogen, hydrogen, ethanol, electric, LPG, etc. that, despite their very different engines, all serve the same purpose – the transport of people or materials – the engine of the “economic machine” can also be arranged differently, as long as it achieves the same purpose: producing and selling more and more commodities with sufficient profit. We can easily illustrate this by taking two productive orders chosen at the two temporal ends of capitalism – savage capitalism at the time of the first industrial revolution, and the “thirty glorious years” after the second world war: It is obvious that, in a world where wage labor is still not widespread, where productivity growth remains modest, where surplus value is essentially of absolute origin, where the technical composition of capital is still low and where a large part of buyers still belong to the precapitalist sphere (farmers, artisans, ancient aristocrats…), the arrangement of the mechanics of accumulation and crises cannot have the same logic, motives and interconnections as in an environment where wage labor has become dominant, where productivity growth is high, where real wages are indexed to it, where surplus value is essentially of relative origin, where the technical composition of capital is very high and where the buyers are almost exclusively in the pure capitalist sphere!

Similarly, just as a new car works well in its early years and then gradually wears out, eventually having to be replaced, productive orders are also functional for a given period of time, only to run out of steam and give way to another (or a variant of the old one). The international economy is thus made up of a succession of productive orders. We will have to specify the modalities of the succession of these different productive orders and their differences in relation to cyclical economic crises.

Cyclical crises, non-cyclical productive orders

Capitalism has experienced twenty-four international economic crises for nearly two centuries, (1) if we retain, with Marx, the 1825 crisis as the first general crisis of capitalism: “… only with the 1825 crisis big industry opens the periodic cycle of its modern life.” (2) This gives us an average cycle of more or less eight years between each of them. These cyclical crises of capitalist accumulation take the form of a “U“, namely that the conditions that generate the depression put in place those permitting the relaunch, as Marx has well explained: “The crises always are just temporary violent solutions of the present contradictions, violent eruptions that momentarily restore the disturbed equilibrium.” […] “The effected stagnation of production would have prepared – within the capitalist limits – for a subsequent expansion of production. Thus the cycle would have been, once again, completed. Part of the capital depreciated by stagnation would regain its former value. Incidentally, the same vicious circle would again be traversed, with extended production conditions, with an enlarged market, and with an increased productive force.” (3) The internal mechanism of the crisis thus creates, by itself, the conditions for generating an “enlarged market”, an “increased productive force” and “extended production conditions” because, according to Marx: “As the accumulation decreases, the cause of its decrease, namely, the disproportion between capital and exploitable labor force, disappears. The mechanism of the capitalist production process thus eliminates by itself the obstacles it temporarily creates for itself.” (4) This is illustrated in a graphic way by the undulating (blue) curve in the graph below, which includes all the dates of the international economic crises from 1780 to 1920:

As the saying goes: “After rain comes sunshine”. This is true for the cyclical crises of capitalist accumulation as we have just seen. However, this cannot be the case for the succession of productive orders because there is no mechanism to ensure their transition. Indeed, moving from one productive order to another requires a more global reconfiguration of the capitalist functioning at all levels: social, political, institutional… and not only at the economic level as in the case of cyclical crises. If the exhaustion of each productive order is inscribed in the contradictions of their modes of functioning (just as is the wear and tear of a car engine), on the other hand, the advent of a new order is not automatic because it does not depend solely on the economic mechanism but also on sociopolitical conditions and the state of the balance of power between its different components.

Thus, the transition from one productive order to another follows the configuration of an “L”. In other words, after a phase of sustained growth, the productive order takes place in a phase of lower growth and exhaustion of its functioning, a phase during which the reconfiguration of a new productive order can take place but without being unavoidable. This is shown by the oblique segments (black lines) crossing the undulating curve of the graph above, which identify these two phases of the “L” of a productive order, phase A of high growth and phase B of lower growth. While they differ in their logic of operation and succession, the temporality of the first three productive orders that crossed capitalism corresponds more or less to phases A (high growth) and B (low growth) of the industrial cycles identified by Kondratieff (whose growth rates are provided in the table below). This is no longer the case for the fourth Kondratieff cycle, which is divided into two distinct productive orders. This gives us the following chronology of productive orders:

  1. Manchesterian capitalism (or savage capitalism) with the start of the industrial revolution in Great Britain (subsequently in France on the continent). It corresponds to Kondratieff’s first cycle from 1789 to 1848 with a phase A of strong industrial growth from 1789 to 1817 and a phase B of weaker growth between 1817 and 1848.

  2. Victorian capitalism of the second half of the 19th century (or fully colonial capitalism in Great Britain and France as other countries on the continent begin their industrial revolution in the same way as wild capitalism). It corresponds to Kondratieff’s second cycle from 1848 to 1895 (this phase begins in 1840 in the table below) with a period A of strong industrial growth from 1848 to 1873 and a period B of weaker growth between 1873 and 1895.

  3. Consolidated colonial capitalism (‘consolidated’ because it is now all the countries that have started their industrial revolution that are caught up in the same overall colonial dynamic). It extends from the end of the 19th century to the end of the Second World War with a phase A of strong industrial growth of the third Kondratieff cycle (1895-1913) and a phase B of weak growth (1914-45) corresponding to its exhaustion (the thirty disastrous years).

  4. Keynesian-Fordist capitalism after the Second World War (since 1933 with the New Deal in the United States). Its best years correspond to the so-called Thirty Glorious Years (1945-75) or Phase A of the fourth Kondratieff cycle (see table below) while its exhaustion spreads from 1973 to 1982 more precisely, but until 1990 in Japan.

  5. Neoliberal capitalism has been established since the early 1980s until today and corresponds roughly to the long phase B of the fourth Kondratieff cycle (see table below).

In other words:

  1. It took the long period of slower growth from 1817 to 1848 and the defeat of the revolutionary movements in the mid-19th century to move to Victorian capitalism in the second half of the 19th century.

  2. It took the long period of weak growth at the end of the 19th century (1873-1895) and the increasing pressure of an ascending workers movement to drive the transition to the consolidated colonial productive order of the Belle Époque.

  3. It took the defeat of the revolutionary wave between 1917-23, the period of weak growth and all the political and social upheavals during the thirty disastrous years (1912-48 in the table) for the conditions of the deployment of the Keynesian-Fordist order in the developed countries after the Second World War to be put in place (but as early as 1933 with the New Deal in the USA following the crisis of 1929).

  4. It took a decade of exhaustion of the thirty glorious years (1973-82), the rapid rise in unemployment from 1975 and the decline in social conflicts from the late 1970s to allow the transition to the neoliberal order in the early 1980s.

  5. As for the period of weak general growth of the neoliberal productive order, and its definitive exhaustion with the subprime crisis (2008-09), it opens a phase in which the objective bases for a reconfiguration of capitalism in a new productive order is possible, without however being unavoidable.

A transition to a new productive order or a sinking into barbarism?

As we have just seen, transition to a new productive order is not automatic, since such a passage imposes a reconfiguration of capitalism on several levels. In other words, it is not enough for the old to be exhausted in order for the new to emerge and become widespread. So what about the neoliberal productive order? Certainly, there are very good reasons to believe that it has reached its economic limits, but does this mean that a new productive order is knocking at the door and that social and political forces are there to carry it and impose it? Do Trump and May announce the advent of this new productive order on the economic and imperialist level?

Answering this question today is not easy because history has also taught us that past productive orders have not been set up just like that, and that it has often taken several years for them to emerge and become a system. Thus, while the main lines of Keynesian-Fordism emerged during the discussions on the Beveridge plan (1942), in the Philadelphia conference in 1944, (5) and during meetings between employers, politicians and trade unionists in exile in London, it was not until the early 1950s that they took shape and became widespread. The same is true for the transition to the neoliberal productive order: the first elements emerged in the 1970s but they will only become a system in the 1980s. However, this does not prevent us from providing an answer with the elements of analysis at our disposal, but it can only be provisional and we reserve the right to change our opinion in the light of new elements. However, here is what seems to us to emerge from the current situation:

  1. Certainly, the exhaustion of the neoliberal productive order makes a reconfiguration of capitalism necessary, but its failure must be obvious and large sectors of the bourgeoisie must be aware of it. This is partly the case in the United States and Great Britain where a significant fraction of the ruling class understands that neoliberalism does not only bring them benefits. However, there is no reason to believe that it will provide an alternative productive order to neoliberalism: its members remain convinced of its validity, at most they seek to mitigate its harmful effects on their interests. As for the rest of the ruling class, one only has to look at the last meeting of the world’s leaders at the Davos Forum to see that they are still bathing in the neoliberal productive order and that the only criticisms are of a cosmetic nature.

  2. Moreover, for a transition to take place, the model of a new productive order must also emerge and be credible for a large part of the bourgeoisie. However, this is not the case at present. Some sectors of the ruling class are even convinced that we are facing a very long phase of weak growth and that nothing can be changed, except to pursue the neoliberal logic where meager productivity gains are entirely confiscated by capital and where progressive transfers from the wage share of the GDP to it continue as before.

  3. A transition to a new productive order likewise requires defeating the economic, political and social forces that live from the old productive order and convincing them or conforming them to the functioning of a new one as well. However, [we can see] nothing like this today, all of the most powerful sectors of capital are viscerally attached to the neoliberal logic. Although some elements within the bourgeoisie may become aware of the failure of some aspects of this policy, globally, the bourgeoisie as a whole remains firmly committed to its continuation, even in the United States and Great-Britain. For proof, Donald Trump’s decisions to lower taxes on companies and the rich and to unravel the financial regulatory measures painfully negotiated and adopted under Obama: such measures are not a challenge but a step forward in neoliberal logic. As for the criticisms of certain aspects of neoliberalism on which Trump and May surf (and more generally all populist parties), they are only there to win over their electorate and not to really question it. Thus, Trump’s bragging against the relocations does not fundamentally question neoliberal policy, it’s compatible with it and is explained by a two-fold reason: economic and imperialist. There is an economic reason because, unlike others, the American and British bourgeoisies are more and more aware that they have made a big strategic mistake by letting their industry go to the so-called “workshop countries” and only maintain the tertiary segments of design, marketing and command. Thus, by making East Asia the workshop of the world, the countries of this sub-continent have benefited from technological contributions that they are turning around like a boomerang against the West, allowing them to close their development gap. There is an imperialist reason as well because, in order to counter the advances of second-rate powers, the dominant imperialist countries are led to significantly increase their military commitments. However, to do so, it is also necessary to defend or “relocate” certain industries to prepare for a possible generalized war. Thus, it is hard to see an imperialist country like the United States having to import steel or other metals from its rivals to be able to manufacture tanks and planes! This is the meaning of the protectionist measures taken by Donald Trump in defense of the American steel industry, automobile industry, etc.

  4. Establishing a new productive order also implies a reconfiguration of the balance of power within society, both between the antagonistic classes and within the dominant class itself. Thus, historically, this transition between productive orders has been achieved through a defeat of the working class as in 1848 (or in a context of strong weakening of the working class as in the transition to neoliberalism), and/or a prospect of prosperity making new compromises possible (as after the Second World War for example), and/or a reconfiguration of the balance of power within the ruling class (as in the establishment of the New Deal in 1933 in the United States). At the present time, if the working class is generally muzzled (although not historically defeated and still capable of reactions) and could allow the bourgeoisie to impose a new productive order, on the other hand, the deterioration of the economic situation and the break-up of the two former imperialist blocs push to the “everyone for himself” between fractions of the ruling class, which makes it unlikely that a common consensus and a redistribution of roles within can be reached that the establishment of a new productive order implicates.

Thus, on all the levels we have just analyzed, the current configuration of capitalism prevents, rather than encourages, the emergence of a reorientation of neoliberal policy. On the contrary, everything contributes to a deepening of the latter in an increased competitive framework on the economic and imperialist levels, especially since the balance of power is always to the disadvantage of the wage earners, which allows capital to increase its exploitation rate with relative ease to increase its profit rate. In this respect, it still has some room for maneuver given the achievements made by the vast majority of the population during the thirty glorious years. (6) This is the central logic of neoliberalism and the bourgeoisie is not ready to restrain this profit manna.

Consequently, if the workers do not find the strength to oppose the iron fist of capital that is increasingly being imposed on them, everything suggests that the capitalist system will sink into a long stagnation during which humanity will be confronted with serious ecological challenges and the very likely advent of a period of economic, political, social and warlike barbarism similar to the thirty disastrous years.

While the rise in social conflicts in the second half of the 1960s and the persistence of a high level of social conflict in the 1970s could suggest an inversely proportional balance of power between wage earners and the dominant groups, the explosion in unemployment from 1975 onward gradually eroded combativity and encouraged withdrawal upon oneself and a search for individual “solutions”. (7) The observation is clear: social conflicts at the global level decreased in intensity by a factor of six during the 1980s (and by a factor of ten in the Triad because they are on the rise in East Asia). As a result, while workers are not historically beaten (they do not emerge defeated from a crushed revolution or embroiled in an imperialist war), they are nevertheless in a very unfavorable balance of power (except in East Asia). In this context, the current issue is more like a [speed race] between the imposition of the interests of capital (maximizing its profit rate, devaluing its variable capital through all-out austerity and devaluing its fixed capital, including through imperialist war) and the interests of the workers (fierce resistance to capitalist encroachments and development of its conscience and of the stakes of the situation within these fights). This is what we will develop in the second part of this contribution by also addressing populism as a typical expression of this economic and sociopolitical configuration of a capitalism at the end of a productive order with no tangible outcome.

End of the 1st part.

C.Mcl., Controverses No.5, May 2018

Source: Crise – Conflits – Luttes – Populisme (part I); Controverses No. 5, May 2018: http://www.leftcommunism.org/spip.php?article462

The article’s introduction “Trump and Brexit: A new economic and imperialist orientation?” has appeared in AFRD Vol.2 #4 (August – September 2018). Integral article translation by H.C., November 18, 2018. A revised overview table of productive orders is included.

Notes

1 In respectively 1825, 1836-39, 1847-48, 1857, 1864-66, 1873, 1882-84, 1890-93, 1900-03, 1907, 1911-13, 1918-21 (-1923 in Germany), 1929-32, 1937-38, 1948-49, 1952-54, 1957-58, 1966-67, 1970-71, 1974-75, 1980-82, 1990-91, 2001, 2008-09.

2 Karl Marx, Afterword to the 2nd German edition of Das Kapital (Volume 1), January 24, 1873. (MEW Bd. 23, p. 18)

3 Karl Marx, Das Kapital, (Volume 3, 1894), III. Law of the tendential fall of the profit rate; Ch. 15: Unfolding of the inner contradictions of the law. MEW Bd. 25, p. 259 & p.265.

4 Karl Marx, Das Kapital (Volume 1, 4th edition 1894), VII. The accumulation process of Capital. Ch. 23: The general law of capitalist accumulation. MEW Bd. 23, p. 648.

5 See “Declaration of Philadelphia” in Wikipedia: https://en.wikipedia.org/wiki/Declaration_of_Philadelphia

6 See the article “How to understand ‘May 1968’ in France? – The significance of the struggles from 1966 to 1972 (Part 1)” in A Free Retriever’s Digest Vol.2 #5 (October-November 2018), or online: https://afreeretriever.wordpress.com/2018/09/23/may-1968-in-france/

7 See the graphs below, taken from “How to understand ‘May 1968’ in France?” (cf. note 6).

Graph: Intensity of labor disputes in the world (Source: Perry and Wilson, I.L.O., 2004)
Graph: Unemployment Rate EU, France (Source: Michel Husson, La France du travail, IRES 2009 : 29).

Annex

Table: Description of the major determinants of capital accumulation for the four main productive orders.

Topic: Capitalism’s productive Orders