History Repeating As Farce - Part 3

Nothing in history repeats itself in the same way. Bonapartism was based upon the rule of an individual. The position of Prime Minister, has been described as “an elected Dictatorship”, but, Prime Minister's and Governments can only continue if they retain a majority in Parliament. In the first place, before the coup, Louis Bonaparte, ruled as an Executive, supposedly under the control of the Legislature. But, it was events, and the impotence of any of the contending classes to assert itself, which ultimately allowed Bonaparte to carry through the coup. The Monarchist parties, the Orleanists, and the Legitimists, represented the interests of the Financial Aristocracy, and the Landed Aristocracy respectively. The Tories fulfil this function today, but the Tories are more than this. They are a far more complex and contradictory formation.

The Tories, as Marx describes, began as the Party not of the bourgeoisie, but of their enemies, the old ruling Feudal Aristocracy. In fact, during the 19th century, when that class saw itself being usurped by the Bourgeoisie, a section of it, and of its Party, attempted to win over the workers to its cause. Marx describes it as Reactionary Socialism. Some of them, like the Countess of Warwick, even found their way into Hyndman's Social Democratic Federation. The Tories also, as Engels describes, even financed Keir Hardie's election campaign. It was frequently, the Tory representatives who were the ones advocating various forms of social reform, who put forward the legislation on working-time etc. It was Manchester Liberalism, which was the red in tooth and claw representative of the industrial bourgeoisie. But, rather like the workers in the Middle East today have allied with their new enemies, in the bourgeoisie, against their old enemies, in the Bonapartist State, so in the 19th Century, the British workers lined up with their new enemies, in the industrial bourgeoisie, against their old enemies, within the Feudal Aristocracy. After all, at the beginning of that century, peasant life, and the oppression, of that old ruling class, was within living memory of many workers, or for their parents or grandparents, who had been forced off the land by the Enclosure Acts, and more open robbery by that Aristocracy.

As Marx, sets out, it was not that the Tories changed their class affiliation, it was that the class they represented itself became bourgeois! That meant that all of the contradictions which go along with that became entrenched within the Tory Party. Those contradictions continue until today. They were shown vividly at the beginning of the 1960's in the division between the old Patrician Wing of the Party, and that wing represented by people like Heath and Thatcher, the embodiment of the Grammar School educated, offspring of the up and coming middle classes. It persisted when Thatcher was Prime Minister, many of her opponents coming from within the Patrician wing of the Party. Eton educated Cameron, and his cohort are part of that wing of the Party.

In the 19th century, many of the old Aristocracy, where they did not extend their family business of land-owning, into Capitalist farming or mineral extraction, or into vast Colonial estates, used their accumulated Capital to move into Banking and Finance. They saw engagement in industrial or other commercial activity as beneath them, and the function of the nouveau riche bourgeois. Not for nothing are they referred to as the Financial Aristocracy. Most of the British Banks obtained their initial Capital from the activities of the Aristocracy in the Triangle Trade, whereby they brought slaves from Africa to their plantations in the Caribbean, bringing the products of those plantations back to Britain. It is not surprising then that a section of the Tory Party have always had a close connection with this Aristocracy of Finance, as well as their continued links with the large landed estates. The Tories links with the bourgeoisie proper, the industrial bourgeoisie, developed out of the failure of the Liberals.

The contradictory nature of the Tories today reflects that. On the one hand, they are a Party whose mass base is made up of those reactionary petit-bourgeois elements, upon whom they also rely for their votes. On the other hand, as the main Party of Capital, they also represent the interests of the industrial bourgeoisie. But, by their history, and the continued role within the upper echelons of the Party, they remain tied both to landed property and to to the financial aristocracy. These irreconcilable rifts within the Party, is what leads to the division over Europe. Whilst, the necessity to pander to its electoral and party base dictates the kind of policy pronouncements it issues, the actual practice in Government has to contend with the conflicting interests of these different social groups, and in particular the interests of the dominant sections of Capital itself. Which section of Capital wins out, tends to depend itself on which is most powerful at the particular time.

Industrial Capital, which during the Long Wave, Post War Boom, proceeded on the basis of Fordism, of an accommodation with the Trades Unions and the Social-Democratic consensus, and the kind of strategy of Capitalist Accumulation that goes with it – Welfarism, Macro-Economic planning, to coincide with the enterprise planning of Big Capital etc. - is interested in the continuity of production and sale of its products, and as Engels described in his “The Condition Of The Working-Class” with the avoidance of labour disputes. Money Capital, on the other hand is interested in unimpeded circulation, particularly of currencies. It will tend towards a more Liberal, or Neo-Liberal position. (For a discussion of this division see Henk Overbeek - “Global Capitalism and Britain's Decline” - 1988 Doctoral Dissertation, University of Amsterdam , and also Kees Van Der Pijl – “The Making of An Atlantic Ruling Class” - 1984.)

During the post war boom, the commitment of the Capitalist State, to a Fordist regime of accumulation, based on mass consumption and mass production, on macro-economic planning, and expansive welfarism “implied a subordination of independent bank capital and the rentier element in the bourgeoisie to an integrated, state supported finance capital” (Kees Van Der Pijl - “Neo-Liberalism vs Planned Interdependence. Concepts of control in the struggle for hegemony” - 1986.)

But, the end of the Long Wave Boom in the 1970's brought with it a crisis of Fordism too, and the kind of state structures and policies based upon it. That is not to say that Fordist regulation ceased. Just as Fordism was never an hegemonic form of Capital Accumulation, but merely represents a dominant form of regulation utilised by the more powerful fractions of Industrial Capital, so the crisis of Fordism only meant that the solutions it provided, just as with the macro-economic policies, based on Keynesianism, that went with it, were no longer capable of working in the way they had in the previous period. Capital needed to find alternative solutions, and within the Crisis of Capitalism that ensued, the fact that Money Capital was able once again to come to the fore, meant that the Neo-Liberal policies that reflected its interests were brought to the fore along with it.

The near collapse of the global financial system that followed on the decision of the US to close the Gold Window, in 1971, making the dollar no longer convertible with Gold broke down all of the forms of State, and international State forms of regulation set up at Bretton Woods, which were themselves an application on an international level of those very forms of Fordism, and Keynesianism, which advanced the cause of the huge multinational industrial Capitals, whose heartland was in the US. When the US abrogated the Bretton Woods agreement, its unintended consequence was the creation, or at least huge development, of the Eurodollar market, through which dollars were purchased via the European arms of US Banks. The breaking up of these forms of state and international state regulation meant that nation states lost control over Money Capital, in effect the international monetary system became privatised.

At the same time, freed from regulation, the Banks expanded massively overseas in search of customers, in a way that Industrial Capital had done via the MNC's. With industrial capital in decline, at home, and increasingly locating overseas, in search of cheap labour, with consumers and small businesses being encouraged to borrow to the hilt, and with them also being encouraged to buy a whole range of new financial commodities, being produced by Financial Capital, the further deregulation of Financial Services, in the 1980's, by Reagan and Thatcher, meant,the ground was set for Money Capital to become a powerful economic, social and political force. The News International phone hacking scandal, exposed the close links that existed in Britain, between sections of the media, the Police and other elements of the State, and with politicians. But, what has not been exposed as yet, is the close links of these same elements with the City, and Financial Capital. That the position of Money Capital became weakened as a result of the Financial Meltdown, may not be divorced from the fact that the News International scandal, which had been known about for years, came to prominence now. And, the consequences of the Leveson Inquiry may be to uncover other similar activities and contacts amongst the other sections of the right-wing gutter press, whose appeal to nationalism, and promotion of anti-Europeanism is against the interests of Big Industrial Capital.

Fennema and Van der Pijl described this transition.

“the disintegration of the industry trade union compromise supporting the Fordist order politically was replaced by bank power and rentier interests as the dominant group in the new configuration. Thus rentier interests in the broad sense of the word were crucial in the formation of a new power bloc which rose to power after 1975.” (“International Bank Capital and The New Liberalism” (1987).

Its not surprising that, in the light of this, Thatcherism's ideological base was provided by the high priest of Money Capital, Frederick Hayek, and the first manifestation of that was in the adoption as Van der Pijl argues of the principles of “sound money”, in order to force “sound micro-economic reasoning … upon the state and society as a whole.” (Van der Pijl - “Capitalist Class Formation At The International Level” - 1987.)

Politics, particularly bourgeois democratic politics, is always a matter of building alliances. The Tory Party is an alliance, of all these bourgeois and petit-bourgeois forces, and it is within this dynamic that its policies and actions have to be understood. Of course, the period after Thatcher was marked by a move of Labour and the Liberals on to this ground too, demonstrating the power that Money Capital exerted during the period. As Marx notes, in the process leading up to Bonaparte's coup, such situations frequently see parties giving ground to those to their Right, and the more they do so, the more they cut from beneath their feet their only real source of support within society. That ultimately was the undoing of Labour – and indeed has always been the undoing of every other Labour Government.

But, the dynamic for Labour is different from that of the Tories. It is never likely that sections of Big Capital will openly declare their support for Labour, as they do, for example, in their support for the Democrats in the US, who stand on the same ground of that Social Democratic consensus. The capitalist class understands the importance of class solidarity in a way that the working-class as yet does not. The interests of Big Capital are not those of Small Capital or of the petit-bourgeoisie and Middle Classes. As in the US, and as set out by Engels, more than 100 years ago, in fact, in many areas, there interests are more closely related to those of the workers. Indeed, its on that basis that the Social Democratic consensus, and Fordism was built. The first Minimum Wage was introduced in Britain by Winston Churchill, as President of the Board of Trade, in 1909, and echoing Engels words, Churchill said, “The good employers must be protected from the bad...” But, the Big Capitalists will not openly break from their smaller Capitalist brethren, even if they work to screw them relentlessly behind the scenes.

The Trades Unions do not exercise anything like the kind of power over Labour Governments that Capital exercises over Tory Governments. Rather the function of the Trades Unions is to act as a safety valve, controlling the actions of their members that might threaten to go beyond the limits that the requirements of the social democratic consensus determines as compatible with Capital Accumulation. But, just as the Tories have to shape their policies, and actions around the need to cater for their base and electoral support, so Labour has to shape its policies around the need to win electoral support, without alienating its own core support. It is forced by those requirements to remain firmly within the Social Democratic consensus in order to meet both the needs of its base, and the needs of Big Capital.

Cameron is attempting to mimic Thatcher, but without the basic requirements that meant her strategy could succeed. The Trades Unions and working-class have been beaten down. The consequence was that real wages flat-lined for a couple of decades. The only way that could be sustained, and profit rates rise was by encouraging workers and the middle class to go massively into debt. Of course, not all did. Those workers who had joined the workforce in the post-war period, and were able to buy a house in the 1960's or 70's, had seen the price of their house rise astronomically, and the inflation of the period meant that their mortgages were inflated away. If they were sensible, they had been able to take advantage of this situation, to build up a considerable buffer of savings and investments – the same that were channelled into the many new financial products created in the 1980's and after. If they were lucky, they may even have benefited from a company pension.

Its to elements of this section that the Tories have been able to target their attention. Its to this section that the Daily Express aims its repeated headlines that house prices are once again soaring. It provides a material base for the idea that interest rates have to be kept low to keep these asset price bubbles inflated, and which thereby provides support for the interests of Money Capital, which would be wiped out if those assets bubbles were to burst.

But, even some of these workers were not sensible, others of this generation were never lucky enough to buy a house, and instead had to pay Council House rents, usually subsidising the Rates of those in owner occupied housing, who also benefited from generous tax relief on their mortgages. Others did benefit from having bought a house before the property bubble began, but were persuaded to squander the equity they had in it, by taking out loans against it, to finance other consumption. At the same time, workers joining the workforce in the 1980's and 90's were confronted with low inflation, low wage rises, and sky-high house prices. A generation of consumerism, which persuaded everyone they should have everything immediately, ensured few of them had any savings. On the contrary, many already had large debts to cover the car they had bought, the holidays they had taken, the mountain of clothes they had stashed in their wardrobes, the plethora of electronic gizmos they had accumulated, and so on.

But, the Money Capitalists would still entice them to take out mortgages they could not afford, by allowing them to have 125% mortgages of amounts up to six times their earnings, and no check was made on whether those earnings were real or not. It was exactly the conditions that had led to the Sub-Prime crisis in the US. It was on this basis that private debt rose to account for 450% of GDP, dwarfing the 70% of GDP, which Public Debt accounted for. But, it was on this basis that attempts to encourage workers to take on even more debt to keep the economy afloat floundered. No matter how much the Government tried to tell people that their now trebled University Tuition Fees did not have to be paid for until they began to earn £21,000 a year, it didn't change the fact that people realised that they still had to be paid back, with interest! It didn't change the fact that they would have been losing potential wages during all that time, and that, in any case, there were tens of thousands of graduates who could not get ANY job, let alone a decent one! They responded with a 10% reduction in the number of people applying for University places.

Thatcher and Reagan's experiment was probably a one-off opportunity. It was made possible because of the savings the Baby Boomers had accumulated in the Post War Boom. Cameron faces its mirror image. Any attempt to repeat Thatcher and Reagan's experiment, today, can only result in mass bankruptcies by individuals, weighed down by a mountain of unsustainable debt. Over Christmas it was reported that 3.5 million people had resorted to Pay Day Loans to cover their immediate costs. Anyone resorting to these usurers, and paying the 4000% interest they demand must be in desperate conditions. But, it is not just the very poor who are in this position. Pawn Brokers are expanding, and they are expanding into middle class areas! The arrears on mortgages have been growing steadily, and it is only fear of sparking a fire sale of house prices, and the ability to sustain loans due to low interest rates, and near free money, provided by the Bank of England, which is preventing them from foreclosing on these mortgages. That situation is not likely to persist for much longer.

If there is fear, today, at the consequences of a Greek default, imagine the devastation of Money Capital that will ensue, when people begin to default on their £2 Trillion of private debt, sitting on their credit card statements, their mortgages, their Student Loans, the Store Cards and so on. But, if millions are already resorting to Pay Day Loans, and with around 20 million people estimated to run out of money around ten days before their next pay day, such defaults seem inevitable as inflation squeezes further people whose wages are effectively, if not actually, frozen, as unemployment rises inexorably towards three million, and as a growing Credit Crunch means that whatever Central Banks do, mortgage rates, and other loan rates are bound to rise sharply.

Moreover, the other solutions, adopted by Capital during the 1980's and 90's, are not likely to work either. The end of the Long Wave Boom, brought with it a crisis in the dominant Fordist method of accumulation. As In the 1930's, Capital sought to bolster the faltering ability to generate Relative Surplus Value, due to slowing increases in productivity, by a return to methods of Absolute Surplus Value. It took the form of casualisation, of intensification of labour, lengthening of the working-day by various methods, including workers being available 24 hours a day on their mobile phone, via email etc., and starting work on their lap-top during their journey into work. But, many of those changes have already been introduced. As Marx and Engels pointed out, long ago, Capital dropped the idea of Absolute Surplus Value because its functionality is limited. Amongst other things it means increased wear and tear on workers, and can be counter-productive because it can lead to lower actual productivity. The main strategy for extracting Absolute Surplus Value, today, centres around extending the working-life rather than day, through the raising of the State retirement age, but, for that very reason, the immediate benefits for Capitalist profits are slight.

In fact, attacks on wages driving them below the Value of Labour Power, whilst possible for a certain time, will as Marx sets out in Value, Price & Profit ultimately have a negative effect, because they will reduce the quantity and quality of Labour Power supplied. This may not take the form of workers refusing to work, under Capitalism, they have to work to live, but will take the form of low productivity, increased sickness absence, higher labour turnover as workers seek better paid jobs, whenever they arise, and so on. It will also mean that workers will tend to be of lower quality, as their reduced condition means they have less ability to obtain education and training, and so on. In more advanced economies, that is more significant than in economies that are reliant on large amounts of unskilled labour.

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