Wednesday, 9 July 2014

After Obama, What Next? - Part 3

To a certain extent, Obama could not compromise with the Republicans, in the same way that Clinton had done, because these were not the same Republicans. Obama had not moved to the Left, compared to Clinton, the Republicans had moved decisively to the Right, under the influence of the Tea Party. The same was true in Britain. Cameron, having started from a position, prior to 2010, of promising to meet all of Labour's spending plans, of promising to be the greenest ever government, of using phrases about “hug a hoody”, swung in completely the opposite direction, under pressure from UKIP, and the Tory Right, and was given political cover by the “useful idiots” of the Liberal Democrats.

That these same political trends, in respect of the conservative parties, in the US and UK, have occurred, is no coincidence; it reflects contradictions that flow from the political and economic solutions developed in the 1980's and 90's. Those solutions were geared to ensuring the return of the conservative governments that implemented them, by playing to the interests of their core constituency of small capitalists, reactionary elements of the middle class, and backward workers.

In doing so, it strengthened and encouraged these sections of society, whilst also creating the economic conditions which favoured them, and undermined the potential for economic growth on a more progressive and sustainable basis, once the period of stagnation ended. Had 2008 not occurred, Cameron would have continued his previous position, and the Tea Party would not have arisen, because there would have been no need for the large-scale monetary and fiscal intervention. But, 2008 had to happen, just as the crash of 2000 had to happen, and just as the coming even larger financial crash has to happen.

They had to happen, because they too are a direct consequence of the policies adopted by conservative governments in the 1980's and 90's, to develop low-wage/high debt economies. The increasing levels of debt are collateralised on astronomical levels of fictitious capital in the form of shares, bonds and property, whose prices have been blown up over 30 years, by increasing money supply and easy credit. But, as Marx describes in Capital III, in describing this fictitious capital (Capital III, Chapter 29), even the debt built up by government, firms and households in this topsy turvy world of money-capital appears as though its capital.

“It is truly wonderful how in this credit gibberish of the money-market all categories of political economy receive a different meaning and a different form. Floating capital is the expression there for circulating capital, which is, of course, something quite different, and money is capital, and bullion is capital, and bank-notes are circulation, and capital is a commodity, and debts are commodities, and fixed capital is money invested in hard-to-sell paper!” (Chapter 31)

In this case, these debts appear as assets of the banks themselves, as part of the bank capital.

So, it was inevitable that these crashes would happen. Ironically, the section of capital that most benefited from these policies, and which is historically tied to conservative parties – the financial oligarchy – were also able to use their increased political weight, built up over that 30 year period, to ensure that it was rescued from the results of its own recklessness.

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