Thursday, 1 January 2015

Ten Predictions For 2015

  1. Syriza win the Greek elections, and refuse to compromise over austerity. The situation in Greece is symptomatic of other deeper changes occurring within the EU and world economy. Those changes are reflected in a struggle between social-democracy, based upon the interests of big industrial capital, and the organised working-class, and conservatism, which reflects the interests of pre-capitalist, and less mature forms of capitalism. The most powerful forms of conservatism reside in the interests of landed property and fictitious-capital, or moneyed capital.

    Both of these latter forms have had a golden period over the last 30 years. The huge amount of profits produced by industrial capital, from the 1980's onwards, fed into an expansion of moneyed-capital, as those profits were accumulated as money hoards, centralised and under the control of global banks and financial institutions. That gave this moneyed-capital huge political power, which it exercised. It made fictitious capital, in the form of bonds, shares and property appear to be more important than real productive-capital. That situation is changing. More real capital must be created, productive-investment must rise, and that will cause interest rates to rise, and asset prices to collapse. As a result, the forces of conservatism will be significantly weakened, and those of social-democracy strengthened.

    Merkel will lead the forces of conservatism in resisting Syriza, but only as an exercise in delay. In the end, Merkel and the EU will agree to write off debt. They will be assisted, as suggested several years ago, by a resort to inflation, as the ECB prints money to buy up this debt. It will be part of a further social-democratic process of insisting on a further concentration of political power, away from the nation state, and towards an EU fiscal union.

  2. As part of the reflection of this same process, Labour will win the UK election in May. The speculative economic policy of the Tories, which has relied on a continuation of low interest rates, and high levels of debt, propping up financial asset prices, and property prices, will be seen to have been as without foundation as the SNP's policy of relying on high oil prices. The three year economic cycle, will mean that the UK economy continues to go sharply into reverse. The failure of real incomes to rise, will mean that despite all the bribes, the property market continues to fall, and as market interest rates rise property prices will collapse. That will be part of a general financial crisis that is sparked by rising global interest rates, and a bursting of assorted financial bubbles, including those in the junk bond market, which may collapse at any moment as a result of defaults by energy companies.

    But, as part of the same process, which will see growing confidence by organised workers, Labour will be pushed to the left along with other European social-democratic parties, a shift that will only in reality undermine the forces of conservatism that infected it, under electoral pressure, just as in the past conservative parties had to adopt social-democratic positions for electoral purposes. Blair's intervention and that of his co-thinkers, should be seen as much of a last gasp, in that respect, as was that of the Wets, in the other direction, within the Conservative Party during the 1980's.

  3. UKIP will fail to win any seats in the general election, because of a higher turnout of voters, and because the increasing strength of social-democracy, will likewise mean a reduced strength for conservative ideologies, including nationalism. It will, however, win sufficient votes in conservative marginals to allow Labour to win the seats. The supposed UKIP vote in Labour seats, will be shown to have been merely a media construct born more out of hope for a new story, than out of actual reality.

  4. The Liberals will only win at most 6 seats. Having already been reduced to a conservative rump, what is left of the party will mostly sink into the conservative party, with a few die-hards linking up again with what is left of the old Liberal Party, and the rest sinking into obscurity or being absorbed into the Labour Party.

  5. The Tories themselves will be driven towards a split. Boris Johnson, representing the same kind of social forces that Louis Bonaparte represented, will make an attempt on the Tory leadership, supported by the representatives of the same forces outside the Tory Party,  represented by UKIP, representatives of the BNP and assorted fanatics. The forces of social-democracy, within the Tory Party, represented by Ken Clarke, Michael Heseltine et al, are already becoming more vocal about the need, for pro-Europeans to go on to the offensive. This is merely code for, and a reflection of the need for social-democracy to go on the offensive against conservatism, whether Clarke and Heseltine know it or not.

    The pressure on the Tories will increase, as a resurgent big industrial capital, begins to assert its interests more forcefully against the interests of the small capitalists, money-capitalists, and landed interests.

  6. A further reflection of this struggle will be that Europe is led into the same kind of Keynesian fiscal intervention that US social-democracy has undertaken for the last 6 years. It will take the form of programmes for large-scale infrastructure spending, which will provide the basis for financing these by the issuing of specific Eurobonds. It will open the door to the development of a fiscal union, and the issuing of Eurobonds to finance an EU budget deficit. This is part of a general requirement to invest in real-capital, rather than fictitious capital, which increases the demand for money-capital, and reduces its supply, causing interest rates to rise.

    Just as a stronger, more confident industrial capital, at the end of the 19th century, felt confident enough to give workers the vote, and to introduce the various political institutions required to support a bourgeois social-democratic state, so it will feel confident enough to wage a similar struggle for the establishment of institutions and measures to address the “democratic deficit” within Europe, and thereby undermine a plank of the argument of conservatism, and nationalism. Workers will have to reject the nationalistic voices, within their own ranks, and push forward, behind the forces of social-democracy, to insist upon the development of a consistent democracy across Europe.

  7. As suggested above, the 13 year cycle for stock market crashes, will eventually manifest itself more than a year late. It has poked its head above the parapet several times, in the last year, only to be beaten down by further doses of QE, and by money flowing from emerging markets, and riskier areas, into the “safe havens” of the West. This process of “whackamole”, in the financial markets, played by central banks, will run out of control, as the economic forces assert themselves, the rate of profit begins to decline, and global interest rates rise.

  8. The property market collapses, for the same reason that the stock market collapses. It will be on a larger scale than 2008, because the bubbles have been inflated to even greater levels. Schiller's CASE index is at higher levels, despite the huge amount of manipulation brought about by stock buybacks. As with 2008, it will cause a severe economic shock on the back of it. However, with the three year cycle entering a new up phase from the latter part of 2015, and with an emphasis on fiscal rather than monetary stimulus, the rebound from the economic shock will be more powerful than in 2009, creating the basis for a period of very strong global growth, as part of the Summer phase of the global long wave boom.

  9. The US will draw closer to other North American economies, as part of the development of larger economic blocs. Russia will draw closer to China, and other Central Asian economies, as part of the same process. The fall in the value of the Rouble will be seen to have been a blessing, as it encourages a move away from dependency on primary products, and encourages a strong growth of inward investment, from China and others, who seek to take advantage of a large internal market, huge supplies of cheap primary products, and the advantages of a low valued currency, in a technically advanced economy. The same process will increase the pressure on EU countries to move more rapidly towards a United States of Europe, as the only hope of competing with these huge politico-economic blocs.

  10. The emphasis of technological development will move away from the development of additional consumer electronics and towards the development of new technologies in the realm of genetics and bioscience, as these areas become a new, large-scale area of consumer spending.

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