Monday, 23 July 2018

Paul Mason's Postcapitalism - A Detailed Critique - Chapter 4(1)

The Long, Disrupted Wave

Imperialism - The Most Dynamic Stage of Capitalism

I find Paul's explanation of the conjuncture of the 4th and 5th long waves confused, convoluted and unconvincing. At the end of Chapter 3, he writes, in relation to the 4th wave, 

“After 1989, the sudden availability of new markets and a new labour force plays an important part of prolonging the wave...” (p 78) 

And he continues, 

“In other words, between 1917 and 1989 capitalism's full potential for complex adaptive behaviour was suppressed. After 1989, it experienced a sugar rush: labour markets, entrepreneurial freedom and new economies of scale.” (ibid) 

To take the last bit first, the period 1917-1989 includes some of the most dynamic and adaptive behaviour of capitalism yet seen. I have previously referred to it as “Imperialism – The Most Dynamic Stage of Capitalism”. During this period, large-scale industrial capital – and thereby imperialism – conclusively asserts its dominance over the previous regime of Mercantilism, in which the symbiotic alliance of the old landed aristocracy, merchant-capital and money-lending capital had prospered, on the basis of unequal exchange, protectionism and colonialism. It breaks apart those old protectionist and colonialist restraints. Its incentive, and mechanism for doing so is the development of the multinational corporation, which, as Michael Barratt Brown demonstrated, becomes possible, because of the development of new forms of corporate governance. It becomes possible also because, in the post-war period, new, international, social-democratic institutions are established, such as GATT/WTO, IMF, World Bank and so on, with the purpose of creating the kind of planning and regulation required for long-term capital accumulation this mammoth multinational capital requires. It creates the EU, and similar formations begin to be created across all other continents. 

Moreover, many of the things that Paul attributes to the period after 1989, are actually the product of the period between 1974-1987/9. Most of the technological development is attributable to the drive for labour-saving solutions to the 1960's/70's profits squeeze, which leads to the crises of the mid 1970's and after. The development of globalisation, and rise of the Asian Tigers was already well underway by the early 1980's, as I wrote about at the time. And, it wasn't just the Asian Tigers. Similar things could be seen in South America. 

It was these technological developments, introduced to resolve the profits squeeze, during a period of intensive accumulation, running from the late 1970's to 1999, that results in the growth in the mass of surplus value, an excess of loanable money-capital, falling interest rates, and soaring aset prices that also creates the mindset of the conservative social-democrats that wealth can derive simply from these successive asset price bubbles. And, that sugar high began in the early 1980's, not in 1989. As I've related before, for example, UK house prices quadrupled during the 1980's. I bought a house in 1977 for £5,000, which I sold in 1988 for £22,000. And, it was during this period that the adaptation is made consonant with that conservative mindset. It is the period, for example, when Thatcher and Reagan deregulate financial markets, leading to the financial Big Bang of 1986, the scrapping of credit controls etc.; in other words all of the financial framework that led up to the 2008 financial crisis. 

But, it was, of course, all an illusion, as the 1987 stock market crash, the 1990 UK property market crash, and the crash of financial markets in the subsequent period, every time interest rates began to rise, demonstrated. Paul has formulated this notion of an extension of the fourth wave, in order to place its termination with the 2008 crash. The alternative would be to place the commencement of the fifth wave in 1989/90, which is the option that Bill Jefferies adopted. However, as I've set out at length, previously, it's pretty clear that all of the data indicate the fifth wave beginning on schedule in 1999. That is illustrated by the qualitative rise in global trade after that date compared to the previous period, the rise in global GDP, in the growth of the working-class, and the sharp rise in primary product prices. 

“A clear indication of the Long Wave can be seen by looking at the graph of world trade over this last cycle. Such a graph was provided in the World Economy Supplement of the FT on 10th October on Page 7. Between 1980 and 1990 global trade rose from around $4,000 billion to around $6,000 billion, remaining flat until around 1994. Between 1994 and 2000 it rose from around $6,000 billion to $12,000 billion. But, the sharpest rise has most notably been since 2002 where it rose from around $12,000 billion to around $28,000 billion by 2007. (Source: WTO Thomson Datastream) The FT article here shows another aspect of this multipodal economic order. The seven years of unresolved discussions over the Doha Round demonstrate these increasing economic interests coming to play and the inability of the US to simply impose its will. The intervening period has been one in which these contending economic powers have sought advantage by establishing multifarious bilateral trade agreements. China, thirsty for raw materials, has been highly active in this regard developing deals in Latin America and Africa for its foodstuffs and raw materials in return for infrastructure, training and manufactures, and has not been slow to use such deals to further its strategic and political goals in the bargain. The fact that the world economy is divided into these three main competing blocs does not mean that they are free of internal frictions, as the recent attempts to obtain a common strategy, across Europe, to deal with the financial crisis, showed. And, as the FT says, “China and Japan are engaged in what appears to be a competition to make themselves the dominant hub in a hub-and-spoke pattern of agreements.” 

Against all of that has also to be placed the emergence of economies in Latin America. Many of these like emerging economies in Africa are prospering on the back of soaring raw material prices. Yet, that once was true of Asian economies. Others, for example Brazil, have rapidly industrialised and diversified their economies. Even in Africa a number of Lion economies are emerging with the potential for rapid growth and industrialisation provided they are able to divert earnings now into the necessary industrial development, capital accumulation etc. Angola, as mentioned earlier, not only benefits from huge mineral wealth, but is looking to make a huge investment in developing agriculture on an industrial scale, using the latest technology etc. other economies such as Kenya are developing rapidly, whilst as I said in a blog some time ago even places like Mauritania have very high growth rates. See:here. China has a huge bilateral deal with Congo (not to be confused with the Democratic Republic of Congo which is currently in Civil War) for the supply of raw materials in return for the building of roads, railways, hospitals, schools, Universities and the training of technicians. 

If the world does not blow itself up in a new imperialist war at the end of this cycle, then in 50 years these countries are likely to be the equivalent of today’s Asian Tigers.” 

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