Review of Predictions For 2020 (5) - Democrats Gain Control of Presidency and Congress

At the time of writing this prediction, it was not clear who the Democrat Presidential candidate was going to be. Joe Biden was actually lagging behind Sanders in the race. But, the Left suffered from its own division between the candidacies of Sanders and Warren. Had they fought on a single ticket, its likely they could, in the early stages, have built up such a lead that it would not have been possible for Biden to come back. But, he did, assisted by the fact that the other right-wing candidates dropped out, and threw their support behind him, and, as with Hillary Clinton, Biden had the support of the party machine. It will be a mistake, as I have written during the last year. However, Biden beat Trump, and although Trump went some of the way to meeting the predictions about trying to hold on to office, the scale of Biden's win was enough to prevent him doing that. 

The problem with Biden's conservative social-democratic politics, as with that of Hillary Clinton, is a) it is based upon a set of material conditions that existed from the 1990 through to 2008, but which have now gone, b) it offers no sustainable solutions to the conditions now existing, which require, as a minimum, progressive social-democratic solutions, c) it, therefore, comes into continual contradiction with reality, making it lack credibility in the eyes of voters, d) it fails to motivate all of those radical new Democrats required to do the groundwork for political advance, and electoral victories, e) as with Macron in France, because it is doomed to fail in office, it simply creates the conditions for a renewed onslaught from the Right, the path that Trump is currently preparing for himself in 2024. 

The conditions in the US, which have led to the sharp division between the Republicans and Democrats, are essentially the same as those in Britain that led to Brexit, and that exist in Europe and elsewhere, leading to a similar division between the forces of reaction, and those of progress. The material basis of the division is that there has been a continued survival of a plethora of small capitalists, and, in the period from the 1980's onwards, these small capitalists were able to capture conservative parties across the globe. Until that time, these conservative parties had recognised the fact that economies depend upon large-scale capital, and on the social-democratic state created to further the interests of that large-scale capital. From the 1980's, these conservative parties began to further the interests of this plethora of small capital, whose owners now comprised the core of the membership and voter base of these parties. In turn, these policies further enhanced the growth of small capital relative to big capital, especially where policies of de-industrialisation occurred. 

The process of de-industrialisation was partly disguised, because, during this period, first falling interest rates, and then money printing by central banks, diverted into the purchase of financial assets, created asset price hyper-inflation, with the resultant capital gains being liquidated, and thereby converted into revenues. The same process saw a return of what Marx calls the antediluvian forms of capital, of merchant capital, and usury, whose dominance Marx says is inimical to capitalism itself. Revenues that would otherwise have been accumulated as industrial capital, instead was consumed unproductively, in what amounts to simply gambling. It went to buy existing shares, rather than to finance new share issues. The result was ever rising share prices. Indeed, rather than issuing new shares to finance capital accumulation, companies themselves used profits or even issued bonds to raise cash to buy back shares, and thereby inflate share prices. In the same way, money was gambled in bond markets, pushing up bond prices to ludicrous levels, which eventually led to negative yields, underwritten by central banks who stepped in to print money tokens and buy bonds whenever their prices fell. Similarly, money went into the purchase of land and property purely in search of capital gains from perennial rises in property prices. 

But, this is no longer sustainable. The underlying contradiction was exposed in repeated financial and property crashes from the late 1980's on, and with the most obvious manifestation being the crash of 2008. Interest, rents, commercial profits and taxes, depend upon the production of profits by industrial capital, and an expansion of those profits depends upon an expansion of industrial capital itself. If industrial capital dos not accumulate fast enough, then industrial profits will not expand fast enough either, to meet the expectations of owners of fictitious capital, and landed property. When as a result, the proportion of profits going to dividends then steadily rises, this further reduces the amount of profit available for accumulation, and the same is true of rising rents and taxes. This is the fundamental basis for continued falling yields, and the ultimate absurdity, negative yields, whereby lenders pay people to borrow money from them. 

Reality and appearance will ultimately be brought into alignment, and the way this happens is via a crisis, as happened in 2008. What has happened since 2008 is simply surreal, an attempt to defy reality, which can only result in an even bigger financial crash than 2008, as I set out in my book – Marx and Engels' Theories of Crisis: Understanding The Coming Storm. There is only one solution and that is that the hyper-inflation of asset prices has to be reversed by a crash that will dwarf 2008. But, it will, in turn, be caused by, and then promote, a much more rapid accumulation of industrial capital. That is the basis upon which progressive social-democracy rests. Rather than retrenching the social-democratic state, it will require its further advance, and enlargement both in depth and in breadth. In other words, that state will have to extend its role in terms of planning and regulation of the economy, and will have to do so, on an increasing geographical scale. The development of large single markets, customs unions, and so on, across the globe, is merely the reflection of this underlying material reality. 

But, such a development is anathema to that plethora of small capital. It has railed against it, and has mobilised in those conservative parties against it, putting forward instead the reactionary vision of a return not only to the nation state – Brexit, America First etc. - but also of the break up of the national social-democratic state, and of the large capitalist monopolies on which it rests, in favour of a return to early 19th or even 18th century visions of free market competition, undertaken by a plethora of small capitals, and independent producers. It is farcical and unachievable, but that does not prevent those reactionary forces from advocating it, or others being taken in by it. 

In Britain, there are 5 million of these small capitals, ranging from the self-employed window cleaner, up to the small engineering works employing a couple of dozen people. There are also some family owned businesses that began as smaller companies, but have grown, in which these ideas are still ingrained. Taking the families of those that own these 5 million small capitals, and their periphery, and around 12-15 million people comprise this petty-bourgeois class, making them the second largest class behind the working-class. 

The US is the classic example of this petty-bourgeois class. It was built on the capital of the peasant farmer, and the independent petty-producer. Large parts of middle America remain based upon this kind of production, in stark contrast to the giant US corporations. This division is the material basis of the political divisions. The reactionaries can offer no way forward, but their easy solutions, based on blaming others – particularly foreigners – appeal readily to this large petty-bourgeois mass, whilst the solutions of conservative social-democrats, like Macron, Biden or Starmer appear hollow and insincere, also offering no credible way forward. 

So, although Biden beat Trump, Trump also secured a large vote, significantly increasing his vote as against 2016. That is similar to what happened with the Brexit vote, mobilising large number for both Remain and Leave.  This large vote on either side, simply exposes the degree to which this division represents a battle between two great class camps - a reactionary, heterogeneous petty-bourgeois mass on the one hand, and the progressive working-class and professional middle class on the other. Trump lost, because opposition to him, for a large number of voters, outweighed apathy towards Biden. So, in many of the other contests, where it was simply a question of supporting a Biden clone, as against a Republican, votes were less enthusiastic. There are nuances in each race, but, in general, it appears to be the case that where the local candidate was a progressive Democrat, and was backed by a large local activist base, going out and arguing consistently, they won. This is important, because it begins to create the groundwork and infrastructure for an advance of the Left in the period ahead. 

As things currently stand, the Republicans retain control of the Senate, but another Senate election is due in Georgia next month. With Democrats having won Georgia in the Presidential contest, the chances should now be for them to win the Senate elections, other than for the fact that in the Presidential Election, they were able to mobilise anti-Trump sentiment. They will, however, now be able to throw all their resources into winning the two seats. Trump's behaviour is also likely to lose Republicans votes. If Democrats win these two seats, then the casting vote of Vice President Harris, gives the Democrats a majority, which means they will, as predicted, have a majority in both houses of Congress, as well as control of the Presidency, meaning they should be able to pursue their agenda. 

The question then will be the extent to which the rank and file of the Democrats can forge a movement with US trades unions and oppressed groups to be able to push the Democrats into the adoption of more progressive positions.

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