At the start of 2021, there were a number of big themes being pushed forward. We had the idea that, just because the self-imposed economic damage, caused by government enforced lockouts, had created the worst slowdown in GDP for 300 years, this was, in some way, a confirmation of the annual predictions of the catastrophists that capitalism was really impossible, and so must be about to collapse. Wrong. On the back of this same idea, we saw predictions that this meant we were back in the 1930's, with the attendant rise of fascism, as witnessed by the attack of people in funny costumes on the US Capitol building. Wrong. For some, such as Paul Mason, that was itself an argument to return to the failed strategies of Stalinism and social-democracy of the 1930's, to fight fascism, i.e. of the Popular Front, a strategy that Paul continues to advocate in the pages of The New Statesmen and elsewhere, today. It led him to advocate support for Starmer, on the basis of building an alliance around the centre, and eschewing any independent working-class politics. Wrong.
It was undoubtedly true that the lockouts and lock-downs, introduced by various governments, across the globe, caused the worst fall in GDP in 300 years. How could it be any different? GDP is a measure of new value created in the economy, i.e. the new labour undertaken, which creates that new value, and its equivalent in revenues – wages, profits, rent, interest and taxes - that constitutes National Income. If the government stops a large chunk of that labour being performed, either by closing workplaces, or closing retail outlets, so that the demand for the products of other workplaces disappears, then obviously GDP will fall. That it only fell by around 25-30%, during that period, is indication of the fact that lockouts and lock-downs were far from being 100% enforced. Around 70-80% of all labour continued to take place.
Millions of workers continued to go to work, and needed to, or else the reality would have been that life would have become unbearable, and society would have collapsed, as energy supplies would have stopped within hours, water supplies would have been cut off, sewage would pile up in the streets, as would uncollected garbage, transport would grind to a halt, and so on. That is not just the reality of The Law of Value in present society, but for all societies. It is just even more true for capitalism, whose astronomical levels of productivity that make possible high living standards, are based upon extensive social division of labour. As Marx put it,
“Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish.”
But GDP is not the value of output, which also includes the value of all of the raw material, and of the wear and tear of fixed capital used in production alongside that new labour undertaken. That raw material as well as the wear and tear of fixed capital is the product not of current labour, accounted for in GDP, but of past labour. It is reproduced out of capital, not out of revenue, i.e. out of the value of output, not out of GDP. Some of the value of that raw material, what Marxists call circulating constant capital, was lost, because it had to be used within a given time before it perished, or lost its utility (use value). But, a lot of it, and most of the value of the wear and tear of fixed capital, was not lost. What is more, unlike the 1920's and 1930's, when profits were low, because in the previous thirty years they had been squeezed by a rising wage share, today, when firms are allowed to produce, the rate of profit is high, and the mass of profits available to capital is also high.
So, the situation today is not at all like the 1920's and 1930's, when capital, facing squeezed profits, and powerful labour movements, needed to defeat labour, and introduce technological revolutions, to replace labour with machines, causing rising unemployment, was led to resort to fascism. Rather, its more like the conditions in 1847, when capital was brought low as a result of a financial bubble in railway shares, and a credit crunch caused by badly conceived bank laws – the 1844 Bank Act. According to Marx, the effects of that financial crisis was to lead to a 37% drop in economic activity, but when the Bank Act was suspended, and the credit crunch was lifted, the economy quickly rebounded, and its boom continued for another ten years, until another financial crisis, caused by the same Bank Acts intervened.
A more recent comparison would be the recession of 1957, which, like 1847 and 1857, came within the context of a period of long wave uptrend.
In 1957 Q1, UK per capita GDP (inflation adjusted) was £1,751. A global recession in that year led to falls in GDP. In Q2, it was essentially flat. In Q3 the figure fell to £1,737, and after a slight recover in Q4, and 1958 Q1, it dropped again in 1958 Q2 to £1,718. These are small falls in GDP, compared to those of 1847, or 2020, but the principle remains the same. As Mandel points out in The Second Slump, the reason these falls are small, compared to the recessions of the 1930's, is the fact that states employed Keynesian fiscal stimulus to moderate the effects, and to cut short the recession, but that was only possible, because this was a period of long wave uptrend, not downtrend. By 1958 Q3, GDP per head was back up to £1,753, rising to £1,774 in Q4, as the post-war expansion continued.
The catastrophists, always looking for evidence that capitalism is impossible due to its contradictions, saw in 2020, the hope that coronavirus would fulfil that function for them. Michael Roberts promised us, in April 2020, that, without a lock-down, Sweden would suffer Covid deaths of 65,000. Well it didn't lock down, and yet, after suffering several thousand deaths in its old folks homes, like everywhere else, by the Summer, it was seeing virtually no new deaths of people even with Covid, let alone caused by Covid. Even, today, Sweden has suffered only 14,000 deaths of people with Covid, not the 65,000 that Roberts claimed was their imminent fate, in April 2020.
Indeed, as I've set out elsewhere, although catastrophists jumped at the chance to claim that COVID was the Angel of Death for capitalism, invoked by its own system – as though they have never heard of the Black Death, The Plague, smallpox, cholera and other epidemics that laid waste to millions, in previous centuries, when society didn't have the benefit of the clean drinking water, better living conditions and medical science that capitalism has created – the truth is that the number of people dying with Covid, globally, is a fraction of the 45 million predicted in 2020, and only a quarter of the 12 million who died (population adjusted) in 1968, from flu. And, the further truth is that, on the basis of ONS data, only about 10% of those listed as dying WITH Covid, actually died FROM Covid. In Britain that amounts to around 13,000 people, or less than died from flu (18,000) in 2017.
Rather than a 1930's style depression, and squeeze on profits, leading to the need for fascism to come to the rescue of the ruling class, the global economy is already rebounding strongly. China's quarterly growth rose by more than 18%, the US is on course for more than 6% growth, as is global GDP. And, yet, capital is not at all suffering, either, 1920's style squeezes on its profits as a result of an overall tight labour market, or powerful labour movements pushing up wages. There are constraints, but they are these. Firstly, continued lockouts and lock-downs make it impossible for capital to function properly still, secondly, as firms start to operate again, in some sectors they cannot recruit the labour required in sufficient numbers, fast enough.
The latest US jobs numbers showed that. In March, the US added 1 million additional workers to its payrolls. Its estimated to add a further 7 million during the Summer, but, in April, it added only 260,000 new jobs (which at any other time would be a very good number). However, the reason it only added this number, when closer to a million again was expected, was not because of a lack of vacancies, it was down to a lack of available workers, prepared to take on the jobs at current wages. Employers are already complaining that to get the workers they desperately need, they will have to pay much higher wages. Bernie Sanders has, of course, rightly said, “pay the higher wages, and increase the minimum wage”.
A similar thing is seen in Britain. We now have shortages of beer, and of tea. Brewers cannot brew beer fast enough, as pubs and restaurants open up. But, also shortages are emerging, because, as a result of Brexit, though the problem was developing before it, Britain is short of thousands of truck drivers. Further problems will arise with other agricultural products, as a result of Brexit meaning the country does not have the seasonal labour to pick the crops. That will mean a rise in agricultural imports, and rising prices. It adds to the existing global shortages of computer chips, copper and other raw materials, as the booming global economy expands faster than the supply of these products, in a similar way to what happened in 1999, when the new long wave upswing began, which led to rising prices, wages, and interest rates that caused the crash in asset prices in 2000, and 2008.
Those US and other employers, currently complaining about labour shortages and need to pay higher wages, will soon do so, because shortages of consumer goods will also see their prices rising fuelled by the oceans of liquidity that central banks have pumped into the system. The lure of rapidly rising money profits, and danger of losing market share will be too much to resist for businesses, as they start to take on additional labour, and expand their output, at whatever cost. And, as they employ more workers, on higher money wages, so that will further boost the global economy, sending borrowing and interest rates higher.
In these conditions, the fascists are the agents not of the ruling class, which sees large-scale capital expanding rapidly, but of the petty-bourgeoisie that for the first time since 2008, sees its own position deteriorating rapidly both against the fortunes of big capital, and of labour. Its no wonder that Trump and his supporters, including those that backed Brexit in Britain are shouting their hurrahs, more loudly, even as their position becomes increasingly weakened.
Far from January 6th being the herald of a fascist insurgency, it was simply a manifestation of the weakness of such forces when they do not have the ruling class and its state standing alongside them. There always are, of course, mavericks within the ruling class, just as there are plebeian elements within the bodies of armed men, who associate themselves with the fascists. That is not the same as the ruling class, or its state, requiring or aligning with the fascists. Instead of a growing wave of fascist insurgency, as was promised, what we have seen is the fascists being cowed, and culled, by the US state, and ruling class.
Trump remains banned from social media. The surprise is only that he has not yet found himself in court, but that is coming. The FBI continues to identify and round-up the fascists behind the January 6th incursions, as they break apart those organisations. Trump continues to exercise control over the Republican Party, as seen by the removal of any opponents such as Liz Cheney, but this is really a sign of the weakness and fragility of the party, which sees no way of retaining its core vote outside pursuing the policies of cultural warfare and bigotry of Trump. The result will be the decline of the party, and eventually it splitting, or a new party being created to exclude the Trumpists.
And, those events in the US are having their effect on the international associates of Trumpism/Strasserism. Eventually, that will wash into Britain too, as all of those connections into UKIP, and the Tory Brexit Right begin to be exposed as the court cases, and investigations into Trump, Breitbart and so on go forward. Those exposures will make the tittle tattle over Tory sleaze in relation to Johnson's wallpaper choices, look as irrelevant as they actually are, and they will come as the disastrous effects of Brexit begin to make themselves felt on the UK economy, and its workers.
The strategy of Starmer of collapsing into Brexit jingoism, is as insane as the rest of his strategy and tactics have been over the last year, if only for that simple reason. Why would any Labour Party want to associate itself with the disaster of Brexit as it unfolds, and inescapably from all of the revelations about corruption and conspiracy that will begin to come out in the months and years ahead? Channel 4's revelations about the money for access given by Prince Michael of Kent to Putin, will appear small beer, compared to all of that when it comes out.
Yet, again, it was Paul Mason that also argued for a position of collapsing into Brexit nationalism and jingoism, and who asked us to drop our own independent working-class politics and organisation so as all to rally around Starmer, and other liberals so as to form a Popular Front to fight the imminent fascist danger, which did not exist. Indeed, its Starmer's authoritarian regime inside Labour that has been the main imminent danger and enemy for the working-class, and its socialist representatives. It has been Starmer's attempts to gut the party of anyone to his Left, or who advocates any independent thought, that has been the main cause around which the Left needed to unite. It has been Starmer's determination to act as Johnson's bag man on almost every issue from Covid authoritarianism to immigration controls, to protecting British war criminals, and to compete with the Tories only on the size of the flag they wrapped themselves in that has been the biggest challenge to liberty and democracy that workers have faced. It is Starmer's adoption of Trumpist, Blue Labour cultural politics, in search of the support of bigots and racists, that is helping to legitimise those vile ideas that are anathema to a healthy society, let alone a healthy labour movement.
In responding to Paul Mason, at the start of the year, I pointed out that trying to form a broad alliance, around Starmer, inside the Labour Party, and, similarly, a broad alliance around such Liberals from other parties, was a dangerous fool's errand. As Trotsky pointed out, in relation to Spain, at times when the ruling class actually needs fascism, an alliance with liberal politicians is pointless, because those politicians represent nothing other than a ghost class, as the social forces they are supposed to represent have already left them and given their support to the fascists. At times when the ruling class does not need fascism, then any such alliance is pointless, because the argument that its necessary to oppose the imminent danger of fascism does not apply.
There is no imminent threat of fascism in the UK or the US, for the reasons set out. On the contrary, its against the interests of the ruling class, and that class, with its state, is already acting to demobilise and break apart the fascists who represent the interests of the petty-bourgeoisie, in antagonism to the interests of large-scale capital.
Victorious Labour candidate, Paul Dennett, got it right, in contrast to Starmer, when, in his speech having won the election for Mayor of Salford, he said,
"It's a path which isn't ashamed of our party's radical roots, which taps into our history and tradition, which puts forward a progressive and dynamic vision for a new and inclusive economy of the future. It's a path in which socialism is at its core.
"The centre ground no longer exists as it once did. The public now expect us to pick a side and articulate a bold ambition and progressive future for all which tackles poverty, tackles inequality, placing the needs of working people and families at its core."
He's right, as I've said before, the centre ground does not exist, but the poles that currently exist are not those of Socialism on the one hand, and 1930's style fascism on the other. The poles are progressive social-democracy on the one hand, which means greater planning and regulation of the economy, including on a wider, i.e. EU wide, geographic basis, and greater industrial democracy, as against reactionary petty-bourgeois liberalism and nationalism on the other. The fact is that Starmer, rather than being in the camp of the former progressive pole, is instead in the latter reactionary petty-bourgeois, Blue Labour, nationalist camp. He is not a part of the solution around which progressive social-democrats and socialists could rally, but a central part of the problem.
Within a week of Paul Mason having made his pleas, for the Left to abandon its independent programme and form a broad alliance around Starmer, at the start of the year, Starmer had proved the point with his suspension of Corbyn, and the start of his pogroms against the Left, even for just demanding the right to open discussions on these issues. Everything seen since emphasises the points I made last year, and at the start of this year. These are the lessons that the Left needs to learn, as we move forward through the rest of this year, and begin to rebuild and reorganise the labour movement.
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