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After the Crisis: Global Capitalism and the Critique of Political Economy

by Hugo Radice on November 3, 2014

In giving this keynote talk to the British International Studies Association (BISA) International Political Economy Group (IPEG) annual conference entitled “IPE and the New Normal: Open Conflict After the Crash” at Leeds (5-6 September 2014), my presentation focused on the present conjuncture in global capitalism as ‘the new normal’.  Certainly, by mid-2010 the financial crisis of 2008 had been contained sufficiently for governments and markets alike to be able to revert to ‘business as usual’, although it is taking a long while to figure out how to put Humpty-Dumpty together again. But I think that this process is better captured by the term ‘normalisation’, in the sense used by the Czechoslovak Communist Party after the Soviet invasion of August 1968: it is a process, but not (yet) a state of normality. What is important is that the field of IPE is especially well-placed to observe and analyse this process, and when we do so, we find that the foundations of the neoliberal normal are being revealed. If neoliberalism is primarily an ideology that serves the interests of the rich and powerful, the now-global ruling class, the current work of rebuilding its operating systems cannot be undertaken entirely behind closed doors: hearts and minds have to be won over, and dissenters sent packing.

IPE’s origins lay in the early 1970s, with what is usually termed ‘the break-up of Bretton Woods’. Instead of a renewal of that intergovernmental order, the outcome was the privatisation of global finance, which set the framework for so much that followed: the unruly Third World tamed by the debt crisis, the renaissance of foreign direct investment and transnational corporations, Reagan and Thatcher, the fall of the Soviet empire, the Washington Consensus, the Maastricht Treaty. These huge changes culminated, within the field of International Political Economy (IPE), in the debates on globalisation and neoliberalism that dominated the 1990s and 2000s respectively.

But as many have argued, there’s the ideology of global neoliberalism, and there’s the reality – of crises, rampant inequalities, the destruction of the planet, small and occasionally larger wars, authoritarian ‘democracy’, and the stately charades of so-called global governance. What sense can we make of all this?

The crisis of 2008 and after

The global financial crisis (GFC) looked briefly as though it was ‘the crisis of global neoliberalism’, and not just ‘a crisis in…’. As it turned out, however, what happened was closely analogous to the way the Third World debt crisis played out in the 1980s: when the markets screw up, the states step in. By a neat coincidence, one figure from the global financial and political élite links the two processes: José Ángel Gurría, head of the OECD during the recent crisis, was a key figure in shoring up global finance after the Mexican default of 1982.

RadiceSo where do we stand now? I think normalisation has revealed two key features of capitalism today. First, as I have argued for over forty years as captured in my recent book Global Capitalism: Selected Essays, capitalism is inherently a global order, even if methodological nationalism continues to allow some of its analysts to plausibly deny this. Second, the conventional focus in IPE on the antinomy of states and markets has been unable to conceal the primary social and political purpose of shoring up the class rule of  the rich and powerful. The question is: why has critical IPE been unable to go beyond critical analysis, to offer an alternative political programme that resonates with society at large? I think there are three main reasons for this.

  1. When in 2010 the governments of Europe in particular turned from bailing out the banks to imposing austerity on their citizens, the critical response that surfaced in public debates was framed in a return to Keynesianism.  Given that the over-50s generations that dominated these debates grew up during the Keynesian era, this is not surprising, but (as I myself quickly discovered in writing regular columns in the Yorkshire Post) it was very clear that public interventions using a Marxist framework – let alone more esoteric discourses of critical IPE – would simply not connect to the concerns of a wider public. However, even that Keynesian discourse, based on his analysis of the Great Depression of the 1930s and the failure of the Treasury orthodoxy of the day, proved unable to puncture the ‘common sense’ of the dominant discourses of neoliberalism in the UK and (most importantly) ordoliberalism in Germany. At heart, although Keynesianism contains within itself a grounding in the economic divide between labour and capital, the focus of its analysis and policy prescriptions is on the restoration of capitalist order, not on opening up real alternatives.
  2.  The GFC demanded, and briefly got, a truly global response, with a deft transfer of leadership from the G8 to the more inclusive G20. The rise of the BRICS made it impossible for Washington to simply dictate the terms of crisis resolution, as happened in the Asian crisis of 1997. But despite the magnitude and universal scope of the crisis, it proved neither possible nor necessary to make this apparent sharing of power in the states-system permanent, and there followed a swift reassertion of the power of global markets (the Eurozone sovereign debt crisis in particular) and of traditional nation-state power politics. And whereas in the 1970s both the Soviet bloc and a significant part of the Third World offered at least a potential challenge to the great capitalist powers around a New International Economic Order, by 2008 ruling classes everywhere (with a few partial exceptions in Latin America) were committed to the restoration of the global neoliberalism that had served them so well for the previous two decades.
  3. In any case, as the discourse of austerity gathered strength, it proved all too easy for governments to scapegoat the poor, the unemployed, and above all the various ‘others’ at home and abroad. The ideology and practices of the competition state – one of the most important analytical concepts developed in IPE – were coupled with a de facto encouragement of racism and chauvinism. Political science helped in this: it had long ago demonised the concept of ‘populism’, once seen as the democratic expression of the popular will (as in the USA between the 1880s and the 1930s), but today associated with the far right. The broad left that might have emerged to challenge austerity has found much of its natural terrain occupied by political forces that, as in the interwar period, divide our societies and thereby assure the dominance of the 1% and the continuance of normalisation.

In search of answers: the question of class

SRFollowing on from a chapter of mine in Socialist Register, it seems as though, in putting forward our analyses of the crisis and after, we critical IPEers were failing to connect either with those in power, or with “the 99%” who were paying the cost of the crisis. In Gramscian terms, we were not ‘organic intellectuals’ representing the interests of the working class – we were representing no-one but ourselves. When I first realised this a couple of years ago, my first response was to develop a critique of the politics of Gramsci and of neo-Gramscian IPE, published in Gramsci, Political Economy, and International Relations Theory, focusing on Gramsci’s concept of ‘critical economy’ and on his analysis of the relation between intellectuals, politics and the state.

More recently, however, I have come to see the main problem facing Marxists in IPE as being the meaning(s) that we attach to the concept of class. In my own work I kept referring to class theory, the working class, the ruling class; but when I looked for the analytical foundations of this language of class, I found myself wondering whether this might explain why our critiques had so little purchase in the crisis debates. For the fact is that, in so far as these debates have anything to say about class, they do so in the established language of mainstream sociology, in which the main focus has for many years been the growth of the ‘middle classes’.

I began by going back to Marx, to the classic two-class theory of a bourgeoisie owning the means of production, and a propertyless proletariat whose subsistence depends upon the sale of their labour-power. In the development of Marxism’s critique of capitalism since the late 19th century, this simple model was very largely taken for granted, perhaps because it offered a convenient link between the crisis-ridden economics of capitalism, and the potential for realising a socialist alternative: crisis would lead to class struggle, and the proletariat would emerge victorious and begin its construction.

With the rise of Stalinism and the failure of revolutionary movements in the West, there arose the critical currents that made up ‘Western Marxism’, and eventually a new flourishing of Marxist debates in the 1960s, in the seemingly favourable conjuncture of the end of the postwar boom. After 1968 all seemed possible: we were re-armed theoretically, we could integrate critiques of capital, the state, the labour process and imperialism; and best of all, the post-colonial Third World and workers in advanced capitalism appeared to be mounting a serious political challenge.

But we know what happened next; and once the moment was passed – some time between Nixon’s visit to China and the Third World debt crisis – we found ourselves locked into defensive struggles, fragmented into diverse if exciting social movements, and unable to halt the decline of ‘working-class’ politics. At times we could mobilise: in Eastern Europe in the final decrepit phase of post-Stalinism in the late 1980s, or against the G7 and the WTO after the Battle of Seattle; but we were unable, especially, to develop an international, or indeed global, movement that could challenge the new realities of neoliberal capitalism.

However, going back to Marx’s Capital for the umpteenth time, I came upon chapter 1, section 4: “The fetishism of commodities and the secret thereof”: eleven pages that set out the foundations of the two-class model. The ‘working class’, he argues, is the other face of capital: it is not just those who sell their labour power for subsistence, it is the source of value and of capital itself. And the fetishism of commodities is the basis of the separation of economics from politics in classical political economy, posing the pervasive antinomies of state and market, and concealing the social relation of capital, with its structure of exploitation and inequality, behind the veil of free and equal exchange.

Class structures and the social division of labour

revolution_smallThat is all very well, but it is a long way from this highly abstract formulation to the messy reality of classes in capitalism in particular times and places. Looking back on the flourishing of debate on class in the 1960s and 1970s, Marxists were faced then with robust criticism from mainstream sociologists, political scientists and historians whose purpose – whether explicit or not – was to challenge the idea of the working class as a revolutionary agent. Leaving aside the unsurprising insistence on identifying Marxism with the reality of Stalinism in the Soviet bloc, there were two main fronts in this challenge.

The first and most important of these was the question of the ‘middle classes’ and their apparently inexorable growth. Marx and his followers had recognised the reality of groups intermediate between the two ‘great classes’, notably the small proprietors in industry and in commerce (the ‘petty bourgeoisie’) and the ranks of supervisors and managers in large-scale industry. But now there were ‘new’ middle classes (NMCs): wave upon wave of white-collar employees, teachers, bank clerks, civil servants, professionals of all kinds. Yes, they were of course workers in the sense that they worked for wages, and with very rare exceptions could not aspire to join the ranks of the capitalist ruling class; yet culturally, socially and politically they seemed quite separate from what everyone agreed was the core of ‘the working class’: industrial workers, usually male, in factories. Did these more prosperous and aspirational workers constitute an aristocracy of labour along the lines of skilled workers in the late 19th and early 20th centuries, easily bought by capital and turned towards reformism? Were they merely another form of petty-bourgeoisie? Or were they more appropriately seen as a singular NMC, with a distinct position and role in capitalism, and interests distinct from the (real?) working class?

The second challenge concerned the sheer diversity of the working class as such. Many had understood Marx to be arguing in Capital that all those labouring for capital would be reduced to unskilled and interchangeable appendages of capitalist machine-systems. However, capitalism since Marx’s day has exhibited a constant renewal of complex hierarchies of skill, with new occupational categories and an ever more detailed social division of labour. Changes in technology and business organisation from the mid-20th century reduced the size of factories and further differentiated the labour force, making it much harder for the common interests of workers, even within a particular sector, to be expressed.

In the last 20-30 years these debates have not in any sense been resolved; indeed, if anything the confusion has deepened, because at the level of everyday life neoliberalism has been so successful in re-establishing the cult of individual achievement that is a central component of its ideology. For individuals, this entails the promise of social mobility as the reward for individual effort, with its unstated threat of poverty and disappointment for those who fail. Alternatively, the hierarchy of class is reframed as a horizontal structure of inclusion / exclusion, with the excluded defined as a ‘social problem’, scapegoated, pitied and dehumanised in a reversion to Victorian liberal thinking. Work itself is, for all but the select ‘creative’ few, defined as a bad, as simply a means to an end, and it is assumed that workers of all kinds must be incentivised by carrots and sticks: only the high-ups, interfacing with the sacred market, have the right to determine what is produced and how.

As a result, today it is hard to see how an earth we can even imagine a collective agency, let alone one that can agree on a vision of an alternative to global capitalism. Was Occupy nothing more than a fleeting spasm, a wisp of an idea that vanished under the ruthlessly-fomented divisions of race, nation, gender and culture?

And yet….

Maybe the dialectics of labour set out by Marx in his analysis of commodities, for all their apparent remoteness from the realities we face, can provide a way out. In that analysis, the flip side of ‘wage-labour’ is not only ‘capital’, important though that structural antinomy remains. It is also ‘useful’ or ‘concrete’ labour. For regardless of the historical social order in which we live, humanity faces eternally the need to transform nature in order to survive and reproduce. The social division of labour maps out the concrete occupations and tasks through which this goal is achieved. However much and in whatever ways we are subordinated and exploited by rulers hiding behind the supposed imperatives of the market, and however deformed and insane their purposes, in workplaces, households and communities we work together to achieve material purposes.

Our capacity to work collectively to build an alternative social order is latent in those everyday achievements. What we do requires, even in the most mundane tasks, our human capacity to reason, to plan, to connect the past that provides our resources, the present in which we transform them into goods and services of all kinds, and the future in which we make use of them for our subsistence. The power to change society can only be unlocked by challenging the right of property to contain it and to channel our efforts into alien and destructive purposes.  We need, perhaps more than anything, to use our understanding of global capitalism, our critique of its political economy, to offer an alternative vision of a society based on universal values of equality, solidarity and harmony with nature. By the look of it, we do not have very much time left in which to do this, so let’s get going.

Hugo Radice
Life Fellow, School of Politics and International Studies (POLIS), University of Leeds and 2008 winner of the Daniel Singer Millennium Prize for his essay '1968 and the Idea of Socialism' (see: http://www.danielsinger.org/).

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