Monday, 16 January 2012

Start the Week: capitalism is dead; long live capitalism

On BBC Radio 4's Start the Week this morning, they were discussing money. Here's the line-up:

Philip Coggan talked about the history of the money system and seemed to be pointing a finger at the fact that there is a perpetual struggle between those who lend and those who borrow - each wants something different from money - lenders want it to cost more, borrowers want it to cost less: hence the crisis, he said (though that seemed to be a big jump for me).

Detlev Schlichter said that all our problems started when President Nixon pulled the world off the gold standard. What happens, he said, is that governments print money to enable people to go on borrowing but this ultimately postpones problems until it reaches a crisis. Solution: money has to be tied to a globally agreed standard, and the best one found to date is gold.

Angela Knight said that the bankers need regulating but we keep giving them the wrong regulations.

Lord Glasman said that Germany gets it right because they have connected their money system to the 'Labour theory of value' which means that wage differentials between workers and 'the board' are much narrower; and workers have real training, skills and qualifications, governments have invested in this and it's quite literally paid off for Germany.

That's how it went.

A couple of bizarre things about it: there's a strange, hollow feel to listen to four people with very different solutions for what is a major problem for capitalists and their governments but all arguing for ways to continue the very system that has caused the problem. In fact, though their structural solutions were different, all of them seemed to be certain that a) some major debtors would default and b) 'we' can't afford to have public services at the level 'we' have them.

On these occasions, I always feel like saying, 'Hold it there, guys.' The level of public service we had in our respective countries wasn't the cause of the problem. As Glasman pointed out, what happened was that capitalists decided not to spend their money developing productive capacity, finding out things we need and making them and/or making them better - they decided to put their money into futures, hedge funds and nebulous packages of debt which various wide boys told them would make massive and quick money.

Then again, our respective governments made a decision, arguably on our behalf to buy the debts that the major banks had run up. As a way of preventing the middle classes rioting, this was an astute move. Middle class riots merging with working class general strikes start to look like revolutions. However, the recoil blow of governments buying all this debt is that governments raise money through a combination of taxation and spending less. That's what they're doing. Through our taxes and rapidly shrinking public sector we are paying for the fun and games capitalists had lending money to people who couldn't pay it back. One key part of this 'policy'? Governments are all trying to introduce a programme of lower wages and/or no wages.

Now that sounds to me like a transfer of wealth from the poorest part of the population to the richest part. Or capitalism by other means. Usually capitalism does this by making people work very hard and paying them as little as possible: the milking principle. But here we have the governments we elect, effectively transferring funds directly across: funnelling the monies they raise on our behalf, for our benefit straight into bankers' and general financial services people's pockets.

(One of the more sickening features of the present crisis is to hear everyone from politicians to commentators talking about unemployment and lower wages as an unfortunate by-product of the 'solutions' that our governments are coming up with. Not so, they are the means. They are the deliberate choices they are making.)

In the midst of this, those of us much accustomed to the phrase the 'Labour theory of value' might be forgiven for a big head-scratch listening to Glasman. This theory states that the source of all value (not the direct or sole source of prices and profits) is human work, acting on materials, acting together to make things that human beings need or are taught or convinced they need. The fixing of prices and the ultimate figures attached to wages and capitalists' profits involve complicated maths but yes, ultimately it all goes back to human beings making things that alter stuff from being of no value to us (eg because it's in the ground, like oil) into stuff that is of massive value.

Glasman even described the capitalists' process of producing this value as one of 'exploitation' (he used the word once, I think) but is clearly reluctant to think that ultimately this is where the problem lies. That's to say, we have a system that works by, as he says, getting workers to produce 'value' (goods we want and need) but when this is transformed into wages and prices, it just so happens that the combined wages of the workers is never as much as the combined profits of the capitalists. All the goods and services are sold for more than the workers' wages, more than the cost of the plant hire and purchase, more than the cost of hiring space or land, more than the advertising and publicity all combined. In other words, the workers don't get the value of what they make or do. That's how and why the rich get richer and the poor get poorer.

The reason why this becomes a crisis may vary from era to era. In the present time, one major problem has arisen out of the fact that that extra 'value' that the capitalists have made off with (ie their profits) needs to be invested in order for it not to lose its monetary price. In the end, this means that capitalists find themselves taking bigger and bigger risks, lending it to ventures that go bust, or on this occasion to poor people who couldn't afford to pay it back. But why were they poor? Because other capitalists were trying to pay them as little as possible (in order to extract value from them) and/or had laid them off from work, or public services were being cut and so they had been sacked by the state. The system produced the very reasons why it failed - namely too many poor people, or at least too poor to pay back their debts, ie the money that capitalists had lent to them.

Now it might have been nice if there had been just someone in a discussion like this who might have represented this point of view. Glasman gets the nearest to it, but he's decided that he's married to capitalism, and so uses his Marxism in a strange truncated way- leans on concepts like the Labour theory of value for him then to apply it to saving capitalism from itself.

One other little 'apercu' that I don't think I had quite thought of before, though: Philip Coggan pointed out an interesting irony. Once the money system is represented by paper money, it is essentially a political system, one in which the supply of money is ultimately controlled by governments for their own reasons. It's a state system.

Isn't there a nice irony here that the great ideologies against the state, the free marketeers, the laissez-faire capitalists, Tea Party folk etc demand to be free of state control, the creeping state and the like? And yet, it's the state they need to run their money system (it's theirs because the really major credit-debt machine is for capitalists), it's the state they need to print money, raise and lower interest rates in order to safeguard their debts and savings (borrowing and lending) and,as now, to create unemployment which in turn depresses wages which - in their theory - enables them to run business more profitably, or start up new ones more easily. (They also want the state to act when workers start to protest about this: they demand that police and armed forces beat up and kill workers who come out on to the streets to say that they and their families are going hungry, their schools and hospitals are getting worse etc)

Governments do that for them. We may not knowingly elect them to do that. But that's what they do for capitalists. And then capitalists keep turning round and saying, down with the state!

We need the state to spend our taxes wisely and efficiently on things we need and want in fair and equitable ways - at this stage: health, education, social services and to an ever decreasing degree  - housing.

One day, we will discover that we need the state to help us produce, distribute, provide and spend so that everything works out in fair and equitable ways. The 'value' that Glasman spoke about will be fairly distributed.

But that'll only happen when we are all confident enough and bold enough to act, to take over all the making and doing for ourselves. The idea that the 'state' (ie the power of which is supposed to lie in the hands of the people we elect) actually owns and controls money is in a way a glimpse of the way it could all be like that - though it'll have to be a very different kind of 'state'; one that we really own and control ourselves and works for the benefit of all of us).