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“Today, an oligarchy is taking shape in America of extreme wealth, power and influence that really threatens our entire democracy, our basic rights and freedom.”
This can be recorded just like Eisenhower’s about the USA being dominated by the “military-industrial complex”.
Both describe what the US has long been.
By coincidence this weekend’s Morning Star has a pull-out supplement putting the point of view of the Leninist-Stalinist “Communist Party of Britain” in which one of its leaders, Alex Gordon, expounds a similar essentially financial theory of crises:
“Beyond profits extracted from surplus value, capitalists amass capital via bank credit and stock markets. Fractional reserve banking creates new credit many times the original deposits. Stock markets likewise multiply the value of the original means of production. Marx called this fictitious capital, since it separates from and achieves value far beyond the original productive capital. Fictitious capital feeds the economy and finances debt out of all proportion to the means of production it is based on. When this bubble bursts this is a crisis.”
This is wrong on at least two counts.
First, banks can’t lend more than they have in terms of their own capital, deposits and what they themselves borrow. They don’t create credit out of thin air. Bank loans are an investment of real capital. They are not “fictitious capital”. Neither is money raised by share issues. It, too, is a real investment of money capital.
Second, trading of shares on the stock market does not (when share prices go up) increase the “value” of the capital originally invested in production.
Fictional capital is transforming an income stream into a notional capital sum which if invested or loaned would yield interest of the same amount.
Shares are a form of fictional capital calculated from the expected future stream of income coming from the profits made by the capitalist firm in which they give ownership rights. They are traded in their own right independently of the value of the capital invested in production. An increase in the price of shares is not an accumulation of capital.
Similarly a fall in the price of shares is not a fall in capital accumulation. The reduction or even disappearance of fictional capital is not a devaluation of existing real capital. In fact it will be a reflection of this — the drying up of the source (profits) of the stream of income that is turned into a notional capital sum.
There are sometimes purely speculative increases in the prices of shares. When such a bubble bursts what happens is that the share prices return to a more realistic reflection of the stream of future income their price is based on. The real economy is not affected.
On the other hand, a change in the real economy such as overproduction in relation to paying demand and so of real and expected profits can provoke a stock exchange collapse, as in 1929 and 2008. In other words, it is a fall in real profit-seeking activity that provokes a stock exchange collapse rather than vice versa.
Debt crisis? Whose debt crisis? In any case this is a quite different theory of capitalist crisis and collapse than we have been discussing up to now. It’s financial rather than economic.
You talk about “the recourse to debt as a solution to the debt crisis” but a state finds itself in trouble precisely when it can no longer do this. Those with money are not going to lend it to a state they know or suspect won’t repay it. A state in this situation has either to declare itself bankrupt or drastically reduce its spending.
What are you expecting? For the US or Britain to go bankrupt?
This article from a recent Socialist Standard deals with the view that capitalism is supposedly based on unsustainable debt:
I think it is better to refer to Luxemburg‘s theory of crises as saying they are caused by underconsumption rather than by overproduction.
Of course her theory that capitalism doesn’t generate enough purchasing power to buy all that it produces does assume that there is overproduction (in relation to paying demand) but she is saying that this is permanent, built into to the system.
The crises of capitalism are caused by overproduction but this only occurs from time to time when during a boom capitalist firms assume that the boom is going to be permanent.
It is the difference between saying that capitalism has a permanent tendency to overproduction and saying that capitalism has a tendency to permanent overproduction.
We and the ICC both agree that capitalism has long since created the material basis for a world socialist society in which the needs of everybody can be met; and that therefore capitalism has no reason, as far as the interest of humanity is concerned, to continue to exist.
We express this by saying that it is obsolete, past its sell-by date and, if we are being philosophical, has fulfilled its historic role and is no longer progressive. And that therefore establishing socialism is at the top of the agenda.
The ICC, on the other hand, ties this to an economic theory that this means that capitalism is incapable of further developing the means of production and is in a state of economic decline, decadence and decomposition and so can no longer offer social reforms as it previously could and that economic crises will get worse and worse until —- unless the working class act – the final big one that will bring about its final economic collapse.
But not only is there no reason in theory to conclude that, having fulfilled its historic role by creating the material basis for a world socialist society, capitalism can no longer function as it did in the 19th century, but the facts also show that it has. Since 1914 capitalism has immensely developed the forces of production (making socialism even more practicable) but has also offered more extensive reforms than in the period before.
And of course there were crises in the 19th century including the big one in the 1880s which led Engels to speculate that capitalism had entered into a period of permanent stagnation.
In other words, despite being past its sell-by date, capitalism as an economic system has continued to operate as it always did, extracting surplus value from the working class and going through cycles of boom and slump without the succeeding slumps being necessarily worse than the previous one. So there is no reason to conclude that the next slump will be worse than that of the 1930s as the ICC is predicting and presumably hoping for as an assumed spur to get the working class to end capitalism.
As it happens, there is an article on this in this month’s Socialist Standard:
Personally I see the problem of overproduction and the problem of capitalisms need for an ‘outside’ to expand into as an underlying tendency which we are now at the extreme limits of
This is what I always understood to be the basic ICC position, based on Rosa Luxemburg’s mistaken underconsumptionist theory that capitalism needs external markets to expand and in fact to exist.
Luxemburg imagined that she had found a flaw in Marx’s analysis but it was her who was mistaken in claiming that, because capitalism did not generate enough purchasing power within itself to buy what was produced, it needed buyers from outside the system to buy the surplus.
The mistaken conclusion that follows from this mistaken view is that, when these external markets have been exhausted, capitalism will begin to collapse. The ICC does not hesitate to draw this conclusion and in fact is arguing that these outside markets have now been exhausted or, as you put it, are at “the extreme limits” of being and as this recent text on their site claims:
https://en.internationalism.org/content/17536/crisis-going-be-most-serious-whole-period-decadence
“This crisis is going to be the most serious in the whole period of decadence”. That’s some claim. I think that’s what they said last time.
What a joke. A treaty that supposed to apply for a 100 years. I wonder who thought that one up.
100 years is a long time during which conditions change a lot. Imagine if Britain had signed a 100-year treaty with some country in 1925 how long would it have lasted? And then think what might happen in the next 100 years up to 2125.
This stupid stunt won’t be remembered even in 5 years.
Decadence means an end to the progressive role of capitalism. Once capitalism is a world system it A) has nothing to be progressive in opposition to B) no longer has a useful role in laying the foundations for communism.
That’s fair enough. But “Decadence” and “Decomposition”, with their connotations of decline, rotting or falling apart, seem over the top as a descriptions of this situation.
Despite having already laid the material conditions for world socialism and so no longer being historically “progressive”, capitalism has continued to grow not decline. At one time the ICC used to deny this, arguing that what appeared to be growth was in fact just replacing what had been destroyed in a world war. I don’t know if they still do.
The fact that capital has continued to accumulate since capitalism became a world system (whether this dates from 1914 or a couple of decades earlier) does not mean that it has not ceased to be historically progressive. It no longer is and hasn’t been for well over a hundred years. What it means is that socialism is now on the historical agenda, irrespective of whether capital accumulation has continued or not, and that this is what socialists say the working class should be striving for as an immediate aim.
I see from other stuff in their site that the Marxist-Humanists are still going on about “Yrumpism” being a “fascist thread”:
Did they call on workers to vote for Harris in November?
I was thinking also of Soren Mau’s Mute Compulsion which argues that not just workers but capitalist corporations (and governments) are subject to the impersonal laws of the capitalist economic system identified by Marx to which they must comply or fail. This has long been the basis of our case, derived from Marxian economics, that capitalism cannot be reformed so as to work in the interest of the working class.
In his article “Marx, Theoretician of Anarchism”, Maximilian Rubel’s point was that Marx was arguing for the abolition of the state before the likes of Proudhon (an unpleasant joke, I agree), Bakunin and Kropotkin.
https://www.marxists.org/archive/rubel/1973/marx-anarchism.htm
What is interesting is that academia is catching up with what we have been saying, in polemics against the Bolsheviks and their descendants, for over a hundred years — that Marx stood for winning control of the state and democratising it before using it to end capitalism and bring in socialism as the common ownership and democratic control of the means by which society survives.
Nothing wrong with that. Nobody here is arguing that a socialist/communist society can be be created “solely” through the ballot box. Obviously workers will need to organise outside parliament too to be ready to keep production going while and after capitalist control is ended.
As far as I can work out, the IP writer opposes some species of “communitarianism” to democracy (seen as a posited on individualism — the “counting of noses” as Bordiga and Mussolini put it). At least that is what I understand from this passage:
“Here we want to oppose communitarian to democratic, one seeks to establish or defend the organic bonds of community and the other seeks political domination with the assistance of an ideology that has it roots in class division and ultimately in the capitalist value-form itself.”
It’s seems to be anti-democracy rather than pro anything. As he says:
“This text does not pretend to offer “practical” solutions to the collective organization necessary for self-liberation but rather to orient future discussion and experimentation in collective action. But, we will assert that democracy, even in its “pure” form, is not a step towards liberation but rather the principle mode through which capital keeps resistance contained within the political.”
He seems to have been influenced by the ideas of Jacques Camette that communism is a new form of community, as set out in this article:
Anyway, as you say, it has nothing to do with “what Marx actually wrote” as well as being practically incomprehensible in parts.
One in the eye, then, for those “left communists” like Internationalist Perspective who reject the whole concept of democracy as capitalist.
They throw out the baby of democracy as an organisational and decision-making form along with the bathwater of democracy as a form of the capitalist state. See:
https://libcom.org/article/towards-critique-democratic-form-draft-b-york
The title tells it all but work your way through the text if you have the time.
But IP are not the only ones to come out with this sort of stuff.
It looks as if the war in Ukraine has a control of important raw materials aspect too:
Confirmation from a non-Russian-media source:
