Posts Tagged ‘Credit Crunch’
After an occupation and strike lasting over six weeks workers at the FCI
Microconnections in Mantes-la-Jolie have saved their jobs.
The strike began on February 24th with workers demanding assurances on their
future. Management refusal to give information on production at an equivalent
factory in Singapore and an announcement that there was ‘overstaffing’ led
workers to believe that the company was planning to shut the factory down
and shift production. Over half of the factory’s 400 workers occupied the
factory to prevent any removal of equipment.
Workers held the factory and picketed for seven weeks, in spite of a legal order
to quit the premises issued on the 26th of March. 100 workers responded by going to the company
headquarters in Versailles and blockading the chief executive in the building for
four hours to demand negotiations.
Management continued to deny that any redundancies were planned until the
CGT uncovered a document detailing a redundancy plan for November on the
3rd of April. This increased support amongst the workers, especially the
A week later after negotiations between the CGT and CFDT unions and management, mediated by the region’s sous-prefet and the work and employment bureau, an agreement was announced. The workers had succeeded in winning a guarantee that the factory would stay open until 2014 with no job losses before 2011. Workers also won payment for 27 of their 34 strike days.
Former employees of a packaging firm in Dundee have seized the factory and have started a workers’ co-operative to run the failed firm themselves.
Incredibly, both business chiefs and socialist die-hards are hailing the move as revolutionary and say similar the worker buy-outs could be the way to stave off mass unemployment during the recession.
The Soviet-style bid to take over the company began last week when staff members at Prisme Packaging were told the business was to cease trading with immediate effect, and that there was no money in the coffers to pay their redundancy. The 12 disgruntled employees decided to occupy the factory until they were paid.
The group contacted the Big Issue Scotland after their first night at the plant. Speaking from inside the doors, 25-year-old employee Matthew Duffield said: “We’re very frustrated and we want what we are entitled to by law.”
During their week-long sit-in, the workers became convinced they could keep the business running. After consulting Dundee North Law centre, they are now taking legal action to secure their redundancy money and ensure Prisme is dissolved legally.
“They treated us like second class citizens and wanted to wash their hands of us,” said employee David Taylor. “We were not prepared to accept this. We’re not militant people – just little people who refused to be little anymore. We stood up for what we believe in and we are all proud of that.”
The Dundee employees have now forged plans to take over the cardboard box-making business as a collective, and begin trading again under a different name. Some members of staff have worked at the factory for 14 years, and contacted clients to ensure enough business would still be there.
“We know what we’re doing and we think we can run it better ourselves,” said Duffield. “We have customers quite willing to come back to us. It’s early days, but we’re confident we can make it work.”
Duffield said the co-operative was already negotiating to rent the industrial unit warehouse from the existing landlord, and have been give first refusal on the cutting tables and box-making machines by the firm who had leased Prisme equipment.The Dundonian workers have received supplies from friends and family, and funding from local trade unionists.
Business bodies have hailed their “entrepreneurial” ingenuity, oddly in tune with the socialist parties who have also united in praise of the defiant enactment of Marxist principle.
“It’s a tale of people getting to the end of their tether and saying we’re not taking anymore,” said firebrand socialist and Celebrity Big Brother contestant Tommy Sheridan. “They’ve showed tremendous courage to take the stand they’ve made. They’ve turned their defiance into something positive, and it shows their initiative to take it further and start a cooperative. They may not have realised it, but they’ve planted a flag for socialism and worker’s control.”
A spokesman for the Federation of Small Businesses said: “It is a viable way forward for people. It shows there are opportunities for the entrepreneurial spirit even as businesses collapse this year. Anything that helps save jobs and keeps places open can only be a good thing.”
Dundee MP and SNP deputy leader in the Commons Stewart Hosie is also excited. “I am delighted that they have taken it upon themselves to start a phoenix company which will benefit from their experience and their years of working together. They are doing all the right things to make this business work as a co-operative.”
The Dundee start-up comes in the same week as one woman in Dorset re-opened the Woolworths branch she worked in before the company’s collapse.
Claire Robertson, 34, who had been with the firm for 18 years since starting as a Saturday girl, re-launched the popular Dorchester branch as Wellworths. She has promised to keep the famous Pick ‘n’ Mix selection, and hopes the shop will become known as Wellies.
None of the management from Prisme Packaging were returning calls for comment.
Adam Forrest, Big Issue Scotland
According to the Italian union Cgil, today – 4th April – 2.7 million people marched in the streets of Rome to demonstrate against the current financial crisis.
According to the police headquarters, only 200,000 people were there. In reality, five different processions took hours to get to the main meeting point, the Circo Massimo. Dozens of trains, two boats and 7,000 buses took people from all over Italy to Rome in order to demonstrate against the inequality of income (a recent survey showed that in Italy one out of three people state to have a year-income of less than 10,000 Euros while 0.9 per cent of the population state they rely on an income of over 100,000 Euros) and to ask for fair social measures.
Many politicians joined the demostration. Among others, Dario Franceschini, the secretary of PD (the Democratic Party of the left). Many were also families and students. There were also many immigrants, often illegal, coming from all over the country. One of them talked to the crowd on the stage denouncing how immigrants are the first to lose their jobs and how the increasing racial discrimantion in Italy is serious and dangerous.
Many stories were reported by workers on the stage. Among the others, one of a 28-year-old teacher reporting how from next September, 42,000 people working in schools will be made redundant.
On the stage, musicians and artists also performed. The son of a factory-worker told the story of his dad who died on the job due to the poor application of safety rules (Italy is characterized by a very high rate of deaths on the jobs, called in Italian “white deaths”, a recent survey showed that in Italy 2,500 accidents happen everyday on the job and three where people die).
When the secretary of Cgil mentioned the name of the Prime Minister Berlusconi, the crowd started to whistle and shout so loud that he had to stop for few seconds.
So, what comes next? This week’s protests over the G20 meeting in London’s Docklands have ended and the focus of discussion is on police tactics and civil liberties rather than any of the questions raised by protesters. Their recession has not become our revolution, it looks certain that we will pay for their crisis, and the streets were most definitely not reclaimed.
The violence, most of it clearly provoked by police, distracted from the message of the protests (although the message itself was somewhat obscure). The protests themselves distracted from the real, difficult tasks facing the left. The general public were well-prepared for the violent scenes and police brutality by a media that was stocked full of bombastic rhetoric from “anarchists”, as well as predictions of chaos and a “summer of rage” from police sources.
It’s difficult to gauge accurately the impression that the average person gets of these protests, although one imagines it is not one of positive identification. The Guardian’s Duncan Campbell, by no means hostile to the protestors, describes the crowd as follows:
“playful, peaceful, harmless group of protesters, including rappers, sax-players, jugglers, spliff-rollers, students, CND campaigners, passers-by, and men dressed as police officers and wearing blue lipstick.”
This week was just the latest in a long succession of these anti-capitalist carnivals: J18, Seattle, Prague, Genoa, Evian, and plenty more in between. The question, as after all these events, is what happens now. Taking the J18 protest in the City of London in 1999 as a starting point, we can count this latest spectacle as something of a tenth anniversary. They are clearly not getting any larger, gaining any more social force (even in the midst of the greatest capitalist crises in decades), or becoming any more effective.
How to make them so? Both left-wing Labour MP John McDonnell, and Richard Seymour of Lenin’s Tomb, say we need bigger protests in future, Richard adding that these should coincide with “a general strike or something” and John suggesting they should be combined with direct action.
But surely both these arguments are to mistake a tactic for a strategy. Without new methods and strategies it is difficult to see these protests becoming any more significant, hopes for a general strike any less remote, nor direct action any more isolated from wider social forces.
It is arguable that there is also a general confusion between defensive and offensive orientation in these protests. Working class communities throughout the country are under attack on a whole range of fronts, the government is preparing a crackdown on welfare, and pushing through fresh privatisations. Yet the left’s rhetoric and tactics would suggest we are in the ascendency. This suggests an urgent reappraisal of our posturing.
Meanwhile, the far more significant news this week was the occupations and protests by employees at Visteon car parts factories in Belfast, Basildon and Enfield after the firm made 565 workers redundant. The company was part of Ford until 2000 and workers are fighting for a decent redundancy package from the company. Our full support goes to these workers. People should email solidarity messages to firstname.lastname@example.org
Audio and video recordings of interviews and talks about the crisis.
- Capitalism and Its Discontents: A 5 part series on the financial meltdown Capitalism and Its Discontents, a 5 part series, delves into the roots of the crisis gripping the economies of the Global North and South — and the political upheaval it has …
Posted 24 Feb 2009 21:17 by david calnitsky
- Rick Wolff Documentary: “Capitalism Hits the Fan” The full-length version (just under an hour) available in low resolution at:http://www.mediaed.org/cgi-bin/commerce.cgi?preadd=action&key=139Also see:http://www.capitalismhitsthefan …
Posted 17 Feb 2009 14:11 by david calnitsky
- David McNally Interview – Anatomy of a Crisis Interview with David McNally on the economic crisis:http://www.againstthegrain.org/program/138/id/031405/wed-1-14-09-anatomy-crisisIn David McNally’s analysis of the nature …
Posted 16 Jan 2009 01:01 by david calnitsky
- Panitch and Ginden: “Grasping the Financial Crisis” (audio) Grasping the Financial CrisisA TSCI event with Sam Gindin and Leo Panitch Wednesday, November 26, 2008″This sucker could go down”: the outcome feared by George W. Bush has …
Posted 2 Jan 2009 18:01 by John Clegg
- Bellamy Foster: “Capitalism in Crisis” A November 3, 2008, public lecture by John Bellamy Foster, editor of Monthly Review and co-author (with Fred Magdoff) ofThe Great Financial Crisis: Causes and Consequences, which will …
Posted 2 Jan 2009 16:29 by John Clegg
- Henwood and Shaikh: The Deepening Economic Disaster: Causes and Opportunities for Change (audio) Henwood gives his basic straightforward description of the crisis: increase in loan-backed consumption, Bernanke’s depression-informed choices…Shaikh contrasts crises in the 1840s and 1930s (crises of sharp …
Posted 9 Dec 2008 01:06 by John Clegg
- Robin Blackburn on the Economic Crisis http://www.againstthegrain.org/program/120/id/491420/wed-12-03-08-finances-failuresUnderstanding the current economic crisis requires grasping the connections between interest rate policy, household debt levels …
Posted 4 Dec 2008 18:30 by david calnitsky
- Michael Perelman on the Economic Crisis and the History of Capitalism Michael Perelman’s talk at the San Francisco Peace & Freedom Party on the economic crisis available at:http://www.archive.org/details/perelman-econ-crisisAlso, Michael Perelman’s blog …
Posted 26 Nov 2008 02:32 by david calnitsky
- Lewis Lapham interviews Michael Hudson on the history of debt and credit up to the current crisis Lewis Lapham interviews Michael Hudson on Bloomberg radio show The World in Time. On the history of debt and credit up to the current crisis.http://www.michael-hudson.com …
Posted 19 Nov 2008 00:01 by david calnitsky
- Wallerstein interview on Against the Grain 11.12.08 Immanuel Wallerstein reflects on Obama’s victory and describes the current crisis as a depression, placing it in the context of broad political-economic trends. Ismael Hossein-Zadeh enumerates several …
Posted 18 Nov 2008 06:46 by david calnitsky
- David Harvey on the crisis and neo-liberalism Audio recording from David Harvey’s class on Marx’s Capital in which he draws on the example of the New York fiscal crisis of the 1970s and the emergence …
Posted 18 Nov 2008 06:50 by david calnitsky
- Bailouts And Bankruptcies, The Economic Crisis in Canada and Around the World On Monday October 27 more than 200 people gathered in Winnipeg’s Millenium Library for a public forum with 3 economists and one historian focusing on the Economic Crisis in …
Posted 9 Nov 2008 21:16 by david calnitsky
- Financial Chaos and the Crisis of Neoliberalism A workshop on understanding the credit crisis and its implications for wages, pensions, American power and Left alternatives.• Greg Albo, community activist, Socialist Project and Professor of Political Economy, York …
Posted 9 Nov 2008 16:51 by david calnitsky
- Lapavitsas and dos Santos talks on origins of the crisis The Financial Crisis Of 2007-8: Why And What Next?, Costas Lapavitsas, SOAS On the Market and Policy Origins of the International Financial Crisis, Paulo dos Santos, SOAS slides from …
Posted 4 Nov 2008 23:31 by John Clegg
- Loren Goldner: Mute Interview “Fictitious Capital and Today’s Global Crisis” http://blip.tv/file/667781/
Posted 4 Nov 2008 19:11 by francesca the coat
- Mike Davis interview From Against the Grain: Mike Davis on the current economic meltdown, worker reaction to it, etc. http://www.againstthegrain.org/program/107/id/441410/wed-10-29-08-mike-davis
Posted 2 Nov 2008 15:27 by david calnitsky
- Brecht Forum Panel 10/6/2008 – An Offer We Can’t Refuse?: Progressives Respond to the Wall Street Crisis with William Greider, Arun Gupta, Doug Henwood, Naomi Klein & Frances Fox Piven at the Brecht Forum, 10/6/2008, co-sponsored with The Nationhttp://s11.video2.blip.tv/1090000285395 …
Posted 29 Oct 2008 18:41 by david calnitsky
- Andrew Kliman talk – Worse than They want You to Think: A Marxist Analysis of the Economic Crisis A talk by Andrew KlimanOctober, 21 2008 @ The New SPACEhttp://ia310828.us.archive.org/3/items/TheNewSPACE_WorsethanTheywantYoutoThink_AMarxistAnalysisoftheEconomocCrisis__/crisistalk.wmaThe text of the talk can be …
Posted 30 Oct 2008 23:04 by John Clegg
- Eric Hobsbawn on BBC http://news.bbc.co.uk/today/hi/today/newsid_7677000/7677683.stm
Posted 21 Oct 2008 00:52 by Asher Dupuy-Spencer
- Global Capitalism and its Discontents– Your Call (sept. 29th) with Brenner What is capitalism? And how is the current crisis changing the way you understand the basic structure of our economy? The current financial meltdown has sparked a debate on whether …
Posted 14 Oct 2008 21:55 by John Clegg
- Geography of the Bubble Economy lecture by Dick Walker Talk by Dick Walker from the University of California Berkeley Geography department Geography of the Bubble Economy September 24, 2008 WATCH HERE
Posted 13 Oct 2008 21:51 by John Clegg
- Richard Wolff “Capitalism Hits the Fan, A Marxian View” Capitalism Hits the Fan: A Marxian View A powerful introduction to some fundamentals of this crisis.a much shorter version of the talk can be found here: Market Meltdown 101 …
Posted 13 Nov 2008 01:41 by John Clegg
- Leo Panitch and Sam Gindin podcast Interview with Doug Henwood on the financial crisis, neoliberalism, and the American empire see also their article http://www.zmag.org/znet/viewArticle/18977
Posted 11 Oct 2008 19:23 by John Clegg
- Duncan Foley on imperialism and the crisis
Posted 11 Oct 2008 07:22 by John Clegg
- Anarchist analysis of the crisis audio and slides from Paul Bowman’s talk “Anarchist analysis of the global capitalist crisis”:
Posted 16 Oct 2008 15:18 by John Clegg
Audio/video of York Uni Marxists on the crisis Market Meltdown Forum: Audio: http://www.socialistproject.ca/inthenews/meltdown1_intro.mp3 http://www.socialistproject.ca/inthenews/meltdown2_albo.mp3 http://www.socialistproject.ca/inthenews/meltdown3_stanford.mp3 http://www …
Posted 12 Oct 2008 01:04 by John Clegg
In a far reaching interview with Red Pepper, David Harvey argues that the current financial crisis and bank bail-outs could lead to a massive consolidation of the banking system and a return to capitalist ‘business as usual’ – unless there is sustained revolt and pressure for a dramatic redistribution and socialisation of wealth
Does this crisis signal the end of neoliberalism? My answer is that it depends what you mean by neoliberalism. My interpretation is that it’s a class project, now masked by a lot of rhetoric about individual freedom, liberty, personal responsibility, privatisation and the free market. That rhetoric was a means towards the restoration and consolidation of class power, and that neoliberal project has been fairly successful.
One of its basic principles that was set up in the 1970s was that state power should protect financial institutions at all costs. This is the principle that was worked out in the New York City crisis in the mid-1970s, and was first defined internationally when Mexico threatened to go bankrupt in 1982. That would have destroyed the New York investment banks, so the US Treasury and the IMF combined to bail Mexico out. But in so doing they mandated austerity for the Mexican population. In other words, they protected the banks and destroyed the people – and this has been the standard practice in the IMF ever since. The current bailout is the same old story, one more time, except bigger.
What happened in the US was that eight men gave us a three-page document, which pointed a gun at everybody and said ‘give us $700 billion or else’. This to me was like a financial coup against the government and the population of the US. Which means you’re not going to come out of this crisis with a crisis of the capitalist class; you’re going to come out of this with a far greater consolidation of the capitalist class than there has been in the past. We’re going to end up with four or five major banking institutions in the United States and nothing else.
Many on Wall Street are thriving right now. Lazard’s, because it specialises in mergers and acquisitions, is making megabucks. Some people are going to be burned, but overall it’s a massive consolidation of financial power. There’s a great line from Andrew Mellon (US banker, secretary of the treasury 1921-32), who said that in a crisis assets return to their rightful owners. A financial crisis is a way of rationalising what is irrational – for example, the immense crash in Asia in 1997-98 resulted in a new model of capitalist development. Disruptions lead to a reconfiguration, a new form of class power. It could go wrong, politically. The bank bailout was fought over in the US senate, so the political class may not entirely go along – they can put roadblocks in it, but in the end they caved in.
But this can lead to a deeper political struggle: there is a strong sense of questioning why we are empowering all the people who got us into this mess. Questions are being asked about Obama’s choice of economic advisers – for example Larry Summers, who was secretary of the treasury at the key moment when a lot of things started to go really wrong, at the end of the Clinton administration. Why would you now bring in so many of the characters who are pro-Wall Street, pro-finance capital, who did the bidding of finance capital back then? Which is not to say that they aren’t going to redesign the financial architecture because I think they know it’s got to be redesigned, but who are they going to redesign it for? People are really discontented about Obama’s economic team, even in the mainstream press.
A new state financial architecture is required. I don’t think that all existing institutions, like the Bank of International Settlements or even the IMF, should be abolished. I think we will need them, but they have to be revolutionarily transformed. The big question is who will control them and what their architecture will be. We will need people, experts with some sort of understanding of how those institutions do work and can work. And this is very dangerous because, as we can see right now, when the state looks to see who can help it understand what is going on in Wall Street, they think the only people who can understand it are those on the inside of Wall Street.
Disempowerment of labour: enough is enough
Whether we can get out of this crisis in a different way depends very much upon the balance of class forces. It depends upon the degree to which the entire population says ‘enough is enough, let’s change this system’. Right now, when you look at what’s been happening to workers over the last 50 years, they have got almost nothing out of this system. But they haven’t risen up in revolt. In the US over the last seven or eight years, the condition of the working classes in general has deteriorated, but there has been no mass movement against this. Finance capitalism could survive the crisis, but whether it does depends entirely upon the degree to which there is going to be popular revolt against what is happening, and a real push to try to reconfigure how the economy works.
One of the major barriers to continuous capital accumulation back in the 1960s and early 1970s was the labour question. There were scarcities of labour both in Europe and the US, and labour was well-organised, with political clout. So one of the big barriers to capital accumulation during that period was: how can capital get access to cheaper and more docile labour supplies? There were a number of answers.
One was to encourage more immigration. In the United States there was a major revision of the immigration laws in 1965 that in effect allowed the US access to the global surplus population (before that only Europeans and Caucasians were privileged). In the late 1960s the French government was subsidising the import of Maghrebian labour, the Germans were bringing in the Turks, the Swedes were bringing in the Yugoslavs, the British were drawing upon their empire. So a pro-immigrant policy emerged, which was one attempt to deal with the labour problem.
The second thing you go for is rapid technological change, which throws people out of work. Thirdly, you had people like Reagan and Thatcher and Pinochet to crush organised labour. And finally capital goes to where the surplus labour is by off-shoring. This was facilitated by technical reorganisation of the transport systems: one of the biggest revolutions that happened during this period is containerisation, which allowed you to make auto parts in Brazil and ship them for very low cost to Detroit or wherever. And the new communications systems allowed the tight organisation of commodity chain production.
All of these solved the labour problem for capital, so by 1985 capital has no labour problem any more. It may have specific problems in particular areas but globally it has plenty of labour available to it. The sudden collapse of the Soviet Union and the transformation of much of China added something like two billion people to the global proletariat in 20 years. So labour availability is no problem now and the result of that is that labour has been disempowered for the last 30 years. But when labour is disempowered it gets low wages, and if you engage in wage repression this limits markets. So capital was beginning to face problems with its market, and there were two things that happened then.
The first was the gap between what labour was earning and what it was spending was covered by the rise of the credit card industry and increasing indebtedness of households. In the US in 1980 the average household owed around $40,000; now it’s about $130,000 for every household, including mortgages.
So household debt sky-rockets and that brings you to financialisation, and that was about getting the financial institutions to support the household debts of working class people whose earnings are not increasing. You start with the respectable working class, but by the time you get to the year 2000 you begin to find these sub-prime mortgages circulating. You are looking to create a market. And so finance starts to support the debt-financing of people who have almost no income. But if you hadn’t done that what would have happened to the property developers who are building the houses? So you try to stabilise the market by funding that indebtedness.
Crises of asset values
The second thing that happened was that from the 1980s onwards the rich are getting far richer because of that wage repression. The story we are told is that they will invest in new activity, but they don’t; most of them start to invest in assets i.e. they put money in the stock market, the stock market goes up, so they think it is a good investment, so they put more money in the stock market, and you get these stock market bubbles. They bid up asset values, including stocks, property, and leisure property. So the investment is in the process of financialisation. But as you bid up asset values this carries over to the whole economy. To live in Manhattan, for example, became all but impossible unless you went incredibly into debt. Everyone was caught in this inflation of asset values. And now we’ve got a collapse of asset values; the housing market is down, the stock market is down.
There has always been the problem of the relationship between representation and reality. Debt is about the assumed future value of goods and services, so it assumes the economy is going to continue to grow over the next 20 or 30 years. It always involves a guess, which is then set by the interest rate, discounting into the future. This growth of the financial area after the 1970s has a lot to do with what I think is another key problem: what I would call the capitalist surplus absorption problem.
As surplus theory tells us, capitalists produce a surplus, which they then have to take a part of, recapitalise it, and reinvest it in expansion. Which means they always have to find somewhere else to expand into. In an article I wrote for the New Left Review (Sept-Oct 2008) called ‘The right to the City’, I pointed out that in the last 30 years an immense amount of the capital surplus has been absorbed into urbanisation: urban restructuring, expansion and speculation. Every city I go to is a huge building site for capitalist surplus absorption. This way of absorbing capital surpluses has got more and more problematic over time. In 1750 the global value of the total output of goods and services was around $135 billion, in constant values. By 1950, it’s $4 trillion. By 2000, it’s $40 trillion. It’s now around $50 trillion. And if Gordon Brown is right it’s going to double over the next 20 years, to $100 trillion by 2030.
Throughout the history of capitalism, the general rate of growth has been close to 2.5 per cent per annum, compound basis. That would mean that in 2030 you’d need to find profitable outlets for $3 trillion dollars. That’s a very tall order. I think there has been a serious problem, particularly since 1970, about how to absorb greater and greater amounts of surplus into real production. Less and less of it is going into real production, and more and more into speculation on asset values, which accounts for the increasing frequency and depth of the financial crises we’ve been having; they are all crises of asset value.
My argument would be that even if we came out of this crisis right now, and there’s going to be capital accumulation at a 3 per cent rate of growth, we’ve got a hell of a lot of problems on our hands. Capitalism is running into serious environmental constraints, as well as market constraints, profitability constraints. The recent turn to financialisation is a turn of necessity, as a way of dealing with the surplus absorption problem; but one that cannot possibly work without periodic devaluations. That’s what’s happening now, with the losses of several trillion dollars of asset value.
The term ‘national bail-out’ is therefore inaccurate, because they’re not bailing out the whole of the existing financial system – they’re bailing out the banks, the capitalist class, forgiving them their debts, their transgressions, and only theirs.
The money goes to the banks, but not to the homeowners who’ve been foreclosed on, which is beginning to create anger. And the banks are using the money not to lend to anybody but to buy other banks. They are consolidating their power.
The collapse of credit
The collapse of credit for the working class spells the end of financialisation as the solution for the crisis of the market. As a consequence of this we will see a major crisis of unemployment and the collapse of many industries unless there is effective action to change that. Now this is where you get the current discussion about returning to a Keynesian economic model, and Obama’s plan to invest in a vast public works programme and in green technologies, in a sense going back to a New Deal type of solution.
To understand the current situation we need to go beyond what goes on in the labour process and production to the complex of relationships around the state and finance. We need to understand how the national debt and credit system have from the beginning been major vehicles for primitive accumulation, or what I now call accumulation by dispossession – as you can see from the building industry.
In my ‘Right to the City’ article I looked at how capitalism was revived in second-empire Paris because the state along with the bankers put together a new nexus of state-finance capital to rebuild Paris. That provided full employment – and the boulevards, the water systems and sewage systems, new transport systems. It was through those types of mechanisms that people built the Suez Canal. A lot of this was debt financed. Now that nexus has undergone a massive transformation since the 1970s. It’s become far more international, it’s opened itself to all types of financial innovations. including derivative markets and speculative markets and so on. A new financial architecture has been designed.
What I think is happening at the moment is that they are looking for a new financial set-up that can solve the problem not for working people but for the capitalist class. I think they are going to find a solution for the capitalist class and if the rest of us get screwed, too bad. The only thing they would care about is if we rose up in revolt. And until we rise up in revolt they are going to redesign the system according to their own class interests.
I don’t know what this new financial architecture will look like. If we look closely at what happened during the New York fiscal crisis I don’t think the bankers or the financiers knew what to do at all. What they did was bit by bit arrive at a ‘bricolage’; they pieced it together in a new way and eventually they came up with a new construction. But whatever solution they may arrive at, it will suit them unless we get in there and start saying that we want something that is suitable for us. There’s a crucial role for people like us to raise the questions and challenge the legitimacy of the decisions being made at present, and to have very clear analyses of what the nature of the problem has been, and what the possible exits are.
We need, in fact, to begin to exercise our right to the city. We have to ask the question: which is more important, the value of the banks or the value of humanity? The banking system should serve the people, not live off the people. And the only way in which we are really going to be able to exert the right to the city is to take command of the capitalist surplus absorption problem. We have to socialise the capital surplus, and to get out of the problem of 3 per cent accumulation forever. We are now at a point where a 3 per cent growth rate forever is going to exert such tremendous environmental costs and such tremendous pressure on social situations that we are going to go from one crisis to another.
The core problem is how you are going to absorb capitalist surpluses in a productive and profitable way. My view is that social movements must coalesce around the idea that they want more control over the surplus product. And while I don’t support a return to the Keynesian model of the sort we had in the 1960s, I do think there was much greater social and political control over the production, utilisation and distribution of the surplus then.
The circulating surplus was put into building schools, hospitals and infrastructure. This was what upset the capitalist class and caused a counter movement towards the end of the 1960s – that they were not getting enough control over the surplus. However, if you look at the data the proportion of the surplus being absorbed by the state has not shifted very much since 1970. What the capitalist class did was to stop the further socialisation of the surplus. They also managed to transform the word government into the word ‘governance’, making governmental and corporate activities porous, which enables the situation we have in Iraq.
I think we are headed into a legitimation crisis. Over the past 30 years we have been told, to quote Margaret Thatcher, that ‘there is no alternative’ to a neoliberal free market, privatised world, and that if we didn’t succeed in that world it’s our own fault. I think it’s very difficult to say that when faced with a foreclosure crisis you support the banks but not the people who are being foreclosed upon.
You can accuse the people being foreclosed upon of irresponsibility, and in the US there is a strong racist element in this argument. When the first wave of foreclosures hit places like Cleveland and Ohio they were devastating to the black communities there, but some people’s response was basically ‘Well, what do you expect, black people are irresponsible.’ We are seeing right-wing explanations of the crisis that explain it in terms of the personal greed of those who borrowed money to buy houses. So they attempt to blame the crisis on the victims. One of our tasks must be to say ‘no, you absolutely cannot do that’ and to try to create a consolidated explanation of this crisis as a class event in which a certain structure of exploitation broke down and is about to be displaced by an even deeper structure of exploitation. It’s very important this alternative explanation of the crisis is discussed and conveyed publicly.
One of the big ideological configurations we are going to have is what is going to be the role of home ownership in the future once we start saying things like you’ve got to socialise much more of the housing stock, as since the 1930s we have had huge pressures towards individualised home ownership as a way of securing people’s rights and position. We’ve got to socialise and recapitalise public education and medicine.
Radical politics beyond class divides
There is another point we have to consider, which is that labour, and particularly organised labour, is only one small piece of this whole problem, and it’s only going to have a partial role in what is going on. And this is for a very simple reason, which goes back to the failure of Marx and how he set up the problem. If you say to yourself the formation of the state-finance complex is absolutely crucial to the dynamics of capitalism, and you ask yourself what social forces are at work in contesting that or setting it up, labour has never been at the forefront. Labour has been at the forefront of the labour market and the labour process, which are important moments in the circulation process, but most of the struggles that have gone on over the state-finance nexus are populist struggles.
For example, many of the struggles going on in Latin America are more populist than labour-led. Labour always has a very important role to play but I don’t think we are in a position right now where the conventional view of the proletariat being the vanguard of the struggle is very helpful. There may be times where proletarian movements may be highly significant – for example, in China, where I envisage it playing a critical part that I do not see it having in the US (although it still has an important role there). What is interesting in the US is that the car workers and automobile companies are in alliance right now in relation to the state-finance nexus, so in a way the grand dividing line of class struggle that has always been there in Detroit isn’t there anymore. We have a completely different kind of class politics going on. So I think some of the conventional Marxist ways of viewing these things get in the way of a real radical politics.
There is also the big problem on the left that many think the capturing of state power has no role to play in political transformations. I think they’re crazy. Incredible power is located there and you can’t walk away from it as though it doesn’t matter. I am profoundly sceptical of the belief that NGOs and civil society organisations are going to change the world – not because NGOs can’t do anything at all, but it takes a different kind of political movement and conception if we are going to do anything about the main crisis. In the United States the political instinct is very anarchist, and I am very sympathetic to a lot of anarchist views but not all of them – for example, their perpetual complaints about the state.
I don’t think we are in a position to define who the agents of change will be. In the United States right now there are signs that elements of the managerial class, which has lived off the earnings of finance capital all these years, are getting annoyed and may turn a bit radical. A lot of people have been laid off in the financial services, in some instances they have even had their mortgages foreclosed. In the 1960s art schools were the centre of political radicalism in this country. You might find something like that re-emerging. Or cross-border organisation with groups affected in Mexico by reductions in the amounts migrants can send home to them.
Social movements have to define what strategies and policies they want to adopt. We academics should never view ourselves as having some missionary role in relation to social movements; what we should do is get into conversation. Having said that, I would want us to propose ideas. An interesting idea in the US right now is to get municipal governments to pass anti-eviction ordinances. I think there are a couple of places in France which have done that. Then we could set up a municipal housing corporation which would assume the mortgage and pay off the bank at a partial rate – the banks have been given a lot of money to supposedly deal with this, but they’re not.
Another key question is that of citizenship and rights. I think the rights of the city should be guaranteed by the rights of residency no matter what your citizenship is. Currently people are denied any political rights to the city unless they happen to be citizens. So if you’re an immigrant you don’t have any rights. I think there are struggles to be launched around the rights to the city. In the Brazilian constitution they have a ‘rights to the city’ clause which is about the right to consultation, participation and budgetary procedures. Again I think there is a politics which can come out of that.
A reconfiguration of urbanisation
In the US there is the capacity to act at a local level, with a lot going on about environmental questions, and over the past 15 to 20 years municipal governments have often been more progressive than federal government. There’s a crisis in municipal finance right now and there is likely to be significant agitation and pressure on Obama to recapitalise a lot of municipal government. He has said this is one of the things he is concerned about, especially since a lot of the issues are local ones – for instance, the sub-prime mortgage crisis. As I have been arguing, the foreclosure stuff must be understood as an urban crisis, not just a financial crisis; it is a financial crisis of urbanisation.
Another important question is to think strategically about how the social economy in some alliance with labour and the municipal-based movements could also be a component in a strategy. This relates to the question of technological development – for example, I see no reason why you couldn’t have a municipal-based support system for the development of productive systems such as solar power, to create more decentralised employment apparatuses and possibilities.
If I could develop an idealised system now, I would say in the US we should create a national redevelopment bank and take $500 billion out of that $700 billion they voted for. The bank should work with municipalities to deal with neighbourhoods which have been hit by the foreclosure wave, because it has been like a financial Katrina in many ways; it has wiped out whole communities, usually poor black or Hispanic communities.
You could go into those neighbourhoods and bring back the people who used to live in those communities and rehouse them on a different basis of tenure, residency rights, and with a different kind of financing. And green those neighbourhoods, creating local employment opportunities in those fields. So I could imagine a reconfiguration of urbanisation. To do anything on global warming we need to totally reconfigure how American cities work; to think about a completely new pattern of urbanisation, with new patterns of living and working. There are a lot of possibilities the left should be paying attention to – this is a real opportunity.
But I also have a problem with some Marxists, who seem to think, ‘Yes! It’s a crisis; the contradictions of capitalism will now be solved somehow!’ This is not a moment for triumphalism, this is a moment for problematising. First of all, I think there are problems with the way Marx set up those problems. Marxists are not very good at understanding the state-financial complex or urbanisation, although they are terrific at understanding some other things. We have to rethink our theoretical posture and political possibilities.
David Harvey was talking to Marco Berlinguer and Hilary Wainwright. Transcribed by Kate Ferguson. This article will feature in the April/May print edition of Red Pepper.
David Harvey is a Distinguished Professor at the City University of New York (CUNY) and author of various books, articles, and lectures.
There’s no doubt that the six weeks from March 28th – May 4th offers our anarchist movement a chance to move out of the shadows. Against the background of recession there has been rioting across Europe from Riga to Sofia. These are riots not by activists but by poor people hurting badly. The Greek uprising has provided a fine example of anarchists being prominent in a wider social movement for radical change. In Britain the war on Gaza and the Heathrow runway decision has brought protests – and direct action – back on the street across the country. They are not yet focussed on the recession but they may become so.
The G20 summit in London on April 2nd provides an opportunity for all these strands across Europe to come together as in the PARIS DECLARATION calling for a mass demonstration in London on March 28th – Saturday before summit – and across Europe on April 1st-2nd. In London the Trade Unions, Stop the War are organising marches on April 2nd. ?THE BEHEADING CAPITALISM? event by the folks behind J18 is planned for the same day. Other anarchists are planning a large entral London anarchist rally on the night of April 1st with speakers from across Europe. After G20 the European leaders move on to the NATO summit in Germany – sure to get the anarchists back on the streets
To often momentum is built over a few events then dribbles away. But this year we have the Mayday marches, a planned UK anarchist conference in London over May2-3rd and a Reclaim the Streets event in Brighton on May 4th. The fates are with us comrades, the sheeps entrails are promising, all we need are a few portents and omens to kick the whole fucking thing off,
JOIN THE SPRING OFFENSIVE!
Anti-globalisation activists are plotting a mass demonstration against bankers in the
heart of the City, the Evening Standard can reveal. —- Police are on full alert ahead of
the protest, planned for 1 April – the day world leaders arrive in London for the G20
summit. —- Thousands of demonstrators, including anarchists and anti-aviation activists, are planning a series of protests, aiming to capitalise on disenchantment with City financiers blamed for dragging the economy into recession. —- The event, dubbed ‘Financial Fools Day’, is likely to cause mass disruption as demonstrators try to block traffic and buildings by lying in tents and sleeping bags across the road. —- One source suggested the protest would include a “spectacular action”. Organisers said on the Climate Camp website: “Join us for camping, workshops, protest, positive alternatives, direct action and community.
“We need to stop this foolishness… Bring a pop-up tent if you have one, sleeping bag,
wind turbine, mobile cinema, extra shoes, action plans and ideas… let’s imagine another world.”
Protesters hope to mobilise “anti fat-cat” sentiment among students and workers affected by the credit crunch as they demonstrate against the financial system, and are inviting activists to “set up camp” in London’s financial centre.
One environmentalist source said: “People are angry about losing their jobs and bankers still getting their bonuses. People are also up in arms about the Government bulldozing anti-airport legislation through as we saw with the third runway at Heathrow.”
Despite police becoming adept at controlling such demonstrations and preventing widespread disorder of the type that occurred during the May Day and poll tax riots in the Nineties, there are fears small groups will wreak havoc.
Police sources said: “Angry activists and aggressive City trader types are a volatile mix, as we have seen before.”
During the 1999 City Riot, which left 46 people injured and caused up to £2 million
damage, fights broke out between City workers and anarchists protesting in the streets and in private premises.
The April protest has captured the imagination of anarchists. Some are plotting further
demonstrations against the G20 on the day of the summit on 2 April.
One protester said the example of Athens, where young Greeks have been rioting for several months since police shot dead a teenager, could provide further inspiration.
An anarchist blogged: “The combination of the recession, the inspiration of the Greek
anarchists and the G20 summit being in London on 2 April gives us the opportunity to
mobilise far larger than usual numbers on to the streets… Seize the time.”
Summit protests and the economic crisis
Summit-hopping is so last year. Or is it? When we began conceiving this issue a few months back, it seemed like everyone was gearing up for a busy 2009: NATO’s 60th anniversary party, the G20 summit in London, the G8 in Italy, the UN’s climate summit in Copenhagen… Ten years on from the ‘battle of Seattle’, 2009 was set to be the return of summit-hopping.
However, so far, anti-capitalists in Italy appear to have made little progress in mobilising against the G8 summit in July. What is more, everyone is talking about the UN’s climate change conference next December in Copenhagen. This comes with the awful package of environment minister Miliband calling for a mass movement for green capitalism and an austerity deal. The threat of another paralysing ‘Make Poverty History’-style mobilisation looms. On the other hand, there are, of course, some summits that continue to attract fundamental antagonism. The EU’s meeting on immigration in Vichy, France, last November was one example, despite a lack of mobilisation from the UK.
There is something that is fundamentally different from the previous decade of large anti-globalisation mobilisations: neo-liberalism itself is in crisis! The policies that were promoted by the anti-globalisation arch enemies (WTO, World Bank, IMF) are failing not only in Argentina and Mexico, but also in Europe and North America. The current financial crisis provides a platform for a systematic critique of the current economic system.
Maybe we should be excited that suddenly everyone is talking about the economy. Or should we? Many analyses of the crisis seem to be putting forward reactionary solutions. For a start, who we blame will define how we respond. Socialists blame bankers, government ministers and conservatives (and increasingly liberals) blame immigration, environmentalists and the middle classes blame the mass consumerism of the working class and the corporate media blames everyone. And what, then, will the response be? Anti-consumerism and austerity politics? Economy-boosting interest rate cuts? Tougher immigration controls? Urban riots? Blame creates hierarchies and characterises anti-globalisation protests. If we are to build a collective, emancipatory response to the crisis we need to be critical of any strategies that ignore the realities of life in capitalism, that fuel moral superiority and reinforce class divisions.
Furthermore, with every crisis comes a new conspiracy theory. The problem with these ‘explanations’ is that a capitalist crisis is not the result of the errors of a ‘small and elusive group of people’ as the conspiracy theorists want us to believe.
We live in a system that is antithetical to our needs, and importantly, our desires.
Crises are inherent in capitalism. There is no solution that will make capitalism free of crises. We can demand more regulation of the financial sector or the nationalisation and democratic ownership of banks. Still, capitalism’s crises are based in its inherent contradictory character with the desire to produce for profit-maximisation rather than social needs. And this will always be the central goal of capitalist production. A crisis won’t change that. There are more crises to come, with indications that speculation with raw materials and food could lead to much bigger misery than the bursting of the credit bubble. It is contradictory and irrational to produce, distribute and exchange resources as is done in a capitalist economy, thus capitalism without crises would be an oxymoron.
The left should take the crisis as an opportunity to push for more, to push for a system that puts our needs and desires above profit, to avoid limiting ourselves and scapegoating others. At a time where political leaders are making our demands seem reasonable (whether that’s the nationalisation of banks or a strong climate deal), we should not settle for compromise but demand the impossible!
Despite these new opportunities, there are few signs for a new wave of summit protests that can escape the attempts by governments to recuperate them. Protests are not happening outside summits now. As we write, they are happening in suburbs and big university towns. The migrant youths of St. Denis, the anti-CPE students, the Anomalous Wave movement and the Greek anarchist youth all dominate the headlines, rather than the plans for opposition to the G8 or G20. Also in Britain, radical anti-capitalist protest is no longer connected to the anti-globalisation movement, but is at the radical edge of the failed anti-war movement of 2003. Maybe in 2009 ‘suburb-hopping’ offers new opportunities for resistance?
Editorial of issue 5 of Shift Magazine, http://www.shiftmag.co.uk