PELUQ UERAS/BARBEROS

Despite its disruptive history many still regard capitalism as the best imaginable system and largely accept it as an almost immutable force. Forbes & Ames (2009) are particularly forceful in their declarations that capitalism will not merely survive but will ‘save us’. They assert that capitalism is a moral system, that it promotes democracy and democratic values, is creative and that its most remarkable achievement lies in its ability to turn scarcity into abundance. Kaletsky (2010) is another who confidently points to capitalism’s capacity to reinvent and reinvigorate itself, especially by using the experience of crisis. Capitalism is also said to be successful because it is self-correcting (Easterly 2008: 129). In the period since the beginning of the Great Depression there have been 17 significant recessions and crises that

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have affected global capitalism. The International Monetary Fund (IMF) reports that from 1970 to 2011 there were 147 banking crises, 217 currency crises and 67 sovereign debt crises (Claessens & Kose 2013: 27). While there is an understandable degree of overlap in these figures, they show that capitalism’s self-correcting capacities have been largely ineffective.

Despite this, capitalism, according to its advocates, is marked by adaptation and resilience. They assert that capitalism continually finds new ways to adapt after each and every crisis that it has faced; and through individual ingenuity and sound corporate management has proven Marx to be wrong. Such is the reasoning of Emmott (2009), former editor of the Economist. Emmott’s arguments are echoed by British economist, Ormerod who claims that “the distinguishing feature of capitalism is not its instability, but its resilience. Markets are not perfect, but unemployment is usually low. Crises happen, but the system bounces back” (2015). From such confident proclamations, capitalism would appear to have triumphed and for all time. What unconsciously emerges from such analyses is that capitalism is a

mysterious entity with an independent existence, in much the same way that the ‘market’ assumes a special aura of inviolability and independence. Capitalism, however, does not operate in an economic or political vacuum. Increasingly the state has acted to both promote capital’s interests and to stabilise capitalism in moments of crisis. As Braudel remarks, “capitalism only triumphs when it becomes identified with the state, when it is the state” (1977: 64). The ‘resilience’ of capitalism is very much connected with the state and its interventions.

Held (2008: 111) paraphrases Marx when he states that capitalism’s success has depended on the rapid growth of the productive forces of society. While this initially represented

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capitalism’s progressive character, it was contradicted by the exploitative system of productive relations. Herein lies the contradiction that Marx maintained would ultimately bring capitalism to a point of destruction. Advocates of capitalist relations, as well as some Marxists, point to what is regarded as the obvious fact that history has yet to prove Marx correct. Using Australia as a case study, Hillier (2010: 74) describes state interventions that acted to stabilise the economy in the face of the GFC. He also points to the globalised nature of capitalist relations that enabled Australian capitalism to maintain equilibrium through its reliance on the strength of Asian markets. In the immediate aftermath of the crisis, Australian capitalism and the state appeared to be faring well. Resilience again appeared to be the motif for capitalism.

The necessity of state structures to provide stability for capitalism becomes yet another focus of contradiction. Wood (2002: 31-32) argued that capitalism, which is naturally anarchic, must inevitably rely on political organisations. At times these appear as regulatory

organisations to safeguard capitalism or in the form of interventionist bodies whose task it is to stabilise capitalist processes. The state, “no matter what its form, is essentially a capitalist machine, the state of the capitalists” (Engels 1966: 63). The role of the state as intermediary for capitalism (Patnaik 2016: 8-9), is especially important. State intervention coincided with the post-World War II era of prosperity, but the crisis of the 1970s demanded a dismantling of such interventionist policies.

Much has been made of capitalism’s recovery from the GFC. Patnaik (2016: 1-2) outlines how the media has played a pivotal role in promoting the idea of rapid recovery. The World Trade Organisation (2016), and the IMF (2016b) however, both report that world trade grew

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at less than three per cent for the fifth consecutive year. This is the slowest rate since the 1980s, indicating that rather than recovering from the GFC, the global economy is effectively in a period of stagnation. A feature of the current stage of capitalist crisis is the rise in

inequality that can be observed, less obviously between states or regions, but rather, between classes (Patnaik 2016: 10-11). Again, the paradoxical nature of capitalist-state relations becomes apparent. The contradiction of a globalised, borderless capitalist economy and a system of nation-states is evident. The state, however, still plays a significant role in the ability of capitalism to successfully function and in maintaining a degree of stability.

Capitalism maintains its dominance, despite a growing tendency toward crisis and inherent instability. The state certainly plays a substantial role herein. The contradiction between the private nature of capitalism and the social nature of the production process remains. There is also a constant need for capitalism to acquire greater returns on its investments as a counter to a tendency for the rate of profit to fall. The irreconcilable contradictions of capitalism would indicate that the system itself must proceed to a point of breakdown as portrayed in Marxist theory. What Marxists refer to as the ‘objective conditions’ for such a breakdown already exist. What is more difficult to assemble are the ‘subjective conditions’. The state and its agencies play a crucial role in maintaining a situation whereby these subjective factors either fail to materialise or remain in a weakened form. Capitalism maintains its dominance, not through any inherent strengths it might possess. On the contrary capitalism and its tendency toward crisis displays weakness. It is in the lack of effective challenge that capitalism has managed to survive.

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The question of why such a challenge has not developed in the face of on-going and intensifying capitalist crisis is at the heart of this study. The economic base upon which capitalist society rests is framed by class antagonisms and yet the working class and its allies remain largely acquiescent. The answer can be found in the manner in which the state has acted, over time, to ameliorate overt expressions of class antagonisms. The state operates for and in the interests of the ruling class. It is, as Engels pointed out when commenting on apparent ruling class accommodation to the needs of the working class, for an objective reason. “The fact that all these concessions to justice and philanthropy were nothing else but means to accelerate the concentration of capital into the hands of the few” (Engels 1984: 27). This, in turn, directly relates to the degree that organisations which have traditionally

represented the working class, in both a political as well as an economic sense, have become incorporated into the structures of the state. For a class-based society to function in relative harmony, there must be a degree of acceptance that the status quo represents the best interests of all. Force and overt coercion cannot be a permanent feature of society. At the same time the ruling class is permanently engaged in struggle, which in turn invites a reaction (Burnham 2002: 116-117). The tendency toward ‘struggle’ is less explosive, however, if the capacity for class consciousness is dimmed. “For a class to be ripe for hegemony means that its interests and consciousness enable it to organise the whole of society in accordance with those

interests” (Lukacs 1976: 52). While Lukacs was commenting on the potential for the working class to actively promote its own interests, it is an apt description of how the ruling class has managed class relations. This careful use of ideology by the state has been remarkably effective, as will be explained further in the next section.