In the aftermath of the 2007 economic meltdown the serious journals of capitalism, (Financial Times, Wall Street Journal, the Economist etc) were full of articles about capitalism. What went wrong, what is its future, how can such a crisis be prevented in the future? Sales of Das Kapital, Marx’s great work describing the inner working of the capitalist economy shot up throughout the world. Capitalist economists recommended it as one of the most important texts to read if capitalism was to be understood.
In an attempt to calm nerves, Gillian Tett pointed out in the Financial Times that there have been 60 market crashes since 1622. “This neo-modern credit market is not very dissimilar after all from its classical predecessors”, she wrote, quoting the now defunct Lehman Brothers, “This summer’s turmoil will not be the last,” she writes, “...these episodes occur with striking regularity—typically at least once a decade.” *
She’s right about this of course, but it was not uncommon during the nineties boom to hear economists and speculators singing a different tune, talking of an end to the business cycle-------forever.
Capitalism is wracked with crisis. It is by its very nature an unstable and destructive economic system. Karl Marx wrote that capitalism was an economic system that, “.......necessitates uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones.”. **
Nowhere is this more painfully obvious than Ireland. Only a couple of years ago the tiny country was ranked the second wealthiest OECD economy behind Japan and ahead of the UK, US, Italy, France, Germany and Canada, with an average wealth per head of nearly €150,000 according to a report published by the Bank of Ireland. *** This tiny country had an estimated 30,000 millionaires, “The same report paints an upbeat picture about the sustainability of recently created wealth and suggests that fears about the rising levels of debt are overstated.”, suggested some economists.
How wrong that was. Ireland’s boom, much like the rest of the world, was based to a large extent on debt. Its debt to disposable income ratio rose from 89% to 140% between 2002 and the onset of the collapse in 2007 but net wealth grew by 350% in 10 years and GDP doubled.
Now, Ireland is traveling down the Grecian road as banks have been taken over by the state and property values have collapsed. Unemployment has doubled since the beginning of the “Great Recession” reaching a national average of 13.8% and almost 20% in the rural southeast according to Business Week. ****. As is usually the case, these figures are most certainly conservative estimates.
In response to the crisis,“Global investors have warmed up to Irish food stocks”, Business week informs us. So capital is shifting back in to the agricultural sector, an area that investors didn’t think was as “sexy compared with property and financial services” says one economist, “That’s changing: High value export industries like food are the future for us now.” He adds.
The debt boom resulted in a massive housing binge that drove construction up to 25% of the economy sucking up agricultural Labor but now new the unemployed are heading for the fields and the Irish government is looking to agricultural exports as a way out of the quagmire, but agriculture still only accounts for 2% of the economy compared to 16% in the seventies and these shifts will no doubt drive up the price of farmland.
So within the space of a few years the Irish population went from one of the poorest to the wealthiest and back among the poorest again. This is what Marx meant by “everlasting uncertainty”. The trademark of the capitalist system is indeed “uninterrupted disturbance”.
This happens not because of evil people or greed in the abstract. It is not an economic mistake. It happens because it is an inherent aspect of the economic system we call capitalism; it is built in to a system of production in which the means of producing the needs of any society are owned by private individuals who set production in motion for their own private gain.
If we just think about how the speculators view production, producing food was not “sexy”. What did the bourgeois economist mean by that? He meant that it was not as profitable as lending money or other financial escapades. Now that the finance industry has collapsed, that there’s too many houses, too much construction, capital invested in food production will bring greater profits and has become “sexy” again. This is how the Irish capitalist class and the global capitalists who will invest in this economy look at the world; it is how any of us would have to look at the world if we were them; our existence as capitalists would depend on it. Below: Irish Workers Protest Cuts 2009
Food production, like all of society’s needs, should not be market driven. The millions that are starving throughout the world are not starving because we can’t produce enough food; they are dying of starvation because it isn’t ‘sexy” to put resources in to food production; it isn’t profitable enough. And in a capitalist economy, the owners of capital have the right to not invest capital resources in food production if they so wish. They have the right to allow people to starve to death. But what we eat, how we produce it as well as how we build our cities and dwellings, how we produce energy or provide public transportation, these are decisions that can only be made collectively. The market never has and never will allocate resources in an efficient and humane way in the way that a rationally planned economy can.
Ireland is just one example of the insanity of the capitalist economic system, of its instability and inherent insecurity as it swings from one end of the spectrum to another. As I read the Business week piece it reminded me of Marx’s description that fits so well but it is only one example. The wars, the environmental destruction, the slums of Mumbai and Rio where there is no cycle but a continuing one of poverty and starvation, child prostitution and disease; this is capitalism’s legacy. Capital, that part of wealth our Labor creates that is re-invested in production is another resource that should not be in private hands. it is our collective product and we should determine its allocation. It is not "their money" as the capitalist like to tell us; it is stolen from us.
Who wouldn’t want to rid oneself of that set up?
* Fears Of A Crash Unfounded—For Now: Financial Times 8-18-07
** Communist Manifesto
*** Finfacts Ireland
**** Ireland's Unemployed Head Back to the Farm
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