Monthly Archives: October 2011

‘I’m in favour of capitalism, just for the record.’ *

by Liam McNulty

Ed Miliband set out his stall at the Labour Party Conference last weekend in Liverpool but behind the rhetoric about breaking from neoliberalism, Labour’s role in stabilising the capitalist system in general is all the more starkly revealed.

One of Miliband’s central messages was to divide UK companies into two categories: ‘producers’ such as Rolls Royce and other manufacturing firms, and ‘predators’ such as RBS and the riskier elements of the financial sector.  Never mind the fact that Rolls Royce is the UK’s second largest arms company, producing the military hardware to realise imperialism’s ‘predatory’ drive, this distinction is fundamentally wrong.

Firstly, the division between manufacturing and finance is by no means clear-cut.  Large manufacturing companies such as General Motors and Ford in fact make as much of their profits from financial operations, for instance in selling insurances through subsidiaries such as GMAC Financial Services, as they do selling cars.  Secondly, it was the very crisis of profitability in industrial production in parts of the advanced capitalist economies which led to the boom of cheap credit and runaway financial profits in the first place, as falling wages squeezed consumption and created a chronic demand problem.

However, what the distinction lacks in purely economic terms it arguably makes up for politically.  As the Financial Times point out, Miliband is riding a wave of anti-finance, anti-banker sentiment which has seen the President of the European Commission, José Manuel Barroso, come out in favour of a financial transaction tax.  Moreover, it has strategic importance on two counts.  Research by the Bureau of Investigative Journalism has laid bare the Tory Party’s reliance on funding from financial capital which counts for over half their income.  Not surprisingly, Peter Hain has jumped on this as evidence of the Conservative’s subservience to the City.

Also, it reflects a real unease within manufacturing capital and intelligent ruling-class circles about the systemic risks posed by runaway finance.  Even George Osborne has doffed his cap to the need for some separation of savings and investments, and don’t forget that even though some fractions of capital are profiting nicely from the crisis and the subsequent bailout, it will take years at the current rate of GDP growth to reach pre-collapse levels of output.  As Larry Elliott wrote back in July: ‘The UK economy is smaller today than it was in 2006 and is crawling out of the deep pit into which it plunged in 2008 at a snail’s pace. There was a 6.4% drop in output over six quarters during 2008 and 2009, and since then gross domestic product has increased by 2.5%. You would have to go back to the 1930s to find an economic recovery so slow and so feeble.’

What does this mean for the socialist left?  With regard to the focus of agitation, it calls for a re-think of incessant targeting of finance and bankers as the root of all evil.  A disdain for finance-capital, though rational and popular, is on its own not necessarily socialist, or even left-wing.  Fascists too have historically denounced finance as a parasitical growth on the productive capacity on the nation, and now Miliband and Barroso are getting on board.  It may even be negative, shifting focus from what capitalism actually is -a form of social relations which is based on the exploitation of surplus value from wage-labour by a small minority who own the means of production as well as the means of exchange- towards a particular aspect of capitalism, finance, which can be safely isolated and held up as an anomalous problem in an otherwise sound system.

What is required now is to shift to a focus on the system as a whole; pointing out the inter-relatedness of finance and manufacturing, the exploitative nature of the wage system and the need not only for the expropriation of the banks but also the struggle against capitalism in the work-place, the engine room of capitalist production itself.  We can’t let Labour off with deliberately narrowing the terms of the debate.

* Ed Miliband to Kirsty Wark on Newsnight.  

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