Capitalism - the long view

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"The more the world goes to hell, the more the prices of houses in Chelsea and Kensington ascend towards heaven."

I have been thinking about the evolution of capitalism, perhaps spurred by reading the London Review of Books – and having a little time on my hands.

The early emerging stage begins with the Italian city states and the aftermath of the Great Plague from 1350, marking the beginning of the end for western feudalism. The emergent period culminates with the print revolution, the Reformation and the Conquest of the Americas, as well as the institution of Atlantic-American slavery. 
By 1550, slavery in the Americas and expanding free labour in Europe combined with the destruction of the Church hierarchy in many lands to bring about social and religious revolution. The Anabaptists of Munster attempted to bring about a communist Jerusalem, a dystopian utopia that is besieged and destroyed by the forces of reaction. Meanwhile a peasant-hating Luther urged the slaughter of revolting commoners as the German Peasant War is likewise crushed.

Out of this early 16^th century upheaval emerges Mercantile Capitalism, a new world order dominated by the merchants of Italy, Holland and London, funded by the Spanish crown’s immense riches, in turn melted down from the treasures of obliterated Mezoamerican civilizations.

1600 was the year that marked the birth of capitalism proper, with the arrival of the world’s first stock-holding trading corporations – the East India Company and Dutch East India companies. Out of the new world trading system that tilted toward the Americas and Asia emerged the first great profit-seeking enterprises. 
Unlike the Spanish colonists, their treasure was not for the Crown, the Church and the slave-owning overlords of America, but for the stockholders in London and Amsterdam.

One sees here a common trait of capitalism that even today its propagandists deny is integral to it – free labour exists alongside unfree labour. The system has always required both.

From 1550 to 1770 the mercantile system prevailed, through England’s aborted bourgeois revolution and the rise of Dutch and English mercantile capitalism, built on slavery and commodity trade.

Then came the industrial revolution, and the republican revolutions of America and France. The third phase of capital from 1770 until around 2000 was defined by western dominance, the rise of industrial capitalism and western imperialism. 
It was also the age of bourgeois revolution, democracy and two other world movements: from 1870 to about 1945, working-class revolution, and then from 1945 until 1980, anti-colonial revolution.

While some have described the world that emerged after 1980 as post-industrial (and post-colonial), this is false, as it only describes a trend of deindustrialization in the West. 
Urbanisation and industrialisation actually reach their zenith in this final phase that takes us to the present. Only in 2005 did the majority of the planet find themselves living in urban centres (See Mike Davis’s Planet of Slums), leaving behind millennia of rural existence. 
The industrial revolutions of Asia, starting in Korea and Taiwan, and moving on to Malaysia, Indonesia, Vietnam and, most importantly, China, at last begin to universalise the new mode of production that started in Britain and America 200 years before.

Simply because the most valuable companies in the world now reside in the ‘digital’ or ‘weightless’ parts of the economy, does not mean that this era is not an industrial one. Human labour, organised in factories and offices, and the use of vast quantities of material in the production of consumer devices, mark simply the development of the consumer phase of industrial society, out of the steam and steel industrial ages that preceded it.
 The endless warehouses of whirring servers that power the networks that keep millions of us online, as much as the army of factory workers assembling the gadgets, these are the inescapable dirty secrets holding up the weightless age.

We can likewise discern, with our 21^st century environmental spectacles, that the fuel of industry was first peat and steam, then coal and now oil and gas. Over nearly 250 years of the age of industry, much has altered beyond recognition, but the underlying forces of capital and labour and the mediating technologies –productive, energetic and monetary – remain at work. 
What we can say for certain is that production and consumption are expanding exponentially, along with population. Bumps in the road do not alter that trajectory.

Since 1980 capital, most particularly finance capital, and also Asian industrial and energy capital, have been in the ascendancy. Labour has been corralled through competition from the new hinterlands, and the age of militancy has receded. The massive expansion of the global labour force has made the withdrawal of labour by any part of it less likely to strike terror into any capitalist. 
Perhaps a time will come when there is no longer a source of cheap, underemployed labour to replace the once uppity workers of the metropolis, but this seems unlikely. Capital is constantly destroying the foundations of social wealth, in a process of borderless rolling back of social gains, euphemistically known as structural adjustment, now, austerity, or better,  ‘disaster capitalism’ (Kline). 
As the last great recession has shown, capital recovers its losses quickly, while workers find it ever harder to hold onto their share of social wealth. This wage stagnation is mostly a western phenomenon, as across the developing world, wages are catching up. Some call this the 'great levelling'.

The last time western capital showed fear of its populace was the last time it had to call on them to fight its wars, and the last such war was Vietnam. In the age of drones, who needs worker soldiers? History tells us that worker soldiers are the most dangerous force for any old regime, since they can demand, and often get, altered social arrangements. 
With their drone wars, perhaps our crafty rulers have abolished the possibility that a New Model Army, or heroes of the wars in Europe, can ever return to demand the end to the system that made them fight.

Meanwhile Asia and the Gulf increasingly hold the great surpluses with which they can acquire strategic assets in the western heartlands. 
This is achieved without blood, like a backdoor coup, much as the blood and treasure of the Spanish and Portuguese empires ended up in the coffers of Dutch, Venetian and English financiers.

Not that capitalism is any less bloody than it was in previous centuries. The American empire keeps order, following the brief interlude of the Cold War, maintaining a status quo that allows the billionaires of Europe, Asia and the Middle East to remain safe in their fortresses. The ability of this gradually declining empire to maintain such order is now in question. 
But if instability strikes in one of the world’s forgotten corners, London is always there to provide a safe haven for money, whatever its colour. Strange how it was that London welcomed the refugees of the world in previous centuries, including Karl Marx, and now welcomes its oligarchs. 
It is a common fact known to London estate agents that the Chinese are the main buyers behind the latest property bubble, getting their money to somewhere safe. The more the world goes to hell, the more the prices of houses in Chelsea and Kensington ascend towards heaven.
This is part of a trend whereby rent of various kinds is eating into the earnings of workers and other producers. Rent is acquired through monopoly control of an asset, and is charged purely by virtue of this ownership, not for adding any value to the economy. The major rentiers include energy producing countries, especially the Gulf monarchies, landlords and banks - who charge us rent (interest and fees) for loans created through leverage on minimal or sometimes zero deposits, which costs the banks nothing but make them rich. The housing bubbles of recent years have been the biggest example of a rent-seeking spree - allowing house prices to rise way beyond any sustainable values - that has actually cost the 'real' economy trillions of dollars in bailouts and debt austerity.
If we ask who has survived best and grown mega-rich in recent decades we note that it is oil-producing countries, the financial sector and property owners. Essentially, rentiers. The only rivals in wealth terms to this are the new manufacturing nations of Asia, firstly China. 

There is a related secular trend worth noting for futurologists and students of political economy. Technological revolution makes anything manufactured cheaper over time. (Is it a coincidence that burglaries are less of a threat nowadays, when most household items, consisting of the latest technology, come so cheap and plentiful that it is not worth the criminal’s bother and risk to break in and take them?)

By contrast, as production expands exponentially, the planet is relentlessly denuded of its finite mineral wealth and consequently, the price of this natural wealth rises. We see this most obviously with oil, but it applies to any number of commodities. 
The stuff we make gets cheaper, but the stuff that we make it from – that the planet has created over millions of years - becomes more precious and expensive. Thus at some point, barring a new form of production that is entirely based on recycled material, a crisis occurs.

We cannot keep producing goods that are built with an ever-decreasing lifespan. The natural resource components make up a greater part of the value of the product, while the product’s inherent human labour and technology becomes cheap as chips, thanks to rising ‘efficiency’. (Efficiency is a very misleading word for a system that is so wasteful of resources; its prime efficiency is to extract profit from the production-circulation process - the accumulation of capital. In terms of materials, it is utterly profligate - see the oceans full of plastic waste).

The holders of the natural wealth become the rulers of the world, while the makers of things, unless they also own the materials, become the slaves of the resource owners. 
The proprietors of the land or sea under which such wealth exists become the greatest rentiers in history. All they do is dig stuff up (or get someone to dig it up for them) and sell it to the highest bidder. This is the future of capitalism unless it can re-use materials more effectively, or make things that last much longer. 
Which of course, it will have to learn to do in order to survive as a system. Unfortunately, capitalism has been moving in the other direction entirely, with products designed to become obsolete more rapidly than ever. 
This is the process of circulation and accumulation speeding up. If I cannot sell you the same thing next year as I did this year, how am I going to make money?

To change such an immanent feature of capitalist production seems unthinkable, and it ought at some point to mark the end of the consumer capitalist age.

Will this end see the beginning of green [recycled] capitalism, or green socialism? The age-old question of whether any private person or corporate body can ‘own’ what lies beneath then becomes the paramount question of the age, since this is ultimately where future wealth lies, just as it did in ages past. 
This will likely be the fight of the – rapidly approaching - future.

Sybil Edmonds - whistleblower who revealed 'Gladio B' link to 9/11

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Sunday Times journalists confirmed earlier this year that their investigation into direct criminal-jihadi links to US intelligence immediately prior to 9/11 was suppressed under pressure. This is a very indepth piece by Guardian writer and blogger Nafeez Mosaddeq Ahmed that goes to the heart of the US role in 9/11. I recommend a detailed read of this thorough article. This is the real conspiracy and it's not just a theory. FBI whistleblower unveils the deep state operation Gladio B - a strategy of tension using links to Al Qaeda and other groups to advance US and NATO Goals, leading all the way up to the terror attacks. 

Hugo Chavez - a dazzling light goes out

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It is a sad day, no doubt about it. Millions around the world are mourning the death of Venezuelan President Hugo Chavez. I first saw him on television around 1996 when I was living in Caracas. He was a charismatic young army officer who had recently been released from prison after his failed coup attempt of 1992. He became a national figure in early 1992, when he told his men to return to barracks and that the struggle against a corrupt government was called off 'Por ahora' (for now).
Twenty one years later, after winning power and leading a 'Bolivarian revolution', he is gone. He was an educator and an enabler of his people, the majority poor of Venezuela, to whom he gave a unique voice in the presidency. While in the rich north, the working class have been largely excluded from political debate since the rise of Thatcherism and neoliberalism, in Venezuela the president unashamedly spoke for the toilers and the poor. For the privileged and highly educated, it is hard to imagine what this kind of articulation means.
I remember seeing Chavez work his way meticulously through the national accounts and the international reports of ratings agencies, explaining to the audience of Alo Presidente what all this elite language meant. He did not dismiss it, he explained it. I could never imagine such a scene on British television where politicians speak in soundbites and patronising cliches.
I remember going on holiday to the beach in 2006 where a Dutchman and his Venezuelan wife ran a small hotel. While the owner complained about Chavez, his Venezuelan cook explained in detail why his boss was wrong. This man may have slept in a modest room adjacent to the kitchen, but he understood Chavez's transport strategy and was able to articulate his view clearly and confidently. The Dutchman's half-baked complaints did not stand a chance. This for me was an object example of what the Bolivarian revolution meant. A people armed with ideas and facts, able to defend their own advancement and their own government. They could criticise it too, but not based on the lies and distortions of a capitalist media, which they were able to see through.
Viva Chavez!

The thrill of the alien

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I prayed last night for the return of my passport in order to be reunited with my family. At about 6 this morning, woken by the cacophony which is the night in the Seeb souk, and the idiot opposite who has the TV on really loud then starts playing Arabic disco at 3am. I went into the corridor and shouted to little effect.

Waking again at 5pm with the call to prayer amid strange and vivid dreams, I went online and saw cryptic messages from T sent while I was asleep boiling down to ‘You owe me big time’ and ‘Get you bag, you’re pulled’ which I had to assume meant she had found the passport. Another email from my mum this morning confirmed this although I will have to wait for a video call to confirm this. I walked along the beach today after spending an hour and a half in the office doing a bit of work to lessen the load tomorrow. P and K came in just as I left at midday.

The thrill of the alien. That is one way to describe the feeling of disorientation mixed with excitement, or rather a heightened sense of awareness, when one is in a strange country with very little that is familiar. There are ugly things about Oman – the shop signs, the scrabble roads, the litter on the beach, the industrial noise and endless traffic. In a sense it is both developed– in the sense of infrastructure and traffic – and underdeveloped in the commercial western sense. Where as we have endless sophisticated advertising and branding, they have brash, ugly shop signage that is all of the same ilk. They have endless ‘coffee shops’ that don’t sell coffee. If was to put on my entrepreneurial hat I would say two lines for tourism would be – a decent, Omani coffee chain to take on the limited inroads of Costa and Starbucks. Secondly, boutique western friendly hotels at reasonable prices. Oman is pitching at the high end market which makes perfect sense but means that many will not come here. For Oman, that of course could be a great blessing. But rather than leave the mid price hotels to Indian chains, an Omani-European chain could cater to those who don not like gloomy rooms and indifferent service. But then of course, you would need trained staff as well as well designed hotels.

My new room has what seems to be a permanent generator hum just outside the window. I am guessing it will continue into the night. Strange that when I came to look at the room earlier I did not hear it. We will see tonight whether it makes sleeping impossible. Shouting and the water truck, and perhaps less disco pounding would be nice, but I am suddenly aware of this incessant jangle. This part of town is the epitome of the hell of rapid modernization without thought for the peace of the people who are supposed to be benefiting from it. 

Zizek, Zabala and the communist horizon

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Santiago Zabala is ICREA Research Professor of Philosophy at the University of Barcelona. he wrote an opinion piece on Al Jazeera - in response to the Slovenian marxist critic Slavoc Zizek. Zizek is a mischievous iconoclast who still claims to be a communist even though allegedly he lives in Dubai. 

This was my response to Zabala's piece and the comments below it:

As an 'anti-capitalist' by nature - gosh, I must be lazy preferring not to slave away for 50 hours a week for someone else! - I don't see the 4 points presented by the author as actually signifying fundamental obstacles to capitalist reproduction. The most important trends that can lead to capitalist breakdown in the longer term are:

1) the substitution of technology for human labour, leading to wage suppression, mass unemployment and a slowdown in economic growth. This is the most fundamental challenge to capitalism. When agriculture advanced through new capitalist techniques, the proportion of the labour force in agriculture fell from 70% to 2% in countries like the UK; the same will happen to industry. Industrial workers have fallen to 10% of the workforce in some countries; human services are the remaining sector where employment growth lies.

However technology is removing the need for skilled labour - and has been for some time. Once the reproduction of society is separated from productive employment, capitalism breaks down because capitalism is based on the labour-capitalist relationship. If the wage labour class - all those who live primarily through paid work - is diminished beyond a certain point, capitalist growth becomes impossible UNLESS an agency outside the market relationship - ie the state (or the people's collective will) steps in to revive the process of circulation by putting money into people's pockets. We have seen this recently with bank bailouts, quantitative easing etc BUT this is putting money into the hands of finance capitalists, rather than ordinary people. 

Capitalism has to be reproduced artificially because wages are insufficient to consume the economy's new output. The state or some other non-market agency must step in to ensure the circulation of capital. Free marketeers believe that by cutting back the state and welfare the market will automatically right itself and everyone will make hay, but there is very little evidence for this now or in the past.

2) Uncontrolled fiat money growth, debt expansion and deflation caused by a decline in the rate of profit in advanced countries, combined with financial monopolisation of the economy. For 15 years western governments allowed debt - public and private - to replace income growth. This economic model is now bust and so we have austerity and government money creation. Austerity can exacerbate point (1) by further cutting wages and increasing unemployment. We now have a dictatorship of finance, which to my mind, is as totalitarian as any other kind of dictatorship.

I believe that a non-capitalist solution to these problems could be found that is far more sustainable and humanistic than the artificial reproduction of capitalism through state manipulation and taxpayer debt bailouts. This would require measures to restrict asset bubble growth, redistribute liabilities to bond holders, writing off debt, introducing such measures as citizen's income, and returning large parts of our social life - and land - to the commons - deprivatisation but via democratic means so that bureaucrats do not take charge of assets.

3) As a point of historical accuracy, the mythology of capitalism ignores the fundamental role of the state as handmaid of market development, expropriation of the commons, and the creation of a wage labour force. This false view of history as presented here by Dave Small is what prevents an understanding of how we got here and where we might go. Would the 'free market' exist in America if the US and colonial governments had not systematically expropriated native common land and handed it over to capitalists and private farmers? Of course not!

Future alternatives are possible, once we abandon the prison of neoliberal ideology. Crucially, we must develop new ways to revive the commons and revive democratic control of the economy. The internet means we can get rid of the monopoly of career politicians and put the decision making directly in the hands of the people through a real time permanent democracy - replacing the plutocratic 18th century model now dominant in the US, Europe and elsewhere. Parliaments should, in my view be made up of people's tribunes chosen at random like juries, with fixed paid terms to prevent capture by lobbyists. See Iceland banking and democratic reform as an example we should all follow.

Staying calm while the world goes crazy

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Oman, my current location, is an oasis of calm in a region that seems to be convulsing with violence. Bombs by Sunni extremists and mass killings by security services in Pakistan trigger a new form of protests - refusing to bury the dead; Syria each day a horror story; Iraq still hit by daily bombings and protests. 

Further away in Mali a war with France against ‘terrorists’ is underway, with Britain in a supporting role; in Algeria militants seize hundreds at an oil installation in retaliation against the French. Weapon stockpiles looted from Libya after the fall of Qaddafi are now put to deadly use.  

The Muslim world is in a process of violent and revolutionary change. America under Obama is like America under Clinton – reluctant to engage in conflicts in far flung places after a decade of wars. So Britain and France step into the breach. France is gung ho after staying out of Iraq and playing a small part in Afghanistan. But they have been humiliated 'Black Hawk Down' style in their botched rescue of a hostage in Somalia. It is truly extraordinary, exactly 20 years after Bill Clinton got burnt with a simliar operation to hear that French forces met with 'unexpected resistance' in Somalia.  Meanwhile the Mali escapade already looks like it could escalate into something much more difficult. France would probably like to intervene in Syria, its former colony, but Russia stands in the way.

Meanwhile life here seems to go serenely on. Even when locals look at me strangely, I don’t detect hostility. But perhaps under the surface there is something there. Clients of the West like Jordan and Oman have to be nervous. That role of being stuck between big players is familiar to both – Oman between Saudi Arabia and Iran; Jordan between Israel and Egypt. If you don’t play it right, you end up like Lebanon or Syria. 

Oman is what a friend called the Switzerland of the Middle East – it remains resolutely neutral and stays friendly with all its neighbours. It’s a small country and it pays not to take sides. Perhaps this commonality is partly why there are so many Palestinians and Jordanians here – but may be more because here there are paying jobs and prospects and in Jordan there aren’t. 

A well connected Palestinian from Jordan living here told me that one in three Jordanian men were informers to the security services. I wonder what the proportion is here in the Sultanate? It’s not an accident that taxi drivers’ licence plates belong to the Royal Omani Police. And it may explain why cabbies are often so curious.