My new book, ‘Chasing The Scream’, is now available
11 years ago
Showing posts with label marxism. Show all posts
Showing posts with label marxism. Show all posts
Wednesday, 11 October 2017
QE: the financial elite’s magic money tree and the birth of finance communism
Sometimes you read something that just blows the lid of reality and makes you mad.
In the latest issue of the New Statesman, Christopher Thompson describes how QE is the greatest redistribution of wealth to the rich in history, helping increase wealth for the rich through $8 trillion of central bank money creation, helping spur a $100 trillion expansion of wealth at the top since 2008. The result: 13 zeros added the balance sheets of bankers, stock holders and all those with significant financial assets. Is it any wonder that populism is on the march and people no longer trust mainstream politicians?
This article should be read as a manifesto for revolution. By bailing out the rich, and squeezing the rest through rising asset prices (the house you can’t afford, the giant mortgage you must pay) and wage depreciation, QE should be seen as a form of financial crime — disguised as an economic rescue. No doubt central bankers and politicians genuinely believe they saved us — but really they saved themselves at our expense.
More than that, this is a new model of state finance capitalism — or we could call it finance communism. A permanent guaranteed income for the financial elite, and permanent stagnation and austerity for everyone else. Traditional economics — both neoliberal and Marxist — holds that capitalists use their capital to invest in production and out of this they make a profit.
Neoclassical economics holds that this profit is a reward for risk. Marxism holds that it is surplus value taken from labour (or as rent for land).
But the age of QE effectively marks the end of traditional capitalism. Previous acts of primitive accumulation, to use the Marxist term, occurred during colonialism, slavery, conquest and imperialism. This accumulation then funded early industrial capitalism in the UK and Europe.
According to the believers in traditional free market economics, there was no plunder, rape and colonially induced mass famine, simply voluntary trade in which everyone got richer from the 18th century onwards. (I read this fairy tale every day, a faith that facts cannot impede.)
With less of these opportunities available in recent decades, and traditional honest capitalism also struggling due to financialisation and stagnant wages, the corporate elite must now find new ways to extract wealth and rent from the rest of society.
Old fashioned exploitation is still there, but it is supplemented by state backed extraction. Take the Iraq war: this was a plunder exercise — not just of Iraq’s wealth, but of no-bid contracts (often simply cash in suit cases for fake work) financed by the US Treasury to the tune of $1 trillion. Then, just as the war booty was drying up, along came QE.
This huge bailout is disguised through central bank bond purchases. “Central banks don’t just hand over this money regardless. They do it by buying bonds, most of them issued by governments, from financial institutions such as pension funds and insurance companies, which hold them as investments,” Thompson explains. “Bonds” are just tradable pieces of debt.
This is the best description of what happened after 2008 I’ve read. The central banks of the US, UK and Eurozone (as well as Japan) created $8 trillion for the 1 per cent, or $10,000 per head for the rest of us. Noticeably this vast cascade of magic money has not trickled down. Real wage stagnation has hit incomes of the bottom 90 percent while asset prices for the wealthy have soared in the biggest housing and stock bubble in history.
“Thanks to central banks’ money spigots, rising property, stock and bond markets have helped global private wealth grow by two-thirds since 2008 to $166trn, according to the Boston Consulting Group,” writes Thompson. That's a $100trn wealth gain.
“Banks have been the biggest beneficiaries,” hedge fund boss Paul Marshall, co-founder of Marshall Wace, wrote in September 2015. “Asset managers and hedge funds have benefited, too. Owners of property have made out like bandits. In fact, anyone with assets has grown much richer. All of us who work in financial markets owe a debt to QE.”
As a result of QE “financiers have used the new-found money to go shopping, all at the same time. Suddenly, demand for assets significantly exceeds supply. This pushes up the value of investment assets — including shares, which have surged to record highs despite weak economic growth, and bonds, and also fine art, London property and vintage Château Lafite,” writes Thompson.
QE can’t be stopped, or the markets might panic. They are addicted and so $131bn in new bond purchases by the central banks is added each month in Europe and Japan. National and private debt expands continuously.
What comes next? The 99 per cent must find leaders and policies to take the trillions back. In the next crisis, the rich must take a haircut, and the helicopter money must go to the bottom 90 percent. The people must be bailed out. Look out for parties and leaders who put that in their manifesto. We won’t get fooled again.
Friday, 5 October 2012
Eric Hobsbawm and my grandfather
Eric Hobsbawm, who died this week, was Britain's greatest marxist historian and one of my favourite writers. He was on the Gramscian wing of the British Communist party, rather than an uncritical follower of the Soviet Union. Gramsci's theory of hegemony, and the efforts of Italian communists to come to power under democracy after 1945, held a lot more relevant lessons for British communists than the grim struggle for power in Russia. At the same time Hobsbawm did not renounce his support for the Soviet Union, which ultimately defeated the nazis at the cost of 26 million lives. He was an emigre from nazi Germany who ended by studying at Cambridge and becoming a standout historian of his generation.
My grandfather Alan Paterson was also at Cambridge in the early 30s, finishing his studies a year or two before Hobsbawm began his. Cambridge University in the 1930s produced a whole generation of influential left-wingers, including the Cambridge spies. In fact my grandfather attended Cambridge in the same years as Kim Philby, the most notorious of the Cambridge Three. My grandfather's background was similarly privileged to those of Guy Burgess, Kim Philby and Donald Maclean. The Soviet Union allegedly recruited 40 spies at Cambridge. My grandfather's political trajectory followed theirs up to a point, as it did for many thinking sons and daughters of the British bourgeoisie in those years. He visited Nazi Germany in 1933, as well as Fascist Italy and later the Soviet Union. I have yet to read that section of the diaries - I hope it is reported in full, although he has a habit of tearing out some of the most interesting sections, something he did at a later date during the war when there was a fear of nazi invasion. Initially he travelled mostly to takle part in international golf tournaments, but as his diaries reveal, he was increasingly inclined to a socialist view of the world, if not at that point marxist. He practised law, stood as a Labour counciller and ultimately became a farmer. I am currently transcribing his diaries which I hope to publish at some point.
Below is an excellent obituary of Hobsbawm from the Morning Star online:
My grandfather Alan Paterson was also at Cambridge in the early 30s, finishing his studies a year or two before Hobsbawm began his. Cambridge University in the 1930s produced a whole generation of influential left-wingers, including the Cambridge spies. In fact my grandfather attended Cambridge in the same years as Kim Philby, the most notorious of the Cambridge Three. My grandfather's background was similarly privileged to those of Guy Burgess, Kim Philby and Donald Maclean. The Soviet Union allegedly recruited 40 spies at Cambridge. My grandfather's political trajectory followed theirs up to a point, as it did for many thinking sons and daughters of the British bourgeoisie in those years. He visited Nazi Germany in 1933, as well as Fascist Italy and later the Soviet Union. I have yet to read that section of the diaries - I hope it is reported in full, although he has a habit of tearing out some of the most interesting sections, something he did at a later date during the war when there was a fear of nazi invasion. Initially he travelled mostly to takle part in international golf tournaments, but as his diaries reveal, he was increasingly inclined to a socialist view of the world, if not at that point marxist. He practised law, stood as a Labour counciller and ultimately became a farmer. I am currently transcribing his diaries which I hope to publish at some point.
Below is an excellent obituary of Hobsbawm from the Morning Star online:
Eric Hobsbawm, who died on Monday aged 95, stood unchallenged as the foremost historian in the Marxist tradition not just in Britain but internationally.
He was also an active Communist for most of his life and closely involved in the key debates which defined the history of the left in Britain during the 20th century.
Born in Alexandria to Jewish parents of British-Austrian nationality in 1917, he was orphaned as a child and then brought up by an uncle in Berlin.
There he witnessed the nazi rise to power at first hand and participated in resistance activities as a member of a communist youth organisation.
Moving to school in Britain in 1934, he secured a scholarship to King's College, Cambridge, in 1935 and quickly became involved in the wider intellectual and organisational activities of the university's Communist Party branch. He served during the second world war in the engineers and army educational corps.
After the war he lectured at Birkbeck College in London from 1947 until his retirement in 1982 and held a fellowship at King's College, Cambridge, between 1949 and 1955.
He held visiting chairs in the United States from the 1960s and became president of Birkbeck College in 2002.
As a historian Hobsbawm was a central figure among those who transformed British history writing in the 1940s and '50s and for at least three decades broke the dominance of those who had hitherto made history speak for the existing order.
Along with Christopher Hill, Donna Torr, George Thomson, Rodney Hilton, Victor Kiernan, EP Thompson and other members of the Communist Party Historians Group, Hobsbawm laid out a new agenda.
This was interdisciplinary, insisted that society had to analysed as a whole and drew on the approach of the French historians of the Annales school, Georges Lefebre and Marc Bloch, both deeply influenced by Marx.
In 1952 Hobsbawm with other members of the Historians Group founded the journal Past and Present and a little later the Society for the Study of Labour History. The sophistication of their analysis forced mainstream historical journals to engage on fields of battle defined in Marxist terms.
Hobsbawm himself did so particularly in three areas.
He redefined the European crisis of the 17th century in economic, demographic and political terms as a clash between feudalism and capitalism.
He provided statistical support for Marx's view that the initial phase of industrial growth was at the expense of working-class living standards and hence challenged the dominant academic orthodoxy which insisted that industrialisation improved living standards.
Hobsbawm also produced detailed studies which vindicated Lenin's explanation of the reformism of Britain's labour movement in terms of a labour aristocracy sustained on the profits of empire.
Regis professors were lured out of their ivory towers - often returning battered and discredited.
These debates took Marxist assumptions on the class-driven character of social change to the heart of history teaching in schools and universities.
Hobsbawm followed this up in the 1960s and '70s with brilliantly accessible histories of Britain, Europe and the world over the past three centuries that defined the historical understanding of a generation.
It is rare for a scholar of Hosbawm's stature to be so accessible in their writing and teaching. Many of us will remember this for many years to come.
At the same time Hobsbawm was closely involved in the politics of the Communist Party. Along with EP Thompson and John Saville, he was among those who demanded changes in inner-party democracy and a departure from democratic centralism in the wake of the 20th Congress of the Soviet Communist Party and its denunciation of Stalin. He did not, however, leave the Communist Party.
In the '60s and '70s he developed links with those in the Italian Communist Party who saw themselves as developing a strategy for socialism that was quite distinct from - and to a large extent posed against - that of the Soviet Union.
In 1977 he published The Italian Road to Socialism based on a long interview with Giorgio Napolitano, then international secretary of the Italian party and today president of Italy.
In 1978 he gave a lecture at Marx House in London that was subsequently published in the Communist Party monthly Marxism Today as The Forward March of Labour Halted.
Writing at the time when the trade union movement was at the peak of its strength - and the left highly influential within it - Hobsbawm argued that the manual working class was in numerical decline and that the character of its politics was inherently economistic, trapped within the bounds of self-interested wage bargaining, and that consequently the left had to look in future to broader alliances and social movements.
This lecture became an iconic text for that wing within the Communist Party that sought to steer it away from class politics and to challenge key elements of Marxism.
While Hobsbawm never fully endorsed this endeavour, he actively supported the transformation of Marxism Today into its flagship journal and was a very frequent contributor. He continued to be so until 1991, by which time the Communist Party of Great Britain under the control of this wing had expelled virtually all opponents and then voted itself out of existence.
The same tendency subsequently provided important ideological support for those within the Labour Party calling for a realignment away from the trade union movement and the creation of new Labour.
Although Hobsbawm supported Neil Kinnock's remoulding of the Labour Party and was honoured by Tony Blair he subsequently spoke out against new Labour, its alignment with US policies and, very firmly, against the invasion of Iraq.
In his final years Hobsbawm continued his role - to use his own phrase - as a "public intellectual."
He refused all invitations to unilaterally condemn the Soviet Union and instead asserted its historic role in the defeat of fascism.
He indicated his concern at the manipulation of "identity politics" and in particular the divisive use of nationalism and national mythology. He showed his exasperation at the abandonment by most contemporary historians of any attempt to understand overall processes of social change.
Internationally, his writings have become an intellectual beacon for those seeking an understanding of human development in Marxist terms, particularly in Latin America and the Indian subcontinent.
While in Britain his death marks the end of that generation of communist historians who transformed history-writing, his continuing influence as a humanist and historian is assured.
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