by Mirkyton Ummashtarte
Part 1: Goodbye to the end of History
31 years ago, US political writer Francis Fukuyama wrote an essay titled The end of history. In it, he summed up what many were feeling at the conclusion of the Cold War: without a grand historical conflict between world superpowers, what further challenges could there be to the system we live under today: capitalist liberal-democracy? In this essay, and his later books, he wrote that with the collapse of the Soviet Union, most world governments would shift towards a liberal democracy, with an emphasis on transnational government much like the European Union, and with this new epoch would come a period of unparalleled peace. Events might still occur, he said, but the overall trend of civilisation would be towards endless peace, endless profit, and endless technological advancement that would eventually lead to humans having control over their own evolution.
What Fukuyama might not have predicted is that his simple thesis would become one of the most criticised essays of all time. Barely had the ink dried on his paper when scores of writers poked holes in his analysis – something very easy to do, for Fukuyama wasn’t much of a philosopher, but rather a political hack who summed up the dominant view among liberal thinkers at the time. In this, he was wholly successful, but he also ended up being correct in ways his critics couldn’t have predicted.
The next 31 years of history were some of the most uneventful, in terms of real movement, of any decades that had passed before – sure, not all countries became liberal democracies, and sure, history continued to chew up innocent lives and spit them back out, and sure, a few terrorists showed up here and there – but it seemed that no single event could ever truly change things beyond occupying the evening news for a few weeks. We have just emerged from the one of the most viscerally boring periods in human history, at least for the more sheltered populations in the west, and it’s important to recognise this.
Fukuyama’s end of history was not a new thesis: as the postmodernist Jaques Derrida, was quick to point out, Fukuyama had simply regurgitated some of the most turgid liberal philosophies of the early Cold-War era; the idea that liberal-democracy had emerged victorious, and that socialism had been proved wrong once and for all through the many perceived failures of Soviet societies. All that had changed was that Fukuyama said it at the right time: it truly was the end, capitalism had found its perfect justification in neoliberalism, a set of ideologies based in the idea that capitalism was a perfect, trans-historical goal of humanity, that only needed to be sufficiently untethered from regulation and sufficiently protected by a growing military and police forces in order to function properly. In this proper version of capitalism, untethered from the need to legitimise itself in the face of opposing ideologies, there was no need for capitalist societies to change to face new threats, for what can challenge an ideology that is so totalising it can convince people that it’s the only thing that exists? The only thing that has ever existed. A universal default.
In that sense, Fukuyama was perfectly right. History did grind to a halt for three decades. Not just the history of those decades, but all history, for every society throughout history could be painted as nothing but a stepping stone to this universal conclusion. There was no challenge to neoliberalism in that time, no great ideological foe to defeat, no workers’ movement to crush, and the best that the neoliberal states could offer up as some immense civilisational enemy was a pitiful force of Wahhabi terrorists – a by-product of the previous era, and therefore hardly a new historical agent. All that was left for the world to do was to reckon with the leftovers of the Cold-War period (the Wahhabis, remnant socialist societies, and shrinking unions), products of the last true period of historical movement, and wait for whatever technological innovation that would come next and inject some feeling of forward momentum into an otherwise stagnant society.
In time, even technology failed to deliver a feeling of progress. Each new technology of the period wasn’t truly new: all that capitalism could deliver was slightly faster and more powerful versions of technologies based in the previous era of major public scientific investments. Internet, wi-fi, cell phones, miniaturised processors, satellite communications – every single one of these technologies was a product of Cold-War era military or public scientific investment, albeit with a better marketing team. It is almost as if capitalists could produce no new innovation whatsoever, other than a faster, slimmer version of existing tech, that broke more often.
In this sense, one of the two defining features of the past 30 years that gave life a sense of movement and progress, communications technology, proved to be nothing but a latent product of the previous era, that came up against a wall as soon as the legacy technologies it relied upon reached the limits of exploitability. The same would soon be proven true of the other great symbol of neoliberal progress: economic growth.
Since the beginning of the end of history, economic growth has skyrocketed. Only part of this was due to imperialism – the ability for strong states with financial capital to spare to offload their surpluses onto the global south. That would have been a source of actual value were it the primary cause of this continuous economic boom, since it would have meant greater exploitation of labour. Instead capitalism developed along the much easier route – pure speculation in financial markets and tech companies, both of which are largely phantasmal.
Capital was creating a bubble – not of any one market, such as the late 90s tech bubble or the late 2000s housing bubble, but rather it was making a bubble out of capitalism as a whole. Who could have guessed what would pop it?
Part 2: What the fuck is going on?
Sometime around December 1, 2019, a few people got sick in the Chinese city of Wuhan. Many writers have spent thousands of hours speculating about the potential causes of transmission. Was it from a shopper at the Huanan Seafood Wholesale Market? Did the disease come from the actual produce at this market? Was it a bioweapon? Was it a bat? A Pangolin? Was everyone at the market just too weird and Chinese to not get the disease? What comparatively few news sites have focused on was how on earth a virus could cause an economic crisis so great that we have nothing to truly compare it to.
This is because it could have been anything. It could have been a completely different virus in a completely different country, it could have been a sudden war erupting, it could have been a plane crash, it could have been a Wall Street Executive slipping on a banana peel. The system of global financial markets had been systematically hollowed out and prepared in every possible way to collapse at the drop of a hat sooner or later. To understand how, we need to understand three things: the underlying philosophy of neoliberalism, the way a modern financial market operates, and the general theory of economic crisis put forward by Karl Marx in his unfinished third volume of Capital.
Under neoliberalism, austerity is everything. The existence of everything, often including human life, has to be justified in terms of cost-effectiveness, self-reliance, and interoperability with the rest of the system. This is why social welfare, such as Work & Income New Zealand, operates by giving the absolute bare minimum to beneficiaries, and why all government departments, with the exclusion of Defence, Police, and Corrections, have to operate on paper-thin budgets, constantly needing to justify any expenditure whatsoever in terms of net-benefits to the economy. It is also not a rational ideology, in that in pursuing its goals of profitability and lean government, the means are much more important than the ends. A health system stretched thin (the “ambulance-at-the-bottom-of-the-cliff model”) might actually be more costly to society than a health system which is budgeted to act preventatively and deal with unexpected crises, but this doesn’t really matter. Likewise, stockpiling, preemptively initiating spending, or even paying for proper maintenance can come to be seen as unnecessary luxuries in a system in which everything must be justified in terms of short-term profitability.
This is why the richest country in the world ended up with a shortage of basic medical supplies. Under ideal circumstances, each hospital should have had just enough masks, gloves and smocks to last a normal week, just in time for a new shipment. The same is true of most systems of logistics and supply under neoliberalism – things enter the warehouse, the shipping container, or the truck, just in time for them to leave. If anything stays in the warehouse, or is stockpiled, then that is an inefficiency in the system. Every minute those hospital gowns spend in the warehouse means a surplus is developing, which means profits lost for the manufacturer and shipping company.
The same logic rings true for financial markets. Each sector of the economy deals in just enough liquid assets (money) to operate under normal circumstances. If too much money circulates in the economy at any one time, then we get inflation – the decline in the value of currency. In a crisis, excess liquidity can be a good thing, which is why the US markets are being flooded with trillions of dollars, but under normal circumstances, these simple laws of financial supply and demand create an incentive for capitalists to invest their cash assets as soon as possible, never leaving anything in reserve in the event of a crisis.
But all of this, supply and demand, surplus and shortage, is somewhat obsolete under late capitalism. Contrary to popular belief, most microeconomic problems are pretty easy to solve using the microeconomic levers most accessible to capitalists such as changing prices, production or wages. Capitalists make them out to be huge, complex issues so that price regulation can be painted as naive meddling in the arcane market, but really, these simple problems like overproduction, underproduction, low demand, and the like, can all be fixed using the tools of the private sector. Larger systemic problems (macroeconomic issues), such as sovereign debt, low competitiveness, trade deficits, and poor consumer buying power, can also be fixed, but through the financial levers available to the state, such as bailouts, stimulus packages, elimination of reserve requirements, and massive liquidity injections. What can’t be fixed, at least not permanently, is the general downward trend in profits relative to investment.
The more serious problems of late capitalist economics – wafer-thin profit margins, constantly slowing rates of growth, and constant fears that consumers are “killing” various industries – are all products of one phenomenon that Karl Marx identified as far back as 1857, the discovery of which he called his “greatest triumph” but which remains a lesser known Marxian theory. This is the tendency of the rate of profit to fall, a hypothesis which explains why capitalism is doomed to perpetually swing between boom and bust, until it reaches a crisis from which it can’t recover.
Central to Marx’s theory of crisis is a much more famous theory – the labour theory of value. Put simply this is the idea that all the value that capitalist society places on a commodity comes from the workers who harvested the raw materials, worked in the factory that made it, and built the machines that filled the factory. The work being done by living workers is supplemented by the machines that other workers have made to assist them in their work.
The living people involved in this system are the organic component, while the machines, products, and other lifeless objects are the inorganic component. Taken together, the ratio between these components is the organic composition of capital (OOC). When there are few workers but many machines in a factory, the OOC is lower, and so the productivity of these workers is very high because the machines allow them to multiply their efforts. But high productivity creates a problem – if all of this work can be done by fewer workers, then unemployment will surely rise, wages will go down, and fewer people will be able to pay for the products from the factories. Eventually this leads to a crisis of consumption, which is what we are currently experiencing, and unless you’re over 50 or so, you’ve probably been experiencing one your entire life.
In a consumption crisis, wages are far too low for people to buy commodities or easily reproduce their capacity to work. Since the 1970s, wages have stagnated in most Western countries, but until now capitalists had many ways they could “kick the can down the road,” delaying the crisis for another few years and making higher and higher profits in the meantime. For example, to absorb the huge surpluses generated by an economy undergoing a consumption crisis, Capitalist states could offload their surplus values onto colonies and nations in the global south by creating new markets, or waging wars and thereby investing in weapons and reconstruction. A good example of this was the 2003 Invasion of Iraq, which ended up costing trillions of dollars, allowed for billions to be invested in weapons manufacturers, and opened up a handful of new markets in the bombed out ruins of Baghdad or Fallujah.
This is one way to offset a major crisis, which we might call the “fuck the rest of the world” method. The other method is a bit harder for the capitalists, which is to massively increase consumer buying power through various measures. The most straightforward of these is the one capitalists are most loath to do, since it undermines neoliberal ideology, which is to simply give people money. This was done in Australia in 2008, when each Australian was given $300 and ordered to spend it immediately. Many other countries, even the US, are now rushing to copy this method of stimulus. Another method, which has been growing since mid last century, is by artificially raising a stratum of consumers through employing people in “bullshit jobs,” a term used by anthropologist David Graeber to refer to people engaged in work that doesn’t seem to do anything. This includes a lot of professionals: secretaries of secretaries, managers of managers, supervisors of supervisors and the like. Finally there is another method which is gaining traction among some of the more far-sighted capitalist technocrats, the Universal Basic Income (UBI), which would give people a flat rate of just enough money to fulfil their duty to the economy as consumers. Such a move would represent a last-ditch effort by capital to avoid the looming consumer crisis, which at time of writing appears to be a tsunami whose waters have only reached chest-height.
However, all of these means can only delay the inevitable. A capitalist system undergoing crisis can only offset the real crunch for so long. In 2008, the global capitalist system experienced a major shock when a speculative housing bubble popped in US financial markets. If the crisis continued, the capitalist class would have had to sell off huge amounts of assets, including industrial machinery. This would have solved the underlying productivity crisis for a time by restoring the huge imbalance between the organic and inorganic composition of capital. But this imbalance had been building for decades. Could the capitalist system survive the shock? Mass sell-offs are nothing new – the first response of the US government to the 1929 Wall Street Crash was to encourage these sell-offs, only to find out that doing so would massively increase public unrest from both capital and workers.
In the end, the crisis was instead offset through fiscal policy, as the US federal reserve removed barriers to debt and artificially preserved the value of assets by paying off capitalists with sums that often exceeded the value of their entire business. For this reason, the recovery from the 2008 crisis was slow, but the crisis itself was short-lived. The speculative bubbles weren’t quite popped, but enough air was let out to delay the inevitable, for about 12 years, as it turned out.
Part 3: Infinite new era
It is still entirely possible that the capitalists will be able to kick the can further down the road, and avert the current crisis through arcane fiscal finagling or through truly barbaric methods like forcing US and UK workers back into the workplace well before it is safe to do so.
But it seems equally possible that the world as we know it is over. By this I don’t mean that we’ll soon be living in a Mad Max-style apocalypse, but rather that period of “the end of history” is finally over. Capitalism will probably recover, either through solving the crisis through the above means before it gets worse, or it will allow the crisis to reach its conclusion and engage in massive selloffs of fixed capital, which might extend its rule by several decades by restoring some degree of profitability relative to investments. What that could mean for our people and ecology is anyone’s guess.
But whatever the results of this crisis are, one thing seems very clear. For the first time in our lives, workers have been forced to sit at home and think – not between shifts, or under the endless stress of being a beneficiary expected to look for work that often doesn’t exist, but just thinking, and getting bored. I don’t remember a time when capitalism gave an entire class of people the opportunity to get truly bored, apart from the upper classes, who get to call it ennui.
The politics of idleness are interesting. A few thousand years ago, the backbreaking labour of slaves, poor citizens, and women created the opportunity for the first truly idle class – the Ancient Greek philosophers who are credited with the entire foundation of our moral and political systems. For the next few thousand years, the only people who were allowed to be idle were the sons of rich nobles and merchants, and only with the birth of capitalism did common people find themselves idle – the unemployed newly-displaced rural folk who waited outside the great cities of Europe, waiting for jobs at the new textile factories to open up. Many of these people became the backbone of the first workers’ parties, often millenarian Christian-socialists and underground brotherhoods like the Chartists, Luddites, or League of the Just, which Marx and Engels would later co-opt and rename The Communist League.
Idleness in these times was feared greatly by those in power, and rightly so. Nothing worried them more than huge surplus populations growing restless, organising in their idle time, and realising their position somewhere near the bottom of a great social pyramid. From time to time these surplus populations grew so great that entire nations had to be set up just to get rid of them: the unemployed and wretched masses of the British Isles found themselves criminalised and subject to transportation to the penal colonies of the Caribbean, the Americas, and later New South Wales. Luckier surplus citizens found themselves in the free colonies, such as Perth, or New Zealand.
But are we truly surplus to requirements? Surely after the crash we’ll get our jobs back?
Many economists aren’t so sure. Unemployment modelling already shows rates are going to grow higher than during the great depression, and that’s without a much more pessimistic Marxian analysis of the crisis. To be surplus is a new experience to many of us. Idleness will force us to reckon with our position in the pyramid of society, just as those 19th century oligarchs were afraid of all those years ago.
The ideological backbone of capitalism as it currently exists has been broken. Neoliberalism has shown itself incapable of dealing with Covid-19. But what we make of this realisation is up to us. The ideological backbone might be broken, but the real nuts and bolts of the system: the police and politicians, bosses and workplaces, will still remain. Given enough time, they will use this crisis of legitimacy to forge a new kind of capitalism: maybe a society with a UBI? Or a form of eco-capitalism? Or maybe they’ll go the other direction, and lead us down a road to fascism, or Trumpian nationalistic fervor? If I had to place bets, I’d put it on a mix of all of the above, as usually seems to happen in a crisis of legitimacy. After all, the last great crisis of legitimacy happened during the Great Depression, leading to both the social-democratic compromise of the New Deal and Michael Joseph Savage’s welfare state, as well as the horrors of Nazism.
In truth I don’t think it matters so much what path capitalism chooses to take in order to legitimise itself in this new era, because unless the agency of that choice lies with working people – with beneficiaries, Māori, migrants, the multitude, the proletariat – it will leave us worse off. It might end the crisis, but we’ll live with the knowledge that the next one will be worse, and once again our lives will be utterly beyond our control.
So agency should be our watchword in this new era. So long as we lack agency, we are only a few years from collapse. So long as we lack agency, the response to crises will be arbitrary. New Zealanders got lucky in getting a rational response to the crisis, but next time we might be more like the US or UK – sending thousands more people to die in the name of profits. Taking power, then, is the only way to ensure that this total lack of agency never happens again.
So far in the things I’ve written for this blog, I’ve not actually included a call to join Organise Aotearoa. In a system built on broken promises, who am I to make a promise to readers that things will get better if only we fight for a revolutionary overthrow of the bosses, police and markets that put us in crisis again and again? As an organisation, we are young, and we are emerging from a very beaten-down, hollowed-out, and disparate left-wing movement. Revolution doesn’t seem realistic to many people, but then, neither did capitalism being crushed by a virus a few weeks ago. Socialism will never just happen – it takes work, and a sense of realism. We have a lot of work to do, but only in this period of transition can we see the possible futures laid out before us – apocalyptic misery, or social and economic justice. To fight for this is always worth the effort.
The best summary of the times we’re living in come from this quote I’m quite fond of:
“There are decades where nothing happens; and there are weeks where decades happen”