A) Blame things on the Virus.

Most current economic pundits seem to be blaming the present state of the world economy upon the interference in human affairs of a tiny speck of bio- chemical organic matter (a virus) plus the reaction of politicians to its spread (the pandemic).  Blaming something external – at this point on time, the Virus – has become for the petite-bourgeoisie a convenient scape goat for the ills of the capitalist mode of production. The rest of us are supposed to be unaware of or ignore the fact that this and many other viruses have been circulating among bats and few other animals in some remote parts of the world, for millions of years, before human profit-seeking interference in one form or another, picked it up and transported it along the global ‘just-in-time’ or ‘gain of purpose’ supply lines. What petite-bourgeois politicians and economic pundits don’t yet understand is that the full depth of a world wide economic collapse has yet to occur.

For in actual fact, the economic stagnation which has followed the Covid pandemic is merely a postponed continuation of what had occurred before the pandemic after the financial collapse in 2008. By then, there was already a massive neo-liberal overproduction of commodities and capital and a further reduction of the general rate of profit, which apart from some particular profitable sectors, had led to speculative financial, commercial and production based bankruptcies and unemployment. This reduction in employment led in turn to a reduction in both purchasing and investment activity and general demand. The well established capitalist economic cycle of boom, slump, and collapse, had already entered its slump phase before the microscopic bio-chemical viral life form and covid lock-downs both accelerated and sustained the arrival of the slump phase.  The covid payment schemes during the various lock downs had propped up some aspects of the food and basics areas of the capitalist economic model and thus prolonged the slump stage whilst postponing the unfolding of the collapse.

However, it is the case that many media  commentators actually think capitalism is a stable economic system and that it only gets messed up by natural or political interference and thus they focus only on one aspect. Lacking an understanding of the system as a whole, it seems obvious to them that insufficient demand is the problem.  But they simplistically identify this continuing lack of demand as having been caused by the political response to the covid pandemic and a post lock-down muted, or lack-luster ‘bounce back’. Those who think like that therefore wish to prompt politicians to stimulate growth and repeatedly say so. Consequently, politicians of left and right, who also fail to understand the capitalist system often agree and make there own feeble recommendations for stimulating growth. However, none of these elite citizens of modern hierarchical mass societies entirely control economics, even those employed within authoritarian state systems.  Therefore, as those in UK engineering used to say to me as an apprentice, these optimists are sort of ‘urinating into the wind’ with the obvious blow-back consequences.

The history of the capitalist mode of production suggests that renewed incremental growth after a protracted slump phase cannot return until the collapse phase has persisted long enough to reduce the productive capacity and its exchange value substantially below its previous boom phase. Many indirect and direct investors in capitalist commodity production know this and therefore, will not sufficiently invest in production when they estimate that extra production cannot be sold sufficiently well to create profits. Consequently they will park their capital somewhere safe (in gold, government bonds or property) or they will use it to speculate in financial markets for example. But of course financial markets do not produce anything material. It only  produces winners and losers of the same mass of value tokens, thrown into financial circulation. When someone gains there someone else loses, or many may also lose if currencies are devalued by one means or another. With some exceptions this is basically the economic situation which has been with the global economy since the financial crisis of 2008.

B) Blame things on the Financial Crash.

That 2008 crash itself was already a symptom of the previous overproduction of capital, which on the basis of vast amounts of credit and cheap foreign labour, had saturated the available production and financial possibilities and encouraged fraudulent ponsey type investment vehicles. These financial ‘vehicles’ and ‘instruments’ were created, precisely because there was too much liquid capital chasing too few profitable investment opportunities  in relatively ‘safe’  illiquid assets, such as buildings and means of production. Therefore, futures, currency speculation and mortgage-based paper instruments, became an alternative outlet for surplus capital. Nevertheless, speculation and financial risk taking exists in forms other than ‘financial instruments’ and trading in shares and with similar predictable results. Speculation is invariably accompanied by loans (to firms and even to governments) and thus the capitalist system in order to continue its chains of debt obligations, relies on the need for an ultimate repayment. Therefore, when the receiver of the loan cannot repay, bankruptsy follows and the debt is written off and/or someone else has to pay.

All these outcomes occurred during and after the 2008 debt crisis. First, the banks had their debts completely or partly written off or reduced; second, the introduction of general austerity measures and the raising tax revenues were the means by which everyone else payed something to keep the bankruptcies to a level lower than was otherwise needed. It should be remembered, in this context, that governments, such as Greece, had borrowed huge amounts of money to keep itself functioning and also faced default and/or bankruptcy. To avoid this outcome the political and financial elite in Greece was persuaded by the financial institutions to restructure its economy to the benefit of the rich (who bought tangible assets cheap) and at the expense of the ordinary citizen and the already poor, who found everything had become dearer. Greece was not the first country and will not be the last to travel along that particular trajectory. A similar repayment and re-structuring crisis had occurred in Argentina in 2001 and of course an even earlier one in Germany at the end of the 1914-18 war.

The Versailles Treaty imposed by the allied forces of the USA, UK and France, caused an almost complete collapse of the German economy. This collapse placed such a socio-economic burden on the ordinary people that millions of them – seeing no help coming from other political tendencies – eventually backed a megalomaniac at the head of a radical racist German National Socialist Party. Not long after this when the Nazi Party became strong enough, the outcome resulted in the Second World War. I ask the reader to bear with me for a little longer in this slight historical detour, because I suggest history may well be going to repeat itself – again! The UK winner of the war  – in terms of the welfare of working classes – was also an immense loser. I have dragged the tip of this two-world-war history iceburg into this article because at least a substantial part of what happened then, is beginning to happen again. An important thing to understand is that the debt from the war loans plus the Marshal Plan reconstruction loans that the UK elites had been given from America were also largely repayed by the working classes of the UK, Europe and the ex colonies.

C) Blame things on the War.

Consequently, long periods of post-war austerity from 1945 to the 1960’s ensued and the UK population was yearly paying the USA elite lending sources for most of the remaining 20th century. The ‘special relationship’ of the UK to the USA was in part the troubled ‘servile’ relationship of a debtor to a rich debt collector. Now if we zoom forward to the present and we consider the much celebrated billions of dollars, pounds or Euros’ of aid to Ukraine’s war effort from America, UK and Europe, we should not imagine that these billion dollar bundles of military hardware and supplies are wonderful acts of an amazing charitable disposition. Despite some grants, which may or may not be eventually repaid, the bulk of these vastly expensive resources are in the form of long-term loans and thus long-term debt, which even in the event of a Ukraine victory some of them  may never be directly repaid. Add to that, the fact that the destruction of Ukraine buildings and infrastructure by Russian munitions is so vast that Ukraine will need further billions of loans (guess who from?) to replace these before anything borrowed can be repaid.

Now at this point, it doesn’t take a university degree to figure out that Ukraine now and in the future, has become  a servile debtor to the US, UK and Europe. Like the UK and Europe before them their subservient status will continue for a few generations into the future and any unpaid debts and loans by Ukraine will be clawed back from the working populations of the US, UK, Europe and elsewhere. So, although on the intellectualised surface of events it appears that the workers of Ukraine are courageously fighting for their own countries autonomy, there is a darker perspective and narrative playing out below the propaganda. In fact whenever workers are fighting for their country – when it exists in the form of a hierarchical mass society – they are fighting to be controlled and exploited by one elite rather than another. And the actual rather than the imagined difference between rival ruling elites in the long term may well be extremely minute. A Thatcher or a Blair; a Trump or a Biden; a Stalin or a Putin, are hardly inspiring choices for working people to make. Indeed, in this war or any other, under the present capitalist system, the least oppressive outcome will probably be the most positive outcome possible.

But even such a slight positive outcome is not certain. This is because if the present and future chain of inter-dependent Ukraine war and reconstruction debts, eventually trigger a 1929 or 2008 banking type crisis, then the entite international system will likely collapse and civil wars and/or a third world war becomes possible – if not probable. That is what capitalism is and does and the owners of capitalist investments, being dependent upon them know this. Their dependency means they can see no alternative to employing capital directly for profitable production or lending it in interest bearing loans. This is why although the planet and all its living inhabitants are suffering from climate change, widespread air, sea and land pollution and key species loss, due to massive overproduction and consumption,  they continue to invest when and where possible in unlimited production, transport, commerce and war. Like drug takers who know the drug they are obtaining is killing them and destroying their families and neighbourhoods, they are so dependent upon wealth accumulation and consumption that they just cannot stop obtaining and consuming it. They are even prepared to take everyone else in their communities down with them in order to maintain their own particular ‘highs’ of conspicuous consumption.

D) Blame things on the next Symptom.

If and when this future collapse finally arrives, petite-bourgeois  politicians, economists and media will no doubt continue to blame  it on something other than  the capitalist system itself. Unless there is another pandemic, the virus will have by then outlived its usefulness. The war in Ukraine has already been used as an added scapegoat for higher food prices and taxes. Climate change, fire or flood disaster, are probably the next candidates lined up along the corridors of power waiting to be chosen as front runners for a future employment in rationalising or excusing a system collapse. Anything but the inherent contradictions of the hierarchical economic system itself will be used. Yet all the above, war, climate change, excessive forest and grassland fires, abnormal floods, like the covid Pandemic are and will be direct or indirect symptoms of the economic system’s over-production crises. Yes of course these symptoms will also amplify any future crisis but they will not be the cause of it.

Roy Ratcliffe (August 2023)