Yeah…what Trotsky wrote!

Original article, titled Slumps and struggle and subheaded The writings of Leon Trotsky shed light on the complicated relationship between booms, slumps and class struggle, writes John Rees, by John Rees via Socialist Worker (UK):

George Bush’s apocalyptic televised address in the US last week will have signalled the seriousness of this economic crisis – even to those not already aware of it.

With W at the rudder, how could we go wrong? Here’s a thought for those of you who think the bailout was a good thing. Now, for those of you who think the bailout is a good thing, let’s consider that the $700 billion for the bailout, the $150 billion in tax breaks for the bailout, the $85 billion spent on AIG (of which they’ve already spent some $60 billion, and some reaction has been harsh), the $160 billion flushed into the system by the Fed just to try to keep open some lending, and whatever else we haven’t been privy to knowledge about. Just there is roughly $1.1 trillion pumped into the financial system (or about to be). Where did most of this money come from? Printing presses, for all intents and purposes. Yeah, it could be said that we’ve borrowed the amount, but to be honest, with the financial meltdown as it is, that borrowed money probably has the value of Monopoly money. Here’s the point: We’re on the road to hyper-inflation (interestingly enough, we’re also on the road to deflation, since we’re carrying out policies vis-a-vis the financial sectors in the same vein as the Japanese did when they propped up their banks, which has led to a decade of deflationary recessions). So, in trying to save the bosses (and that, in the long run, is what this is about), we’re destroying whatever foundations of our economy haven’t been destroyed. You see, the great mass of citizens of the States are going to be mauled by what’s going on right now. Not doing the bailout would just have kept $700 billion out of the hands of the bosses.

For many, the need to resist is obvious. But economic crises do not always produce resistance. Sometimes fear triumphs over anger and passivity over activity.

Which, IMHO, is what has happened amongst the Obamabots and Dem firsters. Now, we all know that virtually all of the Repugs are wedded to neoliberalism, which is the same with, as we now see with the votes of the Dems in Congress, most of the Dems. And though it may be heresy, it should be pointed out that Barack ‘FISA’ Obama and Joe ‘Bankruptcy Bill’ Biden both voted for the bailout, and an attempted continuation of neoliberalism. If the Dem nominees vote for this travesty, we shouldn’t be surprised that the herd accepts their decisions.

So what is the relationship between the economic crisis and the class struggle? This is the question that is now being asked throughout the labour movement.

We begin to see some questioning along this line in the far-lefty blogosphere, too. The ‘reality based’ community seems ready to wait until our ‘savior’ Obama gets inagurated to actually try to think about this. So, let’s go to a font of far-leftyism for some analysis!

Some guidance on this question is to be found in writings by the Russian revolutionary Leon Trotsky. In the 1920s and 1930s Trotsky made some valuable observations about the relationship between recession and resistance.

Yeah, that Trotsky.

Trotsky started by rejecting the crude association of recession with rising class struggle.

Hmmmm. Here in the US, class struggle has been going on pretty much all of the time. The problem is, it’s been unorganized for the greater amount of that time. Our last successful mass movement was the civil rights movement. Since then, we’ve had large demonstrations, but no mass organization has risen to help continue the struggles the demonstrations have been about.

Of course it may be the case that an economic downturn fuels resistance. But it is not always the case that if workers are hit with the big stick of recession they react by fighting back. Sometimes they are simply knocked politically unconscious. “There is,” wrote Trotsky, “no automatic dependence of the proletarian revolutionary movement upon a crisis.”

If you’re scared for your jobs, you’re more likely to be compliant with what the bosses demand of you. I believe that in the US, this is the point where we are right now. The economy has been so looted over the past 30 years or so that the prospects for another job aren’t particularly high. It’s amazing how that works in the favor of the bosses, isn’t it?

So what factors should we look at in order to judge the likely effects of an economic crisis on the class struggle?

Trotsky outlined two broad considerations that are vital in any analysis of this relationship.

Note: Before we get going, let me point out that if one finds Trotsy’s analysis to be good, it doesn’t follow that one is a follower of Trotsky. Marxism has given us valuable tools for the analysis of economics and society. It doesn’t automatically follow that one is a Marxist for recognizing this. What we do get is analysis which is not based upon, or clouded by, a capitalist viewpoint. It allows us to view this current economic crisis through a different facet than most of us would normally be able to view it though.

First, he argued that we have to look at the boom and bust cycle against the longer term background of capitalist development.

Second, Trotsky argued that we have to look at the economic crisis in a wider political framework.

What radical notions! The notion that we might learn something from looking back at the history of Capitalism and seeing if simlar events have occured. What’s more, Trotsky suggests that there might be political forces at play within the financial realm where the current crisis is taking place. Needless to say, I’m being snarky.

Trotsky compared the economic upswing that he was analysing in the early 1920s with the upswing analysed by Karl Marx and Frederick Engels in the aftermath of the 1848 revolutions across Europe.

Ok…an upswing’s and uspswing. Right? Well, maybe not!

In the 1850s the upswing marked the beginning of a prolonged period of capitalist expansion – “an entire epoch of capitalist prosperity which lasted till 1873”, as Trotsky described it.

But, he added, the period after the Russian Revolution and the First World War was a period of capitalist decline in which “upswings can only be of a superficial… character, while crises become more and more prolonged and deeper going”.

So, two differing upswings. One, a large and general eoncomic expansion. The type where a rising tide is able to lift all boats. In the US, this would be comparable to the swing experienced after WW II. The US was at the top of the economic world, and the largess could be shared, at least a little of the largess, by all. This all came crashing down in the late ’60’s and early ’70’s. The next upswing, or to be better put, series of upswings and downswings, began with the Reagan years. You might say there was the Reagan upswing, Bush downswing, Clinton upswing, Bush downswing. These were not based on ecnomic expansion in the US, but by us expanding economically throughout the world, as well as by our increasing use of debt. We’re probably actually just on the cusp of the current downswing, believe it or not.

Rees points out that Trotsky uses two curves to describe what we’re seeing. Remember, Trotsky was reviewing two swings that happened during his time and went through the Great Depression. We’re seeing that his ideas fit with what has happened post-depression. Is that proof that Trotsky was correct in his analysis? Well, so far, yes. It’s not time, though, to call it Trotsky’s Law.

In this light, how should we view our own era?

Since the Second World War there have been two long phases of capitalist development.

From the end of the war to the early 1970s capitalism underwent its longest ever period of sustained economic expansion. Recessions were shallow and short lived, while economic growth was substantial and sustained.

Profit rates could be sustained at the same time as a rising standard of living for workers.

But since the 1970s growth rates have undergone serious decline and recessions have become sharper. Profit rates could only be sustained by attacks on workers’ living standards.

There have been recessions of varying severity in 1973, the early 1980s, the early 1990s, the late 1990s, in 2001 and now in 2008.

So the current recession comes after a prolonged period of slow economic growth. Indeed during the boom that immediately preceded this recession real wages in the US declined for four straight years in a row.

Classic capitalist boom and bust cycles. If I remember correctly, DP Moynihan was one of those who had posited that we had broken the cycle of boom and bust. Needless to say, he and the others who blieved so were wrong. Any boom since 1990 has been predicated upon bubbles (the tech and housing bubbles have been the two most glaring so far, but the worst is probably the derivative bubble, and that’s what we’re waiting to burst next).

Now let’s look at the second element in Trotsky’s framework – the political conditions that recessions interact with.

This idea is as important as the curves Trotsky wrote about!

The end of the post-war boom in 1973 brought about a wholesale alteration in politics.

Remember, this is at the end of an economic general expansion era. Since then, we’ve been in the up, down, up, down era which has been based on worldwide exploitation of workers, the deindustrialization of the US and of the increase in debt.

But the counter-offensive really got under way with the election of Margaret Thatcher in this country in 1979 and Ronald Reagan in the US in 1980. Neoliberalism replaced Keynesianism as the economic orthodoxy and attacks on the welfare state and the trade unions became more fierce.

Without general economic expansion, the only way to increse profits is to attack the workers. Wages stagnate and inflation eats away at the purchasing power. To replace that purchasing power, lax credit was introduced and borrowers (loans and credit cards) built up huge amounts of debt.

The effects of the crisis will build on a deep scepticism about politicians and the political system in general, including scepticism about a Labour Party that has adopted Thatcherite economics virtually without amendment.

The same can be said almost word for word in the States for the Dems and their abandonment of workers in favor of neoliberalism and the bosses.

This sentiment has grown massively since the birth of the anti-capitalist movement in 1999. The scale of the anti-war movement after 2001 then radically enhanced it.

Ummm…remember, this is a British site I’m working with. We’ve seen some anti-capitalist movements via the anti-globalization demonstrations, but I wouldn’t call it a mass movement here in the States yet. And the anti-war movement, while the sentiment is there, has petered out due to the lack of a national leadership such as the National Democratic party should have been giving. Will we see growth in both of these movements? Possibly, but not under the Democrats since BO is neither anti-war or anti-capitalism.

Not all political developments have been to the left, of course. The rise in votes for the fascist British National Party and the resurgence of the Tories remind us that working class opinion polarises in a crisis – some blame the system, some blame the nearest scapegoat they can find.

Interestingly enough, the liberatarians (in the guise of the Ron Paul candidacy) have been on the front of what could be called reactionary (rather than radical) change. It fits into Rees’ argument, though:

Every crisis involves a race between the right and the left as to who can most convincingly express people’s anger at the system and suggest the most effective ways of fighting back.

In the US, the right won the last argument hands down. Sure, they did it with lies and demonization, but they won nonetheless. The argument begins again. And here is the key: The Dems don’t have a leg to stand on to begin the argument. They’ve helped to push neoliberalism and now the bailout of neoliberalism. So, the reactionary right and the progressive and radical left are at about the same points on the starting line. Our economic and societal models are going to be decided by who wins the argument.

There is great danger here – but also a great opportunity for socialists.

You may also want to add for progressives and non-socialist leftists.

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  1. Arise ye ponies from your slumbers!

  2. had his moments, but Communism is not the answer, imho.

    Although Jesus would have been a Communist (I base that on the King James version of the Bible), and the wingnuts seem to miss the points about the loaves & fishes, and the part about “it is easier for a camel to pass through the eye of a needle than for a rich man to attain the kingdom of heaven” parts (I was paraphrasing that last one).

    No.  What I would wish to see is a modified socialism much like they have in Norway or Sweden: tax the rich, ensure a living standard to the poorest, and basically promote a middle class lifestyle for everyone.

    And if the billionaires want to repatriate to the Seychelles, that’s fine with me.  Then the Seychelles get our headaches–not that I wish any harm to those islands.

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