“Crack-Up Capitalism” is not what it is cracked-up to be.
When the Soviet Union imploded in 1991 there were many capitalists and their supporters who not only believed “capitalism” had won but they were on the way to a capitalist utopia of free markets and free movement of capital. Ranging from Liechtenstein to Somalia, and from Hong Kong to Silicon Valley, fee market zones were to be developed away from the confines of the modern state and the constraints imposed on capital by politicians and the party-political system.
What utopian capitalists and their supporters wanted to establish were free market zones; an enclave carved out of a nation and freed from government, politicians, and regulations This market anarchism has been studied in detail by the historian Quin Slobodian in his recent book CRACK-UP CAPITALISM: MARKET RADICALS AND THE DREAM OF A WORLD WITHOUT DEMOCRACY (Penguin 2023).
Pride of place for capitalist utopianism is the anarcho-capitalist vision of “Liberland” demonstrated in bits and pixels through computer screens by Patrik Schumacher, principal of Zaha Hadid architects and a fanatical follower of the economists Ludwig von Mises and Murray Rothbard. At the UIA World Congress of Architects Schumacher argued that governments:
“…should abolish all social and affordable housing, eliminate all housing standards, and privatize all streets, squares, public spaces and parks” (p.266).
Only the rich mattered. And indeed, Zaha Hadid’s client base demonstrates this. Clients include the Chinese authorities in Beijing, authoritarian regimes in the Emirates, BMW and a host of wealthy clients in Dubai.
As for the poor, more than 6,500 migrant workers from India, Pakistan, Nepal, Bangladesh, and Sri Lanka died following Qatar winning the right to host the World Cup. For those workers who actually built from the architect’s designs, the death of construction workers building the various stadiums for the World Cup in Qatar evinced this reply from the late Zaha Hadid: “It is not my duty as an architect to look at it” (Dezeen 26 February 2016).
CRACK-UP CAPITALISM found its keenest support around a group of conservative MPs which included Kwasi Kwarteng and Liz Truss. Their Manifesto was called BRITANNIA UNCHAINED. They wanted Britain to become a deregulated free zone of enterprise, growth, and profit.
In this utopia there would be no planning laws, no regulations, minimal labour laws, little taxation, and minimal interference by politicians in commodity production and exchange for profit. It did not turn out as planned. The markets imploded when economic ideology touched economic reality, CRACK-UP CAPITALISM turned out what it was not cracked-up to be. It was an economic dead-end like so many previous economic theories.
The Lettuce Won
Liz Truss, when briefly Prime Minister, attempted to turn the whole of Britain into a fee zone as influenced by the economist Milton Friedman and billionaire Pay Pal owner Peter Theil.
Cheered on by the Institute of Economic Affairs she was to carpet Britain with investment zones and low taxation. This is what her supporters said:
“The tax cuts were so huge and bold, the language so extraordinary, that at times, listening to Kwasi Kwarteng, I had to pinch myself to make sure I wasn’t dreaming, that I hadn’t been transported to a distant land that actually believed in the economics of Milton Friedman and FA Hayek.” (Allister Heath editor of the SUNDAY TELEGRAPH).
“It’s refreshing to hear a chancellor talk passionately about the importance of economic growth and supply-side reforms, rather than rattling off a string of state spending pledges and higher taxes…Only by bearing down on the amount of tax the state collects across the income spectrum, and reducing the regulatory burden, can we create better conditions for growth.” Mark, (soon to be) Lord Littleford of the IEA.
However, Truss’s capitalist utopia exploded when it met capitalist reality. Her premiership did not survive as long the Daily Star’s lettuce. Investors were petrified at the possibility of financial instability. The markets rebelled. The Premiership was doomed. The lettuce won.
The world is full of free market think tanks all wanting to see a capitalist utopia imposed on the world. Engels in a different context (he was taking about the utopian socialists) dismissed this ideological nonsense as follows:
“…a mish-mash allowing of the most manifold shades of opinion: a mish-mash of such critical statements, economic theories, pictures of future society by the founders of different sects, as excite a minimum of opposition; a mish-mash which is the more easily brewed the more definite sharp edges of the individual constituents are rubbed down in the stream of debate, like rounded pebbles in a brook” (SOCIALISM: UTOPIAN AND SCIENTIFIC).
What is capitalism and what is economics?
How do we assess a scientific economic understanding of capitalism against the vague and idealistic approach of academic economics of which CRACK-UP CAPITALISM is one derivative of many in a history of failed economic theories?
There are two approaches to capitalism and economics; one provided by Karl Marx and one provided by academic economists like John Maynard Keynes, Milton Friedman, von Mises and Rothbard Murray.
Marx’s approach is the correct and scientific one. Unlike modern economists Marx employs a theory of value to study economic relations of production and distribution. Marx’s genius was to apply the labour theory of value to labour itself. The value of labour power is determined by the socially necessary labour embodied in the peculiar commodity of a person’s ability to work.
For Marx, class exploitation was a necessary consequence of commodity production and exchange for profit. Labour was not exploited by bullying managers or cruel and ruthless employers.
The workers’ labour power is exploited in the profit system because workers are paid minimum value to meet their social needs after which the employer makes use of, or exploits, the additional labour the workers are contracted to undertake, thus providing the employer with surplus value.
By labour power Marx meant:
“…the aggregate of those mental and physical capabilities existing in a human being, which he exercises whenever he produces a use value of any description” (CAPITAL VOLUME 1, Ch. 6, p.167).
It is this exploitation of “surplus value” which provide a surplus which is the basis of the unearned income of rent, interest, and profit.
Marx provides the working class with a scientific study of capitalism showing that it could never be made to work in its interest.
CRACK-UP CAPITALISM belongs in the second category along with economic liberalism, neo-classical economics, Keynesianism, state capitalism, Monetarism, neo-Ricardianism and all the other economic derivatives like gangster capitalism and green capitalism. Marx called this form of economics “vulgar economics” -shallow and apologetic.
Academic economics is to capitalism what theology was to the Feudal order. The former defends the private ownership of property the latter the divine right of kings to rule. Economists, like theologians, produce and disseminate ruling class ideas.
So, Marx was right to dismiss economics as a shallow, vulgar and apologetic discipline.
Why vulgar economics? All schools of capitalist economics reject the labour theory of value. They therefore cannot understand capitalism and the reason why the class struggle between employers and workers take place. It is as simple as that. They can only deal with the appearance of the economy despite the use of sophisticated mathematics. Academic economics in all its forms can never reveal the reality of the profit system. It can never tell the truth.
Why capitalism needs the state and regulations.
Socialists do not support the capitalist State nor its reforms, regulations, and legislation. Instead, we explain why the State exists and why it has been forced to take on roles like housing reform, health and safety reform and the NHS.
The machinery of government, including the armed forces exists to protect the private ownership of the means of production and distribution, the raw resources, the land, factories, transport and communication and distribution points. And externally it exists to protect trade routes, sphere of influence and to prosecute capitalist wars. Just as a tortoise cannot live without its shell, so capitalism cannot live without the protection of the capitalist State.
The capitalist State over time has had to take on functions to ensure workers can be employed. Workers need to be educated, housed, fed and to reproduce more workers for the labour market. The State is forced in the course of its activities to place certain limits upon working class exploitation.
It was the Tory party who passed the early Factory Acts. And certain factory owners discovered that the legal regulation of hours of labour and restrictions on so-called sweating undermined their poorer and less efficient competitors.
Faced with working class poverty, destitution and crime central government took the burden of providing unemployment, health insurance, old age pensions.
The National Insurance Act of 1946, provided for a comprehensive system of health and unemployment insurance, as well as for retirement pensions.
Social reforms and regulations are necessary for the running of capitalism and when they are diluted or removed Grenfell Tower disaster is the consequence.
It is the State who attacks trade unions and breaks their strikes. It is the State who passes anti trade union legislation. And it is the State who protects the institution of private property ownership from external attack and internal riots and looting.
The capitalist State is expensive and bureaucratic but it is a cost the capitalist class has to pay for. It is their insurance policy.
A World Without Capitalism
The market anarchists who walk the pages of CRACK-UP CAPITALISM see democracy as an impediment to the freedom of capitalists to do what they want. However, the limited form of democracy in capitalism allows a working class the opportunity to live in a world without classes, without the wages system and without employers. In short, a world without capitalism.
Marx showed how the working class were exploited and why the profit system cannot be made in the interest of all society. For Marx the only conclusion that can be made about capitalism is that the workers must abolish the profit system.
Furthermore, Marx showed that the working class has the potential to organise politically and democratically to establish socialism on a global scale. Workers can take conscious democratic and political action in principled socialist parties to replace the profit system with common ownership and democratic control of the means of production and distribution by all of society. World capitalism must and can be replaced by world socialism.
Socialism will be world-wide because the forces of production including co-operative social labour is global in scale.
Unlike capitalism there will be no artificial barriers, no nation states, as there would be freedom of movement across the globe. Socialism will also mean an end to national, racial, and sexual oppression. And more importantly it will be a world without capitalism. A world without the profit system, buying and selling, a labour market, classes, and employment.
Object and Declaration of Principles
The establishment of a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of the whole community.
Declaration of Principles
THE SOCIALIST PARTY OF GREAT BRITAIN HOLDS:
1. That society as at present constituted is based upon the ownership of the means of living (ie land, factories, railways, etc.) by the capitalist or master class, and the consequent enslavement of the working class, by whose labour alone wealth is produced.
2. That in society, therefore, there is an antagonism of interests, manifesting itself as a class struggle, between those who possess but do not produce and those who produce but do not possess.
3.That this antagonism can be abolished only by the emancipation of the working class from the domination of the master class, by the conversion into common property of society of the means of production and distribution, and their democratic control by the whole people.
4. That as in the order of social evolution the working class is the last class to achieve its freedom, the emancipation of the working class will involve the emancipation of all mankind without distinction of race or sex.
5. That this emancipation must be the work of the working class itself.
6. That as the machinery of government, including the armed forces of the nation, exists only to conserve the monopoly by the capitalist class of the wealth taken from the workers, the working class must organise consciously and politically for the conquest of the powers of government, national and local, in order that this machinery, including these forces, may be converted from an instrument of oppression into the agent of emancipation and the overthrow of privilege, aristocratic and plutocratic.
7. That as all political parties are but the expression of class interests, and as the interest of the working class is diametrically opposed to the interests of all sections of the master class, the party seeking working class emancipation must be hostile to every other party.
8. The Socialist Party of Great Britain, therefore, enters the field of political action determined to wage war against all other political parties, whether alleged labour or avowedly capitalist, and calls upon the members of the working class of this country to muster under its banner to the end that a speedy termination may be wrought to the system which deprives them of the fruits of their labour, and that poverty may give place to comfort, privilege to equality, and slavery to freedom.