This is an abbreviated version of a talk given at the Alternative European Summit in Belgium, on the 11th of November 2018. It traces a developing situation: only two weeks before the talk was due, the main stock markets of developed countries briefly crashed around the world. This fueled the discussions on the next global crisis in the wake of recent trade wars and the rise of corporate debts. The talk discusses the possibility of the next global crisis and why it calls for a paradigm shift of the left, in the light of these events.
Panorama of events
Let me first introduce you to a panorama of events that unfolded this October. Namely, by the end of October, on Monday the 29th, the Sino-American tension that has been plaguing world trade finally began to take its toll. With “The biggest destruction of value since the financial crisis of 2008”, the American stock market indexes lost 2.557 trillion dollars, with the main stock market indexes – S&P 500 and Nasdaq – losing all the gains they had made this year. Trump’s advisors, on the other hand, argue that all is well and, according to them, this is simply another market “correction”. Other commentators like The American Economic Association and Forbes magazine, went as far as to claim that this could be blamed on “Halloween spirits”. Once holidays kick in, they say, this “abnormal stock activity”, will cease to continue. But the US is not alone: the Shanghai and the Shenzhen composite – two of the main stock market indexes of China – also fell on that same day. After an already bad year of downturns, the Asian stock markets experienced a further decline in the range of 20%. If it had been Halloween, it would have been only the US to be hit.
On the contrary, these events correlate in what has become the distinctive mark of our times: the rift between the dollar and the yuan and the escalating possibility of what some call a “second” world crisis, this time originating not in the States, but in Asia.
The rift between the dollar and the yuan and the escalating possibility of what some call a “second” world crisis, this time originating not in the States, but in Asia.
Regardless of the winner in this financial duel, the stakes will concern the shape of contemporary capitalism and nothing less. Its development is conditioned by what the economist Wolfgang Streeck called the “Sino-American co-directorate of the world economy”. The stability, instability, and indeed the possibility of a future crisis of the global economy rest precisely upon this “co-directorate”. Along with the US, the post-2008 world trade was backed by China, and in the conspicuous silence of the World Trade Organization, contemporary predictions of a “second” crisis rest precisely upon the severing of this umbilical cord between Asian and American markets. In order to undermine this “co-directorate” and free the dollar from the yuan, Trump began to introduce costly steel tariffs on imported products from China, thus opening the belly of the Asian economy to inflation and to the possibility of a crash. This, however, will not “Make America Great Again”: while both sides have incentives to calm the situation, it is from here that a future crisis could be unleashed.
It is for this reason that both China and Japan, and Japan and India, have started to brace themselves for impact with two of the largest currency swaps to date. All this comes at a time when China’s growth is already slowing down, while Trump’s tax cuts and steel tariffs surely won’t be able boost the American GDP for a second time. Following this, both the IMF and the chairman of the ECB, Mario Draghi, have already announced weaker growth for Europe and America.
In brief, the world is far less globalised than it was before. In this sense, however, the global trade wars are only a symptom. A symptom, however, that reveals something far deeper. As you know, the neoliberal attack on welfare states has been evolving within Western democracies for almost 40 years already with the rise of the conservative right following in its wake across the globe. In an absence of a Left, these processes finally climaxed in the events of this October. In the absence of an alternative, what they revealed is the possibility that the global way of regulating capitalism, institutionalised after the Second World War, has reached the limits of its development from within. And not only from within: other events make this October even more important. For example, alongside the crashes, the United Nations and the World Wildlife Fund published two reports focusing on the severe consequences of capitalism. In the first, ecological experts state that we now have a deadline before which we must reverse global warming before it becomes permanent. If we want ecological sustainability, we must reform the world economy by 2030. In short, we’ve got 12 years to change capitalism. And, according to the second report, as 60% of all wildlife vanishes, we are the “last generation” that can save nature.
Competitors from the past
It is in this perspective that it is necessary to talk of the Left. In the early 20th century, a similar competition between rival economic superpowers – the US, Germany, France and the British Empire – opened a golden opportunity to influence international politics, the same as today. Ernst Bloch – the German philosopher whose insights are the basis of the present conference – wrote The Principle of Hope (Das Prinzip Hoffnung) during this time. In the revolutionary atmosphere of Bloch’s time, the moment of competition between these militarised Empires was seized by the revolutionary worker’s movements across most of Europe and Asia: think of Berlin and the Soviet Munich or the military-worker’s councils in Germany; the Austrian “Council Republic” or the revolutionary Hungary after the Russian Revolution, etc. However, there is no revolutionary worker’s movement today. There are no Council Republics or Soviets about while the domination of precarious labor hinders even the slightest attempt at unionising. In this context, the Left has taken upon itself to defend the last remnants of the welfare state – the universal healthcare and public education, the rights of pension and social integration. Paradoxically, these are precisely the things that Bloch and the Frankfurt School wrote against. Hoping for integration into a system of compulsion built on the exploitation of labor is something they would have detested. But this should not confuse us. For, it is precisely this that the neoliberal state has been doing for more than half a century: it has been arresting the unification of workers while preventing their wages from rising. It has been doing so not because it is in its nature but because it was designed to do so.
In this context, the Left has taken upon itself to defend the last remnants of the welfare state – the universal healthcare and public education, the rights of pension and social integration.
From the 20th century Weimar and the German Ordoliberals, to Reagan and Thatcher, through the international groups like the “Mont-Pellerin society”, the “Trilateral Commission” or the “Washington Consensus”: the dissolution of the welfare state in the face of neoliberal politics must not surprise us. It is even logical: the first premise of social democracy rests upon its hope that work will guarantee wellbeing. This rests upon the further hope in the possibility of achieving full employment where that wellbeing will be guaranteed to everyone. And that rests on the belief that developing capitalism is the precondition for socialism.This was advocated by all the leaders of social democracy – Otto Bauer, Rudolf Hilferding, Eduard Bernstein and the majority of the German SPD. This led them to open the gates to fascism; while today, their inability faces historical defeat from Germany to Brazil. Meanwhile, Brazilian president Jair Bolsonaro mobilised his electorates against the “red threat” while Steve Bannon mobilised his against “Cultural Marxism”, and in Germany, Alexander Dobrindt called for a “conservative revolution”, “the final battle against the Left-establishment of 1968”, etc. This is what social democracy cannot handle because it was not built to win these fights. And because the Left is forced to defend the heritage of social democracy, it is forced into a loop: it must defend the social integration of the working class which is precisely what prevents it from developing a working-class movement. This leads us to a crucial question.
The last generation to save nature
There is one forgotten tradition of Marxism that remains divided from contemporary politics on the Left. And it is the present moment where it now matters the most. Namely, what the worker’s movements and the “wretched of the Earth” advocated, and what the contemporary left will never do, which is the self-abolishment of labor: the organising of labor not for achieving distributive equality – but for the ultimate aim of ending exploitation itself. This is the dividing line between the paradigm of communism and what became known as social democracy. And because of the political heritage of social democracy, an entire plethora of working-class institutions remain overshadowed: institutions of direct democratic worker’s councils connected with a system of delegates or an international coordination of political struggle and wage prices built from below. This was the first task of the First International – resisting capitalist rivalry. This was how international politics was dislodged successfully – it didn’t take parliaments or individual activism to stop 19th century imperialism, but self-organisation and strikes. It is these movements that we should learn from today. For, the contemporary shifts of our economies call for a paradigm shift in politics: and this is what is needed if we are truly, in the words of one report, the last generation able to save nature.
This was how international politics was dislodged successfully – it didn’t take parliaments or individual activism to stop 19th century imperialism, but self-organisation and strikes.
Hope of the European proletariat
The present generation, to quote Benjamin, is always “endowed with a weak Messianic power to which the past has a claim“ (Thesis II). This “weak power“ is, however, defeated rather then strengthened by the storm of progress which capitalism has brought forth. In their social-democratic hopes of progress, entire generations are still relegating their ” weak“ power to a system that must repeatedly fail. This was Benjamin’s critique of the same German SPD whose naïve hopes today are shattered again in apathy. Yet, “These betrayed radical-emancipatory potentials continue to ‘insist’ as a kind of historical specter and to haunt the revolutionary memory,” as one commentator put it, “demanding their enactment, so that the later proletarian revolution should also redeem […] all these past ghosts.”. This is what motivated Bloch for sure. But Bloch himself succumbed to the other extreme by making hope an everlasting property of the structure of the world. For this reason, Terry Eagleton spoke of tragic hope: that which remains after a devastating loss. In his critique of Bloch, Eagleton introduced the concept of “hope without optimism“: such as that which came after the Second World War, the loss of the European proletariat and the absence of its revival today. And this absence will not reverse itself. For, as it was obvious to the revolutionaries of the 20th century, there may not be a structure of the world to hope for unless we produce it ourselves. Instead of sticking to the “good old” days, we should thus recognise the moment and, instead of our social democratic past, remember that other heritage without which our post-war order would never have existed. The holy trinity of exploitation, finance and fascism, needed a revolutionary worker’s movement to be stopped, after all. And, if there are hopes, my answer is that they do not lie in the reform of a failed system, but in the transformation of what our Left stands for today.
Aleksandar Matković is a political activist from Serbia. He is a PhD student in philosophy at the Research Centre of the Slovenian Academy of Sciences and Arts in Ljubljana, writing on German fascism and the critique of political economy. He was a researcher at the Institute for Philosophy and Social Theory at the University of Belgrade and coordinator at the Regional Science Centre in Novi Sad. In 2018, he was a visiting scholar at the Institute for Philosophy II at the Humboldt University in Berlin. He is involved in several left-wing student and workers’ organisations in the Balkans and South-Eastern Europe ([email protected]).