There is no definitive Marxist assessment of the current economic crisis or of the period leading up to it, but there is a vibrant debate among Marxists trying to grapple with the underlying causes of the world we’re in. David McNally’s book provides one of the most panoramic and provocative accounts with many insights.
He argues that the crisis of 2008 represents the terminus of a quarter-century wave of economic growth — neoliberal expansion — and the transition to a protracted period of slump. He defends three broad arguments:
1. From 1982 an era of severe capitalist restructuring took place in which capital, by attacking working class living standards, reorganising production and spatially reconfiguring global production chains, succeeded in raising the rate of exploitation and increasing profitability.
2. The upward trend in profit-rates from the early 1980s sustained a wave of capitalist expansion that began to falter in 1997, with the crisis in East Asia.
3. A wholesale reorganisation of capitalist finance occurred, stimulated by a metamorphosis in forms of world-money.
Of these, the first thesis is most significant. It can be subdivided into three substantial claims:
1. A sustained government and employer offensive against workers, unions and the social wage beginning in the late 1970s reduced working class shares of national income and real wages, leading to a significant increase in the rate of exploitation of labour.
2. Substantial processes of industrial restructuring took place, with massive downsizing, mothballing of old plants and equipment, introduction of new technologies, speed-up, and the development of systems of lean production that raised the productivity of labour. Robotics, computerisation and the widespread application of new production methods are evidence of decisive processes of technical change that boosted labour productivity, increased relative surplus value, and contributed to rising profitability.
3. A dramatic spatial-geographic reorganisation of capital has seen the creation of a new centre of capital accumulation in East Asia, with the tripling in the size of the waged labour force in China as its economy emerges as a crucial workshop of the world.
The virtue of McNally’s approach is to examine the world economy as a totality, rather than as simply the sum of national economies. In doing so, he avoids the subjective trap that generalises trends in the US and major Western economies to the world economy as a whole.
The book emphasises the tremendous growth in the international working class; it has at least doubled in size across the neoliberal era, with something like half of it living in East and South Asia. The last two and half decades have witnessed one of the great migrations in world history. For the first time ever, a majority of humankind will live in cities and towns. We have probably passed the tipping point, whereby the majority of the world’s direct producers do waged work rather than peasant agriculture. The social weight of the working class has never been greater.
According to the figures used by McNally, of a global labour force of roughly three billion people, more than half today live in East and south Asia combined”.
In the twenty-five years after 1978, China’s employed working class tripled, growing from 120 million to 350 million. By 2002 China “had more than twice the number of manufacturing workers than the world’s largest industrial nations, the G7 combined”, with 109 million compared to 53 million. These workers are not only producing low-cost manufacturing, such as footwear, clothing, sporting goods and toys. They are also producing electronics and information-technology hardware.
McNally dissents from the views of many on the revolutionary left, ranging from the SWP in Britain to Robert Brenner, Andrew Kliman and Monthly Review in the US, who see the last forty years as one of uninterrupted crisis or “long downturn”. Such assessments “either ignore or thoroughly downplay the dramatic social, technical and spatial restructuring of capitalist production that occurred across the neoliberal period, all of which significantly raised profitability, and led to a volatile but nonetheless real process of sustained capitalist expansion, centred on East Asia”.
McNally argues that the current crisis is fundamentally the result of over-accumulation and generalised problems of profitability. When the first signs of a new phase of over-accumulation set in, with the Asian Crisis of 1997, gargantuan credit expansion, increasingly fuelled by record-low interest-rates and the extraordinary build-up of fictitious capital (stocks, bills and other paper claims to wealth), postponed the day of reckoning, while greatly "financialising" relations between capital and labour.
When financial markets started to seize up in the summer of 2007, underlying problems of overaccumulation and declining profitability meant that financial meltdown would trigger global slump. It is therefore not simply a financial crisis, though it does have some unique financial and monetary features. Financialisation is not about the rise to prominence of a stratum of financiers or rentiers, who have twisted capitalism to narrowly financial ends, nor is it simply about neoliberal policies of financial deregulation.
Ultimately the book argues that the world economy has entered a protracted slump involving “a whole period of interconnected crises — the bursting of a real estate bubble; a wave of bank collapses; a series of sovereign debt crises; relapses into recession — that goes on for years without a sustained economic recovery”. McNally believes that the slump drives capital to destroy value in order to restore the conditions for its own reproduction. The crisis will induce measures such as an enormous centralisation and further spatial re-organisation of capital, upset the balance of global economic power and probably witness more draconian restrictions on the movement of migrant-labour. But despite the hardship and suffering, there will be opportunities for socialists to offer our own coherent answers and to mobilise workers to resist the onslaught.
Our job now?
• Pay attention to the development of working class politics in Asia, particularly China, and do everything possible to promote labour movement solidarity.
• Rethink left orthodoxy on imperialism and globalisation, in particular the recognition of the emergence of new imperialist and sub-imperialist powers. Knee-jerk, one-eyed, purely anti-Western “anti-imperialism” is no use in this global configuration.
• Rebuild and recreate the labour movement and other “organised infrastructures of dissent”.