November 2011        

Did Lenin ask for a stimulus package?

The crisis in which monopoly capitalism is now deeply enmeshed has exposed not only the deep contradictions at its heart but also those of some elements on the left.
     Some people on the left appear surprised by the depth of the economic crisis—surprised that capitalism hasn’t begun its recovery yet; surprised that capitalist solutions do not appear to have had any positive effect. Maybe this is because they do not see it as a crisis of capitalism but merely as a banking crisis. They have not placed the crisis in its correct context—the general crisis of capitalism—and they do not see the inherent instability and contradictions within the system.
     What is more surprising, though—or “horrifying” might be the best word—is the number of so-called socialists who are putting forward proposals for trying to save capitalism from itself and who are desperately hoping for a capitalist economic recovery. The demand for a “stimulus package” to provide jobs for stimulating growth is a demand for saving capitalism, not for building socialism.
     Socialism is not a nicer, more humane capitalism—an impossibility, given that exploitation, alienation, inequality and monopolisation are fundamental features of the productive system, not nasty by-products that can somehow be done away with. Socialism is an entirely different economic, political and social system, a system that will replace capitalism and that can fully exist only when capitalism has been surpassed as the dominant order.
     Socialism will be achieved only when people stop demanding a nicer capitalism and start the difficult but necessary struggle to build people’s consciousness and their understanding of the nature of the system and then open up the road to socialism.
     This is not idealistic, nor is it to neglect those people who have suffered most: lost their jobs, lost their homes, even lost the lives of loved ones. No: this is to stand up for those people and say, The system is responsible, and the system must be done away with.
     But even those who dream and wish for a capitalist recovery will be sadly disappointed, because at best all the system will do is find a new bubble, blow it up by flooding it with capital, only to see it burst in even more spectacular fashion in a few years’ time. Why? Because the tools with which to provide capitalist growth have been blunted by its own contradictions.
     We have just witnessed another blundering attempt by the EU authorities and the governments of France and Germany to draw a line in the quicksand that is the euro crisis. A permanent bail-out fund of €1 trillion is now the solution; and Greece will participate in a creditor-led default with even more austerity and loss of sovereignty.
     This meets some short-term needs for capital, at the expense of labour and democracy, but will not be a basis for a productive recovery, because the tools that capitalism has at its disposal are incapable of bringing about a solution. This will be nothing more than temporary relief for capital, and savage permanent austerity for workers.
     The gains made by workers in the twentieth century are now being taken away, with little resistance here and indeed with the active collaboration of social-democratic forces within the labour movement.
     For every option or policy that tries to find an avenue for investment and growth there are contradictory repercussions that exacerbate the crisis. This is the crisis of capitalism.


War has traditionally been the ultimate solution—even if only a short-term one—to stagnation and over-production. It destroys (creates investment avenues and gets rid of surplus labour) and rebuilds (creates growth).
     The Second World War is a perfect example of this. But does this option exist now on the same scale as previously?
     The advent and use of nuclear weapons by the world’s major powers, and the proliferation of these weapons of human obliteration, means that war on a major scale might in fact destroy humanity. War will be used, and is being used, to secure scarce resources, to secure markets and spheres of influence; but does it exist as a pressure valve for capitalism on the scale required? No.

Increased exploitation

The traditional way to enhance profits is to increase the rate of exploitation. Get more for less from your workers: reduce wages, increase the working day, increase the productivity of labour, and introduce new technology. But, given that the system now suffers from over-production and over-accumulation, there now exist far too many products than can be consumed and so realise their surplus value. This creates a problem.
     The most obvious way to increase exploitation is to increase the working day, but then the system will produce more in an already flooded global economy, exacerbating over-production.
     Under competitive capitalism, companies would seek to invest in new technology, writing off their capital in old technologies, and so achieve a competitive edge. This investment in new technology created demand and stimulated some growth. Today, however, under monopoly capitalism, the profit motive doesn’t exist for companies to do this, and so monopolies would rather protect their capital that exists in old technologies and save and store the rest as cash. And even if they did increase productivity through technological innovation, they will again exacerbate over-production and create even more unemployment, further reducing demand.
     If you reduce wages you stifle consumption, reducing the number of people who can afford to buy the products already available, and so again exacerbate over-production and reduce demand.
     If you move production to cheaper parts of the world, resulting in more redundancies in the larger-consuming areas, you reduce global consumption, again feeding over-production. If you try to make these new, cheaper areas also consumption areas, you negate the benefit of cheaper production, or would require a debt bubble on a scale far greater than the West has seen in order to provide credit to poor workers with which to buy the goods.
     Monopoly capitalism will try, and is trying, all of these, and we see it every day in Ireland. And, yes, they may have some short-term positive effects for capitalism (increased profits for the rich—not jobs for workers). But they are in fact only exacerbating the crisis of over-production, and will lead to more redundancies here and reduced demand, and prolong stagnation. They cannot solve the unsolvable contradictions of the system.


The austerity regime being imposed throughout Europe serves one purpose: the bailing out of finance capital. Austerity is a massive transfer of wealth from working people and public assets to finance capital. And it is working in that sense. The critical role now played by finance capital as the engine of growth makes it systemically necessary to bail it out, from the viewpoint of capital. And it is the reason that even bourgeois democracy has been totally sidelined to meet the needs and demands of finance capital.
     Arguably, the old bourgeois parliamentary democracy is no longer the most suitable form of government for a capitalism dominated by a highly mobile and anarchic finance capital. A larger technocratic state, such as the EU proto-state, dominated by unelected officials, is the governance method of choice for future capitalist states. Democracy has become an obstacle to the needs of monopoly capitalism.
     But as this crisis is not merely a crisis of finance capital but is also part of the more general crisis of capitalism, it will not kick-start a recovery (other than further speculative bubbles) and again only creates more problems for capitalism. As austerity drains capital away from consumption it again exacerbates over-production by reducing consumption capacity.
     Indeed the divergent interests of manufacturing (productive) capital and finance capital can be seen very clearly in Germany, where the conflicting interests of these two capitals play out politically in the demand for bond-holders to “share some of the pain,” so that workers can still afford to buy the German monopolies’ products.

Stimulus packages

For those on the left who have failed to understand the nature of the crisis but who are opposed (correctly) to the austerity measures from the Troika, we often hear the demand for a stimulus package, the idea being to use public and private funds to create jobs, increase consumption, grow our exports, and increase state revenue for dealing with national debts.
     It is often retorted in the media, Where will you get your money? But in fact money for investment is not the problem—far from it: billions in private capital exist, waiting and seeking investment opportunities and avenues to exploit. And also, as emphasised in numerous union submissions and papers, significant public funds can also be found and used to invest in a stimulus package.
     The United States released several stimulus packages (“quantitative easing”) of more than $700 billion, yet this did not create any meaningful long-term jobs and barely registered an indentation in the unemployment crisis there.
     Why? This massive state hand-out to big business failed to overcome a couple of problems: debt repayment, and liquidity preference. In the absence of any profitable investment opportunities, any quantitative easing or stimulus package is used by monopolies to pay off any debts and improve their liquidity and is hoarded as cash reserves.
     The question is not where they will get the money, it’s where and what will the money be invested in, and how will this create growth where massive over-production exists in the system. Public infrastructural projects will provide limited release; but short of the mass destruction of entire cities and towns (as in the Second World War) they cannot in any way provide the scale of investment opportunity required by capital to overcome its contradiction of over-production and the need for accumulation.
     The productive economy has been suffering over-production for decades. That is the very reason why capital turned to financial instruments and products, and bubbles, as an avenue for investment, with an expansion of personal credit to make up the gap between people’s wages and their spending power, with debt making up the shortfall to allow consumption to take place. It was not out of choice that capital turned to these gambling algorithms but out of necessity.      To the Irish left: These are not our problems. Ireland is not in crisis: rather, capitalism in Ireland is in crisis, north and south. These are not our problems. We cannot solve the crisis within capitalism—and we do not have to solve its crisis before we can move to an alternative, to a socialist path of development.
     These are built-in contradictions within the system of monopoly capitalism. We do not have to try to find a way around these problems. We must recognise them, expose them, and build the forces for overcoming capitalism and replacing it with a system of planned development and democratic control—the system called socialism.
     Capitalism will not die or end by its own volition but rather has to be challenged and defeated. Socialism is built: it is the product of the conscious actions and struggles of working people and their movements: political parties, trade unions, and social movements.

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