The theory and practice of the Socialist Workers Party - a critical assessment - Part III
"Callinicos has two theoretical models uneasily coexisting together. One is the 'concrete' model which shows that capitalism could improve in terms of economic efficiency and general prosperity by a return to the policy of Keynesianism. The other is the 'abstract' model, which tries to show neo-liberalism as the logical expression of the requirements of capital accumulation"
By Phil Sharpe
Callinicos argues that the neo-liberal policies of the last 20 years have represented an economic failure in comparison to the Keynesian period between 1960-80. (p21-25) He then concludes that at the level of policy neo-liberalism is a failure: "Judged by its own yardstick of economic growth, then, neo-liberalism has been a failure. But from the perspective of the Washington Consensus, the problem has arisen, not from too much privatisation and deregulation, but from too little." (p25)
He is trying to adopt the "common sense" view which shows how neo-liberalism is not able to achieve the aims of economic efficiency and a higher rate of growth. This suggests that an alternative form of capitalism in the shape of a "return to Keynesianism" will be able to perform better. Callinicos does not ask why Keynesianism is essentially located in the past. Significantly, Callinicos does not show that it is in the structural interests of the transnational corporations (TNCs) as to why globalisation is being developed.
What Callinicos calls the policy of neo-liberalism is considered the most viable structural expression of the capacity to extract the highest level of surplus value from labour. The growing internationalisation of production allows for the increasing equalisation of the extraction of surplus value by the cheapening of the cost of labour power in the advanced capitalist countries to a level that is becoming comparatively (not identical) similar to that of the developing world.
But then Callinicos ostensibly disagrees with the call for a return to Keynesianism. Instead he now formally suggests that neo-liberalism is integral to capitalism and expresses its economic limitations: "Others offer a similar, if slightly more radical critique by saying that what's wrong is the prevailing model of capitalism. If only policies were adopted that permitted a return to the more regulated and humane capitalism of the post-war era, then most of the worst ills afflicting humankind could begin to be addressed. A main thrust of this entire book is to challenge this kind of argument. It is capitalism itself and the logic that governs it - a logic of exploitation and competitive accumulation - that is the problem." (p26)
How is this discrepancy explained? It is that Callinicos has two theoretical models coexisting uneasily together. One is the "concrete" model which shows that capitalism could improve in terms of economic efficiency and general prosperity by a return to the policy of Keynesianism. The other is the abstract model, which tries to show neo-liberalism as the logical expression of the requirements of capital accumulation. However, there is theoretical connection established between the two models because they are based upon competing and different premises.
For the Keynesian concrete model is based upon a reformist strategy of the possibility and necessity of state capitalist reforming governments which can administer the capitalist economy in terms of expansion of public expenditure and nationalisation within a welfare state, mixed economy. This represents the immediate and short-term practical programme of Callinicos. The other abstract model is based on the formal revolutionary adherence to the replacement of capitalism by socialism, but is posed as a long-term maximum goal. Given the contradictory relations between the two models, Callinicos shifts uneasily and inconsistently from one to the other. When he is being "empirical" and "practical" he tends to uphold his Keynesian approach, and when he is being "theoretical" he is generally upholding his abstract model of capitalism.
So when he is outlining the problem of commodification and its connection to alienation, the logic of this is to suggest the necessity to replace capitalism with socialism. (p27-28) But when he outlines the empirical relation of neo-liberalism to financial speculation, the emphasis shifts back to reformist conclusions. For the inherent assumption is that the instability and crisis caused by the rapid movement of finance can be answered by the introduction of currency controls by the nation state. (p29-35)
Indeed, it seems at times that Callinicos is equating the policy of neo-liberalism with the role of deregulated finance capital: "Meanwhile the axis binding together Wall Street, the US Treasury, and the international financial institutions promotes the policies of the Washington Consensus, which open up national economies to foreign investment and make them vulnerable to the fluctuations of the financial markets, and thus more dependent on this axis." (p30-31)
On this basis capitalism can be described as primarily irrational because rapid movements of capital encourage over-investment that results in a reaction and recession. This then suggests it is possible to act rationally and introduce Keynesian style state regulated control on the movements of finance by a nation state.
Formally, Callinicos criticises the assumption that reform and regulation of financial markets suggests that capitalism is still the superior and eternal economic system. (p33) But, in practice Callinicos is also arguing for similar measures as the pro-capitalist Keynesians, which is to call for regulation by the state of the financial markets. This is why he supports control by the nation state of the movement of finance, and upholds the Tobin Tax on financial transactions in order to develop the resources for Third World economic growth.
In relation to his abstract model, Callinicos outlines how capital is based on the exploitation of labour by the extraction of surplus value, and a competitive relation between capitals. (p35-40) The emphasis in this model is about what happens within production, such as the tendency for the rate of profit to fall. Only the exploitation of labour extracts surplus value, and therefore the increased ratio of machinery to labour causes the rate of profit to fall. So if the competition between capitals is based upon increasing productivity by increasing the ratio of machinery to labour, it can result in a decreasing rate of profit and ultimately lead to recession and overproduction. (p38-40)
But Callinicos does not apply this model to the reality of economic activity. Instead his emphasis is on the role of circulation - the rapid flow of money in financial markets - as the main cause of crisis. He outlines how the rapid flow of money led to over-investment in South-East Asia, and which in turn produced recession when money was quickly withdrawn as profits were no longer being made. Also in America the boom was increasingly sustained by financial speculation, and this encouraged over-investment, and so when profits were not at the level expected the result was recession:
"It is this process of uncontrolled accumulation, driven by competition and speculation, that is responsible for the collapse of two of the three largest zones of advanced capitalism into recession over the past decade. From this point of view, the role of financial markets is less as an autonomous source of instability, more as one dimension of a set of interconnected processes driving capitalist economies towards crisis. Marx's own analysis of what he called the 'credit system' seems apposite here: the development of credit money and its availability through the banks and financial markets make it possible to sustain the accumulation process for longer than would be otherwise feasible, but the effect is to postpone - and often to intensify - the onset of the underlying economic contradictions. The financial markets backed by the Fed [US central bank], helped to sustain the American boom but that boom was not merely a speculative artefact: it depended on a real, if limited recovery in profitability, and when the rate of profit began to fall, the collapse of the boom was a matter of time." (p43)
While Callinicos tries to maintain an emphasis on the importance of the rate of profit, in actuality it seems as if the main cause of crisis is the dynamic role of the financial markets, or the uncontrolled movement and increasingly rapid circulation of money. It would seem, therefore, as if the contradictions of capital could be modified by restrictions on the movement of money, which would deprive speculative investment of real returns. Investment would return to rational levels, and so the level of profit would begin to increase and the tendency for the rate of profit to fall would be modified and slowed down, even if not overcome.
This emphasis on circulation as essentially more important than production, is to invert the relations of what is primary and secondary in the understanding of crisis. For it is the problems in the process of extracting surplus value from labour, such as bringing about an overall decrease in the necessary labour time of labour, which is of primary importance. How else is it possible to explain the problem of over-investment in industries without it being located within the difficulties of developing sustainable level of profits?
Indeed even developing super profits (as British Telecom did) does not offset the problem of the falling rate of profit, because investment of super profits could not regenerate a comparable level of profits. Instead the result for BT was loss in the area of new investment, as shown by BT's attempt to expand in the American market. This was also the situation for other companies. In other words, the rapid movement of money as new investment (shares, etc.) could only intensify the crisis, but itself was not the cause of the crisis. This was located in the problem of extracting surplus value.
The conclusion of this emphasis on production is to show that only socialism is the alternative to the anarchic, exploitative and crisis-ridden character of capitalism. In contrast, an emphasis on the primacy of finance is to call for the regulation of financial markets in order to produce a more efficient, reform-minded and profitable capitalism. This is the "concrete" model of capitalism put forward by Callinicos.
Callinicos does show the connection between competitive capital accumulation and the use of the natural world in terms that result in ecological catastrophe. (p44-49) He even shows the role of the multinationals in this process of undermining the environment. (p47-48) This analysis seems to represent the expression of his abstract model of capitalism and the call for revolutionary answers:
"The logic of competitive accumulation thus not merely causes profound economic crises; it is the main force behind the increasingly threatening process of environmental destruction. Trapped in the competitive struggle to gain an edge over their rivals, capitals are driving collectively towards an outcome that portends planetary disaster." (p49) But this conclusion is not an aberration from his general adherence to the more reformist-inclined practical model. For Callinicos has a conception of calling upon the nation state to control and regulate economic activity in the favour of the people - peoples' capitalism - and the question of the environment is part of this reformist programme. This is yet another example of the eclectic tension and inconsistency of his moving between his concrete and abstract models of capitalism.
