Scaring Capitalists

Aditya Chakrabortty has built a reputation on the left as one of the good guys in the media for his support of the Corbynite adventure of the Labour Party and his pro-social reporting and commentary, but he is all-too typical of his milieu in that he subscribes to an essentially liberal interpretation of the nature of capital. His recent claim that "The threat of the Soviet bloc forced western democracies to acknowledge the rights of workers and poor people" is typical of this. It isn't a new idea - similar claims have been made by political commentators and historians for decades - but it is worth wondering why the language in which it is couched has become more hyperbolic. Where once it was presented as the competition of capitalism and communism for the affections of labour, now we are expected to believe that capital in the short twentieth century was intimidated, like a shopkeeper paying protection money to the Mafia.

This is how Chakrabortty puts it: "The very presence of a powerful rival ideology frightened capitalists into sharing their returns with workers and the rest of the society, in higher wages, more welfare spending and greater public investment." Related to this claim is the idea that the victory of capitalism over communism was in the balance until the final hour: "From the very outset, November 1989 was framed as the moment when capitalism could stop battling for survival and finally renew itself". The obvious problem with this is that capitalist behaviour did not suddenly change with the fall of the Berlin Wall. The shift from support of the postwar economic and social consensus to a more antagonistic attitude towards labour occurred in the mid-70s, while government policies that explicitly rejected sharing returns with workers were enacted from 1979 onwards with first the election of Margaret Thatcher in the UK and then Ronald Reagan in the US.

In reality, the gains of labour in the postwar years were down to the combination of the necessary reconstruction of the social infrastructure of shattered nations, the redeployment of wartime industrial capacity towards profitable production, and the relative scarcity of both skilled and unskilled labour. The purpose of the NHS, slum clearance and the expansion of education was not to dissuade voters from drifting towards a tiny Communist Party of Great Britain but to improve the calibre of labour for the benefit of capital. Similar considerations underpinned the social reforms enacted by the Liberal government between 1906 and 1914. Asquith and Lloyd George were not preempting the siren call of communism to British workers but trying to beat off the Labour Party. Likewise, the capitalist turn towards the disciplining of labour in the mid-70s arose from a crisis of profitability - as the postwar reconstruction phase ran out of steam and the simultaneous expansion of global production capacity drove down prices - not from a reduction in the perceived threat emanating from Moscow.

In supporting his case for the role of communism as a goad to capitalism, Chakrabortty makes much of the coincidence of revolution in Russia and the enactment of pro-social reforms across Western nations: "The starkest example is the eight-hour working day. Demanded for more than a century by socialists such as Robert Owen, it had been the rallying cry of the annual May Day demonstrations organised since 1890 – yet it took the Bolshevik revolution of October 1917 and the concurrent unrest of workers across Europe to make it law within months in France, Germany and Portugal." As with the introduction of universal male suffrage, this was the product of a political campaign that had run for decades - in the UK's case since the Peterloo massacre and the Tolpuddle Martyrs a century earlier. Chakrabortty acknowledges this history and the campaign's inexorable rise to political prominence but seems unwilling to conclude that reform was therefore inevitable.

The reason why so many progressive reforms were enacted within months of October 1917 was the end of the First World War in 1918, not the storming of the Winter Palace. War was the common factor, triggering both revolution in Russia and progressive reform elsewhere. Among the political establishments of combatant nations there was both a feeling of moral obligation and a fear of an armed working class (a fear realised by extensive violence in Germany). While you can't prove a counter-factual, it is unlikely that in the absence of the Bolshevik takeover countries such as France and Germany would have resisted reform to the statutory working day. It is also important to remember that in 1918 most foreign observers of Russia thought that the "Reds" would be defeated by the "Whites", not least because of armed intervention by the allied powers. Until 1920, many of those observers were more concerned about the potential contagion represented by the anarchist forces of Nestor Makhno.

The fear of communism certainly grew during the 1920s, particularly as the Comintern became more prominent and various countries experienced revolutions and civil strife in the wake of the Great War, but the response of capitalists tended more towards confrontation and suppression rather than accommodation, let alone a strategy of generosity towards labour. For example, the UK General Strike in 1926 was triggered by government attempts to reduce wages and worsen working conditions in the mining industry, an approach that actually boosted support for the CPGB. You could argue that British capital only arrived at a strategy of generosity after 1945, but that undermines the claim that 1917 was pivotal. The USSR was certainly at the peak of its influence following the Second World War but you won't find a correlation between the threat of communist parties in Western Europe and pro-social reform. The most extensive investment in the welfare state came in countries, such as the UK and Sweden, where the communists played a distant second fiddle to long-established social democrats. In countries with powerful communist movements, such as France and Italy, the development of the welfare state was much patchier in the 40s and 50s.

Chakrabortty imagines capital as possessing a will - at times dynamic, at times destructive - but little self-control: "Countervailing forces made capitalism not only more bearable for those living under it but also more likely to survive. Without them, the system loses both consent and even the will to carry on. The banking crash, Brexit, the impending climate catastrophe – all should serve as distress signals for keen-eared capitalists, yet the answer to each is to serve up more of the same: more finance, more slash-and-burn, more tokenism around carrier bags." That capitalism seems incapable of responding to these "distress signals" doesn't appear to give Chakrabortty pause for thought. Holding out for a more responsible capitalism is no less delusional than the 80s belief that the market would provide or the 90s conviction that the state could address its negative externalities by asking financiers to pay a little more tax.

This is an example of the liberal tendency to treat capitalism as a rational actor with bad habits, which is the perspective of centrists like Will Hutton. To imagine that British capitalism consciously and collectively decided to thwart communism through welfarism is a version of the anthropomorphic fallacy. Though it is composed of individuals who each make what they consider to be rational choices, capitalism is an emergent system in which collective action arises spontaneously. It could no more "decide" to improve workers' pay in order to fend off the wiles of communism than it could decide to stop polluting. What aggregate rationality exists is the result of society's attempts to control capitalism -  in other words, politics - but this can be ineffective when it imagines that capitalists will respond to social as much as financial incentives: that we can appeal to their collective conscience or pragmatic calculation.

This belief in capitalist rationality has underpinned much of the liberal angst over Brexit. Why did a capitalist class that was so dominant in the successful "In" referendum of 1975 put up such a poor show in 2016? It wasn't out-thought by Dominic Cummings and Arron Banks, it simply didn't turn up. The reason is that in the mid-70s British capital still identified with what David Edgerton has referred to as a "national capitalism", but 40 years of neoliberalism has since created a capitalist class that is fragmented in it politics and where the balance of power now lies between a globalised finance sector that is disinterested in domestic industry, a manufacturing sector dominated by foreign multinationals that can always relocate elsewhere, and a rentier class for whom deregulation and exploitation have substituted for investment in productive capacity. British capital is split not just between leave and remain but between the interested and the disinterested, and the truth is that most capitalists now fall into the latter category.

If, as the headline to Chakrabortty's article puts it, "The task of politics today is to scare the capitalists as much as communism did", then nothing short of comprehensive expropriation is likely to do it, and even that will probably be ineffective with the many finance and offshore capitalists who can happily go into exile. In practice, Labour's plans to nationalise water, rail and now broadband are actually quite cunning in that they target those forms of capital that cannot take flight, but for all the real benefits they may bring to everyone in terms of better services and lower costs, they will do little to boost wages or conditions for the majority of working people. Ultimately, British socialists have to answer a simple question, and one that has become ever more pressing in the face of a growing climate catastrophe: If capitalism cannot be saved from itself, what should be put in its place?