The Coupon Clippers Get A History Lesson From One Of Their Own
Richard Mellor | 28.08.2007 16:46 | Analysis | History | Workers' Movements | Oxford
Bourgeois theoreticians take measures to assure their class that the present crisis will pass. "Do not panic" is the message. Good times will return and the robbery can go on. Time for a history lesson.
Richard Mellor
AFSCME Local 444, retired
Oakland CA
8-27-07
As I explained in a recent commentary (1) the present economic crisis that is still in process and was triggered by the collapse of the US subprime mortgage industry, is not simply a product of ‘evil” or “greedy” individuals.
Debt allows capitalism to go beyond its limits. One of its limits is the ability of workers to buy back the products of our labor. Capitalism produces too much stuff. Production in the so called free market economy is determined by the private individuals who own the means to produce and also own the labor power, the use of the worker, which is necessary to make that production profitable. Profit comes from the unpaid labor of the working class, that period of working time beyond that for which we are paid wages; this surplus value is the source of the capitalist’s profit and of all wealth.
This relation of production has its consequences as the system overproduces and, as any worker understands, causes economic slowdowns (recessions) and crashes as production has to be halted and workers laid off in order for the surplus products in society to be consumed so that production for profit can be revved up again.
This overproduction occurs with all commodities, even money itself is bought and sold, and the buying and selling of money, or the financial markets, are a greater part of the economy than ever before.
Capitalism is so productive that money is everywhere. “The world is “awash with cash” is a phrase often used in the serious journals of big business. But capitalists, as Marx explained, are not misers. (2); they do not hoard their stolen cash but “risk” it by throwing it in to circulation in one form or another with the aim of it returning to their pockets and in a greater quantity than when it left.
The present crash in the credit markets has reached its limits. The availability of cheap, money, huge amounts of it, fueled the recent economic boom as it funded everything from housing to mergers and acquisitions. Access to cheap credit has stalled, and the effects of the partial collapse of the assets that fueled much of this credit boom, mortgage loans, and the ability of workers to keep up with them, has had global consequences.
The serious journals of capitalism are responding accordingly as they are trying to head off a panic. Gillian Tett, an assistant financial editor at the Financial Times, had a question and answer piece in the Times August 18th that attempted to allay the traders and other coupon clipper’s fears that the system might be in danger of collapse. Fears of a crash are unfounded, she tells her readers; but she qualifies, “for now”. (3) The fundamental causes of crashes are not human nature, but human nature is influenced by objective material conditions and the shark fest that arises in a boom can turn in to panic if the participants think a crash is likely or even worse, a collapse of the system entirely. This panic can trigger these events or at least, exacerbate them.
Economic booms lay the foundations for the human behavior, the psychology of greed and a feeling of euphoria and confidence; just like drugs do. The coupon clippers, particular the young Turks, the daring risk takers, revel in the abundance. History is irrelevant to the participants as they convince themselves that the party will go on forever. Many of them today were babies when the market crashed in 1987 and not much older when the Asian crisis hit in the late 90’s.
But now history is important, and their journals try to remind them of such, try to re-assure them that what is happening today is a natural part of the system, that it is painful, yes, but there will be another opportunity to prosper for the ruthless among them. Capitalism has weathered this storm before.
In today’s Financial Times Ms Tett gives a history lesson. (4) Her readers, particularly the youthful traders and coupon clippers who have gorged themselves over the past period, are looking for an explanation; this is all new to them. They cared not about the past, but thing have changed. “..many are now reaching for the history books with a new found enthusiasm—or desperation---to assess how the crisis will play out.” she writes. (5) How things have changed. “Indeed, as recently as this spring…” she adds with the confidence of the bourgeois intelligentsia, “… it was rare to find any financial trader who spent much time pondering events more than a decade old---or beyond the data points typically found on a trading terminal.”
The same conditions also have an effect on the working class. In such crises, consciousness changes. But it does not proceed in a straight line and there are moments of despair, hopelessness and fear that can produce periods of extreme reaction. But alongside this there is also a tendency toward class unity and huge leaps forward are made. During great social crises, workers who have cared nothing about history like the young traders on the other side of the class divide, develop a thirst for it as they seek an explanation for it all.
In moments like the Seattle general strike of 1919, the mass occupations of the thirties or the civil rights and anti-war movements of the fifties and sixties, our consciousness changes, our minds open as the ideology of the capitalist class increasingly is at odds with objective reality. The view that we can get what we want from this world if we work hard enough, or that we are in control of our own destiny and that if we don’t achieve success as they define it, it is the product of our own miserable failure; these ideas become suspect. Instead, we try to figure out what is happening in the world around us and what we can do about it. We realize we must act.
The role of Gillian Tett’s equivalent among the working classes can influence this behavior and can play a role in determining its outcome. But in that regard the capitalist class have an advantage, their leaders and theoreticians instill confidence in their system and tenaciously fight to defend the interests of their class. They fact that they own the means of communication and education, therefore the production of ideas, is also no small matter. But the worker’s leaders have capitulated completely to this ideological offensive and consequently, without leadership of any significance except one that echoes the capitalist view of the world, the road to the solution of the crisis is unnecessarily difficult and tortuous.
Ms Tett’s analysis is a sober one. When the theoreticians of capital discuss the economy in a serious way they cannot help but validate Marx although they will rarely admit it. Ms Tett points out that Lehman Brothers, a major capitalist firm, estimates that there have been 60 market crashes since 1622. “This neo-modern credit market is not very dissimilar after all from its classical predecessors” says a Leheman Brothers analyst. Is that so? Yet during this credit boom, time and time again they told themselves that things were different now. Sure, there were warnings. But not warnings enough to halt the speculation and profit taking. Now, after workers have lost their homes, and more important a concern for them, traders have lost money, there are historical lessons to be drawn. “…many bankers have believed—at least until recently---that this decades burst of market innovation had re-written the rules of finance.” She correctly points out that this same argument arose during the internet boom of the nineties , when “the rise of the internet was perceived to have altered the business cycle; the boom and bust cycle.
But boom and bust is an integral part of a market economy-------a by-product of the private ownership of the means of production. Marx wrote over 150 years ago:
“It is enough to mention the commercial crisis that by their periodical return put on its trial, each time more threateningly, the existence of the entire bourgeois society.”
And further: “In these crisis a great part not only of the existing products, but also of the previously created productive forces are periodically destroyed. In these crisis there breaks out an epidemic that in all earlier epochs, would have seemed an absurdity—the epidemic of overproduction. Society suddenly finds itself put back in to a state of momentary barbarism as if a famine, a universal war of devastation had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce. (6)
“This summers turmoil will not be the last” Ms Tett tells her class brethren. The Lehmnan Brothers analyst joins her in assuring his class that the end is not nigh, that they must not panic; that the lesson from history books is clear, “..these episodes occur with striking regularity—typically at least once a decade..” he states with authority.
The capitalist class cannot go beyond recognizing the symptom of the malady, overproduction and excess. These episodes occur, “whenever excess leverage, innovation and investor hubris collide.” says the analyst. But they cannot step over the abyss and recognize the cause, the private ownership of production, distribution and exchange------the economic system itself. No ruling class envisages the end of its rule and no social system leaves the arena of history until the potential within it has been exhausted.
All workers should read the Communist Manifesto and the parts of Capital that we find the most readable. The horrors of Stalinism that did so much to destroy the potential of the working class to transform society by claiming the mantle of socialism should not prevent this. Marxism is not a dogma but a guide to action, a way of understanding how the world actually works.
The past period that weakened socialist tradition and ideas among the working class with Stalinism’s help is over with. More and more there is global opposition to the capitalist offensive and socialist ideas, and Marx’s views in particular are strengthening.
Ms Tett tells her class to be prepared for 2017. We should also warn them, 2017 will be the hundredth anniversary of the Russian Revolution, the first conquest of power by the working class in history. Perhaps 2017 will be a good year for workers. It will certainly be different, the working class internationally will guarantee that.
(1) The Royal Prerogative
http://www.laborsmilitantvoice.org
(2) http://www.laborsmilitantvoice.org
(3) Fears Of A Crash Unfounded—For Now: 8-18-07 FT
(4) Doomed To Repeat it?: Financial Times, 8-27-07
(5) ibid
(6) The Communist Manifesto
For more reading on the subprime and its effects visit:
http://www.laborsmilitantvoice.org/index.php?option=com_content&task=view&id=73&Itemid=46
http://www.laborsmilitantvoice.org/index.php?option=com_content&task=view&id=51&Itemid=46
http://www.laborsmilitantvoice.org/index.php?option=com_content&task=view&id=63&Itemid=46
AFSCME Local 444, retired
Oakland CA
8-27-07
As I explained in a recent commentary (1) the present economic crisis that is still in process and was triggered by the collapse of the US subprime mortgage industry, is not simply a product of ‘evil” or “greedy” individuals.
Debt allows capitalism to go beyond its limits. One of its limits is the ability of workers to buy back the products of our labor. Capitalism produces too much stuff. Production in the so called free market economy is determined by the private individuals who own the means to produce and also own the labor power, the use of the worker, which is necessary to make that production profitable. Profit comes from the unpaid labor of the working class, that period of working time beyond that for which we are paid wages; this surplus value is the source of the capitalist’s profit and of all wealth.
This relation of production has its consequences as the system overproduces and, as any worker understands, causes economic slowdowns (recessions) and crashes as production has to be halted and workers laid off in order for the surplus products in society to be consumed so that production for profit can be revved up again.
This overproduction occurs with all commodities, even money itself is bought and sold, and the buying and selling of money, or the financial markets, are a greater part of the economy than ever before.
Capitalism is so productive that money is everywhere. “The world is “awash with cash” is a phrase often used in the serious journals of big business. But capitalists, as Marx explained, are not misers. (2); they do not hoard their stolen cash but “risk” it by throwing it in to circulation in one form or another with the aim of it returning to their pockets and in a greater quantity than when it left.
The present crash in the credit markets has reached its limits. The availability of cheap, money, huge amounts of it, fueled the recent economic boom as it funded everything from housing to mergers and acquisitions. Access to cheap credit has stalled, and the effects of the partial collapse of the assets that fueled much of this credit boom, mortgage loans, and the ability of workers to keep up with them, has had global consequences.
The serious journals of capitalism are responding accordingly as they are trying to head off a panic. Gillian Tett, an assistant financial editor at the Financial Times, had a question and answer piece in the Times August 18th that attempted to allay the traders and other coupon clipper’s fears that the system might be in danger of collapse. Fears of a crash are unfounded, she tells her readers; but she qualifies, “for now”. (3) The fundamental causes of crashes are not human nature, but human nature is influenced by objective material conditions and the shark fest that arises in a boom can turn in to panic if the participants think a crash is likely or even worse, a collapse of the system entirely. This panic can trigger these events or at least, exacerbate them.
Economic booms lay the foundations for the human behavior, the psychology of greed and a feeling of euphoria and confidence; just like drugs do. The coupon clippers, particular the young Turks, the daring risk takers, revel in the abundance. History is irrelevant to the participants as they convince themselves that the party will go on forever. Many of them today were babies when the market crashed in 1987 and not much older when the Asian crisis hit in the late 90’s.
But now history is important, and their journals try to remind them of such, try to re-assure them that what is happening today is a natural part of the system, that it is painful, yes, but there will be another opportunity to prosper for the ruthless among them. Capitalism has weathered this storm before.
In today’s Financial Times Ms Tett gives a history lesson. (4) Her readers, particularly the youthful traders and coupon clippers who have gorged themselves over the past period, are looking for an explanation; this is all new to them. They cared not about the past, but thing have changed. “..many are now reaching for the history books with a new found enthusiasm—or desperation---to assess how the crisis will play out.” she writes. (5) How things have changed. “Indeed, as recently as this spring…” she adds with the confidence of the bourgeois intelligentsia, “… it was rare to find any financial trader who spent much time pondering events more than a decade old---or beyond the data points typically found on a trading terminal.”
The same conditions also have an effect on the working class. In such crises, consciousness changes. But it does not proceed in a straight line and there are moments of despair, hopelessness and fear that can produce periods of extreme reaction. But alongside this there is also a tendency toward class unity and huge leaps forward are made. During great social crises, workers who have cared nothing about history like the young traders on the other side of the class divide, develop a thirst for it as they seek an explanation for it all.
In moments like the Seattle general strike of 1919, the mass occupations of the thirties or the civil rights and anti-war movements of the fifties and sixties, our consciousness changes, our minds open as the ideology of the capitalist class increasingly is at odds with objective reality. The view that we can get what we want from this world if we work hard enough, or that we are in control of our own destiny and that if we don’t achieve success as they define it, it is the product of our own miserable failure; these ideas become suspect. Instead, we try to figure out what is happening in the world around us and what we can do about it. We realize we must act.
The role of Gillian Tett’s equivalent among the working classes can influence this behavior and can play a role in determining its outcome. But in that regard the capitalist class have an advantage, their leaders and theoreticians instill confidence in their system and tenaciously fight to defend the interests of their class. They fact that they own the means of communication and education, therefore the production of ideas, is also no small matter. But the worker’s leaders have capitulated completely to this ideological offensive and consequently, without leadership of any significance except one that echoes the capitalist view of the world, the road to the solution of the crisis is unnecessarily difficult and tortuous.
Ms Tett’s analysis is a sober one. When the theoreticians of capital discuss the economy in a serious way they cannot help but validate Marx although they will rarely admit it. Ms Tett points out that Lehman Brothers, a major capitalist firm, estimates that there have been 60 market crashes since 1622. “This neo-modern credit market is not very dissimilar after all from its classical predecessors” says a Leheman Brothers analyst. Is that so? Yet during this credit boom, time and time again they told themselves that things were different now. Sure, there were warnings. But not warnings enough to halt the speculation and profit taking. Now, after workers have lost their homes, and more important a concern for them, traders have lost money, there are historical lessons to be drawn. “…many bankers have believed—at least until recently---that this decades burst of market innovation had re-written the rules of finance.” She correctly points out that this same argument arose during the internet boom of the nineties , when “the rise of the internet was perceived to have altered the business cycle; the boom and bust cycle.
But boom and bust is an integral part of a market economy-------a by-product of the private ownership of the means of production. Marx wrote over 150 years ago:
“It is enough to mention the commercial crisis that by their periodical return put on its trial, each time more threateningly, the existence of the entire bourgeois society.”
And further: “In these crisis a great part not only of the existing products, but also of the previously created productive forces are periodically destroyed. In these crisis there breaks out an epidemic that in all earlier epochs, would have seemed an absurdity—the epidemic of overproduction. Society suddenly finds itself put back in to a state of momentary barbarism as if a famine, a universal war of devastation had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce. (6)
“This summers turmoil will not be the last” Ms Tett tells her class brethren. The Lehmnan Brothers analyst joins her in assuring his class that the end is not nigh, that they must not panic; that the lesson from history books is clear, “..these episodes occur with striking regularity—typically at least once a decade..” he states with authority.
The capitalist class cannot go beyond recognizing the symptom of the malady, overproduction and excess. These episodes occur, “whenever excess leverage, innovation and investor hubris collide.” says the analyst. But they cannot step over the abyss and recognize the cause, the private ownership of production, distribution and exchange------the economic system itself. No ruling class envisages the end of its rule and no social system leaves the arena of history until the potential within it has been exhausted.
All workers should read the Communist Manifesto and the parts of Capital that we find the most readable. The horrors of Stalinism that did so much to destroy the potential of the working class to transform society by claiming the mantle of socialism should not prevent this. Marxism is not a dogma but a guide to action, a way of understanding how the world actually works.
The past period that weakened socialist tradition and ideas among the working class with Stalinism’s help is over with. More and more there is global opposition to the capitalist offensive and socialist ideas, and Marx’s views in particular are strengthening.
Ms Tett tells her class to be prepared for 2017. We should also warn them, 2017 will be the hundredth anniversary of the Russian Revolution, the first conquest of power by the working class in history. Perhaps 2017 will be a good year for workers. It will certainly be different, the working class internationally will guarantee that.
(1) The Royal Prerogative
http://www.laborsmilitantvoice.org (2)
http://www.laborsmilitantvoice.org (3) Fears Of A Crash Unfounded—For Now: 8-18-07 FT
(4) Doomed To Repeat it?: Financial Times, 8-27-07
(5) ibid
(6) The Communist Manifesto
For more reading on the subprime and its effects visit:
http://www.laborsmilitantvoice.org/index.php?option=com_content&task=view&id=73&Itemid=46 http://www.laborsmilitantvoice.org/index.php?option=com_content&task=view&id=51&Itemid=46 http://www.laborsmilitantvoice.org/index.php?option=com_content&task=view&id=63&Itemid=46
Richard Mellor
e-mail:
aactivist@igc.org
Homepage:
http://www.laborsmilitantvoice.org