By Kumar David –

Prof. Kumar David

In some way, to some degree or in some recess of the mind, everybody is now a Marxist! I am sure many of you have heard this yarn, attributed to Eric Hobsbawm, but I can’t resist telling it. Once every 10 or so years all the great minds and fine ladies of society join in great conclaves, pontificate profoundly, declare Marx definitely dead and bury him deep. Each time deeper than before. But soon the old codger comes bouncing back, livelier than ever, brim full of new revelations. 

For many years it was a deserted ivory tower in which I had to keep lonesome vigil, occasionally with another idiosyncratic crank or two. Now the tower is getting crowded. Everybody is becoming a part-time Marxist or has some profound saw-to-say though they never read Kapital or if they did, they read the wrong volume.

There is another a yarn, this one could very well be true. When Rosa Luxemburg, Marx’s true intellectual heir, read Volume-II she was mortified, horrified, flabbergasted. What! No blood and thunder! No barricades and summons to insurrection! Had the old fool gone senile? Engels published Volume-II in 1885, Rosa born in 1871 is likely have read it within 10 years of publication. The yarn goes on to say that an angry Rosa, hitched up her metaphorical skirt, took a ferry across the channel and marched into Highgate Cemetery and stomped her feet furiously in front of the famous monolith!

But this time this finest eagle had it wrong. One could justifiably say that as a scientific work, Volume II is the most significant of the three as a point of departure in constructing a theory of crisis of finance-capital. The events and relationships that Marx experienced are, of course, not repeating themselves in identical style and order today. It’s the methods of examination he employed which stand out. So, boring and professorial Kapital-II has its uses.

I am writing at a considerable disadvantage because my copies of Kapital, filled with arrows and underlines, marginal scratches and overflowing with comments are in Hong Kong but I am locked-down here. Still, I can remember enough. The crises of capitalism do not “happen” in Volume-I. The ground on which recessions and depressions “happen” originates in Volume-II. After the famous three reflective opening chapters, Volume-I is concerned with production, extended reproduction, surplus value, exploitation, wages, the working day and so on. But global financial crises do not transpire at barricades and in insurrections, nor even in technology or productivity. They mature in the circuits of capital – finance, debt, investment, disinvestment, disruption of chains of supply in finance and goods, and in balance of payment skirmishes. Think of the depression we are sleep-walking into; the villains are debt, deficit, QE, interest rates, asset-prices, trade balances and trade wars. Those who saw what was coming are those who were alert to the fragility and instability of the financial configurations that the “one-percent”, the central banks and the world’s governments were assembling.  

Volume-II is in three parts. You can see from the titles why I say that the macro level disequilibria of global capitalism, “happen” in the ground of Volume-II. The three parts are entitled:

* Metamorphoses of Capital and their Circuits

* Turnover of Capital 

* Reproduction & Circulation of Aggregate Social Capital

It’s about money, capital, funds, the movement of funds and disruptions thereof. It’s about how value, surplus-value, profits, and in today’s jargon, asset and bond values, are realized. The dramatis personae, when re-draped in modern raiment, are known as central bankers, financiers, fund managers, investors in stock-markets and captains of capital. I am projecting Marx’s methodology (categories and ways of thinking) into finance-capitalist domains beyond the empirical material that he would have known, but as he told Engels, “It’s about the social intertwining of different capitals, the component parts of capital and revenue.” Ernest Mandel says “This intertwining, conceived as a movement of commodities and money, enabled Marx to work out the essential elements, if not in definitive form, a coherent theory of trade cycles based on the periodic disequilibria between supply and demand.” We know now that it is mainly, not the disequilibria between supply and demand of commodities, but more so disequilibria of financial circuits, that have become crucial in the age of finance-capital. It is this perception that has made us all Marxist in some way or another.

How my prognosis for the Corona Depression differs from the Great Depression

I will now take this essay to speculation of how, in the world economic sphere, the Corona or COVID Depression (CD) will evolve in the next 12 to 18 months in contrast to the Great Depression (GD) of the 1930s. My hunch is that their paths will be quite different. FDR’s New Deal blended huge state spending on infrastructure construction with raising employment, helping families and encouraging economic renewal. But as we now know it was not enough. GD was W-shaped – a collapse from late 1929 to 1933, a good-looking recovery up to early 1937 followed by another collapse from which only the demand-pull of rearming for WW2 rescued capitalism. The boom-bust-catastrophe- war-rebirth cycle or dialectic of capitalism has long been known.

U.S. industrial production (1928–40)

The evolution of CD will not be the same nor will it track the GD road. To make fun of old Hegel again, history will not repeat itself as tragedy nor as farce. I rule out war; WW3 is unthinkable, it is impossible. Secondly, the attempted remedies, and more important social changes in the capitalist West, will be transformative. CD will not end in a replay of the 1945 to post-war boom, but in a form of social-democracy including, especially including America. Bold assertion? So what!

WW3 is a No-Go no-brainer even in Trump’s looniest moments, and his generals would rather lock him up and throw away the key than launch at China. What good is it to destroy half of China if America has to sacrifice her ten greatest cities in exchange? From the rice paddies, Asia will rise again as did Japan, South Kore and Vietnam while America will stew in rubble. WW3 means immediate and permanent loss of American credibility and global hegemony. I am far from the most pessimistic. A John Smith says that “Coronavirus could spark a capitalist supernova”.  

I see the next phase after CD as a socially transformed America. Both left and right surges of populism will make sure of that. America now is not the same as it was in 1939 nor is the enemy a foreigner called fascism. Never before in American history has democratic socialism been a mass movement. Never before have masses of poor whites, workers and fed-up-with-Washington millions, better known as the Trump Base, so angrily demanded the draining of the swamp. If CD assumes a worst-case manifestation, American society on the morrow will not be what you have known before.

In a strange turn Bernie Sanders has been unexpectedly vindicated. The Sanders dream is coming true. He is being vindicated by, of all people Donald Trump! (See Philip Gotthelf’s Weekly Newsletter). The government has guaranteed payment of salaries, mortgages, student loans, rent and mortgages. Throughout Bernie’s campaign his opponents argued, “Who will pay for healthcare for all, college education, $15 per hour minimum wage etc?” Then 6.6 million applied for unemployment benefits last week! Following the 1982 record of 700,000 the dole system was overwhelmed by 3.3 million applicants two weeks ago; now this! The plight of the system is desperate, loss of faith will be calamitous if the country shuts down, bank-loans default, rents go delinquent and stock-markets are suspended. There was no money for Bernie’s plans. Then when the heavens fell, disoriented Congress, the FED and deranged Trump switched on the printing press and conjured money out of nowhere!  

So “Crazy Bernie” was not so crazy after all! I don’t know whether it will take weeks or months, but the way in which people think in America will change. Can trillion-dollar helicopter-drops avert a worst-case scenario? Too early to tell. The system is taking out all stops and throwing everything it has at the crisis. Congress has committed $ 2.4 trillion, but that’s only the first innings of what may be numerous follow-ons. Europe will throw matching funds, Japan already flat on its face will print and print.  Everybody sees a printing press. Nobel laureates Abhijit Banerjee and Esther Duflo say: “India is too conservative. Print money, do not think of inflation. We need to be quantitative in large sums. The issue is how to reach money to the people. It is time to go wild. Go Keynesian”. But America isn’t going Keynesian. Most of its money is going to big business!

I opened my intervention in the depression topic with a piece entitled ‘COVID was Catalyst not Cause’ last month. This quip remains true though the crisis has intensified. Imagine a skyscraper fabricated of rusty reinforcement bars and sub-standard cement (the global economic order) and send a storm, it will topple. If the storm worsens to furious hurricane (COVID pandemic) catalyst turns into co-cause; a worst-case scenario on two fronts! COVID will pass, but like Humpty Dumpty the rubble and rot of the economic disorder cannot be put together; not in the same old way. Infinite creation of money (MMT), massive debt, asset-value inflation, equity buy-back instead of investment, a stock-market bubble and a ‘1%’ fattening at the expense of the rest of everyone else, this is a no-go road. 

The rebuilding of the economic universe will have to start with a clean sheet and new design tools. If America veers substantially to social-democracy it will be a new universe that will make the Chinese example redundant. Actually, it will be a post-Marxist world. The old man’s job will be over and well done; thanks. We will need new philosophies to imagine new vistas.