The Financial Times is the organ of finance capital in Britain. Its latest issue (August 17-18) contains a prominent article by Niall Ferguson, Professor of Political and Financial History at Oxford and Visiting Professor at the Stern School of Business, New York University. The author of this long article entitled "Full Marx", given the present crisis unfolding under the noses of the bourgeois, is again forced to recognise the important contribution of Marx in his analysis of capitalism.
Professor Ferguson is no friend of Marxism - God forbid! In fact, he describes himself as amongst "the most passionate believers in capitalism". Nevertheless, our bourgeois academic is forced to grudgingly recognise some of Marx's comments as perfectly fitting in the current crisis:
"Not many MBA courses include the reading of Marx's Capital. Not many CEOs could quote from The Communist Manifesto. But there are times when it pays even the most passionate believers in capitalism (and I count myself among them) to heed the bearded Cassandra. Times like these: the worst bear market since the Great Depression - although Marx himself would have preferred to call it a 'crisis of capitalism'," states Ferguson.
For the record, Ferguson is forced to describe Marx as a "washout" and a "class traitor", for siding of the proletariat instead of the bourgeoisie. As usual, he attacks Marx as the supporter of a "socialist utopia [which] turned out to be a corrupt tyranny", presumably Stalinism, which had nothing in common with Marx or his teachings.
"Even so," says the Professor, "Marx's insights into capitalism can still illuminate…Marx got one thing right. Behind the bubbles and busts of the capitalist system there is a class struggle; and that class struggle is the key to modern politics."
At this, many FT readers must have choked on their gin and tonics. "This may read like heresy, especially in the pages of the Financial Times," said Ferguson, somewhat on the defensive. "But a little reflection on the current crisis of capitalism will show otherwise. Not that today's class struggle bears much relation to that of Marx's day." In fact, says our professor, it is, believe it or not, "a conflict within the bourgeoisie."
Professor Ferguson ritually attacks Marx's Capital as "long, verbose, abstruse" which ranks as one of the most "unreadable books of all time". But this attack only shows his ignorance of Marx's method and his inability to understand the processes, economic or otherwise, that govern our lives. Yet, apparently, "there is something to be learned in the bottom line of chapter 32, in part VIII of volume one, where Marx argues that the history of capitalism is the history of expropriation and the concentration of wealth - the means of production - in the hands of an ever-decreasing minority."
For Marx, the defining characteristics of capitalism in his own time included "the centralisation of capital", "the expropriation of the mass of the people by a few usurpers" and "the entanglement of all peoples in the net of the world-market, and with this, the international character of the capitalistic regime". In other words, says Ferguson, "widening inequality and globalisation".
"These characteristics, however, were precisely what made capitalism crisis-prone. Its periodic busts, he hoped, were the preliminary tremors heralding a final and violent collapse." This words are enough to prove that Professor Ferguson doesn't understand Marx and attempts to paraphrase a few comments that serve his purpose. Marx never saw an automatic violent collapse of the system, but its overthrow by the working class. But this is not the point.
"Forget Marx's utopian prophesy that capitalism would be succeeded by socialism, with all property redistributed according to the workers' needs," says Ferguson. "The real point is that many of the defects he identified in 19th century capitalism are again evident today. In the last 20 years, there has been a significant increase in inequality in the pre-eminent capitalist economy, the United States. In 1981, the top 1 percent of households owned a quarter of American wealth; by the late 1990s, that single percentage owned more than 38 percent, higher than at any time since the 1920s." This is truly an astonishing admission by a representative of Capital, and confirms what Marxists have been saying for a long time.
"At the same time, the world's commodity, labour and capital markets have become significantly more integrated: in particular, the vast scale of today's international capital flows recalls the first age of globalisation in the late 19th century", says the Professor.
"As for the susceptibility of our own capitalism to crisis, the figures speak for themselves. The Dow Jones index is down 26 percent since its peak back in January 2000. Just a few months before that peak, a couple of notorious bubble-blowers published a book predicting that the Dow Jones would reach 36,000 in the foreseeable future. Far from tripling your money, if you were naive enough to follow their recommendation and track the Dow from the day their book came out, you would have made an average inflation-adjusted annual return of minus 11 percent.
"True, we are still a long way from a new Great Depression: between 1929 and 1932 the Dow Jones fell by some 89 percent. Nor can it be said that the US is going through a Japanese-style collapse: between December 1989 and July 1992 the Nikkei 225 fell by just under 60 per cent.
"Nevertheless, the fact is that at one point last month the Standard & Poor's Total Return Index was more than 46 percent below its peak. And even after the recent rally, the Nasdaq is still down 74 percent from its peak."
Like a rabbit mesmerised by the headlights of a car, our Professor see the dangers confronting the capitalist system. "The global implications of a slowdown in the vast American economy are alarming. The other key element of the late-90s bubble was the willingness of foreign investors to pour money into the US, funding an enormous balance of payments deficit. These foreign investors are now staring at income statements spattered with red ink. And they have more to worry about than American investors, because a slide in the dollar exchange rate threatens to make those losses even bigger. If the experience of the 1980s is anything to go by, the dollar could fall steeply as foreign investors sell off. The resulting reduction of American imports would further hurt the rest of the world."
But don't worry, our Professor assures us that everything will turn out right! "Not that you should prepare for the death-knell of capitalism just yet. I was in New York during the very worst week of the recent sell-off and came away with a consoling list of reasons to stay cheerful." He then goes on to list a few "cheerful" reasons: the US stock market has simply retraced its steps back to mid-1997, we are free from the spectre of inflation, the American financial sector is in far better health than its Japanese counterpart, and above all, the Fed is not the Bank of Japan. "So relax: the recession was last year, and you barely felt it. This is the kind of crisis of capitalism Argentineans can only dream about."
On the other hand, he says, there are also reasons to be deeply concerned. "For there is no question that the bubble economy of the last decade has brought about a quite astonishing transfer of wealth from one class to another: not from the working class to the bourgeoisie, but from one part of the middle class to another. To be precise, from the sucker class to the CEOcracy."
"More than half of American households now own shares; in 1987 the proportion was about a quarter. Much of this expansion in share ownership happened between 1997 and 2000. So a substantial fraction of American households bought shares at or close to the peak of the market. Their portfolios are now worth significantly less than their original investment." Our professor forgets to point out that it was precisely the working class and the middle class that bought shares, hoping to capitalise on the new boom. But this "hope" has turned to dust, and there is growing anger against the corporations and the capitalist system itself.
"The beneficiaries of the bubble are the CEOcracy - men such as Andrew Fastow, who was chief financial officer of Enron, and Bernie Ebbers, the former chief executive of WorldCom. But the CEOcracy includes not just the chief executives of collapsed companies, but the whole range of insiders who knew enough to cash in their shares and share options before the bubble burst." This is crystal clear, but they are not the only culprits - the whole capitalist class is being correctly tarred with the same brush.
Our upper class sage is desperate to avoid any suggestion the crisis is about to get worse. "It is not that the US economy is about to collapse into a 1930s-style slump. Enough has been learnt from the past to avoid repeating the fiscal and monetary policy errors that turned recession into depression (though after the Bush administration's recent decisions to raise steel tariffs and farm subsidies, the same cannot be said for trade policy)." As old Hegel once said, the only real lesson you can learn from history is that nobody learns from history! This is doubly true of the ruling class.
The bourgeoisie is facing a growing economic crisis from which they cannot escape. This is not simply a cyclical crisis, but a social crisis eating away at its core. Marx explained that through these experiences and events the working class - the grave-digger of capitalism - would come to understand that none of their problems will be solved within the framework of capitalism. Only the overthrow of the system would suffice, laying the framework for the world planning of resources bequeathed by capitalism. Certain bourgeois strategists may refer to Marx as an aside, to warn the ruling class of the dangers inherent in their system. "It is the social structure of American capitalism that is in real need of attention," squeaks Ferguson. "You do not have to be a Marxist to see that something is amiss."
But this is something the bourgeois cannot simply patch up, as if it were some secondary problem. What Ferguson is referring to is a malaise of the capitalist system, which is inherent to it. Overproduction and crises are part and parcel of capitalism. Only the working class can resolve this problem, not through the reform of the system, but its overthrow. This is not a Utopian dream, as our Professor argues. The revolutionary crisis sweeping Latin America and the general strikes in Europe are the heat lightening of a world revolution as predicted by Marx. Far from being out-of-date, Marxism is now more relevant than ever.