Video and Transcript: David McNally on the Crisis of Capitalism and Challenges to the Left


This was not, when we entered it about two years ago was not just any little, ordinary downturn in the business cycle. This was a crisis. It was a dramatic contraction of capitalism in which businesses fell, banks collapsed, all five investment banks on Wall Street either folded or were amalgamated into other banks. World stock markets lost half their value, the American economy contracted for a longer period of time than at any point since 1947, and so on. In other words, we hadn’t seen the likes of this in about 70 years—or more.

If you tracked what it looked like, using almost any measure —industrial output, sales, and so on—you would see this: [sweeping hand gestures to indicate dramatic collapse]. That’s what every graph looks like when you track it. In fact, some mainstream economists showed that the first two years of this crisis that begins in 2007 are almost identical when you plot them as the first two years of the Great Depression. It tracks almost perfectly—job loss, the drop in industrial production, and so on. There is a huge difference, and that is that ruling classes through their central banks and treasuries have engaged in the most massive intervention to stabilize capitalism in its history.

If you put together the fourteen trillion or so that they have injected into the world’s banks—that is the Bank of England’s figure, fourteen trillion—with all of the stimulus that they have injected into the economy generally, we’re talking about something like twenty trillion dollars they injected to stabilize the system. Put in different terms, that’s well over the value of what the world economy produces in a year. Well over. This is a massive intervention because they literally did not know how far the meltdown would go did they not intervene.

And as a result of that intervention, it is true that they have brought the free fall to a halt. That is to say they have stopped the collapse of banks on a large scale, and they have stabilized major global manufacturing corporations - Chrysler, General Motors, and the like. In the process neoliberal ideology, the ideology of the free market, has taken a huge hit. It has taken an enormous hit because what has become clear is that contrary to what we have been told throughout the whole neoliberal period—that you can’t spend what you don’t have—well guess what—when banks and manufacturing corporations are collapsing, you can.

To give you a sense of the scale of this intervention, some of you may recall that before the world economic crisis grabbed the headlines we were in the midst of a world food crisis. That’s because the number of people starving on the planet had hit the one billion mark, it had risen by a hundred million people in the course of twelve months. So world leaders gathered, they hastily convened a conference to say “we really can’t have this many people starving.” And in front of the cameras they pledged they would inject twenty billion dollars into feeding the world’s poor. Ah, you laugh?

How much did they actually deliver? They delivered ten cents on the dollar—a little over two billion. This is another way of saying they have invested ten thousand times as much in bailing out the world’s banks as they have in solving the world food crisis. And I think if you need a single fact about this crisis and how it reveals the priorities of global capitalism—that is to say, that it is driven to bail out and sustain the system of reaping profit from the labor of the world’s producers and not in meeting human need—that one fact would do it.

OK, so, this massive intervention, twenty trillion dollars or so has stopped the free-fall in the world economy. That’s producing giddy euphoria throughout the business press. All of the sudden, they are no longer running things, like the Financial Times was for a number of weeks, a whole column on “the future of capitalism.” Because they really were genuinely worried about its future and what was coming next. But now there is all kinds of talk about having entered a new, sustained, robust, recovery.

We need to put that into some perspective. Because what I am going to suggest to you is that while the global ruling class has stopped the meltdown, they have in no way established any of the conditions for sustained economic recovery. They have stopped the meltdown but it is a very different thing from producing a sustained economic recovery. And for working class people the world over, it will continue to get worse, not better, in part because of the way in which they have stabilized the system. There has been all kind of talk which I won’t get into now about how China will lead the next big wave of expansion and recovery—and all I’ll say is “utter rubbish” and if you want to talk about that during the question period I am happy to do that. But there is absolutely no way that China is going be able to sustain any kind of meaningful and prolonged economic expansion.

Misery of the Working Class

So what then has it meant for working class people? Well recall that I said that on every graph the first two years of this crisis looked just like 1929 to 1931. It tracks it perfectly. And to give you some context, what that means in the United States is that ten million full-time jobs went under during the crisis and almost as many workers were bumped into involuntary short hours, part time work. If you use the unemployment measure that was used in 1930, the US unemployment rate is about 16.5%. The fact that it is just about 10% has largely to do with simply changing the statistical basis of the unemployment figure.

As a reminder of how racialized poverty and unemployment are, 4 out of every 10 African-Americans will experience unemployment during this recession. According to the Deutsche Bank, 2 million Americans will lose their homes over the next year. So the idea that the housing crisis or the jobs crisis are over is complete nonsense. In fact even last Sunday’s New York Times ran an interesting headline: “The Recession’s Over - But Not the Layoffs.” In other words, yes, they have stopped the hemorrhaging of capital, the great meltdown of businesses —but unemployment will continue to rise, layoffs will continue to rise, and as I will say shortly, so will intensified attacks on unions, the public sector in general, and the poor.

If we look at other parts of the world which were supposed to be “immune” from this crisis in its early going, the official unemployment rate in Spain has now hit 20%. That’s the government’s figure. Unemployment for those between 16 and 25 is nearly twice that level, it is nearly 4 out of every 10 young people unemployed. And across the so-called “advanced capitalist world” the youth unemployment rate is running around 25%, something in that neighborhood, youth unemployment being those who are between 16 and 25. According to The Economist magazine, 1 in every 6 US workers has taken a wage cut so far during this crisis. Another report says 40% of those receiving food stamps in the US are working. They are working with reduced wages; they are working shorter hours. The work week has contracted to its lowest level since records were first being kept.

So really so far there has been a two pronged approach by the ruling class. On the one hand, bail out the financial system and costs do not matter. Things we have always been told were not affordable: “You can’t build affordable housing for everybody who’s homeless,” for example. Guess what, they’ve spent it on a scale that could have addressed every one of those issues. So first has been the bailout and the second has been as part of the layoffs, a restructuring of work and a massive intensification of labor: that is to say, getting more work out of fewer workers.

To give you the latest figures, output per hour per worker—the amount of goods and services a worker produces in an hour—went up 9.5% in the last quarter in the United States. This is unprecedented. It basically means they are getting 10% more work out of people as they massively slash the employment rolls. That means of course that the cost of production for businesses, for capital, decline: over five percent fall in their costs for production, the so called unit-labor costs, in the last quarter. Again, nothing like this has ever been recorded since statistics were first started in 1945.

In addition to these massive injections of funds, you also get an incredible offensive against workers by way of job loss, wage cuts, reduced hours, increased intensification of work —in other words, speedup in one form or another. Alongside this is a growing offensive throughout the whole of the advanced capitalist world against migrant workers. Anyone who is precarious or insecure in unemployment is coming under a huge offensive. I would be happy to talk about that in more about that in the question period. It is an issue around which those of us in the New Socialist Group in Toronto have been very active, the intensified attacks on migrant workers.

Workers’ Resistance

Let’s then talk about class struggle and resistance. It’s clear that there has been an intensification of class struggle on the side of the ruling class. Capital has responded in the way it knows best: cut jobs, cut wages, intensify work, and so on. And it has to be said that, by and large, for the world working class the response has been much more fragmented and disorganized than we would like. That is not to say that there have not been very inspiring and important examples of resistance—particularly the factory occupation.

Obviously one of the most important and celebrated being the occupation last December at Republic Windows and Doors in Chicago, but where I live in southern Ontario four auto parts factories have been occupied over the last year. You see similar patterns with very significant plant occupations in Ireland at Waterford Crystal; in Dundee, Scotland; and probably the most intense—in terms of basic bitter class struggle—one of the largest factory occupations in recent history in South Korea at the Ssangyong Motors plant, which went on for 77 days and was smashed by riot police and, unfortunately, a union which—once upon a time—would have launched a much more significant fightback than it did this time around.

So there have been very important and inspiring and important examples of the kind of workplace based class struggles necessary, there have also been significant broader social mobilizations both around huge cuts to health care and education in parts of the world—California obviously a really important example in that regard—and obviously the incredible mass strikes, the general strikes in Guadeloupe and Martinique which were tremendous social upheavals. For any of you familiar with Rosa Luxemburg’s pamphlet The Mass Strike, Rosa Luxemburg talks about how the mass strike runs from one group of workers to another: it moves into the neighborhoods, it runs into sections of the working class who have never even been in unions and been on strike before, it becomes a “people’s movement,” as she said—that’s literally what happened in both Guadeloupe and Martinique. At one point, all 170 demands of the general strike were being granted by the French government.

But having said that, by and large, the resistance has been much more fragmented and disorganized than it needs to be. To take the example of southern Ontario—where there were four factory occupations—there was absolutely no coordination between any of these occupations. They all wound down as soon as severance pay was issued—you’re going to lose your job, but at least you get your severance pay. There was no movement in the direction of what we saw in Argentina in 2001—when once a plant was occupied, then the question of taking over production and restarting it under workers’ control, the whole workers’ enterprise movement—no move in that direction in any of the occupations that I am talking about. I think tomorrow there will be a lot more discussion about the highest level of mass mobilization during the crisis in the Global North, the case of France. So I won’t go into detail about that now but will say, in a couple of minutes, a few words about the New Anti-Capitalist Party.

The Search for Alternatives

So what the crisis has shown us so far on the side of the working class is that the capacity to resist is there. Absolutely no doubt about it. You do not get these kinds of factory occupations, in many cases utterly driven from below with either opposition from trade union officials or no mobilized support - they agree to look the other way while it is done - but in some cases outright trying to block and demobilize the occupations as soon as possible. So you can see the spirit of resistance and you can see at the broader ideological level the search for alternatives.

It is not pulling a rabbit out of a hat to say that when Michael Moore makes his latest film about capitalism and names the system—I’m not an uncritical defender of Michael Moore, but obviously it’s a good thing to have out there in the public domain—it is quite clear that in addition to the spirit of resistance that exists in many quarters there is also a search for alternatives there is a questioning more widely than in a very long time as to what capitalism is, how it works, whether it is worth talking about alternatives. Erin [session chair] mentioned that I teach political science at York University—somebody clapped for that, I never actually took that as a badge of honor—but what has been interesting is that in the past year, I have found myself invited onto television and radio shows and into the mainstream press to discuss capitalism. Most recently, to debate one of the editors of the National Post newspaper in Toronto on Michael Moore’s film Capitalism: A Love Story.

That kind of thing doesn’t happen regularly to me but it has been during the course of this crisis and it has precisely because there is a crisis of the neoliberal ideology that has dominated for the last 30 years or so and created a space to debate and discuss alternatives. That really takes me to the final part of my remarks which is the question of the challenges for the socialist left. One of the things we need to realize is that the crisis that opened up two years ago has opened up a new period not just for capitalism but also for the Left. I really want to underline this.

There is not a quick exit strategy for the ruling class out of this crisis, this is a crisis that was building over about a quarter century of neoliberal capitalist expansion. From about 1982 to 2007, the predominant tendency of capitalism was expansionary. Profits rose. Whole new centers of global accumulation, particularly in China and East Asia, were established. Capitalist profitability was restored by both through global reorganization and the enormous increase of what Marx calls the rate of exploitation, basically how much work they get out of workers and how little cost, but that long process has done what it inevitably does under capitalism. It throws up its own contradictions by which it becomes more and more difficult for capital to continue to accumulate and expand. So this crisis is really a crisis of the whole period we entered about 30 years ago. As a result we are in now for a protracted period of very intense social conflict.

Now that they have bailed out the system by running huge government deficits—and we see this already in California—there will be an enormous move to get government spending under control. It’s going to produce an absolutely nightmarish wave of assault on social services. I was at a workers’ assembly in Toronto a few weeks ago where I said “I have seen the future and it is California.” What I meant by that, is that is the scale of the offensive against social programs the ruling class is going to demand in order to get government spending under control as they try to claw their way out of this crisis. And it also means a continuing wave of resistance—students, public sector workers, welfare recipients, and others—who will be mobilizing around all kinds of issues but with many of the difficulties I have been describing, that is, the fragmented and disorganized character of so much of the resistance.

Here I want to say that, in this context, I think much of the Left internationally has been incredibly unimaginative in the way it has responded to the crisis. A lot of the Left has gone about doing things the way it always has done things, without posing larger questions about what the end of the neoliberal expansion means, what the entry into a new period of instability and crisis means, and how important it is to recognize that for the radical Left it cannot be business as usual. It cannot be sticking with all the routines that people did in the past. Because this is a new context.

Partly routinism and lack of imagination is the case, some parts of the left have been disabled because they have gone around for 30 years saying it’s always been a crisis so when something dramatically new did happen they couldn’t grasp it, because their intellectual horizons were, “Forty years of crisis, so what’s new here?” I think that has also contributed to a failure to grasp the situation and a need to really think more imaginatively and more boldly about ways of linking together the serious, nonsectarian, anti-capitalist forces who can begin to intervene in and around the crisis and the resistance to the crisis in much more substantial and meaningful ways.

That’s going to fundamentally be the task for the Left over the next few years. As the current capitalist euphoria—which really is just the euphoria of, “Holy shit, we survived!—that’s why they have driven stock markets up insanely because their confidence was so shattered. I remember being at the Left Forum in New York when the Bear Stearns investment bank collapsed and realizing just what the scale, not just for the economy but for the ruling class, and then the continued fall of that and the other investment banks. But talking about bringing together the serious nonsectarian forces of the anti-capitalist left and to develop new ways of working together, new solidarities, new forms of organization that at least begin to move us onto a level where we can intervene on a much more substantial level around this crisis is the challenge of the moment that is the reason this conference has been set up to explore the process.

When I talk about intervening around the crisis, I am talking about two things. First, effectively building the resistance. Making it less fragmented, less disorganized, strengthening it, creating the actual sort of solidarity from below that allows it to become more meaningful and powerful. And also creating larger spaces for meaningful anti-capitalist self-education for the process of naming the system, analyzing it, understanding it, and beginning to popularize anti-capitalist alternatives.

And while I was critical on what has happened on much of the international Left, it is important to say that not everything has been hopeless in that regard. I believe that the launching of the New Anti-Capitalist Party in France actually represents the most significant attempt to rise to this occasion that has happened on the far Left and something that I’m delighted we are going to be talking about more this weekend. Even where that is not possible - in Canada it is not possible to imagine conjuring together something like the New Anti-capitalist Party, which itself comes out of a whole period of social and class struggle. But nevertheless it is possible to take initiatives on a scale that weren’t possible before.

About six weeks ago coming out of work that a number of organizations, six or so have been doing in Toronto over the last year, we have created an anti-capitalist network which brings together the most serious radical left organizations and some of the most serious social movement organizations in the city in an explicitly anti-capitalist network for action and popular education. So I’ll conclude by saying that when the _Financial Times_ announced six months ago that the world of the last three decades is gone, I believe they were right. And I believe that what we have been living through for the last two years clearly indicates that but all the evidence is that we are in for years and years of ruling class attempts to extricate themselves from this crisis which can only keep throwing up really significant class and social struggles. It is our job as anti-capitalists, as revolutionary socialists, as people of the genuine and serious left, to begin to explore the process of how we move the serious nonsectarian left forward to meet the challenges of this period. Thank you.

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