Rolling Jubilee is at best a somewhat limited form of charity. At worst, it is a massive shift of power to creditors.
That the financial system is a house of cards at risk of collapse from too much default is the best political leverage debtors have. Buying up debt at creditors’ asking price (which will increase in proportion to the campaign’s success) just strengthens their position.
Relieving the strain on the debt collection system (courts, re-possessors, zombie debt agencies*) would bring the hammer down on individual debtors.
Strike Debt is aptly named since it advocates the literal opposite of a potentially effective debt resistance tactic with some history, the Debt Strike.
*Desperate attempts to stay in business by stepping up the pressure on debtors would precede the equilibration of the Zombie debt market, I imagine.
It ain’t 1913. Capitalism’s M.O. is as clear as its rap sheet is long. For some reason, its apologetics are considered a pretty foreboding edifice. Good thing the system’s totalizing imperative makes it easy for the critic. Prices in New York depend on those in Mumbai. With the tendency towards a uniform rate of profit, we can watch the drama of global accumulation unfold in five or six acts rather than a thousand sub-plots. Scan the dynamics of the capital/output ratio in the four cycles of boom, bust, and stagnation since the dawn of the industrial revolution. Note the millions of dead bodies and you’ve got a devastatingly reductive indictment.
The most explanatory theory of this system of production of commodities for profit starts with the intuition that human labor is the source of all wealth. Owning shit? That can be done in your sleep. Hell, Leona Helmsley’s dog owned more capital than ten tea partying car salesmen put together. Profit – the return to the owners of capital1, by which I mean goods used in production such as machines and factories – is therefore appropriated from the producers. Marx’s genius lay in turning this moral critique into an economic theory. An individual capitalist buying more and better technology reduces her unit costs while competitors share the burden of a lower price for their wares. But if profit comes from the exploitation of labor, the cumulative effect of each owner’s rational investment sabotages the return for their class as the amount spent on capital outpaces that spent hiring workers. Marx called this the law of the tendency of the rate of profit to fall. Whatever the merits of this theoretical justification, capital intensity does explain over 99% of the variation in the U.S. profit rate.
Every epoch of capitalism has seen capital intensity grow and the profit rate fall until crisis set in, production and investment not picking up until massive unemployment, the glut of commodities, the abandonment of factories, and outright physical destruction eliminated enough of the capital stock to rectify the rate of return. The system isn’t bad because its crisis prone. Such violent convulsions are what allowed it to expand beyond a few Victorian sweatshops employing seven year olds for thirty hour shifts and eclipse the old feudal order while developing spectacular technologies that begrudgingly improved the quality of life. The market couldn’t become the dominant human institution without a devious survival instinct. Converting failure into success and collapse into growth is some sick jujitsu.
The first eight or nine decades of capitalism saw many relatively benign crises as the new mode of production spread throughout Western Europe. That the mere sapping of its monetary value constituted most of the “capital destruction” may not make up for the absence of improvement in the working class’s income and living standards as it was enslaved by a system promising longer, more brutal hours.2 The 1880s inaugurated the vaunted increased life expectancies of industrial society, coincident with hard won reforms and growing severity of slumps. Over-accumulation of capital birthed a profitability problem, and the twenty years following 1873 were called the Great Depression. Lenin famously analyzed how growth and stability were restored.3 This era of European colonization on a world scale saw surplus capital seek a home in the markets of the subjugated nations and open up a new workforce to exploit. Expansion itself didn’t do the trick, capital destruction played this dialectic’s Mr. Hyde in the form of physical ruination of most of the world’s productive capacity on a scale challenging the worst barbarian invasions. Civilizations collapsed. Imperialism had thrust China into wars and rebellions unmatched in scale until WW2 accompanied by social, political, and infrastructual decay. India’s manufacturing industry was superior to Europe’s well into the period of British rule but got wiped out completely. In Late Victorian Holocausts Mike Davis estimates up to 60 million deaths from famine (a rare occurrence in the previous two centuries) in 30 years in these two countries . Most African peoples were pushed off the land they had farmed for centuries. The bloody boomerang found its way back to Europe as the rivalry of the capitalists in the different empires caused the first world war.
The new order emerged from the war wracked with too much capital and not enough profit. Social upheaval and a depression so bad it stole the old one’s name were the result. This time, world war wasn’t just an indirect result of the frantic search for profits. Japan’s actions after striking out on desperate attempts to negotiate access to Indian and Central American markets – recently closed off by British and U.S. protectionism -best illustrates the savage logic of depression economics. When Americans say the war fixed the economy, we’re usually referring to the massive demand for armaments (and inheriting a hegemonic position in world trade which let us easily finance the debts the government accumulated) but we can’t ignore how much of the world’s industrial capacity was destroyed before the resumption of profitable accumulation.
Capitalism’s golden age followed its greatest crisis. The modern first world way of life was forged in the 50s and 60s. Things slowed down by the end of the latter decade and the 70s were marked by crisis. Andrew Kliman has demonstrated in depth how the insufficient destruction of capital led to decades of stagnation and the current collapse. Rather than endure acute, concentrated irrationality, governments and industry have since the seventies propped up the system by seeking profits in thin air through finance, manipulation of credit, blowing of bubbles, messianic consumerism, and every other way one can use resources unproductively. Neoliberalism, the other tack of delaying the inevitable pursued by most countries, increases exploitation by slashing social services, attacking labor unions, cutting taxes on the rich, driving third world farmers off the land in “privatization” schemes, and ending most forms of government intervention into the economy that don’t involve stealing from the poor.
None of these phenomena are predicted by mainstream neoclassical economics, but they don’t contradict it. Whatever theory of crisis our learned professors propose, throwing useful products in a landfill and enduring high unemployment while factories sit idle isn’t good for society. If its not in the interest of individual capitalists to remedy it because of demand problems or something, there is a contradiction between individual and collective rationality which necessitates government intervention in the market (textbooks usually teach this with trivial examples like all ship owners wanting a light house built but none paying because they could just free ride on whichever sucker funded it- you can’t charge someone to stay away from a piece of land). The problem with every non-Marxist analysis is that it shouldn’t be a tall order for the state to right the ship. Laissez faire posturing aside, the government has always had a heavy hand in the economy. A “free market” wouldn’t revolve around a banking system that must be bailed out every fifteen years. According to economic theory, pumping up aggregate demand or coordinating the big corporations should be easy. Paul Krugman’s analyses of the political establishment’s right wing intransigence are fairly useful, but he misses the joke when he incessantly points out that the Obama stimulus was too small. He’s right, but the inherence of crisis means he might as well say the magnets on your perpetual motion machine aren’t strong enough.
Part 2 will offer a balanced assessment of socialism’s successes and failures and show why rich countries like the 21st century U.S. offer more favorable conditions for it than did Eastern Europe or China.
1. Profit may have a different meaning in an accountant’s books. Someone who owns a business and is the sole worker may document a profit on a balance sheet. But they didn’t exploit any labor and if they didn’t shrewdly purchase their inputs at below value, all of their income is a return to their labor.
2. See Bagchi’s Perilous Passage on how long it took for capitalism to have any positive consequences.
3. Keep in mind that Imperialism: The Highest Stage of Capitalism is only scratching the surface of Lenin’s theorizing on the subject.
Russia, the first European state to build an empire in Asia, lacked capitalism, liberalism, industry, slaves, or New World colonies.
Going back further, to Ivan the Terrible’s time(ish), Russia started conquering the Turkic states to the south a few years after the Great Standing on the Ugra River ended centuries of paying tribute to them. But the rise of European hegemony in recent centuries just has to be explained by some deep seated, longstanding factor.