Hegemony of finance

A stone at a hornets’ nest

Print edition : July 22, 2016

Public sector workers went on strike across Britain on July 10, 2014, in dispute with the government over working conditions including pension and pay. Here, striking workers protesting in Trafalgar Square in central London. Photo: STEFAN WERMUTH/REUTERS

Margaret Thatcher was forced to step down as Prime Minister in 1990 after she started expressing anti-Europe sentiments. Photo: Gerald Penny/AP

The revolt of the British working class against the hegemony of finance will undermine the confidence of capitalists and also encourage other countries to follow the British example.

The vote for “Brexit” represents essentially an un-self-conscious revolt by the British people against the hegemony of finance capital. Indeed, since 63 per cent of Labour voters reportedly voted for “Brexit”, and the Labour Party, despite years of Blairism, continues to derive its voting strength substantially from the working class, it would be no exaggeration to call the “Brexit” vote a working class revolt against the hegemony of globalised finance capital. It occurred not just as a protest against the fallout of this hegemony in the form of crisis and unemployment, and not just as a counter to finance capital’s project of overcoming all (so-called) “isolationism”, but also in the face of a massive campaign that finance had unleashed against “Brexit”. And it defied not just German finance capital but British finance capital as well, based in the City of London.

The City had worked assiduously for a “remain” verdict, not just because of its general predilection for “globalism”, but also specifically because of its apprehension that Britain’s opting out of the European Union would allow Frankfurt to move ahead of London as the financial centre of Europe. It had always been staunchly pro-Europe: it had been instrumental in pushing Britain into Europe, and also in getting rid of Margaret Thatcher as Prime Minister when she started expressing anti-Europe sentiments. Indeed, a bewildered Margaret Thatcher, when she was forced to resign, had reportedly remarked: “I have never lost a general election; I have never lost a vote of confidence in the House of Commons; I have never lost an election for the Tory Party leadership; and yet I am no longer Prime Minister!” She had obviously not reckoned with the City’s immense manipulative powers. But even these came to naught in the E.U. referendum, partly because it underestimated the opposition to E.U., but above all because the British working people remained steadfast in their opposition despite intimidation and blackmail. The outcome of the hegemony of globalised finance, in the form of neoliberal policies that brought crisis and unemployment, increasing inequality and absolute poverty, and cuts in the Welfare State, especially in the National Health Service, proved too much for them to swallow.

A self-fulfilling prophecy

The tragedy, however, is that the Left and the Centre-Left (in particular the Labour Party), with the exception of a small group (the “Lexit”), completely ignored the sentiment of the working class which they claim to represent and opposed “Brexit”, leaving the field open for racist and ultra-right elements like the U.K. Independent Party (UKIP) of Nigel Farage, and a group of Tories including the former Mayor of London, Boris Johnson, to emerge as the champions of people’s anger. Not surprisingly, a racist and anti-immigrant hue got imparted to the “Brexit” campaign, and this very fact was then used ironically to justify a “remain” vote; but the racist and anti-immigrant hue was itself a result of the abandoning of the working people by those who should have been leading them, namely the Left and the Centre-Left. The position of the Left and the Centre-Left thus became a self-fulfilling prophecy: they did not support “Brexit” because it invoked anti-immigrant feelings; but it invoked such feelings precisely because they did not support it.

And in the process they ignored the real grievances, whose roots they knew, of the working people. They could have explained to those who were influenced by the anti-immigration rhetoric that the problem lay not so much in immigration as in the hegemony of globalised finance capital, which has perpetuated and intensified the crisis because of its insistence upon “austerity”, that is, upon drastic cuts in public spending, adversely affecting employment and incomes. Bringing this fact home to the working people would have made their un-self-conscious revolt against the hegemony of finance into a self-conscious revolt, giving it a greater degree of coherence; but it required recognising the depth of the people’s grievance, which sadly the Left and the Centre-Left did not do. Slavoj Zizek, the Slovenian Marxist philosopher, has talked of the “false consciousness” underlying the Brexit vote; but to the extent it was there, even such “false consciousness”, as Georg Lukacs had once pointed out, also has an element of “truth” in it. The Left, sadly, did not look for this “truth.”

Basic contradiction in E.U.

The Left’s ambivalence towards the E.U. derives from a basic contradiction in the E.U. itself. While it does represent a transcendence of the “nationalism” and “national conflicts” that had plunged Europe into two devastating world wars, this transcendence has occurred within the context of a hegemony of globalised finance capital. The Left, while welcoming the former, has naturally been opposed to the latter; but it has believed that this contradiction could be overcome through democratic struggles within a united Europe. This assumption, however, is wrong, as has been most recently shown by the example of Greece. Syriza (Coalition of Radical Left) had proceeded precisely on the basis of this assumption, namely that it could appeal successfully to the democratic tendency within the E.U. to provide financial accommodation to Greece without imposing “austerity”, that is, to thwart the agenda of finance capital to saddle Greece with “austerity”. Indeed, so confident had it been about succeeding in this effort that it did not even have a “fallback” option. And in the event it had to capitulate miserably before finance capital, accepting an extraordinarily harsh and humiliating “austerity” package devised by Wolfgang Schauble, the German Finance Minister.

The Greek experience should have been an eye-opener for the Left, but alas, it was not. While the Left sees the need for replacing the current E.U. by an alternative E.U. that would not be in thraldom to globalised finance, especially its German constituent, a major chunk of it believes that this transition can occur within the current E.U. itself, that it does not require any delinking from the current E.U. (to be followed at some later date by a “relinking” when the hegemony of finance has been successfully undermined through such delinking). The fact, in short, that the struggle against finance can, and, in certain circumstances when there is an upsurge among the working people in a particular country, must, spill over into a delinking from the E.U. itself as it is currently constituted, has never been recognised by significant sections of the Left. With social democracy, even in its post-Blairite phase, pusillanimously tailing finance (to avoid any “serious disruptions in the economy”), with the Communist Left yet to recover from its shock in the aftermath of the collapse of the Soviet Union and to work out its identity in a post-Leninist conjuncture, and with the sundry “New Left” formations accepting the wrong assumption just mentioned, the Left has generally been incapacitated for playing any leadership role. The fact that the British workers nonetheless went ahead with “Brexit” is testimony to their intrepidity.

Hard times ahead

The coming days are going to be extremely difficult for them. One of the main instruments used by finance capital to prevent any delinking from its prevailing arrangements is the instilling of fear over the consequences that would follow any such delinking, and precisely for those very people who dare to delink. This is no idle threat; it is, indeed, very real. Capital flight, the inability to manage the balance of payments, a collapse of the currency, and a consequent acceleration of inflation constitute the obvious sequence of events; and all of them hit the working people. If measures of fiscal and monetary contraction are adopted to counter this sequence, then the unemployment rate rises, so that the working people become even worse off than they were when they rebelled against the hegemony of finance. In addition to all this, there are at least three other factors that would make things worse in the case of Britain.

The first is the fact that the British economy has already been facing a serious current account deficit even before the “Brexit” vote. For 2015 as a whole, Britain’s current account deficit was 5.2 per cent of the gross domestic product (GDP), which is the highest among the countries of the developed world; for the fourth quarter of 2015 alone, the figure was 7 per cent of the GDP which is a peacetime record for that country. Capital inflows on a scale large enough to finance such a deficit are not easy to come by. If in addition there is capital flight or even a drying up of capital inflows because of uncertainties in the wake of “Brexit” or of a declining pound (that makes speculators postpone bringing money into the U.K.), then the problem becomes more acute. The second is the “bloody-mindedness” of finance capital which would be reluctant to “bail out” a Britain that has opted to leave the E.U., both as punishment and also for preventing a “domino effect”. And the third has been already discussed, namely the lack of the leadership role that needed to be exercised by the forces of the Left and the Centre-Left, forces that should have been sympathetic to the working class opting for “Brexit”. The Nigel Farages or the Boris Johnsons of the world can scarcely be expected to lead the working class against finance capital; they would in fact be waiting to be wooed by finance capital to prevent “Brexit” from developing further as a revolt against the hegemony of finance. They would in short be perfectly willing to compromise the essence of “Brexit” by accepting super-“austerity” packages at the expense of the people for “stabilising” the economy, even while intensifying their racist or anti-immigration agendas. The difficulties facing the British people while coping with the fallout of the revolt against the hegemony of finance must not therefore be underestimated.

Spokesmen of finance are highlighting these very difficulties to draw the conclusion that the “Brexit” vote was wrong. The point, however, is not that the people, because of the transitional difficulties associated with revolting against the hegemony of finance, should remain stuck forever in the crisis and poverty and unemployment which such hegemony engenders; the point is that those who uphold the interests of the people, the forces of the Left, must come to their aid at this juncture.

What the left should do

The Labour Party, which currently has a left-wing leader in Jeremy Corbyn, must commit itself to implementing the Brexit verdict (even David Cameron has done that), ask for immediate fresh general elections, and approach the electorate with a credible new programme of ending “austerity”, of tying up with other Left formations in Europe like Podemos which are on the verge of power (despite the latest election results), of arranging to finance the current account deficit in the near future in a manner that does not entail “austerity”, and of simultaneously taking steps to curtail this deficit through direct measures if necessary.

The current drift in the Parliamentary Labour Party, however, is in an exactly opposite direction: to remove Jeremy Corbyn from leadership for not having campaigned sufficiently vigorously against “Brexit” and to “undo the damage” done by the referendum verdict. But Corbyn enjoys the overwhelming support of the trade unions and the rank and file of the Labour Party and must use that support to ensure that the British working class is not betrayed in its revolt against globalised finance. Indeed, given the context of the world capitalist crisis, a condition for preventing the ascendancy of fascist parties in Europe is that the Left must shake off the hegemony of finance over its own mindset, be sensitive to the grievances of the working class, and not shirk delinking from globalised finance because of the difficulties of transition, since such shirking would only mean a perpetuation of the crisis for the people.

The basic point here is that, notwithstanding all brave claims to the contrary, the current world capitalist crisis is nowhere near ending. It is a protracted crisis from which there is no visible exit. All crises create conditions for the growth of fascism, and the present one is no exception. Hence, unless the Left presents an alternative agenda to the status quo, an agenda that in the present context must mean a transcending of the hegemony of globalised finance and of the era of “neoliberal capitalism” that it has unleashed on the world, fascist elements are likely to gain ascendancy. It is significant that whenever such an alternative agenda has been presented, the people have responded to it with enthusiasm. The obvious example is the United States, where Bernie Sanders, a self-confessed socialist, has drawn substantial mass support with his programme of confronting Wall Street, support that is even larger than what Donald Trump has drawn with his right-wing rhetoric.

No return to status quo ante

No matter what happens in Britain, the British vote to leave the E.U. will have two crucial implications for the capitalist world. One, it will aggravate the crisis of world capitalism, which constitutes the underlying reason for this vote in the first place. The fact that the working class in Britain, one of the most powerful capitalist countries, can revolt against the hegemony of globalised finance, will certainly undermine the “state of confidence” of capitalists, thwarting all prospects for the emergence of “exuberant expectations” in the foreseeable future; and since asset-price “bubbles”, based on such expectations, are the main sources of booms under neoliberal capitalism, the puncturing of such “exuberance” will aggravate the crisis. Two, this very fact will further encourage other countries to follow the example of the British, and this will happen even if the transitional difficulties of the British economy prove to be quite formidable. Remaining stuck in a crisis, in short, will henceforth be unacceptable to the working people. Now that the first stone has been directed against the hornets’ nest, getting back to status quo ante will prove quite impossible. And since the current period of globalisation has been characterised above all by the globalisation of finance, as the revolt against globalised finance gathers momentum, it will set in motion a process of unravelling of the phenomenon of globalisation itself, at least in the form in which it has existed so far.

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