Did anyone notice SMH Political Editor, Peter Hartcher, announce the death of Capitalism yesterday? No? I thought you might have missed it. I’m pretty sure it wasn’t intentional – I don’t think Hartcher is a secret agent of Marxism. His piece yesterday, “Hit by the debt boomerang” was typical Hartcher – right topic, hilarious analysis. It’s also an interesting insight into what the elites are thinking (and it’s kind of scary) – they no longer know WTF is going on.
Hartcher touches on a deeply troubling truth, and then masks the horror with the rose-tinted glasses of how awesome Australia is. His deeply troubling truth? That ‘there is no such thing as private debt’. Let me repeat that in case you missed it – THERE IS NO SUCH THING AS PRIVATE DEBT. Let’s chew that over for a while and consider what it means firstly for capitalism as the dominant mode of structuring global society, and then work out what that means for Australia.
Take the ‘no such thing as private debt’ insight to its logical conclusion, and we find the ethical/normative platform for the private control of capital falling away. That’s because debt is capital, capital that is owed by one entity to another. It’s also an investment – banks and other financial institutions lend capital for others to invest, and then repay to the lender at a profit. Debt is also the bedrock of capitalism – it’s the only way that sums of capital large enough for large-scale profit making projects can be gathered together. Without debt there are no longer (private) large scale sources of capital, without debt there are no longer large scale (private) projects. Debt is nothing other than the Faustian bargain of capitalism. It’s the inferno that must be constantly fed more capital/profit to keep on burning – once the fire stops the system runs out of steam. It’s why nation-states all over the world stepped into bail out the banks – according to the logic of the system there was no other choice.
In short, if all debt is public then the private control of capital is essentially pointless, except for a few individuals profiting from sitting at the top of the shit heap. As I tweeted recently about Peter Reith’s ‘advice’ to Egypt to privatise its banks – all my problems would be solved if I owned a private bank.
Bringing this post back to the here and now – it means that Australia needs to get ready for the politics of both private sector and public sector austerity. If there is no such thing as private debt, then Australia is stuffed. While Commonwealth debt is sitting at or around 7 per cent of GDP (according to Hartcher), Australia’s private debt is now over 100 per cent of our collective incomes.It’s why Australian consumers have had the good sense to maybe start saving a bit more recently.
But Hartcher’s response is to find comfort in the current elite myth of Australian exceptionalism. According to Hartcher, Australia is a safe-haven where everything will be alright if we continue the hard task of pursuing (neoliberal) economic reform. He writes, the “Hawke-Keating and Howard-Costello governments collectively spent 23 years reforming the economy, a bipartisan project of opening it to the world, making it more competitive, improving its systems and institutions.” In other words, the US and Europe are stuffed because of their turn to neoliberal economics and Australia is going to be alright because we’ve gone down the neoliberal path. Cognitive dissonance much? Maybe Australia has been temporarily shielded because we have a lot of natural resources to invest in, in an otherwise resource depleted world?
I don’t mean to be tough on Hartcher as an individual but rather highlight is position as a well-paid spokesperson of elite thinking. His concluding advice, quite frankly scares me, “[t]he Gillard government needs to press ahead with a serious reform agenda and look to new ways of consolidating the federal budget. And the Abbott opposition needs to stop scaring the pants off the public.”
The neoliberal social settlement was different to the Keynesian one though – it was predicated on profiting off its own destruction. Like the human body eating away at its own organs to ensure its short-term survival. Profit has come from flogging off bits of shared wealth such as public services, and getting families with less and less to cough up more and more. This has made us sicker and sicker – especially as we continue to draw down upon nature as the true lender of last resort. We may have reached a new stage 0f capitalism where it is no longer able to provide for a majority of people in a minority of privileged nations. The only things which now bind us to the system are force and fear of the unknown.
* Meanwhile, I’m putting 17 September 2011 in my diary as a day of historic ramifications.
Godfrey's Blog of Claims 
Thought-provoking post.
I think you’re right about the lack of political solutions for the ruling class, but the debt question is a bit more complicated. At one level it is true that the credit system is completely essential for capitalism to work smoothly at least part of the time, and those who argue that we’d be better off if we broke Wall Street (finance capital) in order to bolster Main Street (industrial capital) miss the mutual dependence (and more recent interpenetration) of these forms of capital.
However, the debt crisis of today is based in a different phenomenon, the way that the drive to increase capitalist productivity in major centres of accumulation (the US, the Eurozone “periphery” countries, Japan) has created its own fetter to increased productivity. Debt has been a temporary escape clause, allowing accumulation to proceed but with eventually no way to pay it back because accumulation remains too weak.
When Hartcher says that all debt is public he simply means that workers (as taxpayers) will have to pay it back even if private capitalists racked it up. In framing a concrete demand around this it can’t just be based on the idea that “the private control of capital is essentially pointless”. Rather, we have to start with the fact that the capital relation itself is problematic, no matter who owns/controls it. Eliminating private control leads you to the demand of nationalising the banks, but that’s already been done (and will be done again) in the interests of capitalism as a whole.
Instead I’d argue that the working class should repudiate any responsibility for paying back the debt, and that demand leads to calling for nationalisation of the banks — without recompense — under workers’ control. That’s a class solution to the current form of austerity.
So what you’re saying is that debt, once an escape valve for the barrier that high wages caused to ongoing accumulation has become another barrier?
Kind of. More that debt — aided by low interest rates — played out in 2 ways: (1) allowing workers to spend beyond the restraint of wages and (2) creating bubbles that allowed a temporary space for increased investment, although on an unsustainable basis.
good post Godfrey, and you’re correct on Hartcher!
“All my problems would be solved if I owned a private bank”. Amen.
When the Standard & Poor’s rating story broke last week, I actually had to turn off the radio because all the dooming-and-glooming was depressing me. For the first time in my life I understood why some people don’t like listening to the news. Then I felt bad for wanting to ‘switch off’ from everything when what’s needed is engagement, action.
I feel tired. Meanwhile, Craig McMurtrie has written this thought-provoking piece on the Tea Party, suggesting that the real problem isn’t the movement itself, rather the ‘the practiced complacency of everyone else’. Read it here: http://www.abc.net.au/news/2011-08-03/mcmurtrie-are-tea-party-activists-heroes-or-villains/2822892
Great link – the problem is the true power of the people has not been heard yet.