Conference on Radical Political Economy


In this article Ighsaan Schroeder* outlines the reasons for Khanya hosting such a conference and some of its main deliberations

Why a Conference on Radical Political Economy

The on-going decline of progressive South African civil society organizations can be seen in particular in the absence of any challenge to neo-liberal economic orthodoxy. In the early 1990s several organizations such as Merg, and later NIEP, put forward economic policy options very different to the neo-liberalism adopted by the ANC. In addition to these organisations, a range of NGOs, working on questions of economy from a radical perspective, were highlighting the class character of national budgets, the limitations of the RDP, and exposing the bourgeois class interests behind the Gear and Nepad strategies.

Many of those organizations have now disappeared or lost their capacity to continue such radical critiques and the exposure of neo-liberalism. Consequently, neo-liberal shibboleths, such as the importance of budget surpluses and low inflation, are now presented as uncontested truths, in the interests of the whole of South African society, whereas they actually serve the interests of very specific fractions of the capitalist class. The annual Conference on Radical Political Economy is intended to provide a platform that brings together NGOs and academics working in this field, to exchange ideas and build resources to once again mount a counter offensive against neoliberal ideological hegemony on the fundamental question of economy.

The 2009 Conference

The Conference was a closed event with a relatively narrowly defined and small group of 31 participants, consisting mainly of NGO representatives working on specific issues of political economy, academics doing likewise, and some representatives of social movements. The conference was organized into 2 parts. The first part looked at the global economic crisis, its sources, impact, responses and alternatives. The second part looked at capital accumulation, class formation and the state in post-apartheid South and Southern Africa. A total of 16 presentations were delivered over the 2 days, structured into 7 panels. A recurring theme at the conference was that the current global economic crisis is one more episode in a longstanding, structural crisis underpinning neo-liberalism, namely, a crisis of over-production and over-accumulation, both often identified simply as a crisis of profits, dating back to the late 1960s. It was precisely this crisis of profits that neoliberalism attempted to solve. What distinguishes the latest crisis from preceding episodes since the late sixties is its scale, matching in most important respects, such as a generalized and dramatic decline in industrial output, the capitalist crash of 1929 and in others even exceeding it, such as the collapse in world trade.

The scale and depth of the global crisis has sparked much speculation among progressive forces internationally about the future not only of the neo-liberal model of capitalism but indeed of the capitalist system itself. A view put forward at the conference was that Left speculation may appear justified if the analysis is confined purely to the statistics. Industrial output in the leading capitalist countries has fallen in almost exactly the same way it did in 1929, while the fall in the value of leading stock markets and world trade surpass even the crash of 1929.

This explains why central bank discount rates also sit way below those of the Great Depression. However, the fate of the capitalist system cannot be read off from statistics. Economic relations are essentially social relations, and it is in the response of the different social classes that the likely outcome of the crisis is to be found. More bluntly, it is the class struggle that will ultimately determine whether capitalism survives the current crisis. An analysis of the response of the main contending classes reveals that there are two crises at work, not one. The first crisis is the crisis of profitability facing the capitalist class and its system. The second crisis, a crisis of resistance, is the apparent inability of the working class to resist ruling class attempts to shift the crisis onto it through massive job cuts, record levels of unemployment, state cutbacks in social expenditure and falling living standards. The on-going weakness of working class organization, itself the result of the successful reorganization of class relations by the capitalist class over the past 3 decades of neoliberal hegemony, has left the working class unable to defend itself against these effects of the capitalist crisis, let alone convert the capitalist crisis into a political crisis for the capitalist class.

The current global crisis has exacerbated the crisis of profits within the capitalist system that neoliberalism was intended to solve, and has definitely created a crisis of legitimacy for neo-liberalism. But the weakness of the working class has meant that the capitalist class remains politically unchallenged. This political strength of the capitalist class has allowed it to intervene minimally in its attempts to resolve its economic crisis. The measures taken have been confined mainly to state bailouts and orchestrated interest rate cuts. These have benefited the leading section of the capitalist class, the money capitalists who own the banks, finance houses and insurance companies. The relative sufficiency of these measures can be seen in record profits again for finance companies like Goldman Sachs, Barclays and HSBC. The closure of several banks and financial companies – in the US in 2009 alone over 100 smaller banks failed – means that the crisis has ensured greater centralization of ownership within finance capital, resulting in the emergence of a smaller number of even more powerful financial institutions, partly contributing also to the restoration of record profits. In other words, the leading section of the Capitalist class under neo-liberalism has emerged even stronger than it was before the crisis, not weaker.

This can be seen graphically in the refusal of the financiers to accept even moderate reforms like caps on executive salaries. Goldman Sachs has indicated it will again pay bonuses totaling $17 billion to its staff. More importantly, it is confirmed by the complete absence of any measures to better regulate the finance sector, despite the absence of regulation being cited as the ostensible cause of the current crisis by most bourgeois commentators and ‘economists’. For the rest, money capital has been happy to leave the other capitalist fractions with the task of shifting the crisis onto the working class more directly through mass retrenchments, short time and cuts in wages. Anecdotally, this can be seen in how the auto bosses in the US, ironically perhaps the biggest contributors to the total store of surplus value in circulation at any one point and easily part of the leading fraction of capital 30 years ago, had to collectively beg for an $18 billion bailout, while AIG alone received over $170 billion in handouts from the US government.

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