The UK floods and capitalism in crisis

I don’t live in a flooded area I’d like to make clear but I do think the recent devastating flooding in many areas of the Uk with the South West of England being worst hit it would seem do deserve some reflection I think. Allot of people’s homes have been damaged possibly even permanently with flood waters still peaking in many places. My sympathies and solidarity do go out to all affected by these storms. A transfer of foreign aid to the flood victims is not the answer in my opinion though as many reactionaries will have you think it is the answer. Those foreigners don’t need out money we need it here. This misses the point of foreign aid and the good it does and automatically assumes it is "too high" in the first place which I’d contest. In the last week David Cameron has tried to do his savior of the people hero act by turning up with wellies and a helping hand but this symbolic gesture politics standing for photographs while cutting funding for flood defenses will do little to ease peoples anger I’d say. In fact it wills b interesting to see how much this recent storms and floods and a lack of a proper reply from the government will affect their votes in these areas. The UK has been hit by a series of strong storms throughout January and into February, with no end in sight. This offers a case study of capitalism under climate change. The current string of back-to-back storms has been described as "an almost unprecedented natural crisis". It hasn't escaped notice that the response to the storms in the south west was rather lackluster, but when severe flood warnings were issued for the Thames in the Home Counties, it was suddenly announced that "money is no object". It should come as no surprise that some peoples' misery is worth more than others. The sight of land reclaimed by the sea is also something we'll be seeing more of; as both sea levels and storm strengths continue to rise (managed retreat is proposed as an alternative to increasing reliance on sea defences). It’s probably too early to draw conclusions about the state response, as it’s likely to be still in-formation in response to emerging crises.2 However, we shouldn’t assume that destruction is automatically bad for capital. A moderate amount of destruction can be seized upon as an opportunity for restructuring, reconstruction and investment (so-called 'disaster capitalism'). As the Bank of England Governor Mark Carney said, "You get a hit to GDP [Gross Domestic Product] as it's going on and then you get a recovery, you get that back later on with the repair." On a system-level, rates of profit are boosted by the destruction of capital value.3 This wasn’t allowed to happen to any great extent in the economic crisis, as state intervention propped up banks and the housing bubble. In the absence of a world war to destroy capital and make room for growth (the 1940s ‘fix’), might climate change destruction contribute to a recovery of the rate of profit, amidst secular stagnation? Clearly, if this conjecture is true, this would happen in a hugely unequal, exploitative, and potentially cataclysmic manner. But how much climate destruction is best for capital? Probably more than none. Extreme weather events will start to have an increasing disruptive impact. That might result in shifts in climate policy. But damaging the capitalist economy shouldn't be mistaken for damaging capitalist social relations. Rather, capitalist relations ensure that climate change impacts tend to reinforce existing inequalities.

The long term view of capitalist development or degeneration

There is much talk in the financial press and among economists of the risk that the major capitalist economies could be slipping back into recession. Economic data for the US and Europe are indicating a significant slowdown in economic growth and a weak recovery in employment and investment. Is this just a temporary blip or does it represent a significant downturn? I would like to answer that by returning to the long view. The long view I’d describe is Karl Marx’s law of the tendancy of the rate of profit to fall which I believe is the underlying cause of the capitalist crisis and indeed is the cause of most if not all crisis’s and is Marx’s 3rd law of capialistmotion which we must look at to understand the changes in capitalism and how we stand today. Just taking the post-war period, there was a Golden Age of profitability from 1946 to 1965 when the rate of profit (ROP) was high and even rising. During this period, economic recessions were few and relatively shallow. Then there was a period of crisis when profitability fell steadily until it reached a nadir in 1982. During this period, economic recessions were more frequent, violent and deep i.e. 1969-70, 1974-5 (the first simultaneous post-war economic recession) and 1980-2 (the deepest recession since the 1930s). After 1982 there was a recovery in profitability right up to 1997. This was the period of so-called neoliberalism that many have argued constitutes a completely new structure of capitalism based on ‘financialisation’ and neoliberal policies of privatisation and weakening of the labour movement (see my comrade Steve Dobson’s excellent post “neo liberalism a new stage of capitalism” a http://socialismiscrucial.wordpress.com/2013/07/25/neoliberalism-a-new-stage-of-capitalism/ There was only one significant economic slump in 1990-1. What next? Once the ROP starts falling, it takes a few years before an economy moves into recession. The ROP has usually been falling for three to four years before that happens. On that basis, the US economy will not drop into a new recession until about 2014 onwards. The debate continues among Marxist economists, but if the underlying cause of capitalist crisis is a falling ROP, then a new slump is unlikely to develop until 2014. But it confirms that even the Great Recession of 2008-9 was not big enough to restore a sustained rise in the ROP. That is because it has not destroyed enough value in accumulated capital or in the excessive build-up of debt (fictitious capital) before 2007. More destruction of value is necessary to do that. That there is still much fictitious capital in the system is revealed by the value of the stock market relative to a measure of the real value of the companies the stock prices represent. James Tobin, the leftist economist, developed a measure to tell if the stock market was overvalued or not and whether it would be heading down. It is called Tobin’s Q, measuring the stock market’s value against the replacement value of all the assets of the companies in a stock market index –for the US S&P-500 stock index (the top 500 companies It is difficult to fully predict how the economies of the world will develop by focusing on Marx’s works in volume 3 of capital and especially the chapters on the law of the tendency of the rate of profit to fall are crucial to understanding crisis I feel. I am studying all sorts of facts and figures trying to get to grips with crisis and Marx understands there are many views out there with lots of figures which prove something different. We must be careful to pay attention to all sides of the debate and be sure to uphold the law of Marx who was sure of the cause of capitalist crisis’s despite not finishing volume 3 all his work was there if not published it was in draft form ready for Engel’s to publish and edit and place in order the content was always there. Marx didn’t call this law the most important in political economy for no reason at all. Let’s get with the programme and take up Marx’s ideas again and apply them to 2013.