BOOK REVIEW
3 Sunil Khilnani, “Democracy and Its Indian Pasts”
in Kaushik Basu and Ravi Kanbur (ed.), A ­ rguments
for a Better World: Essays in Honor of Amartya
Sen: Volume II. Oxford University Press (2009),
Chapter 26, pp 488-502.
4 Sudipta Kaviraj, “Ideas of Freedom in Modern
I­ndia” in Robert H Taylor (ed.), The Idea of Freedom
in Africa and Asia (Stanford, CA: Stanford Univer-
sity Press), 2002. Pratap Bhanu Mehta, Three
Crisis and Class Struggle
Pratyush Chandra
T
he various papers in the present
volume of the Socialist Register are
united in one respect – they show
how capitalist crises are not simply prob-
lems of positive economics and neutral
economic management. The neutrality is
exposed once you try to unbundle the
­ceteris paribus and the various assump-
tions that are made in modelling the econ-
omy. The realities of class, state, power
and conflict provide the socio-historical
matrix that configures the economy and
its problems.
In other words, a main thrust of this
collection on the contemporary capitalist
crisis is, as Leo Panitch and Sam Gindin
point out in “Capitalist Crises and the
­Crisis This Time”, to look at “the complex
factors that lead to structural crises…
through the prism of class and state rela-
tions” (p 7). Every essay complements the
others by accounting for the contingent
and historical factors that configure the
terrain for the past, present and future
of the capitalist crisis – determining its
specific conjunctural nature at various
­moments in the development of capitalism.
However, while conjunctural factors do
play a major role in determining the his-
torical expressions, crises are not black
swans appearing randomly, as Anwar
Shaikh explains in “The First Great Depre­
ssion of the 21st Century”: “Capitalism’s
sheath mutates constantly in order for its
core to remain the same” (p 46).
Crises are moments in the “turbulent
dynamic process” of capitalist accumula-
tion (p 44), Shaikh argues. Despite tremen-
dous institutional changes within capitalism,
its history is witness to intrinsic patterns
that derive from the logic of profit, which
is central to business behaviour. The
42
Lectures on Equality and Inequality in India, Watson
Institute, Brown University, RI, April 2011. (These
lectures have not yet been published, but I person-
ally attended all three.) Sheldon Pollock, The Lan-
guage of the Gods in the World of Men: Sanskrit,
Culture and Power in Premodern India (Berkeley,
CA: University of California Press), 2006.
5 A K Ramanujan, “Is There an Indian Way of
Thinking? An Informal Essay” in Contributions
Socialist Register 2011: The Crisis This Time
edited by Leo Panitch, Greg Albo and Vivek Chibber (New
Delhi: Leftword Books), 2010; pp 323, Rs 350.
present crisis was nurtured in the very
successful attempts to overcome the Great
Stagflation of the 1970s and to sustain
high rates of profit through neo-liberal
means. Deregulation of financial activi-
ties, a sharp drop in interest rates in major
capitalist countries and the slowdown in
real wages relative to productivity boost-
ed the rate of profit. Normally a wage de-
celeration would have adversely affected
consumer spending, but falling interest
rates and credit availability, as Shaikh
(p  45) notes, “buoyed on a rising tide of
debt. All limits seemed suspended, all
laws of motion abolished. And then it
came crashing down. The mortgage crisis
in the US was only the immediate trigger.”
The phenomenon of financialisation
has been crucial to the post-1970s resur-
gence of profit and its eventual crisis in
the 1990s-2000s. Financialisation does
not distort pure capitalism, nor is it a re-
sult of a coup against productive capital. It
is ­instead, according to Alfredo Saad-Filho
in “Crisis in Neo-liberalism or Crisis of
Neo-liberalism?”, “a structural feature of
accumulation and social reproduction un-
der neo-liberalism” (p 243). The process
has tremendous disciplining potential. It
­intensifies accumulation by transnation-
alisation, increasing competition between
individual capitals and between (and
within) national working classes.
Managers are submitted to sharehold-
ing interests concerned only with the
over- or under-valuation of stocks and
shares, Doug Henwood notes in “Before
and After Crisis: Wall Street Lives On”.
june 18, 2011  vol xlvi no 25  EPW   Economic & Political Weekly
to Indian Sociology, ns 23(1): 1989, 41-58.
6 Hannah Arendt, Between Past and Future: Eight
Exercises in Political Thought. Penguin Classics
[2006 (1961)]. The very first chapter, titled “Tradi-
tion and the Modern Age” opens like this: “Our
tradition of political thought had its definite
b­eginning in the teachings of Plato and Aristotle.
I believe it came to a no less definite end in the
theories of Karl Marx.”
The industrial and labour reforms that
ensue to satisfy such market regulation of
the circuits of capital make employment
precarious, and force many households
into debt, making them dependent on
asset price inflation for satisfying their re-
productive needs, thus financialising and
controlling the ­reproductive domain of
labour. Demand is propped up through
“Asset Price Keynesianism”, as Saad-Filho
suggests (p 246), or “truly heroic doses of
credit”, as Henwood argues (p 91), i e, by
lowering interest rates, remortgaging and
accumulating unsecured debts, etc.
In “Deriving Capital’s (and Labour’s)
Future”, Dick Bryan and Michael Rafferty
present a rigorous analysis of derivatives –
one of the major instruments of financiali-
sation, defined by them as an extension of
“the calculus of finance and risk into wider
social domains” (p 204). Further, they
note that (196):
[Derivatives] are integral to capitalism and
the expression of its essential property rela-
tions and its inventiveness. The contradic-
tions of derivatives are the contradictions of
capitalism.
Derivatives establish newer sites of
a­ ccumulation out of the segmentation of
the socio-economic world into quantifia-
ble and commodifiable units. The power
of derivatives to make assets fungible
­intensifies the mobility of capital and
capitalist accumulation. As the perpetua-
tion of ­financial instruments or financia­
lisation derives from the logic of capital,
so does the financial crisis. The authors
dub the real/financial dichotomy as
faulty. The ­dichotomy is ahistorical and
does not ground the financial in the logic
of capi­ta­lis­t accumulation.
The Labour Factor
As indicated above, the collection views
the crisis from the prism of class struggle
and state. It has been time and again
shown how under neo-liberalism, the glo-
bal balance of class forces has shifted

away from labour and from particular
forms of capital. In “The Global Crisis
and the Crisis of European Neomercan-
tilism”, Riccardo Bellofiore, Francesco
Garibaldo and Joseph Halevi accurately
encapsulate the political spirit of the
­collection when they describe the central
tragedy in this financial crisis as befalling
“traumatised workers, manic-depressive
savers and indebted consumers – all per-
formed by the same actor” (p 124). Most
of the essays in this collection tell us how
the political economy of neo-liberalism
splits the personality of labour into so
many identities.
Agenda of Neo-Liberalism
The class agenda of neo-liberalism was to
break the Keynesian alliance between
capital and labour, which was proving to
be a hurdle to profit-making in the early
1970s. A thorough financialisation of the
real economy of businesses, households
and governments was crucial in this
regard, as Hugo Radice suggests in “Con-
fronting the Crisis: A Class Analysis”. The
state and the enfeebling of the working
class were major factors in “generating
the conditions that led to the greatest
financial crisis since 1929”, according to
Panitch and Gindin (p 13). Increasing
labour vulnerabilities through industrial
restructuring led to a tremendous increase
in industrial profits, and this in turn freed
finance for betting on vulnerable labour.
As Sam Ashman, Ben Fine and Susan
Newman put it in “The Crisis in South
Africa: Neo-­liberalism, Financialisation
and Uneven and Combined Develop-
ment” (p 175):
The spreading and individualisation of debt,
in part to compensate for three decades of
stagnant or falling real wages, has become
critical to maintaining demand…Financiali-
sation, then, is not just about capital, it is
about labour.
Susanne Soederberg calls this situation
“cannibalistic capitalism” (also the title of
her essay) – a form of financial fetishism
where instead of giving workers inde-
pendence, savings increase worker de-
pendence on the economic performance
of corporations. It is a set of “processes by
which workers’ savings in the form of
pension funds feeds off both their own
increased indebtedness and that of other
Economic & Political Weekly  EPW   june 18, 2011  vol xlvi no 25
BOOK REVIEW
workers” (p 224). Thus, workers are so
bound to capitalist fate that they see in
capital’s ­destruction an extermination of
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BOOK REVIEW
are those which are heavily dependent on
male labour. Families headed by single
mothers have increasingly plunged into
poverty. The care economy was drastically
affected; seemingly greater equality among
men and women in the expenditure of un-
paid labour meant that the women’s work-
ing hours could expand.
However, this was possible only with
the 24/7 economy providing inexpensive
goods and services based on the low
wages of a contingent workforce from
among ­immigrants. The crisis has expo­
sed both the importance and fragility of
family survival strategies. It has deepened
the segmentation of the working class on
the ­basis of the degree to which indivi­
duals can hold on. Racial and occupa­
tional ­disparities play a major role in
this ­segmentation.
Opportunity Lost
The crisis has definitely exposed the fra-
gility of the US economy and its dollar
hegemony, but in turn, it has also exposed
the structural faults of other economies
throughout the globe and their depend-
ence on US growth. The global dominance
of the dollar confirms not just the global
presence and prowess of the American
­interests – US multinationals, Wall Street
and US offshore banking affiliates – but
also the extent to which major national
and regional economies are tied to the US
market. Taggart Murphy argues that
­Japan and eastern economies are loyal re-
tainers of American dollar hegemony;
­Bellofiore et al note the neomercantilist
dependence of the economies in the EU on
the US as the provider of the last resort of
effective demand. As Karl Beitel shows in
“The Crisis, the Deficit, and the Power of
the Dollar: Resisting the Public Sector’s
Devaluation”, there is no viable challenger to
the dollar. The euro lost because of “the
‘fractured sovereignty’ that characterises
the monetary integration of Europe” (p 269)
and the remnibi is out for the time being
because China does not have the will and
capacity to replace the dollar.
The enormous dependence of other
economies on the US, facilitated by finan-
cialisation, has definitely scuttled statist
willingness and ability to emerge from the
neo-liberal framework across the globe.
As Albo and Evans’ analysis of the rescue
44
and exit strategies of the US and various ­ rior to the crisis. Here we find the left
p
European economies shows, these class and radical forces totally marginalised
strategies tend to stabilise and sustain the (Julie Froud, Michael Moran, Adriana
liberalised financial system and to trans- Nilsson and Karel Williams in “Opportu-
fer the burden on to the shoulders of the nity Lost: Mystification, Elite Politics and
working class. In fact, the state is taking Financial Reform in the UK”), labour
interventionist measures to ensure that ­activism reduced to shareholder (and
austerity is imposed on the working class stakeholder) activism and the ideology of
and the public sector. corporate governance, effectively refocus-
As Radice (p 37) notes, “[b]ecause neo- ing political discontent in market-based
liberalism is a project of class hegemony, terms (Soederberg).
the current economic and financial crisis This volume of Socialist Register stands
is only a crisis of neo-liberalism if there is out in providing a comprehensive under-
a working-class challenge to that hege­ standing of “the crisis this time”. It sweeps
mony”. A major part of the volume under away the mists of carefully contrived illu-
review demonstrates through various sion and reveals the stark reality behind
country and regional analyses why the neo-liberal ideologies and politics, a task
barriers to capital accumulation could not which, as Noam Chomsky puts it in his
be transformed into its limits. In fact, concluding contribution, is necessary to
wherever a viable alternative, even if not rekindle the radical imagination.
complete structural overhauling, seemed
feasible, the opportunities were not just Pratyush Chandra (ch.pratyush@gmail.com)
lost, but they were morphed into strate- is associated with Radical Notes.
gies for neo-liberal resurgence. So if neo-
liberal strategies and institutions survived Note
unreformed, the secret of their resilience 1 Karl Marx (1954), Capital, Vol 1 (Moscow:
must be found in the balance of forces Progress Publishers), p 285.
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