Legends of the fall

Issue: 160

Alex Callinicos

The tenth anniversary of the collapse of the Wall Street investment bank Lehman Brothers on 15 September 2018 has attracted enormous coverage.1 The focus has less been on the actual event itself—indeed Albert Edwards of Société Générale argues that its significance has been exaggerated:

Without doubt, the Lehman’s bankruptcy caused the financial system to seize up and for many this was the cause of the ensuing deep downturn and hence the focus on this one high profile event. But I have always found this explanation disingenuous and often an ex-post justification for those who had drunk the kool-aid and never foresaw the financial crisis and economic slump—and that includes policymakers. For even before the Sept 15 Lehman bankruptcy, the US economy had already collapsed into deep recession. In September 2008 we now know US payrolls declined 443,000 after a fall of 277,000 in August, and an average 190,000 decline in Q2. Although these numbers have been revised down, even at that time the Sept 2008 [non-farm payroll] was reported as a fall of 159,000—having already lost 600,000 jobs that year (September’s 2008 survey was taken the week before the Lehman’s bankruptcy, so was unaffected by the fallout).2

This comment points to what the debate has largely been about—the ­relationship between the financial crash that peaked with the Lehman’s collapse and the Great Recession that gripped the world economy in 2008-9. But the weak recovery that followed the slump and the probability of another crisis are also in everyone’s minds. These subjects are systematically explored in Adam Tooze’s mammoth critical history of the crisis, Crashed. Tooze challenges what became the conventional view after the worst of the eurozone crisis seemed to have passed in 2012, namely that the bank bailouts of 2008-9 and quantitative easing (QE)—buying the bonds held by banks in order to encourage them to finance new investment—by the major central banks had seen off the crisis:

What we have to reckon with now is that, contrary to the basic assumption of 2012-2013, the crisis was not in fact over. What we face is not repetition but mutation and metastasis…the financial and economic crisis of 2007-2012 morphed between 2013 and 2017 into a comprehensive political and geopolitical crisis of the post-cold war order. And the obvious political implication should not be dodged…events since 2012 suggest that the triumph of centrist liberalism was false too.3

So the usual “populist” suspects—Syriza and Podemos, Brexit, Donald Trump, the racist right—are organically connected to the crash and the Great Recession. This is, of course, one of the main themes of this journal—that the global economic and financial crisis has unleashed what Leo Panitch calls a crisis of political legitimacy of neoliberal capitalism.4 But it’s important to get the links in the chain right.

Making sense of the crisis

So first the economic crisis. For Tooze it is a crisis of what he calls “the transatlantic offshore dollar system”. In other words, it wasn’t (as European Union leaders are still prone to insist) an “Anglo-Saxon” crisis, even if its main venues, initially at least, were New York and London. Tooze argues that the United States and Europe have been bound together since the collapse of the Bretton Woods system in the early 1970s, and especially during the neoliberal era, in “a financial circulatory system”. Both American and European banks borrow dollars either in the US or via the offshore dollar market that developed in the City of London from the 1950s onwards, in order primarily to make loans in the lucrative US markets. Indeed, “the entire structure of international banking in the early 21st century was ­transatlantic. The new Wall Street was not geographically confined to the southern end of Manhattan. It was a North Atlantic system. The second node, detached from but integrally and inseparably connected to New York, was the City of London”, which enjoyed the advantage of being less tightly regulated than Wall Street.5

But the big Swiss, German, French and Dutch investment banks that came largely to dominate the City after the 1986 Big Bang became, along with smaller and more provincial operations such as the German Landesbanken, more and more heavily involved in borrowing dollars to buy the bundles of mortgages that seemed to offer limitless profits during the US property bubble of the mid-2000s. “In the process,” writes Tooze, “the European financial system came to function, in the words of Fed analysts, as a ‘global hedge fund’, borrowing short and lending long”.6 European banks used this same model when they fed the credit boom that followed the launch of the euro in 1999 and that produced property bubbles across the continent.

From this perspective, what was dangerous about the collapse of the property bubble in the US itself was that, as the infamous subprime mortgages turned bad, the markets through which banks lent to each other and issued asset-backed commercial paper (based, for example, on these mortgages) shut down in August 2007. The flow of dollars that fed the transatlantic “circulatory system” stopped. This threatened not just the banks but also the industrial and commercial firms that also regularly sought funding on the dollar markets. According to Tooze,

in Europe no less than in the United States it was the crisis of 2008, not the later eurozone debacle, that marked the decisive break in investment, consumption and unemployment. From the second half of 2007, as banks great and small in Germany, France, Britain, Switzerland and the Benelux began to acknowledge the scale of their losses, lending collapsed.7

The Lehman’s bankruptcy accelerated, but didn’t begin this process. But in its aftermath, the funding markets froze completely. The decisive step in halting and reversing the collapse was less the bank bailouts than the determined efforts, orchestrated by the US central bank, to restart the flow of dollars:

The US Federal Reserve engaged in a truly spectacular innovation. It established itself as liquidity provider of last resort to the global banking system. It provided dollars to all comers in New York, whether banks were American or not. Through so-called liquidity swap lines, the Fed licensed a hand-picked group of core central banks to issue dollar credits on demand. In a huge burst of transatlantic activity, with the European Central Bank (ECB) in the lead, they pumped trillions of dollars into the European banking system.8

It is therefore highly significant that these swap lines, connecting the Fed to the central banks of the eurozone, Japan, Britain, Canada and Switzerland, were made permanent in October 2013. As Tooze notes, “prior to the crisis, the transatlantic offshore dollar system had lacked a manifest centre of leadership. Indeed, it had developed ‘offshore’ so as to avoid national regulation and control. After 2008 it was openly organised around the Fed and its liquidity provision”.9 This at the very least qualifies the claims that 2007-8 marked the beginning of the end of US hegemony. Tooze’s analysis in this respect supports the argument of Panitch and his co-thinker Sam Gindin that a crucial dimension of this hegemony is the role that the Fed and the US Treasury play in orchestrating crisis management by the leading capitalist states.10

The great strength of Tooze’s account is indeed this focus on the ­transatlantic financial system and how it interacts with the international political order, notably the US and the EU. This allows him to point to a crucial legacy of the crisis, namely that the system, saved by the US state, continues to generate new potential crises, even if the geographical locus may have changed. He shows how the Fed’s policy of keeping interest rates ultra-low and pursuing quantitative easing flooded the global economy with dollars, many of which were lent by Northern funds to the big “emerging market” economies that weathered the Great Recession with comparative ease.

The problem always would be when the Fed started to wind down QE and raise interest rates, cutting off the supply of ultra-cheap dollar loans. Fed chair Janet Yellen started hesitantly to move to “normalise” interest rates in 2015. Tooze argues that the crisis that gripped the Chinese economy in 2015-16 was partly caused by heavy borrowing in dollars by Chinese firms taking advantage of the difference in the interest rates set by the Fed and the People’s Bank of China, which now began to narrow thanks to the Fed’s actions; indeed, he suggests, “in 2015-2016 the world economy dodged a third instalment of the global crisis”.11 The offshore dollar system, in other words, has been extending its net, creating new possibilities of instability.

We’ve seen the consequences in particular of rising US interest rates this summer with the acute downward pressure on the Turkish lira (leading to interest rates being hiked to 24 percent) and the near-collapse of the Argentinian peso. The latter development is particularly interesting since right-wing president Mauricio Macri has been lionised for returning Argentina to neoliberal orthodoxy after the mildly Keynesian policies pursued by Cristina Fernández and her husband and predecessor Néstor Kirchner. Now Macri has been forced to follow in the footsteps of previous Argentinian regimes by appealing to the International Monetary Fund for help and trying to appease the markets with an austerity budget that aims at a zero deficit while the economy is projected to shrink by 2 percent this year and 0.5 percent in 2019.12 The terms offered by the IMF for a $57 billion loan forced the resignation of the president of Argentina’s central bank: “This programme is a huge roll of the dice for the IMF, and they want full control,” one analyst told the Financial Times.13

The main weakness of Crashed is the obverse of this strength—a tendency to overvalue the role played, for better or for worse, by political leadership. So Tooze presents a remarkably positive picture of the key figures in the US response to the crash—for example, Fed chair Ben Bernanke and Timothy Geithner, first president of the New York Federal Reserve Bank and then Barack Obama’s initial treasury secretary, while damning the obtuse handling of the eurozone crisis by EU leaders. The bungling and callousness displayed by German chancellor Angela Merkel, Jean-Claude Trichet and Mario Draghi, successive presidents of the European Central Bank, and the rest of the Brussels mob, certainly deserves condemnation.

But this emphasis on “political choice, ideology and agency” risks losing sight of what Antonio Gramsci calls the “incurable structural contradictions” that express themselves in a great crisis.14 Tooze studies closely—and enlighteningly—the dynamics of the transatlantic dollar system, but never pauses to ask why it assumed the importance that it did in global capitalism in the late 20th and early 21st centuries. An important answer is to be found in the work of Michael Roberts and other Marxist political economists, who argue that the relatively low rate of profit on productive capital in recent decades has pushed investors towards the quick and rapid returns that the financial markets have offered.15

Tooze cites approvingly the work of the late Peter Gowan, who developed a pioneering analysis of the reconstruction of US hegemony around what he called the “Dollar-Wall Street system” after Richard Nixon broke the link between the dollar and gold in August 1971.16 But Gowan was careful to locate inter-state rivalries in an equally path-breaking analysis of the dynamics of industrial competition between the leading capitalist centres, where cost-saving technological innovations permit increasing returns to scale and thus drive the concentration and centralisation of capital.17 By contrast, production figures only at the margins of Tooze’s account—he touches, for example, on how German firms gained “competitive advantage” through “outsourcing production to Eastern Europe and Southern Europe”, but doesn’t pause to consider the polarising impact of this spatial restructuring on the internal configuration of the eurozone, divergences especially between northern and southern Europe that were widened by the crisis.18

Bringing production back in is important not simply to locate shifts of this kind. The long-term problems of profitability with which capitalism has been grappling for the past few decades have their roots in production, in the faster growth of investment in means of production compared to investment in labour power (what Marx calls the rising organic composition of capital) and the associated process of centralisation and concentration of capital.19 The economic dominance of a small number of large firms is a major obstacle to what Marx calls the “destruction of capital”—the elimination of inefficient capitals that allows the rate of profit to recover after a crisis. The bank bailouts, which as Tooze points out have left the financial system dominated by a smaller number of even larger (predominantly American) banks is a good example. Hence the evidence that, ten years after Lehman’s collapse, global capitalism is in the grips of what Roberts calls the “Long Depression”—a protracted period of suboptimal growth reflecting the fact that Gramsci’s “structural contradictions” have not been cured.20

The far right on the front foot

Tracing the roots of the crisis in the very foundations of the capitalist mode of production is of course crucial to getting the politics of the Long Depression right. In a recent discussion of Keynes, Tooze writes: “there are good reasons to defend technocratic government against the unreasoning passions of mass democracy”.21 This does indeed hark back to Maynard Keynes’s intellectual elitism, his belief that “the economic problem…the problem of want and poverty, and the economic struggle between classes and nations, is nothing but a frightful muddle, a transitory and an unnecessary muddle”.22 But Keynes and Tooze ignore the role played by class interests in “political choice”—for example, in Merkel’s ruthless defence of the German low-inflation high-export model during the eurozone crisis or more generally in the refusal of the Western establishment to moderate neoliberalism in the wake of the crash.

Martin Wolf, the Financial Times’s premier commentator, starkly summarises how little policy has changed in the wake of the crisis:

The financial crisis was a devastating failure of the free market that followed a period of rising inequality within many countries. Yet, contrary to what happened in the 1970s [when the turn to neoliberalism began], policymakers have barely questioned the relative roles of government and markets. Conventional wisdom still considers “structural reform” largely synonymous with lower taxes and de-regulation of labour markets. Concern is expressed over inequality, but little has actually been done. Policymakers have mostly failed to notice the dangerous dependence of demand on ever-rising debt. Monopoly and “zero-sum” activities are pervasive. Few question the value of the vast quantities of financial sector activity we continue to have, or recognise the risks of further big financial crises.23

More than anything, it has been the Western ruling classes’ insistence on continuing, and indeed radicalising, neoliberalism despite the devastating consequences for many ordinary people that have driven the “populist” revolts of recent years. Tooze comes dangerously close to the arrogant complacency of the neoliberal extreme centre when he dismisses the “unreasoning passions of mass democracy”. But the detailed account of Brexit and Trump in his book shows a much more nuanced understanding that it is the crisis of the neoliberal model that has informed the political upheavals of recent years.24

Moreover, there are absolutely no signs of these upheavals coming to an end. Indeed, the dominant feature of contemporary Western politics is the emergence of a racist-populist right that is making the political running on both sides of the Atlantic. The Trump presidency has proved no flash in the pan. Leaving aside the intense domestic political struggle it has unleashed between the defeated Democrats and a Republican Party that has largely rallied to Trump because of his hold of the party’s electoral base, he has had two main effects internationally—first, and in line with his economic nationalism, launching what amounts now to a full-scale trade war with China and, secondly, also aiming his fire on a variety of issues (trade, NATO, immigration) at the European citadel of the extreme centre, the Merkel government in Germany.

Merkel was already weakened by the outcome of the German federal elections a year ago. This undermined the legitimacy of the eventual government formed—the not-so grand coalition of the CDU-CSU conservative bloc (the Christian Democratic Union and Christian Social Union) and the Social Democratic Party (SPD)—by drastically cutting their combined share of the vote (according to the latest polls now below 50 percent). It also brought the far-right Alternative für Deutschland (AfD) into the Bundestag for the first time as the third biggest party. Fear of even greater AfD advances have pushed Merkel’s critics on the right of the CDU and in the Bavarian CSU to press for a harsh clampdown on migration.

These calls are echoed by Trump’s allies in the rest of Europe—Matteo Salvini, leader of the Lega and now Italian deputy prime minister, and Hungarian prime minister Viktor Orbán and Austrian chancellor Sebastian Kurz, who both head governments in which fascists participate. The outcome of the Italian elections in March—the formation of a coalition of the Five Star Movement and the Lega—represented a major strengthening of the European far right by adding the heft of one of the big Western European economies. The meeting of the EU’s supreme decision-making body, the European Council, at the end of June saw the extreme centre cave in to the far right on migration amid a soundtrack of tweets from Trump. The summit embraced the idea of “regional disembarkation platforms”—detention centres for migrants—notably in Libya, where the trafficking, kidnapping and rape of migrants are endemic, and backed a clampdown on NGO rescue ships in the Mediterranean. Frontex, the EU’s border force, is being expanded, armed and authorised to operate in neighbouring states.

Meanwhile, the far right continues to advance, with, for example, the Swedish Democrats more than tripling their share of the vote (from 4.6 to 17.5 percent) in the recent parliamentary elections. The impact on the ground of the spread of openly racist governments prompted Michelle Bachelet, the new United Nations commissioner for human rights, to announce that she is sending teams to Austria and Italy to investigate the treatment of migrants and refugees and, in the case of Italy, to “assess the reported sharp increase in acts of violence and racism against migrants, persons of African descent and Roma”.25

The contemporary far right is politically hybrid. The dominant trend seeks to reconstruct bourgeois politics on the basis of a combination of anti-migrant racism, Islamophobia and Euroscepticism; there is much more variation on economic policy and in particular on how far to distance themselves from neoliberalism and the process of globalisation it has promoted. But the main message is that the people (imagined as a cohesive, culturally unified entity) have been betrayed by a liberal elite that has compromised national sovereignty and flooded the country with migrants, many of them Muslims with terrorist sympathies.

This racist-populist right offers a favourable environment for genuinely fascist forces. The AfD, for example, is divided between “national-conservative” and “national-revolutionary” wings, with the latter representing an emerging fascist pole. All sorts of variations exist: in Greece, Golden Dawn is an openly Nazi formation; in the Netherlands, Geert Wilders’s Freedom Party is being challenged by the fascist Forum for Democracy; in Britain, UKIP—which used to be an ultra-Thatcherite anti-EU party—has hitched its wagon to the Football Lads Alliance (FLA) and its offshoots, where open Nazis have an increasingly powerful influence. But everywhere the far right is growing.

The labours of Corbyn

The plight of Western capitalism, where the neoliberal project has run into the sands and the establishment is in denial, represents what Gramsci called a “crisis of hegemony”, in which the ruling class is losing the consent of substantial sections of the population.26 This has given the racist-populist right a real opening and they are seizing it. No wonder, then, that more and more people are raising what Ugo Palheta in a new book on France calls “the possibility of fascism”.27 But the crucial question is, of course, what is to be done? More specifically, how can the radical and revolutionary left begin to offer an alternative to the broad mass of working people, including at least some of those currently attracted to the far right?

One necessary condition of doing so is actually to offer an alternative. So Aufstehen (Stand Up)—the new “unity movement” launched in Germany over the summer by Sahra Wagenknecht and Oskar Lafontaine, leading figures in Die Linke, and aimed at winning over SPD and Green voters—doesn’t begin to qualify since they have echoed the right in demanding restrictions on immigration.28 This is a crucial point since voices are being raised within the British labour movement arguing the left should embrace some of the Islamophobic rhetoric of the FLA, Tommy Robinson and their like: Dave Sewell’s review article elsewhere in this issue shows how disastrous this kind of approach has been in France.

The Labour Party under Jeremy Corbyn has a much better record of anti-racism (though he was pressured into retreating from his former stance of supporting freedom of movement for Europeans). Moreover, Corbyn, his shadow chancellor of the exchequer John McDonnell and their advisers have devised an economic programme that does break with neoliberalism, even if it doesn’t go much further than a combination of Keynesianism and selective ­renationalisation.29 Indeed, at the Labour conference in late September McDonnell reacted to the Tory crisis over Brexit by unveiling proposals to force companies to give their employees ten percent of their shares, allocate one third of the seats on company boards to workers and restore the public ownership of utilities such as water. He said: “The greater the mess we inherit, the more radical we have to be. The greater the need for change, the greater the opportunity we have to create that change”.30 Corbyn in his own speech took an important step towards one of the main demands of the Campaign against Climate Change when he pledged a “green jobs revolution” that would create 400,000 jobs through investment in offshore wind farms and home insulation.

But Corbyn’s case also shows how dangerous it is to offer a real alternative. The summer saw a renewed attack on him for alleged antisemitism, mounted by the Labour right, pro-Israel Jewish organisations and the corporate media. We had predicted that this campaign would continue.31 It has nothing whatsoever to do with actually combating antisemitism; if it had, the focus would not have been on the blameless Corbyn, but on the way that the far right is making antisemitism respectable (witness, for example, Orbán’s attacks on George Soros when he was campaigning for re-election back in the spring). The anti-Corbyn campaign has two aims—first, to weaken and, if possible, to destroy his leadership by discrediting his antiracist credentials and, second, to make criticism of Israel illegitimate within the labour movement.

The latter objective is crystal clear in the joint editorial produced by three Jewish establishment newspapers in July, which denounced Labour’s national executive for refusing to adopt in full the International Holocaust Remembrance Alliance (IHRA)’s incoherent and selective definition of antisemitism, and in particular the example this gives of “claiming that the existence of a State of Israel is a racist endeavour”. The editorial comments: “In so doing, Labour makes a distinction between racial antisemitism targeting Jews (unacceptable) and political antisemitism targeting Israel (acceptable)”.32 So antisemitism needn’t have anything to do with prejudices about or ­discriminating against Jews, but can consist simply in accepting the ample historical evidence that the State of Israel—historically a highly controversial project within the much broader culture of European Judaism—was founded and continues to rest on racism. In early September the Labour national executive caved in and adopted the IHRA definition in full—a major victory for Israel and its supporters, which will make it much harder to organise for solidarity with the Palestinians in Labour Party circles.

This retreat is part of a larger pattern. Corbyn tried to qualify the NEC capitulation on antisemitism but was overruled by his own supporters. At a later NEC meeting he saw his proposals for party democratisation kicked into the long grass. And now he faces the even trickier problem of how to respond to the latest setback Theresa May’s government has suffered over Brexit—the rejection of her “Chequers plan” by the EU summit in Salzburg on 19-20 September. These proposals for Brexit reflected her desperate efforts to square the circle between the pressures from the Brexiteers in her cabinet and on the Tory backbenches for a clean break with the EU and the demands from big business that departure from the EU should change things as little as possible economically.

Adopted by the cabinet in July at the price of the resignations of Boris Johnson and David Davis, the plan involves a post-Brexit Britain retaining considerable elements of EU regulation in order to keep access to the European Single Market for its exports of goods and thereby to preserve the transnational supply chains that manufacturing firms investing in Britain have built up in the past few decades. May hoped to face down her opponents in the Tory right by arguing that this was the only deal on offer.

But now the EU-27 have pulled the rug from under her. This outcome reflects the fundamental bargaining asymmetry between Britain, whose economy is dependent on access to European markets, and the rest of the EU. The Financial Times drew an analogy between the Brexit negotiations and those that led to Britain joining the European Economic Community in 1973:

Both then and now, to London’s great annoyance, Europe’s approach has what one senior EU diplomat calls a “mechanical” quality. Rather than a fluid exchange between equal parties, it approaches talks as more like a process where the weaker country eventually adapts. The main variable is the pace of change… Pascal Lamy, the former head of the World Trade Organisation and two-time European commissioner, attempted to capture the asymmetry when describing Brexit not as a negotiation but “an adjustment”. On hearing the quote, one senior EU figure involved in Brexit talks cried: “Voila!”33

Voila indeed. May’s humiliation means that any deal she eventually achieves may not pass the House of Commons. In one sense this is good news for Corbyn because it brings closer the prospect of a general election. But the higher probability of a government defeat has given growing impetus to the campaign for a second referendum on Britain’s relationship with the EU. This has been spearheaded by People’s Vote, an organisation in which the Liberal Democrats and the Labour right are strongly represented (it is based at the offices of Open Britain, whose executive director, James McGrory, was a special adviser to Nick Clegg), and which has the support of pro-EU pressure groups such as the European Movement. Corbyn has resisted supporting a second referendum, partly because Britain’s continued membership of the Single Market would restrict the economic policies a Labour government could pursue, partly for fear of alienating the Labour supporters who voted Leave in the June 2016 referendum.

Labour’s stance of studied ambiguity on Brexit worked out very well in last year’s general election, when Corbyn’s campaign for alternative economic policies proved attractive to both Remain and Leave voters. But he has come under huge pressure to back a second referendum from the Labour right still strongly entrenched in the shadow cabinet and the Parliamentary Labour Party and also from his own supporters in Momentum. The Trade Union Congress tightened the vice by backing a “people’s vote” in early September. At the Labour Party conference itself, Corbyn and McDonnell were forced to accept a compromise motion that, while giving priority to the demand for a general election, put a greater stress than previously on a “public vote”. Right-wing shadow Brexit secretary Keir Starmer gave the game away when he said in his conference speech: “Our options must include campaigning for a public vote and nobody is ruling out Remain as an option”.34

The idea that the final terms of Brexit should be put to a popular vote is superficially attractive. But this argument is really a stalking horse for restaging the June 2016 referendum on British membership of the EU. A Lib Dem leaflet makes this very clear: “WHO GETS THE FINAL SAY ON THE BIGGEST ISSUE OF OUR LIFETIME?… EXIT FROM BREXIT”. Restaging referendums till Brussels gets the answer it wants has a sordid history—the Danish electorate were bullied into voting twice on the Treaty of Maastricht and the Irish on the treaties of Nice and Lisbon, though the Greek referendum of July 2015 represented a new stage in the EU’s war on democracy since it was overruled by Merkel without the formality of a second vote. Some European leaders made it clear in Salzburg that they are still hoping for a second referendum that will reverse the first one.

But the real problem with a “people’s vote” is political. The June 2016 vote revealed a society deeply polarised in its attitude towards the EU in which the poorer and less educated you were, the more likely you were to vote Leave. Restaging the referendum would reinforce the social and political alienation that many Leave voters plainly felt. Neal Lawson of the Labour left Compass group, a Remain supporter, has stated the problem very well:

If there is a second referendum, I fear that a pro-EU view might win simply because a large swathe of people just won’t bother voting a second time, because they are resigned to the fact that the “elite” will always win and will keep coming back until they do. They will give up on democracy. And who could blame them?

Just as I hate the thought of the social and economic damage Brexit could bring, I can’t bear to think what a second vote would do to the hearts and hopes of the people who voted for Brexit, who for once trusted the system, who had a democratic outlet for once in their life—only to find that they didn’t. Politics and democracy has already failed them, closed their industries, marginalised and humiliated them—and then offered them a huge scream button to hit in the shape of the referendum, which they duly pressed. Could they now have even that last bit of power taken away?35

Whatever the outcome, a second referendum would be a gift to the Tory Eurosceptics and the far right. They would seek systematically to exploit the sense of betrayal at the “elite’s” attempt to override the June 2016 vote and to whip up more anti-migrant racism. UKIP would be reinvigorated amid a climate that would favour the growth of the fascist groups. While predictions that the original referendum would push British society to the right have proved quite mistaken, a second “people’s vote” would most probably have that effect.

A second referendum would also further divide the left, which split between pro-Remain and pro-Leave groups in 2016. It would also leave Corbyn isolated. The support Momentum has given a “people’s vote”, like its backing for the IHRA definition of antisemitism and its tendency to abstain from the anti-racist movement, massively contradict the movement’s ostensible raison d’être of supporting Corbyn. But the danger posed by the far right underlines the importance of the left staying united against racism and fascism. Stand Up to Racism has received increasing support from left-wing Labour leaders and the TUC. Now is the time to transform it into a real mass movement.

It’s also time for boldness. Against the background of the broader legitimacy crisis of neoliberal capitalism, the British state could be heading into stormy waters. One astute observer of the EU, Wolfgang Münchau, argues that, thanks to miscalculations on both sides, “we should all prepare for a no-deal Brexit. In the absence of further developments such as a change of political leadership, a general election in the UK or a change of position by EU leaders, we should consider it to be the single most probable scenario”.36

Corbyn’s and McDonnell’s response to Tory disarray—to raise the stakes in their challenge to big business was exactly right. It treats Britain’s departure from the EU as an opportunity to develop an economic model that doesn’t rely on generating financial bubbles that boost the profits of the City—though Martin Upchurch’s article in this issue should leave no one in any doubt of how difficult it would be to realise this.37 To respond effectively to the Long Depression and the crisis of hegemony it has unleashed requires both offering an economic alternative and rallying the strongest possible opposition to the racist right and its Nazi fringe.

Alex Callinicos is Professor of European Studies at King’s College London and editor of International Socialism.


1 For two good surveys, see Authers, 2018b, and Sandbu, 2018. Authers, 2018a recaptures the atmosphere of the autumn 2008 panic, when it was a pleasure to read the paper the author works for, the Financial Times. Thanks to Joseph Choonara and Camilla Royle for their comments on this article in draft.

2 Quoted in Authers, 2018b.

3 Tooze, 2018a, pp19-20.

4 For example, Callinicos, 2016; Panitch used this formulation in “Trumping the American Empire”, Seminar in Contemporary Marxist Theory, King’s College London, 8 November 2017. For a critique of Tooze’s version of the argument see Ip, 2018.

5 Tooze, 2018a, pp79 and 81.

6 Tooze, 2018a, p81. The Federal Reserve Board, the US central bank, is nicknamed the “Fed”.

7 Tooze, 2018a, p159.

8 Tooze, 2018a, pp9-10.

9 Tooze, 2018a, p219.

10 Panitch and Gindin, 2012.

11 Tooze, 2018a, p612.

12 Mander, 2018.

13 Mander, Wrigglesworth, and Smith, 2018.

14 Tooze, 2018a, p618; Gramsci, 1971, p178, Gramsci, 1975, III, p1579.

15 For example, Roberts, 2016 (see also his review of Crashed—Roberts, 2018) and Callinicos, 2010, chapter 1.

16 Gowan, 1999.

17 See the brilliant posthumously published essay Gowan, 2010.

18 Tooze, 2018a, p97. Compare Simonazzi, Ginzburg, and Nocella, 2013, and Pradella, 2015.

19 The renewed process of concentration and centralisation over the past decade or two is one of the main themes of Moody, 2017, reviewed by Tony Phillips in this issue.

20 Roberts, 2016, Choonara, 2018.

21 Tooze, 2018b, p20.

22 Keynes, 2010, pxviii.

23 Wolf, 2018.

24 Tooze, 2018a, chapters 23 and 24.

25 Owoseje, 2018.

26 Gramsci, 1971, p210; Gramsci, 1975, III, p1603.

27 Palheta, 2018.

28 For a sceptical assessment of Aufstehen, see Lochocki, 2018.

29 See, in addition to Martin Upchurch’s article elsewhere in this issue, Blackburn, 2018.

30 Pickard, Parker and Plimmer, 2018.

31 Callinicos, 2018. For an incisive overview of the controversy see Finn, 2018.

32 Jewish Chronicle, 2018.

33 Barker, 2017. See the blow-by-blow account of what bargaining with the EU is like in Varoufakis, 2017.

34 Clark, 2018.

35 Lawson, 2018.

36 Münchau, 2018.

37 See two interesting attempts to think Brexit in left (moderately reformist) terms—Bickerton and Tuck, 2017 and Bickerton, 2018.


Authers, John, 2018a, “Financial Crisis 2008: A Reporter’s Memories from the Front Line”, Financial Times (7 September), www.ft.com/content/c2d50f1c-b18c-11e8-8d14-6f049d06439c

Authers, John, 2018b, “Too Big To Fail: Too Much To Read”, Financial Times (17 September), www.ft.com/content/2d57774a-babf-11e8-94b2-17176fbf93f5

Barker, Alex, 2017, “Brexit: EU and UK Battle over ‘an Accession in Reverse’”, Financial Times (3 December), www.ft.com/content/e4824a0a-d373-11e7-8c9a-d9c0a5c8d5c9

Bickerton, Christopher, 2018, “Brexit and the British Growth Model: Towards a New Social Settlement”, Policy Exchange (July), https://policyexchange.org.uk/wp-content/uploads/2018/07/Brexit-and-the-British-Growth-Model.pdf

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