Cooking the Books 1: How Long Will it Last?
‘Permanent crises do not exist’, Marx once wrote (in Part 2 of Theories of Surplus Value), by which he meant that a check to capital accumulation brought about by overproduction would not be permanent; the slump itself would create the conditions for capital accumulation to resume.
This tells us nothing about how long this might take. That depends on the particular circumstances of each period of slump. Sometimes recovery might be fairly quick. Sometimes it might take longer, as two capitalist bosses have recently reminded us.
Sir Martin Sorrell, chief executive of the advertising agency WPP, has ventured the following opinion as to how long the present slump might last:
‘”Going cold turkey and weaning the economy off the stimulus drug is clearly painful and will take some time,” he said. “The nearest historical parallel to the latest recession, which started… in August 2008, seems to be the Great Crash of 1929, which took at least ten years to recover from – a long, hard slog.”‘ (Times, 25 August)
His fellow capitalist Terry Smith, chief executive of the inter-dealer broker Tullet Prebon, went even further back in time. He was reported as saying that:
‘the world was heading for an inevitable and necessary recession. “It’s something we have to have,” he said, dismissing governments’ efforts to stimulate the economy as “trying to push a piece of spaghetti”. He likened the present post-crisis era to the Long Depression after the 1873 banking crisis – which, according to some historians, lasted for 23 years. “People are going to realise they are a lot poorer than they used to be,” Mr Smith said.’(Times, 1 August)
While the one capitalist envisages at least ten years of pain (for others) and the other looks forward as “necessary” to people (not him) being “a lot poorer than they used to be”, Times economic journalist, Anatole Kaletsky, is not so brutal. He thinks that this will only happen if the governments of the leading capitalist countries don’t get their act together:
‘Sooner or later, the private sector will recover and generate some kind of economic revival. But it will be a long and painful wait if governments and central banks around the world cannot co-operate to avert another recession.’ (Times, 10 August)
Could the present slump really last for a decade or more? It’s not impossible, as this has already happened twice. The present slump has already lasted for three years and GDP is still a long way from what it was at its peak in 2008. So it’s not going to be a short one.
The truth is we don’t know and can’t know. There is a lesson here. The prolonged depression of the 1870s and 1880s led Engels to comment in his preface to the English edition of Capital that was published in 1886:
‘The decennial cycle of stagnation, prosperity and crisis, ever recurrent from 1825 to 1867, seems indeed to have run its course; but only to land us in the slough of despond of a permanent and chronic depression.’
He gave as an explanation that ‘while production increases in a geometric, the extension of markets proceeds at best in an arithmetic ration.’ Events proved him wrong on both counts, a warning to socialists not to draw hasty conclusions from the situation in the middle of a slump.
The future course of capitalism is largely unpredictable. All we can say with certainty is that it is an irrational system subject to swings from boom to slump which have nothing to do with the level of actual human needs.