The alterations of general economic perspectives must lead to alterations of the relationship between the workers and their employers. The suddenly change of circumstances coincided with many strikes that had already begun, and with many more, that were being prepared. Doubtless, they will be proceed in spite of the Depression and will lead to even higher wages. The factory owners will argue that they are not in the position to pay higher wages, to which the workers will respond that the cost of living has become higher, and so the two arguments will equally weigh against each other. In case of the Depression lengthening, which is what I assume will happen, the workers will soon receive the whole brunt of it, and they will – without intending it – have to struggle against the fall of wages. Then their activity will flow into the political plane, whereby the new economic organizations created by the strike will be of invaluable worth to them. – Marx, the New York Tribune, 27. September 1853

Marx was writing at the time of the Crimean War. The railroad frenzy in England had collapsed (as has been often remarked, the political and economic consequences of the oversupply of rail and of the oversupply of optic fiber cable, one hundred forty some years later, display remarkably similar trajectories). Britain’s war was being fought for cloudy reasons, and had no visible exit to it. The economy was in Depression – a term that has been daintily replaced, in the modern lexicon, by recession, euphemism being the last resort of economists when all else fails. Marx, at this time, was stuffing himself with despair, beer, lust for house maids, and blue-books. As James Buchan, I believe, has noted, with the job for the Tribune, and his other writings, Marx wasn’t making bad money – yet his household was always near the very end of its financial tether.

Here’s what he says in a letter to Engels written about the same date:

Above all I want to slay the fellows with my pen, the moment being propitious, and if at the same time you keep me supplied with material, I can spin out the various themes over longer periods.

Why the quotes from Marx? Well, we’ve been pondering an article in Slate by Chris Suellentrop about the Spanish socialists. No, it isn’t about whether they have definitively leaped off the Good Ship Lollipop and joined the Barbary Corsairs (leave that to the ever ignorant Christopher Hitchens). It is about the hollowed out status of European Socialism:

“Despite what you may have heard, socialism isn't dead. It's undead, a zombie that still roams the earth uncertain what to do with itself since its demise. It was sighted again this week, somewhere on the Iberian Peninsula, though some observers dismissed the reports. Sure, a group named the Socialist Workers Party won the elections in Spain, and a Socialist named José Luis Rodríguez Zapatero is slated to become the country's next prime minister. But it says something about the state of small-"s" socialism—in addition to the state of the world—that conservatives are attacking Zapatero for his response to terrorism, not his attitude toward capitalism.”

That is fair enough play with the specter that haunted Europe. And it is certainly true that Zapatero’s ministers assured the financial markets that the election of socialists does not entail the implementation of socialism – which is what socialists have been doing since Ramsay McDonald assured the City that he had no intention of producing policies that would actually benefit the working class, or chip even the slightest percent from the Bank’s bonds. Suellentrop is right to say that the neo-liberal agenda, in Europe, almost always advances in the Trojan horse of socialist parties.

“In One Hundred Years of Socialism, the historian Donald Sassoon notes that over the course of the 1960s, '70s, and '80s, European socialists went from wanting to get rid of capitalism to declaring "that they were the ideal managers of it."

But Zapatero, Blair, and Schröder are taking this a step further: They're dropping much of the socialist project of economic interventionism. The vestige of socialism they cling to is the commitment to a strong social safety net that can balance the inequities of unbridled capitalism. Schröder may be going the furthest: He's trying to cut Germany's welfare state in order to save it. (Americans might be amused that some Germans are outraged because they now pay $12.40 each time they visit the doctor.) Zapatero's shift toward market economics is understandable: He has to live up to the stellar performance of his predecessor. As the Wall Street Journal Europe noted this week, during José Maria Aznar's eight years as Spain's prime minister, unemployment dropped from 20 percent to 11 percent, and the country created 40 percent of the European Union's new jobs, 4.2 million of them. During the Socialists' 20-year reign from 1976 to 1996, the country's job growth netted out at zero.”

However, the crowing tone is rather odd, given that in the current Depression, the U.S. economy is being supported by a mortgage market that is, in effect, guaranteed by the government and financed through huge public/private corporations; that the record trade and spending deficits are being underwritten by Asian central banks – not least the central China bank, which is controlled by the Communist party of China; and that the most conservative president we have ever seen is running partly on a record that includes running up Medicare entitlements some five hundred billion dollars.

As for job growth – well, perhaps U.S. job growth shouldn’t exactly be bragged about right now. During Bush’s three year reign, the country’s job growth netted out as a loss of 3 million jobs, and that is probably a conservative estimate.

On the first point – as Hamish McDonald put it in the Sydney Morning Herald:

“Asia's depressed currencies and massive US dollar reserves are a recipe for an American recession...

Despite some evident misgivings about his rising level of indebtedness, US President George Bush's bankers of last resort are continuing to lend him the funds to pay for vital necessities like tax cuts, the war in Iraq and missile defence.

Toshihiko Fukui and Zhou Xiaochuan no doubt have their disagreements about Mr Bush's priorities, but as governors of the central banks of Japan and China, respectively, they are continuing to build up already massive holdings of US Treasury securities.”

Thus Lenin’s supposed dictum is neatly inversed. The capitalists, you remember, were supposed to sell the communists the rope with which they were to be hung. It appears that the communists are now doing the rope selling, and the capitalists are busy weaving it into nets to engage in hugely expensive adventures in neo-colonialism. Nowadays, you can’t tell the weaver from the weave.

But it is the trade deficit that points to an underlying story about the end of socialism as a “new economic arrangement that emerges on the political plane.” We have always thought that the decline in socialism, including the decline in labor unions, worked in tandem with the invention of the expanded consumer credit market. In short, the Bank America card was the potent weapon that destroyed Das Kapital.

This is a thesis that we have never seen pursued. This is odd. It is only by retaining that penumbra of credit that American families, in the early 80s, were able to initiate their middle class lifestyle survival technique, which consisted of pouring women into the marketplace. It is only by retaining their ability to take out mortgages on ever easier terms that the American consumer has floated even the weak American economy we see at present. In the meantime, what would appear to be the best opening for union activity in the past fifty years – the revelation after revelation of the gouging of corporations by top management – has resulted in nothing. If anything, a shift towards a lower and lower union membership.

We wonder whether the strains in this system are going to continue to deliver the benefits of social welfare under the aegis of New Economy capitalism, or not. The system itself has retained a stubborn invisibility – it does not seem to have occurred to any economic historian to inquire about the macroscopic effects of expanded consumer credit on the cultures of the Western countries even as economists push for policies that require an ever greater credit market to finance an ever greater level of demand.

There’s a nice moment in the French Lieutenant’s Woman (LI is reading John Fowles at the moment, since we’ve been hired to write a review of a John Fowles biography). The time is 1865. Sam, a valet, tells his employer, Charles, a fairly well to do scion of an aristocratic house, that he wants to get married and set up a shop. Sam claims that he has saved up 30 pounds – an incredibly good sum, over two years, considering that it is more than a fourth of his pay. To set up a shop, he needs 200 pounds. Where is he going to get it? He applies to Charles, naturally.

Today, Sam would probably apply to a bank. More than that, however: Sam would have been able to live above the immediate purchase power of his salary because he is surrounded by the invisible, omnipresent means to do so. In 1865, or 1853, banks would simply not loan money to the likes of Sam. In order to borrow money, Sam has to turn to his very human network – his family, his employer, his friends.

We underestimate the massiveness of these exchanges. It was in getting credit, as well as higher wages, that the working class came to know the bourgeoisie. It was face to face knowledge, it was indelible, and the hostility it created ensured the creation of further hostilities all over the West for two hundred years. The collapse of this face to face encounter erased a factor that played a huge role in the creation of class consciousness. In its place has come a form of mimetism – the imitation of the wealthier by the less wealthy. This is the prevailing mode in our everyday symbolic interactions.

The long implementation of the new form of capitalism, in the sixties and seventies, provoked a crisis of authenticity among the left’s intellectuals of the period. It is this that partly explains the popularity of total systems of control – whether it is Foucault’s regime of surveillance, or Galbraith’s technostructure. By removing the traditional modes of hostility from the relationship between the working class and the management class -- by removing, in effect, the theater of the negotiation -- the system, in effect, paralyzed the working class, and put its intellectuals into an untenable position. The smartest of them, like Foucault, realized that the dialectical truth of the moment was not simply that control had achieved a greater level of penetration and invisibility, but that it had suddenly created both the means and the necessity of producing pleasure.

Well, we will see if this system can overcome its contradictions. One thing is for sure: the death of socialism was not a victory for capitalism. Both were utterly transformed in that struggle. To tell you the truth, the struggle still goes on. In spite of Suellentrop’s crowing.