Janet and Capitalism

Mar 31, 2009 Editorial

The passing of former President Janet Jagan, we noted on Sunday, “marks the end of an era – the era of our transition from colonial to modern politics.” We alluded also, to the acceptance by Dr. and Mrs. Jagan of the ideology of Marxism as a guide to their praxis in that type of politics.
With the benefit of hindsight, it is easy to criticise them for having the temerity to criticise capitalism and its operations in Guyana in light of the powerful forces that were arrayed against them at the time. But recent events emanating from the bastions of capitalism – representing all its variants – have vindicated their critique of the system.
The fall in the early 90s of the Soviet and Eastern European regimes that had hitched their wagon to the Marxist star had led some to overenthusiastically predict the “end of history” and presumably. the arrival of Nirvana. While Janet Jagan was, by all accounts, never a doctrinaire ideologue (and one suspects that she would have agreed on economic matters with Deng Xiaoping who constructed the new China: “It matters not what colour the cat, it matters only whether it catches mice”) she would have had her doubts.
Janet Jagan’s commitment to Marxism had been honed in her concrete experiences during the Great Depression of the 1930s when she was a young girl in the American Midwest. She would have observed firsthand the impact of the financial meltdown on the real economy: the millions of real men and women who were thrown out of work from the closed factories. Back in Guyana, her future husband, who would enter the U.S in 1938, had experienced the impact of that Depression even in the periphery where wages in the sugar industry had contracted more than twenty-five percent. The commitment of the Jagans to Marxism was always based on their concerns for the impact of the workings of capitalism on the ordinary folks – the “working class”.
Marx’s critique that the boom and bust cycles of capitalism were inevitable and were precipitated by the inherent compulsion of capital to seek the greatest return – invariably at the expense of the workers – has never been trumped. Many were lured into a sense of false security by the “great moderation” of the past couple of decades and assumed that the problem had been “solved”. We now appreciate the irony of that position.
As finance fled America for greater profits abroad, the U.S. workers were told that they could get a piece of the mammoth returns, not from salaries obviously, but by easy credit – in housing, credit cards, car loans etc, etc. The rest of the world, especially China and producers of commodities, underwrote America’s profligacy by freely accepting the U.S. denominated capital – in effect providing a seemingly endless supply of credit to them. The bubble that was created had to burst sometime and it has now. The ones who are feeling the strain the greatest are the U.S. workers – the financiers, with all the hullabaloo about claw backs, have long pocketed their profits and plunked them into assets. Janet Jagan would have known that sooner or later we – who are almost all workers – would also feel the squeeze in Guyana.
Back in 1997-98, when the Asian Crisis was precipitated by a speculative run on the currencies of several Asian economies, Janet Jagan was reported to have predicted that capitalism, as a system, was in deep trouble. The seeming success in the developed world that followed that crisis might have appeared to disprove her assertion but we know it was only a temporary reprieve.
The response of the IMF – spearheaded by the now U.S. Treasury Secretary Geithner – was so heavy-handed that the Asian economies vowed never to have it reoccur. They decided to build their reserves to such an extent that they could ride out any crisis. Those reserves were recycled through U.S. T-bills etc and further expanded the credit-induced bubble. Its hastened denouement just needed a trigger, which came at the weakest point of the chain in the U.S. – the workers who had to default even on their sub prime mortgages. Janet Jagan has been vindicated.

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