Tristram Hunt: Groundhog capitalism





[Tristram Hunt's Penguin biography of Engels is published early next year.]

Had Marx and Engels lived to see the day! The counting houses of global finance in freefall, traders going to the wall, and now Washington seemingly intent on nationalising its entire banking sector. As stockmarkets crash around the world, what we are now witnessing is an old-fashioned, full-throttle crisis of capitalism, and no event was more inclined to lift the mood of communism's founding fathers.

In the 1850s Friedrich Engels was in Manchester, earning his and Karl Marx's crust working for his father's cotton-thread business, Ermen & Engels. After the failure of the 1848 revolutions, both men had concluded that communism's best chance lay with an economic rupture brought about by capitalism's inherent instability. And from within the very apex of global finance - the mills, counting houses and Royal Exchange of Cottonopolis, as Manchester was known - Engels reported back on the prospects of just such a collapse. As the mid-Victorian economic boom appeared to stumble and a worldwide credit crunch loomed in ways not dissimilar to the current denouement, Engels could not contain his glee.

"Speculation in railways is again reaching dazzling heights - since January 1 most shares have risen by 40%, and the worst ones more than any. "Ça promet!" he announced in 1851 of another stockmarket bubble similarly out of control. Capitalism's finale was just around the corner: the railway frenzy was unsustainable, the East India market looked sub-prime while the British cloth industry was being hit by a flood of cheap cotton.

"If the crash in the market coincides with such a gigantic crop, things will be cheery indeed. Peter Ermen is already shitting his pants at the very thought of it, and the little tree-frog's a pretty good barometer," Engels wrote of his fearful business partner. Bankruptcies were picking up in London and Liverpool, overproduction was glutting the market, and Engels was adamant the crash would kick in by March 1852. It wasn't to be. Instead exports surged, wages rose, standards of living improved and the mid-Victorian boom ground inexplicably, frustratingly, on.

Four years later Engels's optimism returned as the markets faltered. "This time there'll be a dies irae such as has never been seen before: the whole of Europe's industry in ruins, all markets overstocked ... all the propertied classes in the soup, complete bankruptcy of the bourgeoisie, war and profligacy to the nth degree." And at last, he was right: overproduction in the textile markets and an unexpected hike in raw material costs led to a collapse of confidence in the cotton industry, then an HBOS-style run on the banks, and a spate of insolvencies. Like this week's collapsing stockmarkets, the 19th-century global economy shuddered as sugar, coffee, cotton and silk prices plummeted.

"The American crash is superb and not yet over by a long chalk," Engels wrote in October 1857. "The repercussion in England would appear to have begun with the Liverpool Borough Bank. Tant mieux. That means that for the next three or four years, commerce will again be in a bad way. Nous avons maintenant de la chance." The conditions for revolution were ripe. With the capitalist mode of production in collapse, the working class would surely rise to the occasion. But two months into the crash the proletariat had still failed to realise its historic calling. "There are as yet few signs of revolution, for the long period of prosperity has been fearfully demoralising," Engels noted gloomily. And by the following spring, business had picked itself up again on the back of new markets in India and China.

The final hope lay with the 1860s cotton famine. Then, as now, the crisis of capitalism was US driven, with the civil war leading to a blockade of the south by the north, curtailing cotton exports into Lancashire. Hundreds of thousands of workers were sacked. "You will readily understand that all the philistines are in a cold sweat," Engels reported in 1865 as the Liverpool docks emptied and 125,000 unemployed mill hands wandered the Manchester streets. "A lot of people in Scotland are finished as well, and one fine day it's bound to be the turn of the banks, and that'd be the end of the matter." But it was another false dawn, as the British working class stoically endured further immiseration. By which time Engels had pretty much given up on them. "The English proletariat's revolutionary energy has completely evaporated," he concluded.

While few would expect any such militancy from laid-off bankers, what remains of the Marxist movement today is brimming with optimism that the financial crisis sounds the death knell of capitalism. With almost Alistair Darling-like doom, the International Committee of the Fourth International has declared that "the contradictions within the world capitalist economy are now reaching the point where the type of financial catastrophe and social and economic devastation experienced in the 1930s is not only possible, but is increasingly likely".

I'm not so sure. The uncomfortable truth is that capitalism - assisted by a pliant state - has historically managed to extricate itself from similar crises and emerge ever more virulent. Marx died trying to explain away precisely such incongruities, while Engels chose a different route: building up a remarkable stockmarket portfolio while complaining about tax on his dividends. The final crisis has a little way to go.



comments powered by Disqus