VANGUARD - Expressing the viewpoint of the Communist Party of Australia (Marxist-Leninist)
For National Independence and Socialism • www.cpaml.org
Sometimes human language fails to find adequate expressions to accurately and scientifically describe phenomena beyond our lived experience.
At the two extremes of matter in motion, where observations require extremely precise mathematical calculation, scientists fall back on metaphor and poetry to describe phenomena. Particle physicists attribute to a range of sub-atomic particles known as quarks the properties of “charm”, “colour” and “flavour”. Astrophysicists have given us “white dwarfs”, “black holes” and more.
In Capital Marx revealed in painstaking detail the economic laws of motion of modern society derived from his analysis of the production, distribution and exchange of commodities and embedded in the various circuits of capital. Bourgeois economists have spent 150 years distorting and denying Marxist political economy. Part of that distortion and denial is the creation of terms which capture surface appearances while obscuring the underlying laws. They develop their own language in the process, for example, “naked shorts” and “dead cat bounces” in the share markets and “deep pools” in the murky world of under-the-counter derivatives.
The economic and financial crisis of 2007-8 shocked and scared the economic observers of the ruling class. Instead of using scientifically correct Marxist terminology, they gave us “fat tails” and “black swans” (see below) amongst others. A fat tail describes an aberration in the bourgeois belief that the economy (profits and losses on the stock market in particular) follows a fairly predictable rise and fall over time. A horizontal graph will therefore have movement above and below the line within an understood range. Investors try to “read” this movement to buy and sell shares at the most advantageous moments.
However, the law of uneven development does not allow such “normality”. Crises of overproduction (including overproduction of speculative capital, of capital with fictitious values unrelated to the production of commodities) conspire to disrupt the imaginary normality of capitalist activity. A fat tail is therefore a major spike either above or below the normal range of rises and falls on our horizontal graph line. Fat tails on the “loss” side of the horizontal axis are the stuff of financial nightmares. They are, however, required for a periodic destruction of over-inflated values within the circuits of capital.
2007-8 was such a major nightmare that finance capitalists awoke to the use of a new term: “black swan”. Black swan events were said, post-2007 when the term was coined, to have three characteristics: (i) they are unexpected and rare, thereby lying outside the realm of regular expectations; (ii) their impacts are wide-ranging or extreme; (iii) they can only be explained after the fact. The existence of black swans was based on the proven inability of central banks (such as Australia’s Reserve Bank) to predict and control through regulation and supervision, the desired state of financial stability.
The more perceptive analysts of finance capital are now acknowledging that climate change, as a consequence of the search by fossil fuel corporations for endless and expanded accumulation of capital, is looming as a threat to the capitalist classes of the world as a whole. One such analyst is the Bank for International Settlements (BIS), the central banker to the world’s central banks (eg the Reserve Bank in Australia). The BIS has credibility – in their June 2007 Report they warned of an impending crash. The Great Financial Crisis followed. Now the BIS has just released a paper called “Green Swans”. A green swan event is one arising from global climate change and is qualitatively more dangerous than a black swan event. The authors of the paper argue that green swans are different to black swans in three regards:
1. “there is certainty about the need for ambitious actions despite prevailing uncertainty regarding the timing and nature of impacts of climate change.”
2. “climate catastrophes are even more serious than most systemic financial crises: they could pose an existential threat to humanity, as increasingly emphasized by climate scientists”
3. “the complexity related to climate change is of a higher order than for black swans: the complex chain reactions and cascade effects associated with both physical and transition risks could generate fundamentally unpredictable environmental, geopolitical, social and economic dynamics.”
The BIS is yet to convince itself that the system, post-2007, has returned to anything like the textbook equilibrium of bourgeois economics. It is honest enough to admit that it doesn’t really understand what is going on, that a new black swan event could be hidden under the near-zero, or even in some countries, minus interest rates, or the unusual phenomenon of bond and share values going up at the same time. It has no idea of the severity of a crisis in which a black swan is crossed with a green swan beyond already conceding that green swans “pose an existential threat to humanity”.
Morrison and Trump isolated on climate change
In a major repudiation of the climate change inactivity of leaders such as Scott Morrison and Donald Trump, the authors warn that central banks must not wait for changes in government policy if they are to deliver financial stability and, more broadly, to avoid threats to the existence of capitalism.
They say that central banks must be more proactive, withstand any “sociopolitical backlashes” and lead public opinion away from fossil fuel reliance and in the direction of mobilising “capital for green and low-carbon investments in the broader context of environmentally sustainable development”. The risk of not doing so is that a green swan systemic financial crisis will blow up and central banks will have to “intervene as ‘climate rescuers of last resort’ and buy large sets of devalued assets, to save the financial system once more.” Those devalued assets would include coal mines and coal- and gas-fired power stations, as well as the financial institutions exposed to or dependent on fossil fuel corporations.
The spectre of green swans with fat tails is seriously beginning to haunt finance capital. It is having to concede that saving the system may require sacrificing fossil fuel industries, although in the first place they argue for carbon pricing and various other regulatory measures.
For climate’s sake, capitalism must go!
Capitalism has long disrupted the essential unity of humanity and nature, and that disruption is nearing breaking point It is a catastrophe waiting to happen. We can no longer endure a system which ha to expand, at the cost of people and their planet, to exist. None of the amusing gobbledygook behind which the bourgeoisie attempts to conceal scientific socialist examination of capitalism will save this system. If we want to avoid the catastrophe and restore balance to the relationship between people and nature, we must reject and abandon capitalism.