The International Monetary Fund has released a paper entitled Inequality, Leverage and Crisis making the case that inequality was an ‘underlying cause of the Great Recession of 2008-2009′, The Telegraph reports:

“Global unemployment remains at record highs, with widening income inequality adding to social strains,” he [IMF chief Dominique Strauss-Kahn] said, citing turmoil in North Africa as a prelude to what may happen as 400m youths join the workforce over the next decade. “We could see rising social and political instability within nations – even war,” he said. [my emphasis]

I doubt the IMF has taken a drastic leftward turn (as this article suggests, it is subtley backing Washington’s position on the emerging ‘currency war’ between the US and China, and it has come out against any form of capital controls). Still, paragraphs like this are startling:

The paper, by the Fund’s modelling unit, warned of “disastrous consequences” for the world economy unless workers regain their “bargaining power” against rentiers. It suggests radical changes to the tax system and debt relief for workers.

During the current crisis the IMF has found time from its busy schedule of structurally readjusting the living shit out of third world countries to give some decent advice to the world’s policymakers. Last year it released a paper arguing that one of the best ways to boost global demand would be to increase wages as a proportion of national income (thus ending a decades-long trend of wage stagnation in countries like Britain and the US). It has also warned countries of the dangers of public spending cuts. (See the brilliant Duncan of ‘Duncan’s Economic Blog’ for more: http://bit.ly/gAzOEH).

The fact that the countries currently up in flames are all vastly unequal (intuitively something likely to encourage civil strife) hasn’t been pointed out much recently. These revolts aren’t just pro-democracy, they’re also against the parasitic elites who enjoy stunning opulence while hundreds of thousands live and die well below the poverty line. Hopefully with pronouncements like this coming from the IMF this might become a talking point.

The growth of inequality in recent decades seems to be at breaking point. A few months ago I wrote about some research showing that increasing inequality isn’t even making the rich feel better off (quite the opposite), and multi-billionaires Bill Gates and Warren Buffet have even offered to pay more taxes to deal with the US’s deficit crisis. Without the veneer of increasing consumption and cheap credit to distract us (and with spending cuts for the many coupled with tax cuts for the few on the way), the vast inequalities developed over the decades are now almost offensively obvious.

Sam Harris on the Huffington Post recently commented: “We now live in a country [the US] in which the bottom 40 percent (120 million people) owns just 0.3 percent of the wealth. Data of this kind make one feel that one is participating in a vast psychological experiment: Just how much inequality can free people endure?” I feel we may be reaching that limit (and we now know to ask how such inequality can be endured by people much less than free.)

Alan Johnson announced he’s resigning as Shadow Chancellor for family reasons. Reading between the lines, could it be because he knows nothing about economics, frequently clashes with Ed Miliband and is just a little bit shit? Let’s hope Ed picks someone a bit more suited to the role next time, who’ll really go for the coalition’s jugular.

Edit (by Owen, not Salman): Miliband’s picking Ed Balls, which could be good. He was pretty effective at attacking the Coalition’s economic policy when he was standing for leader, and given his support for control orders, it’s an added bonus that he won’t have the Home Office brief any more.

In a recent email to the rest of this blog’s editors, Jacob requested, in his usual forthright fashion, that we refrain from writing ‘pseudo-insightful piece[s] based around new years’ resolutions’, so I’m not going to do that. However, because it’s Boxing Day (at the time of writing), because I’m full of too much wine and unhealthy food, and most of all because I’m frankly a lazy fucker, I’m going to do the next worst thing: my predictions for the world of politics in 2010. If you think I’m wrong about any of the following, by all means say so. I freely admit most of this is sheer guesswork, with occasional instances of stating the bleeding obvious. (But if any of it turns out to be right I’m still going to crow about it for weeks).

In the months leading up to the election, Labour will start sounding a lot more leftwing in an effort to shore up their core vote. They’ll bring out a raft of populist policies aimed at boosting their share of the vote, but it won’t be enough, and the Tories will win the general election. And yes, I realise that isn’t exactly the boldest of forecasts, so let’s be a bit more specific: the Tories will get a majority of between 50 and 100, the Lib Dems will lose seats but not so catastrophically that they get rid of Clegg, and Labour will be badly hurt but not wiped out like the Conservatives were in 1997; Brown and the rest of the government are obviously pretty unpopular, but at the same time my hunch is that there isn’t enough love for Cameron and friends for them to get a landslide. Caroline Lucas won’t become the Greens’ first MP in Brighton Pavilion, though she’ll probably come close. Galloway will be unlucky too: Bethnal Green and Bow will revert to Labour once he leaves, and he’ll split the traditional Labour vote in Poplar and Limehouse just enough to let the Tories in.

In the election aftermath, Brown will resign (yes, I know, big surprise again), and he’ll give a resignation speech which sets an all-time record for mentions of the words ‘Britain’ and ‘British’, with ‘values’ and ‘duty’ following close behind. Now that they’re sure he’s on his way out, the mainstream media will be really nice about both the speech and the man himself. A mob of pundits will gather to wax lyrical in print and on air about all his good points that were so often overlooked and downplayed by…well, those same pundits, as it happens, but never mind. David Miliband, Jack Straw, Alan Johnson, Harriet Harman and one or both of Jon Cruddas and John McDonnell will stand for party leader. Ed Miliband will look like standing but will stand aside at the last minute and back his brother. Harriet Harman will be unable to come up with any substantial reason why anyone should vote for her other than her lack of a Y chromosome, and the rightwing press will once again paint this as evidence of her radical man-hating feminist nature, rather than simply evidence that she’s a technocratic New Labour drone whose sex is the only thing that distinguishes her from the majority of senior figures in her party, and who – unfortunately – long ago lost touch with anything remotely resembling radical feminism. David Miliband will win the leadership race, and be instantly immortalised as Harry Potter by every unimaginative editorial cartoonist in the land. Jack Straw will come in second despite having less charisma than the common cold (or Harriet Harman). Rising Labour star Chuka ‘definitely not the British Obama’ Umunna will win his seat in Streatham pretty comfortably, and probably get a shadow ministerial brief.

Once in power, the Tories will make lots of noise about eliminating waste in government and cutting public sector fatcats’ pay, then slash and burn everything they can get away with. Budgets for the NHS and schools will probably get off pretty lightly (too easy to mount photogenic anti-cuts campaigns that make the government look bad), but welfare, higher education and anything to do with rehabilitation in the penal system will get hit hard. Immigration policy won’t change much, but the Daily Mail’s hysteria about it will die down a bit. Spurious and unpleasant stories about benefit-cheating single mothers will increase in volume to make up for it, helped along the way by the Tories’ ‘pro-family’ policies (tax subsidies to convince unhappy married couples to stay together – the case for ‘family’ legitimately meaning anything other than Mum, Dad and a couple of apple-cheeked kids will be set back by decades). The recession will deepen and unemployment will rise, thanks to the Tories’ spending cuts, with all the consequences you’d expect – rising crime, increasing urban decay, and so on.

In the wider world, nothing much will continue to happen in the fight against climate change. The pool of deniers will get smaller and people – even Telegraph readers – will slowly pay them less and less attention, but no meaningful action will be taken by any government, as they’ll all be waiting for the others to do something, and the prospects for concerted multilateral action look pretty damn bleak after Copenhagen. There’ll probably be at least one big jump in oil prices for some reason, though it’s hard to guess exactly what. A storm that wrecks some big refineries? Industrial action by hauliers or oil rig workers? Terrorism? Take your pick. Whichever it is, once it happens any worries about climate change in the higher echelons of government will be sidelined as the rush to exploit new sources of fossil fuels (in the Canadian tar sands, in the Arctic and so on) will intensify. The environmental protests will be stepped up in response, but they probably won’t do enough. The old standbys of war, disease and famine will continue to kill millions before their time, and civilisation will continue to lurch towards collapse. Happy New Year.

Photograph: Yves Herman/Pool/EPA

The world may be getting warmer, but, for one day at least, it looks as if hell is getting colder. What’s that? A piece of good news from Copenhagen? No, my friend, not one piece, but two! Not only is Europe pledging €2.4bn a year to help developing nations cope with the cost of climate change, but Britain and France have called for the introduction of the Tobin tax to fund it.

“To ensure predictable and additional finance in the medium term to 2020 and beyond, we should make use of innovative financing mechanisms, such as the use of revenues from a global financial transactions tax and the reduction of aviation and maritime emissions and the auctioning of national emissions permits,” Gordon Brown and Nicolas Sarcozy said in a joint statement.

It’s a handy way to tie up the twin crises of ecology and economy, compensating the poorest nations on Earth – often first in the firing line when it comes to climate change – for our occidental excesses, whilst reigning in the global financial system. The deniers and conspiracy nuts – including those not-quite-so-lefty-lefties at Harry’s Place (is there any low to which they will not sink?) -  are still wringing their hands with glee at climategate, telling us all to stop worrying, but this is, at its heart, a true redistributive measure that any genuine socialist, no matter where they stand on anthropogenic climate change, should welcome.

America, as usual, is dragging her heels. FOX News’ horsemanure of the apocalypse, Glenn Beck and Sean Hannity may delude themselves into thinking Obama is a socialist, but on this side of the pond he’s way behind a conservative Frenchman and a cardboard box.

The recession seems to have become a pantomime this week. At every opportunity the Chancellor tells us: “it’s behind you”, then the Office of National Statistics (ONS) yell: “Oh no it isn’t!” So are we in recession or aren’t we? There’s an easy answer to this – some of us are and some of us aren’t.

This is surely the most inequitable recession on record. While some are badly affected, some have actually benefited. Take investment bankers for example – this is not the part where I say “some of my best friends are bankers” because they’re not and there’s a reason for that – I’m reliably informed those bankers that kept their jobs are currently laughing maniacally while rolling in bank notes and their own effluvia. Anyone who has an interest-only standard variable mortgage is feeling gratified because the interest rates are so low. People who have secure permanent work are also comparatively unaffected.

However, for me the recession has hit home this fortnight. I am currently unemployed. In journalism terms I am ‘between contracts’, a phrase which means exactly the same as ‘resting actor’ only with even more self-righteousness. Being ‘between contracts’ is not an unusual position for journalists and anyone who is self-employed. However, there is something different about it this time: there are very few jobs.

The ONS statistics say that unemployment is reaching the 3 million mark. I think you can easily double that figure. Those statistics don’t take into account anyone the government have managed to segue into a “scheme” of some sort. Then there are the legions of people doing unpaid or barely-paid internships and voluntary work, scraping by on occasional temp work or ‘between contracts’. Many of these people are not on jobseekers allowance (the very name conjures up a ‘seek and ye shall find’ optimism). Why? Surely anyone in their right mind would go on the dole?

Not me, I’m not eligible. Sadly, this isn’t because I’m fabulously wealthy, it’s because I’m married and my husband has a part-time job – therefore he has to ‘support’ me. Whether you agree with this or not (as a feminist I have ethical problems letting him pay for drinks, so you can imagine I’m thrilled…) you have to wonder – how many hidden unemployed are there? Are we getting the full picture?

For any of you still fortunate enough to be wondering if the recession is really that bad let me tell you what it’s like on the ground. I’m getting on my bike and looking for work like a good capitalist. I’m applying for jobs that in the past I would have walked into that day, smiling beneficently and holding my nose. Now I’m up against 150 other candidates, clawing and scratching. Now consider this: I am lucky enough to have many years of solid work experience and I live in London. What about people who live in parts of the country which have been worse affected by the economic downturn? What about people who have just left university and school and have very little experience and huge debts?

If you were wondering why the school/university holidays seem to be dragging on a bit it’s because there are hundreds of thousands of unemployed young people. Things are much worse for them than they are for me. Chances are another contract will come along for me soon enough, and I’ll keep sending CV’s and moaning in my little middle-class trough of despond until it does.

The next person to tell me that ‘when they were unemployed in the early 80’s it was a great time of artistic creativeness’ will have their head impaled on a memory stick. This is a Labour government, so why does it feel like the darkest days of Thatcherism? The millions of unemployed people in this country don’t want another initiative, they just want a job – but it seems to me that Westminster is too busy arguing over the minutiae of whether we are or aren’t in recession to notice. They forget that pantomime is the most democratic of all art forms and the audience has a habit of getting involved in the show…

In capitalism’s early life Marx compared capital to a vampire, that ‘only lives by sucking living labour, and lives the more, the more labour it sucks’. Chris Harman thinks a different horror staple is appropriate for the system’s later years. Far from being the sophisticated, sentient vampire count, it is better compared to the mindless, destructive zombie, ’seemingly dead when it comes to achieving human goals and responding to human feelings, but capable of sudden spurts of activity that cause chaos all round’. Harman’s book is a detailed account of the history and nature of this zombie system, framing a thorough defence of the relevance of Marx to understanding the current economic crisis.

Zombie Capitalism benefits, ironically, from having been intended as a rather different book. Harman’s intention was an update of his book Explaining the Crisis, intended to defend similar conclusions and incorporate work done in articles in International Socialism over recent years. The Credit Crunch, Lehman Brothers and the onset of recession created a need to rework much of the book. This actually helps give greater background to the account of what is going on today. Rather than being a rushed out ‘Marxist guide to the credit crunch’ it is an important document in a particular tradition of Marxism, which gives a persuasive account of the events of the past two years by rooting them in wider processes in the system. In fact, only three of the fourteen chapters are taken up with a direct discussion of recent events.

Harman assumes little prior knowledge, and a good thing too as much of the debate amongst Marxists on these issues can be anything but accessible. Marx’s account of capitalist crisis, his Labour Theory of Value and the various debates around these issues are explained with clarity. Following Marx we get a picture of a system characterised by competitive accumulation, with periodic, ever deepening crises. A system which is international, but at the same time gives rise to powerful and competing nation states. A system which transforms use values into exchange values, and in so doing mystifies and distorts them, and which transforms even basic human capacities into a commodity. 

Harman identifies two key trends in the history of capitalism: Endless, rapid, competitive accumulation and, more controversially, the tendency of profit rates to fall. Marx argued that as the proportion of investment in fixed capital compared to that in Labour increased, the rate of return on investment will decrease. This is because Labour is the only source of value. Whilst this claim has been the source of much controversy Harman is not naïve about it, and he defends it with all the vigour of someone who has been an active socialist across five decades. This tendency, argues Harman, is crucial to understanding the various ups and downs of the global system over the past century and a half, and can help us understand what economists still see as the holy grail, the depressions of the 1870s and 1930s.

Whilst these tendencies help us understand the depressions, a developed analysis can also help us see how, temporarily, they were overcome. Drawing on arguments from Michael Kidron, he suggests out that investment in unproductive labour (defined as labour that does not aid capitalist accumulation) is leakage, or waste from the system. He argues that this insight can explain the so called ‘Golden Age of Capitalism’, from 1945 until the 1970s through the levels or arms investment at the time. The global system was stable because massive amounts of surplus value were invested in armaments during the Cold War, slowing the growth of fixed capital relative to Labour. This allowed the tendency to be offset for the longest period in capitalism’s history, but still crisis returned in the 70s.

And so to today. Since the recessions of the 1970s global capitalism has been hit by regular crisis, from the long drawn out collapse of the Japanese economy to the bursting of the telecoms bubble in 2001. Profit rates never returned to those before the golden age, and throughout the 1980s and 90s the solution was to try to prop up profits through shifting the burdens onto the labour force, holding down real wages and various ‘productivity improving’ techniques. During this period a system of finance developed which, as well as being essential to the management of ever greater international transactions, seemed to offer massive profits. The US’ biggest manufacturing firm, General Electric, received 40% of its revenue from its finance wing ‘GE Capital’, and would often use its assets to ensure it reported regular and steady growth. As Harman observes ‘the vast expansion of finance had created the illusion of a new “long upturn” in productive accumulation; the crisis of finance made that illusion disappear with traumatic effects.’

 Try as it might capitalism can’t escape Marx, and:

“In some important ways the system is even more chaotic than Marx’s account. The very size of the units that make it up means that it has lost some of its old flexibility. The destruction of some capitals through periodic crises which once gave new life to those that remained now threatens to pull these down as well. Life support systems provided by the state may be able to keep the system from complete collapse but cannot restore it to long-term vigour.”

Harman ends with an important call to arms. In re-affirming Marx’s belief that those capable of transforming society and ending capitalism are those who create its wealth, he adds that ‘those who study capitalism have to become an integral part of a movement of those who suffer from it’. And, as we all know, the only way to deal with a zombie is to remove the head, or destroy the brain.

Chris Harman is Editor of International Socialism and a leading member of the Socialist Workers Party. Zombie Capitalism is published by Bookmarks and is available from their website.

Chris will be speaking at the Book Launch at Bookmarks shop, 1 Bloomsbury St, Central London, on Tuesday 29th September, 6:30pm. Call 020 76371848 or email to reserve a place.

A minor coup this week, in a world were power is money and money is time and time is quickly running out.

Are you trying to run a national campaign on a shoestring?  Looking to change the minds of just about ever single person in Houses of Parliament, including the catering staff?  And do you need to get all this done by Monday afternoon, at the very, very latest?  Then look no further, my friend.  I think I’ve got the answer for you.

TFL, it transpires, will actually allow pretty much any old Tom, Dick or Harry to – for a modest fee – plaster their message across ticket barriers at any London Underground station you care to specify.

“Which station would you like to advertise at, sir?” 

“Erm…Westminster, please.”

And so, for the rock bottom price of just about £1,000 for the month running up to next Monday’s demo, just about every stubbornly racist MP – whose butt cheeks clench and 2^nd home payments scream any time they so much as think of looking at the immigration debate rationally – are now forced to read our message first thing in the morning and last thing every night.  (Even if they do then proceed to ignore it for ever hour inbetween.)