THE ICE AGE IS COMING

It is said that anti-capitalists are inflexible, that they rely too much on crude determinism. Nevertheless, their critics will be forced to admit that two cliches about chronology and capitalism have once again come to pass. The first is that centuries as we know them generally take between five and 15 years to get going (the "short twentieth century" began in 1914, the twenty-first appears to be starting now). The second, a combination of Kondratiev and Mandel, is that the capitalist cycle of prosperity-recession-depression-improvement generally lasts around 30 years.

To prove the Kondratiev-Mandel rule, the most pertinent novel for our times is Margaret Drabble's The Ice Age, published in 1977. It is my favourite sub-300 page novel.



The Ice Age revolves around Anthony Keating, clergyman's son and Oxford arts graduate, who marries early, becomes a father soon after, works as a journalist for the BBC, votes Labour and thinks that there must be more to life than this.

Palling up with men of vision, enterprise and money, Keating buys a small plot of land on the Thames riverbank and becomes a property developer. But as the economy melts down midway through the 1970s, as interest rates and inflation soar and as the value of his property and investments plummet, Anthony Keating, his colleagues, friends and family turn anxiously to the mercy of an irrational and unforgiving world. One is jailed for fraud, another returns to the bedsit from which she came; a step-daughter is banged up in an Eastern bloc prison. Keating himself has a heart-attack, as though the antagonism of social-mindedness and a need for hardnosed excitement tears the organ apart. While he is recuperating in his second home in Yorkshire, he ponders his lot.

He remembered the Diggers, who had dug up Richmond Hill. He thought of the enclosure of the Commons. He thought of Shelter, and the homeless, and vandalised council property, and large houses with burglar alarms and guard dogs and barbed wire around them, and of the beaches of the Riviera, parcelled out and cordoned off and sold. Public and private. Locke - he thought it was Locke - had said that we make our stake to the land by working it: was that why he, guilty, owning far more than his fair share, tried ineptly to grow woody carrots?

Keating and the people associated with him are utterly alienated, from themselves and the world. They are frozen, trapped, unable to move. Drabble tells the story of this microcosm of society with some amusement, but it is the neurotic amusement of her own characters.

I think, thought Alison, that I would rather die, than lose my foot ... what happened to Kitty's foot? Where was it? Incinerated? And had it been blown off, or cut off? And if cut off, what with? A knife? Leaving what? A stump? And what did one cut through> Bone, tendon> Or did one find the joint as in a chicken? I would sooner be dead, thought Alison. But I know why. It is because I am a vain, a wicked woman, who thinks too much of this world, and of her own body. I am not humble, I cannot face old age, I cannot face ugliness and decay. She shivered. She was afraid. A large, a terrible fear gripped her. Of death? No, not of death. To die in one's sleep, to fade away, seemed easy enough, as a prospect. Of mutilation? Why, of mutilation? Nobody had ever threatened her with it, so why, so unnaturally, so wastefully, at least so prematurely, face it, fear it?

The actors in her story are clearly culpable, responsible for their situation. Anthony Keating and Len Wincobank and Giles Peters all fly too close to the sun. But they are not blamed for their actions. In a way, each does what he must do.

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Likewise, we know that graduates working in the City have been on £45,000 a year, with a £10-12,000 bonus guaranteed. We know that Sir Fred Goodwin, former Chief Executive of RBS, pocketed £5.375 million in 2008 before bonuses. We know that £64.7 billion has been paid to city workers in bonuses during the last seven years. But it is not greed alone that has caused the financial system to collapse.

Without their stupidity and arrogance, their hubris in investing other people's money into risky financial products or untimely expansions, the bankers may not have found themselves swimming in quite the depths of shit that they do today. But without such extravagance, there would be no bankers, no traders, no investors. Capitalism itself is driven by recklessness. The inflation and deflation of bubbles is only another way of describing boom and bust.

That the market has burned its wings is primarily due to the subprime crisis. So, we are told, with some butting back, some toning down, a little more regulation, all will be well. But we must take care not to treat production and finance as entirely separate entities. The main thing that a 19th century economist like Marx would notice today is that in a globalised economy, Western companies have shipped their productive labour overseas, and that Western nations now rely on the financial sector to deliver profits.

A consequence of this, and the rise of monopoly capitalism, is the changing role of banks. Banks act as the motor force of capitalism by enabling the flow of capital. But Marx would notice that, in the last 30 years or so (since the end of "the golden age" and the beginning of neoliberalism), large companies use retained profits for investment, rather than borrowing credit from banks. Banks have therefore sought their profits by primarily lending to individuals. But since real-term salaries have declined in the last 30 years, banks and other financial institutions have turned to the housing market.

During boom times, banks lend money more and more freely, and begin to look for growth in places where they hadn’t before. In this case, the growth area for American financial institutions was in lending money to poor people whom they wouldn’t previously touch. The banks didn’t exactly go skipping around trailer parks handing out leaflets offering Buy One Get One Free mortgages – except that they did, sort of. The great thing about these poor people was that because their credit history was poor to non-existent they could be charged extravagantly high rates of interest.

Credit-worthiness was measured by rationalised tools which were often designed to produce a positive result - after all, lending increases the prices of assets, which is good for the economy - for a while. Meanwhile, banks packaged these dubious loans together into Collateralised Debt Obligations - potentially lucrative but highly complex and risky instruments - which then pervaded the world market. These packages of debt became dangerous when US interest rates went up and people became unable to pay off their mortgages. This BBC report shows that one home in ten in Cleveland, Ohio has been repossessed.

The CDO virus, coupled with the explosion of labyrinthine instruments called derivatives, so crippled the market that banks stopped lending to each other for fear that, like our own Northern Rock, their assets might be toxic.

Nobody can know if the international bail-outs will pump sufficient cash into the system to get banks lending again. If not, the entire capitalist economy could be staring into an abyss. Tthe dramatic and chronic slowdown in production since the mid 1970s has caused capitalism to rely on the finance sector, which we now know is highly unstable. Iceland, who created a financial, credit-based veneer without any productive foundations, has found this out the hard way.

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"This is not a time for celebration," said David Cameron last week. He is right on two counts. Firstly, no British political party, all neoliberal to their cores, would have ever wished to be dominant shareholder in four major banks. Secondly, Cameron and the Tories have responded to this crisis feebly, dimly aware that it is of their own making.

The City's administration of the State has been politically, economically and culturally awful. It has replaced rational planning with a mysticism whose truths have eluded even its most devoted and educated of disciples. That the State is taking over the reins again is a good thing, but the left should not be satisfied with nationalised banks or drip-drip Keynesianism. It must not lose nerve. Unlike previous battles, it can fight this one with the utmost confidence - confidence that its critique has been proven right, and that it truly speaks for the majority of people.