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Update on the Holding Pattern

Presentations in Thessaloniki and Athens, 2728 Nov 2015
In The Holding Pattern in Endnotes 3 we suggested that just as the extraordinary actions by capitalist
states since 2007 had managed to freeze the development of the crisis, the struggles of 20112013 had
become stalled and unable to venture beyond the weak unitydefined by anti-austerity, anti-police, and
anti-corruption sentimentsthat was established in the movement of the squares. In this talk we will
revisit some of those themes.
We can look at the 2007/8 crisis from two angles. From one perspective, it really was the deepest crisis
since the Great Depression. This was a crisis of epic proportions. But from another perspective, the crisis
was nothing new; it was simply the latest in a long series. Since 1973, recessions have gotten longer and
deeper, while the phases of growth between those crises have gotten weaker. States put mechanisms in
place to manage the recurrent crises of capital, and these mechanisms were quickly set in motion, once
again, in 2008. States took on private debts as public debts, as they had in numerous crises before, but
this time on a much larger scale: financial firms got bailed out. States also spent money paying
unemployment and other benefits, as they had in the past, despite falling state revenues. Meanwhile
central banks took extraordinary measures. They dropped interest rates to zero percent, essentially
offering private banks free money, and then started directly lending to the private sector, propping up
failing securities markets by becoming dealers of last resort.
These actions were effective: the economy was stabilised; the downward spiral was halted. The problem
high-income countries now faced was that their economies had already been growing ever more slowly
over the 40 years before this crisis started. Growth rates fell from 4.3 percent in the 1960s, to 2.9 percent
in the 1970s, to 2.2 percent in the 1980s, to 1.8 percent in the 1990s, to 1.1 percent in the 2000s. In order
to prop up weakening economies, governments had already gone deeply into debt in the 80s, 90s and
2000s: they spent during the downturns but failed to pay down their debts during diminishing upswings.
They thus went into this crisis in 2007 with very high debt-to-GDP ratios. Debt levels in Spain and the
UK were at 36 and 44 percent of GDP respectively; ratios that rose to 98 and 90 percent in 2014. In
France, the US, and Portugal they were already higher, at around 65 percent of GDP, and have now
reached 95, 105, and 130 percent. Meanwhile, in Italy and Greece, where debt levels were already at
around 100 percent of GDP, they have risen to 132 and 177 percent. In almost all countries we looked at
in Endnotes 3, in 2013, debt levels have continued to rise. 1 Germany is the exception, as the only country
to see debt levels fall, from 80 percent of GDP in 2010 to a still-high 73 percent in 2014.
1 See The Holding Pattern, Endnotes 3, September 2013.

Why measure debts as a percentage of GDP? The reason is simple: national governments have to pay
their debts out of taxes on total yearly income. As debt levels rise, a larger and larger share of those tax
revenues must go to paying interest on debts, as well as paying down the principal. States are spending
truly enormous amounts of money, but they are doing so just in order to prevent economies from
collapsing. After an initial period of partial recovery in 201011, the high-income countries economies
have once again been growing ever more slowly. The exceptions are the US and UK, where a small
measure of recovery has taken place, on account of a massive campaign of quantitative easing. Of course,
this recovery has had little benefit for most working people. Unemployment levels remain high; indeed,
on a global level the recovery has been largely jobless: though the global labour force participation rate
stabilised in 2013, and some countries have seen a recovery in employment, current ILO projections are
for ongoing long-term declines.2 Across continental Europe and in Japan, growth rates have remained
extremely low or negative; the latter has now been stagnant almost a quarter century. Abeconomics
notwithstanding, Japan just re-entered a technical recession. Many economies have not recovered pre2008 levels of GDP; Greeces has of course shrunk significantly.
This situation has made the positions of states precarious. After all, the states capacity to borrow is based
on a promise of future growth, out of which the state will pay its debts. Due to a combination of already
high debt levels and very slow growth since the crisis, states have therefore found themselves trapped
between two opposed pressures. On the one hand, governments have needed to spend a lot of money, and
still need to do so, to prevent the recession from becoming a depression. On the other hand, states have
already spent so much money over the past few decades that they have very little left to give. We argue
that this was what determined the form of the crisis. Yet instead of spending even more money, which
would have been required to re-inflate the economy, governments in the rich countries engaged in a
campaign of austerity. In short, they found that, once they had bailed out the financial sector, they had
little left to give. While they were able for a while to maintain spending and thus demand in the economy,
sooner rather than later these states had to start cutting back. In order to show that they still had their
hands on the fiscal tapwhich is necessary to show their creditors that they remain in control of their
financesthese states announced and then initiated massive cuts in spending even as they were bailing
out the banks.

2 World Employment and Social Outlook: Trends, ILO 2015, pp. 1819 and World Employment and Social
Outlook, Trends 2014: Risk of a Jobless Recovery, ILO 2014.

Of course, states cut spending exactly where one would expect: on schools and hospitals, on government
employment, and on many social spending programmes. Thus, for many people, the situation was not
only devastating. It was not only the case that many people found themselves without work; that the
elderly, their retirement savings suddenly reduced in value, had to go back to work; that the costs of
education and healthcare rose, just as household incomes were pinched, and so on. It was also, on top of
all that, that the government acted in an apparently spiteful way, towards the population. It appeared to
many people that government officials had lost their minds: after all, shouldnt they have been making
the banks pay, in order to bail out the people, rather than the other way around? The main explanation
offered at the time was that governments were acting irrationally. That is to say, states could have done
the right thing, but for some reason they did not. What was this reason? Many people argued that states
were acting irrationally because they had been captured by moneyed interests. Thus governments were no
longer acting in the service of the general interest, but rather, in the service of the super rich. Democracy
had given way to oligarchy. It was in this way that the form of the crisis determined the overall form of
the struggles of this period: real democracy against austerity. Real democracy would, according to the
logic of the protests, be able to force states to intervene in the interest of the nation, rather than in the
interests of crony capitalists. Of course, once the protesters came together, their struggles then evolved in
more interesting ways. As it turned out, it was difficult for them to find a common basis for this coming
together, since they experienced the crisis in such diverse ways, some worse than others. Meanwhile, the
terms and perspectives of the old workers movement were dead and gone, and these did not revive
themselves (contrary to many leftists hopes). Those perspectives were thus unavailable as a means of
unifying the protestors. We would say, in general, that what we are seeing is in many ways a
spontaneously evolving anti-capitalist perspective, which is not yet a communist perspective, and which
is disconnected from old Left histories. In Endnotes 3 we called this the composition problem:
The composition problem names the problem of composing, coordinating or unifying proletarian
fractions, in the course of their struggle. Unlike in the past or at least, unlike in ideal-typical
representations of the past it is no longer possible to read class fractions as already composing
themselves, as if their unity were somehow given in-itself (as the unity of the craft, mass or
social worker). Today, no such unity exists; nor can it be expected to come into existence with
further changes in the technical composition of production. In that sense, there is no predefined
revolutionary subject. There is no for-itself class-consciousness, as the consciousness of a
general interest, shared among all workers. Or rather, such consciousness can only be the
consciousness of capital, of what unifies workers precisely by separating them.3

3 See The Holding Pattern, Endnotes 3, September 2013.

This composition problem arises in a situation that we described in Endnotes 2 as dominated by the
simultaneous existence of surplus capital and surplus proletarians. We focused there on the appearance
and expansion of surplus populations, as the human embodiment of capitals contradictions. In Endnotes
4 we have responded to mistaken imaginings of the surplus population as a new kind of unified or
unifiable subject. It has been argued that surplus populations make little direct contribution to
accumulation; they lack the leverage of traditional productive workers, who can bring the system to halt
by withdrawing their labour. Moreover, surplus populations can be marginalised, imprisoned, and
ghettoised. They can be bought off with patronage; their riots can be allowed to burn themselves out.
How could surplus populations ever play a key role in the class struggle?
Surplus population as such does not to give us an answer, but helps us to identify the question. To the
extent that there is an answer to be found, we wager that the real location of the posingand thus the
potential answeringof this question will lie in the specific sorts of struggles proletarians engage in
today, and thus it is in large part on these that we should focus our analyses. In the movements of 2011
13, it often seemed that the endless negotiation of the composition problem produced the thinnest of
unities. The encampments of the movement of squares were in large part given over to the infinite task of
discovering a common basis for action. Leftists often criticised this as if it was merely reducible to a sort
of ideological confusion or mistake. But the absence or weakness of demands was a more or less
unavoidable starting point for these struggles, given by their compositional fragility. Insofar as a unity
could be discovered, it was implicitly a populist one, defined by its opposition to the state as an irrational
or corrupt implementer of austerity.

But the form of appearance of the crisis was not its essence. In reality, governments were not acting
irrationally in the aftermath of the crisis. As we argued in The Holding Pattern, states were actually
acting from a position of weakness: long-standing mechanisms of crisis management are coming up
against their limits, due to a combination of decades of slowing growth and rising levels of indebtedness.
In a world of very high levels of total debt, including debts of governments, businesses and households,
preserving the basic promise of the financial systemthat these debts will be repaidhas been and has
to be the main goal of states, if they want to keep the economy turning over (which of course they do). In
the financial press, all this is only now being discovered. Scholars close to key policy circles are now
discovering what was right under their noses, the whole time: the economy is undergoing what they call
secular stagnation. Put plainly, the economy has been growing ever more slowly. Under conditions of
slow growth, states will find that they have very little room for maneuver in dealing with catastrophic
events to come, whether they be future economic crises, or the already emerging consequences of global
climate change. Slow-growth capitalism will also produce ever greater levels of inequality, as Thomas
Piketty has now famously argued (in a recycling of old Marxist verities). Thus, it will be ever more the
case that the rich stay rich and the poor stay poor, while a rising share of all income will flow towards
those with inherited wealth. We are slowly but surely returning to a world in which the personal power of
inherited wealth replaces a world in which money circulates as an impersonal master. These pessimistic
conclusions are now becoming quite common, in a way that wasnt yet true when we wrote the Holding
Pattern, marking an important transition in public discourse. A growing, although still small portion of
the population, in the rich countries, understands that the state, even a real democratic state, cant save us
the recovery will not come, in any caseand thus we need to find another way to make life liveable;
we need to find a new way forward.
Yet, in a very real sense, we remain stuck in the same situation, economically and socially, that were in in
2011 (even if, in a sometimes subterranean way, very much is changing and developing). Although it has
not generated a recovery, the mode of crisis management has at least staunched the bleeding. The
struggles of 201112 took place on a massive scale, yet due to the decisive actions of the state, which
limited the crisis, those struggles were themselves limited. Still, as in 2012, it remains the case that the
present holding pattern is unlikely to last. First of all, there could very well be another blowout, coming
from the rich countries. The main thing here, which we should definitely talk about, is the ongoing, and
now definitely worsening crisis in Greece, with its potential to spill over to highly indebted and slow
growing France and Italy, effectively knocking out the Eurozone.

The second possible source of a blowout has to do with the fallout from programmes of so-called
quantitative easing. Central Banks in the US and UK, and now in Europe and Japan, have been taking
action precisely where states have failed to do so. In the absence of further government spending, central
banks are undertaking a weak but equivalent form of intervention. In essence, those banks are creating
money, using it to push investors out of safe assets, such as government bonds, and into riskier assets,
like the stock market. Central banks are trying to partially re-inflate bubbles. But quantitative easing has
had contradictory effects. On the one hand, it pushed tons of money towards low-income countries. That
was one reason why those countries were able to respond to the crisis in a different way, undertaking not
austerity, but massive spending campaigns. At the same time, it drove up the prices of food and fuel
worldwide. That transmitted the crisis directly into the lives of the worlds poorest people, who were
already struggling to make ends meet, detonating the food protests that preceded the Arab Spring. It is
possible that when quantitative easing comes to an end, as it is now threatening to do, this will wreak
further havoc on poor countries economies, which are already showing signs of substantial weakening.
Here is a third plausible source of the end of the holding pattern: that the crisis of the rich countries will
be extended to the poorer countries. That the crisis would take so long to extend from rich to poor
countries fits with historical precedents. Recall that the Third World debt crisis of 1982 came 9 years
after the crisis started in the rich countries, in 1973. We are now seeing massive slowdowns in China,
Russia, Brazil and South Africa, although India has continued to grow. The real danger, here, is that the
bubbles blown up by the Chinese government could pop. Will state action in China be able to keep the
now-starting deflation of asset bubbles from becoming a massive crisis? What will be the knock-on
effects for people living in other low-income countries, which until now have relied on massive demand
from China to keep their economies growing? What will be the effects on the world economy? The point
is that the pressures we outlined in the Holding Pattern continue to apply, although the public
understanding of this situation has evolved. We remain caught in the midst of a slow-motion train wreck.
People continue to fantasize about what would be done to stop this wreck from happening, if somehow,
all the limits preventing coordinated action were suddenly removed. But while Marxist economists dream
up ways to to save European capitalism from itself, the wreck continues on its course. The world
economy is a huge, organic interrelation of billions of people. This process will take time.

Struggle update

We wrote the Holding Pattern at what in retrospect appears to have been the end of a high point in the
movement of squares, a last gasp, just before things started to fall apart. At the time we wrote it Tahrir
and Syntagma squares, Puerta del Sol, Oscar Grant Plaza and Zuccotti Park had all been violently
evicted, with little sign that they would be reclaimed from the police. It was not external repression but
internal weaknesses that we identified as the reason for the defeat of these movements: their inability to
establish a real unity beyond the day to day running of the encampments. However, the occupation of
Gezi Park in Istanbul, which had just begun when we were writing the Holding Pattern, seemed to
indicate that perhaps at a global level the momentum had not run out. We thus concluded by asking
ourselves whether the movements would continue on the basis of their existing weak unity, and thus
continue to be defeated, or whether they might find new fighting forms. Yet as Endnotes 3 went to press
even this ambivalent conclusion began to appear over-optimistic. For Sisis coup in Egyptshrouded in
the mantle of Tahrirfor the first time introduced mass-shooting to the repertoire of these movements.
The following year saw another bloodied square in the Maidan, this time defended by fascists. Shortly
thereafter Occupy Bankok, organized by royalist yellow shirts, succeeded in initiating a military coup
in Thailand. Many concluded that we had entered a period of reaction, where the ideas and forms of the
movement were appropriated by altogether darker forces.
This conclusion, however, turned out to be premature. For in fact several of the movements we wrote
about in the Holding Pattern survived, and even those that didnt continued to inspire similar movements
in the years that followed. This is not surprising, since the principle target of these movementsausterity
only intensified, along with its perceived handmaiden, corruption. In Spain the 15th May movement
largely avoided the setbacks suffered elsewhere, for it was able to spread beyond the initial square
occupation into nationwide assemblies and networks of militant workers. By counter-posing the
parliament as a zone of venal intrigue to the square as zone of transparency and exemplary action, the
occupations had been able to present themselves as something fresh and exciting, and austerity as a
symptom of corruption: it was believed that politicians were making cuts because they were in the pay of
the bankers, hence the square would be made incorruptible by a total ban on political parties.
Puerta Del Sol was the most explicitly anti-political of the squares. Yet, as 15M ebbed, much of this
energy ended up flowing in a parliamentary direction as Podemos and Ganemos began to do well in the
polls. Here and in Greece the logic of anti-austerity was taken to its inevitable conclusion: if the state is
acting irrationality by imposing austerity on the populace one needs to take it over and correct this
mistake. In an ostensibly paradoxical development, the anti-politics of the squares thus became the
political anti-politics of a new wave of party formations. In the process these movements did not merely
betray their roots, but confronted the limits of the politics of indignation. Podemos soon discovered that
the right could also exploit disgust at established political parties, splitting the anti-corruption vote. And
when movement activists actually did succeed in getting elected they could no longer simply blame
austerity on corruption, for they found that there really was no money in municipal, county and state
budgets. Even when Syriza was voted into the highest level of government they could only counter the
austerity-mongering creditors with the suggestion of a slightly lower budget surplus.

Other new movements borrowed forms and tactics from the 201112 wave, whilst avoiding the
parliamentary route. The massive student movement that exploded in Chile in 2013 set up public
assemblies modeled on 15th May and took inspiration from Quebec. In early 2014 strikes in Bosnia led
to an uprising in which many government buildings were set on fire. Regular assemblies or plenums
issued a bewildering stream of demands, at the core of which was a rejection of the corrupt system of
ethno-nationalism. This movement consciously referenced the Arab Spring and 15th May, as well as the
Croatian student occupations of 2010. In Autumn 2014 a student strike in Hong Kong combined with a
pro-democracy group, Occupy Central with Love and Peace to occupy the central business district,
attracting 100,000 people at its peak. In these movements anti-austerity and anti-corruption continued to
be dominant themes, as did the exemplary quality of the occupations themselves, which managed to
preserve their innocence by keeping a distance from electoral politics. This remained true in the US with
Occupys brief revival in New York during Hurricane Sandy: the state organizations that had proved
themselves inadequate in Katrina would be directly replaced by direct action organized via decentralized
In the Holding Pattern we focused on an internal limit of these struggles: the fact that the occupiers were
able to achieve only a weak unity on the basis of practical exigencies and their common aspiration to
unity. In reality they found that they were deeply divided, both in terms of their objective situations and
their political and religious ideas, and these divisions would sometimes play out in violent conflict within
the squares. In the struggle that followed, such divisions were at times intensified. Thus in the Maidan
fascists imposed rules for participation on leftists, anarchists and liberals but it was known that the fragile
alliance would only last as long as their common enemy Yanukovych remained in power. In the middle
east, with the notable exception of Turkey, ethnic and religious differences which initially appeared to be
sublimated in the squares were often amplified as the occupations continued, and broke out in open
conflict whenever (as in Tunisia and Egypt) they proved temporarily successful in overthrowing the
existing government.
But the outcome of these movements points to another limit that we overlooked in the Holding Pattern:
geopolitics. Various powers succeeded in taking the gains of destabilised situations. In the Maidan,
tensions between nationalists and pro-EU liberals had been brewing for months, but they did not get
much of a chance to play themselves out, for as soon as Yanukovych resigned, Russiafaced with the
prospect of EU and NATO extension to another country in its near abroadinvaded the Crimea and
began a proxy war in Eastern Ukraine. At that point the rebellion became a civil war. In Egypt the
conflicts between radicals and the Brotherhood, or Muslims and Copts, which had developed in the
aftermath of Mubaraks fall, were ultimately submerged in a larger regional power game, as Saudi
financial support allowed Egypts deep state to reestablish itself. Elsewhere, from Syria to Bahrain,
Yemen and Libya, the hopes of the Spring were snuffed out in civil war, military intervention or both.

Another, less cold-war geopolitical limit was of course encountered by those parliamentarist
deviationists: Syriza. There too it was ultimately the regional hegemon that would decide the fate of the
movements, whatever came out of the assemblies and referendums. To understand the tepid nature of
Syrizas proposals (a 3% rather than a 4% budget surplus), one must see that it is more than just a matter
of structural economic imbalances in the Eurozone: the fact is that the interests of German taxpayers
really do conflict with those of Greek government employees. The point is that for many states in an
increasingly interdependent global economy there is no option but to court the mobile wealth of creditors.
Basic social services that would traditionally have been funded by taxing the wealthy are now
increasingly funded, at least in the short time, by borrowing from themand paying interest for the
favour! The increased demands on the state from laid off workers in a crisis thus coincide with increased
pressure from creditors, whether domestic or international. There is nothing Syriza can do about this, for
Greece cannot feed itself without foreign exchange, and as the summer events showed, any sign of
unilateral default will deplete the country of taxable revenue. Perhaps the only option, as the European
Commission Chief announced in relation to the no vote, was to choose suicide over death.
Recently an analogue of the Syriza developments has occurred in the UK with the shock rise of a
member of the Labour Partys long marginalised left-wing to its leadership. The political discourses that
have greeted these developments have busied themselves with empty rhetorical distributions of the old
and the new, but what is certain is that the social composition that propelled Jeremy Corbyn to victory is
not that which backed Tony Benn in the early eighties. The institutional brakers have of course kicked in
to halt this upsurge, and are likely to be successful. But can a party that has already been looking
cadaverous for years avoid sustaining an even greater loss of legitimacy in the process? The key question
for the current strain of political anti-politics remains: how many instances of these vessels crashing on
the rocks will it take to produce something qualitatively different, and what will that be?
The point of this analysis is not that we merely have to wait it out until the current holding pattern comes
to an end. The point is to identify in a strategically useful way what the dynamics and limits of the
situation are, so that we are able to act with clarity. The identification of limits is not a merely negative
matter of locating constraints to action, pessimistically diagnosing why we cannot go further. It is a
matter of identifying the determinate conditions of the present, and these are the positive basis for what
action does occur. Within the current context we have seen dynamic modes of struggle developing, such
as those around Black Lives Matter in the United States. These built upon both the human connections
and the discursive possibilities that have been opened up in recent waves of struggles; they exploded
certain weaknesses of Occupy, while reinventing them in other ways. Though in various ways their
content remained within a radical democratic framework, they moved beyond the occupation to develop
more confrontational tactics. While there are many dangers on the horizon, it is clear that the moment
remains pregnant with possibility.