Dr W Large

The New Deal


After the great crash of 1929, capitalism required reform. Central to this reform was the ‘New Deal’. Its creation essentially underlined a promoted USA’s domination of the world. We must distinguish the ‘New Deal’ from the welfare state in Europe. The latter merely ameliorated the worst excesses of monopoly capitalism, whereas the former first of all changed the very nature of society itself, and secondly the world. The three major aspects of the ‘New Deal’ were as follows:

1.      High Wages                        Taylorism

2.      High Consumption  Fordism

3.      High ‘Conflictuality’            Keysianism

What is important about the ‘New Deal’ is that it did not just change the relations of production but society as whole through the combination of disciplinarity and accumulation, which in turn produced a new kind of subjectivity: ‘The New Deal produced the highest form of disciplinary government.’[1] It this new subjectivity, which is the basis of the Empire, though it will have to go through another ‘paradigm shift’ to fully develop. What is important in this process is that capitalism and society become one and the same. ‘A disciplinary society is a factory society’.[2] In such a society the only principle of life is to produce something, and the only justification, rationality and legitimation is economic. This covers all aspects of life, the home, school, hospital, university, the arts, and so on, and not just the industrial process: civil society and the division of labour become one.

      By the end of the Second World War, this ‘New Deal’ becomes the basis, through American power and domination, of the new global order. The whole world must now follow the same logic which has three main principles:

1.      Decolonisation

2.      Decentralisation

3.      Creation of the International Disciplinary Order

Decolonisation actually favoured the new hegemony, though in the defence of the old world order USA might find itself on the side of the colonial powers. The Cold War merely exacerbated this ambiguity. The period of decolonisation opened the new world up to global capital rather than preserved the new nation states in their independence. It is though they went from feudalism, modernity and post modernity at accelerated pace. In terms of decentralisation, the first phase was the old imperial system of unequal exchange in which they were simply robbed of their resources. The second stage is more virulent, which is the movement of production abroad. This meant both the transfer of technology, but also the new mobilisation of the labour force. It is terms of the latter that the third principle operates, and it is perhaps the most important one. With the transfer of production abroad, the new disciplinary regime spreads throughout the world. The ideal was the complete interchangeability of labour throughout the world into a global productive process – the world becomes a global factory, which is the real global society and is not a village at all.

We can see that what is central to this development is the creation of a world market. It is the spread of the world market rather than military power that defines American hegemony. Negri and Hardt define this expansion, which is really intensification, in terms of Marx’s distinction between formal and real subsumption. Formal subsumption describes the expansion of capital into the outside, where it takes over existing forms of production and life. Real subsumption describes the historical moment when capital has exhausted the outside, and falls back upon itself. In real subsumption, the movement is not outward but inward, and rather than extension it is intensification. Disciplinarity is a central mechanism of this process. Real subsumption, since it is an intensity, rather than extension, cannot be explained merely economically, but marks real changes in subjectivity in which the discipline society is pushed to the extreme. It is through desire that this transformation comes about, rather than through some act of the capitalist or politician. Having liberated desire from the colonial past, the new desire had to be controlled and disciplined. The best way to achieve this was for desire to desire its own repression.

The hegemony of capital, however, produces its own resistance, crisis and transformations. This is not just because people just resist capital, which is the case, but the future and development of capital is dependent on this resistance. Capital is always reactive, not active, and it is dependent on the creative multitude in order for any change to its regime of production. The 1960’s were a crisis for capitalism. In capitalist countries this took the form of the workers attacking the factory system and disciplinary society in the refusal to work, which lead to a guaranteed social wage and higher level of welfare. Combined with this internal struggle, were the international crises in China, Cuba, Latin America, and Africa. The combination of national and international crises led to the creation of a virtual objective proletariat since the object of these struggles was the same: capital in the form of a disciplinary society.

Capitalism had to respond to this change in desire, otherwise like the Soviet regime in the 80’s it would simply disappear. The rules for the international order and American hegemony were set up in the famous Bretton Woods agreement in 1944, which had 3 basic elements:

1.      Economic hegemony of the USA

2.      Monetary Stabilisation

3.      Quasi-imperial relation of the USA and the rest of the world

The first condition was the liberalisation of world trade and the domination of the dollar through American gold reserves, the second was the reform of the ‘old Europe’ through the surplus of export to the USA, and the third condition followed from the previous two. However what was particular to this formation of this new empire based upon American power was the creation of international organisation to support it: IMF, World Bank and the US Federal Reserve. It was this system that was brought to its knees by the national and international struggles of the 1960’s, and by the 70’s it had becomes completely bankrupt, such that Nixon pulled out of Vietnam, uncoupled the dollar and the gold standard, and placed a 10 % surcharge on imports, which essentially meant that Europe paid America’s debt. The old kind of capitalism was too expensive. Either capitalism changed or it would die. It is important to underline that this change did not have its origin in capital, which would quite happily go on forever in the same form, but in people’s desires and needs, which fed into their political struggles. ‘The proletariat,’ Negri and Hardt write, ‘actually invents the social and productive forms that capital will be forced to adopt in the future.’[3]

The old Marxists believed that capital was on its last legs before the First World War, but at the start of the 21st century it is as strong as ever. So what was wrong with their assumptions? They were still caught up in the old dialectic. They believed that once capital had exhausted its outside, then it would literally starve to death. But capitalism is very healthy and accumulation goes on at a rapid step. There are possibly three answers to this mystery:

1.      Capital is environmentally friendly and sustainable

2.      Accumulation continues but nature is just bigger than we thought

3.      What Capital subsumes is not nature but life –  it is intensive not extensive

To the first, the authors respond that it is a contradiction in terms, capital cannot restrain itself and all the figures support this. To the second, they reply that it is not just a question of resources running out, but whether there is any place on the planet which is not determined by capital. More importantly, however, both hypotheses misunderstand the basic mechanism of the new capitalism. Capitalism responds to the ecological threat by real subsumption, which it the intensification of its own process. To the disappearance of nature it creates man-made nature; to the every increasing fall in profit of from labour, it creates man-made culture. The assault on the disciplinary machine therefore can only come from change in human desire, subjectivity, and not the hope that capitalism will exhaust itself and by some objective mechanism suddenly transform itself into a new society.

      This change in desire has already happened, and capitalism has already appropriated it to move to the next stage: it is called the ‘counter culture’. The creation of wealth and new relations of freedom led to new relative freedom in the multitude. The struggles of the 20th century lead to increases in wages and welfare, but we must see that these struggles came from changes in people’s desires and needs. This is the momentum of change in human history. This change manifested itself most radically in the refusal of the factory and the disciplinary society: ‘The disciplinary society clearly no longer succeeded in containing the needs and desires of young people.’[4] It was this refusal that was behind the ‘counter culture’ of the 1960’s. ‘Dropping out’ is the refusal of the disciplinary regime of capital and a creation of new forms of life. The values of this new subjectivity were mobility, flexibility, knowledge, communication, co-operation and affectivity. This change in desire precipitated a change in the regime of capital itself. If capital hadn’t changed, then the same fate would have befallen it as befell the Soviet regime in the 1980’s which failed to respond to the new subjectivity. The important point is that capitalism did not have to invent a new paradigm, rather it simply had to appropriate the counter culture of the 1960’s: ‘Capital did not need to invent a new paradigm because the truly creative moment had already taken place.’[5]

      The disciplinary society is now completely obsolete. Those institutions that will survive are those that embody the values of the counter culture. This describes the movement of capital in the West from modernity to post-modernity, from material to increasing immaterial labour. Today the new management speaks of transparency, communication, sharing, feelings and creativity and Apple, Google and Microsoft have become the ideal businesses. Soon the separation between life and the factory will be totally destroyed as everyone works from home. Rather than seen this a liberation of the work force (which is how it will be sold to us), we should see it as just one more further step in the intensification of capital. For if we all work from home, what reason would we have for not working?

[1] Antoni Negri and Michel Hardt, Empire (Harvard University Press, 2001) p. 242.

[2] Ibid p. 243

[3] Ibid p. 267

[4] Ibid p. 273.

[5] Ibid p. 276.