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After State Monopoly Capitalism

Zoltan Zigedy Few review articles are as satisfying as the recent Paul Krugman examination of Robert Reich’s new book, Saving Capitalism: For the Many, Not the Few, in the New York Review of Books (December 17, 2015). To begin with, it was gratifying to find the stark candor behind the title of Reich’s book. “Saving

Pivotal moments in recent Irish history

Nicola Lawlor http://www.communistpartyofireland.ie/sv/05-pivotal.html The left today seems to be missing some important lessons from pivotal moments in recent Irish history. This article is a brief, and simplified, overview of some of those moments. The lessons are worth keeping to the fore in considering any strategy for building socialism in Ireland, because without them such efforts

Rupture with EU needed

Thirty years after Portugal joined the EEC by Albano Nunes, Member of the Secretariat of the CC of the Portuguese Communist Party Portugal became an EEC member , by the hand of the PS and the PSD, allies in the capitalist recuperation policy, in January 1986. A political and ideological operation, of a great dimension,

Imperialism and Capitalism: Rethinking an Intimate Relationship

By Prof. James Petras and Prof. Henry Veltmeyer Global Research, December 16, 2015 http://www.globalresearch.ca/imperialism-and-capitalism-rethinking-an-intimate-relationship/5496284 The literature on imperialism suffers from a fundamental confusion about the relationship between capitalism and imperialism. The aim of this paper is to remove this confusion. The paper is organised in three parts. In Part I we state our own position

At COP21, the world agreed to increase emissions

Some countries will reduce emissions a little, but other countries will increase them a lot. You would never know this from UN and media reports. By by Jonathan Neale and Taken from http://climateandcapitalism.com/2015/12/13/cop21-world-agrees-to-increase-emissions/ The circus is over. The suits are leaving Paris. There have been millions of words written about the text. But one fact

After State Monopoly Capitalism

Zoltan Zigedy

Few review articles are as satisfying as the recent Paul Krugman examination of Robert Reich’s new book, Saving Capitalism: For the Many, Not the Few, in the New York Review of Books (December 17, 2015). To begin with, it was gratifying to find the stark candor behind the title of Reich’s book. “Saving capitalism” assuredly implies that capitalism is on the ropes—in danger of expiring—an implication that I both believe and welcome.

Robert Reich, Paul Krugman, and another colleague, Joseph Stiglitz share lofty accomplishments in academic economics and constitute the intellectual triumvirate informing the non-Marxist left in the US. Although they do not agree on everything, they share a core set of beliefs in the viability of capitalism and its need to reform. It is unusual to see Krugman and Reich suggesting such blatant urgency.

The felt urgency turns on the dramatic increase of economic inequality in major capitalist countries, particularly the US. Krugman stresses that inequality was an issue that Reich and he “were already taking seriously” twenty-five years ago. That may be, but I think it’s fair to say that neither was taking the growth of inequality seriously as a structural feature of capitalism until the important work of Thomas Piketty two years ago.

Krugman takes us on an intellectual journey, outlining in clear, non-technical terms how he, Reich, and other non-Marxist economists modified their understanding of the causes of inequality growth (not simply inequality, but its growth) over the last several decades. Where Krugman arrives is nothing short of amazing: he, no doubt unwittingly, describes an evolved capitalism resembling the capitalism that Marxists described well over half of a century ago.

Decades ago, liberal, mainstream economists believed that rising inequality in the US sprang from a poor match between technological requirements and workers’ skill sets—what Krugman calls “skill-based technological change” (SBTC). Education was seen as the great leveler, restoring wealth and income to those falling behind. But with the correlation between levels of education and compensation broken today, all reject SBTC as an adequate explanation and the key to arresting the growth of inequality. The growth of debt-laden college graduates working in call centers surely shatters that illusion. Or as Krugman smartly puts it: “…hedge fund managers and high school teachers have similar levels of formal training.”

But economists fell back on another technological example: robots and other productivity-enhancing devices replacing workers. But Krugman makes short shrift of this explanation:

…if we were experiencing a robot-driven technological revolution, why did productivity growth seem to be slowing, not accelerating?

…if it were getting easier to replace robots with machines, we should have seen a rise in business investment as corporations raced to take advantage of the new opportunities; we didn’t and in fact corporations have increasingly been parking their profits in banks or using them to buy back stocks.

Krugman thus dismisses a technological explanation for the growth of inequality.

Instead he urges that we consider the centerpiece of Reich’s study: monopoly power.

It is the concentration of economic power in the hands of fewer corporate players that accounts for growing economic inequality, according to Krugman and Reich: “…it’s obvious to the naked eye that our economy consists much more of monopolies and oligopolists than it does of the atomistic, price-taking competitors economists often envision.”

So why did it take Reich and Krugman so long to arrive at this juncture, a place that Lenin visited over a hundred years ago? Marxist writers like Paul Baran and Paul Sweezy devoted an entire influential book to monopoly capitalism nearly fifty years ago.

Krugman apologetically– “an intellectual and a policy error”–attributes the mainstream economic neglect of monopoly to an influential paper written by Milton Friedman in 1953 that emphatically dismissed the effects of monopoly power on significant economic behavior.

Thus, non-Marxist economists and their political allies have scorned the concept of monopoly power until recently, a concept that Marxists have made a centerpiece of their analyses for most of the twentieth century. What is “obvious to the naked eye…” now informs the theories embraced by our left-leaning reformers.

But Krugman and Reich reveal another crucial linkage—that between economic power (monopoly power) and political power (“And this ties the issue of market power to political power”). They see monopoly power as sustained, protected, and expanded by political actors. At the same time, they see political actors as selected, nourished, and guided by monopoly power. This creates a troubling conundrum for those seeking to reform capitalism. Reich’s conclusion, in Krugman’s words:

Rising wealth at the top buys growing political influence via campaign contributions, lobbying, and the rewards of the revolving door. Political influence in turn is used to rewrite the rules of the game—antitrust laws, deregulation, changes in contract law, union-busting—in a way that reinforces income concentration. The result is a sort of spiral, a vicious circle of oligarchy.

Putting aside the clashing metaphors of circles and spirals, this statement reasonably captures the mechanism behind the socio-economic formation Marxists call State Monopoly Capitalism.  For Marxists, concentration necessarily begets monopoly capitalism, which subsequently completely fuses with the state, creating a mutually reinforcing synthesis. The state rules in the interest of monopoly capitalism while policing the economic terrain to maximize the viability and success of monopoly capital.

Monopoly capital legitimizes the state and selects and imposes its overseers. Nothing demonstrates the intimacy more than the crisis bailouts of mega-corporations (“too big to fail”) and the increasing establishment of international governing bodies and trade agreements. Nothing demonstrates monopoly capital’s political dominance more than the decisive role of mega-corporate money in the two-party political process.

With the recognition of the vital link of monopoly capital and the state, Krugman and Reich reach an understanding on a parallel with those Marxist theorists who characterized the post-World War II era as one of state monopoly capitalism. While some features of that characterization were and are sometimes disputed (see, for example, Politico-Economic Problems of Capitalism, Y. Varga, 1968), most Marxists would enthusiastically welcome the two economists to their camp on this important issue.

But unlike Marxists, who see the overthrow of capitalism as the final answer to the wedding of monopoly power to political power, Krugman, Reich and their liberal and social democratic colleagues are left with the conundrum that follows inescapably from their conclusions about the source of inequality. The economic reforms that they envision to retard the growth of inequality are altogether blocked by the massive political power stacked against them. And that political power is stacked against reform because political power is the purchase of monopoly power. In other words, their findings confirm that monopoly has the political process locked up and that lock will ensure that monopoly will continue to grow along with inequality.

Krugman clearly recognizes this conundrum and casts serious doubts over Reich’s wistful glance back at the past and faith that a New Deal-like solution will magically emerge from the amorphous “populism” of candidates from both parties (he mentions Ted Cruz!).

Of course, Krugman is right in dismissing Reich’s nostalgic answer, but he can offer no alternative.

We conclude that the growth of inequality will only be stopped when the program of saving capitalism is put aside for a program that vigorously challenges the capitalist system. We hope that Krugman and Reich will draw the same conclusion in the future.

Pivotal moments in recent Irish history

Nicola Lawlor http://www.communistpartyofireland.ie/sv/05-pivotal.html

The left today seems to be missing some important lessons from pivotal moments in recent Irish history. This article is a brief, and simplified, overview of some of those moments. The lessons are worth keeping to the fore in considering any strategy for building socialism in Ireland, because without them such efforts will be wasted, misguided, and even damaging.

Prof. Denis O’Hearn, in The Atlantic Economy: Britain, the US and Ireland (2001), divides Ireland’s twentieth century into three periods: (1) partial independence after 1922, (2) efforts to industrialise, 1932–1958, and (3) the failure of the industrialisation strategy and the turn to dependence on the EEC (EU) and on transnational corporations and foreign (particularly American) direct investment, which remains the ruling class’s interest today.

This third period, which began developing earlier than 1958, deliberately fitted into the emerging US empire’s post-war anti-communist reconstruction of Europe and construction of a global economy structured to suit the needs of the US ruling class and American capital, in particular finance capital.

Not all this was predetermined, or determined by external forces or by some hidden hand. As Marx explained, we make our own history but we do so in the context of a socio-economic system with significant class forces that create conflicts.

Ireland was not predestined to be the way it is: it has developed this way out of class struggles, with some victories for workers but more losses, and this is what has placed it in the position of dependence and debt servitude that it is now in.

As O’Hearn explains about the second period in the century,

The greatest pressure for protection, however, came from the popular classes . . . The Irish Labour movement was heavily nationalist and republican and was united in support of industrial development through protection and the creation of state industry.

And Eoin Ó Murchú, writing in the 1970s, noted:

    The years of the Cumann na nGaedheal government, however, have rightly been condemned as wasted years. Little effort was made to construct a state which would construct capitalism on a healthy basis. It was left to Fianna Fáil when they assumed power in 1932 to construct the bourgeois state. But Fianna Fáil inherited the administrative institutions of the Free State.

The key question was that of finance. Irish capitalism lacked the ability to concentrate the funds necessary for modern capitalism. But Fianna Fáil, for all the vigour and importance of its programme of state industrial development, shied away from tackling the issue of foreign finance domination. In their practice they revealed the weakness of the bourgeoisie in confrontation with imperialism which Connolly had commented on.

The Irish Revolution and the counter-revolution


Despite the crucial involvement of workers and the trade union movement in the Irish Revolution, the movements of the day were a class alliance of workers, small farmers, small capitalists, and even some bigger capitalists whose interests conflicted with those of the British empire. At critical moments, workers failed to take the lead—as Mellows lamented in the Four Courts during its bombardment—and this shifted power within the alliance to capitalists, who ultimately led a counter-revolution. With the political, military and financial support of the British empire, a “free state” was established that partitioned Ireland, limited our independence, and left us economically and politically well within the empire’s rule.

Crucially, it placed an alliance of big farmers and big capitalists, with its quasi-fascist police and military, as the ruling class in the form of the Irish Free State. This class, unable to govern alone, allied itself with the British Empire to maintain its rule in Ireland.

The promises of 1916, of the election of 1918 and of the Democratic Programme of 1919 were firmly defeated—not betrayed, but defeated.

The understanding that those years witnessed a revolution, and a victorious counter-revolution, is often lost on activists today. Some discount it as a nationalist struggle without class content—not unlike Trotsky’s woefully ignorant view of the 1916 Rising; others glorify the great Collins, totally ignoring the class that led his counter-revolutionary forces and his acceptance of a divided Ireland within the sphere of British imperialism, and what this meant to the future of Ireland.

Class alliances in struggle are sometimes necessary, but the crucial question is what class leads the alliance, and at what point the working class is strong enough to break away and push the struggle on towards socialism. Clearly, during the Irish Revolution the working class wasn’t strong enough, and the pro-imperialist capitalist class in Ireland, and unionist capitalists in the North, established a compromise. The class shifted its allegiance in the South from liberation to subjugation through its alliance with British imperialism.

Most of the British state structures and processes in Ireland were kept intact and were employed by the counter-revolutionary Free State, importantly in agriculture (particularly cattle) and, most crucially, in banking and finance.

Thus was the class state born in Ireland, not through “betrayal” but through a victorious counter-revolution of classes who saw their rule best secured through an alliance with British imperialism. Far from being betrayal, this is naked class self-interest; and this understanding helps us to understand Ireland today. As Conor McCabe puts it,

    …history provides a canvas wide and deep enough to enable us to see the economic and political mechanisms, the machine itself, in motion . . . The logic behind it reveals itself. It is still deeply shocking [the 2008 bank guarantee], but it was not the result of a few bad apples.

    Up to the 1980s cattle were to Ireland what the car industry was to Detroit, and although the Irish Free State gained partial independence in 1922, its economy, via the cattle industry, remained intertwined with that of the UK.

    In 1927 the Irish Free State decided to hand over monetary policy to the banks, who decided, not surprisingly, that the future of Ireland lay with a strong, value-laden, currency. Yet, this strength would not be drawn from the economic dynamics of the state, but from the punt’s link with sterling at parity. The Government had the option to link the punt to sterling in a way that would have allowed the punt to rise or fall in value in accordance with the realities of the economy, but it did not take it.

    There was no central bank until 1943, and even then it declined to use the powers associated with such an institution—namely the management of national currency.

Attempted independence, 1932–1958

The division within Irish capitalism, largely between big and small capitalists, landowners, and farmers, was represented by the two main parties, Cumann na nGaedheal (which later became Fine Gael) and Fianna Fáil, the former representing the victorious ruling class of pro-imperialist big farmers, big capitalists, large-scale landowners, and the banks, the latter representing—though not exclusively—smaller capitalists and farmers as well as emerging industrialists in competition with Britain.

The election of a Fianna Fáil government in 1932 represented disillusionment with the Free State and the global crisis of imperialism. It allowed for a more progressive attempt to turn towards developing native capitalism, strengthening its supporters, and an attempt to develop the economy and state more independently of the British empire.

In doing this, Fianna Fáil supported some progressive national industrial programmes and state-led investment and production strategies. Critical in this stage too was the “economic war” with Britain between 1932 and 1938, which ultimately ended with the Anglo-Irish Agreement of 1938, essentially recognising Ireland’s junior and subject status. The failure to win this “war,” or to develop deeper strategies of state-led production, employment, and capital formation—essentially to push on from native capitalism towards socialism—meant that this attempt at industrial development and independence would ultimately fail.

Those who favoured foreign imperialist support for their class interests seized on inflationary aspects of the state’s policies and fought, successfully, for the change in policy in the mid-1950s, for an austerity regime of reduced government spending and reliance on foreign capital.

Such is the contradiction within any ruling class in a neo-colony attempting to develop national capitalism while avoiding any moves towards socialism. The conflict this brings about with imperialist powers and structures usually ends with the weaker state being placed back in its box, something that the permanent civil service and big capitalists in Ireland gladly sized upon to once again return to power as the leading class within the country.

The crisis of the 1950s also showed the limitations of Keynesian economics more generally. The state could either continue to take wealth into public ownership and bring production into a planned development to avoid stagnation, in contravention of the capital accumulation process, or release capital and provide further investment opportunities through what ultimately would be called neo-liberalism. The Irish state, governed as it was, and is, by capitalist class interests, chose the latter path, as did the system globally.

1958, the EEC, and the US empire

The new economic strategy did not spring one fine day full-blown in the minds of Whitaker and Lemass in the late 1950s. It was in development locally and earlier than that. For example, the Industrial Development Authority was created in 1948 and catered for both indigenous and foreign business but increasingly turned towards foreign capital. It celebrated the signing of the free trade agreement with Britain in 1965 and is now exclusively focused on foreign investment.

American strength, influence and pressure within Europe after the Second World War helped to “resolve” the conflict within the ruling class and to direct the economy towards returning to a more submissive role within capitalism globally, one that accepts its place within imperialism as supporting the major powers, as opposed to challenging or upsetting them.

The Irish capitalist class, not strong enough alone, once again allied itself with imperialism to maintain class rule rather than seeking compromise or alliance at home that might have threatened capitalist rule and their wealth and privilege. Such has been the ebb and flow of capitalism and the ruling class since the counter-revolution won out and established the Irish Free State.

It was no coincidence that Ireland joined the EEC (EU) in the same year as Britain, and it is no coincidence either that the Irish ruling class is now campaigning for Britain to remain in the EU. But to understand the EU itself one must look at its origins.

The European Coal and Steel Community, later the European Economic Community, now the European Union, has never been progressive or “social” or had anything to do with “equality.” Any misunderstanding on this question needs to be overcome once and for all.

The Coal and Steel Community between Germany and France, and then the EEC, was first and foremost an anti-communist bloc, sponsored by the emerging US empire for rebuilding capitalism in Europe after the war. Some progressive aspects or legislation have been won by workers, conceded on the basis of weakening the struggle for socialism and the threat of socialism when it existed in the USSR and eastern Europe.

In 1973 Ireland did not join a progressive union or community of equals: its ruling class and their state joined their fellow-capitalists in Europe, supported by the American ruling class, in a structural and institutional alliance of big business and monopoly capital throughout Europe, centred on a Franco-German alliance.

Over the years the Irish ruling class ceded control of our seas and fishing industry, our currency and much of our fiscal control in return for grants to big farming and cheap credit for the financial elite. Ireland did not lose its sovereignty in the Troika deal of November 2010: much of it was already given away. The country became a conduit economy for both American and German capital, which ultimately left us exposed industrially to the whims of American big business and the global purchase of exports and inflated the property market through a flood of cheap foreign capital, much of it German.

This strengthened and promoted a particular type of capitalist sector within the ruling class, which ultimately gained the upper hand within the elite and is now very much tied to imperialism globally and reinforces Ireland’s subject place within it. Again, as Conor McCabe puts it,

the expansion in financial investment, construction, and land sales gave rise to a particular type of Irish capitalist entrepreneur. There was money to be made in providing services to foreign investors. Construction, banking, insurance, property, road haulage and legal services—these were the areas of commercial activity that gained a commanding presence in the Irish economy. At the same time there was money to be made by speculation on the boom to the economy that foreign investment brought.

Successive EU treaties, from the Treaty of Rome (1957) to the European Stability Mechanism (2012), have been for securing the interests of capital in Europe, accommodating the rise of the US empire, and maintaining the rule of local capitalist classes, which, acting together even if not quite as equal partners, are better able to secure their rule and oppose any progressive mobilisations or movements for socialism.

Lessons for the building of socialism

Comrades, activists and “leftists” could do a lot worse right now than read both the CPI’s “Democratic Programme for the 21st Century” and the Peadar O’Donnell Socialist Republican Forum’s collection of essays on “Republicanism in the 21st Century,” which deal with these issues in far more detail and far more expertly than this brief article, as well as the books by Conor McCabe and Denis O’Hearn referred to earlier. These documents offer a more complete and comprehensive analysis (the Peadar O’Donnell booklet) as well as a transformative programme (the CPI document) for building socialism in Ireland on the basis of this understanding of our history.

So, what are the essential lessons to be learnt and taken into account?

  1. The years from 1916 to the mid-1920s were formative years. A revolution was started that presented huge opportunities for winning national liberation and building socialism. Tragically, a counter-revolution won out and laid the basis for the “independent” state through continuity, not change. Capitalism and imperialism were secured in Ireland in those fateful years.
  2. There was no “betrayal” of anyone or any set of ideals: there has just been class interest and class conflict, which has developed the Irish state and Irish capitalism within imperialism the way it has.
  3. This class conflict ebbs and flows and at times takes leaps forward, given the prevailing conditions and balance of forces. Nothing is predetermined or carved in stone but happens according to the outcome of class conflict within the prevailing conditions while also shaping those conditions for future struggles.
  4. There is a ruling class in Ireland, and by “ruling class” we mean (quoting Göran Therborn) that class through which “the state positively acts upon the reproduction of the mode of production, of which the class in question is the dominant bearer . . . Taking and holding state power is a process of interventions in a given society effected by a separate institution which concentrates the supreme rule-making, rule-applying, rule-adjudicating, rule-enforcing, and rule-defending functions of that society.”

This class in Ireland is the big capitalist class, which is allied           internationally with imperialism and the imperialist centres, the United States and the European Union, and still, but to a lesser extent, Britain.

  1. The state is not neutral: the ruling class is in control of it, and so it must be won if we are to successfully build socialism, as opposed to just softening the system through the ebb and flow of class conflict within capitalism.
  2. To build socialism our class must have state power and sovereign control. The capitalist class won’t deliver this, and so the struggle for state power, for national freedom and for socialism, are all part of the same struggle.
  3. If inter-class alliances are necessary in particular campaigns or at particular moments, the organised working class must ensure that it leads the alliance at all times and must not give up its independence or accept a secondary role.
  4. Only the working class will deliver socialism and then only through the conscious self-development of a united working-class movement, industrially and politically.

Rupture with EU needed

Thirty years after Portugal joined the EEC

by Albano Nunes,

Member of the Secretariat of the CC of the Portuguese Communist Party

Portugal became an EEC member , by the hand of the PS and the PSD, allies in the capitalist recuperation policy, in January 1986. A political and ideological operation, of a great dimension, and that introduced “Europe” as the El Dorado, that ought to bring a new prosperity era to thePortuguese. Upon thirty years, the result is so negative, that even those who have defended Portugal’s participation in the European capitalist integration process, the alpha and omega of the right-wing policy, are able to underline an ephemeris, unless in a shy and defensive manner. And what has to be said? A simple idea but with plenty political meaning: that life has given and carries on giving reason to the PCP, that here, one holds a very valuable patrimony, that gives out confidence and strength to our progressive and revolutionary struggle.

The very serious consequences regarding Portugal, towards its productive structure’s destruction, the people’s impoverishment, the democracy amputation, the subjection situation towards the great transnational capital and the great powers, are therefore, a proof. Together with this “union” own nature, presented as “ social cohesion”, “humanism”, solidarity” is to be confronted with the – labour exploitation policies and national oppression, barriers from a “fortress Europe” unto the dramatic refugee waves, the brutal attacks to fundamental freedoms and rights in the name of “security”, the militarist aggression escalade against other peoples, under the pretext of “war to terrorism”, the concerning xenophobia and fascism growth – its real class and imperialist block nature. Revisiting on how the PCP warned and previewed on the EEC /European Union adhesion, one ought to remark how this party, deeply rooted within the Portuguese reality and guided by a scientific and revolutionary conception of the world, always elevated itself above the conjuncture contingences and appearances, never allowing, even when rowing practically on its own against the tide, of the “single thinking”, of defending Portugal and the Portuguese interests, choosing to lose votes, by proclaiming the truth, than by lying towards the Portuguese .

Thus, this is a PCP’s great merit, a historical merit, situated on the decisive field of the class struggle, where many(long ago) great communist parties hesitated and, gave up /abandoned clearly anti-monopolist and anti-imperialist positions, and ended up by adopting an opportunist “left-wing Europeanism” and theorizations on the “ national territory exhaustion” within the social change process, allowing the right-wing to hold the patriotism banner, used as reactionary nationalism, and spreading throughout Europe. And when this widely recognized merit, namely when the PCP places as a central issue the struggle against external embarrassments to the country’s development? Not for yet, although more and more, are those who approach the PCP positions concerning debt renegotiation or even Portugal’s preparation for the Euro exit. But they are but a few who deny the deep crisis in which the EU is emerged.

Portugal’s entry to the EEC was a political operation with the objective to stop and defeat the Portuguese Revolution. The success is an evidence concerning the latter. Therefore, a policy following April values and the Constitution demands a rupture with the European capitalist integration process and the whole recuperation for the Portuguese and the right to follow their own destiny. The presidential elections is a major issue and Edgar Silva, the candidate supported by the PCP, is the one with the most authority to deserve the Portuguese trust.


Imperialism and Capitalism: Rethinking an Intimate Relationship

By Prof. James Petras and Prof. Henry Veltmeyer

Global Research, December 16, 2015


The literature on imperialism suffers from a fundamental confusion about the relationship between capitalism and imperialism. The aim of this paper is to remove this confusion. The paper is organised in three parts.

In Part I we state our own position of the capitalism-imperialism relation. In part II we discuss some major points at issue in the Marxist debate on imperialism. And in Part III we review the changing forms that imperialism has taken in Latin America in the course of the capitalist development process.

The main focus of the paper is on the form taken by imperialism in the current conjuncture of capitalist development, namely extractive capitalism. This conjuncture is characterised by the demise of neoliberalism as an economic model and a growing demand on the world market for energy, minerals and other “natural” resources—the political economy of natural resource development (large-scale investment in the acquisition of land and entailed resources, primary commodity exports). The fundamental dynamics of what we term “extractivist imperialism” are examined in the context of South America, which represents the most advanced but yet regressive form taken to date by capitalism in the new millennium. Our analysis of these dynamics is summarized in the form of twelve theses.

In this essay we are concerned with unravelling the intimate relation of imperialism to capitalism and clearing some confusion surrounding it. There are two major problems in the way these two concepts are often understood and used in the literature. In the liberal tradition of political science the projection of imperial power and associated dynamics are generally disconnected from capitalism and its economic dynamics, reducing imperialism to a quest for world domination based on a lust for power or purely geopolitical considerations by the guardians of the national interest in the most powerful countries. On the other hand, in the Marxist tradition of political economy, among world system theorists of the new imperialism there can be found the opposite tendency in which the institutional specificity of the state as an instrument of class power is ignored, and imperialism is reduced to a purely economic dynamic, essentially confusing imperialism with capitalism.

In this paper we argue that capitalism and imperialism are intimately connected but engage distinct dynamics in the geoeconomics and the geopolitics of capital that need to be clearly distinguished. We advance this argument in the Latin American context, with reference to the capitalist development process and associated dynamics in their temporal and spatial dimensions. But first we engage several points of dispute among Marxists in regard to imperialism. We then trace out the salient features of imperialism at various stages in the capitalist development process in Latin America.

The Marxist Debate on Imperialism: Points of Dispute


Almost all theories of contemporary imperialism, both in its (neo)Marxist and (neo)liberal variants, lack any but the crudest sociological analyses of the class and political character of the governing groups that direct the imperial state and its policies (Harvey 2003; Magdoff 2003; Amin 2001; Panitch and Leys 2004; Foster 2006; Hardt and Negri 2000). The same is true for contemporary theorizing about the imperial state, which is largely devoid of both institutional and class analysis.[1] Most theorists of imperialism resort to a form of economic reductionism in which the political and ideological dimensions of imperial power are downplayed or ignored, and categories such as “investments,” “trade” and “markets” are decontextualized and presented as historically disembodied entities that are comparable across space and time. Changes in the configuration of class relations and associated dynamics are then accounted for in terms of general economic categories such as “finance,” “manufacturing,” “banking” and “services” without any analysis of the political economy of capitalist development and class formation, or the nature and sources of financial wealth—illegal drug trade, money laundering, real estate speculation, etc. (Panitch and Leys 2004). As for the shifts in the political and economic orientation of governing capitalist politicians representing the imperial interests of the dominant class, resulting in the formation of links with other capitalists and imperialist centres with major consequences in the configuration of world power, they are glossed over in favour of abstract accounts of statistical shifts in economic measures of capital flows.

Contemporary theorizing about imperialism generally ignores the sociopolitical and ideological power configurations of imperial policy, as well as the role of international financial institutions such as the World Bank in shaping the institutional and policy framework of the new world order, which not only provides a system of global governance but the rules of engagement for the class war launched by the global capitalist class against labour in its different redoubts of organised resistance. The focus of most contemporary and recent studies of the dynamics of imperial power is on the projection of military power in the project of protecting and advancing the geopolitical interests of the United States and the geo-economic interests of monopoly capital in the middle east and other zones of capital accumulation, or on the economic operations of the large multinational corporations that dominate the global economy. In regard to the Middle East the main issue in these studies is the threat presented by radical Islam (and its forces of international terrorism) to accessing one of the world’s greatest reservoirs of fossil fuel as well as the imperialist project of world domination.

As for the multinational corporations that dominate the global economy they are viewed by theorists of the “new imperialism” as the major operational agency of imperial power in the world capitalist system, having displaced the nation-state in its power to advance the project of capital accumulation and the quest for world domination. While theorists and analysts in the liberal tradition continue their concern with the dynamics US foreign policy in the projection of imperial power, and Marxists in the tradition of international political economy and critical development studies continue to concentrate their analysis on the dynamics of state power, the theorists of the “new imperialism” concentrate almost entirely on the globalizing dynamics of monopoly capital.

Nevertheless, the dynamics of imperial power relations are political as well as economic, and do engage the political apparatus of the state. As for the economic dynamics, as theorized by Lenin in a very different context, they derive from the search by capital for profit and productive investments as well as cheaper sources of raw materials and labour and markets. In terms of these dynamics, particularly those that relate to the fusion of industrial and financial capital, the export of capital and the emergence of monopoly capital, Lenin theorized imperialism as the highest form of capitalism, a manifestation of its fundamental laws of development. However, while liberal theorists of imperialism tend to emphasize the political, and to isolate the political dimension of imperialism from its economic dynamics, viewing imperialism purely in terms of the quest for world domination or the pursuit of geopolitical strategic concerns and the national interest, Marxist theorists following Lenin recognize that the imperial state is a critical agency of capitalist development and a fundamental source of political and military power pursued in the service of capital, to ensure its dominion.[2]

From this Marxist perspective imperialism is understood in terms of its connection to capitalism, and the agency of the imperial state system—the projection of state power—in securing the conditions needed for capital accumulation. Not that there is a consensus on this point—on imperialism as the bearer of capital, an agency of capitalist development. William Robinson, for example, expands on the argument advanced by Hardt and Negri (2000) and other world system theorists that the “class relations of global capitalism are now so deeply internalized within every nation-state that the classical image of imperialism as a relation of external domination is outdated” (Robinson 2007, 7).[3] Although what these class relations might possibly be is unclear, as is the question as to what form imperialism takes under these circumstances (the dominion of capital over labour?), Robinson argues that in effect “national capitalist monopolies” no longer need to

“turn to the state for assistance . . . .” The corollary is that the state no longer needs to assume the responsibility for empire-building and the projection of imperial power is no longer concerned with the dynamics of capital accumulation.[4] In Robinson’s formulation “the system of nation-states . . . is no longer the organizing principle of capitalist development, or the primary institutional framework that shapes social and class forces and political dynamics” (Robinson 2007, 8).

Another assumption made by Robinson and shared by other world system theorists of transnational capital and “globally integrated enterprise” is that “if we are to get at the root of 21st century global social and political dynamics” the Marxist tradition of imperialism theory based on the classical statements of Lenin and Hilferding should be discarded. Based on the assumption of a world of rival national capitals and economies, conflict among core capitalist powers, the exploitation by these powers of peripheral regions, and “a nation-state centred framework for analysing global dynamics,” this theoretical tradition is entirely useless, incapable—according to Robinson—of grasping the fundamental contemporary dynamics of capitalist development (Robinson 2007, 6–7).[5]

If, as Robinson contends, capital no longer needs the imperial state does it mean that imperialism will wither away, or does it mean, as argued by Klare (2003, 51–52), that it will take the form of

“geopolitical competition . . . the contention between great powers and aspiring great powers for control over territory, resources, and important geographical positions such as ports and harbours . . . and other sources of wealth and influence.”

Or does it mean what Robinson and some—including Amin (2001), Arrighi (2005), Foster (2003) and others in the torrent of “new imperialism” literature that has appeared since 2001—have suggested or contend, namely that imperialism is advanced primarily, if not exclusively, in economic form via the agency of transnational(ized) corporations that represent an empire without imperialism, as Hardt and Negri would have it, or capitalism beyond imperialism, as Robinson sees it.

In opposition to this rather reductionist view of imperialism, we hold that imperial power is shaped predominantly by the imperial state and its policies that take as a given that what is perceived as in the “national interest” coincides with the concerns and interests, both economic and political, of the capitalist class—or the “private sector,” in the official discourse. Notwithstanding arguments to the contrary, and taking into consideration both its economic and political dynamics and its actual operations (investments, production, sales), imperialism now as before is clearly designed and works to advance the project of capital accumulation in whatever and in as many ways as possible—to penetrate existing and open up new markets, exploit labour as humanely as possible but as inhumanely as needed, extract surplus value from the direct producers where possible, and access as needed or process raw materials and minerals.

Insofar as the capitalist class is concerned the aim and the agenda of its individual and institutional members is to accumulate capital. As for the imperial state and its agents and agencies, including the World Bank and the agencies of international cooperation for security and development, the agenda is merely to pave the way for capital, to create the conditions needed for economic and social development. In neither case is uneven development of the forces of production and its social conditions (social inequality, unemployment, poverty, social and environmental degradation, etc.) on the agenda. Rather, these conditions are the unintended or “structural” consequences of capitalist development, and as such inevitable and acceptable costs of progress that need to be managed and, if and where possible, mitigated in the interest of both security and development.

Under these strategic and structural conditions it is illuminating but not particularly useful to measure the impact of imperialism merely in economic terms of the volume of capital inflows (FDI, bank loans, portfolio investments, etc.) and outflows (profit, interest payments, etc.).[6] This is because imperialism is a matter of class and state power, and as such an issue of politics and political economy—issues that are not brought into focus in an analysis of national accounts. At issue here are not only the structural dynamics of uneven capitalist development (the “development of underdevelopment,” in André Gunder Frank’s formulation) but social and international relations of power and competition between imperial and domestic classes, between officials and representatives of the imperial state and the state in “emerging economies” and “developing societies.”

Under current conditions of rapid economic growth and capitalist development on the southern periphery of the world system, these relations are very dynamic and changing. By no means can they be described today as relations of domination and subordination. In addition, members of the global ruling class (investors, financiers, big bankers, industrialists, etc.) must compete with each other not only in the same sector but in different countries within the world capitalist and imperialist system. This is not only a question of inter-capitalist and intra-imperialist rivalry. It is also a development and political issue embedded in the social structure of the capital-labour relation and the economic structure of international relations within the world system. For example, within the dynamic and changing structure of this complex system of class and international relations officials of the states with a subordinate position in the imperial state system will insist on the transfer of technological, management and marketing knowhow to strengthen the ability of their capitalists to compete and for them to make profit, extract rents and serve their “national interest.”

As for relations of “domination” and “dependence” among nations on the lines of a north-south divide the structure of global production, and international relations of domination and subordination, are dynamic and change over time, in part because the geopolitical and economic concerns of the nation-state subject to imperial power leads to a quest for relative autonomy by state officials and politicians in these countries as well as protection of the national interest. “Developments” along these lines have resulted in qualitative changes in the relations between established imperial and emerging capitalist states.[7] Therefore, theorizing that is focused only on an analysis of inflows and outflows of capital—as if the “host” country was a “blank factor”—or a focus on the structure of global production based on a fixed international division of labour, cannot account for the dynamics of capitalist development in countries and regions on the periphery of the system with those at the centre.[8] Nor can this type of economistic theorizing explain dynamic features of the world capitalist system, for example the shift in economic power from North America and Western Europe towards Asia—China and India, to be precise.

Capitalist Development, Class Struggle and Imperialism

In outlining his conception of Historical Materialism, the foundation of Marxism as a social science, Marx had argued that at each stage in the capitalist development process[9]—the development of the forces of production—can be found a corresponding system of class relations and struggle. For Marx this was a matter of fundamental principle arising out of a fundamental conflict between the forces and relations of production. But he could have added that at each stage of capitalist development can also be found both a corresponding and distinct form of class struggle based on the forces of resistance to this advance, as well as imperialism in one form or the other and distinctly understood as the projection of state power in the service of capital—to facilitate its advance in the sphere of international relations and secure its evolution into and as a world system. That is, the projection of state power in the quest for world domination—to establish hegemony over the world system—is a necessary condition of capitalist development. Capitalism requires the state not only to establish the necessary conditions of a capital accumulation process, but to ensure its inevitable expansion—the extension of the capital-labour relation, and its mechanism of economic exploitation (the extraction of surplus value from the labour of the direct producers)—into a world system.

Lenin had theorised this projection of state power in the service of capital as the most advanced stage in the capitalist development process, which includes a phase of “primitive accumulation” (in which the direct producers are separated from the land and their means of production) and a process by which the small-landholding agricultural producers or peasant farmers are proletarianized, converted and made over into a working class. As Lenin saw it imperialism so conceived (as the “highest stage of capitalism”) featured

(i) the fusion of industrial and financial capital;

(ii) the export of capital in the search for profitable outlets overseas;

(iii) the territorial division (and colonization) of the world by European capitalist powers within the institutional and policy framework of Pox Britannica (the hegemony and dominion of the United States); and

(iv) an international division of labour based on an international exchange of primary commodities for goods manufactured in the centre of the system. These features encompassed an economic dynamic of capital accumulation, but this dynamic and the economic structure of this system evidently required and was secured politically with the projection of state power, including military force.

Lenin astutely identified the fundamental structural features of the world capitalist system at this stage of development. However, it was misleading to characterise it as “imperialism” in that the projection of imperial class-based state power was a distinct feature of capitalism in an earlier phase in the evolution of capitalism as a world system, namely mercantilism, a system in which merchant’s capital was accumulated through the expropriation of natural resources as much as exploitation of labour as well as state-sanctioned and regulated international trade. And imperialism was also a distinct feature and an adjunct to the capital accumulation process in later periods of capitalist development, as discussed below.

Imperialism in an Era of State-led Capitalist Development (1950–80)

In the wake of the Second World War the United States emerged as an economic super-power, in command of at least one half of world industrial capacity and up to 80 percent of financial resources or capital for productive investment. Having replaced Great Britain as the leader of what were then described as the “forces of (economic and political) freedom,” and to counter a perceived potential threat from its Russian war-time ally, now the USSR, which had also emerged from the war as an industrial power but representing an alternative socialist system for expanding the forces of national production, the US led the construction of a capitalist world order in the form of the Bretton Woods system (Bienefeld 2013; Frieden 2006; Peet 2003).

This system included two “international financial institutions”—the International Monetary Fund (IMF) and what would become the World Bank—as well as a General Agreement on Tariffs and Trade (GATT), an institutional mechanism for negotiating agreements in the direction of free trade that would eventually emerge as the World Trade Organisation (WTO). This system provided a set of rules used to govern relations of international trade—rules that favoured the operations and expansion of what had emerged as a complex of predominantly US-based multinational corporations and thus the hegemony of US capital. However, it also provided the institutional framework of a project of international cooperation with the nation-building and development efforts of a large number of countries that were engaged in a war of national liberation and independence from the colonial powers that had subjugated them for so long.

In this context capitalism engaged a process of productive and social transformation—the transformation of an economic system based on agriculture and an agrarian society and social system based on pre-capitalist relations of production into a modern industrial capitalist system based on capitalist relations of production, or wage labour.[10] The basic mechanism of this transformation was exploitation of the “unlimited supply of surplus rural labour” released in the capitalist development of the forces of production in the agricultural sector (Lewis 1954).

This process of capitalist development, and the associated process of productive and social transformation, can be traced out in different countries and regions at different points of time. But the process unfolded in different ways, engaging different forces of change and resistance in the class struggle, in the countries at the centre of the system and those on the periphery. First, in peripheral regions (Latin America and the Caribbean, parts of Asia and Africa) were found countries that were struggling to escape colonial subjugation and imperialist exploitation as well as class rule. Governments in these countries were in a position to choose between a capitalist and a socialist path towards nation-building and economic development, a situation that called for a strategic and political response from the guardians of the capitalist world order.

The response: to assist the development process in these countries—for the states in the developed countries and the international organizations and financial institutions to provide technical and financial assistance (foreign aid, in the lexicon of international development) to the undeveloped and less developed countries on the periphery of the system. In this context it is possible to view the idea and the entire enterprise of international development through the lens of imperialist theory—as a distinct form of imperialism (Petras and Veltmeyer 2005a; Veltmeyer  2005).

There is considerable evidence to suggest that the most powerful states within the institutional framework and system what can now be described as Pax Americana (the hegemony and dominion of the United States) in the post-war era of capitalism began to deploy the idea of development as a means of facilitating the entry into and the operations of capital in peripheral countries…in the development of their forces of production and the accumulation of capital in the process. In this context diplomatic pressure and military force were deployed as required or dictated by circumstance, but only secondarily, i.e., as a strategy and tactic of last resort. Thus the projection of military force to achieve the geopolitical objectives of the imperial state used predominantly by the US state in the 1950s and early 60s to maintain imperial order in its backyard—Guatemala (1954), Cuba (1961), the Dominican Republic (1963, 1965), Brazil (1964), Guyana (1953) and Chile (1973).[11]

After the military coup engineered in Chile this strategy of direct military invention and sponsored military coups gave way to a war by proxy, which entailed the financing of both the policy-making apparatus re social and development programs and the repressive apparatus (the armed forces) deployed by its Latin American allies.

In the same way as the imperialist project of International Cooperation for Development was used in the 1950s and subsequently to discourage those countries seeking to liberate themselves from the yoke of colonialism from turning towards a socialist path towards national development, the US government as an imperialist state resorted to the idea of “development” as a means of preventing another “Cuba” and turning the “rural poor” away from the option of revolutionary change provided by the revolutionary movements that had emerged in Latin America (Petras and Veltmeyer 2007a).

The class struggle at the time (the 1950–60s) assumed two main forms. The first was as a land struggle waged by the peasantry, most of which had been either proletarianized (rendered landless) or semi-proletarianized (forced to take the labour path out of rural poverty).[12] Many of the proletarianized and impoverished peasants, separated from their means of production and livelihoods, chose to migrate and take the development path of labour staked out by the World Bank (2008) and the modernization theorists of “development.”

However, many others chose to resist rather than adjust to the forces of capitalist development operating on them, to join the revolutionary social movements in the form of “armies of national liberation”. But by means of a three-pronged strategy and policy of (i) land reform (expropriation and redistributing land to the tiller), (ii) integrated rural development (technical and financial assistance to the small landholding peasant or family farmer), and (iii) repression (use of the iron fist of armed force hidden within the velvet glove of integrated development) the imperial state, via its allies in the local states, managed to defeat or “bring to ground” the social movements engaged in the land struggle. The one exception was the Revolutionary Armed Forces of Colombia (FARC), which continues to be a powerful force of resistance against the incursions of capital in Colombia to this today.

The second major form of the class struggle at the time had to do with the capital-labour relation, and engaged the working class in an organised labour movement against capital and the state for higher wages and improved working conditions. This struggle was part of a global class war launched by capital in the 1970s in the context of a systemic crisis of overproduction (Crouch and Pizzorno 1978). One of a number of weapons deployed in this war was the power of the state, via its policymaking role, to fatally weaken the labour movement in its organizational capacity to negotiate collective contracts for higher wages and reduce the share of labour in national incomes.

This approach was particularly effective in Latin America, where the imperial state, via the international organisations and financial institutions at its command, was in a position to impose market-friendly “structural” reforms on the labour movement. As a result of these reforms in the capital-labour relation the share of labour (wages) in the distribution of national income in many Latin American countries was reduced by as much as 50 percent.[13] The purchasing power of the average wage in Argentina, for example, was less in 2010—after six years of economic recovery and export-led rapid economic growth—than it was in 1970. The loss in the purchasing power or value of wages was particularly sharp at the level of the government-regulated minimum wage, which the World Bank throughout the 1980s and 1990s tirelessly argued was the major cause of low income, poverty and informalisation in the region. For example, in Mexico, the country that followed the strictures of Washington and the World Bank in regard to deregulating the labour market, from 1980 to 2010, over three decade of neoliberalism, the minimum wage lost up to 77 percent of its value (Romero 2014).

While the imperial state was indirectly engaged in the land struggle via a program of international cooperation that was implemented by the Latin American state but financed by officials of the imperial state, imperialism vis-à-vis the labour movement took the form of an armed struggle against “subversives” (a broad urban coalition of forces of resistance mobilised by the “political left”).

The struggle was led by the armed forces of the Latin American state, particularly in Brazil and the southern cone of south America (Chile, Bolivia, Argentina, Uruguay), although financed by and (indirectly) under the strategic command of the US, and operating within the framework of an ideology and doctrine (the National Security Doctrine) fabricated within the ideological apparatus of the imperial state. By the end of the 1970s this movement had also suffered defeat, its forces in disarray and disarticulated under the combined weight of state repression and forces generated in the capitalist development process. With the defeat of both major fronts of the class struggle and popular movement, with the resurgence of the Right in the form of a counterrevolutionary political movement and an ideology of free market capitalism, the stage was set for a major turnaround in the correlation of opposing forces in the class struggle. Imperialism would have an important role to play in this process.

Imperialism and Capitalism in an Era of Neoliberal Globalization (1980–2000)

Neoliberalism as an ideology of free market capitalism and a doctrine of policy reform in the direction of free market capitalism—“the new economic model,” as it was termed in Latin America (Bulmer-Thomas, 2006)—was some four decades in the making, manufactured by a neoliberal thought collective put together by Van der Hayek (Mirowski and Plehwe 2009). It was not until the early 1980s that the necessary conditions for bringing these ideologues to state power, i.e., in a position to influence and dictate policy, were available or otherwise created. These conditions included an unresolved systemic crisis of overproduction, a fiscal crisis in the North and an impending debt crisis in the South, and the defeat of the popular movement in the class struggle over land and labour.

Under these conditions the imperial state, via its international organizations and financial institutions, mobilized its diverse powers and forces so as to mobilize the forces needed to reactivate the capital accumulation process. The main problem here—from a capitalist and imperialist perspective—was how to liberate the “forces of freedom” (to quote from George W. Bush’s 2012 National Security Report) from the regulatory constraints of the welfare-development state. The solution: a program of “structural reform” in macroeconomic policy (the vaunted structural adjustment program” constructed by economists at the World Bank and the IMF) within the framework of a Washington Consensus (Williamson 1990).

By 1990 all but four major Latin American states had succumbed or joined the Washington Consensus in regard to a program that was imposed on them as a conditionality of aid and access to capital markets to renegotiate the external debt. And in the 1990s, in a third cycle and generation of neoliberal reforms,[14] the governing neoliberal regimes in three of these states—Argentina, Brazil, Peru—had followed suit, generating conditions that would facilitate a massive inflow of productive capital in the form of Foreign Direct Investment (FDI) as well as a substantial inflow of unproductive or fictitious capital seeking to purchase the assets of existing lucrative but privatised state enterprises (Petras and Veltmeyer 2004).

What followed was what has been described as the “Golden Age of US Imperialism” (viz. the facilitated entry and productive operations of large-scale profit- and market-seeking investment capital), as well as the formation of powerful peasant and indigenous social movements to resist the neoliberal policy offensive and protest the destructive impact of neoliberal policies on their livelihoods and communities—movements no longer directed against the big landlords or corporate capital and agribusiness but against the policies of the local and imperial state (Petras and Veltmeyer 2005a, 2009, 2013). By the end of the decade these movements had successfully challenged the hegemony of neoliberalism in the region as an economic model and policy agenda. What resulted was a “red” and “pink” tide of regime change—a turn to the left in national politics and the formation of regimes oriented towards the “socialism of the 21st century (Venezuela, Bolivia, Ecuador) or a post-Washington consensus on the need for a more inclusive form of development—inclusionary state activism (Argentina, Brazil, Chile, Uruguay . . .).[15] The states formed in the so-called “red wave” of regime change constituted a new anti-imperialist front in the struggle against US imperialist intervention—another front to the one formed by the social movements in their resistance and direct action.

Salinas de Gortiari, Bush Senior, Mulroney

At the level of national politics the main issues was US intervention in Latin America affairs, including the funding of opposition groups in Venezuela, the economic blockade against Cuba, and the attempt by the US government to orchestrate a free trade agreement, first between the US and both Canada and Mexico, and then a continent-wide agreement (FTAA, or ALCA in its Spanish acronym). The US regime was successful in the first instance, but failed miserably in the second—having encountered powerful forces of resistance in the popular sector of many states, as well as widespread opposition within the political class and elements of the ruling class and the governing regime in countries such as Brazil.

Both imperialism and the anti-imperialist struggle in this conjuncture of capitalist development assumed different forms in different countries, but Colombia was unique in that the most powerful movement in the 1960s land struggle had never been defeated. With land still at the centre of the class struggle the existence and large-scale operations of what we might term narcocapitalism allowed the US imperial state to move with armed force against the major remaining obstacle to the capitalist development of agriculture in Colombia—to make the countryside safe for US capital—under the façade of a drug war waged by the government against the manufacturers of cocaine and the narco-trafficking. The mechanism of this imperial offensive was Plan Colombia, a US military and diplomatic aid initiative aimed at combating Colombian drug cartels and left-wing insurgent groups in Colombian territory. The plan was originally conceived between 1998 and 1999 by the administrations of Colombian President Andrés Pastrana Arango and US President Bill Clinton, as an anti-cocaine strategy but with the aim of ending the Colombian armed conflict and making the countryside safe for US capital (Vilar and Cottle 2011).

A third front in the imperialist offensive against the forces of resistance in the popular sector involved International cooperation and the agencies of international development. The strategy employed by these agencies was the same as successfully used in the 1960s and 1970s to dampen the fires of revolutionary ferment in the countryside: to offer the dispossessed peasants and the rural poor a non-confrontational alternative to social mobilization and direct collective action (Veltmeyer 2005). The strategy had a different outcome in different countries.

In Ecuador, home to the most powerful indigenous movement in the region—the Confederation of Indigenous Nationalities of Ecuador (CONAIE)—the strategy of ethnodevelopment orchestrated by the World Bank and the IDB resulted in dividing and weakening the movement, undermining its capacity to mobilise the forces of popular resistance (Petras and Veltmeyer 2009). For example, in just a few years Antonio Vargas, President of CONAIE and leader of the major indigenous uprising of the twentieth century, had been converted into the head of one of the most powerful NGOs in the region, with the capacity to disburse funds for local development microprojects and a resulting diminution in the power of CONAIE to mobilise the forces of resistance. By 2007, when Rafael Correa, a left-leaning economist, came to power as the country’s president, the indigenous movement led by CONAIE, was but a shadow of its former self, allowing the political left, in the form of Correa’s Citizens Movement, to push CONAIE and the indigenous movement aside in the political project of a “Citizen’s Revolution.”

The outcome was rather different in Bolivia, a paradigmatic case of anti-neoliberalism and anti-imperialism in the current conjuncture of the class struggle. Whereas the popular movement in Ecuador had been pushed aside in the capture of the instruments of state power by the Political Left, in Bolivia an extended process of class conflict and mass mobilization was the prelude and condition of the Political Left’s rise to power in the form of the Movement Towards Socialism (MAS). The water and gas “wars”, clashes with the military, and the dismissal of several corrupt and neoliberal governments, were all part of a cocktail that allowed for the emergence of a new political “actor” or instrument in the form of MAS, and the rise to power of Evo Morales, which was backed by the “social movements”—that encompassed both communities of indigenous “peasants,” a rural proletariat of landless workers, and diverse sectors of the organised working class (Dangl 2007; Farthing and Kohl 2006; Webber 2010).

Imperialism and Anti–Imperialism in an Era of Extractive Capitalism

The neoliberal “structural reform” agenda of the Washington Consensus facilitated a massive inflow of capital in the form of foreign direct investments directed towards non-traditional manufacturing, financial and high-tech information-rich services, and natural resource extraction.  The 1990s saw a six-fold increase in the inflows of FDI in the first four years of the decade and then another sharp increase from 1996 to 2001; in fewer than ten years the foreign capital accumulated by MNCs in the region had tripled (ECLAC 2012, 71) while profits soared. John Saxe-Fernandez, a well-known Mexico-based political economist, determined that over the course of the decade that the inflow of FDI had netted enormous profits, reflected in the net outflow of US$100 billion over the entire decade of (Saxe-Fernández and Núñez 2001).

Another major inflow occurred in the first decade of the new millennium in the context of a major expansion in the worldwide demand for natural resources and a consequent primary commodities boom in South America (Ocampo 2007). As shown by data presented in Table 1 this boom in the export of primary commodities in the energy sector of fossil and bio-fuels (oil and gas), as well as minerals and metals, and agrofood products primarily affected South America, which led a worldwide trend towards the (re)primarization of exports from the periphery of the system and the expansion of extractive capitalism.

The main targets and destination points for FDI in Latin America over the past two decades have been services (particularly banking and finance) and the natural resources sector: the exploration, extraction, and exploitation of fossil and biofuel sources of energy, precious metals and industrial minerals, and agrofood products. In the previous era of state-led development FDI had predominantly served as a means of financing the capitalist development of industry and a process of “productive transformation” (technological conversion and modernization), which was reflected in the geoeconomics of global capital and the dynamics of capital flows at the time. However, the new world order and two generations of neoliberal reforms dramatically improved conditions for capital, opening up in Latin America the market for goods manufactured in the North (the United States, Canada, and Europe) and providing greater opportunities for resource-seeking capital—consolidating the role of Latin America as a source and supplier of natural resources and exporter of primary commodities, a role that is reflected in the flows of productive investment in the region away towards the extractive industries (see Table 2).

At the turn into the new millennium the service sector accounted for almost half of FDI inflows, but data presented by ECLAC (2012, 50) point towards a steady and increasing flow of capital towards the natural resources sector in South America, especially mining, where Canadian capital took a predominant position, accounting for up to 70 percent of FDI in this sector (Arellano 2010). Over the course of the first decade in the new millennium the share of “resource seeking” capital in total FDI increased from 10 to 30 percent. In 2006 the inflow of “resource-seeking” investment capital grew by 49 percent to reach 59 billion US dollars, which exceeded the total FDI inflows of any year since economic liberalization began in the 1990s (UNCTAD 2007: 53).

Despite the global financial and economic crisis at the time, FDI flows towards Latin America and the Caribbean reached a record high in 2008 (128.3 billion US dollars), an extraordinary development considering that FDI flows worldwide at the time had shrunk by at least 15 percent. This countercyclical trend signalled the continuation of the primary commodities boom and the steady expansion of resource-seeking capital in the region.

The rapid expansion in the flow of FDI towards Latin America in the 1990s reflected the increased opportunities for capital accumulation provided by the neoliberal policy regimes in the region, but in the new millennium conditions for capitalist development had radically changed. In this new context, which included a major realignment of economic power and relations of trade in the world market, and the growth in both the demand for and the prices of primary commodities, the shift of FDI towards Latin America signified a major change in the geo-economics and geopolitics of global capital. Flows of FDI into Latin America from 2000 to 2007 for the first time exceeded those that went to America, only surpassed by Europe and Asia. And the global financial crisis brought about an even more radical change in the geo-economics of global capital in regard to both its regional distribution (increased flows to Latin America) and sectoral distribution (concentration in the extractive sector). In 2005, the “developing” and “emerging” economies attracted only 12 percent of global flows of productive capital but by 2010, against a background of a sharp decline in these flows, these economies were the destination point for over 50 percent of global FDI flows (CEPAL 2012. In the same year FDI flows into Latin America increased by 34.6 percent, well above the growth rate in Asia, which was only 6.7 percent (UNCTAD 2012: 52-54).

The flow of productive capital into Latin America has been fuelled by two factors: high prices for primary commodities, which attracted “natural-resource-seeking investment”, and the economic growth of the South American sub-region, which encouraged market-seeking investment. This flow of FDI was concentrated in four South American countries—Argentina, Brazil, Chile, and Colombia—which accounted for 89 percent of the sub-region’s total inflows. The extractive industry in these countries, particularly mining, absorbed the greatest share of these inflows. For example, in 2009, Latin America received 26 percent of global investments in mineral exploration (Sena-Fobomade 2011). Together with the expansion of oil and gas projects, mineral extraction constitutes the single most important source of export revenues for most countries in the region.

The Geopolitics of Capital in Latin America: The Dynamics of Extractive Imperialism

As noted, a wave of resource-seeking FDI was a major feature of the political economy of global capitalist development at the turn into the first decade of the new millennium. Another was the demise of neoliberalism as an economic doctrine and model—at least in South America, where powerful social movements successfully challenged this model. Over the past decade a number of governments in this sub-region, in riding a wave of anti-neoliberal sentiment generated by these movements experienced a process of regime change—a tilt towards the left and what has been described as “progressive extractivism” (Gudynas 2010).

The political victories of these democratically elected “progressive” regimes opened a new chapter in the class struggle and the anti-imperialist movement, notwithstanding the fact that the wide embrace of resource-seeking FDI, or extractive capital, has generated deep paradoxes for those progressive regimes in the region committed to addressing the inequality predicament and conditions of environmental degradation that are fast reaching crisis proportions as a result of the operations of extractive capital.

Some political leaders and social movements in this context speak of revolution in the context of moving towards “the socialism of the 21st century—Venezuela’s “Bolivarian” revolution, Bolivia’s “democratic and cultural revolution,” and Ecuador’s “citizens’ revolution”—and, together with several governments that have embraced the new developmentalism (the search for a more inclusive form of development), these regimes have indeed taken some steps in the direction of poverty reduction and social inclusion, using the additional fiscal revenues derived from resource rents to this purpose. Yet, like their more conservative neighbours—regimes such as Mexico and Colombia, committed to both neoliberalism and an alliance with “imperialism”—the left-leaning progressive regimes in the region find themselves entangled in a maze of renewed dependence on natural resource extraction (the “new extractivism”) and primary commodity exports (“reprimarization”). Further, as argued by Gudynas (2010), this new “progressive” extractivism is much like the old “classical” extractivism in its destruction of both the environment and livelihoods, and its erosion of the territorial rights and sovereignty of indigenous communities most directly affected by the operations of extractive capital, which continues to generate relations of intense social conflict.[16]

Despite the use by “progressive” centre-left governments of resource rents as a mechanism of social inclusion and direct cash transfers to the poor, it is not clear whether they are able to pursue revolutionary measures in their efforts to bring about a more inclusive and sustainable form of development, or a deepening of political and economic democratization, allowing the people to “live well”, while at the same time continuing to toe the line of extractive capital and its global assault on nature and livelihoods. The problem here is twofold. One is a continuing reliance of these left-leaning post-neoliberal regimes (indeed, all but Venezuela) on neoliberalism (“structural reforms”) at the level of macroeconomic public policy. The other problem relates to the so-called “new extractivism” based on “inclusionary state activism” as well as the continued reliance on FDI—and thus the need to strike a deal with global capital in regard to sharing the resource rents derived from the extraction process. The problem here is that in this relation of global capital to the local state the former is dominant and has the power, which is reflected in the tendency of the governments and policy regimes formed by the new Latin American Left, even those like Ecuador and Peru that have taken a “radical populist form,” to take the side of global capital (the multinational mining companies) in their relation of conflict with the communities that are directly affected by the extractive operations of these companies (see the various country case studies in Veltmeyer and Petras 2014).

Another indicator of the relation of dependency between global extractive capital and the Latin American state is the inability of the latter to regulate the former and the extraordinary profits that are made by the companies that operate in the extractive sector. It is estimated that given very low or, as in the case of Mexico, non-existent royalty rates and the typically lax and low tax regime on the exportation of minerals and minerals—a major factor in the export regime of a number of countries in the region (particularly Chile, Bolivia, Colombia, Peru) —over 70 percent of the value of these minerals and metals on the global market is appropriated by different groups of capitalists in the global production chain. For example, Financial Times reported on April 18, 2013 that from 2002 to 2008, during the height of the primary commodities boom, the biggest commodity traders harvested 250 billion US dollars in profits on their “investments.”[17]

At the same time, given the capital intensity of production in the extractive sector it is estimated that workers generally received less than ten percent of the value of the extracted resources. Typically, the benefits of economic growth brought about by the export of Latin America’s wealth of natural resources are externalised, while the exceedingly high social end environmental costs are internalised, borne by the communities most directly affected by the operations of extractive capital (Clark 2002; Veltmeyer and Petras 2014).

The continued reliance on the neoliberal model of structural reform within the framework of a post-Washington Consensus on the need to bring the state back into the development process, together with the turn towards and a continued reliance on extractive capital (“resource-seeking” FDI), constitute serious economic, social and political problems for Latin American states seeking to break away from the dictates of global capital and the clutches of imperial power. However, the turn of the State in Latin America towards regulation in regard to the operations of extractive capital, as well as the growing popular resistance and opposition to their destructive and negative socioenvironmental impacts of these operations, also constitute major problems for global capital. The difference is that the capitalists and companies that operate in the extractive sector are able to count on the support and massive resources and powers of the imperialist state.

In regard to the issue of regulation the states and international organisations that constitute imperialism have been able to mobilize their considerable resources and exercise their extensive powers to create a system of corporate self-regulation in the form of a doctrine of a Corporate Social Responsibility doctrine (Gordon 2010; MiningWatch Canada 2009).[18] With this doctrine the Latin American states that have turned to or resorted to a strategy of natural resource development have been under tremendous pressure to allow the companies that operate in the extractive sector to regulate themselves.

As for the issue of the resource wars and social conflicts that have surrounded the operations of extractive capital, particularly in the mining sector, over the past two decades the imperial state has come to the rescue of extractive capital time and time again. In this regard the Canadian state has been particularly aggressive in its unconditional and relentless support of the Canadian mining companies that dominate foreign investments in the industry—accounting as they for upwards of 70 percent of the capital invested in this subsector in Latin America.[19]

The support of the Canadian government for these companies, via diplomatic pressures exerted on Latin American governments in favour of corporate social responsibility, financial support and assistance in overcoming the widespread resistance to the extractive operations of Canadian mining companies in Latin America, has gone so far as to place the entire apparatus of Canada”s foreign aid program at the disposal of these companies (Engler 2012; Gordon 2010; Webber 2008).

Conclusion: Theses on the Imperialism of the 21st Century

The conclusions that we have drawn from our analysis of economic and political developments in Latin America over the past two decades can be summed up in the form of twelve theses:

1.The dynamic forces of capitalist development are both global in their reach and uneven in their outcomes. Furthermore the capital accumulation process engages both the geo-economics of capital—the advance of capital in time and place—and the agency of the imperial state in facilitating this advance: the geopolitics of capital.

  1. Class analysis provides an essential tool for grasping the changing economic and political dynamics of imperial power in the various conjunctures of capitalist development. It allows us to trace out different stages in the development of the forces of production and the corresponding relations of production and dynamics of class struggle. These dynamics, which we have traced out in the Latin American context, are both internal and international, implicating both the capital-labour relation and a north-south divide in the world capitalist system.
  2. Whereas in the 1980s imperialism was called upon to remove the obstacles to the advance of capital and to facilitate the flow of productive investment into the region in the new millennium it has been called upon to assist capital in its relation of conflict with the communities directly affected by the operations of extractive capital, as well as cope with the broader resistance movement.
  3. The shift in world economic power in the new millennium, and the new geoeconomics of capital in the region, have significant implications for US imperialism and US-Latin American relations, reducing both the scope of US state power and the capacity of Washington to dictate policy or dominate economic and political relations. This is reflected inter alia in the formation of CELAC, a new political organisation of states that explicitly excludes the United States and Canada, the two imperial states on the continent.
  4. The new millennium, in conditions of a heightened global demand for natural resources, the demise of neoliberalism as an economic model and a number of popular upheavals and mass mobilizations, released new forces of resistance and a dynamic process of regime change.
  5. The centre-left regimes that came to power under these conditions called for public ownership of society’s wealth of natural resources, the stratification and renationalization of privatized firms, the regulation of extractive capital in regard to its negative impact on livelihoods and the environment (mother nature), and the inclusionary activism of the state in securing a progressive redistribution of wealth and income. As in the 1990s, the fundamental agency of this political development process were the social movements with their social base in the indigenous communities of peasant farmers and a rural proletariat of landless or near-landless workers. These movements mobilized the forces of resistance against both the neoliberal agenda of “structural reform” in macroeconomic policy, the negative socio-environmental impact of extractive capitalism, and the projection of imperial power in the region.
  6. These forces of change and resistance did not lead to a break with capitalism. Instead some of “centre-left” regimes took power and, benefitting from high commodity prices, proceeded to stimulate an economic recovery and with it an improvement in the social condition of the population (extreme poverty). But the policies of these regimes led to the demobilization of the social movements and a normalization of relations with Washington, albeit with greater state autonomy. In this context Washington in this period lost allies and collaborator clients in Argentina, Brazil, Uruguay, Bolivia, Venezuela and Ecuador—and, subsequently faced strong opposition throughout the region. However, Washington retained or regained clients in Panama, Costa Rica, Honduras, Colombia, Peru, Mexico and Chile. Of equal importance the centre-left regimes that emerged in the region stabilized capitalism, holding the line or blocking any move to reverse the privatization policy of earlier regimes or to move substantively towards what President Hugo Chávez termed “the socialism of the 21st century.”
  7. The fluidity of US power relations with Latin America is a product of the continuities and changes that have unfolded in Latin America. Past hegemony continues to weigh heavily but the future augurs a continued decline. Barring major regime breakdowns in Latin America, the probability is of greater divergences in policy and a sharpening of existing contradictions between the spouting of rhetoric and political practice on the political left.
  8. In the sphere of military influence and political intervention, collaborators of the US suffered major setbacks in their attempted coups in Venezuela (2002, 2003) and Bolivia (2008), and in Ecuador with the closing of the military base in Manta; but they were successful in Honduras (2009). The US secured a military base agreement with Colombia, a major potential military ally against Venezuela, in 2009. However, with a change in the presidency in Colombia, Washington suffered a partial setback with the reconciliation between President Chávez and Santos. A lucrative 8 billion US dollars trade agreements with Venezuela trumped Colombia’s military-base agreements with Washington.

10.It is unlikely that the Latin American countries that are pursuing an extractivist strategy of national development based on the extraction of natural resources and the export of primary commodities will be able to sustain the rapid growth in the context of contradictions that are endemic to capitalism but that are sharper and have assumed particularly destructive form with extractive capitalism.

11.The destructive operations of extractive capital, facilitated and supported by the imperial state has generated powerful forces of resistance. These forces are changing the contours of the class struggle, which today is focused less on the land and the labour struggle than on the negative socio-environmental impacts of extractive capital and the dynamics of imperialist plunder and natural resource-grabbing.

12.The correlation of forces in the anti-imperialist struggle is unclear and changing, but it is evident that the United States has lost both power and influence. Taken together these historical continuities argue for greater caution in assuming a permanent shift in imperial power relations with Latin America. Nevertheless, there are powerful reasons to consider the decline in US power as a long-term and irreversible trend.

James Petras taught Sociology at Binghamton University

Henry Veltmeyer  teaches development studies at the Universidad Autónoma de Zacatecas

At COP21, the world agreed to increase emissions

Some countries will reduce emissions a little, but other countries will increase them a lot. You would never know this from UN and media reports.

By by Jonathan Neale and Taken from http://climateandcapitalism.com/2015/12/13/cop21-world-agrees-to-increase-emissions/

The circus is over. The suits are leaving Paris. There have been millions of words written about the text. But one fact stands out. All the governments of the world have agreed to increase global greenhouse gas emissions every year between now and 2030. [1]

Why? Because all the countries have agreed to accept the promises of all the other countries. Among the top 20 countries for emissions, here are the countries that have promised to increase their emissions a lot by 2030: China, India, Russia, Korea, Mexico, Indonesia, South Africa, Turkey, Thailand, Kazakhstan, United Arab Emirates, Vietnam.

And here are the countries in the top 20 that have promised to cut their emissions by about 1% a year between now and 2030: USA, European Union, Japan, Canada, Brazil, Australia, and Argentina.

The countries that won’t cut will increase a lot will increase a lot. The countries that will cut will not cut by much. You would never know this from the way the agreement has been reported by the UN or the media.

They phrase everything as a promise to cut emissions. But they phrase these promises in ways that lie. So some countries, like Korea and Mexico, promise to cut emissions compared to Business as Usual (BAU). Business as Usual means the current UN estimate of how much emissions will increase if nothing is done. So a promise to cut only compared to Business as Usual is a promise to increase emissions.

Other countries, like India and China, promise to cut emissions in terms of carbon intensity. Carbon intensity is the amount of carbon in fossil fuels that is needed to produce the same amount of work. Carbon intensity has been going down in the United States for a hundred years. It is going down all over the world. This is because we learn to use coal, oil and gas more efficiently, just like we learn to use everything else in industry more productively. So a promise to cut carbon intensity is a promise to increase emissions.

Or they play tricks with time. Russia promises to cut emissions by 25% by 2030, compared with emissions in 1990. But the Russian economy collapsed after 1990, so the emissions were much higher in 1990 than they are even now. A promise to cut emissions compared to 1990 by 25% is a promise to increase emissions by 30% compared to this year. [2]

Then there are the rich countries which promise to cut emissions by a lot. But they always choose a comparison date to make them look good.

The US, for instance, promises to cut emissions in 2030 by 26% compared to 2005. But US emissions in 2014 were already 9% lower than in 2005. So really they are only promising to cut emissions by 15% in the next fifteen years.

The European Union promises to cut emissions by 40% compared to 1990. But EU emissions are already 20% less than they were in 1990. So this is a promise to cut emissions by 20% in the next 15 years.

So some countries will increase emissions a lot and some countries will cut them a little.

The regions of the world that will increase emissions already make two thirds of global emissions. The regions that will cut emissions a little make one third of global emissions. [3]

You do the math. They are lying. Emissions will rise every year. The leaders of the world have betrayed humanity. All we have on our side is seven billion people. Now we go home and mobilize.


[1] http://www.c2es.org/indc-comparison

[2] http://climateactiontracker.org/countries/russianfederation.html

[3] http://cait.wri.org/historical

Latin America: The Aborted Neo-Liberal Offensive

james petras

Pundits and commentators on the Left and Right are pronouncing ‘the end of the progressive cycle in Latin America’. They cite the recent presidential elections:

  1. Argentina, where hard-right Mauricio Macri was elected;
  2. Brazil, where President Dilma Rousseff has appointed a neo-liberal ‘Chicago Boy’ economist, Joaquin Levy, as Finance Minister and launched an IMF-style regressive structural adjustment policy designed to reduce social expenditures and attract financial speculators; and
  3. Venezuela, where Washington channeled millions of dollars to far-right parties, as well as violent extra-parliamentary and paramilitary groups, to destabilize the center-left Maduro government; right-wing Democratic Unity Coalition (MUD) won the legislative elections in December 2015 with more than 2:1 margin over the Chavista Venezuelan United Socialist Party (PSUV).

No doubt progressive social legislation has come to a virtual halt, even before the recent political advances of the US-backed right-wing parties with their neo-liberal economic agenda.

But paralysis, and even retreat and electoral defeats of the center-left regimes, do not mean the return to the neo-liberal 1990’s, a period of privatizations, pillage and plunder, which had plunged millions into poverty, unemployment and marginality.

Whatever the current voting results, the collective memory of mass hardship, resulting from ‘free market’ policies, is seared in the memory of the vast majority of the working population.

Any attempt by the newly elected officials to ‘unmake and reverse’ the social advances of the past decade will be met with (1) militant resistance, if not open class warfare; (2) institutional and political constraints; (3) and low commodity prices drastically limiting export revenues.

A careful analysis of the policies proposed by the neo-liberal right, their implementation and impact will demonstrate their likely failure and the rapid demise of any new right-wing offensive. This will abort the neoliberal cycle.

Argentina: President Macri and Wall Street – Premature Ejaculation

In the upper income neighborhoods of Buenos Aires, there was singing and dancing in the streets as the Presidential election results rolled in and Mauricio Macri was pronounced the victor. Wall Street, the City of London and their financial mouthpieces, the Wall Street Journal and the Financial Times, announced the coming of a new era and the end of ‘anti-investor, populism and nationalism, wasteful social spending’ referring to increases in pensions, family allowances and wages, approved by the previous center-left government

Mauricio Macri does not merely represent the plutocracy; he is one of the richest plutocrats in Argentina. He not only boasts of a ‘carnal relationship’ with Washington in his acceptance speech, he pleasured US President Obama by announcing he would work to expel Venezuela from MERCOSUR, Latin America’s foremost regional economic integration organization.

Macri announced a cabinet made up of hard-core neo-liberal economists, former supporters of the military dictatorship and even a rabid rightwing rabbi. He then spelled out his policy agenda, which had been cleverly hidden during his electoral campaign when his raucous rhetoric for ‘change’, spoke to everybody and nobody.

Macri promises to (1) end capital controls, export taxes and retentions on agro-business exports, (2) devaluate the peso, (3) pay over $1.2 billion dollars of Argentine public money to the Wall Street vulture-speculator, Paul Singer, who had bought $49 million dollars of old Argentine debt (a profit of astronomical proportions for buying paper), (4) privatize and de-nationalize the state-owned airline, oil company and pension funds (5)sign-off on EU and US-centered free trade agreements, thus undermining Latin America integration projects like MERCOSUR; (6) tear up the joint memo of understanding with Iran regarding an investigation into a terror bombing as requested by Israel; and (7) expel Venezuela from MERCOSUR.

In a word, the multi-millionaire playboy President plans harsh austerity for the Argentine working class and bountiful handouts for the economic elite.

The day after the elections, local and overseas speculators boosted Argentine stocks 40% anticipating the free market bonanza. George Soros and hedge fund mogul, Daniel Loeb, ‘piled into Argentine assets’. Investment fund managers urged Macri to act swiftly in imposing his ‘sweeping reforms’ before Argentina’s famous capacity for mass popular resistance could be organized to resist his policies.

Macri’s Wall Street and Washington patrons are well aware that their clients’ boisterous big business bombast faces serious political obstacles because his policies will provoke severe economic hardships.

President Macri does not even have a majority in Congress to approve his radical proposals. The congress is controlled by a coalition of rightwing and center-left Peronist parties, which will need to be coaxed, bought or coerced.

The Argentine Congress will balk at supporting his entire neoliberal agenda. When he resorts to ‘executive decrees’ to bypass Congress, he will be contested in the courts, streets and legislature. It is doubtful he will be able to neutralize all his critics and implement his radical neoliberal agenda.

The head of the Central Bank, Alejandro Vanoli, who was appointed by the previous center-left Fernandez government, is not likely to go along with Macri’s tight money policy, radical devaluation and fiscal austerity. Macri will likely look for a pretext to purge the incumbent and nominate a free market crony. However, the institutional damage will increase the general sense of a lawless regime willing to trample the constitutional order to impose his free market dogma.

Macri’s promise to end the ‘tax’ retention on agro-exports will decrease government revenues, exacerbating the fiscal deficit and necessitating deeper reductions in social expenditures. The contrast between higher earnings for the agro-business elite and lower living standards for labor is an invitation to greater class hostility and strife. Even more decisive Macri’s “export strategy” will be undermined by the low world demand and prices of Argentine commodity exports.

Macri’s promise to end capital and price controls on his first day in office will provoke a major devaluation of the peso which may exceed 60%. This will automatically result in severe increases in the price of consumer goods and increased profits for the export elites, provoking mass unrest across the occupational spectrum.

Macri promises to meet with the 7% of speculator hold-outs of old Argentine debt (from the pillage years of the 1990’s) demanding full payment with interest, especially the ‘vulture funds’ led by Wall Street’s Paul Singer of Elliott Capital Management. Pay-offs of over $1.3 billion on an original $49 million purchase of Argentine debt to Wall Street speculators will provoke fury among Argentine workers and nationalists who will shoulder the added burden on top of austerity and cuts in social welfare. Moreover, the 93% of debt holders, who had agreed to the ‘financial haircut’ and discounted the debt at 70% will now demand full payment multiplying tenfold the demands on the Treasury with disastrous consequences.

The devaluation and decline of purchasing power will not attract the ‘tidal wave of foreign investment’ to lift the economy and provide jobs and general prosperity as Macri had promised during his campaign. Foreign capital will not create new enterprises; they will concentrate on buying existing privatized public enterprises at fire-sale prices. Incoming capital will not increase the productive forces; it will only shift the direction of the flow of profits from public coffers to private pockets, from the domestic economy to overseas investors.

Neoliberalism: Then and Now

The general foreign and domestic political climate is vastly different today from the 1990’s when the previous neo-liberal experiment was launched with such disastrous consequences. In the late 1980’s, Argentina was suffering from acute inflation, stagnation and declining income. The working class organizations were still recovering from the murderous decade of military rule. Moreover, in the 1990’s the US was at the pinnacle of imperial power in Latin America. China was only beginning its dynamic growth cycle. The USSR had disintegrated and Russia was a struggling vassal state. Latin America was ruled by a motley collection of neo-liberal clones under the thumb of the IMF.

Today Macri faces an organized working class. The trade unions and militant popular movements are intact and have experienced a decade of substantial gains under a center-left government. The IMF experience remains a poisonous memory for hundreds of thousands of Argentines. Hundreds of military officials responsible for crimes against humanity have been arrested, tried and prosecuted under the out-going regime. The threat of a military coup, ever-present in the 1980’s and 90’s, is non-existent. China has become the key market for Argentine agro exports (soya). Macri, despite his declared passion to serve Washington, is obligated to accommodate to the Chinese market.

Any moves out of MERCOSUR and into the arms of the Transpacific Trade Agreement will prejudice Argentina’s strategic trade links with Brazil, Venezuela, Uruguay and Paraguay. Today Macri will find a hostile climate in Latin America for his proposed embrace of the US. His promise to ‘expel Venezuela from MERCOSUR’ has already been rejected by its members.

In summary, Macri will find it impossible to replicate the neoliberal policies of the 1990’s for all the above reasons. There is one additional factor to consider: The earlier version of the ‘free-market experiment’ led to the most severe economic depression in Argentine history with double-digit negative growth, unemployment exceeding 50% in working class districts (and 25% nationally) and poverty and extreme misery in some Argentine provinces exceeding Sub-Sahara Africa.

If Macri believes he can rush through the “harsh medicine” – and avoid the inevitable mass protest– while attracting a massive inflow of capital with which to rapidly grow the economy, he is gravely mistaken. After the initial giveaways and uptake of the stock market, the Soros and Loeb speculators will grab their profits and run. Weakened domestic consumption and the depressed global commodity market do not attract long term, large-scale capital.

The real question is not (as the financial pundits claim) whether Macri will ‘seize the opportunity’ but how soon after he tries to impose his free market model his regime will crash amid the ruins of a depressed economy, raging inflation and general strikes.

Brazil: Right Turn or a Left Opportunity

Commentators left and right cite the vertical decline of support for President Dilma Rousseff from over 50% to less than 10% as a sign of the ‘decline of the left’. Judicial investigations have led to the arrest and prosecution of dozens of Congressional leaders of the so-called ‘Workers Party”’(PT) for wholesale bribery, money laundering and illicit transfers of millions of dollars!

Prosecutors have jailed scores of PT officials, legislators and senior executives of the giant public petroleum company, Petrobras, the directors of the biggest construction companies and investment banks who were partners in crime with former PT President Lula Da Silva. The one-time trade union leader, President Lula, turned into a poster boy for Wall Street and more recently a notorious influence peddler for Brazilian big businesses.

Prosecutors have arrested 117 officials from Petrobras, the giant state oil corporation, and Brazil’s biggest company. They have arrested two of Brazil’s most powerful capitalists: Marcelo Odebrecht, president of Constructora Norberto Odebrecht, and Octavio Marquez de Azevedo of the Andrade Gutierrez Corporation. Both contributed to the Workers Party electoral campaign of ex-President Lula Da Silva and current President Dilma Rousseff.

Big business contributors, currently under investigation or jailed, had received forty-times the value of their political donations in terms of lucrative PT government contracts (a 4000% return on investment!).

Criminal cases and arrests for ‘bribes for contracts’ schemes have affected the financial sector, including the billionaire financier Andre Esteves, founder-President of BTG Pactual , a close friend and associate of Lula Da Silva.

The entire elite of Brazil’s capitalist and financial class has been indicted, jailed or is under investigation. The Treasurer of the PT, Senate and Congressional leaders and Presidential advisers of the ‘Workers’ Party have been arrested and jailed for bribes, money laundering and fraud, in connection with the Petrobras and other corporate corruption scandals.

The judicial investigation demonstrates that the PT had become a party of the corporate elite. PT leaders and officials work closely with business elites in channeling billions to corporate treasuries. In contrast, the PT’s so-called “poverty program” donated $60 a month to poor families, just above subsistence level. This poverty program was part of a vast patronage machine designed to secure votes to elect corrupt officials embedded with big capital and financiers!

While the prosecutors are not explicitly anti-capitalist, the investigations have exposed the corrupt basis of capitalist rule. In the course of one year Brazilian prosecutors have conducted deeper and more thorough research on the power elite and determined how it rules, exploits and pillages the wealth of the country than any analysis by the vast majority of ‘leftist’ academics and journalists over the fifteen years of PT mis-governance.

The prosecutors have acted against the entire class of capitalist executives and their political partners in the PT with greater force and integrity than the major ‘left’ trade union (the CUT) and social movement (Landless Rural Workers (MST) leaders. The CUT and MST leaders secured minor regime concessions, in exchange for ignoring the large-scale, long-term criminal links between bankers, agro- businesspeople, industrialists and the PT.

While leaders of the MST, the CUT and the National Union of Students gave ‘critical’ support to Presidents Lula and Dilma and their entourage of corrupt Congresspeople, the prosecutors exposed years of endemic fraud, swindles and bribes which had enabled the PT leaders to buy luxury BMWs, Rolex watches and million-dollar villas and luxury condos in exclusive neighborhoods.

Deltan Dallagnol, one of the prosecutors leading the investigation, has demonstrated that the PT works for the rich and powerful, foreign and domestic capitalists and deceives the poor. His investigations demonstrate that the PT is not a ‘center-left’ party – it is a party of kleptocrats working for capitalists.

One thing is sure: the PT is not a party embracing diverse popular classes; it is not an arena for popular struggle. It is a party that serves diverse capitalist sectors, including finance, construction, petroleum and agro business.

Because of corruption, the cost of government projects doubled and tripled. As a result vital social services were starved of funds and deteriorated and public transport construction was delayed for years.

In summary, the decline and discredit of the PT is not a defeat for the Left because the PT regime never was on the left. On the contrary, the discredit of the PT is a positive victory for anti-capitalist forces struggling against the ruling class and political elite.


The victory of hard right neo-liberal Mauricio Macri in Argentina and the disintegration of the PT do not augur a new rightwing cycle in Latin America. Macri’s economic team will quickly confront mass opposition and, outside the upper class neighborhoods, they lack any political mass support. Their policies will polarize the country and undermine the stability, which investors require. Brutal devaluations and the end of capital controls are formulas, not for economic development, but for inciting general strikes. Conflict, stagnation and hyperinflation will put an end to the enthusiasm of local and foreign investors.

Moreover, Macri cannot embrace Washington’s entire agenda because Argentina’s natural trading partner is China.

Macri’s regime is the beginning and the end of a reversion to the neo-liberal disaster, similar to what took place at the end of the 1990’s.

The fall of the PT, more a product of conscientious prosecutors than the action of trade unions and social movements, opens political space for new working class struggles, free from the constraints of corrupt leaders and bureaucrats.

Even if the Right returns to power in Brazil– it is tainted with the same stench of corruption; its capitalist partners are in jail or facing prosecution. In other words, the fall of the PT is only part of the decline and decay of all the capitalist parties.

Over time, soon after the collapse of the ‘New Right’, a new authentic left may emerge, free of corruption and links to big business. Hopefully, an authentic working class party will form, which can pursue socio-economic policies to end exploitation of labor, the pillage of the public treasury and the destruction of the Amazon rainforest. This should be a left, which sustains the environment, respects nature and upholds the rights of Afro-Brazilians, indigenous people and women.

TTIP—a cloak for imperialist expansion


Taken from this months Socialist Voice -http://www.communistpartyofireland.ie/sv/02-ttip.html

The Transatlantic Trade and Investment Partnership, now being secretly negotiated between the European Union and the United States, is an agreement designed to attack the gains of workers, to open up public utilities and services to private competition, to reduce environmental and safety standards, and to do away with banking regulations, and it will result in massive levels of unemployment and reductions in wages.

Furthermore, TTIP would give transnational corporations a veto over any government regulations that stood in the way of greater profit. And—according to the US “ambassador” to the EU, Anthony Gardner—TTIP is an imperial geopolitical strategy, aimed at isolating Russia and creating an economic version of NATO.

The origin of TTIP goes back to 1995, when it was floated by the Transatlantic Business Dialogue, an invitation-only group of chief executives of the most powerful American and European companies. Unlike other trade agreements, TTIP has little to do with the lowering of tariffs and everything to do with removing or degrading regulations that they see as a barrier to profits. The banking regulations that were intended to prevent another 2008-style capitalist crash are to go; environmental regulations that are superior to those in the United States are to be degraded, giving American transnationals a decided advantage over European businesses; and hard-won social standards and labour rights are to go, along with health and safety regulations, food standards, and regulations on toxic chemicals and on data protection.

Furthermore, the proposed establishment of a “Regulatory Co-operation Council” would police the implementation of agreed deregulation commitments, and would give corporations the power to amend, or even veto, the planned regulations of a sovereign state, even after TTIP has been ratified. This would give the corporations power over national governments, diminishing their right to regulate in the interests of their own people. Any proposed regulations that corporations felt would get in the way of profit could be amended by the corporations in their interests, or removed altogether.

With regard to employment, exaggerated claims have been made by EU officials and local politicians about the positive effect TTIP would have on the creation of jobs. Reducing Transatlantic Barriers to Trade and Investment: An Economic Assessment, commissioned by the Centre for Economic Policy Research, claims that the EU’s economic output would rise by 0.5 per cent by 2027, and this has become the most commonly quoted figure. However, this claim is nothing more than smoke and mirrors, and is only the most optimistic scenario from that report. More realistic scenarios from the same report estimate an increase in GDP of little more than 0.1 per cent—i.e. an annual increase in the growth of GDP of 0.01 per cent for the ten-year period.

The reality is very different from the optimistic claims of the pro-TTIP officials and politicians. The degrading and reversal of regulations, and the fact that employment standards are lower in the United States and that trade union rights are practicality non-existent, would result in European companies purchasing goods and services from the United States, causing a huge negative effect on jobs in Europe.

A recent report by Jeronim Capaldo, The Trans-Atlantic Trade and Investment Partnership: European Disintegration, Unemployment and Instability, predicts that European countries would lose 600,000 jobs. Furthermore, there would be a significant reduction in wages as a result of TTIP.

The EU has in fact recognised the reality of such job losses, and that those who lost their jobs would be unlikely to find alternative employment. In response to this probable loss the EU Commission has advised member-states to draw on structural support funds, such as the European Globalisation Fund and the European Social Fund, which has been assigned €70 billion to distribute over the seven years 2014–2020.

The hard-won working conditions of Irish and other European workers will be under threat as TTIP seeks to harmonise the working conditions of European workers with those in the United States. This puts in context the Croke Park and Haddington Road Agreements, which are preparing the way for a wholesale onslaught on the wages and working conditions of Irish workers.

For further evidence of the likely effect on jobs we need only look at the North American Free Trade Agreement (between the United States, Canada, and Mexico), which also promised hundreds of thousands of jobs but in fact resulted in the loss of more than a million.

Public services and government procurement contracts would be opened up, creating new privatised markets for transnational corporations, particularly in the fields of health, education, water, and housing—which explains the disinvestment by the Irish government in those areas: they are preparing the way for privatisation.

Furthermore, local authority procurement contracts would be opened up to the private sector. This means that important social and environmental goals and protections would no longer be allowed.

Massive job losses, wage reductions, banking deregulation, environmental and safety deregulation, the privatisation of public utilities and services, and the vetting by corporations of proposed national government regulations—you would think it couldn’t get worse. But it can.

In all its recent trade agreements the United States has built in an “investor-state dispute settlement” (ISDS) mechanism. It also wishes to see this as part of TTIP, which would mean that transnational corporations would be able to sue national governments over any existing legislation that would inhibit profit-making. ISDS makes transnational capital the equal of sovereign states, which threatens to undermine the most basic principles of democracy.

Under ISDS, transnational corporations would be able to bring states to a tribunal outside the normal legal system, administered by corporate lawyers. Several countries are already being sued under ISDS, including Sweden, Canada, Australia, Argentina, Uruguay, and Ecuador. In Australia the tobacco giant Philip Morris is suing the Australian government for introducing plain packaging on cigarettes. Ecuador was fined €1.77 billion for ending the oil contract with Occidental Petroleum after the company broke Ecuadorian law. In another tribunal Ecuador was refused a claim for €19 billion against Chevron for damage the company did to the Ecuadorian rain forest.

TTIP is something more than a trade agreement: it is an imperialist geopolitical strategy, with three clear purposes:

(1) an imposed economic and regulatory hegemony between the EU and the United States, resulting in the loss of 600,000 jobs, worsening conditions of employment, and wage reductions, massive privatisations of public utilities and services, and deregulation in banking and environmental protection and in health and safety;

(2) a reduction of the powers of sovereign states over their own regulatory legislation, which would be vetted by transnational corporations, which could sue states over any legislation that negatively affected their profit;

(3) the isolation of Russia and the creation of a bulwark against China and against Asian energy supplies. As Anthony Gardner recently stated, “there are critical geo-strategic reasons to get this deal done, and every day I am reminded of the global context of why we are negotiating TTIP.” And, “just look at what is happening in the Middle East, or Russia’s behaviour in Ukraine. We need this deal to help solidify further the transatlantic alliance, to provide an economic equivalent to NATO, and to set the rules of world trade before others do it for us. There are many reasons why this agreement is not only important, it is vital.”

The capitalist crisis of 2008 provided the cover for capitalism to attack the hard-won living standards of workers. TTIP would be a frontal assault on all the gains workers have achieved not only in wages and working conditions but in social support, environmental protection, health and safety, personal privacy, and financial regulation. Social-democratic government would be eviscerated, becoming a mere fig leaf for corporatism.

Irish government ministers have been falling over themselves to praise TTIP; but such is the level of secrecy surrounding it that ministers are not involved in the negotiation of the treaty. They can only see documents related to TTIP under very restricted circumstances, and are not allowed to take copies. They would have no say in the final agreement. Ministers have exposed themselves for the collaborators they are. They represent the interests of international capital and the imperialist powers and have no regard for the interests of their own citizens.

While hundreds of thousands have demonstrated in Europe against TTIP, there has been no similar response here in Ireland. The trade unions have complained about it but have done little by way of organising the people against it. The mainstream media have virtually ignored it. An international trade agreement that would devastate the working class is staring us in the face, yet little or nothing is being done to offer even a token defence.

Trade unions are meant to be the protectors of workers. It is imperative that they rally Irish workers to reject this agreement, rather than walking them into this nightmare.

ICTU on bogus self employment in construction

Bogus self employment in construction is a new briefing paper from the Irish Congress of Trade Unions on exploitation of workers in construction through the use of forced self employment of workers to save money for construction firms and employers. Not only does it exploit the workers it also rips off the state of valuable taxes. In many ways it is a double rip-off.

Below is from the Exec Summary of this paper:

Bogus self-employment in the construction industry has increased at an alarming rate in the last decade. The practice involves workers being incorrectly designated as ‘self-employed’ in order to save money for major contractors, in terms of tax and social insurance. This has had a number of very negative consequences for the workers concerned, for the industry as a whole and for wider society, resulting in very substantial losses to the State. Workers suffer the loss of employment protections and social insurance cover, while the wider industry sees an erosion of standards that make it less sustainable into the future. Meanwhile, the State and citizens are deprived of substantial revenue in the form of lost PRSI contributions, taxes foregone and public money lost to unscrupulous contractors engaged in de facto fraud.

An economic case for Irish unity

The economic case for Irish unity by Michael Burke should really be entitled ‘An economic case for Irish unity’ because that is what it is. It is a case for it not the only one.

At this point in Ireland’s history, meaning the balance of class forces here and the position within the global class system, Irish unity could in fact come about in a number of ways and from a number of class positions. For example, it could come about through a growing unity of the ruling economic elite, north and south, who’s common interests are tied to finance, property and the attraction of foreign direct investment. Equally, it could come about through the unity of working class interests, especially in a common struggle for democracy and control and in opposition to all three foreign dominating influences hear – Britain, EU and US. Unfortunately, this presentation of an economic case for unity is closer to the former than the latter.

As he says himself, The transformation of one part of Ireland’s colonial status has also ultimately transformed its economic performance. At the same time the vestigial colonial relationship of the North to Britain limits the scope of its
economic performance. Removing that vestige would improve the economic outlook for the whole island. In addition the two divided economies have unexplored synergies.They are also highly complementary, if current
barriers are removed and investment is fostered. Irish reunification is an economic growth story.

In essence this document argues for a united capitalist Ireland under the European Union and the reason we should do it? The growth of capital.

The border is a barrier to the free movement of goods, capital, labour and services. Removal of the border will increase the size of the market and produce market synergies. Unification may allow for the northern capitalist economy to catch up on the republics, having shot ahead thanks to EU investment.

Nevertheless this is an important part of a much needed debate and a valuable contribution. The author, Michael Burke, much of who’s work can be read at http://socialisteconomicbulletin.blogspot.co.uk/ and should be followed @menburke , was formerly an economist at Citibank in London. His views are always interesting and worth exploring.

Read it and make your own mind up.

TTIP: what it will mean for us and what is the alternative?

A new briefing paper from November 2015 written by Martin Myant for the European Trade Union Institute – ETUI.

TTIP: what will it mean

As the author says:

TTIP has already provoked more public opposition and doubts than has been the case with any previous international trade agreement. Thanks to the strength of that opposition, we now have a little more openness in the negotiation process. We now know what the negotiations cover, in broad terms. We know something of the EU negotiating positions. However, we do not know the US positions, nor do we know to what extent the two sides are agreeing on the range of topics
covered by the agreement.

The paper goes on to look at what we do know about the inclusion of reduction of non-tariff barriers, ISDS and the affect of TTIP on working conditions.