Featured Posts

<< >>

The political economy of water charges – an EU dimension

The origin of the planned water charges lies in the EU’s Water Framework Directive (2000), which provided for full cost recovery for water use and whose Article 9 states; ‘Member States shall take account of the principle of recovery of the costs of water services …’ It also required Member States to have in place

Where the Money Leads

‘Traditionally in American history, politics is like a seesaw: When one side is up the other side is down,” said Peter Wehner, a former aide to President George W. Bush. “Now it’s as if the seesaw is broken; the public is distrustful of both parties.” Wall Street Journal (11-04-14) “Follow the money” is a seemingly

Ireland, Still Addicted to Tax Breaks

Taken from http://www.nytimes.com/2014/10/20/opinion/ireland-still-addicted-to-tax-breaks.html The Irish government decided last week to get rid of a tax loophole that has helped big multinational companies like Apple and Google avoid paying billions in taxes to any government at all. But hold the champagne: Ireland could well replace one problematic tax policy with another, leaving aggressive tax avoidance pretty

Eurozone design failure

Eurozone Design Failures by Paul de Grauwe I analyze the nature of the design failures of the Eurozone. I argue first that the endogenous dynamics of booms and busts that are endemic in capitalism continued to work at the national level in the Eurozone and that the monetary union in no way disciplined these into a

Declining support for EU

These referendum results show a steady decline in support for the European Union and the political, social and economic direction it has taken and directed member-states to follow. As the global economy continues to stagnate and the ‘recovery’ falters more austerity is to come as the EU and the US drive home their agenda for

The political economy of water charges – an EU dimension

The origin of the planned water charges lies in the EU’s Water Framework Directive (2000), which provided for full cost recovery for water use and whose Article 9 states; ‘Member States shall take account of the principle of recovery of the costs of water services …’ It also required Member States to have in place water-pricing policies by 2010. The Directive was transposed into Irish Law in 2003. The Water Framework Directive, which seeks to commodify water provision through the establishment of the principle of recovery of the costs of water services. The EU took advantage of the ‘bailout’ to make it a condition of the ‘loans’.  This will open the way for the sale of Irish Water either in whole or in part, ostensibly to complete the single market or to promote competition ‘in the interests of the consumer’. This is just one reason why there is such government resistance to a constitutional referendum to permanently retain Irish Water in public  ownership – the other is TTIP.

Both sides in the TTIP negotiations have made clear their intention to use TTIP to get access to what is described as “public monopolies;” that is, public utilities including water. These services would then be vulnerable to greater outsourcing and private tendering for service delivery and eventually, to privatisation. TTIP would open up public procurement contracts to the private sector, meaning that social, environmental or “public good” goals in public procurement would be removed. A private monopoly can fix its price at an unaffordable level, as Bechtel did in Bolivia, leading to a popular uprising; the termination of the contract and replacement of the government.

It would also make the nationalisation (or renationalisation) of services or resources virtually impossible, as incredibly, corporations would be able to sue for loss of future and expected profits. This is facilitated by the inclusion of an (ISDS) Investor – State Dispute Settlement clause in TTIP. TTIP would increase the pressure for the privatisation of ‘services of general interest’, such as water services. Foreign suppliers of services of general interest should not be entitled to claim “forgone profits” through ISDS. This provision, in effect would further legalise neo-liberalism as the economic and social framework in Ireland and the EU.

But even if ISDS is removed from TTIP, the main goal remains; to remove regulatory ‘barriers’ which restrict the potential profits to be made by transnational corporations on both sides of the Atlantic. Yet these ‘barriers’ are in reality some of our most prized social standards and environmental regulations, such as labour rights, food safety rules, regulations on the use of toxic chemicals and digital privacy laws. Public water provision is only one of the services under threat from TTIP. Both water charges and TTIP must be defeated!

Frank Keoghan


Where the Money Leads

‘Traditionally in American history, politics is like a seesaw: When one side is up the other side is down,” said Peter Wehner, a former aide to President George W. Bush. “Now it’s as if the seesaw is broken; the public is distrustful of both parties.” Wall Street Journal (11-04-14)

“Follow the money” is a seemingly simple, but telling popular prescription for discerning people’s motives, a slogan made popular by literature and movies.

But it is more than that. It is also a useful key to unlocking the mysteries of social processes and institutions. In a society that affixes a monetary worth on everything, including opinions, ideas, and personal values, tracking dollars and cents becomes one of the best guides to our understanding of events unfolding around us.

Take elections, for example.

Every high school Civics class teaches that elections are the highest expression of democratic practices. Apart from the direct democracy of legend– the New England town meeting or the Swiss canton assemblies– organized secret-ballot-style elections count as the democratic ideal deeply embedded in every US school-age child’s mind.

Let’s put aside the arrogant high hypocrisy of US and European politicians and pundits who deride secret ballots when they result in the election of a Chavez, Morales, Maduro, or Correa. That will make for a juicy topic on another occasion.

Instead, let’s examine what the flow of money tells us about the gold standard of democracy as celebrated in Europe and the US.

Surely, no one would deny that money has a profound effect upon election outcomes. That comes as old news. Even before the dominance of party politics, even before the evolution of party politics into two-party politics, money played a critical factor in advantaging issues, campaigns, and candidates.

To the extent that mass engagement– rallies, outreach, canvassing, etc.– could match or even trump both the corrupting and opinion-changing power of money, electoral democracy maintained an aura of legitimacy. To be sure, buying elections seems a nasty business, but as long as elections remained highly contested extravaganzas drawing interest and engagement, credibility remains intact.

New and changing technologies cast a lengthening shadow over the electoral process. News and entertainment media, like radio, were only too happy to take advertising dollars to promote electoral campaigns. At the same time, these technologies eroded the efficacy of traditional campaigns reliant upon campaign workers’ sweat and shoe leather.

With television and now the internet, the power of media and media dollars has grown exponentially. It has hardly gone unnoticed that these shifts have amplified the power of money and diminished the traditional get-out-the-vote efforts of unions, civil rights, and other people’s organizations.

Most recently, the Supreme Court’s Citizens United decision has opened the spigot of unregulated cash into elections, further overwhelming any counter forces to the outright purchase of candidates and election results.

Readers may find nothing new here. The sordid story of money’s corrupting and deflecting influence has certainly been told before, as has the pat remedy offered by reformers. To return to the halcyon days of US electoral democracy is simply a matter of establishing financial limits on campaigns and campaign contributions. By leveling and limiting the electoral playing field, we can restore the legitimacy tainted by money.

Unfortunately, this idealistic solution will itself be overpowered by the power of money. The traditional forces in US politics are not unhappy with buying and selling political power, except insofar as their own money is not put at a disadvantage.

But the reformist panacea would not work even if it were implemented. Advocates of campaign financial reform fail to see that capitalism and informed, independent, and authentically democratic electoral processes are incompatible. Capitalism, unerringly and universally, erodes and smothers democracy. Eliminating, even significantly, reducing the power of money in politics under a capitalist system is an impossibility. The historical trajectory goes the other way.

A Broken System

Since the New Deal era, political partisanship and the accompanying flow of money was linked to Party politics. Corporations and the wealthy gave generously to opponents of the New Deal, the Republican Party. To a great extent, the people power (and significant independent money) of unions and other progressive organizations served as an adequate counterweight to the resources of the rich and powerful. The Democratic Party enjoyed the benefits of this practice.

The television and money-driven election of JF Kennedy in 1960 marked a watershed in both the diminution of issue relevancy and the maturation of political marketing. Money and the advertising and marketing attention that money bought moved to center stage. Key chains, buttons and inscribed pens were replaced by multimillion dollar television advertisements in the buying of election outcomes.

In 1964, the organic link between the money of wealth and power and the Republican Party began to stretch with the campaign of Barry Goldwater. So called “liberal Republicans” of the East Coast establishment recoiled from what they perceived as extremism, leaving Goldwater’s campaign treasuries to be filled by the extreme right’s wealthy godfathers in the Southwestern and Western US (The looney right rebounded to Goldwater’s loss by investing heavily in rallying and expanding the 26 million Goldwater voter base and by buying a broader, louder, but less shrill voice in the media; that project paid off handsomely by 1980).

While it is understandable that donors would spend to their interests– support candidates of shared ideology– things began to change with the Democratic Party’s retreat from New Deal economic thinking, the general decline of traditional Party politics, and the rise of the politics of celebrity and personality. With advertising and marketing domination of electoral campaigns, constructing an attractive personal narrative replaced issues and accomplishments– contrived image replaced content.

Today, the two-party system holds electoral politics in its tight grip. And issue-driven politics has been replaced by the politics of flag pins, winning smiles and a “wholesome” family.

Undoubtedly, the decline of substance in politics further encouraged the activity of sleazy lobbyists and influence peddling. Politicians are not faced with the conflict of principles against powerful interests because electoral politics have turned away from principles.

We see the cynicism of principle in the Republican Party’s rejection of its ideological zealots. So called “Tea Party” radicals sat well with the Republican corporate leaders when they were energizing electoral campaigns, but the zealots were challenged after setbacks in 2012. Today, the Republican corporate god fathers are making every effort to temper party radicalism in order to insure the only important principle: electability.

The Democratic Party, on the other hand, simply ignores its left wing, treating it alternately as an embarrassment or a stepchild. It is this trivialization of principle and ideology that channels the flow of money today.

Barren Politics

I wrote in 2008:

This election cycle has revealed something new: Democrats are raising more money from corporate interests for their campaigns than the traditionally dominant Republicans. This process began before the 2006 elections, accelerated sharply in the Presidential elections, strengthened in the early primaries and continued into 2008. In March, 2008, McCain gained somewhat on his Democratic rivals, but still fell well below the total raised by the two Democrats. Within the Democratic camp, Clinton dominated most corporate contributions until 2008, when Obama enjoyed big gains, pushing ahead through March especially in the key industries of finance, lawyers/lobbyists, communications and health. Wall Street has strongly supported the Democratic candidates over the Republicans. Through the end of 2007, seven of the big 8 financial firms (Goldman Sachs, Citigroup, Morgan Stanley, Lehman Brothers, JP Morgan Chase, UBS, and Credit Suisse) showed a decided preference towards the Democrats. Only Merrill Lynch gave more to Republicans, though they gave the single most to Clinton. The Wall Street Journal (2-3/4-08), while noting that Obama receives a notable number of contributions from small donors, pointed out that “…even for Sen. Obama, the finance industry was still the richest source of cash overall…” Through February, Obama led the other candidates in contributions from the pharmaceutical industry and was in a virtual dead heat with Clinton with respect to the energy sector. These numbers strongly suggest that candidates, especially Democratic Party candidates, are unlikely to challenge their corporate sponsors in any meaningful way.

Clearly, Corporate America was not afraid that Obama or Clinton would step on their toes or even stand in their way. While the Republican message and program were more overtly and adamantly pro-business, big business was not trying to swing the election their way. While they may have differed on social and even foreign policy questions, wealth and power understood that the Democrats would not challenge them on any matters relevant to their business agenda. Six years after, they appear to have been right.

Another way to illustrate the uncoupling of corporate money from party ideology is through the trend in corporate PACs to shovel money to incumbents of either party: In 1978 corporate PACs gave 40% of their contributions to House incumbents; in 2014, that number had leaped to 74%.

Corporations are not trying to deliver a message; they are outright buying all of the candidates.

With respect to this year’s November 4 interim election, corporate PACs have shifted their support– sometimes dramatically– from Democrats in key races to Republicans over the last 18 months (WSJ, 10-29-14). Obviously, neither the corporations nor the candidates have changed their agendas greatly. So it’s not about issues, but electability.

It should be transparent that two-party politics in the age of extreme concentrations of wealth and media influence is far from a rousing example of democratic process. Consequently, we should surely not expect the results of the tainted process to be democratic. Like the commercialization of commodities, the commercialization of politics results eventually in the domination of the market by a few products (parties, candidates) and the minimizing of their differences. We no more pick our leaders than we pick the products offered in the showroom. Corporate America picks them both.

Zoltan Zigedy



Ireland, Still Addicted to Tax Breaks

Taken from http://www.nytimes.com/2014/10/20/opinion/ireland-still-addicted-to-tax-breaks.html

The Irish government decided last week to get rid of a tax loophole that has helped big multinational companies like Apple and Google avoid paying billions in taxes to any government at all. But hold the champagne: Ireland could well replace one problematic tax policy with another, leaving aggressive tax avoidance pretty much intact.

On Oct. 14, Ireland’s finance minister, Michael Noonan, said the country would get rid of the “double Irish” — a provision that allows companies doing business in the country to avoid taxes by making royalty payments to an affiliated firm that is registered in Ireland but has its tax home in another country, often a tax haven like Bermuda that has no corporate income taxes. The provision will disappear for new companies in January, but businesses already using it can continue to do so until 2020.

Still, Ireland, which for years used policies like the double Irish to attract multinational businesses, appears uninterested in true reform. It will create a new provision known as the Knowledge Development Box that will allow technology, pharmaceutical and other companies that make money from patented products and services to pay a discounted tax rate. Officials haven’t said much about what kinds of profits will qualify for the lower rate or what it will be. Experts expect it to be lower than the already low standard corporate tax rate of 12.5 percent.

Ireland is not alone in trying to lure tech companies with very low tax rates. Since last year, Britain has been phasing in what it calls the Patent Box. By 2017, the country will have just a 10 percent tax on profits from “patented inventions and certain other innovations.” That will be less than half its standard corporate tax rate of 22 percent.

There are numerous problems with such policies. For starters, they leave one group of businesses — those that are not fortunate enough to make money with the help of patented products — at a significant disadvantage. Is it fair to have a much higher tax on the profits of, say, a modestly profitable restaurant business than on a highly prosperous technology giant?

These tax policies also create a dangerous race to the bottom, with each nation trying to outdo the others in tax giveaways. If left unchecked, this could make it impossible for any nation to tax profits from a fast-growing part of the economy. Governments, of course, must still pay for public services, so they will have to levy higher taxes on individuals, which will fall most heavily on the middle class and the poor.

It is particularly depressing that countries like Britain and Ireland are engaging in such beggar-thy-neighbor policies given their public commitments in international forums to behave differently. For instance, the Group of 20, of which Britain is a member and at which Ireland is represented through the European Union, has made ending tax avoidance a priority. If even G-20 countries cannot resist the temptation to create giant loopholes, how can the international community ever hope to persuade other nations that are tax havens to change? Getting countries to cooperate with one another on tax policy is beginning to seem like a far-fetched idea.


Eurozone design failure

Eurozone Design Failures by Paul de Grauwe

I analyze the nature of the design failures of the Eurozone. I argue first that the endogenous dynamics of booms and busts that are endemic in capitalism continued to work at the national level in the Eurozone and that the monetary union in no way disciplined these into a union-wide dynamics. On the contrary the monetary union probably exacerbated these national booms and busts. Second, the existing stabilizers that existed at the national level prior to the start of the union were stripped away from the memberstates without being transposed at the monetary union level. This left the member states “naked” and fragile, unable to deal with the coming national disturbances. I study the way these failures can be overcome. This leads me to stress the role of the ECB as a lender of last resort and the need to make macroeconomic policies more symmetric so as to avoid a deflationary bias in the Eurozone. I conclude with some thoughts on political unification, and the dangers of unification without democratic legitimacy.

Below are a number of  graphs from this report that show how Ireland’s ‘debt’ crisis results directly from the perverse nature of the Irish economy’s role as conduit for US and European capital and the subsequent socialisation of private debt.

Declining support for EU

These referendum results show a steady decline in support for the European Union and the political, social and economic direction it has taken and directed member-states to follow.

As the global economy continues to stagnate and the ‘recovery’ falters more austerity is to come as the EU and the US drive home their agenda for big business and the wealthy.

Progressives in Ireland have to challenge the EU and not just ambulance chase on issues in Ireland. For this we need a principled movement not caught up in short term electoral opportunism.

TTIP represents the challenge of the day and public awareness must be raised on this issue. Unions must be won over to campaign and standing up against TTIP and the EU/US elites. ISDS, while being the most offensive part of the TTIP negotiations, is not the only concern.

A broad alliance is growing around the TTIP Information Network www.ttip.ie this needs to be built on and expanded as does the progressive union positions that are being taken.

Europe said no to burning the bondholders!

There has been much debate about could we have burnt the big bondholders, and if so why didnt we, who was this protecting and who made the ultimate call on it.

Below is a revealing and insightful quote from Ray McSharry, former Minister for Finance, former EU Commissioner, Bank of Ireland Board member and close friend of then Minister for Finance Brian Lenihan.

“Brian [Lenihan] had been keen to burn the big bondholders and we discussed this on a number of occasions. One morning I got a call about a quarter past eight and it was Brian. He told me that he was able to burn the bondholders and he was very happy because the European Central Bank President, Jean-Claude Trichet, had toldhim he could do it.

‘This would have improved Ireland’s position significantly and it was going to be a big story, but later that day a now despondent Brian rang me back. He said Trichet had changed his mind because he realised that the main casualty if the bondholders were burnt would be big German and French banks. This was a disgraceful decision because the ECB is supposed to represent the interests of Europe generally, but they were clearly under the sway of the German and French banks. Even today, I still would not have much confidence in the ECB and until Europe gets a totally independent entity to defend its currency, the euro will remain a fragile currency.”—Ray MacSharry, former minister for finance and member of the EU Commission

Extract taken from Murphy, O’Rourke and Whelan (eds.) in Brian Lenihan, in Calm and in Crisis (Merrion Press, 2014).

Interview with Zoltan Zigedy

Politicaleconomy.ie is delighted to have interviewed US communist and political economy blogger Zoltan Zigedy.

Full text of the interview is available here Interview with Zoltan

Politicaleconomy.ie interview with Zoltan Zigedy


1 – A crisis erupted with the collapse of Lehman Brothers in 2008 but this had been brewing for some time. Can you briefly explain how you view the crisis?

Economists and pundits alike– caught watching an event unfold that simply could not happen– portray the 2007-2008 collapse as a singular event, an accident brought on by an unlikely coincidence of human failings.  Of course that perspective masks the inherent, systemic flaws of the capitalist system.

The seeds of the current crisis were planted many decades earlier. The intense global competition resulting from the post-war revival of the European and Asian economies, replete with new technologies, engaging new principles of industrial organization, and flooding global markets with innovative products, placed enormous pressure on the rate of profit. The implicit Cold War labor contract– support US, NATO, and SEATO policies, maintain labor peace, and receive compensation at least in step with productivity and costs of living– pressured capitalist profits from below.

The stagnation of the 1970’s resulted.

Capital found a solution: mount an all-out war on workers and their wages. The slash and burn Thatcher and Reagan axis restored profitability (and the celebration of its rewards) by feverishly jacking up the rate of exploitation.

The collapse of Eastern European socialism added new markets and cheap labor to the favorable conditions for profit-making. Not surprisingly, the loss of a real-world beacon of socialism proved profoundly demoralizing to the labor movement. Many Western Marxists turned to navel-gazing or the “rethinking” of the socialist project.

Without filling in the details, the hyper-accumulation of this triumphalist era stretched the bounds of available productive and safe investment opportunities. Thus, began the explosion of financial exotica (and financial “profits”!) to absorb the glut. On the investment side, this took the form of venture capital and dot.com initial public offerings at the end of the 1990’s; risky speculation inflated an enormous bubble of virtual value and unsecured debt. As we know, that ended badly.

Since 2001, capital has sought to rally and sustain profitability. The collapse of 2007-2008 shows that it is not possible without speculative brinksmanship and courtship of hazard. That seems to me to still be the case.

2 – There is some debate amongst Marxists about the development of capitalism post WW11 and the traditional understanding of the declining rate of profits versus financialisation and super-profit/under-consumptionist theories. Are these theories conflicting or can we reconcile the declining rate of profit with financialisation and monopolisation and concentration of wealth?

A. Post-war Marxists, both in the socialist countries and in the West, fell under the influence of Keynes, locating the principal contradiction of capitalism in the stagnant (or declining) purchasing power of the working class (underconsumptionism).  This was a convenient and appealing explanation for crisis, but, unfortunately, it doesn’t fit the facts, misrepresents the accumulation process, and encourages a turn towards social democracy.

Marxist economists were unjustifiably impressed with the “success” of pump priming in stemming the seemingly unstoppable economic collapse of the Great Depression. While, what came to be called “Keynesian” policy may have slowed, even stopped the bleeding, it didn’t heal the wound. But many Marxists reasoned– mistakenly– that if force-feeding consumption halted further collapse, then the crisis was caused by insufficient consumption.

Neither the Great Depression nor the current crisis were preceded by any consumption shock, an event, if it had occurred, that would have given some credence to an underconsumptionist explanation of crisis. On the other hand, the crises did cause a shock to consumption, a major factor in amplifying and extending the course of crisis. So the facts would seem to suggest that the underconsumptionists actually conflate cause with effect.

The relatively long post-war period without a major systemic crisis (1945-1972) further seduced far too many Marxists into acknowledging the success of Keynesian policy prescriptions. By crediting the perceived stability of the capitalist system to the welfare state support of consumption, they concluded that failing consumption was the demonstrated explanation of capitalist crisis. The severe and lengthy decade of stagflation that followed should have cast some doubt on that too easy conclusion.

B. The 2007-2008 crash spawned a renewed and welcome interest in the tendency-of-the-falling-rate-of-profit explanation of systemic capitalist crisis.  Outside of the Marxist mainstream, Henryk Grossman and Paul Mattick,  were often-isolated voices supporting this explanation which drew largely from Marx’s account in volume III of Capital. While we owe them much for keeping this theory out of the dustbin, they developed it in a mechanical, formalistic way alien to Marx’s method. And the new generation of advocates, largely academic Marxists, have unfortunately followed this road. They fail to understand that tendency laws– like  the tendency of the falling rate of profit– are not logical demonstrations, but descriptions of social and economic forces that shape the course of a social structure’s (in this case, capitalism’s) trajectory.

The great value of the rate-of-profit explanation is that it locates the cause of crisis at the main spring of the capitalist production process: accumulation. It insists that the ultimate cause of malfunction must and will be found in the ultimate element that powers capitalism as an economic system: profit.

In my view, a robust explanation of capitalist systemic crisis can only emerge by beginning with the crucial role of the rate of profit, the determinant that keeps the capitalist class in the reproduction game or, as the system stumbles, out of the game and on to the side lines. I believe that a comprehensive contemporary explanation of the nature of capitalist crisis is yet to appear, though I have offered modest sketches in my writing.

C. “Financialization” is not an explanation of the crisis. Instead, it is too often merely a characterization (like its sibling, “globalization”), a handy descriptor of an aspect of the current crisis. No one would accept “atomization” as a worthy explanation of what happens in an atomic reaction. Nor should we accept “financialization” as more than a neologism useful in indicating that some kind of financial shenanigans played a role in the present crisis. My own view is that “speculation” and “risk taking” better capture the financial dimensions of the ongoing crisis for those needy of a concise handle.

When pressed to unpack financialization to reveal an explanatory theory, its advocates reference familiar developments: deregulation,  the growth of financial institutions, their penetration of non-financial corporations, their development of new and and exotic schemes and instruments, etc. But these developments, in most cases, have been unfolding since Lenin’s time. Moreover, there is no obvious link between these developments and the onset of economic crisis. That link is easily provided by declining profitability, however. One need look no further than Countrywide, Washington Mutual, Merrill Lynch, and Lehmann Brothers to see how speculation and risk-taking eviscerate profits and generate an economic retreat and panic.

Can there be a synthesis of three contestants for a Marxist theory of crisis?

I think not. But there are aspects of each that should inform a Marxist theory of crisis. No adequate Marxist theory can fail to address financial innovation and the peculiar status of financial profit; it must pay particular attention to the amplifying effect of debt. And the one-sided class struggle plays an undeniably important role by generating hyper-exploitation, the consequent super-accumulation, and the resulting abundant capital in search of the elusive return. That said the tendency for capitalism to generate downward pressure on the rate of return remains the centerpiece of any adequate theory of capitalist crisis.

3 – We hear much being made of a US recovery but you describe it as ‘slug-like motion’, what is the real state of the US economy today?

The US economy is in the doldrums. It lacks momentum to escape the doldrums, and it remains precariously afloat. It remains afloat because willingly or unwillingly the rest of the world accepts a part of its burden. The PRChina continues to purchase enormous quantities of US debt, along with Japan. It remains afloat because the rest of the world has yet to challenge the dollar as the global means of exchange, allowing it to weaken or strengthen according to the needs of the US economy. It remains afloat because the US sets the rules of trade, commerce, and exchange to its own benefit. That’s the reward for imperial domination.

Domestically, the US economy is on the life support system that economists call “the wealth effect”. That is, economic activity is founded on the subjective sense of well-being fostered by stock market increases and increases in the value of homes. Both increases today have little or no connection to market realities. Of course, the wealth effect only applies to those owning homes and financial assets.

The rest rely on stagnant wages and benefits and assuming debt (household income is at the same level as 1990). Capital continues to wring every drop of value from US workers. A comrade recently computed that the starting wage of an autoworker at a unionized (UAW) shop, adjusted for inflation, is commensurate with that of a Ford worker in 1914, a moment when Henry Ford “generously” raised the wages of the workers so that they could buy his Model T’s.

Going forward, the prognosis is no better than continuing stagnation. A shock, possibly reverberating from the EU, Brazil, China, or Japan, could yet rock this shaky stability. Moreover, there are many signs that pre-collapse financial  practices are again stretching the bounds of rationality.

4 – You have compared the period we are in to the 1930’s and have challenged the notion that the New Deal investment brought about a recovery pointing to the role WW2 played instead. Do you see war is a policy tool being used today and what are you concerns about this?

William Z Foster, a US Communist writing early in the Cold War period, developed the idea of military Keynesianism. The value of his work– minimized and neglected because of intellectual anti-Communism– was to expose the connection between militarism and government economic policy. For the US ruling class, the idea of “pump priming”, fiscal intervention through the public sector, was much more appealing if it were rendered through spending on open ended contracts with military corporations and armaments rather than spending on human welfare. The former gave government revenue to corporations, the latter some alms to the people.

That same ruling class drew important lessons from the thirties and forties: the most complete recovery from the Great Depression was accomplished swiftly by Hitlerite German militarism. And the US economy only began to recover vitality with the military buildup leading to US entry into World War II.

After the fall of the Soviet Union, there was much talk of a “peace dividend” and a radical reduction of military spending in the US.

It didn’t happen– a fact that surely demonstrates that militarism is inextricably embedded in US economic policy since there was no and could be no serious threat to US security in the immediate aftermath of the Cold War.

Nonetheless, the lap dog media machine has been conjuring up new enemies  in order to keep the US public from objecting to militarism. Interestingly, one can observe public opinion shift from skepticism to consent over the course of the constant monopoly media war campaigns.

In part, the bizarre anti-Russian campaign, the demonizing of Putin, is only rational in the framework of an economic explanation of militarism. The US expects to spend over a trillion dollars during the next three decades modernizing its nuclear weapons program. This can solely be justified to the public by inventing threats from a nuclear power. Nuclear weapons are not necessary against men in sandals with AK-47s, rocket propelled grenades, and improvised explosive devices. But Russia has nuclear weapons.

The liberal magazine, The Nation, recently documented the financial ties between retired military leaders and the armaments industry. The same ex-admirals and generals exposed in the article are omnipresent in the US media, posturing as experts on foreign policy while sounding the call for confrontation and aggression.  They serve as the transmission belt of militarism to the public and the governing bodies.

It is no mystery why we live under the constant threat of violence and war.

5 – How do you define the system globally? There is much talk of neo-liberalism and finance capitalism or financialised capitalism but how do you best understand it?

It is easy to fall into the trap of taking a snapshot of the global capitalist system and drawing hasty conclusions, of announcing a new stage, a new trend, a new era… Certainly that makes for a provocative, but quickly outdated, article or book or garners appearances on talk radio shows. Over the last several decades we’ve been treated to new intellectually fashionable buzz words such as “neo-liberalism”, “globalization” or “financialization”, portentous theories like the decline of the nation-state, and sheer nonsense like Hardt and Negri’s Empire. Fortunately, they, and their ilk, only distract; they seldom persist.

Rather than take that tantalizing bait, I will note some important trends. The last three decades have been marked by significant changes in the international division of labor. A veritable revolution in logistics along with political changes in Eastern Europe and the PRChina integrated new armies of workers into the global capitalist system. Together, these developments ushered in a shift of manufacturing to far flung, low wage areas. Accompanying this shift has been the rise of finance, insurance, real estate and services in those countries experiencing a decline in manufacturing. This new division of labor fostered a dramatic growth in the global rate of profit, a level of profitability that has now run its course.

Labor markets in previously low wage areas are now tightening while the crisis and unemployment have slammed workers’ compensation in the formerly high wage countries. Global wage convergence is the ultimate, predictable outcome of labor market competition without restraint or protection.

Those workers from formerly extreme low wage areas (PRC, India, Brazil, etc.) who have had a taste of a better life, now and want more.

Those workers who have been devastated in the vise of international competition and crisis-induced unemployment want to restore and improve their standard of living.

Standing in the way of winning these demands is a still resilient, resourceful capitalist system; and frequently standing in the way of fighting for these demands are complacent institutions and leaders– union leaders, politicians, and political parties– that are ill-serving workers in the twenty-first century.

Fanciful expressions and speculative theories only obscure the fact that the logic of capitalism and imperialism, capital’s international manifestation, still rule in the twenty-first century.

 6 – Globally, the system is objectively in crisis on many fronts , yet in the ‘west’ it’s politically and cultural hegemony remains unchallenged in any serious way. Is it still a case of progress will likely come from the periphery within Imperialism?

Unquestionably, the struggle against imperialism, particularly in the Middle East and in Latin America, has occupied center stage and has posed more of a challenge to ruling elites than has the anti-capitalist struggles in the West. Even more disappointing is the absence in the West of a formidable anti-imperialist movement– an anti-war, anti-interventionist movement– in solidarity with Middle Eastern and Latin American anti-imperialism. This is not a particularly noble chapter in the history of the Western left.

Any thoroughly objective assessment of capitalism today will reveal stark vulnerabilities. It will challenge the sustainability of the shaky global economy, question the viability of the corrupted, undemocratic political system, and abhor the vulgarity and nihilism of bourgeois culture.

Still, the goal of replacing capitalism with a profoundly more just and democratic system appears far off. Some have given up on the task, retreating to incrementalism or accommodation, believing unrealistically that we can gradually or surreptitiously undermine capitalism. Still others have visions of nineteenth century utopias, cooperative communities coexisting with monopoly capital. Free market theocracy has bred a generation disposed to worship the gods of individualism and spontaneity as instantiated on the left by anarchism. In short, left politics in the West churn in a cauldron of wildly idealistic and misguided ideology.

Of course this is frustrating, especially for students of history and the workers’ movement.

Disillusionment and confusion are not new to the socialist project. One-third of the Communist Manifesto is devoted to exposing the dead-end roads and far-fetched ideologies that Marx and Engels contested in their time.

Lenin scathingly recorded the dismal condition of the Russian left after the failed 1905 revolution. Should we be surprised, after the history-altering dismantling of European socialism nearly twenty-five years ago, that much of the Western left has yet to find its bearings?

And yet, as Lenin’s example shows so well, it is precisely when there is widespread political disarray that Marxism (and Leninism) are so desperately needed to bring clarity and unity to the anti-capitalism struggle.

I think we are in such a moment.

The Chronic Crisis, with Worse to Come?

Article from the excellent political economy blogger Zoltan Zigedy


Looking back on the ten years following the 1929 stock market crash, Marxist economist and Science and Society co-editor, Vladimir D. Kazakevich, wrote of the “chronic crisis” that persisted throughout the nineteen thirties in the US (“The War and American Finance,” Science and Society, Spring 1940). Kazakevich drew attention to the stagnation that lasted over the decade, noting that after World War One, the United States became the most dominant economy in the world. Yet “[a]s the most powerful capitalist country, the United States developed particularly glaring financial weaknesses, attributable, for the most part, precisely to its foremost place in a capitalist world torn by economic contradiction and frustration.”
Kazakevich, a good Marxist instead of a born-again Keynesian, reflected on the collapse of growth of the capital goods sector through the New Deal decade: “These figures show how enormously capitalist activity had shrunk in the thirties as compared to the twenties. Most of the Federal expenditures of the New Deal period were directed towards sustaining the demand for consumers’ goods rather than for capital or producers’ goods… Although widely advocated, ‘priming of the pump’ from the end of consumers’ goods alone, has proved a complete failure as an economic measure for resuscitation of the capitalist organization harassed by a chronic crisis.”
Economic commentators today are increasingly nervous about a similar slump in capital goods accompanying our own “chronic crisis.” Because the growth of capital spending (and capital equipment spending) is running well below its long-term average of 8% (growing just 3% in 2013), the average age of industrial machinery and equipment in the US has surpassed 10 years, the highest average age since 1938 when Kazakevich was painting his dire picture! (The Wall Street Journal, 9-3-14) Thus, the slug-like motion of the US economy during the last seven years mimics in an important way the stagnation following the great crash initiating the Great Depression.
While capital spending may not now play quite the decisive role it played in the US economy during the 1930s, it remains a strong indicator of the hesitancy of managers to expand the productive core of the economy. They fail to see prospects for profit expansion in the extensive growth or retooling of the manufacturing sector. Of course that does not mean that managers are not seeking profits or investors are not seeking a return on investment. Managers have plowed more cash into mergers and acquisitions during the first half of 2014 than any time since 1999. That also is typically a part of capitalist restructuring after a severe crash. This rationalizing of capitalist production serves and has served to restore the growth of profit following a capitalist misadventure.
In the wake of the crash of 2007-2008 the US economy experienced a dramatic jump in labor productivity (in the absence of capital investment, this necessarily came largely from an increase in the rate of exploitation). Massive layoffs, plant closings, and weak union leadership combined wage stagnation with extreme speed up of a shrunken labor force. Profits ensued. And consequently the previously depressed rate of profit resumed its growth.
Unfortunately for the prospects of capitalism, the growth of productivity has petered out: its past 5-year average is only slightly more than half of the 20-year average, with productivity actually falling 1.7% in the first quarter of 2014. So this road to profit recovery and growth is seemingly closed.
Of course if the past productivity gains had been shared with the working class, capitalism likely would have experienced an increase in revenues (folks would have purchased more goods and services) and a rosier earnings outlook. But that did not happen. Adjusted for inflation, the cumulative growth of median household income has dropped precipitously since the crash, settling at the level of 1990. Consequently, corporate revenue growth peaked in the third quarter of 2011 and has shrunk ever since.
Thus, three signal measures promising profit-rate increases– capital investment, labor productivity, and revenue increases– are failing the US economy.
Not surprisingly, reported corporate profit growth has suffered. From its peak in the last quarter of 2009 (over 10%), it has receded steadily.
Profits, Profits, Profits!
It is important to emphasize that it is profits that fuel the capitalist system. While it seems an obvious point, it is the starting point of the Marxist theory of crisis. The capitalist system only appears healthy when the capitalist both holds capital and expects a return. He or she dreads two things: idle capital (capital with no prospect of return) and a stagnant or declining rate of return. Consequently, capitalism generates systemic growth if and only if capital is abundant, investment opportunities are rife, and the rate of profit is sufficiently enticing.
But this law of capitalist accumulation contains the seeds of capitalist crisis. As noted above, the growth of the rate of profit has been declining for some time. At the same time, the accumulation of capital is expanding faster than the overall US economy. The relative mass of profits– measured by US corporate profits as a percentage of GDP– reached unprecedented levels in the second quarter of 2014 (a level of profit/GDP only approached twice since 1947: immediately before the crash and in 1950). In other words, despite the fall in the rate of profit, the profit-generating capitalist engine is producing potential new capital faster than wealth is being produced. Three conclusions follow: capital is winning the class war, growth is lagging, and the mass of capital is growing relative to the size of the economy while the profit rate is declining.
And new capital must seek a home, a place to go to accumulate more capital.
Combine the profit-generated capital with the unprecedented cash held by corporations and the availability of cheap credit (nearly non-existent interest rates) and the capitalist class is faced with a daunting task of finding investment opportunities for a vast pool of capital.
If this sounds familiar, it is. Before the crash, many economic commentators noted that the investment world was awash in cash searching for opportunities. I wrote in April of 2007 (Tabloid Political Economy: The Coming DepressionMarxism-Leninism Today, April 5, 2007) that “Despite being awash in capital, financial power searches for investment opportunities to no avail. Economic theorists have been puzzled by the low returns available, even for high-risk or long-term investment. Under normal circumstances, risk and patience earn a premium in investment, but not today. Instead, the enormous pool of wealth concentrated in fewer hands can only lure borrowers at modest rates. There is simply too much accumulated wealth pursuing too few investment opportunities.”
It is this paradox of accumulation– two much capital, too few opportunities– that collapses the already stressed rate of profit and courts structural crisis (or deepening crisis, in our case). It is this paradox of accumulation that drives capital-gorged investors to pursue riskier and more ephemeral schemes.
Once again a vast pool of capital chases diminishing investment opportunities. Once again, as in the prelude to the crash, yields have shrunk, leading investors into riskier and more speculative investments. Pension funds and hedge funds are moving toward more arcane and less safe bets, hoping that return will outweigh the danger. As Richard Barley perceptively observes in the Wall Street Journal (August 11, 2014):
…there is a dearth of high quality securities. Yet there is still a global glut of capital seeking a home… All this creates incentives for financial engineering. In credit derivatives markets, there are signs investors are delving into esoteric structures. Citigroup reports a “large increase” in trading of products that slice and dice exposure to defaults in credit-default-swap indexes… Precrisis, low yields and seemingly benign market conditions led to the creation of instruments that ultimately few understood. The longer the reach for yield persists, the greater the chance that investors revisit the unhappy past.
For some time, the elusive “reach for yield” has driven a re-vitalized junk-bond market. In the five years after the crash, four of the ten fastest-growing bond funds held substantial quantities of low rated debt, according to WSJ analysts. They note that this “…development underscores the intense demand for investment returns since the 2008 crisis.”
But the flow of cash to the high yield market depressed yields to levels unseen since late 2007. They are rising again as investors sense that global economic turmoil and low yields signal danger.
The mania for mergers and acquisitions has also swung into dangerous, risky territory. Despite Federal guidelines urging the limitation of leverage to six times gross earnings by banks financing acquisitions, forty percent of private-equity takeovers in 2014 have exceeded the 6X rule. This rate is fast approaching the pre-crisis level of 2007.
The Wealth Effect
A seemingly robust stock market and a relatively stable US debt market join to create the illusion of a healthy, prosperous economy. They have, to great effect, masked the serious cracks in US capitalism.
The long anticipated Federal Reserve retreat from QE (Quantitative Easing: the purchase of US and other debt by the Fed) has not brought the disaster that many in the punditry and on Wall Street feared. Seldom noted, however, is the fact that the Peoples Republic of China has escalated its purchase of US treasuries nearly dollar for dollar against the Federal Reserve’s retreat.
The “stellar” performance of equities is another matter. One moderately alarming sign is the steady march of equity price-to-earnings ratios to a territory greater than the long-term average and to a level equal to or above that of 2006-2007. Of course this alone does not explain the market’s performance.
A puzzling aspect of equity price expansion is the historically low market activity in the post-crash period. What, then, has jacked up stock prices?
Part of the answer lies in corporate repurchases of shares, a practice that elevates the market price by taking stocks off the table. The Wall Street Journal (9-16-14) reports that $338.2 billion of equities were bought back by corporations in the first half of 2014, the most since 2007. The same report noted that corporations in the second quarter of 2014 spent “31% of their cash flow on buybacks.”
Corporations are hoarding cash and amassing debt at unprecedented levels (thanks to low interest rates, corporate bond issuance may approach $1.5 trillion this year, having grown geometrically over the last twenty years). Thus, corporate activity has shifted away from investing in future growth and toward mergers and acquisitions and stock buybacks, activities that bolster share inflation without creating underlying value.
Take Apple, for example. Sitting on vast quantities of cash, Apple nonetheless sold $12 billion worth of corporate bonds this year. At the same time, Apple repurchased $32.9 billion in Apple stocks, effectively driving up the price of those shares remaining in the market place.
Does this really create wealth? Or is it a ruse to keep the party going?
Interestingly, it’s not just the jaundiced Marxist eye that peers through the fog to see rocky shoals ahead. Rob Buckland, a CITIGROUP analyst, perceives the US economy as entering “phase three,” the phase preceding a marked downturn. Business Insider(August 15, 2014) summarizes Buckland’s phase three as follows:
Phase 3: This is the tricky part. Stocks are still flying high, but credit spreads are widening as investors become increasingly unwilling to finance further risk. Corporate CEOs have now experienced a lengthy period of gains and become risk-happy. (And we’d note that central banks are already talking about tightening credit by raising interest rates.) Bubbles can form in Phase 3, Buckland says, as the high-flying stock market ignores the early warning signs of the deteriorating credit market….(http://www.businessinsider.com/citi-economy-phase-3-where-bubbles-form-prior-to-crash-2014-8#ixzz3DcJqF9tH)
It is against this backdrop that worries are surfacing among investors. Some bearish hedge fund managers are investing anxiously in credit-default swaps and retreating from high risk. Discounting the distractions and illusions fostered by the monopoly media, serious students see the intractable crisis in Europe, the slowdown of the emerging market economies, the recent setbacks to Abe-nomics in Japan, and the loss of momentum in the economy of the Peoples Republic of China as adding to the contradictions lurking under the surface of the US economy.
Vladimir Kazakevich expressed fears in his 1940 article cited above that “…powerful interests on both sides of the Atlantic are likely to regard a war economy as an immediate solution for the chronic crisis…” Certainly his fears were well grounded. Militarism did prove able to “solve” the contradictions of global depression, at the enormous, unprecedented human cost of World War Two.
One cannot but wonder today if a similar logic is operating in the minds of US and NATO leaders who seem determined to stir hatred and belligerency. The newly emerged ISIS demons seem almost too perfect of a foe — almost a caricature of evil that may well bring an unprecedented level of US military might back to the Middle East. The “limited” US air campaign has already cost over a billion dollars, a nasty piece of military “pump priming” for the US economy.
And bear-baiting– poking Russia with threats, sanctions, and military engagement– is the new obsession of NATO, even at great economic cost to a prostrate Europe. The actions contemplated by militarists would push the risk level back to some of the worst days of the Cold War.
Is it now more and more apparent that only the “specter” of socialism can offer an answer to the chronic global crisis of capitalism and its attendants, xenophobia and war mongering?
Zoltan Zigedy

Samir Amin: Popular Movements Toward Socialism

The article below by Samir Amin is well worth reading by all interested in a political economy of transformation to socialism. It was published in June’s issue of Monthly Review.

Popular Movements Toward Socialism: Their Unity and Diversity

The following reflections deal with a permanent and fundamental challenge that has confronted, and continues to confront, all popular movements struggling against capitalism. By this I mean both those of movements whose explicit radical aim is to abolish the system based on private proprietorship over the modern means of production (capital) in order to replace it with a system based on workers’ social proprietorship, and those of movements which, without going so far, involve mobilization aimed at real and significant transformation of the relations between labor (“employed by capital”) and capital (“which employs the workers”). Both sorts of movements can contribute, in varying degree, to calling capitalism into question; but they also might merely create the illusion of movement in that direction, although in fact only forcing capital to make the transformations it would need to co-opt a given set of working-class demands. We are well aware that it is not always easy to draw the boundary between efficacy and impotence in regard to the strategies resorted to by these movements, no more so than to determine whether their strategic aims are clashing with their tactical situation.

Taken as a whole, many of these movements can be termed “movements toward socialism.” I borrow this phrase from the terminology introduced during recent decades by some South American parties (Chilean, Bolivian, and others). These parties have given up the traditional aim of Communist parties (“take and hold power to build socialism”), substituting for it the apparently more modest aim of patiently constructing social and political conditions which allow an advance toward socialism. The difference derives from the fact that the building of socialism as proposed by those Communist parties stemmed from a preconceived definition of socialism, derived from the Soviet experience, which can be summed up in two terms: nationalization and state planning. Those parties choosing the label “movement toward socialism” leave as an open question the specification of the methods to be used in socializing the management of a modern economy.

Some, but not all, of these organizations and parties that portray themselves as socialist, or even communist, claim to be the heirs of Marx and even sometimes of the versions of Marxism inherited from Sovietism and/or Maoism.

In fact the triumph of capitalism since the industrial revolution, and its globalization through imperialist expansion, have simultaneously created the conditions for the projected emergence of a higher universal socialist/communist form of civilization. Many streams came together in this invention. Engels, and Lenin after him, gave a well-known classification of its Marxist variant: English classical political economy, French utopian socialism, and German Hegelian philosophy. But this classification simplifies the reality and leaves aside many pre-and post-Marxian contributions.

Of course, Marx’s contribution to formulating the socialist/communist project was the critical breakthrough in its elaboration. Marx’s thought, in fact, was elaborated on the basis of a rigorous scientific critical analysis of capitalism taking into account all aspects of its historical reality. This had not been the case with previous socialist formulations or later ones that disregarded Marx. The formulation of capitalism’s own law of value; the specification of the long-run tendencies of capital accumulation and of their contradictions; the analysis of the relationship between class struggles and international conflicts and likewise of the transformations in methods for managing accumulation and governance; and analysis of the alienated forms of social consciousness—these together define the thoughts of Marx that initiated the unfolding of historic Marxisms, especially those of the Second and Third Internationals, of Sovietism and of Maoism.

The Central Place of the French Revolution in Forming the Modern World

In my understanding of the modern world’s construction, the French Revolution takes a central place. It defined a system of values—Liberty, Equality, Fraternity (in present-day terms, Solidarity)—that founded modernity on its fundamental contradiction. In the last analysis these values are much more the values of the still-to-be-invented higher socialist civilization than they are values whose real and full actualization could be acceptable to capitalism. In this sense the French Revolution was more than a “bourgeois revolution” (such as the 1688 English “Glorious Revolution”); it proclaimed—with the Jacobin ascendancy—the need to go beyond.

Capitalist values—those which are useful to its spread—are those that inspired the American Non-Revolution: Liberty and Property. Together they define “free enterprise”: whether in the form of a small family farming business, as was the case in the New England colonies; or of the slave-labor-based farms of the Southern colonies; or, in later periods, of industrial Big Business and then of financialized monopolies. Linked together, these two values exclude any aspirations for an equality going beyond universal equality of legal rights. “Equality of opportunity” is the ideological phraseology that finesses the starting-point inequalities which distinguish the property-owning classes from the proletarians who have only their labor-power to sell. Liberty and Property together make inequality seem legitimate: inequality is made to seem the result of individuals’ talent and hard work. They lead people to ignore the virtues of solidarity and recognize only their opposites: competition among individuals and among businesses.

By their very nature Liberty and Equality are conflicting values that can be reconciled only when bourgeois property, as the property only of a minority, has been suppressed. The French Revolution, even at its most radical Jacobin phase, did not go that far: it remained protective of property rights and held them sacred, imagining them to be generalizable in the form of small family farms and artisanal enterprises. It had no way to grasp how capitalism would develop, how it would put such emphasis on the inevitably ongoing concentration of modern capitalist property.

The socialist/communist idea, understood as a stage of civilization superior to the capitalist stage, takes form precisely through the gradually growing consciousness of what is implied in a sincere effectuation of the slogan “liberty, equality, solidarity”: the substitution of collective workers’ property in place of the bourgeois-minority property form.

Diverse Lines of Descent in the Formation of Socialist Thought and Action

At the origin of modern peoples’ struggle movements is the challenge posed by capitalist social relations and concomitant exploitation of the workers. These movements, in some instances, arose spontaneously; in others, they were prompted, with varying degrees of success, by groups that endeavored to mobilize and organize the workers for that purpose.

Such movements appeared very early in the new Industrial Revolution Europe, especially in England, France, and Belgium; a little later in Germany and elsewhere in Europe; and in the New England region of the United States. They expanded throughout the nineteenth century and took varying directions (termed “revolutionary” and “reformist”) in the twentieth.

Other movements sprang up in the peripheral capitalist societies, i.e., in those countries integrated into the globalized capitalist system as regions subjected to the accumulation requirements of the dominant centers. As it extended itself worldwide historical capitalism was polarizing, in the sense that dominant centers and dominated peripheries took shape simultaneously in an asymmetric relationship steadily reproduced and deepened by the logic of the system. Capitalism and imperialism constituted the inseparable two sides of a single reality. In those conditions the movements of struggle against the established system were broadly anti-imperialist, the forces initiating them seeking not to build a post-capitalist society but to “copy in order to catch up” with the opulent societies of the centers. Nevertheless, because the bourgeoisies of those countries, formed at their births by a relationship of dependency (and by that very fact naturally “compradore,” the term originally used by Chinese Communism to characterize them), were in no state to remake themselves into national bourgeoisies able to carry out a true bourgeois revolution (“anti-feudal,” in the terminology of Third International Communism). Because of this, the combat against imperialism, undertaken by a broad anti-imperialist and anti-feudal social alliance led by a party proclaiming its perspective as socialist/communist, became potentially an anti-capitalist one.

These peoples’ and national emancipation movements took as their aim to pass through the stage of anti-imperialist/anti-feudal/peoples’ (and not bourgeois)/democratic revolution. So they are to be counted in the movement toward socialism.

We thus have to examine more closely two sorts of movement toward socialism: those arising and spreading in the imperialist centers, and those developing in their dominated peripheries. These two sorts of movements never bear a union label saying “movement toward socialism,” but some of them might potentially become such. What then are the conditions and criteria allowing us so to classify them?

The Lineages of Movements Toward Socialism in the Centers of the World Capitalist System

In the nineteenth century, more so than elsewhere in Europe or in the United States, it was in France that a newborn awareness of the need to abolish capitalism and replace it with a socialist organization of society took its first steps. The carrier for this progression was provided by the heirs of Jacobinism, major actors in 1848 and then in the 1871 Paris Commune—most notably Auguste Blanqui, whose theories were the inspiration for French revolutionary syndicalism. Self-governing production cooperatives, according to these initial formulations, were to provide the institutional and legal framework for the socialization of property.

“French socialism”—if that is what it is to be called—was distinguished by its idealist character from the socialism inspired by Marx. It derived, rather, from the heritage of eighteenth-century Enlightenment philosophy—to whose ethical values like justice, citizenship, equality, liberty, and solidarity it gave the most socially radical interpretation. But it remained unaware of any scientific analysis of how the process of capital accumulation is produced and reproduced, the process that provided Marx with the first and only analytic understanding of the rationale and nature of the aspiration for socialism.

It is thus understandable that Marx, and then the historical Second and Third Internationals’ varieties of Marxism, were critical of this “French socialism’s” theory and practice. Blanquism is criticized for substituting a strategy of conspiracy and coup d’État for strategies based on struggle by a self-organized proletariat over the long haul; Proudhon was subjected to as harsh a critique; and revolutionary syndicalism was criticized for its “elitist” organizational conception. We will come back to this question of French-style “revolutionary syndicalism,” whose living traces can still be discerned in modern-day France, in distinction from the “mass” or “consensus” trade unionism of the other European countries. Of course there are other traditions beyond the French, especially the English, that in Europe helped to form the movement or movements, effective or illusory, toward socialism. But I will not discuss them here.

It was those streams that were to merge, during Marx’s lifetime and with his active participation, into the International Workingmen’s Association (“First International”). In this connection, the founding resolution of the First International, written by Marx, stated: “The task of the International is to generalize and unify the working class’s spontaneous movements, but not to prescribe for or impose upon them any doctrinal system whatsoever.”

The First International grouped certain organizations—parties and unions in an embryonic stage, associations of various sorts—which subscribed to differing “doctrinal systems”; that of Marx but also those of Proudhon and Bakunin. Within the International, Marx carried on a political and ideological combat against doctrines that he regarded as scientifically unfounded and thereby likely to spread illusions and render the working-class movement ineffective. But, in the quoted sentence, he propounded the fundamental principle (to which I adhere): accept and recognize diversity, act to reinforce unity in struggle.

But what in Europe was to develop in the last third of the nineteenth century, especially after Marx’s death but while Engels was still alive, was precisely an evolution away from that principle on the part of its movements toward socialism.

The Second International was founded by a meeting among “parties” that had become, at least relatively, “mass workers’ parties,” in practice one for each country. This evolution went along with the formation of mass trade unions, vastly bigger than those in the Europe that Marx had known: to each country, “its” party. Differing from one country to the other, all still shared the ideal of being its country’s “only workers’ party.” They considered themselves such since their establishment was based on fusion among movements with different traditions. The German Social Democratic Party (SPD) grouped Lassalians and Marxists, the French Socialist Party united Jaurèsians (heirs of the “French socialism” tradition), Guesdists (Marxists), and Blanquists. The British party was indistinguishable from the Trade Unions, federated in the Labor Party. To many, at the time, this evolution seemed positive and solid. But history was to show it to be more fragile than was thought. Nevertheless “unity,” realized in form on the organizational level, was thenceforward to be taken not as complementary to diversity—whose very existence was denied by many—but as incompatible with it. The apparent unity of the workers’ party seemed strengthened by the emergence of similarly unified trade unions. “Mass unionism” cleared its own pathway—its chosen aim was that all the workers in each line of industry or trade were to be organized in and belong to a the same union. France remained an exception to this general tendency. Each union, in the tradition of revolutionary syndicalism, recruited only a politicized vanguard and endeavored to lead the masses of wage-workers, to organize their struggles, and/or to support spontaneous movements. The Union would see itself as a quasi-party, an ally or a competitor to the workers’ parties. Mass unionism, in contrast, does not favor the politicization of its rank and file but actually favors their passive obedience, their depoliticization. The mass union sticks with its lowest common denominator—purely economic demands and, possibly, electoral support to its ally, the social-democratic party.

The 1914 war was to expose, for all to see, the impotence of the Second International’s parties and trade unions. Lenin himself was surprised by Kautsky’s “betrayal.” Nevertheless, the “revisionist” deviation initiated by Eduard Bernstein—and its success—ought to have produced an understanding that those parties and trade unions no longer constituted a “movement toward socialism.” The principal cause of this deviation, nevertheless, was not to be found in a “betrayal by the leaders,” nor in the corruption of the small layer of labor-aristocrats, nor in the careerism of those organizations’ bureaucrats. It originated from an objective fact: the opulence of a society based on imperialist plunder. The deviation kept going during the interwar period (1920–1939) and even after the Second World War in the thirty-year postwar boom (1945–1975). The “reformist” parties and trade-unions—who had given up on calling capitalism into question—retained the confidence of the majority of the working class, reducing the Leninist-communists to minority status.

Of course, in writing these lines I am aware that they should be read in a nuanced way. At certain times in the interwar period, struggles to preserve (bourgeois) democracy from the Nazi and other fascist threats combined with struggles to improve the workers’ living conditions. At that instant the Popular Fronts offered a hope of possibly reconverting themselves into movements toward socialism. In the immediate postwar years, because the class-collaboration of the European bourgeoisies with triumphant Nazi Germany had coincided with the decisive role of the working classes in the resistance movements and the prestige of the Red Army which had routed the Nazis, it once more became possible to hope for a rebirth of movements toward socialism, especially in France and Italy. The conquests of the working classes in Great Britain, Western Europe, and even the United States—social security, full-employment policies, annual wage increases in pace with increases in the average productivity of social labor—can in no case be viewed with contempt. They transformed, for the better, the face of those societies. But at the same time one is forced to recognize that those workers’ gains were made possible—for capital—by the intensification of imperialist plunder. During the whole thirty-year postwar boom energy (petroleum) had become practically costless.

Thus there was, in the imperialist centers, no serious obstacle to the victory of capital’s counter-offensive that began in 1975 and put an end both to the long boom and to further workers’ gains—nor, likewise, to continued deviation by the former Second International’s parties and trade-unions, which thenceforward were merely social-liberal. So we reached the end of the road: a “consensus” society accepting “eternal capitalism”; depoliticization; and, in place of worker/citizens a populace of spectators and consumers.

Nevertheless, this victory of capital and the disappearance of any movement toward socialism from the imperialist centers are not as solid as one might believe, or pretend to believe. The renewal of struggles against the social devastations concomitant to the dictatorship of triumphant capital signify the possible renewal of a movement toward socialism. This will be discussed further on.

The Leninist Lineages of the Movement Toward Socialism

The first victorious revolution to be carried out in the name of socialism was that of Russia, a semi-peripheral country. And this was not fortuitous. The Russian Social Democratic Labor Party, established at the close of the nineteenth century, regarded itself as part of the European Marxist family, whose mentor was Karl Kautsky. But in fact the RSDLP was not European; it signified the shift in the center of gravity of movements to socialism from the imperialist centers to their peripheries. That shift was to shape the whole twentieth century. So it was not by chance that its radical tendency (the Bolsheviks) gained the upper hand over, and put on the defensive, the conciliating tendency (the Mensheviks), while the inverse of that relationship prevailed in all the European parties.

Nevertheless, Lenin always stayed faithful to Second International thinking in regards to the relationship between necessary unity and the diversity of the currents comprising the movement toward socialism. He even emphasized its view on two important questions. In the first place he believed there to be no place for multiple working-class parties—“one class/one party.” No parties except those recognized by the Third International could be participants in the movement toward socialism. The other parties were nothing but traitors, and the task was to win the masses they were deceiving. He thought that possible until the—completely foreseeable—defeat of the 1918–1919 German revolution. Secondly, he refused to allow for trade-unions independent of the Party. For, without guidance from the Party, they could never think beyond reformist struggle for immediate economic demands. It was therefore necessary to integrate them into the system of the movement toward socialism by making them submit to the status of a transmission belt for the revolutionary strategy of the revolutionary Party. Nevertheless, the real history of labor struggles in Europe itself was to refute both Lenin’s and the Second International’s conceptualizations of the role of trade unions. At the present moment the “big mass unions” (as in Germany), consensus-based and firmly allied to the “big parliamentary parties of the left” (like the German SPD), have posed no obstacle to the unfolding offensive by capital of the financialized monopolies; on the contrary, they helped it to reach its objectives. Contrariwise, the remnant of the revolutionary syndicalist tradition in France (ironically called “elitist” and “minoritarian”), because it leaves a large measure of autonomy to grassroot initiatives, has proved to be more effective in resisting capital’s offensive—a state of affairs deplored by the French bosses, who reserve their praise for the “German model.”

Leninism, defined like that, was to inspire the dominant lineages of the twentieth century’s movement toward socialism while the European lineages were, as I pointed out above, to slide more and more openly toward opportunist positions. At best they advance merely trade-union demands—signing up for permanent maintenance of fundamental capitalist relationships and thereby taking their leave from anything that might be considered the movement toward socialism.

Was Lenin personally responsible for the “Leninism” of his successors, in the USSR and throughout the world? Yes and no. Yes, in the sense that all his successors, including Stalin, adhered to Leninist dogmas on management of the unity/diversity relationship. No, of course, insofar as Lenin lived through only the first years of the Russian Revolution and so bears no personal responsibility for whatever ensued.

And that which ensued had a positive aspect, one of decisive importance for the future of the world movement toward socialism. Leninism broke with the Eurocentric dogma that socialist revolution was on the agenda only in advanced (i.e., imperialist) capitalist countries. He takes account of the transfer, from the centers to the peripheries, of the combat for socialism’s center of gravity. This was proclaimed, Lenin present, in 1920 at the Congress of the Peoples of the East in Baku. And the Third International was to be present throughout the world while the Second had existed only in Europe.

In regard to Soviet society the movement toward socialism led by Leninist bolshevism was constrained by the objective conditions of the country (its backwardness; its semi-peripheral-capitalist nature) to reduce “building socialism” (its professed aim) to the building of state socialism. I insist here that state socialism is different from state capitalism. State capitalism (like that of France under de Gaulle) remains a system in service to monopoly capital (even when making major concessions benefiting the workers), state socialism involves two aspects of a quite different nature: (1) its obligation to pose as equivalent to worker-power at least by legitimating itself through bold social policies; and (2) its independent posture in relations with the world capitalist system.

This state socialism, the defining characteristic of Stalinism, which, consequently, makes it correct to call it Stalinist-Leninist [in preference to Marxist-Leninist—Ed.] was pregnant with the possibility of gradual leftward evolution. (That is to say, the potential remained for the socialization of economic management ) through effective participation of the workers in the exercise of power—progressively more advanced, more in keeping with socialist values, forms. But it also was pregnant with the risk of stagnation with a final fall to the right by way of capitalist restoration. Which is what happened in Eastern Europe and the USSR with Yeltsin and Gorbachev. Would Trotsky have done better? I doubt that very much. Which is why the Fourth International (in reality the Third International, second edition) never amounted to more than a springboard for orators reproducing ad nauseam the principles of Leninism without going beyond them.

The Stalinist and post-Stalinist systems never were able even to begin going beyond the state socialism (economic stratification and central planning) stage. A start to such a going beyond was made by Titoist Yugoslavia. It is not by chance that this attempt was ostracized by Moscow. For at the level of its actions on the world stage, Third International (and then Cominform) Communism had gradually come to subordinate all strategies of the movements toward socialism to the tactical needs of the Soviet state, whose sole concern was with the requirements of resistance to capitalist encirclement. The theory of the “non-capitalist path,” imposed on its Bandung-period nonaligned partner countries—especially the radicalized anti-imperialist Egypt of Nasser—which I criticized as soon as it was formulated (while I was attached to the Planning bodies of the Nasser regime and shortly thereafter), constituted the abandonment of any strategic perspective in favor of mere tactics.

It was left for Chinese Communism and Mao to introduce a different conception of the movement toward socialism in world capitalism’s peripheries, not by breaking with the heritage of Leninism but by going beyond it. That makes up the subject of another lineage of the movement toward socialism, which we will take up below.

Lineages of the Movement Toward Socialism in World Capitalism’s Peripheries

I will begin by taking a look at the Chinese experience.

The March–May 1871 Paris Commune and the 1851–1864 Taiping Revolution (and I do mean to say Revolution, not Revolt) initiated the entrance of the human race into the contemporary phase of its history. They put a end to the illusive belief that capitalism was progressive, they proclaimed the end of its summer.

Judged by their long-term significance, these were two gigantic revolutions. One of them (the Commune) unfolded in a developed capitalist metropolis, at the time second only to England in economic stature; the other broke out in a region of the world that had just been integrated into globalized imperialist capitalism with the status of a dominated periphery.

The Taiping Revolution overthrew the despotic imperial autocracy of the Ching dynasty, it abolished the regime of peasant exploitation by the ruling class of that mode of social production which I have termed “tributary” (the Chinese Communists called it “feudal,” a difference in terminology that is secondary). But at the same time the Taiping Revolution rejected the forms of capitalism which had infiltrated themselves into the interstices of the tributary system; it abolished private commerce. It rejected just as strongly foreign domination by imperialist capital. And it did so extremely early, since the first imperialist aggressions foreshadowing the reduction of China to the status of a dominated periphery in imperialist capitalist globalization—the 1840 Opium War—had taken place a mere decade earlier. And, in advance of their time, the Taipings abolished polygamy, concubinage, and prostitution.

The Taiping Revolution—they also were “sons of heaven,” i.e., it had a messianic aspect “linked” to Christianity—laid the foundation-stones for socialism/higher stage of human civilization by formulating the first revolutionary strategy of global imperialist capitalism’s peripheral peoples. The Taiping Revolution is the ancestor of (to use the later terminology of the Chinese Communists) “the people’s anti-feudal/anti-imperialist revolution.” It proclaimed the awakening of the peoples of the South (of Asia, Africa, and Latin America) that was to shape the twentieth century. It was an inspiration to Mao. It showed the pathway to revolution for all the peoples of the modern global capitalist system’s peripheries, the path that allowed them to enter into the long socialist transition.

The Paris Commune is not just a chapter in French history, nor are the Taipings just a chapter in Chinese history. These two revolutions had universal significance. The Paris Commune gave substance to the “proletarian” internationalism that the First International invoked as an alternative to chauvinist nationalisms, to capitalist cosmopolitanism, to past racial, linguistic, and confessional identities. The universalism of the Taipings’ call was symbolized by their (said to be “curious”) adoption of the figure of Christ, who nevertheless was a figure alien to Chinese history. How could a human being defeated by his adversaries—the ruling power—be a supposedly invincible “God?” For the Taipings their Christ was not the one held up by the missionaries who had tried to introduce their submissive Christianity into China. Rather, he was the exemplary example of what the struggle for human liberation had to be: courageous unto death and by that very fact proving the secret of success to be solidarity in struggle.

The Paris Commune and the Taiping Revolution elsewhere proved capitalism to be a mere parenthesis in history. A short parenthesis, moreover. Capitalism has merely fulfilled the (honorable) role of creating—in an historically short space of time—the conditions that made its surpassing/abolition necessary in order to allow the construction of a more advanced stage of human civilization. The Paris Commune and the Taiping Revolution, by that very fact, opened history’s current chapter—that which was to develop in the twentieth century and be continued in the twenty-first. They opened the succeeding chapters of the springtime of peoples, parallel to capitalism’s autumn.

China, at the far end of the continent, likewise showed characteristics particularly favorable to precocious political maturation. China had very early, even before Europe, begun to go beyond its (“advanced,” solidly formed) socio-economic tributary mode. In its invention of modernity it was ahead by five centuries in its abandonment of a religion of individual salvation—Buddhism—in favor of a sort of unreligious secularism before that word existed; and bold development of commercial relationships based on the internal market. Moreover, China (unlike India and the Ottoman Empire) long resisted the assaults of European imperialist capitalism. It thus was not until 1840 that British gunboats broke open the doors to the Celestial Empire. In combination, this aggression together with the earlier advancements of Chinese capitalism had prodigious accelerating effects: inequalities in landownership (to which the logic of the tributary system posed declining resistance) grew faster, and the “betrayal” of the ruling class (the Emperor and the landed aristocracy) quickly replaced their earlier attempts at “national” resistance. So this is how we understand the precociousness of the Taiping Revolution and its “anti-feudal/anti-imperialist” nature.

So two great revolutions, but two revolutions at work on each of the two complementary fields of globalized imperialist capitalism—at the center and at the periphery—in the two “weak links” of this worldwide system.

Were Marx and historic Marxism(s) up to the analytic demands of this reality of globalized capitalism and thus able to form effective strategies to “change the world,” i.e., to abolish capitalism? Yes and no. Marx yielded to the temptation of seeing in the worldwide expansion of capitalism a force that would homogenize economic and social conditions, reducing the workers of the whole world to the sole status of employees exploited by capital in the same way and to the same intensity everywhere. On this basis it justified, as progressive in the last analysis, colonialism. There is no lack of supporting citations to be found in Marx’s writings, spotlighting the progressive consequences, however unintentional, of colonialism—i.e., despite its odious practices (denounced by Marx) in India, Algeria, South Africa, Eritrea—as well as “Yankee” annexation of Texas and California (“industrious,” as distinguished from the “lazy” Mexicans.)*

By this logic Marx condemned the Taipings—about whom he knew nothing at all! Nevertheless, whenever he dealt with countries of which he was not totally ignorant, Marx sketched out a quite different vision of capitalist expansion. Marx saw nothing positive in the colonization of Ireland by England; on the contrary, he unreservedly denounced its destructive effects upon the English working class itself. In regard to Russia—which was less foreign to him than China was—Marx had an intuition that it was a “weak link” (to use a term coined by Lenin) in the worldwide capitalist chain and that, by that very fact, an anti-capitalist revolution which would clear the way for socialist advance was possible. Marx’s correspondence with Vera Zasulitch is evidence of this.1 He saw the possibility of a revolution with a strong peasant dimension, based on the resistance of peasant communities (organized as a mir)—if they could free themselves from feudalism through the real abolition of serfdom. Even though the peasants would themselves be threatened by expropriation to the gain of both some newly rich peasants and of the new latifundiary landlords (former feudal lords), a revolution that might be able to clear an original path for the socialist advance.

Lenin, and so the historic “Leninist” Marxism, made a great stride forward. Lenin denounced “imperialism.” It does not matter at all that, probably because of his respect for Marx, he called it a new and recent stage of capitalism. He drew the two obligatory and conjoined consequences: “revolution” was no longer on the agenda in the “West”; contrariwise, “revolution,” was on the agenda in the “East.” Lenin did not come to this conclusion right away. He wavered. He still hoped, for example, that the revolution which had started in the “weak link of the system” (Russia) would carry in its wake that of the workers in the developed centers (Germany, first of all). His reading of capitalism’s first great systemic crisis (which began in the 1870s and led to the First World War) saw it also as the “final” crisis of moribund capitalism. But Lenin quickly drew a different conclusion from the facts: he had been fooling himself; the revolution had been defeated in Europe (in Germany); those to come were starting to sprout in the East (in China, in Iran, in the former Ottoman Empire, in the colonies and semi-colonies). Nevertheless, Lenin failed to relate his new reading of Marxism to a deepening of his thought regarding the place of Russia in the global capitalist system, that of a periphery (or semi-periphery). He saw in that position—“semi-Asiatic” Russia—an obstacle rather than a trump card. No more did Lenin see the “peasant question” as central to the new “revolution” on the agenda. He thought, rightly or wrongly, that the possibilities inherent in the mir had been wiped out by the development of capitalism in Russia (The Development of Capitalism in Russia was the title of one of his earliest books.) He drew the consequence: the Russian revolution would give the land to the peasants, but only to make them owners of their land.

So it was for Mao, the heir of the Taipings, to master absolutely all the teachings of this story. Mao formulated the strategy and the aims of the long transition to socialism starting with an anti-imperialist/anti-“feudal” revolution to be carried out in the given conditions of the global system’s peripheral societies. His definition of the tasks of this “anti-feudal” revolution expressed Mao’s absolute rejection of the backward-looking illusion in any form whatsoever. The revolution of the peoples of the periphery would of necessity sign up for the universalist perspective of socialism.

So Mao’s Chinese Communism was to put in operation a coherent strategy of movement toward socialism for China, whose teachings carry great importance for all the peoples of the peripheries (Asia, Africa, and Latin America). Here we are, come back to our fundamental question: the relationship between unity and diversity.

The anti-imperialist/anti-feudal/popular and democratic (but not bourgeois democratic) revolution links diverse social, ideological, and cultural forces. It cannot be a “proletarian revolution.” Indeed, to this day the proletariat is scarcely better than a feeble, embryonic, presence in any of the modern societies of the peripheries. This revolution has to be, just as much, that of the majority of oppressed and exploited peasants. It has to be that of large portions of the educated middle classes who find their expression in the revolutionary intelligentsia. It can neutralize (without suppressing) political intervention, seeking to restrain the movement toward socialism, by the local bourgeoisie. It can even grease the slide of that bourgeoisie from its natural compradore behavior to a pro-national outlook.

The fact remains that Chinese objective conditions, at that stage, scarcely allowed anything but the establishment of a state socialism. Which was done. But this state socialism, which began as an imitation of the Soviet model, quickly diverged from it on diverse and important questions. Among these were questions indissociable from governance over the rural population and democratization of the socialization of economic and political life.

According to Mao, maintenance and reinforcement of the unity of the people that had been sealed in the course of the liberation war implied management of urban/rural relations emphasizing equality of living standards among industrial and agricultural workers and consequently rejecting the option of “the primitive socialist accumulation” which puts all the burden of development and industrial modernization onto the peasantry. That choice having been made, the conditions were then ripe for advancing in a possible democratization of the society. The Maoist formula for this was that of the “mass line.” As for everything to do with the evolution of the Chinese system of movement toward socialism, its advances and (post-Maoist) steps backward, and differing future alternatives, were opened up (transformation of state socialism into state capitalism).

The major lesson that I draw from this reading of China’s evolution from 1950 to today is that until now its treatment of the relationship between the unity (of the nation, of the people) and the diversity (of the social components of that nation) has been correct enough to give some legitimacy to the Beijing power structure and consequently to guarantee social stability. The unparalleled success of the emergence of China, in comparison with that of other countries of the contemporary South (Brazil and India, for example), is the result of this better (or less bad!) management of the unity/diversity relationship.

Other examples of movement toward socialism in countries of the periphery have successfully gone past several fine stages, having, among other things, known how to manage correctly the unity/diversity relationship and thus have eased the evolution of the originally anti-imperialist struggle toward the implementation of policies that, having gone outside the framework of the logics of capitalism, write themselves onto the long road to socialism. We refer, of course, to Vietnam and Cuba.

We might likewise refer to the advances realized in South America during the previous decades in Venezuela, Brazil, Bolivia, and Ecuador. Starting from powerful revolts of the popular classes, these movements have won elections (exceptionally, for these times) and have passed a first stage. But, to go forward and become real movements toward socialism establishing facts and not merely expressions of hopes, they need to find more effective answers to the challenge of the unity/diversity contradiction.

We cannot, however, ignore the examples of swingeing [i.e., scathing] failure that characterized the broad popular movements that during recent decades overthrew bloody dictatorships but were unable to impose themselves as movements toward socialism. We are thinking here of the movements that overthrew the dictatorships of Moussa Traoré in Mali, Marcos in the Philippines, and Suharto in Indonesia. None of these movements were able to formulate and impose a common program based on unity in diversity. The same nonexistent or even deplorable management of this contradiction is characteristic of the movements in Arab societies since 2011 (Egypt, Tunisia, Syria). So there is no movement toward socialism in any of these countries, despite the fact that objective conditions for its possible emergence do exist.

Looking backward in time, the Bandung epoch (1955–1975/1980) was that of a victorious takeoff for national liberation movements in Africa and Asia. For basic reasons, which I have invoked in my analysis, they were pregnant with the possibility of becoming movements toward socialism. But in reality what happened to their unfolding, to their victories, to their tomorrows?

This question needs a nuanced answer. Yes, at certain moments in the expansion of popular movements that were relatively more advanced, the movement toward socialism seemed, in outline, possible. This, for example was the case in “Communist” (actually advanced national popular) South Yemen or, very sketchily, in Sudan. In many African instances the state powers issuing from parties that had organized and directed the national liberation were professedly socialist, sometimes even Marxist-Leninist, more often professing a tradition, more imaginary than real, that they termed socialist. And this posture was not demagogic; it expressed the ambitions of leading progressive groups and of their real popular bases. Nevertheless, all these regimes emphasized “the unity of the people” (behind their leaders!) and most often denied the extent, even the reality, of the diversity of social interests competing within the broad national alliance or of other sorts of diversity among the components (ethnic, religious, linguistic) of the nation. This mediocre, at best, management of the fundamental contradiction of the movement toward socialism is at the bottom of their incapacity to progress at a sustained pace, of their rapid decrepitude once the limits of what they could achieve had been reached, of the erosion of their legitimacy—and thus of their sliding toward a return to the sheepfold managed by contemporary imperialism and its partners the compradorized bourgeoisie or, if need be, the compradore state.

Only a concrete, country by country, examination would let us say more. I have put forward some concrete analyses of this obstructed emergence of the movement for socialism for some countries of Asia, Africa, and the Arab world—obviously and especially for Nasserist Egypt.

In this tumultuous history, the parties professing Marxism-Leninism—when they existed—were unable to bend the course of events in the direction of the movement toward socialism. There are various reasons for their weakness; but undoubtedly their adhesion to the Moscow camp within international Communism sometimes played a decisive role in the annihilation of the hopes placed upon them. That they went over to the “non-capitalist path” propounded by Moscow provides the most dramatic example of this: these parties thus became the “left wing” of a power system that was sliding rightward.

In the case of India the breakup of the former Communist Party of India, aligning itself de facto with the Congress, and the formation of the Communist Party of India-Marxist (CPI-M), of Maoist inspiration, did not result in the qualitative leap that would have been needed to make of the CPI-M a replica of what the Chinese Communist Party had been. There are many and various reasons that explain this failure, such as the sacred nature of the caste system with its alienating effects on the spread of class struggles, and the diversity of the nations comprising the Indian Union. Having entered governments (by way of elections) in West Bengal and Kerala, the CPI-M had to the credit side of its balance sheet the realization of non-negligible progressive measures. But it did not succeed in reversing the balance of forces on the scale of the Indian Union in favor of a movement toward socialism. Unable to go beyond the limits of what could be realized by it in those two states, it then was gradually “absorbed” by the system. A radicalization of Maoist Indian Communism then was outlined in the formation of the Communist Party of India-Marxist-Leninist (CPI-ML) and the peasant/tribal war that it undertook. We have no choice but to recognize its failure, and then the breakup of the Party. It must nevertheless by noted that the same line of action produced some results in Nepal and outlined, sketchily, a possible movement toward socialism.

I have termed as “national-popular” regimes the family of these advances of the “first awakening of the South” (the Bandung decades), within which the movement toward socialism was only sketchily inscribed, impeded in its possible development by the tendency of the ruling political classes to maintain their exclusive power, even at the price of a return to the compradore fold.

The Challenge Before the Movement Toward Socialism: Socialization of the Management of A Modern Economy

The central question posed by revolutionary and/or authentic socialism (or communism or Marxism, or Marxist-Leninism, or Maoism) professing reformist advances was and remains that of socialization of the management of a “modern” economy, whose foundations were laid by the spread of historic capitalism as much in its dominant centers as in its dominated peripheries. In the centers the deviation of reformist socialism and then its later abandonment of its references to Marx led logically to giving up on posing the “post-capitalism” question. Contrariwise, in the peripheries that make up the stage for enactment of revolutions carried out in the perspective of building socialism, the question of socialization of the management of economic life has remained at the heart of the debates and conflicts that have unfolded among the revolutionary vanguards and the holders of state power. Of course the specific objective conditions of the revolution in the peripheries of globalized capitalism have weighed heavily on the scale: it was simultaneously necessary to “catch up” (develop the productive forces and in order to do so, to “copy” and reproduce capitalist forms of organizing production) and “to do something else” (to build socialism). The answer given to that question has been the construction of “state socialisms” or “state capitalisms,” the line between these two forms being itself vague and shifting. The fact remains that in the theoretical elaborations, as in the programs, of the parties professing socialism, advances in socialization of economic management and advances in democratization of society’s political management have always been thought of as inseparable. Affirmation of this central principle in formulating the project for a future socialism/communism is worthy of recall, the more so because it was exactly the state socialisms/state capitalisms of the Chinese, Soviet, and others’ experiments which, in their practices, have on a broad scale separated these two dimensions of a single challenge.

Autumn of Capitalism, Springtime of the Peoples?

Although susceptible to forming the head and tail of a single coin, the autumn of capitalism and the springtime of peoples are not the same thing.

The emergence at the end of the nineteenth century of the new form of capitalism, monopoly capitalism, was the autumnal equinox of that system—of that historical parenthesis, as I have said. Capitalism had “done its time,” the short period (limited to the nineteenth century) during which it still accomplished progressive functions was over. By this I mean that, in the nineteenth century, the “creative” dimension of capitalist accumulation (fantastic acceleration, in comparison with previous periods throughout human history; technological progress; the emancipation of the individual, even though this mainly benefited the privileged but was limited and deformed for everyone else) still outweighed the destructive consequences of that accumulation. The latter were primarily the effects of destruction of societies of the peripheries incorporated by imperialist expansion inseparable from historic capitalism. But with the emergence of monopoly capitalism the relationship of creative destruction in all of these respects was reversed to the detriment of the “creative” one.

It is in the framework of this long-run perspective that I have analyzed the two long systemic crises of “obsolete” (“senile”) capitalism: the first long crisis which extended from 1871–1873 up to 1945–1955, the second, still underway, which began a century later, starting with 1971–1973. I have emphasized in this analysis the central means mobilized by capital to overcome its permanent crisis: the construction and vertiginous growth of a Department III (complementing the two departments—production of means of consumption and production of means of production—dealt with by Marx) for absorption of the surplus linked to conjoined monopoly rents and imperialist rents.2

Lenin was the first to take notice of this qualitative change in the nature of capitalism. His sole sin was optimism, the belief that this first crisis of capitalism would be the last one. He underestimated the perverse and destructive effects of the imperialist unfolding in the central societies of the system. Having drawn the consequences of a precise estimate of those effects, Mao chose patience: the socialist road would be very long and strewn with ambushes.

The twentieth century was indeed that of a first time “awakening of the South,” more exactly an awakening of the peoples, the nations, and the states of the peripheries of the system: starting with Russia (a “semi-periphery”), then engulfing China, Asia, Africa, and Latin America. In this sense the twentieth century was that of the first springtime of the peoples involved. I have pointed out the series of major events which, right from the outset of the century, proclaimed those springtimes—the Russian (1905–1917), Chinese (from 1911), Mexican (1910–1920), and other revolutions. I have put the Bandung period for contemporary Asia and Africa, which was both the crown and the end of that great moment in universal history, back into this framework. Thus, in some way we can read this response of the peoples dominated by the imperialist unfolding as a continuation of the task undertaken by the Taiping Revolution and as its generalization across three continents.

In contrast, the Paris Commune had no successors in the developed West. Despite their courageous attempts, the Third International Communists did not succeed in building a historic camp alternative to the camp aligned upon rule of society by the imperialist monopolies. It is here that lies the true tragedy of the twentieth century, not in the inadequacies of the peripheries’ awakening but in its absence in the centers. The inadequacies—then the fatal deviations—of the peripheries’ nations might well have been overcome if the peoples of the centers had broken with their own pro-imperialist alignment.

The springtimes of peoples that unfolded during the twentieth century have worn out their effects. From deviation to deviation, they ended by collapsing and falling rightward before capital’s counter-offensive. During the 1990s this collapse was expressed through the series of triumphant counter-revolutions in that decade. Those possibilities that had existed, whether a leftward evolution of these exhausted systems or, in crisis, their stabilization around center-left formulae keeping open the future, were broken by the triple conjunction linking: (1) the inadequacies of popular protest limited to democratic demands unrelated to social or geopolitical questions; (2) the exclusively repressive responses of the power structures; (3) interventions by the imperialist West. In these conditions it is just farcical to treat the “revolutions” of the USSR and the countries of the European East (1989–1991) as “springtimes of peoples.” Built on huge illusions about capitalist reality, these movements ended with nothing that might be considered positive. The peoples involved are still waiting for their springtime, which perhaps might yet come.

Throughout the course of the twentieth century and right up to today the autumn of capitalism and the springtime of the peoples (itself confined to the peoples of the peripheries) have been entirely separate. For that reason the autumn of capitalism has provided the major motive force of evolution. Which it has switched onto the rails of increasing barbarism, the only logical answer that conforms to the requirements for maintaining the dominion of capital. In the first instance, imperialist barbarism, redoubled by putting into effect military control of the planet by the armed forces of the United States and their subaltern European allies of NATO to the sole profit of the monopolies of the collective imperialism of the triad United States–Europe–Japan. But also in response to this the sliding of the responses of their victims—the peoples of the South—toward backward-looking illusions which themselves are pregnant with barbarity.

That risk, which at present is the dominant reality, will not diminish until advances toward the conjunction between the autumn of capitalism and the springtime of peoples—of all the peoples, those both of the peripheries and of the centers—will be decisive enough to open the universalist socialist perspective. Will the twenty-first century be a “remake” of the twentieth, with the liberation attempts of the peoples of the South coinciding with maintenance of the pro-imperialist alignment of the peoples of the North?

To Build Unity Within Recognition of Diversity

There is no possible revolutionary advance of the movement toward socialism without construction of strategic unity of action linking together the needed critical mass of diverse social forces in conflict with the dominant capitalist system. It yet remains to identify correctly the nature of the social diversity at issue: distinguishing between those differences that count more and those that count less. The sources and forms of diversity are themselves innumerable. To describe them would take many pages of statistical tables: there are the men and the women, the young and the old, the natives and the immigrants, in some countries the human beings with different shades of skin color, those belonging to this or that religion or linguistic group, those who own property and those who do not, skilled and unskilled workers, etc.

A non-simplifying class analysis permits deeper comprehension of the problems. At bottom, there is certainly in capitalism the contrast between the bourgeois (owners of the means of production and/or the managers of that property) and the proletarians (who have only their labor power to sell). But this contrast is expressed through a great diversity in the spectrum of concrete social situations. There are wage-earners (sellers of labor power) whose possession of unusual skills lets them benefit from a certain degree of stability, and there are those relegated to permanent instability. There are the capitalists—owners—small, medium, or large-scale entrepreneurs, and there are the managing executives of the big capital of the financialized monopolies, etc.

This great differentiation of the basic classes is likewise extremely varied depending on whether the society in question is that of a dominant capitalist/imperialist country or that of a dominated peripheral capitalism. The social situation of a proletarian in an opulent country is different from that of his alter ego in a poor society. The rural and peasant mass, reduced to numerical insignificance in today’s centers, remains a strong presence in the peripheries, etc.

There is certainly a weighty tendency toward simplification of social structures resulting from the logic of capital accumulation (concentration of property and/or concentration of control) but there are several false notions about the simplification of social structure resulting from capitalism: (1) the idea that the bourgeois/proletarian contrast would wipe out expression of the presence of other social forces from the field of politics; (2) the idea that the bourgeoisie, on the one hand, and the proletariat, on the other, would become homogeneous camps with little internal differentiation; (3) the idea that the globalized expansion of capitalism would bring closer together the social structures of the advanced countries and those of the backward countries pursuing the path of “catching up” (“developing,” as they say).

Let us take, for example, the expansion of industrial capitalism in nineteenth-century Europe. In no country of that continent did the bourgeoisie, the new dominant class, wipe out the aristocratic classes from the ancien régime. Everywhere it reached political compromises with them that preserved their control over important segments of the power-structure (like the officer corps). And though the 1914 war was an inter-imperialist war, it was also a war belonging to the crowned heads of Europe; until the entry of the United States, France was the only republic at war.

The bourgeoisie is not a class composed of all those with formal ownership of the means of production. That property could, once limited-liability corporations had been invented, be spread around even though control over it was not. The bourgeoisie is not a homogeneous class organized as a pyramid of wealth rising from small, through middle, to great capitalists. An integral part of it is provided by segments of the middle classes (middle as measured by quantity of income formally derived from wage labor) involved in economic and political management of society. The bourgeoisie is likewise differentiated by business-sector positioning and/or location in advancing or declining regions, etc.

In the peripheries the bourgeoisie is not simply a late-born bourgeoisie growing up comfortably, living a lavish, if even more parasitic, lifestyle akin to that of its counterparts in the center. No more is it divided into two segments, one compradore (bad bourgeoisie) the other national (good bourgeoisie). Having entered the world within the framework of the worldwide expansion of imperialism, the bourgeoisie of the periphery is compradore by nature. Nevertheless, it might behave like a national bourgeoisie when the circumstances offer it some room for maneuver. I insist on the importance of this Maoist interpretation about the nature of the bourgeoisies of the periphery.

The structure of the classes making up a people in the countries of the periphery is likewise very different from that in the centers. The peasant classes in the South are themselves differently differentiated from one country to the other, with structurings partly inherited from specific precapitalist pasts—and themselves reshaped in turn by the particular ways in which they were integrated/subordinated into modern capitalism. The pauperization processes resulting from global capitalist accumulation have created there, in the peripheries, a growing mass of the dispossessed who survive only through “informal” economic activity.

Under the deceptive label of “neoliberalism,” during the past three decades weighty tendencies have been at work in the framework of the spread of globalized, financialized, and generalized monopoly capitalism.3 These weighty tendencies have produced: (1) a general, but extremely segmented, proletarianization (80 percent of the population, at least in the centers, comprising waged and salaried sellers of labor power); (2) forms of subordination established everywhere, in the centers as in the peripheries, reducing economic activities seemingly independent of the monopolies (especially those of the peripheries’ peasants but also of their industries) to the de jure or de facto status of subcontractors—thus enabling the transformation of a growing fraction of surplus value into monopoly rents; (3) replacement of historic forms of capitalist organization as embodied in concrete bourgeoisies with a new form of domination by abstract capital (“incarnate in the market,” specifically in the “financial market”). Thenceforward the bourgeoisie had become a class composed of—very well paid!—wage-workers employed by the financial oligarchy (the 1% of Occupy Wall Street and of the Spanish Indignados).

The unfolding of this new structure of generalized-monopoly capitalism did not (and could not) result in relative social stabilization—it resulted in social degradation pregnant with popular revolts. Neither did it (nor could it) result in relative stabilization of the new center/periphery relationships—on the contrary, it resulted in aggravation of the contradictions and conflicts between them. The historic imperialist centers (the United States–Europe–Japan triad) could no longer maintain their global dominance other than through military control over the whole world. In the face of this geostrategic deployment by Washington and its subaltern allies, some “emerging” states and peoples of the South resist by affirming—to various degrees—“sovereign projects,” leading to growing North–South conflicts. In other countries of the periphery the domination system of globalized-monopoly capitalism works through its alliance with compradore state power structures lacking national and popular legitimacy. This is a second motive for revolts of the peoples.

Under our eyes, generalized-monopoly capitalism is imploding in the various forms here recalled. By that very fact a new period of revolutionary situations is opening to us. How are we to act, in these circumstances, to make of the possible a reality: advances of the movement toward socialism? To answer we must take up again our reflection on the relationship: strategic unity of action/diversity of the social and political components of the movement of the peoples.

In the past, revolutionary situations allowed revolutionary advances (towards socialism) whenever concrete responses were given to this unity/diversity dialectical contradiction.

I speak here of dialectical contradiction. In effect, its solution does not proceed through negation of one of its two terms but through the transformation of their contrast into their active complementarity. A metaphysical view of contradiction cannot understand the nature of this challenge and the way to respond to it. Now, that view has often been, and still is, prevalent because it offers easy answers that, according to immediate appearances, might seem to be the only ones possible.

For example: the absolute priority of “unity” (of the people) is affirmed and the real effects of diversity, which make implementation of that unity impossible or pernicious, are denied. Or contrariwise, the unavoidable need for unity (identification of common staged strategic objectives and organization of a united front taking responsibility for their realization) is denied in favor of the affirmation that diverse struggles (those of various fractions of the people in revolt) will all by themselves provide a solution of the problem. The unavoidable question of power is then avoided. This metaphysical response to the contradiction still prevails on the contemporary scene everywhere in the South and the North. It reduces the movements in struggle to maintenance of defensive positions leaving the initiative to the enemy—monopoly capitalism and its state political instruments in North and South. So it is a strategy powerless to push forward the movement toward socialism.

As I have said, in the past correct dialectical responses have sometimes been applied with success. In Russia in 1917, Lenin grasped the way to maximize the power of unity by proposing, to the diverse components of the people in revolt, shared strategic objectives: peace and land. By offering land to the soldier-peasants he founded an alliance that allowed the new Bolshevik party to escape its isolation. For that party, until then, had no real audience among peasants. In China, as early as the 1930s, Mao refounded the Communist Party on the base of a firm and lasting alliance with the poor and exploited peasantry. That is the secret of the 1949 victory. What happened to it afterwards in regard to management of the unity/diversity relationship (i.e., the question of alliances making up the historic coalition of the movement toward socialism) constitutes a different problem, one that I will not take up in this essay.

In both cases there was a concrete response to the challenge. It stemmed from a concrete analysis, which turned out to be right, of what were the diversities: those that are crucial (in the sense that taking them into account enables working the lever of revolutionary advance) and those that were not. In this domain there are no worthwhile general formulae that could be substituted for concrete analysis. The crucial contemporary diversities cannot be the same in France as in the United States, in China as in India, in Peru as in Congo.

Whatever “generality” can be expressed in this connection I have already formulated in my propositions about the necessary “audacity” which alone enables the radical lefts of our epoch to respond properly to the challenge.4 I will sum up the meaning of these propositions in the next two paragraphs:

  1. In the imperialist centers the radical left must dare to advocate the pure and simple expropriation of the monopolies through nationalization/statification (a first stage), together with plans concerning the organization of advances toward the democratic socialization of their management. It is then a matter of identifying the crucial diversities that are to be linked together through constructing a unity of action based on the identification at each stage of their common partial goals.
  2. In the peripheries the radical left must be able to identify the diverse components of a hegemonic social alliance that is an alternative to the one on which the compradore coalition in power finds support. Only if it becomes capable, at each stage, of identifying strategically the common partial goals crucial to the anti-compradore alliance, can it achieve this result.

It is only when these conditions will have been fulfilled that the movement toward socialism can be seen to be affirmed through advances in the real, albeit progressive, transformation of contemporary societies.

Communism, Higher Stage of Human Civilization

Toward a second wave of emergence for the states, peoples, and nations of the peripheries.

The ambition of the movement toward socialism is to refound human society on other foundations than those that are fundamentally characteristic of capitalism. This future is conceived as realizing a higher stage of universal human civilization, not simply as realizing a more “just,” or even more “efficacious,” model of our familiar civilization (“modern” capitalist civilization).

Well, preparation of the future, even of the distant future, begins today. It is good to know what one wants. What social model? Based on what principles: Destructive competition among individuals or affirmation of the benefits of solidarity? A liberty that legitimizes inequality or a liberty tied to equality? Exploitation of the planet’s resources with no concern for the future or an exact accounting of the requirements for reproduction of the planet’s conditions of life?

Socialism will be democratic or it will not exist at all. On condition of understanding the democratization of society as an unending process that cannot be reduced to the formula of electoral multiparty representative as the definition of “real democracy.” The dominant Western media propounds “democracy first” for the countries of the South, which it understands as the immediate holding of multiparty elections; and many civil society organizations in the South have gone over to that proposition. Nevertheless, repeated experiments prove that this is merely a miserable farce which the imperialists and their local allies have no trouble manipulating to their own gain. In the centers, representative electoral democracy had always constituted the effective means for blocking any threats that labor struggles would become radicalized. Class struggles, which unfold on a basis of the extreme diversity of living conditions and segmentation within the laboring classes, articulated in these conditions to electoral settlement of political conflicts, had always been effective means for blocking the radicalization of popular movements. Electoralism (which Lenin called parliamentary cretinism) reinforces the negative effects of the segmentation of classes within the people and deprives of all effectiveness any strategy for building their unity. Western public opinion, alas, envisages no alternative to this system of political management, to which even the Communists have now gone over. Nevertheless, with the establishment of generalized-monopoly capitalism the electoral farce becomes totally visible, effacing the former right/left contrast.

The movement toward socialism has the duty of opening new fields for the invention of more advanced ways to manage political democracy.

John Bellamy Foster has argued convincingly that socialism, as understood by Marx, is ecological by its very nature. I add that green capitalism is still an impossible utopia because respect for the requirements of a political environmentalism worthy of the name is incompatible with respect for the basic laws governing capitalist accumulation. Here also the movement toward socialism has the duty of opening new fields for the invention of procedures of economic management that integrate the long run, that link democratic socialization of social relationships to the requirements for reproduction of life-spaces on the planet, which, in its turn, is the condition for transmitting the heritage of these common properties from one generation to another.

In its answers to these questions, the movement toward socialism cannot restrict itself to expressing pious vows, to propounding a remake of the nineteenth century’s utopian socialisms. To avoid that fate it must answer the following questions: (1) Today, what is our scientific knowledge in the fields of anthropology and sociology that calls into question the “utopias” formulated in the past? (2) What is our new scientific knowledge about reproduction conditions of life on the planet? (3) Can this knowledge be integrated into an open Marxist thought?

In this general framework, we must give full treatment to the emergence projects of the states and peoples of Asia, Africa, and Latin America. The first wave of emergings, which extended successfully between 1950 and 1980, is exhausted. That page having been turned, the imperialist powers were able to retake the initiative and to impose the “diktat” (and not the supposed “consensus”) of Washington. In its turn, this project of wildcat globalization is in implosion, offering to the peoples of the peripheries a chance to undertake a second wave of liberation and progress. What might be the goals of that second wave? There is a confrontation here among different political and cultural visions (reactionary, or illusory, or progressive) whose likelihoods will need to be studied.

To Exit From the Framework of Established Globalization

Within the framework of the established globalization model, there is no space available for the movement toward socialism to begin its deployment onto the field of reality. So it has to write into its program both immediate and more distant strategic objectives that allow an exit from that framework. If not, there will be no exit from the model of “lumpen development” based on subcontracting and resource pillage, resulting in an indescribable pauperization of all the countries that accept their submission to the extension requirements of liberal globalization.

One often hears: “The problem is worldwide; its solution must be worldwide.” The first proposition is correct, but the second does not flow from it. A transformation of globalization from above, for example by international negotiations in a UN framework, has absolutely no chance of permitting even the least progress. The long series of UN international conferences, from which nothing (as was foreseeable) has ever emerged, is evidence of that. The global system has never been transformed from above, but always starting from below, i.e., from initial changes of the line of development that at first became possible at local levels (or else national levels, in the framework of states/nations, which are the centers of crucial political struggles). Then conditions might eventually be formed to open possibilities for transformation of globalized relationships. Deconstruction must always be preliminary to the possibility of reconstructing differently. The example of Europe in crisis is testimony to that. The European structures will never undergo transformation from above by Brussels. Only disobedience by some European state, and then by another one, would make it possible to envisage the reconstruction of “another Europe.”

The strategy of starting transformations by action at national levels can be summed up in the following sentence: one must refuse to adjust unilaterally to the requirements for extension of the established globalization, replace it by prioritizing getting to work on “sovereign projects,” and force the global system to adjust to the requirements for the unfolding of these national projects.

But what then is meant by “sovereign projects”?

In certain conditions, getting to work on sovereign projects opens a space for advances of the movement toward socialism. Of course, the very notion of “sovereign project” is open to discussion. Given the degree of penetration of transnational investments in all domains and all countries we cannot avoid the question: What sort of sovereignty are you talking about?

The dynamics of contemporary capitalism are in many ways determined by the global conflict over natural resources. The matter is a special question whose examination is not to be drowned in other general considerations. The United State’s dependence for many of those resources and the growing demand from China are a challenge to South America, Africa, and the Middle East, which are particularly well endowed with resources and have been shaped by the history of their pillage. Can one develop, in these domains, national and regional policies that initiate rational and equitable planetary management, benefitting all the peoples? Can one develop, written into that perspective, new relationships between China and the countries of the South at issue? Will they link China’s access to those resources to support for the industrialization of the countries involved (something the supposed “donors” of the OECD refuse to do)?

The framework for the unfolding of an effective sovereign project is not limited to the field of international action. An independent national policy remains fragile and vulnerable so long as it does not enjoy real national and popular support, which requires that it be based on economic and social policies enabling the popular classes to benefit from “development.” Social stability, which is the condition for success of a sovereign project confronted by the destabilization policies of the imperialists, is at that price. We therefore have to examine the nature of the relationships among different established or possible sovereign projects and the bases of the power systems: national, democratic, and popular project, or (illusory?) project for national capitalism?

We can then, in this framework, draw up the “balance sheet” of the “sovereign projects” currently being put into effect by the “emerging” countries.

(1) China is the only country truly engaged on the path of a sovereign project, and is the only one for which this is the case. This is a coherent project: it articulates the planned establishment of a self-centered (although simultaneously and aggressively open toward exporting) modern and complete industrial system to a mode of agricultural development based on the modernization of small farms not owned by the farmers—thus guaranteeing access to the land for everyone. But what is the nature of the objective of sovereignty being pursued? Is it a matter of national bourgeois sovereignty (whose success, in my opinion, remains based on illusions), or of national/popular sovereignty? Is it a matter of a state capitalism based on the illusion of the governing role of a new national bourgeoisie (part of which is made up of a state bourgeoisie)? Or of a state capitalism with a social dimension, evolving toward a possible “state socialism” that would itself be a stage on the long road to socialism? The answer to that question has not yet been given by the facts. Here I refer the reader to my argument about the future alternatives on offer to contemporary China.5

(2) Russia has returned to the international political stage, posing itself as the adversary of Washington. For all that, is it engaged on the path of a sovereign project? Yes, perhaps, in the intentions of the power-holders to rebuild a state capitalism independent of the diktats of the globalized monopolies? But the economic management of the country remains liberal, controlled by the oligarchy of private monopolies established by Yeltsin on the Western model. This policy, then, remains without any social dimension that would enable it to rally its people behind it.

(3) Elements of a sovereign policy exist in India, notably state-supported industrial policies of private national industrial monopolies. But nothing more than that: its general economic policies remain liberal, tragically speeding up the pauperization of the majority of peasants.

(4) In the same fashion elements of a sovereign policy exist in Brazil, carried out by big private Brazilian financial and industrial capital and big capitalist agricultural estates. But here as in India the general economic policies remain liberal, bringing no solution to the problems of poverty in a country that has become 90 percent urbanized—except that poverty has been lessened through redistributive public welfare measures. In Brazil, as in India, the power-holders’ reluctance to go further favors the ambiguous behavior of big capital, tempted to seek compromises with international capital. The fabulous natural riches of Brazil, and their exploitation under deplorable conditions (destruction of the Amazonian rainforest), further strengthen their efforts to insert the country in the established globalization system.

(5) There exists no sovereign project in South Africa, whose system remains under Anglo-American imperial control. What then are the conditions for emergence of a sovereign project in that country? What new relationships with Africa would be implied by such emergence?

(6) Can non-continent-size countries develop sovereign projects? Within what limits? What forms of regional association might facilitate their advancement?

Where to start?

With regard to the sovereign projects which the movement toward socialism ought to promote, I propose to start by identifying the priorities of action on the economic level and on the political level.

In regard to the economic level:

I suggest identifying the initial priorities with an exit from financial globalization. But take note: this involves only the financial aspect of globalization, not globalization in all its dimensions, notably the commercial ones.

We start from the hypothesis that we are dealing with the weak link of the established globalized neoliberal system. With this in mind we will examine:

  • the question of the dollar as universal money, of its future, taking into account the United States’ increasing foreign indebtedness;
  • questions in relation to the prospective adoption of the principle of “total convertibility” of the yuan, the ruble, and the rupee;6
  • the question of “exit from convertibility” of certain emerging-country currencies (Brazil, South Africa);
  • the measures that might be taken in regard to management of their national currencies by the fragile countries (especially the African ones).

Some initiatives, whose scope, however, remains modest, have been taken towards a deconstruction of the integrated globalized financial system. We here mention the establishment of the Shanghai Conference, the agreements between China and ASEAN, ALBA, the Bank of the South, the “Sucre” project, and the BRICS Bank.

In regard to the political level:

I will suggest prioritizing the implementation of strategies capable of holding in check the geopolitics and geostrategics developed by the United States and its subaltern allies within the triad.

Our starting point is the following: the capitalist monopolies of the historic imperialist (United States, Europe, Japan) powers’ pursuit of worldwide dominion is threatened by growing conflicts between: (1) on the one hand the goals of the triad (to maintain its dominion); and (2) on the other the aspirations of the emerging countries and those of the peoples victimized by and in revolt against “neoliberalism.” In these conditions the United States and its subaltern allies (linked together in “the triad’s collective imperialism”) have chosen to add to their risks by taking recourse to violence and military interventions. Testifying to this are: (a) the deployment and reinforcement of U.S. military bases (Africom and others); (b) military interventions in the Middle East (Iraq, Syria, tomorrow Iran?); and (c) measures taken by the triad to encircle China militarily, including Japanese provocations, and manipulations involving China/India and China/Southeast Asia conflicts.

But it appears that, while the violence of imperialist powers’ interventions remains in fact on the agenda, these powers find it ever harder to respond to the requirements for the coherent strategy that is the condition for possible success. Is the United States at bay? Is its decline a passing one, or is it definitive? Washington’s responses, though made in a day-to-day fashion, remain no less dangerously criminal.

In confrontation with these major challenges, what strategies of international political (or even military) alliance might force a withdrawal on the U.S. project of military control over the whole planet? The importance of possible advances on this terrain is obvious. It is not by chance that the BRICS, and behind them many countries of the South—some having to various degrees entered on the path of sovereign projects, others still mired in the ruts of lumpen development—still express refusal to support the U.S. military adventures and dare to take initiatives contradicting Washington (like the use of the veto by Russia and China)? It is necessary to go further in these directions, in a broader and more systematic fashion.


  1. *Editors’ Note: For references to this see Howard B. Davis, Nationalism and Socialism (New York: Monthly Review Press, 1967), 61–63. Davis points out that such comments were confined to Marx and Engels’s earlier works, roughly before 1860.


  1. Teodor Shanin, ed., Late Marx and the Russian Road (New York: Monthly Review Press, 1983), 97–126.
  2. Samir Amin, Three Essays on Marx’s Value Theory (New York: Monthly Review Press, 2013), 67–76.
  3. See in particular my discussion of this in The Implosion of Contemporary Capitalism (New York: Monthly Review Press, 2013).
  4. Ibid, 133–47.
  5. See Samir Amin, “China 2013,” Monthly Review 64, no. 10 (March 2013): 14–33.
  6. Samir Amin, “The Chinese Yuan and HSBC Bank,” Pambazuka no. 643, August 13, 2013, http://pambazuka.org/.

The US and tax havens like Ireland

There is a growing campaign in the US backed by US President Obama to restrict the increasing use of tax havens like Ireland by US TNC’s. The campaign is gathering traction as the administration seeks popular issues ahead of the next elections. This issue may also feature in the ongoing TTIP negotiations between the US and EU.

Below is a recent article from the NYT that give a sense of the issue.


White House Weighs Actions to Deter Overseas Tax Flight

WASHINGTON — The Obama administration is weighing plans to circumvent Congress and act on its own to curtail tax benefits for United States companies that relocate overseas to lower their tax bills, seeking to stanch a recent wave of so-called corporate inversions, Treasury Secretary Jacob J. Lew said on Tuesday.

Treasury Department officials are rushing to assemble an array of options that would essentially wipe out the economic incentive for the deals, Mr. Lew said. No final decision has been made.

“The question is, Can we do enough that it will materially change the economics of inversions so that companies will make different decisions?” Mr. Lew said in an interview. “The things we are looking at look to me like they could very materially change the economics of inversions.”



The action comes in the face of a recent increase in United States companies reaching deals to reorganize overseas, creating an explosive political issue that Mr. Obama has called a lack of “economic patriotism.” Investment banks have been counseling companies to pursue such transactions because of the potential tax benefits. Two large United States pharmaceutical companies — the drug giant AbbVie, based in Illinois, and the generic manufacturer Mylan, based in Pennsylvania — agreed to such deals last month. The Walgreen Company, owner of the drugstore chain, considered using an inversion but was unable to follow through.

“Time is of the essence,” Mr. Lew said. “We are looking at a very long list of possible ways to address the issue.”

It would be the latest move by the Obama administration to use its authority to act where Congress will not. A provision in the president’s budget would have effectively banned inversions, and Democratic lawmakers have introduced legislation to halt or suspend them. Still, while some Republicans say they want to address the issue, there has been little bipartisan agreement on how to do so.

While Mr. Lew said legislation was the “best solution” to addressing the issue, the recent flood of inversions has persuaded Mr. Obama’s team that a quicker response may be necessary. A Bloomberg analysis estimated American companies are parking as much as $2 trillion in cash overseas.

“If Congress doesn’t act, we can’t wait for months or years to go by and just watch companies make decisions as if nothing will change,” Mr. Lew said. Josh Earnest, the White House press secretary, told reporters on Tuesday that Congress should “take action on this quickly,” sidestepping questions on whether the administration would act unilaterally if Congress did not.

Mr. Lew said his “goal is actually to change what’s happening out there.”

“Putting companies on notice is, I think, part of it,” he said.

Tuesday morning, a group of Democratic senators called on President Obama to act on his own authority. “The coming flood of corporate inversions justifies immediate executive action,” they said in a letter, spearheaded by Senator Richard J. Durbin of Illinois, the No. 2 Democrat, and signed by Elizabeth Warren of Massachusetts and Jack Reed of Rhode Island.

If Treasury pursued unilateral action, there could be at least some retroactive effect because new limits would be placed on the transactions of inverted companies. Inversions could still go through, but depending on when new rules were issued, the tax strategies that made the mergers seem lucrative might be severely limited.

Mr. Lew said last month that he did not think he had power to act alone to stop the practice, but administration officials say they believe they have many more options to limit the kinds of transactions inverted companies typically use.

“They want to do it,” Senator Charles E. Schumer, Democrat of New York, said in an interview last week. “The president really dislikes the inversions, and if they feel they have a strong legal ability to do it, they will.”

With the size and pace of deals accelerating, policy makers have intensified their efforts to find ways of countering the practice, spurred in part by the fact that Walgreen had discussed it as part of a buyout of the British chain Alliance Boots.

Walgreen’s consideration of an inversion “tipped the scales to show that this is a slippery slope of inversion deals continuing and increasing in size and number,” said Nell Geiser, the associate director of retail initiatives at Change to Win, the organized labor-backed consumer advocacy group. She said the company would have faced “extreme consumer backlash” if it had made the move overseas.

It’s also a politically opportune time for the president to focus on the issue, as he works to contrast his economic vision with that of Republicans in advance of the midterm congressional elections.

The president highlighted the issue in a recent speech in Los Angeles in which he questioned the patriotism of companies that inverted for tax purposes.

“I don’t care if it’s legal. It’s wrong,” the president said. “You shouldn’t get to call yourself an American company only when you want a handout from the American taxpayers.”

Just days after the president’s speech, Stephen E. Shay, a former Obama administration Treasury Department official who now teaches at Harvard Law School, suggested in an article in the trade journal Tax Notes that it was within Mr. Obama’s power to act alone.

“I’m really concerned that we are losing a significant portion of our corporate tax base that you’re not going to get back,” Mr. Shay said.

His article referred to a section of the tax code that allows the Treasury secretary to issue rules for determining whether a given financial instrument should be treated as debt or equity. The idea would be to limit the degree to which a foreign parent company could load up a United States subsidiary with debt, which can be deducted for tax purposes, and require that any excess be designated as equity, which is not eligible for deductions.

Mr. Shay also proposed other administrative moves to reduce the use of offshore earnings without paying United States tax.

“They have the authority to go after those two incentives to do the deals under existing law,” Mr. Shay said of Mr. Obama’s team.

A person involved in the deals told Mr. Shay that without those two prospective benefits, 75 percent of the inversions underway would not occur.