Archive for Interviews

Interview with Prof Ben Fine, SOAS interview with Professor of Economics Ben Fine of the School of Oriental and African Studies in London.

PDF version of interview Interview with Ben Fine Prof Economics SOAS

Thank you Ben for taking the time to do this interview.

  1. Can you briefly outline for us what you think the causes of the great 2008 crash and subsequent years of crisis were?

Over the past thirty years, the volume of global financial assets to GDP has risen three times. That means that each unit of output has involved three times the level of financing than previously, something that would have been deplored had it been anything else underpinning provision, such as energy to produce electricity, steel to produce cars, and so on. It is hardly surprising that such a system should blow at some point, ultimately globally, with ever larger and uncontainable crises emerging at earlier points along the way.

But something else, and deeper, is involved than the increasing ratio of finance to production, and the increasing proliferation of the types of assets. What we have seen is the increasing role of finance in what might be termed economic and social restructuring and accumulation of capital. Thus, within the capitalist economy itself, more and more finance has been involved, together with financial motives and operations in what firms do. In the USA, for example, non-financial firms make as much money out of their financial dealings as they do out of their real operations. Such, what is termed financialisation, has meant, for example, increasing pursuit of short-term profitability at the expense of long-term investments for increasing productivity and wages. Together with corresponding worsening to extremes of income inequality also over the last three decades, and the priority in policymaking to restore not only the profitability of finance but of its continuing operations, it is hardly surprising that, following the global financial crisis, there should be no signs of rapid recovery.

These processes of financialisation, and their effects, are uneven within and across countries and within and across sectors of the economy. They have also, as indicated, been extended to social restructuring, by which is meant the ways and means by which social provisioning takes place, economic and social infrastructure in general and health, education, welfare, etc, in particular. Not least through privatisation directly, and through all sorts of other mechanisms indirectly such as user charges, public private partnership and contracting out of government services, financialisation has increasingly become embroiled in social reproduction, something that is vital for the rhythm and pace of accumulation.

All in all, the result has been a slower pace of growth across the capitalist world, following the collapse of the post-war boom in the 1970s, with globalised, financialised neoliberalism ultimately suffering a global crisis from which it can barely recover growth in prosperity despite the enormous interventions on behalf of finance as both the levels and efficacy of accumulation and the conditions under which it occurs have been increasingly dictated to by financial motives and markets.

  1. You defend the more traditional Marxist declining rate of profit theory which has come under some scrutiny by Marxian economists in recent time. Can you explain the theory first and then why you see it as still a strong tendency in the system?

Let me answer this question indirectly. Broadly, debate over Marx’s law of the tendency of the rate of profit to fall (and, for me at least, its counteracting tendencies, CTs) have, again for me, been based upon two false framings. The first is does the rate of profit empirically fall or not for some theoretical reason or other. The second is that given the rate of profit has fallen, for whatever reason, does this give rise to a crisis. Answers to the first question have resulted in huge debates across method, conceptualisation and theory, especially concerning the validity of Marx’s value theory and its application. Much empirical work has also been devoted to the issue of whether the rate of profit has fallen or not over particular periods for particular countries, with the presumption that crises can be explained by falling profitability (although capitalists themselves at the time did not have the benefit  of these retrospective calculations). For me, Marx’s law and CTs do not revolve around either of these framings, at least directly. Rather he is concerned with underlying forces that necessarily accompany accumulation and what I have termed restructuring of capital in answering the previous question. The law concerns increases in productivity that arise out of the accumulation of capital; the CTs concern the realisation of these developments in or through exchange. For Marx, this interaction is always contradictory rather than a simple sum in terms of profit going up or down. The issue is less this than whether the market (and non-market) mechanisms for accumulating and restructuring capital can be sustained without an economic and/or social crisis.

Now, if parodying, some argue that Marx’s law resulted in the end of the post-war boom and that the resulting crisis has yet to be resolved so that the current crisis is not a financial crisis at all but an unresolved crisis of profitability. Others argue that, especially in the USA with stagnant wages, profitability was fully restored and so the current crisis is purely financial (arising out of undue speculation and/or insufficient demand because of low wage income). These are wrong or limited, respectively, as the current crisis is one of inability to sustain and renew accumulation and restructuring of capital through what has become the major mechanism for doing so, financialisation.

  1. How do you see the recent years of austerity across Europe in terms of class? Why was it imposed and who did it benefit?

Everyone knows the bankers were to blame but they have got off scot free more or less – socialism for the bankers, capitalism for the rest of us. The imposition of austerity is indicative of the priority to restoring finance in the wake of its crisis so that the working class has been particularly hard hit even though arguments blaming them concerning unduly high economic and social wages do not hold true (although they are offered in case of the EU periphery in general and Greece in particular).

  1. I have to ask you now also about the upcoming referendum on Brexit. How would like it go? and what way do you think it will go?

The single most important thing about Brexit is political. For whatever reasons, the most horrendous coalition of forces is being put together to support Brexit and it would be disastrous if they were to win in terms of strengthening their political position, that is of the right more generally. More substantively, if a little over-simple, Brexit is about whether we want to be ruled directly by a European (predominantly German) capitalist class (think what has been done to Greece, although Britain has not offered any counterweight) or by a British one (think finance). It is hardly a choice that offers anything to working people, with the longer-term prospect being whether British finance is best served (by being eroded) in or outside the EU (as with membership of the Euro itself).

  1. Without doubt there has been a renewed interest in Marx and Marxist analysis in recent years do you see this translating into a raised level of class consciousness in Britain and, if so, will this translate into a rebalancing of forces in the country over the coming years in favour of working people?

I suspect the main direction of causation is in the opposite direction with interest in Marxism responding to developments rather than vice-versa. So the prominence and impact of Marxism will depend upon the growing strength and organisation of working people for which the unexpected and fortuitous rise of Corbyn is a welcome if fragile first step until such strength and organisation emerges and is consolidated. interview with Ernst Herzog and Richard Corell


Both authors are scholars of political economy and members of the World Association for Political Economy (WAPE). As freelance researchers and journalists they publish also in left-wing papers (like KAZ or Junge Welt) in the FRG. In the World Review of Political Economy (Pluto Journals) they have published: “Financial and Currency Crisis Undermines the Euro and National Sovereignty”, Summer 2011; “Where Will the Euro-crisis Take US To: Germany´s Third Attempt?” (Together with Stephan Müller), Spring 2012 and “Subprime Crisis and Marx´s Theory on Ground Rent”, Summer 2014.

Full interview on PDF here Interview with Ernst Herzog and Richard Corell

Q: You quote Lenin on a United States of Europe being impossible or reactionary. Well it exists now so what do you make of the European Union and how do you define it?

A: Today we can say that the more the United States of Europe become a real possibility, the more reactionary they become.

After two world wars, after the foundation of the European Coal and Steel Community, after the foundation of the EEC and finally the European Union (EU), in 1998 there began a currency union between several of the EU member states. The introduction of the euro currency is based on a temporary compromise of the ruling classes of the monopoly bourgeoisies of France and the Federal Republic of Germany (FRG). The intention is:

  • To strengthen their position against the US and Japan
  • To share out together the Eastern parts of Europe after the crush of the USSR (Russia, part of Europe is excluded from the EU by the imperialists)
  • To oppress small capitalist nations in Western Europe
  • To also oppress any resistance by the European peoples and the working-class
  • To make a stand against socialist China

We call this alliance reactionary, backward-looking and hostile to any social and democratic progress. It attempts to preserve, defend and indeed strengthen capitalism, a socio-economic system which is obviously past its time.

Eastern European states, annexed to the EU after 1989 including the German Democratic Republic, as well as smaller capitalist countries affiliated to the EU, are economically dependent on EU imperialist states because of their size and their own national industrial and banking system, as yet not fully developed. While French and German imperialism endeavour to strengthen their dominant position through the EU and to create, for example, an “economic government” of European countries, those states are becoming increasingly dependent politically. Their national sovereignty is increasingly endangered. In this context, to make a clear difference between nations which oppress other nations and those nations which are oppressed is manifestly sensible. Yet the European Union is neither a new nation nor a new state. It is, in fact, the agency of historically notorious imperialist states in Europe—a temporary alliance with developing major internal contradictions.

The obvious contradiction between oppressor and oppressed nations is concretely demonstrated in the manner in which EU member states Greece and Ireland were dealt with after the outbreak of financial and economic crises.

Q: You emphasise the role of the State as a key structure in the system and describe it is a ‘state of usurers’.  What do you mean by this?

A: Writing “Imperialism, the Highest Stage of Capitalism,” in 1916, Lenin develops the term “rentier state” or “usurer state.” “Imperialism is an immense accumulation of money capital in a few countries… Hence the extraordinary growth of a class, or rather, of a stratum of rentiers, i.e. people who live by ‘clipping coupons’, who take no part in any enterprise whatever, whose profession is idleness.” Imperialist states become rentier states in which a perpetually growing part of the bourgeoisie lives by lending money, or in other words by investing money, buying and selling bonds and shares, gaining interest and dividends, and the world “has become divided into a handful of usurer states and a vast majority of debtor states.” “The rentier state is a state of parasitic, decaying capitalism.” The cause thereof is:

The surplus value extracted from the working class within the capitalist countries finds lesser fields for being reinvested in productive manner, in industrial and rural production. It exists as money-capital in the hands of the rich eager for interest, after all for fixed income on the highest possible level. They have the banks, their consultants and their governments to guarantee an effortless and riskless life. This development encroaching on those countries makes them living more and more from fixed income, from the tributes or the rents they gain with different forms of credits, loans, bonds, shares and other forms of fictitious capital from outside their countries. The development of a so-called service society based on a tremendous deindustrialisation in the last four decades proves well Lenin’s concept of the usurer state.

The imperialist state, still existing in the form of a national state and not able to overcome this form, has the task to secure the dominant role of the monopoly bourgeoisie internally against the working class and to safeguard the interests of the monopolies externally against the imperialist competitors. After the financial crisis 2008 the rentiers (investment banks, hedge funds, etc. with the rich families behind them) used the governments and the state apparatus to pass on their losses to the working people.

Q: Marx’s theory on ground rent has renewed relevance in the context of the crisis today. What is the connection between the monopoly of land ownership in Marx’s time and the monopoly of land/housing today?

A: Marx was the first economist who developed a general “theory of ground rent”. This theory, reflecting the relationship between the three classes (labourers, capitalists and landowners) of bourgeois society, is valid for all capitalist relations of production, also today. Marx underlines: “With a correct conception of rent, the first point to arise was of course that it does not originate from the land but from the product of agriculture, that is, from labour, from the price of the product of labour, for instance of wheat; in other words, from the value of the agricultural product, from the labour applied to the land, not from the land.”

With his theory of the ground rent Marx has developed a profound theory of monopoly. He shows some consequences of this exclusive power of disposal of parts of the planet.

Since Marx`s times, capitalism has changed into monopoly capitalism.

Besides the monopoly of land ownership, which came into existence with the capitalist system, since the last third of the 19th century, monopolies have developed in the sectors of industry, trade and finance.

Under monopolist-capitalism, superseding capitalism with freedom of competition, monopolies come into existence in industry, bearing features previously subject to private property. They represent obstacles to non-monopolistic capital penetrating their markets. They can realize prices exceeding the value and realize monopolistic profits, above average rate of profit. They impose a tribute on society chargeable to the working class, the petty bourgeoisie and the non-monopolistic bourgeoisie. By their ambition to rule world-markets, monopolies stamp down the autonomic development of bourgeoisies and capitalism in many countries worldwide too. To safeguard their rule, monopolies form an alliance with semi-feudal big landowners in the less developed countries in the same way as they did in imperialist countries before. The monopolists of industry and banks, the financial oligarchy, form an alliance with the big landowners; even so the contradictions between them are not sublated. In dominating the access to land they can decide whether a piece of land is used or not used for building houses or whether wells of crude oil or other sources of raw materials are exploited or not.

Insofar the survival of the monopoly on private property of land is closely related to the survival of the financial capital and both contribute to increasing parasitism and decay of imperialism. At the same time however, contradictions between the factions of monopolists are not overcome, as soon as it concerns the share of the tribute, or the prey, and the transfer of losses resulting of crises.

Since the time of Marx these contradictions have increased, prices for housing in cities grew exorbitant, a growing number of humans are living in slums, land grapping takes place in big dimensions, wars about raw materials are on the increase as well as debt bondage for a growing number of people by mortgage loans, etc. These mortgage loans and their financialisation played a major role in the development of the 2008 crisis as described in our article in WRPE, (World Review of Political Economy; Vol. 5, Nr. 2, Pluto Journals),

Q: You draw interesting connections between finance capital, low interest rates, the price of land and the underdevelopment of peripheral countries today. Can you explain this?

A: Though, unworked land has no value, because it is not a product of human labour, it is the object of buying and selling. The reason for that is the historic transformation of land into private property. Buying and selling of land creates per se not a cent in favour of land fertility, new machinery, or jobs. On the contrary buying and selling deprives resources of productive use.

For the owner of the ground, price for land is principal rent for a certain period of use. The principal amount of rent must at least yield the same rate of return, as the rate of return of savings deposits for the same amount of money would deliver.

“It follows, then, that the price of land may rise or fall inversely as the interest rate rises or falls if we assume ground rent to be a constant magnitude” (Marx). The price of land is all the higher, the higher the rent and the lower the interest rate.

If the interest rate by tendency approaches zero— and the real interest rate (adjusted by the rate of inflation) had this tendency since the nineteen eighties—price for land tends to go to infinite and this is regardless whether ground rent has  the form of rent, lease or other forms. The same principle also explains why Warren Buffet and others were on solid ground at first glance, thus negating the risk of decreasing prices for land as a result.

The tendency of price of land to rise is also supported by other facts. Beside the “growing demand for shelter” Marx states “. . . agriculture becomes relatively less productive in relation to the industrial product the value of the agricultural product rises and so increases ground rent”. Similarly, the like has to be considered for the building industry which, in spite of important technical achievements, is still relatively underdeveloped (low organic composition of capital) and contributes therefore to an increasing rent.

The financial capital penetrates the sphere of landed property and ground rent more and more. The main connecting piece thereby is the institute of mortgage and the instrument of mortgage loans. These allow increasing control of landed property and access to land by the financial capital. After the expropriation of land in the present imperialist countries in former decades; in the period of “globalisation” the banking system and the mortgage loans were used by the financial capital to export capital in underdeveloped countries. This led to expropriation of farmers, small industries and parts of the national bourgeoisies in those countries by the take-over of agricultural land, mines and wells of resources and building sites in Asia, Africa, South America, etc. by multinational companies. In most of these cases the borrowers could not serve their loans after diverse crises broke out (currency, prices for raw material, etc.) triggered by speculations of the financial capital in those countries. Then the financial capital took over to extract more surplus value from those countries.

Q: How does Germany fit into this within the Eurozone?

A: To become a world power again, Germany pursuit mainly three goals. First goal was reached through the annexation of the GDR in 1989/90. Second goal was, to expand its influence to the eastern countries (former part of the Warsaw Pact); this happened by exporting goods and capital to those countries and through their integration into EU. And thirdly it tries to become the leading power within the EU to make a stands against the US and the US$.

Making large-scale dealings in real estate in the former GDR and former Warsaw Pact countries, taking over the important parts of their banking system and using the well-trained industrial workers from the GDR to dump the wages domestically, German imperialism developed new strength with the consequence that the German business models are becoming more unbalanced and hazardous.

As the US-investment banks had socialised the risks of MBS and CDOs by securitisation, rating and selling this bonds to banks and investors all over the globe; also German banks were involved in this crisis from 2008 on heavily. While Deutsche Bank was part of the party issuing those AAA rated but then defaulting bonds; other German banks – as well as most banks in the EU – were hit massively by those losses and are under the guarantee of the state. The row about sharing the losses was intensive. Neither the German banking system nor that of the EU has properly recovered from this. Still governments and media are forced to tell different versions about the same facts. While Irish people know that their government (by issuing guarantees for the banks and, under the pressure of the Troika, paying back the speculative money to the big US, German, French and British investors) has saved also the German banks; in Germany, people are told Germany had saved the Irish State and banks. Germany is the main power using its influence on the ECB to put on the losses of the crisis to the smaller European countries and to the working people in the EU.

Also, contradictions between the German imperialism and the US imperialism have increased since the outbreak of the crisis.

Q: Is it not overdramatic to suggest this is Germany’s third attempt to become a world power?

A: The question here is, how could German imperialism, after it had missed out during the sharing of the world between the Great Powers in the 19th century and after it had tried 1914 in the First World War to push through a redistribution of the world for its own benefit according to its economic strength and how could it to a day 65 years after its defeat by May 8th 1945 climb in such a position again (being the leading power in “solving” the Euro-crisis). Where does the power, where does the strength of financial sources result from? How did German tycoons succeed after their defeat 1945 not only to survive, under protection of the dominating capitalist power US, but also to soar into a leading imperialist power again?

On the one hand they could use the contradiction between the socialist and the capitalist camp, which developed after 1945 into cold war. On the other hand the crippled German financial oligarchy could profit on the fact that the French imperialists had get under US-hegemony too and wanted to get rid of US supremacy again. Together with the US the German tycoons perused the split of Germany and of Europe by introducing the Marshall-plan, European Steel and Coal Community and the EEC. In coalition with France they transferred the EEC into the EU to dominate Europe und to rival with the US.

The basis for the present position of German imperialists during this period was that its capital accumulation was growing faster as those of their competitors that is to say, they have been forced and they are forced to make higher profits.

Starting from scratch 1948 without government debt, more modern production facilities and lower wage costs German Imperialism became the strongest power in Western Europe from the 1970s on. As mentioned before, the annexation of the GDR and the expansion to the East later strengthened the German position enormously.

Currently, the result is that the US is still the most powerful imperialist state which has the largest economy, based on, by far, the  biggest military potential. However, it has become more difficult to force its will on the other capitalist countries. In the present development the US will continue to lose influence as leading power of the capitalist world.

We want to try to answer your question with another question. Which alternative has an imperialist country like Germany, driven by its big monopolies – which are in need of markets and raw materials to realise profits – as to take this path to become a world power again? What is different to the situation of the first and the second attempt?

Behaving like an imperialist world power can be seen in the handling of the Greek debt crisis, dictating austerity policy for all EU-countries a. s. o. As Germans we know what aspirations for supremacy meant to our people and for other peoples. That is why we try to reveal the truth on this new attempt and to fight against it together with all true patriots.

Interview with Thomas Kenny co-author of Socialism of ‘Betrayed Behind the Collapse of the Soviet Union, 1917-1991′

Socialism Betrayed

Given the instability and anarchy we have seen and are still seeing in the market capitalist system what do you see as the merits of a planned economic system? 


Only when the class character of the state has changed after a socialist revolution and when a working-class, revolutionary party sets the basic direction of policy, can there be a comprehensively planned system.

Capitalism sometimes claims to “plan.” But state-monopoly capitalism, capitalism’s current form, must leave undisturbed the privileges of private monopoly. Therefore it cannot plan comprehensively except to some extent in a wartime emergency when private capital is willing to cede some powers to the capitalist state.

The 20th century is a fair basis for comparison. The system of socialism based on working class rule, collective or state ownership of property and state planning proved a remarkable success in comparison with capitalism.

The younger generation needs to hear this truth. The socialist system proved itself capable of providing sustained, rapid economic growth over six decades, notable technical and scientific innovations, unprecedented economic and social benefits to all its citizens, all the while defending itself from invasion and other forms of military pressure, combatting subversion, sabotage, and threats, and offering economic aid, technical assistance, and military protection to other nations struggling for independence and socialism.

Consider socialism in relation to the evils of the US capitalist economy, the economy I know the best. For more than a century the US economy has been  dominated by giant monopolies. Monopolization grows ever more extreme.  The dominant world power since 1945, US imperialism is now in a state of permanent, global war. The US military is in action in scores of countries. Overseas US military bases number about 1000 by some reckonings. A $600 billion yearly military budget pays for this.

Capitalism’s boom-bust economic cycle has become more violent in recent decades. The recovery from the 2008 crash is still weak and tentative in the US. The unrestricted export of capital and jobs has de-industrialized many industrial areas, resulting in good union jobs in manufacturing being replaced by low-wage service jobs often held by undocumented immigrants, alongside the fabulous wealth of a tenth of one percent. There is homelessness for millions.

Ugly political features stem from these economic realities: a tendency to restrict (bourgeois) democracy, e.g., the US Supreme Court decision to end all restriction on corporate donations to election campaigns; the Republican Party campaign to roll back the Voting Rights Act. There is the growing paralysis of Congress, an institution that seemingly can muster the will only to authorize tax cuts for corporations, fund new wars, and strive to make the tax system more regressive.

Racism is an old US evil. It creates monopoly superprofits from high unemployment rates and low wages for most Black workers. Today, it is still expressed in police violence in Black urban areas, and mass incarceration of young Black men.

The Leninist law of uneven development operates on so many levels. Vast regions of the US South and US West, largely non-union, are home to  the most backward forms of  political belief and religiosity. The political representatives from these regions are now dominant in Congress.  We have a culture sick with gun insanity and resultant frequent mass shootings of innocents. The gun lobby always blocks reform. There is brutal treatment of undocumented immigrants. The present Administration deports them on a greater scale than the  Bush Administration did.  The vaunted health care “reform” of 2010 was written by the private insurers. We have a corporate media degraded to mindless “info-tainment. “ It excludes dissenting voices.

We have a “justice” system that operates along blatant class lines. Torture in Guantanamo and the rendition “black sites”? Nobody goes to prison except a few corporals. An aggression against Iraq based on a Big Lie by top US officials? Nobody goes to prison. A trillion-dollar bailout for banks whose illegal, fraudulent practices were the proximate cause of the crash of 2008? Nobody goes to prison. Secret NSA spying on the world? Nobody goes to prison. Pollution of the environment to the point of triggering climate change? Nobody goes to prison

A socialist economy’s superiority should be discussed concretely. Look at the main socialist country over most of the 20th century, the USSR. Bahman Azad’s fine book Heroic Struggle, Bitter Defeat summarizes its accomplishments.

In the first two five-year plans, industrial production grew at an average annual rate of 11 percent. From1928 to 1940, the industrial sector grew from 28 percent to 45 percent of the economy. Between 1928 and 1937, heavy manufacturing output’s share of total manufacturing output grew from 31 percent to 63 percent.

The illiteracy rate dropped from 56 percent to 20 percent. The number of graduates from high school, specialized schools and universities jumped. Moreover, in this period, the state began providing free education, free health services, and social insurance, and after 1936 the state gave subsidies to single mothers and to mothers with many children. These accomplishments, Azad notes, were “impressive and historically unprecedented.”

Between 1941 and 1953, the Soviet Union defeated fascist Germany and rebuilt after the devastation of the war. By 1948 overall industrial output exceeded that of 1940, and by 1952 it exceeded 1940 by two and a half times. The Soviet Union developed and forced the imperialist West into a Cold War stalemate.

But at what cost, both human and environment, does that kind of growth come?


Admittedly, problems existed, notably acute agricultural shortages, and even the achievements, made in conditions of hostile encirclement, exacted a certain cost in terms of lives, living standards, socialist democracy, and collective leadership, but the achievements had occurred nonetheless.

Social reformists love to sneer at the phrase “real, existing socialism,” a term that Soviet writers often used.  Reformism usually puts the phrase in quotation marks, holding it up to scorn.  In so doing they reveal their own political limitations. They prefer to discuss socialism as an imagined ideal, not what really developed in the harsh reality of 20th century class struggle and all its contradictions.

Twentieth-century socialism came into being amidst the most trying historical circumstances. What were those circumstances?  Imperialist war, civil war, invasion, blockade, arms race, subversion, making a beginning on socialist construction from a low level of development.

Who or what imposed those circumstances? Imperialism imposed the cost, created the emergency, created the choice: either breakneck industrialization or defeat.

The deformities and distortions that existed in 20th century socialism were due to the imperialist onslaught against the new revolutionary states, not to the intrinsic nature of socialism. I can’t prove this by pointing to a historical example, because we have no example — yet — of a socialist revolution that had an easy birth and a conflict-free childhood.

But we can find other, indirect evidence for the truth of this point. As for one kind of human cost, consider the repression that took place in the late 1930s. I like the point made by Hans Heinz Holz  “the despotic aspects of Soviet socialism occurred in the period of its encirclement.” In the late 1930s the Soviet leaders were not imagining the threat of pro-fascist Fifth Columns, which were coming to power in one country after another, financed and orchestrated by German imperialism. Austria 1934; Spain 1936-1939, and many other places. Harsh measures were necessary

Another example: the forced collectivization that took place after 1929. Its speed was dictated by the necessity of accelerating industrialization.  The industrialization would be paid for out of the heightened agricultural efficiency. The Soviet leaders would have preferred to collectivize slowly and by persuasion and example. They said so at the time.  They did not have the luxury of a slow pace.

I remember that after 1989 as Western journalists toured Eastern Europe they delighted in pointing out the mixed environmental record of, say, the GDR. But the same considerations apply. Under pressure, GDR economic planners cut corners on environmental protections. There was no internal private capitalist profit motive driving socialist enterprises to pollute.  When they were not under external pressure, the environmental record of the socialist states was superb.

Apologists of capitalism claim that, whatever its other shortcomings, capitalism is more “democratic.” Nonsense. If the word “democracy” means the empowerment of working people, then the Soviet Union had democratic features that surpassed any capitalist society. The Soviet state had a greater percentage of workers involved in the Party and government than was the case with parties and governments in capitalist countries.

The extent of income equality, the extent of free education, health care and other social services, guarantees of employment, the early retirement age, the lack of inflation, the subsidies for housing, food, and other basics, and so forth, made it obvious that this was a society run in the class interests of working people. The epic efforts to build socialist industry and agriculture and defend the country during World War II could not have occurred without active popular participation. Thirty-five million people were involved in the soviets (councils).

Soviet trade unions had powers over such things as production goals, dismissals, and their own schools and vacation resorts that few, if any, trade unions in capitalist countries could claim. Unless there is enormous pressure from below, capitalist states never challenge corporate property. Advocates of the superiority of Western democracy ignore class exploitation, focus on process not substance, and give credit for capitalist democracy to capital, not its real defender and promoter, the modern working class. They compare capitalist democracy’s achievements to its past, but, asymmetrically, compare socialist democracy’s achievements to an imagined ideal.

Similar glowing accounts could be given with respect to other socialist countries. Cuba, China, North Korea, Vietnam, Laos. Specific national conditions (isolation, blockade, partition, invasion) have affected each one of them, slowing or distorting development. In each country, the balance between the planned and the unplanned sector has been different at various stages of development.

How did the planned socialist economic approach fare in the Soviet Union?  How did it work and what were its characteristics?


The merits of a planned socialist economy are many. Faster growth of the productive forces being one. Most socialist revolutions so far have occurred in countries of medium and low development. Standards of living rise steadily. There is stable, proportionate development of the economy, instead of anarchy. Soon there is low or no unemployment. There is no economic boom bust cycle. Socialism ends the fear of technological unemployment. It is egalitarian with regard to national minorities, women, and other oppressed groups. Socialism has a massive commitment to science and culture. It ends the colossal wastefulness inherent in competition. It overcomes poverty and homelessness.

The Soviet Union, for example, not only eliminated the exploiting classes of the old order, but also ended inflation, unemployment, most racial and national discrimination, grinding poverty, and glaring inequalities of wealth, income, education, and opportunity.

In fifty years, the country went from an industrial production that was only 12 percent of that in the United States to industrial production that was 80 percent and an agricultural output 85 percent of the U.S. Though Soviet per capita consumption remained lower than in the U.S., no society had ever increased living standards and consumption so rapidly in such a short period of time for allots people. Employment was guaranteed. Free education was available for all, from kindergarten through secondary schools (general, technical and vocational), universities, and after-work schools. Besides free tuition, post-secondary students received living stipends.

Free health care existed for all, with about twice as many doctors per person as in the United States. Workers who were injured or ill had job guarantees and sick pay. In the mid-1970s, workers averaged 21.2 working days of vacation (a month’s vacation), and sanitariums, resorts, and children’s camps were either free or subsidized. Trade unions had the power to veto firings and recall managers. The state regulated all prices and subsidized the cost of basic food and housing. Rents constituted only 2-3 percent of the family budget; water and utilities only 4-5 percent. No segregated housing by income existed. Though some neighborhoods were reserved for high officials, elsewhere plant managers, nurses, professors and janitors lived side by side.

The government included cultural and intellectual growth as part of the effort to enhance living standards. State subsidies kept the price of books, periodicals and cultural events at a minimum. As a result, workers often owned their own libraries, and the average family subscribed to four periodicals. UNESCO reported that Soviet citizens read more books and saw more films than any other people in the world. Every year the number of people visiting museums equaled nearly half entire population, and attendance at theaters, concerts, and other performances surpassed the total population. The government made a concerted effort to raise the literacy and living standards of the most backward areas and to encourage the cultural expression of the more than a hundred nationality groups that constituted the Soviet Union. In Kirghizia, for example, only one out of every five hundred people could read and write in 1917, but fifty years later nearly everyone could.

In 1983, American sociologist Albert Szymanski reviewed a variety of Western studies of Soviet income distribution and living standards. He found that the highest paid people in the Soviet Union were prominent artists, writers, professors, administrators, and scientists, who earned as high as 1,200 to 1,500 rubles a month. Leading government officials earned about 600 rubles a month; enterprise directors from 190 to 400 rubles a month; and workers about 150 rubles a month. Consequently, the highest incomes amounted to only 10 times the average worker’s wages, while in the United States the highest paid corporate chieftains made 115 times the wages of workers. Privileges that came with high office, such as special stores and official automobiles, remained small and limited and did not offset a continuous, forty-year trend toward greater egalitarianism.

The opposite trend occurred in the main capitalist country, the United States, where by the late 1990s, corporate heads were making 480 times the wages of the average worker. Though the tendency to level wages and incomes created problems, the overall equalization of living conditions in the Soviet Union represented an unprecedented feat in human history. The equalization was furthered by a pricing policy that fixed the cost of luxuries above their value and of necessities below their value. It was also furthered by a steadily increasing “social wage,” that is, the provision of an increasing number of free or subsidized social benefits. Beside those already mentioned, the benefits included, paid maternity leave, inexpensive childcare and generous pensions.

Szymanski concluded, “While the Soviet social structure may not match the Communist or socialist ideal, it is both qualitatively different from, and more equalitarian than, that of Western capitalist countries. Socialism has made a radical difference in favor of the working class.”

There were two broadly different approaches to Soviet planning, 1) War Communism and 2) the New Economic Policy (NEP).  What emerged was the planned economy in the so called Stalin era, 1929-1953. Can you explain what these were, why they came about and what were their merits?


“War communism, ” in my opinion, is really a misnomer (though widely used) for the improvisational, emergency measures taken  in 1919-21 by the Soviet state when the Russian economy was staggering from defeat in the First World War and the chaos of the Civil War. It involved, in part, forcible appropriation of peasant production by the Bolshevik state to feed the starving cities. Peasant anger at such confiscations (and peasants were about 80% of the people) threatened the peasant support for the revolution. In 1921 Lenin replaced it with NEP which partly restored normal market relations in the countryside and allowed for expansion of capitalist relations of production in many areas of the economy, until such time as the economy recovered to pre-war levels.

As you suggest, there was a two-sidedness. But it would be more accurate, I think, to say that there were two main tendencies in all of Soviet politics and economic policy, a right-wing tendency and a left-wing tendency.

This two-sidededness had class roots. Two revolutionary classes made the Bolshevik revolution, the working class and the petty bourgeoisie (i.e., the middle and poor peasants). Throughout the history of the Soviet Union two trends always battled in politics: a right wing, which incorporated the ideas and methods of capitalists, and a left wing which supported class struggle, a strong communist party, and an uncompromising defence of working class leadership. These two currents appeared even before the October Revolution: the Menshevik trend, on the one hand, and the Bolshevik trend on the other. Later, this fight polarized around Bukharin and Stalin, Khrushchev and Molotov, Brezhnev and Andropov, and Gorbachev and Ligachev. The whole history of the USSR can be seen in the light of the struggle between these two trends. However, in the late 1980s, Gorbachev, along with the right wing, won a complete victory.

Your book with co-author Roger Keeran,  Socialism Betrayed Behind the Collapse of the Soviet Union,  1917-1991 has a unique understanding of the collapse of the Soviet Union, can you explain briefly how you see this historic event?


Others saw that the Soviet downfall stemmed directly from Gorbachev’s policies rather than from some structural crisis. This means that the word “dismantling” is actually a more accurate metaphor than “collapse.” Others saw that two trends had existed in Soviet politics from the revolution through Gorbachev. Still others saw that a second economy (private, illegal) had developed and grown strong in the bowels of socialism in the 30 years before 1985.

Our more or less singular contribution was to see that these phenomena were linked, that they both explained the Soviet collapse and showed that the collapse was not at all inevitable.

In the aftermath of 1991, Marxists and Communists had  trouble applying their usual, scientific  method of historical materialism to the Soviet downfall,  given the axiom, pushed since the Khrushchev era, that there was no longer a class struggle in the USSR, there was no exploiting class, that corruption and black markets  were survivals from the past, if they existed at all, and that, therefore, there was no material basis for pro-capitalist consciousness .

It turns out, we discovered, there was such a basis — the second economy. But Marxist economists had not studied it.

Our thesis was that the Soviet collapse occurred in the main because of the policies that Mikhail Gorbachev pursued after 1986. The deeper question is where did these policies come from? These policies did not drop from the sky, nor were they the only possible ones to address existing problems. They derived from a debate within the Communist movement, nearly as old as Marxism itself, over how to build a socialist society.

In order to explain the lineage of Gorbachev’s policies before and after 1985, we discuss the two main tendencies or trends in the Soviet debate over building socialism. The ongoing debate centered on this question: under the particular circumstances obtaining at any given time, how should Communists build socialism? The left position favored pushing forward class struggle, the interests of the working class and the power of the Communist Party, and the right position favored retreats or compromises and the incorporation of various capitalist ideas into socialism. In this sense, “left” and “right” were not synonyms for good and bad. Rather, the correctness or appropriateness of a policy had to do with whether it best represented the immediate and long-term interests of socialism under existing conditions. The history of Soviet politics was thus a complex matter.

On the one hand, Vladimir Lenin, who fearlessly pushed forward the class struggle for socialism, at times, favored compromise, as in the Treaty of Brest-Litovsk and the New Economic Policy. On the other hand, Nikita Khrushchev, who often favored incorporating certain Western ideas, at the same time favored a “leftist” policy of greater wage equality. We did not provide a full history and evaluation of Soviet politics but rather a useful, if simplified, backdrop for the later argument that Gorbachev’s early policies resembled the leftwing Communist tradition represented in the main by Vladimir Lenin, Joseph Stalin, and Yuri Andropov, while his later policies resembled the rightwing Communist tradition represented in the main by Nicolai Bukharin and Nikita Khrushchev.

After 1985, Gorbachev’s policies moved to the right, in the sense that they involved what might be called a social democratic vision of socialism that weakened the Communist Party, compromised with capitalism, and incorporated into Soviet socialism certain aspects of capitalist private property, markets, and political forms.

We argue that Gorbachev’s shift in policies had a material basis. The reason for Gorbachev’s shift was the development within socialism of a “second economy” of private enterprise and with it a new and growing petty bourgeois stratum and a new level of Party corruption. The growth of the second economy reflected the problems of the “first economy,” the socialized sector, in meeting the rising expectations of the people. It also reflected the laxness of the authorities in enforcing the law against illegal economic activity, and the failure of the Party to recognize the corrosive effects of private economic activity.

Are there lessons for Cuba today from this, given some of the ‘reforms’ it has introduced?

My co-author Roger Keeran and I visited Cuba in 2011 and 2014. The two articles we wrote after the trips to Cuba — and further study of the recent Cuban reforms — have reinforced our conclusion that there are lessons. But Cuba seems to have learned the lessons.

Obviously, the Soviet Union and Cuba represent two entirely different countries with very different histories and situations. A significant difference has been the economic, commercial and financial blockade imposed by the U.S. on Cuba.  Though the Soviet Union also experienced an economic blockade for two decades, the Cuban blockade has lasted longer and cost comparatively more. Now over fifty years old, the blockade has cost the Cubans by conservative estimates more than $104 billion in current prices and, if one takes into account the devaluation of the dollar against the price of gold,  $975 billion. Without the blockade, the Cuban standard of living today might well equal that of Western Europe.

Nevertheless, there are general laws of socialist construction. In spite of obvious differences, Cuba and the Soviet Union shared some features. Both the Soviet Union and Cuba had economies based on public ownership and centralized planning and had the political leadership of a Communist Party, and both Soviet society in 1985 and Cuban society in 2011 faced some similar problems, though to different degrees.

For example, both societies had two currencies, a hard currency geared to international trade and a domestic currency. The Soviet hard currency, whose use was illegal for most citizens, was limited to tourists, diplomats and a few others and was used only in hard currency shops. The Cuban hard currency, however, is not illegal, and many Cubans earn it legally by working in the tourist industry, by earning it as bonuses in certain workplaces, or by receiving it legally as remittances from relatives abroad. The existence of two currencies creates more problems in Cuba than it did in the Soviet Union.

The great disparity in value between pesos (CUP) and hard currency (CUC) (25 to 1) led to a number of problems including a growing inequality between those with access to hard currency and those without, and a brain drain from the professions without access to hard currency to those like tourism with such access.  Driving a cab and receiving hard currency tips could gain more income than teaching.  This was clearly demoralizing and inefficient.

In another example, a second economy, or black market existed in both societies.   In the Soviet Union, however, it represented a greater problem than in Cuba.  Compared to the second economy in Cuba, that in the Soviet Union had  existed  for a longer period, was more widespread and highly developed, and was often linked to national minorities and an organized “mafia.”

In some ways, the Cuban and Soviet problems resembled each other. There was a lack of productivity and efficiency, an insufficiency of quality consumer goods, a shortage of initiative and sense of ownership and responsibility in the workplace, an inadequate diffusion of computer technology, and so forth.

Moreover, one could easily find similarities between the economic remedies proposed by Yuri Andropov in 1983 or even the early Gorbachev policies and the Cuban program of actualization (“updating” in English) proposed in 2011.   For example, both reform efforts hoped to increase efficiency, productivity, motivation and quality by linking compensation to effort, by decentralizing control and responsibility, developing joint ventures with foreign capitalists, encouraging cooperatives, and allowing more latitude to private enterprise.

The Soviet and Cuban situations differed in one outstanding way. The Cuban   process of reform involved rank and file Communists and workers to a much greater extent than the Soviet one. In Cuba, from the development of the reform guidelines in 2010 through their ongoing implementation in 2014, the entire process embraced  mass involvement and the building of mass consensus. The process began in December 2010 through February 2011 with discussions by the people as a whole, followed by discussions by the party in every province, and then followed by discussions at the Sixth PCC Congress in April. In total 163,079 meetings occurred, involving 8,913,838 participants. These discussions modified or incorporated with others 68 percent of the original 291 guidelines, modified 181 others, and created 36 new guidelines. Discussion of the guidelines also occurred in the letters page of Granma, radio phone-ins, internet blogs and trade unions. One observer noted:  “A key point here is that the drafting of new employment law involves a process of consultation with the CTC (the central confederation of trade unions) so detailed and extensive that unions have a de facto veto.”

In the Soviet Union, in 1983 Yuri Andropov initiated economic reforms with workplace discussions.  Under Gorbachev, however, rank and file discussion of changes took the form mainly of public relations and photo opportunities. The broad discussions, encouragement of criticism, and building of consensus were mostly missing from the Gorbachev reform process.

Our book did show that undermining socialist ownership, planning, social benefits and internationalism required the simultaneous erosion of the authority of the Communist Party and the institutions of socialist democracy.

If any “good” has come of the Soviet downfall, it is that Cuba has learned this lesson. Cuba translated and published our book Socialism Betrayed (Socialismo Traicionado) in 2014, with a foreword by one of the now free Cuban Five, Ramon Labanino and we were invited to speak at the book launch at the Havana Book Fair.

Interview with Zoltan Zigedy is delighted to have interviewed US communist and political economy blogger Zoltan Zigedy.

Full text of the interview is available here Interview with Zoltan 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 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.

Interview with Dr. Richard Smith on ‘Capitalism and the Environment’

 Interview with Dr Smith

  1. What are main causes of climate change in your opinion?

There are two main anthropogenic drivers of climate change/global warming. The first is of course the surging growth of the human population since the middle of the last century.

When I was born in 1946, there were 2.6 billion people on earth. Today, there are 7 billion. Since we live on a planet with finite resources, even if most of those billions consume very little, this trend is unsustainable in the long run. So the world needs to have a conversation about that, means need to be provided so that people can control their reproduction and see it in their interests to help bring the global human population back down to sustainable numbers (and by means I mean not just birth control, but all the social services including pensions, socialised healthcare and so on so that people do not need to depend upon their children to support them in their old age).

But the more important driver is capitalism. For while human populations have tripled, the consumption of raw materials has multiplied many times over the rate of population growth. And that is owing to an economic system in which producers produce for market, in which market competition drives industries constantly innovate, cut costs, grow production, grow the firm, find and create new markets, push for ever shorter production/model/fashion cycles in every product line possible, thereby driving massive overconsumption of raw materials/ sinks, and so on. This is the main driver of ecological collapse because, again, we live on a finite planet. So endless growth of production is, by definition, doomed to end in collapse. But these are, I think, fairly obvious points.

  1. 2.       Climate change is not the only feature of the ecological crisis, what are its other main features?

First, resource overconsumption – everything from fish to forests, minerals to oil, fresh water, you name it, we’re unsustainably consuming it.

Second, pollution, especially toxic pollution: mountains of trash around the planet. New forms of unrecyclable trash – ewaste, etc. The wanton spraying of deliberate poisons all over crop lands, forests, etc. The use of the oceans as dumps. This will do us in in the end.

Look at China. They could turn off the coal-fired power plants tomorrow. But now that they’ve poisoned virtually all the fresh water sources, and ever more of the cropland is being destroyed by toxic pollution – cadmium, chromium, all kinds of heavy metals from all the new industries, toxic dyes and all kinds of chemical dumped everywhere. (I have a chapter on China, my original academic speciality, in my upcoming book – but see my article in New Left Review in 1997: “Creative destruction: capitalist development and China’s environment”).

So resource exhaustion and pollution, not necessarily in that order but these two are right behind global warming as our most dire threats.

  1. What would you say is the main cause of this crisis?

Again, overwhelmingly, the capitalist motor of development and overdevelopment – together with the fact that we have no democratic control over the machinery of production and pollution.

  1. In a recent paper you talk about 6 thesis on saving human life, do you really thinks it’s that threatening and, if so, what are those thesis?

It’s very interesting that back in the 70s and 80s, environmentalists who called attention to the looming threat of human-caused ecological destruction of the planet were ignored or derided as extremists, panic-mongers, and so on. At that time, most in the scientific establishment were also way behind the curve. Not anymore.

Today, mainstream science has joined, and in some ways, are leading the environmental “extremists”. Look at James Hansen, who quit his NASA job to get himself arrested as often as possible protesting against the failure of governments to anything of substance to combat climate change.

So yes, I think we face the greatest existential that humanity has ever faced. In my six theses (which I will elaborate more fully in my book), I argued as robustly as I could that there is no hope for derailing this global ecological trainwreck-in-the-making short of all out overthrow of the existing order – eco-socialist revolution.

I argued that there is a logical and functional relationship in the six theses I advanced: 1) First, capitalism is the main driver of planetary collapse, 2) the solutions to our interrelated crises are obvious, they don’t require any new technology, but they do require a new social-economic system, 3) that new economy has to be mostly (not entirely) a planned economy based on public ownership of the major means of production (just as today, lots of governments own major means of production – utilities, rails systems, internet, etc. etc.) because market anarchy and private interests cannot reorganize the world economy around the public good, the salvation of humanity the rest of the species with which we share this planet. That requires the visible hand of conscious comprehensive planning of large-scale production. I don’t see planning as the “road to serfdom” like Milton Friedman. There is no alternative to planning. The market system can only destroy us so we better figure out how to make it work.  4) Planning requires democracy: the only way to enforce the will of the common good is when everyone has an equal share in decisions (about production, pollution, income distribution, investment, and so on) that affect them. 5) The only way to make democracy work, to be actually democratic, and to prevent corruption, is to establish a society based on rough equality – fixed limits on incomes such that there are no rich and no poor, democratic rationing of most goods and services, social guarantees for all: guaranteed jobs, minimum incomes, public health care, excellent schools for all, and so on – the sorts of guarantees we are already supposed to have as our right as spelled out in the Universal Declaration of Human Rights (1948). 6) Collectively, humanity has the wealth and technical capacity to build such a democratic eco-socialist society over the whole world. Whether we will be able to overthrow the gangsters, thugs, juntas and elected frauds who currently run the world, and replace them with a truly bottom-up democratic society and economy, I have no idea. We may fail and collapse instead. But we don’t have much choice but to try.


Michael Yates, Associate Editor Monthly Review

Interview with Michael Yates Associate Editor of Monthly Review journal.

Click here for pdf version

1.      How important is theoretical analysis of the system and what role do you feel Monthly Review plays?

If we just look at the facts of the system, things like the distribution of income and wealth, the extent of legislation protecting workers, profit margins, and the like, we cannot know why these facts are as they are. To give facts meaning, we have to have a conceptual framework within which we try to make sense of them.  If we cannot do so, this tells us either that the facts are not as they appear to be (for example, profit margins are notoriously subject to idiosyncratic definition) or that our conceptual framework is inadequate. Therefore, theoretical analysis is the sine qua non for an understanding of the capitalist system. In fact, to say analysis and to say theoretical is pretty much to say the same thing. For example, how would it be possible to analyse unemployment without having a theoretical perspective to give us guidance on the questions to ask about unemployment? And for an analysis of the entire capitalist system, theoretical guidance is paramount. This is not to say that very great problems arise in social scientific theories, mainly having to do with our ability to test them, but also having to do with the power of ideology to blind us to even the clearest rejection of the hypotheses that a theory generates.

Monthly Review has played an important role in analysing the capitalist system, in that those most closely associated with it have developed a powerful theory of the modern capitalist economy, one that has generated a good deal of criticism from those who think that it is not really Marxist. However, what the theory of monopoly capitalism, first fully laid out by Paul Baran and Paul Sweezy in their book, Monopoly Capital, does is extend Marx’s seminal insights into the workings of capitalism to the modern era, one dominated by large, monopolistic corporations. Many so-called orthodox Marxists take what Marx said as the last word in theoretical analysis, ignoring the method of the master himself, which was to constantly subject his understanding of capitalism to critique based upon new developments in the system itself.

2.      In particular, how important has Paul Baran and Paul Sweezey’s theoretical analysis of monopoly capital and then the role of finance been?

I think the Baran/Sweezy theory of monopoly capital has a great deal to tell us about modern capitalism.  The writers in the Monthly Review tradition, which now must include current Monthly Review editor John Foster, have always taken the view that the works of Karl Marx must provide the starting point for any explanation of the inner workings of the capitalist economy. This means that we all accept the notion of surplus value, of the exploitation of wage laborers, who, while freer than slaves or serfs, are not free to withhold their capacity to work for someone else. This is because they have nothing but their ability to work to sell. We all agree with Marx’s idea that capital continuously organizes production to extract the most surplus value from the laborers’ work; that is, we understand that the essence of capitalist power is control over the labor process. We know that capitalism cannot be reformed so as to liberate workers from their unfreedom. Only the abolition of capitalism has any chance of doing that.

However, as Marx himself clearly understood, his work (and every work in political economy) is unfinished, and it is the job of contemporary scholars to build upon the insights of their forbearers. The key feature of modern capitalism is the giant business firm, whose access to money capital and political power allow them to set prices without the same concern for the actions of multiple competitors. These oligopolies also have funds available for massive sales efforts, intertwined with their research and development departments, which cannot be duplicated by smaller potential competitors.  The result is that the profits of these businesses are enormous and not nearly as subject to the vagaries of the ups and downs normal in capitalist economies. Furthermore, profits, as ordinarily defined, do not encompass the “surplus” available to the oligopolies. In fact, contrary to the thesis of Marx that there is a tendency for the rate of profit to fall (a tendency that we now know, as a result of new materials uncovered by German scholars involved in the production of the Marx-Engels-Gesamtausgabe [MEGA] Marx himself had come to reject), under conditions of monopoly capital, there is a tendency for the economic surplus to rise. That is, the gap between society’s total production and the socially necessary costs of producing that output tends to get larger. This creates severe problems for the stability of capitalist economies, because this rising surplus must find spending outlets if the economy is to continue to grow. The difficulty arises as a consequence of the spending-retarding effects of the nature of oligopolies, whose capital spending is so large and long-lasting that these businesses will not regularly replace their capital even if new, more efficient investments are available. Thus, advanced capitalist economies face a constant problem of insufficient demand, the product of over-accumulation. There are ways to avert the problem, mainly through certain “epoch-making innovations,” such as the automobile that create very large capital spending opportunities. However, these cannot be guaranteed through the private market. Other, short-term fixes involve various kinds of government spending, but the power of private capital inevitably places limits on this. Advanced capitalist economies are thus doomed to stagnation, that is, slow growth, wasted output, and slack labor markets.

Using recently discovered chapters that were not included in Monopoly Capital and previously unknown correspondence between Baran and Sweezy, as well as his own recent research, John Foster, in a new edition of his The Theory of Monopoly Capitalism, has added significantly to the exposition of the theory of monopoly capital. First, he shows that some part of the wages of workers is in reality part of the surplus. The pricing power of oligopolies allows firms to force workers to give back part of their wages to pay for unnecessary and wasteful components of consumer goods, such as yearly model changes in cars and glitzy packaging of many products. Wages as costs of production are higher than they are and should be reduced to account for this “profit by deduction.” Second, Foster shows the complex role finance plays in monopoly capitalism, as an essential aspect of the drive by capitalists to accumulate and as an outlet for the growing surplus. Finance gives rise to new and lethal instabilities in output and employment, and under conditions of neoliberal deregulation, to unprecedented private wealth on the one hand and unprecedented inequality on the other. Finally, Foster discusses the role of the entire cultural apparatus, which becomes an important center of capital accumulation, contributes to growing surplus as the industries that comprise this apparatus themselves become more concentrated, and serves as a powerful ideological underpinning for the system as a whole.

3.      In recent years Monthly Reviews analysis of both financialisation and the ecological crisis has been outstanding, can you briefly sums these up?

Monthly Review was one of the first places where readers could learn about the boom in finance and the increasingly dominant role finance plays in the economy. Readers could also learn that finance and production are intimately connected, part and parcel of the drive by capital to accumulate. As capital shook off the shackles of Keynesian controls over markets in the 1970s, the drive to subject the earth to global markets, which had marked capitalism from its birth but had been delayed as a result of the calamities of two world wars, a depression, and the rise of strong working class movements and national independence struggles, resumed. This required new financial instruments, to protect capitalists from, for example, changes in exchange rates and political turmoil that might threaten exported capital. In addition, the battle to end Keynesian policies was also a war against workers, and this war succeeded in driving down working class living standards. As the distributions of incomes and wealth became more unequal (as most of the growth in capitalist countries ended up in the pockets of the rich), workers were compelled to borrow money, often using homes as collateral, to maintain purchasing power. This allowed for the invention of still more financial instruments and a rush to sell them. In addition, the stagnation tendencies shown by the developed capitalist economies found an outlet for the social surplus in financial markets. No wonder, then, that finance has come to dominate our economies, and that the growing economic power of finance has greatly raised the political power of finance, as seen by the unwillingness of governments to challenge this power in the wake of the Great Recession.

Our analysis of the ecological crisis owes most to the work of John Bellamy Foster and Meszaros. The analysis is complex, but in a nutshell, the argument is that the universal connection between humans and the natural world is mediated by the social relations of production. In capitalism, the latter are those of alienating exploitation, marked by the commodification of everything, most especially the natural world, including the land. The result has been a rift between us and nature, one that has generated innumerable environmental crises, most notably today, global warming, but also the degradation food supplies, air and water pollution, and many others. This rift is also tied to the uncontrolled growth of urban areas and the depopulation of rural regions. Unless this rift is ended, we are all pretty much doomed to growing misery. And, at the same time, the rift makes possible all sorts of boom and bust cycles in agriculture and mineral production, as well as financial crises associated with these.

4.      Your journal has written of the age of finance monopoly capital, what do you mean by this?

Put simply, this is the age when the global economy is dominated by oligopolistically organized giant business firms, which are either tightly allied with financial firms or are financial firms themselves. In such an economy, financial transactions are not necessarily (or even often) directly connected to the production of goods and services (other than financial services). This means that finance has now taken on a life of its own, which can generate tremendous economic instability, which will inevitably affect production and employment. What we have is, in effect, a new level of social irrationality in a system already profoundly irrational from the perspective of most of the world’s people. One other point here is that, with so many financial instruments and money so mobile, the time horizon for making money has shortened considerably. Capital seeks money where it finds it, and this short-changes real capital investment as often as not.

5.  5 years into the crisis, can you sum up what you feel the establishment’s response and strategy has been and how successful has it been for them?

The main responses have been to shore up the financial system, to provide some relief to those without work, and to limit the latter, with an eye toward moving forward with the neoliberal project of maximizing both the freedom of capital and the insecurity of the masses. What this has meant is that the global financial elite is more powerful now than ever, and austerity is nearly everywhere the watchword.  Nothing at all has been done to undo the massive shift of income and wealth to the super rich, and little has been done to make the global economy less subject to instability. And almost nothing is being done to address the ecological catastrophes looming in the immediate future.

Given what has and has not been done, there will be no way for the ruling elites to avoid mass confrontations and revolts. The prospects for a good life are diminishing rapidly for most people in the rich capitalist nations, and the likelihood of anything but growing misery for most of humanity is pretty high.

Right now, we are witnessing the development of a global capitalist class, a global imperialism, detached from the nation state, and using governments mainly as police forces used to quell resistance. As Italian economist, Ernesto Screpanti tells us, there is a need for a global hegemon, and militarily, that is the United States. He also says that there is a need for a global medium of exchange, and right now that is still the dollar.  However, the United States is beginning to be overcommitted with respect to both of these. The global elite also need a demand driver, a country that will buy the world’s surplus goods and services. The United States seems incapable of fulfilling this role today. What this all means is that there is instability in the global system itself, and the future will see a growing conflict between those seeking global economic dominance and those victimized by this process. The outcome is anybody’s guess. But there will be no more “golden ages” for the working classes anywhere in the world. We will have to force our own golden age onto the stage of history, one in which production for social use is the standard by which everything is judged.

6. And the left in the US, how has it responded and how do you sum up the State of the left in the US?

There are leftists in the United States, but there is no left. So, the left as any sort of unified entity made no response to the crisis, because it does not exist. There have been responses by some labor unions and, of course, by the Occupy rebellion. But nothing approaching a coherent, socialist-inspired movement. Some have argued that there is a resurgence of interest among the young in Marx, no doubt reflecting the rather limited life prospects for young persons today. However, while there are young leftists who are organizing, embedding themselves in unions, and writing about labor issues, I don’t see any significant upsurge even here. A new magazine or two, a few books, certain intellectuals discussing radical ideas on social media don’t make for a left. There are still left political formations here, but they are stuck in a swamp of sectarianism. If those who have a radical perspective manage to become integral parts of various struggles—immigrant rights and organizing, public sector unions, environmental battles, anti-imperialist efforts, and the like—we could see a real resurgence of the left. However, and I can’t stress this enough, all too many leftists, old and young alike, are as egotistic and willing to champion and engage in self-serving actions. We will have to see a lot more collective efforts, a de-emphasis on careerism and notoriety-seeking, and a willingness to serve the people than we have right now. When I retired in 2001, my wife and I gave away nearly everything we own. We’ve dropped out of the consumption rat race. We help others whenever we can. This is what leftists ought to do if they can. Then it will be easier for those of us on the left who have some means to ally ourselves with those who do not. If we don’t lead by example, who will?

7. You recently wrote a book, Why Unions Matter, can you describe the state of the trade union movement in the US post the massive public sector struggles we have seen?

I wrote about this not too long ago, so here is the link for your readers: I don’t know if I would characterize the public sector struggles as massive, though both the one in Wisconsin and that of the Chicago Teachers Union were important, at least in terms of giving public sector workers confidence that they could fight back and even win some battles. However, these and others that might develop in the future will face considerable obstacles. Here is how I put it with respect to the Chicago Teachers Union efforts, which are inspiring and on the right track in terms of championing the rights of those who are being educated and the communities from which they come. (This is taken from

Most of us who see the need for a radical labor movement in the United States, or at least one that embraces the old Industrial Workers of the World motto that “an injury to one is an injury to all,” tend to see every victorious strike or Wisconsin-like uprising as the start of something new and revolutionary. However, while hope springs eternal, we should understand that powerful obstacles face all labor reform efforts, including that spawned by the Chicago Teachers Union.

First, while the CORE and the CTU won a remarkable victory with the strike, the union still faces powerful enemies: billionaires who control large swathes of the economy, the nation’s political machinery, and the media. They have the capacity to engage in smear campaigns, spy on anyone they choose, hire provocateurs, and otherwise destroy those who defy their wishes. When they suffer a defeat, they don’t crawl into a corner and lick their wounds; they find new ways to get what they want. The CTU did not manage to win the things they wanted most. As one long-time high school teacher and union activist pointed out:

[The CTU] was unable to: significantly slow the mayor’s crusade to close scores of schools; halt district funding for mostly non-union, privately run charter schools; stop the lengthening of the school day and year without adequate employee compensation; or prevent the establishment of a teacher evaluation system based to an important degree on unreliable student scores on standardized tests.

What is more, Emanuel didn’t miss a beat in continuing to close schools. His handpicked school board agreed to close another forty-nine schools, the largest mass closing in U.S. history. Draconian budget cuts have been implemented, targeting mainly poor communities while maintaining funding for schools in richer areas and continuing the move toward charter schools. Labor journalist David Bacon tells us that “at Kennedy High School, for instance, a reduction from $15 to $13 million will cause the elimination of four of its five counselors, the school librarian, a clerk and special education personnel.  Blair Elementary, which focuses on special education, is getting a 75% budget cut, and will lose seven special ed teachers, one general education instructor, and up to eight paraprofessionals.”  School principals are to gain broad new powers to hire and fire teachers and to decide how funds are to be spent, under a new budgeting scheme that lumps teachers’ pay in with every other expenditure. Each school will be allocated funds according to the number of students. Instead of the number of teachers being determined by rules for class size, staffing will be determined by principals, who will now have a fixed sum of money available to them. Therefore, administrators will have a strong incentive to get rid of tenured, better-paid educators in order to stretch tight budgets as far as possible.

The CTU has vigorously opposed the new cuts, with mass protests by teachers, parents, and students, in which scores of protestors have been arrested. These actions saved a few schools from closure. The union is planning more protests, lawsuits against the closings, and efforts to rid the city of Mayor Emanuel and hostile state legislators. A massive voter registration campaign is in the works. These are praiseworthy efforts, but they are defensive and certainly not assured of success.

Second, while the joining together of teachers and communities is essential to the consolidation of both union and citizen power, more solidarity will be needed if a labor movement worthy of the name is to be built. The working class itself will have to be mobilized, beginning with members of the teachers’ unions nationwide and spreading to those of other unions, in Chicago and everywhere teachers are on the march. Here prospects are not very promising. The American Federation of Teachers (AFT) and the National Education Association (NEA) long ago abandoned the militancy that marked their beginnings and embraced the business union model, focusing strictly on wages and benefits, forming partnerships with management, and ignoring issues of social justice. As what is happening in the public schools now shows, this was a recipe for disaster, one that continues. As labor journalist Lee Sustar points out, conservative leaders still rule the teachers’ unions: “AFT President Randi Weingarten has been directly involved in negotiations in New Haven, Baltimore, Pittsburgh and Cleveland, in which teachers abandoned their longstanding opposition to merit pay and accepted the weakening of teacher job security.”  This past April Weingarten embraced the Common Core State Standards for mathematics and language arts, which were developed by school administrators, college professors, and representatives of private education companies. These standards were, in effect, imposed by the federal government on the states with the threat of denial of funds under Race to the Top. They were not tested, sanctify dubious “skills,” and do not have the benefit of input from either public school teachers or parents. Where they have been implemented, standardized test scores, tied to the standards, have plummeted, delighting those who have been attacking the public schools, who hope that the poor test results will drive communities to abandon them in favor of charter and private schools. Weingarten did urge a moratorium on using test results to punish schools and teachers, until the standards can be made to work effectively. She thus sounds a progressive note while accepting the premises she should be rejecting out of hand.

If the teachers’ unions are unlikely to aggressively support the CTU and other radical local union actions, the rest of organized labor is still less likely to do so. Support might come from local unions, but, except for the United Electrical Workers and perhaps a few others, national unions will be missing in action. These are still mired in the muck of labor-management cooperation; they are top-down autocracies, afraid of their own members. Like the AFL-CIO, the federation to which most of them belong, they are joined at the hip to the Democratic Party, whose leaders and major money donors support Rahm Emanuel and not public school teachers.

Third, rank-and-file insurgencies, in and of themselves, do not guarantee that a union will be radically transformed. The new leaders are susceptible to cooptation by employers and political elites, and to a retreat to business as usual when times get tough. Creating a new, more democratic culture within a union is hard work; it requires patience, rank-and-file education programs, a willingness to trust the members, and a commitment to a permanently adversarial relationship with those sitting across the bargaining table.

Finally, the fact that a group of reformers gets elected to lead a union does not mean that the union will embrace the kind of class conscious, anti-capitalist perspective that alone could help create a labor movement. CORE’s commitment to embed itself in the communities that teachers serve, especially those where poor, mainly minority parents live, is important. We are facing the imposition by our economic masters of what promises to be unending austerity, and those most supportive of CORE have and will continue to suffer most as a result. An alliance of teachers (and other public sector workers) and those who most need quality schooling (and other public services) could be a powerful building block of a radical politics. But to make such a politics a reality will require radical education—of teachers, students, parents. Every action taken by the union must be complemented by education: history, political economy, ideology. Only in this way can we come to understand why we face austerity, why our schools are being closed, why our communities are being laid waste, why certain topics are ignored in our classrooms.

The promise of public sector unions has been debated for at least forty years. Perhaps some teachers have finally seen the light, and, in the face of unprecedented attacks on them and public schools, are beginning to create new unions, new alliances, a new politics in our towns and cities. As always, I am hopeful.

    8.  Has there been any noticeable shift to the socialist left in the US?

In some polls, young people, say under thirty, claim to be more favorably disposed toward socialism than capitalism. Whatever this means, it probably reflects the fact that younger men and women don’t see capitalism as being able to deliver the goods to them. They are fearful, disaffected, insecure. Some are willing to organize to do something about this. So are many others who are older. However, this does not mean a shift to the socialist left, and if it did, I don’t know where this left would be. As I said before, there are socialist organizations, but no real left exists in the United States. So my answer here is no.

9. Globally, how do you describe the role played by the US?

I answered this, in part, above. The United States is still the world’s gendarme. The argument that it is losing its hegemonic power is perhaps partly true (witness its backing down from all-out attacks on Syria), but with all the weapons it has at its disposal, with it omnipresent military bases, with its unparalleled  capacity to spy and engage in espionage, with its own docile population, I wouldn’t press this argument too far at present. It continues to train the agents of repression and oppression around the world. The United States still issues the world’s medium of exchange, and this gives it great economic power. So for now, the United States is the world’s hegemonic power, the one others rely on to maintain the climate necessary for capital accumulation. With the decoupling of corporations from national boundaries, things are changing, but it is too soon to make firm predictions about the future. Except to say that we are in for a long period of periodic turmoil, all bounded and constrained by impending ecological disaster.

Interview with Emeritus Professor John Foster

Below is an interview with Emeritus Professor John Foster, Social Sciences, University of the West of Scotland on the crisis.

Interview with Prof John Foster

Describe the current crisis

It is a capitalist crisis affecting the most developed capitalist economies – the United States, Japan and the dominant EU states – and the economies most closely dependent on them.  Those countries with significant state sectors, particularly the BRIC countries, continued to grow vigorously through the first five years of the crisis as highlighted by the 2012 UN Trade and Development report.

The origins of the current crisis

The crisis emerged in the financial sector as a consequence of speculation in debt, the creation of ‘fictitious capital’ and the inability of some banks to cover obligations.  An economic crisis followed as the scale of fictitious capital became manifest and new investment ceased.

The underlying causes were:

  • Financialisation – being a combination of the deregulation of financial markets, making for the growth of unsecured speculative lending by banks, together with an intensifying concentration of the ownership of productive assets and their increasing control by a narrow range of financial institutions


  • The long-term decline in the labour share of national income in most advanced capitalist economies – particularly the US, Britain, Germany and France – as production was outsourced to cheaper labour venues in eastern and central Europe, Africa and Asia after the demise of the Soviet Union and the concurrent decline in vigour of trade union organisation


  • A long-term increase in the relative cost of subsistence goods as countries in Asia and South America industrialised and placed new global pressures on supplies of food and fuel


  • A decline in the pace of innovation in capital goods arising from the growing ownership of productive assets by financial institutions with short-term profit horizons and the contraction of public sector investment programmes


  • The short-term maintenance of mass demand for subsistence needs, such as housing, through bank lending – leading to high-risk, high profit speculation in unsecured debt on a massive and ultimately unsustainable scale.

How useful is Marxist political economy?

It is essential.  Without an adequate explanation  of causes counter-crisis remedies are likely to be misconceived – even on capitalist terms.

Non-Marxist explanations stress:

  • Psychological factors such as investor confidence (Keynes’ animal spirits)
  • Lack of labour market flexibility preventing ‘market clearing’ crisis resolution: lower wages stimulate new investment
  • The unsustainability of non-wage costs of labour reproduction such as benefits, pensions and social services

The resulting remedies, central bank credit creation, wage restriction policies and major cuts in social services have now been in force for six years and have failed to create anything but the most tepid recovery.  Britain’s GDP remains 3 per cent lower than that in 2007 although real wages have fallen below their 2003 level.

Marxist explanations focus on the basic contradictions of a system of production based on the private ownership of the means of production.

These contradictions are:


The concentration of ownership in fewer and fewer hands as the nature of production becomes  ever more social in character and dependent on the combination of many different processes.  Arising from this concentration of ownership, the tendency to monopolisation and, as Marx pointed out in Capital Volume III, the merger of the ownership of productive capital with bank capital leading increasingly to the creation of fictitious capital and the dislocation of capitalist exchange.

Medium term

The dependence of capitalist production and its calculation of profit on the labour value of commodities.

The resulting contradictions are most easily understood if the economy is considered as a whole in terms of manpower planning as used in the last war.

The amount of labour power available to capital to produce investment goods and for its own consumption is determined by the surplus available over and above that required for the production of subsistence goods for the maintenance of the labour force.  The ratio between the two is described as the rate of exploitation.  Its size varies and is dependent on the ability of capital collectively to extract additional or surplus value from labour in the course of production over and above the cost of its reproduction.

The rate of profit is measured by the value of this ‘surplus’ living labour as against the cost of living labour involved in producing subsistence goods plus the replacement cost, in terms of living labour, of all ‘capital’, that is, ‘stored up’ labour embodied in capital goods utilised in production.

The key medium term contradiction that results is the tendency of the rate of profit to decline – as living populations of labour tends to increase more slowly than the rate at which capital, in terms of stored up labour, is accumulated.   There are, however, offsetting factors.  It is these that provide the analytical framework for assessing the nature of medium-term crises – like the present one.

These are:

1. The ability of capital to shift the ratio between surplus and subsistence uses of labour by absolutely reducing consumption by driving down wages.  This increase in the absolute rate of exploitation has its limits.

2. The ability of capital to cut the labour cost of subsistence goods – either through technological innovation or through securing cheaper supplies externally.  This results in a relative increase in the rate of exploitation by releasing more surplus labour over and above that used for reproduction.

3. Cutting the replacement labour cost of capital goods through innovation

4. Exporting capital to venues where there is a higher rate of exploitation

The protracted and difficult character of the current crisis has been caused by:

  • the scale of fictitious capital creation which has to be treated as ‘real’ capital/stored up labour
  • the long-term decline in innovation as a result of a fall in levels of productive investment as against speculative investment (and intensified since 2008)
  • the relative increase in the cost of subsistence goods as pressure is placed on global resources through industrial development elsewhere
  • the decline in the areas of the world available for ‘safe’ or ‘high profit’ investment over the last decade

Hence the continued focus of crisis-resolution measures in the advanced economies on

  • Increasing the absolute rate of exploitation
  • Rendering new areas of the world ‘safe’ for investment and preventing other areas from becoming ‘unsafe’

Neither response has been very successful and the first is in the short-run directly counter-productive because it cuts demands for consumer products and hence investment in labour-saving technology [it will depend for its success on the longer-term re-tooling of the economy towards luxury consumption to match the new income distribution].

As a result of these policy failures governments – especially in Britain, the US and Japan – are relying on sub-Keynesian solutions of currency devaluation and increasing money supply.  However, these also are counter-productive in the current stage of capitalist development as they do not result in productive investment and innovation but remain within the financial system and create asset bubbles which further increase the dead-weight of capital.

This is one consequence of capitalist economists failing to understand their own economies in Marxist terms – as well, of course, of the self-interest of the super-rich who benefit.

What have been the lasting changes in the capitalist economies?

The two most fundamental have been:

Financialisation in terms of the concentration of ownership of the means of production in investment banks and the ‘alternative investment’ sector.

The increasing role of the State in maintaining the conditions required for extracting profit.  The protracted and dangerous character of the current crisis has required an unprecedented increased in the state regulation of, and support for, the financial sector and of the state redistribution of revenue to the private sector through the privatisation of state assets and services for the social reproduction of labour. ‘National’ finance capital is
today more, not less, dependent on its ‘own’ state than before.

Globalisation is itself not a new feature of capitalism – being an essential feature of its development since the 17th century in terms of the internationalisation of markets and movements of both capital and labour.

What is relatively new is the emergence of ‘global’ and regional institutions for the negotiation of terms of trade between states.  However, the actual function of these institutions is far more specific: to mediate relations between dominant (imperialist) powers and subordinate states – as in the case of the IMF, WB, NAFTA and in Europe the EU and the ECB.  These have virtually no role in regulating the currencies or international trade policies of the major imperialist powers.  The US, Japan and Germany make their decisions on these matters.

Characteristics of capitalism today

  • An intensification of the contradiction between the increasingly social character of production and the private character of appropriation and ownership


  • An intensifying contradiction between monopolitisation/financialisation and the ability to sustain the pace and scale of investment required for innovation

In consequence a re-emergence of systemic challenges from state relying on a degree of social ownership of the means of production – most notably China.

However, it would be incorrect at this stage to overestimate the depth of these contradictions and any resulting challenges.  Capitalism has shown itself previously able to overcome – as in the 1930s and 40s – what appeared to be fundamental crisis.  More critical still, capitalism will not be replaced automatically.  Any replacement will depend on the working class and its allies having the cohesion and sense of purpose to impose a new system and dismantle the current state system on which monopoly capital depends.

What is austerity in Europe designed to do?

It has a two-fold objective:

1. To increase wage flexibility through a long-term reduction in labour’s collective bargaining power.  The neo-liberal assumptions of the EU make this the only way of attempting to secure a post-crisis return to equilibrium.

2. To effect a step change in the political/institutional relations between the dominant imperialist states and subordinate states in the EU – with state power being concentrated in the hands of the former and their finance capital elites.

Why have the massive injections of capital into the US economy not resulted in job creation?

The injection is of credit/fictional capital and, as a result of the financialisation of the US economy, this has not resulted in productive investment but has simply added to the scale of speculative investment in financial assets – particularly equities.

The only successful  injections of capital have been those where the state has directly financed the car industry ($24 billion) and, far more powerfully, paid for specific hardware and software for military purposes (in excess of $500 billion).

Can capitalism be revived by Keynesianism ?

The effectiveness of Keynesianism in the past depended on stimulating investment in production by dominant monopoly producers through an inflationary expansion of money supply and sometimes the direct creation of consumer demand through employment-creating projects.  This operated to redistribute income to those who could control their prices at the expense of those who could not (small business, farmers, third world producers) and therefore gave large-scale capital the incentive to re-invest.

This variant of Keynesianism operated very effectively between the 1940s and the 1960s in a period when it was politically necessary to restore the legitimacy of the capitalist system.  It was less so from the 1960s in face of economic and political resistance from third world countries, small business and labour – resulting in inflationary crises.

This form of Keynesianism would not be very effective now, as already noted, because of the scale of financialisation.  Keynes always insisted that the multiplier effect arising from employment in the creation of real goods.

However, a variant of Keynesianism has been advanced by Hyman Minsky and his associates.  This proposes to counteract the financialisation of the economy by the state take-over of banking and its use by the state to facilitate reinvestment in all areas where there can be a productive (exploitative) relationship between capital and labour (which would remain under private ownership).

It is unlikely that this approach will be introduced unless the legitimacy of the capitalist system comes under very much more substantial political challenge than exists at present.

What demands should be made in ‘building socialism’

Two caveats:

1.  Any answer must, in its specifics, be matched to particular countries

2. ‘Demands’ by the working class cannot be related to ‘building socialism’ (which can only be undertaken after the rupturing of capitalist state power) but to the period preparatory to it

In this period of capitalist crisis the demands of the working class should have two main objectives

  • Strengthening the collective organisation of all working people: their confidence, their ability to defend their immediate interests – in all spheres – and their political understanding of the class nature of capitalism


  • Developing political alliances with small producers in ways that expose the effects of finance capital control and thereby expose the class character of its state power

The resulting demands would, in important respects, be different in Britain and Ireland.

Significant challenges in Britain

There have so far been only quite limited demonstrations of popular discontent in Britain compared with Spain, Portugal or Greece – particularly surprising given the 15 per cent cut in real wages.

There are, however, some developments that do worry the British ruling class

a) the leadership of  a number of key trade unions has shifted to the Left in a way not seen since the 1970s even though the trade union movement is much weaker than it was then.  This has been manifested in the support of the TUC for the People’s Charter and in 2013 for the People’s Assembly and its programme of co-ordinated industrial action and civil disobedience

b) the cohesion of its wider political base, essential for the parliamentary control of the Conservative Party, is beginning to fracture most notably through the rise of UKIP and its challenge to the EU (membership of which is of central importance to the City of London and the strategic alliance with the US)

The government’s response has been:

a) to step up the promotion of racist interventions aimed at immigrants and asylum seekers

b) to seek to pit those in work (‘hard-working people’) against benefit seekers

c) to divert opposition to the EU into a token renegotiation of the terms of EU membership particularly aimed at winning back support from small and medium business

d) to seek to break the political links between the trade union movement and the Labour Party to halt any parallel politicisation to that which occurred in the 1970s and 80s

Mobilisation for the People’s Assembly may help to offset a),  b)  and d).  So far there has been only limited success in raising the issues of democracy, popular sovereignty and the EU in the trade union movement – essential to offset  c) and develop a more strategic alliance between the working class movement and other strata.


Interview with Professor Denis O’Hearn

Interview with Prof Denis O Hearn

Can you outline for us briefly the main thesis of your seminal work, The Atlantic Economy?

I was concerned with two trends that have impaired not just the long-term analysis of Irish development but of other localities/regions. First, there is a tendency from one side, particularly some historians and economic historians, to see all events as local and to ignore or at least downplay the global context of local development. On the other hand, global analyses such as Immanuel Wallerstein’s  version of world-systems analysis, tend to have a top-down or centre-out view of world-systemic processes. Important changes and relations among regions or localities are viewed as if they are determined by the system and then work themselves out in localities. I think the long view of Irish development shows that localities like Ireland – given such things as path dependency and possible switching points away from given paths, and in the context of imperialism – have limited agency, that things work out differently in each locality and at different times, and that the capitalist world-system is made and remade NOT by the mechanistic workings of the system’s “laws” but by the ways in which local and global interests clash and interact across time. I think a particularly important part of this is the specific nature of each hegemonic regime (Britain, twice, then the US, and now…who knows?) and its associated strategy/regime of accumulation. But we must also pay careful attention to how local parties including elites and masses try to navigate the waters that are imperfectly defined by these attempted regimes of global accumulation.


What do you mean by, and what are the main features of, a periphery or semi-periphery economy?

In my work, peripheral and semi-peripheral regions/economies are primarily defined (and distinguished from core regions/economies) by the nature of innovation and by their reactions to innovations. Innovations of technology and social relations of production (Joseph Schumpeter’s “creative responses”) tend to aggregate in core economies, while semi-peripheral economies may try to compete for a time by what Schumpeter calls “adaptive responses.” The distinctions between these two kinds of activities are not simply determined by the market but are also created by economic, political, and military power. Thus, the British state and its institutions such as the British Board of Trade ensured that core regions around Liverpool/Manchester would have regular access to the best cotton wool during early cotton industrialization. This was combined with new developments in spinning and weaving machinery, steam energy, innovations in the factory system, and trade access to many ancillary materials and industries that supported cotton. All of these things made England a “core” region. Ireland as a semiperipheral region, by contrast, could compete for a time by the “adaptive response” of using water power and extending cheap labour into the countryside but only in old patterns of production that took place in the home or in weaving sheds. Eventually, the concentrated factory-based industry in England won out. Ireland was changed utterly by the process however, first, as relatively mundane industries (linen, basic non-advanced shipbuilding) were introduced in place of its cotton industry; and, second, as the countryside was deindustrialized and people were displaced (eventually by famine) or moved to the (semi-peripherally) industrialized northeast regions around Belfast, Lisburn, Armagh. Generally, peripheral regions unlike semi-peripheral ones lack even adaptive or mundane industry (or, today, they lack certain semiperipheral service activities). Thus, there is a distinction in the nineteenth century between semiperipheral Belfast and the RE-peripheralized rural areas of Ireland. Of course, this is the specific way things worked out in the 18th/19th centuries. There was a different and equally interesting story under US hegemony after the Second World War.

There is a lot of talk today about core and periphery in the context of the Eurozone, how do you see the current crisis as fitting into your theory of Ireland’s position within the Atlantic Economy?

Some people make the mistake of defining core-ness or semiperipherality by per capital income levels. By these standards, Ireland moved into, indeed moved to the top of the European core after 1994, under the so-called Celtic Tiger. But we now know that the rapid rise of incomes after 1994, while real in many ways, was highly dependent on foreign (US) capital. Their activities generated much local income, mostly for a group of builders, bankers, and speculators who had no real presence in the innovative parts of the world-economy. There was some limited innovation in software, as Sean O Riain has demonstrated, but most of this was quickly subjugated under foreign capital. The huge influx of foreign investment in US electronics and pharma production, which created the “Celtic Tiger,” ended in 2000/2001, and foreign capital actually began to disinvest. This was the beginning of the crisis, but it was hidden by the speculative activities of local capitalists, many in construction, who benefitted from the Celtic Tiger and who had discretionary capital that had to be invested somewhere. Of course, we all know about what then transpired: the property bubble, speculation, corrupt bank activities and so on. When the “crisis” actually hit, it only confirmed what was already going on but it was also misinterpreted by most economists and economic analysts as a “banks crisis.” Yet the “banks crisis” was only the immediate form of a much deeper crisis that had its origins in the capitalist world-system and its inability to create sufficient demand for what its companies were producing. This was already happening by 2001-2002.

It is also important to note that the rise of incomes in Ireland was accompanied by an increasing element of unreality, in the form of a widening gap between gdp (the measure that the Irish state and Eurostat use to represent “wealth”) and gnp (a better measure of the wealth that actually remains in a country). By 2011, Irish gdp was 25% higher than gnp, so even disregarding in the inequality that accompanied the Celtic Tiger, it was largely a fraud in terms of its economic growth.


How useful is Marxist political economy in understanding Capitalism?

It is still very critical, in one form or another, and with adaptations. Marx’s analysis of expanded accumulation and of the hidden abode of labour as a commodity is still at the centre of how we must understand capitalism both at a world and at a local scale. But it is an abstracted analysis and capitalism has changed in many ways. Thus we need many other tools in our box. Joseph Schumpeter, and post-Schumpeterians like William Lazonick, added a crucial understanding of innovation, which has also been taken further by people like Alfred Chander and his analysis of the giant vertically-integrated global firm. People like Stephen Bunker added to our knowledge of natural processes whereby raw materials are created and social processes whereby states and associated capitals achieve economies of scale and scope in their efforts to extract increasingly remote and expensive resources. Giovanni Arrighi and others made important advances in how we understand changes in the regimes of accumulation that characterize world capitalism, and the shifting importance of territory, forms of trade and market control, in profitably exploiting those regimes. I think Paul Sweezy and Paul Baran’s analyses of monopoly capital and “realization crisis” (the consistent inability of capitalism to generate sufficient demand to sell its product) are still crucial, although they work themselves out in ever different ways at different times and places. And, speaking of crisis, there is a huge literature that is steeped in Marxism that is absolutely crucial today, including, I think, the model of “structures of accumulation” that was developed by people including Terry McDonough in Galway.

But I also think traditional Marxist analysis is not sufficient. There are other analyses and strategies including, for example, the work of anarchists, which supplement Marxism in crucial ways. I think Marx even understood this in much of what he wrote, especially in letters and short pieces rather than his abstract analyses of capitalism as in Capital. Unfortunately, Marxists often take his abstractions and try to apply them as if they are descriptive accounts of or recipes for understanding actually existing capitalism.


What do you see as the main characteristics of Capitalism today and what implications does this have for workers both in core capitalist economies and in peripheral economies?

My main concern is that capitalism has produced a huge and increasingly urban working class (including informal workers), not just in Europe and North America but throughout the world. It appears that an increasing proportion of the labour that was induced to come to the world’s urban areas is no longer needed nor wanted by capital. Many of these people are racialised: African-Americans and Latinos in North America; Turks, Africans and East Europeans in the EU; Kurds in Turkey; indigenous people everywhere. When they are both hated by large segments of the population and only marginally needed by capital, what do you do with them? Well, you criminalize them and you throw them into prisons. I have witnessed both in the United States and in Turkey, my two current homes, a vast rise in the number of people in prison and most disturbingly a rise in the inhumane practice of isolated imprisonment (in supermax prisons and Secure Housing Units in the US, in F-type prisons in Turkey). Following the US example, Turkey’s prison population more than doubled in the past six years. And prisons are not the only answer to unwanted labour. In Ireland, we saw the invitation of Poles, Portuguese (well, Cabo Verdeans and other postcolonial migrants), and Romanians, only to be “thrown away” in the current crisis. All of these processes of how we treat “marginal people” call for very good research, rather than the kind of knee-jerk and essentializing, often shoddy, work that has been done so far (particularly by the mainstream, but also by Marxists and especially by “postcolonial” and “subaltern” studies).

Where does Ireland fit into the global system today and what are the dominant forces at play in the South today?

Do you mean the South of Ireland or the global South? Unfortunately, the South of Ireland seems to be captured in this see-saw of Tweedle-dee Tweedle-dum politics, without a really coherent left alternative. Thus, the population is left waiting for the next global upturn so that a dependent Irish economy can hook onto it and export-led growth will work once again as it did in the 1990s. Yes, there are parties that have a “left” platform but they are either timidly leftist (Sinn Fein) or orthodox Marxists. Labour is of course beside the point in the same way that the Social Democrats on the continent are. They turned their backs on social justice in favour of other goals such as fiscal responsibility. Perhaps the most distressing thing about the recent crisis has been the way that the conservative powers of the EU have been able to rein in any alternatives that have emerged in the European periphery, largely I think because of the betrayal of the left by social democracy. That is not to say that we are without hope, but most of it is on or beyond the periphery, starting with Greece but really going beyond the borders of the EU. And most of the hope comes from social movements and actions that supersede political parties including leftist parties in the traditional sense. I mean, looking at recent Egypt as an example, whenever political parties of any kind get involved they fuck things up and when there is forward movement it is through the combined actions of masses of people who are organized in different ways than we are used to seeing. They camp out in squares and they force social change, even if so far it has been tentative and incomplete and may even depend (and I shudder) on armies.

Structurally, Ireland is just about where it has always been, stuck in a dependent relationship with global (mostly US) capital, its economic ups and downs largely determined by global markets. The Celtic Tiger period was a historically unique one in terms of the force and concentration of investment flows that enabled rapid Irish economic growth – I do not think we will see that ever again, although there will be recoveries and dips. The secret is how to move out of this particularly dependent pattern of accumulation and into something more autonomous, and this goes back to the things I mentioned at the beginning of my answer to your question: if the Irish along with the other masses of dispossessed in the world can find new, less hierarchical ways of organizing and working together, and if they can orient themselves toward things that are more about quality of life and less about economic growth, then we may have a chance. This new way forward has not been very well defined anywhere yet. But there are hints about a way forward, particularly in Latin America. These seeds of change are seen in the original “occupy” movements such as the Zapatistas in Mexico and the Movimento sem Terra in Brazil, but also alternative state projects in Brazil (the attack on poverty and inequality), Ecuador, Bolivia, Venezuela and, most importantly, in the idea of regional associations like ALBA that are not built on traditional economic market models but on cooperation and solidarity. Those are the interesting forces at play in the global South today and I think the South (and North) of Ireland can learn a lot from them in terms of organizing and in terms of goals.


Where does the North fit in and what is its economic relationship with Britain and with the South?

It seems to me that an unfortunate by-product of the peace process and of Northern devolved government has been a loss of dynamic toward a new and different kind of society and economy. Yes, many of the daughters and sons of my generation have largely decided that religion is unimportant – I praise them for that and I think they are our hope. But beyond that, where is the dynamic for change? The most hopeful thing at present seems to be that any dynamic for change has moved to the regional level, rather than either the British or Irish level. What may happen in Scotland, for example, could have positive effects on Ireland and on Britain. And perhaps some of the tendencies among younger people in places like Greece, Spain, and parts of the Balkans might just rub off on Ireland. At any rate, changes of the northern relationships with Britain as with the South move pretty glacially, sometimes for better and sometimes for worse, so any force for positive change will probably come from as yet undefined sources.


Has the material basis of Unionism in the North changed and what, if any, is its material basis as an ideology today?

It has changed utterly. There has been little material basis of Unionism for a long time. Unionism is largely an ideology and it belongs in the dustbin of history. Recently, I have been living through the rise and consolidation of Sunni majority rule in Turkey. It all looks so familiar. Yes, there is some material basis for it, in this case mostly in the form of populist policies in healthcare and housing that are aimed not so much at consolidating the Sunni faithful but at bringing in wavering supporters at the margins. Increasingly, though, we are experiencing forms of frankly neo-fascist social control, backed by a sectarian police force, which is not based in material life but in an ideological, pseudo-religious desire by the leaders of state to force their will on an unwilling minority (which may turn out to be the majority). It all looks so familiar. And in the context of northern Ireland, this kind of sectarian majority rule just seems like a relic these days. It has no basis in economy, jobs, housing, education. If a few hold onto Unionism as an ideology, it is just a rotten form of a will to impose morality, or, for some, to bring back sectarian material advantages that are thankfully gone for good. We see this kind of thing in the religious right in the US, in Hindu nationalism in India, among Sunni especially but also Shia religious zealots. It is a cancer that will eat away at any kind of decent society unless we overcome it as a people. Again, I have some hope for our children and grandchildren, as these things become meaningless to their lives. I am hoping that we are living through the swansong of these sectarian and racist majority-rule ideologies. But unfortunately many of the institutional forms of inequality remain, and the position of African-Americans in post-civil-rights US is the clearest example of that.


We are obviously seeing austerity, in various degrees of measures, being rolled out across Europe. Why austerity? What is it actually designed to do?

It is a last gasp of a class of economic animals that convinced themselves that the so-called Washington Consensus was the wave of the future. Against all odds they have clung to this. It is partly by the design of the Tony Blairs and Angela Merkels of this world, but also partly a historical accident. It has not worked and cannot work but certain politicians and economists cling to it because of their arrogance, their inability to admit that they were and are wrong. And of course, segments of the capitalist class gain from it. It has been widely discredited in Washington, its home, so why is it still near-hegemonic in the EU centres of power? I hope it will go away. Whatever replaces it will have to be better but I haven’t much faith in any capitalist alternatives.


Many alternative economic proposals from ‘left’ sources seem to want to try and revive a capitalism from a previous era, namely through Keynesian inspired stimulus plans, can this work in today’s economy?

Keynesianism is better than austerity. With all of its problems, the US has bounced back from the recent crisis to a greater extent and quicker than the EU has, even despite the restraints put on Keynesian policies by the tea-baggers in the US House of Representatives. But obviously this is not a solution, at least not beyond some immediate minor amelioration of some of the ills of contemporary capitalism. It still leaves vast numbers of people, citizens and migrants, unwanted and potentially criminalized, while others are just marginal. But this has always been the case. Keynesianism was designed to save capitalism. It can only do so partially and temporarily, and it then creates new contradictions that provoke new crises. If anything, we know more than ever before that capitalism of any kind is crisis-prone and that the real problem is systemic. Thus, while I have sympathy with the efforts of some people on the left to do something practical because people are hurting, especially in areas such as healthcare and the environment, I also think that we must keep our eye on long-term systemic change. Capitalism is still the problem.


If Ireland, north and south, desires more economic control what policies should it pursue?

After years of rabid opposition to the EU I find myself ambivalent. We have to admit that the EU has protected certain human rights and civil liberties against conservatives at home. On the other hand, the EU has obviously removed important economic instruments from the hands of the Irish state and Irish policymakers. Those things are still important to a degree. But I think we are misleading ourselves if we get caught up in that discourse. Real change cannot depend on the state and whether we have access this instrument or that because the state will always let us down, whether we are inside the EU or on the outside, whether in the Euro or Schengen or out. “Economic control” is something that the people themselves have to take. They will do it in ever new ways, by practicing solidarity, first, at the level of their community but also at bigger levels. We may have to just ignore the state and the EU altogether and begin to find new ways to do what is right on our own accord. If we don’t want borders, we find ways to act as if they are not even there. If we oppose the security functions of the Irish or British or EU or international state apparatuses we just find ways to work around them. Yes, this may have a high cost, as Julian Assange and Bradley Manning and Edward Snowden are finding out. But more and more of us have to begin acting as if the state has no rule over us. If enough of us do that, it becomes reality.


What economic demands should be made if one is trying to build an economic system centred around people?

We’ll not get there through demands. The recent occupy movement, with all its limitations, at least had the advantage of not making demands on the government. People are starting to make demands on themselves because they are losing faith in the ability of government to fix anything. They are beginning to think about the following: what can I/we do in our everyday lives to make things better? How can we build better societies in our communities rather than depending on politicians to do anything for us? This is a new way of organizing and thinking about the future. We cannot depend on overthrowing the state anymore; we have to build the future that we want in the interstices of capitalism, in our own communities and workplaces, and overcome this system from within. I think a big part of this new consciousness has to do with how we live politics on an everyday basis. Many people are beginning to think less about electoral politics at the national level and more about politics on the street and in the community. I am particularly moved by strategies for change that came out of unexpected places like El Salvador, by Archbishop Romero’s concept of accompaniment, especially when it is stripped of its religious mumbo jumbo. I think everyone who wants to make social change today should read Staughton Lynd’s new book, Accompanying, and think about how they can obtain a skill, or use an existing skill, to accompany communities and people at the grassroots. Utopian communities and projects are emerging in the strangest places – in prisons, jungles, urban ghettoes. Obviously, they have not yet changed the world but I think they provide the greatest sources of hope today.

Interview with Dr. Maurice Coakley

As part of our series of interviews with political economists the website interviewed Dr. Maurice Coakley, Griffiths College Dublin. We would very much like to thank him for this valuable contribution to the website.

Interview with Dr Maurice Coakley

Can you outline for us very briefly the main thesis of your recent book, Ireland in the World Order: A History of Uneven Development?

Ireland in the World Order attempted a historical materialist analysis of Ireland’s social and political development from the medieval to the modern era, in order to explain why Ireland differed so radically from other parts of the ‘United Kingdom’. It argued that the socio-economic structure of the Gaelic order made it difficult for the English state to integrate the Gaelic elite into an expanded ruling class. Religious change accentuated these difficulties and encouraged the English state to adopt a strategy of full-scale conquest. This conquest had long term social and economic consequences, resulting in a social order that was premised upon maximising surplus extraction from the peasantry and which inhibited capital accumulation in the countryside. Instead of developing along lines similar to England or Scotland in the nineteenth century, Ireland came to display the typical characteristics of what has come to be known as ‘underdevelopment’. This context of underdevelopment ensured that social resistance in Ireland was closely linked to a striving for national independence.

The last couple of chapters explore the relationship between this historical background and Ireland’s social and economic development in the 20th and 21st centuries. It argued that the Irish capitalist class had been shaped by this structural underdevelopment and showed no inclination to develop an independent industrial base. From the 1960s onwards it sought to insert Ireland into transnational networks – above all by making it a conduit for US capital investment orientated towards the European market. Some of this was manufacturing industry that created real employment but much of it was fraudulent, with the Irish state becoming complicit with tax evasion on a massive scale. While the country significantly increased its average standard of living, it also made itself deeply dependent upon foreign capital. Most of the left and the labour movement assumed that this dependence on foreign capital was not a problem, and were wholly unprepared for the collapse occasioned by the 2007/8 financial crash.

At a more general level the book argues that uneven development is intrinsic to the capitalist system. This is not just a matter of the laws of the capitalism system working themselves out unevenly – though there is an element of that – but also that patterns of development are heavily shaped by politics. Global capitalism is a hierarchal system, and states play a central role in moulding that hierarchy.

How do you see the current crisis as fitting into this thesis?

The failure to the Irish state to pursue a course of independent economic development has made the Irish economy exceptionally vulnerable in the event of crisis. The Irish state found itself with very limited leverage to negotiate with the institutions of global and regional governance. To make matters worse the political elite has become closely interwoven with a rentier/financial oligarchy whose interests are very removed from any development project, or from the needs of the wider population. The Irish elite as a whole has become characterised by a mentality that combines dependency and fraud, a combination not uncommon across much of what is called the ‘developing’ world. The crisis also showed that behind all the rhetoric of equality and solidarity between European nations, the European Union retains a hierarchy of nation-states and any spirit of mutual solidarity between these nations is shallow.

How useful is Marxist political economy in understanding crisis in capitalism?

Marx’s great insight was to see capitalism as a social system with its own dynamics which he spend most of this life analysing. It is not so much that Marx provides all the answers; what his work does provide is a framework of questions that are essential for making sense of contemporary capitalism.

For Marx, the manner in which the social surplus is extracted is the key to understanding societies across history. Whereas in earlier social systems, surplus extraction tended to take the form of unpaid labour or the handing over of surplus produce, in capitalism it occurs through the medium of exchange. The worker is paid wages, but profits arise from the amount of labour which is never paid for. Capitalist production occurs in a competitive context and the capitalist is forced to adopt measures – either proceed with technological development or hammer down wages – in order to stay in business. This becomes the driving dynamic of the whole system, and an analysis of these processes enabled Marx to make sense of how the capitalist system functions, or at least to establish a clearer picture than anyone before him, and a much clearer picture than most economists who came later, but who rejected his logic because the implications of his analysis were too politically and morally uncomfortable.

Marx had been written off as an antiquated nineteenth century economist, but once the financial crash came, he suddenly became relevant again. What made Marx’s writings so pertinent was his insistence that capitalism is a crisis-prone system, and that social polarisation is endemic to it. His argument that the capitalist order has a systemic tendency towards social polarisation has been the most ridiculed aspect of all his work, but the reality of social polarisation has come back to haunt the contemporary capitalist world, and with it, the spectre of Marx.

Marx did not produce a completed theory of crisis, or rather he a produced a few different theories, and this has led to major debates and disagreements among Marxists theorists about how best to interpret the current crisis. Many of the intellectuals who radicalised in the 1960s and 70s became de-politicised or shifted to the right. But many did not and the writings of people like David Harvey, Peter Gowan, Robert Brenner or the Monthly Review school, to mention but a few, provides a rich body of work that is hugely valuable to those wanting to make sense of contemporary capitalism.

What do you see as the main characteristics of capitalism today and what implications does this have for workers both in mature capitalist economies and those in emerging economies?

There has been a radical change in the balance of forces between capital and labour – to the detriment of labour – over the last few decades and this has been one of the defining features of contemporary capitalism. Other significant changes have also occurred.

Over the last few decades, global capitalism – especially in the North Atlantic economies –   has been characterised by a massive expansion of the financial sphere, a process known as financialisation. Behind the financial upsurge are some wider changes in the global economy. One is the presence of global over-capacity in production which inhibits investment. Too many goods are chasing too few customers. Many corporations don’t see any way that they can achieve profitable returns by investing in new production lines so they are either hoarding their profits or looking for speculative fields to put their money in. In the old core zones of global capitalism, investment rates have been falling for decades.

In this context financialisation was useful because more people could buy goods on credit, but the huge debt which was built up from the 1990s ultimately became unmanageable and the financial system imploded. We are living with the consequences of that. Most of the world’s banks are underwater, and have only survived because of massive infusions of public money from governments around the world.

There was also a political dimension to the rise of finance. The US government encouraged the process because it enabled the big Wall Street banks to achieve global dominance in the financial sphere at the very time that the US was losing its leading edge across much of the productive economy. Washington figured that they could best profit from economic expansion elsewhere in the world by becoming the world’s banker. However, that position depended upon the stability of the dollar, and of US government debt being at the heart of the global financial order. The structural centrality of US capitalism to the global system has been gradually undermined by the decline of the US manufacturing base. While the US government succeeded in preventing a complete meltdown of its financial system in 2008, it has not overcome its more fundamental problems.

Many commentators speak of a process of ‘globalisation’ as the dominant feature of recent decades. There is a partial truth in this. Capitalist manufacturing now takes place right across the globe, and East Asia in particular has become a major centre of global manufacturing. However, much of this manufacturing base is dominated by North Atlantic corporations. In many cases, the North Atlantic companies don’t bother setting up their own manufacturing plants but sub-contract out the manufacturing to local operators. This occurs not only at the lower levels of the value chains – like textiles – but also in high value areas. Apple, for example, farm out much of their manufacturing operations to Chinese sub-contractors. The manufacturing sector receives only a small percentage of the final sales prices for the goods being produced. Many corporations are spending more money on advertising than on manufacturing. One of the consequences of this is to create a huge imbalance of income between capital and labour, not only nationally, but even more so at a global level.

The whole framework of capitalist growth that emerged in the post-war decades appears to have exhausted itself. It would seem that once capitalist economies reach a certain maturity, growth levels start to decline. Alongside this, and interacting with it, has been the growing imbalance of power between capital and labour.

It seems clear that capitalism has entered a period of deep systemic crisis, one that is global in scale, even though it may take different forms in different places. In we compare the current crisis to the last major general capitalist crisis – the 1970s – some fundamental differences stand out. In the 1970’s, labour in the advanced capitalist societies was in a position of strength, and a slowdown in growth rates led to declining profitability. It was at that point that capital decided that the only way they could resolve the crisis of profitability was to reduce labour costs (and the power of labour) beginning in Britain under Thatcher, and followed on by Reagan in the US. This would ultimately result in the neo-liberal counter-revolution which has swept the boards over the last few decades. Looser market rules for capital and rising unemployment significantly weakened the position of labour. While the US in particular did succeed in partially restoring profitability, the defeat of the labour movement has some ironic consequences for the capitalist system as a whole. It meant workers had less money to buy consumer goods, and no less importantly it meant that capital could ride roughshod over popular demands for better services, better infrastructure, and a better environment.

The current crisis is very different in character. It occurs in a context of a vastly weakened labour movement. The 2008 financial crisis was not initiated by a fall in profits: on the contrary corporate profits were booming. If anything, the very weakness of labour was a key factor responsible for bringing about the crash. Because workers could not afford to buy the goods produced, the credit system was vastly expanded to cope with this but it ultimately collapsed under the weight of the huge levels of debt which had accumulated. The crucial point is this: capital will not be able to resolve the crisis this time by further assaults on labour. This does not of course mean that they won’t try. But even if they are successful in their efforts, it will not end the systemic crisis. On the contrary, it will deepen it because ordinary people will be even less able to afford the goods being produced.

Marx spoke about the ‘over-accumulation’ of capital. We usually think about this as an economic process, but it is also a social one. The huge wealth and power that capital has built up over the last three decades has become an obstacle to the capitalist system itself. If capitalism was a rational system it would have imposed harsh sanctions on the bankers and the brokers, and ensured that sufficient resources went into social services and into the creation a sustainable energy system. It would also make a serious effort to ensure that the general population would be able to buy the goods being produced by capital. But capitalism is not a rational system, or rather what is rational for the individual capitalist – or the individual state – becomes irrational for the system as a whole. While the current crisis is global in character, it takes very different forms in different regions

In North America and the European Union, workers’ movements – and progressive politics – will most likely be premised upon defending existing social gains. In parts of the world where there has been the most dramatic capitalist industrialisation and urbanisation, like China or Vietnam, we may well see the re-emergence of classic forms of the workers’ movement, with militant trade unions, strikes and factory occupations playing a key role. Elsewhere we have witnessed the rise of movements of solidarity among the poor, urban and rural. One cannot predict the future, but it seems reasonable to assume that this global crisis will produce new forms of resistance, and many surprises. If we do see a global popular radicalisation and the re-emergence of a radical labour movement, there is no guarantee that such a movement would be happy with modest reforms, and willing to allow the system of private property to remain intact.

Gramsci spoke, nearly a century ago, of an organic crisis of capitalism that was characterised by the rise of all kinds of destructive and irrational tendencies. Something similar seems to be happening again today. The ability of the US to win consent for its global ‘leadership’ continues to decline while Iraq and Afghanistan have shown the limits of its military power. If a substantial popular and democratic resistance to neo-liberal polices does not emerge, we are likely to see a deepening of destructive and irrational trends, alongside more imperialist adventures, across the globe.

Where does Ireland fit into this global system today?

Ireland’s position in the global system is a very contradictory one. At one level it is characterised by exceptional levels of dependency upon external capital, both North American and European. At the same time, Ireland’s position as a ‘bridge economy’ between the US and the EU has enabled Irish people to have a significantly higher income than they might otherwise have had. The GDP figures are exaggerated certainly, but there is no getting away from the fact that wages in Ireland are, by and large, significantly higher than in Mediterranean Europe. To many people, including many trade unionists, this seemed like a good deal. It is only with the global financial crisis that the downside of the deal has become more evident. Suddenly, Ireland was being demoted to the status of a ‘peripheral’ state, albeit a periphery of the world’s second major core region.

One of the reasons why resistance in Ireland has been muted so far is because people are afraid that resistance could be counterproductive, that deeper confrontations could damage Ireland’s position in the global system. The EU leaders and the debt collectors are aware of these fears and use them to their advantage.

While many are beginning to realise that there may be a heavy price to pay for having so lightly abandoned national sovereignty, they see no easy way to regain it. As living standards and social services in Ireland continue to fall, a point may well be reached when anger overcomes fear. The key issue here is not likely to be Ireland’s statistical position in the global hierarchy, so much as the jarring contrast between the official rhetoric of recovery and fairness and people’s lived experiences of deprivation and injustice.

We are obviously seeing austerity, in various degrees of measures, being rolled out across Europe. Why austerity? What is it actually designed to do?

The austerity agenda has a global dimension, but it is particularly pronounced in Europe. The Eurozone has created a single currency and monetary administration but does not have a unified system of government. Once the financial crisis broke, it became clear that most of Europe’s banks were effectively insolvent and the battle commenced to see who would pay the cost. If the European banks (including the Irish ones) had declared bankruptcy, this would automatically triggered the bond insurance system (known as CDO’s) which was operated by the big Wall Street banks, especially by Goldman Sachs. Wall Street would have had to cover these loses, which would have impacted on the value of the dollar.

But this never happened. Instead the European Central Bank insisted that individual states cover these losses. These were mostly concentrated in Europe’s peripheral regions where there had been a financial bubble, financed by the banks from Europe’s core states: Germany, France and Britain. The peripheral governments, led by the Irish, caved into these demands and nationalised the private debt. Once these governments accepted the private debt as public debt, the European Union authorities launched what they call the austerity programmes. These are similar both in form and content to the structural adjustment programmes imposed to such destructive effect by the IMF on Latin America and Africa at the behest of the North Atlantic banks in the 1980’s.

The argument put forward by the European Commission and the European Central Bank – that cutting public spending will rejuvenate the private economy by making it more competitive – is simply not credible. It has been rubbished by the International Monetary Fund and indeed by research commissioned by the European Commission itself. It is clear that the austerity programmes are not only having a disastrous social effect, but are also damaging the capitalist economies in the affected countries. Not only are these deprivation programmes socially and economically harmful but they have also significantly eroded the position of the political establishment in these states. Why then do the European Union authorities persist with them?

There are a number of factors here. This is evident if we look at the three key institutions pushing the austerity programmes, the European Central Bank, the European Commission and the Berlin government. Each of these institutions has their own particular interests and logic. The European Commission and the European Central Bank share a determination to maintain a single currency in Europe at all costs. The position of Germany is more complex.

The European Central Bank is closely linked to the private banking institutions and their aggressive pursuit of retrenchment in the periphery is to a considerable extent driven by the need to protect the big private banks, which are mostly underwater and would have collapsed without ECB protection. Jean Claude Trichet, who was head of the ECB at the time that they pressurised the Irish government to takeover the Irish bank debt, was in charge of the French Treasury at the time of Credit Lyonnais scandal. Criminal charges against him in relation to this were controversially dropped. His successor, Mario Draghi, was a former leading executive of Goldman Sachs, the leading Wall Street bank, which has an even murkier history than Credit Lyonnais. It is striking that when the ECB and the EC decided to impose so-called ‘technocratic’ prime ministers on Italy and Greece, in place of the elected ones, they chose two former executives of the Wall Street bank. It points to an aspect of European financial governance that is rarely mentioned in the media: the role of the big American banks. It is not only the big European banks that the European Central Bank has a strong affinity for; their generosity of spirit also extends to Wall Street.

The European Commission has had a long standing project of making the EU more ‘competitive’, a code word for reducing wages and working conditions and diminishing the welfare state across the EU. The Lisbon Agenda published in 2000 is fairly explicit about this. The global financial crisis was seen as a golden opportunity by the European Commission because it gave them the clout to overrule national governments, and impose a set of policies that they would never have been able to push through in normal circumstances.

Aside from the rarely mentioned role of the United States, the most powerful state in the EU is Germany. As unelected bodies, neither the Commission nor the Central Bank have any popular legitimacy. The Berlin government is of course anxious to protect its own banks, but more than that, they are answerable to their electorate, and that puts them in a peculiarly vulnerable position. Precisely because the German state and the German economy are the most powerful in Europe, they are not in a position to claim that they are being forced to adopt particular polices because of outside coercion. To justify their capitulation to financial interests, the German political elite have had to construct a bizarre narrative of lazy feckless Mediterraneans trying to swindle the German people out of their hard-earned savings. If this narrative is convenient for the German government, it runs its own political risks. It makes it more difficult for them to take the measures they need to take to protect the private banking system and the single currency, because they are perceived as undermining their own citizens’ savings.

There is another aspect to German policy. The have developed an economic strategy which has been described by many economists as ‘neo-mercantilist’. Berlin has prioritised creating an export surplus, which puts them in a very strong political position. However, wherever there is a trade surplus, there has to be a deficit somewhere else. By pursuing this strategy within the European Union, they made imbalances within the European economy inevitable. German banks – famously tight-fisted at home – lent money to banks across the European periphery so that people there could buy German products. To make matters worse, they are now forcing austerity polices on their neighbours, ignoring the evidence that these are thoroughly counter-productive. As an economic strategy, this was bound to crash because if the peripheral economies are on their knees, who then is going to buy German goods? The Greek Marxist economist, Costas Lapavitsas, has described this strategy as being one of ‘beggar thy neighbour and thyself’. That about sums it up.

Why doesn’t austerity work? Surely capital should be able to accumulate through lowering wages and thereby increasing profits – what Marx called increasing absolute surplus value. Unfortunately, as Marx also pointed out, workers are also consumers, and if enough of them are hit by lower wages, they won’t be able to buy sufficient consumer goods. More than that, it would appear that as capitalism becomes more mature, it can only be stabilised by more and more public spending. Without that, these economies go into reverse gear. This is what is happening today across the European periphery.

One way of overcoming Europe’s debt problems would be to simply write off the debt. This happened to German debt in 1953, with the blessings of Washington. Were the European Union to do this, it would be a massive blow to the interests of financial capital, and it would probably force the European states to take public ownership and control of the credit system. Another solution would be to print money to inflate away the debt. This would damage both the interests of financial capital and also of savers, who would see the real value of their savings reduced. It is considered to be politically unacceptable to the German government. Instead, the ECB, the EC and the Berlin continued to push through austerity programmes that they know are self-defeating. This whole policy is incoherent and behind the arrogance of the European leadership one can detect more than a hint of panic. Many of the right-wing apparatchiks who run the Commission and the ECB are probably genuinely oblivious to the political dangers they face in pursuing the deprivation agenda. They have grown up with the success of shock doctrine tactics in Latin America and in Eastern Europe and are confident that they will be equally successful in Southern Europe. They fail to note the difference between the regions. It was only through terror, torture and military dictatorship that the IMF could get away with these policies in Latin America. In Eastern Europe, people were desperate to become more ‘western’. None of this applies to the south of Europe. The European project increasingly lacks legitimacy. If these rulers resort to more direct form of coercion, this will blow away any remaining legitimacy that the EU has and there is no guarantee that the state security forces will perform as expected. The Egyptian example is a reminder of how powerless a state becomes once it faces a genuinely popular revolt.

Some people interpret the current impasse as an attempt by Germany to establish hegemony over Europe, but this is too simplistic and it misses two crucial aspects of the European crisis. The American connection has already been noted. The elites of all the Eurozone nations agreed to hand over a significant share of their sovereignty in order to strengthen the position of capital at the European level. They understood what they were doing, and the same elites, for the most part, still stand over that decision. The single currency was at the heart of this deal, and it fitted perfectly into the neo-liberal agenda of reducing social spending. National governments could turn to their electorates and declare that their hands were tied. As much as they would like to improve citizens’ conditions, the rules of the EU won’t allow them. This is what has been happening in Ireland and across most of the continent. The problem that these national elites now face is that the demands being made by Brussels are so excessive, that their political representatives run the risk of electoral extinction.

It is true that German exporters have benefitted from a single currency, but the wider German population has not. It was the French elite, not the Germans, which pushed for the single currency. The French elite remain nostalgic for their lost empire (a bit like the British) and they hope to create a European empire as a substitute. However, while it is unlikely that the current crisis has been driven by any thought out project by Berlin to establish a more-or-less coercive domination over Europe, this has become the actual logic of the European Union. This is the Achilles heel of the whole European project. The population of the rest of Europe will almost certainly not accept German domination and Germany itself has neither the will nor the capacity to impose it.

It seems more likely that the German elite are divided about what course to take. Sections of the German elite, most notably the Bundesbank, appear determined to crash the single currency rather than take any further losses. It is difficult to see how the single currency will survive. The most likely outcome is that one of the peripheral states, probably Italy or Spain, will withdraw from the euro, effectively sinking it. Alternatively, if they resist the Troika’s deprivation programmes, the German parliament will recognise that the game is up and pull the plug on the single currency. The German state will survive a collapse of the single currency, the ECB will not, and the whole Brussels operation will be hugely weakened and discredited. It is not surprising that they are so intransigent: they have nowhere else to go. A defeat for Brussels and Frankfort would not be the end of European co-operation. It would rather open up a debate across the continent about how best to create a different kind of Europe.

Many alternative economic proposals from ‘left’ sources seem to want to try and revive a capitalism from a previous era, namely through Keynesian inspired stimulus plans, can this work in today’s economy?

Some of the points that the Keynesians make are valid enough. There is a necessity to increase public spending in both social and physical infrastructure. We are, however, not likely to see a return to the high growth rates of earlier decades, nor is it clear that high growth would be a good thing. The Keynesians have yet to get their heads around the global ecological crisis. Endless economic growth is simply not possible, nor is it ecologically viable. The global environment is much too fragile for that. If we are to establish a viable economic model, it has to include an agenda of moving towards a sustainable energy system.

Given that a return to high growth rates is impractical, it is difficult to see how a social compromise between capital and labour of the sort that existed in the post-war decades could be revived. At a very immediate level, the private banking system is a massive obstacle to economic revival because it represents claims on future production.  These claims are strangling investment projects. This private financial sector needs to be closed down, and the credit system should be turned into a public utility system, like electricity, water or transport. A publically owned, democratically structured credit system would enable the population to determine where investment should go and what forms it would take. Such a programme would not, in itself, abolish capitalism, but it would significantly re-structure the system and shift the balance of power from capital to labour.

If Ireland desires more economic control what policies should it pursue?

The crucial arena for establishing a modicum of self-determination is the financial one. The debt burden imposed upon the population is not only immoral, it is also impractical. It effectively condemns the state to extended stagnation, which will be accompanied by a gradual but accumulative reduction in social spending and social rights.

Beyond that there is a pressing need to for the Irish state to establish democratic control over the whole financial system. Formal nationalisation of the banks is not enough. The AIB for example is already state owned but continues to operate as a private bank servicing its own executives. The state doesn’t want to control the private banks because that would bring them under public scrutiny and it would encourage popular demands that national savings be used to improve the material and social infrastructure, and not just to enrich the elite and their hangers on. Capital control would be needed to make this effective. These measures would probably be inconsistent with membership of a single currency as it is presently constituted.

This programme is fairly modest but it would face massive opposition from the whole of the Irish elite and from the European Union (at least as it is presently operates). Given the weakness of left wing politics in Ireland, it might seem that we face a near impossible task. However, the destructiveness of the austerity programmes and the increasingly self-defeating character of European Union policies ensure that Ireland would be very unlikely to be alone in its battles to protect its society against the demands of Brussels.

The details of what policies a progressive government would need to introduce would have to be worked out collectively and these would change over time depending on circumstances. In the 1930s trade policies were considered more central than they would be now, but that could change again. A lot of good work has been done by people like Michael Taft, the Anglo Not Our Debt campaign, and the Irish Left Review. I am not an economist and I have no specialist knowledge of economics. What I have been trying to do is to locate economic policies in their wider political and historical contexts.

What economic demands should be made if one is trying to build an economic system centred around people?

Any political advance towards a more just society must begin from where we are now. In the case of western Europe, a defence of social rights and the welfare state has to be the starting point for launching a political challenge to the existing order, at least for the foreseeable future. However, a strategy that is based solely of making demands on the state and expects that the population, or the working class, will become radicalised when these demands are not met, is hardly credible. Politics has moved on over the last century and the ruling class now appeals directly to the population – mainly through the media – arguing that while certain social rights may be desirable, they cannot realistically be granted or maintained because the state cannot afford them.

If the left is to defend the earlier gains achieved by workers and the wider population, it needs to explain how these social rights are to be paid for. It is not good enough to say: “that’s their problem”. It is our problem too. Agitation will not succeed unless it is accompanied by a transformation in popular political consciousness, and for that to happen people must see a societal alternative. By that I don’t mean some vague notion of socialism but a concrete project for changing society’s direction and its social priorities. Such a project needs to be combined with a wider battle against the culture of greed and consumerist elitism that has been dominant for decades across the mature capitalist formations, especially the English-speaking ones.

There are many difficulties with the Scandinavian welfare systems but there are hugely positive features to these societies too and the left should not be afraid to acknowledge these. One of these is a much more equitable tax system, where the wealthier pay significantly higher rates of tax than lower income groups. This was made possible by a political culture that stressed the importance of social equality and if the left is to make headway elsewhere they need to create or revive an equalitarian political culture.

Re-distribution of income is only one part of a programme of transition to a more equitable society. Another crucial aspect is control over the credit system. This would involve not only having capital controls but also a publically owned credit system. The only way that we can ensure that a publically-owned credit system is used to benefit the broader population, and not just the elites, is to have an open and ongoing debate of what our social priorities should be, and where our collective resources should be best invested.

The radical left has long argued for greater workers’ control at the level of manufacturing industry but we also need to think through what needs to be done in other sectors of the social order. The workings of government and its many institutions should be transparent to the citizens and should be subject to democratic supervision. That would necessarily involve participation and consultation not only with the workers in any given institution, but also with citizens involved with them, like patients, commuters, residents etc. This kind of project would need to be accompanied by the development of new democratic media.

Marx is often criticised for failing to outline a comprehensive plan for a socialist society, but this is arguably a strength of his position rather than a weakness. We have to begin from where we are and work from there. The minimum measures necessary to defend popular living standards and the welfare state will face fierce opposition from the ruling elites. If a pro-worker government is to succeed in these very modest goals, it would need to achieve a deep popular mobilisation, and a politicisation of the populace. That’s the clear lesson of Venezuela. How far such a government could advance towards the goal of an alternative social order depends to a great degree upon the regional and international balance of forces.

Interview with Dr. Gerard McCann

As part of our series of interviews with political economists the website interviewed Dr. Gerard McCann, Queens University. We would very much like to thank him for this valuable contribution to the website.

Interview with Gerard McCann

Can you outline for us very briefly the main thesis of your recent book Ireland’s Economic History: Crisis and Development in the North and South?

The book circumvents the conventional macro-economic analyses of Irish economic development and investigates the economic development of the island economy from the Act of Union to the demise of the Celtic Tiger. It highlights the systemic shocks that have come to shape the respective economic bases, North and South, and assesses the uneven patterns of economic development that have led to volatile, often extreme, systems of economic management in the Republic of Ireland and Northern Ireland. Its intention is to give a sufficient overview of the development of the economy, while highlighting points of economic integration, reconciliation and cohesion. In economic history and economic analysis, the Irish economy has been largely portrayed as a product of its political history, divided and analyzed with distinct entities North and South, and with respective divergent patterns of growth. This is true to an extent but has lead academics to look at the two regions on the island in terms of absolutes, without adequately acknowledging the interactive nature of these border economies or the nature of the peripheral economic forms that have evolved on the island. The book attempts to address economic development on the island as an interactive process, shaped by exogenous factors and dominated by ideological paths that have carried the country through a sequence of crises.

How do you see the current crisis as fitting into this thesis?

With the ongoing crisis in the Irish economy and the possible breakup of the Eurozone, new thinking is desperately needed to reassert the principal that democratic government and equitable economic development should go hand in hand. The recent bitter experience in Ireland has shown that shaping a society to comply with the whims of market growth does not work as a model for sustainable development. For the Irish, their version of this Tiger economy imploded dramatically in 2008 and continues to cause widespread disaffection, job losses, migration and disinvestment. Other countries have not been as affected as Ireland, North and South, yet the architects of the Irish economy seem intent on continuing to apply a failed methodology without questioning its faults or looking for alternatives. The questions that this poverty of theory leaves are shocking, the scenarios it anticipates difficult to contemplate: What will happen if the South is caught outside the Eurozone? What will happen in the North when austerity measures bring community relations under the pressure of further cuts? What will indigenous businesses and the population do to survive a stagnating economy? And how will the society cope with a declining standard of living and a reduced quality of life? These problems are looming along with a complex of others that will seriously disrupt the lives of all but a few. We need alternatives and to look beyond the ‘Atlantic’ model of economic development, as Denis O’Hearn labelled it, to possible systems that are more appropriate to a peripheral island economy with a history of underdevelopment and dependency.

How useful is Marxist political economy in understanding crisis in capitalism?

Economic theory from the Left presents a solid and ethical counterbalance to the dysfunctional discourse that created the casino capitalism that is so prominent across the world today and of which the Celtic Tiger personified. The Left can be represented almost as an antidote to the neo-liberal squeeze on public space, defined through investment for job creation, the rebalancing of wealth, welfare enhancement and systemic regulation – particularly of the financial sector. Marxist political theory is a broad church in its own right, stretching from European neo-Keynesianism and dirigism through to the highly popular Bolivarian revolution in South American. I find it useful to go back to the old man himself to get an insightful understanding of the nature of capitalism. His challenge to Say’s Law is prophetic in its exploration of the boom-slump cycle in capitalism and his appreciation of  commodity fetishism in its most extreme forms are almost an overview of the current crisis. In the Economic and Philosophical Manuscripts Marx analysed what he termed the ‘essence of money’, writing that the lust for money will eventually become the single most important ‘virtue’ within capitalism. “The only wheels that political economy sets in motion are greed and the war between the greedy, competition”.


The economic mechanism which leaves financial services at the center of the market must also be seen as the source crises – the inability to pay for overproduced commodities, people as commodities, poverty and market driven regional conflict. Ernest Mandel in The Formation of the Economic Thought of Karl Marx helpfully noted that: “In an economy in which the use of money is general, however, money is not merely the universal means of circulation of all commodities; it is also the universal means of payment. The more the capitalist mode of production develops, the more credit expands and the more the function of money as means of payment increases in importance as compared with its function as means of circulation”. In this egoistic system it has to idolize wealth, the accumulation of money becomes the single most important thing. This culture of accumulation was all too obvious in the Celtic Tiger.


This  economic determinism and its attendant culture can be seen as the source of the crises – the result being the inability to pay for overproduced commodities. Marx was to point this out himself in his chapter on money in the Economic and Philosophical Manuscripts, imaginatively using illustrations from Goethe’s Faust and Shakespeare’s Timon of Athens. Money eventually becomes the divine power (Göttliche Kraft) of capitalist society, the corruptible Absolute. “That which exists for me through the medium of money, that which I can pay for, i.e. which money can buy, that am I, the possessor of the money. The stronger the power of my money, the stronger am I. The properties of money are my, the possessor’s, properties and essential powers…. Money is the highest good, and consequently its owner is also good. Moreover, money spares me the trouble of being dishonest, and I am therefore presumed to be honest”. Humanity, I think, can aspire to much more than this.


The monetaristic culture that came with the Celtic Tiger fitted perfectly into this 168 year old theory of money, a culture typified by a fixation with something as base as property prices and absolute in its deference to the self-proclaimed “masters of the universe” in the banks.

What do you see as the main characteristics of capitalism today and what implications does this have for workers both in mature capitalist economies and those in emerging economies?

The central most prominent feature of this transnational mature capitalist system is the purity of its form. Production, manufacturing, industry all operate at the behest of financial services. This is most obvious with the demands being made from the banks and the managers of the system in Washington and Brussels. It took the UK government two days to find and deliver £600 billion to six UK banks in August 2008. This was in the UK alone. Global overseas assistance including humanitarian aid per year is worth roughly £100 billion, a pittance in comparison to the trillions that goes out of the public purse to failed banks. The crisis did however expose the importance of the banks in the neoliberal global economy.


The outcome of such attempts at structural adjustment is nothing new. The Asian economic collapse of 1997-98 was a further insight into things to come when the rapidly adjusting economies of South Korea, Thailand, and Indonesia – under pressures by the IMF to liberalise – disintegrated. It also happened in Southern America and Africa with differing outcomes but similar attempts at externally imposed rebalancing. Interestingly, those countries that only selectively engaged with IMF strategies, Malaysia and Singapore, were to an extent cushioned from the devastation that affected the other so-called ‘Tiger’ economies. Iceland is another country that benefited from being democratic with economic management. Joseph Stiglitz observantly noted in Globalization and its Discontents that it was the financial sector, in patronage to the IMF, who were in 1998 to be the ultimate beneficiaries of a destabilising global financial system: “The IMF first told countries in Asia to open up their markets to hot short-term capital. The countries did it and money flooded in, but just as suddenly flowed out. The IMF then said interest rates should be raised and there should be fiscal contraction, and a deep recession was induced. Asset prices plummeted, the IMF urged affected countries to sell their assets even at bargain basement prices… The sales were handled by the same financial institutions that had pulled out their capital, precipitating the crisis. These banks then got large commissions from their work selling the troubled companies or splitting them up, just as they had got large commissions when they had originally guided the money into the countries in the first place”. The mechanism that benefited the international financial sector in Asia and Africa was to be subsequently reapplied to the European countries.


Crisis and systemic shock as a method of opening up market opportunities have now become a standard method of releasing financial opportunities. Neo-conservative and lecturer to the Tory grandees, Roger Scruton, coined it well when he wrote about The Uses of Pessimism. So the theory goes, debilitating civil society and depressing the general public can be very profitable for certain sectors of the economy and political elites. This method of economic ‘development’ is nothing new.  The 1987, 1993, 1998, 2001 and 2008 stock market crashes give an indication of the cyclical nature of this system.  The Western economies have become vulnerable to the slump, and while opportunities reveal themselves at each contraction, public finances remain particularly susceptible to unregulated predatory and fluctuating global markets. Uncertainty and fear open up new markets.


Global economic fluctuations are nothing new and are symptomatic of free market development.  With the dominance of the system residing in two hubs, the EU and US, any contortions within these economies will reverberate outward.  Representing some 50 per cent of global trade these regions have a controlling influence on the fortunes of markets and countries around the world. Downturns/slumps in these economies are infectious through other less robust economies, including the vulnerable and exposed economies of the developing world – and peripheral economies such as Ireland.  Robert Brenner, in The Economics of Global Turbulence, put this into perspective with the comment that in comparison to the 1950s and 1960s recent years have seen: “an era of slower growth and increasingly economic turbulence… marked by deeper recession and the return of devastating financial crises absent since the Great Depression”. For him profitability has become more focused, financially targeted and downturns have become more extreme as the neoliberal system has evolved.  If anything the 1997-2007 period with its sustained growth in Western economies was abnormal in post war history in that it was positively reacting to structural adjustment and seemingly manageable as a process.  In effect for a period the Western states had a competitive advantage and could affect their design for economic growth onto other compliant economies – China and India being the most noticeable examples of compliant emerging economies which are linked to Western growth.  Other countries, particularly former colonies of EU powers, have been cut adrift; not permitted to participate and have more often than not recoiled into underdevelopment or war.

Where does Ireland fit into this global system today and what are the dominant forces at play in Ireland today?

Alan Greenspan, the former Chairman of the US Federal Reserve and one of the architects of this neoliberal model that the Irish establishment became so fond of, in testifying before the US Congress, concluded that the system was prone to collapse: “I found a flaw, I don’t know how significant or permanent it is, and I have been very distressed by that fact. A flaw in the model that I perceive is critical to the structure that defines how the world works”. Ireland, as with other economies around the world that followed this model and becoming dependent on external financial services and banks in particular was exceptionally susceptible. It was collateral damage in a globalising system that had become increasingly dysfunctional. Greenspan’s admittance revealed the extent to which the system was dominated by the International Financial Institutions with compliance by governments across the world. What is interesting is that even through the horrors of the crash the Irish government remains scrupulous in its policy adherence, even at the expense of losing a generation of young people to emigration.


The ideological undercurrent that is neoliberalism was obscure through the years of the Celtic Tiger, an Atlantic economy that may have benefited some, but cascaded the vast majority of those subjected to it into the extremes of boom and bust. Irish ‘casino capitalism’ constructed a false economy based on corruption sold to the general public through a sequence of confidence tricks, and a credit based extravagance that was by its design dysfunctional. This flaw in the Irish system was typified by the extent of corruption throughout government, banking and business. For me The Mahon Report has become the last word on the extent of dishonesty throughout the Celtic Tiger. One would think that after that indictment the primary objective would be to ensure that checks and balances are properly in place to restore representative democracy to the Irish people, in effect to regain sovereignty. Arguably, those designing a distinct Irish model of economic development would be better serving its people by looking for an alternative, to seek a model that is more applicable to an advanced social market island economy, and to aspire to an economy that is transparently and honestly within the parameters of the European Union. To attempt to revive the extremes of the Celtic Tiger model would be disastrous.


And more specifically, where does Northern Ireland fit in and what is its economic relationship with Britain?

In the North, the high level of British government public subvention, EU peace and structural funds and public sector dominance in the economy have cushioned the extent of the economic shock that came with the recession elsewhere. Unemployment in the North is still almost half of that in the South. A third of the population work in the public sector and a third are economically inactive, leaving one third susceptible to largely unregulated private sector market fluctuations. In the North the most visible aspect of the recession has been the closure, or rundown, of high profile private sector companies which had been drivers in regional economic development (Visteon, Seagate, Zavvi, Shorts, Nortel, Woolworths, Adams), with job losses averaging 1,000 per month. Between May 2008 and May 2009 there was a 159% increase in redundancies with 49,000 people unemployed – an 11,000 increase on the previous year. If the Tory austerity measures are followed through the losses will be added to by an anticipated 10% contraction within the public sector and the job cuts related to the estimated £370 million necessary savings that the government of Northern Ireland is making. With this single sector of the economy in Northern Ireland employing 32% (222,000) of the working population, income poverty will be visited upon many additional thousands of families. The anticipated cuts will mean a further 10,000 people unemployed. Stephen Kingon, the Chair of Invest Northern Ireland commented: “I do not think we will be spared any harsh realities. It is going to be a tight decade or two”.

Accounting for the already formidable problems relating to the regionally peripheral position of Northern Ireland, the legacy of the conflict, high levels of poverty, unemployment, and house repossessions; it is anticipated that the outworking of this recession will bring additional complications to already stressed governmental and voluntary sector attempts at intervention. In effect, an already difficult situation for many people will become worse and the numbers who are subjected to poverty and social exclusion will increase as long as the recession continues. With this in mind the poverty generated by a prolonged recession urgently needs to be planned for by government and voluntary sector organisations.


We are obviously seeing austerity, in various degrees of measures, being rolled out across Europe. Why austerity? What is it actually designed to do?

Austerity is one option for confronting a recession. It is a mechanism to try and adjust an economy to controlling debt and mange a balance of payments. But is just one method of creating stability. In certain regions is appears to work, in others it is a monumental failure which has devastating consequences for the population. Structural adjustment as a means of stimulating economic growth was applied in many countries through the 1990s. One of the most violent examples of the method came not in Greece, which has been horrendous for its people, but in regions of sub-Saharan Africa. It that context IMF and World Bank applied measures lead to the stripping of hospitals and the closure of schools in order to repay debts. Millions fell into food insecurity and grinding poverty. Life expectancy fell in places such as Zambia to 38. Indeed, in Russia after the market induced reforms of the 1990s life expectancy fell by one year per year for ten years. We have to remember that these problems do not just happen of their own accord. This economics of austerity has its architects and managers, still committed to the acceleration of process of globalisation, and under the direction of the main International Financial Institutions (IFIs) and trans-governmental bodies: the World Bank, the World Trade Organisation (WTO), the International Monetary Fund (IMF) and the Group of Eight leading industrialised countries (G8). Together they provide an enabling framework for the design, advising, investing, and where necessary ‘disciplining’ of economies in regions around the world. We are now in the middle of this disciplining process.

Susan Strange, a life-long student of global economic development, envisaged the future of the global system as being dominated by ‘the impersonal forces of world markets’ that will be “more powerful than the states to whom ultimate political authority over society and economy is supposed to belong”. The new millennium has already witnessed a realignment of political and cultural forms to facilitate the more predatory intentions of corporate strategies and global finance. The dominant influence of transnational financial powers has been largely unhindered by political constraints, thereby requiring that the various state and governmental agents need to conform to the mandate which the enterprise demands. In short, corporate enterprise and its political agents enact and practice globalisation while the rest of the world is subjected to it. Austerity is their favoured method that can be utilised to achieve this goal.

Many alternative economic proposals from ‘left’ sources seem to want to try and revive a capitalism from a previous era, namely through Keynesian inspired stimulus plans, can this work in today’s economy?

The ideology underwriting this type of neo-liberal development is, however, only one vision of the future of globalisation. NGOs, many of whom have been at the forefront of the anti-globalisation protests against the programmes of the World Bank, Troika, G8 and IMF summits, have offered a different vision of development based on progressive inclusion and equitable relations between the rich and poor.

By and large the alternative that the Left in most of its shades is demanding is premised on a concept of social justice placing meaningful development as a political priority through economic growth and designed to meet people’s needs. The World Development Movement some years ago set out an agenda for change which urged governments to adapt policies to be fairer regarding development and market regulation. It commented that: “We consider that governments have a crucial role to establish fair and sustainable economies nationally and internationally, rather than assuming that the market will produce outcomes that are equitable. Unless governments assume their responsibilities to establish a fair framework for markets to operate in the public interest, the problems will worsen”.

Ultimately, it is up to the politicians in government to recognise their responsibility to a sustainable and equitable economic process that actually benefits the population. As a central plank of this there must be an enforcement of the practice of genuine democratic political control over public finances and expenditure. Policies should give priority to inclusive and sustainable strategies for economic regeneration. If neo-Keynesianism delivers, to my mind, it is worth a try. I cannot see a Bolivarian revolution hitting Dundalk or Newry just yet. To cut to the chase – if our governments accept their responsibility to promote the principle of social justice and are genuine about poverty alleviation within an active market focused economic, they will ultimately need to respond with a pro-poor concept of economic development. Everything else can follow from this red line.

If Ireland, north and south, desires more economic control what policies should it pursue?

In the book I present a case for a platform of polices that would bring the island economy onto a sounder and more natural footing in relation to global economic change. Three features stand out when we look at the island economy – first, the often fundamentalist nature of economic policies across the various governments on the island, from Malthusianism to neoliberalism. These extremes have being applied to Ireland in a way that few other parts of Europe have witnessed. Second, there is the divergence of the northern and southern economies which has left a border region which covers a third of the island going into cycles of underdevelopment. And finally, the conflict has been a disintegrating factor both in terms of economic regeneration and community relations North and South. In the North we also have the scenario where conflict influences economic policy and at one stage dominated it.

To take these in sequence, a more progressive matrix of policies that would be appropriate to the regeneration of a peripheral island prone to dependency and underdevelopment, may include: applying an economic model based on theory that is sensitive to the dysfunctional nature of the Irish economic system, possibly more akin to other peripheral regions of the EU that have similar border divides, similar demographics, but have successfully been able to navigate their way through the recession through innovative and flexible governmental intervention. Secondly, in this day and age the economic border that divides business, life and society North and South is an anachronism. The first standard of European integration is economic integration. George Quigley, in a ground breaking speech to the Confederation of Irish Industry as early February 1992, proposed the way forward: “Ireland, North and South, should become one integrated ‘island economy’ in the context of the Single European Market”, advocating “nothing short of a sea-change in economic relationships within the island”. For me this still stands. Civil society wants it, businesses want it, it makes sense, but the politicians (and remember this economic answer is outside the constitutional dispute) do not seen passionate enough to act on it. Finally, peace. Having been brought up on the front line of a war, I am only too aware of how fragile peace is. Without it there is no prosperity and we can forget about the previous two options. Investing in peace North and South is crucial in the full realisation that any significant resumption of the conflict will in all likelihood be an all island affair.