Samir Amin has been an important participant in the conversation among Marxists for decades. His many books, his articles and his partisanship for the peoples of Asia, the Middle East, and Africa are acknowledged and respected by all those who strive for a world without capitalism. He has associated his views with Marxism and enthusiastically interprets those views through the prism of the Monthly Review theoretical triad of Paul Sweezy, Paul Baran, and Harry Magdoff. Perhaps he adheres even more faithfully to these views than the current editors of this influential journal. He shares with Immanuel Wallerstein the World Systems approach, with its emphasis on the “core” and “periphery” distinction in the global economy. Both views have, at different times, exerted great influence among Marxist thinkers and activists, especially in the West. These views have revealed important insights into the mechanism of global capitalism and imperialism. Yet these views are inadequate for a coherent understanding of our world today.
In his new book (The Law of Worldwide Value, Monthly Review Press, 2010), Amin offers a rich, thought-provoking update of his 1978 book The Law of Value and Historical Materialism (Monthly Review Press, 1978) designed to defend his views with respect to the developments leading us into deeper crisis in the twenty-first century.
Much has changed since 1978: the rise and total dominance of neo-liberal thinking and policy in the evolution of capitalism; the dramatic demise of the European socialist community; the rise of the Peoples’ Republic of China as a global economic power; the rise of powerful “emerging” economies in Brazil, India, Russia, and the Republic of Korea; the stagnation of the once-mighty Japanese economy; the rise and possible fall of the European Community; and most important, a profound crisis of capitalism generated by the ascendancy of finance capital in the US. In short, the world is vastly different than the world that Amin wrote of in 1978.
To his credit, Amin offers a vigorous defense of his earlier views in light of the dramatic changes experienced over the last three decades. Unfortunately, events have swept these once persuasive perspectives off the table; capitalism has moved on.
Fundamental to Amin’s perspective is a partisan defense of Marx’s law of value. The law of value for Marx engages a theoretical construct that demonstrates the fundamental relationships inherent in capitalist commodity production. Its import is to expose the components of productive activity and explain how they interact. With that understanding, the basis for commodity exchange is bared as an expression of uniform, embodied labor. As such, the law holds up well through the long evolution of capitalism from its competitive stages, through the emergence of monopoly capitalism, and its current expression as state-monopoly-capitalism.
Moreover, these revealed relationships give birth to useful technical ratios such as profit, exploitation, and capital composition that further reveal the deep structure of a system of commodity production based upon the selling and buying of labor power.
Marx goes to some lengths to show that the key components that he distills as constitutive of a commodity are fully measured by embodied abstract labor and combine to exhaust the content of a commodity’s value. His most impressive argument is to establish the necessity of such a value theory in establishing the proportionality of values between the various and sundry “products” of capitalist production. Put succinctly, the law of value explains how things bearing few or no obvious common features can nonetheless be exchanged in a non-random, regular, and rational fashion.
Armed with this theoretical framework, one can further understand the real-world relationships of prices and grasp how they tend to fluctuate around those proportionalities.
Many, following Marx’s refinement of the law of value in Volume III of Capital and Engels’ dogged pursuit of the matter, view the law of value as promising a derivation of real-world prices from Marx’s value theory. This issue consumes many Marxist economists, particularly those schooled in bourgeois economics, who have created a scholarly dust-up for over a century around the so-called “transformation problem.” Amin offers his own solution to this problem as well as to the challenge of value theory redundancy made by Piero Sraffa (for a relatively straightforward and clear exposition of the issues, the reader might want to read An Introduction to Marxist Economics, George Catephores, pp 87-106).
To my mind, Marx’s law of value is theoretically secure because it constitutes a necessary, though perhaps not sufficient determinant of real-world prices. By explaining the proportionality of prices of different commodities, it avoids the circularity of “cost” theories of price formation and the inadequacy of a supply-and-demand explanation. Bourgeois economics has no counterpart to fulfill this function.
Imperialist Rent
Of more interest is Amin’s innovative project, the expansion of the law of value into a law of global scope, the law of worldwide value. Central to this law is a distinction between those economies of the capitalist “core” – the advanced capitalist countries of Europe, North America and Japan—and the less developed economies of the South or “periphery.” From this once-widely-held thesis, Amin maintains that this distinction is generated and maintained by a structure of “imperialist rent”—a kind of imperial tax, systemic to the era of imperialism and imposed unerringly for the benefit of the core at the expense of the periphery.
There is much to recommend this view, especially as reflecting the world after World War II, with newly liberated, former colonial countries enduring the same kind of subordinate, super-exploitive economic relations as they did while under colonial subjugation. During the post-war era, the living standards on the periphery stagnated or declined, while working people in the core enjoyed some improvements and a relatively stable social life undoubtedly sustained in part by the super-exploitation of the periphery. In the same period, the periphery provided cheap raw materials to the core in exchange for expensive finished products, a clearly unequal exchange imposed by imperialism and inexplicable by mere market forces.
Certainly, these post-war developments provided facile experiential evidence for Amin’s and other theorists’ distinction. However, they were no more than that—they could not carry the weight of the claim that they evidenced a structural feature of global capitalism. They constituted no reflection of the deep logic of capitalism, no modification of Marxism’s fundamental law of value to fit the global economy.
Instead, they reflected historical contingencies in capitalism’s trajectory, contingencies that shifted again in the period to follow, with ever more varied and complex relationships between Amin’s core and periphery.
The bonds of colonialism were not severed easily. Political liberation was much easier to attain than socio-economic emancipation. Imperialism vigorously clung to and often enforced the former relationships. Further, most former colonies (most of the periphery) were deeply scarred by their histories of oppression and pillage. The former Spanish and Portuguese colonies of the New World demonstrate how severely these handicaps and imperial meddling can retard any real development for a very long time. And of course, the legacy of colonialism left few developed, unified peoples’ parties to effectuate a new path.
After the Second World War, the exigencies of the Cold War – the confrontation between the socialist bloc and the advanced capitalist countries—shaped relations between the core and periphery. The socialist community offered substantial material aid to many countries of the periphery (including some of the most active members of the non-aligned movement) in an effort to shore up their resistance to neo-colonial dominance. The advanced capitalist countries focused on undermining these efforts and maintaining the existing relationships under trusted, subservient regimes. They confronted these challenges covertly or through direct military intervention while establishing strategic outposts throughout the developing world, outposts like Israel, Iran, apartheid South Africa, Taiwan, etc.
Post-war monopoly capital focused on rebuilding a capitalist Europe and Japan because they offered a developed, though damaged, industrial infrastructure vitally in need of investment, and also provided cheap labor; and capital counted these countries as reliable allies in the Cold War. The Soviet effort to assist the periphery in escaping the clutches of neo-colonialism failed. Socialist material aid shifted necessarily to military aid and the countries of the periphery were denied the opportunity to peacefully develop a human and material infrastructure for advancement.
At this time, in the immediate decades after the war, conditions and production and distribution techniques were inadequately developed to fully exploit export-driven economies in the periphery. While cheap labor was available, industrial experience, urbanization, and infrastructure were lacking due to colonialism’s legacy. Similarly, the low levels of consumption from that legacy were unattractive to monopoly capital. The advanced capitalist countries neglected the periphery economically while attempting to dominate it politically.
The relationship between the core and periphery changed substantially over the next thirty years, changes brought on by transformation and advancement of production and distribution techniques, revolutionizing technologies, new divisions of labor, and the creation of an enormous labor market pool wrought by changes in the Chinese road to socialism and the demise of the European socialist states. The mobility of capital, the de-skilling of many manufacturing processes, new-found logistic efficiencies, cross-border assembly processes, de-regulation, free market ideology and, of course, cheap, flexible labor have created new conditions for exploitation in the periphery.
As a result, many, but certainly not all, of the peripheral nations have enjoyed growth rates far higher than the most advanced capitalist countries, as capital exploits low wage opportunities to shift production and services to its advantage. Where the doors are open, capital flows.
And the former privileged position of the core masses has eroded as productive activity has shifted South and East. Of course standards of living are still much higher in the core, but the trend is towards convergence as low- cost labor pressures those engaged in the diminishing industries of the US and UK core countries. Without a social net or their former public benefits, the once-socialist countries of Europe share an economic status akin to most peripheral countries. Their low wage levels have served as a magnet for capital and now pressure wage levels in Europe. Lower wage levels of some industrial workers in the US are now serving as leverage against their counterparts in Canada and other countries. In short, the development of the productive forces over past decades has vastly improved the hand of capital’s owners and managers to exploit global labor sources uninhibited by borders.
Thus, capitalism’s trajectory does not support a sharp economic divide between core and periphery. Nor does it support a theoretical addendum to the law of value expressed as “imperialist rent.”
I give core/periphery theorists this: the so-called peripheral countries are carrying the burden of anti-imperialist struggle far more than their brothers and sisters in the “core” who have failed to adequately find their place in this struggle. Remnants of their privileged position, chauvinism, and poisoned ideology keep them compliant as their privileges fade away. This is a matter of shame and embarrassment to those of us who live in the core countries.
Monopoly Capital: Sweezy and Baran
Amin generously acknowledges the intellectual heritage of the important, influential 1966 book, Monopoly Capital, by Paul Sweezy and Paul Baran, and he sees his book as part of the theoretical legacy of their work. Monopoly Capital is essential reading for many reasons, including its demonstration of the tendency of capital to concentration and centralization, a tendency that is well tracked and proven again and again in the pages of the late authors’ worthy journal, Monthly Review.
Sweezy and Baran dissected the sales effort and exposed the enormous material waste concomitant with monopoly capital, the ever-present role of militarism in maintaining the capitalist economic mechanism, and the hollow worth of life under monopoly capitalism. Their 1966 book contributed greatly to our understanding of these features of modern capitalism.
However, Monopoly Capital made a far more controversial claim: it argued that the concentration of capitalist enterprises diminished competition to the point that it changed the basic dynamics of capitalism, necessitating a modification of Marx’s analysis in Capital. Under monopoly (really, oligarchic) conditions, they see the laws of motion and basis for crises as different from what they were in Marx’s era of competitive capitalism.
Lacking competitive price pressure, giant corporations accumulate huge surpluses that cannot be adequately absorbed by reinvesting in capitalist growth when consumption is limited by a persistent rate of labor exploitation and the bounds of the gluttony of the rich. This over-accumulation results in investment in non-productive activities like the sales effort, product differentiation, false needs, military spending, government growth, etc. Eventually, these unproductive uses of the capitalist surplus lead to stagnation.
Amin attempts to demonstrate this theoretical turn by drawing on Marx’s two-sector expanded reproduction schema. He offers an algebraic argument with arithmetic examples to show that, at a given rate of exploitation and organic composition of capital, capital will eventually accumulate beyond the capacity of producer goods investment and investment in mass consumption to absorb it. Therefore, he argues, we must acknowledge a third sector— a “Department III” in Marx’s nomenclature—that absorbs the over-accumulation. And that third sector is co-extensive with the economic activities detailed in Monopoly Capital (John Bellamy Foster develops a similar three-sector analysis in “Marxian Economics and the State,” Science and Society, Fall, 1982).
It is significant and revealing that Amin’s argument is almost identical to the argument pressed by Henryk Grossmann’s 1929 book, The Law of Accumulation and Breakdown of the Capitalist System. Grossmann, too, uses Marx’s expanded reproduction schema to demonstrate an over-accumulation of capital after finite reproduction cycles. But it is telling that he draws a far different conclusion. Grossmann contends that over-accumulation generates a tendency for the rate of profit to fall (and lead to eventual crises) and not to unproductive or irrational “investment” and stagnation. Some might argue that, given the recent experience of sharp global economic decline following pressure on profitability, Grossmann’s views might offer a more satisfactory explanatory model.
We can credit Amin, Grossmann and Marx (in volume III, part III of Capital) for similar demonstrations of the tendency of capital to over-accumulate (with counter-tendencies discussed by all three), but they each draw different conclusions for the trajectory of capitalism.
In my view, over-accumulation is a persistent and pervasive tendency of capitalism in its competitive and monopoly phases. Indeed, it is, simply put, an inherent tendency in capitalist reproduction. Yet continuous concentration and centralization of capital are consistent with competition (Amin dismissively acknowledges it as “monopolistic competition”). Competition in the era of monopolies exists through changes in the regional and national balance of economic power, technological advantages, new product and industry introduction, rapid changes in manufacturing techniques, different management strategies, etc.—in short, a diverse set of factors beyond price competition. Robert Brenner traces this evolution of “monopolistic competition” convincingly in his account of “the long upturn” in The Economics of Global Turbulence (1998).
As for the absorption of the surplus generated by monopoly capitalism, the Monopoly Capital School underestimated the growth of consumption as a driving force of investment and productive activity. The relatively stagnant consumption base of the late sixties and seventies (in the US) expanded rapidly with women joining the workforce for both reasons of liberation and family survival. Equally, the authors failed to anticipate the explosion of consumer credit as a factor in consumption growth, a development fraught with problems, but powerfully boosting effective consumer demand.
From the eighties forward, the financial sector played a growing, even dominant role in absorbing the enormous monopoly surplus. In Monopoly Capital, Sweezy and Baran devoted a mere three pages to the financial, insurance, and real estate industries. Soon after the turn of this century, financial profits accounted for over 40% of the profits generated by the US economy, demonstrating its dominant role in surplus absorption. The authors vastly underestimated monopoly capitalism’s capacity to mortgage the future; they failed to anticipate how investments and bets on future gains could become the key factor (with disastrous results!) in exploiting the surplus. The relative decline in profitability of productive activity, poised against the growth of the surplus, led to “investment” in high-risk, future-directed speculation. The disaster ensued.
Amin, like his Monthly Review colleagues and many other Marxists, acknowledge this development with the unhelpful term: financialization---one of those trendy neologisms unrelated to any other aspect of Marxist theory. However, it is not enough to give a name to a profound shift in capitalism’s evolution without an equally deep Marxist analysis of debt and speculative capitalism. To my knowledge, that analysis is still forthcoming.
Old and New
The economic crises of the twenty-first century – the orgy of venture capital and technology speculation and the super-crisis of financial speculation-- afford Marxism a new opportunity to both energize a movement for socialism and revitalize the theoretical heritage of Marx, Engels, and Lenin. Both projects are behind schedule.
Crises expose the weaknesses of capitalism, but equally its inner logic. They display the mechanisms that propel growth and accumulation as well as those that produce failure.
Old views, like the ready, but theoretically weak under-consumptionist interpretation of crisis from a Marxist perspective, are swept away by the facts. Hyper-accumulation of capital in the hands of a few was the antecedent of these crises and not a drop in consumption. The economic data prior to the twenty-first-century crises demonstrate this clearly. The destruction of living standards and erosion of consumption were the effect and not the cause, an effect that indeed deepened the crises. Our understanding of capitalism’s dynamic begins with our understanding of the role of surplus and the capitalist’s unending drive to invest surplus profitably. I believe Samir Amin shares the recognition of the central role of accumulation in the system’s mechanism, but he is shackled by the Sweezy/Baran interpretation in applying it to today’s global economy. Sweezy and Baran (and Amin) drew their useful insights from a different era in capitalism’s evolution. Despite Amin’s intelligent efforts to apply those insights to today’s global economy, The Law of Worldwide Value falls short. That era was one of decadence and stagnation; this era is one of decline and multi-faceted crises. For Amin, the “new” is a characterization of our moment as “late capitalism of generalized, financialized, and globalized monopolies.” But this is merely an observation and not a theoretical analysis, an identification and not an explanation.
Different theoretical conclusions must be drawn; and a different politics is necessary.
Zoltan Zigedy
zoltanzigedy@gmail.com
Thursday, March 22, 2012
Tuesday, March 6, 2012
The Battle for China’s Future
Suppose your favorite basketball team leads by twenty points at half-time, with more rebounds and steals and far fewer turnovers than its opponent. The athletic director rushes into the locker room and announces to the coach and players that unless they radically change the game plan, they will suffer a devastating defeat. Your first thought would likely be that the athletic director has taken leave of his senses. Or that he or she has been bought off by the rival.
Yet this is exactly like the advice that The World Bank and the Development Research Center urged upon The Peoples’ Republic of China on Monday, February 27. In a report entitled “China 2030,” the two entities—one a notorious cheerleader for free markets, privatization and meager social spending and the other an arm of the State Council of the People’s Republic of China—concede that the PRC has enjoyed 30 years of an average of nearly 10% annual growth. Besides this stunning achievement, the PRC negotiated the treacherous shoals of the world-wide economic crisis far better than any other large economy.
One would think that the study would probe the basis for this remarkable achievement and urge its continuance. Perhaps The World Bank would even suggest a similar approach for other countries. But instead, the authors of the report issue dire warnings of rough times ahead and prescribe urgent changes.
They warn that the average growth rate for the next 19 years will only be 6.6%. Assuming that the projection has some theoretical justification (World Bank predictions have fallen on hard times), the PRC economy would, at this rate, double in GDP every 11 years. Indeed, the report notes that it would become the world’s largest economy before 2030. Apparently, the authors of China 2030 are not impressed.
This warning is even more puzzling when we remember that most mainstream developmental economists project a declining growth rate as economies mature. Following W. W. Rostow’s heralded theory, high growth rates are only a feature of economies experiencing a “take-off.” Necessarily, growth slows, they agree, after the initial rapid expansion. Such a theory justifies the relatively low growth rates of the most advanced capitalist nations.
The PRC’s “friends” evade these questions by raising the dangers posed by the “middle-income trap,” a theoretical construct first suggested by economists in 2007. Noting the difficulties that many emerging market economies had in the 60’s and 70’s, they offer a muddled explanation of their failings, ignoring their political turmoil, dependencies, resource deficiencies, etc. Of the rare thirteen proclaimed “successes”—countries that elevated to the high-income category – four are now spiraling into the low-income ghetto. Greece, Portugal, Ireland, and Spain dutifully followed the prior prescriptions of The World Bank and The International Monetary Fund and are now choking on the Kool-Aid. The authors of China 2030 see no irony in this.
The report comes at a particularly opportune time, a week before the PRC’s annual meeting of the National People’s Congress. Media reports signal a heightening of tension between political leaders who wish to press forward with privatization and market de-regulation and those who want to preserve or even expand the socialist elements still extant in the economy and social life. A recent article in The Wall Street Journal (Fate of Two Chiefs Gives Clues on China, 3-3/4-12) embodies this struggle in the views of two rising leaders, Bo Xilai and Wang Yang. Clearly, China 2030 is ammunition for the rightists typified by Wang Yang.
While the Western media anticipated a lambasting of the state-owned sector, a boost for privatization, reduced government intervention and more doors open to Western corporations (see New Push for Reform in China, WSJ, 2-23-12 for a lengthy discussion), the report complied in somewhat veiled, measured econ-speak. Its primary recommendation was to implement structural reforms to:
In case the point was not made emphatically enough, the report goes on:
Why these “reforms” are necessary and how they will improve prospects is never fully explained, except through blatant appeals to the neo-liberal manifesto. Since the state-owned industries represent 45% of non-agricultural GDP and they almost tripled their contribution to gross industrial output from 1998 to 2009, something beyond dogma is wanted.
The West and its accomplices in the PRC have their eyes on key state monopolies in petroleum, chemicals, electricity, and telecommunications as well as the state-dominated banking system. Under the guise of stimulating competition, the report argues for “breaking up state monopolies or oligarchies in key industries,” the first steps towards privatization. Undoubtedly, foreign capitalist monopoly corporations are lusting after these assets.
As I argued several months ago (The Chinese Puzzle, ZZ’s Blog, 12-14-11), the future of the PRC remains a mystery, with the leadership walking the thin, risky line between emerging capitalism and the remaining socialist institutions. But, clearly, The World Bank and its Chinese allies are determined to influence that direction. And there should be no doubt which direction China 2030 is intended to push those leaders.
Zoltan Zigedy
zoltanzigedy@gmail.com
Yet this is exactly like the advice that The World Bank and the Development Research Center urged upon The Peoples’ Republic of China on Monday, February 27. In a report entitled “China 2030,” the two entities—one a notorious cheerleader for free markets, privatization and meager social spending and the other an arm of the State Council of the People’s Republic of China—concede that the PRC has enjoyed 30 years of an average of nearly 10% annual growth. Besides this stunning achievement, the PRC negotiated the treacherous shoals of the world-wide economic crisis far better than any other large economy.
One would think that the study would probe the basis for this remarkable achievement and urge its continuance. Perhaps The World Bank would even suggest a similar approach for other countries. But instead, the authors of the report issue dire warnings of rough times ahead and prescribe urgent changes.
They warn that the average growth rate for the next 19 years will only be 6.6%. Assuming that the projection has some theoretical justification (World Bank predictions have fallen on hard times), the PRC economy would, at this rate, double in GDP every 11 years. Indeed, the report notes that it would become the world’s largest economy before 2030. Apparently, the authors of China 2030 are not impressed.
This warning is even more puzzling when we remember that most mainstream developmental economists project a declining growth rate as economies mature. Following W. W. Rostow’s heralded theory, high growth rates are only a feature of economies experiencing a “take-off.” Necessarily, growth slows, they agree, after the initial rapid expansion. Such a theory justifies the relatively low growth rates of the most advanced capitalist nations.
The PRC’s “friends” evade these questions by raising the dangers posed by the “middle-income trap,” a theoretical construct first suggested by economists in 2007. Noting the difficulties that many emerging market economies had in the 60’s and 70’s, they offer a muddled explanation of their failings, ignoring their political turmoil, dependencies, resource deficiencies, etc. Of the rare thirteen proclaimed “successes”—countries that elevated to the high-income category – four are now spiraling into the low-income ghetto. Greece, Portugal, Ireland, and Spain dutifully followed the prior prescriptions of The World Bank and The International Monetary Fund and are now choking on the Kool-Aid. The authors of China 2030 see no irony in this.
The report comes at a particularly opportune time, a week before the PRC’s annual meeting of the National People’s Congress. Media reports signal a heightening of tension between political leaders who wish to press forward with privatization and market de-regulation and those who want to preserve or even expand the socialist elements still extant in the economy and social life. A recent article in The Wall Street Journal (Fate of Two Chiefs Gives Clues on China, 3-3/4-12) embodies this struggle in the views of two rising leaders, Bo Xilai and Wang Yang. Clearly, China 2030 is ammunition for the rightists typified by Wang Yang.
While the Western media anticipated a lambasting of the state-owned sector, a boost for privatization, reduced government intervention and more doors open to Western corporations (see New Push for Reform in China, WSJ, 2-23-12 for a lengthy discussion), the report complied in somewhat veiled, measured econ-speak. Its primary recommendation was to implement structural reforms to:
…strengthen the foundations for a market based economy by redefining the role of government, reforming and restructuring state enterprises and banks, developing the private sector, promoting competition, and deepening reforms in the land, labor, and financial markets. As an economy approaches the technology frontier and exhausts the potential for acquiring and applying technology from abroad, the role of the government and its relationship to markets and the private sector need to change fundamentally. While providing relatively fewer “tangible” public goods and services directly, the government will need to provide more intangible public goods and services like systems, rules, and policies, which increase production efficiency, promote competition, facilitate specialization, enhance the efficiency of resource allocation…
In case the point was not made emphatically enough, the report goes on:
In the enterprise sector, the focus will need to be further reforms of state enterprises (including measures to recalibrate the role of public resources, introduce modern corporate governance practices including separating ownership from management, and implement gradual ownership diversification where necessary), private sector development and fewer barriers to entry and exit, and increased competition in all sectors, including in strategic and pillar industries. In the financial sector, it would require commercializing the banking system, gradually allowing interest rates to be set by market forces, deepening the capital market, and developing the legal and supervisory infrastructure to ensure financial stability and build the credible foundations for the internationalization of China’s financial sector.
Why these “reforms” are necessary and how they will improve prospects is never fully explained, except through blatant appeals to the neo-liberal manifesto. Since the state-owned industries represent 45% of non-agricultural GDP and they almost tripled their contribution to gross industrial output from 1998 to 2009, something beyond dogma is wanted.
The West and its accomplices in the PRC have their eyes on key state monopolies in petroleum, chemicals, electricity, and telecommunications as well as the state-dominated banking system. Under the guise of stimulating competition, the report argues for “breaking up state monopolies or oligarchies in key industries,” the first steps towards privatization. Undoubtedly, foreign capitalist monopoly corporations are lusting after these assets.
As I argued several months ago (The Chinese Puzzle, ZZ’s Blog, 12-14-11), the future of the PRC remains a mystery, with the leadership walking the thin, risky line between emerging capitalism and the remaining socialist institutions. But, clearly, The World Bank and its Chinese allies are determined to influence that direction. And there should be no doubt which direction China 2030 is intended to push those leaders.
Zoltan Zigedy
zoltanzigedy@gmail.com
Sunday, February 26, 2012
Stern Advice to the Left from the House of Lords
A sense of humor is essential to balance the humbuggery of much of the political commentary that surfaces today. “Astonishment” is the best word for a recent “provocative discussion” (Say No to Protectionism) posted on the Political Affairs website and authored by Peter Mandelson--“Lord Mandelson” to his UK peers. In the past, Political Affairs was the source of timely, informative articles that expressed the views of advocates of the Marxist-Leninist perspective, authors like Jacques Duclos, Palmiro Togliatti, William Z. Foster, Henry Winston, Herbert Aptheker, Paul Robeson, and many other committed Communists.
But today Political Affairs embraces a far wider spectrum of opinion including now, for undoubtedly the first time, a “lord” from the prestigious UK House of Lords, Lord Peter Mandelson. Unlike Foster, Winston, and Robeson, Mandelson has established his credentials by championing the “third way”, a position to the right of traditional social democratic doctrine.
Mandelson, a pal of George Bush’s subservient buddy, Tony Blair, argued that the UK Labour Party should transform into a market-friendly, classless party located somewhere in the narrow political space occupied by the US two-party farce.
While advocating the vacuous, yet successful ideological fakery of Tony Blair,
he managed to cash in on the new opportunities afforded by the “third way”. Undeterred by the media scandals—the multiple resignations from government positions forced by shaky financial dealings—Mandelson persevered with his personal program. Like his US counterparts in governing, he managed to accumulate a fortune and achieve a tainted celebrity.
Mandelson’s subservience to capital has earned him—besides a “lordship”—a consultancy firm, an advisory position with the banking firm, Lazard Freres, and participation in the elite Bilderberg conference: all dubiously supportive of his leftist credentials.
Though Mandelson’s career has been tarnished by opportunistic changes of heart, charges of corruption, and political expediency, those facts do not necessarily diminish his argument. In other words, it doesn’t follow that Mandelson is wrong simply because he is a scoundrel.
So what does Mandelson have to say?
Put bluntly, Mandelson offers a simple, lordly scold to the Left: Say “no” to protectionism; say “yes” to globalization. In his words, “The most important focus for the left should be on equipping people to live in an uncertain economic world, not shutting that world out.”
But let us be clear: in the tortured language of modern day media punditry, Mandelson isn’t scolding the traditional Left of Marx, Lenin, or even the Left of Ralph Nader or Dennis Kucinich, as the editor of Political Affairs might want us believe. Instead, Mandelson means the tepid, slippery left of Barack Obama and Francois Hollande, the Left defined by its ever-so-slight distance from the Center and its merely rhetorical commitment to common folks. One might better call it the “corporate Left” for its refusal to decouple any popular reform from the promotion of corporate interests. That is, Obama and Hollande are really “third way” Left poseurs like Mandelson’s pal, Tony Blair. Hollande, the Presidential candidate of France’s misnamed Socialist Party, says as much in a recent interview in the UK Guardian (http://www.guardian.co.uk/world/2012/feb/17/francois-hollande-uk-city-london) where he heaps lavish praise upon Blair as well as associating himself with Obama’s policies.
While monopoly capital has little to fear from these third-wayers, Mandelson knows that in the heat of both Obama and Hollande’s electoral campaigns, they may well reach deep into their bags of campaign tricks and pull out a calculated populist promise to be tossed to the masses. His concern is that some may take them at their word and actually expect a mild rebuke to the corporate agenda.
For Mandelson, the great fear is that his ideological compatriots might back away from a fully enthusiastic commitment to “globalization”. Now “globalization” is one of those unfortunate and lazy terms that rise to the surface of popular discourse while masking more than it reveals. For decades, talk of free trade, the sins of protectionism, and the enhancement of international competitiveness have been a cover for the exploitation of labor markets. In the end, all the speeches, legislation, and agreements have been constructed to allow capital to flow freely and easily to centers of cheap labor—no more, no less.
It should be obvious that regions, countries, sections, and cities differ vastly in terms of resources, infrastructure, technologies, and capital. But the one element that they all share, the one element that can flexibly change to meet competition, is the cost of labor-power; workers can always be convinced or forced to work for less. A country or region cannot compete globally in the energy market if it has no energy resources, but any country can choose to compete by offering cheaper labor for production or services. Thus, behind all the promised benefits of globalization lies a profit-driven motive: cheap labor. Of course capitalists are not concerned that this process inevitably results in a wage-death spiral.
The big lie proffered by Mandelson and his ilk is that global, unfettered competition can produce a world of winners. Yes, even the most apathetic sports fan knows that competition is about winners and losers; someone loses when someone else wins. Perhaps when David Ricardo wrote nearly two centuries ago about countries enjoying relative advantages, the idea of winning some competitions and losing others made some sense. But in today’s world of huge trans-national monopoly enterprises rushing from one low wage area, then to another, the ancient argument dissolves. Only a fool does not see this. And Mandelson is no fool.
He writes that: “The banking crisis discredited certain kinds of financial capitalism and financial regulation and not capitalism in general…we still have to have faith in the basic model of an open and competitive economy.”
And faith is all that Mandelson offers. Only a “lord” in the church of market fundamentalism could disconnect the financially-triggered crisis from the trajectory of global capitalism. Vast wealth and income inequalities, spawned in large part by the “globalization” so dear to Mandelson’s heart, generated a vast ocean of capital seeking investment opportunities. Capitalists found a haven for this enormous glut of surplus value in the banks and other financial institutions, a haven promising strong returns through speculative ventures. Of course this was not a random series of events, but another logical step in the evolution of monopoly capitalism driven by the insatiable thirst for profit.
If over four years of global economic turmoil, four years of mass unemployment and declining living standards, does not “discredit… capitalism in general”, one wonders what would. With even conservative institutions like the IMF and the OECD projecting 5 to 10 more years of pain and suffering in Europe, one wonders what stands behind Mandelson’s vote of confidence.
Perhaps Lord Mandelson’s advice to the left will advance his career and earn him the prestigious knighthood. Certainly he has served the ruling class well.
Zoltan Zigedy
zoltanzigedy@gmail.com
But today Political Affairs embraces a far wider spectrum of opinion including now, for undoubtedly the first time, a “lord” from the prestigious UK House of Lords, Lord Peter Mandelson. Unlike Foster, Winston, and Robeson, Mandelson has established his credentials by championing the “third way”, a position to the right of traditional social democratic doctrine.
Mandelson, a pal of George Bush’s subservient buddy, Tony Blair, argued that the UK Labour Party should transform into a market-friendly, classless party located somewhere in the narrow political space occupied by the US two-party farce.
While advocating the vacuous, yet successful ideological fakery of Tony Blair,
he managed to cash in on the new opportunities afforded by the “third way”. Undeterred by the media scandals—the multiple resignations from government positions forced by shaky financial dealings—Mandelson persevered with his personal program. Like his US counterparts in governing, he managed to accumulate a fortune and achieve a tainted celebrity.
Mandelson’s subservience to capital has earned him—besides a “lordship”—a consultancy firm, an advisory position with the banking firm, Lazard Freres, and participation in the elite Bilderberg conference: all dubiously supportive of his leftist credentials.
Though Mandelson’s career has been tarnished by opportunistic changes of heart, charges of corruption, and political expediency, those facts do not necessarily diminish his argument. In other words, it doesn’t follow that Mandelson is wrong simply because he is a scoundrel.
So what does Mandelson have to say?
Put bluntly, Mandelson offers a simple, lordly scold to the Left: Say “no” to protectionism; say “yes” to globalization. In his words, “The most important focus for the left should be on equipping people to live in an uncertain economic world, not shutting that world out.”
But let us be clear: in the tortured language of modern day media punditry, Mandelson isn’t scolding the traditional Left of Marx, Lenin, or even the Left of Ralph Nader or Dennis Kucinich, as the editor of Political Affairs might want us believe. Instead, Mandelson means the tepid, slippery left of Barack Obama and Francois Hollande, the Left defined by its ever-so-slight distance from the Center and its merely rhetorical commitment to common folks. One might better call it the “corporate Left” for its refusal to decouple any popular reform from the promotion of corporate interests. That is, Obama and Hollande are really “third way” Left poseurs like Mandelson’s pal, Tony Blair. Hollande, the Presidential candidate of France’s misnamed Socialist Party, says as much in a recent interview in the UK Guardian (http://www.guardian.co.uk/world/2012/feb/17/francois-hollande-uk-city-london) where he heaps lavish praise upon Blair as well as associating himself with Obama’s policies.
While monopoly capital has little to fear from these third-wayers, Mandelson knows that in the heat of both Obama and Hollande’s electoral campaigns, they may well reach deep into their bags of campaign tricks and pull out a calculated populist promise to be tossed to the masses. His concern is that some may take them at their word and actually expect a mild rebuke to the corporate agenda.
For Mandelson, the great fear is that his ideological compatriots might back away from a fully enthusiastic commitment to “globalization”. Now “globalization” is one of those unfortunate and lazy terms that rise to the surface of popular discourse while masking more than it reveals. For decades, talk of free trade, the sins of protectionism, and the enhancement of international competitiveness have been a cover for the exploitation of labor markets. In the end, all the speeches, legislation, and agreements have been constructed to allow capital to flow freely and easily to centers of cheap labor—no more, no less.
It should be obvious that regions, countries, sections, and cities differ vastly in terms of resources, infrastructure, technologies, and capital. But the one element that they all share, the one element that can flexibly change to meet competition, is the cost of labor-power; workers can always be convinced or forced to work for less. A country or region cannot compete globally in the energy market if it has no energy resources, but any country can choose to compete by offering cheaper labor for production or services. Thus, behind all the promised benefits of globalization lies a profit-driven motive: cheap labor. Of course capitalists are not concerned that this process inevitably results in a wage-death spiral.
The big lie proffered by Mandelson and his ilk is that global, unfettered competition can produce a world of winners. Yes, even the most apathetic sports fan knows that competition is about winners and losers; someone loses when someone else wins. Perhaps when David Ricardo wrote nearly two centuries ago about countries enjoying relative advantages, the idea of winning some competitions and losing others made some sense. But in today’s world of huge trans-national monopoly enterprises rushing from one low wage area, then to another, the ancient argument dissolves. Only a fool does not see this. And Mandelson is no fool.
He writes that: “The banking crisis discredited certain kinds of financial capitalism and financial regulation and not capitalism in general…we still have to have faith in the basic model of an open and competitive economy.”
And faith is all that Mandelson offers. Only a “lord” in the church of market fundamentalism could disconnect the financially-triggered crisis from the trajectory of global capitalism. Vast wealth and income inequalities, spawned in large part by the “globalization” so dear to Mandelson’s heart, generated a vast ocean of capital seeking investment opportunities. Capitalists found a haven for this enormous glut of surplus value in the banks and other financial institutions, a haven promising strong returns through speculative ventures. Of course this was not a random series of events, but another logical step in the evolution of monopoly capitalism driven by the insatiable thirst for profit.
If over four years of global economic turmoil, four years of mass unemployment and declining living standards, does not “discredit… capitalism in general”, one wonders what would. With even conservative institutions like the IMF and the OECD projecting 5 to 10 more years of pain and suffering in Europe, one wonders what stands behind Mandelson’s vote of confidence.
Perhaps Lord Mandelson’s advice to the left will advance his career and earn him the prestigious knighthood. Certainly he has served the ruling class well.
Zoltan Zigedy
zoltanzigedy@gmail.com
Monday, January 23, 2012
Theater of the Absurd
Talented artists are gifted with the ability to take some commonplace belief or unquestioned assumption and reveal underlying nonsense. Still others craft inventive works that expose fatuity lurking behind pomposity and platitudes.
But consider some of the events transpiring over the last few weeks. Reality is indeed stranger than fiction. These events rival any work of literature in illustrating hypocrisy and proud ignorance. And the real-life actors in this public theater know no shame or regret.
The Republican primary medicine show is low entertainment. Its candidates and their stage hands have amused liberal, but spineless commentators and shocked international observers with the primary debate inanities.
Within the arena of right-wing ultimate fighting, Gingrich has assailed Romney’s money making career as “vulture capitalism.” Romney sups at the table of Bain Capital, a private equity fund that preys on vulnerable businesses weighed by debt and burdened by marginally criminal mismanagement. Bain buys these businesses at a heavily discounted price by leveraging their substantial assets and then guts the victims chiefly of their employees, imposing a new draconian labor discipline, and reselling the polished product at an enormous profit. Indeed, "vulture capitalism" is the appropriate term for this parasitic process widely practiced among ambitious capitalists in the US.
But wait! This exposé came from Newt Gingrich? Not from Paul Krugman? Joseph Stiglitz? Or any of the other economists or pundits arrayed around the liberal wing of the Democratic Party? None of the Party’s shrewd operatives rallied around President Obama? Or the President himself?
No, this exposé of vulture capitalism came from one of the icons of the ultra-right. Further, the ultra-right fed on the revelation that Romney only paid taxes at a rate of 15% or less compared to the much higher rates paid by most citizens.
Surely this is class warfare initiated from the right. And just as surely no prominent Democrat – representing the presumed Party of working people – joined the chorus. As David Bromwich noted, in The New York Review of Books (2-9-2012), “Gingrich… fleetingly placed himself to the left of President Obama, who has been careful to portray the financial collapse as a disaster without a villain.” Isn’t this an indictment of the hypocrisy and deception of the two-party circus?
Yes. Exposing a sector of capitalism as illegitimate is beyond the pale, beyond the two-party discourse, even though no one but Romney has rushed to defend it. Everyone knows that private equity firms – that have worked their black magic on over 3,200 firms – engage in wholesale destructive behavior (apologists call it “constructive destruction”) yet no one will say it – except Gingrich.
Similarly, Ron Paul, the only candidate in years with a set of internally consistent principles, has dared to challenge the two-party consensus on aggressive imperialism, arguing that the US should abandon its occupations and wars and let the rest of the world (including Iran) go its own way. Paul, the only Republican right-wing ideologue who believes what he says, stands for an anachronistic Republicanism favored by the Party before the New Deal. The target of liberal derision because of his appearance and mannerisms and discounted by conservatives because of his slender fund-raising, Paul continues to have his campaign energized by poll results and young volunteers impressed with his integrity. And he dares to speak heresy.
Of course those who respect the man’s integrity should consider the consequences of his free market and barely-breathing government principles before jumping on his bandwagon. Nineteenth-century nostrums are not the solution to twenty-first-century problems, regardless of Paul’s honesty.
It is incredible, however, that no one among the left of the Democratic Party’s luminaries has either defended Paul’s anti-imperialism or, at least, used it as a spring board for a tepid critique of US policies regarding Israel, Iran, or the rest of the Middle East. Again, writing in the New York Review of Books, David Bromwich ventures: “In addressing such issues, he has no rival among Republicans, and, after the death of Robert Byrd and the defeat of Russ Feingold, none among Democrats of national stature. On issues of national security and war, he is the American politician who speaks to Americans as if they were grownups interested in their own condition…”
But who speaks for “grownups” on the other urgent issues? Certainly not the Democrats. This is surely a measure of the untenable, unpopular and unsustainable US two-party system and its money-driven pre-election entertainment.
●●●
Hungary has its own Ron Paul in the body of conservative Prime Minister Viktor Orban. A political maverick born of the anti-Communist scramble for power after Hungary’s socialist government crumbled, Orban won election in 2010 representing the right-wing, nationalist Fidesz Party. Lacking Paul’s principles or any principles at all, Orban delights in playing to nationalist sentiments and defying the EU and the IMF. I wrote earlier of the outrage created by Orban when he dared to tax banks to reduce Hungary’s deficit. As I sarcastically noted, austerity programs to lower the deficit on the backs of working people are prescribed by these august bodies, but raising revenue by taxing banks is strictly forbidden, even though the deficit-lowering results would be the same! So much for the independence and objectivity of the EU and the IMF.
Orban struck again late last year securing a parliamentary law that slightly limits the powers of Hungary’s Central Bank. Like most Central Banks, Hungary’s enjoys a special status buffering it from any popular or governmental influence. In essence, capitalist Central banks are enormously powerful economic actors that are isolated from any kind of democratic control, pressure, or oversight. And the EU, the IMF, and capitalism, in general, want to keep it that way. It is capitalism’s ultimate economic tool immunized from the will of the people.
Orban’s parliament would place a government minister on the Bank’s monetary council, seemingly a small step towards democratizing the Bank, as well as requiring the Bank to share its meeting agenda with the parliament, another small step towards transparency. The move was met by righteous indignation from the European Commission (threatening to sue), the IMF (threatening to withhold funds) and the entire global financial hierarchy. They charged indignantly that the new law compromised the Central Bank’s “independence”.
Of course the question is independence from whom. Currently the Bank is independent from any sort of Hungarian popular governance, but it is hardly independent from outside influence, particularly the IMF, the EU, and financial markets. This is a strange sort of independence advocated and protected by foreign financial forces. To quote the famed philosopher, Humpty Dumpty: “When I use a word… it means just what I choose it to mean—neither more nor less.” Financial elites occupy the same fantasy world created by Lewis Carroll.
●●●
US workers can breathe easier. The wholesale destruction of their living standards, benefits, and wages, coupled with a dramatic increase in the rate of exploitation over the last decade is paying dividends. But not dividends for them.
Recently Caterpillar Inc locked out its Canadian workers in London, Ontario, contending that the workers need to cut their pay dramatically. They point to the fact that Caterpillar pays its workers 50% less in Lagrange, Illinois. Quoting The Wall Street Journal (US: A Cheaper Labor Pool 1-6-2012): “…[B]ut instead of pointing to the usual models of cheap and pliant labor, such as China and Mexico, it is using a more surprising example: the US.”
So the tables are turning and today we find that US workers are setting miserable standards of pay and benefits against their Canadian and European counterparts. They, in turn, could repeat the same sad misguided tactic popular in the US by blaming poorly paid “foreigners” – in this case US workers or their government’s policies -- for the pressure on their living standards. US hourly compensation costs in manufacturing rose only 39% over the last decade, while average comparable labor costs grew by 74% in OECD countries and 91% in Canada.
Put differently, labor costs per unit of output in the US are 13% less than they were in manufacturing a decade earlier. In Germany they rose 2.3%, the Republic of Korea 15%, and Canada 18%. These figures are most telling because they reflect—assuming roughly similar levels of productive force development – differences in the relative rates of exploitation. Clearly US workers have surrendered far more than their international brothers and sisters while being squeezed much harder in the work place.
Instead of the divisive and diversionary tactic of blaming foreign governments or foreign workers for job losses or pay cuts – typically China – it’s time to target the trans-national corporations that exploit labor cost differentials to increase profits. Like the machine-breakers of yore, workers and their trade union leaders must correctly identify the enemy and embrace class struggle unionism if they have any hope of stopping this destructive game of competition to see who can offer the best wage deal to rapacious corporations.
●●●
Speaking of China, the Western media reported on January 17 an ominous drop in fourth quarter GDP in the Peoples Republic of China; quoting Reuters: “Growth of 8.9% over a year earlier was slightly [my emphasis] stronger than the 8.7% forecast by economists in a Reuters poll, but the data on Tuesday raised concerns about the immediate outlook and how much support China can offer a struggling global economy… Growth for all of 2012 slipped to 9.2%, a pace last seen in 2009… from 10.4% in 2010."
While it is true that the PRC GDP growth dropped slightly (5%) from the 3rd to the 4th quarter, it meant that that the PRC GDP would double, at that rate, in a little over eight years rather than a bit more than seven and a half – not a bad performance either way for the world’s second largest economy. Put into perspective, the OECD estimates that from 2011 through 2013 the collective OECD states (including PRC) will only average less than 2% growth. At that rate, it would take the entire OECD over 37 years to double its economic output!
But the Reuters report, like so many other media accounts of PRC 4th quarter GDP performance, masks two implicit points:
So it’s not the future of the Chinese people that so worries the pundits, but the impact of the Chinese economic engine on capitalism’s future. At the same time, they continue to demonize the policies that fuel that powerful engine. Strange, indeed.
Zoltan Zigedy
zoltanzigedy@gmail.com
But consider some of the events transpiring over the last few weeks. Reality is indeed stranger than fiction. These events rival any work of literature in illustrating hypocrisy and proud ignorance. And the real-life actors in this public theater know no shame or regret.
The Republican primary medicine show is low entertainment. Its candidates and their stage hands have amused liberal, but spineless commentators and shocked international observers with the primary debate inanities.
Within the arena of right-wing ultimate fighting, Gingrich has assailed Romney’s money making career as “vulture capitalism.” Romney sups at the table of Bain Capital, a private equity fund that preys on vulnerable businesses weighed by debt and burdened by marginally criminal mismanagement. Bain buys these businesses at a heavily discounted price by leveraging their substantial assets and then guts the victims chiefly of their employees, imposing a new draconian labor discipline, and reselling the polished product at an enormous profit. Indeed, "vulture capitalism" is the appropriate term for this parasitic process widely practiced among ambitious capitalists in the US.
But wait! This exposé came from Newt Gingrich? Not from Paul Krugman? Joseph Stiglitz? Or any of the other economists or pundits arrayed around the liberal wing of the Democratic Party? None of the Party’s shrewd operatives rallied around President Obama? Or the President himself?
No, this exposé of vulture capitalism came from one of the icons of the ultra-right. Further, the ultra-right fed on the revelation that Romney only paid taxes at a rate of 15% or less compared to the much higher rates paid by most citizens.
Surely this is class warfare initiated from the right. And just as surely no prominent Democrat – representing the presumed Party of working people – joined the chorus. As David Bromwich noted, in The New York Review of Books (2-9-2012), “Gingrich… fleetingly placed himself to the left of President Obama, who has been careful to portray the financial collapse as a disaster without a villain.” Isn’t this an indictment of the hypocrisy and deception of the two-party circus?
Yes. Exposing a sector of capitalism as illegitimate is beyond the pale, beyond the two-party discourse, even though no one but Romney has rushed to defend it. Everyone knows that private equity firms – that have worked their black magic on over 3,200 firms – engage in wholesale destructive behavior (apologists call it “constructive destruction”) yet no one will say it – except Gingrich.
Similarly, Ron Paul, the only candidate in years with a set of internally consistent principles, has dared to challenge the two-party consensus on aggressive imperialism, arguing that the US should abandon its occupations and wars and let the rest of the world (including Iran) go its own way. Paul, the only Republican right-wing ideologue who believes what he says, stands for an anachronistic Republicanism favored by the Party before the New Deal. The target of liberal derision because of his appearance and mannerisms and discounted by conservatives because of his slender fund-raising, Paul continues to have his campaign energized by poll results and young volunteers impressed with his integrity. And he dares to speak heresy.
Of course those who respect the man’s integrity should consider the consequences of his free market and barely-breathing government principles before jumping on his bandwagon. Nineteenth-century nostrums are not the solution to twenty-first-century problems, regardless of Paul’s honesty.
It is incredible, however, that no one among the left of the Democratic Party’s luminaries has either defended Paul’s anti-imperialism or, at least, used it as a spring board for a tepid critique of US policies regarding Israel, Iran, or the rest of the Middle East. Again, writing in the New York Review of Books, David Bromwich ventures: “In addressing such issues, he has no rival among Republicans, and, after the death of Robert Byrd and the defeat of Russ Feingold, none among Democrats of national stature. On issues of national security and war, he is the American politician who speaks to Americans as if they were grownups interested in their own condition…”
But who speaks for “grownups” on the other urgent issues? Certainly not the Democrats. This is surely a measure of the untenable, unpopular and unsustainable US two-party system and its money-driven pre-election entertainment.
●●●
Hungary has its own Ron Paul in the body of conservative Prime Minister Viktor Orban. A political maverick born of the anti-Communist scramble for power after Hungary’s socialist government crumbled, Orban won election in 2010 representing the right-wing, nationalist Fidesz Party. Lacking Paul’s principles or any principles at all, Orban delights in playing to nationalist sentiments and defying the EU and the IMF. I wrote earlier of the outrage created by Orban when he dared to tax banks to reduce Hungary’s deficit. As I sarcastically noted, austerity programs to lower the deficit on the backs of working people are prescribed by these august bodies, but raising revenue by taxing banks is strictly forbidden, even though the deficit-lowering results would be the same! So much for the independence and objectivity of the EU and the IMF.
Orban struck again late last year securing a parliamentary law that slightly limits the powers of Hungary’s Central Bank. Like most Central Banks, Hungary’s enjoys a special status buffering it from any popular or governmental influence. In essence, capitalist Central banks are enormously powerful economic actors that are isolated from any kind of democratic control, pressure, or oversight. And the EU, the IMF, and capitalism, in general, want to keep it that way. It is capitalism’s ultimate economic tool immunized from the will of the people.
Orban’s parliament would place a government minister on the Bank’s monetary council, seemingly a small step towards democratizing the Bank, as well as requiring the Bank to share its meeting agenda with the parliament, another small step towards transparency. The move was met by righteous indignation from the European Commission (threatening to sue), the IMF (threatening to withhold funds) and the entire global financial hierarchy. They charged indignantly that the new law compromised the Central Bank’s “independence”.
Of course the question is independence from whom. Currently the Bank is independent from any sort of Hungarian popular governance, but it is hardly independent from outside influence, particularly the IMF, the EU, and financial markets. This is a strange sort of independence advocated and protected by foreign financial forces. To quote the famed philosopher, Humpty Dumpty: “When I use a word… it means just what I choose it to mean—neither more nor less.” Financial elites occupy the same fantasy world created by Lewis Carroll.
●●●
US workers can breathe easier. The wholesale destruction of their living standards, benefits, and wages, coupled with a dramatic increase in the rate of exploitation over the last decade is paying dividends. But not dividends for them.
Recently Caterpillar Inc locked out its Canadian workers in London, Ontario, contending that the workers need to cut their pay dramatically. They point to the fact that Caterpillar pays its workers 50% less in Lagrange, Illinois. Quoting The Wall Street Journal (US: A Cheaper Labor Pool 1-6-2012): “…[B]ut instead of pointing to the usual models of cheap and pliant labor, such as China and Mexico, it is using a more surprising example: the US.”
So the tables are turning and today we find that US workers are setting miserable standards of pay and benefits against their Canadian and European counterparts. They, in turn, could repeat the same sad misguided tactic popular in the US by blaming poorly paid “foreigners” – in this case US workers or their government’s policies -- for the pressure on their living standards. US hourly compensation costs in manufacturing rose only 39% over the last decade, while average comparable labor costs grew by 74% in OECD countries and 91% in Canada.
Put differently, labor costs per unit of output in the US are 13% less than they were in manufacturing a decade earlier. In Germany they rose 2.3%, the Republic of Korea 15%, and Canada 18%. These figures are most telling because they reflect—assuming roughly similar levels of productive force development – differences in the relative rates of exploitation. Clearly US workers have surrendered far more than their international brothers and sisters while being squeezed much harder in the work place.
Instead of the divisive and diversionary tactic of blaming foreign governments or foreign workers for job losses or pay cuts – typically China – it’s time to target the trans-national corporations that exploit labor cost differentials to increase profits. Like the machine-breakers of yore, workers and their trade union leaders must correctly identify the enemy and embrace class struggle unionism if they have any hope of stopping this destructive game of competition to see who can offer the best wage deal to rapacious corporations.
●●●
Speaking of China, the Western media reported on January 17 an ominous drop in fourth quarter GDP in the Peoples Republic of China; quoting Reuters: “Growth of 8.9% over a year earlier was slightly [my emphasis] stronger than the 8.7% forecast by economists in a Reuters poll, but the data on Tuesday raised concerns about the immediate outlook and how much support China can offer a struggling global economy… Growth for all of 2012 slipped to 9.2%, a pace last seen in 2009… from 10.4% in 2010."
While it is true that the PRC GDP growth dropped slightly (5%) from the 3rd to the 4th quarter, it meant that that the PRC GDP would double, at that rate, in a little over eight years rather than a bit more than seven and a half – not a bad performance either way for the world’s second largest economy. Put into perspective, the OECD estimates that from 2011 through 2013 the collective OECD states (including PRC) will only average less than 2% growth. At that rate, it would take the entire OECD over 37 years to double its economic output!
But the Reuters report, like so many other media accounts of PRC 4th quarter GDP performance, masks two implicit points:
1. The Chinese economy is vigorous even in the midst of world wide economic turmoil (2009, for example, and now).
2. Most importantly, economic wizards concede that the health of the global capitalist economy depends critically on the continued vigor of that economy.
So it’s not the future of the Chinese people that so worries the pundits, but the impact of the Chinese economic engine on capitalism’s future. At the same time, they continue to demonize the policies that fuel that powerful engine. Strange, indeed.
Zoltan Zigedy
zoltanzigedy@gmail.com
Monday, January 16, 2012
REVIEW: Post-Modern Imperialism—Geopolitics and the Great Games, by Eric Walberg
I confess that I cringe when I see the word “post-modern.” This word has obscured more discussions, confused more gullible readers, and conned more writers than any word since “existential” and its “-ism.” For the most part, it has served as a kind of fashionable linguistic operator that signals something radical and profound will follow. Almost always, what follows disappoints.
Eric Walberg’s book, Post-Modern Imperialism (Clarity Press, 2011), doesn’t change my general opinion of the word, though what follows the title certainly doesn’t disappoint.
Walberg has offered a welcome taxonomy of imperialism from its nineteenth century genesis until today; he has given a plausible explanation of imperialism’s contours since the exit of the Soviet Union and Eastern European socialism from the world stage; and he has convincingly described Israel’s unique role in the continuing reshaping of imperialism’s grasp for world domination.
One of the disappointments of recent Marxist thought is a neglect of the theory of imperialism. It is not that imperialism is questioned by Marxists; it would be hard to find an advocate who denied its existence or historical significance. Indeed, few Marxists dispute (since the Lenin-Kautsky debate) the fundamental elements of imperialism as outlined by Lenin and presaged by Hobson; but its historical trajectory -- deflected by wars (hot and cold), shifting balances of forces and alliances, and economic upheaval – has received only cursory attention. All acknowledge that the dominant imperial center of power has shifted from Britain before World War I to the USA after the Second World War. Outside of the bizarre pseudo-Marxism popularized in the post-Soviet period (Hardt and Negri’s Empire and theories of the decline of the nation-state and ascendancy of the trans-national corporation, for example), most left-of-center political thinkers would concede that imperialism – especially, as expressed by US imperialism -- is alive and well today. Yet, Marxist studies have yet to provide a full, overarching account of the material forces that have shaped imperialism’s evolution over the last century and a half. We see this failing in the world-wide confusion and tepid resistance to NATO’s Balkan aggressions, the various contrived color “revolutions,” and the wars and interventions in the Middle East and Central Asia.
It is to Walberg’s credit that he attempts to provide this account. While expressing respectful homage to the Leninist tradition, Walberg writes in an eclectic style that expropriates the terms of the agents of imperialism, both old and new. Following Lord Curzon in 1898 and Z. Brzezinski today, imperialism becomes the Great Game, an exercise in aggressive national self-interest that engages economic coercion, political manipulation, subversion, alliances, and, of course, war. And behind the curtain of “national self-interest” proclaimed by the ideologues of imperialism lies the real interests of monopoly and finance capital.
In Walberg’s account of the classic era of imperialism – dubbed Great Game I (GGI) – European powers and the US competed for the economic and political domination of the world, its resources, and its people. In this competition, the British Empire stood triumphant. This small island, thanks to its industrial might, its dominant navy, and its highly developed colonial apparatus, imposed its will globally. Other powers sought to undermine this dominance, resulting in the tensions and conflicts that climaxed in the Great War, World War I.
The Great War, in turn, spawned an anti-imperialist movement centered in revolutionary Russia, nascent Communist Parties, and nationalist movements aroused and supported by the liberated Euro-Asian power, the USSR. For Walberg, this event – the Bolshevik revolution—became the central event determining the course of imperialism. The crisis of imperialism identified with the unprecedented slaughter of 1914-1918 unleashed a new era of counter-revolution – or counter-anti-imperialism – with the locus of anti-imperialism to be found in the USSR.
Walberg calls this new era “GGII: Empire Against Communism”.
It is this assessment, this correct analysis, which separates him from the conventional view popularized on the left, center and right. Walberg is emphatically correct on two crucial counts.
First, he identifies the imperialist project as targeting the role of the Soviet Union in inspiring, supporting and sustaining the anti-imperialist movement after World War I. Those honest enough to recognize the decline of the anti-imperialist movement since the demise of the Soviet Union surely must recognize this point. From China’s liberation to the independence of the former African Portuguese colonies, from Egypt’s national movement to the Vietnamese victory over US aggression, from Cuba’s revolution to the destruction of apartheid in South Africa, the Soviet Union had devoted generous material and moral support to anti-imperialism. Because of this support, anti-Communism became the ideological, political and military pillar of imperialism.
Second, he discounts the view advanced by imperialists and the ultra-left that the Soviet Union was itself an imperialist power. While he voices criticisms of the USSR, he stops far short of characterizing its policies as imperialistic, a conclusion that he argues persuasively.
Between the two World Wars, the imperialist countries were saddled with a profound economic crisis that challenged the very viability of capitalism and strengthened the anti-capitalist and anti-imperialist movements. In many countries, this challenge generated a ferocious and violent movement, fascism, expressing a new, more virulent, and aggressive strain of anti-Communism. Both in Europe and Asia, the primary goal of these movements, when securing power, was to remove the obstacle of Communism and anti-imperial nationalism in furthering their imperialist goals. In all cases, the Communists and anti-imperial nationalists were the backbone of domestic resistance to these aggressions.
After the Second World War and the defeat of fascism, the US engaged its economic and military might to lead the imperialist powers. At the same time, it organized and launched a new, more sophisticated attack on the strengthened, world-wide Communist and anti-imperialist movement. The lengthy Cold War, while proclaimed as a struggle between democracy and tyranny, was simply a continuance of imperialism in a new context. At stake was the economic exploitation of the resources and people of the world outside of the imperial club.
Walberg does a thorough job of demonstrating the role of the US dollar nexus in cementing the anti-Communist alliance, as well as describing the international institutions enabling and enforcing this dollar domination of world economic activity. He equally exposes the political and military institutions and alliances, such as NATO, created to both maintain US imperial goals and confront Communism and anti-imperialism.
Walberg’s narrative masterfully exposes the imaginative, but unscrupulous tactics devised to further the imperial goals. From engineered coups to CIA-backed intellectuals, from surrogate insurgents to phony human rights campaigns, Walberg dissects the tactics and reveals the hypocrisy behind imperialist intrigues. Most impressively, Walberg knits together the long standing, but seldom acknowledged, imperialist tactic of exploiting purist Islamic movements -- with its latent hostility to secular leftism and nationalism -- to oppose, divert, and even exterminate socialist and anti-imperialist movements in the Middle East and Asia. Of course this is not a new tactic; imperialism similarly used Christianity, especially Catholicism, to disable trade union movements and left parties in Europe and the US. But, Walberg brings much detail and historical continuity to the story of religious manipulation in the Islamic world. And he reveals Israel as a key player in this maneuver.
With the departure of the Soviet Union, a new phase of imperialism emerged, dubbed “Great Game III” by Walberg. The consequent triumphalism of the US and other imperialist powers was disguised as the promise of a global paradise based on economic fundamentalism, free trade, “democratic” governance and human rights. But in truth, this disguise masked a commitment to economic aggression, imperial intervention, and unfettered domination. A massive array of new or transformed institutions – the UN, NAFTA, countless NGOs, etc—eagerly aided the imperial program. And after September 11, 2001, imperialism found its alien scapegoat in Islam, the excuse to vigorously and openly mount military adventures, especially in Asia, the Middle East and Northern Africa.
To Walberg’s praise, his deep understanding of the shifting currents of imperial aggression along with its historical continuities allows him to identify the anti-imperialist actors in each phase of imperialism’s development. He clearly understands that resistance to imperialism, regardless of its religious, ideological or political underpinnings, is objectively anti-imperialist. This is in sharp contrast to many on the left in Europe and the US who sided with imperialism or demonized the Islamic fighters who met the US on the battlefield. Blinded by their cultural distaste for what they saw as obscurantism, social backwardness, and intolerance, they betray anti-imperialist unity and objectively take the side of imperialism. Like previous supporters, seduced by Britain’s “civilizing mission,” they accede to apologists who portray the resistance as “Islamo-fascists.” This shallow understanding of imperialism accounts for the failure of many to recognize and reject the recent Libyan regime change and the current foreign interventions in Syria and Iran as imperialist actions. Leftist “purists” prefer standing on the sidelines to siding with the “tainted” Islamists who now militantly oppose imperial power.
Walberg places much emphasis on Israel’s role in the imperial project. His position as a Middle East-based writer for Cairo’s Al Ahram newspaper, coupled with his obvious prodigious research, gives him a privileged vantage point for commenting on this area. Readers will be impressed with his account of the history and ideology of Zionism. He brings great detail to the overt and covert activities of Israel both on behalf of US interests (as a policemen in the region) and in its own behalf (as a neo-colonial aggressor). His exposure of the role of US Zionists and their political partners in shaping US policies towards Israel (and the Middle East) is boldly and starkly presented, with little of the usual forbearance or timidity.
On the other hand, I believe his privileged position also brings a measure of myopia to his analysis. Throughout the book, he asserts a persistent importance of the Middle East and Central Asia that might unwittingly minimize the importance of other regions in imperialism’s grand designs. Certainly his demonstrated sensitivity to the shifting forces, policies and foci of imperialism would suggest that there is not one materially critical area of imperialist design. For example, through the first thirty years of the postwar period, imperialism was mostly directed to the Far East, with massive, brutal wars launched in Korea and Vietnam. And today, the staunch anti-imperialist advances in Central and South America cause deep concern and intense activity in the imperialist centers, especially the US. This area gets little coverage in Walberg’s fine book. Imperialism is indeed a scheme for complete global domination, wherever there are resources and people to exploit.
Also, I think that Walberg overstates the role of Israel in the imperialist order. Despite his excellent exposition of the “tail wagging the dog” behavior of Israel, it remains a junior partner in the imperialist picture. Israel still needs and expects the US to pull its chestnuts out of the fire.
In the same vein, it is an exaggeration to portray Islam (or any other religion) as inherently anti-imperialist: in his words, “The unyielding anti-imperialist nature of Islam, its rejection of the fundamental principles of capitalism concerning money, its refusal to be sidelined from economic and hence political life…” Surely, Walberg’s own account challenges this claim; Islamic movements in the Middle East have and continue to shift sides frequently in both the struggles between imperial powers, in support of imperialist powers, and its current leading role in resisting imperialism in the Middle East. I would suggest, rather, that religion adjusts (as with Catholic Liberation Theology) to the material, historical plight of its believers. In the case of the Middle East, half a century of Palestinian oppression is the wellspring of contemporary Islamic anti-imperialism.
“GGIII: Many Players, Many Games”—Walberg’s final chapter – is an immensely useful overview of how things stand at the moment in the Middle East-Central Asia “Great Game.” One will not find a better concise account of the forces, alliances and institutions at play in this contest, a contest best understood as between imperialism and its foes.
One final quibble: throughout Post-Modern Imperialism, Walberg insists on the division between pre-modern, modern, and post-modern states (hence, the title), a distinction he adopts from the influential work of Robert Cooper. Distinctions are neither true nor false; rather they are helpful, misleading or irrelevant. Despite its currency, Cooper’s distinction blurs instead of clarifying Walberg’s excellent account of imperialism.
That said, I can enthusiastically recommend Post-Modern Imperialism – the book is a serious contribution to our critical understanding of imperialism, its history, and, particularly, its expression in our era. By reading this study, both Marxist and non-Marxist activists will be better armed to confront the beast.
Zoltan Zigedy
zoltanzigedy@gmail.com
Eric Walberg’s book, Post-Modern Imperialism (Clarity Press, 2011), doesn’t change my general opinion of the word, though what follows the title certainly doesn’t disappoint.
Walberg has offered a welcome taxonomy of imperialism from its nineteenth century genesis until today; he has given a plausible explanation of imperialism’s contours since the exit of the Soviet Union and Eastern European socialism from the world stage; and he has convincingly described Israel’s unique role in the continuing reshaping of imperialism’s grasp for world domination.
One of the disappointments of recent Marxist thought is a neglect of the theory of imperialism. It is not that imperialism is questioned by Marxists; it would be hard to find an advocate who denied its existence or historical significance. Indeed, few Marxists dispute (since the Lenin-Kautsky debate) the fundamental elements of imperialism as outlined by Lenin and presaged by Hobson; but its historical trajectory -- deflected by wars (hot and cold), shifting balances of forces and alliances, and economic upheaval – has received only cursory attention. All acknowledge that the dominant imperial center of power has shifted from Britain before World War I to the USA after the Second World War. Outside of the bizarre pseudo-Marxism popularized in the post-Soviet period (Hardt and Negri’s Empire and theories of the decline of the nation-state and ascendancy of the trans-national corporation, for example), most left-of-center political thinkers would concede that imperialism – especially, as expressed by US imperialism -- is alive and well today. Yet, Marxist studies have yet to provide a full, overarching account of the material forces that have shaped imperialism’s evolution over the last century and a half. We see this failing in the world-wide confusion and tepid resistance to NATO’s Balkan aggressions, the various contrived color “revolutions,” and the wars and interventions in the Middle East and Central Asia.
It is to Walberg’s credit that he attempts to provide this account. While expressing respectful homage to the Leninist tradition, Walberg writes in an eclectic style that expropriates the terms of the agents of imperialism, both old and new. Following Lord Curzon in 1898 and Z. Brzezinski today, imperialism becomes the Great Game, an exercise in aggressive national self-interest that engages economic coercion, political manipulation, subversion, alliances, and, of course, war. And behind the curtain of “national self-interest” proclaimed by the ideologues of imperialism lies the real interests of monopoly and finance capital.
In Walberg’s account of the classic era of imperialism – dubbed Great Game I (GGI) – European powers and the US competed for the economic and political domination of the world, its resources, and its people. In this competition, the British Empire stood triumphant. This small island, thanks to its industrial might, its dominant navy, and its highly developed colonial apparatus, imposed its will globally. Other powers sought to undermine this dominance, resulting in the tensions and conflicts that climaxed in the Great War, World War I.
The Great War, in turn, spawned an anti-imperialist movement centered in revolutionary Russia, nascent Communist Parties, and nationalist movements aroused and supported by the liberated Euro-Asian power, the USSR. For Walberg, this event – the Bolshevik revolution—became the central event determining the course of imperialism. The crisis of imperialism identified with the unprecedented slaughter of 1914-1918 unleashed a new era of counter-revolution – or counter-anti-imperialism – with the locus of anti-imperialism to be found in the USSR.
Walberg calls this new era “GGII: Empire Against Communism”.
It is this assessment, this correct analysis, which separates him from the conventional view popularized on the left, center and right. Walberg is emphatically correct on two crucial counts.
First, he identifies the imperialist project as targeting the role of the Soviet Union in inspiring, supporting and sustaining the anti-imperialist movement after World War I. Those honest enough to recognize the decline of the anti-imperialist movement since the demise of the Soviet Union surely must recognize this point. From China’s liberation to the independence of the former African Portuguese colonies, from Egypt’s national movement to the Vietnamese victory over US aggression, from Cuba’s revolution to the destruction of apartheid in South Africa, the Soviet Union had devoted generous material and moral support to anti-imperialism. Because of this support, anti-Communism became the ideological, political and military pillar of imperialism.
Second, he discounts the view advanced by imperialists and the ultra-left that the Soviet Union was itself an imperialist power. While he voices criticisms of the USSR, he stops far short of characterizing its policies as imperialistic, a conclusion that he argues persuasively.
Between the two World Wars, the imperialist countries were saddled with a profound economic crisis that challenged the very viability of capitalism and strengthened the anti-capitalist and anti-imperialist movements. In many countries, this challenge generated a ferocious and violent movement, fascism, expressing a new, more virulent, and aggressive strain of anti-Communism. Both in Europe and Asia, the primary goal of these movements, when securing power, was to remove the obstacle of Communism and anti-imperial nationalism in furthering their imperialist goals. In all cases, the Communists and anti-imperial nationalists were the backbone of domestic resistance to these aggressions.
After the Second World War and the defeat of fascism, the US engaged its economic and military might to lead the imperialist powers. At the same time, it organized and launched a new, more sophisticated attack on the strengthened, world-wide Communist and anti-imperialist movement. The lengthy Cold War, while proclaimed as a struggle between democracy and tyranny, was simply a continuance of imperialism in a new context. At stake was the economic exploitation of the resources and people of the world outside of the imperial club.
Walberg does a thorough job of demonstrating the role of the US dollar nexus in cementing the anti-Communist alliance, as well as describing the international institutions enabling and enforcing this dollar domination of world economic activity. He equally exposes the political and military institutions and alliances, such as NATO, created to both maintain US imperial goals and confront Communism and anti-imperialism.
Walberg’s narrative masterfully exposes the imaginative, but unscrupulous tactics devised to further the imperial goals. From engineered coups to CIA-backed intellectuals, from surrogate insurgents to phony human rights campaigns, Walberg dissects the tactics and reveals the hypocrisy behind imperialist intrigues. Most impressively, Walberg knits together the long standing, but seldom acknowledged, imperialist tactic of exploiting purist Islamic movements -- with its latent hostility to secular leftism and nationalism -- to oppose, divert, and even exterminate socialist and anti-imperialist movements in the Middle East and Asia. Of course this is not a new tactic; imperialism similarly used Christianity, especially Catholicism, to disable trade union movements and left parties in Europe and the US. But, Walberg brings much detail and historical continuity to the story of religious manipulation in the Islamic world. And he reveals Israel as a key player in this maneuver.
With the departure of the Soviet Union, a new phase of imperialism emerged, dubbed “Great Game III” by Walberg. The consequent triumphalism of the US and other imperialist powers was disguised as the promise of a global paradise based on economic fundamentalism, free trade, “democratic” governance and human rights. But in truth, this disguise masked a commitment to economic aggression, imperial intervention, and unfettered domination. A massive array of new or transformed institutions – the UN, NAFTA, countless NGOs, etc—eagerly aided the imperial program. And after September 11, 2001, imperialism found its alien scapegoat in Islam, the excuse to vigorously and openly mount military adventures, especially in Asia, the Middle East and Northern Africa.
To Walberg’s praise, his deep understanding of the shifting currents of imperial aggression along with its historical continuities allows him to identify the anti-imperialist actors in each phase of imperialism’s development. He clearly understands that resistance to imperialism, regardless of its religious, ideological or political underpinnings, is objectively anti-imperialist. This is in sharp contrast to many on the left in Europe and the US who sided with imperialism or demonized the Islamic fighters who met the US on the battlefield. Blinded by their cultural distaste for what they saw as obscurantism, social backwardness, and intolerance, they betray anti-imperialist unity and objectively take the side of imperialism. Like previous supporters, seduced by Britain’s “civilizing mission,” they accede to apologists who portray the resistance as “Islamo-fascists.” This shallow understanding of imperialism accounts for the failure of many to recognize and reject the recent Libyan regime change and the current foreign interventions in Syria and Iran as imperialist actions. Leftist “purists” prefer standing on the sidelines to siding with the “tainted” Islamists who now militantly oppose imperial power.
Walberg places much emphasis on Israel’s role in the imperial project. His position as a Middle East-based writer for Cairo’s Al Ahram newspaper, coupled with his obvious prodigious research, gives him a privileged vantage point for commenting on this area. Readers will be impressed with his account of the history and ideology of Zionism. He brings great detail to the overt and covert activities of Israel both on behalf of US interests (as a policemen in the region) and in its own behalf (as a neo-colonial aggressor). His exposure of the role of US Zionists and their political partners in shaping US policies towards Israel (and the Middle East) is boldly and starkly presented, with little of the usual forbearance or timidity.
On the other hand, I believe his privileged position also brings a measure of myopia to his analysis. Throughout the book, he asserts a persistent importance of the Middle East and Central Asia that might unwittingly minimize the importance of other regions in imperialism’s grand designs. Certainly his demonstrated sensitivity to the shifting forces, policies and foci of imperialism would suggest that there is not one materially critical area of imperialist design. For example, through the first thirty years of the postwar period, imperialism was mostly directed to the Far East, with massive, brutal wars launched in Korea and Vietnam. And today, the staunch anti-imperialist advances in Central and South America cause deep concern and intense activity in the imperialist centers, especially the US. This area gets little coverage in Walberg’s fine book. Imperialism is indeed a scheme for complete global domination, wherever there are resources and people to exploit.
Also, I think that Walberg overstates the role of Israel in the imperialist order. Despite his excellent exposition of the “tail wagging the dog” behavior of Israel, it remains a junior partner in the imperialist picture. Israel still needs and expects the US to pull its chestnuts out of the fire.
In the same vein, it is an exaggeration to portray Islam (or any other religion) as inherently anti-imperialist: in his words, “The unyielding anti-imperialist nature of Islam, its rejection of the fundamental principles of capitalism concerning money, its refusal to be sidelined from economic and hence political life…” Surely, Walberg’s own account challenges this claim; Islamic movements in the Middle East have and continue to shift sides frequently in both the struggles between imperial powers, in support of imperialist powers, and its current leading role in resisting imperialism in the Middle East. I would suggest, rather, that religion adjusts (as with Catholic Liberation Theology) to the material, historical plight of its believers. In the case of the Middle East, half a century of Palestinian oppression is the wellspring of contemporary Islamic anti-imperialism.
“GGIII: Many Players, Many Games”—Walberg’s final chapter – is an immensely useful overview of how things stand at the moment in the Middle East-Central Asia “Great Game.” One will not find a better concise account of the forces, alliances and institutions at play in this contest, a contest best understood as between imperialism and its foes.
One final quibble: throughout Post-Modern Imperialism, Walberg insists on the division between pre-modern, modern, and post-modern states (hence, the title), a distinction he adopts from the influential work of Robert Cooper. Distinctions are neither true nor false; rather they are helpful, misleading or irrelevant. Despite its currency, Cooper’s distinction blurs instead of clarifying Walberg’s excellent account of imperialism.
That said, I can enthusiastically recommend Post-Modern Imperialism – the book is a serious contribution to our critical understanding of imperialism, its history, and, particularly, its expression in our era. By reading this study, both Marxist and non-Marxist activists will be better armed to confront the beast.
Zoltan Zigedy
zoltanzigedy@gmail.com
Tuesday, January 3, 2012
2011-2012: Summing Up/Taking Stock
People across the political spectrum share one thing: they sense that we are living at a critical moment in the history of capitalism. Where the last decade of the twentieth century brought a near-universal and smug celebration of capitalism’s success, the second decade of the twenty-first century and beyond finds uncertainty, doubts, and fears in every conversation about global capitalism.
As recently as 1999, capitalism’s managers – look-alike, sound-alike politicians, media puppets, and swaggering corporate managers – enjoyed the confidence of all but obstinate skeptics and those many living on the margins.
True, the so-called “anti-globalization movement” gained traction at the end of the twentieth century, but as a scattered, unfocussed movement against capital’s excesses and not its mechanism.
Today, everything has changed. Confidence in capitalism and its institutions is at a low never seen in most our lifetimes. While I plead guilty as much as any Marxist in finding a “crisis” at every juncture, one can construct a plausible argument for locating profound contradictions in every bourgeois institution – the economy, the political system, ideology, and culture.
Few would argue that the global capitalist economy is healthy. Instead, leaders and thinkers of every stripe are occupied with offering road maps for delivery from the four years of intractable chaos. Little progress has been made.
The four years of economic turmoil has taken its toll on political legitimacy. The US political system and its two-party manifestation have likely never known such deep and popular disapproval. Alternative movements of left and right have boiled over to express this frustration.
The Obama administration, after three years, appears stuck in a historic rut slightly more activist than the Hoover administration in 1932, but far from the audacity and experimentation of the Roosevelt administration of 1933.
Looking back, it is easy to see the political revival of the right in 2010 as the obstacle and subsequent log jam to progress, but that abuses history. Armed with a Congressional majority, the Democrats could have moved decisively in 2008, but not with the cabal of neo-liberal advisors chosen by Obama to craft policy. One can better see the rise of the right as a measure of the disappointment with the Administration’s inadequate management of the economy.
In Europe, elected governments have ceded authority to technocrats approved by international financial interests. Frustration with social democratic impotence has lead to a series of “protest” victories by conservatives.
In the near future, there is a real chance that Germany will achieve, by peaceful means, the dominance of Europe that it sought in World War II.
Ideologically, most of the world’s leaders remain caught in the web of neo-liberalism – the worship of markets, balanced budgets, government restraint, and the sanctity of capital. Despite much sensationalist commentary early in the economic crisis about the death of neo-liberalism or the passing of the Thatcher-Reagan moment, political leaders, most economists, and too many labor leaders have failed to escape neo-liberal thinking.
Fundamentalist market dogma, enforced by an extortionate financial complex, breeds the crisis-deepening austerity favored by leaders in the US and Europe. And there is no escape in sight.
Culture, dominated by monopoly capital entertainment behemoths, has sunk to new levels of vulgarity and triviality. At the same time, it counts as the distraction that holds together the fragile politico-economic system. The coarseness of “reality” television, the violence and moral depravity of cinema, banal, soulless corporate-crafted music, and the faux-loyalties of spectator team sports pass as entertainment. Equally distracting is the ubiquitous cult of the celebrity.
The once-promising diversity of the internet is, thanks to commercial penetration, transforming into a medium of personal, individualistic self-indulgence.
The same monopolies that own the entertainment industry own the news media and employ the mass opinion makers. The result is timid, conformist coverage, slanted to respect officialdom and the corporate paymasters. Likewise, what passes for analysis is a useless brew of shallowness and deference to the rich and powerful.
Entering the New Year, dangers abound. Italy alone must refinance nearly a third of its national debt in 2012-2013—591.9 billion euros. Spain must refinance nearly half and Greece nearly two-thirds. None can sustain refinancing at current yields asked by financial markets without harsh, dramatic counter-cuts in spending. And these cuts necessarily will shrink economic growth, resulting in even greater debt as a percentage of GDP. Growth rates are already shrinking in the European Union: On December 16, Ireland announced a 1.9% drop in GDP for the 3rd quarter, well below expectations. Overall EU growth has slipped to .8% in the 3rd quarter from 3.1% in the 1st quarter. The politics of austerity will only exacerbate this trend in 2012.
In the US, the Federal Reserve reports that households’ net worth fell by $2.4 trillion from the second to third quarter of 2011. For the year, growth in personal disposable income has been flat or trending downward, while the personal savings rate has dropped dramatically and consumer credit debt is again on the upswing— mimicking the pre-crisis trend. Debt-driven consumer spending fuels what little economic growth is shown by the anemic US economy. These same consumers must contend with escalating food prices: year-over-year increases in food costs hit 4.6% in November.
September and October factory orders dropped and the index of service sector activity declined in November.
Unemployment remains dangerously and intransigently high despite minor adjustments in the official rate that reflect, at best, deep structural changes in the employment and compensation options available to those without work or underemployed. Even the Wall Street gasbags who fill the airwaves with Pollyanna optimism know that US standards of living have taken a radical and gloomy turn for the worse.
The electoral landscape in the US shows little to celebrate. While many on the left are again raising fears of a Republican Party in ascendancy, the truth is that the Republicans are engaged in an intense, bitter, and bloody struggle between the corporate wing and the no-nothing fanatics who occupy the Party’s extreme right. With Obama-mania now reduced to a tepid enthusiasm for blocking the crazies, corporate Republicans sense a real opportunity to win executive power as many of their European counterparts have in recent months. At the same time, they recognize that voters overwhelmingly reject the ranting of the extreme right Neanderthals. So far, corporate Republicans have used their financial resources and media control to turn back the tea-party pretenders: Palin, Bachman, Cain, Perry, and now Gingrich. Clearly, they want Mitt Romney, a man who can talk the tea-party talk, but walk the pro-corporate walk.
And just as clearly, the Democratic Party has its counterpart to Romney. Obama can skillfully rouse the liberal base by scoring the rich, the powerful, and the privileged while delivering for the corporations. The words are there, but where is peace, health care, EFCA, strengthened Social Security and Medicare, enlightened foreign policy, tax fairness, a robust social safety net, Constitutional guarantees and other “liberal” goals promised four years ago?
Obama and Romney are the designated hitters for the ruling class. Where do working people find their political voice in this charade?
Once again, the New Year promises intense struggles against imperialism, against exploitation, and for social justice and sovereignty. But again, the focus of these struggles will likely remain on the periphery of the most advanced capitalist countries where workers and the poor are more organizationally and ideologically advanced and fervent in their commitment. Despite healthy developments like the Occupy movement and only-too-rare labor militancy, North America seems destined to confine the fight to the corrupted field of electoral politics, especially in the US, where the Presidential election will soon overshadow all other action and siphon off oppositional energies.
The uprisings in North Africa and the Middle East were unexpected and important developments in 2011. They brought masses into the streets and shook ruling elites throughout the region. Yet observers overestimated their political impact and potential and underestimated the ability of imperialism to exploit these events for its own interests. The billions committed at the G-20 summit, the rapid response of the “soft” imperialist Western NGO’s, and the violent intervention of NATO quickly re-directed or superseded many of these movements with regime changes beneficial to the NATO allies, an attempt to create a reprise of the infamous “color revolutions.”
Libya was the clearest example of this, with Syria now fixed in imperialism’s sights. Egypt, another target of imperialist intervention, continues to resist the “helpful” hand of the US State Department and many US-funded NGO’s that hope to shape the political landscape in a way friendly to US interests.
The same kind of struggle is emerging in Russia after the strong showing of Communists and their allies in the Parliamentary elections. Enjoying little popular support and with much encouragement and resources from the West, Russia’s liberals have sought to bring down the Medvedev/Putin government through mass protests against electoral irregularities. While electoral fraud is a fact and directed mainly at Russia’s Communists, while the Communists support the struggle for transparent elections, the liberals are seizing on the issue as their own best chance to better their marginal role in Russian politics.
At the same time, in the time-honored bourgeois tradition, Vladimir Putin --the ruling class candidate for Russian President in the forthcoming elections – has thrown up a Trojan horse candidate disguised as the opposition: an expatriate, playboy billionaire who owns a US NBA basketball team. The hope, of course, is that the billionaire’s resources will generate a hollow media campaign to confuse and split the opposition.
The deceptions and ruses of imperialism and its liberal chess pieces ultimately serve imperialism. The broad masses astutely see the call for “democracy” or “free elections” as useful only insofar as they actually lead to their empowerment and well-being. For working people, this is, and should be, the litmus test for their support.
In Russia, as in the Egyptian revolution of 2011, the masses will rally against bad leadership under the banner of “democracy,” but they want more than a hollow procedural victory; they want peace, a better life, a promising future. Twenty-first century liberals offer only the meager morsel of elections and not the nourishment of justice and prosperity. That is why Russian and Egyptian liberals fared so poorly in recent elections. That is why Russian Communists made big gains.
My hope for the New Year is that working-class-oriented, working-class-based movements, especially Communist and Workers Parties, will bring this nourishment to all the peoples of the world.
Zoltan Zigedy
zoltanzigedy@gmail.com
As recently as 1999, capitalism’s managers – look-alike, sound-alike politicians, media puppets, and swaggering corporate managers – enjoyed the confidence of all but obstinate skeptics and those many living on the margins.
True, the so-called “anti-globalization movement” gained traction at the end of the twentieth century, but as a scattered, unfocussed movement against capital’s excesses and not its mechanism.
Today, everything has changed. Confidence in capitalism and its institutions is at a low never seen in most our lifetimes. While I plead guilty as much as any Marxist in finding a “crisis” at every juncture, one can construct a plausible argument for locating profound contradictions in every bourgeois institution – the economy, the political system, ideology, and culture.
Few would argue that the global capitalist economy is healthy. Instead, leaders and thinkers of every stripe are occupied with offering road maps for delivery from the four years of intractable chaos. Little progress has been made.
The four years of economic turmoil has taken its toll on political legitimacy. The US political system and its two-party manifestation have likely never known such deep and popular disapproval. Alternative movements of left and right have boiled over to express this frustration.
The Obama administration, after three years, appears stuck in a historic rut slightly more activist than the Hoover administration in 1932, but far from the audacity and experimentation of the Roosevelt administration of 1933.
Looking back, it is easy to see the political revival of the right in 2010 as the obstacle and subsequent log jam to progress, but that abuses history. Armed with a Congressional majority, the Democrats could have moved decisively in 2008, but not with the cabal of neo-liberal advisors chosen by Obama to craft policy. One can better see the rise of the right as a measure of the disappointment with the Administration’s inadequate management of the economy.
In Europe, elected governments have ceded authority to technocrats approved by international financial interests. Frustration with social democratic impotence has lead to a series of “protest” victories by conservatives.
In the near future, there is a real chance that Germany will achieve, by peaceful means, the dominance of Europe that it sought in World War II.
Ideologically, most of the world’s leaders remain caught in the web of neo-liberalism – the worship of markets, balanced budgets, government restraint, and the sanctity of capital. Despite much sensationalist commentary early in the economic crisis about the death of neo-liberalism or the passing of the Thatcher-Reagan moment, political leaders, most economists, and too many labor leaders have failed to escape neo-liberal thinking.
Fundamentalist market dogma, enforced by an extortionate financial complex, breeds the crisis-deepening austerity favored by leaders in the US and Europe. And there is no escape in sight.
Culture, dominated by monopoly capital entertainment behemoths, has sunk to new levels of vulgarity and triviality. At the same time, it counts as the distraction that holds together the fragile politico-economic system. The coarseness of “reality” television, the violence and moral depravity of cinema, banal, soulless corporate-crafted music, and the faux-loyalties of spectator team sports pass as entertainment. Equally distracting is the ubiquitous cult of the celebrity.
The once-promising diversity of the internet is, thanks to commercial penetration, transforming into a medium of personal, individualistic self-indulgence.
The same monopolies that own the entertainment industry own the news media and employ the mass opinion makers. The result is timid, conformist coverage, slanted to respect officialdom and the corporate paymasters. Likewise, what passes for analysis is a useless brew of shallowness and deference to the rich and powerful.
Entering the New Year, dangers abound. Italy alone must refinance nearly a third of its national debt in 2012-2013—591.9 billion euros. Spain must refinance nearly half and Greece nearly two-thirds. None can sustain refinancing at current yields asked by financial markets without harsh, dramatic counter-cuts in spending. And these cuts necessarily will shrink economic growth, resulting in even greater debt as a percentage of GDP. Growth rates are already shrinking in the European Union: On December 16, Ireland announced a 1.9% drop in GDP for the 3rd quarter, well below expectations. Overall EU growth has slipped to .8% in the 3rd quarter from 3.1% in the 1st quarter. The politics of austerity will only exacerbate this trend in 2012.
In the US, the Federal Reserve reports that households’ net worth fell by $2.4 trillion from the second to third quarter of 2011. For the year, growth in personal disposable income has been flat or trending downward, while the personal savings rate has dropped dramatically and consumer credit debt is again on the upswing— mimicking the pre-crisis trend. Debt-driven consumer spending fuels what little economic growth is shown by the anemic US economy. These same consumers must contend with escalating food prices: year-over-year increases in food costs hit 4.6% in November.
September and October factory orders dropped and the index of service sector activity declined in November.
Unemployment remains dangerously and intransigently high despite minor adjustments in the official rate that reflect, at best, deep structural changes in the employment and compensation options available to those without work or underemployed. Even the Wall Street gasbags who fill the airwaves with Pollyanna optimism know that US standards of living have taken a radical and gloomy turn for the worse.
The electoral landscape in the US shows little to celebrate. While many on the left are again raising fears of a Republican Party in ascendancy, the truth is that the Republicans are engaged in an intense, bitter, and bloody struggle between the corporate wing and the no-nothing fanatics who occupy the Party’s extreme right. With Obama-mania now reduced to a tepid enthusiasm for blocking the crazies, corporate Republicans sense a real opportunity to win executive power as many of their European counterparts have in recent months. At the same time, they recognize that voters overwhelmingly reject the ranting of the extreme right Neanderthals. So far, corporate Republicans have used their financial resources and media control to turn back the tea-party pretenders: Palin, Bachman, Cain, Perry, and now Gingrich. Clearly, they want Mitt Romney, a man who can talk the tea-party talk, but walk the pro-corporate walk.
And just as clearly, the Democratic Party has its counterpart to Romney. Obama can skillfully rouse the liberal base by scoring the rich, the powerful, and the privileged while delivering for the corporations. The words are there, but where is peace, health care, EFCA, strengthened Social Security and Medicare, enlightened foreign policy, tax fairness, a robust social safety net, Constitutional guarantees and other “liberal” goals promised four years ago?
Obama and Romney are the designated hitters for the ruling class. Where do working people find their political voice in this charade?
Once again, the New Year promises intense struggles against imperialism, against exploitation, and for social justice and sovereignty. But again, the focus of these struggles will likely remain on the periphery of the most advanced capitalist countries where workers and the poor are more organizationally and ideologically advanced and fervent in their commitment. Despite healthy developments like the Occupy movement and only-too-rare labor militancy, North America seems destined to confine the fight to the corrupted field of electoral politics, especially in the US, where the Presidential election will soon overshadow all other action and siphon off oppositional energies.
The uprisings in North Africa and the Middle East were unexpected and important developments in 2011. They brought masses into the streets and shook ruling elites throughout the region. Yet observers overestimated their political impact and potential and underestimated the ability of imperialism to exploit these events for its own interests. The billions committed at the G-20 summit, the rapid response of the “soft” imperialist Western NGO’s, and the violent intervention of NATO quickly re-directed or superseded many of these movements with regime changes beneficial to the NATO allies, an attempt to create a reprise of the infamous “color revolutions.”
Libya was the clearest example of this, with Syria now fixed in imperialism’s sights. Egypt, another target of imperialist intervention, continues to resist the “helpful” hand of the US State Department and many US-funded NGO’s that hope to shape the political landscape in a way friendly to US interests.
The same kind of struggle is emerging in Russia after the strong showing of Communists and their allies in the Parliamentary elections. Enjoying little popular support and with much encouragement and resources from the West, Russia’s liberals have sought to bring down the Medvedev/Putin government through mass protests against electoral irregularities. While electoral fraud is a fact and directed mainly at Russia’s Communists, while the Communists support the struggle for transparent elections, the liberals are seizing on the issue as their own best chance to better their marginal role in Russian politics.
At the same time, in the time-honored bourgeois tradition, Vladimir Putin --the ruling class candidate for Russian President in the forthcoming elections – has thrown up a Trojan horse candidate disguised as the opposition: an expatriate, playboy billionaire who owns a US NBA basketball team. The hope, of course, is that the billionaire’s resources will generate a hollow media campaign to confuse and split the opposition.
The deceptions and ruses of imperialism and its liberal chess pieces ultimately serve imperialism. The broad masses astutely see the call for “democracy” or “free elections” as useful only insofar as they actually lead to their empowerment and well-being. For working people, this is, and should be, the litmus test for their support.
In Russia, as in the Egyptian revolution of 2011, the masses will rally against bad leadership under the banner of “democracy,” but they want more than a hollow procedural victory; they want peace, a better life, a promising future. Twenty-first century liberals offer only the meager morsel of elections and not the nourishment of justice and prosperity. That is why Russian and Egyptian liberals fared so poorly in recent elections. That is why Russian Communists made big gains.
My hope for the New Year is that working-class-oriented, working-class-based movements, especially Communist and Workers Parties, will bring this nourishment to all the peoples of the world.
Zoltan Zigedy
zoltanzigedy@gmail.com
Wednesday, December 14, 2011
The Chinese Puzzle
Whither China? was the name of a widely circulated pamphlet authored by the respected Anglo-Indian Marxist author, R. Palme Dutt. Writing in 1966, with The People’s Republic of China (PRC) in the throes of the “Cultural Revolution”, the pamphlet sought to shed light on the PRC’s tortured road from liberation in 1949 to a vast upheaval disrupting all aspects of Chinese society as well as foreign relations. To most people – across the entire political spectrum—developments within this Asian giant were a challenge to understand. To be sure, there were zealots outside of the PRC who hung on every word uttered by The Great Helmsman, Chairman Mao, and stood by every release explaining Chinese events in the People’s Daily, Red Flag and Peking Review. A few Communist Parties and many middle-class intellectuals embraced the Cultural Revolution as a rite of purification. Yet for most, as with Palme Dutt, the paramount question remained: Where is the PRC going?
Today, forty-five years later, the question remains open.
The cultish followers of Mao have mostly gone on to their life’s work, though some still uncritically defend every aspect of Chinese Communist Party policies during Mao’s chairmanship.
But the PRC that we know today is a vastly different country from the country worrying R. Palme Dutt in 1966; yet it is one that is just as difficult to comprehend. In place of the economic stagnation of the Cultural Revolution period, the contemporary Chinese economy enjoys one of the highest consistent growth rates in the world and counts as an industrial giant well on its way to challenging the USA in annual national product. The economic autarky of the Mao period has been replaced with a massive effort to trade globally. And state enterprises and common land ownership are now eroded by private investment and private ownership. The PRC today has an abundance of millionaires and not too few billionaires, a fact that would violently offend the militants of the Cultural Revolution.
At the same time, the ruling party in the PRC is the Communist Party. Its theorists and ideologues insist that they are proceeding down a distinctive, deliberate road to socialism. Ironically the PRC is now the darling of many in the right wing of the anti-capitalist movement, embraced by those who defend the market mechanism and a gradualist, evolutionary approach to socialism.
Among those advocating socialism, the PRC constitutes a kind of laboratory for socialist policy, much the way the Soviet Union was regarded after 1917. Partisans of socialism sift through the massive literature, reports, and commentaries on the PRC to find evidence to support ideological positions. For the most part, conclusions are, at best, tentative and speculative. Comprehensive conclusions remain illusive to even the most elevated intellectual egos.
Yet the PRC is entirely too formidable of a factor in global political and economic affairs to ignore. Therefore, I offer some modest observations.
“China-bashing”
Wherever the PRC road leads, it remains a lightening rod to bourgeois politicians and, unfortunately, most labor leaders. To hide their own failings, they easily and often point to some Chinese policy that stands in the way of satisfying the interests of working people. In its crudest form and in its essence, it is vulgar anti-Communism. Exploiting the deeply ingrained collective hysteria of the Cold-War, crass leaders and class-compromised union bureaucrats invoke the words “Chinese Communists” and mass distraction ensues. China-bashing has replaced Soviet-bashing (and the once popular Japan-bashing when Japanese corporate power was on the upswing) as an easy and frequent diversion from the rapacious behavior of multi-national corporations.
Rather than blame US multi-nationals for the destruction of decent paying jobs in the US, leaders scapegoat the PRC. From 1999 until 2009, US multinationals added 2.9 million workers abroad while cutting 864,400 in the US, according to the Commerce Department. In 2009, these monopoly capitalist enterprises employed 23.1 million workers in the US against 10.8 million in other countries. Most overseas employees are in Europe with the Chinese holding only 943,900 jobs from US multi-nationals. Canada, Mexico, and the UK, on the other hand, account for over 3 million of multinational overseas employment.
These same multinational corporations have reduced capital investment spending in the US at a decade long annual rate of .2% while boosting capital investment overseas by an annual average of 4%.
These job shifts are corporate decisions based upon profit expectations and, according to the Commerce Department, “primarily to sell to local customers… rather to sell in the US market.” Thus, politicians and union leaders are hiding behind simplistic and self-serving demagogy in blaming China for the demise of US jobs. And their aversion to class struggle against US corporate giants masks the role of those corporations in taking jobs to where they can recover profits most easily; bogus patriotism obscures corporate fealty to the bottom line.
When pressed to put some meat on the bare bones of China-bashing, bourgeois economists cite the currency policies of the PRC. They argue that the relationship between the yuan and other currencies is consciously maintained at a lower-than-market level to increase the competitiveness of the Chinese export industries. But that argument has evaporated over the last year. Third quarter reports of PRC current-account surplus – a widely acknowledged measure of trade imbalance – show a dramatic decline from a year earlier; against the third quarter of 2010, the PRC current-account balance fell by 43.5%. Through the first three quarters of this year, PRC current-accounts surplus as a percentage of GDP fell from 5.1% last year to 3% currently. Ironically, at the November, 2010 G20 meeting, the US pressed hard to establish 4% or less current-accounts surplus/GDP as the benchmark for determining whether currencies were reasonably valued. With the PRC easily passing this test, the US has no argument. Nonetheless, US policy makers and pundits, including liberals, like Roubini and Krugman, continue to pound away at PRC currency policies.
When these current-account numbers are coupled with the continued high growth of the PRC (9.1% in the third quarter), they suggest that the PRC has made a significant shift from export growth to investment and consumption growth.
For the US left, the myths supporting China-bashing should be emphatically rebuffed. While the PRC policies internationally are generally self-interested – the PRC has seldom demonstrated the kind of international solidarity associated with twentieth century socialism—they are nonetheless independent of US imperialism. That is, the PRC operates to promote its own security and economic health. Where it clashes with US imperialism, for example, in UN votes against NATO aggression, progressives should applaud its role. At the same time, it shares many features with imperialism in its competition for markets, resources, and economic advantage in the global economy. These features often place it on the wrong side in its relations with other countries.
White Cat, Black stripes; Black Cat, White Stripes?
Much heat has been generated over the question of whether the PRC is socialist or capitalist. But from a Marxist perspective – like that of Palme Dutt – the telling question is not where it is, but where it’s going: Is the PRC on a path towards socialism or capitalism? Where is the process leading?
No one can deny that for decades, the PRC has allowed -- indeed welcomed -- capitalism in the front door. Foreign direct investment, joint-stock and private-stock enterprises, privatization, securitization, and acceptance of the market mechanism have all transformed the PRC economy into a prominent player in the global economy. This change has brought forth stunning growth for the country and a general rise in the Chinese standard of living, certainly from the stagnation of the period of the Cultural Revolution. In only a few decades, the PRC leadership has mounted a veritable revolution as profound as the sharp turns organized in Mao’s era.
At the same time, capitalism has brought with it nearly all of its ills: inequalities that rival history’s worse, a shattered health care system, working conditions that too often approach that of Dickens’ England, corruption, cronyism, unemployment, and a broken sense of collective fate or communal solidarity.
The entry of capitalist features into the PRC economy has plagued it with the maladies that arise from the anarchy of markets: imbalances, speculative fervor and bubbles, inflation, labor unrest, grey and black markets, and labor market chaos. In the spring and summer of 2010, workers rose against low wages and working conditions in many areas. Again, this year, there were significant actions for better pay, working conditions and against layoffs. In the fall, the PRC’s sovereign wealth fund was forced to buy shares in major Chinese banks. Despite the fact that private investors own a quarter or less of the country’s biggest banks, a sell-off by foreign investors caused a near panic met by the sovereign wealth funds’ intervention. Today, inflation, a construction bubble, and over reliance on exports weigh on the economy.
Despite these ugly aspects of the PRC’s flirtation with capitalism, the PRC negotiated the most tempestuous waves of the global economic crisis without the catastrophic damage incurred by the other economic powerhouses. In addition, most honest analysts, including even The Wall Street Journal, credit the PRC with a large role in thwarting world economies from being swept over the brink in 2008-2009.
How was this done?
In my view, those structures intact from the PRC’s early commitment to socialist economics proved to be a bulwark against global economic turmoil, especially from the financial sector. Regardless of the future course of the Chinese economy, many elements of socialist economic structures remain and they and they alone, permitted the PRC to evade the harshest consequences of the 2008-2009 collapse and blunt the forces of the market.
1. Banks and finance: The PRC’s four largest banks dominate the financial system along with the Central Bank. Despite recent public offerings, the big four banks remain 75% or more under public ownership. The experiment in raising private funds through stock offerings has proven to be more damaging (a recent sell-off briefly rocked the stability of these public institutions) than advantageous, but, nevertheless, the banks remain steadfast under government management. And the Central Bank, unlike our corporate dominated Federal Reserve, functions as a publicly run and owned institution tuned in closely to government economic goals. The “shadow banking” that rocked Western private banks was virtually unknown in the PRC: no securitized US mortgages, no complex derivatives, opaque bank-to-bank deals, etc. The pillars of the financial system, because they were publicly owned and relatively transparent, stood solid against the crisis; they retained the central functions of a financial system without the corruption of private profiteering.
For sure, private banking in the PRC exists and jolts the smooth functioning and stability of the financial system, but to date the government has been able to adjust financial flows swiftly and efficiently.
2. Economic Policy: The PRC retains indicative planning, though flexible and partial. With the onset of the global crisis, the PRC embarked on a sharp turn towards domestic consumption and investment and away from a deteriorating international market. Quickly adopting a massive $622 billion stimulus program and loosening the valves on lending from the publicly owned banks, the PRC minimized the damage from a collapsing global capitalist economy. While the West, stumbled and delayed, politicizing and horse-trading intervention in the economy, the PRC acted promptly and decisively. As a result, the PRC maintained a growth rate well above Western norms through 2008-2009, while nearly all other countries endured negative growth.
Even with the corrosive and corruptive influences of capitalist social relations, the Communist Party of China remains a leading institution linked to advancing the general welfare of the people. That is, it continues to respect and seek the promotion of national interests. Compare its performance in the face of severe crisis to the appalling submission of bourgeois democratic institutions in the West to the welfare and interests of capitalist institutions; banks and corporations were rescued while living standards were decimated. In terms of serving the interests of the vast majority of the people, the PRC institutions proved far more democratic in content than the formal Western “democracies”.
3. Planned development: The PRC adopted the “National Medium- and
Long-Term Plan for the Development of Science and Technology” in 2006, a plan that proposed doubling the percentage of GDP devoted to research and development through 2020. At the end of this November, the PRC confirmed a plan to spend $1.7 trillion over the next 5 years on sectors including alternative energy, biotechnology, and advanced equipment manufacturing (Reuters, 11-21-11). Such national planning is virtually unheard of in the West since the massive investments in infrastructure, education, and research and development brought forth by the panic over the Soviet launch of Sputnik.
Chinese planning shows much more responsiveness and flexibility than policy initiatives in the West. With global demand shrinking from 2008 through 2009, the PRC shifted swiftly with internal investment and expanded consumption while Western powers debated and hesitated.
4. Public ownership: With state banks opening the floodgates, and a
Communist Party leadership quickly implementing a stimulus program, publicly-owned enterprises reacted immediately and decisively to the call to expand economic activity. While the public sector was curtailed in the early years of the shift to market relations, it remains dramatically larger than in Western countries or most Asian neighbors. In a generally hostile article in The Wall Street Journal (China’s ‘State Capitalism’ Sparks a Global Backlash, 11-16-10), the authors make the point vividly: In 2008, the assets of the PRC’s publicly owned firms totaled 133% of economic output; in the same year, France’s state-owned firms’ assets amounted to only 28% of economic product. While much speculation revolves around the role of the public sector in the PRC, these numbers give a perspective on how important publicly-owned enterprises are in the PRC. Thus, when essential stimulus programs or planning initiatives are undertaken, they translate into rapid, measurable results, unlike in the US where policies are pushed through the sieve of private contractors with the consequent siphoning off of overhead and profits, few jobs created, and long delays.
While many in the West are skeptical of the PRC’s ability to move away from export-driven manufacturing to domestic consumption, the following figures are revealing: Exports as a percentage of GDP have fallen from 35% in 2007 to 27% in 2010; third quarter 2011 import growth exceeded export growth; and retail sales grew by 17% in August and 17.7% in September of this year against the prior year.
Of course the PRC’s success in weathering the economic crisis is no guarantee that it will do so going forward. Certainly the PRC leadership is aware of difficulties ahead. The PRC Vice Premier, Wang Qishan, was recently quoted by the Xinhua news agency: “The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic.”
The country’s participation in global markets could present problems that even its remaining socialist tools cannot overcome. Moreover, it is not clear if the PRC will strengthen these safeguards or jettison them, as its leading Communist Party shapes this awkward mix of socialism and capitalism.
Thus, forty-five years after Dutt’s pamphlet, we are still left with the burning question: Whither China?
Zoltan Zigedy
zoltanzigedy@gmail.com
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