Dependency, Marxism and Class


11th April 2013


This one’s far shorter than I’d have liked it to be, since I had to trim it down for a 2,500 postgrad essay - but let me know what you think of it anyway! :)


 

Dependency Theory: A Critical Defense

 

            Arising from critiques of the Economic Commission for Latin America (ECLA), theories of dependency remain the most misunderstood and caricatured of all theories pertaining to the development of the Third World. For any kind of meaningful assessment of the usefulness or validity of theories of dependency it is imperative that we shift from the notion of an homogenous dependency theory to a complex paradigm of dependency, the various constituents of which have roots in multiple theories and methodologies.[1] It is patently absurd that one should tar the works of writers as diverse as Frank, Amin and Cardoso with the same brush merely because they all use the concept of a set of unequal relationships between nations within a polarised international economy. This shift in understanding allows us to retain the baby whilst removing the bathwater - separating flawed methods and concepts from sound ones and giving us a far more realistic and fair picture of dependency theories as a synthesised whole. To do otherwise is to fall into the trap of stereotyping, and stunts the ability to make critical remarks which may improve our understanding of the functioning of dependency.

A great deal more service can be done to a set of theories with honest appraisal, the suggestion of new directions of travel, and the exposure and correction of past mistakes, than with either complete dismissal or blind praise. Hence, whilst I offer criticisms of individual authors from the point of view of a modern Marxist, particularly those of the ‘world systems’ school, I believe dependency theories to be an indispensable addition, not only to historical-materialist conceptions of international capitalist relationships, but also to the search for practical solutions to the alleviation of the great social evils which exist outside of the developed world.

 

The ECLA: Breaking New Ground

Formed by the United Nations in 1948 as a body to explore regional development, the ECLA (also known by its Spanish acronym CEPAL) operated under its director Raul Prebisch. By 1949, Prebisch and the Commission had already written an extensive report into the condition of Latin American capitalism,[2] and therein took a radically different stance to the mainstream of modernisation development theorists, typified by those such as Rostow.[3] Whilst Rostow and his colleagues proscribed the supposed extension of ‘modern’ economic and social values over the ‘traditional’ through Ricardian specialisation, increased exposure to international markets and the abolition of barriers to trade, the ECLA drew a blunt but powerful distinction in international markets – the centre and the periphery. Far from the sharing of technological benefits amongst all capitalist nations, and the increasing of raw material prices to the benefit of primary producer nations, the ECLA demonstrated widening gaps between rich and poor nations, industrial profits at the centre booming with the levels of trade, whilst peripheral nations were broadly excluded from sharing in prosperity. As Prebisch puts it, the key flaw in modernisationist thinking is that when it talks of the process of the sharing of industrial benefits, ‘it attributes general character to what of itself is very circumscribed.’[4]

            The ECLA’s key contributions lie in two areas:

1.                  An imbalance in income elasticities between central and peripheral consumers, stemming from the fact that industrial goods are produced primarily in the capitalist centre and imported to Latin American countries, leads to worsening terms of trade for Latin American countries if monoculture and primary-export-led growth policies continued.

2.                  The mass of available labour and lack of strong trade unions across Latin America means that wages could be kept low – hence, the prices of food and raw materials remained low, whilst the prices of central capitalist industrial exports increase (due to strong trade unions and comparative scarcity of labour).

When taken together, these laid the foundation for what would become known as the ‘theory of unequal exchange’, built upon by later writers. It created a perfect storm for Latin American nations – the more they exported, the more they contributed to their own subjugation to central capitalist nations. But paradoxically, the ECLA failed to extrapolate the logical international conclusions of its theory, and focused almost entirely on endogenous obstacles to development: a reactionary and entrenched landlord class, and an inefficient latifundio system of land ownership which stunted development of internal markets.[5] The ECLA recommended a programme of import-substitution industrialisation (ISI) to be undertaken by the state, with strong powers of planning, economic coordination and protection of domestic industry, in order to delink from exploitative global markets.

            In practical terms, ISI was a flop - it merely changed the form of economic dependency which countries faced. Import dependence shifted from industrial goods to capital goods, attempts to escape monoculture status were fraught with difficulties,[6] and tariff barriers were circumvented by foreign capital investment.[7] Though the ECLA was groping in the right direction, asking all of the correct questions, it was methodologically flawed and lacking the mechanics to explain the surplus drain from periphery to centre. Reflecting a deeper sense of pessimism as the Fordian boom of the postwar years reached its impasse in the 1970s, Cardoso remarked that industrialisation was no longer in contradiction to imperialism, but had become subsumed as another of its many vehicles.[8]

 

Typology of Dependency Theories

Against this background of disappointment, a host of theoretical alternatives grew upon the foundation of the ECLA’s conception of dependency. As I have remarked before, failure to distinguish between the strands of thought is an intellectual crime – hence, how we group and distinguish between these strands deserves some consideration.

Palma’s three divisions are elucidating – first, ‘theories of underdevelopment’, which start from the point that internal Latin American conditions are directly derived from their external relationships, typified by Frank and Baran. Second, thinkers who attempted to reformulate the ECLA’s propositions, but shy away from any wider theory: Sunkel and Furtardo fit in here. Finally is the ‘concrete situations of dependency’ school, which rejects formal attempts to create an overarching externality upon which to pin all internal problems in Latin America, and stresses the mediatory effects of class formations and struggle – Cardoso, Faletto and Palma himself can be categorised thusly.[9] This schema gives the false impression that Cardoso and Faletto are superior to Frank because of their anti-theoretical empiricism. This is not the case, since all three are highly theoretical; it simply happens that Frank is wildly flawed. Thus, I am convinced by Larrain’s[10] broader but more methodologically sound schema of two schools:

1.                  A ‘world system’ school, within which we can locate Frank, Wallerstein, Emmanuel and Amin. This school sees dependency as an encompassing global system, characterised by a duality between centre and periphery, between which there is unequal exchange of resources and value to the benefit of the centre. Underdevelopment is therefore a function of development, and vice versa.

2.                  An ‘associated dependent development’ school, which sees dependency as a condition for specific social and economic circumstances within given concrete institutional formations and national boundaries. International exchange is given less attention, and the focus shifts to the historically, politically and culturally contingent class struggles which take place within underdeveloped nations. This school is somewhat heterodox, coming in humanitarian developmentalist forms (Pinto, Sunkel, Furtado), and Marxist forms which integrate international situations and internal class struggles (Cardoso, Faletto).

World Systems

Frank’s writings posit a non-Marxist chain of exploitation through a network of metropolises and satellites – each metropolis being a satellite of the next rung up the ladder.[11] However, as Booth points out, Frank makes a fatal mistake at this most basic level – he conflates the spatial exploitation of one nation by another with the social exploitation of one class or individual by another. The relationship between a peasant and his landlord is precisely comparable to that between a central capitalist nation and a peripheral satellite.[12] Through the conflation of these two relationships under one notion of surplus, he hamstrings his analysis in the concrete by abstracting to a series of analogous but vague exploitative relationships – as Roxborough says, to explain dependency in reality, only concepts of the exploitation of labour and the transfer of surplus-value through unequal exchange are sufficient since they describe demonstrably different economic and social relationships.[13] Furthermore, Frank’s analysis has grave implications for the examination and interpretation of class struggles. Within Frank’s schema, nationally-based processes of class formation are ignored – Frank slides from a level of analysis appropriate to explaining concrete struggles and social formations (generally, individual nations) to the level of analysis appropriate to capitalism as a world economic system (global).

Wallerstein’s method of dealing with the problem of units-of-analysis is radical: he abolishes the national, stating that ‘the relations of production that define a system are the relations of production of the whole system’, and goes on to point out that capitalism cannot be conceived of without a duality between free labour in the centre, and coerced labour in the periphery.[14] This is a perceptive point, certainly, but fails to get us beyond the problems with units-of-analysis, since international capitalism is far more complex than a homogenous system with an identical set of productive relations everywhere – take, for example, pre-Chavez Venezuela: a largely agrarian export economy with a small enclave of highly industrialised foreign-owned industries around the PDVSA.

It is clear that as dependentistas, Frank and Wallerstein fail to provide a convincing articulation. But our two next analysts are much more enlightening: Emmanuel and Amin. Both were interested in the concrete operation of processes of unequal exchange between nations, and hence contributed significantly to a more fleshed-out conception of dependency.

Dependent countries, says Emmanuel, are those which are trapped in a cycle –constantly exchanging a larger quantity of domestic labour for a smaller amount of foreign labour.[15] The tendencies towards constant degradation in terms of trade picked out by Prebisch and the ECLA, he says, are an illusion: higher wages in the centre necessarily mean a smaller amount of socially-necessary labour time is contained within industrial exports from the centre, in exchange for cheap raw materials with more socially-necessary labour time invested in them – hence surplus drains towards the centre.

Implicit in this formulation is that exchange itself is an arena for exploitation – meaning that workers at the centre benefit directly from the exploitation of their counterparts in the periphery. Emmanuel describes this succinctly: ‘A de facto united front of the workers and capitalists of the well-to-do countries, directed against poor nations, coexists with an internal trade-union struggle over the sharing of the loot.’[16] Predictably, Emmanuel has been roundly criticised for these ideas, which smack of a Third-Worldist perspective to the exclusion of reason or history. Most incisive is Charles Bettelheim, who attacks the fundamental logic of Emmanuel: ‘we do not treat wages as an ‘independent variable’, we are led to relate the low wages in the poor countries to both the low level of development of their productive forces and to the production relations that have hindered and continue to hinder the growth of these forces’.[17]

Rightly, Amin blasts Emmanuel’s mechanistic proclamation of wages as ‘the independent variable’ – and goes on to examine how productivity functions within international exchange. Most Third World exporters, he notices, use modern productive techniques, but with much lower wages than the central capitalist nations. Though not all Third World commodities are produced through capitalist property relations, this doesn’t matter – unequal exchange can easily take place between different modes of production. Thus he arrives at his neat summary of unequal exchange: ‘the exchange of products whose production involves greater wage differentials than those of productivity’.[18] This is a gigantic improvement on any of the other theorists in this school.

            Yet all of the above writers fall into the same trap: in seeking to create an all-encompassing system which explains development purely in terms of exchange rather than production, they create a stagnationistmodel, which is inflexible and pessimistic, and gives little agency to the vast majority of working people, trapped as they are within a monolithic structure of exploitation. Dealing with this problem is the invaluable contribution of our second group of theorists.

 

            Associated Dependent Development

            Central to the second school of development is the re-centring of the analysis of development on the processes of class struggle. Though Sunkel and Furtado failed to progress far beyond the analyses of the ECLA, their examinations of concrete situations of development in Chile[19] and Brazil[20] respectively meld traditional ideas of dependency with serious investigation of political and social institutions, and their mediation through class struggles. Both authors pay particular attention to how national discourses are integrated into political action – some would say that this marks a retreat from proletarian internationalism, but surely they are attempting to examine real-world phenomena and processes, rather than engage in abstract dreaming about an international working-class which cannot be said to have the vital qualities of a class in any real sense.

            Faletto and Cardoso, former President of Brazil, present by far the most well-rounded account of dependency – one which deserves the most vehement case of support. Their analysis begins with the rejection of the conception of dependency as an external ‘cause’, and progresses onto emphasizing ‘the historic transformation of structures by conflict, social movements and class struggles.’[21] Dependency expresses itself through the mediating and historically conditioned factors of class, state policy and direct local interests. Though dependent economies are characterised by the fact that capital accumulation cannot be effectively sustained by internal forces within the domestic economy, they reject out of hand as obviously incorrect that development and dependency are always incompatible – one only need to look at a host of economies which could be considered to be both dependent and developing.[22] They make a raft of criticisms of the previous school of dependentistas too long to enumerate here – fortunately, Larrain has done so for us.[23] Broadly, they attack the stagnationist idea that capitalist development is impossible at the periphery, and counter effectively Frank et al’s assertion that classes at the periphery act as zombies under the influence of dependency. They conclude their excellent analysis with a thorough examination of the broad sweep of Latin American dependent history. In this ‘thick’ historical description, one can see all of the elements of their dependency theory working together – the conditioning effect of central capitalism, the contingent historical struggle over surplus within Latin American nations, the differing ways in which institutions and social structures form in different national and historical contexts, and the development of Brazil, Chile and Argentina in the 1970s and ‘80s.

            It would be remiss to spare this final school from criticism, though they avoid the vast majority of the pitfalls associated with Frankian dependency. Again, Larrain has helpfully summarised a list of fifteen separate criticisms of dependency theories, stemming mostly from Marxist critiques.[24] But very few of these criticisms apply to Cardoso and Faletto, having been directed against the caricatured stagnationist version of dependency championed by Frank. Even Warren, one of dependency theories’ most strident Marxist critics, admits that ‘Cardoso stands somewhat apart from other theorists’.[25]

 

            As an independent theory, dependency is flawed, pessimistic and rigid – taking its heritage from Marxism, but stripping from it all dynamism and flexibility. But with conscious reintegration into Marxist ideas of productive relationships, class struggle and real-world analyses, such as the project undertaken by Cardoso and Faletto, dependency can become an extremely useful adjunct for the analysis of global economic systems. ‘Men’, wrote Marx, ‘make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.’[26] This short passage from the Eighteenth Brumaire illustrates perfectly why one must support dependency with Marxism – without ‘men making their own history’, we have merely rigid circumstances transmitted from the past. This is not a case of support for dependency as a whole – as I have shown that it is a diverse if not heterogeneous theory – it is a case of support for the most clear-thinking of dependentistas.

 

Word count: 2,650.

 

Bibliography

 

Monographs

Bettelheim, C., ‘Theoretical Comments’ in A. Emmanuel, Unequal Exchange (New York: Monthly Review, 1975)

Cardoso, F. H. and Faletto, E., Dependency and Development in Latin America (Berkley: University of California Press, 1979).

Emmanuel, A,. Unequal Exchange (New York: Monthly Review, 1972).

Frank, A. G., Capitalism and Underdevelopment in Latin America (New York: Monthly Review, 1967).

Furtado, C., Subdesarrollo y estancamiento en America Latina (Buenos Aires: EUDEBA, 1966).

Larrain, J., Theories of Development (Cambridge: Polity, 1989).

Rostow, W. W., The Stages of Economic Growth, a Non-Communist Manifesto (Cambridge: Cambridge University Press, 1985).

Roxborough, I., Theories of Underdevelopment (Basingstoke: MacMillan, 1979).

Prebisch, R., The Economic Development of Latin America and its Principal Problems (New York: United Nations, 1950).

Wallerstein, I., The Modern World System (New York: Academic Press, 1974),

Warren, B., Imperialism: Pioneer of Capitalism (London: Verson, 1980), F. H. Cardoso, ‘Dependency and Development in Latin America’, New Left Review, no. 74 (June-July 1972).

 

 

 

 

Works in edited collections

Amin, S., ‘The End of a Debate’, in Imperialism and Unequal Development (Brighton: Harvester, 1977),

Booth, D., ‘Andre Gunder Frank, an Introduction and Appreciation’ in Oxaal et al, Beyond the Sociology of Development (London: Routledge and Kegan Paul, 1975).

Palma, G., ‘Dependency and Development: A Critical Overview’ in D. Seers (ed.), Dependency Theory: a Critical Reassessment (London: Frances Pinter, 1981).

Prebisch, R., ‘El desarrollo economico de la America Latina y algunos de sus principals problemas’ in ECLA El Pensamiento de la CEPAL (Santiago: Editorial Univeritaria, 1969).

Sunkel, O., ‘Cambio social e frustracion en Chile’ in H. Godoy (ed.), Structura Social de Chile (Santiago: Editorial Univeritaria, 1971).

 

Digital Sources

Marx, K., The Eighteenth Brumaire of Louis Bonaparte (New York: Die Revolution 1952) (http://www.marxists.org/archive/marx/works/1852/18th-brumaire/index.htm, accessed 11/4/13)

 



[1] I. Roxborough, Theories of Underdevelopment (Basingstoke: MacMillan, 1979), p. 43.

[2] R. Prebisch, The Economic Development of Latin America and its Principal Problems (New York: United Nations, 1950).

[3] Rostow, The Stages of Economic Growth, a Non-Communist Manifesto (Cambridge: Cambridge University Press, 1985).           

[4] R. Prebisch, ‘El desarrollo economico de la America Latina y algunos de sus principals problemas’ in ECLA El Pensamiento de la CEPAL (Santiago: Editorial Univeritaria, 1969), p. 49.

[5] Roxborough, Underdevelopment (1979), pp. 30-31.

[6] Cuba immediately after the 1959 Revolution provides a remarkable example of the failure of ISI within a framework of international markets – by 1963, after a disastrous attempt to diversify agricultural exports, the Cuban government returned wholesale to sugar production for the Soviet Union.

[7] J. Larrain, Theories of Development (Cambridge: Polity, 1989), p. 108-110.

[8] F. H. Cardoso, ‘Dependency and Development in Latin America’, New Left Review, no. 74 (June-July 1972).

[9] G. Palma, ‘Dependency and Development: A Critical Overview’ in D. Seers (ed.), Dependency Theory: a Critical Reassessment (London: Frances Pinter, 1981).

[10] Larrain, Development (1989), p. 114.

[11] A. G. Frank, Capitalism and Underdevelopment in Latin America (New York: Monthly Review, 1967).

[12] D. Booth, ‘Andre Gunder Frank, an Introduction and Appreciation’ in Oxaal et al, Beyond the Sociology of Development (London: Routledge and Kegan Paul, 1975), p. 78.          

[13] Roxborough, Underdevelopment (1979), p. 46.

[14] I. Wallerstein, The Modern World System (New York: Academic Press, 1974), p. 127.

[15] A. Emmanuel, Unequal Exchange (New York: Monthly Review, 1972).

[16] Ibid., p. 180.

[17] C. Bettelheim, ‘Theoretical Comments’ in A. Emmanuel, Unequal Exchange (New York: Monthly Review, 1975), pp. 228-9, emphasis in original.

[18] S. Amin, ‘The End of a Debate’, in Imperialism and Unequal Development (Brighton: Harvester, 1977), p. 181.

[19] O. Sunkel, ‘Cambio social e frustracion en Chile’ in H. Godoy (ed.), Structura Social de Chile (Santiago: Editorial Univeritaria, 1971).

[20] C. Furtado, Subdesarrollo y estancamiento en America Latina (Buenos Aires: EUDEBA, 1966).

[21] F. H. Cardoso and E. Faletto, Dependency and Development in Latin America (Berkley: University of California Press, 1979), p. x.

[22] Ibid., p. 94.

[23] Larrain, Development (1989), pp. 162-3.

[24] Ibid.„ pp. 188-193.

[25] B. Warren, Imperialism: Pioneer of Capitalism (London: Verson, 1980), p. 161.

[26] K. Marx, The Eighteenth Brumaire of Louis Bonaparte (New York: Die Revolution 1952), Ch. 1. (http://www.marxists.org/archive/marx/works/1852/18th-brumaire/index.htm)

Troika: First Tragedy… Now, Farce?


26th March, 2013 - a short piece on Cyprus and the Troika.

And so, the panic of the financial classes of Europe continues. With news unremittingly bleak from Greece, Italian bond markets wobbling under the political instability brought about by the shock success of Beppe Grillo,s Five-Star Movement, Spanish youth employment still falling, one would have thought that all Mme Lagarde and the Troika’s shadowy chiefs needed was another flashpoint to further underline the utter lack of strategy on their part and the part of the European capitalist classes. Lagarde et al appear, stage left, in comically ill-fitting firefighters’ garb, with their cash-filled engine (filled, of course, from the pockets of the working masses) spraying bonuses all over the bankers - only to be called away, sirens blaring, to the next imploding economy. But Cyprus has caught them unawares - and forced a very significant compromise on the Troikistas.

Since they themselves are bankers, finance ministers, Chicago-school economists, they go to dinner with their financial aristocrat friends, spend weeks in meetings with the rich and the powerful of Europe, and more crucially have no democratic accountability and the support of the entire state apparatuses of Europe, how can we expect the IMF-EU-ECB Troika to behave any differently than it does: that is, as little more than imperialists enforcing the diktats of capitalist property relations in order to maintain the accumulation of wealth at the very top of society? With this in mind, it is utterly unsurprising (albeit spectacularly ill-judged) that Cyprus was planned to be used as a ‘test laboratory’ for a radically new kind of bailout. Contrary to popular belief, the Troika is not stupid - it is able to assess, calculate and repond to the changing situations which it faces. Hence, seeking to circumvent the massive anti-austerity movements arising in the PIIGS economies in opposition to the decimation of public services, the Troika sought a more direct root of bank recapitalisation. Instead of the assumption of private bank debts by public institutions of state (and the gradual repayment through Africa-in-the-80s-style social devastation in the form of the brilliantly euphemistic ‘structual adjustment), the Troika opted for a direct levy on savings. That is, every Cypriot, no matter their income, was to pay around 7% of their savings directly to the coffers of the bank.

Obviously, this was a semi-medieval measure; in Marxist terms it is pure accumulation by dispossession - the acquisition of wealth by simple force. What the Troika had not accounted for was the reaction of the Cypriot people, turning out onto the streets surrounding the Parliament building in Nicosia in their tens of thousands (a huge proportion considering the island has only a whisker over a million inhabitants. It is my guess that the Cypriot Parliament surprised even itself when it was forced into unanimously rejecting the bailout and hastily suspending operations at the banks, with massive queues already forming outside ATMs.

This unexpected stand from the government (albeit one which the Parliament was forced into by the desire to avoid massive social discontent) precipitated a few tense days of crisis. At first, it looked as if the levy on savings, hated by the vast majority of ordinary Cypriots who would be hit far harder than the multi-million dollar investment portfolios of shady offshore businessmen, was to be struck down in its intirety - but then what? Devastation of public services, living standards, and so forth? The fact is, neither participants in the negotiations (the conservative Greek government and the Troika, the people of Cyprus being unsurprisingly excluded from any such democratic input) could find an alternative to some kind of banking levy within their narrow capitalistic frames of reference.

Hence, like a mortgage-backed security version of Lazarus, the levy rose from the dead. Caught between axing the people and axing the bankers, the Troika and the Cypriot government chose the less hostile and more predictable of the two - the bankers (because let’s face it - at least at the moment the bankers are less likely to burn down Parliament). What emerged from those negotiations is a solution which reflects the contradictory position which crises place the ruling class in: a capitalistic solution which will cripple Cypriot banking capital for its own sake. The threshold of the levy was raised to around £80,000, exempting the working small savers who were most militant in their opposition to the theft of their earnings.

But where does this leave Cypriot capital? On an island which prides itself as a destination for the deposits of the bourgeoisie around the world, surely such a significant levy on investment, topping 25% for some investors, sets a worrying prededent (from the perspective of individual bankers) where investments can be appropriated by banks if crisis looms. This undermines the fundamental structres of business confidence which financial capital especially relies upon - often balanced upon a hair-trigger as it is. But what is the alternative for the Cypriot ruling class? Slay their financial credibility through the levy, or carry out massive austerity and risk giganitic social upheavals and economic disaster similar to those elsewhere in Southern Europe? Within the bounds of the accumulation of capital, only these measures which kick the can a little further down the road can be attempted - no long-term strategy is possible, never mind whether it is within the grasp of those economists and penpushers who seem to have only the barest knowledge about the formalities of their own economic system.

This new strain of Troika thought - of banking levies and accumulation by dispossession - has been brought about reactively in response to economic realities; as such it can only be a stopgap rather than any serious engagement with the root of the financial crisis. Such an engagement is intellectually untenable for them, since it entails the dismantling of the very system of exploitation which keeps them in caviar and champagne: the only solution to this intractable problem of capital is the alternative demanded by the Greek, Spanish, Italian, Portuguese and Cypriot working classes - No to the Bosses’ EU, No to Austerity, for a Workers’ Europe!

One thing is certain: that the Troika emerge from this entire escapade battered and bloody. Their gamble on the Cypriot people taking draconian measures quietly utterly backfired, forcing them into an embarrassing retreat, and a compromise which looks unlikely to be stable or sustainable. One is reminded of the words of Marx, reminding us that ’ all great world-historic facts and personages appear, so to speak, twice: the first time as tragedy, the second time as farce’ - the tragedy of the Troika’s austerity-at-gunpoint is rapidly dissolving into the volte-face farce of Cyprus. But amongst the tragicomic flurry of last-minute negotiations and the resurrection of the failed levy, one vital point emerges once more, as it has throughout the struggle against austerity - that in an age of stagnation and crisis, the collective actions of ordinary working people are magnified to the degree that makes the changing of history on a knife-edge possible.

Globalisation, social democracy and the irrationality of capital


Thurs 21st Feb 2013

A pressing question for anyone wishing to change the world in the Age of Austerity is how far it is possible to recreate the social democratic institutions and structures which once benefited ordinary working people, before the hegemonic swing towards neoliberalism beginning in the late 1970s. In this postgraduate essay for my Masters in Politics, I argue that social-democratic capitalism, able to provide socially beneficial support to the working classes, was a historico-political phenomenon contingent on specific social and economic conditions which no longer exist.

Thus, it is important that we treat such ideas of ‘turning the clock back’ to the postwar period for what they are - dangerous illusions which have little grounding in modern economic or political fact, owing more to nostalgia for a broadly imagined past than to serious potential for ‘new social democracy’. Such an agenda can only play into the hands of those who seek to strip the welfare state of what little content it has left.

It’d be great to hear what you think of my writing!



Has globalisation killed social democracy?


We must define social democracy, if we are to gain true insights into its function as a social system, as a product of class society. It is the product of a capitalist system within a given set of historical circumstances; a particular balance of contradictory forces, the outcome of which depends dialectically on their relative strength and urgency – capital and labour. It will become obvious to the reader through the course of my analysis that the class relations which gave rise to social democratic corporatism no longer exist – more precisely, that the balance between labour and capital has shifted inexorably and irreversibly towards the latter. The ever-present imperative for capital to maintain and increase its profitability comes at the expense of social democratic systems which restrained and impeded this imperative.

Viewed through a class paradigm, the question of whether globalisation was the wielder of the knife in the back of corporatist Keynesianism becomes somewhat of a forced question. The interlocking causes of the death of social democracy demystify themselves under Marxist analyses of the social surplus as necessary effects of the imperatives of continued capitalist accumulation. This must of course be qualified by the fact that these effects are complex, uneven and often interdependent, subject as they are to the anarchic jostlings of a countless number of capitalists, who exert pressures and counterpressures on state and economy. The outcomes of these pressures are institutionally and historically conditioned, encountering vary degrees of resistance from nationally differing state- and labour market-institutions. But nevertheless, the chain of causation begins with the basic processes of money turning itself into more money – that is, capital.

I would argue that if social democratic corporatist structures were translated onto the contemporary balance of class forces, they would be inevitably parasitic, authoritarian and unable to provide anything close to what we have had in the past, let alone offer significant improvement on what we have now. So the urgent task of the socially engaged political theorist, in my opinion, is not to explore the ways by which a new social democratic order could be established – this would be historically and politically, but above all economically, impossible. Our task is to explore radical new forms, arising naturally from the situation which presents itself, which would be able to organise production and distribute surplus far better than even social democratic capitalism ever could.

Such is a task, however, is beyond the scope of three and a half thousand words. Thus, this present analysis of the relationship between globalisation and social democracy will proceed broadly in three sections:-

1.     An analysis of what is meant by ‘social democracy’. This will include the construction of a broad ideal type of social democratic regime which holds true enough for most Western regimes in the postwar period to be of theoretical insight, yet is not imprecise enough to be merely prescriptive and meaningless. As I outlined above, my analysis will take class and the interactions between classes within social democratic regimes as its methodological anchor.

2.     The application of theoretical globalisation to this ideal type, drawing wherever possible on the vast array of empirical data collected by eminent political theorists over the last fifty years. I will conclude that analyses of social democracy and globalisation viewed in isolation, though they draw out significant and important trends and potential dialectics for exploration, do little to explain the material decline of the viability of social democratic regimes since the 1970s.

3.     I will provide what I find by far the most convincing explanation for the death of social democracy, and its continuing unviability – a Marxist account giving centrality to the course of the rate of profit, based upon Marx’s own formulation of the ‘law of the tendential fall in the rate of profit’ (LTFRP hereafter).

 

‘Globalisation’?

The least amount of time in this essay will be devoted to the analysis of the character of ‘globalisation’, as I believe I have covered it rigorously in a previous essay.[1] I shall restate my key conclusions in a brief summary, as to make my use of the word ‘globalisation’ clear.

Hirst and Thompson present compelling evidence that what has conventionally been described as ‘globalisation’ has been crucially misunderstood. They accept the undeniably large increase in trade as a proportion of produced goods, but empirically demonstrate that rather than a multipolar ‘free’ system of trade, regional blocs (notably the Triad of the US, Europe and South East Asia) predominate, surrounded by strong protective barriers. Large swathes of the globe (notably Africa) are broadly excluded from integration into the global market.[2] Further to their analysis must be added a class dimension that takes into account and explains global inequalities of wealth and trading power – development theorists when taken as a synthetic whole, though sometimes individually lacking, provide the most eloquent answer to this problem. They describe a specific form of stunted economic growth designated as ‘underdevelopment’[3] which allows the draining of surplus from periphery to centre through differentiations in the organic composition of capital[4] and productivity.[5] This is the process that I shall refer to as ‘globalisation’. It is implicit in this analysis that peripheral nations are generally unable to sustain effective social democratic regimes due to the draining of surplus which would otherwise be free for social investment – however, this essay will concern itself primarily with the relationship between globalisation and social democracy within the Western (primarily European) capitalist states.

Towards an ideal type of social democracy

One of the earliest class analyses of the social bargain between employers and employees is made by J. A. Hobson in his landmark economic analysis The Evolution of Modern Capitalism. The fact that British industrialists had consented to the restriction of their activities by regulatory frameworks such as the Mines Regulation Acts, the Factory Acts and ‘the large growth of public provisions for guarding against economic, hygienic and other injuries arising from the conditions of modern industrial life’ is itself an tacit admission that ‘machinery subject to the unrestricted guidance of the commercial interests of an individual or a class’ is inherently dangerous to the social fabric.[6] To put it a slightly different way, the unrestricted extraction of profit is itself a danger to the extraction of profit, because of the social fallout which it inevitably entails – one may be reminded of Karl Marx’s prediction that the unfettered capital of his day was producing ‘above all, its own grave-diggers’.[7] Therefore, smart capitalists will see the need for ‘an administration of a genuine antagonism’ between the interests of capital and labour, in order to preserve the system which allows them to increase their wealth. [8] This ‘administration of antagonism’ is the cornerstone of social democracy, and provides a theoretical lens through which to view modern social democratic societies.

Obviously, the uneven development of capitalism across Europe has led different countries to develop different institutional forms, but the rise of a broad Keynesian consensus after the Second World War deserves analysis in the search of common trends. Jessop gives us a useful fourfold definition of the postwar Western state as the ‘Keynesian National Welfare State’ (KNWS).[9] These dimensions are:-

Keynesian. Postwar Western states pursued interventionist economic and social policies. These involved the maintenance of full employment, stringent capital controls to maintain a relatively closed economy,[10] and a substantial nationalised sector of the economy (even the ambivalent case of Britain, which is perhaps the least Keynesian of the European economies in the postwar period, undertook a substantial, if reluctant, programme of nationalisations under Atlee’s Labour government).[11]

Welfare. The social bargain between labour and capital involved the provision of robust welfare systems - what Esping-Andersen refers to as high levels of ‘decommodification’; broadly the idea of ‘rights’ of workers to particular services and systems of social support.[12] They were also redistributive to a significant degree, characterised by a much flatter income distribution than at any other point in these states’ history.[13]

National. The postwar Keynesian consensus was a distinctively national phenomenon, ‘within the historically distinctive matrix of a national economy, a national state, and a society seen as comprising national citizens’. International organisations set up after the war, such as the IMF and the European Economic Community, were designed primarily to stabilise individual nation states rather than to attempt transnational governance.[14]

Statism. As Miliband astutely observes state institutions in KNWSs exist ‘precisely for the purpose of maintaining the rights of property in general’. This is not to say that governments have not ‘been compelled over the years to act against some property rights, to erode some managerial rights, to help redress somewhat the balance between capital and labour’, but that this is all undertaken in the interests of upholding the collective interests of the ruling class.[15] However, to argue that all social democratic states are entirely unresponsive to the needs of citizens would be disingenuous – particularly through a universally enfranchising electoral system, the dispossessed classes can influence the government (as distinct from the state, importantly), giving the state a complex character.[16] The state, in KNWSs, acts as mediator between capital and labour, subject to the influence of both, but bound to the interests of the maintenance of capital accumulation, and hence more to the interests of capitalists than to those of workers. The precondition for this state intervention is organised and disciplined labour, expressed through a trade union movement which can be brought to abide by the deals hammered out between union leaders and the state.

 

 

The KNWS plus globalisation – a theoretical-empirical analysis

We now turn to the question of whether globalisation in isolation has rendered the above social democratic form of state impossible. Though it is obvious that globalisation has rendered some aspects of social democracy unfeasible, in and of itself it can by no means be said to have ‘killed’ social democracy.

Sitting firmly in the ‘Yes’ camp is John Gray, an academic at the London School of Economics. His hardline stance contends that the ‘global freedom of capital effectively demolishes the economic foundations of social democracy’.[17] The evidence for the dissolution of restrictions on capital movement is clear – when comparing a compound index of how restricted states were of capital movements in 1966-1973 to 1985-1990, even Garrett, a strong advocate of social democracy, is forced to admit that capital was freed from virtually all constraints.[18] Of the trends directly attributable to globalisation, this is the most threatening to social democratic regimes. A new international division of labour brings labour power costing much less than that of Northern European welfare states into the pool of labour available to capital – thus it is often simply a matter of cost-effectiveness for capitalists to ‘outsource’ production to ‘developing’ (read: underdeveloped) nations. This effect is observable in international industrial statistics, where the new division of labour has had most effect, industrial output of central capitalist nations declining from 95% to 77%, with the share taken up by the periphery more than tripling, from 5% to 23% from 1963 to the late ‘90s.[19] This has potentially grave consequences for the coherence of social democratic regimes. Though the evidence is far from conclusive, it seems intuitively likely that this new division of labour has led to greater job insecurity in former social democratic regimes,[20] with deindustrialisation taking its toll on union densities. Garrett attempts to argue that successful social democratic regimes have been able to maintain and indeed build on high union densities, but those which have managed to do this (such as Sweden and Denmark) remain atypical and economically insignificant compared to states where union densities have crashed since the 1980s (for example the UK), and do little to buck the overall trend of decline.[21] The lack of a strong union voice jeopardises the ability for social democratic regimes to remain stable, incoherence meaning wage-push in sectors unexposed to international trade (particularly within the public sector) can create income inequality even amongst workers (the middle-class/working-class divide) and can damage the ability for stable class coalitions to be built.[22] Indeed, a decline in unionism in and of itself is hampering to the cause of the working classes, since it reduces the simple ability of workers to effectively impress their demands on their employers, changing the relative strength of labour in relation to capital in favour of the latter.

However, the impact of other dimensions of globalisation on the viability of social democracy is much more ambivalent. Cameron was one of the first to demonstrate in 1978 that there is a significant correlation between the economic openness of the state and the strength of its social democratic regime, including labour market institution strength and public sector size.[23] One common and convincing explanation for this is that small export-orientated economies are more at the mercy of fluctuating demand in international markets, hence strong social democratic and corporatist policies arise to compensate for the ill effects of such fluctuations – both from the workforce, who are more at the mercy of market machinations than their more closed-economy counterparts, and from the owners of profitable export industries seeking to suppress militancy. However, Cameron was examining a period where significant and restrictive capital controls were still the norm – Rodrik argues that this trend, of openness reinforcing social democracy, has been reversed in a situation of free movement of capital.[24] In any case, the evidence is far from unambiguous.

As I suggested in my introductory remarks on globalisation, it is obvious that the extent of globalisation, and the ability for capital to move without restriction, has been exaggerated. As Pierson points out, ‘if global financial markets were really as integrated as some of the hyperglobalists believe’ we would not see ‘the repeated feeding frenzies of speculation against vulnerable currencies’[25] – or they would certainly be less frequent and less disastrous. Others, such as Fliegstein, point to the fact that ‘bias’ towards domestic shareholding and investment is still preponderant to a significant degree.[26] Internationalisation has also not undermined public spending in and of itself, though I would argue that its character has changed significantly – but it has become less generous in terms of its provisions, and more orientated towards corporate welfare rather than the advancement of social rights.[27]

 

Capitalism, in the drawing room, with the falling rate of profit

Yet when viewed as a whole, the dynamics of globalisation, though they may make certain policy choices less desirable[28] and certain arrangements of class compromise less viable, there is nothing within the inherent dynamic in globalisation which would account for the shift from US President Nixon’s famous phrase ‘We are all Keynesians now’ (which as I have demonstrated, is very true for the Western world) to the Washington Consensus merely two decades later. Thus, in order to understand the dynamics of the demise of social democratic states it is vital that we extend our search beyond the confines of globalisation. Though globalisation may have been an accessory to murder, the smoking gun rests firmly in the hands of capitalism’s own inescapable propensity to undermine its own profitability through technological competition – the LTFRP.

The LTFRP was formulated in Marx’s third volume of Capital, compiled from the hordes of Marx’s notes by his lifelong colleague (and thoroughly put-upon friend) Friedrich Engels in 1894, a decade after Marx’s death. Even taking this into consideration, it is easily one of Marx’s most insightful works. The law can be summarised thus:-

In the course of competition, capitalists inevitably replace human labour with machines to maximise productivity, or in Marxist terms, they replace variable capital with constant capital. This is an increase in the organic composition of capital, because constant capital increases whilst variable capital decreases as a proportion of the total advanced capital. Since human labour is the only source of value, the value created by labour is ‘stretched out’ over more products: the rate of surplus value, and therefore the rate of profit, must diminish.[29]

Marxist writer Andrew Kliman draws the implications of this law out for modern capitalism with exhaustive empirical analysis, and reveals that the rate of profit has followed a course which explains almost perfectly the turn away from social democratic corporatism to neoliberalism. In summary, it was the decline in profit rates in the 1970s that prompted formerly Keynesian capitalists, happy to be restricted by corporatist agreements and high tax rates, to do all in their power to throw off the chains of the ‘big state’ and to force through policies which allowed the continuation of profitability. He begins by underscoring the effects of three decades of Keynesian policy on the trajectory of the capitalist system as a whole – the very fact that governments sought to lessen the extent of crises and flatten out the ‘business cycle’ through countercyclical spending and fisco-financial policy meant that profit rates were not allowed to recover.[30] Crises, in the words of David Harvey, are the ‘irrational rationaliser of an irrational system’[31] – they allow the restoration of profitability by devaluing constant capital (through, for example, bankrupt companies holding fire-sales of buildings and machinery) thereby reducing the ratio of constant capital to variable capital – a countertrend to the LTFRP.[32]

Kliman’s empirical analysis shows that profit rates continued to decline from the 1960s to the present day, or at least were certainly no less promising during the 1980s. The most obvious explanation for this is that the economic slump experienced by almost all Western economies, triggering worrying ‘stagflation’,[33] failed to devalue constant capital adequately; ie. that the crisis itself was never allowed to bite enough to rationalise the irrationality of the system. The only solution, in lieu of high rates of profit, was the search for new sources of surplus extraction in order to swamp the fall in quality with a rise in quantity. Namely, this involved the dismantling of the old corporatist welfare regimes, the disciplining of labour at home, and the export of capital abroad.

Marx offers us some countertrends to his law – Gillman reminds us that the LTFRP ‘must be thought of as expressing tendencies which under given conditions might be counteracted temporarily by other tendencies or forces’.[34] One of these potential countervailing forces is foreign trade – it both reduces the cost of domestic labour through cheap imports, and reduces the price of machinery and means of production through the import of cheap raw materials.[35] Even in the abstract, it is already obvious why foreign trade, indeed globalisation, might well appeal to capitalists beset by falling rate of profit. Other trends which Marx identifies are the ‘raising of the intensity of exploitation’, for example by lengthening the working week; the ‘depression of wages below their value’, for example by the creation of new divisions of labour which bring cheaper workers into direct competition with more expensive ones; and ‘relative overpopulation’, the creation of industrial reserve armies of the unemployed to weaken the position of labour.

Each and every one of these countertrends can be seen taking marked effect from the 1980s onwards – they necessitated the breakdown of the postwar social order. I have already demonstrated above the turn towards foreign trade and globalisation, and the creation of a new global division of labour enabled by the dissolution of the barriers to capital movement maintained by Keynesian states. We have seen how governments have eroded state restrictions on capital movements – bearing in mind the social consequences of such a new global division of labour and high exposure to trade, it is unlikely that such a move came about purely by popular democratic volition. We must have the words of Thorstein Veblen ringing in our ears at all times when observing these political trends: ‘the chief – virtually sole – concern of the constituted authorities in any democratic nation is a concern about the profitable business of the nation’s most substantial citizens’.[36] The creation of a persistent reserve army of unemployed labour and the vanishing of permanent employment has also been marked in Western states; indeed it was admitted by one of British Prime Minister Margaret Thatcher’s ministers, whose government presided over the first violent phases of neoliberal imposition, that ‘raising unemployment was an extremely desirable way of reducing the strength of the working classes’.[37]

 

The true culprit

The policies of neoliberalism fit most precisely with the capitalist class’ desire to paper over the crisis of the late 1970s, the fruition of a long-term unsustainability created precisely by the Keynesian policy which attempted to manage capitalism’s inherent and inescapable flaws. As I have demonstrated, to depict the impersonal and ‘inevitable’ process of globalisation as the prime mover in the death of social democracy is to excuse the crimes of the wealthy minority who, as David Harvey demonstrates in terrifying black-and-white, got stinking rich out of the gutting of social democratic corporatism.[38] When falling rates of profit have both undermined the ability of capitalists to participate in corporatist structures which would benefit working people, and given the perfect excuse for the more violent imposition of their interests. It is obvious that if such structures were created today they would lose both their social and their democratic content, becoming nothing more than coercive means for enforcing the startling inequality between workers and capitalists. Under such conditions of low profits rates, if the capitalist wishes to make money out of the deal, they could be nothing else.

Such a grim prognostication leaves little choice for working people, other than the abolition of capital as a method of organising production. Leaving the ceaseless drive for profit in place, attempting to regulate or modify it, remains ever more fruitless, as reducing rates of profit lead capitalists to drive wages further and further downwards in Western nations. Even then, this process undermines the demand for the products which they hope to sell us for profit. Such an economically ridiculous system has become parasitic and must be replaced – my own hopes are for democratic socialism, a system of allocating surplus through democratic decision-making, with a focus on community involvement and cooperative ownership. Yet if the Left is not an agent of transformation, then authoritarianism and perhaps even state fascism will find its own solutions – one way or another, we can’t go on like this.

 

Word count inc. substantive footnotes – 3,674.


 

Bibliography

 

Monographs

Amin, S., ‘The End of a Debate’, in Imperialism and Unequal Development (Harvester Press, 1977).

Baran, P., The Political Economy of Growth (Monthly Review Press, 1962).

Cline, W. R., Trade and Wage Inequality (Institute for International Economics, 1997).

Emmanuel, A., Unequal Exchange (New Left Books, 1972).

Esping-Andersen, G., The Three Worlds of Welfare Capitalism (Polity, 1990).

Garrett, G., Partisan Politics in the Global Economy (Cambridge University Press, 1998).

Gillman, J., The Falling Rate of Profit (Dennis Dobson, 1957

Gray, J., After Social Democracy (Demos, 1996).

Harvey, D., A Brief History of Neoliberalism (Oxford University Press, 2005).

Hay, C. and Wincott, D., The Political Economy of European Welfare Capitalism (Palgrave Macmillan, 2012).

Hirst, P. and Thompson, G., Globalisation in Question (Polity, 1999).

Hobson, J. A., The Evolution of Modern Capitalism (George Allen and Unwin, 1926).

King, D. S., The New Right (Macmillan, 1987).

Kliman, A., The Failure of Capitalist Production (Pluto, 2012).

Lockett, C, ‘“Regionalisation is a more potent force in the global political economy today than globalisation”.  Discuss.’, Postgraduate essay (University of Sheffield, 2012).

Marx, K. and Engels, F., ‘Manifesto of the Communist Party’ in K. Marx and F. Engels, Selected Works, vol. 1 (Progress, 1969).

Miliband, R., Capitalist Democracy in Britain (Oxford University Press, 1982).

Miliband, R., The State in Capitalist Society (Quartet, 1973).

Pierson, C., Hard Choices (Polity, 2001).

Rodrick, D., Has Globalisation Gone Too Far? (Institute for International Economics, 1997).

UNIDO, World industry: a statistical review, 1985, Industry and Development (1985).

Veblen, T., Absentee Ownership and Business Enterprise in Recent Times (Transaction, 1923).

 

Journal Articles

 

Cameron, D. R., ‘The expansion of the public economy: a comparative analysis’, American Political Science Review, 72, no. 4.

 

Fliegstein, N., ‘Is globalization the cause of crises of welfare states’, EUI Working Paper SPS, 98/5 (European University Institute, 1998).

 

Jessop, B., ‘The Future of the State in an Era of Globalization’, Internationale Politik und Gesellschaft 3/2003.

 

Multimedia Sources

 

A. Curtis, Pandora’s Box (BBC, 1992) - http://politicalscrapbook.net/2010/07/resigning-obr-chief-alan-budd-describes-nightmare-tory-economic-policies-in-archive-interview/ (accessed 30/1/13).

 

Harvey, D., ‘Crises of Capitalism’ (RSA Animate, 2010) - http://comment.rsablogs.org.uk/2010/06/28/rsa-animate-crisis-capitalism/ (accessed on 30/1/13).

 

Marx, K., Capital Vol 3 (Marxists.org, 1999) - http://marxists.org/archive/marx/works/1894-c3/index.htm (accessed 30/1/13).

 

 



[1] C. Lockett, ‘“Regionalisation is a more potent force in the global political economy today than globalisation”.  Discuss.’, Postgraduate essay (University of Sheffield, 2012).

[2] Though, due to the imperatives of the search for profitability which I shall analyses later in this essay, these regions are being brought more and more into the orbit of the capitalist centre. P. Hirst and G. Thompson, Globalisation in Question (Polity, 1999).

[3] P. Baran, The Political Economy of Growth (Monthly Review Press, 1962).

[4] A. Emmanuel, Unequal Exchange (New Left Books, 1972).

[5] S. Amin, ‘The End of a Debate’, in Imperialism and Unequal Development (Harvester Press, 1977).

[6] J. A. Hobson, The Evolution of Modern Capitalism (George Allen and Unwin, 1926), p. 406.

[7] K. Marx and F. Engels, ‘Manifesto of the Communist Party’ in K. Marx and F. Engels, Selected Works, vol. 1 (Progress, 1969), p. 119.

[8] Hobson, Modern Capitalism (1926), p. 406.

[9] B. Jessop, ‘The Future of the State in an Era of Globalization’, Internationale Politik und Gesellschaft 3/2003, p. 34.

[10] See Figs. 3.3 and 3.4 in G. Garrett, Partisan Politics in the Global Economy (Cambridge University Press, 1998), pp. 56-6.

[11] R. Miliband, The State in Capitalist Society (Quartet, 1973), pp. 97-9.

[12] G. Esping-Andersen, The Three Worlds of Welfare Capitalism (Polity, 1990), p. 37.

[13] For a graphic example of this, see Fig. 1.3 in D. Harvey, A Brief History of Neoliberalism (Oxford University Press, 2005), p. 17.

[14] Jessop, ‘Era of Globalization’ (2003), p. 34.

[15] Miliband, State in Capitalist Society, (1973), pp. 71-2.

[16] R. Miliband, Capitalist Democracy in Britain (Oxford University Press, 1982), p. 100.

[17] J. Gray, After Social Democracy (Demos, 1996), p. 26.

[18] Note the downward shift in the index of every country except Finland between Fig. 3.3 and 3.4 in Garrett, Partisan Politics (1998), pp. 57-58.

[19] See Fig. 1; UNIDO database in UNIDO, World industry: a statistical review, 1985, Industry and Development (1985).

[20] For example see W. R. Cline, Trade and Wage Inequality (Institute for International Economics, 1997).

[21] Fig. 3.6 and Table 3.2 in Garrett, Partisan Politics (1998), pp. 61-2.

[22] Esping-Andersen reminds us of the importance of working-class/middle-class coalitions in shaping social democratic states in Esping-Andersen, Three Worlds (1990), p. 31.

[23] D. R. Cameron, ‘The expansion of the public economy: a comparative analysis’, American Political Science Review, 72, no. 4.

[24] D. Rodrick, Has Globalisation Gone Too Far? (Institute for International Economics, 1997).

[25] C. Pierson, Hard Choices (Polity, 2001), p. 77.

[26] N. Fliegstein, ‘Is globalization the cause of crises of welfare states’, EUI Working Paper SPS 98/5 (European University Institute, 1998), pp. 28-9.

[27] Hay and Wincott examine a lot of the empirical data connected with the withdrawal of the welfare state and the shift in focus of public spending, which I would analyse in depth had I more space to do so. C. Hay and D. Wincott, The Political Economy of European Welfare Capitalism (Palgrave Macmillan, 2012).

[28] See, for example, Garrett’s conclusion that international financial markets have been able to penalise high-deficit spenders through punitive interest rates in Garrett, Partisan Politics (1998), pp. 94-103.

[29] See Part III of K. Marx, Capital Vol 3 (Marxists.org, 1999) - http://marxists.org/archive/marx/works/1894-c3/index.htm.

[30] A. Kliman, The Failure of Capitalist Production (Pluto, 2012), p. 3.

[31] For an excellent description of how and why capitalist crises occur, see D. Harvey, ‘Crises of Capitalism’ (RSA Animate, 2010) - http://comment.rsablogs.org.uk/2010/06/28/rsa-animate-crisis-capitalism/

[32] J. Gillman, The Falling Rate of Profit (Dennis Dobson, 1957), p. 26.

[33] See Fig. 1.1, Harvey, Neoliberalism (2005), p. 14.

[34] Gillman, Falling Rate of Profit (1957), p. 1.

[35] Ibid., p. 25

[36] T. Veblen, Absentee Ownership and Business Enterprise in Recent Times (Transaction, 1923), p. 36-7.

[37] Alan Budd, interview for Adam Curtis’s documentary Pandora’s Box (1992) -  http://politicalscrapbook.net/2010/07/resigning-obr-chief-alan-budd-describes-nightmare-tory-economic-policies-in-archive-interview/
 For more on the policies and ideological content of neoliberalism, see D. King, The New Right (Macmillan, 1987).

[38] See Fig. 1.4 in Harvey, Neoliberalism (2005), p. 18.

 

A (Hopefully) Reasonable Response to Events in the SWP


Sat 12th Jan 2013

I think it’s very important that I draw two distinctions here, in light of current events.

Firstly, I myself am a member of the Socialist Party, not the Socialist Workers’ Party. These are two entirely separate organisations who, though we are both revolutionary socialist parties and we both want to see a society for the 99%, have entirely different approaches to many issues, political and organisational.

Secondly, it’s important that we draw a distinction between the actions and attitudes of the grassroots members of a party, and the actions of its leadership, especially in a situation where the leadership has become isolated and estranged from the grassroots, in both its attitudes and actions. It is therefore vital that people from ANYWHERE on the political spectrum do not see the events of the past month within the SWP as a reflection on left-wing politics, or upon the lay membership of that party. The vast majority of activists I know in the SWP are class-fighters, anti-sexists and are committed to democracy. The actions of their leadership, I believe, tar and blacken the reputation which lay activists have spent decades upon decades building with their bare hands. Indeed, as has been proved by the debates had at their congress, lay members were simply powerless to prevent the awful processes which have taken place, cut out from any democratic involvement as they were - indeed, through the report of the disputes committee the CC placed delegates in the most pernicious of situations, voting either against sexism and against the victimisation of a young female comrade for reporting possible abuse by a senior official, or against the Party that they themselves had in many cases given their lives over to building.


Yet if the entirety of the Left fails to learn the lessons of these events, it will be at the detriment of our activity and our ability to fight for a better society. The existence of sexism within left-wing parties is to some degree an inevitable reflection of the sexist, racist and homophobic society we find ourselves in. This can, and must, be mitigated to the lowest possible level by the creation of solid democratic structures which enfranchise specifically oppressed groups, such as women. It is not left-wing politics which creates sexism or favour sexists, but a lack of democratic accountability which allows sexists to become abusers in the very worst of cases, such as the nightmarish case of Gerry Healy - history has repeated itself in this case (though to a much lesser degree), where the members of the SWP’s central committee felt duty-bound to defend Comrade Delta from accusations of rape made by one woman, and accusations of harassment by another, identifying the interest of Comrade Delta with the interests of the Party as a whole. Thus, I urge every member of every party which fights for socialism to ask yourselves - are we the best we could be, democratically and in relation to dealing with these issues?


Therefore: a witchhunt of the Left as a whole, is unjustified. A witchhunt of SWP members, is unjustified. Forthright and honest criticism of the leadership of the SWP in particular, but also those of all organisations on the left, is not only justified but a necessity if we are to collectively move beyond these harrowing events.

Reclaiming the Trade Unions


[This article was submitted for publication in the Socialist - hopefully it’ll get printed next week!]

A battle is being fought for control of the trade union movement. On the one side is a great groundswell of workers and shop stewards whose conditions are under assault from the ConDem government. On the other are the entrenched leaders of many trade unions, who have achieved their positions during a long period of suppressed trade union activity, who have never before had to back up their left-leaning words with solid action and strikes.

We need to kick out the old leadership and elect a decent, fighting union leadership drawn from the rank-and-file. The members and shop-floor stewards are entirely clear in what they want: they’re going on strike against a government who are making them work longer for less; who are taking away their kids’ educations; who are diminishing their ability to access free-at-the-point-of-delivery, high quality healthcare; who are attacking the disabled and the elderly; and who are intent on rolling back more than half a century of progress for working people. It is the role of the trade union leadership, whom the press quite naturally focus on as the figureheads of the movement, to articulate the reasons and aims of their members, to proudly announce that the trade unions are fighting now for the rights and interests of ALL workers, public and private, and to generalise the struggle with their comrades in the private sector as well.

But many union leaders, a bunch of hangovers from New Labourism, are unwilling and indeed unable to voice the true aims of their members in a clear and concise fashion. This is because they themselves simply do not share the aim of their members - they are in effect of the same class as the Tories, in terms of both class outlook and in terms of income and social prestige. They want a strike just as little as the government does. They are only calling for strike action in order to keep their jobs - they been forced to do so by the grass roots of their membership. Hence their pronouncements are always confused and vague, usually lacking in content, and sometimes miss the point entirely. Dave Prentis of Unison’s speech at the Labour Party conference on the 26th September are a prime example of this: he made hazy ‘leftish’ statements about “creating the type of society we want for our children”, and downplaying accusations that his members were “militant”. If a shop steward, having their pension decimated and their working life further extended, was standing on the same podium they would almost certainly have declared themselves unashamedly militant!

This is not to say that left-wing union leaders committed to fighting for their members don’t exist – to name the most high-profile, Mark Serwotka of the PCS, Matt Wrack of the FBU and Bob Crowe of the RMT are excellent at combating the usual image of the modern trade union leader - but even they are on salaries many times the average wage of their members. But these unions have a tradition of radicalism - that is what we must forge in the coming months within the so-called ‘right-wing’ unions, which are only now being reclaimed by their members.

Thus the Socialist Party demands that all trade union representatives are regularly elected to ensure their continuing mandate for action; that they be subject to immediate recall by their electors if they are found to be lacking; and that they take only the average salary of those that they represent. It is these measures alone which will allow the creation of unions worthy of calling themselves the defense organizations of the working class. If we win this fight for trade unions which truly represent the interests of all workers, they can become the tools with which we can not only efficiently defend what we have, but with which we can liberate ourselves from the inherent oppression of capitalism.

usuallytakesacrane-deactivated2 asked: That's a good answer. It's pretty well why I voted against it. A mere re-jigging of first-past-post that serves only to allow the main parties to boast of their 'mandate'. But I was surprised to see how many socialists stood in your ward. As ever, we are fragmented. And if we stay that way - and you may choose to - then elections, demos and what-have-you are all geared to but one purpose ... altering awareness. We cannot hope, after all, to win any election. We may even be stuck with the 80s farce of hammering Labour and then having to vote for them (I never did) .... In which case, my next question. What is more likely to alter awareness? Polemic or reporting?

In fact, my party stood under TUSC (Trade Unionist and Socialist Coalition), an electoral alliance of Socialist Party, Socialist Workers Party, RMT and PCS members, and various other left-wing groups and trade unionists. We fully support the Campaign for a New Workers’ Party which seeks to build upon groups such as TUSC in order to create a mass party of genuine, democratic working-class representation; goodness knows Labour is beyond all hope in that respect.

I would hope that as many socialist organisations affiliate to TUSC as possible, as many already have; however many are still convinced that the Labour Party should be ‘won back’, that a ‘critical vote’ can turn back the clock to the mid 1980s. We cannot forget that the reforms introduced by New Labour have fundamentally changed the character of the Labour Party - it is now internally undemocratic, viciously hierarchical, and in the pockets of an executive with an extremely powerful party bureaucracy. A ‘critical vote’ is simply another scrap of paper fed to the party machine, to be ground up and turned into something entirely alien from what the voter originally intended.

Similarly, there are organisations which are highly critical of trade unions, who say that they also have become corrupted and exploitative of their memberships. This to a degree is true; the death of trade unionism in the late 1980s had led to a shrinking of their remit, a narrowing of horisons, and an emergence of a financial elite in control of unions. However, the unions are an altogether different animal to the Labour Party - the Labour Party was brutally beaten out of shape by an elite with a determined political agenda, seeking political power, whilst unions have merely contracted; they have not undergone the radical bureaucratisation of the Labour Party. Thus the trade unions can certainly be reclaimed by a concerted effort of trade unionists (I shall not go into the debate about whether ‘workers’ councils’ are a more effective manner of opposing the cuts; suffice to say it would be a complete misreading of Marxism to suggest that they would not be subject to precisely the same class pressures as the trade unions).

As you say, elections, demonstrations etc. are all tools in our box; that is to say that political office is not the goal of our participation in electoral politics - if we can use political office, however, as a platform to advancing the ideas of socialism (and, as Militant did back in the 80s in Liverpool, demonstrating the real beneficial effects of socialism in action), then it’s foolish to deny that avenue to ourselves. After all, many ordinary people’s main contact with electoral politics is through their local council - if we can show how councils could be or would be used in a socialist manner, we can demonstrate the power which individuals can exercise in affecting their conditions of existence.

In terms of providing an alternative media (which is I think what your closing question refers to? Feel free to correct me :) ), we must always remember (and communicate to people in our literature and conversation) that the mass media itself is a form of polemic. More specifically, it is a capitalist polemic - the rise of advertising as the main source of revenue for the media has created a market-driven system which rewards frothy, light ‘news’ reporting, the ownership and control of which is concentrated in the hands of a very few extremely rich individuals. The oligarchical nature of the press is express by subtle, contextual propaganda. ‘News’ is presented, through careful selection, highlighting and censorship of particular facts, so as to already make a given conclusion inevitable; a ‘subrational’ discourse is created, where even the most erudite reader is unable to divine reality or make an informed judgment.

Thus in literature and the alternative press, we must stress our position as not giving an impartial ‘actual reality’, but an alternative viewpoint unsullied by a military-industrial complex of advertisers, proprietors and soundbytes. People aren’t stupid, the vast majority wouldn’t trust the mainstream press as far as they could hurl it; thus always within our media we must give a conscious perspective which is unafraid to call itself socialist and which is made by workers, for workers.

AV


In response to a question on AV:

I’ve already voted against AV. It’s a marginally worse system that I (and my party) consider would make it harder for small parties to gain representation, due to the ability, as is widespread at Australian elections, for large parties to do deals to trade preferences in order to exclude smaller parties.

Personally, I want PR. A system such as STV or a party list system would produce far more representative results which would, at least marginally, break the stranglehold upon the ‘centre ground’ which leads all of our political parties to behave in a rigorously capitalist fashion. AV won’t clean up our politics, it won’t make our politicians ‘work harder’, and it certainly will not lead to a greater political diversity - quite the opposite.

Whichever way this referendum goes, though, it will be twisted to kick the issue of political reform into the long grass for another few decades. Tomorrow, we will stay with an electoral system which favours large established parties and creates completely undemocratic government which is biased towards representation of elite interests, or we change to a system which is much the same, if not marginally worse. Hence I’ve mainly voted against AV, personally, to irritate the Liberals and hasten the demise of the coalition. It’s certainly not something I’ll be losing any sleep over.

Electoral Dysfunction


If there was one phrase which I’d choose to sum up the campaign of the Socialist Party in Walkley, it would be ‘they’re all the same’.

I’ve heard those words from more people than I could possibly count, on campaign stalls, canvassing and in impropmtu conversations whilst leafleting. People are more able than ever to see the nature of British (and, indeed, global) centrist politics - now, in a time of economic crisis, our political parties are being more openly bullied by the financial markets into accepting (or in some cases, openly welcoming) the agenda of cuts and austerity.

The result is three main political parties in Britain which in reality do not represent real social cleavages in wider society, but merely social cleavages within the ruling class. The Tories can be characterised by their marriage to the financial sector - after all, over half of their party funding comes from rich individuals from the City of London (which, more than coincidentally, is up from 25% before Cameron and Osborne came to the fore of the party). The LibDems in reality are undergoing somewhat of a political crisis - the rank and file membership of the Liberal party is becoming increasingly dissatisfied with the rabid neoliberalism of the leadership (as typified by the rebellion over the government’s proposed NHS ‘reforms’ at March’s LibDem annual conference); but clearly the leadership is in obvious agreement with the meat of the government’s spending plans, having sold its electorate as a bargaining chip, along with many of its key election pledges, cf. tuition fees, raising of the tax threshold, freezing of council tax etc etc etc. In short the executive wing of the Liberal party, made up of an economic and financial elite of sons of bankers and former Tories has been able to completely circumvent any social-democratic vestiges within the rank and file LibDems by entering into coalition with the Tories, and to implement its own undemocratic plans. In the process it has openly and shamelessly flouted any and all promises which it made to the electorate.

Even the Labour Party now represents the interests of the rich - one need scarcely be reminded that, when Thatcher was asked what her greatest achievement was, she replied ‘New Labour’. The New Labour Party were the acceptable face of Thatcherism; after Kinnock’s brutal excoriation of any vaguely socialist element within the Labour Party (including the Militant) in pursuit of ‘electability’, their record in government was very little different to that of Thatcher in the stealth privatisation of public services, illegal wars and the erosion of civil liberties. Now, under ‘Red’ Ed Miliband (a laughably inaccurate title), the government’s attitude again represents merely another facet of elite interests - like the TUC, the Labour Party advocates simply ‘slower’ and ‘nicer’ cuts; again, Labour Party would merely allow the economy to recover as not to harm industrial and non-financial businesses, yet would still reduce the size of the welfare state in the long term.

Thus we have, in the most real sense, a one party state with three different, often fighting heads. Doubtless that bickering over trivialities often appears as if there are real differences between the three party’s elites, yet they all agree fundamentally upon the cuts agenda and ultimately have common class interests.

Thus the task of TUSC Against Cuts is to provide an alternative, and ultimately stronger, expression of class interest - that of workers, trade unions members, public service users, the unemployed and those chronically unable to work or on benefits. All of these apparently disparate individuals are united in their common position with regard to having to work for a living, reliance on the welfare state, and being the ultimate victims of the capitalism in times of crisis. Cameron, Osborne, Clegg, the bankers and the idle rich are also united in class interests - they do not have to work to survive (both Cameron and Osborne are heirs to aristocratic fortunes), they have the luxury of being able to afford private services rather than the NHS and state schools (60% of the cabinet went to public schools, compared to 7% of the population), they are not affected by the financial crisis (cf. bankers continuing to receive obscenely huge bonuses as reward for crashing the world economy, George Gideon Osborne remarking to a select committee that his lifestyle would be ‘very much affected’ by his cuts of £35 a week in child support).

Yet we are the ones who hold the true power within society - we have the ability to bring the economy to a standstill by withdrawing our labour, getting involved with the anti-cuts movement and building class solidarity. Let us not forget that the dictators in Egypt and Tunisia were only overthrown once independent trade unions began to take serious industrial action. Last weekend’s May Day rally in Chesterfield was hugely enthused by a speaker who participated in the Egyptian revolution, and he ensures us that trade union membership is growing in all sectors, including the unemployed and the elderly!

TUSC seeks to give a political voice to the majority which has been routinely excluded from politics for the last 30 years - yet no socialist movement can succeed purely electorally. Anti-cuts demonstrations, trade union actions and co-ordinated strikes across the public and private sectors, and electoral pressure will all play their part in the defeat of the cuts agenda of all main parties. So in one respect, the electoral success of TUSC is nothing more than a means to an end - what matters is the impact which we can have through campaigning upon the consciousness of individuals, and the self-empowerment that socialist solidarity can bring.

Either way, this time tomorrow night, we will have walked countless miles, delivered more than 8,000 leaflets and will have made a serious impact in putting forward the ideas of socialism to a receptive and supportive audience.

‘Mindless Yobs’ : An Alternate Perspective


Yesterday half a million trade unionists, university and college students, schoolchildren, unemployed, disabled and retired people descend on London with a collective voice of hatred against the ConDem cuts agenda.

In the largest display of solidarity since the huge Stop The War march in 2003, hundreds of thousands of those affected by the cuts marched down Victoria Embankment, past the walls of the Houses of Parliament, to Hyde Park; banners of all sizes, colours and indeed ages (I spotted one venerable and frayed banner proudly emblazoned with a Soviet-style stalwart, muscled worker beneath a starry sky, complete with miniature Sputnik), people of all ages, ethnicities, and costume (including a posse of fully made-up clowns, complete with oversized dungarees and honky noses). Whenever the streets gave a vista long enough to see any distance, the crowds stretched on seemingly from horizon to horizon, chanting, marching and singing, in the case of the beautiful rendition of the Internationale by the Communist Choir. Once at Hyde Park, it was virtually standing-room only - I personally have never seen more people in one place with one common purpose.

Any marcher on the day would doubtless tell the same: a vibrant, noisy demonstration which peacefully marched through the streets of London to the hustings at Hyde Park. Yet of course, the media is bound to push a very different agenda in their reports - ITN barely covered the main protest, and focused almost exclusively on the 500-or-so protesters who were drawn into a late-night street battle with the police along New Oxford Street, and the BBC is today running their lead story about how Brendan Barber from the TUC has been condemning the ‘violence’ of the protesters. Indeed, they report how the officer in charge of the day’s policing, Commander Bob Broadhurst of the Met, has called the breakway groups ‘mindless yobs’. I intend to offer personal testimony that shows that the words of Brendan Barber and Commander Broadhurst (not to mention the horrifyingly one-sided reporting with the mainstream press) is a malicious blackening of the actions of several thousand people; what has been denounced as nothing more than targetless vandalism and teenage rebellion was in reality a politically informed, nonviolent campaign of targeted civil disobedience.

The actions of activist group UK Uncut provide us with the model example of how a campaign of civil disobedience should be run - meeting them moving along Oxford Street, it was clear to even the most casual observer that their actions were not a ‘rampage’ or a ‘riot’ - moving noisily but efficiently along the street, the crowd of about 3,000 homed in singlemindedly upon the outlets of companies accused of the most disgusting tax avoidance. Upon spotting a HSBC branch (who owe the taxpayer £2bn - that’s £35 for every man, woman and child in the UK), the group calmly walked in through the front doors, warned the staff and customers with megaphones that the bank was being closed down by UK Uncut, and then defaced the shop front with graffiti and paint. No attacks on the customers or staff were made - indeed every effort was made to allow people to leave before the store was closed. Police were simply powerless to halt the steady, unified progress of the group, which was being continually swelled by members of the public; I talked to at least three groups of teenagers who had been shopping along Oxford Street and had been so impressed by the group’s tactics that they had joined in. TopShop and Dorothy Perkins (Owned by Sir Philip Green, tax avoidance: £1bn), three branches of Boots (tax avoidance: hundreds of millions of pounds due to moving headquarters to Switzerland), two branches of Vodafone (tax avoidance: £6bn) and numerous others were closed by UK Uncut’s campaign of targeted nonviolent disobedience. The group, much larger than when it has set off at one end of Oxford Street, then occupied Oxford Circus, bringing all traffic to a halt and managing to kettle in 20 police officers!

The chants, which echoed around the tall Georgian buildings now mostly shops and offices, of ‘Who’s streets? Our streets!’ were entirely justified - the group had demonstrated that smart, informed political vandalism is a brilliantly effective tool in combating tax evaders and sending out the message that the huge debt to the people of Britain accumulated by these parasitic multinational corporations, will not be tolerated. The BBC’s assertion that this action is ‘completely unconnected’ to the anti-cuts protest is clearly an attempt for the establishment to disavow any support for actions which anger the big corporations; tax avoidance costs the British government as much as £130bn a year, while the structural deficit is £143bn - we could practically erase the deficit by simply making the rich pay the taxes they already owe us! What I witnessed along Oxford Street was not a mob or a riot, but angry young people chanelling their frustration into constructive, highly political expression in closing down the tax evaders.

But where next? The anti-cuts movement has generated a huge mass within society who are questioning the neo-liberal agenda of all three main parties - our answer must be clear: protests alone won’t bring down the government, we must organise, unionise and build for a 24-hour public sector strike with the prospect of building for a one day general strike. The momentum of the movement must be kept up, with more protests, coordinated strike action and agitation for targeted civil disobedience. The public ownership and democratic control of major industries is the only option to avoid these capitalist cuts from the free-market fetishists - Labour are no alternative - a revival of popular, mass democratic socialism is the alternative which people marched for on Saturday.

tumblrbot asked: WHAT IS YOUR FAVORITE INANIMATE OBJECT?

My 1974 copy of V. I. Lenin’s ‘Imperialism - The Highest Stage of Capitalism’.