The CWO acknowledges Trotsky’s insight from his participation in the Russian Revolution of 1905, that ” the appearance of Soviets allowed him to foresee the possibility of a proletarian revolution in Russia”. (1)  But, Trotsky always had something of Lassalle’s notion of the people’s state about his politics.  It was always the revolution using the state and nationalisation,  rather than a revolution against the state.   So even though ” Trotsky led the  Soviet, his theory of permanent Revolution never led him to analyse the Soviet and draw from it what Marx drew from the Commune” .  (2)  Instead,  in 1905, Trotsky reached the conclusion that in  the future revolution,  unemployed and locked out factory workers  would not limit themselves to the Capitalist Republic, but would demand  state intervention from a workers government.

The Social Democratic vision of a working class party capturing state power and using the state was what constituted the step beyond the Democratic Revolution.  For Trotsky,  in 1906, the state machine was a powerful lever for revolution : ” every political party worthy of the name strives to capture political power and thus put the state at the service of the class it represents”. (3)   This could not be further from the anti state lessons of the Paris Commune of 1871 :  ”The important contention by Marx that the old state, once smashed,  should not appear again as an instrument above and against the working class is neither challenged by Trotsky or even acknowledged”.  (4)   In the understated words of the CWO,  ”Trotsky after 1918 was less concerned with the question of working class self emancipation and more concerned with building a state power” .  (5)

The dictatorship of the party state, masquerading as the dictatorship of the proletariat, was a sustitutionism personified by Trotsky.  Trotsky saw no contradiction between the dictatorship of a party leadership supported by the authoritarian rule of managers, army officers,  specialists, and the transition to a post capitalist society.    He was the champion of a top down bureaucratic centralism :  ” Reporting to the sixth Congress of Soviets in 1918, Trotsky complained that not all soviets and workers have understood that our administration has been centralised and that all orders issues from above must be final ” .  (6)  Integral to this State Socialism was the Social Democratic view that without private ownership,  Capital’s economic forms, hierarchy and division of labour prefigure socialism.  The Bolshevisation of American Technology : the transition to Socialism was Taylorism and a Bolshevik state.

Trotsky also remained “bound by a conception of the relations between party and masses that matured between 1919 and 1920 and was shared by Trotskyists and Stalinists alike” . (7)  His opposition to Stalinism and bureaucracy was belated, hesitant and theoretically confused due to his refusal to recognise the seeds of Stalinism sown by the Bolshevik Party following the revolution.  He uncritically identified himself with the state and the party during this period.  Why would workers need trade unions to defend themselves in a Bolshevik state?   As for factions and democratic rights in the party, for Trotsky  it was a case of my party right or wrong  :  declaring at the 13th Congress ,  that:  “I know that no one can be right against the party” .  (8)  Identifying progress to Socialism with the extension of State ownership he remained blind to the growing counter-revolutionary power of the state and the bureaucracy.

The CWO nail Trotsky’s definition of a workers state as “the nationalisation of the land, the means of industrial production, transport and exchange together with the monopoly of foreign trade”.  (9)  This fixed, and abstract definition, is at odds with Marxist view that, the economic factor is not an isolated factor, separate and apart from social relations : it’s not a technological machine.  This is the politics  of the Second International.  According to Marx, “to try to give a definition of property as an independent relation, a category apart-can be nothing,  but an illusion of metaphysics or jurisprudence”.  (10)  The argument that nationalised property is a transition to a post capitalist society does not stand up to historical scrutiny.  Rooting the Soviet bureaucracy in distribution as a sphere apart does not theoretically work either. As the  CWO point out  the structure of distribution  is determined by the structure of production.

Inconsistently, Trotsky showed awareness in his assessment of Stalinism in the Revolution Betrayed, that the ruling bureaucracy had the characteristics of a ruling class and the transfer of the factories to the state only altered the situation of the worker juridically. But he was unable or unwilling to draw any coherent theoretical conclusions from these insights and others.  Ultimately, this meant that,  ” he avoided having to come to terms his own role in preparing a strong state and army which the Stalinists were able to use against the working class “. (11)  He had foreseen the danger of the Leninist Party substituting itself for the working class as early as 1904,  when he famously warned that:

” in the internal politics of the party these methods lead….to the party organisation substituting itself for the party, the central committee substituting itself for the party organisation and finally the dictator substituting himself for the central committee”.  (12)

He simply repudiated these organisational views following 1917.  In his own words : ” in this substitutionism of the power of the party for the power of the working class there is nothing accidental and in reality there is no substitutionism at all”.  (13)  A complete uncritical turnaround from his previous organisational views.  The CWO have nothing to say about these crucial  issues of organisational democracy.  In 1904 the young Trotsky mocked Lenin for his admiration for factory discipline and mechanical subordination within the party : ”  for discipline has meaning ony when it gives the possibility of fighting for what one thinks just; and it is for this that one impresses discipline on oneself”.  (14)   Nor does the CWO pamphlet discuss Kronstadt. Trotsky was still spreading lies about Kronstadt during the 1930′s.  In response to Victor Serge, in Hue and cry over Kronstadt, Trotsky wrote that the red sailors had been replaced by a petty bourgeois mass demanding special privileges.  A claim at odds with the truth which was a demand for equal rations directed at the bureaucracy and the revival of the Soviets directed at the Bolshevik leaders.

 In the New Course in 1923, he discussed the power of the state- party bureaucracy as a problem of generations, the old guard, including himself and the younger generation. The old guard would pass on the baton to the young Red Jacobins as custodians of the socialist future.  This idealism of the party apparatus  followed the suppression of workers strikes and the bloody crushing of Kronstadt.  As Miasnikov asked :  why has the Communist party no common language with the rank and file?  Why do the party leaders reach for their guns ?  Trotsky had supported the ban on factions and refused to defend those who called for a return to party  and industrial democracy.   He argued against the right of  members to form factions in his speech to the 13th congress : ” I have never recognised freedom for groupings inside the party, nor do I now recognise it”.  (15)  He tied himself to the bureaucratic apparatus.

 Later in exile, in his notebooks, he wrote,  ”Lenin created the apparatus. The apparatus created Stalin”. (16)  He drew back from the logical conclusion, Lenin created Stalin, but acknowledged  Lenin promoted Stalin  to important positions.  But following the Revolution it was the non Trotskyist oppositions which fought for party democracy,  far sooner and more deeply than Trotsky.  In 1921, Aleksandra kollontai of the workers opposition argued that the :

“bureaucracy is a direct negation of mass self-activity….there can be no self-activity without freedom of thought and opinion….we give no freedom to class activity; we are afraid of criticism; we have ceased to rely on the masses; hence we have bureaucracy with us”. (17)

There was a deeper problem in that Trotsky  had difficulty developing theory as events unfolded and was conciliationist towards his own theories.  For many years,  he remained stuck in the groove of 1905.  The theory of permanent revolution was not developed until 1928,   after the defeat of the Chinese workers revolution.  It took him  until 1926 to come out in support of Zinoviev and Kamenev and against socialism in one country.  Even in 1926, in search of unity with the Zinoviev and sections of the apparatus,  he was still publically against factions.    From 1923 to 1933,  he called for reform of Stalinism and  saw Stalinist State industrialisation as due to the pressure of the working class. He considered Stalin as a distorted form of the dictatorship of the working class.  Trotsky’s  transition to Socialism was via a Labour dictator : a role he had pioneered himself.

Endnotes

1  Trotsky, Trotskyism and Trotskyists,  p4 ,  Communist Workers Organisation,2000.

2  CLR James, (1980) , Notes on Dialectics, Alison and Busby, London.

3 Leon Trotsky, Results and Prospects,  1906,  p 194,  in The Permanent Revolution, New Park Publications 1982, London.

4  Roy Ratcliffe, (2003) Revolutionary Humanism and the Anti Capitalist    struggle, p203.

5 Trotsky, Trotskyism and Trotskyists, p28.

6  Paul Mattick,  (2007),  Anti Bolshevik Communism, p66, Merlin Press, Monmouth.

7  Antonio Carlo,  (1976)  Critique 7,  p29.

8  Leon Trotsky, the Challenge of the Left Opposition, P161,  Pathfinder Press, New York.

9 Trotsky ,Trotskyism, Trotskyists , p9.

10 Frank Furedi,  (1986),  The Soviet Union Demystified , Junious publications, p58.

11 Roy Ratcliffe,  (2003) ,  Revolutionary Humanism and the Anti Capitalist struggle, p204

12 Leon Trotsky, (1904)  Our political Tasks,  p77  New Park Publications, London.

13 Leon Trotsky,  (1920)  Terrorism and Communism, p123 , New Park Publications 1975.

14 Leon Trotsky, (1904) Our Political Tasks, p 99, New Park Publications.

15  Leon Trotsky, the Challenge of the Left opposition p 154, Pathfinder Press 1980.

16 Trotsky’s Notebooks 1933-35  (1986) , p27 ,  Translated, Annotated, Introduced by Philip Pomper, Colombia University Press.

17  Ronald Grigor Suny,  ( 1998 )  The Soviet Experiment, p 133 , Oxford University Press.

     At the same time, the SNP is desperate to depict an independent Scotland as one that can be counted on to be a reliable cog in the global capitalist order. This drive for respectability has led Alex Salmond to push through the recent SNP national conference a resolution insisting that an independent Scotland would remain within NATO. Contrary to the SNP’s protestations, these two positions are blatantly contradictory.

     NATO is committed to nuclear weapons by charter, and by  strategic objective. All member states agree to a policy statement holding that nuclear weapons are integral to its military plans. Furthermore, the British and French nuclear arsenals are specifically included as complements to the U.S. nuclear capability. Every NATO country, except for France, is a member of NATO’s nuclear planning group. (France insists that its nuclear weapons constitute a separate military force.) The entire logic of the situation would suggest that the SNP policy is a sham, that membership in NATO implies a willingness to host nuclear weapons.

The SNP has attempted to resolve this quandary by insisting that NATO needs Scotland due to its strategic location, and thus will be willing to bend its rules to allow an independent Scotland to remain  a member state while refusing to host nuclear weapons. This argument ignores the vast power imbalance confronting Scotland. The United States remains the sole global superpower, with strategic and economic power that dwarfs Scotland, and this does not take into the power of other NATO countries, especially Germany. (Germany is one of several NATO countries that hos U.S. tactical nuclear weapons.)

Furthermore, the United States will not view the issue as one that only involves Scotland. If an independent Scotland is permitted to join NATO on the basis of a public refusal to permit nuclear weapons on its territory, other member countries in which popular opinion is hostile to nuclear weapons will cite the Scottish case, and demand to be exempted as well. The Scottish debate can only be understood within the broader context of widespread popular support throughout Western Europe for an initiative to make the entire region free of nuclear weapons.

NATO might permit an independent Scotland to claim that it is free of nuclear weapons, but NATO would require Scotland to continue to permit ships and planes armed with these weapons to use its military facilities. Salmond and the SNP argue that NATO has already agreed to allow some member countries to refuse to host nuclear weapons. The two countries usually cited to support this position are Denmark and Norway. In 1988, the Danish Parliament passed a resolution requiring NATO ships and submarines to inform Denmark if they were carrying nuclear weapons before docking. Denmark had already publicly stated that it did not want nuclear weapons deployed in its territory. The United States, with the support of NATO, voiced its vehement opposition to this requirement, arguing that it threatened the future of the alliance. In the end, Denmark agreed that NATO vessels could dock by merely stating their intention to use a Danish port. The captains of these vessels would not be required to inform the Danish authorities as to whether it was carrying nuclear weapons. This ‘no question asked’ policy met with NATO’s approval, and continues in force to this day. Norway follows a similar procedure.

Obviously, the ‘no questions asked’ policy is a fraudulent facade. Joining NATO implies a willingness to further U.S. military power, both in terms of conventional forces and nuclear weaponry. There is only one country that once was in a military alliance with the United States and that has opted out, not just in terms of meaningless phrases but in its actions.

New Zealand was a member of the ANZUS alliance that included the United States and Australia as well. In 1984, it declared itself free of nuclear weapons, and the government announced that U.S. ships would have to declare whether it carried nuclear weapons before being allowed to dock. When a U.S. warship attempted to dock without specifying its weaponry, it was refused landing privileges. The United States responded by breaking military relations with New Zealand. For twenty-five years, New Zealand warships were not allowed to use U.S. naval bases located around the Pacific Ocean. Nevertheless, New Zealand, unlike Denmark, refused to buckle, and it continues to be a country free of all nuclear weapons.

The New Zealand case is crystal clear. The SNP argument is false. If an independent Scotland wishes to remain within NATO, it will have to allow NATO ships and submarines carrying nuclear weapons to dock in its ports. As long as it remains a NATO member state, Scotland will not be free of nuclear weapons.

Since Salmond cites Denmark and Norway as support for his argument, we can only assume that he intends to follow the same model that these countries have established. NATO submarines will continue to dock at Faslane, but they will do so without declaring that they are carrying nuclear weapons. In other words, it will be a deceptive and compliant Scotland engaging in subterfuge, rather than adhering to its stated principles.

The SNP perspective on NATO and nuclear weapons is a sham, but then the entire SNP vision of Scottish independence is empty rhetoric. “Independence” with a continued allegiance to the crown, membership in NATO and the European Union, and retention of the pound sterling or use of the Euro is not a genuine independence. Scottish independence could be a meaningful step forward to a more just society, but only if those committed to independence reject the SNP perspective in its entirety, and move forward along a very different path.

In the 1870′s, Bakunin in Marxism and the State, argued that the divide between Marxists and Anarchists was this: Marxists stood for the Peoples State (workers state) and Anarchists aimed for the destruction of the state. This was not a direct polemic with the views of Marx in the 1870′s. It was an indirect attack on Marx as the pope of German Social Democracy. Therefore, when Lassalle advocated the people’s state this reflected the views of Marx.

Bakunin went all the way back to 1848, and the Communist Manifesto, where we find the following state socialist position: “the proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the state, i.e. the proletariat organised as a ruling class”.  (1) But this was described as outdated by Marx in 1872, “One thing especially was proved by the commune, that the working class cannot simply lay hold of ready-made state machinery and wield it for its own purpose”. (2)

We have to remember the historical context of 1848. This was at the beginning of modern industrial capitalism and the working class. Industrial Capitalism had not rolled out across Europe, let alone the world. Marx developed his understanding of the nature of capitalism and class struggle as history moved on. State socialism to an extent reflected the development of class struggle at the time. The Chartists demanded the democratisation of the state with annual parliaments.

Bakunin criticised Marx for being too optimistic about the spread and development of capitalism. He did have a point.  In 1848 Marx did tend to see capitalism rolling reactionary, backward elements flat. But as we now know backward, reactionary forces embraced capitalism faced with revolt from below and modernised from the top down using the state. National unification in Germany in the 19th century took on a reactionary form under Bismark. Later, Marx’s views became more open-ended, or more multilinear, rather than unilinear.

The point is, Marx generalised from class struggle and developed his understanding of capitalism. Bakunin, although lacking a developed social theory, did have an insight in 1848 that revolution could not be advanced through the state. Later Marx studied events in France and in, The Eighteenth Brumaire of Louis Bonaparte, noted the growing power of the State which in specific circumstances could rise above classes. But it was the Paris Commune in 1871 which drove the point home. It was a proletarian  revolution against the state itself. The state might have predated capitalism, but it embodied the power of capital over labour. The alternative was the self-government of the producers.

In the 1870′s Marx wrote a critique of Social Democracy’s Gotha programme. He made the mistake of keeping the criticism of the leaders of Social Democracy private, not making it public until 1890. Marx rubbished Lassalle’s concept of the people’s state. But he did step back from the clarity and boldness of his writing on the Paris  Commune. There are some ambiguous statements. For example, the democratic republic is not the final aim, but the site of the final struggle. This echoes the notes of Marx on Bakunin and the State, that the over throw of the old society is on the basis of the old society. Not the basis of the old state, but the clarity is not there.

Lenin in his, State and Revolution in 1917, did take up the theme of smashing the state, but added that the capitalist state would be replaced by a workers state, a political regime which would represent the Dictatorship of the Proletariat. In this he followed Plekhanov rather than Marx. The Dictatorship of the Proletariat became a government, not the social domination of society by the working class. The State and Revolution had no influence on Bolshevism before or after 1917. Following the Russian Revolution, the Bolsheviks rooted themselves in government and the State, rather than the Soviets and mass organisations from below. In so far as the state was damaged in 1917, they reconstructed it around their party.

The lesson of the Russian Revolution for Victor Serge, who had been an Anarchist and a Bolshevik, was that Bolshevism lacked the spirit of liberty. This echoed the views of Lenin’s left critics within the Bolshevik party that the Bolshevik government lacked confidence in the creativity and initiative of the masses.  In this sense, we can agree with the sentiments of Bakunin when he wrote: “liberty can only be created by liberty, by an insurrection of all the people and the voluntary organisation of the workers from below upward”. (3)

1 Marx and Engels, 1848 , The Communist Manifesto,  Introduction by David Harvey, 2008 , Pluto press, p63/4

2 ibid p86

3  Mark Leier,  2006, Bakunin,   Seven Stories Press, New York,  p 318

On the 1st  of May, a public holiday which celebrates the resistance of  the workers and the poor against the oppression of the rich, the City  even again took the side of the rich and stole our building material.  This is thousands of Rands worth of our property which we don’t think we will ever see again because they don’t tell us where they have taken  it. Without this material, we have nowhere else to go because even if we had a little money, we can’t now rent somewhere build a shack there.

So we have nowhere else to go. Since Wednesday, we have been  sleeping out in the open, in the rain. While we sleep in the bush, at  least the snakes have forgiven us for moving onto their land. They don’t chase us away and now treat us with respect. They have become like our  brothers and sisters.

But the same cannot be said for our government which is chasing us  away as if we are not their brothers and sisters. As if we are not even  human. But next year, they will need us to go vote for them. But how can we vote for anyone that takes away our dignity.

Yesterday, on Friday the 3rd, Law Enforcement came again and took  away our waterproof tarps and plastic material the we were using to keep us dry from the rain. Why did they do this? We can’t build a shack with that material – we were just trying to keep dry and warm because we are stuck there with nowhere else to go. But the City of Cape Town is  heartless. They want us to get sick. They want to punish us for trying  to do whats best for our families, for our children. All 50 of us!

But we are not going anywhere. They can take the material. They can  shoot us. They can even kill us. But we will not move from this place.  This piece of land is not being use and has never been used (except by  criminals who go there to kill people, abuse children and rape women) so we will remain there unless we are given a piece of land that we can  call our own.

We have tried to engage with the City of Cape Town, but they ignore  us. We are trying to attend a meeting between the City, Law Enforcement  and SAPS at the Philippi East police station on Monday the 6th of May.  This meeting is about us but we have not even been invited! When we  spoke to Station Commissioner Colonel Mdimbaza, he told us: “I am sick  and tired of you. I don’t want to see you in that meeting. If I see your faces in the meeting, I will shoot you”.

So what can we do? The police shoot us, the Law Enforcement evicts  us, and the rest of the City ignores us. So we will just continue to  stay in Marikana until they give up or we die. This is the same story as the Marikana Massacre of the rich and government oppressing the poor  and it is being repeated all over the country included here in Philippi  East.

Abahlali baseMarikana

Luke and Simon’s starting point is the observation that the “dramatic growth of the radical left after 1968 and the much more modest gains made after the mass movements of 2011 underlie the fact Marxism has lost its position as the natural ‘go to’ in politics” (1).  Speaking from experience of 1968 and 2011 this is certainly a correct assessment and also, a revealing conclusion. What does it say about the record of the Leninist left since 1968 ? They dodge this question. Instead, they side step any criticism of the Bolshevik heritage by simply declaring that the common perception of Leninism as top down organisational control and sectarian splitting “does not accord with the totality of the Russian experience” (2). Explicit Leninism is placed on one side for flexibility and popular appeal.

As Luke and Simon argue, young anti-capitalists value social struggle from below rather than relying on bureaucratic hierarchies.  Trade union officialdom is a good example of bureaucracy and hierarchy, yet for Simon and Luke, “this should be the time when the unions come forward to do their job as defensive organisations” (3).  But are the trade unions fit for purpose: can they defend their members pensions, jobs and conditions? Even before the onset of Thatcherism and the anti-union laws, trade unions accepted capitalist realism. Trade union leaders are not just mediators between the bosses and the workers in the factories, and offices, they often enforce the requirements of the state and capitalism. It was the rank and file workers who went outside the official trade union structures in the 1960′s, and 1970′s to force up living standards by unofficial action.  The recent successful wild cat strikes by the Sparks was a throw back to this tradition.

Before Neo-Liberalism, the trade union leaders still helped to manage capitalism and police their own members. But as Will Hutton notes  “they could not deliver their members to agreed policies,” (4) or a pay freeze, and wage restraint.  So trade union officialdom had to be strengthened by the rule of law. Now, as Simon and Luke describe it, most of the anti-trade union laws today are implemented by the trade Unions themselves: the appointed regional official will tell workers they cannot strike. But does the trade union bureaucracy have an organic connection with the working class? And did this bureaucratic link, in turn, give Old Labour an organic connection with the working class ? These are not questions Simon and Luke ask.  They still cling to the old Trotskyist phrases and dogma, which is not consistent with the values of struggle from below.

The authors believe there is a qualitative difference between Old and New Labour. They declare that New Labour opened up a “radically different era in the history of the Labour Party” (5 ). New Labour was modern:  it was cool Britannia, technocratic, and vaguely ethical. But there is nothing new about this; Harold Wilson was a modern leader with a vision of the white heat of the technological revolution. For Ramsay MacDonald, socialism was all about an ethical community. They go on to assert that, “New Labour broke with the politics of class” (6). New Labour’s crime was in “dismantling a mass pole of opposition to Neo-Liberalism that was based on the working class movement” (7).  They even claim Old Labour was “never overtly pro-capitalist in its message” (8).  All this tired ‘thinking’ is wrong and a distortion of history. The Labour party originated, not as a party of a class, hence the label Labour not Socialist, but as a one nation party. Keir Hardie won the vote against the socialists who argued that the Labour party should be based on the class struggle.

The parliamentary Labour Party has had a pro capitalist message throughout its history. It was against the General Strike, opposed miners strikes, sent in troops against dockers on strike, blamed workers for any economic crisis, appealed for the suspension of the class struggle to work for the election of a Labour Government, called for workers to make a sacrifice for the national interest, and pioneered Neo-Liberalism in 1976. Public ownership was never about democratic control. Mass council house building was based on the capitalist market and the private sector. The Atlee government revived failing capitalist enterprise with nationalisation, but still championed private capitalism for most of the so-called mixed economy.

They write that to resolve the austerity crisis is to solve the central antagonism between a government and  Neo-Liberal accumulation at the base.  To put this another way, “its contradictions can arguably only find their resolution at the level of politics” (9).  In plain English, the crisis will be resolved at a parliamentary level. This is why they are  critical supporters of Syriza, despite the reformist programme of its leadership. Electoralism is central to their outlook. They write, “it is quite wrong as some international supporters of Antarsya have argued that strikes and the streets are where the struggle will be decided” (10), but it is their opinion which is wrong. In a profound crisis solutions tend to by-pass parliaments which cannot take the strain. In Germany, in the 1930′s, Social Democracy taught the workers high parliamentary politics, but the fascists imposed their will on the streets.

Their strategic stress on electoralism is clear in their comments that for the great majority of working class people, politics will still be limited to the electoral terrain (11).  Underlying this electoralism is the stale old formulas of the Communist International in the 1920′s, which were a variation of the strategy of left-wing social democracy: a parliamentary government resting on the capitalist state, but simultaneously representing the workers outside parliament. In other words, the strategy of a so-called Workers Government. The extra parliamentary dimension is a rhetorical fig leaf since the transition is understood to be through winning a parliamentary majority and looking at the state as a route to a post capitalist society.

In an attempt to theoretically back up their strategy, they refer to Rosa Luxembourg’s, Reform or Revolution, to buttress their discussion about betwixt and between a sect and a mass reformist movement. But their understanding is skewed. Luxemburg was talking about steering between two reefs of the mass character of the movement and the final aim. There was already a mass social democratic workers movement which was losing its sight of the final goal after a period of social stability. Luxemburg was alerting the movement to the growing contradictions of capitalism which pointed to its overthrow. Rosa was calling on a mass party with a formal adherence to Marxism to attenuate the contradictions, not seek reform in parliament or look to the state to ameliorate the crisis.

Luke and Simon’s focus is not so much on going beyond capitalism as going beyond Neo-Liberalism. They describe the current economic situation as the transfer of wealth from the poor to the rich, which they regard as the central feature of policy making and the economic motor of the financial crisis. This hints at an underconsumptionist view of the economic crisis. But there is no discussion of crisis theory; they do not examine the depth or nature of the current great recession. Nor do they rule out a Keynesian solution as a transition to socialism, even for the short-term. Given their emphasis on elections, this is a big omission, among many other gaps in their analysis.  At the end of the book we are still left with the question: how do we move beyond Capitalism?

Notes

1 Luke Cooper, Simon Hardy,Beyond Capitalism, p6 ( Zero Books 2012)

2 ibid, p5

3 ibid, p72

4 Will Hutton, Observer, 14 April 2013

5 Luke Cooper and Simon Hardy,Beyond Capitalism,p40

6 ibid  p42

7 ibid, p41

8 ibid, p40

9 ibid, p11

10 ibid p151

11 ibid p141

Left Unity was initiated by Andrew Burgin & Kate Hudson, both of whom use to be in George Galloway’s Respect – itself an attempt to build a left alternative to Labour. Burgin & Hudson are married & have both been involved with the Stop the War Coalition. Hudson is the General Secretary of CND & was previously in the Communist Party of Britain. Burgin use to be in the Trotskyist Workers’ Revolutionary Party, as was the film director Ken Loach.

With such revolutionary pedigree, the hope is that Left Unity will try to be something more than ‘old’ Labour. That it can attract the support from the myriad revolutionary groups of Britain’s left who have often spent more time attacking one another than the common capitalist enemy. But after the failure of Respect why should Left Unity have any more success? Prior to Respect there was also the largely ineffective Socialist Alternative which was built upon the combined resources of the SWP & the Socialist Party. There is still the TUSC (Trade Union & Socialist Coalition) which passes the electorate by. To be successful Left Unity needs to appeal to more than the usual group of revolutionary ‘trainspotters’ & those nostalgic for 1945 or 1968. This doesn’t & shouldn’t mean peddling reformism. It means sending out a clear anti-capitalist message. A message not wrapped in red flags & Marxist terminology, but a simple message to saying what we are against & what we are for, such as:

We are anti-capitalists.

We are against a world that produces for profit.
We are for a society that produces to meet human needs.

We are against the few controlling the labour of the many.
We are for people sharing out the mundane tasks any society requires to be done.

We are against the ecological destruction of our planet.
We are for a way of life that lives in harmony with our natural world.

We are against any groups discriminating against others.
We are for humanity living together in solidarity & respecting diversity.

We are against an elite making decisions for the rest.
We are for equality in decision-making.

We want humanity to be free.

All this requires offering something more than an electoral alternative. It means building an alternative system, however embryonic, now.

IOPS (International Society for a Participatory Society – http://www.iopsociety.org/) are attempting this. The geographical layers & the lack of centralised control suggests to me that this has some of the features an alternative anti-capitalist system would have. IOPS focus largely on the society they wish to create & do not use what to many is the old-fashioned, off-putting language that dyed-in-the-wool communists use. For those of us comfortable with Marxist terminology & the Marxist analysis of capitalism this can sometimes feel uncomfortable. It does mean they have a serious disadvantage in understanding the here & now, but we need to realise that most people cannot fully relate to the Marxist explanation of how capitalism works, but can relate to a simple vision of the future, which is communist is all but name (at least as we at The Commune understand communism to be, rather than the one-party dictatorships of the 20^th century).

The Commune has also got local Communes. They have Facebook pages making them easy to promote & for people to join. They are free from any central control & are open to all who support the common ownership, rather than the private ownership of the means of production.

Whether Left Unity ends up supporting the creation of an alternative system as well as an alternative party is as yet unclear. It will require those with influence to speak up. The advantage supporting IOPS, the local Communes or some other alternative, is it will counter-balance the risk of being seen as yet another group of political wanna-be’s who lust after power as much as any other party politician. So that if Left Unity was ever to become successful in elections & emulate Syriza’s popularity, it wouldn’t be tempted to try & reform capitalism, only to fail miserably & hence open the door for far-right reactionaries – just as Syriza was close to doing at the last elections.

Professional politicians are part of the problem. We should be clear that we intend to abolish them. If we really want politics to be classless whereby all have equality in decision-making, then we must embrace an alternative system as much as an alternative party.

Historical Radicalism in India

There is a place in India where one cannot walk more than a block without seeing a white hammer and sickle upon a red flag. Giant stone statues of Lenin hide peculiarly behind coconut trees in lush overgrown plots of land and little old men read communist newspapers next to frescos of Ernesto “Che” Guevara. This place is Kerala, India – A region in rapid transition from socialist pragmatism to capitalist wealth accumulation. Large portions of the older generations still dream about full communism, but the younger generations now predominantly dream of commodities.

Radical politics has a long and complex history in India. Anarco-syndicalism was reportedly disseminated throughout the country by Russian travelers and returning Indians who lived abroad1. However, by the early twentieth century, Marxist literature came to dominate all other forms of radical theory (Graeber, 214). This was due in part to the appeal of the Marxist- Leninist program, but more so because of the rise of the Soviet Union, a force seen by many to have the potentiality to rival global colonial powers.

Manabendra Nath Roy, was by far the most prominent member in bringing Marxism to India and bringing the Indian struggle to Lenin. Through a mix of luck and ingenuity, M.N. Roy managed to befriend Lenin, and earn himself a seat representing India during several congresses of the Comintern. To cut a painfully long story short, Lenin felt that India was not adequately industrialized for a proletariat revolution. To the great dismay of M.N. Roy, the Soviets decided to back the Indian National Congress (INC). After Lenin’s death in 1924, Roy spent much of his time quite accurately arguing that an independence movement not based around Marxism would only lead to new forms of exploitation at the hands of the native bourgeois (Maitra, 119).

A lack of Soviet support did little to eliminate hope for a social revolution in India. All over Asia, radical revolutionary groups took up arms against the British rule. Baghat Singh and Netaji Subhas Chandra Bose were two of the most influential revolutionaries in the Indian Independence Movement. Bose, former president of the INC and self declared socialist, split with the INC out of opposition to Gandhi’s pacifist influence on the group. Allying with the Japanese, Bose used guerilla warfare to fight the British throughout Southeast Asia until his death in 1945. Baghat Singh, gained notoriety after assassinating a British police officer and throwing two bombs inside of the Central Legislative Assembly. Singh was an outspoken Anarcho-communist, writing articles on both anarchism and Marxism. Singh was executed after a long, highly publicized trial at the age of 23.

By the time India gained it’s independence in 1947, the country was divided into a multitude of political groups. West Bengal (in the east) and Kerala (in the south) were the two regions predominated by ultra-left politics. The Communist Party of India (CPI) was formed when the socialist contingent split with the INC. By 1957, the Keralan CPI managed to become the first communist government in the world to be democratically elected.

West Bengal went in another direction. In 1969, the Communist Party of India-Marxist- Leninist (CPI-ML) was formed out of the All Indian Coordination Committee of Communist Revolutionaries (AICCCR) denouncing the electoral system, and advocating for armed revolution to fight the exploitative corporations and redistribute land to the peasants populations. Through ideological support of Mao Zedong, the CPI-ML trained and armed peasants in the region of Naxalbari, West Bengal. It was from this current that the Maoist Naxalite movement was formed.

Present day India

Today the Naxalites are comprised of several different Maoist groups, active throughout India, with the largest number of supporters reported in the states of Andra Pradesh, Orissa, Chhattisgarh, and Biharat. In 2006, Prime Minister Manmohan Singh declared the Naxalites to be “the most serious internal threat to India’s national security”. This may not be far off from the truth. As recently as 2010, an estimated 1,000 Naxalites in Chhattisgarh launched an offensive, killing 76 police officers in a matter of hours. A month later, in the same region, Naxals bombed a bus killing 30 people, including several Special Police Officers. There remains little doubt that the Naxals are the most brazen internal opposition to the Indian State, however they seem to be a bigger threat to the Indian police and corporations than to any civilian population.

The Keralan Leftist Coalition (The parliamentary party comprised of the CPI, CPI- Marxist, and Left Democratic Front) occupies a unique position on the issue of militancy. At some moments they seem to call upon images of militant revolutionaries to garner support for their party, while at other times they try to distance themselves from any real acts of social upheaval and militancy. Abdur Rezzak Mollah, Chief Whip of the CPI-M Legislature Party recently described his stance on the Naxalite struggle “What is required in the present context is [to] carry on the struggle in a more soft and flexible manner”. This attitude should come as no surprise. The last thing a parliamentary party would want would be militants threatening the electoral status quo, a status quo which had until 2011 continued to be favorable for their political influence and wealth.

When traveling just ten kilometers (about 6 miles) north of Kerala, into the state of Karnataka, one can really get an idea of how Kerala differs from other regions in India. Kerala’s rich history of leftist governing bodies has led to some of the best literacy rates (94.59%), highest life expectancy (74 years), more gender equality, and the highest Human Development Index (HDI) in all of India. These social improvements have translated into a rapidly growing middle class and more overall wealth for the state. Although the Keralan government has remained stringent on allowing foreign investors into the region, foreign money still pours in through other channels: vast numbers of highly educated Keralans leave the country to work abroad, sending large sums of money back home.

Going along with the Marxist-Leninist program, the CPI-M is notorious for taking the side of industrialists over rural farmers. At a time when the rural poor remain dependent on agriculture for their livelihoods, this can mean the difference between a simple life and complete destitution (Ramnath, 215). As if following Lenin’s advice on India and revolution, the transition to industrialized capitalism seems to be a priority for the party, even at the expense of the most oppressed. As Kerala continues to gain wealth and prominence in the world stage, the divide between the rich-middle class and the poor only grows larger. Walking down the streets one can

see a brand new BMW one moment and an ox pulled cart the next. At night you can find people sleeping on the streets while large apartment complexes close by remain vacant.

Many of the blue collar jobs in Kerala, such as the auto-rickshaw drivers and the bus drivers are predominantly communist identified and heavily unionized. These sectors have the incredible capacity to halt the transportation of commodities and thus quite effectively shut down whole cities. When general strikes are called by these sectors, not only do the roads shut down, but so does every other sector of business. This is done both out of solidarity, but also out of the fear of violence, as rickshaw drivers have been reported to roam around harassing stores owners who don’t comply with the strike. However, this is changing rapidly. Many union leaders as well as Coalition politicians have adopted the pro-capitalist idea of trade unions and strikes as being a mode for collective bargaining, rather than as a mode for class struggle (Maitra, 136). As more people turn towards electoral politics to bring about change, the less we will see the potentiality for a mass movement in Kerala, outside of the capitalist-statist landscape.

Towards the Future

The CPI-M has fallen short of bringing about any real radical change because of its traditional and transitional program. By depending on the parliamentary system to create the “right” social environment for class struggle, the party continues to follow the Marxist-Leninist program which has for the last hundred years failed to bring about any lasting egalitarianism. Sure, some Keralans have prospered, but only off the labor of the destitute working class. A working class which I must point out is unable to compete with the surrounding areas. Many of the same problems experienced in the “developed” world are here in Kerala, such as the exploitation of cheap un-unionized labor from neighboring regions. This has only furthered the divide between the neo-bourgeoisie and the unionized workers within the state.

Nonetheless, the Left in India today is far from resigned to electoral politics. Mass protests and direct actions continue to make headline news and usually involve not a single political party but a plethora of different groups, radical and non-radical, working together for a shared cause. Recently these actions have manifested in anti-nuclear, anti-Mosanto, anti-land grab, and anti-patriarchy movements. There is definitely no shortage of leftist activism in this country, yet a vision of restructuring society seems to be missing from the picture. In practice, these movements tend to be reformist in nature simply because they turn towards the Indian State for solutions (i.e. regulations of nuclear power, close oversight of Mosanto, or more policing/ executions to prevent rape). This exemplifies a lack of realization, that the very problems these movements strive to eradicate share the same core foundation as the state and capitalism itself- that of the centralization of power.

There are however post-traditionalist Communist groups in India such as Shramik Mukti Dal from Maharashtra, which offer exceptional new theories into understanding the modern forms of caste, exploitation, and alienation. Sharing much in common with Italian Autonomia theory and modern Communization currents, the Shramik Mukti Dal manifesto, offers a uniquely Indian approach to the notion of social revolution and praxis in a world of global capital. (Ramnath, 221-222).

An excerpt from the manifesto:

“A revolution that creates a new ecologically balanced, prosperous, non-exploitative society is not an “event” that takes place in one day. It is necessary to start this process of revolutionary transformation from today itself. Briefly, revolution is not a single “event” but a “process” that makes change. It is a process of striking one blow after another against the roots of the established capitalist, casteist, patriarchal, social-economic structure, and establishing again and again the roots creating the new society. It is a process of new creation.”2

As the social landscape around the world continues to change, so too must the radical left, always looking for new ways to adapt and combat inequality in all its forms. I firmly believe that there is no better place to look for new approaches than outside of that which we consider familiar. By learning about other radical communities and other perspectives, not only do we see immense differences, but also we see similarities, and through this active observation, we can start to see the immense space for solidarity. Our global revolution depends on a unified world.

____________________

Footnotes & Further Reading:

Lala Har Dayal

1

xa.yimg.com/kq/groups/…/Shramik Mukti Dal Manifesto.doc

2

Sources:

Maitra, Kiran. Marxism in India:from decline to debacle. New Delhi, India: Lotus Collection, Print.

Ramnath, Maia. Decolonizing Anarchism. Oakland, CA: AK Press & the Institute of Anarchist Studies, 2011. Print.

Graeber, D. Direct action: An ethnography. Oakland, CA: AK Press, 2009. Print.

     The global economy is mired in the worst crisis since the Great Depression of the 1930s, and yet capitalism has always been characterized by instability and insecurity. An economic system that operates without an overall plan, and in which powerful economic forces act on the basis of maximizing short-run profits, is a system that is inherently unstable. Marx predicted a collapse of capitalism leading to a revolutionary upsurge as early as the 1850s.[i] This would appear to be one of his predictions that has been contradicted by the course of history, but in fact the global economy has been plunged into one crisis after another.

     The unpleasant reality we confront today is that although capitalism is constantly changing, the impact of these changes is, on balance, overwhelmingly destructive. Indeed, as capitalism grows and expands, it destroys everything in its path. As the system unravels, more and more workers become permanently displaced from the workforce; income and wealth differentials widen within the already industrialized societies, as  an increasing number of countries are added to the list of “failed” nations; and ecological catastrophe threatens the continued existence of the planet as we know it. We are at a crossroads. Either the working class acts as a class and wrests power from the capitalist class, or the system will disintegrate into a catastrophic freefall.

The Business Cycle

     Capitalism has always been marked by short-run business cycles in which times of prosperity are followed by harsh times. To some extent, these short-run cycles are self-regulating. Unplanned growth leads to overproduction in certain sectors and investors pull back. Bankruptcies ripple through the economy allowing venture capitalists to purchase existing assets at bargain prices. Lower prices, and, more importantly, even lower wages, create opportunities for new investment, and the cycle begins again.

Capitalism has also experienced several severe downturns when its continued existence was called into question. Frequently, an economic boom is accompanied by a period of frenzied speculation. When the bubble bursts, and speculators go bankrupt, the crisis spreads rapidly through the entire economy, with banks and financial institutions the hardest hit. Investment banks play a vital role in directing investment into new sectors, the dynamic growth sectors. Once confidence in the financial sector has been lost, investment spirals downward, and the entire economic system confronts a total collapse.

Although a decline in the price of capital goods might help to overcome the down phase of the usual short-run business cycle, the opposite occurs when bankruptcies occur as the result of a sustained and precipitous slump, such as the current one. Firms coming out of administration initiate massive layoffs as venture capitalists squeeze a greatly reduced workforce in a desperate search for profits. Ultimately, bankruptcies in the midst of an economic crisis only reinforce the pervasive collapse in investor confidence, thus making it even more difficult to spur the economy back into sustained growth.

     Bailouts and Total War

     When the system reaches the point of catastrophic collapse at the onset of a crisis of confidence, the most powerful capitalist interests usually intervene, often in conjunction with the state, bailing out the banks in order to avert a disastrous crash. This happened in the fall of 2008 and into the spring of 2009, with the support of both President Bush and President Obama. Confronted with the imminent possibility of a precipitous fall in output, and in stock market prices, the rich and powerful abandoned their distaste for planning and government intervention, and agreed to a massive rescue of bankrupt financial institutions, as well as the auto industry. The recent bailout is not the only time that such a crisis intervention has occurred during a financial panic.

An imminent economic collapse is not the only moment of crisis when the government can rapidly assert a dominant role in the economy. The planned mobilization of a nation’s resources when fighting a total war is the other circumstance. During both world wars, the governments of the combatant nations commanded vast resources, becoming the predominant factor in the economy. In some cases, key industries were nationalized, and the rudiments of a national economic plan were put into practice. Segments of the Left, especially mainstream social democrats, viewed these developments as significant steps toward a socialist economy. The move toward a more planned economy was cited as further proof that a socialist transformation was inevitable. Furthermore, it was argued, the inefficiencies of an unplanned economy were so glaring that even segments of the capitalist class understood the need for a regulated economy, with a substantial public sector that included key industries.

These arguments were advanced by some influential socialists in the United States during World War I, only to quickly be proven totally wrong. Once the war ended, there was a concerted corporate onslaught designed to ensure that the capitalist class regained its hegemonic control of the economy. The entire network of railroads  had been taken over by the federal government during the war, but the railroads were returned to their owners soon after the war came to an end. Public sector spending was sharply curtailed, and any hint of government planning was abandoned. After World War II, the anti-Communist hysteria provided a convenient rationale for dismantling wartime planning, along with the social reforms of the New Deal.

The dire threats arising from a total war provide a temporary crisis situation in which the government displaces the capitalist class as the prime factor in determining investment. In a very different context, a pending economic collapse has the same effect. In both cases, the role of the state as the determining factor in the economy has proven to be a temporary phenomenon. As the crisis passes, the pendulum soon swings back, and the government is forced to retreat.

The Limits of Deficit Financing

     The capitalist economy is not self-regulating. Furthermore, emergency bailouts of bankrupt banks and corporations can prevent a rapid and total collapse, but they don’t resolve the crisis, which continues as economic stagnation threatens to deepen into a downward freefall.

Keynesian economists recognize this and argue for active government intervention as an effective means of stabilizing the system. In “normal” times, Keynesian economics can act to provide a certain balance, smoothing out the cycle. Higher interest rates can check the tendency to high inflation rates during the boom years. Deficit financing can enable the government to stimulate output and employment during the downturn. Only a few years ago, many mainstream economists were convinced that counter-cyclical government intervention assured the stability of the system. The current  crisis has proven that this forecast was nothing more than an ideological rationale for the capitalist system.

In fact, once an immediate crisis situation has been passed, the traditional resistance to government intervention, and, indeed, to any kind of broader plan, reasserts itself. This resistance represents more than an adherence to the ideology of “free markets.” Indeed, the powerful corporate interests that backed the bailout did so in pragmatic disregard for “free market” dogma. One of the essential mechanisms of control held by the capitalist class is its ability to determine how much of its savings it will invest and in which industries it will invest. To permit the government to become the primary channel for the flow of investment funds is to strip capitalists of a key component of the economic power they control as the ruling class.

It is easy for the wealthy to bring pressure on the government because a rapidly growing debt will lead bondholders to become more fearful of a default. With an increasing public debt to government budget ratio, or public debt to output ratio, interest on the debt starts rising as a proportion of total spending. This can not continue indefinitely since some expenditures are viewed as critically important, and are extremely difficult to cut. Thus, aside from upholding the interests of the capitalists as the ruling class, bondholders have real concerns that the state will default on interest payments as debt ratios increase. Deficit financing by its nature can only act as a short-term means of stimulating the economy.

The Failure of Keynesian Economics and the 1930s

Thus, the curious paradox that Keynesian policies only work in “normal” times to smooth the short-run fluctuations of the business cycle, and not in a time of crisis when the system is threatened with collapse. Yet Keynes developed his General Theory in the 1930s with the express purpose of countering the Great Depression. He was convinced that his policies would enable the industrialized countries to overcome the Great Depression, and to avoid further slides into mass unemployment. Both predictions proved to be false. Once the “animal spirits”[ii] of investors have totally soured, as the wealthy few lose confidence in the growth potential of the economy, deficit spending will not succeed in moving the economy back on track.

The experience of the United States in the 1930s provides an interesting case to examine. FDR was surrounded by advisers who viewed themselves as social reformers and were open to Keynesian economics. The federal government deliberately expanded its expenditures on social services, through deficit financing, with the explicit intention of stimulating economic growth and returning the country to prosperity. These policies were followed from the time FDR was inaugurated in March 1933 to June 1937.

At the height of the depression, in 1934, the official unemployment rate stood just short of 25%. One out of four workers were officially counted as out of work, and many more were missing from the official tally. This was a catastrophic disaster, one requiring drastic measures. Congress created the Works Program Administration and gave the President a wide discretion in determining how this money was spent. Through Keynesian pump-priming, the official unemployment rate fell to 17% in the three years from 1934 to 1937. This was an improvement, but hardly an impressive one. The United States was still bogged down in a economic depression, with millions remaining out of work, and with little hope for the future.

In June 1937, the Roosevelt Administration came under heavy attack from corporate interests and retreated from its previous policies. As the government moved toward a balanced budget, output fell  once again. In 1938, the unemployment rate averaged 19%. Only with the end of the decade, and the advent of World War II, did the United States emerge from the Great Depression.

This is hardly a tremendous success story. Keynes’ technical analysis was shown to be true. Government spending when not counterbalanced by taxes on the working class has a significant multiplier effect on output, income and employment. Nevertheless, Keynes did not take into account the overall context. First, unlike wartime, countering an economic downturn does not provide the government, even a very popular one such as that of FDR’s New Deal, with sufficient momentum to engage in the level of deficit spending required to counter the collapse in private investment. As a result, the economy remains stuck in the doldrums, although no longer at the trough of the cycle.

Second, Keynes’s analysis views pump priming as a temporary fix. The government gives the system a boost and then the economy returns to its previous course. In fact, during a severe downturn investor confidence does not respond to deficit financing. Once the government moves toward a balanced budget, usually by reducing spending on social services, output falls, moving back to the level where it was prior to the government intervention. The underlying problem, the refusal by the wealthy few to invest, has not been resolved.

The only way deficit financing could work in the midst of a severe economic downturn is if it were to be made a permanent feature of the economy, but this will never happen. Deficit financing can only be a temporary measure because the state is taking over an essential task in a capitalist economy, one reserved to the capitalist class. Thus the rich and powerful will use all of their power to ensure that deficits are cut and they again become the driving force in the economy, determining the flow and direction of investment.

The pattern of the 1930s in the United States provides an archetypical model. The government responded to a sharp downturn by increasing expenditures on social services without increasing taxes. With increasing demand came higher output, and yet depression level unemployment rates, while lower than before, continued. After a few years, the government, responding to the pressure of a threatened capitalist class, retreated from its commitment to deficit financing. Almost immediately, the economy headed downward again, as the wealthy few still refused to funnel funds into new investment opportunities.

The Great Depression ended when the United States entered World War II. This solution to the current economic crisis is no longer possible. Capitalism is a dynamic system in which certain innovations are fostered. The producers of armaments are always seeking deadlier weapons that require fewer soldiers to deploy them. Thus, a future total war would be over quickly and would leave the planet a radioactive waste land. Smaller, localized wars of occupation do not necessitate a huge output of military weapons and do not involve enormous armies. Indeed, the United States was fighting two localized wars in 2008 and yet experienced the worst economic downturn since the Great Depression. In the current context, the military can not provide the sustained demand needed to lift a country out of the mire of economic stagnation.

The Myth of Neo-Liberalism

     In analyzing the failure of Keynesian economics to resolve the tendency of the capitalist economy to veer into an economic collapse, the emphasis has been on the underlying economics and class relations, and not on ideological dogma. The current “common wisdom” of the Left ascribes the defeat of Keynesian economics to the ascendancy of neo-liberal ideologues. This is a highly dubious explanation.

There is nothing new about the theory that the capitalist system  is self-regulating, and that any government intervention can only make the situation worse by upsetting the automatic correcting mechanisms built into a market economy. Similar ideas were formulated by the Austrian school of economists in the late nineteenth century in response to the rise of a working class movement influenced by Marxism.

There is no doubt that this perspective has more traction now than even a few decades ago, but this is hardly because of its cogency or insights. The globalization of production has provided the objective basis for the rise of neo-liberalism. Corporations have outsourced their factories and mills to low-wage countries, thus destroying unions in the private sector. Unions provided the essential base of support for social democratic parties that legislated the welfare state in Western Europe, and for the liberal wing of the Democratic Party as well.

As corporations create a global workforce they see no need to pay higher wages and benefits to workers in the previously industrialized countries than to those paid to workers in Bengla Desh, China or India. This drive to reduce wages is not a matter of ideology, but rather the pragmatic imperative of the bottom line. Globalization has substantially shifted the balance of class forces. The rightward tilt in the ideological debate reflects a more fundamental shift in the underlying balance of class forces.

This is not to deny that the rise of neo-liberal ideologues  marks a meaningful change in the political terrain. In particular, in the United States, which has a long history of elections dominated by two corporate parties controlled by opportunistic politicians whose political perspective is limited to upholding the power of the capitalist class, while maintaining the stability of the system. The Tea Party has a program and an ideology that goes well beyond this, calling for the total dismantling of the welfare state reforms instituted during the New Deal of the 1930s. Its rapid rise in visibility has made a significant impact on the Republican Party, which has begun to present a distinct alternative to the pragmatic centrism of the Democrats.

As socialists, we can recognize that there are genuine differences between the pragmatic Obama Democrats and the Tea Party neo-liberal ideologues. Nevertheless, both approaches remain well within the constraints of mainstream capitalist politics. Neither trend is interested in moving society toward greater equality, and both believe that social services need to be substantially cut and public sector workers must be paid less. When leftists target neo-liberalism as the primary problem, they underscore their failure to understand  the essential dynamic of the current crisis in order to  exaggerate the differences between neo-liberals and their pragmatic opponents. This position is often followed by a call for a coalition of the broad Left against the rabid, dogmatic Right, as those on the Left subordinate their radical politics to defeat the perceived threat of a neo-liberal victory. Global capitalism, not neo-liberalism, is the primary problem, and a rapid transition to a socialist society provides the only possible answer.

Globalization

     Capitalism has always had an inherent tendency to expand. Of course, the drive to conquer others precedes the rise of the capitalist system, as imperial rulers have always fought to expand their domain. In the past, this would involve looting and pillaging. The empires that have arisen in modern times have certainly looted and pillaged, but this has been a secondary aspect of their rule.

Historically, a capitalist power has sought to create a distinctive link between the imperial center and the subject countries on its periphery. The British empire of the nineteenth century is the classic example. Industrial production was concentrated in the center, England and Scotland, while industry in the periphery was actively discouraged. The headquarters and coordinating functions of the finance sector were also centrally located in London. Conquered countries were limited to one primary economic role, providing cheap raw materials for the industries of the imperial power. This could entail the exploitation of scarce natural resources, with no regard for the environment, or the extreme exploitation of unskilled labor through the use of force.

In this context, the working class of the imperial power had a vested interest in maintaining the empire. Indeed, a century ago the more far-sighted strategists of the British empire understood the utility of ensuring the loyalty of the British working class by providing limited social benefits and establishing a minimum wage. In the past, there had been a definitive set of economic relationships between the imperial power and its dependent colonies.

The outsourcing of industry and mining to the developing countries has devastated the the traditional working class, Marx’s proletariat, in the developed capitalist countries. Unions in the private sector have been virtually wiped out, and public sector unions have come under intensive attack. As a result, inequalities in income and wealth have significantly widened, thereby increasing the volatility of the system, as well as its tendency to become mired in prolonged slumps.

Globalization also increases the volatility of the system because it greatly restricts the ability of governments to regulate the economy, and to redistribute income through taxes. The interconnectedness of the global economy also increases the likelihood that a crisis triggered in one country will spread quickly throughout the globe.

Globalization makes the system more volatile, but it only  accentuates the fundamental underlying problems. Indeed, the Great Depression of the 1930s occurred decades before corporations began shifting industrial production overseas. Still, globalization adds to the instability of the system, while making it more difficult to pull the economy out of a prolonged downturn.

Regulation

The Keynesian policy of deficit financing as a method of stimulating the economy constitutes one of an array of government programs designed to stabilize the system. Many of those on the Left are convinced that the deregulation of markets, as driven by the neo-liberals, provides the primary reason for the current global downturn. In their view, future disasters can only be avoided by strict regulation of the economy, especially the financial sector.

At the turn of the twentieth century, progressives pushed for government action to break up the trusts. They called for anti-trust legislation, hoping that the market economy would return to a mythical golden age when small firms, each acting independently, operated within competitive markets. This project proved to be a total failure, as large corporations discovered ingenious ways to evade anti-trust legislation in order to create ever more gigantic entities, and to act in collusion with other powerful firms in their market. Capitalist economies have always been dominated by a few large corporations that manipulate prices and outputs so as to maximize profits. These days, corporations span the globe, crossing national borders with ease.

During the New Deal, the focus of reform shifted from anti-trust legislation to the financial sector. The current crisis has lead progressives, once again, to argue that strict regulation of the financial sector will be a critical element in a program that will allow the economy to overcome the current slump and prevent another one from occurring. In fact, such a policy is bound to fail.

To start with, a speculative frenzy only occurs when investors are confident of the future and are willing to take risks. The current situation is characterized by investor pessimism, and a reluctance to undertake risky projects. Indeed, investor confidence appears to be heading downward, with no sign of any imminent upswing. The current problem confronting capitalism is not how to curb an unbridled speculative frenzy. Quite the contrary, investors are following an extremely cautious path.

Even if the current crisis is overcome, it will be very difficult for any government to enforce strict regulations on the financial sector that inhibit speculative investments. The only time the economy can prosper is when investors are prepared to undertake investments in new sectors where, by definition, the future is unclear and the risks are high. Obviously, there are no gains to society from the kind of scam investments that brought the housing market to a standstill. Still, it is difficult to discern in the midst of a boom what are risky but still potentially worthwhile investments and what are elaborate frauds.

Furthermore, even the most skillful regulation does not touch the underlying problem. Capitalism generates more savings than can be matched by profitable investments. Globalization has further exacerbated this underlying problem by widening the gap between rich and poor. Regulating the financial sector will not add to effective demand, and, indeed, may well reduce it by dampening investment.

There is also little reason to believe that regulation of the financial sector will prove to be effective. Globalization has integrated the world’s financial markets, making it easy to shift funds from country to country. Financial institutions need no longer remain in New York or London, but rather can be relocated to any place that is connected to the internet. Restrictive legislation in the United States and Britain will just speed the rate at which financial institutions move offshore.

Finally, the impetus to enforce strict regulation dissipates as the crisis that spurred these actions fades in memory. As time goes on, enforcement becomes increasingly lax and banks and financial institutions become more adept in evading the rules. Corporations use their enormous power to press the case for regulatory “reform,” insisting on the need for freeing financial institutions from “unnecessary” restrictive red tape.

This trajectory can be traced in the United States from the 1930s to the recent debacle. During the New Deal, the Glass-Steagall Banking Bill was passed with the goal of stabilizing the financial sector, in part by making it harder for banks to invest in high-risk loans. One aspect of this was the creation of a tight barrier between retail banks, those taking deposits from individuals and small businesses, and investment banks, which funnel large sums to fund mergers and new technologies, but also underwrite risky investment vehicles. Over the years, the tight separation of financial institutions was eroded until legislation passed during the Clinton years junked the entire policy, permitting retail banks to merge with investment banks. The funneling of funds from retail banks to the high-risk investments of credit default swaps and real estate investment trusts was one factor facilitating the speculative frenzy in the housing market which, when it collapsed, triggered the current crisis. It should be noted that this piece of deregulation was not formulated by neo-liberal ideologues, but rather by the pragmatic advisors of Bill Clinton who were enamored with the rapid spread of a global financial sector.

Capitalism is inherently unstable, and subject to extended periods of mass unemployment, bankruptcies and crisis economics. Government regulation will not prevent economic instability. Efforts to regulate the financial sector in order to prevent destructive   speculative booms are bound to fail. These efforts represent yet another case of reformers fruitlessly trying in vain to fix a system through piecemeal changes. Capitalism can not be reformed. It must be transformed through a revolutionary process.

Obama and the Economic Crisis

     Emergency bailouts of banks and bankrupt corporations can forestall a total collapse, but the economy remains mired in stagnation. The recent course of events in the United States is indicative of the depth of the problems confronting a capitalist system in decline.

President Obama is, above all, a pragmatist. He has no ideological reluctance to using the state to intervene in the economy, and yet he also has no intention of confronting the capitalist class. Very much the corporate centrist, Obama’s economic policy has been marked by cautious timidity. A mildly expansive fiscal policy has left the official unemployment rate stuck at above 8%, with tens of millions of young people unable to find a job or stuck in minimum wage, part-time employment.

Official unemployment rates that remain at a high level for a period of several years become an increasingly unreliable measure of the true situation in the labor market. Once a slump continues for years, the unemployed become discouraged and stop looking for work.  This strikes particularly hard among older workers, who, in effect, are forced into retirement.

Thus, the situation in the United States looks worse than the official statistics indicate. Obama’s approach to overcoming the crisis has been far more cautious than Roosevelt’s New Deal, as limited as that was. This reflects several factors. First, the bailout of 2008 was enormously expensive, adding significantly to the total debt, and thus making it more difficult to undertake deficit financing to spark a revival. Furthermore, globalization has led to the U.S. debt being held by wealthy individuals and financial institutions from around the world. It is all too easy for those currently holding U.S. bonds to sell them should they become concerned with the federal government’s increasing debt. Such a dumping would increase the interest rate accruing to U.S. bonds, making it more expensive to borrow.

These factors are relevant, but secondary to the significant shifts in the objective situation since the 1930s. Globalization has undermined the strength of the working class in the previously industrialized countries. (In the United States, only 7% of those working in the private sector are union members.) With the working class in retreat, Obama has been only willing to implement a fiscal policy of economic stagnation. This is in contrast with the first years of the New Deal, when Roosevelt authorized deficit financing on a scale that led to lower unemployment rates, although unemployment still remained at depression levels. Globalization makes capitalism even more susceptible to severe economic downturns, while at the same time making it more difficult to recover.

Obama has also been eager to limit the scope of counter-cyclical spending to capital projects that can be viewed as emergency measures, while avoiding projects that widen the areas of responsibility undertaken by the public sector. New Deal plans to counter mass unemployment were quite different. The Civilian Conservation Corps constructed roads and buildings that made natural parks more accessible and desirable, and thus stimulated the demand for increased funding for the park system that went well beyond the 1930s. The Works Progress Administration was given a broad mandate that led to a variety of projects such as the that could only inspire working people to demand that the federal government do more than fund a vast military apparatus. The Obama Administration has studiously avoided any creativity in envisioning pump-priming projects.

This difference in approach reflects the underlying shift in the balance of class forces. Roosevelt was worried that the working class in the United States might be attracted by Soviet Russia or Nazi Germany. He therefore sought to present a positive alternative, a welfare state which remained a capitalist market economy.

The change in approach to deficit financing also reflects the very different global context in which the United States finds itself. In the 1930s, most Americans believed that the Great Depression was merely a temporary downturn that would be followed by further periods of prosperity. Eighty years later, globalization has led to deindustrialization. For three decades prior to the economic crisis of 2008, the working class has suffered through declining real wages and a deterioration in essential social services. Although Obama has pursued a fiscal policy of modest economic stimulus that has forestalled a total collapse, state and local governments have not been provided with funds from the federal treasury needed to counteract the precipitous drop in tax revenues at every level of government. As a result, there have been drastic cutbacks in education, health care and mass transit, compounding those that were already in place before the current crisis. Workers are constantly told that austerity is inevitable, and that they will have to live on less, not just now but in the future.

The Eurozone Debt Crisis

     The sharp downturn in the global economy has led to a rapid increase in the debt owed by governments in most of the developed capitalist countries. Banks have been bailed out by governments anxious to avoid a collapse of the financial sector. Tax revenues have substantially declined, as output and incomes spiral downward. At the same time, some countries have pursued Keynesian pump-priming policies by increasing expenditures on infrastructure projects, such as roads, railroads, even prestige projects such as venues for the Olympics.

For most countries, the rising debt ratios, debt versus output, frequently creates a situation where government bonds come under speculative pressure. Hoping to counteract this pressure, governments feel that they must cut the deficit, even though this means that the global economy is likely to slide into an even deeper economic slump. In this context, social services are cut even more, and the wages and benefits of public sector workers are further reduced. This has produced an unstable situation, but it has not, at least until now, triggered a crisis threatening the continued existence of the system.

Nevertheless, in several countries problems arising from the government debt have reached crisis proportions. All of these countries operate within the Eurozone, and, generally, these countries are among those with the weakest economies, having the lowest per capita incomes within Western Europe. Nevertheless, despite some similarities they have entered into a crisis situation for different reasons.

Ireland became the epitome of the deregulated economy prior to the crash. Its government was desperate to attract foreign investment, so no limits were set on speculation. For awhile Ireland was presented as a model of success, but when the bubble burst the economy crumbled. Iceland’s banks sought online deposits from abroad, offering unsustainable interest rates. When the downturn came, the entire banking system failed, leaving the Icelandic people liable to billions of dollars in lost deposits, a liability they have refused to accept.

Both Ireland and Iceland are small countries enmeshed in the international network of finance and commerce. Spain is one of Europe’s largest countries, but the recent upswing came with a speculative boom in property, as the affluent middle-class of Western Europe sought vacation homes. After the collapse in the housing market, Spain has been left with an official unemployment rate of 25%, with a majority of its youth excluded from the workforce.

Italy is a somewhat different situation. A country where corruption is endemic, organized crime is a major factor, and tax evasion a national sport, the economy has always been on shaky ground. Part of the speculative attacks on Italian government bonds reflect investor distrust of the entire society, one that is marked by pervasive tax avoidance, organized crime and corruption.

Greece has become the most critically ill country, with the value of its government bonds hurtling downward. Greece was one of the poorer countries admitted into the European Union. The promise of that time was that by creating a common market there would also be a sustained effort to equalize incomes throughout the EU. This largely meant a commitment by Germany to subsidize countries such as Greece. When everything went well, Greece could sustain a network of social services, relying on German aid and borrowing on the basis of future prosperity. When the global economy tanked, Greece was left with huge debts and zero credibility. The results have been catastrophic.

The debt crisis has spread through much of the Eurozone. Portugal and Holland are two other small Eurozone countries  experiencing rising interest rates for their bonds. France, one of the larger and more prosperous countries in Western Europe, has also come under attack by speculators.

Although the specific road to the debt crisis has varied, the results have been very similar. The economic crisis has led to a sharp fall in output and, as a result, tax revenues have fallen as well. As deficits increase, the countries are pressured into sharp cuts in social services, which produce even further cuts in output, and the downward spiral continues as the system spins out of control.

Bondholders observe debt to output ratios rapidly increasing in the weaker Eurozone countries, and they respond by shifting out of the bonds of those countries and into safe havens, such as U.S. government bonds. The increase in those wanting to sell leads to a fall in the price of the bonds of the beleaguered countries, and an increase in interest rates. Higher interest rates add to government expenditures, thus creating even larger government deficits, and a further twist in the downward spiral.

As interest rates on government bonds approach 7% per year, bondholders begin to panic, and bankruptcy looms. Interest rates for both Greece and Spain have begun to approach this critical point. To avoid a crisis, the European Union, that is primarily the German government, provides emergency funds to buy the bonds of the targeted country, demanding stringent repayment plans and further cutbacks. The emergency infusion of funds stabilizes the bond market for awhile, until the spiral begins again and the abyss approaches again.

In this situation, austerity measures are self-defeating. Cutting government spending only exacerbates the underlying problem. Still, Keynesian policies will not work either, given the readiness of bondholders to flee from risk. Furthermore, the draconian cuts required to service the emergency loans virtually propel the working class into action, and the militancy of the popular resistance deters the government from fully implementing the austerity program demanded by the European Union and the International Monetary Fund.

There would appear to be only one way out of this impasse within the constraints of a capitalist market economy. The wealthy few must be heavily taxed, and the revenues thus generated used to fund vital social services. This would require a significant shift in the class struggle toward the working class. The recent decades have been characterized by the exactly contrary trend, as the gap between the rich and the poor widens even further.

Globalization not only undercuts the power of the working class in the previously industrialized societies, but it also makes it easier for the affluent to hide their incomes in the many tax havens that have sprung up around the world. The ability of nation states to effectively tax wealthy individuals or large corporations has been significantly undermined by globalization. Incomes and corporate profits would have to be taxed at the source, and this would require full and open transparency by corporations to become meaningful. A true accounting would necessitate a direct confrontation with international capital, triggering massive capital flight.

Immediately, the Eurozone countries confronting economic collapse can gain a breathing space by leaving the European Union and defaulting on sovereign debt. By being integrated into a currency zone dominated by Germany, less technologically advanced countries such as Spain and Greece have been saddled with overpriced exports. This has exacerbated the impact of the global downturn, and has been one factor contributing to the economic crisis in these countries. Nevertheless, leaving the Eurozone will not resolve the underlying problems. Investor confidence has been decimated, and a brief upsurge in exports is not likely to remedy the problem.

Conclusions

The choice is stark. Either countries such as Greece and Spain move rapidly to overthrow capitalism, and to establish a new society, or economic stability will be restored by quashing the working class, dismantling social services and slashing wages. This is a choice that can not be confined to one country. The revolutionary option will only succeed if it rapidly spreads. The current crisis can not be transcended through half-measures and limited reforms. We need to think in bold terms, to view our commitment to building a new society as an immediate strategic priority, not as a goal for some vaguely defined future.

Speaking at the Firebox Cafe ( March 7th)  Owen Jones started on a positive note: ‘It was the kind of place you could plan a revolution’. Then Owen quickly adopted a pessimistic tone. As usual his focus or fetish was on the defeats of the Thatcher years. He presented the bald facts of defeat. The miners were defeated, then everyone said: if they can be defeated no one can win.  His family was typical, experiencing decades of defeat going back to the General Strike. They were fed up. Yet despite this, he was prepared to give the Labour Party and trade union left yet another go.

The Great Miners Strike, in 1984, was one of the longest, and most determined, trade union struggles in British history. It left a fighting tradition. History could have taken another course; it was a close run thing. In July 1984, there was nearly a national dock strike to coincide with the miners strike, which could have prevented coal imports, as well as opening up another front against Thatcher. There was also the pit managers union dispute in October 1984. The presence of their members was a legal requirement for a pit to open, but the union leaders sold out for a toothless review of the closure programme. The effective solidarity action of rank and file power and railway workers to handle and remove the coal, could have been decisive if generalised, but it was undermined by trade union officialdom.

Owens failure to explain the defeats implies that Thatcherism and Neo-Liberalism were in themselves too strong for any fight back. However, the Labour Party leadership helped Thatcher, by refusing to organise support for the strike and condemning the miners pickets. The previous Labour Government, and their energy minister, Tony Benn, had introduced an incentive scheme, which  divided miners on the basis of earning and productivity, which was an underlying cause of some of the miners disunity. Stuck in their traditional sectionalism the trade union bureaucracy also refused to mobilise for an effective solidarity. Nor did they seek to challenge the anti union laws. As Owen said, rather self-consciously, if not in self-criticism, ‘we must not wallow in defeat’.

Owen did make a passing reference to the successful rank and file electricians strike in September last year, against Balfour Beatty and other construction companies, who attempted to tear up national terms and conditions by imposing new contracts, with huge pay cuts. But he did not give the detail or recommend their tactics. The sparks elected their own fight back committee parallel to the Unite leadership, and beat the bosses with unpredictable wildcat strikes and civil disobedience. The Unite national construction official described their action as cancerous. Jerry Hicks supported the sparks. Owen does not support this advocate of grass-roots action, he is campaigning for Len Maclusky, the leading full-time official of Unite, in the current union election.

So it did not come as a surprise that Owen left out of his gloomy narrative the battle of Saltly Gates, where grass-roots miners and engineering workers solidarity won the day, and flying pickets won the miners strike. Owen also left out the successful spontaneous  general strike by 170,000 workers to free the Pentonville Five, the dockers jailed for picketing in 1972. Nor was there any mention of the great wave of workers militancy from below, in the 1960′s, which bumped up living standards in a struggle against the Labour Party and their supporters the trade union leaders. Towards the end of the 1960′s most strikes were unofficial.

Owen stands for the rejuvenation of old Labour. For him, there are no viable alternatives to British Labourism. This was clear in his speech to the Socialist Party (Jan 3rd). He said, all attempts to build an alternative to the Labour Party had failed. For Owen, Labourism is the natural politics of the British Working Class. Forget the historical alternatives past or future. In the past, Chartism, or the great workers unrest of 1910- 1914, and the revolutionary year 1919. The future can only be Labourism. Proof? The failure of the Communist Party and the ILP to build an alternative. But the Communist Party had a terrible handicap: Stalinism. Even before the onset of Stalinism, ‘the party’ saw the way forward as transforming the Labour party and election of a left Labour government. The same failed perspective Owen offers today, nearly a hundred years later. The ILP did not have the politics for a revolutionary socialist alternative: its politics were a mixture of left Labourism and Popular Frontism.

Owen leaves out of his narrative of defeat the role and nature of the Labour Party and the trade unions. The Labour party was created by the trade union bureaucracy: it was born out of TUC constitutionalism. It was not an expression of class struggle. It’s electoralism was a product of industrial defeats and caused further defeats. In his speeches he describes the miners as the vanguard of the British working class, for their role in the British General Strike of 1926. But the trade union leaders unanimously, left and right, called off the solidarity strike when it was at its most solid. The miners were left to fight alone as they were in 1984. In both cases the Labour Party leaders refused to support the strikes. Owen talks as if  the defeats were  simply something which were inflicted on the Labour Movement from an unbeatable force from the outside. But the Labour Party did not and does not fight the class war.

In his book ‘Chavs‘ Owen is nostalgic for old Labour, despite the real history of the labour movement. He is correct to criticise New Labour as a continuation of the Thatcherite policies of shovelling as much money in the direction of the rich as possible, but old labour’s anti working class governments did not champion the needs of the working class either. Owen dreams of a golden age of Labourism where Labour MPs started off working in mines and factories and were the voice of the working class in Parliament. But it’s not where they started off that counts, but where they finished up, separated from their class in Westminster. Parliament converted them, they did not convert Parliament. Those who do not speak for themselves are not likely to be spoken for by others, who no longer share their working class circumstances.

Owens old labour views patronize the working class. He claims that if we do not send working class representatives out of the working class into Parliament, then working people will allow the BNP and other reactionaries to represent them in non parliamentary terms. Look to Parliament or reaction outside it. What a pessimistic perspective. Labour representation in Parliament is not an alternative to capitalism. It’s a discredited detour away from working class emancipation through its own self-activity, and organisation from below. Owen Jones looks with nostalgia to a repeat of the post war Labour government which modernised capitalism in the context of the vast destruction of capital, commodities and infrastructure by the Great Depression and WW2. Today with capitalism in a profound crisis, it’s not time to look back in nostalgia, but time to represent ourselves.

]]> http://thecommune.co.uk/2013/04/02/owen-jones-rebuilding-hope/feed/ 1 commie46 892263_10200285366674806_1232808784_o (1) http://thecommune.co.uk/2013/03/28/the-slow-death-of-capitalism/ http://thecommune.co.uk/2013/03/28/the-slow-death-of-capitalism/#comments Thu, 28 Mar 2013 16:48:20 +0000 duvinrouge http://thecommune.co.uk/?p=8752 ]]> Post World War II capitalism was able to afford social democracy, says duvinrouge. Profit rates were high after the capital devaluation & destruction of the Great Depression & war. Cheap oil enabled great advances in productivity. In Marxist terms the rate of exploitation increased. This means a larger percentage of the value created by workers was going to the capitalists. But because of the productivity increases, in material terms the workers were actually getting better off (at least in the West) even though they were being exploited more. This enabled the creation of a welfare state: state-funded healthcare, education, pensions & unemployment benefits. Western societies became more equal. With such improvements in living standards there was little reason for the workers to overthrow capitalism.

These improvements began to be tested in the late 1960’s. In 1967 the £ was devalued & at the same time the US$ was coming under increasing pressure, eventually leading to Nixon removing the convertibility to gold in 1971. It may be that these difficulties were based upon a falling rate of profit at the time, but even if this was just a crisis of overproduction, the authorities seemed determined to avoid a re-run of the 1930’s, particularly at the height of the Cold War with the Soviet Union. Keynesian fiscal stimulus seemed to only create inflation. The Phillips Curve gave way to stagflation. With the major currencies threatened with debasement a solution was needed. Neo-liberalised seemed to offer this. Attacking trade union power was seen as the best way to deal with the ‘enemy-within’ & perceived cost-push inflation. Alongside this came the demand to end capital controls so finance capital could overcome restrictions put in place by the now ‘independent’ ex-colonies. A new phase of multi-national globalisation directed by the bankers was beginning. This renewed power of finance capital largely came from financialisation, itself a product of the new fiat currency regime. The wider provision of mortgages & the selling off of social housing, enabled those in the West who still had work, to continue to give credence to the conservative dream of a property-owning ‘democracy’. With the fall of the Berlin Wall & the collapse of the Soviet Empire, the ‘end of history’ & the triumph of capitalism was celebrated, even China was now conceding defeat & turning to capitalism. This offered the ‘masters of the universe’ the opportunity to deindustrialised the West on an even greater scale by exploiting Chinese former peasants at even lower wages. The printing of US dollars in the form of US Treasury Bills bought by rich Arabs & the Chinese keen to keep their currency competitive, enabled the West to live on credit, buying cheap goods from Asia. How could this ever go wrong?

With an economics based upon a subjective notion of value – marginal utility – neither the Keynesians, nor the neo-liberal economists could see that value cannot be printed. With the dot.com bubble followed by a property bubble, debt ratios in the West reached record levels. The sub-prime mortgage market in the US kicked off the credit-crunch of 2007 & the outright panic of late 2008 when the collapse of Lehman Brothers threatened the whole financial system. Banks got nationalised. Banks had their bad debts bought by the government. Governments bought back their debt from the banks, long-term as well as short-term debt, & so stopped credit money from collapsing. Taxpayers are now picking up the bill in the form of ‘austerity’: cuts to government spending & a new, more intense phase of ‘rolling back the frontiers of the state’. Because of the crisis of overproduction (too much produced relative to what the market can afford to buy sustainably) capitalism can no longer even pretend to offer humanity improved living standards. Across the globe workers are suffering. Final-pension salaries are no longer ‘affordable’. Graduates are unemployed, saddled with debt & with little prospect of having the same standard of living enjoyed by their parents. Others are ‘written-off’ whilst still at school as ‘no-hopers’ & are expected to become invisible, not to riot as many did in England in the summer of 2011. The politicians’ expenses scandal in Britain has damaged the façade of so-called ‘representative democracy’. They are increasingly hated along with the bankers. The capitalist media has also taken a knock with the phone-hacking scandal & the collusion of senior police officers at London’s Metropolitan police with Rupert Murdoch’s News International has been revealed. There is little trust left.

The Great Recession is now turning into the Long Depression. Economists are bemused as to why there is no recovery. Quantative Easing has fuelled asset prices, but the real economy is seeing little investment & so anaemic growth. Not only has there not been enough deleveraging (paying off of debts) but the underlying factors that favour the production of surplus value are going the wrong way. The end of cheap energy means that the percentage of the working day’s value created by labour that can go to the capitalists in the form of surplus value, & ultimately profit, interest & rent, is under pressure as it takes more time to produce the same amount of subsistence goods to keep labourers alive & capital goods to replace depreciated capital. This means that new investment slows & capitalism struggles to grow. And it’s not just cheap energy that’s history, as other raw materials, such as rare earth minerals become scarce, prices increase & profits come under pressure. So a solution to the realisation problem, which will involve huge capital destruction, far from guarantees the resumption of good times for the capitalists. The current human-made ecological crisis, with its accompanying mass extinction of species, is testament to the limits to growth the finite world places on capitalism. Without capital accumulation, & particularly growth in labour time, capitalism has to rely upon getting profits from relative surplus value, i.e. stealing more of the workers’ labour time. But as we are seeing, under such growth constraints, the same amount of worker’s time is meaning less in material terms. The class antagonisms of labour fighting for an increased share of the value it produces just to stand still & the capitalists fighting for a greater share just to maintain the same level of profitability, is coming out into the open. The material circumstances for class struggle are very much with us & will be so for a long while yet. Already we have seen glimpses of the potential for revolution in Tahrir Square, Syntagma Square, & many places around the world that were ‘Occupied’. Politics is now catching up with the economics.

What is needed now is bold revolutionary demands. Not just new parties fighting elections with the promise of legislating the common ownership of the productive forces. But the creation of an alternative system based upon direct democracy & so equality of decision-making now. The Commune have begun the process of setting up local communes. See the list of those already in existence (http://thecommune.co.uk/contacts-links/). If you want help setting one up contact us. These are for all who want the common ownership of the means of production rather than the private ownership of capitalism. They are not branches of The Commune; they are totally autonomous. They are just one form of action out of many. Please get involved one way or another & help put capitalism out of its misery.

What is the view of Tsipras on the rise and the growing threat  of Golden Dawn?

Recently, Newsnight’s Economic  Editor Paul Mason (13/02/13) and left-wing author,Seumas Milne(19/03/13) ,asked Tsipras what he thought about the threat of an authoritarian solution to the crisis in Greece.

In response to Paul Mason’s question about what he would do about the racist actions of Golden Dawn, Tsipras answered: we will implement the law! He would use the State against not only the counter-revolutionary violence of the fascists, but all groups which use violence. In other words, he stands for a bourgeois constitutionalism against  any violence from the revolutionary left, including the anarchists, who are defending  working class communities from fascist attacks.

He said he would use the state to root out fascist cells in the police. This is a naive view of the Capitalist state – to say the least. Faced with the threat of workers resistance, the  state will facilitate fascist attacks covertly and in the event of any revolutionary threat the state will be openly in alliance with fascism or other authoritarian forces. In the Great Depression of the 1930′s parliamentary democracy was unable to take the strain and fascism filled the void. The rise of Golden Dawn is a clear warning for those leaders of Syriza who want to cling to parliamentary democracy.

In response to Seumas Milne’s concern about an authoritarian solution, Tsipras fell back on the general point that fascism thrives on austerity. Therefore, fascism could be halted by the end of austerity. Besides, in his view, the Greek people are anti-fascist. It is true that the Greek working class are anti-fascist, so were the German working class in the 1930′s. But in the event of the failure of working class parties to resolve the capitalist crisis by pushing forward to a post capitalist society, fascism will receive support from some sections of the population. Currently Golden Dawn has a 14% share of the popular vote.

What solution does  Alexis Tsipras put forward to exit the economic crisis?

In general, Tsipras has expressed faith in European institutions and is confident he can persuade European and international economic and political leaders that he is fit to govern. During an international tour of the USA, he said in a speech to the Brookings institute that ‘I hope I have convinced you that I am not as dangerous as some people think’. He seems to have succeeded. Following a meeting with the deputy assistant Secretary of State, the official view in Washington was that he was an old-fashioned Social Democrat, which appears to be an accurate assessment. His message to the IMF was that Syriza would save Greece by staying in the Eurozone and deserved support.

Specifically, Tsipras has called for a new Marshall Plan for Europe. But the Marshall plan was put in place following the massive destruction of capital during the Great Depression and the Second World War. These were the preconditions for a protracted boom. The plan was part of a  strategy of the USA for economic  and political hegemony in Europe. It was a  successful attempt to save capitalism in Europe and contain and roll back ‘ Communism’ or the influence of Russia and its left allies in Europe. The historical and political circumstances  and the balance of class forces are fundamentally different in Europe today. He is looking for a capitalist solution or is nostalgic for the post war boom.

Will Syriza bend the knee in government ?

Tsipras believes that Syriza will inspire and strengthen the calls for social justice to solve the humanitarian crisis in Greece. There is certainly a capitalist crisis: suicides and soup kitchens; unemployment running at 30% and huge drops in household income of between 20% and 40%; 25,000 homeless in Athens alone. The Marshall Plan was not about social justice, but aimed at marginalizing the most revolutionary impulses of the European left at the time. Tsipras sales angle to decision makers and those that help to form opinion in London and Washington, is that a renewal of social democracy is a safe option, given the failure of Neo Liberalism.

However, there is currently no economic space for a rebirth of a new form of Social Democracy in Europe. The depth and fragility of European financial institutions has been once again exposed by the banking crisis in Cyprus. Where is the shareholder, bond holder, financial sector, confidence to accept a massive programme of state intervention? The deeper the crisis, the greater the political polarisation. Tsipras is already bending his knee. A Syriza government would  discredit alternatives to capitalism, leaving Golden Dawn ready to provide an authoritarian solution. Only a non parliamentary revolutionary grass-roots movement from below can pose a viable  working class alternative to Capitalism in crisis.

To understand what is happening requires an understanding of the nature of the crisis, the crisis of overproduction. Capitalism is based upon commodity production: things are produced for sale, to sell for money, not for immediate consumption. Furthermore, the price must be higher than the costs of production for a profit to be realised. Profit is the objective, not the satisfaction of human needs. But the problem with commodity production is the commodity that acts as the universal equivalent – money – must grow in line with commodity production in general for all the commodities to be sold. If money gets hoarded, e.g. capitalists refuse to invest because profit rates aren’t high enough, then we have stagnation, even a depression. This hoarding of money is what most Keynesians, and some Marxists, see as the cause of the current crisis. Hence they argue that the government must step in with fiscal stimulus until the capitalists return to their senses and start investing again. Crises due to hoarding are possible, but this is not overproduction and not the current crisis.

Overproduction occurs because credit money, created by banks through fractional reserve banking, grows too big. People and companies are buying things on credit. But although they notionally owe the money to bank, the bank never really had the money in the first place, it created it. Hence banks can find themselves exposed when they over lend. This is what happened to Northern Rock, RBS, Lloyds and of course many others, most notably Lehman Brothers.

During the boom phase and the growth of credit money everything looks fine. Profit rates appear sky high, there may even be full employment. But as debt saturation is reached the repayment of debts becomes a problem. As soon as a debt defaults start, previously looking healthy organisations get into trouble dragging down others. It’s like climbers roped together, as one falls the others are in danger of being taken down as well.

In 2008 the US authorities took a chance in letting Lehmans’ go under; it almost took the world economy and capitalism down. Only after many rounds of ‘quantative easing’ (essentially giving the banks money for their government and other bonds, which the banks will never buy back) they still haven’t resolved the crisis. This is because all they have done is stopped the destruction in credit money by moving the bad debts to the government books. This has now given them the excuse to cut government spending and roll back the state. This means the end of the welfare state which was used so well by social democracy to prevent revolution.

These attacks on workers through government ‘austerity’ is matched by below inflation pay rises in the private sector, even outright wage reductions. No forgetting the unemployment. Banks in particular are sacking huge numbers. Then of course there’s pension funds being raided and increases in the retirement age. All excused by the fact that we are living ‘too long’.

We’re told that there is no alternative. Well, as the people of Egypt glimpsed in Tahrir Square, there is an alternative. An alternative that doesn’t have crises of overproduction. An alternative where production isn’t based on profit. An alternative that is based upon human needs and dignity. An alternative where the people have direct democratic control of what is produced, how it is produced and who consumes it. An alternative that finally gives humanity control of its destiny. An alternative called communism.