Louis Proyect: The Unrepentant Marxist

September 29, 2015

Will the Asian Infrastructure Investment Bank be any different than the World Bank?

Filed under: Argentina,China,economics,imperialism/globalization,Latin America — louisproyect @ 10:33 pm

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The day before yesterday an article appeared on the Guardian website that had the aura of a Chinese government press release:

As world leaders met quietly behind the scenes, others lined up to express support for the new development push that aimed to eliminate both poverty and hunger over the next 15 years. They replace a soon-to-expire set of development goals whose limited success was largely due to China’s surge out of poverty over the past decade and a half.

China’s president vowed to help other countries make the same transformation. Xi said China would commit an initial $2bn to establish an assistance fund to meet the post-2015 goals in areas such as education, healthcare and economic development. He said China would seek to increase the fund to $12bn by 2030.

And Xi said China would write off intergovernmental interest-free loans owed to China by the least-developed, small island nations and most heavily debt-burdened countries due this year.

He said China “will continue to increase investment in the least developed countries,” and support global institutions, including the Beijing-backed Asian Infrastructure Investment Bank that is due to launch by the end of the year and is seen as a Chinese alternative to the more western-oriented financial institutions of the World Bank.

After having read and reviewed Patrick Bond and Ana Garcia’s “BRICS: the anti-capitalist critique”, I am more skeptical than ever about Chinese altruism especially the role of the Asian Infrastructure Investment Bank referred to in the last paragraph above.

I was also puzzled by the provenance of the article since it was included with others in the category “Sustainable Global Development” that was support4ed by the Bill and Melinda Gates Foundation, which is described as follows:

This website is funded by support provided, in part, by the Bill and Melinda Gates Foundation. Content is editorially independent and its purpose is to focus on global development, with particular reference to the millennium development goals and their transition into the sustainable development goals from 2015.

All our journalism follows GNM’s published editorial code. The Guardian is committed to open journalism, recognising that the best understanding of the world is achieved when we collaborate, share knowledge, encourage debate, welcome challenge and harness the expertise of specialists and their communities.

I confess that I have as much confidence in this foundation’s commitment to sustainable development as I do in the Windows Operation System, especially for their promotion of the Green Revolution, an application of chemicals to food production that has led to all sorts of problems as I indicated here: http://louisproyect.org/2009/09/20/food-imperialism-norman-borlaug-and-the-green-revolution/

In an article for Huffington Post, Richard Javad Heydarian, the author of the forthcoming “Asia’s New Battlefield: US, China and the Struggle for Western Pacific State”, casts a skeptical gaze over the Chinese gifts to the developing world, reporting on the Philippines’s encounter with the China EximBank, an entity that the new bank will likely mimic:

Under the Arroyo administration (2001-2010), the Philippines’ National Broadband Network (NBN) signed a $329.5 million contract with China’s ZTE Corp. to upgrade its facilities and communications network. It also signed the $431 million Northrail infrastructure contract, which was awarded to China National Machinery and Industry Corp. (Sinomach) and largely financed by the China EximBank.

The NBN-ZTE venture, however, would be mired in a massive corruption scandal, after investigations revealed huge kickbacks, cost inflations, and irregularities in the contract. Failing to meet laws requiring competitive bidding, the Philippines’ Supreme Court, meanwhile, struck down the Northrail project.

The common perception in the Philippines is that the ZTE and Northrail contracts were some sort of bribe to pressure/persuade the Arroyo administration to compromise on South China Sea and sign up to the controversial and secretive Joint Maritime Seismic Undertaking (JMSU) agreement in 2005, which was deemed unconstitutional and in violation of Philippine national patrimony and requirements for transparency and consultations with other branches of the government, particularly the legislature.

During his recent visit to Tokyo, Philippine President Beningo Aquino also complained about the alleged decision of the China EximBank to prematurely demand drawdowns from its Northrail project loan at the risk of default. In short, Aquino suggested that China wanted to punish his government for standing up to China by using its loan payment card.

In a CounterPunch article dated March 6, 2015, Ecuadorian journalist Raul Zibechi considered the possibility that Chinese investments in Latin America could have a different character than what the Chase Manhattan Bank and Citibank offered. Initially China was focused on mineral extraction and agricultural commodities such as soybeans but in the more recent period, it has invested in areas that depart from the traditional colonizing relationship between the core and the periphery. They include arms manufacturing in Latin America, which offers the possibility of ancillary benefits to the non-military sector just as was the case with radar after WWII, and infrastructure. He points to the construction of two hydroelectric dams in the Santa Cruz province. One is named the Kirchner after the late President and the other is called the Cepernic after the late governor of the province. Another ostensibly worthwhile project is the upgrade of railway equipment, including cars to renovate dilapidated trains. So how can you be like the old-time Anglo-American imperialists when you are building dams and modernizing the railway system in Argentina? How dare you stand in the way of progress?

If the goal is “sustainable development”, it is doubtful that there is much difference between the World Bank when it comes to hydroelectric dams. The Dialogo Chino website that is dedicated to tracking the impact of Chinese investment in Latin America referred to these dams as “mired in environmental conflict” in a February 13, 2015 article.

Experts claim the maximum level of the Kirchner dam, at the same average level of the Argentino Lake, is unsuitable, increasing the level of the lake and causing tides that will erode the front of the Perito Moreno glacier and stop the traditional blocks of ice breaking off, a phenomenon that attracts thousands of tourists.

The controversy is not without precedent. Across the border in Chile, also in Patagonia, the HidroAysén project would have resulted in the construction of five hydroelectric power plants, two on the River Baker and three on the River Pascua. However, fierce criticism from environmental groups and indigenous communities resulted in a council of ministers rejecting the project last year.

“The dam will be fed from the lake, whose level will rise and fall to meet Buenos Aires’ energy requirements and consumption. The glacier will not be immune to variations and their erosive effects,” argues Gerardo Bartolomé, the engineer at the head of an online petition aiming to ensure the correct environmental studies are carried out for the dams.

Similarly, Juan Pablo Milana, a glaciologist and researcher at the National Scientific and Technical Research Council (CONICET), believes the dams will cause irreversible damage to the Spegazzini and Upsala glaciers.

“The glaciers are already subject to the forces of nature and introducing further changes is complicated. Increasing the level of the Argentino Lake will create a flotation effect. Lower water pressure at the base of the glacier will not only cause detachment of ice but will also change the way it breaks off,” explains Milana.

It seems that the Chinese engineers overseeing the project worked on the Three Gorges Dam so you can get an idea of how much thought has gone into the environmental impact in Argentina.

Finally on the question of Argentina’s rail system. Pardon me for sounding like an unrepentant Marxist but when I hear about improvements to a transportation system that is primarily intended to haul commodities from the interior of a country to its seaports, I reach for my revolver.

This is an article I wrote on the construction of railroads in Argentina in the 19th century as part of a series on the financial crisis in the country back in 2002. Somehow I doubt that China’s intentions are any nobler than Great Britain’s.

The Collapse of Argentina, part one: Railway Imperialism

As the Argentine economic collapse began to deepen, I decided to search for radical or Marxist literature on the country written in English to help me understand the situation better. This proved futile (although I continue to be open to recommendations). Nestor Gorojovsky, an Argentine revolutionary who I have been in touch with on the Internet or by phone for at least five years now, could recommend nothing. (His own efforts at a Marxist overview of Argentine history can be found at: http://www.marxmail.org/archives/january99/argentina.htm.) Not even after posting an inquiry to the H-LatinAmerica list, whose subscribers are exclusively academic specialists, were any recommendations forthcoming.

Taking the bull by the horns, I plan now to fill this gap beginning now with a series of posts based on scholarly material from Columbia University’s library. Although I do plan to review literature on Argentina written in Spanish, most of the source material for my posts will be in English, a language that I am more comfortable with when it comes to higher-level analysis.

My own involvement with Argentina dates back to the mid 1970s when I was drawn into a faction fight within the world Trotskyist movement over political perspectives in Argentina. The two main antagonists in the debate were the late Joe Hansen, Trotsky’s bodyguard at Coyoacan and a leader of the Socialist Workers Party, and the late Ernest Mandel, the renowned Belgian economist who was on the executive committee of the International Secretariat. The Americans and their mostly English-speaking followers (I use the word advisedly) backed a Trotskyist group in Argentina that appeared to be implementing their own orthodox approach.

Led by the late Nahuel Moreno, this group participated in trade union struggles, the student movement and opposed the ultraleftist guerrilla formations that were kidnapping North American executives or hijacking trucks in order to dispense meat and other goods in poor neighborhoods like Marxist Robin Hoods. It was one of these groups that the Mandel faction backed. Although they paid lip service to Trotsky, these Argentine guerrillas organized as the PRT/Combatiente were more interested in applying Regis Debray’s foquismo theory to the urban sector.

My role in all this was to battle the Mandel supporters in Houston, Texas who held a near majority in the branch and whose affinity for guerrilla warfare was open to question. Most were disaffected from the SWP leadership, whose alleged “petty-bourgeois” orientation to the student movement was supposedly leading the party to ruin. A couple of years later, the SWP leadership would go completely overboard in a kind of ‘workerist’ orientation to the trade unions, thus robbing the dissidents of their raison d’etre. By the time this turn had taken place, the SWP and the Fourth International had parted ways. As a local leader of the anti-Mandel faction, I had the opportunity to spend long hours in discussion with Argentine co-thinkers who visited Houston to give reports for our faction. Security was extremely tight in those days and I had to check my 1968 Dodge Dart for bombs before driving any of them to a public engagement.

During that intense struggle, I gained a deep appreciation for the Argentine people, their culture and their revolutionary will. Although I grieve to see their personal suffering today, I am inspired to see them acting collectively for a better country and world. One hopes that their heroic example can begin to erode the “TINA” mood that has affected wide sections of the left since 1990.

In this first post, I want to address the question of Argentina’s “golden age”, a notion that you can find in many left publications or on the Internet. In this version of Argentine history, the country is seen as an exception to the rest of Latin America where conventional notions of “imperialism” and “dependency” might not apply.

For example, British state capitalist theoretician Chris Harman writes:

Argentina is an industrial country, with a higher proportion of its workforce in industry than in Britain. It’s also a country where working people have, within living memory, experienced living standards close to west European levels. It was known as the ‘granary of the world’ at the beginning of the 20th century, with an economy very much like that of Australia, New Zealand or Canada, centred the massive production of foodstuffs on giant capitalist farms for the world market. Relatively high wages made it a magnet for millions of immigrants from Italy and Spain who brought traditions of industrial militancy with them.

Brad DeLong, an economist who held a post in the Clinton administration and who is a ubiquitous figure on leftwing electronic mailing lists, wrote the following on Progressive Economists Network (PEN-L):

As I said quite a while ago, Argentina was a first world country–like Canada, Australia, or New Zealand–up until the 1950s. Arguments that development possibilities were constrained by relative backwardness may work elsewhere: they don’t make *any* sense for Argentina.

If views like these are meant to support a kind of Argentine exception to the Leninist concept of imperialism or its subsequent elaborations such as the Baran-Sweezy theory of monopoly capitalism, they are mistaken. They would fail to see Argentina’s role in the world capitalist system, which–despite favorable moments–has been that of victim of imperialism. Comparisons with the USA, Canada, etc. are specious, even if in a given year income or other statistics were comparable. The *structural* questions are far more important for understanding Argentina. Despite the presence of European immigrants, industrialization, national independence, the lack of feudal-like latifundias, etc., Argentina had much more in common with direct colonies in the 19th century like India.

Specifically, one of the main factors that led to Argentine dependency was its reliance on British capital and expertise for the construction of railways in the 19th century. Just as was the case in India, these steam-driven showplaces of modernization did nothing but drain the country of capital and force it into a secondary role in the world economy.

If one is a Marx “literalist,” there can obviously be a lot of confusion about the introduction of railways into Argentina or India, especially when Marx wrote:

I know that the English millocracy intend to endow India with railways with the exclusive view of extracting at diminished expense the cotton and other raw materials for their manufactures. But when you have once introduced machinery into locomotion of a country, which possesses iron and coals, you are unable to withhold it from its fabrication. You cannot maintain a net of railways over immense country without introducing all those industrial processes necessary to meet the immediate and current wants of railway locomotion, and out of which there must grow the application of machinery to those branches of industry not immediately connected with railways. The railways system will therefore become, in India, truly the forerunner of modern industry.” (“The Future Results of British Rule in India,” NY Daily Tribune, Aug. 8, 1853)

In contrast to these early hopeful writings, before Marxism had developed an understanding of the negative role of imperialism, the historical record demonstrates that foreign owned railways did not lead dependent countries to become anything like the those of the investors, engineers and builders from the core. Rather than serving as a catalyst for Argentine industry, they did nothing except enrich British finance capital, the nefarious Barings Bank in particular. For a scholarly treatment of this subject, we can turn to Alejandro Bendaña’s 1979 PhD dissertation “British Capital and Argentine Dependence 1816-1914”. (Bendaña was a senior level Sandinista official who served as ‘responsable’ with Tecnica, the volunteer organization I was involved with in the 1980s. He continues to participate in the radical movement, nowadays with the Center for International Studies in Managua and the Jubilee Campaign against 3rd world debt.)

The most important sector of the Argentine ruling class in the 19th century was the ‘estancieros’, or ranchers. From 1820 onwards, they began to develop an alliance with British capital, which was seen as strategic for the goal of exploiting the country’s land-based riches. Arising from within its ranks, Juan Manuel de Rosas emerged as the primary spokesman for this class. British merchants played an important role in guaranteeing the Argentine rancher access to world markets. Smiling benignly on this interdependence, the British consul wrote:

the manufactures of Great Britain are becoming articles of prime necessity. The gaucho is everywhere clothed in them. Take his whole equipment – examine everything about him – and what is there not of raw hide that is not British? If his wife has a gown, ten to one that it is made at Manchester; the camp-kettle in which he cooks his food, the earthenware he eats from, the knife, his poncho, spurs, bit, all are imported from England. . . Who enables him to purchase these articles? Who buys his master’s hides, and enables that master to employ and pay him? Who but the foreign trader. Stop the trade with foreign nations, and how long would it be before the gaucho would be reduced to the state of the Indian of the Pampas, fed on his beef and horse-flesh, and clothed in the skins of wild beasts? (Bendaña, p. 34)

However, one important piece was missing from this jigsaw puzzle. Unless a modern railway system was introduced into the country, Argentine goods would be not as competitive with those of countries which could deliver beef, hides, and etc. to seaports in a much shorter time over rail rather than horse-back. Furthermore, unless workers and managers could make reasonably quick trips over rail between cities and rural points of production, the entire system would lack the kind of internal cohesion that other capitalist countries enjoyed. From the standpoint of classical economics, one would think that it would be to the mutual benefit of English and Argentine capitalist classes to develop a kind of partnership. Instead, what transpired has much more in common with the con games of the 1990s in which Wall Street banks got rich at the expense of the Argentine people. Except, in the 19th century, it was Barings Bank rather than Goldman-Sachs that was doing the robbing.

To look after its interests in this vastly ambitious railroad-building enterprise, the Argentine government named North American William Wheelwright as its agent. They were overly optimistic. After making the rounds in British banking houses, Wheelwright said in 1863 that a deal could be done only on the following basis:

–The land grant must be doubled (land adjacent to the tracks given free to the railroad company.)

–45 percent of the railroad revenue would be counted as working expenses.

–The profit ceiling would be raised to 15 percent, more than triple the norm.

–Most importantly, the expropriation clause would be eliminated.

Although the Argentine ruling class and its British partners were committed to liberalism in the economic sphere (the model for 1980s-90s neoliberalism), this loan-sharking deal had nothing to do with free market principles. Such concessions could only reflect the internal weaknesses of a bourgeoisie that relied on cattle ranching, as opposed to the British ruling class that had accumulated vast amounts of capital through manufacturing, and then finance.

When the shares for Central Rail, the new British-owned railroad, sold sluggishly, the bankers demanded further concessions. No longer would working expenses be limited to 45 percent, they would be *whatever the company accountants said they were*. So, not only do you get concessions forced down the throat of the Argentine government, you get an 1860s version of the kind of accounting that Arthur Anderson did on behalf of the Enron crooks.

To make sure that all the Central shares got sold, the British investors demanded that the Argentine government buy 2000 shares, which is a little bit like asking someone being hijacked to drive the truck. An Argentine Minister glumly commented:

We are faced with having to lower our heads for all these demands and any other ones that may be put before us given our nation’s need for the railway’s benefits and our own incapacity to secure these by any other means. (Bendaña, p. 93)

Finally, in the May of 1870, 17 years after the original conception and 7 years after work began, the first locomotive arrived in Córdoba. Over the course of the 1870s, the Argentine state provided nearly 40 percent of the guaranteed profits for the new railroad. In a nutshell, the wealth of the country was being drained to make sure that British investors enjoyed super-profits. Furthermore, the British enterprise was tax-exempt. This turned out to be a bonanza for the Central Argentine Land Company that came into existence in 1871. Unlike the railroad, commercial exploitation within land claim areas were far less risky and had no particular claim to the kind of tax-exempt status enjoyed by large-scale capital projects. Once again, the weak Argentine bourgeoisie had been given an offer that it couldn’t refuse.

With British technological superiority, one might at least hope that the new railway would provide adequate service. As it turned out, the Argentine people had ended up with a Yugo rather than a Rolls-Royce. Public complaints about service and rates grew legion.

Central was just the first in a series of white elephants. Next came the Northern, the Eastern, and the Great Western Railways, all financed by the British and all imposing larcenous penalties on the people of Argentina. A government audit revealed that the East Argentine railroad was marked by an excess of employees (exclusively English at high salaries), overly generous salaries for company directors, inadequate rolling stock, dubious accounting procedures, and bloated operating costs.

When such exploitation operates in open view, one might ask why the Argentine capitalists did not rebel. After all, if one is committed to national development, then one must allow oneself the ultimate weapon against foreign exploiters: expropriation. Unfortunately, except for the urban middle-class, such calls were not made. As is the case today, the dominant fraction of the national bourgeoisie lost its nerve. And like today, the ideological excuse for inaction was a commitment to the “free market.” The estancieros regarded their own economic well-being as synonymous with the extension of railway lines made possible by foreign investment.

When the harsh reality of British theft collided with the delusional schemas of the local bourgeoisie, voices of dissent began to be heard in parliament. Why couldn’t the nation redeem itself through seizure of properties that were based on criminality to begin with? Even the conservative “La Nación” asked in 1872:

Can and should the state build all railways itself and expropriate existing ones? We do not believe that the benefits of state railways should necessarily carry us to the latter consequence . . . Although the country cannot afford expropriation now or for many years to come, there may come a day when revenue and necessity may, possessed of means and facing a need for new lines, expropriation might become convenient. (Bendaña, p. 152)

Skilled as they were in keeping the natives at bay, the British turned to one defense after another. They bribed ministers, congressmen and railroad bureau officials to vote against nationalist legislation or to look the other way when laws were being broken. When this proved insufficient, the British were not above gunboat diplomacy. In late 1875, the British bank in Rosario suddenly demanded immediate repayment of railroad notes as part of a maneuver to destroy local financial competitors. When the nationalist-minded local governor in Santa Fe sided with his countrymen, the British sent their navy to blockade the city. Buenos Aires caved in to the show of force and the British won their demands without a shot being fired. Bendaña cites H. S. Ferns’s “Britain and Argentina in the Nineteenth Century”:

“prosperity had created a nation of boosters, and the porteños (Buenos Aires elites) looked at the Governor of Santa Fe as Pierpont Morgan might have regarded William Jennings Bryan.” (p. 258)

By 1913, Great Britain owned 95.8 percent of all private railways in Argentina. That amounted to 60.2 percent of total British investment in the country. The economic consequences on the nation were enormous. Arturo Castaño, a legislative deputy and rail expert, warned:

“the more the railways extend themselves, the greater will be the economic disruptions, and the greater will be the migration to the cities from the provinces. A third of our national production is absorbed by the railways, without the Executive being able to intervene in rate-making due to an administrative system which favors the companies.”

Indeed, when foreign capitalists absorb a THIRD of national production, the question of imperialism has to be addressed.

The railway era lasted about a century. The first 3 decades, from 1830 to 1860, were a time of rapid expansion in the imperial centers. The spread of railways into Asia, Africa and Latin America did not produce concomitant benefits. Although Cecil Rhodes characterized railroads as “philanthropy plus 5 percent,” the profits were always far higher and the progress realized in countries such as Argentina was far less than advertised.

In my next post, I will take up the question of Juan Perón and his legacy.

August 23, 2015

“Anti-imperialist” schemas versus BRICS reality

Filed under: economics,imperialism/globalization,mechanical anti-imperialism — louisproyect @ 6:47 pm

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Mike Whitney: The dollar is toast. The IMF is toast. The US debt market (US Treasuries) is toast.  The institutions that support US power are crumbling before our very eyes. The BRICS have had enough; enough war, enough Wall Street, enough meddling and hypocrisy and austerity and lecturing. This is farewell.

UJUH: South Africa is pushing two high profile candidates into the top leadership layer of the BRICS New Development Bank (NDB).

These two are Tito Mboweni who has been appointed as the Non-Executive Director to the Board of the BRICS New Development Bank and Lesley Maasdorp who has been nominated to become one of four Vice Presidents of the BRICS New Development Bank (NDB).

When the World Economic Forum named Maasdorp as a Young Global Leader in 2007, he was already a matured leader. This is after serving the ANC’s economic desk in the pre 1994 era and then graduating into public service. He served as a special advisor to the minister of labour, Tito Mboweni. He then moved to become deputy director in the department of public enterprises where he oversaw major state assets restructuring and privatisation of the time. Maasdorp broke into the top business league in the mid 2000s with positions at different intervals that included; President of Bank of America Merrill Lynch for Southern Africa, Vice Chairman of Barclays Capital and Absa Capital and International Adviser to Goldman Sachs.

Andre Vltchek: “Among the BRICS, there is no place for countries that are siding with the colonialist powers, as there is no place for those nations that are tormenting and sacrificing their own people. For now it is still just an acronym of the countries, its members. But soon, who knows, it may be interpreted as the Broad Revolutionary Internationalist Causeway towards Socialism.”

RT.com: While investors drop Greece like a hot potato Russian and Chinese companies plan to take part in the privatization of Greek state assets, considering them a good investment.

Russia’s leading gas producer Gazprom is considering taking part in the privatization of the Greek gas company DEPA and grid operator DESFA. The Greek Government is currently inviting bids for DEPA, but it plans to keep 34% of DESFA, Reuter reports.

Experts estimate a controlling stake in DEPA would cost about $1.5 billion.

In June 2014, I wrote a commentary on the question of Russian imperialism, making the case that even if it didn’t meet the yardstick established by Lenin in 1914, it was still imperialist in the same sense that Japan was in the 1930s or for that matter Czarist Russia, which colonized nations on its borders. On the other side of the debate, Roger Annis maintained that there are no significant Russian or Chinese banks so how can they be imperialist?

That may be the case but the New Development Bank is projected to be a competitor to the World Bank and a major financier of 3rd world development projects that would supposedly put the interests of the people over profits. Somehow this does not seem to square with Marx’s theory of capitalism but that would not seem to deter people like Mike Whitney and especially Andre Vltchek who views China as following its own rules and not that of a Westerner like Karl Marx: “Only the Western thinkers can define such things as ‘socialism’ or ‘communism’, not Asians, and ‘Chinese socialism’ means nothing to them; it is just a pose, a charade.”

For many BRICS has a totemic quality, as if there could be such a thing as “good capitalism” as opposed to the demonic, mustache-twirling variety found on Wall Street or London’s financial district. I was reminded of that just today when Ron Jacobs forwarded an interview with Thomas Mountain to Marxmail. Mountain turns out to be a former member of Robert Avakian’s cult who retains a soft spot in his heart for China as if the old-time spirit of Maoism lingered on:

Chinese aid has built more schools, hospitals, water and electric infrastructure than all the western governments and the UN combined, and is set to do much more if the present programs that have been announced are implemented. China recognizes that Africa needs educated and skilled personnel to help develop African resources and it is in China’s interest to help make this happen. Again, doing this is a long term investment that will pay off for China, both in good will and in their companies’ bottom lines.

So maybe colonialism is not such a bad thing as long as it has Chinese characteristics? Well, maybe Mountain had the early writings of Karl Marx in mind who thought that the British colonization of India had some benefits: “The political unity of India, more consolidated, and extending farther than it ever did under the Great Moguls, was the first condition of its regeneration. That unity, imposed by the British sword, will now be strengthened and perpetuated by the electric telegraph.” (Of course, years later Marx explicitly renounced these views and equated British rule to grand larceny.)

Is this far-fetched? Comparing China to Victorian England? Not if you read what Nick Turse has to say about the Chinese presence in newly independent South Sudan:

Hungry for energy reserves, minerals, and other raw materials to fuel its domestic growth, China’s Export-Import Bank and other state-controlled entities regularly offer financing for railroads, highways, and other major infrastructure projects, often tied to the use of Chinese companies and workers. In exchange, China expects long-term supplies of needed natural resources. Such relationships have exploded in the new century with its African trade jumping from $10 billion to an estimated $200 billion, which far exceeds that of the United States or any European country. It has now been Africa’s largest trading partner for the last five years and boasts of having struck $400 billion worth of deals in African construction projects which have already yielded almost 1,400 miles of railroad track and nearly 2,200 miles of highways.

A civil war in South Sudan has recently imperiled China’s interests. It was forced to withdraw 300 oil workers when forces hostile to the government threatened them. As an indication of the UN’s willingness to come to the aid of stability whenever the natives get too restless, just as was the case in the Congo in Lumumba’s time, the Blue Helmets are there to “keep the peace”. It is of some significance that China has sent detachments of the PLA to help them out.

For those who like their politics kept simple if not stupid, the whole idea of the BRICS is to counter the power of Wall Street. That being the case, can I make a pitch for being able to handle complexity? Like understanding that Lloyd Blankfein is just fine with BRICS (obviously the two honchos from South Africa with ties to Goldman joining the new BRICS bank serving as all the evidence you should need). Turns out the scumbag-in-chief of Goldman-Sachs went over to China to give his blessing to the New Development Bank at Tsinghua University. You can watch him chatting it up with the dean of the business school here, a chap named Qian Yingyi:

Qian doesn’t seem to understand that the BRICS countries are on a collision course with Western financial interests, at least based on the evidence of the men he has appointed to the business school’s advisory board: Apple Inc.’s Tim Cook, Citigroup Inc.’s Michael Corbat, Blackstone Group’s Steve Schwarzman, Goldman Sachs Chairman Lloyd Blankfein and Carlyle Group’s co-founder David Rubenstein.

So the obvious question is whether this business about rival hegemonic blocs, with the West being Evil and the BRICS being Good, makes any sense with Goldman-Sachs’s bromance with someone like Qian Yingyi. Of course, we should never forget that it was a Goldman-Sachs big-shot who first got gung-ho on this development, even coining the term BRIC (before South Africa was added.) Jim O’Neill wrote “Building Better Global Economic BRICs” in 2001. It is mostly a call for figuring out how to make money in emerging markets and contains none of the hysterical warnings about how Wall Street is threatened by a new white-horse riding hegemon.

One of the interesting theoretical questions that arises out of all this is whether the old understanding of imperialist rivalry based on 1914 and 1940 make much sense in understanding today’s world. I would offer this as a potential research topic. WWI and WWII were ignited by rival nationalist agendas in line with defending capitalist industry. Protectionism via tariffs was the name of the game.

But over the past 30 years or so, capital is much less interested in building walls around local industry, as the hollowed out shells of Detroit, Cleveland and Pittsburgh would indicate.

In a brief chat with Patrick Bond at the Rosa Luxemburg conference in NYC this weekend, I raised the question of whether Lenin’s much-heralded book on imperialism is that useful in understanding today’s world. He suggested that Rosa Luxemburg’s writings are more relevant in many ways. Hmmm. Given her affinity with David Harvey’s analysis, which places an emphasis on capital’s ability to take flight and move wherever a profit can be made, that’s something that makes a lot of fucking sense.

June 19, 2015

The Economics of Hollywood

Filed under: economics,Film — louisproyect @ 2:17 pm
An Irreversible Road to Ruin

The Economics of Hollywood


The name Edward Jay Epstein might ring a bell as the author of Inquest, a 1966 tracing of Oswald’s footprints prior to the JFK assassination. After reading his The Hollywood Economist 2.0: The Hidden Financial Reality Behind the Movies published 49 years later, I am left with the feeling that he has uncovered a more serious if less violent crime: the degradation of American film by an industry much more committed to the bottom line than culture.

While I have written over the years about how commerce trumps art, including for CounterPunch and Class, Race and Corporate Power , I now understand the nuts and bolts behind commerce’s triumph. Epstein describes in meticulous detail that would make a CPA envious exactly how we have descended from “Citizen Kane” to films such as “Transformers” shown at multiplexes. Ironically, it was the latter day versions of William Randolph Hearst—the inspiration for Charles Foster Kane—who transformed the film industry into what it is today, a globalized behemoth that not only churns out films geared to children and teens but one that appeals to their basest instincts, the equivalent in some ways of selling crack cocaine to high schoolers.

Epstein, who is ten years my senior, probably mourns the loss of great filmmaking as much as me or anybody who was blessed with the opportunity to live through the Golden Age of Hollywood. It was not just that it was it home to Orson Welles, Alfred Hitchcock, John Ford, Preston Sturges and Stanley Kubrick. It was linked to palatial movie theaters that evoked cathedrals, including the six thousand seat (!) Roxy Theater in New York that Epstein alludes to on page one. I remember traveling to New York to see a movie at the Roxy in 1955 with my mother who promised that it would be the experience of a lifetime. It was like a Catholic family visiting a shrine for a miracle that some saint had performed.

Read full article

April 8, 2015

Naomi Klein, Jodi Dean and the debate over “Green Keynesianism”

Filed under: economics,Global Warming,Green Party,revolutionary organizing — louisproyect @ 6:40 pm

this changes everything

Despite its obvious intention to challenge the corporate-dominated status quo, some Marxists fault Naomi Klein’s “This Changes Everything” for supposedly straddling two opposing and mutually exclusive systems: capitalism and socialism. For every criticism, there has been a defense of “This Changes Everything” from other Marxists, including those who have had long-standing affinities with the critics–thus demonstrating that deep divisions do not have to stand in the way of a unified movement. As such, the debate is a reminder that as long as our primary focus is on challenging capitalist rule, there is no reason why we cannot air out our differences in the public arena without the schisms that have harmed out movement in the past.

In a December 30, 2014 Jacobin article, Sam Gindin praises Klein for attacking capitalism as the source of climate change but faults her for leaving too much “wriggle room” for capitalist reform. By hammering away at “villains” such as the Koch brothers et al, the left can effectively let the system off the hook. While Gindin does not identify her as a Keynesian—the term that is widely identified with the leftwing policy studies base of the Democratic Party—he leaves the impression that she is not much different than Bill McKibben. When he writes that “It is one thing to ask how we can organize ourselves better to register our dissatisfaction and to pressure or lobby corporations and states to modify some of their ways within capitalism”, it is clearly a warning that Klein’s agenda is one of capitalist reform.

read full article

November 9, 2014

Slavery, capitalism and economic growth: a response to Timothy Shenk

Filed under: Academia,economics,slavery — louisproyect @ 7:34 pm

Screen shot 2014-11-09 at 2.30.54 PM

Timothy Shenk

In the latest Nation Magazine there’s an article by Timothy Shenk titled “Apostles of Growth” that is a review of recent books making the case that slavery was integral to the rise of American capitalism, as well as a platform for some questionable theorizing about economic growth. Since the article is nearly 10,000 words long, one wonders how a mere dissertation student can exercise such clout. (Then again the editorial judgment of the magazine is suspect, demonstrated most recently by its urging a vote for Andrew Cuomo.)

This is not the first time that Shenk has used the magazine as a bully pulpit. Earlier this year our Ivy League prodigy had a 9,500-word article there titled “Thomas Piketty and Millennial Marxists on the Scourge of Inequality” that was also notable for a hefty word count and its confusion over what Marx stood for. After it came out, I wrote:

Much more serious is our author’s contention that ”All…socialists needed to seal their victory was a revolution, which capitalism’s contradictions would deliver to them.” In reality, Marx and Engels thought that the tasks were far more challenging. In Critique of the Gotha Programme, Marx writes: “What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges.” Doesn’t that sound like the conditions that have prevailed in every post-revolutionary society over the past 100 years or so? If Marx was referring to a heavily industrialized country like England, where he expected the revolution to occur, what could he possibly have thought about Cuba’s prospects? Shenk talks about capitalist contradictions delivering a revolution like Pizza Hut, when in fact it is after the triumph of the people that the hard work really begins. I say that as someone who was deeply involved with providing technical aid to Nicaragua in the late 80s.

You find the same misunderstanding of Marx in his latest article. He writes: “In Capital, Marx wanted to prove not just that capitalist practices were uglier than the soothing fables its theorists spun (though he made that point too), but that capital’s internal logic drove the system toward collapse.” Although Shenk is a dissertation student, he has apparently not learned the need for citation. Where would you find Marx saying anything like “capital’s internal logic drove the system toward collapse”? I doubt that you could find such sentiments in Capital. (I just checked on www.marxists.org. There aren’t any.)

In fact the idea that capitalism will collapse because of internal structural defects like the World Trade Center on September 11, 2001 is a crude reading best described as vulgar Marxism. Ernest Mandel, who was widely regarded as the foremost Marxist economist of his time, had a far more nuanced analysis in his 1990 “Karl Marx”:

Does Marx’s theory of crisis imply a theory of an inevitable final collapse of capitalism through purely economic mechanisms? A controversy has raged around this issue, called the `collapse’ or `breakdown’ controversy. Marx’s own remarks on the matter are supposed to be enigmatic. They are essentially contained in the famous chapter 32 of volume I of Capital entitled `The historical tendency of capitalist accumulation’, a section culminating in the battle cry: `The expropriators are expropriated’. But the relevant paragraphs of that chapter describe in a clearly non-enigmatic way, an interplay of `objective’ and `subjective’ transformations to bring about a downfall of capitalism, and not a purely economic process. They list among the causes of the overthrow of capitalism not only economic crisis and growing centralisation of capital, but also the growth of exploitation of the workers and their indignation and revolt in the face of that exploitation, as well as the growing level of skill, organisation and unity of the working class. Beyond these general remarks, Marx, however, does not go.

Turning to Shenk’s critique of the books under review, it is worth noting that although he rejects their premise, it is not from the “Political Marxism” perspective—one which describes the plantation system as “precapitalist”.

For Shenk, the new books, such as Edward E. Baptist’s “The Half Has Never Been Told: Slavery and the Making of American Capitalism”, are defined by their shared belief that capitalism can be defined as a system based on economic growth:

Viewed from this perspective, capitalism is defined not so much by its institutions as by its results—not by what it is, but by what it does. The variety of ways in which labor can be commodified, the diverse forms that capital can assume, the different institutions that structure relations of production and exchange—all of these are just means subordinated to the larger end of economic growth. A weak definition of capitalism that might seem banal when reduced to its simplest terms—“capitalism’s only constant is change”—supports a historical narrative of remarkable scope.

Although I have yet to read Baptist or the other books under review, it seems unlikely to me that they were attempting to theorize capitalism. These are historians much more interested in identifying the role that slavery played in capital accumulation in the 18th and 19th century. For example, there’s not a single entry for Marx in Baptist’s index and a cursory examination of the pages indexed under “capitalism” reveals nothing of theoretical consequence. I suspect that the real importance of works such as his and Walter Johnson’s is the empirical data that will help confirm Eric Williams’s original hypothesis that without slavery capitalism could have not taken off in Britain and the USA. These are works that rest on the minutiae of receipts and tax records, not theorizing. At a certain point, Shenk has to admit as such:

According to Johnson, tracing the path of a single bale of cotton reveals more about the antebellum economy’s workings than any number of theories targeting “the grand abstraction” of capitalism.

It is too bad that Shenk found matters of cotton less interesting than “grand abstractions” of the sort that mesmerize him. If he had given more time to the authors’ research than his own agenda, the review would have served some use.

Understanding that the books got short shrift, let’s turn to some of our dissertation student’s Grand Theorizing, which was really the main focus of the nearly 10,000-word article.

The real agenda of the article is to investigate the possibilities for “economic growth” in the 21st century. He writes:

But what if growth stalls? That question has increasingly occupied economists, many of whom are convinced that we have reached a new stage in growth’s history. Those parts of the world with the longest experiences of growth—Europe and the United States—face the prospect of a sustained decline in the metric that has come to define prosperity, and the planet as a whole confronts the even more daunting challenge of mitigating the environmental damage that has accompanied economic growth since the Industrial Revolution. The irony is conspicuous. Historians have begun in large numbers to rewrite modernity as the history of growth at precisely the moment when moderns might have to learn to do without their accustomed rates of economic expansion—one last swoop for the Owl of Minerva before climate change ravages its natural habitat.

In this section, he makes sure to misrepresent Marxists once again:

A future in which the small amount of economic growth that is eked out accumulates in the bank accounts of the rich and boils the planet bears little resemblance to the bright forecasts of perpetual prosperity conjured by optimists in the mid-twentieth century. This bleak vista has convinced some that capitalism has entered its final days: absent the possibility of unlimited growth, the system will stumble forward until it collapses under the weight of its internal contradictions.

The system will stumble forward until it collapses under the weight of its internal contradictions? Where in the world does he encounter such vulgar Marxist formulations? The New Left Review? Socialist Register? Unless he is reading material I am unfamiliar with, the only collapse noted by Marxists with a functioning brain is the one gripping the socialist left, a movement much more in a state of collapse than capitalism. After the financial crisis of 2007, there was suffering across the planet, especially in southern Europe. But who in their right mind would have argued that capitalism in Greece was about to collapse under its own weight?

Most people with a background in Marxist politics—unlike Shenk—understand the importance of the subjective factor. With a divided left in Greece, one in which the Communists stubbornly refuse to back Syriza and anarchists hurl Molotov cocktails as if flames can destroy commodity production, who thinks that the system will collapse? In 1914, the European bourgeoisie were ready to destroy billions of dollars in property and the lives of millions of working-class soldiers to protect their own narrow interests. If it had not been for Lenin and the Bolsheviks, the miserable war might have lasted for another decade. As Mao Zedong once said, “It is up to us to organize the people. As for the reactionaries in China, it is up to us to organize the people to overthrow them. Everything reactionary is the same; if you don’t hit it, it won’t fall. This is also like sweeping the floor; as a rule, where the broom does not reach, the dust will not vanish of itself.” (Probably the only useful thing he ever said.)

Despite the article’s focus on economic growth, there’s little indication of how Shenk thinks this is possible or even if it is worthwhile. Flirting with the “no growth” current of the environmental movement, he writes:

Prophets of an end to economic growth, or of its triumphant resurrection, beg to be made into fools by an unpredictable future. Indictments of contemporary policy, however, don’t hang on forecasts of what is to come. That fact was clear to the hundreds of thousands of people who marched against climate change in September, and to anyone who felt a twinge of recognition after seeing the protesters in Zuccotti Park—or to the 58 percent of Americans who reported in a recent New York Times/CBS News poll that protecting the environment should take precedence over economic growth.

Missing from this gargantuan article is any consideration of the real measure of an economic system. It is not simply a question of a rising GDP. Class society is marked by violence both explicit and implicit. In South Africa striking workers are gunned down. In the USA, striking workers might not get gunned down but their factory might disappear to another country if the boss so decides. In my view people are far less interested in growth than they are in security and the right to live in dignity. I suspect that the well-heeled, Democratic Party supporting owners of the Nation Magazine had everything to gain by giving such ample space to an “expert” on Karl Marx who had so little interest in such questions.


July 8, 2014

Questions about socialism and value theory

Filed under: economics,socialism — louisproyect @ 8:42 pm

Recently a correspondent posed some questions to me that I would like to respond to publicly since others might get something out of my response.

Q: “How would a socialist system account for jobs that don’t occur on property? Or small businesses that adhere to the service industry where minuscule amounts of profit comes from labor time as opposed to capital investment? i.e., I get paid $22 per hour / 89.50 labor rate. 60 otherwise goes overhead. And I sell the parts my boss invests in with his capital.”

I’ve been faced with this question and I’m unsure how to respond; what is a fairly short explanation of how a social system based on workplace democracy would replace this? What’s the socialist solution to this problem?

A: In general, I shy away from questions about how a future socialist system will work but in the Russian revolution the original intent was to only expropriate the big capitalists. In the immediate period, however, a policy of War Communism led to the expropriation of all privately owned firms, large and small. This was a function more of the need to disempower a middle class that was hostile to the revolution rather than comply with any socialist blueprint—which of course Marx never intended to begin with.

Once the civil war ended, War Communism was abandoned. From that point on, large enterprises remained collectivized but small to medium sized peasants were given a lot of leeway—similar to the experiment taking place in Cuba today. Cuba adopted something similar to War Communism in its early years but this was a function more of the prevailing understanding of what “socialism” was about in 1960 than anything else. It really made no sense to expropriate small hotels, restaurants, retail shops and the like.

I am not exactly sure I get the drift of you math but in a way it is beside the point. If the American working class ever seizes control of Exxon, IBM, Chase, GM, Pfizer, Monsanto et al, it will be absolutely unnecessary to take over small enterprises. The important thing to understand is that unlike a pizza parlor or a nail-polishing shoppe, Exxon and Monsanto have enormous social and economic power. Negligence by Exxon destroyed wildlife in Alaska for a generation. Monsanto’s drive to make GM hegemonic will lead to huge risks for the ecosphere. These are our big concerns not whether a bike shop or a frozen yogurt shop adheres to the labor theory of value.

Q: Hello, I’m getting ready for a debate on Marxism and my opponent has in the past pointed out that value is in fact subjective. I may value a pot at $100 yet he may value it at $50. If it is true that Labor determines the value of this pot, how do I argue against the Subjective Theory of Value?

I myself do not possess too much of an understanding of the Labor Theory, and most attempts at reading long articles do little to advance my knowledge. If I’m understanding the Labor Theory wrong, can you give me a simple explanation of it devoid of confusing rhetoric and such?

Thanks a lot.

A: This is a variation I have heard on arguments against the labor theory of value that involve art, which in a way a pot can be seen as. For example, how does a painting by a well-established abstract artist command prices of a million dollars when it was executed in a day while a landscape by a mediocre artist that took a year to paint is valued at $1000?

Marx was far more concerned to explain the pricing of more mundane items like a yard of cotton textiles, which do not involve taste or training. Capitalist production does not involve esthetics. Steel production, mining, manufacturing, rail transportation, etc. all revolve around basic commodities and services that can be produced anywhere. That is why offshoring has become such a powerful weapon in the hands of the bourgeoisie.  There was a book review recently in the NY Times (http://www.nytimes.com/2014/07/06/business/a-game-of-chairs-and-globalization.html) that takes a close look at what takes place with the Bassett furniture company:

There are superb scenes in which Mr. Bassett’s son, and then Mr. Bassett himself, go in search of the Louis Philippe, finally finding it being made in a grim plant in a remote corner of northeast China near the North Korean border. Their quest climaxes when Mr. Bassett meets face to face with the owner, who is planning a mammoth factory complex that threatens to eradicate what remains of the American industry. Mr. Bassett is coldly informed that the only way Vaughan-Bassett can survive is to shut its factories and sell Chinese furniture.

The furniture company managed to resist offshoring but the overall prospects for that kind of manufacturing is grim.

Another book that I would strongly recommend is “Capital Moves: RCA’s Seventy-year Quest for Cheap Labor” by Jefferson Cowie that I read when it came out in 1999. Much of it can be read online:


I should add that the labor theory of value is best understood as a way of understanding  the class relationships between worker and boss rather than as a way of pricing commodities—although a couple of British economists have written extensively about how computers would make such a thing possible under socialism: http://users.wfu.edu/cottrell/eea97.pdf. It is very technical, I’m afraid.

I think James Devine, a California economist, wrote one of the best things: http://myweb.lmu.edu/jdevine/notes/Law-of-Value.html

Here is an excerpt:

In an e-mail discussion, Brad deLong of U.C.-Berkeley economics wrote that: “The LTV [labor theory of value] is not true: average market prices are not labor values, and the deviations of the average prices of particular commodities from their labor values are not simple redistributions of ‘surplus value’ from boss to boss…. “

It’s hard to say that Marx’s “labor theory of value” is “not true” if one doesn’t understand it, just as it’s hard to say that it’s “true” if one doesn’t understand it. In fact, there are a lot of questions about what “it” is. In fact, it’s unclear what to call “it.” Below, I present one interpretation of the “LTV” which I hope will make these questions clear, allowing us to move on to other issues.

Finally, there’s a very good piece by Brian McKenna on CounterPunch titled “If Marx’s Math is Fundamental, Why Do So Few Teach It?” that is very good. It is drawn from his personal experience:

I’ve had several fast food jobs. I’ll never forget my first. I was 19 and I flipped burgers at Gino’s (a competitor of McDonald’s) in 1975 in the suburbs of Philadelphia. I was earning money for college. Ginos advertised “flexible hours” to cater to college student’s busy needs. I signed on at $1.90 an hour, plus one free hamburger per shift.

One day I was called in at the last minute for an evening shift of four hours. Not owning a car, I took public transportation to the place, about 4 miles away, for the 4:00 shift. It started to rain. When I arrived, soaking wet at 4:00, I was told, ‘we don’t need you anymore tonight, Brian.

“But it took an hour to get here and I want to work. Please let me do something.”

“Can’t you see?” the manager pointed out the window, “it’s raining out, hard, and no one is coming into Ginos. We don’t need you. Can you work a shift on Saturday at 11:00 to 2:00?”

“Can I at least have my hamburger?”

“But you didn’t work!” he said.

Needless to say, those bastards at McDonald’s and Ginos will be on the expropriation block the day after the workers seize power.

April 19, 2014

What does state ownership have to do with socialism?

Filed under: economics,socialism,state capitalism — louisproyect @ 5:07 pm

The other day I received an inquiry by email:

Hello, I am a young Marxist, and I have a question regarding production. In a Socialism, Utopian and Scientific, Engels stated:

“The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of the productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage workers – proletarians. The capitalist relationship is not done away with. It is rather brought to a head. But, brought to a head, it topples over. State ownership of productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.” –Engels.

From what I take from this, State Ownership was only advocated to further develop productive forces to make way for socialism. But in the Manifesto, it called for Nationalization of productive forces. However, this is now redundant because production is already built up.

So my question is this: if state ownership of industry is not socialist; what is? Would it be a decentralized planned economy run by the workers through worker councils? If so; how would this operate and how would planning go about? Without planning, we slip back into the chaotic production of capitalism; only this time it’s worker owned. Would the state own land and workers exercise workplace democracy on it?

As for communism (which obviously has no state to direct planning), can you also describe the economic system it would operate on?

I am very confused about this subject, and I’d like to understand it better.

Since many other people might have the same kinds of questions, I am going to reply publicly.

Essentially Engels is writing about trusts, joint-stock companies—the monopoly capitalism that Lenin wrote about in his “latest stage” pamphlet, prompted by the outbreak of WWI. One can imagine that it was possible to see only the plus side of monopolies in 1880, when Engels wrote Socialism, Utopian and Scientific. They were “transitional forms” that would lend themselves to socialist planning. In fact you can see the same kinds of enthusiasm in Edward Bellamy’s “Looking Backward”, written in 1889 and inspired by the early development of large-scale department stores and technological breakthroughs made possible by monopoly production. He even writes of “the nation” being “the sole employer and capitalist”.

I am not quite sure what exactly is the nature of the “state ownership” that Engels is referring to, however. To my knowledge, most of the big trusts were privately owned—such as Standard Oil or Carnegie steel works. There is a good chance that Engels was referring to developments in the future.

Later on the term “state capitalism” became more familiar in the lexicon of the Russian Communist Party. In Bukharin and Preobrazhensky’s The ABC of Communism, the term does not mean that the state has taken ownership of production but that the monopoly capitalists have taken over ownership of the government. They write:

Thus in the end we arrive at the following picture. The industry of the whole country is united into syndicates, trusts, and combined enterprises. All these are united by banks. At the head of the whole economic life there is a small group of great bankers who administer industry in its entirety. The governmental authority simply fulfils the will of these bankers and trust magnates.

In other words, John D. Rockefeller, Andrew Carnegie and J.P. Morgan never lost ownership of their empires. Instead they took over ownership of the state.

You also find a reference to state capitalism in Lenin’s writings on the NEP, where the Soviet government allowed a certain amount of market relations to help revive a war-ravaged economy. In 1922 you can find a section of an article on the NEP titled

State Capitalism In The Proletarian State And The Trade Unions that states:

The proletarian state may, without changing its own nature, permit freedom to trade and the development of capitalism only within certain bounds, and only on the condition that the state regulates (supervises, controls, determines the forms and methods of, etc.) private trade and private capitalism. The success of such regulation will depend not only on the state authorities but also, and to a larger extent, on the degree of maturity of the proletariat and of the masses of the working people generally, on their cultural level, etc. But even if this regulation is completely successful, the antagonism of class interests between labour and capital will certainly remain.

What Lenin was describing might be compared to the experiments that Cuba has been making with foreign-owned hotels, privately owned restaurants, etc. They can best be described as pockets of production for profit in a society that has broken with profit as the ruling principle of the economy. On the other hand, it has little to do with China where capitalism is so widespread that even the state-owned enterprises operate on the same basis as the factories owned by Apple, et al. For profit and only for profit.

Perhaps the best example of state-owned enterprises in the more recent past in the capitalist world are those that flourished under fascism. For example, Volkswagen was formed in 1937 by the Nazi trade union. You also have state ownership in a capitalist country when it is critical to the capitalist economy as a whole. Airlines and other transportations systems fall within this rubric. Finally, you see plenty of it in third world countries that have just liberated themselves from imperialism but have not had a chance to develop a native bourgeoisie. My Turkish professor at Columbia University once quipped that the state owned more companies under Mustafa Kemal than were owned in Stalin’s Russia. He was exaggerating but not by much.

You referred to the call for nationalization in the Communist Manifesto. I am not exactly sure what that is a reference to. By and large, Marx tended not to lay down rules for how socialism would be built. In chapter two of the CM, there are demands put forward, including one that calls for “Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.” That’s really about it. Keeping in mind that the CM was written in 1848, the main political concerns of Marx and Engels was how to rid Europe of the feudal restraints on production and to create the conditions for the emergence of working class power in a democratic framework—in other words, pretty much the same goals as Lenin in 1905 or so.

This leads me to the big questions you raise:

So my question is this: if state ownership of industry is not socialist; what is? Would it be a decentralized planned economy run by the workers through worker councils? If so; how would this operate and how would planning go about? Without planning, we slip back into the chaotic production of capitalism; only this time it’s worker owned. Would the state own land and workers exercise workplace democracy on it?

As for communism (which obviously has no state to direct planning), can you also describe the economic system it would operate on?

To get to the last question first, I don’t see any difference between socialism and communism. In fact, Marx and Engels used the terms interchangeably. Years later, and especially under the influence of Stalin, socialism became an intermediate stage between capitalism and communism but there is no basis for that in Marx’s writings.

As to how socialism would operate, I confess that I have not written much about that over the years. My emphasis is on how given post-capitalist societies function, with a particular emphasis on Cuba. I recommend this piece in particular: http://www.columbia.edu/~lnp3/mydocs/state_and_revolution/cuba.htm. It was written primarily to answer a member of the British SWP, a group that believes that the USSR was “state capitalist” but not even in the sense of what Lenin wrote above. It saw no particular connection between the Soviet economy and the Marxist project despite the lack of a profit motive in production.

I do strongly recommend that you look at the writings of Michael Lebowitz, an economist living in Venezuela, who has written many articles and a number of books on exactly the questions you posed. It was he, in fact, who convinced me that the distinction between socialism and communism was a bogus one. I have reviewed a couple of his books that you might find useful. Here’s an excerpt from my review of his “The Socialist Alternative”:

Although The Socialist Alternative is very much about conceiving how a future socialist system might function, it wisely avoids the neo-utopian parecon of Michael Albert and Robin Hahnel. As Marx said in an 1873 afterword to volume one of Capital, he was not interested in writing recipes for the cookbooks of the future. Given the catastrophic tendencies of global capitalism, however, a socialist alternative is clearly on the agenda.

For Lebowitz, the goal is what he has dubbed the “socialist triangle,” consisting of:

1. Social ownership of the means of production. It is, of course, not the same thing as state ownership since that has led to a kind of class differentiation exploited by bureaucrats in the Soviet model.

2. Social production organized by workers. This is an attempt to eradicate the distinction between intellectual and manual labor in the plants and offices of the capitalist system, a social relationship that tends to breed apathy and resentment.

3. Satisfaction of communal needs. This breaks with the paradigm of the individualist consumer and stresses the need for a collective definition of social needs. Without democracy, of course, this would be impossible.

In breaking with Leninist orthodoxy, Lebowitz rejects the distinction between socialism and communism. Lenin conceived of socialism as the first stage of communism, but Lebowitz finds no support for this in Marx. He also makes what I think is an essential point:

The term communism communicated something different when Marx wrote in the nineteenth century. Communism was the name Marx used to describe the society of free and associated producers — “an association of free men, working with the means of production held in common, and expending their many different forms of labour-power in full self-awareness as one single social labour force.” But very few people think of communism that way now. In fact, people hardly think of communism as an economic system, as a way in which producers organize to produce for the needs of all! Rather, as the result of the understanding of the experiences of the last century, communism is now viewed as a political system — in particular, as a state that stands over and above society and oppresses working people.

Finally, I recommend googling “Michael Lebowitz” and “socialism”. This will give you plenty of food for thought, including those gathered at the Monthly Review website: https://monthlyreview.org/author/michaelalebowitz. Here’s an excerpt from a 2011 interview titled “The Unifying Element in All Struggles Against Capital Is the Right of Everyone to Full Human Development”.

First of all, Capital is written from the perspective of an alternative society, the inverse situation in which the products of society serve what Marx called “the worker’s own need for development.” I think the struggle for human needs, for the satisfaction of needs is not simply giving people gifts, but it is a whole process of people having the power to work together in the communities to produce for communal needs and communal purposes. That is the revolutionary demand and struggle. For those people who say “well, that’s communism (a utopian society), but socialism has a different principle—to each according to their contribution,” I say that’s a distortion of Marx. Marx didn’t have two stages: socialism and communism. Marx had one society which comes on to the scene defective initially because it inherits all these defects from the old society. But developing that new society cannot be carried on by building on those defects. That argument goes back to Lenin, who argued that until people are highly developed, we have to have the state control where they work, how much they get, and the “socialist principle” is to each according to his contribution. But the tendency to want an equivalent for everything you do is the defect inherited from the old world. That’s what you have to struggle against, not build upon. And it obviously can’t happen overnight. Because people culturally don’t immediately accept it. But you have to say “this is the goal.” How will we proceed to build that goal? And you can’t put off this ideological and practical struggle until a distant stage. We have to build socialist human beings while developing new productive forces—a point that Che made so eloquently.

They didn’t do that in the Soviet Union. They had a focus there on self-interest (bonuses in that case), and the same was true in Yugoslavia. Unfortunately, the same pattern is emerging in Cuba—a growing emphasis on how “we can’t have distribution of subsidized food, we can’t have cheap electricity, we can’t have all this inefficiency, it’s waste, etc.” These are things that have been part of the revolution which are now being rejected. The perspective reflects in general the idea that these are things for a higher stage (and it is not the only thing put off to a later stage—e.g., there’s worker management). I think that is a very unfortunate tendency which is going along with a re-emphasis upon distribution according to contribution. However, the whole concept of a separate stage of socialism and a separate stage of communism has been the way in which a principle alien to Marxism was introduced. Building on selfishness which is what distribution in accordance with contribution is (“I will give you this only if you give me that”) is not building anything except building the basis of return to capitalism.


April 15, 2014

In response to Timothy Shenk

Filed under: economics,socialism — louisproyect @ 5:42 pm

Screen shot 2014-04-15 at 1.39.35 PM

On The Nation magazine website there’s a 9500 word article by Timothy Shenk titled Thomas Piketty and Millennial Marxists on the Scourge of Inequality  that will require far fewer words to dismantle. As Shakespeare said, brevity is the soul of wit and all the more so when it comes to Marxist polemics.

Shenk’s article is a survey of Jacobin Magazine and three books. One is Piketty’s “Capital in the 21st Century”, ordered from Amazon two weeks ago. Apparently it is back-ordered, a propitious sign given its sweeping indictment of the capitalist system. I know vanishingly little about Piketty’s analysis except that he does not care much for Marx, according to Doug Henwood whose word on such matters I trust implicitly. The other two books are written by N+1 editors, Nikil Saval’s “A Secret History of the Workplace”, a work that examines cubicles and the like, and Benjamin Kunkel’s “Utopia or Bust”.

Shenk is a doctoral student at Columbia University who somehow managed to write a biography of Maurice Dobb in his spare time, no mean feat. For those of you unfamiliar with Dobb, a word or two should suffice. He was a British CP’er who wrote a book on the history of capitalism titled “Studies in the Development of Capitalism” that I highly recommend. Dobb took part in a debate with Paul Sweezy in the 1950s defending a somewhat Anglocentric analysis that put the emphasis on primitive accumulation in the countryside as opposed to the expansion of global trade—Sweezy’s perspective. But unlike Robert Brenner, who took up the cudgel against Sweezy later on, Dobb stated that colonization and slavery was also essential.

It is rather unusual for The Nation to publish such a long article so focused on Marxist theory. The standard fare there is something about the nefarious Koch brothers or the need to hold Obama to his promises, etc. In the back of my mind I wondered if The Nation ever got over Jacobin editor’s Bhaskar Sunkara’s Letter to ‘The Nation’ From a Young Radical, a piece that can best be described as biting the hand that feeds it.

Shenk starts off with an observation that probably looms more importantly in his own mind than in the general left public, namely that Karl Marx preferred to use the term “capitalist mode of production” rather than capitalism. This distinction strikes me as more semantic than theoretical but if it is important to the author, why quibble?

Much more serious is our author’s contention that ”All…socialists needed to seal their victory was a revolution, which capitalism’s contradictions would deliver to them.” In reality, Marx and Engels thought that the tasks were far more challenging. In Critique of the Gotha Programme, Marx writes: “What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges.” Doesn’t that sound like the conditions that have prevailed in every post-revolutionary society over the past 100 years or so? If Marx was referring to a heavily industrialized country like England, where he expected the revolution to occur, what could he possibly have thought about Cuba’s prospects? Shenk talks about capitalist contradictions delivering a revolution like Pizza Hut, when in fact it is after the triumph of the people that the hard work really begins. I say that as someone who was deeply involved with providing technical aid to Nicaragua in the late 80s.

After another thousand words or so on the history of the use of the term capitalism, a word that had lost its sting in the prosperous 50s and 60s except among the hard-core Marxist left, Shenk zeroes in on the ostensible purpose of his review, which is to evaluate the magazines and books under consideration.

For Shenk, the new generation of Marxists such as the Jacobin and N+1 editors made the transition from college to the revolutionary cause rather seamlessly, aided by social media:

Many had just left college, carrying with them fresh memories of an academic world that doubles as Marxism’s heartiest stronghold…The commitment was lighter, but easier to share, maybe with a post on Facebook.

Screen shot 2014-04-15 at 12.27.17 PM

Yes, I quite understand. Most of my Marxist FB friends will regale me with a singing dog Youtube clip one day and a status post the next about a David Harvey lecture the next. This is not exactly the sort of thing that will get you an FBI file but neither will this, I suppose.

After some more excursions (was The Nation paying him by the word?), Shenk finally gets down to brass tacks:

Cloaked in the moral authority of Occupy and connected by networks stitched together during those hectic days in 2011, a contingent of young journalists speaking through venues both new and old, all of them based in New York City—Jacobin, n+1, Dissent and occasionally this magazine, among others—have begun to make careers as Marxist intellectuals.

When Shenk had earlier referred to Marx as a descendant of rabbis who never fancied himself the leader of a religion, the subtle implication was that this was exactly had transpired—socialism as a secular religion. Given that line of thought, it of course logically leads to the conclusion that “cloaked in moral authority” is a jab at the people under consideration who Shenk wants to cut down to size as bible-thumpers–the holy book being Capital:

Combine all this with some fondness for navel gazing and with the fortunes of geography—politics aside, New York writers are New York writers, and they like to talk about each other—and the pieces are in place for the articles declaring the rebirth of Marxism that have become a minor genre in the last year. Like a puffer fish temporarily ballooning to vastly larger sizes, the Marxist revival can seem more imposing than it is. For a certain type of reader, however, it’s easy to forget the illusion when there are so many withering tweets to skim.

As an example of the puffer fish inflating itself, Shenk refers to a Jacobin editorial in 2011 that blasted the Obama administration for seeking to roll back the New Deal and Great Society, a claim he felt was “clear to almost nobody anywhere.” Hmm. Now I am beginning to understand why The Nation would put down the red carpet for him. Melissa Harris-Perry could not have been more scornful of such puffer fish impudence.

Turning to the books under review, Shenk dismisses Saval’s work as breaking little new intellectual ground. Since I only know Saval’s analysis from an excerpt in “Harpers”, I will defer commenting on whether it does or doesn’t.

Shenk is more generous to Kunkel’s “Utopia or Bust”, a book that he describes as “playful and unfailingly lucid”. When one hand giveth, the other taketh away, however:

Precisely because of its clarity, however, Utopia or Bust reveals some of the more peculiar aspects of a group that can seem more inclined to recite Marx than to rethink Marxism, or move beyond it.

Shenk regards Kunkel’s reference to a “near unchallenged global capitalism” as a “fixation”, something I suppose that’s akin to a neurotic obsession. Since Shenk regards “investments gushing in from China today” as an exception to global capitalism, I suppose I’ll have to count myself among the neurotically obsessed.

As I stated earlier, I have not yet read Piketty’s book so I am no position to weigh his Shenk’s critique. That being said, I do have to wonder about his characterization:

Though not a Marxist, Piketty is firmly of the left. A supporter of France’s Socialist Party, he has said that he “dream[s] of a rational and peaceful overcoming of capitalism.”

I am not sure what I am going to make of Piketty’s book but the notion that France’s SP will play any role in the “peaceful overcoming of capitalism” strikes me as absurd, and almost equally absurd is Shenk’s taking this claim seriously. Hadn’t he read the NY Times article dated April 11th on the party’s new leader?

On Tuesday, Mr. Valls offered the most detailed summary yet of how the government intends to meet its promise to enact $69 billion in spending cuts by 2017. He called for $26 billion in cuts to the central government bureaucracy, $13.8 billion to the national health care system and $13.8 billion to local governments — an element at which many legislators on the right booed loudly, having just won control of a number of local governments. He did not specify how the remaining $15.4 billion in cuts would be made.

One hopes that there was an equivalent of Jacobin in France raising hell about the country’s version of Obama no matter Shenk’s credulous take on the Socialist Party.

Finally, after a tsunami of words, Shenk gets to his real point in the concluding sentences:

Reflexive grasping at the language of the past, vividly displayed in the Marxist resurgence, brings a sense of order to what would seem like chaos. But a more promising alternative might be on the way. Marxism is one kind of socialism, but history suggests a much richer set of possibilities, along with some grounds for hope. So does a work like Capital in the Twenty-First Century—a sign that another lost tradition, the postcapitalist visions in abeyance since the 1970s, could be poised for a return; or, even better, that we might put aside old pieties and chart our own path.

Call me grasping reflexively at the language of the past, but history does not suggest a much richer set of possibilities to me. Instead I see a deepening of class conflict with the eventual renaissance of Marxism and the revolutionary socialist movement. I have been committed to that project for 47 years now and see nothing to change my mind at this point. With a nod to Piketty’s book, one that rejects socialism in favor of neo-Keynesian half-measures (I don’t have to read it to know that this is his outlook), Shenk makes clear why he is so fed up with those who live in the past. In my view, you have to live in the past to some degree if you want to live in the future. Capitalism, or whatever word you want to use, is destroying the planet no matter what The Nation and its hired guns would have you believe.

April 11, 2014

Reading Richard Seymour in the Age of Austerity

Filed under: economics,financial crisis — louisproyect @ 11:48 am
Strategies of Resistance

Reading Richard Seymour in the Age of Austerity


Dating back to the overthrow of Salvador Allende, financial austerity has been the watchword of the capitalist class. Frederick Hayek supplanted John Maynard Keynes in the ideological driver’s seat, as the free market became sacrosanct. Adding to the neoliberal momentum, the collapse of the Soviet Union caused Karl Marx to lose his official status for a third of mankind. Despite the hiccup of interest in Karl Marx following the 2007 financial meltdown and rueful reflections by Francis Fukuyama that it might not be the end of history after all, the mantra of balanced budgets and eliminating “waste” was taken up by politicians and pundits alike. To paraphrase W.H. Auden, we seem to be living through an Age of Austerity.

As perhaps the first study to take these issues head-on, Richard Seymour’s “Against Austerity” is a must-read primer for old hands in the class struggle and newcomers alike. Leaving aside the merits of his arguments—and they are plentiful—Seymour would be worth reading if for no other reason than his elegant and witty style. At the risk of inflating the young man’s ego, I regard him as the most compelling prose stylist on the left since Alexander Cockburn in his heyday and Christopher Hitchens before he turned into Mr. Hyde. Also, unlike most people who write for leftwing publishing houses, Seymour has a brash but self-effacing manner that is as refreshing as a cold beer on a sweltering summer night. From the book’s preface:

There is also a certain familiar use of esoteric political theory and rococo ornamentation that some readers will find off-putting. I hope so anyway. Those readers would be far better off reading something else. (Or, alternatively, stay and have your middlebrow sensibilities challenged.) This book comes with swearing and unapologetic intellectual swagger.

I imagine you’re scanning this page while still in the bookshop calculating whether you’d be willing to be seen reading this book on the train. If the above appeals to you, you’re probably a bit ‘wrong’ in some way, but I welcome you. If it doesn’t, then make your way the holy apotheosis of bookshops that is the ’3 for 2′ section. And buy yet more inconsequential shit with which to line your shelf of good intentions.

Read full article

March 14, 2014

Poverty reduction in Venezuela

Filed under: economics,journalism,Venezuela — louisproyect @ 12:17 am

As many of you are aware, Salon.com has been a source of vicious anti-Chavista propaganda for quite some time now. An article by Simeon Tegel titled “5 myths about the Venezuela crisis” is a prime example. What caught my eye particularly was this:

If Maduro and Chavez have a single claim to justify their combined 15 years in power, it’s that they have significantly benefited Venezuela’s poor majority. No one seriously questions that the percentage of Venezuelans classed as poor has dropped from around 50 percent to 30 percent over that period. The problem is that many other countries in Latin America, including staunchly free-market economies Chile and Peru, have registered similar progress over the same period. Just take a look at this graph by Argentine economist Lucas Llach.

Another liberal publication that has it in for Venezuela is the Independent newspaper that gave journalist James Bloodworth the opportunity to make exactly the same point as Tegel, even citing the same graph (since Bloodworth’s article appeared first, it was obvious that Tegel was up to a little plagiarism.)

Between 2007 and 2011 there was a reduction in extreme poverty in Venezuela by some 38 per cent. Impressive no doubt. But the percentage of people who escaped extreme poverty in Brazil during the same period was 44 per cent, in Peru 41 per cent and in Uruguay 63 per cent.

The graph both journalists referred to was actually produced by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). One of the things I have learned about statistics is that they are insufficient for telling the whole story, especially when it comes to questions of wealth and poverty—and Venezuela in particular. The problem with the graph is that it cuts off before 2012. After 2012, poverty reduction slows down in all of the cited countries except for the two that are demonized so frequently in places like Salon.com: Venezuela and Ecuador. (I suppose that I don’t have to remind you that Ecuador is another country that gets bashed by liberals like Tegel and Bloodworth at every opportunity.)

The latest report from ECLAC makes exactly such a case:

Six of the 11 countries with information available in 2012 recorded falling poverty levels (see table 1). The largest drop was in the Bolivarian Republic of Venezuela, where poverty fell by 5.6 percentage points (from 29.5% to 23.9%) and extreme poverty by 2.0 percentage points (from 11.7% to 9.7%). In Ecuador, poverty was down by 3.1 percentage points (from 35.3% to 32.2%) and indigence by 0.9 percentage points (from 13.8% to 12.9%).

Another statistic that does not enter Tegel and Bloodworth’s calculations is the GINI coefficient, a measure of income inequality. Bloodworth would probably have not mentioned Brazil if his editor had given him instructions to deal with GINI statistics. At  .546 it is close to Guatemala and Honduras in terms of inequality (a GINI of 1 would be perfectly unequal; zero would be perfectly equal.) At .447, Venezuela is the most economically equal country in Latin America. (http://www.quandl.com/demography/gini-index-all-countries)

I noticed Bloodworth’s favorable reference to Peru, proof supposedly that “Boring social democracy may be less romantic, but it has been far more successful at tackling poverty than the Chavez/Maduro model.” Did Bloodworth think that his readers would not bother to check who is the head of state in Peru? I know that my readers would.

It is none other than Ollanta Humala, a figure who has come in for as much redbaiting as Hugo Chavez over the years. The gold standard for redbaiting—Fox News—just about equated the two politicians in a 2011 article titled “Ollanta Humala of Peru –Hugo Chavez’s Secret Candidate”. After Humala’s election, The Australian rendered its verdict on the direction that Peru would take, a far cry from “boring social democracy”:

A FORMER lieutenant-colonel moulded in the image of the Marxist Venezuelan firebrand Hugo Chavez was elected President of Peru yesterday, adding to the trend of the leftward political drift across Latin America.

Ollanta Humala, 48, narrowly defeated the daughter of an imprisoned former leader in an election campaign that laid bare the rift between the millions of chronically poor and the middle class. The affluent fear punitive taxes, in the style of Mr Humala’s Venezuelan mentor, and a reverse of economic reforms that made Peru one of the most successful economies in Latin America.

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