Understanding the terrain on which we fight. from MR Zine “Post-modernism does not make this radical critique to promote the emancipation of individuals and of society through socialism. Instead it proposes a return to pre-modern, pre-capitalist alienations.
“The forms of sociability that it promotes are necessarily in line with adherence to a ‘tribalist’ identity for communities (para-religious and para-ethnic), an antipode to what is required to deepen democracy, which has become a synonym for the ‘tyranny of the people’ daring to question the wise management of the executives who serve the oligopolies.
“Post-modernist critiques of ‘grand narratives’ (the Enlightenment, democracy, progress, socialism, national liberation) do not look to the future but return to an imaginary and false past, which is extremely idealized. In this way it facilitates the fragmentation of the majority of the population and makes them accept adjustment to the logic of the reproduction of domination by the imperialist oligopolies.
“This fragmentation hardly disturbs that domination; on the contrary, it makes the task easier. The individual does not become a conscious, lucid agent of social transformation, but the slave of triumphant commodification. The citizen disappears, giving way to the consumer/spectator, no longer a citizen who seeks emancipation, but an insignificant creature who accepts submission.”
The Battlefields Chosen by Contemporary Imperialism: Conditions for an Effective Response from the South
by Samir Amin
In the art of war, each belligerent chooses the terrain considered most advantageous for its battle for the offensive and tries to impose that terrain on its adversary, so that it is put on the defensive. The same goes for politics, both at the national level and in geopolitical struggles.
For the last 30 years or so, the powers forming the Triad of collective imperialism (the United States, Western Europe, and Japan) have been defining two battlefields, which are still current: “democracy” and “the environment.”
This paper aims first to examine the concepts and substance in the definitions of each of these two themes selected by the Triad powers and to make a critical analysis of them from the viewpoint of the interests of the peoples, nations, and states at which they are targeted, the countries of the South, after those of the former East. Then we shall look at the role of all the instruments brought into play by the strategies of imperialism to wage its battles: “liberal” globalization, with its accompanying ideology (conventional economics), the militarization of globalization, “good governance,” “aid,” the “war on terrorism” and preventive warfare, as well as the accompanying ideologies (cultural post-modernism). And each time we shall highlight the conditions for an effective response from the peoples and states of the South to the challenge presented by the reorganization of the Triad’s imperialism.
1. “Democracy,” What “Democracy”?
It was a stroke of genius of Atlantic alliance diplomacy to choose the field of “democracy” for their offensive, which was aimed, from the beginning, at the dismantling of the Soviet Union and the re-conquest of the countries of Eastern Europe. This decision goes back to the 1970s and gradually became crystallized in the Conference of the Organization for Security and Cooperation in Europe (OSCE) and then with the signing of the final Act in Helsinki in 1975. Jacques Andreani, in his book with the evocative title Le Piège, Helsinki et la chute du communisme (The Trap: Helsinki and the Fall of Communism), explains how the Soviets, who were expecting an agreement on the disarmament of the NATO and a genuine détente, were quite simply deceived by their Western partners.1
It was a stroke of genius because the “question of democracy” was a genuine issue and the least one could say was that the Soviet regimes were certainly not “democratic,” however one defined its concept and practice. The countries of the Atlantic Alliance, in contrast, could qualify themselves as “democratic,” whatever the limitations and contradictions in their actual political practices, subordinated to the requirements of capitalist reproduction. The comparison of the systems operated in their favor.
This discourse on democracy then gradually replaced the one supported by the Soviets and their allies: “peaceful coexistence,” associated with “respect” for the political practices of both parties and for “non-interference” in their internal affairs.
The coexistence discourse had had its important moments. For example, the Stockholm Appeal in the 1950s reminded people of the real nuclear threat implied by the aggressive diplomacy employed by the United States since the Potsdam Conference (1945), reinforced by the atomic bombing of Japan just a few days after the conference.
However, at the same time the choice of this strategy (coexistence and non-interference) was convenient — or could be convenient, depending on circumstances — to the dominant powers in both the West and the East. For it enabled the realities of the respective descriptions, “capitalist” and “socialist,” to be taken for granted by the countries of both the West and the East. It eliminated all serious discussion about the precise nature of the two systems: that is, examination of the actually existing capitalism of our era (oligopoly capitalism) and “actually existing socialism.” The United Nations (with the tacit agreement of the powers of the two worlds) changed the terms of “capitalism” and “socialism” to “market economies” and “centrally planned economies” (or, to be mischievous, “administered economies”).
These two terms — both of them false (or only superficially true) — sometimes made it possible either (1) to emphasize the “convergence of the systems” — a convergence that was itself imposed by modern technology (a theory — also false — derived from a monistic, technicist concept of history) — and to make room for coexistence in order to facilitate this “natural” convergence; or, (2) on the contrary, to stress the irreducible opposition between the “democratic” model (associated with the market economy) and “totalitarianism” (produced by the “administered” economy), depending on the needs of the moments during the cold war.
Choosing to concentrate the battle around the discourse of “democracy” made it possible to opt for the “irreducibility” of systems and to offer the Eastern countries only the prospect of capitulation by returning to capitalism (the “market”), which should then produce — naturally — the conditions for democratization. The fact that this has not been the case (for post-Soviet Russia), or has taken place in highly grotesque forms (for ethnic groups here and there in Eastern Europe), is another matter.
The “democratic” discourse of the countries of the Atlantic alliance is in fact recent. At the outset, the NATO accommodated itself perfectly well to Salazar in Portugal, the Turkish generals, and the Greek colonels. At the same time the Triad diplomacies supported (and often established) the worst dictatorships that Latin America, Africa, and Asia had ever known.
At first the new democratic discourse was adopted with much reticence. Many of the main political authorities of the Atlantic alliance saw the inconveniences that could upset their preferred “realpolitik.” It was not until Carter was President of the United States (rather like Obama today) that the “moral” sermon conveyed by democracy made sense. It was Mitterand in France who broke with the Gaullist tradition of refusing the “division” imposed on Europe by the cold war strategy promoted by the United States. Later, the experience of Gorbachev in the USSR made it clear that rallying to this discourse was a guarantee for catastrophe.
The new “democratic” discourse thus bore its fruits. It seemed sufficiently convincing for “left-wing” opinion in Europe to support it. This was so, not only for the electoral left (the socialist parties) but also those with a more radical tradition, of which the communist parties were the heir. With “eurocommunism” the consensus became general.
The dominant classes of the imperialist Triad learnt lessons from their victory. They thus decided to continue this strategy of centering the debate on the “democratic question.” China is not reproached for having opened up its economy to the outside world, but because its policies are managed by the Communist Party. No account is taken of the social achievements of Cuba, unequalled in the whole of Latin America, but its one-party system is constantly stigmatized. The same discourse is even leveled against Putin’s Russia.
Is the triumph of democracy the real objective of this strategy? One has to be very naïve to think so. The only aim is to impose on recalcitrant countries the “market economy,” open and integrated into the so-called liberal world system. This is in reality imperialistic, its purpose being to reduce these countries to the status of dominated peripheries of the system. This is an objective that, once achieved, becomes an obstacle to the progress of democracy in the victimized countries and is in no way an advance in response to the “democratic question.”
The chances of democratic progress in the countries that practiced “actually existing socialism” (at least at the beginning) would have been much greater, in the medium term if not immediately, if the dialectic of social struggles had been left to develop on its own, opening up the possibility of surpassing the limits of “actually existing socialism” (which had, moreover, been deformed by at least partial adherence to the liberal economic opening) to reach the “end of the tunnel.”
In actual fact, the “democratic” theme is only invoked against countries that do not want to open up to the globalized liberal economy. There is less concern for highly autocratic political regimes. Saudi Arabia and Pakistan are good examples, but also Georgia (pro-Atlantic alliance) and many others.
Besides, at the very best, the proposed “democratic” formula hardly goes beyond the caricature of “multi-party elections,” not only completely alien to the requirements of social progress but always — or almost always — associated with social regression that the domination of actually existing capitalism (that of oligopolies) demands and produces. The formula has already largely undermined democracy, for which many peoples, profoundly confused, have now substituted backward-looking religious and ethnic illusions.
It is therefore more than ever necessary now to reinforce the critique of the radical left (I underline radical to distinguish it from the critique of the left, which is confusing and vague). In other words it must be a critique that associates, rather than dissociates, the democratization of society (and not only its political government) with social progress (from a socialist perspective). In this critique, the struggle for democratization and the struggle for socialism are one and the same. No socialism without democracy, but also no democratic progress without a socialist perspective.
2. “The Environment” or the Socialist Perspective of Use Value? The Ecological Question and So-called Sustainable Development
Here, too, the point of departure is an acknowledgement of a real problem, the destruction of the natural environment and, in the final instance, the survival of life on the planet, which has been brought about by the logic of capital accumulation.
Here, too, the question dates back to the 1970s, more precisely the Stockholm Conference of 1972. However, for a long time it was a minor issue, marginalized by all the dominant discourses and the practices of economic management. The question was only put forward as a new central plank in the strategy of domination relatively recently. Thus only much later did the work of Wackernagel and Rees (whose first English-language publication came out in 1996) produce a new, major reflection for radical social thought concerned with the construction of the future.2
Not only did Wackernagel and Rees put forward a new concept, that of the ecological footprint; they also elaborated a system for measuring it, which was defined in terms of “global hectares,” comparing the bio-capacity of societies/countries (their capacity to produce and reproduce the conditions of life on the planet) with the consumption by those societies/countries of the resources at their disposal through this bio-capacity.
The authors arrived at very disturbing conclusions. The bio-capacity of our planet, in human terms, is 2.1 global hectares (gha) per capita — in other words, 13.2 billion gha for a population of 6.3 billion people. However, the average world consumption of its resources was already — in the mid-nineties — 2.7 gha. This “average” hides an enormous disparity: the average for the countries of the Triad had already reached around four times the world average. A large part of the bio-capacity of societies in the South had been taken by the center for its own profit. In other words, the expansion of actually existing capitalism is destroying the planet and humankind while the continuation of the logic of this expansion requires either a veritable genocide of the peoples of the South who are in the way or at least keeping them under ever growing poverty. An eco-fascist current that legitimizes this kind of solution of the problem is developing.
The interest of this work goes beyond its conclusions. For it is a matter of calculation (and I stress calculation, not discourse) of the use value of the planet’s resources, measured in global hectares (gha), not in dollars.
Thus it has been proved possible that the social use value can be calculated absolutely rationally. This proof is decisive in its impact because socialism is defined in terms of a society based on use value, not on exchange value. And the defenders of end-of-history capitalism have always argued that socialism is an unrealistic utopia because — according to them — use value cannot be measured without being mixed with exchange value (based on “utility” of vulgar economics).
Taking into account use value (of which the ecological footprint constitutes the first good example) implies that socialism must be “ecological,” cannot be anything but ecological. As Altvater has observed, “Solar Socialism” or “No Socialism.”3 However, it also implies that it is impossible for any capitalist system whatsoever, even a “reformed” one, to take it into account, as we shall see later.
Marx, in his time, not only suspected the existence of this problem. He already formulated a rigorous distinction between value and wealth, which were confused by vulgar economics. He said explicitly that capitalist accumulation destroyed the natural bases on which it was founded: human beings (alienated, exploited, dominated, and oppressed workers) and the land (symbol of the natural wealth given to humanity). And whatever the limits of this expression, as always a prisoner of its epoch, it is nonetheless true that it shows a lucid awareness of the problem (beyond that of intuition), which should be recognized.
It is therefore regrettable that the ecologists of our era, Wackernagel and Rees included, have not read Marx. It would have enabled them to carry their propositions further, to understand their revolutionary impact better, and even, obviously, to go beyond Marx himself on the subject.
This deficiency of modern ecology makes it easier for it to be taken over by the vulgar economics that is in a dominant position in the contemporary world. This takeover is already under way — even well advanced.
Political ecology, like that proposed by Alain Lipietz, was first found in the ranks of the “pro-socialist” political left. Then the “green” movements (and, after that, the “green” parties) were classed as center-left, because of their expressed sympathies for social and international justice, their criticism of “waste,” and their empathy with workers and “poor” peoples. But, apart from the diversity of these movements, none of them had established a rigorous relationship between the authentic socialist dimension necessary to respond to the challenge and the no less necessary ecological dimension. To be able to do so, the distinction between value and wealth, as originated by Marx, cannot be ignored.
The takeover of ecology by vulgar ideology operates on two levels: reducing the calculation in use value to an “improved” calculation of exchange value; and integrating the ecological challenge into a “consensus” ideology. Both of these operations prevent a lucid awareness of the fact that ecology and capitalism are antagonistic in their very essence.
Vulgar economics has been capturing ecological calculation by leaps and bounds. Thousands of younger researchers, in the United States and by imitation in Europe, have been mobilized for that purpose.
The “ecological costs” are thus assimilated to the externalities. The common method of cost-benefit analysis for measuring the exchange value (which itself is confused with the market price) is thus used to arrive at a “fair price,” integrating external economies and “diseconomies.” And the trick is done!
Of course the work, which is highly mathematical when carried out according to this traditional method of vulgar economics, does not say how the calculated “fair price” can become that of the actually existing market. One is thus led to imagine fiscal and other “incentives” sufficiently effective in producing this convergence. The proof that it could be so is however lacking.
In fact, as we can already see, the oligopolies have taken over environmentalism to justify opening up new fields for their destructive expansion. François Houtart has given an excellent example in his book on agrofuels.4 “Green” capitalism is now the order of the day for those in power in the Triad (right and left) and the directors of oligopolies. The environmentalism in question of course conforms to so-called “weak sustainability” — to use the current jargon — that is, the marketing of “rights of access to the planet’s resources.”5 All the conventional economists have openly rallied to this position, proposing “the auctioning of world resources (fisheries, pollution permits, etc.).” This is a proposition which simply supports the oligopolies in their ambition to mortgage the future of the peoples of the South still further.
This capture of ecologist discourse is providing a very useful service to imperialism. It makes it possible to marginalize, if not eliminate, the development issue. As we know, the question of development was not on the international agenda until the countries of the South were able to impose it by their own initiatives, forcing the powers of the Triad to negotiate and make concessions. But, once the Bandung era was over, it was no longer a question of development but only of opening up the markets. And ecology, as it is interpreted by the dominant powers, is just prolonging this state of affairs.
The capture of ecologist discourse through consensus politics (the necessary expression of the concept of end-of-history capitalism) is no less advanced. This capture has been easy, for it responds to the alienations and illusions on which the dominant culture feeds, which is that of capitalism. It has been easy because this culture really does exist, in place and dominant in the minds of most human beings, in the South as well as in the North.
In contrast, it is difficult to express the needs of counter culture of socialism. A socialist culture is not there, in front of us. It is the future to be invented, a project of civilization, open to inventive imagination. Formulae (like “socialization through democracy, not through the market” and “dominance of culture instead of that of economics and politics in service to it”) are not enough, in spite of the success they have had in initiating the historical process of transformation. For it will be a long “secular” process: the reconstruction of societies on principles other than those of capitalism, both in the North and in the South, cannot be “rapid.” But the construction of the future, even if it is far off, starts today.
3. Conventional Economics: An Ideological Instrument That Is Central to Capitalist Reproduction
The discourse of conventional economics refers to the current system as the “market economy.” It is inadequate, even deceptive: as we have already pointed out, it could equally well describe England in the 19th century, China of the Sung and Ming dynasties, and the towns of the Italian Renaissance.
The theory of the “market economy” has always been the backbone of “vulgar economics.” This theory immediately and wholly eliminates the essential reality: social relations of production (particularly, ownership as the immediate expression of these relations, promoted to a sacred principle). It is replaced by the hypothesis of a society constituted by “individuals” (who, in the final analysis, become active agents in the reproduction of the system and its evolution). These “individuals” (homo œconomicus) are ahistorical, identical with those who, since the origins of humanity (Robinson Crusoe), have possessed the same, unchanging qualities (egoism and the capacity to calculate and make choices that benefit themselves). The construct built on these foundations — the “market economy” — therefore does not correspond to a stylized formulation of the world of historical and real capitalism. It constructs an imaginary system into which it integrates almost nothing of the essentials of the capitalist reality.
Marx’s Capital unmasks the ideological nature (in the functional sense of the word) of this construct of vulgar economics since Frédéric Bastiat and Jean-Baptiste Say, whose function has been simply to legitimize the existing social order, likening it to a “natural and rational order.” The later theories of value — utility and the general economic equilibrium, developed in response to Marx in the last third of the nineteenth century, as well as those of their heir, contemporary mathematicized economics, described as classic, neoclassic, liberal, neoliberal (the name does not really matter) — do not diverge from the framework defined by the basic principles of vulgar economics.
The discourse of vulgar economics helps to meet the requirements of the production and reproduction of actually existing capitalism. It promotes, above everything else, a eulogy of “competition,” considered as the essential condition of “progress.” It denies this attribute to solidarity (in spite of examples from history), which is confined to a straitjacket of compassion and charity. It can be competition between “producers” (i.e. capitalists, without really taking the oligopolistic form of contemporary capitalist production into consideration) or between “workers” (which assumes that the unemployed, or the “poor,” are responsible for their situation). The exclusivity of “competition” is reinforced by the new language (“social partners,” instead of classes in conflict) as well as by practices — of, among others, the European Union Civil Service Tribunal, which is a fierce partisan of the dismantling of trade unions, an obstacle to competition between workers.
The adoption of the exclusive principle of competition also invites society to support the aim of building a “consensus” that excludes the imagination of “another society” based on solidarity. This ideology of the consensus society, which is well on the way to being adopted in Europe, destroys the transformative impact of the democratic message. It conveys the libertarian right-wing message that considers the State — of whatever stripe — as “the enemy of freedom” (which should be interpreted as the enemy of the freedom of enterprise of capital) and divorces the practice of castrated democracy from social progress.
4. Real Problems of the Contemporary World, beyond Vulgar Economics
Vulgar economics simply removes from the field of its “analyses” the real major problems posed by the unfolding of historical capitalism in its conquest of the world. We shall now briefly recall the nature of these questions.
At the Heart of Today’s Problem: Capitalism of Oligopolies, Which Has Been Generalized, Globalized, and Financialized
Capitalism has reached a stage of centralization and concentration of capital out of all comparison with the situation only 50 years ago, and I thus describe this capitalism as one of generalized oligopolies. “Monopolies” (or, better, oligopolies) are in no way new inventions in modern history. What is new, however, is the limited number of registered oligopolies (“groups”) which stands at about 500, if only the colossal ones are counted, and 3,000 to 5,000 in an almost comprehensive list. They now determine, through their decisions, the whole of economic life on the planet, and more besides. This capitalism of generalized oligopolies is thus a qualitative leap forward in the general evolution of capitalism.
The reason given for this evolution — and usually it is the only one — is that it is the inevitable result of technological progress. This is only very partially true — and even so, it is important to specify that technological invention is itself commanded very largely by the requirements of concentration and gigantism. For much production, efficiency not only does not demand gigantism but, on the contrary, “small” and “medium” enterprises. This is the case, for example, with agricultural production, in which modern family agriculture has proved to be far more efficient. But it is also true of many other types of production of goods and services, which are now subordinated to the oligopolies that determine the conditions of their survival.
In actual fact, the most important real reason is the search for maximum profits, which benefits the powerful groups who have priority access to capital markets. Such concentration has always been the response of capital to the long, deep crises that have marked its history. In recent history, it happened for the first time after the crisis that started in the 1870s and for the second time, exactly a century later, in the 1970s.
This concentration is at the origin of the “financialization” of the system, as this is how the oligopolies siphon off the global surplus value produced by the production system, a “rent monopoly” that enables oligopolistic groups to increase their rate of profit considerably. This levy is obtained by the oligopolies’ exclusive access to the monetary and financial markets which thus become the dominant markets.
“Financialization,” therefore, is not, in any way, the result of a regrettable drift linked to the “deregulation” of financial markets, even less of “accidents” (like subprimes) on which vulgar economics and its accompanying political discourse concentrate people’s attention. It is a necessary requirement for the reproduction of the system of generalized oligopolies. In other words, as long as their (private) status goes unchallenged, the talk of bold “regulation” of the financial markets is in vain.
The capitalism of generalized and financialized oligopolies is also globalized. Here, again, “globalization” is in no way a new characteristic of capitalism, which has always been “globalized.” I have even gone further in the description of capitalist globalization, stressing its inherently “polarizing” character (producing a growing gulf between the “developed” centers of the system and its dominated peripheries). This has taken place at all stages of capitalist expansion in the past and present, and it will in the foreseeable future. I have also advanced the thesis that the new phase of globalization is necessarily associated with the emergence of the “collective imperialism of the Triad” (the United States, Europe, and Japan).
The new globalization is itself inseparable from the exclusive control of access to the natural resources of the planet exercised by collective imperialism. Hence the center-peripheries contradiction — the North-South conflict in current parlance — is central to any possible transformation of the actually existing capitalism of our time. And more markedly than in the past, this, in turn, requires the “military control of the planet” on the part of the collective imperialist center.
The different “systemic crises” that have been studied and analyzed — the energy-guzzling nature of production systems, the agricultural and food crisis, and so on — are inseparable from the exigencies of the reproduction of the capitalism of generalized, financialized, and globalized oligopolies. If the status of these oligopolies is not brought into question, any policies to solve these “systemic crises” — “sustainable development” formulae — will just remain idle chitchat.
The capitalism of generalized, financialized, and globalized oligopolies has thus become an “obsolete” system, in the sense that the socialization of oligopolies, that is the abolition of their private status, should now become the essential strategic objective in any genuine critical analysis of the real world. If this does not happen, the system by itself can only produce more and more barbaric and criminal destruction — even the destruction of the planet itself. It will certainly mean the destruction of the societies in the peripheries: those in the so-called “emerging” countries as well as in the “marginalized” countries.
The obsolete character of the system as it has reached the present stage of its evolution is itself inseparable from changes in the structures of the governing classes (“bourgeoisies”), political practice, ideology, and political culture. The historical bourgeoisie is disappearing from the scene and is now being replaced by the plutocracy of the “bosses” of oligopolies. The drift of the practice of democracy emptied of all content and the emergence of ultra-reactionary ideological expressions are the necessary accompaniment of the obsolete character of contemporary capitalism.
The domination of oligopolies is exercised in the central imperialist Triad under different conditions and by different means than those used in the countries of the peripheries of the system. It is a decisive difference, essential for identifying the major contradictions of the system and then imagining the possible evolutions in the North-South conflict, which will probably increase.
The collective imperialist Triad brings together the United States and its external provinces (Canada and Australia), Western and Central Europe, and Japan. The globalized monopolies are all products of the concentration of national capital in the countries that constitute the Triad. The countries of Eastern Europe, even those that now belong to the European Union, do not even have their own “national” oligopolies and thus represent just a field of expansion for the oligopolies of Western Europe (particularly Germany). They are therefore reduced to the status of the periphery. Their asymmetric relationship to Western Europe is, mutatis mutandis, analogous to that which links Latin America to the United States (and, incidentally, to Western Europe and Japan).
In the Triad, the oligopolies occupy the whole scene of economic decision-making. Their domination is exercised directly on all the huge companies producing goods and services, as well as on the financial institutions (banks and others) that pertain to their power. And it is exercised indirectly on all the small and medium businesses (in agriculture as in other fields of production), which are often reduced to the status of subcontractors, continually subordinated to the constraints that the oligopolies impose on them at all stages of their activities. The oligopolies of the Triad operate in the countries of the periphery using various methods that will be described later on.
Not only do the oligopolies dominate the economic life of the countries of the Triad. They monopolize political power for their own advantage, the electoral political parties (right and left) having become their debtors. This situation will be, for the foreseeable future, accepted as “legitimate,” in spite of the degradation of democracy that it entails. It will not be threatened until, sometime in the future perhaps, “anti-plutocratic fronts” are able to include on their agenda the abolition of the private management of oligopolies and their socialization, in complex and open-endedly evolving forms.
Oligopolies exercise their power in the peripheries in completely different ways. It is true that outright delocalization and the expanding practice of subcontracting have given the oligopolies of the Triad some power to intervene directly into the economic life of various countries. But they still remain independent countries dominated by local governing classes through which the oligopolies of the Triad are forced to operate. There are all kinds of formulae governing their relationships, ranging from the direct submission of the local governing classes in the “compradorized” (“re-colonized”) countries, above all in the “marginalized” peripheries (particularly, but not only, Africa), to sometimes difficult negotiations (with obligatory mutual concessions) with the governing classes, especially in the “emerging” countries — above all, China.
There are also oligopolies in the countries of the South. These were the large public bodies in the former systems of actually existing socialism (in China of course as in the Soviet Union, but also at a more modest level in Cuba and Vietnam). Such was also the case in India, Brazil, and other parts of the “capitalist South”; some of these oligopolies had public or semi-public status, while others were private. As the globalization process deepened, certain oligopolies (public and private) began to operate outside their borders and copy the methods used by the oligopolies of the Triad. Nevertheless, the interventions of the oligopolies of the South outside their frontiers are — and will remain for a long time — marginal, compared with those of the North. Furthermore, the oligopolies of the South have not captured the political power in their respective countries for their own exclusive profit. In China the “statocracy” of the Party-State still constitutes the essential core of power. In Russia, the mixture of State/private oligarchies has returned autonomous power to the State that had lost it for a while after the collapse of the Soviet Union. In India, Brazil, and other countries of the South, the weight of the private oligarchy is not exclusive: power rests on broader, hegemonic blocs, including mainly the national bourgeoisie, the middle classes, the owners of modernized large estates (latifundia) and rich peasants.
All these conditions make it impossible to confuse the State in the Triad countries (which functions for the exclusive use of the oligarchy and is still legitimate) and the State in the peripheries. The latter never had the same legitimacy as it has in the centers and it may very well lose what little it does have. Those in power are in fact fragile and vulnerable to social and political struggles.
The hypothesis that this vulnerability will be “transitory” and likely to attenuate with the development of local capitalism, itself integrated into globalization, is, even for the “emerging countries,” unquestionably mistaken — a hypothesis that derives from the linear vision of “stages of development” (formulated by Rostow in 1960). But conventional thought and vulgar economics are not intellectually equipped to understand that “catching up” is impossible in this system and that the gap between the centers and the peripheries will not “gradually” disappear.
The oligopolies and the political powers that serve them in the countries of the Triad pursue their sole aim of “emerging from the financial crisis” and basically restoring the system as it was. There are good reasons to believe that this restoration — if it succeeds, which is not impossible, although more difficult than is generally thought — cannot be sustainable, because it involves returning to the expansion of finance, which is essential for the oligopolies if they are to appropriate monopoly rent for their own benefit. A new financial collapse, still more sensational than that of 2008, is therefore probable. But, these considerations apart, the restoration of the system, designed to expand the fields of activities for the oligopolies again, would mean aggravating the process of accumulation by dispossession of the peoples of the South (through seizure of their natural resources, including their agricultural land). And ecologist discourses on “sustainable development” will not prevail over the logic of expansion of oligopolies, which are more than capable of appearing to “adopt” them in their rhetoric — as we are already seeing.
The main victims of this restoration will be the nations of the South, both the “emerging” countries and the others. So it is very likely that the “North-South conflicts” are destined to become much greater in the future. The responses that the “South” will give to these challenges could thus be pivotal in challenging the whole globalized system. This may not mean questioning “capitalism” directly, but it would surely mean questioning the globalization commanded by the domination of the oligopolies.
The responses of the South must indeed focus on helping to arm their peoples and States to face the aggression of the oligopolies of the Triad, to facilitate their “delinking” from the existing system of globalization, and to promote multiple substantial alternatives of South-South cooperation.
Challenging the private status of the oligopolies by the peoples of the North themselves (the “anti-plutocratic front”) is certainly an absolutely strategic objective in the struggle for the emancipation of workers and peoples. But this objective has yet to become politically mature and it is not very likely to happen in the foreseeable future. Meanwhile, the North-South conflicts will probably move to center stage.
Capitalism, a Parenthesis in History
The principle of endless accumulation that defines capitalism is synonymous with exponential growth and this, like cancer, ends in death. Stuart Mill, who had understood it, thought that a “stationary state” would halt this irrational process. Keynes shared this optimism of Reason. But neither of them was able to understand how the necessary surpassing of capitalism could be imposed. However, Marx, by assigning the new class struggle its role, could imagine overthrowing the power of the capitalist class, which is today concentrated in the hands of the oligarchy.
Accumulation, which is also another word for impoverishment, constitutes the objective background for struggles against capitalism. But it takes place mainly through the growing contrast between the opulence of the societies of the center, which benefit from the imperialist rent, and the destitution of the societies in the dominated peripheries. This conflict thus becomes the central theme of the alternative of “socialism or barbarism.”
Historically, “actually existing” capitalism has developed in successive forms of accumulation through dispossession, not only at the outset (“primitive accumulation”) but at all stages of its development. Once constituted, this “Atlantic” capitalism set out to conquer the world and to rebuild it on the basis of permanent dispossession of the conquered regions, which thus became the dominated peripheries of the system.6
This “victorious” globalization has proved incapable of imposing itself for long. Hardly half a century after its triumph, which might have seemed even then to inaugurate the “end of history,” it was challenged by the revolution of the Russian semi-periphery and the (victorious) liberation struggles of Asia and Africa which mark the history of the 20th century — the first wave of struggles for the emancipation of workers and peoples.
Accumulation through dispossession has been continuing under our eyes in the late capitalism of contemporary oligopolies. In the centers, the rent-seeking monopolies, from which the oligopolistic plutocrats benefit, are tantamount to the dispossession of the whole productive base of society. In the peripheries, this pauperizing dispossession is illustrated by the expropriation of peasantry and the pillage of the natural resources of the regions concerned. Both these practices constitute essential planks in the expansion strategies of the late capitalism of oligopolies.
In this context, I put the “new agrarian question” at the heart of the challenge for the 21st century. The dispossession of peasantry (Asian, African, and Latin American) constitutes the main contemporary form of the tendency towards pauperization (in the sense that Marx gave to this “law”) that is associated with accumulation. Its implementation is inseparable from the harnessing of the imperialist rent by the oligopolies, with or without agrofuels. I deduce from this that the development of struggles on the land, the answers that will be given through them to the future of the peasant societies of the South (almost half of humanity), will determine the capacity of workers and peoples to progress towards an authentic civilization, liberated from the domination of capital, for which I see no other name than that of socialism.7
The pillage of the natural resources of the South, which is made necessary by the continuation of the wasteful consumption model for the exclusive benefit of the rich societies of the North, destroys all prospect of development worthy of the name for the people of the South; and it thus constitutes the other face of impoverishment at the world level. Hence the “energy crisis” is not created by the scarcity of certain resources necessary for its production (oil, of course), nor is it the result of the destructive effects of the current energy-guzzling forms of production and consumption. While these are real, they constitute only immediate and visible evidence of the problems. Rather, this crisis has been produced by the desire of the oligopolies of collective imperialism to ensure their monopoly of access to the natural resources of the planet, whether they are rare or not, in order to appropriate the imperialist rent, whether or not the use of these resources remains as it is at present (wasteful and energy-guzzling) or becomes subject to new corrective “ecological” policies. I thus predict that the pursuit of the expansion strategy of the late capitalism of oligopolies will necessarily come up against growing resistance from the nations of the South.
From One Long Crisis to Another
The current crisis is neither a financial crisis, nor an ensemble of multiple systemic crises, but the crisis of the imperialist capitalism of oligopolies, whose exclusive and supreme power risks being challenged, once again by the struggles of all the popular classes and by those of the peoples and nations of the dominated peripheries, whether or not they seem to be “emerging.” It is simultaneously a crisis of US hegemony. The capitalism of oligopolies, the political power of oligarchies, barbarous globalization, financialization, the hegemony of the United States, militarization of the management of globalization in service to the oligopolies, the decline of democracy, the pillage of the planet’s resources, the abandonment of the development perspective of the South: all these are indissolubly linked.
The real challenge is this: will the struggles succeed in converging to open the way, or ways, to the long road of transition to world socialism? Or will they remain separated one from another, even coming into conflict with each other, and thus be ineffective and leave the initiative to the capital of oligopolies?
It is worth going back to the first long crisis of capitalism, which shaped the 20th century, as the parallel between the stages of development in these two crises is really striking.
The industrial capitalism that triumphed in the 19th century entered into crisis in 1873. The rate of profits collapsed, for the reasons shown by Marx. Capital reacted in two ways: concentration and globalized expansion. The new monopolies seized the rent levied on all the surplus value generated by the exploitation of labor and accelerated the colonial conquest of the planet. These structural transformations enabled them to obtain soaring new profits and opened the way to the “Belle Epoque” — from 1890 to 1914 — of globalized domination by the capital of financialized monopolies. At that time, the dominant discourse praised colonization (the “civilizing mission”) and described globalization as synonymous with peace. The social democracy of European workers rallied to this discourse.
And yet the “Belle Epoque,” which was proclaimed as the “end of history” by the leading ideologues of the era, ended in a world war, as only Lenin had foreseen. And the period that followed, up until the aftermath of the Second World War, was to be a period of “wars and revolutions.” In 1920, the Russian revolution (the “weak link” in the system) having been isolated after the defeat of the hopes for revolution in Central Europe, the capital of the financialized monopoles restored the “Belle Epoque” era, against all odds. This restoration, which was denounced by Keynes at the time, was at the origin of the financial collapse of 1929 and the subsequent depression that continued until the Second World War.
The “long 20th century” — 1873 to 1990 — thus saw both the unraveling of the first deep systemic crisis of ageing capitalism (to the point that Lenin thought that this monopoly capitalism constituted the “highest stage of capitalism”), as well as the first, triumphant wave of anti-capitalist revolutions (Russia, China) and the anti-imperialist struggles of the peoples of Asia and Africa.
The second systemic crisis of capitalism started in 1971, when the dollar lost its convertibility to gold, almost exactly a century after the first crisis. The rates of profit, investment, and growth all fell (and were never to return to the same levels they had enjoyed from 1945 to 1975). Capital responded to the challenge in the same way as in the preceding crisis: by a double movement of concentration and globalization. Thus it established the structures that were to define the second “Belle Epoque” — 1990 to 2008 — of financialized globalization that enabled the oligopolistic groups to maintain their monopoly rent. There was the same accompanying discourse: the “market” guaranteed prosperity, democracy, and peace — it was the “end of history.” And, as before, the European socialists rallied to the new liberalism. Yet this new “Belle Epoque” was, from the outset, marked by war, waged by the North against the South, starting in 1990. And as the first financialized globalization led to 1929, the second produced 2008. We have now reached this crucial moment which heralds the probability of a new wave of “wars and revolutions.” All the more so because the powers that be cannot envisage anything else than the restoration of the system as it was before the financial collapse.
The analogy between the developments of these two long, systemic crises of ageing capitalism is striking. However, there are differences, the political implications of which are important.
The Second Wave of Peoples’ Emancipation: Will It Be a Remake of the 20th Century or Something Better?
The contemporary world is governed by oligarchies. There are financial oligarchies in the United States, Europe, and Japan who dominate not only economic life but politics and everyday life just as much. There are Russian oligarchies who imitate them and whom the Russian State tries to control. There is statocracy in China. Then there are autocracies (sometimes masked by a certain façade of “low-intensity” electoral democracy) that form part of this world system elsewhere on the planet.
The management of contemporary globalization by these oligarchies is now in crisis.
The oligarchies of the North are counting on staying in power, once the period of crisis is over. They do not feel threatened. On the other hand, the fragility of the powers of autocracies in the South is very visible. Thus the current globalization is vulnerable. Will it be challenged by the revolt in the South, as happened in the last century? Probably, but that is not enough. Because, for humankind to embark on the path to socialism, the only human alternative to chaos, it will be necessary to defeat these oligarchies, their allies, and their servants, both in the North and in the South at the same time.
Capitalism is “liberal” by nature, that is, if by “liberalism” is meant not the pretty appellation that the term inspires but the full exercise of the domination of capital, not only over work and economy, but over all aspects of social life. There is no “market economy” (the common way of saying capitalism) without “market society.” Capital relentlessly pursues its sole objective — making money. Accumulation for itself. Marx, and other critical thinkers after him like Keynes, understood this perfectly. But not our conventional economists, including those of the left.
This exclusive and total domination of capital had been inexorably imposed by the governing classes during the whole of the preceding long crisis up to 1945. Only the triple victory — of democracy, socialism, and the national liberation of peoples — made it possible, from 1945 to 1980, to replace this permanent model of the capitalist ideal by the conflictual coexistence of three regulated social models, which were the Welfare State of social democracy of the West, actually existing socialisms of the East, and popular nationalisms of the South. The loss of impetus and the consequent collapse of these three models made it possible to return to the exclusive domination of capital, called neoliberalism.
The social disasters that liberalism let loose — “the permanent utopia of capital” as I put it — inevitably inspired much nostalgia for the past, both recent and more distant. But these nostalgias did not facilitate an appropriate response to the challenge. For they were a product of the impoverishment of critical theoretical thinking which gradually made it impossible to understand the internal contradictions and limits of the post-WW2 period, whose erosions, drifts, and collapses appeared like unforeseen cataclysms.
Nevertheless, in the vacuum created by the decline in critical theoretical thinking, a new awareness of the systemic crisis of civilization has been able to develop. I am referring here to environmentalists. But the Greens, who claimed to distinguish themselves radically from the Blues (conservatives and liberals) and the Reds (socialists), have become trapped in an impasse because they have not integrated the ecological dimension into a radical criticism of capitalism.
Thus everything was set to ensure the triumph — temporary, in fact, but believed to be definitive — of the alternative of so-called “liberal democracy.” It is a miserable way of thinking — veritable non-thought — that takes no notice of Marx’s decisive remarks about this bourgeois democracy and that ignores the fact that those who decide are not those who are affected by the decisions. Those who decide, enjoying the freedom reinforced by the control of property, are today the plutocrats of the capitalism of oligopolies and the States that are their debtors. Obviously the workers and peoples concerned are hardly more than victims. But such nonsense may have seemed credible, at least for a short while, because of the drift of the post-war systems, whose origins the poverty of dogmatics could no longer comprehend. Liberal democracy could then seem the “best of all possible systems.”
These days, the powers that be, who had not foreseen anything themselves, are doing their best to restore the same system. Their eventual success — like that of the conservatives of the 1920s, whom Keynes denounced without finding any echo in that epoch — can only exacerbate all the conditions that are the cause of the financial collapse of 2008.
The recent meeting of the G20 (London, April 2009) in no way begins any “reconstruction of the world.” And it is perhaps no accidnet that it was followed by that of the NATO, the militarized arm of contemporary imperialism, and by the reinforcement of its military occupation in Afghanistan. The permanent war of the “North” against the “South” must go on.
We have already seen that the governments of the Triad — the United States, Europe, and Japan — are pursuing their sole objective of restoring the system as it was before September 2008. More interestingly, the leaders of the invited “emerging countries” kept silent. Only one intelligent sentence was uttered during this Grand Circus, by Chinese President Hu Jintao, who observed, “in passing,” without insistence and with a (mocking?) smile, that we will eventually have to envisage the creation of a world financial system that is not based on the dollar. A few rare observers immediately — and correctly — made the connection with Keynes’ 1945 proposals.
This “remark” reminds us of the reality: that the crisis of the system of oligopoly capitalism is inseparably linked to that of the hegemony of the United States, which is running out of steam. But what will take its place? Certainly not “Europe,” which does not exist apart from Atlanticism and has no ambition to become independent, as the NATO meeting once again demonstrated. China? This “threat,” which the media endlessly conjure up (a new “yellow peril”), is baseless. The Chinese authorities know that their country does not have the means and they have no will. The strategy of China is content with working towards a new globalization without hegemonies. This is not considered acceptable either by the United States or by Europe.
Thus the chances of a possible development in that direction lie entirely with the countries of the South.
A New Internationalism of Workers and Peoples Is Necessary and Possible
Whatever you like to call it, historical capitalism is anything but sustainable. It is only a brief parenthesis in history. Challenging it fundamentally — which our contemporary thinkers cannot imagine is “possible” or even “desirable” — is however the essential condition for the emancipation of dominated workers and peoples (those of the periphery, 80 percent of humanity). And the two dimensions of the challenge are indissoluble. It is not possible to put an end to capitalism unless and until these two dimensions of the same challenge are taken up together. It is not “certain” that this will happen, in which case capitalism will be “overtaken” by the destruction of civilization (beyond the discontents of civilization, to use Freud’s phrase) and perhaps of all life on this earth. The scenario of a possible “remake” of the 20th century thus remains but falls far short of the need of humanity embarking on the long transition towards world socialism. The liberal disaster makes it necessary to renew a radical critique of capitalism. The challenge is how to construct, or reconstruct, the internationalism of workers and peoples confronted by the cosmopolitism of oligarchic capital.
The construction of this internationalism can only be envisaged by the success of new revolutionary advances (like those initiated in Latin America and Nepal) which open up the prospect of surpassing capitalism.
In the countries of the South, the struggle of States and nations for a negotiated globalization without hegemonies — the contemporary form of delinking — supported by the organization of demands of the popular classes — can circumscribe and limit the powers of the oligopolies of the imperialist Triad. The democratic forces in the countries of the North must support this struggle. The “democratic” discourse proposed by the dominant ideology and accepted by the majority of left wings (such as they are), “humanitarian” interventions, and pathetic practices of “aid” do not genuinely confront this challenge.
In the countries of the North the oligopolies are already clearly “common goods” whose management cannot be entrusted to private interests alone (the crisis having shown the catastrophic results). An authentic left must have the courage to envisage nationalization as a first essential step towards their socialization through the deepening of democratic practice. The current crisis makes it possible to conceive a potential crystallization of social and political forces rallying all the victims of the exclusive power of the reigning oligarchies.
The first wave of struggles for socialism, that of the 20th century, showed up the limitations of European social democracies, of communisms of the Third International, and of popular nationalisms of the Bandung era: the loss of momentum and finally the collapse of their socialist ambitions. The second wave, that of the 21st century, must draw the lessons. In particular it must associate the socialization of economic management with the deepening of democracy in society. There will be no socialism without democracy, but equally no democratic progress outside a socialist perspective.
These strategic aims make it necessary to think about the construction of “convergences in diversity” (to take up the expression of the World Forum for Alternatives), of forms of organization and of struggles by the dominated and exploited classes. And I do not intend to condemn in advance those forms which, in their own way, get back to the traditions of social democracies, communisms, and popular nationalisms or move away from them.
It seems to me necessary to be thinking about the renewal of a creative Marxism. Marx has never been so useful and necessary to understand and transform the world as he is today, perhaps more so than in the past. To be Marxist in this spirit is to begin with Marx, not to end with him, or a Lenin, or a Mao, as the historical Marxisms of the last century conceived and practiced it. It’s to render unto Marx what is his: the intelligence of having begun modern critical thought, critical of the capitalist reality and critical of its political, ideological, and cultural representations. Creative Marxism must unhesitatingly pursue the aim of enriching such critical thinking par excellence. It must not fear integrating all contributions resulting from reflection in all fields, including those contributions that were wrongly considered as “foreign” by the dogmatists of historical Marxisms of the past.
In Conclusion: The Impotence of Vulgar Economics
At moments of “crisis” like ours, the impotence of vulgar economics is all too evident.
Thus Le Monde posed a mischievous question: “How is it that the pundits of Harvard had not foreseen the ‘crash’ . . . ?” Are they just imbeciles then? Certainly not. But their intelligence is completely focused on the only paths acceptable to vulgar economics and the false theory of an “imaginary capitalism of generalized markets.” Just as the brilliant minds of another epoch believed that the debate on the sex of angels could contribute to a better understanding of the world!
Vulgar economics, focusing on analyzing the markets operating on the basis of “imperfect information,” is thus forced to replace an analysis of the capitalist reality by an endless game (for which mathematics becomes indispensable) of hypotheses concerning “expectations.” These hypotheses make it possible to foresee all and nothing, as the subtle and realistic intelligence of Keynes had realized so well.
What are these “expectations”? They are but a series of tricks. The expectations of those who sell their labor? These unfortunate workers know that they have hardly any choice. They also know that they cannot improve the conditions of selling their labor power except by organization and collective class struggle. The expectations of consumers who “choose” (their “supermarket”?) and “choose” potential financial investments? These unfortunates are forced to take the advice of their bankers, the real deciders. The expectations of entrepreneurs who decide whether or not to invest? History shows, as Marx and Keynes understood, that cycles of overinvestment and depreciation of capital impose their reality. The expectations of owners of capital who choose between risky investment and preference for liquidity? Repeatedly there have been financial bubbles, and their reasons and mechanisms — which were perfectly analyzed, once again, by Marx, together with his discovery of the supreme alienation of vulgar economists (“money makes more money,” M makes M’, without passing through production) — will always remain outside the thinking of our conventional economists. The expectations of speculators on the stock exchange? We know that the best position is what is taken by the sheep who follow the general movement and that this necessarily accentuates fluctuations.
The shipwreck in the ocean of expectations is the inevitable product of reducing society to a collection of individuals and to deliberate ignorance of the major realities by which real capitalism is defined (classes, private property, the State, nations, etc.). This is only an ideological formulation in the negative sense of the term; it is extremely functional in giving legitimacy to the real practices of dominant capital. The vulgar economists who claim that their work is scientific are not even conscious of what they are doing. They cannot understand that, to do scientific work, to approach an understanding of the objective reality, one must begin with radical critique of the starting point of their reasoning.
Conventional economists are not critical thinkers. They are, at best, “technocrats.” I like to use the Anglo-Saxon word “executive” for them: they are agents of execution, once at the orders of capital, now at the orders of the oligopolies.
That is why the “critiques” that they may make of the system are always marginal and their proposals for reform that they believe are “realistic” are in reality perfectly unrealistic for the most part. And when, for some moral reason or another, the reality upsets them (“too much poverty” — in fact, “too much inequality”), the drift towards pious wishes and sermons in the guise of policy becomes inevitable. The bestseller of a Nobel Prize winner for Economics (strictly reserved for vulgar economists) is therefore at best a mediocre work. That of Joseph Stiglitz, which bears the pompous title Another World, is a good example.8
Stiglitz “discovers,” in 2002, that the Washington Consensus was not good; he discovers the reality of the behavior of the IMF, the WTO, etc. More than half of the 550 pages of this overblown work are dedicated to “revelations” which others have known about for 30 or 40 years! Stiglitz believes he is the first one to say them, never having read the work of critical thinkers (and probably he never will). And it is not even arrogance, but quite simply ignorance. An amusing example: Stiglitz “discovers” that in 1990 there was an agreement on prices by some oligopolies! Extraordinary! And what does he propose in order to re-establish “competition”? An anti-trust law and litigation, US-style!
In his book, Stiglitz disregards financialization, about which he says hardly anything and which he believes to be inoffensive, even useful. The remarkable work of the late lamented Giovanni Arrighi concerning financialization being the last stage of hegemonies in decline is obviously totally ignored.9 Evidently Stiglitz was surprised by the financial collapse of 2008, about which there is not even one line indicating the seriousness of the threat. And yet others (including myself), by the time of his “discovery,” had analyzed the globalized liberal system as being by nature unstable, condemned to collapse through financial crisis (the Achilles heel of the system, as I called it). Stiglitz evidently ignored all that.
The idea he has of himself, “revealing to the world” the “defects” of the system, can thus only make one laugh.
It is therefore not surprising that what I have called “the Stiglitz report” does not break with the reactionary, conventional orthodoxy. That report was issued by the commission designated by the then President of the United Nations General Assembly, Padre Miguel D’Escoto, which was unfortunately to be headed by Stiglitz, who probably imposed his superficial and limited perception of the problems in the final version of the document.10 The “failure” that resulted — the fact that the countries of the South decided not to be represented at the June General Assembly at the level required — was in fact, for me, a good sign. It implies that the countries of the South had understood that this report — under the pretext of “global consensus” . . . and realism — would be in line with the North’s strategy to “respond to the crisis” and that its proposals were of the kind that would be “acceptable” to the oligopolies. Change the world? You must be joking!
5) The Militarization of Globalization, “Aid,” Post-Modernism
To maintain their monopoly rent, the oligopolies cannot content themselves with deducting their levies from their “national economies” only. Their globalized dimension enables them to deduct still more from the economies of the dominated, emerging, and marginalized peripheries. The pillage of the resources of the whole planet and the super-exploitation of workers supplies the substance of the imperialist rent. In turn, this constitutes the conditions for the social consensus that then becomes possible in the opulent societies of the North.
The discourses on democracy and ecology serve as masks to hide the real objectives.
Vulgar economics is the keystone of capitalist ideology, as should have been understood since the appearance of “critique of political economy” (the subtitle of Marx’s Capital). Vulgar economics, because it concerns a “non reality” (generalized markets), does not deserve the name of science that it claims. Its real social function is like that of sorcery in ancient times. Like the latter it resorts to a language that is deliberately unintelligible to citizens, aiming to eliminate their power of decision by bombarding them with “truths” that are claimed to be “objective.” In contrast, the language of authentic social thought always remains clear, like the writings of Marx, even at its most difficult: they educate people.
Defeating the Military Control of the Planet by the Imperialists
The real challenge that people face is first of all the militarization of globalization. In fact, the military control of the planet by the United States and its subalterns (the NATO and Japan) has become the only way, at last resort, to make it possible to levy the imperialist rent without which the system cannot survive. The Empire of Chaos, as I have been describing it since 1991, and the permanent war against the peoples of the South are one and the same thing. This is why one of the first strategic objectives of the progressive and democratic forces in the North and in the South must be to defeat the armed forces of the Triad, to force the United States to abandon its bases spread over all the continents, and to dismantle the NATO.11
This is probably the objective of the “Shanghai Group” which has begun to renew the spirit of “non-alignment,” in the sense of “non-alignment on imperialist globalization and the political and military project of the Triad.”
I believe there is a parallel here with the history of Bandung. Even before the conference of this name (1955) and “non-alignment” (1960), radical groups of thinkers were mobilized to propose possible and effective counter-strategies for the peoples of Asian and African countries to force the rolling back of the imperialism of that epoch. The author of this paper had the honor and pleasure of participating in one of these groups for the Middle East from 1950. There is need for similar initiatives today.
“Aid,” a Complementary Instrument to Control Vulnerable Countries
“International aid,” presented as being indispensable for the survival of the “least developed countries” (UN terminology for many African countries and a few other ones), plays its role here. Because its real objective, aimed at the most vulnerable countries of the periphery, is to create an extra obstacle to their participation in an alternative front of the South.12
Concepts of aid have been confined within a straitjacket. Its structures were defined in the Paris Declaration on Aid Effectiveness (2005), which was drawn up by the OECD, then imposed on the beneficiaries. The general conditionality, alignment with the principles of liberal globalization, is omnipresent. Sometimes it is explicit: promoting liberalization, opening the markets, becoming “attractive” to private foreign investment. Sometimes it is indirect: respecting the rules of the WTC. A country that refuses to subscribe to this strategy — which has been unilaterally defined by the North (the Triad) — loses its right to be eligible for aid. So that the Declaration of Paris is a step back — and not an advance — in comparison with the practices of the “development decades,” the 1960s and 1970s, when the principle of free choice by the countries of the South to follow their own system and economic and social policies was recognized.
In these conditions, aid policies and their apparent, immediate objectives cannot be separated from imperialism’s geopolitical strategies. For the different regions in the world do not have the same functions in the globalized liberal system. It is not enough to mention their common denominator (liberalization of trade, opening to financial markets, privatizations).
Sub-Saharan Africa is very well integrated into this global system, and in no way “marginalized” as it is claimed, unfortunately all too often without thinking. Its foreign trade represents 45 percent of its Gross National Product, compared to 30 percent for Asia and Latin America and 15 percent for each of the regions constituting the Triad. Africa is thus quantitatively “more” and not “less” integrated, but in a different way.13
The geo-economy of the region depends on two production systems that determine its structures and define its place in the global system:
1.the export of “tropical” agricultural products: coffee, cocoa, cotton, peanuts, fruits, oil palm, etc.; and 2.hydrocarbons and minerals: copper, gold, rare metals, diamonds, etc. The former are the means of “survival” (apart from food for the auto-consumption of peasants), which finance the transplanting of the State onto the local economy and, through public expenditure, the reproduction of the “middle classes.” This kind of production is of more interest to the local governing classes than to the dominant economies; in contrast, what interests the latter is the products of natural resources of the continent. Today it is hydrocarbons and rare minerals. Tomorrow it will be the reserves for developing agrofuels, the sun (when long-distance transport of solar electricity becomes feasible, within a few decades), water (when its direct or indirect “export” becomes possible).
The race to convert rural areas for the expansion of agrofuels is under way in Latin America. In this field, Africa has tremendous possibilities. Madagascar has started the movement and already conceded large areas in the west of the country. The implementation of the Congolese Rural Code in 2008, inspired by Belgian aid and the FAO, will no doubt enable agribusiness to take over agricultural land on a massive scale to “exploit” it, just as the Mining Code has already enabled the pillage of the mineral resources of this former colony. ”Useless” peasants will pay for it, and increasing destitution that awaits them will perhaps attract future humanitarian assistance and “aid” programs to reduce poverty! In the 1970s I learnt about an old colonial dream for the Sahel, which was to expel the population (useless Sahelians) in favor of extensive, Texas-style ranches raising livestock for exportation.
The new phase of history that has opened is marked by the sharpening of conflicts for access to the natural resources of the planet. The Triad intends to reserve for itself the exclusive access to this “useful” Africa (that of natural resource reserves) and to prevent such access by the “emerging countries” whose needs in this respect are already great and likely to increase. Guaranteeing exclusive access means political control and reducing African countries to the status of “client states.”
It is not therefore wrong to consider that the aim of aid is to “corrupt” the governing classes. Apart from the financial appropriations (which, alas, are well known and for which we are led to believe that the donors are in no way responsible), aid has become “indispensable” as it is an important source of financing budgets and fulfils a political function. It thus becomes necessary to think of aid as being permanent and not prepare for its elimination through a serious development effort. Hence it is important that it is not reserved exclusively and wholly for the classes in power, for the “government.” It must also give stakes to “oppositions” that are capable of succeeding them. The so-called civil society and certain non-governmental organizations (NGOs) have a role to play here. The aid in question, if it is to be really effective politically, must also help to maintain the entry of peasants into this global system, this entry bringing another source of revenue for the State. The aid must also be concerned with progress in “modernizing” export crops.
Right-wing criticism of aid is based on the notion that it is for the countries concerned to take action to liberate themselves from this dependence by opening up still more to foreign capital. This was the substance of Sarkozy’s speech at Dakar and Obama’s at Accra. This oratorical appeal avoids the real question. For aid, an integral part of the imperialist strategy, in fact seeks to marginalize the peoples of Africa who are useless and troublesome, the better to continue their pillage of African resources!
The critique made by the “do-gooder” left, which is that of many NGOs, accepts that the “donors” will honor their pledges. It limits itself to pointless talk about “absorption capacity,” “performance,” “good governance,” promoted by “civil society.” It calls for “more” and “better” aid! Radical critique, on the contrary, supports autonomous development. One can imagine that aid in this context would derive from peoples’ international solidarity, confronting (and against) the cosmopolitanism of capitalism.
Poverty, Civil Society, Good Governance: The Feeble Rhetoric of the Dominant Discourse
This dominant discourse claims that its objective is to “reduce, if not to eradicate, poverty” by supporting “civil society,” in order to substitute “good governance” for “governance” that is judged “bad.”
The very term “poverty” stems from a language which is as old as the hills, that of charity (religious or otherwise). This language belongs to the past, not to the present, much less to the future. It predates the language created by modern social thought, which tries to be scientific — that is, to discover the mechanisms that give rise to a visible and observed phenomenon.
The overwhelming mass of literature about poverty focuses exclusively — or almost — on “locating” the problem and quantifying it. It does not pose questions such as “what are the mechanisms that create the poverty under discussion?” Do they have some connection with the fundamental rules (like competition) that govern our systems and in particular — as far as the countries of the South receiving aid are concerned — with the development strategies and policies conceived for them?
Has the concept of “civil society,” even if it is taken seriously (not to speak of its random use), been raised to the level at which a concept should be in order to take its chance and be worthy of inclusion in a serious debate that purports to be scientific? As it is proposed, “civil society” is associated with an ideology of consensus. It is a twofold consensus:
1.that there is no alternative to the “market economy” (itself an indiscriminate expression that serves to replace an analysis of “really existing capitalism”); 2.that there is no alternative to representative democracy based on multi-party elections (conceived as “the democracy”) that serves as a substitute for the conception of democratization of society, which is a process without end. On the contrary, the history of struggles has seen the emergence of political cultures of conflict, based on the recognition of the conflict of social and national interests, which gives quite another meaning to the terms of “left” and “right.” It attributes to creative democracy the right and power to imagine alternatives and not just “alternations” in the exercise of power (changing the names for doing the same thing).
“Governance” was invented as a substitute for “power.” The opposition between these two qualifying adjectives — good or bad governance — calls to mind manichaeism and moralism, substitutes for an analysis of reality as scientific as possible. Once again this fashion comes to us from the other side of the Atlantic where the sermon has often dominated political discourse. “Good governance” requires the “decider” to be “just,” “objective” (choosing the “best solution”), “neutral” (accepting a balanced presentation of arguments), and above all else “honest” (including, of course, the blander, financial meaning of the word). On reading the literature produced by the World Bank on the subject, one finds oneself — judging from the grievances presented, usually by men of religion or of law (and few women!) — back in the East of ancient times, of the “just despot” (not even enlightened!).
The underlying ideology is clearly being used to simply eliminate the real question: what social interests does the governing power, whatever it is, represent and defend? How can the change of power progress so that it gradually becomes the instrument of the majorities, in particular of the victims of the system, such as it is? It goes without saying that the multi-party electoral recipe has shown its limits in this respect.
Post-modernism caps the discourse called by some the “new spirit of capitalism,” but it would be better to call it the ideology of the late capitalism/imperialism of oligopolies. A recent book by Nkolo Foe gives a powerful description of how this functions very well to serve the real interests of the dominating powers.14
Modernism originated in the discourse of the Enlightenment in the 18th century in Europe, together with the triumph of the historical form of European capitalism and imperialism that goes with it, which subsequently conquered the world. It suffers from contradictions and limitations. The ambition to be universal that it formulated is defined by the affirmation of the rights of man (but not necessarily of woman!), which are in fact the rights of bourgeois individualism. Real capitalism, with which this form of modernity is associated, is moreover an imperialism that denies the rights of the non-European peoples who have been conquered and subordinated to the levying of the imperialist rent.
Criticism of this bourgeois and capitalist/imperialist modernity is certainly necessary. And Marx effectively undertook this radical critique, which it is always necessary to update and study more deeply.
The new Reason considered itself emancipatory; and so it was, to the extent that it freed society from the alienations and oppressions of the Anciens Regimes. It was thus a guarantee of progress, but a form of progress that was limited and contradictory because it was capital which, in the final instance, was to manage society.
Post-modernism does not make this radical critique to promote the emancipation of individuals and of society through socialism. Instead it proposes a return to pre-modern, pre-capitalist alienations. The forms of sociability that it promotes are necessarily in line with adherence to a “tribalist” identity for communities (para-religious and para-ethnic), an antipode to what is required to deepen democracy, which has become a synonym for the “tyranny of the people” daring to question the wise management of the executives who serve the oligopolies. Post-modernist critiques of “grand narratives” (the Enlightenment, democracy, progress, socialism, national liberation) do not look to the future but return to an imaginary and false past, which is extremely idealized. In this way it facilitates the fragmentation of the majority of the population and makes them accept adjustment to the logic of the reproduction of domination by the imperialist oligopolies. This fragmentation hardly disturbs that domination; on the contrary, it makes the task easier. The individual does not become a conscious, lucid agent of social transformation, but the slave of triumphant commodification. The citizen disappears, giving way to the consumer/spectator, no longer a citizen who seeks emancipation, but an insignificant creature who accepts submission.
1 Jacques Andreani, Le Piège, Helsinki et la chute du communisme, Paris: Odile Jacob, 2005.
2 Mathis Wackernagel and William Rees, Notre empreinte écologique, Montréal: Ecosociété, 1999.
3 Elmar Altvater, “The Plagues of Capitalism, Energy Crisis, Climate Collapse, Hunger, and Financial Instabilities,” paper presented at the FMA, Caracas, 2008.
4 François Houtart, L’agroénergie, solution pour le climat ou sortie de crise pour le capital? Charleroi: Couleur Livres, 2009
5 Aurélien Boutaud and Natacha Gondran, L’empreinte écologique, Paris: La Découverte, 2009.
6 Giovanni Arrighi, The Long Twentieth Century, London: Verso, 1994; Giovanni Arrighi, Adam Smith in Beijing, London: Verso, 2007. The concept of accumulation by dispossession, introduced by Arrighi, like that of “permanent primitive accumulation” which I proposed, characterizes historical capitalism, originated in Europe, through contrast with another path of development to capitalism, inaugurated by China during the Sung and Ming dynasties (Arrighi-Amin correspondence). See, also, Samir Amin, Sur la crise, Pantin: Temps des cerises, 2009, Chapters 2 and 3.
7 Cf. the work of Samir Amin, Sam Moyo, Archie Mafeje, and others in Samir Amin, Sur la crise, op cit, Chapter 5.
8 Joseph Stiglitz, Un autre monde, contre le fanatisme des marches, Paris: Livre de poche, 2009.
9 Arrighi, The Long Twentieth Century, op cit.
10 The UN documents in question here are published on UN Web sites.
11 Samir Amin, L’Empire du Chaos, Paris: Harmattan, 1991; Samir Amin, L’hégémonisme des Etats-Unis et l’effacement du projet européen, Paris: Harmattan, 2000
12 Samir Amin, “Aid, for What Development?” (in a book published in English by Fahamu, forthcoming in 2009)
13 Samir Amin, “Is Africa Really Marginalized?” in, Helen Lauer (ed), History and Philosophy of Sciences for African Undergraduates, Ibadan: Hope Pub, 2003.
14 Nkolo Foe, Le post modernisme et le nouvel esprit du capitalisme, Sur une philosophie globale d’ Empire, Dakar: Codesria, 2009; Samir Amin, Modernité, religion, démocratie, Critique de l’eurocentrisme et critique des culturalismes, Paris: Parangon, 2008; Samir Amin, Sur la crise, op cit, Chapters 2 and 3; Jacques Rancière, La haine de la démocratie, Paris: La Fabrique, 2008.
The “Greek bailout” should be thought of as a TARP for German and other European bankers and global currency speculators. Almost $1 trillion is being provided by governments (mainly Germany, at the cost of its own domestic spending) into a kind of escrow account for the Greek government to pay foreign bondholders who bought up these securities at plunging prices over the past few weeks. They will make a killing, as will buyers of hundreds of billions of dollars of credit-default swaps on the Greek government bonds, speculators in euro-swaps and other casino-capitalist gamblers. (Parties on the losing side of these swaps now will need to be bailed out as well, and so on ad infinitum.)
This windfall is to be paid by taxpayers – ultimately those of Greece (in effect labor, because the wealthy have been untaxed) – to reimburse Euro-governments, the IMF and even the U.S. Treasury for its commitment to predatory finance.The “sanctity of debt – sacrificing the economy to pay bondholders – is to be used as an excuse to slash Greek public services, pensions and other government spending. But what is sanctity and religion, after all, without sacrifice. The question is, who is being sanctified, and to what god? In this case it seems to be Mammon, not Jesus. Self-immolation is to become a model for other countries to impose similar austerity as governments run up budget deficits in the face of economic shrinkage and falling tax collections.
Meanwhile, the financial sector is to be enriched by the translation of junk economics into international policy. Living in the short run is the financial sector’s time frame – while distracting the attention of indebted populations from calculations that Wall Street understands quite well: the debts cannot be paid in the end.
But they can be paid in the short run, with promises to pay someday – as if any economies ever have been able to grow by imposing austerity! It is all junk economics, of course. But it buys time for the bankers to pay themselves yet more bonuses this year. By the time the financial system collapses, they presumably will have put their money into hard assets.
Financial lobbyists are using the Greek crisis as an object lesson to warn about the need to cut back public spending on Social Security and Medicare. This is what the Greek demonstrators are opposing. Their interest lies in reversing the global tax shift off property and finance onto labor. They understandably want to give priority to labor’s claims for retirement pensions, not claims by the banks to get fully paid on hundreds of billions of dollars of recklessly bad loans recently reduced to junk status – government debts run up by not taxing real estate and finance.What “Europe” has just done (with U.S. applause) is throw its hat into the class war of finance, insurance and real estate (FIRE) against labor, and hence against economic growth.
Bank lobbyists know that the financial game is over. They are playing for the short run. The financial sector’s aim is to take as much bailout money as it can and run, with large enough annual bonuses to lord it over the rest of society after the Clean Slate finally arrives. Less public spending on social programs will leave more bailout money to pay the banks for their exponentially rising bad debts that cannot possibly be paid in the end. It is inevitable that loans and bonds will default in the usual convulsion of bankruptcy.
Greek labor is not yet so pessimistic as to give up the fight.What it recognizes that its American counterparts do not is that somebody will control the government. If labor – the demos – loses its spirit, power will be relinquished to foreign creditors to dictate public policy by default. And the more the bankers’ interest is served, the worse and more debt-burdened the economy will become. Their gain is bought at the price of domestic austerity. Scheduled payouts by Greek pension funds and government social spending programs must curtailed be to replenish German and other European bank capital.
This worldview already has been delivered to Europe’s northernmost periphery, where it has elicited a fiscal masochism that banks hope to see in Greece. Having fallen on their swords, Baltic governments would be jealous and even resentful to see Greece rescue its economy where they themselves failed to repudiate arrogant creditor demands. “Seen from the eastern rim of the European Union, the looming austerity drive in crisis-afflicted Greece reads like old news,” writes Nina Kolyako. <#_ftn1> “For almost two years, the Baltic states of Lithuania, Latvia and Estonia have brought in repeated draconian measures, slashing public spending and hiking taxes to try to dig themselves out of a hole. ‘We learned the lessons very painfully, heavily and effectively, that you need to look after the fiscal situation very carefully,’ Lithuanian Prime Minister Andrius Kubilius told AFP in a recent interview. ‘We understood very clearly that fiscal consolidation was the only way for us to survive.’”
Capitulating in a classic Stockholm syndrome (literally to Swedish banks in this case), Lithuania’s government dutifully tightened to screws so much that GDP plunged by over 17 percent. A similar plunge occurred in Latvia. The Baltics have slashed public-sector employment and wages, imposing poverty rather than the Western European levels of prosperity (and progressive taxation to foster a middle class) that was promised after the Baltics achieved their independence from Russia in 1991.
After Latvia’s parliament imposed austerity in December 2008,popular protest in January brought down the government (as a similar protest did in Iceland). But the result was merely another neoliberal “occupation regime” run on behalf of foreign banking interests. So what is unfolding is a Social War on a global scale – not the class war envisioned in the 19th century, but a war of finance against entire economies, against industry,real estate and governments as well as against labor. It is happening in the usual slow motion in which great historical transitions occur. But as in military conflicts, each battle seems frenetic and spurs wild zigzagging on the world’s stock and bond exchanges and currency markets.
All this is great news for computer program traders. The average commitment of funds lasts only a few seconds these days as financial markets are buffeted up and down by vast credit waves blown by the storms sweeping today’s financially overheating planet.
The coming economic dystopia
The Greek crisis shows how far the “European idea” has shifted from 1957 when the six-member European Economic Community (EEC) was formed. At U.S. prodding, Britain and Scandinavia created the rival seven-member European Free Trade Association (EFTA) Even so, the promise of Euroland – at least before Maastricht and Lisbon – was to elevate labor to middle-class prosperity, not to impose IMF-type austerity programs of the sort that devastated Third World countries. The message to indebted economies is stark: “Drop dead.” And they are obediently committing economic hara kirim(emulating Japan in the 1985 Plaza Accords) to endorse the Washington Consensus – the class war of finance against labor and industry.
Political, social, fiscal and economic power is being transferred to the EU bureaucracy and its financial controllers in the European Central Bank (ECB) and the IMF, whose austerity plans and related anti-labor programs direct governments to sell off the public domain, land and subsoil wealth, public enterprises, and to commit future tax revenues to pay creditor nations. This policy already has been imposed on “New Europe” (the post-Soviet economies and Iceland) since autumn 2008. It is now to be imposed on the PIIGS (Portugal, Ireland, Italy, Greece and Spain). No wonder there are riots!
For observers who missed Iceland and Latvia last year, Greece is the newest and so far the largest battlefield. At least Iceland and the Baltics have the option of re-denominating loans in their own currency,writing down their foreign debts at will and taxing property to recapture for the government the revenue that has been pledged to foreign bankers. But Greece is locked into a European currency union, run by unelected financial officials who have inverted the historical meaning of democracy. Instead of the economy’s most important sector – finance – being subject to electoral politics, central banks (the designated lobbyists for commercial and investment bankers) have been made independent of political checks and balances.
In truly Orwellian fashion, right-wingers in Europe and the United States (such as Fed Chairman Ben Bernanke) call this the “hallmark of democracy.” It actually is the stamp of oligarchy, stripping away control over the economy’s credit allocation – and hence, forward planning – while giving high finance a stranglehold over public spending programs.
Iceland, Latvia and now Greece are the opening shots in the resulting global campaign to roll back the great democratic reform program of the 19th century and the Progressive Era: taxation of land and the “unearned increment” of price gains for real estate, stocks and bonds, and subordination of the financial sector to the needs of economic growth under democratic direction. This doctrine was still being followed by the post-1945 era of progressive taxation that saw the 20th century’s greatest rise in living standards and economic growth. But most countries have reversed the fiscal trend since 1980.Tax collectors have “freed” income from public obligation only to see it pledged to banks for higher loans to bid up property prices.
Houses, office buildings and entire companies are worth whatever banks will lend. So populations (and corporate raiders) have responded to the pro-financial tax shift by borrowing to buy houses (and companies) before prices recede even further out of reach. And taxes on labor now are about to be jacked up to pay off the public debts resulting from the asset-price inflation and financial wreckage that property tax cuts have helped cause. This is the cause of national debts. Governments have run into debt as a result of un-taxing the wealthy in general, not just real estate.
Following Western governments in shifting the fiscal burden off property and finance onto labor over the past few decades, Greece’s government is politically unable or unwilling to tax the wealthy, or even well-to-do professionals. But neoliberals blame it and other debtor governments for not selling off enough public land and enterprises to make up the gap. Tax-deductible interest charges make privatizations on credit tax-exempt, so governments will lose the user fees they formerly received – while populations pay higher “tollbooth” charges for hitherto public services.
Just as the U.S. Government has done, it has issued bonds to finance the deficit resulting from these tax cuts. The buyers of these bonds (mainly German banks) are demanding that Greek labor (and now German taxpayers as well) should bear the burden of tax shortfalls. German and other European banks and bondholders are to be repaid at the social cost of drastic cutbacks in pensions and social spending – and if possible, by more privatization sell-offs at distress prices.
The riots in Greece have erupted because labor understands what most journalistic reporting shies away from confronting. Growth in real wages has slowed (and has stopped cold in the United States since about 1979). Home ownership has been achieved at the cost of new buyers taking on a lifetime of mortgage debt. And the post-Soviet economies won their political freedom from Russia, only to find themselves insolvent today, dependent on IMF and EU direction of their economies to obtain the loans to pay their foreign bankers that have loaded down their housing, public enterprises, industry and families with debt.
Bondholders and financial speculators have ganged up to demand EU, IMF and US support for them to take their gains before the financial game crashes. The grab can be done most quickly by shrinking economies under IMF-style austerity plans. Unemployment is to rise while driving economies even further into debt – not only public debt as shrinking markets lead to falling tax revenue, but also foreign debt as import dependency increases.
Creditors are to be paid by letting them appropriate the economic surplus, in the form of debt service at the expense of new capital investment, infrastructure spending, public social spending and rising living standards. Economically, the Greek uprising is a revolt against the policy of sacrificing prosperity to pay foreign creditors in this way.
At the political level the fight is to save Greece from being turned into an anti-state. The classical definition of a “state” or government is the ability to levy taxes and issue money. But Greece has relinquished its fiscal authority to the EU and IMF, which are telling it to violate what political theorists list as the Prime Directive of any government: to act in the long-term national interest. The Greek government is being directed to act on behalf of bank capital, and indeed, that of foreign countries to engage in asset stripping, not to promote long-term growth.
At issue is whether nations will be run by creditors or by popular aims to reap the benefits of economic growth. An oligarchic push for IMF-EU loans to bail out foreign banks and bond speculators at the expense of Greek labor (the intended taxpayers of the future) aims at making labor rather than finance capital take the loss of government arrears resulting from un-taxing wealth. The aim is to enable foreign banks to avoid having to pay the price for acting as enablers in draining the domestic market. Government policy is to be taken out of the hands of voters and subordinated to the IMF and EU acting as instruments of international finance.
This creates a state of affairs in which neither Greece nor the EC are “states” or “governments” in the traditional political sense. The EU and IMF bureaucracy is not elected. And at the point where their foreign-dictated financial plan succeeds, the economy’s capital will be stripped and social democracy will collapse.
On Sunday, May 9, German voters expressed their anger at the government’s role in bailing out German bankers (euphemized as bailing out “Greece”) at the expense of German taxpayers. The European Central Bank [ECB] is not creating free euro-money but is billing national governments). The Social Democrats overtook Chancellor Angela Merkel’s Christian Democratic Union party in North Rhine-Westphalia. Winning only a bit over a third of the vote – a bit less than the Social Democrats (and down over 10 percentage points from the last election, of which 4 points were lost just in the last week when the bailout package was promoted by Ms. Merkel) – the CDU lost its majority in Germany’s upper house.
Many German voters may have wondered whether taxing the poor to pay the rich to engage in usury was really as “Christian” as the party claimed to represent. Or maybe they were concerned that Germany’s tax collector is to pay nearly $30 billion as its share in the bailout of bankers – not all of whom are beloved in Germany, even when they are German. And some no doubt saw the game as a financial deception by the banking sector’s compliant politicians.
Europe’s financial lobbyists used the crisis as an opportunity to promote a broad series of bailouts. For Swedish and Austrian banks, the EU approved a €60bn extension of the balance-of-payments facility already put in place to help Hungary, Romania and Latvia keep current on their debts to Austrian and Swedish banks respectively. To circumvent the Eurozone’s no-bailout principle, this special bailout law is based on Article 122.2 of the EU treaty permitting loans to governments in “exceptional circumstances.” <#_ftn2>
If we give Ms. Merkel credit for understanding the economics at work, then we must accuse her of lying through her teeth. The Baltic debt problem is chronic and structural, not “exceptional.” Ms. Merkel also must know that she is being deceptive in pretending to help Latvia by extending loans that the EU limits explicitly to support the lat’s exchange rate, not for domestic development. The foreign exchange is to cover the cost of Latvians paying mortgages in euros to Swedish banks, and of Latvian consumers buying food and manufactures that EU governments subsidize while leaving the Baltics in a state of economic and financial dependency.
Latvia thus is being victimized, not helped. The aim is to give Swedish banks a little more time to keep collecting payments on loans that are going to go bad in due course. Foreign exchange spent in facilitating private debt service to foreign banks becomes a national debt, to be paid by Latvian taxpayers. This EU loan thus is an exercise in naked neo-colonialism.
Will the belated shift of German voters to back the Social Democrat red-green coalition with the Green and Left parties do much to stem matters? Probably not. Greek President Papandreou acquiesced in the cave-in despite being head of the Socialist International. So the question is whether Greece really is checkmated, destined to see its public spending, pensions, health care, schooling and living standards rolled back in the way that the Baltics have experienced. They have been an experiment in neoliberal central planning. If they are an example of what the future is to bring, the world will soon see a wave of Greek emigration, Baltic-style.
That evidently is what stock markets around the world anticipated when they soared on Monday morning at the news of Europe’s trillion-dollar bailout. What really was bailed out is the principle that economies should be stripped so that finance capital may rule. But the fight surely is not yet over. It will escalate for the remainder of the 2010s,because it is nothing less than an attempt to roll back the history of the 19th and 20th century’s struggle to replace the power of vested property and financial interests with principles of progressive taxation and public enterprise.
Is this where Western civilization really is supposed to be leading? Confronted by parliaments controlled by aristocracies, the 19th-century reformers sought to take them over on behalf of democracy. Classical political economy was a reform program to tax away the “free lunch” of land rents, monopoly rents and financial interest extraction. John Maynard Keynes celebrated this program in his gentle term, “euthanasia of the rentiers.”
But the vested interests have fought back. Calling social democracy and public regulation “the road to serfdom,” They are trying to set Europe’s economies on the road to debt peonage. Making an end-run around national elected governments to impose the Washington Consensus IMF and EU institutions have gained fiscal and economic control over governments and their tax policies to cut taxes on wealth – and borrow from it to finance the resulting fiscal deficits.
America’s Tea Partiers and anti-tax rebels have given up the fight to reform governments. Squeezed by debt from which they see no escape, they demand lower taxes – and are willing to see the highest brackets become the major beneficiaries in an even more regressive tax shift. Faced with the corruption of Congress by lobbyists acting on behalf of the vested interests, they reject government itself and seek safety in local gated communities. They see Congress and parliaments throughout the world losing autonomy to the IMF, the EU and other Washington Consensus organizations seeking to impose austerity and shift the tax burden onto labor and industry, off property and off predatory finance.
The only way to prevent a regressive tax shift and debt squeeze is gain control of governments on behalf of the spirit of classical economic and Progressive Era reforms. At least, that is what Greek labor is rioting for. Someone must control government, and if democratic forces withdraw from the fight, the financial sector will tighten its grip.
Last week is still only the beginning of how this drama will play out. The response by the post-Soviet economies, which have retained their own currencies, is to come this summer and autumn.
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