9 June 2004
My previous essay (‘Queen Victoria in Drag‘) prompted some further thoughts on our present predicament and foremost was the reality that the 20th century consisted almost entirely of a war between two ideologies – capitalism and socialism. And although the examples, the Soviet Union, China and so forth were not exactly what many socialists of the 19th and the 20th centuries had in mind, there is no escaping the fact that the ideas inherent in all the attempts at building an alternative to capitalism captured the imaginations of much of the world and laid the basis for all the liberation movements that were to follow and, had a profound effect on capitalism.
A book I read last year, “Marx’s Revenge” by the economist Mechnad Desai, proposed that the Bolshevik Revolution ‘postponed’ the development of capitalism by forestalling what we now call globalisation, a process, he contends that was well underway until the Bolshevik Revolution came along and rudely interrupted it.
To justify this analysis he delves deeply into Marx, Hegel, Adam Smith as well as 20th century economists such as Keynes, Schumpeter and Hayek. Desai proposes that the process of globalisation that was already well underway in the 19th century underpinned Marx’s ideas about the necessary pre-conditions for a socialist society and that with end of the Soviet Union, capitalism was free once more, to pick up where it left off before the Bolshevik Revolution.
And it follows therefore, that if Marx’s analysis was correct, the period we are now in continues the process that will eventually lead to the triumph of socialism but this time it will be global in scope rather than in isolated and importantly, poor (underdeveloped) countries. For Marx pointed out that for socialism to flourish, it needed a developed economic base that included an educated population able to take on the job of building a viable alternative to the anarchy of capitalism.
Of course hindsight almost always gives us 20/20 vision. So was Marx right and does the present ‘resurgence’ of imperialism vindicate his life’s work or, is capitalism the best thing since sliced bread?
The issue is complex and for those not conversant with economics, not easy to unravel but the attempt has to be made to present the issues to my readers as best as I can without going too deeply into such things as:
Rate of profit = surplus-value ÷ total capital
= surplus-value ÷ [variable capital + constant capital]
Or, to bring it uptodate:
Rate of profit = surplus-value ÷ variable capital
x variable capital ÷ total capital
= rate of exploitation x [share of wages in total capital costs]
See what I mean? Yet these equations underpin the entire capitalist enterprise and whether we like it or not, the recurring crises of capital hinge on the fact that over time, the rate of profit tends to fall and capitalism has to figure out a way of boosting profits to levels that make the investments worthwhile for the capitalist.
Traditionally as it were, there are a number of ways of attempting to solve the problem of the falling rate of profit:
- Depress wages
- Lower the cost of production by introducing more efficient production methods
- Find new markets
- Wipe out the competition or as it’s commonly known, war (war also has the added ‘advantage’ of destroying lots of fixed and variable capital ie, buildings, labour and all the destruction will spur new investment in rebuilding eg, the Marshall Plan after WWII)
In reality of course, the solution might well consist of a combination of the above and, as production has become increasingly automated, removing labour almost entirely from the process whilst solving one problem, creates another namely, who will buy the products and where will the surplus value come from (profits cannot be made from machines, only from people’s labour)? This in part, explains the shifting of production from the metropolitan hearts of capital but carries with it like a virus, the seeds of change, for every country that becomes a new centre of production will in turn produce opposition and struggle over the ownership of the surplus created. This is, as Marx pointed out, an endless process until the world is one big factory for capital. How long this process will take to complete is of course unknown but based upon the last thirty years or so, some centres of production eg automobiles and electronics have already been relocated three or four times to ever cheaper ‘zones’ of production.
And, as some of the more astute managers of capitalism have noted, the developed capitalist world is now in real danger of de-industrialising to the point whereby, the critical intellectual skills are disappearing into countries like India and China. It also explains the need to resort to military solutions to economic problems such as the US invasion of Iraq, for failing strong, civilian economies such as those of the EU, an economy based on a military/industrial core has little choice but to use all the weaponry.
In addition, we have the added environmental crisis that it closely related to the oil-based economy of the US which in turn is exacerbated by being dependent on the petro-dollar to underwrite the vast deficit being created by the US military economy in a vicious circle that only the massive consumption afforded by war can break. For capitalism then, this is an endless cycle unless it can break out into the world. The additional problem of a war-based economy is that it adds no real wealth to society as a whole.
“Dropping bombs is not productive investment and returns no real value back into the circulation and accumulation process, unless, that is, we consider a fall in the price of oil to $20 a barrel as part of a rate of return on military action in Iraq.
“The New Imperialism” by David Harvey p.204. (Also, see my review)
Hence finding new markets is the raison d’etre of capitalism and it is to this end that capitalism expands across the world, sweeping all other forms of production away until, in theory at least, it has no place left to expand into. It is at this point that Marx contended that the necessary pre-conditions for a transition to a socialist economy would be in place.
This process reveals itself to us as ‘boom and bust’ and historically speaking, a major war roughly every 25 years or so to consume all that capital, take out the competition and open up new markets.
Ever since the Crash of ’29 and under the impact of socialist competition, efforts have been made to regulate capitalist economies, that until the Reagan/Thatcher years used the theories of Keynes that utilised state intervention to ‘guide’ investment and to use the state to invest directly, especially in those areas critical to development but not necessarily profitable (in the short term) for the capitalists eg telecommunications, transport and energy.
But even under so-called neo-liberalism the state has no compunction about intervening to prop up ailing sections of a capitalist economy either through subsidies, grants, tax breaks and so forth.
Moreover, capitalism doesn’t operate in a vacuum, there are always opposing forces that to a lesser or greater degree attempt to exert some control over the anarchy of capitalist production whether it’s the state itself, the organised working class or even supra-national bodies like the UN or the EU.
But since the end of the Cold War, the major capitalist powers have seen fit to try and return things back to the ‘good old days’ before the advent of socialism (or at least socialist ideas) which means essentially the ethos (and morality or lack of) of 19th century imperialism. So for example, what used to be called gunboat diplomacy is now called pre-emptive war masked by a lot of rubbish about preserving civilisation, humanitarianism, the war on terror, failed states…
One might add (somewhat flippantly I admit) that everything else is bullshit, ‘democracy’, ‘human rights’ etc, for as history shows, capitalism in its most extreme forms such as Nazi Germany or Apartheid South Africa dispensed with such niceties as universal suffrage, free speech, (the right to assemble) and so on. And anyway, the ‘right to vote’ wasn’t given to us by capitalism, we had to fight for it. Indeed, I might also add that no one or country can give you freedom, it’s something you have to take and it’s something that starts first and foremost in your mind. And, as we have seen, under the pretext of the ‘war on terror’ taking away the rights we have fought so hard to attain is not confined to such extreme forms of capitalism such as Fascism.
If Marx was indeed correct in his analysis, one could argue that for socialists, all we need do is ‘sit back’ and wait for capitalism to expand into every available nook and cranny until such time as we can step in as it were and take over.
However, firstly the world doesn’t work this way not only because people tend to resist being screwed over but perhaps just as importantly, unrestrained capitalist ‘development’ has proved to be extremely destructive, not only materially but just as importantly, spiritually. And it should be clear to most thinking people that capitalism has an unhealthy propensity for starting wars when everything else fails, no matter what kinds of propaganda it puts out about ‘human nature’ in order to justify its predations.
The other objection to the ‘sit and wait’ approach is that capitalism doesn’t have a plan of any kind, it is driven by the immediate needs of those who own and control capital. Serendipity rules.
The question that confronts us right now however, is why in this new period of unrestrained capitalism, there is no coherent opposition to its predations and what are the chances of one developing, especially as the ‘new’ imperialism without any realistic alternative to offer from a fragmented Left, has a free hand?
In part, this is the legacy of the Cold War and a century of anti-communism, so in this sense the real failure of socialism as it was practiced in the 20th century was to create a defeatist attitude amongst the former Left as well as dividing the Left into sectarian blocs, each claiming to be ‘real’ socialists or Marxists.
Following the failure of 20th century socialisms the only real opposition to the ‘new’ imperialism has come from the ‘anti-globalism’ movement, the environmental or Green movement and now in a most negative form, the rise of fundamentalist Islam that in any case has not shown itself to be anti-capitalist, merely anti-Western, a backwards-looking movement that would seek to recreate some non-existent nirvana from the ancient past.
Moreover, the anti-globalism’ movement aside from calling itself anti-capitalist, appears not to have any kind of real alternative to offer. The Greens, whilst correctly reflecting the real concerns of millions of people over the environmental crisis that confronts us, has no real economic alternative to offer except vague concepts about ‘sustainability’ and so forth. By itself then, the issue of the environment is not sufficient, what we need is a holistic alternative that takes into account all the key elements, the economy, democracy and human rights, the environment and of course a viable political structure that can embrace all these elements.
Is such a programme possible? I contend that it is but I think that it requires us to return to basics such as, what kind of socialist economy, what form or forms of democracy? And assuming such a programme could be developed, should it be based on the nation state or perhaps grow out of formations such as the European Union?
And how should such a programme relate to the poor countries of the world that those of us in the rich world regardless of our economic status, rely on so heavily for our advantage? These and many other questions should be at the top of our agenda as we ponder the disaster unfolding in the Middle East and the failure of social democracy to confront the ‘new’ imperialism.
What is certain, at least in the UK, is that the Labour Party (including its so-called Left) is a spent force and will never again be trusted by those who are genuinely on the left. With local and European elections due here this Thursday, the sad reality is that for a Lefty, the only party worth voting for is the Greens. The experience in Germany of the Red/Green coalition doesn’t bode well for such an alliance here in the UK even if there were a ‘left’ social democratic party to ally with.
So the agenda is clear, we need to return to our roots in the light of our experiences of the 20th century and reformulate the socialist project. Marx did much of the work for us, we need to reinterpret his deep understandings of capitalist development and apply it to the new conditions. To do anything else is to renounce the sacrifices and the heritage of our brothers and sisters of the past century.