Marxism and political organization by Elizabeth Schulte � Dandelion Salad

Marxism and political organization by Elizabeth Schulte @Dandelion Salad

by Elizabeth Schulte
SocialistWorker.org
December 2, 2010

How do we get from the vision of a socialist society to achieving one? Elizabeth Schulte looks at what Karl Marx and the Marxists after him had to say.

SOME ACADEMICS and historians may be happy to foster the idea that Karl Marx confined himself to analyzing the world, but the truth is that he and Frederick Engels sought to change it–and took part in building organizations dedicated to the goal of socialism.

In 1885, looking back on their discoveries about class society and the founding of the Communist League, Engels wrote:

[W]e were by no means of the opinion that the new scientific results should be confided in large tomes exclusively to the “learned” world. Quite the contrary. We were both of us already deeply involved in the political movement, and possessed a certain following in the educated world, especially of Western Germany, and abundant contact with the organized proletariat.

It was our duty to provide a scientific foundation for our view, but it was equally important for us to win over the European and in the first place the German proletariat to our conviction. As soon as we had become clear in our own minds, we set about the task.

Marx and Engels had fierce debates with radical thinkers of their day about how to achieve socialism. Central to their view was the importance of working-class organization to achieve a new society. They insisted on a vision of what has become known as “socialism from below”–the idea that socialism could only be achieved by the active participation of workers themselves, not a tiny elite, and that workers had to have their own organization to carry this out.

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IN THE Communist Manifesto, the 1848 pamphlet written as the platform of the Communist League and eventually one of the most famous books ever published, Marx and Engels devote considerable space to these arguments.

The utopian socialists, who believed that islands of “socialism” could be imagined, planned and carried out by an enlightened (if not necessarily well-meaning) elite, were a target of their criticism. So, too, were those who argued that the existing representatives of the state could be coerced into granting socialism from above.

Marx and Engels also spared no criticism for those, like the followers of the French revolutionary Louis Blanqui, who believed that the fight for socialism had to be the work of a tiny band of insurrectionists, organized secretly. While cloaked in seemingly radical language, this approach also amounted to another plan for socialism delivered from above that must ultimately fail, according to Marx and Engels.

Following from the idea that socialism could only be achieved by the mass of workers emancipating themselves, Marx and Engels looked to build the kind of organizations that were equipped to take part in struggles for this purpose.

When he was invited to join the group League of the Just, Marx said he would do so on the condition that it abandon its secret and conspiratorial methods, and organize openly. The group was renamed the Communist League. Marx likewise argued against radicals of the day who refused to take part in trade union activity–he and Engels sought out ties with unions and the Chartist movement in England.

Later, Marx and Engels would help found the International Working Men’s Association, in an effort to bring together a number of workers’ organizations internationally. Its founding document made the central point crystal clear: “That the emancipation of the working classes must be conquered by the working classes themselves.”

Nevertheless, the participants in the First International represented a fairly broad set of different politics. The kind of organizations that Marx was building were primarily social democratic organizations, where the party attempts to represent the whole working class. Later, Lenin and the Bolsheviks in Russia would develop the idea of a vanguard party–an organization that seeks to unite the most revolutionary workers.

Marx, however, built the framework for how future socialists viewed the relationship between the revolutionary socialist organization and the working class–by insisting that there needed to be a party of the working class that represents working-class interests.

While he may have underestimated the forces at play that undercut workers coming to revolutionary conclusions, Marx’s analysis of the nature of working-class consciousness–that it is neither uniform nor static over time, but uneven and influenced by the dominant ideas in society, which are those of the capitalist class–provided the building blocks for further revolutionaries to think about what kind of organizations needed to be built.

Marx explained how ruling class ideas–everything from racism based on skin color to the idea that workers are unable to run society–could be challenged in the course of struggle. But he also insisted on the important of direct intervention by organized socialists.

In the Communist Manifesto, he and Engels argued:

The Communists do not form a separate party opposed to the other working-class parties. They have no interests separate and apart from those of the proletariat as a whole. They do not set up any sectarian principles of their own, by which to shape and mold the proletarian movement.

The Communists are distinguished from the other working-class parties by this only: 1. In the national struggles of the proletarians of the different countries, they point out and bring to the front the common interests of the entire proletariat, independently of all nationality. 2. In the various stages of development which the struggle of the working class against the bourgeoisie has to pass through, they always and everywhere represent the interests of the movement as a whole.

The Communists, therefore, are on the one hand, practically, the most advanced and resolute section of the working-class parties of every country, that section which pushes forward all others; on the other hand, theoretically, they have over the great mass of the proletariat the advantage of clearly understanding the line of march, the conditions and the ultimate general results of the proletarian movement.

This idea of the role of “the most advanced and resolute section of the working-class parties” would be fully developed by Lenin and later revolutionaries.

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AFTER MARX, the dominant form of socialist organization was large, national workers’ organizations whose members subscribed to many different ideas about socialism. For example, Germany’s Social Democratic Party (SPD, by its initials in German), the jewel of the socialist movement of the time, had a large and growing influence on working-class life.

By the mid-1910s, the SPD had created a kind of “state with the state,” with a million members, elected representatives in parliament, and many social and cultural organizations to benefit workers. During this period of economic expansion in Germany, workers were able to win reforms from the state with greater ease than at other times.

Within the broad membership of the SPD, conservative reform-oriented socialists existed alongside committed revolutionaries. So Rosa Luxemburg and Karl Liebknecht, who viewed the revolutionary self-emancipation of the working class as the way to socialism, were SPD members–and so was Eduard Bernstein, who rejected revolution and argued that socialism could be carved out of capitalism one reform, or seat in parliament, at a time.

Around the world, these groups made up the Second International, with the pattern of the SPD’s broad tent repeated in other countries.

In the U.S., for example, the Socialist Party included conservative leaders like Milwaukee’s Victor Berger, who thought that the party should limit its activity to getting elected to government office. Berger was also a racist who defended segregation in SP organizations in the South and supported keeping out Chinese immigrants. At the same time, the SP also counted among its members militant revolutionary socialists like Big Bill Haywood and Eugene Debs.

Like Berger, Debs ran for public office on several occasions–but with an important difference. Debs’ goal wasn’t actually getting elected to office, but using the campaign to spread the idea of socialism and convince workers that they needed to get organized. The source of workers’ power wasn’t in their ability to vote, but in their ability to stop working and bring society to a standstill, Debs believed. The election was a way to bring these ideas into the public debate.

In this way, Debs’ idea of how social change happens and the role that elections can play in spreading these ideas was in keeping with what Marx thought. “Even when there is no prospect whatsoever of their being elected,” Marx advised, “the workers must put up their own candidates in order to preserve their independence, to count their forces and to bring before the public their revolutionary attitude and party standpoint.”

But this wasn’t the approach shared by many social democrats, and conservative leaders by and large succeeded in pulling their organizations to the right.

Over time, it became clearer that the differences within organizations like the SPD weren’t cosmetic or insignificant, but much more fundamental. They proved disastrous in 1914, when the elected leaders of the SPD voted alongside capitalist parties in favor of war spending in the lead-up to the First World War. Social democrats in other Western countries, who had previously agreed to oppose the drive to war, followed suit.

In other words, so-called workers’ parties–while still professing to stand for international socialism–were voting in the interests of their own countries’ ruling classes to send workers into the slaughter of the First World War.

It was up to Lenin and the Bolsheviks in Russia to argue for and organize a different kind of socialist organization–a vanguard party made up of revolutionary workers committed to the overthrow of capitalism.

Up until 1914, Lenin believed that he and social democrats in countries like Germany were all building organizations to prepare for workers’ revolution–and that the differences between their methods were the result of Russia’s specific situation of organizing under Tsarism and in conditions of illegality.

But with the Second International’s capitulation in the face of capitalist world war–a fact that Lenin would not believe when he first heard the news–Lenin turned his attention to building a new international of parties devoted to revolutionary socialism.

Lenin developed an uncompromising critique of social democracy. He broke with other socialists who still looked–to whatever degree–to the idea that socialism could be gradually won by winning seats in parliament, or those who made compromises to keep social democrats of different political tendencies together.

Lenin went back to Marx’s writings on the 1871 Paris Commune–the uprising that produced the first, though brief, experience of workers’ power when the ordinary residents of Paris took charge of the city–and especially to Marx’s analysis of the state. As a later preface to the Communist Manifesto written by Engels points out: “One thing especially was proved by the Commune, viz., that ‘the working class cannot simply lay hold of the ready-made state machinery and wield it for its own purposes.’”

Lenin built upon this point in his short work State and Revolution, arguing against the social democrats and advancing the case for creating socialist parties capable of overthrowing their own ruling classes around the world.

As British socialist John Molyneux commented in Marxism and the Party:

A party aiming to smash the state cannot be organized in the same way as a party intending to take it over. Its center of gravity must be not in parliament, but in factories, from which the new state will issue. The rank-and-file of the party cannot simply be passive voters or even propagandists. They themselves have to become leaders of their fellow workers, builders of their own new state machine.

Moreover, the thesis that the bourgeois state had to be smashed, finally closed the option of peaceful or constitutional revolution even for the “freest” of democratic republics. Proletarian revolution would by definition involve a mass struggle for power, and therefore every revolutionary party would have to be organized as to be able to lead such a struggle.

Lenin insisted on the need for a disciplined revolutionary party made up of the vanguard of the working class–or put more simply, the most politically advanced sections of the working class. A lot of people, from the right and the left, have heaped abuse on the concept of a vanguard, painting it as an elitist term that means a few people at the top make all the decisions and then hand them down to the masses below. But the real Lenin has nothing to do with this picture.

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LENIN, LIKE Marx before him, understood that socialism could only by achieved by the mass of workers’ self-activity, not a tiny minority of enlightened individuals. But like Marx, Lenin also recognized that capitalism had created powerful barriers to workers reaching revolutionary conclusions.

For instance, racism, sexism and homophobia divide workers and obscure the interests they actually share. Similarly, competition for jobs pits one worker against another, diverting attention from the real source of the problem–that capitalism thrives on a pool of unemployed workers who can serve as a constant threat to those who have jobs. Other obstacles include the lie that workers are incapable of running society themselves, and that this should be left to the “experts.”

Up against an avalanche of these ideas propagated in schools and in the media, it’s no wonder that workers have widely different ideas about themselves and the possibilities for far-reaching change. So, for instance, some workers can have racist ideas, while others may understand the necessity of confronting racist ideas that make our side weaker.

In the course of individual struggles, workers can arrive at these conclusions and also learn about their own power as workers. But not everyone learns these lessons at the same pace. For any struggle to go forward, it has to be led by those who had learned those lessons–the most advanced, forward-thinking workers, or what Lenin called the vanguard.

Lenin’s idea of the vanguard party means that working-class militants and other activists who have already concluded that we need a whole system must come together into their own organization in order to centralize and coordinate their efforts against the system.

In the pamphlet What Is to Be Done, Lenin explained that these revolutionary workers should stand alongside other workers in all kinds of struggles, not just those over economic demands in a workplace. A revolutionary should see herself or himself, Lenin wrote, as:

the tribune of the people, who is able to react to every manifestation of tyranny and oppression, no matter where it appears, no matter what stratum or class of the people it affects; who is able to generalize all these manifestations and produce a single picture of police violence and capitalist exploitation; who is able to take advantage of every event, however small, in order to set forth before all his socialist convictions and his democratic demands, in order to clarify for all and everyone the world-historic significance of the struggle for the emancipation of the proletariat.

Lenin argued that an organization with the aim of overthrowing capitalism would have to be both highly democratic and disciplined. Right-wing historians have had a field day over the years, spinning stories about how the Bolshevik Party was made up of coup-makers, or was a top-down organization where decisions were dictated from above.

The reverse is true. At its height during 1917 and after, the Bolshevik Party counted among its members young militant workers who took part in regular and sharp debates over the next steps in the struggle. After such debates, there were votes, and then the decisions were put into effect.

This gets at the practical meaning of one of the more maligned and misunderstood concepts in Marxism: “democratic centralism.” This principle means freedom of debate and discussion, majority rule and then unity in action. For it to work, no steps can be skipped.

Lenin argued in 1906 for “unity of action, freedom of discussion and criticism…The strength of the working-class lies in organization. Unless the masses are organized, the proletariat is nothing. Organized–it is everything. Organization means unity of action, unity in practical operations. But every action is valuable, of course, only because and insofar as it serves to push things forward and not backward, insofar as it serves to unite the proletariat ideologically, to elevate, and not degrade, corrupt or weaken it.”

Leading bodies and officials in the party were elected by the members and were responsible to them and subject to recall.

In this way, democracy and vigorous discussion flourished during the Russian Revolution and after. Tragically, this experiment in workers’ power was crushed by the counterrevolution that took place with the rise of Stalinism. It was then that the concept of centralism was turned on its head. The small elite around Stalin squelched democracy and threatened any hint of opposition in order to maintain their rule.

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DURING REVOLUTIONARY upswings, the need for such a party is obvious, as it was in Russia in 1917 in the months preceding the October revolution, when Bolsheviks were able to organize among fellow workers about the immediate next steps.

But this also shows the necessity of building such an organization, experienced in the struggles of the day, well before revolutionary upheavals. Organizations need to be built before the great upheavals, and help knit together and learn from the smaller struggles that happen in seemingly quieter times. This became obvious in Germany, where no such revolutionary party was built in time to play a leading role when a revolutionary situation arose that could have helped spread the revolt in Russia to workers throughout Europe.

Building a revolutionary socialist organization can’t be put off to situations of upheaval, when success or failure depends on already having an organization rooted in past working-class struggles.

Whether or not such an organization exists can mean the difference between a workers’ movement going forward and backward–between moving toward revolutionary conclusions or retreating back to the old ideas of the status quo. This is a lesson that has been repeated in struggle after struggle internationally, from Chile in 1973 to Poland in 1980.

The Russian revolutionary Leon Trotsky described it this way:

Only on the basis of a study of political processes in the masses themselves can we understand the role of parties and leaders, whom we least of all are inclined to ignore. They constitute not an independent, but nevertheless a very important, element in the process. Without a guiding organization, the energy of the masses would dissipate like steam not enclosed in a piston box. But nevertheless, what moves things is not the piston or the box, but the steam.

For socialists today, the urgency of building this kind of organization should be clear. A socialist organization works to be the memory of past working-class struggles and to learn from them, as well as to help build today’s struggles on all sorts of fronts. And in times like these, when fightbacks are often sporadic and short-lived, socialists play a key role in linking together these struggles and generalizing the lessons from them.

As Paul D’Amato puts it in his book The Meaning of Marxism, “The question for socialists today is bridging the gap between muted anger and collective action, and between collective action and socialist consciousness.”

Writing about the need for rebuilding revolutionary organizations rooted in working-class struggles of the time, British socialist Duncan Hallas wrote in 1971 about the job that lay before socialists:

The many partial and localized struggles on wages, conditions, housing, rents, education, health and so on have to be coordinated and unified into a coherent forward movement based on a strategy for the transformation of society. In human terms, an organized layer of thousands of workers, by hand and by brain, firmly rooted amongst their fellow workers and with a shared consciousness of the necessity for socialism and the way to achieve it, has to be created.

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Capitalism's global slump | SocialistWorker.org

Capitalism's global slump | SocialistWorker.org

Capitalism's global slump

A new book provides a framework for understanding the worst economic crisis since the Great Depression--and the opportunities for revolutionaries, writes Ashley Smith.

March 7, 2011

A man sits outside a makeshift home in a slum in Cape Town, South Africa (Arne Böll)A man sits outside a makeshift home in a slum in Cape Town, South Africa (Arne Böll)

IN LATE 2008, our rulers panicked. With the spectacular crash of the investment bank Lehman Brothers, they were seized with the fear of the possible collapse of the global financial system. As George W. Bush's Treasury Secretary Hank Paulson confessed, "I'm worried about the world falling apart."

But today, the bankers and capitalists seem to have recovered their gravity-defying hubris. Wall Street firms handed out record bonuses at the start of the year--and big business cheerleader-in-chief Barak Obama boasted in his State of the Union Address, "We are poised for progress. Two years after the worst recession most of us have ever know, the stock market has come roaring back. Corporate profits are up. The economy is growing again."

Don't believe the hype. The crisis has not ended, but mutated. The governments of the world spent trillions of dollars to bail out banks and corporations, essentially transferring their bad debts and losses onto government ledgers. In some countries, this caused a sovereign debt crisis that could lead to defaulting on their debt.

To get themselves out of this trap and balance their budgets, governments everywhere have launched massive austerity programs. They are slashing public workers' wages and benefits, gutting social programs, raising the retirement age to lower the cost of social security, and scapegoating the oppressed to divide and conquer any opposition. The only success story among the world's major economies, China, is plagued with overcapacity, speculative bubbles on the stock market, and rampant inflation.

Review: Books

David McNally, Global Slump: The Economics and Politics of Crisis and Resistance. PM Press, 2011, 230 pages, $17.

Canadian socialist David McNally's new book Global Slump: The Economics and Politics of Crisis and Resistance, brilliantly explains the roots and nature of this new epoch of crisis, capitalist austerity and working-class resistance.

In an accessible and witty style, he uses Karl Marx's theory of crisis to explain the arc of world capitalism from the long boom after the Second World War to today's slump. He also develops a perspective that can guide the revolutionary socialist left to build forces in the thick of emerging struggles for reform and eventual revolution.

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McNALLY ARGUES that booms and crises are rooted in the dynamics of competitive exploitation at the heart of the system. Capitalists, in order to out-compete their rivals, invest in plant, machinery and technology to increase productivity so workers make more products that can be sold at a cheaper price. This generates a boom for a period of time, but soon, rivals catch up. Worse, since they are investing more in technology than in living labor, which is the source of profit, their rate of profit goes down.

Crises then break out. Corporations have built too many factories, producing too many products that they can't be sold at a high enough rate of return. Such crises of overproduction and declining profit rates can only be overcome when capital can rid itself of some of the overaccumulation--by cheapening the cost of plant and machinery and driving down the cost of living labor. When that's accomplished, the cycle repeats again.

In ageing capitalism, however, crises take on a different character. To restore growth, the actions taken during crises must be more destructive to clear out space for renewed expansion. For example, it took the Second World War to restore growth after the Great Depression.

But fearful of the gravity of such deep crises, national states now step in to protect companies from failing, thus preventing the destruction of overaccumulated capital. "The result," McNally argues, "is a stretching out of the crisis--by making it longer, if less severe. In short, by inhibiting the destruction of capital, recessions are made less brutal--but also less effective."

Based on this theory, McNally explains how the postwar boom turned into crisis in the 1970s. The Second World War had laid waste to Germany and Japan, as well as large parts of Europe. Therefore, capitalism was able to sustain a prolonged boom from the end of the war up to the early 1970s. By then, the rise of Japan and Germany as economic rivals to the U.S. triggered another crisis of overproduction and declining rates of profit.

All the governments responded with policies known as Keynesian that typically revolve around increased government spending to stimulate demand and investment. Keynesians, according to McNally, wrongly think that crises are rooted in capitalist's psychological fear of inadequate returns. If state investment is substituted for them, then it can trigger another expansion in the economy.

The Keynesians are wrong theoretically--crises are rooted in the system itself, not in the bosses' mindset. The proof was in what happened in the 1970s--state spending merely triggered an inflationary spiral and poor growth rates, described at the time as "stagflation."

To get out of a massive global crisis, the ruling classes, especially in the U.S., turned to quite different policies, which came to be known by the term "neoliberalism." This meant letting the free market rip, by implementing deregulation and privatization, and shredding social welfare system. The face of neoliberalism on a world scale was globalization, where more powerful countries battered their way into markets in the less developed world.

McNally argues that ruling classes used three strategies to cheapen capital and labor in this era. First, they shut down factories and turned to lean production techniques that lowered the cost of plant and machinery. Second, they smashed unions in the advanced capitalist world. Third, carrying out what Marx called "primitive accumulation," they dispossessed peasants in the developing world, driving them into the cities as cheap labor.

As a result of these measures, McNally argues, the capitalist class was able to overcome the crisis of the 1970s and trigger a period of expansion from the early 1980s until 2007 in the advanced capitalist world and sections of developing world, especially around China in Northeast Asia. The neoliberal boom tripled the size of the world economy.

McNally's argument is an important correction to Robert Brenner, Alex Callinicos and the late Chris Harman, who have claimed that the world economy has suffered a long downturn since the 1970s. These authors argue that capitalism in the neoliberal period pales in comparison to the robustness of the postwar boom.

But as McNally shows, the postwar expansion was exceptional in the history of capitalism, and when you instead compare the neoliberal period to other periods of capitalist expansion, it matches their rates of growth and profitability.

McNally also counters other radicals who suggest that the neoliberal expansion was merely the product of speculative bubbles or the casino economy on Wall Street created by what economics call financialization. He also rejects Marxists like Gerard Dumenil and Dominique Levy, who believe that finance capital effectively carried out a coup to take control of the state and thus deregulate the free market in its interests.

The problem with such conceptions is that they can lead their supporters to tail Keynesianism, with its case that there is no systemic cause of capitalist crisis, and that financial regulation can solve the current crisis.

Instead, McNally shows how financialization is rooted in the problems of the system itself. It was an unintended consequence of the 1970s crisis, it enabled the neoliberal expansion and it then exacerbated the crisis.

How? From 1946 to 1971, countries backed their currencies with gold. But as the U.S. increasingly imported products from abroad, its competitors built up enormous dollar reserves that the U.S. could no longer back with its own gold. Nixon therefore abandoned the gold standard, allowing currencies to change in value, or "float," against one another. From this point on, finance capital found ways to speculate on currency movements. Deregulation of financial markets in the 1980s and '90s was a matter of government policy catching up to reality, rather than policy causing the speculation.

As a result, finance capital became the predominant section of American capital, garnering 41 percent of U.S. profits in 2007. By then, these profits were no longer underpinned by growth in the real economy.

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THE NEOLIBERAL boom came with enormous social costs. The capitalist class impoverished workers in the advanced capitalist world. "In the U.S.," McNally writes, "real wages were 15 percent lower by 1993 than they had been in 1978."

McNally pays particular attention to racist dynamics of this class war on workers. In the U.S., he tracks how, as the U.S. cut social programs, it turned to prisons to jail its racialized "surplus" population. Finance capital turned to what he calls "predatory inclusion" by pushing credit cards not only on workers as a whole, but particularly on impoverished people of color. Banks abandoned racist practices of redlining and entrapped people of color in sub-prime loans.

In the Global South, the predatory nature of the neoliberal boom has been even more dramatic. McNally shows how the U.S., through the IMF, imposed structural adjustment policies on indebted countries, privatizing state industry, gutting the welfare state and opening them up to multinational capital. Neoliberal agricultural policies opened countries to imperialist agribusiness, whose subsidized products undercut local agriculture, driving peasants off the land to become a source of cheap labor in their own countries, or abroad as migrant workers, where they suffer from xenophobia and racial oppression.

The neoliberal boom fell prey to the classic contradictions of capitalism and turned into a bust in 2007. By the mid-1990s, the boom had produced overcapacity and an orgy of speculation centered in one of the new areas of growth--Asia. The crisis in Asia starting in 1997 was a sign that the neoliberal boom was coming to an end.

Since then, McNally argues, the advanced capitalist world engaged in increased financial speculation, first in high-tech and then real estate. Growth in the real economy was restricted to China, Northeast Asia and countries like Brazil, which mainly supplied commodities to the Asian boom.

But financial speculation could only delay the day of reckoning until 2007, when the combination of overproduction and declining rates of profits popped the mortgage bubble and threatened to bring down the world banking system.

While national states have been able to bail out the financial system and prevent collapse, they have not been able to restore growth. Instead, because they saved the "too-big-to-fail" corporations and banks, they have been unable to clear out the overaccumulated capital and restore the rate of profit.

The world economy is thus mired in what McNally calls a slump. "Rather than describing a single crisis," he writes, "the term is meant to capture a whole period of interconnected crises--the bursting of a real estate bubble; a wave of bank collapses; a series of sovereign debt crises; relapses into recession--that goes on for years without a sustained economic recovery."

Until capital is able rid itself of the overaccumulation, cheapen the cost of capital goods again, and drive down the cost of labor even further, it won't be able to generate another boom.

McNally argues that capital and their states are determined to find a way out of the slump through austerity. "Our rulers," he writes, "hope to soften us up for 'a decade of pain'--a period of high unemployment, falling incomes and huge cuts to health care, education and social welfare programs." What little recovery we have now is a result of this class war. As McNally reformulates a quip by Lawrence Summers, "We have statistical recovery because we have a human recession."

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AT THE same time, however, the crisis is producing the hope of resistance. McNally recounts some of the highlights of class fightback, from the Republic Windows and Doors factory occupation in Chicago, to the U.S. immigrant rights movement, to the heroic struggles in Bolivia, to the teachers' revolt in Oaxaca, Mexico, the victorious general strike in Guadeloupe and Martinique, and the wave of strikes in Europe.

To this, we can now add the revolutions that have erupted in North Africa and the Middle East against U.S.-backed tyrants and their neoliberal policies that have impoverished the working class and dispossessed the peasantry. And now, in the U.S. itself, the uprising against union-busting and austerity in Wisconsin, and its echoes in protests around the country.

McNally calls for socialists to throw themselves into these struggles. He emphasizes how neoliberalism has undermined, in a term adopted from Canadian socialist Alan Sears, "organized structures of dissent." The ruling class has smashed up unions and broken apart mass organizations of the oppressed, while benefiting from the NGO-ization of much of the left.

The task of socialists therefore is to help build struggles for reform, forge new organizations to sustain resistance and--in the middle of that process--organize new revolutionary socialist parties that fight for a whole new society that ends the reign of capital and establishes workers' democracy.

One significant missing element in this otherwise brilliant book is the question of the relation of the economy to world imperialism--the competition between capitalist states for the division and redivision of the world system. This absence weakens McNally's explanation of the postwar boom. He argues that the great boom was largely the result of the destruction wrought by the Second World War. That of course was a factor, but is insufficient to explain the persistence and length of the boom.

A host of Marxists, including British socialists Tony Cliff, Michael Kidron and Chris Harman, developed an explanation--the permanent arms economy--that showed how military competition between the U.S. and state capitalist Russia was at the root of the boom.

During the Cold War, both states diverted surplus into arms production that would have otherwise been ploughed back into investment in plant and machinery for producing capital and consumer goods. As a result, the world system averted the problem of overaccumulation and the tendency of the rate of profit to fall up until the early 1970s. By then, states like Germany and Japan, which were under the umbrella of the U.S. and did not spend much on military production, had caught up with the U.S. by investing in plant and machinery, generating a classic crisis of overaccumulation and declining profit rates.

McNally also doesn't take the impact of the slump on the dynamics of imperialism in the current period. He does refer to increased competition between countries as they attempt to export their way out of the crisis, but never develops the point. Other Marxists like Alex Callinicos and Joel Geier have pointed out that the crisis is likely to sharpen the antagonisms between the world's capitalist states--most obviously, the U.S. and its main rising competitor China.

Some authors like Dilip Hiro contend we are witnessing an emerging multipolar world order. We have already seen the failure of the main capitalist states to coordinate economic policy as they have turned to beggar-thy-neighbor policies to protect their own capital. Add to this increasing competition over resources, especially oil, and we can see the prospects of increased inter-imperial conflict in the system.

Besides this missing discussion of imperialism, McNally has written an invaluable book for a new generation of radicals and Marxists looking to understand the system, why it doesn't work and how we can transform it. Everyone should buy, read, and discuss this book as part of rebuilding a fighting socialist left around the world today.

Golem XIV - Thoughts: Guest Post by Hawkeye - Crime and Collective Punishment

Golem XIV - Thoughts: Guest Post by Hawkeye - Crime and Collective Punishment

Guest Post by Hawkeye - Crime and Collective Punishment
In three weeks time, mass demonstrations are being planned in the UK against public sector cuts. The organisers of the 26th March protests have called themselves the Coalition of Resistance, with the aim of consolidating a variety of unions and groups most at risk.

What they are resisting are the cuts and austerity measures which the Government says are essential. The government’s message is, “We must all share the pain of austerity to put right what we all got wrong.” What the Government is failing to admit is that the cuts will likely affect a vast majority of people who had little involvement in creating the dire fiscal conditions in the first place or actively benefited from the boom times either. And more profoundly, leave those who did create the mess both unnacountable and benefiting further.

It is vital therefore that these demonstrations are focussed on how the current policy prescriptions are unjustly misdirected and ignore the underlying causes of the crisis.

A further critical consideration is that the audience for the March 26th demonstrations is not the Government; We must make it crystal clear that we are not there to petition or plead for clemency. Far more will be achieved if we remember that the real audience watching the demonstrations will be the vast majority of the country who hasn’t yet felt the pinch of deteriorating financial circumstances, but soon will. It’s to them that we must reach out and make common cause. Private sector must not get pitted against public sector; both are in this together.

People watching the protests from the comfort of their homes need to empathise with the participants and their concerns, perhaps even prompted to ask questions because of it. We all need to understand the real causes of our economic woes and how we are all suffering together. We need to shout out that our Government is rewarding speculation, corruption and malfeasance by the banks, whereas real workers, savers, the law abiding and the prudent are getting bashed, not in a verbal sense, but a very real “standards of living” sense.

We need to understand how we are actually witnessing a scandalous outbreak of “Crime and Collective Punishment”.

The evidence of Crime:

The recently released Oscar winning documentary “Inside Job” gives a thorough overview of how the current crisis was not only inevitable, but more importantly nothing short of criminal. Although primarily a tale of the US situation, the criticisms made in the film are just as applicable in the UK:

1) The active pursuit of de-regulation of the financial industry. The rising levels of debt were not just the consequence of irresponsible borrowing by the public and governments alike. Any debt contract involves two parties, and so it is critical to understand not only the demand for debt but the relentless supply of it. What we often forget is that in any lending situation it takes two to tango. The recent growth in debt pushing has been actively facilitated by de-regulation of the finance sector, such as the increase of bank leverage and the removal of “firewalls” within the industry (such as Glass-Steagal regulation). The key point is that from the late 1990s onwards we have seen a shift (most notably in the US and UK) from regulating banks and financial systems by clearly stating what limited activities they can do, to the highly questionable situation of banks pretty much able to whatever they want to do, unless a regulator expressly says they cannot do it. They have completely contorted the concept of banking regulation, and well and truly let the "venal but legal" genie out of the bottle.

2) The growing corruption and co-opting of politicians to act in the interests of the finance sector. The de-regulation of the finance sector did not emerge spontaneously. Indeed, the extent to which the finance sector exerts undue pressure on policy makers to act in their sole interests could be nothing short of a complete contortion of democracy. Simon Johnson’s article “The Quiet Coup” in the June 2009 edition of the Atlantic (and his subsequent book “13 Bankers”) charts the revolving door policy between regulatory bodies, treasury politicians, and the private banking institutions. There is a worrying trend that regulations, laws and the priorities of Government itself are at the mercy of powerful lobbying efforts. Eisenhower feared the might of the military-industrial complex. In the 21st Century the real weapons of mass destruction are financial. But unlike the brutish prowess of the military, the financial sector tends to enjoy a more benign public perception. Far from being wary of our new captors we are instead lured in to a semi-conscious embrace of their mounting supremacy. Could it be that we’ve slowly developed Stockholm syndrome? How else can we explain the idolatry the public and Government still bestow upon a sector which is both holding us hostage and repeatedly subjects us to blackmail and extortion?

3) Ripe conditions for widespread fraudulent conduct: A bank isn’t like an ordinary company. Strictly speaking it doesn’t actually make anything itself. Instead it greases the wheels of genuine productive enterprises. In that respect then, a bank should only really prosper when the rest of the economy prospers. But a very obvious de-coupling of this relationship has happened recently. How exactly can the banks be doing well when the rest of the economy is limping? The only answer can be covert fraud and looting.

George Akerlof (a Nobel economist) first outlined the conditions for financial looting after studying various corporate fraud cases in the 1980s and 1990s. He concluded that looting is ripe when businesses have extremely high salaries, over inflated firm values, and are safe in the knowledge that the Government will underwrite any mistakes and not pursue malevolent conduct. Given the prevalence of all these pre-conditions, there is more than just a suspicion of this looting syndrome. It’s like leaving ones door on the latch, and then acting surprised when the house contents have disappeared.

4) Absence of any criminal prosecutions: One could be forgiven for assuming that because there have been almost no charges of fraud, then none exists. In the face of allegations of serious misconduct regulators seem to settle cases with what amounts to little more than a slap on the wrist and non-culpability agreements. It’s what Joseph Stiglitz calls the equivalent of a “parking fine” to these firms. The banks regard fraud not as a crime, but as an acceptable business practice where the benefits are more than outweighed by the occassional cost of getting caught. And worse our regulators seem to have accepted this as well. In modern parlance it is known as Regulatory Capture. In the eyes of the law we should all be equal. But now it seems that the extent of legal air cover one gets is actually proportional to the amount of money one has access to. And the banks have no shortage of it.

The current situation is a heady cocktail of perverse incentives, lax supervision and bewildering complexity; ripe conditions for fraudulent conduct and ambiguous larceny. Excessive levels of private banking debt have been created under at best dubious assumptions of genuine economic growth, or at worst malicious conditions of fraudulent lending activities. There is too much debt in the system, and the financial sector was culpable in creating it. Currently, the public, the mainstream media and the Government seem oblivious to the crime taking place under their noses. If that in itself weren’t bad enough, then guess who has to pay for the damage created by this crime…..

The evidence of Collective Punishment:

Since 2008 our country has been left with a pretty hefty clean up bill. So who has to pay the cost for this excessive debt build-up? When things go wrong, who should pay the price for an ill judged loan; the borrower alone, the lender alone, or should there be a shared responsibility? Certainly, if an ordinary commercial business or start-up fails then the process of liquidation commences. Shareholders could likely see their whole stake eliminated, as it is an accepted price that one pays for holding equity. Other creditors are recompensed to a certain degree, but there is the very real prospect of a sizeable proportion of any monies owed actually being written off.

A broadly similar process of bankruptcy can also be administered upon individuals when they are no longer able to service commitments to creditors. In both cases, a proportion of debt is destroyed, with creditors compensated to some extent, but not necessarily in full. In becoming a creditor to a company or individual, they have forfeited the right to seek complete re-imbursement in the event of failure. There is a line beyond which they cannot cross, as they may have to share responsibility in meeting the cost of these failures. Unpleastant though these events are, they serve a valuable purpose in resetting unprofitable or insolvent operations. The business is dismantled with assets removed from the control and ownership of those who failed and instead finding a more viable new function; it’s the Schumpterian mantra of creative destruction. It’s Capitalism’s way of dealing with change and renewing itself for the better.

But when the UK banks suffered major liquidity problems in 2008, no mention of their potential insolvency was made. We were told that it would be inconceivable to allow the banks to fail (i.e. become bankrupt), or their creditors (bond holders) to suffer losses. Instead the taxpayer became the guarantor of last resort, with the Government pledging the public finances in support of private misdemeanours.

The two main outcomes of the Government’s bailout policy have been the worsening public finances and rising inflation. It is nothing less than an absolute prevention of debts being reneged on. It is in fact an act of anti-Capitalist behaviour. The implementation of Austerity measures is not one jot of recognition of fault on the part of the lender, but instead the enforcement of debt maintenance by any means necessary. The lender is being provided with complete protection, but at the expense not only of the borrower, but also wider members of society who are innocent bystanders. If education is cut, then why should my children suffer from a poorer education? If policing is cut, then why should victims of crime have to suffer from lower crime fighting resources? If the health service is cut, why should those who are ill or sick have to pay the price of potentially worse levels of care?

Why should society as a whole have to pay the price of private debts gone bad?

Wikipedia defines Collective punishment as “the punishment of a group of people as a result of the behavior of one or more other individuals or groups. The punished group may often have no direct association with the other individuals or groups, or direct control over their actions.” This is precisely the point. That the punishment is being inflicted on society at large, and indeed it could be argued, hits those who are most vulnerable in society.

The UK seems to be following the path taken by Ireland who bailed-out insolvent banks (i.e. they protected the bond holders) by using the might of the public purse. The consequences for Ireland were dire. But there was an alternative. When faced with extraordinary private debts having to be borne by the public, Iceland took a very different approach. They placed the major banks in receivership, defaulted on many obligations and made debt holders share the pain:

“With the economy projected to grow 3 percent this year, Iceland’s decision to let the banks fail is looking smart – and may prove to be a model for others.”

Far from being reckless or short sighted, burning the bond holders was in fact the ultimate Capitalist prescription of privatised profits and privatised losses. However, our Government is hot on the heels of Ireland down the path of privatised profits and socialised losses. A perverse contortion of economic dogma that is grossly assymetric. Bank bailouts assure that the lender bears no responsibility whatsoever for their faulty judgement in lending out in the first place, and instead disseminates it through Austerity and Inflation. So, without making debt holders share the pain, we’re not quite “all in this together” are we?

Who exactly is getting “bashed” here?

We often hear complaints by banks that they are the victims of “banker bashing” as if the criticisms are indiscriminate and unfounded. This argument is spin-doctoring par excellence. There are specific, substantial and legitimate concerns raised about the conduct of the banks. If we look beyond the veil of rhetoric we can clearly see that far from being bashed, the bankers are constantly appeased, reassured and encouraged by Government policy, whilst the rest of society is covertly shafted. Back in the real world we actually have savers being squeezed, real workers getting bashed, and those who act prudently being penalised through rising costs of food, fuel and energy. The bankers cry foul as if they are the victims, but the detrimental consequences of their actions on society are undeniable. The upcoming protests in March must not become diluted or distracted by chaff and obfuscation. This is our grievance, plain and simple:

We are all victims of a great crime, and are collectively being punished. It is state sponsored racketeering. The immoral and unlawful conduct of a select few must not go unnoticed by the people of this country.