Why is China Imperialist?
In a previous post written in July 2008 (Is China the new US?) I explained the restoration of capitalism in China and its move towards imperialism. It was however, not yet an imperialist power. I concluded with this statement:
Is China Imperialist?
Today by the measure of the LOV China is capitalist. In that sense a rapidly growing powerful capitalist China could be considered imperialist. But what do we mean by imperialist? According to Lenin and imperialist country has a surplus of finance capital which must be exported to counter falling profits at home. That is, the possibilities of growth at home can only be sustained by the export of capital to earn super-profits in other countries, and be imported to the home country to maintain the rate of profit. Less important was the need to find new markets in which to sell the commodities produced in the home market. Historically, the powers that clearly meet this definition are the USA, Japan and the main European powers like Britain, France, Germany, Spain and Italy. Others are not imperialist, or may be former imperialist, and are more like semi-colonies, such as Portugal, Greece, Poland, etc. Others may be small imperialist powers such as Sweden, Austria etc.
Does China today meet these criteria? As yet it doesn’t appear so. China has a big trading surplus from its commodity exports but this is mainly invested in US bonds. It is a peculiar sort of finance capital that must accept US petrodollars to fund the massive US external deficit. Most of China’s growth is driven by its internal market which is huge and expanding rapidly. In that sense China’s internal market is sufficient to maintain its profitability, while its exports are more re-exports of foreign mainly overseas Chinese companies (mainly Hong Kong and Taiwan) that have invested in China. So far from being evidence of the export of China’s surplus finance capital, China is the source of imperialist (Japanese, overseas Chinese, EU, US etc) FDI which reaps massive super-profits from China’s cheap resources and labor power.
While the organic composition of capital in China is growing it doesn’t seem yet to have reached the point of an overproduction of capital necessitating an export of productive capital. China today, then, is still developing its internal market, making huge infrastructural investment and is only beginning to establish FDI overseas in Africa, Latin America, and the rest of Asia to create its own so-called ‘empire’. Nevertheless, China is being driven by the rapid growth in demand for cheap raw materials and markets to become a major competitor to the existing imperialist powers, a fact that is clearly behind the growing alarm with which the EU and US views its aggressive role in Africa.
For some China’s capitalist growth has many of the features of industrialization in Europe in the 19th century. However, the form of combined and uneven development that Trotsky and Lenin spoke of in the case of the Soviet Union, and which Marx foreshadowed in China, is today manifest in a pace and scale that would have been beyond even their imaginations. Not only has China become the key driver of the world economy at a time of US dominance and relative decline, it is now at the center of the world historic contradiction between labor and capital. Emerging out of a bourgeois national revolution and the aborted socialist revolution China has within the space of two decades created a powerful capitalist economy. Whether it is contained as a semi-colony exploited by the other capitalists, or succeeds in re-dividing the world economy at the expense of the other capitalist powers, remains to be seen. China may be on the road to displacing the US but will it be as an imperialist China or a socialist China?
This was written over a year ago. At that time China’s capitalist dynamic was clear, but evidence that it had emerged as a new imperialist power was as yet unclear to me. In the time since then there has been a continued rapid development of Chinese economic expansion. Moreover this expansion has been at a time when most of the rest of the world was in recession. FDI into China has fallen significantly due to the financial crisis in the US, Japan and EU. So inward FDI cannot account for China’s growing share of global capital accumulation.
Moreover ‘decoupling’ shows that China is not dependent on trade with the US.
Questions then arise as to the reasons for this dynamic capitalist growth facing what is systemic stagnation in the forces of production globally. Is there something specific to capitalist development in China that allows it to become the main driver of capitalist boom while the rest of the world is in a slump? The question of China as emergent imperialism needs to be re-examined.
Why does China boom amidst global slump?
The continued growth of China (probably around 10%) while the rest of the world, apart from India is either stagnant or in recession, has not gone unnoticed. Those who think that China is state socialist, or mixed capitalist/socialist, put it down to it ability to avoid the worst excesses of capitalist crisis. Others who don’t think China is socialist agree that its powerful central state ownership of the banks has been able to compensate for falling exports by pumping up the domestic economy. Ironically, China is able to implement a fully blown Keynesian counter-cyclical policy to protect itself from the global cycle.
What these positions all point to is the vast accumulated reserves of China. Clearly they are not the result of socialist planning which led to stagnation, but rapid capitalist growth. So China’s phenomenal capitalist accumulation over the last 20 years is the key to explaining its continued rapid growth in the crisis.
But China is not only boosting its growth by domestic spending. In the middle of the world recession it has made a “great leap forward” in foreign investment; i.e capital export, the critical characteristic of imperialism. What this means is that China has not only sufficient accumulated surpluses to spend on domestic infrastructure, social spending on the unemployed etc it has accumulated surpluses in the profits of the massive SOEs that enable it to rapidly expand its foreign investment, either as outward FDI in foreign companies, as Joint Ventures like that with Venezuela for oil production, and loans for oil in a number of countries. As we shall see below this is Chinese finance capital, not the FDI of other imperialist countries using China as a proxy in capital re-export.
In other words China has turned the crisis of US and EU finance capital which is in crisis and suffering massive devaluation, into an opportunity to export its own finance capital. As a result, China is now entering directly into competition with the existing imperialist powers as an emerging imperialist in particular posing a major challenge to the US, the EU and Japan. What accounts for this amazing performance when the rest of the imperialist states are in recession or stagnating?
The answer this is to answer the question: Why is China Imperialist?” The answer can be found by going back to the salient point that the secret of China’s “success” rests in its highly centralized state banks and SOEs which can act to take advantage of the global recession. An while this is no longer a feature of a so-called ‘socialist’ society, it is the legacy of China’s history as a degenerated workers state (DWS). In other words if China had not been a DWS it could never have become a dynamic capitalist country. It would have been fated to be divided and ruled by imperialism from the the early 20th century to the early 21st century. Like all other semi-colonies, China would never have been in the position to accumulate sufficient capital to force its ruling class to export surplus finance capital and emerge as a new imperialist power.
This would be what Trotskyists would expect on the basis of Lenin’s theory of imperialism which in the epoch of imperialism – capitalism’s highest stage – spoke of imperialist powers competing to re-divide the world. New imperialist powers could only arise on the basis of expanding into parts of the world as yet not dominated by other imperialist powers. Once the world was divided, imperialists could only advance by redividing it at the expense of other imperialist powers. There was no possibility of colonies and semi-colonies oppressed by one or other imperialist power to transform themselves by means of national revolutions into imperialist powers. Therefore, no new imperialist powers can emerge in the epoch of imperialism. Two World Wars were proof of the correctness of this theory.
To characterize China today as imperialist then, appears to contradict the logic of Lenin’s theory of imperialism which states that no colony or semi-colony can make a national democratic revolution and emerge as a new imperialist power. However, if it can be proved that China did make its national revolution and win independence as a DWS, and that the restoration of capitalism did not cause it to lose that independence then there is no contradiction with Lenin’s theory. We would find that the essence of his theory explains the anomaly that a former workers state can do what is apparently impossible – become a new imperialist power.
The Law of Value
What distinguishes the DWS from capitalist colonies or semi-colonies is its relative isolation and independence of the from the global capitalist market. Thus the DWSs have been “partitioned” by revolutions that overthrow capitalist social relations putting them outside the spheres of imperialism. Of course their isolation means they don’t escape capitalist imperialism entirely. It oppresses them indirectly by stopping them developing the forces of production by means of new technology. By definition (as explained in the post on “Is China the New US”) DWSs are isolated from the direct effects of the law of value. The prices of production of state produced goods and services are not determined by the value of labor power as is the case in the capitalist market. Prices are determined by a plan.
Whether or not that plan is under the control of the people or a bureaucratic caste makes big difference. In the former case prices are used to signal the amount of necessary labor that workers democratically decide should to used to produce goods and services to meet their needs. In the latter case labor is allocated to produce goods and services that favor the luxury consumption of the bureaucracy and not that of the workers. But in both cases the planned economy develops the forces of production to a greater degree than is possible in a semi-colony where production is controlled by a division of labor imposed by imperialism. Such a planned economy requires a centralized production process and a centralized state. Hence the origins of the strong central state and state owned enterprises (SEOs) in the DWSs.
As I argued in the earlier post, China’s revolution in 1949 was a national revolution that was led by Stalinist army of peasants in isolation of the working class that was forced to go on to become a socialist revolution because the weak national bourgeoisie was aligned with imperialism and incapable of completing this task. But from the outset the ordinary peasants and workers never had control of the revolution so that the form of workers state that emerged was ‘degenerated’ or bureaucratized from its birth. The planned economy under the control of the party elite developed the forces of production beyond that of any semi-colony but never to the point that they could match that of the most advanced capitalism. The isolation of the economy from the world market prevented it from acquiring new technology to increase the productivity of labor other than by increasing its intensity.
The resulting stagnation meant that the privileges of the bureaucracy who lived a parasitic existence on the labor of the workers were threatened. This led the Communist Party to reintroduce private property rights (a sort of NEP) in agriculture to stimulate production and hence its share of the surplus product. Thus the LOV was planted in the countryside. The LOV spread to industry and commerce and caused a full blown restoration of capitalism around 1992. As Trotsky had already predicted, the form of capitalism that is restored in a DWS is state capitalism that uses the existing state machinery and SOEs to reproduce the production of surplus value and profit. It does this by allowing the law of value (the market) to determine prices as opposed to the planning process. China’s accession to the WTO in 2001 marked its full entry into the world capitalist economy.
To recap: China as a DWS ‘partitioned’ itself from the capitalist economy and developed the forces of production internally beyond that possible in a semi-colony oppressed by imperialism. Yet its isolation led to economic stagnation and the Communist Party planned the restoration of capitalism to stimulate growth and the transformation of the bureaucracy parasitic on the plan into a new national bourgeiosie in a restored capitalist economy. Thus, as I am arguing, capitalism that is restored in a former workers state has special characteristics which are critical in allowing it to escape the fate of a capitalist semi-colony and to emerge as a new imperialist power.
China’s legacy was therefore a strong centralized state and massive SOEs under the control of a strong and united new national bourgeoisie. China’s re-entry into the capitalist world economy was managed in stages so that the new bourgeoise remained independent of all imperialist powers. As the imperialists sought to use China as a semi-colony to re-locate their maquiladoras using cheap Chinese labor, the Chinese ruling class retained control of the key state sectors of the economy and restricted the freedom of entry of FDI and in particular the big imperialist banks.
In other words, US and other imperialist powers could not fully ‘re-partition’ a restored capitalist China as their own spheres of interest. The new Chinese bourgeoisie retained control of the national economy and could use the centralized state to monopolize the process of capital accumulation on the same basis as the existing imperialist powers. That is, it operated on the basis of the law of value which sets prices in terms of labor power, but in reality it extracting super-profits and monopoly rent on its own account – the defining feature of imperialism. Let us expand on this point.
Super profits and monopoly rent
In a previous post (“Is Russia Imperialist”) I argued in support of Lenin that imperialism is characterized by monopoly which in the last analysis extracts super-profits in the form of monopoly rent. Marx defined monopoly rent as the difference between the price of production and market price where the latter is determined by a few firms that act as a cartel, or trust i.e. a monopoly. This concept simplifies our understanding of super-profits arising from so-called cheap labor as well as the plundering of raw materials and energy sources. The price of production consists of labor costs, raw materials etc., plus average profits where competition allows a redistribution of surplus-value. That is, in the epoch of competitive capitalism, the price of production reflects competition where average profits result from a process of the equalization of profits from the least efficient producers to the more efficient, given that there is sufficient demand.
Imperialist monopoly ends competition at the level of the market as a few firms control the prices by preventing the ability of more efficient firms to undercut their price. Prices of production now include not the average profit resulting from equalization but a set monopoly price. Thus ‘equalizing’ of profits is done by “fixing” the price in advance of production and not by the market after production. This is why Lenin observed that the imperialist epoch is dominated by monopolies as a few major firms – cartels, trusts, monopolies – set the world prices in various sectors of production such as oil, steel, railways etc.
A short sidetracking is necessary here to distinguish between imperialist monopoly and the so-called monopoly of state planning in the DWSs. While the central state apparatus may in fact by formally the same, as the Communist Party is like a giant monopoly firm planning, or fixing, prices, the law of value separates out these two forms in their essence.
Ideally socialist monopoly (ie in a democratically determined plan) sets prices without any reference to the law of value. Prices are just a means of allocating labor to different branches of production to meet collectively determined needs. Capitalist monopoly however, determines super-profits by calculating monopoly rent as value in excess of the ‘real’ market price of production set by the law of value. By ‘real’ I mean that monopoly looks for the lowest labor and raw material costs (this is the point of investing FDI in colonies and semi-colonies) so that the excess of monopoly price of production over the real price of production i.e. monopoly rent, is a great as possible. Nevertheless, when it comes to the role of the central state, it is a relatively simple matter to switch the state monopoly over the allocation of workers labor in a Degenerated Workers State like China to the monopoly of value produced in a capitalist economy.
China as state monopoly imperialism
If the above argument is correct, China has been able to use its legacy as a DWS to convert its centralized state apparatus into a monopoly capitalist state to escape the trap of semi-colonial partition, oppression and super-exploitation by the existing imperialist powers. It has done this by monopolising land which remains nationalised, and by heavily regulating FDI in terms of both relative and absolute share of value produced in China. Thus the Joint Equity Ventures law of 2001 (No. 48) states the basic criteria on which FDI enters China. FDI operates under ‘business licences’ under Chinese law, pays taxes, and if the national interest requires can be “nationalised with payment of compensation”. Generally, FDI shares in JVs is limited to less than 25%. The Foreign Investors law of 2000 allows 100% FDI in companies that meet the criteria of “economic cooperation” and “technological exchange” and are “export oriented”. If these firms do not fulfill these criteria their licenses can be canceled.
The state retains a monopoly control over the key sectors of industry, energy, and banking via its State Owned Enterprises and State Banks. Typically the SEOs do not pass on their profits to the state but accumulate them for further reinvestment. Does FDI share in this bounty? The share of FDI in SOEs is limited to around 10%. The fact that FDI does not control the SOEs is confirmed by attempts to block them taking over established US and other monopoly firms. For example, the third ranking oil and gas SOE and biggest offshore operator, CNOOC Ltd had its bid to buy the US oil major Unocal in 2005 rejected as it was 70% owned by and getting a cheap loan from its 100% state owned parent SEO. Interestingly one commentator pointed to the hypocrisy of this rejections. Any state monopoly support gained by CNOOC in the process of this acquisition would be matched by big US oil corporations, including Chevron which was the preferred buyer of Unocal at a lower price. It seems that the Chinese SOEs do not “play by different rules” but the rules of state monopoly imperialism!
The big international banks do not own China. For example the BOA has a 10% shareholding in the China Construction Bank . China accumulates its capital on its own account and has a massive sovereign wealth fund that has no need for large borrowings from international banks. Also China is a large US creditor with around US$800 billion in US Treasury bonds. This results from China’s trade surplus in supplying cheap wage goods to US workers and keeping down their real wages. That relationship is not a imperialist parasitic relation as it reflects China’s low domestic wage costs and so does not result from the export of finance capital.
However, while US domestic capitalism benefits from cheap Chinese imports, the FDI in the manufacturing export sector that buys inputs sourced from Chinese SOEs does not get them cheaply because of the SOEs monopoly pricing. A recent analysis showed that China’s return from FDI in copper mining in the Democratic Republic of Congo was higher than that of the giant US mining firm Freeport. The profits of the FDI manufacturing export sector in China are therefore dependent on cheap labor not a share of the superprofits of Chinese state monopoly capitalism. This is true of FDI in JVs that produce for the China market like GM which has as 50/50 partnership with the the SOE Shanghai Automotive Industry Corporation. Of course the GM parent company is currently 61% owned by the US Treasury, 17% by the UAW union, and 11% by the Canadian state following a Chapter 11 bankruptcy!
As China rises, other imperialists fall
If China can monopolise capital accumulation at home and is now embarking on a rapid expansion offshore, is this a classic case of the export of finance capital of an emergent imperialist power? For China to emerge as a new imperialist power it must do so by redividing the sphere’s of influence of existing imperialist powers. That means a growing rivalry with these powers as competition for scarce resources such as oil, gas and minerals intensifies. As we have seen China as a DWS asserted its historic control over Greater China and the autonomous territories etc. It has not had to contest control over these territories with existing imperialist powers. Everywhere else China has to fight for control of these resources.
On what terms? Is this OFDI done on behalf of other imperialist powers? To do so the SOEs would have to pass on cheap inputs to its rivals. We have seen that this is not the case in China. This means that China is a rival not a patsy. Why else were the Unoco and Riotinto deals stopped? This would have seen China gain more control over the energy sector internationally. Is this not protectionism?
Why is China accused of exploiting the Congo? Why is the US beefing up its military presence in Africa in the form of AFRICOM which is training African troops in several countries where China has significant investments as well as journalists in Kinshasa? Why is the SCO and military agreement led by China/Russia being projected as the main threat to US hegemony in Central Asia by the US itself?
But China is not the new US. It is an emerging imperialist power that can only expand at the expense of other imperialist powers by “re-partitioning” their spheres of interest. Which will these be? In East Asia, Japan is the main competitor. Is China developing at the expense of Japan for hegemony in East Asia and the Eastern Pacific? South East Asia? Australia? These are questions for ongoing research.
In Central Asia China is part of a bloc with Germany, Russia, India and Iran that are all experiencing growth at the expense of of the US/Japan/UK/France bloc. Germany is an established imperialist country, while Russia is also a newly emerging imperialist power. India and Iran are relatively independent semi-colonies that have never been able to complete the national revolution to emerge as a form of workers state.
In Latin America China is doing deals under the nose of the US, France and Britain. Venezuela, Brazil, Argentina.
In Africa the China is rapidly becoming the major rival to the US led bloc. Ghana, Nigeria, Lesotho, Congo (Katanga), Sudan, Zimbabwe etc.
These and other questions of the expansionary role of China can only be explained by recourse to Lenin’s theory of imperialism. In a global capitalist economy growth is only possible by means of capital accumulation. Expansion overseas into the existing markets or spheres of interest of imperialist powers, can only occur at the expense of the existing imperialist powers. This has direct effects of the workers and peasants over whose surplus value these powers are fighting. If we cannot explain what is driving China in its expansion we are theoretically and programatically disarmed in our struggle against the super-exploitation and oppression of all imperialist powers.
Crisis of Overproduction
If one thing unites the left of all shades right now its a sort of satisfaction that the market has been shown to fail dramatically if not yet apocalyptically. On the left there are broadly three responses. The first is social democratic or Keynesian, of which Krugman, Henwood or Monbiot are examples. The second is radical, such as that of the Monthly Review School and many others who call themselves ‘socialist’, and the third is what I would call classic Marxist; Marx, Lenin and Trotsky of course, but also others like Paul Mattick who lived through the 1930s depression, David Yaffe in the 1970s and Anwah Sheikh today. We can call these standpoints Keynesian, Radical and Marxist for short. Each has a theory of how the capitalist economy works and as a result a theory of crisis and crisis solutions. All three are attempts to rectify what they see as the shortcomings of neo-classical, or what Marx called vulgar, political economy.
Keynesian model
As Mattick notes (in Marx and Keynes p.20) Keynes was hardly a revolutionary. In fact he could be said to have “partially” returned to the classical theory of Adam Smith in which labor produced value. Keynes did not think that the market could establish an equilibrium between consumption and production without state intervention. Say’s Law that supply creates demand did not work in reality and capitalists would tend to hoard rather than invest in production to meet demand. Only the intervention of the state to boost consumption would stimulate production, and that too would have to be pump primed by state investment to start.
For Keynes then the business cycle was a thing of the past and could be eliminated by judicious state policies to balance consumption and production. This does not mean ideally building pyramids in Eygpt or military expenditure, since these do not normally increase workers incomes and consumption. Keynes policies were designed to transfer income from the savings of employers to the consumption of workers. This is why social democracy has seized on Keynes and applied it where possible, drawing on the lessons of the New Deal and Labour Governments in UK, Australia and NZ.
A good example of that is George Monbiot’s call for a return to Keynes.
Today the response of social democrats to the financial crisis is to jump at the opportunity to redirect social spending at increasing the incomes and hence consumption of workers. However the sheer scale of the crisis has taken them by surprise and they have been overwhelmed by the banks and goverments spending pontentially many trillions of dollars to stave up the collapsing financial system. Calls for social spending on jobs, wages and consumption have been lost in the rush to bail out the banks.
Social democrats have a problem. They know that state spending on the banks and big corporates does not necessarily mean more production since there is no matching consumption. The bailing out of the banks could end up being hoarded. The logic of Keynesianism is therefore to take ownership of the banks or to found state banks to ensure that productive investment takes place. This however would end up in the state regulating and even owning production itself. Yet social democrats have not seized the time to demand complete nationalisation of the economy. Why is this?
One interesting comment is from Steve of Marx Redux Blog
Henwood in my view is not a Marxist, but a left Keynesian. His claim that “If the credit markets could not function properly, the economy would grind to a halt and cause immense suffering to those who could least afford it” is clearly false, since it is being shown to us every day since August 2007 that the intermediation of the “credit markets” can be replaced by the direct financial intermediation of the state. Unfortunately, actual state intervention is being perverted into intermediation for the purpose of preserving the position of the financial sector in the economy rather than for the benefit of the economy as a whole, not even for the benefit of capitalist sectors excluded from the charmed circle of military-financial parasitism, much less for the rest of the population.
But since state intervention IS occurring on a massive scale in full public view (if except for the details of the diversion of enormous sums from the U.S. Treasury), why not call for direct state intermediation NOW (Doug!) and cut out the middleman who, after all, precipitated the crisis. These “too big to fail” operations should, of course, be taken over, shutdown, broken
up, their officers imprisoned and the remainder restricted to public utility functions.
But no, Henwood can’t even bring himself to support this minimal reform because there is no “realistic” chance of it occurring. But it is precisely this diversionary hijacking of the Treasury that will now be an immense barrier to any US economic restructuring that would constitute a “way out”
of the crisis, even in narrow capitalist terms. Henwood in his call to support the AIG bailout therefore is calling for a worsening of mass misery, not its alleviation. Henwood refuses to see that the immediate PROBLEM is that the advancement of “future wages” in the form of credit in lieu of actual wages earned (and actually stagnant and declining) – the “Payday Loan Economy” – has exhausted itself at the point where significant sectors of workers no longer earn actual wages to minimally pay the interest on this credit, resulting in a profit crisis for finance and a massive devaluation of financial capital. Reinflation of the balloon will not address this fundamental contradiction.
Doug’s call is now directly opposed to what should now be called for: the reversal of the Treasury hijacking. Realize a stanza of the International: “That the thief return his plunder”. Without that there will be no class struggle over where these funds should be going: in essence to bail out the capitalists or the workers. They will all be gone down the financial rathole. Instead this is the line at present in the class struggle and once
again Henwood is to be found on the other side of the front line as it presently stands.
This comment is interesting as it confirms the views of radicals and Marxists that the social democrats franchise is not to expropriate capital, merely to reform its workings. Radicals are summed up by the line from the Internationale: capitalists “steal” their profits from workers and the task is to take it back. But both radical and Marxists agree that Keynesian policies are designed to rescue capitalism from a crisis of excess capital by boosting consumption, not take over the banks and corporates. For that would be socialism!
Radical model
The radicals objection to neo-classical equilibrium theory goes beyond a rejection of Say’s law. Radicals argue that the accumulation of wealth in the hands of the ruling class is at the expense of the impoverishment of the working class. This theory goes back to a radical reading of David Ricardo the best political economist before Marx came along. Hence as wages are kept down to maximise profits, underconsumption is a chronic condition of the market and cannot be simply corrected by Keynesian policies. Because normally the ruling class controls the state boosting of jobs and incomes is always subject to their resistance to funding such a redistribution adequately. Of course radicals support Keynesian policies but say it is necessary to go further to nationalise the means of production so that it can be planned to meet the needs of consumption.
Again, as with social democracy, the capitalist state is the instrument of this radical reform. Just as the welfare state redistributes income to boost consumption in the Keynesian system, the radical advocates state investment in industry to plan production. Thus the radical response to the current crisis is to push the state intervention to support the banks and corporates further to public ownership and control of finance and industry.
For the Monthly Review School and many others including Robert Brenner and Noam Chomsky, public ownership of finance and industry would overcome the basic cause of the failure of the market – the tendency for capitalists to hoard their wealth unless they can drive down wages and conditions sufficiently to justify further investment. The social democratic solution is no solution for them because taxing their profits to pay a social wage prevents wages falling and profits rising.
Given that understanding radicals go to the ‘root’ of the problem as they see it, the cause of inequality itself, the unequal exchange between capitalist and worker when the capitalist buys labour power below its real value. In the place of the capitalist the state steps in and in the name of the democratic people creates an equal exchange between labour and state capital.
There is therefore no shortage of radicals calling for state bailouts of the banks to go further then state shareholding to complete nationalisation and control of the banks. Similarly, as big corporates like Ford, General Motors and Chrysler start to fall over, the call is for these firms to be nationalised.
This call is now being made as the banks being bailed out by the taxpayers (whose taxes draw on future labor) refuse to themselves bail out bankrupt firms. Example: Republic Windows in Chicago occupied the plant to get their redundancy from the bailed out Bank of America. They won and are now reemployed by a new boss. What is at issue here is workers using direct action to force the employer to shell out some of the public bailout money. Its about getting what is ‘fair’ and not about workers control of production!
While workers limit their actions to pressure the nationalisation of the banks however, their political solution to the financial crisis does not go beyond the nationalisation of money. Marxists call this radical theory of capitalism ‘utopian socialism’ as in Marx’s critique of radical Ricardians and in particular of Proudhon.
Marxist model
Marxism was a development of classical political economy, so Keynes return to Smith and the radicals return to Smith and Ricardo, are a return to a pre-Marxist political economy. Keynes system is a redistribution of income towards the social wage. It assumes equal exchange as did Smith. Radicals assume unequal exchange after Ricardo and want the state to intervene to equalise exchange. Marxism critiques both these theories as limited by the level of analysis.
Marxists critique Keynesians as theorists of capitalist distribution. To illustrate this lets look at one ex-Marxist, James Heartfield, who has moved from Marx back to Keynes. Ironically, Heartfield was once a member of the British Marxist Revolutionary Communist Party that was founded on the economic analysis of David Yaffe who was heavily influenced by classic Marxists Paul Mattick and Henryk Grossmann.
In a recent article Heartfield claims that the current crisis has nothing to do with a crisis of overproduction, but rather a ‘subjective’ psychological aversion of capitalists to productive investment that has led to speculation. Heartfield argues that a crisis of overprodution results from the TRPF and while the crisis of the 1960s could be seen as such, today the crisis originates in the sphere of finance.
Steve of Marx Redux again has pointed to the arguments against this that Heartfield must be aware of.
Of all the cases Heartfield could have chosen to illustrate supposed ‘subjectivism’ (aka psychologism), he made an unfortunate choice.
There is absolutely nothing novel about the burgeoning of finance and its attempts to distance itself from capitalist production. The case of the money market is *precisely* the one which Engels uses in his classic letter to Schmidt (Oct 27 1890) about historical materialism to discuss the relative independence of certain social developments from production – without ever having to resort to a deus ex machina or any form of idealism.
His account of the reception of Mattick’s ‘Marx and Keynes’ is ignorant – it was one of Merlin Books’ Book Club choices and was widely read and debated on the British left in the ’70s. Mattick remarks:
‘A depression may “sneak” into existence by a gradual slowing down of economic activity, or it may be initiated by a dramatic “crash” with sudden bank failures and the collapse of the stock market. The crisis itself is merely the point at which the reversal of business conditions is publicly recognized. … Even the last phases of the boom preceding the crisis are, viewed in retrospect, already unprofitable; but recognition of this fact has to await the verdict of the market. Commitments made on the assumption of a continuous upward trend cannot be met. The conversion of capital from commodity to money form becomes increasingly more difficult. The crisis of production is at the same time a financial crisis. The need for liquid funds and the attempt to avoid losses intensify the fall of securities and commodity prices.’ p84.
http://www.marxists.org/archive/mattick-paul/1969/marx-keynes/ch09.htmAs for copy-editing Grossman, Heartfield seems to have skipped several pages, at the end of Chapter 3, where Grossman clearly, if briefly explains how the expansion into finance is actually a consequence and symptom of overaccumulation!
‘I have shown how the course of capital accumulation is punctuated by an absolute overaccumulation which is released, from time to time, in the form of periodic crises and which is progressively intensified through the fluctuations of the economic cycle from one crisis to the next. At an advanced stage of accumulation it reaches a state of capital saturation where the overaccumulated capital faces a shortage of investment possibilities and finds it more difficult to surmount this saturation. The capitalist mechanism approaches its final catastrophe with the inexorability of a natural process. The superfluous and idle capital can ward off the complete collapse of profitability only through the export of capital or through employment on the stock exchange.’ p 191 and so on for pages.
http://www.marxists.org/archive/grossman/1929/breakdown/ch03.htmAs an alumni of the RCP, Heartfield seems to have forgotten, probably for good reason, ‘RC Papers’ tedious attack on Yaffe and Bullock’s ‘Inflation, the Crisis and the Post-War Boom’.
(http://www.revolutionarycommunist.org/marxism/rc3-4_inflation.html)
There, several pages (22-26) describe in detail exactly the evolution of the financial crisis showing how it comes about precisely because of the constraints imposed by overaccumulation! Although developed to explain the limits on state expenditure (since Keynesianism was still the dominant economic ideology) the article is virtually a tutorial on the relationship of Marx’s theory of credit to his theory of overaccumulation, and can readily be used to understand the current financial crisis.Heartfield is clearly well aware of these three sources which refuted him in advance. Yet he either fails to mention them or gives the impression that they don’t address the issue of the connection of the financial crisis with overaccumulation.
So, on these long cold dark winter nights, drawn up a chair close to the fire, pull down volume three and take another gander through parts 4 and 5, perhaps with some help from Yaffe and Bullock, the latter end of Grossman’s chapter 3, and Mattick’s analysis of the Great Depression, all conveniently online … and reassure yourself that things are undoubtedly going to get worse – thanks to the overaccumulation of capital, not to the fleeting whims and tastes of capitalists.
Not only does Heartfield abandon classic Marxism he arrives back at the distributional analyis of Keynes. Heartfields psychological causes of speculation are exactly the same as Keynes reference to ‘animal spirits’ of capitalists who choose to hoard rather than invest productively. It is the same failure of will on the part of the capitalist who ‘chooses’ to hoard or speculate. The thing about hoarding is that money inevitably loses value, speculation however creates the a fictitious value to disguise the loss of value. All that is needed is another dose of Keynesian state discipline to force the weak minded bosses to invest or else be punished by high taxes that the state will use to invest and reflate the economy. Like making spoiled children behave really. Problem is that the spoiled children do not want their toys taken off them, and rather than lose them they will destroy them.
Is Zionism Fascism?
Polemic
Fascism is an extreme social movement that arose in Europe between the wars in response to the crisis-ridden capitalism of the early 20th century. It emerged under the threat of a workers’ revolution when bourgeois democracy had exhausted its ability to contain the working class. Its function was to smash the revolutionary vanguard before it could mobilise the working class in a revolutionary uprising. It employed an extreme nationalist, racist ideology in order to bind together the middle classes with sections of the working class in the name of defending the nation from communism.
Zionism is the founding ideology of the Israeli state. It is based on several founding myths that declare Jews’ God-given right to be the exclusive occupants of Palestine. It defends that right by constant reference to anti-semitism and the ‘holocaust’.
Zionism as a doctrine fatalistically submitted to anti-semitism. In the Europe of the early 20th century anti-semitic movements called on all Jews to ‘get out’. Zionism took up this call to provide a homeland to escape to. Yet in doing so, Zionism made many deals with the European ruling classes, not least the Nazis, in return for their cooperation in transferring Jews to Palestine. The cost of these agreements to Jews was millions of more deaths than would have been the case had the Zionists not existed.
The Zionists agreements with the Nazis were to concentrate Jews for shipment to labour camps and extermination camps in exchange for the freedom to select and relocate some Jews to Palestine.
Where the Zionists were weak, resistance to Nazi extermination saved the majority of Jews. In some countries active opposition prevented any transportation and killing (Denmark). Where Jews fled Europe into the Ukraine or Russia they survived in their millions.
Thus Zionism is not an antidote to fascism but its junior partner in the death and destruction of Jews.
The sacrifice of Jewish workers can only be explained by a Zionism that is the class ideology of Jewish capital. The Zionists representing the interests of the Jewish bourgeoisie which needed a homeland to defend their capital. Jews as finance capitalists facing the collapse of European capitalism before and after WW1 were both bankrupted by national capitals with which they were associated and forced to flee. Those who could not move their capital to new countries wanted to found a Jewish state to protect their capital. Not only that, they wanted a Jewish working class, selected from the European working class to establish a capitalist economy in Palestine.
The price paid by Jewish workers who were rounded up by Zionist organisations to feed the Nazi’s labour and extermination camps proved that Zionism was motivated by exactly the same class interests as the Fascists in Europe. They wanted to select a racially pure and strong stock out of those ‘concentrated’ in Europe, take them out of the hands of the ‘anti-semites’ who would work them to death, and save them for shipment to Palestine where they would become the core of a Jewish working class.
Just as the European capitalist powers were prepared to sacrifice millions of workers in wars to defend their capital, the millions of weak, old and otherwise defective Jews who would not be of any ‘use-value’ in Palestine were similarly sacrificed.
But if Palestine was already being formed as a racially pure Jewish state in collaboration with the fascists, could it be any less fascist?
First, Zionist reactionary nationalism was the ideology of Jewish capital facing destruction during the capitalist crisis of the interwar years and organised bourgeois, petty bourgeois and working class settlers to found a national homeland for Jewish capital.
Second, the class collaboration with the Nazi’s scapegoating of Jews, betrayed working class Jews into the labour and extermination camps and played into the Nazi’s objective to smash the communist movement. This complicity was critical, since working class Jews were strongly overrepresented in working class struggles and revolutionary organisations and even more so in the leadership of these organisations. Where the Zionists were unable to separate Jewish workers from the rest of the working class their role in the resistance proved that this was the only way to defeat fascism.
Finally, the very act of establishing the state of Israel mimicked the Nazi invasion and seizure of foreign lands. Palestine was already occupied by a large majority of non-Jews. The peasant and working class inhabitants were evicted, relocated in ghettos and concentration camps, and then terrorised by a policy of military genocide.
Nevertheless, despite its history, its complicity with Nazism, and its occupation of Palestine, the Zionists are not fascists. They are extreme racist nationalist colonial settlers who in many ways resemble fascists. But since the Israeli working class is also Zionist there is no need for the Israeli bourgeoisie to impose a fascist reaction to smash any communist movement among Israeli workers. When Israeli workers turn against Zionism and unconditionally support the Palestinian struggle for self-determination, then we will see the Zionist regime resort to fascism.
Is Russia Imperialist?
[Update: I recently came across an valuable article written by bourgeois economists perplexed by Russia’s sudden emergence as a net capital exporter! Actually their conclusions, written up as a test of various schools of bourgeois economics, fit Lenin’s conception of imperialism very well. It turns out that Russia has been able to rapidly transit from so-called ‘socialism’ to net capital export because it retained the advantages of a monopoly structure of production (state and crony capitalist owned) and its former economic division of labor which has allowed it to profit from the highly integrated economies of the former soviet republics with the Russian economy. That is Russia can take advantage of its state monopoly over a sphere of influence in Central Asia, accumulate capital and export it to take ownership of its ‘downstream’ energy markets and new sources of energy.]
Is Russia Imperialist? A hot topic raised dramatically by the brief war in the Caucasus the subject of a recent post here. My view expressed in that post was that Russia had indeed become imperialist again, given the export of capital to what are now formally independent states that had belonged to the SU in central Asia. I admit that this judgment was based on a fairly cursory swing through the internet looking for evidence of Russian FDI. It is something that I want to return to here. But before I do that, there is a larger question, and that is the definition of imperialism itself, since today the Left seems very confused as to whether or not Lenin’s definition still applies today, and if it does, is there agreement on what it is? This post is designed to address that larger question before returning to a consideration of what this means in the case of Russia. The first question then, is: what did Lenin mean by Imperialism?
What did Lenin mean by Imperialism?
In his pamphlet written in 1916 titled Imperialism: the highest stage of capitalism, Lenin summarizes the massive amount of research he had undertaken into this question collected in his Notebooks on Imperialism -Volume 39 of the Collected Works. Lenin reads all the material written by bourgeois writers like Hobson and former ‘Marxists’ like Kautsky. They agree that in the late 19th and early 20th century there has been a growing concentration and centralization of capital in the form of big banks, corporations with strong links to states that are pursuing predatory foreign policies designed to gain territory and raw materials from their rivals. The capital of these banks dominates and fuses with corporate capital to form finance capital. These banks and corporations form cartels (a few firms) or trusts (1 or 2 firms) in each of the major industries, railroads, oil, chemicals etc. While they often operate in several homelands (as in the case of oil) and make agreements to share territories and raw materials, the tendency is for these corporations to form monopolies that compete with one another using protectionist trade and military interventions to defeat their rivals. Thus, says Lenin, the bourgeoisie are quite capable of describing the emergence of state monopoly finance capitalism where increasingly market competition is displaced by state monopoly in determining investment and in the distribution of profits.
While Lenin agrees with this description, he disagrees with the bourgeois (and pseudo-Marxist) explanation of the nature of imperialism. The bourgeois view is that imperialism is a policy of the ruling classes in the dominant countries pursued to advance their national interests at the expense of their competitors. The most right-wing nationalists see this as some march of civilisation bringing its virtues to the uncivilised. The liberals see it as a process of enlightened humanitarism. The pseudo-Marxists like Kautsky etc. see it as a wrong policy that can be corrected by the mass intervention of the working class in bourgeois parliament. Kautsky backs up his view with the argument that already this nationalist policy is being supplanted by an ‘ultra-imperialism’ in which the monopolies in the big powers have invested heavily in their rivals monopolies so that war between them is against their profit interest. Lenin demolishes this argument quickly showing that despite the multinational character of monopoly capital, it relies on a national state to advance its interests in competing with other monopolies, and that this competition must inevitably lead to war. In other works when Lenin’s talks of politics as concentrated economics, he is talking about Imperialism.
What Lenin insists on is that state monopoly capital does not lead to a peaceful process of transition from capitalism to socialism. Rather it opens up a succession of trade wars and military wars as each big power seeks to re-partition by force, territory and raw materials claimed by other big powers. Monopoly therefore does not mean the end of competition, rather its shift from the market into the sphere of big power politics where workers would be conscripted to fight to defend national monopolies rather than uniting as an international working class to defeat their own ruling class. Thus the epoch of imperialism is the epoch of crises, counter-revolution and revolution. Imperialism was necessarily the highest stage of capitalism at its extreme limit forced to destroy the forces of production to survive. The alternative facing humanity was barbarism or socialism.
While it was one thing to agree with the bourgeois analysis of state monopoly finance capital, and to prove the pseudo-Marxists wrong -that imperialism would not peacefully evolve into socialism, but necessarily causes wars which must end in counter-revolution or revolution -Lenin did not need the first imperialist war to prove his theory correct. Though “imperialism” is a pamphlet and was therefore written for a mass working class readership, it does contain within it a short theoretical section where Lenin seeks to link his theory back to Marx’s Capital. In this section Lenin popularises Marx’ view of crises and extends his analysis to show how such crises much necessarily give rise to imperialism. And more than that, he proves that imperialism cannot resolve those crises other than by counter-revolution or revolution.
The starting point is Lenin’s understanding of Marx’s method in Capital, that is, the reasoning that led Marx to explain in Capital the laws of motion of Capital that must necessarily express the fundamental contradiction between the relations and forces of production as a tendency for the rate of profit to fall- the TRPF, “the most important law of political economy” as Marx called it. There were a number of means of offsetting or weakening that tendency – called Counter-Tendencies (CTs). Let us see how Lenin takes up and develops Marx’s theory of crisis.
The Marxist/Leninist theory of crisis
Marx calls the TRPF the “most important law” because it explains why capitalism is an historically finite mode of production – a transitional mode between feudalism and socialism – and why that transition could not be peaceful. But first we have to look at the method Marx used to arrive at this law in order to assess its validity. Marx used a method of abstraction which he worked out over decades of critiquing Hegel’s philosophy and the British political economists. In the Introduction to the Grundrisse Marx explains his method as avoiding falsely abstracting from the observable events of the market to insert assumptions about timeless human nature and capitalism as the high point in some evolutionary story. Hegel did this in assuming that God was the universal idea and the society evolved according to his divine plan. The political economists did the same arguing that capitalism arose from an historic struggle to accumulate wealth so that the class structure reflected a natural evolution of the survival of the fittest.
Marx critique of Hegel and political economy rejected these stories as idealist: a set of ideas are taken as universal and projected back into history to explain it. Marx reverses this process. Ideas are the product of social relations -being precedes consciousness – so that capitalist ideas produced by capitalist social relations projects an inverted view of capitalism as a natural state of being. Marx’s method is to reject the surface phenomena and the ideological assumptions that define them and dive deeper into material substance of society, its social relations, so that he can then return to the surface and explain everyday events as the result of the laws arising from the social relations. Capital represents this method self-consciously. The familiar commodity of the market is analysed as the ‘cell’ of capitalist society and is found to have two contradictory aspects, exchange value and use value.
Capital Vol 1 demonstrates that in his intellectual laboratory where capital is reduced to the commodity, that the use value of the commodity is necessary for it to be useful in meeting a need through consumption. The exchange value is the value of the labor-time required to produce it. These two aspects are contradictory because under capitalist social relations commodities are sold to realise an exchange value and thus allow their consumption only if that exchange value contains sufficient surplus value to return a profit over the cost of production. Hence production expropriates surplus labor time for profits. Capital Vol 2 shows that capitalism as a system must try to coordinate its production so that investment is balanced out to ensure production of use values necessary for it to be reproduced in an equilibrium. Thus all commodities and produced and reproduced at their value. Capital Vol 3 shows that this is impossible, because under conditions of competition between capitals insufficient surplus-value is extracted to return a profit over total capital invested – hence the TRPF and crises. Capitalism cannot be in equilibrium and is more like a state of moving anarchy which poses the question of socialising the means of production to stave off anarchy, but in the process creating the conditions for its transformation into socialism.
Lenin goes beyond Marx
Marx did not complete his project of diving into the substance of capital in order to return to the surface to explain the complexity of concrete events. He didnt live long enough. Capital 2 and 3 had to be edited and pasted by Engels after Marx’ death. His projected volumes on world trade, International relations and the state, would have meant coming back to the surface and allowed Marx to finish his project. Some foreshadowing of these volumes can be found in Marx’ journalism, and his later work on the Russian commune. Here Marx links his more abstract concepts with current events. What were the class interests that drove the British in India, or the Paris Commune of 1871. Would the coexistence of the Russian commune and backward capitalism in Russia allow a short-cut to socialism, bypassing mature capitalism? No systematic body of work left by Marx provided the answers. It was to be Lenin who had the task of completing these unwritten volumes. Notably in his book on the Development of Capitalism in Russia, and in his highly condensed pamphlet Imperialism. Let’s see how this happens.
In his book on capitalism in Russia, Lenin applies Marx theory of rent in agriculture to prove that Russian agriculture had made the transition to capitalism. This is an important book because it shows that as soon as production on the land enters into the capitalist market it becomes valued in terms of its productivity of value. The social relations on the land shift from landownership deriving rents in kind to money rents representing exchange value. Rent is now a deduction from surplus value in the sphere capitalist distribution having already been produced and exchanged in the market. This is the analysis of capitalist agriculture that enables Lenin to define Tsarist Russia as imperialist in Imperialism, a point I will come back to.
The small section of Imperialism where Lenin attempts to explain why capitalism had to develop into an imperialist stage he pins the cause onto capitalist agriculture. Again this is based on Marx’s analysis of agriculture. Rent in agriculture is in two forms. First, absolute rent is that part of the surplus deducted by landowners. Ownership of land in limited supply means that landowners can always demand a share of the profits of non-owners – hence monopoly.
Second, differential rent is that amount of surplus-value that can be deducted from non-owners above the price of production of the worst land. Monopoly rent therefore varies depending on the quality of land and distance from market, and takes the form of differential rent. Industrial capitalists who pay rent therefore constantly look for land where the costs of production on the best most productive land means paying less differential rent. This is the basis of Lenin’s development of Marx’ theory of crisis.
Marx’s TRPF means that the rising costs of constant capital – raw materials, plant and machinery that do not add value – call into existence CTs that cut the costs of constant capital. Taking his cue from Marx, Lenin argues that capitalist agriculture in the more developed capitalst powers becomes ‘over-ripe’. Despite its growing productivity its organic composition reduces profitability so that investment in agriculture falls. Moreover, the differential rent set by the worst land imposes a barrier on the reduction of costs of raw materials and wage goods in industry. As production on the land stagnates the price of production on the worst land sets the prices of agricultural commodities.
The land then sets a barrier to the CTs reducing the costs of agricultural inputs as constant capital, so the TRPF begins to bite and overproduction of capital results. This necessary overproduction of capital cannot find an outlet in the ‘home’ countries and looks for new land and productive investments abroad. It is the barrier of capitalist production in the land and the rising organic composition of capital at home that necessitates the export of capital, the search for new land, raw materials and markets. Hence Lenin is able to prove that Marx’ laws of motion arrive necessarily at the highest stage of capitalism where the concentration and centralisation of capitalism takes the form of state monopoly finance capital.
State Monopoly Finance Capital
We have now arrived at Lenin’s concept of Imperialism as a necessarily highest stage of capitalism transitional to socialism. This theory as sketched out in his pamphlet Imperialism is the practical application of Marx method of abstraction used to explain the complex concrete reality of the world economy, international relations and the state in at the time of the first imperialist war. The famous 5 criteria of imperialism are a summary of these results which can be unpacked further to prove this point:
(1)The concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life;
(2)the merging of bank capital with industrial capital, and the creation on the basis of ‘finance capital’, of a financial oligarchy;
(3)The export of capital as distinguished from the export of commodities acquires exceptional importance;
(4) the formation of international monopolist capital associations which share the world among themselves,
(5) the territorial division of the whole world among the biggest capitalist powers in completed. Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capital is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed.
These five points are different aspects of the same process. The concentration and centralization of capital in the form of monopoly trusts results from their ability to monopolize rent, i.e. redistribute profits from weak to strong capitals. This sees monopoly capital associated with the states of the biggest capitalist powers whose foreign policies are designed to advance the interests of the monopolies. Moreover, state monopoly finance capital is dependent upon the export of finance capital and the import of ‘super-profits’.
To recap, Marx theory of crisis in Capital 3 explains the root cause. The rising organic composition of capital is the result of competition between capitals for larger shares of the market which causes capitalists to increase labor productivity by introducing new techniques. This requires a rise in investment in constant capital made up of plant and machinery and raw materials as a ratio to variable capital. This causes a tendency for the rate of profit to fall (TRPF) when the rate of exploitation of variable capital cannot return sufficient surplus to realize a profit. Marx talks about the role counter-tendencies in cheapening both Constant and Variable capital which act to moderate but not prevent the TRPF. Following Lenin then, It is easy to develop his arguments to show how these CTs become implemented in the epoch of imperialism in the form of state monopoly capitalism.
Lenin encapsulates this argument briefly in Imperialism. As the rate of profit falls capital is overproduced in the home country facing a land barrier to further capital accumulation, the result is capital export to new colonies and markets where new sources of land, raw materials and labor power holds down the value of both CC and VC. The result is super-profits that allow the further accumulation of capital as state monopoly capitalism. Let us see how Lenin arrives at this view.
The counter-tendencies Marx nominates act to reduce the costs of Constant and Variable capital. However they are also part of the same development of capitalism that causes the organic composition to rise. But while they can “weaken” they cannot “annul” the law. These CTs include:
(1) More intense exploitation of labor: the increase in relative and absolute surplus value without increasing the proportion of constant capital.
(2) Reduction of wages below their value: this is the result of competition among workers that drives down the value of labor power below the level necessary for its reproduction.
(3) Cheapening the elements of Constant Capital: this is a CT that shows that Marx was fully aware that rising productivity actually cheapened the elements of constant capital such as raw materials or machines. However, unlike many of his critics who seize on this fact to prove Marx wrong, he was clear that this acted as a CT and could not in itself prevent the TPRF.
(4) The Relative Surplus Population: here Marx is talking about the general tendency of the development of labor productivity expelling living labor from production and creating a surplus population. This increases the competition among workers driving down the value of labor power below the average, driving up profits above the average.
(5) Foreign Trade: Marx states that the “expansion of foreign trade was the basis of capitalist production in its infancy”. It both cheapens the elements of constant capital as well as wage goods so raises the rate of surplus value and hence the rate of profit. Capitalism however introduces a rising organic composition which reduces the rate of profit. He then states:
There is a further question, whose specific analysis lies beyond the limits of our investigation [i.e. in Capital 3 Marx is analyzing ‘many capitals’ but not yet at the level of the market, the state and international relations]: is the general rate of profit raised by the higher profit rate made by capital invested in foreign trade, and colonial trade in particular?”
Marx’s answer to that question is that a surplus profit can be realized on the basis of unequal exchange where labor is cheaper and can be sold above its price of production but below the average price in the home country. This situation however will be equalized as capitalism develops in the colonies “unless monopolies stand in the way.” Marx does not go beyond this since he is theorizing at a level of abstraction that does not take into account the actual colonial trade, nor the degree to which monopolies prevent the equalization of profits. It is this shift up in level of analysis that Lenin makes in his application of Marx theory of rent in Imperialism.
While Marx argues that these CTs are contradictory in their application, we can see that he does allow that monopoly in foreign trade can prevent the equalization of profits and maintaining ‘surplus profits’. If we look at Lenin’s theory of Imperialism it is clear that he argues that monopoly is the main feature of Imperialism. Therefore the application of these CTs understood in relation to the highest stage of capitalism must operate on the basis of monopoly rather than competition. Hence the rate of profit is not equalized and surplus profits result. Thus monopoly gives rise to the state form in the imperialist epoch to defend and extend monopoly of territory, markets and raw materials etc.; the ‘international relations’ among states are now oppressor/oppressed relations; and the world market as ‘divided’ among the big capitalist powers and colonies, semi-colonies, and independent countries etc. Hence, the 3 volumes that Marx had planned to write to finish his analysis of capitalism at the level of the concrete, complex world of international relations and world market, had to wait for Lenin to write his pamphlet Imperialism: the Highest Stage of Capitalism. [page refs that follow are from Imperialism, NB means Lenin’s Notebooks on Imperialsm, Lenin, Collected Works, Vol 39]
Back to Russia
From this theory flows Lenin’s programmatic position on the national question. Finance capital flows from the imperialist powers to the non-imperialist countries. This means that there are imperialist oppressor countries and oppressed colonial and semi-colonial, and independent capitalist countries. Among the former is Russia. According to Lenin writing in Imperialism, Russia is an imperialist power of a special kind. Lenin speaks of three types of imperialist countries;
“firstly, young capitalist countries (America, Germany, Japan) whose progress has been extraordinary rapid; secondly, countries with an old capitalist development (France and Great Britain), whose progress lately has been much slower than that of the previously mentioned countries, and thirdly, a country most backward economically (Russia), where modern capitalist imperialism is enmeshed, so to speak, in a particularly close network of pre-capitalist relations.” [259]
By 1914 Russia is second only to Britain in the area and population of its Empire [258] which includes a protectorate in Mongolia, and a sphere of influence in Persia and Northern Manchuria. [NB 675] Lenin calculates that 96 million poor peasants and workers are oppressed by Russia. [NB 300]
“Russia’s final aims in Central and South Asia…can be reduced to a single formula. The final aim is to bring the states concerned –Armenia with Turkey, Persia, Afghanistan and the adjacent small states – under Russian influence, then under a Russian protectorate and ultimately incorporate them in the Russian Empire.” [NB 676] “
Thus, owing to the formation of capitalist monopolies, the merging of bank and industrial capital has also made enormous strides in Russia.” [232].
And while Britain is using Egypt to produce cotton
“…the Russians are doing the same in their colony, Turkestan, because in this way they will be in a better position to defeat their foreign competitors, to monopolise the sources of raw materials and form a more economical and profitable textile trust in which all the processes of cotton production and manufacturing will be “combined” and concentrated in the hands of one set of owners.” [262]
However, Russia was a relatively minor imperialist power dominated by the finance capital of France, Germany and Britain which in 1913 use “holding banks” to extract around 75% of the surplus value created in Russia, dividing this booty among them (France, 55%, Germany 35%, Britain 10%). [232] By 1910 the bulk of French capital exports to Russia were loans to the government rather than industrial production. German capital export was divided roughly equally between Europe (including Russia) and North America. [243] Russia’s largely foreign owned banks were ‘highly leveraged’ [i.e. loans far in excess of reserves] but were guaranteed by the Russian Finance Ministry and Credit Office. [NB 126-135]
Thus the Russian state acted as the agent of French loans, German extraction of raw materials, by means of a foreign policy of highly centralized expansion beyond its borders. Lenin quotes of Rosa Luxemburg (Junius) on this point.
“In Russia, imperialism is “not” so much “economic expansion” as “the political interest of the state” [NB 309]
While Luxemburg wants to give the priority to politics, Lenin shows that Russian imperialism is politics as concentrated economics. That is, Russian imperialism in 1915 has the general features of imperialism, but the role of the state is central in facilitating the fusion of banking and industrial capital to a degree more pronounced than in any of the other imperialist states because of the relative backwardness of the Russian economy. The state acted to use its power to dominate its capital export to its colonies and extraction of surplus-profits in return, as well as guarantee the interests of its imperialist ‘partners’.
Russia Today
If Russia was imperialist in 1915, notwithstanding its relative backwardness and “network of pre-capitalist social relations”, the dominance of French (and lesser extent German and British) finance capital, and given that the fusion of banking and industrial capital under the political control of the state was ‘developing’, might these same characteristics be found in the Russia of today where capitalism has been restored and where the Russian state plays a central role in organizing the economy? Is Russia a semi-colony, independent capitalist state, or imperialist state?
The critical factor is not gross FDI and extraction of surplus by other imperialists in Russia. Nor is it the monopoly character of the corporations. Nor is it the centrality of the state. Nor is it the extraction of surplus value inside Russia itself. These are characteristics of all capitalist economies in the epoch of imperialism especially weaker semi-colonial countries. The critical factor is the overproduction of capital in Russia that poses a problem of insufficient opportunities for profitable investment, and that requires the export of surplus capital abroad to Russia’s ‘protectorates and semi-colonies as well as in other imperialist powers, in order to return surplus-profits.
The key indicator as to whether Russia is imperialist today is its net export of capital (and the net return of surplus profit).
According to a Deutsche Bank research report Russia’s Outward Investment (April, 2008)
In recent years, emerging market multinationals have increasingly expanded abroad to enhance their competitiveness, i.e. the ability to survive and to grow while maximising profits. This is achieved by saving costs, improving efficiency, applying new technologies as well as gaining access to new markets and resources.
Capital export to the Central Asian CIS states where Russia plays the dominant role in the exploitation of oil and gas has expanded to capital export to Europe, North America and Africa. In the biggest CIS states such as Kazakhstan and Turkmenistan the oil and gas resources are extracted by multinational joint ventures [JVs] and most are exported via Russia. In other words Russia has been able to maintain its dominant role in the central Asian former soviet Republics despite the independence of these states and the opening up of their economies to foreign investment.
According to Deutsche Bank:
The expansion of Russian corporations started predominantly in the member countries of the Commonwealth of Independent States (CIS) in the 1990s, moving on to developed markets and continuing in Africa more recently. Russian corporations established a prominent position close to their home market due to linkages already in place in the Soviet Union as well as a lack of foreign investors from elsewhere. Armenia, Belarus and Uzbekistan have accounted for the bulk of the Russian FDI flows to the CIS (see chart 7). Examples of Russian investment in the CIS include state-owned energy supplier RAO UES, which has invested in energy distribution chains in Armenia, Georgia, Moldova and Ukraine. In addition, Gazprom controls infrastructure assets in Kazakhstan and Moldova. Furthermore, Russian mobile telecom services providers are competing for the leadership in the CIS, having invested USD 1.38 bn in M&A [mergers and acquistions] since 2001 and accounting for 40% of the CIS cell phone market. However, the proportion of Russian direct investment flows to CIS member states shows a downward trend: it fell to 12% on average in the period 2004-2006 from 59% in 1997-99 (see chart 8). At the same time, the figures should probably be taken with a grain of salt, since they have been quite volatile. In 2004, Uzbekistan received 85% of total investment to the CIS, while Armenia accounted for 78% in 2005. In 2006, FDI flows seem to have been more equally distributed, with Tajikistan accounting for 39%, Kazakhstan for 33% and Ukraine for 26% of total CIS investment. In general, strong economic growth in the CIS should make them an attractive market for Russian direct investment in the future.
Under Putin the Russian state is taking a leading role in virtually all sectors of the economy. In oil and gas the state owns over 60% of the industry and the big players Gazprom and Rosneft are majority state owned. That in itself is not decisive, however most oil and gas projects are JVs where Russian firms have the controlling interest and the lion’s share of surplus value and foreign operators are minority shareholders providing new technology. Also Russian oil majors have swapped shares or merged with foreign firms to gain shares in downstream markets and get access to new resources abroad. Today Russia has a GDP of over $2 trillion and is rates 6th largest economy in the world. Its foreign reserves are around $60 billion, 3rd ranked in the world. But more important its outward FDI is around $200 billion and greater than the $200 inward FDI. However, 2/3rds of inward FDI is ‘round-tripping’ Russian capital returning via Cyprus and Luxembourg, which by definition is returing to Russia to earn higher profits than can be earned abroad. (Kari Hiuhto ‘Russian Tycoons largest FDIs.’ BBC 26/2/08.)
Conclusions
It is important to see that Lenin’s analysis in Imperialism extends Marx analysis of capitalism in Capital. The production of value and surplus value remains the basis of capitalist development. The laws of motion that Marx sketched on in the General Law of Capitalist Accumulation in Capital 1 and argued in Capital 1,2,3, were applied by Lenin to the concrete, complex level of reality that had been Marx’s intention in his unfinished volumes on the state, world market and international relations.
In Capital 3 Marx argued that the expansion of capitalism into the colonies would create opportunities for unequal exchange but would before long give rise to the equalization of capital and see the ‘normal’ operation of the law of value apply, and hence the ‘normal’ development of capitalism. Marx argues this in Capital 3 where the level of analysis is of many capitals, but where there is as yet no application of the role of competition to the actual functioning world market. Thus for Marx colonialism/imperialism cannot bypass the laws of motion and rescue capitalism from its fate as a transient mode of production, that is transitional to socialism. Extending his analysis to the concrete complex reality would not and could not alter these historical laws.
Lenin takes this analysis as his starting point and proves its conclusions at the level of the world market. Imperialism is an empirical test of Marx’s theory and comes up with the finding that it is the highest stage of capitalism transitional to socialism. It is so because the assumption of competition that Marx had made and held constant in Capital, once freed up and observed in concrete reality was now being superseded by monopoly. The market as the mechanism of the allocation of capital was now dominated by the locus of power concentrated in the hands of the institutions of centralized value – state monopoly capitalism. This meant that competition had been shifted from the market to the political sphere of international relations between rival states. What Marx saw as a feature of capitalism’s infancy, and an aberration in its maturity, monopoly, was now the terminal condition of capitalism in its dotage.
The world market then becomes subordinated to international relations among states of varying powers. The big imperialist powers are oppressor states dominating oppressed countries politically and economically. It is the political domination of oppressed countries that determines whether or not the surplus value generated in that country is accumulated internally or exported as “surplus profits”. In most cases the character of a particular country can be readily determined.
In the case of Russia as I have argued above, the answer is more difficult because of its ‘unique’ status prior to the revolution, and complicated due to its isolation from the capitalist world market during the period from the revolution to the restoration of capitalism in 1992. Nevertheless, Russia today has not only restored capitalism but has been able to retain the most resource rich former Socialist Republics within its sphere of interest. In that sense it has carved out a sphere of interest for its renewed imperialist expansion on the basis of its close ties formed within the USSR, without having to compete directly to re-divide the sphere of interests of its rival imperialist powers. It has used this empire on its borders to build an economic base for an aggressive expansion into the spheres of interest of the EU and the US and further into those imperialist heartlands. Russian imperialism is back with a vengeance.
Class Line in the Caucasus
Most of the revolutionary left has responded to the war in the Caucasus with a dual defeatism of the imperialist blocs on both sides. However, Yossi Schwartz of the RCG in Israel has circulated his groups position on the war between Russia and Georgia. He takes the classic Leninist position that Russia is an imperialist oppressor while Georgia is an oppressed semi-colony, therefore it is necessary to defend Georgia and defeat Russia. [See Yossi’s post below]. For this position to be correct then not only must Russia must be imperialist and Georgia a semi-colony, but the defeat of Russia should have the purpose of advancing the right to self-determination of the Georgian people from all imperialist oppression. Let us see.
First, is Russia imperialist?
Lenin thought so in 1917 when the Tsar was overthrown even though its ‘imperialism’ didnt really match up to the definition of imperialism as the export of capital he developed. Lenin considered Russia imperialist because it was a “prison house of nations” and extracted tribute if not super-profits from its political protectorates. In that sense, Russia was an awkward imperialism in transition from a feudal empire to capitalist imperialism, though dominated by French and German imperialism. Anyway, it is clear that Lenin thought that the workers’ revolution ended the Tsarist empire.
Is Russia imperialist today?
Yossie thinks that the SU became imperialist in 1939 so therefore it must be so today. At that time Russia’s state capitalist economy which had been ruled by the working class was finally taken over by the bureaucracy as a new Russian bourgeosie. Because the the SU included many republics and and autonomous republics, and becuase it was expansionist into the Ukraine, Poland and Finland, Yossie thinks that the SU was capitalist AND imperialist in 1939.
We do not agree. The SU as a workers state retained elements of the market alongside its economic plan. Lenin and the Bolsheviks were pragmatic about using market techniques of prices to boost the economy, always aware that too much market would bring with it the restoration of capitalism. The Stalinist bureaucracy failing to increase labour productivity by any other means than repression, always looked to find a way to the capitalist market to borrow the more advanced techniques that would allow an increase of labour productivity. But until the 1980s the bureaucracy always failed in this quest. At that point the planned economy was almost defunct with massive waste and inefficiencies leading to huge shortages. Perestroika was a deliberate policy of restoring capitalism as the only way that the bureaucracy could rescue the economy and their own existence as a parasitic caste. They welcomed the opportunity to privatise workers property and turn themselves into a new bourgeoisie. By 1992 the SU was breaking up and the law of value replaced the plan as the means of allocating economic resources.
If capitalism was restored in Russia in 1992 has Russia become imperialist since?
We can ignore the right wing idea that Russia has restored a pre-Bolshevik Great Russian Empire. The law of value dominates in the former SU not feudal tribute. To qualify as an imperialist country today Russia would have to be exporting capital and importing super-profits. It doesnt matter how much of a bastard Putin is, how murderous the Russia army is, or what sort of ‘great Russian’ ideology flowers to spur Russia on to domination of the republics and autonomous regions of the former SU. The only thing that counts is if Russia is extracting super-profits from these countries, in the same way that France, Germany, Britain, US, Japan etc extract superprofits from their colonies and semi-colonies.
I would say that Russia is clearly extracting huge super-profits from its oil interests in what are now the formally independent nations in Central Asia. In that sense Russia today is an imperialist country motivated to increase its imperialist control over the resources of Central Asia in particular of oil and gas. So what motivates Russia today, is the return on its capital investments in the production of oil and gas, not any political or ideological set of interests. Certainly it has no interest in defending the national rights of its semi-colonies other than to retain them as semi-colonies.
How are Russia’s imperialist interests expressed in this war?
Its obvious from what has been said above that Russia is motivated in its war against Georgia to defend and extend its imperial control of the Caucasus against its imperialist rivals. Russia is allied economically with France and to a lesser extent Germany because it supplies these states with gas. It is hostile however, to the US, Britain as imperialist powers that are contesting Russia’s dominance in Central Asia. It regards the US/UK oil pipeline that runs through southern Georgia and Turkey and eventually Israel, as an extension of US intervention in its sphere of interest. It sees the US policy of including promoting ‘color’ revolutions in the Baltic states, and the Ukraine and Georgia as clear evidence of the US creating new protectorates or semi-colonies in the region. Russia opposed the Sheverdnadsi and Saakashvili regimes deals with the US to remove Soviet era bases and establish US bases and to join NATO as direct attacks on the security of its border. It has worked hard to create majorities in Abkhazia and South Ossetia to create a buffer zone between Russia and a now US client state in Georgia. So when Georgia invaded South Ossetia Russia took the opportunity to invade Georgia and militarize the buffer zone.
Can we oppose Russia’s invasion without defending Georgia?
Yes. While Russia is an imperialist power motivated in its war to defend and extend its control of resources in the region, and Georgia is a semi-colony of the US and EU, there is no obligation to defend Georgia from Russia. This has nothing to do with the unpopularity of Saakashvili (which is true) or its invasion of South Ossetia. These by themselves would not change the political character of Georgia as a semi-colony.
What is decisive in this situation is the fact that Georgia as a semi-colony is also a client state under the direct control of the US and is acting as a US proxy in its relations with Russia. To defend Georgia against Russia would not demonstrate to the Georgian workers that we are against their national oppression. It would mask the fact that Georgia is already oppressed by the US. It would not make it clear that the people of Georgia are being used by both its client Saakashvili regime and its imperialist masters as pawns in an inter-imperialist war for oil. How could we defend Georgia from Russia without also defending it from the US/Israel specialists, advisors, military, and those who were clearly acting behind Saakashvili in the bombardment of South Ossetia? Not to do so would fail to show how Georgia’s national sovereignty is already sacrificed to the interests of the US in its rivalry with the EU and Russia.
To be more specific. Georgians have been ethnically cleansed from South Ossetia and Abkhazia. While Russia is also responsible for this and gains a buffer zone in which Russian nationals dominate, the US is the main beneficiary. The US will now extend its military base near Tbilisi and militarise the south of Georgia to defend the oil pipeline. So the US has intervened in Georgia to split the country and its national sovereignty to further its oil interests. Further, the US is working on the other former members of the Soviet bloc, Poland and Ukraine, to expand NATO and to ring Russia with forward missile sites. Poland has agreed to do so, and the membership of NATO by Ukraine is being fast forwarded.
To conclude, by defending Georgia against Russia we would not be defending the national rights of Georgia. Rather we would be providing cover for the US (and NATO) to present its opposition of Russia as a defence of the national rights not only of Georgia but also the Ukraine and all the other former members of the Soviet bloc that are now US and EU semi-colonies as part of the “new Europe”.
The correct position is defeat on both sides and defence of the national rights of the oppressed countries in the region
The only way then to show to workers in all of these former Soviet bloc countries that their fate rests with breaking from both Russian and also US and EU imperialism, is mutual defeat in wars between the imperialist blocs, along with defence of the rights of all the nationalities to self-determination. While Yossi argues that Lenin’s position is consistent with his own position, I would argue that Lenin’s method was to prove to workers in oppressed countries that the workers of oppressor countries would side with them to gain independence from the imperialist ruling class. In the current case, this purpose would be defeated if we opposed only Russian oppression and ignored US oppression in Georgia. Therefore, I consider dual defeatism to be more consistent with Lenin’s method than Yossi’s.
Thus, we are for the right of Georgians to self-determination against all regional powers including US military occupation. We are for the right of South Ossetians for independence from Georgia and voluntary association with the Russian Federation. The same goes for Abkhazia. However, since all of these countries must break from imperialism to win their independence this can only result from socialist revolution based on workers councils and militias, and led by revolutionary Marxist parties, the forming of workers governments, and voluntary membership of a federation of socialist republics in Eurasia!
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yossi schwartz said, on August 16th, 2008 at 1:58 pm (Edit)
Many years have passed since Lenin raised his revolutionary slogan:” the less evil is the defeat for imperialist Russia. He did so because even though other countries on the other side were imperialists, he lived in Russia and the enemy first of all in an imperialist country at home.
The war of Russia against Georgia is a clear indication of an end of a period when the US was the only super power of the world. Many supporters of the US “new order” are now in tears.
Those who fail to see that imperialism is a stage of the advanced capitalist states that include Russia, Japan , Australia –New Zealand Europe and Israel in addition to the US and not simply the US, must well come the victory of Russian imperialism as a step in the right direction. For those of us who are Leninists the defeat of Russia in this conflict with the non imperialist state- Georgia is the only correct line.
Most of the left groups correctly do not side with Russian imperialism in the war. However, wrongly they do not side military with Georgia because of its right wing regime in alliance with the US. Confusion between regime and a state leads to reformism . For example siding with Western imperialism against Nazi Germany rather than struggling for a defeat for both as imperialists was already during WWII a symptom of reformist pressures.
To have the correct position from a Marxist perspective: siding military with Georgia against Russian imperialism without any political support for Georgia, Marxists have to differentiate between military and political support.
Lenin in 1917 did differentiate between the two when he defended Kerensky’s government military but not politically.
Would US and NATO step in and fight Russia our position will change to revolutionary defeat for all imperialist sides. This in essence will be the beginning of WWIII.
However mean time the US and NATO are not involved directly and for this reason most people who support US imperialism are in shock.
It is a reformist mistake not to take the position of Revolutionary defeat for Russia and Revolutionary defense for Georgia.
To understand this question even in a more clear way is to remember Iraq. Sadam was the instrument of US for many many years including in his war against Iran. He tried to occupy Kuwait with the assumption the US gave him green light. He was wrong. Now in the war of the US against Iraq the revolutionary position was and is Revolutionary defeat for the US Revolutionary defense of Iraq.
Georgia has been acting for many years as US instrument against Russia, yet in this war the US deserted Georgia and so is Israel.
There are many implication for the desertion of the US its weak ally-Georgia. It means among other things that If the Israeli ruling class want to attack Iran they are not likely to get the US actively on their side.
RCG
YOSSI
Is China the new US?
For many China is the new USA. They think that it will be the next economic powerhouse, if it is not already, replacing the US as the leader in the world economy. Others doubt this, but there is no denying that today China is rapidly growing – but what sort of society is it? There are still those who think that China is a socialist country or some transitional type of ‘market socialism’ somewhere between socialism and capitalism. Then there are the classic liberals who think that in China the Manchu dynasty and the Chinese Communist regime are different versions of ‘oriental despotism’ all engaged in human rights abuses. Rather than attempt to navigate between these contending viewpoints on the surface of events, we prefer to approach China by looking for the underlying revolutionary changes in its modern history which allows us to understand its development and its current role in the global economy today. Using Trotsky’s concept of the law of uneven and combined development, and Marx’s concept of permanent revolution which was later taken up by Lenin and Trotsky we can uncover and reveal this historic dynamic.
China’s pre-capitalist history
China before the entry of the European powers had been a highly developed pre-capitalist society for centuries. Marx famous and controversial concept of an Asiatic Mode of Production was an attempt to describe the typical hierarchical society typical of Asia of which European feudalism was a local variant. Despite being criticized as a Eurocentric version of ‘oriental despotism’ Marx seems to have identified the key elements of this mode in the communal modes at its base and centralized state at its center.
Eric Wolf defines this mode in Europe and the People Without History as a tributary mode of production which incorporated and dominated kinship modes of production Peasant families organized as kinship modes of production had their tribute or rent expropriated by a class of landlord families which in turn paid the standing army and bureaucracy to administer society. Yet for all its advanced technology and trade relations the tributary mode of production tends towards stagnation and could not embark on the capitalist road. The ruling class was able to extract sufficient rents to maintain society and did not need to allow the formation of a middle class of merchants to bring wealth from unequal exchange overseas back to China. Rather, those traders who sought to expand their wealth through trade and become merchant capitalists had to exile themselves and look for opportunities in other parts of the world in particular South East Asia. This merchant diaspora is the basis of overseas Chinese capitalism today.
China was highly successful in producing and exporting tea, running a trade surplus until the British ‘opium wars’ in the mid 19th century forced it to import opium in exchange for its exports. The tributary mode was thus subordinated to British imperialism which exploited China’s raw materials and surplus labor force as migrant workers in its other colonies. So long as China remained a form of British colony and had its resources and wealth expropriated it would not be able to create its own internal market and develop the capitalist mode of production. It would remain a tributary mode mined and plundered by imperialism. Karl Marx, however, anticipated that the sleeping giant would awaken as an independent capitalist nation. Marx wrote of the impact of the capitalist mode of production in dissolving the Asiatic mode, though he noted that this was very slow. Nevertheless in a famous newspaper article he wrote in 1850 Marx was not joking when he said: “When our European reactionaries in their immediately coming flight across Asia finally come up against the Great Wall of China, who knows whether they will not find on the gates which lead to the home of ancient reaction and ancient conservatism the inscription, ‘Chinese Republic – liberty, equality, fraternity’.”
The Bourgeois revolution
Here Marx is anticipating the uneven and combined development that would see capitalism progressively free China from the Asiatic Mode so that it would replace Europe as the dominant force in the world economy. For this to happen, however, a national bourgeoisie would have to rise up to overthrow the tributary ruling class which was subservient to imperialist powers. This national democratic revolution began in 1911 when the weak bourgeoisie struggled to force the old landlord ruling class to break from its subservience on British imperialism and free up the opportunities or the emergence of a national bourgeoisie. However, the Chinese would-be bourgeoisie proved to be too weak to united the country and win complete independence from the imperialist powers. Power shifted from the imperial center to a host of tributary warlords. As an expression of the tragicomic adventures of the would-be bourgeoisie, the united Chambers of Commerce declared their own national government in 1923, supported by Mao Zedong who said “The merchants of Shanghai…have adopted revolutionary methods; they have overwhelming courage to take charge of national affairs’. (Cambridge History of China, p 782). To unite China and win independence the national bourgeoisie would have to harness the class power of the peasantry and the workers and complete the bourgeois revolution. But it ran the risk of the peasants led by the workers taking over the national revolution and going straight to socialism.
The Kuomingtang (KMT), the party of the bourgeoisie the under Sun Yat-sen sought to complete the national revolution against Japan and Britain and liberate the nation from semi-colonial oppression. To achieve this, the KMT formed a patriotic alliance between a bloc of workers, peasants and middle class under its leadership. This bloc was unstable because it contained a contradiction between the producing classes and exploiting classes. In order to ensure that the bourgeoisie would retain its class rule, the KMT could not allow the workers and poor peasants to lead the revolution for fear that they would not stop at throwing out the Japanese, but would throw out the KMT as well.
Russia’s permanent revolution
This class contradiction was recognized by the Bolsheviks because it had occurred in Russia as well. In Russia the weak bourgeoisie preferred to stay in power with the backing of the imperialists rather than cede power to the worker and poor peasant majority. Why? Because the imperialists would allow them a share of the super-profits expropriated from workers and peasants, while a workers revolution would eliminate the bourgeoisie as a class. Because of this treacherous role of the bourgeoisie only the workers leading the poor peasants could complete the national revolution against imperialism. The Bolsheviks rapidly dropped their alliance with the bourgeoisie and led a revolution in which the worker and poor peasant majority took power. The Bolsheviks had an ‘uninterrupted’ revolution (or ‘permanent’ revolution in Trotsky’s terms) in which the national revolution was completed by a socialist revolution.
Facing a similar situation in China in 1924, the Comintern (the 3rd International) that arose out of the Russian Revolution, was divided over how the national revolution should be completed. The majority around Stalin abandoned the lessons of October and reverted to the Menshevik idea that the bourgeoisie would lead a ‘united front’ [the ‘bloc of 4 classes’] to complete the national revolution and so prepare the conditions for the socialist revolution. The minority around Trotsky, (the Left Opposition) applied the lessons of the Russian revolution to China. Only the working class leading the poor peasants could complete the national revolution as a socialist revolution – the permanent revolution! The bourgeois KMT could not be trusted to lead a national revolution because it would side with the imperialists as a comprador bourgeoisie rather than allow the workers and peasants to take power. This division in the Comintern was reproduced in the leadership of the Communist Party of China (CCP).
The second revolution betrayed
Trotsky’s warnings that the workers and poor peasants must not subordinate themselves to Chiang Kai-shek’s military leadership were ignored. KMT were made honorary section of Comintern. The Comintern overruled the CCP leadership and suppressed the Left Opposition (LO). The KMT led the bloc of 4 classes to fight the imperialists but fearing the power of the exploited classes then turned on the CCP leadership and destroyed it. Stalin blamed the CPP leadership. Some of the CPP leadership opposed this and were expelled. Others were won to LO in China and four LO currents were formed which later formed a United Opposition.
Meanwhile in the face of this betrayal the Maoist leadership of the CCP continued the failed Stalinist popular front tactic of the bloc of 4 classes and began to suppress the LO. The KMT regime under Chiang was a form of Bonapartist bourgeois regime balanced between the Chinese peasants and workers on the one side and the imperialists on the other. Because of the weakness of the national bourgeoisie the KMT regime encouraged the formation of a state bourgeoisie. The national war of liberation became a peasant ar and it took many years to drive out the Japanese the KMT and its backer, the US. Mao finally took power in 1949 still committed to a bourgeois China and attempted to hand power over to the bourgeoisie. Again the popular front theory was proven wrong but only because by this time the peasants and workers were mobilized to take power, and not to hand it back to the bourgeoisie. The leading sectors of the Chinese bourgeoisie abandoned the revolution since it would not allow them to profit from a comprador relationship with imperialism. Some other sectors made an alliance with the CCP. Mao was then forced to expropriate bourgeois property but at the same time refuse to allow the workers and peasant base to administer the dictatorship of the proletariat.
The third revolution
Thus despite the Stalinist Maoists the revolution succeeded in removing the imperialists and the national bourgeoisie, but failed to create the conditions for the transition to socialism. The nationalization of bourgeois property created workers property and a bureaucratic plan, but the working class and poor peasantry were never able to democratically control the state. This transitional form of society contained a contradiction between workers property and the parasitic Bonapartist bureaucracy. In that sense it was structurally a workers’ state degenerate at birth, the same as the states formed in Eastern Europe that were occupied by the Red Army, or like Yugoslavia, balanced between the Soviet Union (SU) and imperialism.
We characterize this transitional form of state in China as a Degenerate Workers State (DWS) at birth following Trotsky’s method in explaining the role of the Red Army in occupying the Ukraine, Poland and Finland in 1939. Against those who took the position that the Red Army could not substitute for the working class to create workers states in these countries, Trotsky said that the state forms that resulted were an extension of the DWS in the SU. Despite everything the bureaucracy did, including suppressing national workers and poor peasants’ movements, the expropriation of the bourgeoisie created post-capitalist property.
But does the analysis of the DWS occupied by the Red Army as an extension of the Soviet Union also apply to those countries that were not occupied by the Red Army – Yugoslavia, China, Vietnam, Cuba? In each of these countries, the nationalist forces that led the revolution were not under the direct control of the SU. But the same phenomenon that Trotsky observed in Poland happened. The support of the SU encouraged the workers and peasants to join in not only the expulsion of the imperialists, but in forcing the bureaucratic or petty bourgeois leaderships to go further than forming a government with the national capitalists, and rather to expropriate them.
In China the expropriation of big bourgeois property was possible only with support from the Soviet Union –a fact that the bureaucracy was forced to use to legitimate its rule. This is why when the CCP nationalized property it took the form of workers property, even under a bureaucratic dictatorship. The bourgeoisie as a class are removed, and all that remains for workers to claim their property is the removal of the bureaucracy. That is why, against those who thought that the Stalinists could create healthy workers’ states, substituting for the historic revolutionary role of the working class, Trotsky said that the only sure defence of workers property was the overthrow of the bureaucracy in a political revolution as part of an international socialist revolution.
Thus in China in 1949, as in Poland as Trotsky had argued in 1939, it was not the Chinese Red Army in itself that was progressive but the fact that the SU backed it against Japan and the US, expelling the comprador bourgeoisie, and forcing the Bonapartist CCP leadership to expropriate capitalist property.
Forward to socialism, or back to capitalism
China, as a new DWS could go in two directions. Forward to socialism by political revolution that removes the bureaucracy, or back to capitalism by a counter-revolution where the bureaucracy privatized workers property and turned itself into a new national bourgeoisie. The contradiction between workers property moving forwards to socialism and the bureaucratic caste moving backward to capitalism was expressed in the class contradiction which the Bonapartist regime attempted to reconcile. It was also represented in two factions in the CCP leadership. The Maoists fought to keep workers property and the planned economy as the basis of their bureaucratic privilege, while the ‘capitalist roaders’ fought to privatise collective property, restore capitalism and convert themselves into a new bourgeoisie. These big internal fights then represented both sides of the class contradiction striving for victory over the other.
The capitalist roaders won and began by replacing the rural collectives with the TVE (Town Village Enterprises) cooperatives in the 1980s, and then began transforming the SOEs (State Owned Enterprises) into privatized corporations in the 1990s. The shift to TVE cooperatives was decisive as it allowed a shift to personal shareholding. These became the basis of the conversion of the TVEs into privatized industries in the 1980s. This created a huge movement of displaced workers into the cities as a rural reserve army of formal wage labour who would then become a free wage labor force.
By the early 1990s the Chinese economy had been gradually opened to the influence of the Law of Value (LOV). State owned land was increasingly commodified with the development of a rental market, the SOEs were freed of any responsibility to meet the health, education and welfare needs of wage workers, and the state surplus increasingly became accumulated as private capital in pockets of TVE shareholders, SOE managers as well as private bosses. Thus at this point workers property relations were being replaced by capitalist property relations. The bureaucracy had converted the TVEs and SOEs into capitalist corporations in which a new bourgeoisie become the private owners.
Capitalist Restoration completed
The question of when workers property is replaced by capitalist property determines the change in the class character of the state. Here again, we apply Trotsky’s analysis of the counter-revolution in the SU. Up to the time of his death in 1940 Trotsky argued that the SU remained a DWS, and as we have argued the just as the occupied countries were DWs by extension of the SU. The counter-revolution in all of the DWS that emerged after WW2 would follow the same pattern as the SU. In the SU, the economy was characterized as workers property, or nationalized property, that was nevertheless coexisting with some elements of the market to allow demand to guide prices. But as long as the market was subordinated to the plan, no matter how bureaucratic, the allocation of resources would follow the plan rather than the law of value. That is why the SU was plagued by waste and shortages of basic necessities. Capitalism is restored when the LOV takes over from the plan in determining prices in allocating resources. Today when workers have little money the shortages of necessities result from lack of effective demand not lack of commodities.
In the EE states, attempts to remove the Red Army included elements that were for the defence of state property and those that wanted to restore capitalism. The bureaucratic suppression of both had the effect of subordinating the independence struggle to the restorationists. Thus by the 1980s the struggle for political revolution was weakened and the forces for counter-revolution strengthened. In the SU and EE this counter-revolution was completed between 1989 and 1992. At this point it was clear that the bureaucracy, despite competing factions, was committed to destroying the plan and re-imposing the LOV as the basis of production. Thus the SU and its buffer states ceased to be DWSs and became capitalist states. The first phase of the operation of the LOV was to destroy the existing industry and allow asset stripping by a new capitalist class to set its value on the world market. Trotsky anticipated this transition back to capitalism as a state capitalist phase.
Applying the same method to China it is clear that the turning point was around 1992 when the CCP abandoned and defence of the plan and passed laws to privatize the SEOs as the property of their managers. The CCP did this more deliberately than the CPSU and this phase of state capitalism was dressed up as market socialism. Massive devaluation and asset stripping was spread over decades instead of a few years. As opposed to those who point to the concessions to Foreign Direct Investment (FDI) in China as a major force for restoration, we point to the fact that FDI is still relatively small, and that the major moves towards privatization originated in the state sector where the bureaucracy made a smooth transition to capitalism and to their re-invention as a national bourgeoisie.
Is China imperialist?
Today by the measure of the LOV China is capitalist. In that sense a rapidly growing powerful capitalist China could be considered imperialist. But what do we mean by imperialist? According to Lenin and imperialist country has a surplus of finance capital which must be exported to counter falling profits at home. That is, the possibilities of growth at home can only be sustained by the export of capital to earn super-profits in other countries, and be imported to the home country to maintain the rate of profit. Less important was the need to find new markets in which to sell the commodities produced in the home market. Historically, the powers that clearly meet this definition are the USA, Japan and the main European powers like Britain, France, Germany, Spain and Italy. Others are not imperialist, or may be former imperialist, and are more like semi-colonies, such as Portugal, Greece, Poland, etc. Others may be small imperialist powers such as Sweden, Austria etc.
Does China today meet these criteria? As yet it doesn’t appear so. China has a big trading surplus from its commodity exports but this is mainly invested in US bonds. It is a peculiar sort of finance capital that must accept US petrodollars to fund the massive US external deficit. Most of China’s growth is driven by its internal market which is huge and expanding rapidly. In that sense China’s internal market is sufficient to maintain its profitability, while its exports are more re-exports of foreign mainly overseas Chinese companies (mainly Hong Kong and Taiwan) that have invested in China. So far from being evidence of the export of China’s surplus finance capital, China is the source of imperialist (Japanese, overseas Chinese, EU, US etc) FDI which reaps massive super-profits from China’s cheap resources and labor power.
While the organic composition of capital in China is growing it doesn’t seem yet to have reached the point of an overproduction of capital necessitating an export of productive capital. China today, then, is still developing its internal market, making huge infrastructural investment and is only beginning to establish DFI overseas in Africa, Latin America, and the rest of Asia to create its own so-called ‘empire’. Nevertheless, China is being driven by the rapid growth in demand for cheap raw materials and markets to become a major competitor to the existing imperialist powers, a fact that is clearly behind the growing alarm with which the EU and US views its aggressive role in Africa.
For some China’s capitalist growth has many of the features of industrialization in Europe in the 19th century. However, the form of combined and uneven development that Trotsky and Lenin spoke of in the case of the Soviet Union, and which Marx foreshadowed in China, is today manifest in a pace and scale that would have been beyond even their imaginations. Not only has China become the key driver of the world economy at a time of US dominance and relative decline, it is now at the center of the world historic contradiction between labor and capital. Emerging out of a bourgeois national revolution and the aborted socialist revolution China has within the space of two decades created a powerful capitalist economy. Whether it is contained as a semi-colony exploited by the other capitalists, or succeeds in re-dividing the world economy at the expense of the other capitalist powers, remains to be seen. China may be on the road to displacing the US but will it be as an imperialist China or a socialist China?
Nepal under the Maoists
The election victory of the Communist Party of Nepal (Maoist) has created an acid test for socialists who claim to represent the interests of workers and the oppressed. There are many who welcome the victory as a progressive step forward to socialism. Some support the CPN (M) position that a period of capitalist development is necessary before a socialist revolution is possible in Nepal. Revolutionaries around the world have rejected this policy as the revival of the classic Stalinist theory of stages. They say that history proves that unless the workers and peasants reject a bloc with the national bourgeoisie and socialize the economy under a Workers’ and Peasants’ Government, then the national democratic revolution will be driven back by counter-revolution. This is the situation that faces us in Nepal today.
Stalinism and Bolshevism
I’m reprinting here a classic article by Trotsky from August 1937 that defends Bolshevism from those accusing it of preparing the way for Stalinism. For those of us who see Trotskyism as the continuation of Bolshevism, but in need of refounding on the basis of the 1938 program, this article is as important today as it was in 1937.
. . .
Reactionary epochs like ours not only disintegrate and weaken the working class and isolate its vanguard but also lower the general ideological level of the movement and throw political thinking back to stages long since passed through. In these conditions the task of the vanguard is, above all, not to let itself be carried along by the backward flow: it must swim against the current. If an unfavourable relation of forces prevents it from holding political positions it has won, it must at least retain its ideological positions, because in them is expressed the dearly paid experience of the past. Fools will consider this policy “sectarian”. Actually it is the only means of preparing for a new tremendous surge forward with the coming historical tide.
Bolivia and the Transition to Socialism
[stoppress Morales Army kills miners at Ururo August 5]
While most of the global socialist left looks to the Morales led regime in Bolivia as a popular, indigenous government in transition to socialism, others see only a repeat of the fatal return to a popular ‘patriotic’ front that traps and immobilizes the mass of workers and peasants and prepares the way for imperialist reaction. How is it that socialists can be so ignorant of recent history that they look to popular front regimes as instrumental in the transition to socialism?
I think the answer to this question is that the exchange theory of capitalism promoted by the petty bourgeoisie reinforces the illusion among the masses that progressive populist regimes can negotiate class compromise deals with imperialism.
As I have argued elsewhere, exchange theory views capitalism as a system in which one class exploits another (leaving aside for the moment questions of intermediary classes, the multitude etc) by underpaying the full value of the commodity it sells as wage labor or as direct producers. This is the classic under-development theory today promoted by James Petras to name one prominent contemporary exponent. It is also the ideology that underpins the populist regimes in Latin America which propose that a petty bourgeois state bureaucracy can come to power and implement a national economic development strategy. Cuba is seen to be a partial model of this strategy as it opens up its state socialism to market socialism, while Venezuela is a success story in transition from a neo-liberal market towards market socialism.
This convergence on ‘market socialism’ places the state at centre stage. According to exchange whichever
class controls the state controls the economy. That is, the state is the instrument of the ruling class by definition. The only question is which class rules? Exchange theorists advocate a transition from a capitalist state to a socialist state. But what does this mean exactly? Exchange theory proposes that a national state voted into power by a majority of all patriotic classes, is necessary if not sufficient, to take control of the state as the primary instrument of popular national development. In other words the patriotic front of all classes managed by a state bureaucracy is the instrument of the socialist transition.
Bolivia as a test case
Bolivia is a good test case. Like Venezuela it has a populist regime voted into power by a majority of the electorate of different classes on a program of equalising exchange and national development. However, unlike Venezuela it has not yet won control over its gas and mineral wealth sufficient to convince its supporters that it can deliver the fruits of equal exchange. This is because the major contradiction faced by semi-colonial states-between the needs of the people and the power of international capital-is dramatically expressed as the geographic division between the Media Luna and Altiplano. More than 80% of the mineral wealth of Bolivia is located in the Media Luna and the move to secede from the rest of Bolivia would starve the populist regime of the resources it needs to fulfill its program for the masses.
Yet while Bolivia faces the stark contradiction between imperialism that demands resources on terms which
return high profits, and the desperate poverty of the majority of its citizens, the Morales government is committed to a policy of compromise, attempting to negotiate terms of exchange between the two sectors. A lot is a stake here. The populist regime claims to represent the indigenous peasantry and the depleted and displaced mine workers, who have historically paid the price of having their wage labor and direct production expropriated by the Eastern ruling class that still monopolizes the land and mine ownership. It is not an exaggeration to say that Bolivia today is the test case of the capacity of exchange theory/program to break the nation from his history of underdevelopment, while directly confronting an intensified and irreconcilable contradiction between the impoverished masses and rich minority.
Enter Garcia Linera
Alvaro Garcia Linera, Morales vice president, is a powerful figure in the regime. He was a former guerrilla fighter in the indigenous Tupac Katari. He was jailed for a period when he studied sociology and Marxism and emerged as a leading intellectual advocate of development theory in Bolivia. In that sense, Linera’s theory of ‘Andean Capitalism’ is the key to understanding the framework which guides the MAS politics and the new Constitution. Linera shares with other dependency theorists the view that Bolivia has been under-developed as a backward capitalist neo-colony. He sees the solution as the building of a national state that can control the national resources and develop the forces of production within the framework of ‘Andean’ capitalism (i.e. Bolivia along with the bordering original Andean states, Peru, Equador etc.) This process was begun with the national revolution in 1952 but was setback and then defeated by the emergence of the neo-liberal state in 1986. Today, the popular MAS regime and constitution represents a new situation in which the weakened neo-liberal state and emerging national state are at a point of ‘catastrophic equilibrium’, or ‘tipping point’ between the neo-liberal state and the national state.
Despite the Gramscian language he uses, Linera’s theory is a variation on underdevelopment theory
which simply reverses the terms of development theory. Development theory holds poor nations responsible for their backwardness due to political and cultural defects that prevent the emergence of market culture and behavior allowing market exchange to develop. Under-development theory rejected this racist imperialist cover up for colonial exploitation outright. Colonization established exchange, but on hugely unequal terms, where the poor masses has their labor and mineral wealth virtually stolen. The precondition for the reversal of this unequal exchange is therefore the national revolution and control of the national state. While the period of national revolutions, especially that of Bolivar, in the early 1800s went some way, they failed to free Latin America from a parasitic mestizo ruling class of land owners and mine-owners who ruled as ‘compradors’ for the ‘western’ imperialist powers.
Completing the national revolution
Despite the fact that the 1952 revolution in Bolivia, and a number of other revolutions where also driven
back and failed, under-development theorists hold up the current populist regimes as marking the possibility of escaping under-development and completing the national revolution. Yet exchange theorists are adopting the same failed political strategy of popular front politics based on cross class alliances including workers, poor peasants, rich peasants, and patriotic national capitalists. It is precisely the failure of such popular front governments to maintain a hold on power and to nationalize economic resources to meet the needs of the masses that has failed again and again. From the Trotskyist left this is because only the workers and poor peasants have a class interest in breaking with imperialism, and with the national bourgeoisie that serve it. A ‘patriotic’ popular front which includes petty bourgeois and bourgeois forces, no matter how small, will inevitably side with imperialism and betray the national revolution.
The model of a popular front regime can redistribute power inside the existing state and displace the old ruling class without overthrowing the social relations of production has been proven as wrong over and over again. Yet it is still being recycled today as the basis of Garcia Linera’s ‘Andean capitalism’. However, if it was only a question of bourgeois intellectuals around the MAS, which has its support among the richer peasants, the masses of workers and poor peasants would not retain their loyalty towards a regime that represents a disastrous failed model of the national revolution, but has already through its actions, continued to demonstrate its inability to deliver the answer to the basic needs of the masses.
In Bolivia (and elsewhere) a number of left currents in the labor movement also serve to defend the popular front and the exchange theory/program on which it is based. These include Stalinists, Maoists, Castroists, Guevaraists and fake Trotskyists. Again the reactionary role of these left currents in the ‘shadow’ of the popular front is well established historically. The more the revolution threatens to overthrow capitalist social relations, the more the extreme left is needed to contain the insurrection within the popular front. In Bolivia this is very clear. In 1952 the Trotskyist POR-Lora supported the MNR regime which it called a ‘petty bourgeois’ regime,[1] trying to gain influence for the workers by nominating trade union ministers in the government. The result was that the petty bourgeois MNR became a rallying point for the weak national bourgeoisie to drive back the revolution over the next two decades. Garcia Linera does not acknowledge the real cause of the defeat of the 1952 national revolution as the cross class MNR regime itself. Thus he wants to replay this first tragedy as another an even more terrible tragedy.
Morales regime as a popular front
As Linera himself recognizes, the current Gramscian ‘catastrophic equilibrium’ can also be conceived as a Leninist ‘revolutionary situation’. However Linera misinterprets Lenin here. For Lenin a revolutionary situation opens up the possibility of a socialist revolution. For Linera the critical situation is poised between two forms of bourgeois regime, either the consolidation of a national popular regime or a reactionary slide back to a neo-liberal regime. Without exception the reformist left follows Linera and the MAS in arguing for a negotiated solution within the framework of the new Constitution. The so-called ‘Marxist’ left of all shades makes a similar analysis. This became clear before the events leading up to the election of the MAS majority government in 2005.
There is an interesting exchange between socialists on the possibility that the organized workers and poor peasants were capable of taking power in October 2005. Following the mass mobilizations of 2003 which forced President Sanchez Lozada (Goni) to flee the country, his deputy Carlos Mesa came to power. Mesa failed to deliver on his promises and in October 2005 another wave of mass demonstrations took place. These included blockades of La Paz, occupations of gas fields, and the emergence in El Alto of a popular ‘originary’ congress with a program for radical 100% nationalization of gas. Such was the pressure on Mesa he resigned, and the congress shifted to Sucre where it was surrounded by a peasant mobilisation. Those who argue that this was a situation of dual power, also point to the fact that the army had split in 2003, so that the ruling class could not rely on the army to defend the power of the land and mine owning Rosca.
Over this pre-revolutionary period the MAS had continued to work alongside Mesa and attempted to increase the tax of gas from 30% to 50%. The popular slogan “not 30%, 50% but 100%” clearly rejected this position. The popular demand was not for renegotiating the price of gas, but for complete nationalization of gas. During October Morales was out of the country for 6 weeks. When the masses surrounded the congress in Sucre, Morales intervened proposing that the chief justice take over as interim president and that new elections be held as soon as possible. The danger that dual power might provoke a further revolutionary surge and seizure of power saw the rallying of the reformist left around the MAS proposal for a national patriotic popular front.
The Castroists role in the popular front
Because of the centrality of the Cuban Revolution in Latin America, old fashioned Soviet style Stalinism
is no longer significant. After the end of Sendero Luminoso and the weakening of the FARC the Maoists are also isolated and weak. In their place we find Castroism and its twin, Guevarism. Castroism is the ideology of the Cuban bureaucracy – it is privileged caste, statist and defending ‘socialism in one country’. That is it subordinates the revolutions in Latin America to the popular front with ‘progressive’ national bourgeoisie and imperialism that ‘defends’ Cuba and the role of the parasitic bureaucracy open to recycling as a national bourgeoisie. Guevarism is the radical twin of Castroism since it nominally rejects the state bureaucracy and seeks to build guerrilla movements in the peasantry against imperialism and the compradors in the manner of the Vietnamese revolution. The petty bourgeois peasantry is its class base rather than the bureaucratic caste in the working class. Celia Hart’s revival of Guevarism as an unconscious Latin American Trotskyism subordinates the leading role of the proletariat to the peasantry in the national revolution.
These currents have in common a tradition that goes back to Menshevism and Stalinism both of which
were dedicated followers of exchange theory. These traditions are now widely discredited because of the so-called ‘failure of 20th century socialism’. But is their recycling under the new label of ‘21st century
socialism’ any different? Despite their credentials as ‘left’ in Latin America they are associated with numerous betrayals and defeats. We need only mention Castro’s visit to Chile in 1972 when he lectured the top military officers, including Pinochet, that “socialism was not the enemy of the army”.[2]
Castroism does not represent bright unspoiled flags to head the revolution. Castro always backed national revolutions with its armed forces e.g. Congo, but only on the invitation of nationalist regimes. It refused to arm the masses in Nicaragua, Salvador and Chile against the populist regimes. In other words Castro lent his armies to boost the popular front regimes. Guevara did not wait for the invitation. He set about trying to mobilize the Bolivian peasantry to rescue the national regime from its right-wing degeneration under Barrientos.
Today in Bolivia, the Castroists in the unions and as advisors and agents of the MAS and play a critical role in boosting the popular front. In 2005 they backed Morales’ rescue of the Rosca regime from the organized anger of the people. With the election of MAS they help subordinate the unions to the popular front. The do
this by presenting Morales regime and the ‘popular army’ in Bolivia as on the side of the masses.[3] In the recent autonomy referenda, the Castroists kept the union actions disorganized and impotent. They followed
Morales orders and prevented a united march on Cochabamba to protest the recent autonomy referendum. But in this task the Castroites have exposed their complicity with the popular front policy of appeasing the oligarchy, so they need the left cover of the Guevarists and the fake Trotskyists of the POR-Lora and COR.
Guevara as an unconscious Trotskyist
In 1967 Guevara died in Bolivia trying to create a peasant revolution. He failed to understand the history of the national revolution of 1952 led by the miners’ vanguard. When he arrived in Bolivia the peasants were in a bloc with the military to suppress that revolution and Guevara stumbled into the wrong trench.
“We consider that the Cuban Revolution made three fundamental contributions to the laws of the revolutionary movement in the current situation in America. First, people’s forces can win a war against the army. Second, one need not always wait for all conditions favorable to revolution to be present; the insurrection itself can create them. Third, in the underdeveloped parts of America, the battleground for armed struggle should in the main be the countryside.” Che Guevara, Guerrilla Warfare (1961)
Guevara’s self-imposed isolation in the countryside, did not stop the miners whose tradition was based on the Trotskyist Theses of Pulacayo from striking in solidarity with Guevara months before his capture leading to the massacre of miners by the military on San Juan’s day, 24th June, 1967.
Despite his mistakes due to his Stalinist and Maoist influences, Guevara’s conception of “100 Vietnams” and “either socialist revolution, or the caricature of revolution” are portrayed today by Celia Hart Santamaria,
a Cuban writer, as evidence that Guevara subscribed to the concept of ‘permanent revolution’ and was an unconscious Trotskyist. But since Hart is a full-blown Castroite and has never challenged Castro over his betrayal of Latin American revolutions, we can only assume that the “Trotsky” that Hart has in mind is not the original but rather the fake Trotsky represented by the POR and COR of Bolivia who trample on the Trotskyist flag when they operate in the shadow of the popular front to cover it up and deceive the workers and poor peasants.
In reality, Guevara’s concept of the ‘socialist revolution’ does not break from the popular front bloc of four classes that are central to Stalinism and Castroism. In that sense, Guevara’s approach was also part of the theory/program of market socialism. It can be understood as developing a peasants’ leadership in a bloc
with the Castroists who dominate the workers union bureaucracy to pressure the progressive bourgeoisie to the left and to create a socialist regime. In this he is indistinguishable from the fake Trotskyist POR and COR.
Fake Trotskyists left wing of the popular front
The history of fake Trotskyism in Bolivia starts with the POR Lora. In the most important event in modern history, the April 1952 revolution, the POR led the COB (Bolivian Workers Central) which dominated the MNR (National Revolutionary Movement) government in the first months of the revolution. But it did not adopt a
Leninist/Trotskyist position in this revolution.[4] Instead of using the power it had already taken and forming a workers and peasants state, the POR Menshevik strategy was to pressure the bourgeois government to the left! The POR was so disoriented that it thought the failure of the MNR to complete the revolution was an oversight![5] This was an historic betrayal of the only revolution in Latin America led by a Trotskyist organization! Other Trotskyists, in this case Moreno, claimed to have taken the position of ‘All power to the COB” to break with the MNR government. Villa points out that this was just another variant of the popular front.[6] The POR never owned up to this betrayal in front of the workers and still plays the same role today on the left of the popular front.[7]
As in 1952 and 1971, the Bolivian proletariat rose up in a huge revolution from 2003-5 that did not succeed. Again the POR played the same role, this time by preventing any move by workers’ organizations to form armed workers and poor peasant councils. Once the popular front was in power, the POR covered for the liquidation of the independent workers and peasants organizations by the bureaucracy of the COB led by the Castroite Solares, refusing to fight for the centralizing of the rank and file vanguard to defeat the class collaborationist leadership.
When the fascist reaction raised its head in the Media Luna, the POR adopted a Stalinist 3rd period posture, opposing the MAS and the Media Luna fascists as equally reactionary. This did not challenge the Castroite COB bureaucracy reliance on Morales’ ‘red troops’ or raise the need for the renewal of the worker poor peasant alliance that could have mobilized the rural poor independently of the MAS government to form armed militias to smash the fascist organizations and also break from the popular front.[8]
We saw also the LOR-CI group (a satellite of the Argentinean PTS) spent the entire revolutionary period
opposing the formation of centralized bodies of dual power and instead raising its slogan for a “Constituent Assembly”. When Morales Constituent Assembly came to power to strangle the revolution, allowing the Rosca ruling class to regain its tenuous hold on power, this tendency lectured workers on how to overcome their backward ‘consciousness’.
But the LOR-CI fails to draw the lesson that the backwardness of its own program to sow illusions at the feet of the popular front was responsible for the failure to realize the revolution, not the backwardness of the revolutionary vanguard of El Alto. The LOR-CI does not take any responsibility for this defeat and for putting the workers and poor peasants at the mercy of fascism. So while Morales popular front isolates and
traps the workers and poor peasants, the POR points to heaven while the COR points to the horizon.
For a revolutionary party
The fundamental conclusion to be drawn by the proletarian vanguard and the youth is that without a
revolutionary internationalist leadership, struggling to create Soviets, there can be no defeat the reformist leaders or break with the popular front which strangles the revolution. Therefore, with the lessons of 1952, 1971 and now the lessons revolutionary from 2003-2005 and all the other revolutions prove that without an organized revolutionary leadership they will end in defeat. These lessons of history prove that for the proletariat to win they must break from their treacherous leaders. What is urgently needed is a revolutionary party in Bolivia that is part of a united revolutionary party of the whole of Latin America.
The immediate task of the workers and youth vanguard in Bolivia today is to build a Trotskyist party capable of leading the next Bolivian revolution as part of a Latin American and global revolution. The Bolivian Trotskyists who are part of the Leninist Trotskyist Fraction are fighting for an international conference of principled Trotskyists and workers revolutionary groups to regroup revolutionary internationalists as a new world party of socialist revolution.
During June2008 the ORI founded the International Trotskyist League (ITL) in Bolivia to fight to recover the healthy tradition of Trotskyism in Bolivia alongside the workers of Huanuni, the people of El Alto and the students of Cochabamba.
[1] Lora wanted to uphold this reformist position by characterising the regime as petty bourgeois. The petty bourgeoisie is
incapable of installing its own mode of production and regime. Small property engenders large property. A society of small owners is impossible and cannot avoid competition so forcing some to enrich themselves to accumulate while others become poor and are turned into proletarians. When the petty bourgeoisie is not allied to the proletariat it is marching behind the bourgeoisie aiming to reform its state. A government that is not subordinate to the Soviets and workers militias is one that is against the proletariat. A petty bourgeois government which oscillates between the proletariat and the bourgeoisie cannot exist. By upholding such a possibility, Lora put forward the view that these `petty bourgeois’ governments, should have pressure put on them to try to fill them with extra labour ministers, with the aim of gradually achieving a workers and peasants government. This is a gradualist and reformist conception that led the POR to prop up the military socialist dictatorship, and it would later lead them to ask for ministers in the cabinet of General Torres. Whenever you try to put `red’ ministers in the populist governments of the bourgeoisie and sow further illusions, the more the ruling class is helped make use of these demagogues so as to confuse and disorientate the masses and to prepare a reactionary coup. Neither the MNR government nor the party were petty bourgeois. The MNR, like every party with popular support, reflects the composition of the society in which it operates. A populist party, even though it has a majority of members from the most oppressed strata, just as elsewhere within capitalism, is run from the top down. Almost all the top leadership of the MNR were people who came from the oligarchic families, who had collaborated with German imperialism, propped up the bloody nationalist dictatorship of Villarroel and who were socially, ideologically and organically, an expression of a sector of the national bourgeoisie. The MNR, like Bolivian society, might have a majority of members and voters in the petty bourgeoisie, but it was led by politicians of and for the bourgeoisie.
[2]
“Many Army chiefs in the different regions and their general staffs wanted to converse with me wherever I was and showed considerable interest in issues related to our war of liberation and the experience of the Missile Crisis in 1962. The meetings, which lasted hours, would be held in the early morning, which was the only time I had available. I would agree to these to help Allende, to familiarize them with the idea that socialism was not an enemy of armed institutions. Pinochet, as a military leader, was not an exception. Allende considered those meetings useful.” Fidel Castro. Salvador Allende: His example lives on. http://www.lankamission.org/content/view/459/44/
[4] “…there was a huge difference between the POR and Bolsheviks. The Bolsheviks demanded of the Soviets that they should give no class support to the bourgeois-democratic, reformist coalition government and that instead they should break with the bourgeoisie and take all power in their own hands. The POR, in contrast, gave `critical support’ to the bourgeois government and asked to be given ministerial posts. While the Bolsheviks attacked the Mensheviks and the SRs without pity, seeking to remove them from leadership positions, the POR identified itself with the labour bureaucracy (for whom they drafted speeches and ministerial plans) and sought to transform the bourgeois party and its government. The Bolshevik strategy was to make a new revolution while that of the POR was to reform the MNR and its government. In short, while Bolshevism was Leninist, the POR was Lechínist.” Introduction to “The 1952 Revolution: How the 4th International and the POR betrayed the revolution which
could have carried Trotskyism to Power.”
[5] In June, Lucha Obrera maintained that the MNR should thank the POR for helping it achieve power and for its support. Its task would now be to put pressure on the MNR to carry out reforms which would benefit the working and middle classes.”If the MNR has to give thanks to anyone, and greatly for our help, it is without doubt, to the POR (…) The POR will continue in carrying out its task of guiding the proletariat and of ensuring that the actions which deposed one government and raised up another, which enjoys the support of all the people, are carried out in a way beneficial to the proletariat and the oppressed sectors of the middle class”. (LO, 12.6.52, p.3). “Never before had a party like the MNR, that can count on uniform backing from an armed people and proletariat, achieved power; and never, therefore, did anyone have the opportunity of adopting measures with a real revolutionary content. The government has closed its eyes, or has not wanted to see the magnificent opportunity, and has preferred to deceive the proletariat which supported it unconditionally”. (LO, 29.6.52, p.4) Never before had the party had such an opportunity to make a social revolution, but the MNR hesitated. The POR opposed the view that the deficiency was because of the bourgeois class character of the MNR, but said it was due to its lack of tactical ability. The task was to open its eyes and make it see the magnificent opportunity. The whole policy of the POR was completely Menshevik. Instead of calling on the workers to reject the MNR and to struggle to put the COB into power, the POR boasted of having served the MNR and of wanting it to mull over things and see reality – an orientation that was simply limited to seeking to serve as an adviser to the MNR in order to reform it.
[6] Nahuel Moreno always claimed that he called for `All Power to the COB’, as opposed to the POR policy of adaptation to the MNR
left-wing. But Moreno’s slogan was only a variant of the popular-frontist resolutions of the 3rd congress of the 4th International and the `government of the MNR left-wing’ position. In May, his paper put forward the “Demand that the worker ministers elected and controlled by the Miners Federation and the new Workers Centre are taken into the Paz Estenssoro government”. (Frente Proletario, 29.5.52. Quoted in Prensa Obrera 131, 3.5.86 – presumably `PO’ Argentine – eds). Moreno’s position was akin to Lora’s. In reality, co-government was a cabinet of all the wings of the MNR. The worker ministers constantly reported back in detail to the COB, but that, instead of modifying the government and changing it into a proletarian one (an impossibility) simply confused the class. Moreno’s paper said that “the two wings which now exist within the MNR express the interests of the proletariat and the bourgeoisie”. (ibid.). Presumably Lechín represented the proletariat. But a sector that stays within a bourgeois party cannot represent the interests of the proletariat. By 1953 Moreno was proposing the “development, support and strengthening of a left wing inside the MNR”. (Estrategia, April 1966, quoted in ibid.). One proposed a government of Lechín’s faction of the MNR, while the other preferred a
government of Lechín’s bureaucracy of the COB – the same jam but in different jars. Anyway the slogan `All Power to the COB is invalid once a dual power situation no longer exists (that is since 1952.) It only generates illusions in its bureaucracy.
[7] POR and LOR: The Role of the fake Trotskyists at Huanuni http://redrave.blogspot.com/2006/10/bolivia-leninist-trotskyist-statement.html
The Acid Test of Palestine
Palestine is one of the critical acid tests for revolutionary Marxists.
I recently came across some material from the International Socialist League in Israel, and in particular the writing of Yossi Schwartz on Marxmail.
The first was a post from Yossi taking a position on the current situation in Lebanon.
Here he stated his military support for Hezbollah against imperialism, Israel and the Siniora national bourgeoisie. But at the same time he carefully spelled out his political oppostion to Hezbollah as a bourgeois party that could not defeat imperialism nor bring about a socialist revolution.
He was then attacked by a number of Marxmail regulars who see any criticism of ‘progressive’ anti-imperialist forces as sectarian. Not only that, as an Israeli revolutionary, he should be ashamed at having the gall to criticise a political party that was fighting Zionism.
It doesnt matter that Yossi explained his position on the defeat of the Zionist state and his support for one Palestine socilialist workers republic. His critics told him it was easy for an Israeli to make such ‘ultra-left’ pronouncements. Yossi then explained that it was not easy.
Yossi then posted a statement in the name of the ISL on the recent actions of the Palestinian bulldozer driver who smashed into cars and overturned buses in Jeruselem before being shot dead by an off duty Israel cop.
This aroused my curiosity in the ISL. I discovered that it was a split from the Grant/Wood tendency in mid 2007 resulting from an apparent disagreement on tactics towards Hamas. There is an account of it here.
The article written by Yehuda Stern, “The Victory of Hamas in Gaza and the questions facing Israeli and Palestinian workers” is still posted on the In Defence of Marxism website here.
The subject of the article was the victory of Hamas in an internal struggle with Fatah for control of Gaza. Stern argued that Hamas rode to victory on a wave of popularity as the Palestinian masses expressed their rejection of the open collaboration of Fatah with Israel and Imperialism. The Grant/Woods tendency however argued that the dispute between Hamas and Fatah was a fight between two equally reactionary forces incapable of advancing the Palestinian struggle.
As Stern says in the article:
“It is amazing to see how the imperialists have understood far better than most people on the left what lies at the heart of the present conflict – not a mere power struggle between two equally reactionary forces but a decisive battle between imperialism and the Palestinian people. The bourgeoisie in Israel is now hysterical, and for a good reason: although the victory of Hamas in Gaza does not solve any of the fundamental problems of the Palestinian masses, this was clearly a severe blow against imperialism. It is clear then that the question at hand is not the leadership of either side but the class forces supporting them.”
Indeed the ISL has no illusions in Hamas:
“Hamas is a populist, reactionary movement, whose leadership not long ago had announced its willingness to negotiate with the USA and Britain. They justified this with the argument that these two imperialist powers were different from Israel, as they are not “occupying states”. They said this long after the wars
in Afghanistan and Iraq where the USA and Britain are the main occupying forces and also ignoring the fact that behind Israeli imperialism stands US imperialism with all its might.”
Stern then goes on to explain how Hamas rose to power from the time of the formation of the Islamic Brotherhood in Gaza in 1948. Hamas opposed the Oslo agreement of 1993 and the sellout of the Palestinian Authority which created terrible conditions for Palestinians.
“That is why we cannot join the hue and cry of the sectarian and petit bourgeois left. They limit themselves to shouting that Hamas is a reactionary movement, that it is as pro-imperialist as Fatah, that it is a terrorist organization, and so on. These cries reflect bourgeois public opinion, and not by chance. We defend the right of the Palestinian people to determine their own destiny and to choose their own government without any outside interference. They clearly voted massively for Hamas giving this organisation a landslide victory in the last elections. It is an unfortunate fact that an Islamic fundamentalist force has come to lead the Palestinian masses, but rather than weep about all this what we should be doing is looking at the responsibility of the “left” in allowing such a situation to emerge.”
But while Hamas won popular support rejecting the treachery of Fatah, rose to power on the wave of anti-imperialist sentiment of the Palestinian masses, Hamas cannot bring about their liberation.
“The main problem facing the Palestinian masses now is that the de facto break up of the PA into two farcical states will not change the fundamental nightmare situation they are living in. Hamas does not have any real alternative to offer to capitalist exploitation, hardly compensated by Hamas’ Islamic charity institutions upon which a growing layer of the population of Gaza depends in order to survive. Even the temporary relief granted by the effect of the victory of Hamas upon the powerful rival clans and organisations cannot last for very long.”
Stern goes on to explain why revolutionaries can block with Hamas against imperialism but at the same time fight against their reactionary class politics:
“For these reasons we do not give the fundamentalists any political support. Hamas is a populist movement. It built its support on the one hand on the betrayal of the nationalists and on the other on the betrayal of the left and its sell-out to the PLO and Fatah. And we should always keep firmly in mind that Hamas does
not want to overthrow capitalism. They merely wish for banks and monopolies with Islamic names. If they follow the same path of making deals with the imperialist powers, which at a certain stage will be inevitable, its leadership will be exposed as just another group of bourgeois politicians, no better than Fatah, especially should they attempt to set up a regime in their image to assert their domination. This, in the long run, is the only possibility in Palestine, where the ruling class is extremely weak and lacks any popular base.”
The article goes on to explain how the Stalinists capitulate to the popular front of progressive national bourgeoisies like Hamas or Hezbollah.
More interesting however, is their critique of the ‘philosophical roots of sectarian political degeneration’.
Here we have the main difference between the ISL and the Grant/Woods tendency exposed.
“Their argument, as we have already said, is that since both Fatah and Hamas are reactionary bourgeois movements, there is no reason to differentiate between them. We have already demonstrated why the refusal to differentiate between the downtrodden masses that support and fight under the leadership of Hamas and the rotten Fatah leadership is nonsensical and irresponsible from a class perspective. Now we shall elaborate on the philosophical postulates underlying it.”
…”Thus, the sectarian usually substitutes Marxist philosophy with either vulgar materialism or with idealism. One of the main characteristics of idealist philosophy is that it analyses objects, movements, states and so forth through their form instead of their material basis (Trotsky explains this quite well in his 1938 essay, Their Morals and Ours). This is the reason for their inability to understand phenomena such as Proletarian Bonapartism, the Bolivarian Revolution, or the political situation in the Middle East and in Israel-Palestine in particular, alongside countless other questions. For the idealist, all that matters is that
Hamas is “Islamic” and Fatah is “nationalist”. The fact that at this moment in time one side is supported by the Palestinian masses, while the other is supported by imperialism, is at best secondary to these so-called
“Marxists” (here again we see how the sectarian considers “the incidental thing serious and the serious thing incidental.”)”
Stern then elaborates on how sectarians impose their petty bourgeois program on workers ignoring the actual struggles in which workers class consciousness develops. He could have mentioned that this is the point made by Trotsky that sectarians are frightened opportunists -afraid that they will capitulate to opportunism which in this case would be Islamic fundamentalism.
To avoid both sterile sectarianism and crass opportunism, it is important to understand why the mass support of Palestinians for Hamas is an important starting point in developing a class consciousness that can break with the reactionary politics of Hamas.
“Those who stand together with the masses in the struggle and support them have the credibility needed to present their criticism of the leadership. Those who stand aside and refuse to support the masses will never be taken seriously. Nor should they be. This, as we have already mentioned, is merely the ultimate fate
of sectarianism.”
…”Meanwhile, in Palestine, the inability of Hamas to advance the liberation struggle will become more and more evident. Just as we saw in Lebanon after last year’s war, the masses in Gaza after the defeat of Fatah – seen as agents of imperialism -will demand jobs, bread and higher wages. In Gaza the unemployment rate is just over 60%. The reactionary Hamas will not be able to give the masses anything. After any military setback of Israeli we would see the national liberation struggle grow, but this would expose Hamas and reveal all its limitations, and would serve as a lesson for the Palestinian workers. They will eventually come
to realise that the only way to liberate the Palestinian masses from imperialism is through the class struggle. The present state of affairs in Israel exposes more and more the fact that Israeli and Palestinian workers have a clear common goal – the social revolution.”
On the acid test of Palestine, I think the Israeli International Socialist League has passed with red flag flying.
Living Marxism 