Lecture/Discussion Tip

December 24, 2009

Lecture & Discussion in Oakland, California, January 3, 2010

US Health Care Reform: Another Historic Moment in the Administration of Poverty

Time: January 3, 2010, Sunday, 1:00 pm

Location: Niebyl-Proctor Library, 6501 Telegraph Ave, Oakland, CA 94609-1113 Ph: (510) 595-7417

Speaker: Joseph Patrick, co-editor of GegenStandpunkt (Germany)

With the legislation on healthcare reform coming to a head, President Obama has left no doubt about what is at stake. He has enjoined his colleagues in the House and the Senate to “seize the moment,” reminding them that “this is the moment of our legislative lifetimes. This is why people run for public office, to be here at the creation of something really big.”

Indeed, for all the rancor of the debate in Congress and the media, there is overwhelming agreement on the need to overhaul America’s healthcare system. And the ruling elites – from President Obama and politicians on both sides of the aisle to a slew of Nobel Prize winning economists – have been kind enough to tell us why they regard healthcare reform to be so urgent. Without far-reaching change, two things that are much more important than the health of individual citizens will face impending doom: the nation’s economy and the solidity of the national budget. On that basis, the population’s poor bill of health raises some urgent questions for the ruling class: Is the health of the nation’s competitiveness in danger? Does the illness of broad swathes of the population represent a disadvantage in international competition that America can no longer afford? That requires a solution, and controversy abounds. How to extend basic care to a greater portion of the population without imposing unbearable costs on “the economy”, i.e., the profits of employers, while making sure that America’s premier growth industry can emerge stronger than ever.

And average citizens haven’t been left out of this crucial debate either. On the contrary, they get to follow the ups and downs of the negotiations in Congress, listen to the pleas and arguments of big and small business, weigh the options and come to a conclusion about which is worse: their current inability to pay for the most basic care or their inability to pay for compulsory insurance, the risk of financial ruin posed by a serious illness or by unbearable healthcare costs on the companies that employ them?

This gives us no reason for joy or even “cautious optimism,” but raises some unwelcome questions of a more fundamental kind:

  • Why, right in the middle of the free market economy, is healthcare always a matter of state intervention?
  • What does the state take care of when it takes care of the “health of the nation” and why?
  • Why is healthcare always considered too expensive and in constant need of reform?

The answers to these questions illustrate why the hopes for a “historic moment” in the history of American healthcare are not only woefully modest, but hopelessly wrongheaded. We invite you to come and find out why.

GegenStandpunkt: Recent Additions

December 2, 2009

Elections in Afghanistan

the reason, purpose, and failure of a bloody farce staged by a local puppet troupe, directed by the Free West, enforced by NATO soldiers under U.S. command, with scant public interest, to the applause of the democratic press, and with sporadic booing of the leading man

A Critique of Alternative Money Theories

December 2, 2009

A talk delivered by Amelie Lanier at the Anarchist Congress in Berlin April 11, 2009.

Translated by Ruthless Criticism.

Table of Contents:

Silvio Gesell was one of the few theorists of anarchism who dealt with economic issues. He was a kind of model for Keynes, who explicitly referred to him. Today, in view of the financial crisis, many people reflect back on him. This is reason enough to offer a critical assessment of him.

First of all, however, I will talk about what money is.

1. Exchange

The market is where commodities are exchanged. Whoever wants to buy something in the market — whether its a small, local one or the big world market or e-Bay — must simultaneously give something else for it. He also must have something that he can exchange. If he has nothing, he can also get nothing. He cannot satisfy what needs he always has.

At the same time, we have a system of property which excludes most people from any opportunity to produce something. Most people have no land on which they could grow anything. They do not have a workshop in which they could put something together. They do not even have a house or a hut in the woods where they could live. In order to access food, housing or consumer goods commercially, they must give something for it — nowadays it is money. However, it would not be any better if all kinds of exchange objects were admitted or asked for on the market because they also do not have them. Most people are simply excluded from any possibility of creating something useful.

There are many explanations for why there is starvation in the world. They are all wrong. Among other things, because they ignore this basic equation: in order to get something, you have to give something. They mention logistical and distribution problems, nature and its quirks, human greed and corrupt officials, or an unjust world order in which one side overeats and the other thus does not even get the bare minimum. If such reasons are accepted and acknowledged, exchange and the principle of ownership are politely left out: they can not be the reason. Often just a better exchange policy, a “fairer” access to this very global market is recommended for the food problems of humanity.

You no longer have to look at the the Third World, the countries of the periphery, to find hunger. There are, as you can see from the media, in the centers of our world order, even here in Berlin, lots of people who have difficulties feeding themselves properly. For example, schoolchildren who have nothing to eat at home and are supplied with food in school and by food banks. And these social conditions are not ignored, everyone knows them. But one can also bring up such truly outrageous conditions unperturbed because everyone who reads about this or sees it on television is convinced that exchange and ownership are necessary, and that nobody would produce if they were not then afterwards satisfied with an equivalent. The media can be sure that nobody starts to doubt our economic and social system, but only calls for initiatives to make this condition manageable.

So I attach great importance to the fact that exchange is a form of exclusion because today, in view of the fact that money has fallen somewhat into disrepute, many critics of our social system see the solution to all these problems in a return to a type of barter economy, or to a means of exchange which is not money, but some other useful object.

I will also point out that before colonialism there were many societies and economic forms which knew nothing of exchange, and where the people were somehow well fed and clothed. Many of the indigenous movements in Latin America today, for example, have set a goal of getting back the land that has been robbed from them over the centuries and managing it communally. And they are brutally massacred by the respective governments — also in Venezuela, for example — because their desire signifies a fundamental criticism of property and exchange, and thus puts in question the foundation of the states in which they live.

However, the defenders of our social order never tire of pointing out that exchange is a good thing and it is best of all done with money. This is how they want to create propaganda for money. They point out with all kinds of examples that it is terribly impractical if people go to the market with potatoes and want to exchange them for shoes. And if someone wants to be sure to exchange without fail, this is indeed really impractical. Will someone want potatoes who also has shoes to give for them?

2. The universal equivalent: money

Therefore, so say the devotees of exchange, it is a fine thing that a universal means of exchange exists, one that all wish to have. Marx called it the universal equivalent to express that there is and must be a means of exchange that everyone accepts and everyone
wants to have.

What does this mean for exchange? It means that everyone who wants to exchange wants to have this universal means of payment, so that they get it for what they want to get on the market. So they offer something and hope that there is a buyer. And then they want to obtain for their commodity what the other sellers recognize as an equal value. Everyone who goes to the market accepts and wants this universal equivalent because with it they are sure that they themselves, when they use it in this country, can also use it to buy.

Do not forget: everyone only goes to the market with his commodity because he wants to get rid of his stuff first, and secondly wants to get something that he himself does not have and is unable to produce himself. No matter whether it is food he wants to eat or raw materials he needs for the production of his commodities. Everyone wants this universally accepted medium of exchange.

Earlier, in societies with simpler exchange structures, in the Middle Ages in Europe, this universal equivalent was a precious metal: gold or silver, and copper as coin. And there was the one who empowered this universal equivalent: the state power. Gold and silver mining, even if they were pursued privately, were put under state control, and the right to mint coins was a state monopoly.

If someone has control over this universal means of exchange, he has a power of control over society: this authority can determine the conditions of exchange and force them on others. This authority has the ability to determine what something is worth and what it is not. Therefore, the feudal rulers — kings, emperors, princes — secured the monopoly on the extraction of precious metals and the right to mint coins.

All those who go to the market to get rid of something want to get for it this universal means of exchange, money. And so of course they accept that their commodity is measured in this value, this coin. That means that they recognize a universal measure of value, which their product, their commodity, must be subordinate to, because that’s the only way to get a universally recognized value. And their product, their commodity can be converted into cash only if it can obtain this value, if it actually has value, thus is sold.

Insofar as one day a “measure of value” (also an expression of Marx for one of the functions of money) is established and everyone strives to receive it in their hands, metallic money then has its shortcomings: its availability is limited, its production is complicated and expensive, and it wears out in use, in changing hands. The time is ripe for its replacement by more suitable substances.

3. State paper money

The states, the sovereigns, as guarantors of the universal equivalent, eventually decided to produce this themselves, and to use their pure power to do this. This was a protracted process.

Paper notes as money substitutes led the way. Merchants put down bills of exchange and banks printed banknotes. These private value-substitute slips had their validity as representatives of commodities or coins. They were reliable in reference to commodities to be sold or through promises of coins. The state learned from this, and from the demand for its own coin money, that this was replaceable: through the state’s promises of payment, which it guaranteed, thanks to its power. The state paper money, which itself has no value — or as much as other paper products, napkins, toilet paper — gets its special value as a universal equivalent from the fact that the state guarantees its value and says: this note is 50, that one 100 marks or today euros; the two notes are of course the same in their substance. The difference in their value comes only from the outside, from the state, which prints a different value on it.

Today, the value of commodities, thus all wealth, is measured only in state paper money. It also does not go any differently. The circulation of money as precious metals is unfeasible. The exchange economy and the circulation of money are not abolished, but increasingly called into question, and indeed not from a distrust of exchange, but of value: if I have something on the market and receive a universal equivalent for it — do I generally have the value of my commodity? Can I buy something with it of commensurable value to my commodity? The exchange relation is generally questioned, but not according to its substance, but its manageability.

And with this Silvio Gesell becomes topical once again.

4. Gesell’s criticism of money, property and interest

What pertains to the preoccupation with Gesell is similar to that of his admirer Keynes: he is referred to, but hardly read. So a few points where Gesell has followers, even if they maybe do not know his theories and hence do not at all know that they are in agreement with him.

4. 1. The backing of money

A criticism of modern state paper money is that it is unprotected and can therefore suddenly lose value at any time. My main objection against such a criticism is that money and value production are things in themselves to be fought and abolished. But Gesell’s criticism also has its internal contradictions.

a) Money should be backed up by commodities

How should this go? If a nominal value is printed on bank notes and a pile of money is confronted with a pile of commodities, how should “backing” appear here? How much money a product is worth is something that first ordinarily shows up on the market. In order to realize the targeted “backing” or correspondence between commodities and money notes, one must decree the value of every single commodity in money and make price changes punishable. Then, however, there is no more market and we are in real socialism, and it also ends private production.

b) Money should be backed by precious metals

Silver or gold are stored in national depositories which should guarantee the value of the paper money put into circulation. Only: as soon as confidence is lost in the paper money and the citizens want to exchange the paper notes for the money commodity, there is of course too little of it there, and the parity has to be repealed. Because every amount of gold which is stored in the bank is a horde of dead capital, it is always held low and represents only a fraction of the money in circulation.

This type of backing only applies as long as it is believed. You can not guarantee money value. I say this because there are now again proposals to introduce a gold standard. But how should that go? As soon as a state says: 200 dirham are as much as an ounce of gold — who believes this? And the gold, in order to be able to be exchanged for any amount of paper money, has no state, and there is also not at all so much of it in the world.

4. 2. Against ground rent, interest and income without labor

First, images of the kind: someone who does not work should also get nothing to eat, are unpleasant from the outset: one thinks of work camps and euthanasia. Somehow, they make up a society in which there are only those healthy and able to work, and all the others fall through the cracks.

But I also have economic objections: Gesell’s free economy opposes developed capitalism with a precapitalist ideal: in opposition to the separation of the producers from the means of production it advocates a return to a state where the producers are at the same time farmers and craftsmen and sell their commodities themselves on the market. It is also popular with dropouts who seek their salvation in agricultural communes.

What is first and most important to say against this free economy is that it is adverse to reality. This model (and that it is backward is the slightest objection to it) pretends as if our economic system is based only on errors and one should just invent a better one in order to make everyone happy. Why it is about money, money acquisition and profit, and who has an interest in maintaining it — that is of no interest, so a brave new world is painted.

Constructing models and model thinking also has its use in modern economics: there it is always done in such a way as if, nevertheless, the economy exists here for all of us, and one only needs the right model. And if one already exists, and it is good for nothing, then one goes on to construct the next one. The interests which rule the world, and their executors, are nicely left aside with such castles in the air.

How Gesell’s free economy eliminates ground rent and interest is also very elegant: he considers not how they come into the world, thus why they both exist, but explains them to be undesirable elements in a construction kit that one can simply eliminate — while retaining others, the better ones, like commodities or money. Which brings us to his ideal economy.

4. 3. Commodity production: a fundamental human right

Labor, provided that it is honest and one’s own, gets a fat praise. Only someone who works should also eat. It is possible that Gesell did not think so, but this is the implication in any case.

Secondly, it is just like with the avowed defenders of the market economy, as if all needs are satisfiable by the market. Everybody produces what he can and wants, and you will find a buyer for everything. Unless one can offer an equivalent, one’s need is negated, as in capitalism.

Maybe something about how the planned economy contrasts to the market economy: planned economy means first of all only that the need should be raised first and afterwards the production is established. A plan will ensure that what is produced is exactly what is needed. Today, with the internet, this would really not be a problem, that everyone declares his wishes, and production possibilities are ascertained, and then the two are somehow brought together.

Against the planned economy, a caricature of a commission is always sketched, one which decrees the needs, designs them; and on the other hand, this holds private initiative high as the realm of individual freedom. And in this way the absurd fact is endorsed that one produces first and then see whether one finds a buyer who puts down money for one’s product. As a result, if you think through the idea consistently, this accepts that needs are not met — because they are not able to pay — and poverty and misery are explained as necessities of nature.

4. 4. Money as cash, intermediary for commodity exchange

It is often said that Silvio Gesell wanted to abolish money. From what I have learned and read about him, this is a mistake. No, he was a merchant and thought like a businessman: he wanted to make money functional for commodity exchange. And he had his theories about what stands in the way of the management of money. He especially wanted to prevent money from disappearing from circulation, being hoarded, and becoming a separate commodity which is then used for speculation and lent again for interest. He wanted to keep it in circulation, therefore his shrinking money theory: hoard formation should be punished by the depreciation of money. So because he did want to renounce a universal equivalent, money should always remain in circulation and serve the mediation of commodity exchange. His shrinking money teaching draws from the fact that he was an unconditional defender of the commodity and exchange.

Often when the issue of local money as a solution to the problems of money circulation is brought up, Gesell’s theories are to support this. I have selected two examples to show why such an emergency money — because such moneys invariably arise in emergency situations and are therefore only tolerated for short amounts of time — appears and what it does.

5. Token money — local money as “the answer”

a. Worgl

In the 1930s, the Austrian town of Wörgl was bankrupted by the global economic crisis and it could no longer pay its employees. So the mayor, a supporter of Gesell’s free economy, decided in 1932 to issue a local currency which, through various maneuvers, should be recognized as a money substitute. This was guaranteed by the local priest and the local credit union. The salaries of municipal employees were paid in this local money and in fact succeeded in creating a regional solvency and thus animating commodity circulation in Wörgl and its surroundings. Three other villages in the surrounding region also wanted to issue local money. The regional money of Wörgl created solvency in an area at a time when insolvency had previously prevailed. The Austrian National Bank fought the regional money of Wörgl from the beginning — it was a challenge to the state monopoly on bank notes — and it was ended in 1933 under threat of military action, thus was prohibited by state intervention.

b. Argentina

In 1991, Argentina negotiated with the IMF a parity of dollars to pesos to stop the runaway inflation in the country and to stabilize the currency. One of the conditions for it was that the Argentine state had to refrain from issuing money. The IMF controlled the monetary policy in Argentina.

One consequence was that Argentine exports were more expensive and the country lost its export markets. But also in the domestic market Argentine products were no longer competitive in comparison with cheaper imports. The IMF urged the Argentine government — which wanted to hold to the dollar parity — to privatize unprofitable companies. They could not be subsidized by the state. The privatization had in most cases the same effect as closure.

In this manner, from 1991 to 2000 Argentina liquidated a good part of its industry which originated from the times of the Peron government. This included the railroad network, the aircraft, automobile and military industries, the energy sector and the consumer goods industries. Argentina became a net importer. It had to import more and more of everything that it no longer produced in its own country. So its trade deficit grew. Argentina had ever bigger problems placing its bonds on the world market, had to offer higher interest rates and the state debt rose while the economy shrank continuously. All this has led to the national bankruptcy of the years 2001-2002.

But already in the 90s, the economics of scarce money had its consequences. In the provinces of the north, there was no money. Whatever industry there had once been was gone. The only employer was the state. Besides agricultural production, partially a subsistence operation, there were salary recipients: teachers, civil servants, doctors. They often received no salary for months.

To generally maintain some money circulation, the provinces issued their own money — the money tokens were called Bonos — which were recognized only within the province. The IMF turned a blind eye on this and this money was not included in the money creation policy of the Argentinean state. However, it was not enough to create a frictionless economy, and there were in the 90s hunger riots in these provinces, which were suppressed by the police and the military.

In 1995 even a nation-wide alternative currency, the Credito, originated in flea markets and unemployed exchange markets. This parallel currency was also tolerated because it prevented the collapse of the economy. This regional creation of purchasing ability of course also led to abuse. Those who issued these tokens took something for themselves. In the end, these money tokens were no longer recognized. Today the peso is worth just as little as the local currencies, which no longer exist. One consequence of the state’s bankruptcy in 2001 was the end of the local moneys.

What service did they have?

1. To generally hold together the cohesion of the state. If we all do not get salaries as state employees: teachers, civil servants, doctors — for what do we still work? These people were kept on staff with “bonos,” local money. These people with “Bono” regional money, when the rod held.

2. To maintain the infrastructure. Buses had to travel between provincial towns, and between the capital and the provinces.

Now I don’t want to bore anybody further with details about the Tyrol in the 30s and Argentina in the 90s. I have only given these examples because such local moneys are referred to as illustrations of Gesell’s theories. The local moneys are created in times and regions in which capitalism has failed as value production, but where nevertheless the principle of value production and commodity exchange should be retained. They are necessarily temporary: because money is just the general equivalent that should represent value.

If one sees the issuing of local money as a way out of the crisis, one does not understand what money is: first, a general equivalent that everyone recognizes, thus accepts as a representative of value. Secondly, and just therefore an expression of value, a means of business: the attempt to introduce money in a regional context and to preserve it as a means of circulation is nothing else than the attempt to survive the crisis of capitalism so that it can rise again later in full bloom: as the exclusion of the needy, those without property, from the goods of the world, or the use of the poor for the business of the propertied.

No more proletariat, nowhere?

October 31, 2009

[MPunkt’s synopsis of Peter Decker and Konrad Hecker, Das Proletariat (GegenStandpunkt Verlag: Munich, 2002)]

Nobody talks about the “proletariat” these days. The word has disappeared, just like “working class” or even “worker.” There is no “workers’ movement” anymore, no labor parties, the trade unions no longer fight. It is widely believed that the the “proletariat” existed only in history, in Manchester capitalism. In those days, the workers were class conscious: they understood that they not only had to work for their living costs, but they also had to fight for them.

Supposedly, this means that the proletariat belongs to the past and, with the removal of the word, bourgeois society has overcome this contradiction; the resistance resulting from class conflict was pacified within capitalist society. The best example of this “progress” by bourgeois society is a previous winner of the class struggle: the trade unions. Today they no longer want to hear about “class struggle,” “wage conflicts” or “strikes” – or any fights at all. They represent themselves as a business service. The goal of Social Democracy was for the proletarians to attain the status of citizens by securing their national rights; it is tremendously proud of this achievement. Since achieving its goal, it can conceive of nothing better than the current capitalism.

In the social sciences, it is also passe to talk about the “proletariat.” There are several trends:

  • The class term originates in industrial society, but in the present it would designate too large or too small a social layer to apply to a single class unit. This argument is about as reasonable as stating that apples and pears do not fall under the category of fruit because they are different.
  • The working class experiences only one form of discrimination among many (like discrimination against women, foreigners, the uneducated, etc.).
  • The term might have been meaningful in previous times, but affiliation with the working class did not prove important for the formation of community. Therefore there can also be no objective common position. This point of view shows that the proletariat was of interest to social science only insofar as it was a problem for bourgeois society. If it does not represent a problem, then there is also no need to be concerned with it. However, everybody knows that poverty exists and is not desirable. In school it is known that factory work is to be avoided later in life if possible. Now the wage laborers are called by other names: as “the little guys” or “the man on the street.” As such (and not as proletarians!) they are a major reference point for democratic politicians. “The little guy” is dissatisfied with his existence, but holds to his role with an iron grip. This means that he is not in opposition to his boss, but to all possible scapegoats who do not do their duties properly.

Then there is also the “socially disadvantaged”: those in need who cannot meet their living expenses. (By the way, this danger threatens nearly everybody.) It is concluded that the state must concern itself with them; and if it does, then the problem is already settled. Some of the “socially disadvantaged” finally give up hope of ever finding a job. Of them, the designation “prole” pops up every now and then as an insult word – with the objective circumstances fading from view, it turns from an objective class designation into a moral reproach.

However, only consciousness of the problem has disappeared with the disappearance of the term, but not the problem itself. The democratic state can define a “proletariat” quite well in practice – certainly without a theory behind it. For example, by setting social security payments by income it recognizes that humans with a smaller income have actually too little money to insure themselves. They must be forced to do this as a precaution, while this happens automatically for those who own assets.

In order to understand how it came to this, it is enlightening to take a look at the situation of workers back in the times of Manchester capitalism – but without losing the commonalities with the current situation. They had to offer their labor as factory hands, but could not live on their wages. It was (is) not only because there was (is) never enough wages paid, which was (is) shown by their low amount, but in that wages also always threatened(s) to disappear when there was (is) a lack of demand for labor or if one was (is) in an accident, gets ill, etc. Since the workers could not live on wages, they led fights against the factory masters. The state opposed them with repression. This led to the correct understanding that the state must also then be fought. However, they made the error that they criticized the state only because it was the state of the “factory magnates and financiers,” in relation to which they were without rights. Therefore they fought not against the state as a repressive force, but for its impartiality: the working class should be recognized as honorable and worthy of protection and the state should be accessible to proletarians too and thus made impartial. When Marx attacked this long-term “holy column” of the workers’ movement in the Critique of the Gotha Program, he was already in the minority.

This call for democracy was gradually fulfilled; in some places, such as Germany, representatives of the working class even fulfilled the long-held dream of becoming a majority in parliament. By orienting towards the government, they had to take part in the competition over the best state program and thus also recognize the hostile interest of the factory masters. Because of this orientation by the working class towards the “public interest,” the interest of the possessing class – although in democratic theory the minority – became the strongest socially. Finally, their interest was objectively recognized (“in order for there to be higher wages the economy must flourish,” etc.), instead of assumed to exist only due to the balance of power. The distress was not repaired, but only the distress as a social problem.

So that the workers (class) could exist – i.e. in the interest of their functioning – the state set limits to their exploitation. These can be dealt with, however, with sufficient money: e.g. overtime bonuses, compensations, danger bonuses, etc. Marx criticized it as extremely characteristic of this mode of production that even these minimal protections still had to be fought for. The fight for rights was thus successful; this did not, however, put in perspective the dependence of the workers on the sale of labor. Insisting on rights is unfavorable all around. This is also said by business management schools, by the way, in their cynicism, when they define a protection as a discrimination against the group protected by it on the labor market; e.g. maternity leave = lower wages, protection against layoffs because of age = no more employment … If the workers hurt their rights by this circumstance, they cannot be meaningful protections.

The state proves the working class’s inability to survive in principle in its own actions. It forces the lower income brackets, by social insurance obligations, to protect themselves with their own wages against the risk of one day no longer being in a condition to feed themselves from the sale of their own labor. In the social insurances, a state-forced redistribution takes place not between the classes, but within the working class. With the social insurance system, financed by the total wage of the class, the state ensures on the one hand that the wage is a means of livelihood, but on the other hand provides by this compulsory solidarity for a generalization of scarcity. This ensures new lines of conflict in which – in contrast to “wage laborers issues”! – “exploitation” is talked about: “the old persons cost the young ones too much,” etc. So looks the material side of political emancipation …

Something similar can be said about the trade unions. They are no longer illegal, a fact which is highly regarded by them. Since they may fight, however, it does not bother them any longer that they must fight, and they want to do this less and less. This is structurally demonstrated in their history. Because they fought for wages as a means for living costs instead of against the hostile wage system, a lack of consequence and strength inevitably set in. In the end, someone who wants more wages may not spoil the business of the opposite side – otherwise no more wages could be paid. The trade unions fight for a compromise, while the entrepreneurs fight for their interest (they do not orient their offers towards what is needed by the workers). Examples here are campaigns against “super profits,” “unnecessary exploitation,” “entrepreneurial arbitrariness,” etc., i.e. for limits to “excesses.” Then they defend “regulated” and “normal” capitalism against “exaggerated demands” from their own ranks, or fire communists. In the end, they must consider what is “necessary” for the entrepreneurs. By this relating of the interest of the hired hands to national success – and thus the interest of the entrepreneurs – the trade unions are also permanently in the dilemma that the achievement of the conditions for the possibility of fighting is threatened by the elimination of jobs and thus by what they can never really extricate themselves from.

2.

The proletarian’s political emancipation was accompanied by his total administration and regulation, differentiating between “pious hopes” on the one hand and “entitlements” which are based on a legal situation on the other. Every demand is submitted to this examination for its authorization. Instead of implementing one’s own demands with a fight, one strives for permission from the responsible institutions.

3.

Since the working class is perfectly integrated, the proletariat becomes the freely manageable means of competition for state and capital; it is at the disposal of the state for its respective needs. By means of the location competition in “globalization,” the working class must prove their results (i.e. the relationship of productivity to wages) are cheaper than those available in other states. Since it is perfectly integrated, the measures that served for their integration are gradually diminished again in the course of this process.

4.

The statement that the workers have a high standard of living can be refuted. Clearly today they can afford certain consumer goods (e.g. car, refrigerator, television) – but this is, however, under the higher productivity of the 21st century. Out of these conditions others follow than was the case in the 19th century. The mentioned consumer goods are, under these conditions, no longer luxuries, but necessities for working with the higher level of productivity: a car for flexibility, a refrigerator because the supply of food must be adapted to work times, a television for recuperation, etc. Since the prices for these products are also fully paid for by the workers and must remain profitable for the businesses that produce them, the products become cheaper to produce. This takes place in capitalistic competition only through the lowering of the wage portion of the value of the product – either by longer and/or harder work for the same wages and/or by replacing the workers by machines, which forces a higher work intensity upon the remaining workers. The working class’s exploitation is increased; instead of becoming prosperous, they become poorer, i.e. they get a smaller portion of the products produced by them (as social wealth).

If the working class continues to let itself be useful, then it will probably get ever worse for them. However, it is meaningless to make grand prognoses; the analysis should point to the imperative for action. Objectively, feelings of discontent have not been eliminated. The workers just have wrong explanations and argue for their rights (“that should be forbidden”) and thus appeal to the state. This results from incorrect ideas about their source of income (wage labor). We aim to reorient their criticism.

***

Available English translations from Das Proletariat:

On the “standard of living like never before” of the modern proletariat

On the “necessary false consciousness” of the proletariat

Nobel Peace Prize for Obama

October 29, 2009

Nobel Peace Prize for Obama

Energetically setting up a new American world order with “change”

The Nobel peace prize is awarded to Barack Obama. What is one supposed to make of this? Does Obama receive the prize because Americans have now suddenly become peace-loving? Do Americans now throw their nuclear weapons on the scrap heap unconditionally? Do they stop shooting in Afghanistan? By no means. So for what does such a person get such a prize?

GegenStandpunkt: Finance Capital

October 17, 2009

FINANCE CAPITAL

Finance capital turns a sum of money into a larger one, without creating exchange value and ‘realizing’ it through sale, i.e., without transforming it into money or, in other words, without itself going through a process of creating a surplus value.

This is a miracle the entire world regards as completely normal – at any rate as long as it works. All the more does it deserve a natural explanation.

Part I. The Basis of the Credit System:
On the Art of Lending Money

1.

The capitalist business world’s notorious shortage of money and how it is managed and exploited through the first fundamental equation of finance capital: Money becomes a commodity as capital and thereby itself money-capital

2.

Creating credit and money through the second fundamental equation of banking: Debts function as capital and generate ability-to-pay

3.

The permanent endeavor to bring about security in the credit business by means of the third fundamental equation of financial capital: Liquidity generates trust, trust generates liquidity

4.

Certifying finance capital’s credit and money creations through the equation the state adds as “bank of banks” to the other three: Whatever functions as money in the credit institutions’ payment transactions is a fully adequate substitute for the legal money “commodity”

To follow:
II.  The development of finance capital’s credit capacity
III. The state and its relation to the financial sector

Freedom or socialism?

October 13, 2009

“Why is the concept of “freedom” not appropriate for a society in which I can live ‘free’ from rule and exploitation?”

The contradiction between freedom and communism lies in the absoluteness of the individual will expressed in the concept of freedom. The absoluteness of the will is the way in which private property owners relate to each other. The disposing will counts absolutely and excludes all others from its property. Its sociality comes to it as an unconscious force of nature. This absoluteness of the individual will, which inevitably stands against members of society, cannot exist in communism, because in communism production is carried out collectively with the means of production held in common and the product is also consumed by all. Accordingly, the labor of the individual will exists as a part of the total social will. On the one hand, as a part of this, it determines it; on the other hand, however, it also relativizes itself in it.

Also, in communism, your individual will won’t necessarily count. There you live in a society which, on the one hand, benefits your interests, however at the same time you must also qualify your will. The utilization of the productivity which a society stands on implies that your will does not count in it absolutely. This is of course self-evident. However, it also nicely shows the idiocy of freedom which can seem reasonable only in capitalism. How is this supposed to work, that a will counts absolutely in a society? 1. As with Robinson Crusoe when there are no other wills, thus no society. 2. If a society is subjected to a single will. A god-like autocrat who subordinates all other wills to his absolute power, which is nothing other than a power fantasy. 3. Or in a capitalist society where all members of society want a social power which places their will in the right against other wills. One’s own will is thus qualified simultaneously against other legitimate wills.

The peculiar thing is not that the individual will is qualified in a society, but that this qualification occurs as its absolute validity is enforced. The qualification of individual wills against each other occurs through the authorization of individual wills. Therefore, society exists in capitalism as a negative relation of individual wills against each other. On the one hand, in capitalism people of course depend on each other. However they exercise this always mutually against one another. Their disposing will is used as a means for extorting social power. The ideal of freedom suits only such a society, thus of a will which counts absolutely against others and at the same time does not want to bend to the extortion of other wills. It is clear that in a reasonable society, a single will can not count absolutely. Why in a democracy does freedom count as a higher value? Because it perfectly describes the willing relationship of private property owners to each other. Freedom perfectly describes the negative relation of wills to one another. By virtue of my proprietary will, I exclude all other members of society from the possession of my property. Freedom is therefore sensible in a society in which individual wills in principle relate to each other antagonistically. Mutual exclusion as private property owners is the content of the antagonism. In a communist society, individual wills do not relate to each other antagonistically, but complementarily, as part of a general social will which has as its purpose the production and reproduction of the members of society.

New at Ruthless Criticism

October 5, 2009

New texts at Ruthless Criticism:

Freedom and equality:

as good as their esteemed reputation?

Letter and response: “I would disagree with your decision to designate the western states as democracies”:

Idealisms of democracy and the people

“Working while sick poses risks” – For who really?:

Sickness and health regarded as matters of willpower

“Cash for clunkers”:

A spotlight
on the role of the consumer in capitalism and on the people in a democracy

Six theses and a conclusion about democracy and fascism :

Successful and unsuccessful nationalism

“ADHD”:

Medication instead of beatings

www.ruthlesscriticism.com

Critique of state capitalism theory

September 17, 2009

On the murky concept of “state capitalism” and an attempt to define it

by Amelie Lanier

From the Wikipedia entry on “State Capitalism”:

State capitalism, for Marxists and heterodox economists is a way to describe a society wherein the productive forces are owned and run by the state in a capitalist way, even if such a state calls itself socialist. Within Marxist literature, state capitalism is usually defined in this sense: as a social system combining capitalism – the wage system of producing and appropriating surplus valuewith ownership or control by a state apparatus. By that definition, a state capitalist country is one where the government controls the economy and essentially acts like a single giant corporation. There are various theories and critiques of state capitalism, some of which have been around since the October Revolution or even before. The common themes among them are to identify that the workers do not meaningfully control the means of production and that commodity relations and production for profit still occur within state capitalism. …

After 1940, dissident Trotskyist currents developed more theoretically sophisticated accounts of state capitalism. One influential formulation has been that of the Johnson-Forest Tendency of CLR James and Raya Dunayevskaya who formulated her theory in the early 1940s on the basis of a study of the first three Five Year Plans alongside readings of Marx’s early humanist writings. Their political evolution would lead them away from Trotskyism. Another is that of Tony Cliff, associated with the International Socialist Tendency and the British Socialist Workers Party (SWP), dating back to the late 1940s. Unlike Johnson-Forest, Cliff formulated a theory of state capitalism that would enable his group to remain within the Trotskyist fold, albeit in a heterodox way. (http://en.wikipedia.org/wiki/State_capitalism)

We are confronted with at least two different ideas about what the term “state capitalism” covers: it’s either nationalized companies run by state institutions within a capitalist state, or it is used to denominate the system of former “real socialism.In both cases, there seems to be some confusion about the state, capitalism and the relations between the two.

With the definition of “capitalism” given above: “the wage system of producing and appropriating surplus value,” capitalism as a system is, first, reduced to the sphere of production. The system of competition on the market, the submission of the entirety of production to creating abstract value, and the role of money as a measure of this abstract value – as a result of this money being the real economic power or the “real community” (reales Gemeinwesen), as Marx expressed it – this is not mentioned, and from this we can conclude that this is not the target of criticism for these Marxists. Second, the door is opened to a series of false comparisons: when the payment of wages characterizes capitalism, then every system where wages are paid is “capitalist.” From this definition, we can see that some Marxists have a conception of capitalism with a different meaning than what Marx expressed in Capital and the writings connected to it.

Now, how about the state? State property within a capitalist economy is evidently considered something extraordinary that has to be honored with a special denomination. This shows that, for the adherents of the “state capitalism” theory, state property and private property are evidently considered contradictory and worth special consideration when they coexist. So let’s examine their – rather frequent – coexistence.

State property in a capitalist state

Let’s turn to Austria as an example of a country with a large sector of nationalized industry. In Austria, state property was quite common till the 1990s. The vast majority of banks, the energy sector, the steel and chemical plants, even electronic manufacturing were state-run. A large portion of the apartments were communal property. Without entering into the subject of the historical reasons for this large participation of the state in economy – the former German property had to be saved from the Soviet occupation forces by nationalization – we have to understand why this dual system was kept till the 90s.

Austria did not have sufficient capital to run these enterprises – which were, in fact, owned by Germans in between the wars, or founded during national socialist rule – by private owners after 1955, when the occupation powers left the country. Still, they were utterly necessary as a base for the Austrian economy, as they constituted the base of private entrepreneurship. Banks, energy and primary industry supplied the private sector with all it needed in order to function in national and international competition. They were utterly necessary if Austria was to remain a part of the West, that is, function as a capitalist state.

The nationalized sector therefore neither constituted a contradiction to private enterprises, nor was it a sector excluded from competition, a kind of protected production and employment. It constituted an entirely competitive sector of the economy, and a necessary supplement to it. Just as in the private sector, investment in the national sector was profit-oriented and yielded profit. Often the national industry, as it bore bigger capacities for investment, was a pioneer in introducing new technologies which improved the exploitation rate, or, as it is usually called, the productivity of labor. From there it passed to private enterprises, thus improving the competitiveness of Austrian enterprises on the international stage. This had the usual consequences for the livelihoods of the employees: in the 1980s, for example, at the big steel plant at Linz, the VOEST (originally built as the Hermann Goering-Werke after 1938), the work force was reduced from 25,000 to 6,000 within 5 to 6 years.

As far as the communal apartments are concerned, it has to be remembered that in those days Austria attracted foreign capital by boasting its low wages – partially based on low housing cost – and the low average strike seconds per year.

In other countries, like France or Great Britain, more important from the point of view of capital size and accumulation, nationalization was a means of putting key industries or banks under state management, injecting money out of the state budget and making them efficient; that is, internationally competitive in order to privatize them later on. In all these countries state revenue was used to engage in investments in the national industry with the aim of raising the competitiveness of national capital against the enterprises of other capitalist nations.

It’s necessary to remember these facts, and to remind the reader about them, as nowadays quite frequently – as a result of the general uncertainty of general concepts and also a certain nostalgia – the word “capitalism” is used when talking about liberated markets, free trade, the unlimited transfer of gain, while on the other hand, state property or even just state measures restricting this “turbo capitalism” are considered necessary, democratic and therefore anti-capitalist, just and social – that is, contradictory to capitalism.

Moreover, the supposed antagonism of state property and private property is incorrect because of the fact that capitalism in itself is always state capitalism, in the sense that capitalism cannot exist without a state. That is, the state, as the monopoly of force, is the main basis and condition of capitalism, or as it is called nowadays, the market economy. Without a state, which establishes the exclusion of the workers from the means of production – by its laws, its judiciary, its police, its prisons – and therefore forces him to sell his labor-power to an employer, no capitalist production can take place. The state enforces the cooperation of the classes on the basis of their antagonism, ensures obedience, but also the functionality of the proletariat for the aims of the class of proprietors, that is, the making of profit from the use of labor. Wage labor is the source of surplus value and profit, but this can only exist if the state sets the basis and ensures the necessary preconditions of exploitation.

The fact that the antagonism of the classes again and again creates the necessity for a supreme power that forces the two main classes of this society into cooperation has led to the illusion that the state would “die out” after the abolition of the class of entrepreneurs. This idea, which does not stem from Marx, but from Engels[1], was more or less put into practice with the rise of Soviet Union: the Bolsheviks believed the antagonism of classes to be the essential condition of the state, so they abolished the former while re-creating the latter, in a different form.

Stamocap (state monopoly capitalism) theory

If we keep rummaging in the relic box of Marxist theories – that is, theories that came after Marx’s death but claim to be in keeping with his analysis – we find the so-called stamocap theory that is linked to the names of Hilferding[2] and Lenin[3]. According to this theory, capitalism in the course of its advance leads to the formation of monopolies which dictate prices and exercise their influence on state authorities to such an extent that the state becomes their servant. Furthermore, the stamocap theory stresses the supremacy of finance capital over productive capital.

Concentration of capital is a fact. The idea of the emergence of “monopolies” (today they are called “multinational corporations”), which constitute the real rulers of the world and make governments obey their orders, is nowadays as popular as ever. Whoever thinks this way is convinced that the state, if it were only independent from class interest and truly sovereign, would be a source of benevolence, taking care of its citizens as a foster parent does the minors entrusted to him. That is how the Bolsheviks thought, too, and they started looking after their wards of the state.

One of the offsprings of the stamocap theory was the idea of “Organized Capitalism” that was mainly fostered by the Austromarxists. According to this concept, the state should take over companies and entire industries step by step and, in this way, progress peacefully towards socialism. Here again the state figures as a neutral institution, apart from class interest, which may be used by those in power for whatever noble aims they may pursue. The task is only to get into the position to do so, gain a majority in elections, form a government and, in one fell swoop, the road towards socialism may be taken. Led by such considerations, Hilferding more than once joined the government of the Weimar Republic as minister of finance.

Against the rather naive concept of “Organized Capitalism,” Lenin wrote The State and Revolution on the eve of the October Revolution. In this book, he tries to argue that the bourgeois or capitalist state is a means of class rule which cannot be taken over peacefully and rearranged, but has to be shattered and replaced by a proletarian state which will then, later, as a result of the socialization of the means of production – yes, indeed, die out. For this book, Lenin resorted to some of the writings of Marx and Engels, among them The Civil War in France. Marx, indeed, did not intend it as an instruction manual for future revolutionaries, and most probably never would have guessed that it would one day be read as such. He wrote the book in defense of the Communards and of the International against the defamations spread against them in the press. Lenin, on the other hand, considered it the description of the structures of a proletarian state. It has to be said that the proletarian, though bound to be the liberator of humanity and without egoistic interests, is ignorant and therefore needs leaders. Their task is to set the rules for the new – of course only transitory – state.

Here the adherents of the stamocap theory came to a crossroad and split. Hilferding and the other German and Austrian social democrats continued to believe in a peaceful takeover of power by democratic elections. In Russia, a new type of state was created which, as we know, did not serve the interests of the exploited after the end of the civil war, but called on their subjects to “enrich themselves.” Of course, only transitionally …

On the other hand, one belief still united Bolsheviks and social democrats: the state is an institution apart from and above class interest and is bound to abolish it.

The treatment of the classics: quotation instead of argument

The German and Austrian social democrats and the Bolsheviks also agreed on the method for using the writings of Marx and Engels: these are texts by authorities that have to be referenced. They browsed their writings – the collection and editing of which was linked to the work of the social democrats and the Moscow-based Institute for Marxism-Leninism, and their achievements in this respect should not be underestimated – but to what end? Their method was very unscientific and looked like this: first, they set their mind on something. In the first case, they wanted to be elected, form a government and act. And then they started to search the writings of the authorities until they found a passage that supports this goal. Or, in the case of the Bolsheviks, they seized power and started to wonder what to do and also turned to Marx’s and Engels’ writings.

A good example for this method is a quotation from Marx in Lenin’s The State and Revolution: Lenin unearthed a letter that Marx wrote to Weydemeyer, a friend then already living in the USA:

“2) that the class struggle necessarily leads to the dictatorship of the proletariat, 3) that this dictatorship itself only constitutes to the abolition of all classes and to a classless society”[4]

This letter was written in 1852 when Marx was still far from working out his analysis of capitalism. It was a private letter which he certainly never believed would be published. In Lenin’s book, still, it figures as a statement on the proletarian state, therefore the practice of establishing one is correct and scientifically founded.

This whole procedure is, of course, not scientific at all. An intention is the starting point and guiding idea of this way of arguing, and this intention is justified with quotations, as is every subsequent measure. Arguments are considered obsolete. This approach to theory, unfortunately, was not only practiced in the Soviet Union, but became a habit among those who considered themselves Marxists. Only for this reason could a reproach like “revisionism” come into being, as the followers of Marx did not argue their positions logically, but by pointing to quotations.

A theory has to be presented with arguments and defended by logic. Conclusions have to be drawn from observations, contradictions have to be resolved by finding out what the correct explanation is. Pointing to a remark by Marx or Engels doesn’t solve anything. On the other hand, if we turn to their heritage and use a term created by them, first we have to determine what exactly the author wanted to express with it.

The Ideal Personification of National Capital

With the discussion about collective or corporate capital, we also enter into a translation difficulty. A concept of Marx and Engels is translated into English in three different ways: Marx uses the word “Gesamtkapitalist” in the first and second volume of Capital. In the former case, it is translated into English as collective capital[5], in the latter as “aggregate capitalist”[6]. With “collective capital,” he denominates the whole national capitalist class, with “aggregate capitalist,” a part of it.

The notion “Ideal Personification of National Capital” (“ideeller Gesamtkapitalist”), to which state capitalism theories resort, stems from Engels, and refers to the state.

The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital.”[7]

Engels here points to the fact that the state takes measures that may be against the interest of an individual capitalist, but in the end serve the capitalist classsuch as a national health service financed by state revenue that takes care of the maintenance of the working class and in this way ensures that the entrepreneurs will always find an exploitable workforce in abundance; or the legal authorization of trade unions, in order to have a lever of control and calculability of the workers.

Unfortunately, he sort of refutes his own statement in the continuation and attributes a role to this “capitalist machine” which has given rise to a lot of errors:

The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers – proletarians. The capitalist relation is not done away with. It is rather brought to a head. But, brought to a head, it topples over. State ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution.”[8]

A national capitalist,” this has to be stated, as a single subject can only exist in theoretical or ideal form, as one of the essences of the capitalist system is competition. The state itself may act as a capitalist, but only as described above: as a participant in competition. If the market, that is, competition ceases to exist, it no longer makes sense to talk about capitalism, as in this case we are confronted with something else. This enigmatic subject brings “the capitalist relation” “to a head.” What does that mean? A few will get even richer, the others poorer? So what? That happens every day in capitalism. Why should the state, as an entrepreneur, be more efficient or more cruel than an individual or a private corporation? And then, one day, “the capitalist relation” “topples over.” Why? How? All this sounds familiar, but in an annoying way: the international situation is getting tense to the breaking point. The capitalists produce their own grave-diggers. And so on. One day necessarily revolution or some kind of radical change is bound to come, just like the messiah. With this paragraph from Engels, the social democrats justified their policy and insisted that this is the correct Marxist way to proceed. And “state ownership of the productive forces” made sense to Lenin and his comrades, too.

So much for the antecedents of contemporary state capitalism theories.

Tony Cliff’s book and theory

Cliff’s book State Capitalism in Russia [9] was written in the 1940s and published in 1955. The preface[10] to the 1996 reprint contains numerous obsessions of 20th century Marxist theory which represent canonical principles: they are beyond all question and constitute the basis of all further critical reasoning.

The perception of the Stalinist regime as a socialist state, or even a degenerated workers’ state – a transitional stage between capitalism and socialism – assumed that it was more progressive than capitalism.”

What do workers need a state for? Did they ever ask for one? But these true friends of the working man like Tony Cliff are convinced that this would be a great thing. And, in any case, progressive. His objection to the Soviet Union is that it didn’t meet his standards in this respect.

The transitional period also belongs to the repertoire of Marxism. Though everyone might know from personal experience that makeshift solutions tend to be permanent and it is always better to do things well from the beginning, it is supposed that social change always requires a transitional period. And during this transition the friends of the working class – that is, the Marxist comrades who are, in any case, always wiser than their clients – have the historical obligation to lead their herd. The “transitional period” is necessary in order to fulfill an educational task and form the suppressed and exploited into “new men.” For this, the latter are obliged to be grateful towards their benefactors.

Marxist literature in regard to the “transitional period” relies – also in The State and Revolution as an intermediary – on Marx’s “Critique of the Gotha Program.” This was originally a personal letter to a German social democrat comrade that was published by Engels in 1891. In this letter, Marx criticized the party program of the social democrats in 1875. He pointed out that their magniloquent declarations were really nothing but nonsense, or contradictory. Lenin declared this a guideline for how to move towards socialist society, and with this the necessity of the “transitional period” was born.

There are few words that have been pronounced more frequently and with more devotion than the notion of “socialism. Socialism as an aim could be found – at least till 1989 – in a lot of party programs. Everyone who considers himself left-wing has to be a partisan of this rather formless concept – but, if we take a closer look it, what does it really mean? Nationalized railroads? A system where the unemployed are able to go on the dole? Material support of large families? A system formerly applied in the kibbutzim? What should a “socialist state” look like? And in what way should it be different from what existed in former “real socialist states”?

Another one of these frequently used, but rather empty terms is the one of progress. It belongs to the Marxist teleology of history, according to which history is a subject, follows certain rules and necessarily develops positively, progressively …

Cliff uses the change of the political system in Eastern Europe as an piece of evidence for the continuity of capitalism:

The transition from one social order to another is necessarily accompanied by the replacing of one state apparatus by another. The state machine was hardly touched anywhere in 1989.”

The whole procedure here is again rather unscientific. Cliff simply invents some imperative that fits his purpose, and blames reality for contradicting it. On the contrary, one might conclude, from the way the change of system was effectuated and still continues to be enforced, that it takes a functioning state machine in order to impose the market economy and private property in countries where these blessings have been absent for decades.

Cliff’s unscientific way of arguing continues throughout the whole book. He blows up his rather meager and unsatisfactory reasoning with a lot of facts. Let’s take, for example, the first chapter (“Socio-economic relations in Stalinist Russia”), and in it: “The accumulation of capital on the one hand and poverty on the other”[11]: Here he supplies (in my case: bores) the reader with a lot of facts and tables. We learn that meat consumption in the Soviet Union was very low compared to that in Breslau in the 19th century. We are informed in which year sewerage was introduced into Archangelsk. The miserable living conditions of the population of the Soviet Union are described in a lot of detail. The only thing missing is the evidence promised in the title. The passage closes with a rhetorical question: “Is it necessary to give additional proof that the accumulation of wealth on the one hand means the accumulation of poverty on the other?” But he offers no proof at all that, on the one hand, wealth had been accumulated, and that this assumed wealth would have functioned as capital.

Other passages in the book have a similar quality. Let’s take, as an example, the part on “the turnover tax”[12]: Here Cliff tries to point out how the state exploits its subjects by taxation. It doesn’t enter his mind that the socialist state, which issued its money, might have just printed it, if its leaders needed cash. Taxes, just like prices in the real socialist economy, belonged to the system of levers for controlling the economy, but were not at all necessary for filling the treasury.

The stupidity of Cliff’s method, moreover, clearly shows in the conclusions to one of the chapters.[13] While Marx strove to show the economic laws that determine the capitalist economy and to explain the relation of its momentums, such as, for example, logically deducing the value of labor power or the inevitability of crisis, for Cliff the whole capitalist economy presents itself as a big mosaic, like a lot of stones adjoining each other. He overwhelms his audience with terms, facts, quotations and numbers, and in this way puts together his picture of capitalism and the Soviet (in his words: Russian) system. He comes up with “features,” “elements,” “characteristics” and the like. As the relation between them has no importance, Cliff easily compares the two heaps of singularities that he has collected and – surprise, surprise! – finds that they have a lot in common. This is how the “critical” theory of state capitalism comes into being, a theory hardly deserving to be called one.

Who adheres to the state capitalism theory, and why?

The October Revolution and the foundation of the Soviet Union was a big social experiment. It showed to the world the power of ideas: a bunch of have-nots, organized merely on the basis of thoughts, theories and convictions, could topple the government of the world’s biggest country and annihilate its ruling class. The Bolsheviks constructed the social system they created on a wrong fundament. They were so fond of the working class that they wanted to preserve it and to turn every member of society into a worker, thus ennobling them. Probably inspired by the title of one of Engels’ essays – “The Part Played by Labor in the Transition From Ape to Man”[14]they believed that man gets to the highest stage of evolution by labor, and becomes the “new man.”

The Soviet Union existed for more than 70 years. It defeated fascism. And finally it ceased to be. As a heritage, it left a lot of industrial ruins and scrap, but a still powerful state with an impressive military industry. And it left a lot of questions: Why did it emerge? Why did it vanish? Was it a mistake as a whole, or did it have a sound basis? Did it give in because of external threat, or because of inner antagonisms? The abolition of private property, communism – is this possible at all, or is it just an unrealistic dream of naive idealists? All these questions are inevitable and have to be answered. The more so as it turns out to be clear that Marx was right in his analysis of capitalism.

And then there is a book like Cliff’s. Quite a while ago he already stated that the soviet system isn’t worth anything. And what is more, he said it as a confessed Marxist. Therefore it is regarded as a left-wing, critical theory which can be easily accepted by anyone who is opposed to the current political and economical system. One ought to be careful with the consumption of these types of ready-made goods. Cliff – and all the others who operate with this concept of “state capitalism” – don’t explain, and they don’t convince. The attractiveness of his ideas has other reasons: he is serving popular prejudices. He is reviving well-worn socialist phrases. In times like the ones we are living through and where ideologies crash, this kind of babble offers a safe haven for those who calmly want to watch the others suffer shipwreck in the stormy sea. The talk about state capitalism is adequate for wiseguys who cultivate a critical attitude and sneer at humankind in general as being incapable of escaping from the tread-wheel of its limited insights.


[1] Engels, Anti-Dühring, Part III. Socialism. II. Theoretical, 1878; repeated in: The Development of Socialism from Utopia to Science, 1880: “The state is not «abolished», it dies out.”

[2] Rudolf Hilferding, Finance Capital, 1910

[3] Lenin, Imperialism, The Highest Stage of Capitalism. This text originally appeared in Petrograd in 1917. In the Russian original it is called Imperialism as the Most Recent Stage of Capitalism which indicates an essential difference, as after the most recent stage there is still the possibility of further development while after the highest stage the whole mess is bound to go down the drain. Therefore the little impreciseness in the translation brings Lenin’s pamphlet close to the theories of collapse according to which capitalism is bound to collapse sooner or later as a consequence of its repugnancies.

[4] Lenin, The State and Revolution. II. Chapter 3. “The Presentation of the Question by Marx in 1852”

[5] Marx, Kapital I, Chapter 8 (in German) or X (in English): The Working Day

[6] Marx, Kapital II, Chapter XXI. Accumulation and Reproduction on an Extended Scale

[7] Engels, Anti-Dühring. Part III. Socialism. II. Theoretical

[8] id.

[9] It can be found on the internet at: <http://www.marxists.org/archive/cliff/works/1955/statecap/&gt;. The original title of the 1955 issue was Russia: A Marxist Analysis. It’s worth noting that Cliff never uses “Soviet Union” but always “Russia” for the denomination of this country. Evidently with this he wants to present the Soviet Union as a mere continuation of tsarist Russia, before and without arguing it.