On 10, 11, and 12 October 2008, the Centro Internacional Miranda organized a conference in Caracas to discuss the erupting financial crisis, with a focus on the opportunities and challenges it posed to countries in the South. On 10 October, in one of the meetings, Michael Lebowitz formulated a few thought-provoking questions. I quickly jotted down some tentative answers to his questions. I hoped then to refine my thoughts further, but other pressing needs made it impossible. My remarks are rather general, but they remain relevant. Slightly edited, this is what I wrote then:
Michael Lebowitz said:
I have three short questions to introduce into our discussion which have been provoked by the presentations we’ve just heard. These questions are based on two assumptions: (one) capitalism does not collapse by itself and (two) in the absence of agents, subjects, popular forces, capital will sooner or later exit the crisis restructured. My first question is how exactly can capitalism restructure itself successfully? I stress here that I’m not asking you to act as advisers for the capitalist system. Rather, I think it is important to understand the strength of the capitalist system; in other words, it’s important to respect the enemy tactically.
This capitalist crisis is not terminal, precisely because of what Michael suggests above: The active subject required to overthrow capitalism and build socialism, a united, self-educated, and coordinated global working class is yet to emerge. Internationally, the degree of development of this collective subject is very unequal.
U.S. imperialism is something else. U.S. imperialism is likely to be in a terminal crisis, regardless of how long it may still last. By imperialism I mean the exploitation of poor countries by rich countries using extra-economic forms of appropriation of wealth. We know since Hilferding and Lenin that the modern type of imperialism is turbo charged by the power of modern capitalist production. Thus, it will remain extremely dangerous until the end, but it is also in irreversible decay, without a trace left of historical justification if it ever had one (as Marx claimed in his writings on India), with its global legitimacy exhausted.
Let alone the standpoint of the struggle for socialism, even from the standpoint of the needs of global capitalist production, imperialism under U.S. hegemony has become cost ineffective, passé. It is in a terminal crisis. The ultimate basis of U.S. imperialism is, of course, international inequality. More precisely, it is the tremendous disparity in the size of the economies of the U.S. and its Western allies vis-a-vis the rest of the world. If those differences narrow down beyond a point, the scheme stops working.
Michael is right in pointing out that global capitalism will re-structure itself if no global subject impedes the re-structuring. The confusion, hesitation, and lack of coordination exhibited by the governments of the rich countries as the crisis erupted was temporary.
The logic of capital is dual. On the one hand, there is competition among capitals, divisions, conflict, etc. On the other hand, there’s the need for capitalism to reproduce itself, which in this case appears as the need for capitalism to re-structure itself. In the face of a crisis, especially one so grave and pregnant with political opportunities for the class adversary as this one, the need of capitalism to ensure basic conditions for its re-structuring is likely to assert itself sooner rather than later.
Ideology is the easiest thing to jettison. In fact, to the extent the doctrine of so-called “neoliberalism” is in the way of this need of capitalism to re-structure itself, the doctrine is likely to be abandoned. That is why neoliberalism, as a doctrine that postulates “free” markets (as opposed to direct forms of collective agency), as the panacea to social problems always and everywhere (except in the production of legal and political conditions underpinning private ownership rights), is in shambles.
Some version of Keynesianism is likely to be restored, because there are not many other obvious ways for global capitalism to pull itself out of the crisis in a reasonable time frame. I’m not talking Keynesian monetary policy, which is showing its limits, but Keynesian fiscal policy (and the Keynesian vision behind the original Bretton Woods’ plan), like the nationalization of big chunks of the banking system now in process, global economic governance, (regulated) trade of goods and financial assets at a global scale.
To me, handing the Nobel to Krugman is a symptom of this need asserting itself ideologically. (I don’t mean that I’m not glad that Krugman, a fundamentally decent person with demonstrated sympathy to the interest of working people, got it, instead of a right winger.) Other symptoms of this ideological re-adjustment have been visible for a while already.
Not only the ideology of neoliberalism, but the practice of U.S. imperialism as well conflicts with the need of capitalism to re-structure itself under existing global conditions. I can list a few factors pushing U.S. imperialism into a corner:
1) the anti-imperialist rebellion in the South, with historical roots in the anti-colonial struggle, a part of which is a process of consciously building socialism, another part of which is simply a nationalist impulse with no aspirations beyond the capitalist horizon (with no impermeable membrane separating one from the other in practice);
2) the erosion of the modicum of domestic consensus required for U.S. imperialism to exist, as a result of the failures in Iraq and Afghanistan and the persistent internal opposition to the war (part of which stems from a shift to the left in the social consciousness of Americans, part the result of Americans not wanting to pay the human and financial sacrifice);
3) the U.S. debt, not only public, but also private, whose counterpart is the financial and global strategic position of China and other Asian and oil-producing countries; and
4) the current financial and economic crisis, which accelerates the reckoning due to the three factors above.
The main way capitalism can re-structure itself is via fiscal Keynesianism. In particular, the nationalization of large chunks of the financial system, e.g. banks, and the plugging of the holes created by a the decline in private consumption and investment with public spending.
But, where are the resources necessary to fund fiscal Keynesianism? The U.S. is already indebted and, as its economy shrinks, its debt looks scarier. At a global scale, the only way to fund an expansion in other forms of global spending is by expanding global savings (i.e. limiting global consumption). Reducing the consumption of Americans sufficiently has political limits and defeats the effect of public spending. At a global scale, the creation of debt money can only depreciate the currency, which in the absence of higher interest rates would only stimulate more consumption. Hence, the kind of fiscal Keynesianism required to re-structure global capitalism is global in nature. I call it “global Keynesianism.” In other words, the resources held by China and the oil producing countries are effectively the re-structuring fund.
Who in the history of capitalism has funded an enterprise without claiming dividends? Not the merchants and money capitalists that propped up the Bourbons in XVIII century France? Not the U.S. in WWI? Etc.
So, this poses the thorniest of all issues, which is of course the distribution of the costs/benefits of the re-structuring among nations and social classes. That depends on political strength, which depends on (broadly understood) economic strength. Global money is a social power. In this case, global power.
But is U.S. imperialism without a hand to play? Certainly not. It has military power, which counts for something. More importantly, it still has a huge economy with enormous long-run productive potential. This is what the creditors are pondering precisely. It explains the fact that the flight to safe financial assets temporarily strengthens the U.S. dollar. However, the U.S. doesn’t have the upper hand. In theory, the U.S. could try to blackmail the rest of the world using military threats. To paraphrase Marie Jana Korbelová (a.k.a. Madeleine K. Albright), What’s the point of having a big military if not to use it?
Well, that strategy would fail miserably. The only upside of the U.S. debacle in Iraq is that it exposed clearly to the world (and to Americans) the miserly limits of U.S. military power. The U.S. has more nuclear weapons than the rest of the world together, but how could it effectively blackmail China or Russia militarily with a sputtering economy and people fed up with militarism abroad and at home? It’d destroy much more resources that it’d intend to appropriate. That’s why the strategy would not work. (I’m not saying it’s impossible. Stupid people in power can do stupid things. My point is that it would not accomplish its intended goal.)
The other available method is, of course, the depreciation of the U.S. dollar, trying to impose an inflationary tax on the rest of the world. That would be akin to the U.S. taking itself hostage, pointing a gun to its temple, and threatening to pull the trigger. That could work partially. It’s been working, since China and Brazil (and Russia?) have already promised to help. But they are going to help the re-structuring from a position of relative strength. I cannot envision the BRICs propping up global capitalism without demanding a bigger role in global economic governance and the effective dismantling of U.S. imperialism as we’ve known it. The strategy of depreciating the U.S. dollar would lead to the most rapid evaporation of U.S. power I can think of.
The global character of today’s financial markets cuts both ways. The U.S. cannot dissolve them unilaterally at a massive scale without hurting itself badly. In the 1980s, the reason why many countries in South America refused to renege on the debt unilaterally was that they’d be effectively cutting themselves out of the world market. That’s what ties the U.S. to its liabilities today. Global money is a global power. Under existing conditions, who’d lose more if the U.S. severed its links with the BRICS?
The BRICS are now on the creditor side of the re-structuring. They are exposed and they have power. They have strong nationalist impulses. They are not building socialism now. But, from a historical, global viewpoint, the nationalism of the BRICS is today a progressive force. Of course, the nationalism of the BRICS is only progressive, only historically justified, to the extent its impulse effectively contributes to reducing international inequality, the most fundamental basis of imperialism and global capitalism.
I should add here that the momentary tactical advantage the South (the BRICs in particular) currently enjoy can only be turned into a permanent strategic advantage if and only if 1) these countries continue to succeed in expanding their economies, and with increasing social efficiency, necessary condition for it to build sustainable popular support, and 2) if they increase their unity, move to negotiate their interest in greater collective accord. It’s easy to see how this connects with the struggles of socialists in these countries.
If they drop out of the sphere of influence of capitalism and try to consciously build socialism, the game changes. If they just limit themselves to protecting their industrial development and narrowing the gaps in average productivity and standards of consumption with respect to the rich countries (whether or not this is the intention or merely an unintended byproduct of the plan to assist domestic private accumulation), they will cooperate in the re-structuring for the reasons suggested above.
What seems clear to me is that global capitalism needs to jettison U.S. imperialism, at the very least its most extreme form (unilateralism, extra-legal aggression), if not altogether. The complete dismantling of imperialism in all its forms is of course unlikely without a stronger rebellion from below, i.e. one, two, three many Venezuelas.
My second question is how can agents and subjects act to prevent a capitalist restructuring? And who are those agents?
In the background of Michael’s questions is the reticence of Brazil and Argentina to embrace the type of economic integration proposed by Venezuela. In the case of the U.S., I would not accept the premise, namely that U.S. workers should struggle to prevent a capitalist re-structuring.
Clearly, for workers in the U.S., the political horizon is not socialism, but a rapid way out of the crisis, i.e. a rapid capitalist re-structuring of the economy so that they end up with jobs and increased economic security. Given political conditions, the longer it takes for the crisis to end, the worse for them. The working people in the U.S. can only get crushed, more fragmented, politically weaker (and more susceptible to extreme right-wing ideology) under a longer crisis.
My third question is can capitalist states prevent capitalist restructuring or do they serve as agents of capitalist restructuring?
With Brazil and Argentina as the backdrop, this seems fair. However, as I reflect on the question, it seems to me that the question begs its answer. To the extent Brazil’s and Argentina’s states are capitalist states, they can’t go beyond the horizon of helping, taking part in, or at least allowing the re-structuring of capitalism, not only externally (something that even Venezuela can’t avoid), but domestically.
But if we remove the adjective “capitalist” (since things are in some flux in South America), the answer is, It depends on the political conditions. If Brazilian and Argentinian workers manage to revolutionize their state, then they are enabling themselves to go beyond merely re-structuring capitalism.
I think the distinction that we have to make is to recognize that there are two paths. The first is a capitalist path, the restructuring of capitalism. The second is a socialist path, one which creates conditions for building socialism; and one of the most significant of those conditions is creating conditions in which there is mobilization of subjective forces, masses, the accumulation of popular forces.
Once again, with Brazil and Argentina as the backdrop, this sounds fair to me. But I’d argue here that, under some conditions (e.g. in the U.S.), the accumulation of popular forces requires not a strategy of obstructing the re-structuring of capitalism, but ensuring better conditions for the further unity, organization, and education of workers in the longer run.
Now, can U.S. workers educate themselves if they don’t struggle against the capitalist re-structuring? Sure. Actually, I’d argue that they cannot educate themselves if their immediate goal is the direct struggle against the capitalist re-structuring, because they can only educate themselves through struggles they actually wage. As far as I can see, they may passively resist the re-structuring, but as individuals, not as members of a class in political motion.
As David Barkin says, the rest of the world, or Latin America in particular cannot wait until the U.S. gets its act together, meaning until it decides to reform itself and abolish imperialism. I don’t disagree with that. But I’d argue that the U.S. is shifting, and that this shift creates the opportunity for getting our act together.
People in the U.S. can struggle against the redistribution of the cost of the re-structuring at their expense. That’d be the most immediate task, I’d say. Who knows where that struggle may lead. Ultimately, of course, the workers’ struggle to prevent the dumping of the cost of the re-structuring on their shoulders will succeed only to the extent they threaten to derail the re-structuring itself. But we can similarly say that not even the mildest economic struggle can ever succeed in its own terms if workers don’t threaten with a bigger disruption of capitalist reproduction. So, the argument is silly. The point is that posing at the outset the struggle against the re-structuring as an immediate goal is wrongheaded, an empty propagandistic gesture. It tends to lead to (what I call) sectarian responses — political reactions divorced from the immediate needs of working people.
The first path relies upon the capitalist state and reproduces illusions in capitalism; it reinforces the idea of capitalism as practical. The second path creates consciousness of the nature of capitalism; it recognizes that crisis is an opportunity, an opportunity to intensify the battle of ideas.
I guess, under some interpretation, the struggle against the redistribution of the costs of re-structuring global capitalism at their expense can be viewed as moving along the socialist path. However, I’d just insist that it shouldn’t necessarily imply opposing the re-structuring as an immediate task always and everywhere.
The first path, the capitalist path, is the path of Mercosur and a Bank of the South that reproduces the character of existing international agencies. The second path is the path of Alba and of a Bank of the South based on new relations building upon solidarity.
Again, I’m trying to look at things from the point of view of the U.S. workers’ interest.
