Capitalism The Real Problem

Greek workers and youth staged a general strike in opposition to the so-called bailout scheme engineered by the leading capitalist countries in Europe, the United States and world financial institutions.
Originally uploaded by Pan-African News Wire File Photos

Capitalism the real problem

By Stephen Gowans
Reprinted From the Zimbabwe Herald

"THE search for scapegoats has started," observes German magazine editor Michael Naumann, alluding to growing anti-immigrant sentiment throughout Europe.

The Swedes "elected an anti-immigrant party to Parliament for the first time, and the French are busy repatriating Roma" while "Germans continue to debate a best-selling book blaming Muslim immigrants for ‘dumbing down society’." (

Complaints are heard in England that England is no longer for the English, while a paroxysm of Islamophobia marks a US campaign to block a Ground Zero mosque, which is neither a mosque nor at Ground Zero.

Naumann’s point is taken, but he misses the reality. The search hasn’t just begun, it’s complete.

These days, the paradigm for scapegoating is provided by the Nazis’ blaming Jews for the ills of the inter-war years, a period of intense capitalist crisis. The parallel is the latest crisis, with its mass unemployment, insecurity, stagnant and shrinking incomes, and in some places, fiscal austerity.

The real blame lies with capitalism — a system whose internal dynamics regularly produce wrenching downturns, making life uncertain, challenging and sometimes cold, bleak and humiliating for countless millions.

How many people 50 years of age and older live, either without hope of ever again finding work, or in fear they’ll lose their jobs and never work again? How many young people have failed to land a first job, or are forced to navigate an uncertain world of low-paying, part-time, contract or temporary positions? How many are working harder, for less? In times of crisis the desperate, the humiliated, the frightened, look for an explanation for their situation.

They don’t have to look far. The far right has a ready answer — that immigrants are stealing our jobs and freeloading on social services. The first part has a ring of truth to it. Governments, after all, do use immigration policy to manage labor market flexibility, a euphemism for a pool of employees large enough to meet capital’s current demand for labor with a reserve army of job seekers left over.

The reserve army — eager to take the place of those who already have work — maintains downward pressure on wages and keeps those with jobs in line. Without keen competition for employment, the price of labor would rise, eating into profits, possibly so much that capitalists would no longer invest, and the system would come to a halt.

Labour market flexibility, then, is necessary to the smooth functioning of the system. But because people compete for jobs, any measure which increases the intensity of competition is hostile to their interests. It limits their bargaining power and increases the chances someone else will get the job they hold or want.

In the competition of all against all, those who bear the greatest burden are the workers who fill the ranks of the reserve army, or go from one low-paying job to another, denied any form of economic security. It’s easy for them to blame their plight on the immigrants they see working in jobs they want (though regularly in jobs they would disdain to hold), because it is often with them they compete.

It’s true, they also compete against people of the same ethnicity, color and national origin, but don’t hold them to blame. But differences in skin colour, accents, cultural practices and religion facilitate the creation of in-group-out-group divisions, making it easy to mark out the competition.

At the same time, the non-immigrant working poor often live side by side with newly arrived immigrants, some of whom have no work, and get by on welfare payments and sometimes criminal activity.

Their presence is a source of confusion and resentment to the working poor, who question the wisdom of their governments’ accepting new immigrants — whose upkeep can be subsidised in part by the working poors’ taxes — at a time of economic downturn.

Crises, you would think, would provide opportunities to transcend the capitalist system.

At these times the system’s problems are encountered the most acutely and therefore the motivation to overcome them ought to be greatest, but crises paradoxically have often led to the rise of far right parties and anti-immigrant sentiment. The reason why is two-fold: The far right’s seemingly plausible explanation for the insecurity many people are forced to bear; and the left.

When the left provides a compelling alternative explanation and mobilises mass energy around it and thereby threatens to take power, charismatic far right leaders are provided with money to rally public support for a nationalist cause and vie with the left for power. When the left fails to offer a compelling alternative explanation, the far right movement remains limited, poorly organised, and largely spontaneous; it’s not needed to protect the system from challenge, and so is left in its inchoate state.

The far right isn’t pressed into service and built up as a major force unless the left is strong.

The dominant left response to the recent rise of xenophobic sentiment has been moral suasion and anti-racism demonstrations, a strategy that possibly owes more to satisfying the psychological needs of the practitioners than concern over efficacy.

It fails to attack the root cause of the disease, trying to suppress the symptoms instead.

Campaigns of anti-racism offer their practitioners cathartic opportunities to express moral indignation (which may be the underlying motivation for carrying them out), but their effectiveness is questionable unless accompanied by an assault on the root causes. The recent wave of anti-immigrant sentiment didn’t arise in a vacuum. Its momentum comes from economic crisis, and if one wants to mobilise the energy that far right explanations attract, a credible solution must be offered to the critical underlying problem: economic insecurity.

Against the far right’s explanation that immigration is the cause of joblessness, the left could point out that insecurity is caused by the failure — indeed refusal — of capitalism to offer secure employment to all; that the solution is to transcend the capitalist system; and that where it has been transcended in the past, secure employment has been made available to all, along with guaranteed healthcare, security in old age, subsidised housing, free education, and a raft of other mass-oriented reforms.

There is no freeloading in a socialist society. Work is an obligation.

But at the same time, employment is guaranteed. Against the pseudo-explanation: immigration is the cause of your problems, must be counterpoised an accurate explanation: capitalism is the cause of your problems; it can’t — won’t — guarantee a secure life for all; socialism can.

The problem is that much of the left, even that part of it that traces its origins to revolutionary Marxism, has given up on both revolution and socialism, defined here as production for use (not profits), governed by a plan (not markets), and carried out in publicly owned (not private) enterprises.

Socialism in contemporary usage has come to refer to a mixed economy presided over by an elected government that calls itself socialist. Production is governed by markets, much of the economy remains in private hands, the commanding heights of the economy are brought gradually under public control, and the exploitation of man by man is accepted as necessary, desirable, and the key to efficiency.

But markets — which almost everyone now thinks are an unavoidable necessity — inescapably mean recurrent economic crises, unemployment, and inequality. In other words, socialism, as it is defined by 21st century socialists, offers no solution to the economic insecurity that regularly flares up and drives the insecure into the arms of far right campaigns to scapegoat immigrants and foment xenophobia.

Sweden, often celebrated as a social democratic paragon and held out as an attractive alternative to Marxist-Leninist-style socialism, has proved no less vulnerable to outbreaks of recession-induced xenophobia than bastions of neo-liberalism have. And that’s because 20th century social democracy and its equivalent, 21st century socialism, don’t transcend capitalism, but embrace it, and therefore accept its destructiveness (in crops, products, factories, and gainful employment eliminated during regular downturns), inefficiencies (capitalism regularly operates below capacity and well below during downturns), wars (to pry open closed markets and secure new investment opportunities) and blighted lives.

No one in Germany "is predicting the rise of a successful right-wing party," remarks New York Times reporter Michael Slackman, "but that is because the main ingredient is missing: a charismatic leader to rally the public. With such a leader, and some financial support, the prospect could take on a life . . ." Perhaps. But there is also one other ingredient missing: a compelling left alternative explanation of people’s distress. Without one, there’s no need to find, and provide financing to, a charismatic right-wing leader to transform a spontaneously arising, minority, anti-immigrant movement into a mass movement capable of vying for power to do what far right mass movements have been historically mobilised to do: block the rise of a revolutionary left movement.

That the rise of a far right demagogue is unlikely can perhaps be looked at as a good thing (and in one sense it is), but in another sense it is far from good, for it means capitalism is safe, despite what one might think about capitalism’s current tribulations creating an opportunity for change. The opportunity may exist, but who is there to seize it?

It used to be that the role of a revolutionary Marxist party was to set forth an alternative explanation to the dominant ideology, one that would supply an essential ingredient to the project of transcending capitalism at a time of crisis. People’s troubles with unemployment, under-employment and poverty, it would be explained, are systemic, not personal or immigrant-related; they are remediable, not inevitable.

Freedom from the ills of capitalism, it would be shown, is possible and realistically achievable through collective action. Nationalism, xenophobia and social democracy would be revealed to be pseudo-solutions, offering the illusion of change but no real redress of capitalism’s ills. No longer. Nowadays, everyone has shifted to the right. Liberals are conservatives, social democrats are liberals, and communists are social democrats, if not liberals in practice with a vaguely radical rhetoric.

With a void having opened up in the space once filled by alternative left explanations, the current capitalist crisis is proving to be a fertile ground for the growth of far right pseudo-explanations of what are properly systemic problems. With the left having embraced markets, and thereby all that markets imply (regular crises, unemployment and inequality), it no longer has a solution to offer for market-induced plights. Having capitulated, it has reduced itself to the role of uttering pious expressions of benevolence.

Many people who were once communists drew strength from the knowledge that communism represented a mass movement. Perhaps it remained marginal (or more aptly, suppressed) in their own country, but it had been embraced by a substantial fraction of the world’s people and seemed to be getting stronger. With the demise of communism in Eastern Europe and the Soviet Union, and China’s journey down the capitalist road, all that changed.

Now, really-existing socialism had all but disappeared, hanging on, sort of, in a few outposts: Cuba, where parts of the socialist model had to be dismantled to survive, and North Korea, where the Juche philosophy supplanted formal adherence to Marxism-Leninism. Communism now seemed largely discredited, and to cling to it, was to mark oneself as peripheral and locked in the past.

Desperate to reconnect to a mass movement, many embraced the only mass working class movement they could find, which in many Western countries, was social democracy. But the corruption that had led the Bolsheviks to break away from social democracy to form the communist movement in 1917 had intensified, and by the time the Soviet Union was dismantled, social democracy had nothing anymore to do with socialism; it had become capitalism with a friendly face, and at times, not so friendly.

In Marx’s and Engel’s day, there were periods when a meeting of every socialist in Europe could have been easily held in a mid-sized hall. Until 1917, the Bolsheviks — whose ideas and organisational forms would eventually guide the economic and political organisation of a majority of the world’s population — remained a political party of limited significance without a mass following. The need to be connected to a popular movement — and the practice of linking up with a cause on the basis of its popularity and not the ideas and aims that inspire it — would have led many latter day communists to shun Marx, Engels and the Bolsheviks had they been contemporaries.

One reason Marxism-Leninism commands little authority nowadays is that it seems to have been rejected by its practitioners.

Glasnost and Perestroika and the eventual dismantling of communism in the Soviet Union, followed by communism’s collapse in Eastern Europe, and the turn to capitalism in China and Vietnam, appear to be admissions that Marxism-Leninism doesn’t work and that capitalism is both inevitable and the end of history.

Cuba’s recent decision to expand its private sector by cutting loose 500,000 state employees — and Fidel Castro’s remark to Atlantic journalist Jeffrey Goldberg that "The Cuban model doesn’t even work for us any more" — seems to underscore the point. All this, however, misses a few significant points.

First, communism arose under inauspicious circumstances. It took root where capitalism was weak, and therefore without the strength to smother the infant in its cradle. In 1917, Russia’s Tsarist ruling class was demoralised by war and the capitalist class too small, weak and disorganised to put down revolutions in March and October.

But capitalism being too weak to block the rise of revolution meant that the revolution would have to take hold in a country where the working class was small and the industrial base — necessary to progress toward a communist society of plenty — was rudimentary at best.

Lenin believed his revolution would spark working class revolutions in Germany and elsewhere in Western Europe, and that the working class in those countries would come to the Bolshevik’s aid, providing the necessary capital Russia would need to build its own socialist society.

He judged wrong. While the Kaiser’s rule was overthrown in Germany, the Social Democrats — who disagreed with Bolshevik’s revolutionary methods and refused to break decisively with capitalism and its rulers — came to power.

Revolutions elsewhere were stillborn or not in the cards. After a period of waiting, the Bolsheviks realised that if socialism were to come to Russia, they would either have to first shepherd the country through a long period of capitalist development, actively intervene in Western Europe to foment revolutions there, or undergo a programme of rapid industrialisation and forced agricultural collectivisation at home.

After a period of conflict about which path to pursue, the Bolsheviks decided to build socialism in one country. This decision was reinforced by the expectation that the capitalist powers would attack the Soviet Union within a decade, and that an industrial base was urgently needed to build a modern military for self-defence.

Second, communism had not a moment’s rest from attempts by the capitalist countries to destroy it. Blockades, sanctions, trade embargoes, sabotage, subversion, diplomatic isolation, military intervention, war (both hot and cold) and ideological warfare were pressed into service with the aim rolling back — and ultimately destroying — communism.

The chances of communism surviving the onslaught were far from sanguine.

Attributing the demise of really-existing socialism to internal failings, and ignoring seven decades of efforts to exterminate the communist challenge — a practice of both the right and left — is a peculiar form of blindness. As William Blum observes: "It’s as if the Wright brothers’ first experiments with flying machines all failed because the automobile interests sabotaged each test flight. And then the good and god-fearing folk of the world looked upon these catastrophes, nodded their heads wisely, and intoned solemnly: Humankind shall never fly."

Third, it wasn’t because communist countries rejected markets that they failed. It was because they backed off of Marxist-Leninist principles, and conciliated with capitalism, that they collapsed.

Poland, for example, ran into trouble because it failed to collectivise agriculture and provided implacable enemies of socialism, including the Catholic Church, space to operate.

Rather than using agricultural surpluses to pay for industrialisation, Polish communists subsidised food prices and emphasised light industry and the production of consumer goods and foot the bill by borrowing heavily from Western banks. Burdened with debt, the government was eventually forced to allow Western banks to dictate economic policy. The banks demanded the government remove its food subsidies to pay interest on its debt.

This led to spikes in food prices, sparking strikes and ultimately the development of a working class strike movement.

The strike movement was hijacked by anti-socialist ideologues linked to the Catholic Church and the CIA who eventually managed to force the government to step down when it became clear that the Soviet Union, under the leadership of Mikhail Gorbachev, would not intervene.

Stephen Gowans is a Canadian writer and political activist resident in Ottawa. This article is reproduced from gowans.wordpress.com

Gorbachev was dismantling the Marxist-Leninist basis of the Soviet state and experimenting with market mechanisms in response to a slow-down in the Soviet economy. The slow-down had a number of causes. The Soviets had been forced to adopt a policy of self-sufficiency to protect the country from the possibility of imperialist countries manoeuvring to strangle it economically by cutting off its access to vital raw materials. This led to a situation where the Soviets paid more to extract some raw materials internally than they would have paid had they imported them. Another factor was an increase in raw materials costs. As easy to reach mines were depleted, deeper mine shafts had to be dug, and longer distances had to be travelled to reach new mines.

Planning had its own problems. Enterprises hung on to employees to ensure they had sufficient staff to meet planned production targets. This led to over-staffing, and to the less than efficient deployment of manpower. The Soviet commitment to full employment also meant that retrofitting factories—in order that they could continue in operation with layoffs avoided—was favored over building new factories based on new technology. As a result, the industrial base became a patchwork of new grafted onto old.

At the same time, the need to keep pace with NATO put a severe strain on the Soviet economy. Despite its rapid growth, the Soviet economy was still much smaller than that of the United States. To come anywhere close to matching NATO expenditures, the Soviets had to allocate a crushingly large percentage of their GDP to the military. Although necessary for self-defense, this was wasteful, since it diverted resources away from the productive investments that were needed to raise living standards. US cold warriors figured that if they could stall the growth of the Soviet economy by locking the Soviet Union into an arms race, they could weaken attachment to Marxism-Leninism, both among the Soviet citizenry and in the Kremlin. With living standards failing to converge on those of the advanced capitalist countries, Eastern Bloc populations might sour on the socialist model and look longingly to the West. At the same time, it might occur to Soviet leaders that their only hope was to compromise on Marxism-Leninism and open up the Soviet economy to market mechanisms and the world capitalist economy.

There were other strains. In order to win allies and expand socialism to other countries, the Soviets shipped aid to countries and movements struggling to free themselves from colonialism. Most of these countries were desperately poor, and profited from transfers and subsidies from the Soviet Union, while returning little in exchange. For example, the Soviets bought Cuban sugar and nickel at above world prices, getting little in return from Cuba. Cuban military intervention in southern Africa on behalf of the liberation movements there–ultimately paid for by the Soviet Union–and the intervention in Afghanistan on behalf of a modernizing and secular revolutionary government, put further strain on the Soviet economy. In the end, Gorbachev decided to pull troops out of Afghanistan, cut Cuba loose, and not intervene to protect Warsaw Pact allies from counter-revolutionary movements. He also moved the Soviet Union toward a Scandinavian-style social democracy. Far from invigorating the Soviet economy, the attempt to make over the USSR pushed the economy into collapse. As the economy imploded, the economies linked to it through the socialist community fell like dominos. By embracing capitalist methods, Gorbachev had turned a set of manageable problems into a catastrophe. Communism’s collapse was not due to public ownership, central planning, and production for use, but the abandonment of socialist practices in favour of markets and capitalist methods. The problem wasn’t that there was too much socialism; there was too little.

The capitalist class in imperialist countries is a formidable enemy. Except for the period of the Great Depression and the chaotic aftermath of the two world wars, it has not been weakened, demoralized and disorganized—a condition that would need to prevail if revolutions were to come about. What’s more, both world wars led to a stronger, more confident, and assertive class rule based in US finance and industry. The opportunities for Marxist-Leninists to lead new revolutions were, therefore, limited. At the same time, the space for socialist countries to develop was systematically impeded by a United States immeasurably strengthened by WWII, whose rulers committed themselves to wiping the communist foe from the face of the earth, a campaign that carries on today in efforts to bring down the Cuban and North Korean systems. (By comparison, the Soviet Union was immeasurably weakened by the same war.) That the communist movement should be bloodied, bruised and knocked to the mat should come as no surprise. The opponent was formidable. But does that mean the towel must be thrown in? It would appear that for communists who were accustomed to being linked to mass movements, the answer is yes. But the movement of revolutionary socialists has been tiny and peripheral before. Had there not been a core of revolutionaries who remained dedicated to Marxist-Leninist principles and refused to sacrifice fundamental principles for immediate gains and popularity, the first attempt at building socialism would never have come off. Capitalist crises and war are inevitable and recurrent. Opportunities for transcending capitalism and liberating mankind from its scourges are therefore, inevitable and recurrent as well. When they arrive, a Marxist party capable of offering an explanation of people’s unhappiness, showing that another way is realistically achievable, and revealing the pseudo-solutions of nationalism, religion and social democracy to be dead-ends, can lead a renewed attempt to move humanity forward

Stephen Gowans is a Canadian writer and political activist resident in Ottawa. This article is reproduced from gowans.wordpress.com