Opening our eyes to how capitalism began

All systems of inequality and exploitation require violence. When we peer into the past, such a statement is not controversial; it is only when we turn our attention to the present that selectivity is applied.

Capitalism, however, has weaved a vast web of mythology about itself. If we are talking about ancient enough history — say the nineteenth century in the context of the Industrial Revolution — some acknowledgement of brutality is accepted. Inconsistently, the beginnings of capitalism are shrouded in mists of rose-colored haze despite lying further back in time.

Slave memorial in Saint-Paul, Reunion Island (Photo by Tonton Bernardo)

Slave memorial in Saint-Paul, Reunion Island (Photo by Tonton Bernardo)

But think about it: Does the idea that peasants, used to self-sufficiency albeit under often difficult circumstances, would willingly take subservient jobs in inhuman sweatshops make any more sense than today’s apologists who claim that people in developing countries wish to work back-breaking hours for pitiful wages? Horrific, state-directed violence in massive doses enabled capitalism to slowly establish itself, then methodically expand from its northwestern European beginnings.

Peasant uprisings repeatedly broke out across medieval Western and Central Europe, sometimes with explicit demands for equality and sometimes in the form of religious movements challenging the feudal order and, therefore, the Roman Catholic Church that provided the local ideological glue. In response, the church stepped up its Inquisition and its burning of non-conforming women as “witches” as part of the effort to subjugate peasants and town-dwelling working people and to foster divisions within those large groups.*

Entering the new factories at gunpoint

English feudal lords began throwing peasants off their land in the sixteenth century, a process put in motion, in part, by continuing peasant resistance. The rise of Flemish wool manufacturing — wool had become a desirable luxury item — and a corresponding rise in the price of wool in England induced the wholesale removal of peasants from the land. Lords wanted to transform arable land into sheep meadows, and began razing peasant cottages to clear the land. These actions became known as the “enclosure movement.”

This process received further fuel from the Reformation — the Roman Catholic Church had owned huge estates throughout England, and when these church lands were confiscated, the masses of peasants who were hereditary tenants on these lands were thrown off when the confiscated church lands were sold on the cheap to royal favorites or to speculators.

Forced off the land they had farmed and barred from the “commons” (cleared land on which they grazed cattle and forests in which they foraged), peasants could either become beggars, risking draconian punishment for doing so, or become laborers in the new factories at pitifully low wages and enduring inhuman conditions and working hours.

Force was the indispensable factor in creating the first modern working class. Late feudalism was hardly a paradise for small farmers, but Western European peasants, some of whom were independent smallholders, had wrested better conditions for themselves. They had no reason to enter willingly the new workplaces and the Dickensian conditions they would endure there.

The historian Michael Perelman, in his appropriately titled book The Invention of Capitalism, wrote:

“Simple dispossession from the commons was a necessary, but not always sufficient, condition to harness rural people to the labor market. A series of cruel laws accompanied the dispossession of the peasants’ rights, including the period before capitalism had become a significant economic force.

For example, beginning with the Tudors, England created a series of stern measures to prevent peasants from drifting into vagrancy or falling back onto welfare systems. According to a 1572 statute, beggars over the age of fourteen were to be severely flogged and branded with a red-hot iron on the left ear unless someone was willing to take them into service for two years. Repeat offenders over the age of eighteen were to be executed unless someone would take them into service. Third offenses automatically resulted in execution. … Similar statutes appeared almost simultaneously in England, the Low Countries, and Zurich. … Eventually, the majority of workers, lacking any alternative, had little choice but to work for wages at something close to subsistence level.”

Supplementing these laws were displays of military power. A widely quoted document claims that 72,000 were hanged during the early sixteenth century reign of King Henry VIII, throughout which England experienced a series of peasant uprisings. Regardless of what the true number may have been, Henry, who reigned as the enclosures reached their peak, did have large numbers of people executed for being “vagabonds” or “thieves” — in reality for not working.

Force of the state backs the powerful

Systematic state force enabled factory owners to steadily gain the upper hand against artisans, although those nascent capitalists possessed no production innovations at the time. Economist Herbert Gintis wrote:

“Early factories employed the same techniques of production as putting-out [assemblers of finished products working from home] and craft organization, and there were no technological barriers to applying them to these more traditional forms. The superior position of the capitalist factory system in this period seems to derive not from its efficiency sense, but its ability to control the workforce: costs were reduced by drawing on child and female labor, minimizing theft, increasing the pace of work, and lengthening the workweek.”

A process of intensifying exploitation enabled early factory owners to accumulate capital, thereby allowing them to expand and amass fortunes at the expense of their workforces; they were also able to force artisans out of business, forcing artisans to sell off or abandon the ownership of their means of production and become wage laborers. Greater efficiencies can be wrung out through economies of scale, which in turn leads to the ability to introduce new production techniques because the accumulation of capital also provides funds for investment. Such efficiency, in turn, is necessary for the capitalist to take advantage of opportunities for trade.

The gathering pressures of competition eventually ignited the Industrial Revolution and fueled the rise of the factory system. A flurry of inventions useful for production shaped the Industrial Revolution that took root in Britain in the second half of the eighteenth century. The Industrial Revolution emerged not only due to technological and economic factors, but also as a result of capitalist class relations that had already become established. The introduction of machinery was a tool for factory owners to bring workers under control — technological innovation required fewer employees be kept on and deskilled many of the remaining workers by automating processes.

As industrial resistance gathered steam in the early nineteenth century, the British government employed 12,000 troops to repress craft workers, artisans, factory workers and small farmers who were resisting the introduction of machinery by capitalists, seeing these machines as threats to their freedom and dignity — more troops than Britain was using in its simultaneous fight against Napoleon’s armies in Spain.

This period coincided with a “moral” crusade promoted by owners of factories and agricultural estates in which the tiny fraction of commons that had survived were taken away by Parliament; the measure of independence rights to the use of commons provided wage laborers was denounced for fostering “laziness” and “indolence” — defects that could be cured only by forcing full dependence on wage work. Organizing, in the forms of unions and other coordinated activity, soon supplanted machine-breaking, reinforcing capitalists’ desire to use technical innovation to make their workforces docile.

Fortunes built on slavery, colonialism

The process of accumulation by European capitalists was greatly accelerated by slavery and colonialism.

Gold and silver were the mediums of exchange in Europe, Asia and Africa, and currencies were based on these metals. Indigenous peoples in Mexico and the Andes were skilled at mining, creating a supply of both metals that they themselves used for ornamental purposes. Silver shipped to Spain from Latin America by 1660 totaled three times more than the entire pre-existing supply in all of Europe. During this period, silver production in the Americas was an estimated ten times that of the rest of the world combined, all of which was shipped to Spain.

This vast wealth enriched the empires and monarchies of Europe, except for Spain — the metals it imported mostly were delivered to foreign creditors, and the rest spent on the Crusades, the Inquisition and importing manufactured items. Spain imported everything it needed while other countries threw up trade barriers and developed their industries.

The brutality with which this extraction of wealth was carried out led to the reduction of Indigenous populations by an estimated 95 percent. The imperial solution to this genocide was to import slaves from Africa. A steadily increasing number of slaves were shipped from the early sixteenth century as plantations grew in size. During the seventeenth century, Caribbean sugar supplanted mainland precious metals as the mainstay of wealth extraction; for three centuries the European powers would engage in continual struggle for possession of these islands. This sugar economy was based on the slave labor of kidnapped Africans; conditions were so horrific that one-third of the slaves who made it to the Caribbean died within three years — it was more profitable to work slaves to death and buy replacements than to keep them alive.

The triangular trade (Graphic by Sémhur)

The triangular trade
(Graphic by Sémhur)

The slave trade, until the end of the seventeenth century, was conducted by government monopolies. European economies grew on the “triangular trade” in which European manufactured goods were shipped to the coast of western Africa in exchange for slaves, who were shipped to the Americas, which in turn sent sugar and other commodities back to Europe. Britain and other European powers earned far more from the plantations of their Caribbean colonies than from North American possessions; much Caribbean produce could not be grown in Europe, while North American colonies tended to produce what Europe could already provide for itself.

Britain profited enormously from the triangular trade, both in the slave trade itself and the surpluses generated from plantation crops produced with slave labor. Proceeds from the slave trade were large enough to lift the prosperity of the British economy as a whole, provide the investment funds to build the infrastructure necessary to support industry and the scale of trade resulting from a growing industrial economy, and ease credit problems — early industrialists had extremely large needs for investment capital and commercial credit because of long delays in returns on investment due to the slow pace of trade transport.

Profits from the slave trade and from colonial plantations were critical to bootstrapping the takeoff of British industry and modern capitalism in the second half of the eighteenth century into the early nineteenth century.

Wealth for colonial masters, poverty for the colonies

The sociologist Robin Blackburn, in his comprehensive study The Making of New World Slavery, wrote:

“Britain undertook a major series of investment programmes: in the merchant marine, in harbours and docks, in canals, in agricultural improvements and in developing new industrial machinery. The profits of empire and slavery helped to make this possible, enlarging the resources at the command of public authorities, [land-]improving landlords, enterprising merchants and innovating manufacturers. Because of the prior transformation in agriculture, and in British society as a whole, colonial and mercantile wealth could be transmuted into capital employing wage labour.”

This extraction process had opposite effects in those colonies undergoing the most intensive exploitation. The Caribbean countries were reduced to monoculture production, forbidden to manufacture anything, because their agricultural products were so profitable. The mainland colonies that would one day become the United States, by contrast, were allowed to develop the industry and varied agriculture that would in the future enable rapid growth of their economy. African development also was stunted because rulers of coastal kingdoms could buy goods and weapons from Europe while profiting by enslaving Africans from other kingdoms; wealth there was used to buy from imperial powers and thus did not stay in Africa.

The widespread use of slave labor also necessitated that further social divisions be instituted, while institutionalizing global trade. Marxist feminist theorist Silvia Federici, in her book Caliban and the Witch, wrote:

“With its immense concentration of workers and its captive labor force uprooted from its homeland, unable to rely on local support, the [Caribbean and Latin American] plantation prefigured not only the factory but also the later use of immigration and globalization to cut the cost of labor. In particular, the plantation was a key step in the formation of an international division of labor that (through the production of ‘consumer goods’) integrated the work of slaves into the reproduction of the European workforce, while keeping enslaved and waged workers geographically and socially divided.”

On such roots is modern inequality built.

* The remainder of this article consists of extracts from the “Explorations in theories of transition to and from capitalism” section of my forthcoming book It’s Not Over: Lessons from the Socialist Experiment (still seeking a publisher). Footnotes omitted. In addition to the works directly quoted, sources include Karl Marx,“Expropriation of the Agricultural Population from the Land”; David Dickson, The Politics of Alternative Technology; Eric Williams, From Columbus to Castro: The History of the Caribbean; Eduardo Galeano, Open Veins of Latin America: Five Centuries of the Pillage of a Continent; John C. Mohawk, Utopian Legacies: A History of Conquest and Oppression in the Western World; and David McNally, Against the Market: Political Economy, Market Socialism and the Marxist Critique.

Venezuela’s revolution is a process propelled by millions, not one leader

Venezuela’s Bolivarian Revolution is much bigger than Hugo Chávez; it is a movement of millions. The movement that drives the process forward long predates his election and his failed 1992 coup.

Saying this should not come as a revelation, for no large-scale social movement can exist as a personal vehicle, nor can any one person, no matter how charismatic, single-handedly carry the responsibility for social change, especially when that change has the long-term, open goal of supplanting the global capitalist order.

We Created ChávezContrary to the myopic, superficial corporate-media narrative of a caudillo motivated by a fathomless desire to poke Uncle Sam in the eye (although we must immediately ask how a leader who won 16 of 17 national elections, almost all by at least 10 percentage points, can be a “dictator”), the Bolivarian Revolution is a continuation of struggles that have been waged since the late 1950s. The defining moments, George Ciccariello-Maher argues in We Created Chávez: A People’s History of the Venezuelan Revolution,* are not President Chávez’s electoral victories but rather two outbursts of people’s power, a 1989 uprising and the 2002 uprising that re-installed him, reversing the business coup.

The Bolivarian Revolution can’t be understood without a bottom-up perspective, without analysis of the pressure from below that buffeted President Chávez, pushed forward by organizations that support the revolution. Professor Ciccariello-Maher, as his book’s title signals, provides that necessary background:

“Hugo Chávez is not a cause but an effect, not Creator but creation; in this sense, the history that follows is literally a defetishization, a demystification. His election and even his failed coup did not mark the beginning of the Bolivarian Revolution, but were instead the results and reflection of its long and largely subterraneous history.” [page 21]

That history has roots two centuries old, and the modern manifestation of Venezuelan struggle begins in the late 1950s, ironically with the downfall of Venezuela’s last dictator and the establishment of a formally “democratic” republic. Marcos Pérez Jiménez was overthrown in 1958, replaced by a two-party system designed to stifle popular participation. The “social democratic” party, Acción Democrática — unusually ruthless in attacking its base even by the standards of world social democracy — mostly was in power, alternating with Copei, the Christian democrats.

‘Democracy’ proves little different than dictatorship

Acción Democrática leader Rómulo Betancourt won office in the first post-Pérez Jiménez election. Within a year, his government was shooting people dead in the streets and ruling under states of emergency. Violent repression was the swift response by the new president to his unpopularity; repeated massacres sparked uprisings across the country. A revolutionary situation developed, but Professor Ciccariello-Maher argues that the Venezuelan Communist Party waited too long while the Revolutionary Left Movement went too soon. A series of tactical mistakes doomed this armed struggle, not least of which was a lack of connections with the people, the author writes.

A series of groups blossomed and declined, rural guerrilla strategies failed, the electoral Left floundered, and mass fronts and other popular organizations faced severe state repression during the following years. The net of state repression was cast steadily wider — the government provided little services but attacked those who asked for them. Out of this situation, barrio assembles and popular militias began to be organized for self-defense; the latter forcibly ended the drug trade in neighborhoods in which they operated. These popular organizations organized sporting and cultural activities, and expelled the police — their militancy propelled people forward.

Professor Ciccariello-Maher argues that the 1989 uprising known as the “Caracazo” is the first of two “ruptures” (the 2002 coup reversal the other) that are the critical moments in the process that is the Venezuelan Revolution. Carlos Andrés Pérez took office as president that year as the Acción Democrática candidate on an explicitly anti-International Monetary Fund platform. It took him two weeks to jettison his campaign pledges and impose the full IMF-dictated austerity package. Riots broke out the morning of imposition, led by informal workers. But because political organization was widespread, these were not blind lashings-out — the target of the anger quickly went from bus drivers (a doubling of oil prices prompted large fare increases) to the state and its system.

A curfew was declared the next day, and a violent crackdown ensued, with as many as 3,000 left dead. The author leaves no doubt as to the severity of the government crackdown:

“Known organizers were dragged from their homes to be either executed or ‘disappeared,’ and when security forces met resistance from rooftop snipers, they sprayed entire apartment blocks with automatic machine guns. … The human toll of the rebellion has never been fully revealed, especially because the Pérez government subsequently obstructed any and all efforts to investigate the events. … A recent study has shown that some four million bullets were fired to quell the rebellion, and the Relatives of Victims Committee, an organization founded around the victims of the Caracazo, reports that 97 percent of the documented victims died in their own homes.” [pages 96-97]

Grassroots organizations build opposition

The author writes that the Caracazo crystallized and focused organized opposition within the military while civilian armed groups sought to unify the popular militias with the military opposition. By 1991, barrio assemblies in Caracas were organizing and coordinating opposition. The military uprisings in February and November 1992 (the former the one led by Hugo Chávez) were the “detonators” for subsequent popular rebellions. State repression could not break popular control of the streets, and these social movements led to the 1998 election of President Chávez.

“[D]efeat notwithstanding, the Caracazo sounded the death knell of the old system, simultaneously reflecting and contributing to the inevitability of its collapse and thereby setting into motion the entire process that came after it. In symbolic terms, it smashed in a single stroke the façade of [Venezuelan] ‘democratic exceptionalism,’ revealing the bankruptcy and the violence of the existing system for all to see. Neither completely spontaneous nor fully organized, the Caracazo was an instant in which widespread disgust and revolutionary capacity met on the streets, generating historical agency by emboldening the faithful and converting the waverers: it was 1989 that enabled 1992, and 1992 that enabled 1998.” [page 89]

The author’s second moment of rupture, the reversal of the 2002 business coup against President Chávez after two days, was a product of the connections between militias and military, of political understanding and experience. Millions poured into the center of Caracas in defiance of the coup. Venezuela’s corporate media had unleashed an orgy of lies before and during the coup; the state television channel was closed while the private media blacked out any coverage of the mounting resistance. The coup leader, Pedro Carmona Estanga, the head of the national chamber of commerce, dissolved all branches of government and declared the 1999 constitution void, despite its having been approved by 72 percent of the electorate.

Loyalist military units, taking their cues from the mass popular resistance to the coup, took the presidential palace back, with officers giving the credit to the people and their “spontaneity” — but the “spontaneity” was the product of years of organizing, with Left activists seeking much more than the mere return of President Chávez to the palace.

“[M]ass spontaneity, while fundamental in its importance, is often the result of serious organizing that, in the case of Venezuela, spans decades. As with the Caracazo, then, this spontaneous mobilization and its spontaneous grasp of the strategic realities of the situation it confronted should not lead us merely to a panegyric of spontaneity for spontaneity’s sake. Rather, every moment of this spontaneity and every gesture of these spontaneous masses contained an aspiration toward increasingly conscious organization. In this explosive dialectic between spontaneity and organization that was resistance to the 2002 coup, such conscious effort would be especially important in the realm of mediatic and popular armed organizing.” [pages 172-173]

Struggle within the struggle

Can an engaged people go back to the ancien régime? We Created Chávez was published just before Hugo Chávez’s untimely death, but given the context of this story the president’s passing in no way renders the book out of date. The modern history of Venezuela is that of regularly employed workers, informal workers, peasants, students, women, Afro-Venezuelans and Indigenous peoples in a many-sided struggle against domestic elites and the country’s subaltern status in global capitalism. Then there is the struggle within the Bolivarian Revolution.

There are tensions between economic and political demands, between workers’ autonomy and the state, over the nature and content of “co-management” and over if co-management is a step toward a higher level or a capitalist trick, as well as opposition to developing the Bolivarian process from managers and within the ranks of the movement.

What forms should workers’ control take? Some argue for state ownership with employee participation, others argue for full autonomy of enterprises and the workers in them, and there are gradations in between. Enterprises under state ownership presumably should be managed to benefit the community, but how much management should be ceded to the workforce? Should workers fortunate enough to work in the oil industry be able to reap benefits far in excess of other workers? How should autonomous enterprises be managed to benefit the community, not only those who work in them?

There are similarly serious questions regarding agriculture. Venezuelan land ownership remains highly unequal, with owners of large ranches in control of the countryside. Moreover, because the countryside emptied out and the economy grew overly dependent on the oil industry before 1998, the country lost its food sovereignty. This exodus to the cities has swelled the size of the informal workforce, who get by with street vending and whatever other means they can to survive.

Less than half of the workforce has formal employment, Professor Ciccariello-Maher writes, but although the Chávez government had difficulty with informals, to the point of occasional hostility, the author argues that this sector has been the staunchest base of support for the revolution and is neglected at the government’s peril. Informal workers played no small role in reversing the 2002 coup, for example.

There is no stasis

Ultimately, the revolution can only succeed through creating mechanisms for self-government. “Patriotic Circles” became Bolivarian Circles after 1998, and were tasked with drafting and defending the 1999 constitution. Communal councils (local bodies that manage policy and projects in their communities) came into existence after a 2006 law. These are legally on par with state institutions and have oversight over them; these are views as potential replacements for the state bureaucracy. The councils are linked horizontally to one another and vertically in communes with a goal of them exercising sovereignty.

Due to the timing of the book, the author concludes with an analysis of President Chávez’s “complex and nuanced position” as someone who is not purely a representative of the state but also an ally of the social movements that have driven Venezuela forward in past decades:

“[M]ore often than not he has pushed a radical agenda that facilitates the transformation of that state, a fact most visible in the recent development of communal councils and popular militias. Here there are no guarantees, and despite the fact that the collective ‘we’ of the Venezuelan revolutionary movements … ‘created him,’ this does not mean the creation will not betray the creators. However … to do so would certainly require a fight.” [pages 254-255]

The necessity of struggle to deepen the revolution is unchanged by the president’s death. Social movements have driven the process forward, and will continue to do so, regardless of who occupies the palace. We Created Chávez is indispensable toward understanding the process that is the Bolivarian Revolution and the path taken by Venezuela.

* George Ciccariello-Maher, We Created Chávez: A People’s History of the Venezuelan Revolution [Duke University Press, Durham, North Carolina, USA, and London 2013]

Power concedes nothing without a demand

We struggle because there is no alternative. We need to struggle because none of us can know when the spark will come. To not struggle is to give up.

Photo by Patrick Prémartin

Photo by Patrick Prémartin

I couldn’t help thinking about this subject again while helping out at an Occupy Wall Street information table last Sunday. As usual, there were many perspectives contending, but there was a distinct undercurrent of despair. Some articulated that as frustration that more people can’t be reached faster, but another subset was rooted in the idea that all is already lost, that we are already running out of time. From the latter it is a short journey toward giving up.

The process of organized resistance to injustice is called “struggle” for a reason — it is never easy. Frederick Douglass said it as well as it can said be a century and a half ago in words that will always bear repeating:

“Those who profess to favor freedom and yet depreciate agitation, are people who want crops without ploughing the ground; they want rain without thunder and lightning; they want the ocean without the roar of its many waters. The struggle may be a moral one, or it may be a physical one, or it may be both. But it must be a struggle. Power concedes nothing without a demand. It never did and it never will.”

During this process, success always lies over the horizon. Sometimes we struggle for something we won’t see in our lifetimes; history is replete with such examples. Sometimes we know we won’t see it in our lifetimes, but the call of a greater good animates us. Sometimes we do taste victory. But when? We can never know ahead of time.

One strike among many

Take Russia’s February Revolution of 1917, when the tsar was overthrown. People persevered for decades in conditions far worse than anybody in an advanced capitalist country faces. The movement waxed and waned; strikes and even peaceful marches were drowned in blood. St. Petersburg, then the capital, was racked by waves of strikes in the first weeks of 1917 amidst shortages of all kinds.

Put aside for the moment your opinion about the eventual course of Russian history; the people struggling to survive at this time shouldn’t be held responsible for the wrong turns the October Revolution later took. On one particular day, tens of thousands of women textile workers walked out, then went to the metal factories and asked the men working there to join them. They did, the strike spread and within two days a general strike took hold. In another five days, the tsarist régime was finished — one of the world’s most brutal dictatorships brought to an end.

Why that one day? Why that one strike among hundreds of actions? We can never know. The most we can say is that on that particular day, Russians had finally had enough. This amazing feat, overthrowing an autocratic régime that had endured for centuries, occurred as most of the leaderships of the various political parties and organizations were in Siberian exile, in foreign exile or in jail.

Yet there was no spontaneity at work. Russia’s socialists had tirelessly laid the groundwork, and although the tsar’s secret police had decimated their ranks and so many had paid with exile, banishment, hard labor, jail and execution, the ideas could not be stamped out. The talks of the socialist agitators, the words of the socialist newspapers, pamphlets and fliers, resonated with the experiences of Russians — not only in the cities, but in the countryside and in the army and navy. It was this practical work, carried out over many years, that provided the people of Russia with the tools necessary to understand, and then change, their conditions.

They changed their conditions even though most were so under-educated that they were illiterate; even though a omnipresent propaganda insisted that the tsar ruled as a direct representative of God and there could be no change; even though police, militaries, death squads and secret police promised swift retribution against anyone questioning the natural order, the only order that could be.

Dignity in the face of inhumanity

Take a more recent example, South Africa. The apartheid régime seemed impervious. Disdainful of world opinion, determined to hold power at any cost, murdering or shipping to island prisons its opponents with impunity, consigning the Black majority to grinding poverty and daily humiliation — how could optimism that a better day would come be sustained? Yet is was.

I remember vividly the day Nelson Mandela made his first speech after his release. The only picture we had of him had been that of a young man with a fierce expression. Now here he was, an older man with gray hair. I was startled by his appearance before remembering we were seeing him three decades older, all at once. I couldn’t quote to you a single word of what he said that day, but it was perhaps the most memorable speech I have ever witnessed. What I do remember is the dignity of Nelson Mandela. Dignity. He was not broken after 27 years in prison, not at all. But beyond that, the African National Congress leader was fully human.

He would not allow his humanity to be taken away, no matter how cruel his oppressors. Nelson Mandela made that speech because he was part of a movement. Only an organized movement could have brought that day. A movement willing to engage in struggle. Another African National Congress leader, Steven Biko, summarized a most important lesson in these words:

“The most potent weapon of the oppressor is the mind of the oppressed.”

Throwing up your hands in despair, declaring that nothing can be done so nothing should be started: You are oppressing yourself more effectively than any dictatorship, any sham democracy, any rule of financiers. To say “they” are too strong or too vicious, whomever “they” are, is to give up on living. Such an attitude is the surest route to your material conditions getting worse, to the next generation living under harsher conditions.

Everything of human creation is temporary. Everything of human creation will come to an end. Whether the next system will be better or worse, whether we or our descendants will be more or less free, is up to us.

History, subordination weigh heavily on unfinished Arab Spring

As exhilarating as it was for the people in Tahrir Square to have forced out Hosni Mubarak, that was the easy part. Dismantling a dictatorial system is much more difficult than seeing off a particular dictator.

This is the reality that Egyptians, and participants in other countries comprising the Arab Spring, continue to face. The dictator does not sit suspended above all of society, but rather rules with the support of a social base. Not rarely the dictator, when in the global South, is supported (and even reliant on) an imperial power with its own agenda. The United States government, whether the occupant of the White House is a Republican or a Democrat, has kept dictators in power throughout the world — the U.S. has militarily intervened in Latin America or the Caribbean 96 times, including 48 times during the 20th century. That total doesn’t include coups fomented by the U.S., such as Guatemala in 1954 and Chile in 1973.

Tahrir Square photo by Jonathan Rashad

Tahrir Square photo by Jonathan Rashad

The leading powers of capitalism were quite comfortable with the pre-Arab Spring status quo and, most notably in the case of the U.S. government, did little to discourage the idea that they’d prefer to keep things as they had been. But this is not to suggest that internal factors should be ignored. The same judges appointed by former President Mubarak preside; the Army continues to impose its will in the judicial and economic spheres; and the Muslim Brotherhood seems comfortable stepping into the shoes of the former régime. The economy continues to not function but the priority among Egypt’s elites is to jockey for power.

The military was the crucial social force on which the dictatorship of Anwar Sadat and Hosni Mubarak rested and, having accumulated significant economic interests to go along with their powers of coercion, is not inclined to loosen its grip. This source of power survived the removal of President Mubarak intact — augmented by the continuance on the bench of the Mubarak-era judges, the pillars of the dictator’s system remain in place. And although the Muslim Brotherhood would likely prefer the power of the military and the judiciary trimmed, it nonetheless appears content to simply place itself at the apex of this system and govern, to the ability it is able, with its own heavy hand.

The imperial powers, needless to say, are not eager for too much democracy in the Arab world, lest their ability to keep their grip on the region’s oil supplies loosen. But the greed of Western oil majors sometimes can backfire. A June 2 article in The New York Times reported that China is reaping the benefits of increased Iraqi oil production, buying half of Iraq’s oil and seeking more. The U.S. failed to gain complete control of Iraq’s oil as it had intended, and the measure of relative independence shown by the Iraqi government resulted in Baghdad setting tougher contract terms than Western oil companies would prefer.

The result, according to the Times, is that Chinese companies have accepted the lower profits resulting from the stricter Iraqi terms, content to secure needed supplies rather than maximize profits. Of course, although oil was a factor in the invasions of Iraq by the Bush I and Bush II/Cheney administrations, bringing Iraq (and, ultimately, the rest of the region) firmly into the U.S. orbit and forcing them open to unfettered penetration by multi-national corporations was a paramount goal. Naturally, this was to have been on a subordinate basis. There is a long history here, starting with the British crushing of Egypt’s attempt to industrialize in the 19th century.

First by military means, then by financial means

Although still formally a part of the Ottoman Empire, Egypt gained considerable autonomy after an Ottoman military commander, Muhammad Ali Pasha, became the ruler of Egypt following the departure of French forces under Napoleon Bonaparte. The new Egyptian leader, after securing power through a massacre of a rival group, embarked on a policy of industrialization and commodity agriculture to facilitate his a goal of Egyptian independence.

Cultivated lands were expanded and crops were grown specifically for export, most importantly cotton. The new strain of cotton he ordered planted was to be the cash crop used to finance Egypt’s economic rise. Lowell Lewis, an agricultural scientist, summarized this process:

“Since British textile manufacturers were willing to pay good money for such cotton, Ali ordered the majority of Egyptian peasants to cultivate cotton at the exclusion of all other crops. At harvest time, Ali bought the entire crop himself, which he then sold at a mark-up to textile manufacturers. In this way, he turned the whole of Egypt’s cotton production into his personal monopoly.”

Had Muhammad Ali been content to be a supplier of a raw material (in this case, cotton), he likely would not have incurred the wrath of the British. But he also was committed to industrial development. Factories in several industries were set up, including textile, and foreign trade monopolies were established. To stop the flood of British textiles imported into Egypt, embargoes were put in place. Britain did not want this competition, ultimately crushing the rise of Egypt through a mix of military and financial means.

Egypt’s ambitious ruler, despite being a viceroy for a province of the Ottoman Empire, built a large army that was used in a series of invasions, expanding his areas of control from Sudan to Syria. Britain had adopted a policy of propping up the Ottoman Empire; a weak but intact empire would suit Britain’s strategic and commercial interests. When Muhammad Ali’s army approached Istanbul, the Ottoman capital, several European powers came to the aid of the Ottomans, handing Egypt’s ruler a decisive defeat. In 1841, he was forced to sign a treaty specifying that Egypt would adhere to “free trade” policies, ending his monopolies and allowing Egypt to be flooded with cheap British imports, decimating Egyptian industry.

Egypt’s peasants had borne much hardship under the pre-1841 policies; they would now suffer more under heavy burdens of debt and taxation, while elite landowners who came to own most of Egypt’s farmlands were taxed at a small fraction of the peasants’ rate. Muhammad Ali had handed much of the elites’ land to them, and his successors continued to oversee a consolidation of land.

That was one component of the 19th century version of neoliberalism, although the term had not yet been coined. Another component was the debt that ensnared Egypt. Muhammad Ali’s grandson, Ismail, sought to modernize Egypt along European lines during his reign in the 1860s and 1870s. But the country went deep into debt to finance this program. Egypt could not even pay the interest, let alone the principal. Rather than risk a repudiation of the debt, the German and French governments forced Ismail to appoint British and French commissioners to oversee Egyptian finances to guarantee that the debt was paid.

As an example, in 1873, the Egyptian government accepted a loan with a face value of £32 million but received only £9 million because of conditions placed on the loan by the lenders — yet had to repay the full face value. Reduced to an exporter of raw materials as the British had intended, and thus overly dependent on volatile cotton prices, by 1877 more than 60 percent of all Egyptian revenue went to service the national debt. Within another five years, Britain’s direct occupation of Egypt had begun.

The players change, but the game does not

Following World War I, Britain maintained tight control of Egypt’s cotton exports, which accounted for 90 percent of Egypt’s exports. Even after Egypt gained independence after World War II, imperialist intrigue did not end. The British and French governments, in collusion with Israel, invaded Egypt in an attempt to seize the Suez Canal and overthrow Egyptian leader Gamal Abdel Nasser. A series of diplomatic maneuvers had led President Nasser to nationalize the Egyptian company that operated the canal, with payments to shareholders at full market prices.

Following British and French withdrawal in the face of international opposition to the invasion, including by U.S. President Dwight Eisenhower, President Nasser proceeded to nationalize British and French assets. He also embarked on plans to industrialize the country and redistributed land. But a decisive loss in the 1967 war with Israel, by then strongly backed by the U.S., undermined the president and weakened the economy. Anwar Sadat became president in 1970, and was rewarded for his re-aligning the country toward the U.S. from the Soviet Union with heavy aid.

Since then, Egypt has been dependent on U.S. aid and, in turn, the country was ruled almost continuously under emergency laws until the fall of Hosni Mubarak. The U.S. provided $1.47 billion in foreign aid to Egypt in 2011, $1.3 billion of which was military assistance. U.S. military-assistance programs have the goal of inducing recipients to align their policies with U.S. wishes, and much of it is specifically earmarked for the recipient to buy arms from U.S. companies. Thus recipient militaries are able to buy materiel that wouldn’t otherwise be able to, and U.S. arms manufacturers’ profits are subsidized.

The size of the military’s share of Egypt’s economy remains a subject of considerable controversy but, whatever the figure, is substantial. The last years of the Mubarak era saw a decisive turn to neoliberal prescriptions; although the military might have seen privatization schemes as a threat to its commercial interests, the post-Mubarak military command, which appears to possess decisive political power even after the ascension of Mohamed Morsi to the presidency, reached a tentative agreement (not yet ratified) with the International Monetary Fund, attached to the usual austerity conditions.

The Egyptian military has expanded into shipbuilding, railroad cars, real estate development, heavy equipment leasing and military materiel. It also is a part owner of companies in a variety of other industries, including computers and oil and gas pipelines.

The military and the Muslim Brotherhood are rivals for power, but whatever the differences between them, they have mutual interests in maintaining the status quo. The judiciary is another pillar of the old régime, and has flexed its muscles by issuing a series of rulings undermining the establishment of new institutions.

A United Nations report issued last month reports that more than 40 percent of Egypt’s population lives below the country’s poverty line of $2 per day, while two percent of the country’s population controls 98 percent of the economy; poverty, inflation and unemployment are steadily rising. A law passed by the military bans strikes, sit-ins and protests, and fewer Egyptians have access to health care because it is increasingly privatized. Meanwhile, Egypt’s Muslin Brotherhood-appointed prime minister announced this week that “there are no differences” between he and the International Monetary Fund concerning austerity measures the IMF is demanding in return for providing a loan.

Egypt’s generals want U.S. money and the Brotherhood promotes Turkey’s neoliberal Justice and Development Party as model. The military, the Brotherhood and the remnants of the Mubarak régime are the only institutions remaining, and the U.S. government can’t be displeased about that. It destroyed all Left entities that posed any threat, refusing to tolerate even nationalistic leaders whose “socialism” was limited to rhetoric, such as Gamal Abdel Nasser. Doing so was in the tradition of the previous leading capitalist power, Britain.

The inability of the Arab Spring, thus far, to bring about any meaningful reform, let alone revolutionary change, is inseparable from the region’s history and continued subordinate status in the world capitalist system.

Mirror images and ideological straitjackets on the path from Solidarity to sellout

For much of the 20th century, there was a curious mirror effect between orthodox Soviet and Chicago School ideologies — both saw the other as the only other possible economic system. Although both time and the ongoing global crisis of capitalism has begun to chip away at such a ridiculous binary, to a maddening degree this ideological straitjacket continues to assert itself. A straitjacket that does not spontaneously materialize but is crafted for the maintenance of power.

The effects of this mirrored duality are still very much with us, and are a crucial factor in the path the countries of the former Soviet bloc have traveled. The usages of this ideological construct are obvious enough in the capitalist world, distilled into “there is no alternative” by the just departed Margaret Thatcher. Less obvious were the usages further East; perhaps the nearest equivalent of the prime minister’s “TINA” is Leonid Brezhnev’s declaration of the Soviet system as “irreversible.”

When the general secretary’s formulation began unraveling in the late 1980s, what was a Soviet bloc economist to do? For many, the answer was to pick up a copy of a book by Friedrich Hayek or Milton Friedman, and jump through the looking glass. And when their new mirror seductively told them to apply shock treatment to their own countries, they did — the mirror told them there was no alternative.

There is always an alternative, Polish economist Tadeusz Kowalik reminds us in his book From Solidarity to Sellout: The Restoration of Capitalism in Poland.* Professor Kowalik, drawing on his decades of experience as a reform socialist often on the outs with the communist authorities for his willingness to challenge orthodoxy, his work as an adviser with the Solidarity trade union and his personal knowledge of the key players, reminds us that Poland — and, by implication, the Soviet bloc as a whole — had an opportunity to create a different economy, one built on cooperatives and democratic participation in the economy.

Solidarity to Sellout coverSuch an outcome was widely desired by Poles, and the outlines of such a system emerged in the “Round Table” negotiations held between Poland’s communist authorities and representatives of opposition groups, led by Solidarity, from February to April 1989. Economic democracy was already an established concept, embodied in the “Self-Governing Republic” program of Solidarity, adopted at its first national congress in 1981. In it, Solidarity, which consciously identified itself as a labor union and a broad social movement, declared:

“In the organization of the economy, the basic unit will be a collectively managed social enterprise, represented by a workers’ council and led by a director who shall be appointed with the council’s help and subject to recall by the council. The social enterprise shall … [work] in the interests of society and the enterprise itself.  … The reform must socialize planning so that the central plan reflects the aspirations of society and is freely accepted by it. Public debates are therefore indispensable. It should be possible to bring forward plans of every kind, including those drafted by social or civil organizations. Access to comprehensive economic information is therefore absolutely essential.”

Solidarity’s program forgotten, but the looking glass not on agenda

Although Solidarity’s original program was tossed aside, the Round Table negotiators envisioned significant changes without any “leap” into a capitalist market. The two sides did not have serious disagreements, ultimately agreeing in principal, on the political side, on pluralism, freedom of speech and freely elected local governments. On the economic side, there was agreement on facilitating employee ownership, for employee control of state-owned enterprises and a uniform policy toward enterprises, regardless of ownership form. Summarizing the agreement in Solidarity to Sellout, Professor Kowalik wrote:

“Of primary importance here are the provisions concerning protection of labor and employment, written out in ten settled upon and two contentious points. All these detailed settlements distinctly show that the participants of the agreement had no such thought in mind as a ‘leap’ into a market economy.” [page 60]

Yet a particularly harsh brand of capitalism was instituted; “Thatcherism” or “Reaganism” in the parlance of then and “neoliberalism” in today’s vernacular. Professor Kowalik cites several factors leading to the imposition of shock therapy in contradiction to popular opinion, negotiated agreements and pre-existing platforms:

  • The centralization of Solidarity while underground during the period of martial law during the 1980s converted it into a top-down organization with a severe cut in membership and an isolated leadership that drifted to the Right.
  • The grabbing of state property by the nomenklatura (the bureaucracy managing enterprises and overseeing that management from within the government) for themselves.
  • A blurring of Catholicism with socialism, particularly on the part of Tadeusz Mazowiecki, who would become the first non-communist prime minister, but also by other influential people.
  • The adoption of undiluted neoliberal ideology by the Polish economists who would become the architects of economic policy by becoming ministers and government advisers.

One of the agreements arising out of the Round Table was that one-third of the seats to the Polish parliament (the Sejm) would be contested later that year (1989) in June. Solidarity won all but one of the contested seats — so sweeping was the rout that Solidarity became the effective government even though the communists still held a parliamentary majority. Mr. Mazowiecki became prime minister when the next government was formed three months after the election. Solidarity activists dominated the new government, although communists retained some portfolios, including the Interior and Defense ministries.

Critically, however, the new finance minister/deputy prime minister was Leszek Balcerowicz, a proponent of neoliberalism who was distant from Solidarity’s struggles and whose writings were of an abstract nature; “his interests were limited to pure theory,” according to Professor Kowalik. Prime Minister Mazowiecki’s leading economic adviser was Stanisław Gomułka, who converted to neoliberal ideology while at the London School of Economics. And Western advisers beat a path to Warsaw as they did to other Soviet bloc capitals; Jeffrey Sachs, who oversaw shock therapy in multiple countries, perhaps was the most prominent. The International Monetary Fund was also on the scene.

Abstract theorizing instead of examination of concrete reality

Other economists who had imbibed starry-eyed ideas of how market forces would shortly create paradise played roles as well; but the finance minister’s role was so important that Poland’s shock therapy became known as the “Balcerowicz Plan.” Professor Kowalik wrote of his obfuscating tendencies:

“Balcerowicz made great efforts to compromise — like the term ‘social interest’ — the adjective ‘social.’ … Such a standpoint was bound to lead him to extreme individualism, a negation of the role of the state as a general social institution, with only the interest of the authorities being important. Balcerowicz does not write this outright, but his reasoning resembles a lot the well-known view of Margaret Thatcher, that there is no such thing as society (and thus it does not exist). He rejects the very notion of social justice and often simply avoids this subject. … Balcerowicz’s knowledge, of course, remained theoretical, abstract, and distant from real economic policies.” [pages 112-114]

Such an approach and outlook dovetails with orthodox capitalist economics, as distilled through the wellspring of neoliberalism, Chicago School economics: highly abstract, built on mathematics and based on airy concepts such as “perfect competition” rather than on the real world. Firms and individuals are not seen as part of a social structure; factors such as wealth and property are taken as given. Production is alleged to be independent of all social factors, the employees who do the work of production are in their jobs due to personal choice, and wages are based only on individual achievement independent of race, gender and other differences.

Such is the underlying rationale for neoliberalism, which seeks to make “market forces” — the aggregate interests of the wealthiest industrialists and financiers as expressed through the power of the corporations they control — the sole arbiter of outcomes in all social spheres. Neoliberalism, as Henry Giroux recently put it, “construes profit-making as the essence of democracy, consuming as the only operable form of citizenship, and an irrational belief in the market to solve all problems and serve as a model for structuring all social relations.”

New laws accelerate grabbing of state property already in progress

Privatization, however, was already under way by the time the Round Table negotiators hammered out their agreement. A 1987 law enabled the creation of private businesses with the assets of state enterprises and a January 1989 law stipulated outright that state assets could be transferred to private individuals for conducting economic activity. Such transfers were not necessarily done with full value paid, and private firms were given preferential treatment. Professor Kowalik wrote in Solidarity to Sellout:

“[T]he players of the nomenklatura offshoot of privatization consisted of managers of various rank, government and party functionaries associated with them, along with their families. The process, commonly called ‘enfranchisement of the nomenklatura,’ deserves attention because it was then that the phenomenon of corrupt privatization, or arranged clientelistic privatization, developed. …

“The state sector shortly became a cash machine, which was made easier by the authorities through relevant legal regulations. … These laws sanctioned the plunder of the state sector earlier begun by its own managers. The state sector was highly taxed to maintain the entire state infrastructure and doomed to hopeless competition with the nearly tax-free private firms that were also paying infinitesimal customs duties.” [pages 204-205]

The pace was accelerated when the parliament, in late December 1989, hurriedly passed nearly unanimously a series of bills implementing the Balcerowicz Plan, with the plan going into effect on January 1, 1990. Noting the later contrition of the parliament speaker, who said Finance Minister Balcerowicz and Professor Sachs “plainly tricked us,” Professor Kowalik summed up the vote this way:

“Advantage was simply taken of the immense trust that the people had in the first non-communist government. There could be no serious debate, because without a general document presenting a synthesis of the systemic contents of eleven laws and the simultaneously ratified budget, such a discussion was not possible. The parliamentarians acted under the pressure of a race with time, imposed on them by the executive authorities.” [page 133]

One scheme for privatization was the creation of “National Investment Funds” — state companies disposed in this program were to be 15 percent owned by employees, 25 percent by the state treasury and 60 percent by the funds, with the public allowed to buy shares in the funds. Only a minority of privatized enterprises were disposed of this way (more were simply sold to foreign buyers), but the funds were a failure, Solidarity to Sellout reports, because inflation and a declining stock market caused the shares to steadily lose value; moreover, most of the public shares wound up in foreign hands.

What capital remained in Polish hands also became concentrated as, similar to the pattern in Russia, the nomenklatura-turned-privatizers were soon dwarfed by a new class of oligarchs.

Actual cooperatives faced consistent hostility from the government, which saw coops as a temporary “transition” to what it termed “real” privatization. Pre-existing cooperatives were simply  “administratively eliminated,” new coops had barriers placed in front of them and foreign capital, which soon controlled Polish banking, was also hostile. At the same time, state farms were immediately thrown into competition with subsidized Western European agricultural with all domestic subsidies removed at a stroke, devastating Polish farmers. This was in contrast to the buildup of Western European agriculture after World War II, which was nurtured through protective measures.

Results of shock therapy differ widely from promises

The results of the Balcerowicz Plan were devastating, in contrast to promises of a short-lived downturn followed by rapid growth and transition to Poland becoming a “normal” European country, a concept dangled by Western advisers skillfully playing on Polish antipathy toward Russia:

  • A 50 percent drop in real wages and a 30 percent drop in industrial output in the first month of the Balcerowicz Plan.
  • From 1996 to 2005, the percentage of Poles whose income was so low as to be insufficient for biological survival tripled to 12 percent even though the national income rose by one-third.
  • Wage inequality became the highest in the European Union.
  • The number of Poles living below the official poverty level ballooned to 58 percent by 2003; the statistics bureau then stopped publishing this figure.
  • Before entry into the European Union, the average unemployment rate was 16 percent, topping 20 percent during the early 2000s, more than a decade after the imposition of shock therapy; the rate declined after E.U. ascension due to a stream of emigration.

Having told this story in a somewhat idiosyncratic but nonetheless compelling style, Solidarity to Sellout ends, surprisingly, on an unimaginative note by championing the Scandinavian model of capitalism, seeing Sweden as the model for Poland to emulate. In part, the conclusion follows from Professor Kowalik’s acknowledgment that a lack of organized anger and the sellout by trade unions has allowed the Polish Right to flourish, and a tacit understanding that creating a cooperative economy is drastically more difficult in a privatized economy than it would have been when enterprises were in state hands. He writes:

“[I]t was enough for the trade unions to become involved in support of anti-employee systemic changes and the shock operation. That is why rebuilding he strength of the trade unions in Poland is going to be an extremely difficult task.” [page 298]

Professor Kowalik calls the Scandinavian countries “centers of economic excellence,” contrasting them to Poland’s “role of subcontractor.” The former model by any reasonable measure is superior to neoliberalism, but the professor has perhaps not fully considered that Poland, and the rest of the Soviet bloc, were destined by the dynamics of capitalism to become a source of cheap labor, akin to Latin America’s relationship to the United States. Nor are the more powerful capitalist countries likely to acquiesce to a subcontractor becoming a serious competitor.

Having become completely entangled in the global capitalist system, Poland can only transcend to a better system as part of an international bloc; it can’t be an island unto itself. Given the structural crisis of global capitalism, the aim will have to be higher than simply emulating Sweden, where capitalist pressures are not unknown and the European Union methodically imposes downward pressure.

But regardless of one’s opinion of the conclusion, Solidarity to Sellout provides an outstanding analysis of the capitalist restoration of Poland on neoliberal grounds, as could only be written by an economist with an intimate understanding of Poland, economics, the Solidarity movement and the key individuals in the process. Professor Kowalik’s book is well worth pursing by anybody interested in understanding the post-Soviet path of Central Europe, or, more generally, the dynamics of neoliberalism.

* Tadeusz Kowalik, From Solidarity to Sellout: The Restoration of Capitalism in Poland [Monthly Review Press, New York, 2012]

Dangers from a ‘mixed’ economy that brought down Sandinista Revolution exist for Venezuela

A revolution meant to advance the material conditions of large numbers of previously disenfranchised people is necessarily larger than one individual. That is true even when the individual who embodies the revolution is a charismatic leader such as Hugo Chávez.

There is no denying that the death of President Chávez is a setback for Venezuela’s Bolivarian Revolution. That revolution is a process — it is perhaps more akin to a steady evolution than a revolution — and will go forward if Venezuelans continue to see the process as beneficial to them. That was true throughout the 14-year reign of President Chávez and is true whether or not he occupies the presidential palace.

Ultimately, the survival of the Bolivarian Revolution rests on two factors: Effecting a change in economic relations and becoming a constituent component of a larger bloc that effects a similar change in economic relations. Simply put, the Bolivarian Revolution has taken political power away from Venezuela’s capitalist elite but largely has left economic power in the hands of that elite. As Nicaragua’s Sandinista Revolution of 1979 to 1991 demonstrated, leaving economic power in the hands of a capitalist elite enables that elite to destabilize a revolution.

That represents a larger threat to the future prosperity of Venezuelans than the many-sided struggles going on within the country’s institutions, including disagreements inside unions, government departments and social organizations. The process of the Bolivarian Revolution is hardly straightforward, with some interests, such as union leaderships, that should be behind the socialization of production instead opposed. President Chávez often acted as an arbiter or a court of last resort, able to settle disputes due to his personal authority.

No other person possesses the charisma to arbitrate in such a manner; nonetheless, that personal authority — based on the late president’s popularity and repeated electoral victories — was invoked only in extraordinary circumstances. Such disputes will remain solvable, but may require more negotiation and grassroots struggle. The much larger question of who owns, controls and/or manages production and distribution is what will be decisive, and no one person, no matter how charismatic, can be decisive. This is a social question.

Sandinistas left economic power in hands of capitalists

A generation ago, another Latin American experiment held the world’s attention. The Sandinista Revolution, like the Bolivarian, tended to be seen through ideological prisms. The same hyperventilating language — “dictatorship” “communist” “repressive” — was used to describe Nicaragua during the Sandinista era. It was not a perfect government — is anything of human creation perfect? — but real progress was made despite the many mistakes that are inevitable when people previously blocked from any meaningful participation in their society suddenly find themselves in government.

The Sandinistas never declared that they would implement a socialist economy, and didn’t. For those who cared to pay attention, the Sandinista leadership repeatedly said their goal was a mixed economy. The Nicaraguan economy came to include large enterprises owned by the government; commonly owned collectives; marketing collectives composed of individual privately owned small farms; small-scale private businesses and independent farms; and private big-business manufacturing and agricultural operations left intact from before the revolution.

The property of the Somoza family, which came to personally own large portions of the Nicaraguan economy during its decades-long dictatorship, was confiscated by the Sandinistas following the revolution. Doing so was not necessarily opposed by Nicaragua’s capitalists, who were disgusted with the Somoza dictators because they had forced their way into many business sectors, muscling out capitalists when they saw an opportunity. Because of that, many business leaders came to oppose the dictatorship however much they applauded its ruthless, frequently deadly, suppression of labor.

The last dictator, Anastasio Somoza Debayle, ordered factories owned by capitalists opposed to him bombed, looted the treasury, laid waste to the economy and ultimately killed 50,000 in his bid to retain power. After the Revolution, the remnants of Somoza’s National Guard and the United States government, which had been the Somoza dynasty’s protector, created the terrorist groups known as the “Contras” that inflicted huge damage. The Contras specifically targeted public infrastructure and cooperative enterprises for destruction.

Nicaragua’s capitalists had expected to assume political leadership after the revolution, and when they discovered that the people and organizations that had carried out the revolution and had suffered the most repression would have the majority of political power, they swiftly began to undermine it. Although credit was now available for the first time for small farmers, most loans went to the country’s capitalists, who instead of using the capital for investment, spirited the money to overseas banks and began stripping their factories of assets. A few factories where this took place were nationalized, but the legal process to do so was lengthy and a factory owner determined to de-capitalize an enterprise could do so before the legal system could act.

The contradictions of a mixed economy

Strange as it may appear, the Sandinistas, more than once, imposed austerity on their own country, reducing living standards for working people while continuing to provide subsidies for capitalists. The Sandinistas had sought to raise living standards for working people in the cities and the countryside, provided large subsidies to the capitalists and were forced to fund an expensive military effort to defend the country. These factors were further aggravated by the U.S. embargo, with the resulting shortages fueling inflation. The only way to support all these policies simultaneously was to print more money, which touched off more inflation.

To combat inflation, the government implemented an austerity program in 1985 designed to “rationalize” these competing interests by reducing consumer consumption through reductions in the earning power of wages while increasing subsidies for capitalists and small farmers to induce more production. But since the capitalists controlled a much bigger share of the economy than did small farmers, the result was more subsidies for the already wealthy. Thus, “austerity” meant austerity only for working people — their reduced living standards would pay for the government money that would be channeled into capitalists’ pockets.

Nonetheless, the capitalists continued to refuse to invest, pocketing the money instead. Those local capitalists had strong links with capitalists in the United States and in other advanced capitalist countries, creating a web of interests. Under the impact of the intense military pressure of the Contras and the U.S.-imposed economic blockade, Nicaragua’s mass-participation social groups lost their grassroots characteristics and became more vertical organizations with imposed leaderships; progress on social issues, such as combating discrimination against women, halted because so much effort had to be put into basic defense.

In 1988, the Sandinistas imposed another round of austerity, a program similar to those demanded by the International Monetary Fund, although in this case without the often dubious benefits of the loans nor the debt burden. Speculators and smugglers had taken advantage of price imbalances by buying products cheaply in Nicaragua and selling them for more in foreign markets and, internally, by diverting subsidized food from intended markets and instead selling it at inflated prices, earning themselves windfall profits while increasing costs to consumers.

The country was also hurt by international currency speculators, who drove down the exchange-rate value of its currency, forcing costly devaluations. Wages were reduced in these austerity programs, to the applause of Nicaragua’s capitalists.

A strong contrast to the Sandinistas’ intentions, this was the result of maintaining a “mixed” economy in which economic power was left in the hands of capitalists. Although capitalists did not possess formal political power, political leaders were forced (by the “market”) to implement policies benefiting capitalists and hurting working people in agriculture and industry.

Social successes during the Chávez era

History does not repeat itself neatly, and the Venezuela of the 2010s is a different place than the Nicaragua of the 1980s. With no equivalent of the Contras and a high-priced commodity (oil) that Nicaragua does not have, the Bolivarian Revolution is on firmer ground. Venezuela also has a far larger population, making it is a much less attractive target for armed interventions. Nonetheless, its stated goal of empowering working people on a road to “21st century socialism” is an example that capitalists, and their governments, around the world would like to stamp out.

Venezuela is a country not without problems, although problems such as high crime rates and inflation were part of the Venezuelan fabric well before President Chávez took office. It is legitimate to argue that these problems have not been sufficiently tackled; it is unfair to insinuate that these are new problems caused by the Bolivarian Revolution as the corporate media repeatedly does. There have been many successes, among them these reported by the Center for Economic Policy and Research:

  • Annual economic growth of 3.2 percent during the Chávez administration (4.3 percent since 2004, after the government asserted control over the state oil company, PDVSA) as opposed to 1.4 percent annual growth in the 13 years preceding President Chávez.
  • Inflation, although high, is less than half of what it was in 1996, two years before President Chávez took office.
  • The unemployment rate is now half of what it was during the former PDVSA management’s lockout in 2003 and is far below what it was when President Chávez took office.
  • The rate of poverty has been halved, and the rate of extreme poverty reduced by three-quarters.
  • The number of higher-education graduates has tripled.
  • The number of Venezuelans receiving a pension has quadrupled.

And none other than the International Monetary Fund reports that Venezuela has the lowest level of inequality in the Latin America/Caribbean region, as measured by the Gini coefficient. Venezuela has also made the greatest improvement since 2005 in this widely used metric of any country in its region, at a time when inequality rose in many countries throughout the world.

As I have previously written, although nationalization of the state oil company receives most of the attention, the bedrock of the revolution are the formations of small cooperatives in a variety of industries; the creation of “social production companies” in which existing enterprises were to create co-management structures and create chains of supply with cooperatives; shuttered enterprises that are expropriated by the workers who re-start production; and experiments in “co-management” with workers’ participation conducted in large state-owned resource enterprises.

The transformation of Venezuela’s industry is not only resisted by capitalists, but faces resistance from within government bureaucracies and even inside the Bolivarian movement itself. Resistance from unions, for example, has contributed to setbacks in creating workers’ co-management of the large state-owned resource enterprises.

‘Endogenous development’ in response to sabotage

The Bolivarian process took a step forward in the wake of the PDVSA lockout carried out by the revolution’s opponents, which followed the failure of their 2002 coup against President Chávez. A 2006 Dollars & Sense article written by Betsy Bowman and Bob Stone noted that the need for internal development was a lesson learned from the lockout and coup:

“Cooperatives also advance the Chávez administration’s broader goal of ‘endogenous development.’ Foreign direct investment continues in Venezuela, but the government aims to avoid relying on inflows from abroad, which open a country to capitalism’s usual blackmail. Endogenous development means ‘to be capable of producing the seed that we sow, the food that we eat, the clothes that we wear, the goods and services that we need, breaking the economic, cultural and technological dependence that has halted our development, starting with ourselves.’ To these ends, co-ops are ideal tools. Co-ops anchor development in Venezuela: under the control of local worker-owners, they don’t pose a threat of capital flight as capitalist firms do.

The need for endogenous development came home to Venezuelans during the 2002[-2003 management] oil strike carried out by Chávez’s political opponents. Major distributors of the country’s mostly imported food also supported the strike, halting food deliveries and exposing a gaping vulnerability. In response, the government started its own parallel supermarket chain. In just three years, Mercal had 14,000 points of sale, almost all in poor neighborhoods, selling staples at discounts of 20% to 50%. It is now the nation’s largest supermarket chain and its second largest enterprise overall. The Mercal stores attract shoppers of all political stripes thanks to their low prices and high-quality merchandise. To promote ‘food sovereignty,’ Mercal has increased its proportion of domestic suppliers to over 40%, giving priority to co-ops when possible.”

A new stress on workers’ control of industrial enterprises was one of the responses to the capitalists’ attempts to sabotage the economy during and after the PDVSA lockout, when management halted oil production. Since 2005, enterprises in a range of industries have come under various forms of workers’ control. This has not been a straightforward process. According to analyst Ewan Robertson, who wrote in August 2012:

“The many achievements by workers in taking over and collectively running individual factories, and in driving forward a project of worker control for the state owned heavy industries in [the eastern region of] Guayana, have generated a backlash, not only among the US-backed conservative political opposition, transnational companies and private bosses, but also among a reactionary and bureaucratic faction within the Bolivarian revolution itself.

This is because progress made by workers threatens those who only support Chavez for personal gain and political opportunism, and see their special privileges or vested interests threatened by worker control: there is little need for state managers or union bureaucrats if workers eliminate hierarchies and operate factories themselves in a participatory democratic manner. It also undermines those who hold a more restrictive view of what socialism is and argue that workers are ‘not ready’ to operate factories themselves. Indeed, there are those in the government that hold socialism to be little more than state ownership of industry and central planning from above, with little participation from workers.”

Socialism is the full and free democratic participation of everybody in all spheres of life. In the workplace, that means a concrete and genuine workers’ control whereby all workers have a say in their enterprise’s decision-making, whether the enterprise is fully or partially owned by a government or fully owned by the workers themselves in a cooperative. Understanding the concept of socialism is one part of ongoing Venezuelan struggles. Another part is that about 70 percent of the country’s economy remains in private hands, according to the country’s central bank.

That means that capitalists still have the power to disrupt the economy and undermine the Bolivarian process. Venezuela’s continuing over-dependence on oil exports is another potential source of destabilization. Venezuela remains tied to the logic of capitalism and, no matter how much progress it makes in implementing its “21st century socialism,” it is too small to be a self-contained island of socialism in a vast turbulent sea of capitalism. No country on Earth can be self-sufficient, not even a country with as much exportable mineral wealth as Venezuela.

The Bolivarian Revolution can only advance and stabilize itself as part of a large regional bloc, large enough to withstand the economic, financial, political and military attacks of capitalist powers. But as of today, the furthest description that could be given to the Venezuelan economy is that it is a “mixed” economy. Capitalists hostile to the revolution still retain considerable ability to undermine it. The history of the Sandinista Revolution demonstrates what happens to a mixed economy. History has also demonstrated that an economy held in state hands has its own serious weaknesses.

Venezuela’s stress on workers’ control and cooperative enterprises demonstrates that the latter lesson has been learned; cooperation is at the center of the country’s “21st century socialism.” But there is also the lesson provided by the Sandinistas — that experience, too, should not be forgotten.

Defending Howard Zinn

Howard Zinn’s A People’s History of the United States: 1492-Present has always been a controversial book. We are taught as young students that history is made by monarchs, emperors, presidents, generals and industrialists who created the modern world, the only world that can be. The overwhelming majority of humanity is putty shaped by these great men, and we should all be grateful for what they have bestowed upon us.

Professor Zinn’s work is a direct challenge to such narratives, illuminating the struggles of ordinary people against the dominant classes through long periods of history and the violence that accompanies the creation and maintenance of institutional inequality. The potent challenge that People’s History represents more than 30 years after its first printing is demonstrated by a vitriolic attack on it published in the magazine of the American Federation of Teachers, American Educator.

The article, “Undue Certainty,” was brought to my attention by a dedicated New York City high school teacher who is not confident that the AFT will publish a response. The author of the article, Sam Wineburg, could not long maintain his mask of neutrality despite his attempts to root his challenge in a supposed concern for “balance.” A perusal of Professor Wineburg’s curriculum vitae shows no obvious ideological slant, and I shall not attempt to assign him one. Moreover, he took pains to write from a centrist position. Nonetheless, his false equivalences between Right and Left ultimately ring hollow, and his assertions that he is standing up to the “dominant narrative” of People’s History badly at odds with reality.

After acknowledging that traditional school textbooks “too often” hide the history of ordinary soldiers and everyday people, Professor Wineburg’s first critique is that People’s History “is naked of footnotes,” similar to traditional textbooks. It is true that direct footnotes aren’t used, but People’s History contains 18 pages of references, grouped by chapter, and often provides sources in the text, so it is not difficult to find relevant sources.

Questioning the questioning of World War II

The core of Professor Wineburg’s argument centers on a critique of “A People’s War?,” People’s History’s chapter on World War II and the beginnings of the Cold War. (Professor Wineburg uses the 2003 HarperCollins edition while my copy is the 1995 edition, so the page numbers I will cite will vary a bit from those cited in the American Educator article.) The professor begins his critique of the chapter by pouring cold water on the questions raised by Professor Zinn concerning African-American attitudes toward the war, although he does acknowledge that the Black press wrote about the “Double V” — victory over fascism in Europe and over racism in the United States.

Professor Wineburg asserts that Professor Zinn “hangs his claim on [only] three pieces of evidence” — a quote from a Black journalist, a quote from a student and a poem published in the Black press [page 28]. It is strongly implied that these were lone unrepresentative voices. But Professor Wineburg leaves out that the student quote was was read to a crowd of “several thousand people in the Midwest,” according to People’s History, and was met with loud and sustained applause, to the “surprise and dismay” of the NAACP leader who is directly quoted. [page 410]

Moreover, Professor Zinn immediately follows those examples with these two sentences: “But there was no organized Negro opposition to the war. In fact, there was little organized opposition from any source,” save for a handful of very small socialist, anarchist and pacifist groups [page 411]. A page later, the book states, “Public opinion polls show[ed] large majorities of soldiers favoring the draft for the postwar period.” These passages are hardly consistent with Professor Wineburg’s contention that Professor Zinn one-sidedly declares that the U.S. seethed with hostility toward the war.

Professor Wineburg then complains that the number of conscientious objectors was not only low, but that Black C.O.s were proportionally fewer than White C.O.s. He simply uses the raw numbers in these categories without making any attempt to analyze them, an irony when a primary accusation against People’s History is that it is too simplistic. I am not an expert on World War II and am in no position to issue judgments, but a reasonable analysis would take into account the fact that Blacks consistently faced much harsher punishments than Whites, perhaps dampening the willingness to act on ambivalences toward the war. We might also consider the racism that would have made it more difficult for a Black objector to be granted C.O. status by White decision-makers.

Any analysis would surely have to contend with the fact that, as People’s History does but Professor Wineburg does not, the World War I-era espionage act criminalizing dissent was still on the books and the Smith Act passed in 1940 made criticism of the war effort illegal. These acts, while applied ruthlessly against Left critics of the wars, likely would have come down especially hard on African-Americans who publicly objected and wielded as racist object lessons. Would this not have an effect?

War aims and the decision to drop the atomic bomb

Professor Wineburg continues his critique of the World War II chapter by complaining that Professor Zinn asks “yes-no” and “either-or” questions [pages 29-30]. People’s History does ask big questions, but that is rather the point. The book openly asks if an Allied victory would deliver a blow to imperialism and if U.S. post-war policies would match the country’s stated ideals and values. Considering post-war McCarthyism, continued Jim Crow laws and the forcing of women back into the home, these hardly seem irrelevant questions.

Despite ample evidence of hostility to change by the country’s rulers, it is difficult not to conclude that Professor Wineburg is offended by the mere asking of these questions. People’s History presents a long series of evidence of the true U.S. goals of economic dominance covering five pages, backed by quotations directly from U.S. government archives [pages 401-405]. Some of the documents reveal that officials explicitly told Allied governments they would be allowed to keep their colonies.

The U.S. has a long history of interventions in other countries, often to directly benefit U.S. corporations. The U.S. intervened militarily almost 100 times in Latin America alone before 1970 and has a long history of overthrowing governments not to its liking. Does this history truly have no relevance to an analysis of U.S. war aims in World War II? It should not be controversial that the first world war was fought for imperial gains and colonies, nor that a struggle between the U.S. and Germany to be the successor to Britain’s declining world dominance was a factor in early 20th century foreign affairs. World War II did in fact end with the Allies dividing the world among themselves, nor did the Allies exert themselves to stop the Holocaust.

Professor Wineburg is certainly entitled to draw different conclusions than Professor Zinn, but his accusation that People’s History asks one-sided questions to pre-determined answers itself appears to be pre-determined. Professor Wineburg’s subtle contention that Professor Zinn gives insufficient credit to the Allies’ supposed zeal to defend Jews is complemented with a more direct accusation that People’s History fails to acknowledge the suffering of Poles. As I am Slavic and a Marxist intellectual, I need no lectures on Nazi barbarism; I am painfully aware of what the Nazis did to people like me in the Mauthausen death camp. I doubt Professor Zinn needed such lectures, either. Nonetheless, Professor Wineburg writes:

“Zinn is silent about Poland. Instead, he approvingly cites Simone Weil, the French philosopher and social activist. At a time when the Einsatzgruppen were herding Polish Jews into the forest and mowing them down before open pits, Weil compared the difference between Nazi fascism and the democratic principals of England and the United States to a mask hiding the true character of both. … Zinn adds that the real struggle of World War II was not between nations, but rather that the ‘real war was inside each nation.’ Given his stance, it’s no wonder that Zinn chooses to begin the war not in 1939, but a full year later.” [page 30]

That is a heavy charge. Did Professor Weil really say that? When we examine the relevant passage, we find that what she wrote was rather more subtle; neither she nor Professor Zinn is quoted accurately. Here is the relevant passage in People’s History:

“A few voices continued to insist that the real war was inside each nation: Dwight Macdonald’s wartime magazine Politics presented, in early 1945, an article by the French worker-philosopher Simone Weil: ‘Whether the mask is labelled Fascism, Democracy, or Dictatorship of the Proletariat, our great adversary remains the Apparatus — the bureaucracy, the police, the military. … No matter what the circumstances, the worst betrayal will always be to subordinate ourselves to this Apparatus, and to trample underfoot, in its service, all human values in ourselves and in others.’ ” [page 412]

There are no direct comparisons of countries. Reasonable minds can disagree with Professor Weil’s anti-authoritarian stance or her imagery, but her writing unmistakably is a cri de coeur for democratic values to be honored, an end to oppression everywhere and for people to have control over their lives. That is not unreasonable. Jim Crow and racism was enforced with state-sponsored and -enabled terrorism across the U.S. South, women could hardly be said to have attained equality even if their labor was needed for the war effort and all sorts of national hatreds coursed through the populations of all belligerents.

That the evil of Nazi Germany was a unique menace that had to be eliminated is not an excuse for Allied countries not to take stock of themselves. No Allied country was anywhere near as cruel as the Nazi régime — but is that the bar we wish to set for ourselves?

Finally, Professor Wineburg addresses Professor Zinn’s contention that Japan was seeking to negotiate a surrender in the months before the atomic bombs were dropped on Hiroshima and Nagasaki, and that it was not necessary to drop them as the dominant narrative has consistently maintained. The complaint here is that Professor Zinn relies on “the two defining texts of the revisionist school, Gar Alperovitz’s Atomic Diplomacy (1967) and Martin Sherwin’s A World Destroyed (1975).” But Professor Zinn also quotes from U.S. government documents that are based on interviews with “hundreds” of Japanese civilian and military leaders, and also notes that the U.S. had broken Japanese codes, revealing that Japanese leaders were talking of surrender.

Moreover, Atomic Diplomacy has a “selected bibliography” of 28 pages and A World Destroyed supports itself with more than 100 pages of notes, sources and documents. It is rather difficult to argue that these books are not well sourced. Nonetheless, Professor Wineburg rests his case on his disbelief that the Japanese had any intention to surrender. He writes:

“The Japanese had been courting the still-neutral [in the Pacific theater] Soviets for months, with airy proposals containing scant details about surrender terms. In fact, as late as June 1945, their backs to the wall and all hope seemingly lost, the Japanese were still trying to barter with the Soviets, going so far as to offer Manchuria and southern Karafuto in exchange for the oil needed to stave off an American invasion.” [page 31]

Is it really so remarkable that the Japanese were maneuvering to avoid a surrender they were becoming reconciled to, even if they had only the slimmest of hopes? This passage “proves” that Japan was willing to try anything to avoid a surrender, not that they were definitively determined to fight on no matter what. For a critic so quick to accuse Professor Zinn of “undue certainty” in the support of a preferred narrative, Professor Wineburg appears to be the one rather casual with documentation.

Is it really ‘neutrality’ that is the issue?

Having built up a head of steam, Professor Wineburg perhaps does not realize the extent to which he reveals an agenda, and not merely disapproval of conclusions supposedly too strong. In different passages, he issues these harsh judgments on People’s History:

“It is here that Zinn’s undeniable charisma becomes educationally dangerous, especially when we become attached to his passionate concern for the underdog. … Instead of encouraging us to think, such a history teaches us how to jeer. … A history of unalloyed certainties is dangerous because it invites a slide into intellectual fascism.” [pages 33-34]

Wow! “Intellectual fascism”? What purpose is the use of such invective by someone who has spent pages claiming to be above any partisan scholarship? The purpose is to dismiss out of hand any real critique of the modern capitalist state and its workings. Professor Wineburg’s lines of attack demonstrate that he identifies strongly with these dominant powers. It is not uncommon for a person with such an identification to react with fury when patterns of domination are challenged because such patterns are so deeply woven into the fabric of society. Here is how he dismisses People’s History:

“Zinn remains popular not because he is timely but precisely because he’s not. A People’s History speaks directly to our inner Holden Caulfield. Our heroes are shameless frauds, our parents and teachers conniving liars, our textbooks propagandistic slop. Long before we could Google accounts of a politician’s latest indiscretion, Zinn offered a national ‘gotcha.’ They’re all phonies is a message that never goes out of style.” [page 33]

So there we have it. How dare Howard Zinn question our great country and its great institutions! There is no reason for anyone to complain, so he writes only to indulge a childish desire to poke people in the eye and only the immature could possibly follow him. Sam Wineburg may have convinced himself that he has “exposed” Howard Zinn, but he has exposed only his own desire to guard the honor of the powerful and keep them safe from criticism.

People’s History is an attempt to write people into the history that they lived. Professor Wineburg’s illogical contention that the Right’s efforts to erase people from history — the ideological re-writing of history in school textbooks in Texas and the elimination of Mexican-American studies in Tucson, Arizona, are merely two of the most recent efforts — is equivalent to the pioneering work of Professor Zinn is unworthy of an educator. And far less removed from such ideologically inspired erasures of history than he would like to believe.