As production is moved to ever more distant locales, with ever lower labor and environmental standards, the corporations behind these moves want all barriers to the movement of raw materials and finished products removed. Thus the era of so-called “free trade” agreements. These agreements, which are written to elevate corporations to the level of national governments (and in practice, actually above governments), have become so unpopular thanks to the efforts of grassroots activists to expose them to public scrutiny that governments have become cautious about embracing new ones.
How to get around this impasse? The U.S. government has evidently believed it has found a solution: Claim a “free trade” agreement is not a “free trade” agreement. Not only as an attempt to avoid public scrutiny but to totally bypass Congress.
This latest offensive on behalf of multi-national corporations is the Indo-Pacific Economic Framework. Haven’t heard of it? That’s because the Biden administration, which has cooked up this scheme, would much prefer you didn’t. So far, the 13 other governments that have entered negotiations, including Australia, India, Japan and New Zealand, aren’t eager for their own citizens to know about it, either, and have agreed, whether explicitly or tacitly, to keeping quiet.
The countries negotiating the Indo-Pacific Economic Framework (graphic by JohnEditor132)
Make no mistake, however. The Indo-Pacific Economic Framework (IPEF) is a straightforward initiative to deepen U.S. domination in the Asia-Pacific and Indian Ocean regions. Activists across those regions have taken notice and have already spoken out against the IPEF. Interestingly, some of the governments of those countries, in particular Australia and New Zealand, are quite open in acknowledging the IPEF is a U.S. initiative designed to keep them firmly under the U.S. umbrella and away from China — and are supporting this in their limited public statements. So those social-movement groups sounding alarms are on firm ground, to which we will return below.
So what is this “free trade” deal that is allegedly not a “free trade” deal? A White House “fact sheet” issued by the Biden administration in May 2022, upon the announcement of the IPEF at the Quadrilateral Security Dialogue meeting in Tokyo, declared that the “IPEF will enable the United States and our allies to decide on rules of the road that ensure American workers, small businesses, and ranchers can compete in the Indo-Pacific.” And how might this stated goal be achieved? Negotiations are to focus on “four key pillars to establish high-standard commitments that will deepen our economic engagement in the region.”
Those four pillars announced by the Biden administration are a “connected economy” that will harmonize standards on cross-border data flows and data localization; a “resilient economy” that seeks to “better anticipate and prevent disruptions in supply chains … [and] guard against price spikes that increase costs for American families”; a “clean economy” that “will seek first-of-their-kind commitments on clean energy, decarbonization, and infrastructure that promote good-paying jobs”; and a “fair economy” under which “tax, anti-money laundering, and anti-bribery” standards are used “to promote a fair economy. “
The same lies packaged for new consumption
Does this list sound familiar? Perhaps it does, as these are the sort of goals repeatedly promised in “free trade” agreements of the past, goals that never materialize because the draconian rules designed to unilaterally overturn health, safety, labor and environmental regulations always have words like “must” and “shall” attached to them in trade agreement texts, but any language purporting to safeguard such standards use words like “may” and “can.” And as disputes are settled in secret tribunals in which the lawyers who represent corporations against governments in these tribunals on one day switch hats and sit as judges on another day, the interpretation of what appears to be dry, technical, neutral-sounding language almost invariably is adjudicated in favor of the complaining corporation, without any appeal being possible.
Attempting to sidestep this history, the U.S. government is trying to claim the IPEF is not a trade deal at all, and thus can be approved by the White House unilaterally with no input by Congress. The Biden administration asserts that IPEF talks do not cover tariff liberalization or provisions that would require changes to key U.S. laws that Congress would have to approve and therefore has no intention of submitting the agreement for approval. Senators disagree, with 21 members of the Senate’s Finance Committee, including its Democratic (Ron Wyden of Oregon) and Republican (Mike Crapo of Idaho) leaders, sending the White House a letter telling the administration it must submit IPEF to Congress for approval.
Discussions during Indo-Pacific Economic Framework negotiations (photo via Prime Minister’s Office of Japan)
Washington is far from the only seat of government slapping happy faces on this subterfuge. Let’s start our survey with Australia and New Zealand, where the governments seem quite pleased at this opportunity to be sidekicks to U.S. imperial designs. And perhaps believe a sub-imperialist slice of the action could come their way given there are several developing countries taking part in negotiations. The full list of countries taking part in IPEF talks are Australia, Brunei, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, the United States and Vietnam, although India is taking part in only some of the “pillars.”
The Australia Department of Foreign Affairs and Trade claims that the IPEF “Supports the promotion of clean energy technologies and renewables to help address climate change impacts and the region’s energy transition” and will “accelerate growth in the digital economy, unlock green trade and investment opportunities, and improve labour and environment standards across the region.” The department also said the IPEF “Improves regional trade and investment conditions.” Unfortunately, Canberra does not specify how the IPEF will miraculously bring about those results, and any text circulating or positions taken in negotiations are unknown because the entire process is being kept secret from the public and legislators.
That the IPEF is a back-door attempt to resurrect the Trans-Pacific Partnership was broadly hinted in December 2022, when Foreign Minister Penny Wong “praised Washington’s commitment to Indo-Pacific security but said its departure from a regional trade pact was still being felt and that enhanced U.S. economic engagement with the region should be a priority,” according to a Reuters report.
Corporate interests already lining up in support
A clue to who will benefit comes courtesy of the Australian Strategic Policy Institute, which claims to be an “independent, non-partisan think tank” despite being established by the government, receiving some of its funding from the Australian military and says it reflects the opinions of Australian government officials and industry leaders. A report the Institute published is, like corporate interests in general, favorable toward the proposed pact. “The IPEF is viewed as a potentially innovative way to boost regional investment rather than as a mechanism to strengthen the usual substance of trade agreements, such as market access into the US,” the report said. This corporate vision appears to be to position Australia as a regional assistant to U.S. corporations. The report’s first recommendation: “The US, as the convener of the IPEF, should lean into Australia’s capacity-building expertise in the region” because “Australia has a long history of organising capacity building and training exercises in Southeast Asia and the South Pacific.” In other words, Australia should position itself firmer as a junior imperialist country.
Canberra has been a good pupil, if you want to look at it that way, as symbolized in its decision earlier this year to spend up to $368 billion to buy nuclear submarines from the United States after the U.S. strong-armed the Australian government to cancel a previous cheaper deal to buy conventional submarines from France. The deal also will have U.S. and British submarines stationed on Australia’s Indian Ocean coast.
Much the same comes from Wellington. The New Zealand Foreign Affairs & Trade Ministry has declared, “The Indo-Pacific Economic Framework for Prosperity is an opportunity to strengthen economic cooperation with the United States and across our wider home region. The IPEF will provide an open and inclusive platform for the US to engage more deeply in the economic architecture of the Indo-Pacific, which we think is valuable for both New Zealand and the wider region.” Considering that when the Trans-Pacific Partnership was being negotiated, a key initiative for the United States was to weaken New Zealand’s health care system, it is reasonable to wonder why again negotiating a surrender to U.S. corporate interests would be a good idea.
The architecture of Melbourne (photo by Diliff)
U.S. government negotiators, on behalf of the pharmaceutical industry and its obscene profits, took direct aim at New Zealand’s Pharmaceutical Management Agency program that makes thousands of medicines, medical devices and related products available at subsidized costs in Trans-Pacific talks. The agency’s cutting down the industry’s exorbitant profit-gouging was openly called by the U.S. corporate lobby group Pharmaceutical Research and Manufacturers of America an “egregious example” to be eliminated because of its “focus on driving down costs.” Can New Zealand expect anything better this time?
Other participating governments have issued similar statements, with South Korea Trade Minister Ahn Duk-geun stating that “creating practical outcomes in areas like supply chain and clean energy is imperative.” Malaysian Trade Minister Mohamed Azmin Ali, discussing the supply chain talks, said “Malaysia believes that it is crucial to outline the tangible benefits of this trade and multilateral economic framework.”
With eyes open, grassroots opposition has already begun
Activist groups across the region and around the Pacific Ocean have already begun organizing opposition. This is a drill, after all, that groups organizing in opposition to always one-sided “free trade” agreements have had to repeatedly conduct.
A strong voice of opposition is that of Jane Kelsey, the University of Auckland law professor who long sounded the alarm on the Trans-Pacific Partnership from New Zealand.
Once again taking up the challenge, Professor Kelsey, in a May 2022 article in The Conversation, wrote, “[D]espite the high-profile launch, the IPEF remains an enigma, a high-level idea in search of substance.” She questions why the Australia and New Zealand governments are in these talks at all. “Realistically, the IPEF is a ‘pig in a poke’. Aotearoa New Zealand and Australia need to take a deep breath and realistically assess the opportunities and threats from such an arrangement. … Then they must weigh up the options: stand aside from the negotiations, pursue alternative arrangements, or establish a clear, public negotiating mandate that would truly maximise the nations’ interests for the century ahead.”
That commentary was written at the time of the IPEF’s creation. More recently, in December 2022, Professor Kelsey wrote more forcefully on the imperial nature of this trade deal, intended to reinforce U.S. dominance. Note that, in the U.S. government’s “fact sheet” quoted above that the purpose is to “ensure American workers, small businesses, and ranchers can compete in the Indo-Pacific.” Not even a pretense that working people in the other 13 negotiating countries might benefit. Writing in Bilaterals.org, Professor Kelsey said:
Lupin field, New Zealand (photo by Michael Button)
“It is extraordinary how quickly states across ‘the region’ (whatever we name it) have fallen into line. Old imperial powers have embraced the US’s re-assertion of its regional presence: Australia, with its increasingly strident anti-China stance; Canada, welcoming a new hybridised North-South version of the old Western hegemony; France, wary of its remaining colonies being seduced by China. … Predictably, New Zealand has also fallen into line.”
What we have here is a replay of the Trans-Pacific Partnership, and the TPP agenda of dismantling national protections against the depredations of U.S. multi-national capital. Professor Kelsey wrote:
“Barack Obama famously and unsuccessfully tried to sell the TPPA to the American people, and the US Congress, as the vehicle for America to write the rules and call the shots in the 21st century, not China. Those power politics remain the same. As with the TPPA, the US initiated the negotiation and will set the agenda, dictate the script and approve the outcome, with other states attempting to influence at margins. Even when Trump withdrew the US from the TPPA, many of the US-driven texts were retained by the remaining eleven countries. We also expect parts of the TPPA to form the starting point for US demands. …
‘The prosperity’ promised by IPEF is principally for the US on terms it can manage politically. The Biden administration is determined to bypass the messy problem of securing approval in the Congress. An ‘executive agreement’ that does not contain market access commitments and does not require the US to change any of its laws avoids that problem. So, unlike the TPPA, IPEF will not include negotiations for other parties to access the US market, removing the most obvious means for other countries to point to any commercial gains. The pro-corporate regulatory settings will reflect the status quo in the US. Add to that the penchant for the US to invoke ‘national security’ exceptions to justify breaching its trade obligations, which makes a mockery of an ‘open rules-based system’ and any pretence that IPEF will be a reciprocal exchange of benefits by all the participating countries.”
Opposing a policy of total subservience
Such goals have not gone unnoticed in Australia. Writing in Green Left Weekly, William Briggs noted how fast the new Labor government of Anthony Albanese fell in line. “The first action of a new government is always steeped in symbolism,” he wrote. “The Anthony Albanese Labor government’s reaffirmation of Australia’s unswerving loyalty to the United States at the Quadrilateral Security Dialogue (Quad) meeting was just so. … The new Labor government is facing almost impossible tasks. No capitalist economy can hope to overcome global crises. Any reform, any tinkering at the edges, is to be supported and welcomed, but a policy of total subservience to the interests of the US is hardly the way forward.”
The Indo-Pacific Economic Framework will be detrimental to the developing countries as well. The president of the Malaysian civil society organization Consumers’ Association of Penang, Mohideen Abdul Kader, said:
“US multinational companies are openly pushing for provisions that would prevent the Malaysian government from preferentially purchasing from our local companies. This undermines domestic manufacturing especially in current times. It also adversely affects the need for small and medium sized firms to recover from the effects of Covid-19. The US industry is also demanding stronger intellectual property protection that would, among others, make medicines, textbooks, agricultural and manufacturing inputs and climate change technology more expensive. The digital economy provisions sought by US big tech companies would undermine Malaysia’s privacy, consumer protection, health, environmental, financial, tax and other crucial regulations, while the privately held global food company Cargill wants provisions that allow foreign investors to sue the government in international tribunals.”
Tokyo at night (photo by Basile Morin)
And from the Philippines, Joms Salvador of Gabriela Philippines, in a statement issued through the Asia Pacific Forum on Women, Law and Development, a network of feminist organizations, sees through the attempt to promote the IPEF as benefiting women:
“The IPEF is not, and never will be, just about economic trade, but a link in the chain of US hegemonic dominance in Asia-Pacific, where it has maintained strategic military presence and client relations with its neocolonies in the region, often to the detriment of national sovereignty and the human rights of Asian women and peoples. Women must resist the IPEF and stand our ground in the face of intensifying US-China rivalry and its encroachment on our lives as sovereign peoples.”
Helping women? No, women have seen this movie before
Filipino women are far from alone in rejecting an attempt at whitewashing the corporate-oriented nature of the IPEF. In a statement titled “Statement Rejecting Pinkwashing in the Indo-Pacific Economic Framework,” more than 60 women’s rights organizations, labor unions and civil society organizations firmly rejected an “upskilling” program that is promoted as a way for young women to gain employment in technical fields but it seen as another initiative actually designed to deepen the dominance of U.S.-based Big Tech companies. The coalition of groups, in their statement, said:
“The Upskilling Initiative for Women and Girls promises training by fourteen US Big Tech companies to women in IPEF countries. However, it appears that much of the promise is simply re-packaged training that is already available, and primarily designed as a tool to increase market presence and profits. The initiative is designed to encourage developing countries to agree to ‘high-standard commitments’ on the ‘promotion of cross-border data flows’ which translates to the adoption of rules that have been included in other trade agreements at the behest of Big Tech. Rules that a) restrict governments being able to effectively regulate Big Tech, b) inhibit governments from implementing rights-enhancing data policies for political sovereignty and economic self-determination, c) enable algorithms to be kept secret, d) constrain governments from requiring tech companies to have a local presence, and e) stop governments from pro-actively developing digital industrial policies, including autonomous digital public infrastructure. All of these can be extremely harmful to women’s human rights.
The initiative involves companies that have undermined labour rights, refused to recognise workers as employees, have used tax havens to avoid making tax contributions to public services essential for gender equality. Previous trade agreements have included commitments to gender equality, but those agreements have instead harmed women’s human rights by liberalising services, promoting the privatisation of public services essential in addressing discrimination and exclusion, deregulating the labour market, and promoting a race to the bottom in wages and conditions, and denying governments the policy space required for people to progressively realise their economic rights.”
Opposition also arises in the imperial center
Opposition has begun to be organized across the Pacific, in the United States itself. A letter initiated by Citizens Trade Campaign, a national coalition including unions, community groups and other organizations, released on March 2023 a petition signed by more than 400 labor, environmental, community and religious groups calling for the Biden administration to include strong labor rights based on International Labour Organization standards, binding commitments to combat global warming and digital standards to protect consumer rights and privacy while reining in Big Tech abuses. The letter also asks for transparency during IPEF negotiations: “A more transparent and participatory negotiating process for IPEF would allow for a wider set of interests to provide informed input and ensure equitable treatment of communities which are not part of the official U.S. trade advisor system most representing corporations who now have access to U.S. proposals and other confidential IPEF texts.”
A separate U.S. effort, by a group of consumer advocates, calls on the Biden administration to eliminate IPEF language that they say could undermine efforts to hold Big Tech accountable for their privacy practices. The consumer advocates have not seen any IPEF text because it remains secret from the public, but in their letter they said they “understand from policymakers and others who have reviewed the draft” that its digital trade section could help let U.S. tech companies off the hook when it comes to privacy safeguards, The Washington Post reports. The letter adds that the IPEF contains “problematic terms” giving “Big Tech firms control of our personal data” while limiting other countries from applying regulations.
A third negotiating round is scheduled for May in Singapore. The first round of talks, in Brisbane in December 2022, ended without a status report by participants but reportedly negotiators set aside more challenging issues. The second round, in Bali, Indonesia, ended with a commitment “to an aggressive negotiating schedule throughout 2023,” with nothing of substance revealed.
Activists on both sides of the Pacific had to organize a years-long campaign to defeat the Trans-Pacific Partnership, an effort that can only be said, at best, to be partially successful because most of the countries involved did eventually sign it, albeit with somewhat less draconian rules because the most hard-line government, that of the United States, dropped out due to intense domestic pressure. As with the TPP, and the many other “free trade” agreements that have been implemented, the purported benefits for working people are illusions. Fanaticism and fantasy have long driven government propaganda in promoting these deals. Once the TPP text was released, it could readily be seen why it had been secret throughout the negotiations.
“Free trade” agreements — even when falsely advertised as something else — have very little to do with trade and much to do with imposing corporate wish lists, including sweeping away health, safety, labor and environmental standards that can’t be eliminated through democratic means. As with all “free trade” agreements, the fault lines are along class, not national, interests. Industrialists and financiers around the world understand their class interests and are united to promote their interests. Working people uniting across borders, in a broad movement, is the only path toward reversing corporate agendas that accelerate races to the bottom.
When we conceptualize the power that maintains capitalism, violence and ideology readily come to mind. Despite the vast inequality, grotesque exploitation, contempt for life and the environment, chronic instability and the rebellions that repeatedly arise and sometimes take power, capitalism seems firmer in the saddle than ever, spreading its suffocating tentacles to virtually every place on Earth.
“How is it even possible that a social order so volatile and hostile to life can persist for centuries?” asks Søren Mau in the introduction to his book Mute Compulsion: A Marxist Theory of the Economic Power of Capital. Violence has been with capitalism since its beginning — indeed, capitalism could not have taken root without massive coercion through violence, draconian laws, slavery and colonialism. The ideological constructs that keep so many in thrall become ever more sophisticated, with a vast apparatus of mass media, “think tanks” and other institutions perpetually reinforcing bourgeois mantras, supplemented by schools, militaries, workplaces and other applicators of social conditioning.
Yet violence is not necessarily ever faced by a typical working person in the advanced capitalist countries, the core of the global system. Violence was used copiously in earlier days of capitalism, both to establish its foundation, enable its growth and to put down strikes, but today is generally reserved for those in the Global South. Ideology is ever present, but keeps bumping up against the material realities of life; that the propaganda telling us no other system is possible seems to get ever more frantic is a clue that capitalist ideologists are perhaps less certain of their mantras than they would let on in public.
Saying this is not to suggest that violence and ideology haven’t been, and still aren’t, crucial props for capitalism. Of course they are and will be. But is that all there is? Dr. Mau, a philosopher and researcher based in Copenhagen, argues persuasively there is more. That there is more beyond violence and ideology really isn’t controversial, at least for those willing to open their eyes to the realities of capitalism. But how to conceptualize this? This is the task that Dr. Mau assigned himself, and Mute Compulsion is the result. In a methodically constructed presentation, he details the concept of “mute compulsion,” the impersonal power embedded in capitalist economic processes. Because violence and ideology are not always in operation, something else must keep the system in place — specifically, keeping working people in their deeply subordinate place — and that is the indirect social forces that maintain the system.
The power of capital is “operative even when ideological and coercive domination are absent,” he writes.
The book seeks to build on Karl Marx’s description of how other forms of power take over once violence has done its job. Quoting from Capital Volume 1, Dr. Mau translates from Marx’s German-language original as follows:
“[T]he mute compulsion of economic relations seals the domination of the capitalist over the worker. Extra-economic, immediate violence is still of course used, but only in exceptional cases. In the ordinary run of things, the worker can be left to the ‘natural laws of production,’ i.e., it is possible to rely on his dependence on capital, which springs from the conditions of production themselves, and is guaranteed in perpetuity by them.”
The power to impose will in multiple dimensions
To grasp this concept, the definition of power must be expanded beyond defining it as simply referencing relations among individuals. The concept should be extended to “relations among social actors as well as the emergent properties of those relations,” Dr. Mau writes. “The power of capital can thus be defined as capital’s capacity to impose its logic on social life; a capacity which includes and ultimately relies upon, yet is not reducible to, relations among social actors in a traditional sense, such as the relationship between capitalists and proletarians or the relationship between an employer and an employee.”
Thus, he argues, power is not a simple dyad nor is it something possessed or exercised exclusively by people, groups, classes or subjects. Marx’s first breakthrough, Dr. Mau argues, is a turning from his original critique of bourgeois society based on human nature, permeated by a “Feurerbachian humanism,” following an 1845 break, “an important step forward,” after which Marx no longer criticized capitalism “in the name of the essence of the human being.” Leading thinkers among those following Marx, such as Friedrich Engels, Georgi Plekhanov and Karl Kautsky, tended to base their theories on “productive force determinism” and thus tended to see the state as the “ultimate locus of capitalist power.” Dr. Mau argues that tendency flows from the idea that capitalism had entered a monopoly state, as exemplified by Vladimir Lenin and Rudolf Hilferding, and remained influential deep into the 20th century, as exemplified by Paul Baran and Paul Sweezy.
Forms of domination beyond the violence/ideology couplet slowly were developed late in the 20th century, with Robert Brenner and Ellen Meiksins Wood, frequently cited throughout the book, discussed here. This development is seen as a break with the idea of the economy as a separate sphere. Having completed a discussion of philosophical development, Mute Compulsion then begins building its case. This construction begins with a discussion of tools. Humans use tools not for convenience but because of necessity. Because they are a necessity, tools are an organ, part of the human body, yet separated from it. Human tools are “absolutely crucial for understanding how such a thing as economic power is possible.” At the level of corporeal organization, “human individuals are caught up in a web of social relations mediating access to the conditions of their reproduction.”
The conquest of the Incas (mural by FUEJXJDK)
The corporeal organization of humans “opens up an immense space of possibility” that makes “a succession of modes of production possible.” The author acknowledges the foregoing is not a full anthropology, but rather is intended to create a better understanding of what economic power is. A stress on the relations of production arises because through them people gain access to the necessities that keep them alive. This is not an “economist” view but reflects the necessity to counter the false bourgeois idea that the economy is completely separate from the rest of society.
Whatever the means used to subject workers — violence, ideology, mute compulsion — the production and extraction of surplus value is the object of capitalist production. Without the capacity of humans to produce more than what is necessary for their own survival, class society would be impossible. As Dr. Mau quotes Marx, again from Capital Volume 1:
“If the worker needs to use all of his time to produce the necessary means of subsistence for himself and his family, he has no time left in which to perform unpaid labour for other people. Unless labour has attained a certain level of productivity, the worker will have no such free time at his disposal, and without superfluous time there can be no surplus labour, hence no capitalists as also no slave-owners, no feudal barons, in a word no class of large-scale landed proprietors.”
After violence does its job, less direct means can substitute
The possibility of surplus labor explains the possibility of class domination, but not its actuality. Tools and machines outside the body forces a need to gain access to what are means of survival. That necessity results in a concentration of economic power in the hands of those possessing those means and employing those who don’t have them. Thus the worker must sell their labor power to a capitalist to survive. No violence at all is needed here; the need to survive is sufficient to impose the relationship. But this is not a personal relationship, because nobody is bonded to any single capitalist. Capital induces a “debt relation” that binds workers to “capital as such,” not any specific capitalist. The need of capitalists for a steady supply of labor meant that, in the early period of capitalism, peasants had to be violently forced, including through the use of law, to become wage workers and dispossessed of reproducing themselves outside of the market. Once the social pattern solidifies, less direct means of power can be deployed. Dr. Mau writes:
“In opposition to violence or ideology, the ‘silent, unremitting pressure’ of property relations does not directly address the worker; it rather addresses the material environment of the worker, or, more specifically, the material conditions to reproduction. … The power of capital does not just prevent the worker from following their will (although it often does that); it also facilitates a certain way in which they can actually follow that will. Mute compulsion only works because the worker wants to live. Only because of this can capital succeed in demanding surplus labor in exchange for the means of life.”
The subjugation of everybody — especially workers but also capitalists — to the market, unique to capitalism, is inescapable. Market competition is not only a result and cause of the power of capital, “it is itself one of its mechanisms.” There are vertical market relations, skewed by the unequal power of capitalists and working people, and there is horizontal competition among proletarians and among capitalists. That production is for the sale of products in the form of commodities for exchange value in markets adds to the dependence on markets. Competition confronts workers and employers — for workers, it is an alienating form because they are “confronted with the essence of capital,” and for capitalists, it is an inescapable force that requires them to cut costs, drive their workforce to work at a pace maximizing profit and incorporate ever larger portions of social life.
Statue of Alice Nutter, English woman accused of witchcraft. (Photo by Graham Demaline.)
Competition strengthens class power because, although capitalists compete with one another, it also unites them as “hostile brothers” dividing “the loot of other people’s labor.” (A phenomenon that demonstrates this clearly is the stream of lawsuits in which industrialists and financiers fight over which gets the bigger share of the pie; the two representatives of capital are in full agreement that the workers, whose work created the profits they fight over, don’t deserve any of it.) Class domination is necessary “to secure workers’ appearance on the market as sellers of labour power in the first place.” Violence is no longer necessary to secure the supply of workers, Dr. Mau writes:
“Marx points out that ‘state coercion’ was necessary in the early days of capitalism in order to ‘transform the propertyless into workers at conditions advantageous for capital,’ since at this early stage of capitalist development, those conditions ‘are not yet forced upon the workers by competition among one another.’ In other words, competition has the same function as violence had in the original creation of capitalism, and competition is an absolutely crucial part of the mute compulsion of economic relations.”
The continuation of capitalism relies on impersonal domination as well as personal relationships of domination. The authority of the capitalist within the workplace is merely the form of appearance of the impersonal power of capital, Dr. Mau argues, adding that this realization enabled Marx to move beyond his early moral critiques of capitalism. Thus it is not personal lack of morality that compels a capitalist to introduce new technologies and surveillance techniques, or to “deskill” the workforce. Rather, relentless competition forces capitalists “to live up to standards in order to stay in business.”
As it grows, it can take over more aspects of life
As capitalism gains in power, it is able to subsume more and more of life and geography. Agriculture is now dominated by multi-national corporations, rendering most farmers subcontractors with little decision-making ability; the containerization of shipping has overhauled logistics and taken power from dock workers at a crucial choke point of distribution; and the ability of commodities to move freely while labor is constrained is detrimental to employees. Spatial expansion means increased competition, intensifying the power of capital over everything. Even the very instability of capitalism can rebound to the benefit of capitalists, as economic downturns increase unemployment and thus further disciplines workers. “The forces of capital know very well that a crisis is a splendid opportunity to strengthen capital’s grip on social life,” Dr. Mau writes. Capitalism is indeed “tremendously tenacious.”
Mute Compulsion is not easy reading but it is important reading, providing a welcome assistance toward understanding the ongoing power of capital and longevity of capitalism in all its dimensions. No book is perfect, and so it is proper to note a couple of weak points. One is that the author’s attempt to integrate racial and sex discrimination into his theory fell short, most notable in the muddled discussion of sex relations. The book gropes toward a declaration that the “hierarchical system of gender” precedes capitalism “yet nevertheless reproduces and is reproduced by it,” a certainly reasonable conclusion but one in which the preceding discussion does not lead. It is also jarring for the flippant and unwarranted one-line dismissal of “the radical feminist concept of patriarchy” (is the concept of structural male oppression of women really controversial?) and that the author believes himself to be a far better authority than feminists like Silvia Federici and Maria Mies who have written foundational books that have shaped the field. Sometimes we need to remind ourselves we are not experts on all topics. Hostility to feminism has sadly become fashionable on the Left, and it is difficult not to speculate if this phenomenon, conscious or not, has influenced this refusal to engage, uncharacteristic from the rest of the book.
The other weakness is in the brief discussion of deskilling, which is not understood in the phenomenon’s full dimension. Minimizing the tendency of deskilling, Dr. Mau writes that “capital is not interested in deskilling as such, but only in deskilling as a tool of domination.” That is true to a degree but is not quite right. Deskilling can mean changing work conditions such that skills are made irrelevant; a de facto taking away of a skill.
As I have decades of experience in the workplace, I have experienced this first hand. I once worked as an editor for a large publishing company that owned dozens of newspapers and magazines covering the legal industry. A new management decided to dismantle the staff of each publication, which were specialized in various subjects or geographical areas, and throw everybody together as one giant staff, with editors and reporters assigned to a general pool assigned to no particular publication. Thus our specialized knowledge was rendered useless by making everybody interchangeable. Unfortunately my attempts to raise this issue with my co-workers was met by blank stares and in less than a year mass layoffs began. That’s deskilling, at least in a white-collar environment.
The preceding critiques are not fatal flaws. It would be pointless to judge a book by whether we agreed with the entirety of the contents. What matters is the overall argument, content and presentation. Mute Compulsion succeeds marvelously at constructing a picture of the impersonal aspects of capitalist domination, a crucial aspect that requires full comprehension if we are to grasp the totalizing nature of capitalism. And without a full comprehension, how are we to rid ourselves of it? If you want to understand the workings of capitalism, you’ll want to read this book.
Every so often, the World Bank puts out a paper that calls for better social protection or at least a somewhat better deal for working people. The public relations people there evidently believe we have very short memories.
No, dear reader, the World Bank has not changed its function, nor have elephants begun to fly. Without any hint of irony, the World Bank’s latest attempt at selective amnesia is what it calls its “Social Protection and Jobs” strategy, in which it purports to advocate that the world’s national governments “greatly expand effective coverage of social protection programs” and “significantly increase the scale and quality of economic inclusion and labor market programs.” Hilariously, the World Bank titles its 136-page report fleshing out this strategy “Charting a Course Towards Universal Social Protection: Resilience, Equity, and Opportunity for All.”
In that report, the World Bank, with a straight face, writes that it “recognizes that the progressive realization of universal social protection (USP), which ensures access to social protection for all whenever and however they need it, is critical for effectively reducing poverty and boosting shared prosperity.” Furthermore, the report builds on a previous document that allegedly offers “an overarching framework for understanding the value of investing in social protection programs and outlined how the World Bank would work with client countries to further develop their social protection programs and systems.” The report asserts goals of achieving equity, resilience and opportunity for all people, especially the developing world’s most vulnerable, and “to create opportunity by building human capital and helping men and women to access productive income-earning opportunities.”
A demonstration in Oslo during the World Bank conference in June 2002 (photo by Vindheim)
We arrive at that favorite set of code words, “human capital.” We’ll return to that shortly. But before we highlight the actual record of the World Bank and its role in imposing devastating austerity on countries around the world, at enormous human cost, let’s take a brief look at the International Trade Union Confederation response. The ITUC, which represents 200 million workers in 163 countries and has 338 national affiliates, says its “primary mission is the promotion and defence of workers’ rights and interests.” Readers may recall that the ITUC issues a yearly report on the state of labor, consistently finding that not a single country fully upholds workers’ rights.
In its four-page summary of the World Bank declaration, the ITUC said it agrees with the World Bank’s stated goals, and “agrees with the Bank that the lack of social protection for the majority of the world’s workers in the informal economy is a challenge that needs to be urgently addressed.” Nonetheless, the ITUC “has a number of considerable reservations to some of the policy messages” and disputes “the rigor of the analysis underpinning some of the policies proposed.”
The ITUC writes: “The Bank’s vision of universal social protection appears to prioritise the extension of targeted non-contributory social assistance at the expense of social security, when both forms of support serve distinct and complementary functions.” Further, it “disagrees with the Bank’s critique of social security schemes, especially pensions, as an undue burden on public finances and ‘regressive’ in nature.” The World Bank’s “solution” to make pension and social security systems sustainable “mainly involve reducing public subsidies to social security, strengthening the link from contributions to entitlements through defined-contribution schemes [retirement plans in which you pay into but have no guarantees as to payout], as well as strengthening the role of voluntary and private pensions.”
In other words, it’s work until you drop! That is already a long-term goal of right-wing ideologues and corporate interests not only in the United States but around the world.
Underneath the rhetoric, the usual right-wing prescriptions
And, true to right-wing form, the World Bank places the onus for unemployment squarely on individuals. The ITUC critique says: “the onus of addressing unemployment appears to focus on the individual, rather than on the broader structural forces at play. The [bank report] disregards in particular the measures that governments can take to create new, quality jobs, such as proactive industry planning, public sector job creation, and public investment – including in labour intensive sectors with strong social and environmental dividends, such as infrastructure, care and the green economy.” Finally, the World Bank claims that labor regulations are “excessive” and threaten employment, and advocates lowering already meager worker protections.
Once again, the World Bank has not forgotten its raison d’être; it has not suddenly changed its stripes. Elephants will continue to not fly.
Did we really expect otherwise? A look at the World Bank’s record provides all the evidence anyone could want of it being one of the world’s most destructive agencies, an organization dedicated to enhancing corporate plunder and imposing punishing austerity. A one-two punch with the International Monetary Fund. Both organizations do the bidding of the Global North’s multi-national corporations through playing complementary roles.
Three Gorges Dam, a project funded by the World Bank that displaced 1.3 million people (photo by Christoph Filnkössl)
When I last checked in at the World Bank, in 2018, the bank was in the process of completing its “World Development Report 2019: The Changing Nature of Work,” which opened with quotes from Karl Marx and John Maynard Keynes. That was merely a feint. What we soon read in examining the report is that the problem is “domestic bias towards state-owned or politically connected firms, the slow pace of technology adoption, or stifling regulation.” Sure, jobs are disappearing, but that’s no problem because “the rise in the manufacturing sector in China has more than compensated for this loss.” Essentially, the World Bank was advocating that we become sweatshop workers in China. What else to do? “Early investment in human capital” — in other words, pay lots of money for advanced degrees you won’t be able to use — and “more dynamic labor markets,” which is code for gutting labor protections and making it easier to fire workers.
Elephants didn’t, after all, fly five years ago, either.
The World Bank has even declared itself above the law. Unfortunately, at least one U.S. court agrees. A lawsuit filed in federal court in Washington on behalf of Indian farmers and fisherpeople ended with a ruling that the World Bank is immune from legal challenge. The bank provided $450 million for a power plant that the plaintiffs said degraded the environment and destroyed livelihoods. The court agreed with the World Bank’s contention that it has immunity under the International Organizations Immunities Act. The World Bank thus was declared the equivalent of a sovereign state, and in this context is placed above any law as if it possesses diplomatic immunity. Another suit, however, also filed by EarthRights International against the World Bank for its role in turning a blind eye to alleged systematic human rights violations by a palm oil company in Honduras for a project it financed, was allowed to proceed by the U.S. Supreme Court in 2019. That case, however, appears to yet be decided by the trial court. So the World Bank can sometimes be sued in the United States legal system but it remains to be seen if it will have to shoulder any responsibility.
The World Bank has a long history of ignoring the human cost of the projects it funds. The World Development Movement, a coalition of local campaign groups in Britain, reports that the World Bank has provided more than US$6.7 billion in grants to projects that are destructive to the environment and undermine human rights, a total likely conservative. To cite merely three of the many examples, the World Bank:
Loaned an energy company in India more than $550 million to finance the construction of two coal-fired power plants. Local people, excluded from discussions, were beaten, their homes bulldozed and reported reduced food security and deteriorating health as a result of the power stations.
An Indonesian dam, made possible by the World Bank’s $156 million loan, resulted in the forcible evictions of some 24,000 villagers, who were subject to a campaign of violence and intimidation.
In Laos, a hydropower project made possible by World Bank guarantees displaced at least 6,000 Indigenous people and disrupted the livelihoods of around 120,000 people living downstream of the dam who can no longer depend on the rivers for fish, drinking water and agriculture.
“Drawing on Bank studies, project evaluations and sectoral reviews, it is shown that the World Bank still suffers from a pervasive ‘loan approval culture’ driven by a perverse incentive system that pressures staff and managers to make large loans to governments and corporations without adequate attention to environmental, governance and social issues. In 2013, Bank Staff who highlight social risks and seek to slow down project processing still risk ‘career suicide.’ … [The bank] has continued to binge on enormous loans to oil and gas extraction, coal-fired power stations and large-scale mining generating environmental damage, forest loss and massive carbon emissions.”
Destroying the environment in the service of short-term profits
Want more? The World Bank has provided nearly $15 billion in financing for fossil fuel projects since the 2015 signing of the Paris Climate Accords. An October 2022 report by Big Shift Global, a coalition of 50 environmental organizations across the Global North and South, notes that despite World Bank claims that it would end financing for upstream oil and gas production, it has other avenues to promote fossil fuels. One of these methods is to send funds to a financial institution, which in turns sends the money to the fossil fuel project. Another is to provide non-earmarked funds but make the money conditional on instituting reforms encouraging fossil fuels.
The biggest fossil fuel funding, according to the Big Shift Global report, is $1.1 billion for the Trans-Anatolian Pipeline, a gas distribution project in Azerbaijan. Another $600 million went toward a gas storage project in Turkey and another eight projects were given at least $100 million by the World Bank. Projects that the World Bank has financed include expansion of coal. Other work by the World Bank includes $2.8 billion so that Ghana could move its energy mix from mostly hydropower to majority fossil fuels, and pressured Ghana to enter into gas contracts that causes it to pay $1.2 billion annually for gas it doesn’t use, which also has put a greater debt burden on the country.
The World Bank also encouraged Guyana to use a Texas law firm that has Exxon as a major client to rewrite its petroleum laws, while providing money for oil and gas development in Guyana. That development will benefit Exxon as the fossil fuel multinational snagged a contract under which Guyana doesn’t receive any of the profits until the costs of the field are paid off. In other words, the Big Shift Global report says, “Exxon can continue to charge Guyana for every newly developed oil field. It could take decades before the money trickles down to the people.”
Protest at the World Bank (photo by “Jenene from Chinatown,” New York City)
The World Bank attempted the same whitewashing stunt with its fossil fuel funding, once issuing a report lamenting global warming while completely ignoring its role in worsening global warming. At the time of that whitewashing report, the bank was providing billions of dollars to finance new coal plants around the world. By any reasonable standard, the World Bank is a key organization in the concatenation of processes that has brought the world to the brink of catastrophic climate change. The policies of the World Bank and its sibling, the International Monetary Fund, have constituted non-stop efforts to impose multi-national corporate control, dismantle local democratic institutions and place decision-making power into the hands of corporate executives and financiers, the very people and institutions that profit from the destruction of the environment.
A trail of evictions, displacements, gross human rights violations (including rape, murder and torture), widespread destruction of forests, financing of greenhouse-gas-belching fossil-fuel projects, and destruction of water and food sources has followed the World Bank. It works in conjunction with the International Monetary Fund, whose loans, earmarked for loans to governments to pay debts or stabilize currencies, always come with the same requirements to privatize public assets (which can be sold far below market value to multi-national corporations waiting to pounce); cut social safety nets; drastically reduce the scope of government services; eliminate regulations; and open economies wide to multi-national capital, even if that means the destruction of local industry and agriculture. This results in more debt, which then gives multi-national corporations and the IMF, which enforces those corporate interests, still more leverage to impose more control, including heightened ability to weaken environmental and labor laws.
The World Bank compliments this by funding massive infrastructure projects that tend to enormously profit deep-pocketed international investors but ignore the effects on local people and the environment. The two institutions are working as intended, to facilitate the upward distribution of wealth, regardless of human and environmental cost.
Wishing for central banks to act in the interest of working people rather than the financial industry is about as fruitful as hoping a starving wolf won’t eat the chicken that was just placed next to it. Pigs will fly, the Amazon will freeze over and Wall Street will give all its money away before a central bank in the capitalist core goes against its raison d’être.
We need no fresh reminders of central bank behavior. Consider that just five central banks — the U.S. Federal Reserve, the European Central Bank, Bank of Japan, Bank of England and Bank of Canada — handed out about US$10 trillion (€8.8 trillion) to artificially prop up financial markets in the first two years of the Covid-19 pandemic on top of the US$9.36 trillion (or €8.3 trillion at the early 2020 exchange rate) that was spent on propping up financial markets in the years following the 2008 global economic collapse.
So about $20 trillion — that’s the equivalent of a year’s gross domestic product of Japan, Germany, India, the United Kingdom, France and Italy combined — to reward the most parasitic portion of the economy, an industry that confiscates money not only from all of you who work for a living but from industrial capital as well. What did you get? Little or, more likely, nothing. Actually, what you have been getting for the past year is worse than nothing. And that brings us to the topic of interest rates. Although we ordinary mortals are not supposed to comprehend the mystical alchemy of the practitioners of high finance as they conjure the forces of capitalism to magically guide the economy to a steady course, in reality there is no mystery.
Given a choice among the Federal Reserve’s three congressionally mandated goals — maximum employment, stable prices, and moderate long-term interest rates — employment is what is jettisoned every time. The European Central Bank is a little more honest by listing its single goal to be to “maintain price stability.” The Bank of Canada is somewhere between those two by stating that its mandate is “to promote the economic and financial welfare of Canada.”
Bank of Canada facade
Of course, with bankers defining “welfare of Canada,” we need not hold our breath in anticipation of how that “welfare” will be determined. Although there are reasons for the sudden appearance of price inflation from early 2022, this really isn’t a mystery, either. Ongoing supply-chain disruptions due to the Covid-19 pandemic, drastic rises in fuel prices due to Russia’s invasion of Ukraine and Western cutoff of Russian energy in response, and good old fashioned corporate greed account for the past year’s inflation, not wage increases. How to respond? The world’s central banks responded in unison — throw people out of work to dampen the economy.
Indeed, when the only tool you have is a hammer, every problem is a nail to be hit hard. Perhaps central bank officials do have other tools, but can’t seem to find anything other than the hammer. The hammer here is interest rates, and they have been using their one and only inflation-fighting tactic of rapidly raising interest rates to slow down the economy. By making it more expensive to borrow money, business and consumer spending will slacken and when that happens, layoffs follow.
When the hammer is the only tool and it is used on you
Inflation is not good, but central bank officials are not using their hammer because they are upset that you are paying more for groceries but rather because inflation reduces the value of speculators’ financial assets. Just as the then chair of the Federal Reserve, Paul Volcker, plunged the United States into what was then the steepest recession since the Great Depression by raising interest rates to unprecedented highs, and thereby causing unemployment to skyrocket to 10.8% — with the enthusiastic support of the Reagan administration even though Volcker was an appointee of Jimmy Carter — interest rates have risen sharply this year. Nowhere near to the extent of the early 1980s, yet, but enough to make a recession a real possibility in 2023.
Here are a few numbers to illustrate this:
The Federal Reserve raised its benchmark interest rate to 4.375% in December 2022, up from 0.125% at the start of 2022, with more to come.
The European Central Bank has raised its benchmark rate for lending to banks to 2.5%, up from years of 0%, with more raises expected.
The Bank of Canada raised its policy interest rate seven times in 2022, to 4.25% from 0.25% in March.
The Bank of England raised its interest rate eight times in 2022, reaching 3.5% in December 2022, with further raises expected.
The bottom line is that you’ll pay more to use your credit card and the price of mortgages (and rents) will rise even higher; housing costs are already obscenely high because housing is a commodity. Bank profits, however, will go up — and there is nothing more important than that for bankers, in or out of central bank offices.
The European Central Bank in Frankfurt (photo by DXR)
So although there are always a few spare trillions dollars or euros or pounds or yen lying around to shovel into the bottomless pockets of financiers, it’s crumbs for you if you are lucky. Thus central banks are acting in the interest of speculators with these rapid-fire interest rate increases just as they did for years following the 2008 economic crash that financiers caused and then again in the wake of the sudden 2020 downturn triggered by the pandemic. Their standard solution to recessions is to throw more money at banks and inflate another stock-market bubble. Now that wages have temporarily ceased falling (and even slightly nudged upward) and unemployment has fallen sharply, it’s time to apply a different medicine, one that, in a remarkable coincidence, also punishes working people and rewards speculators.
So, are central banks simply evil people? Is it time to “end the Fed” as Federal Reserve critics frequently call for in the United States? Or to put an end to other central banks?
Ironically, the answer is no.
That answer certainly is counter-intuitive. Why shouldn’t we be rid of institutions that do so much to perpetuate, and widen, inequality, and which are run by bankers for the benefit of bankers despite being formally government institutions? Simply put, if you don’t like what the Federal Reserve, or the European Central Bank, or any other central bank does, what you actually don’t like is the capitalist system. The Federal Reserve, for example, is surely (as its critics accurately charge) a far too secretive, unaccountable branch of government that protects the interests of financiers at the expense of everybody else. Nothing unique there. The European Central Bank is perhaps the world’s most undemocratic central bank — it is the most powerful entity in the European Union and is completely unaccountable to anyone, openly operating on behalf of European finance capital.
Recall how Greece was treated by the European Central Bank during the country’s financial crisis of the mid-2010s. The ECB issued a series of diktats that cut off all funding for the Greek government, including from Greek banks, in order to bring the new Syriza government to its knees and force a full surrender to punishing austerity imposed by it, the European Union and International Monetary Fund. So harsh were these measures that the IMF reportedly said the ECB was too extreme in its austerity measures! The Greek economy was crushed to ensure banks that lent to Athens, in particular French and German banks, would be repaid in full no matter the cost to Greeks.
No sense reforming what can’t be reformed
Democratically accountable central banks that promulgated policies to increase employment and toward a socially responsible financial system would be welcome reforms. But such a reform is an impossibility, and not simply because central banks are outside any democratic accountability under the official rationale of lessening “political interference” in economic decision-making but in reality because finance capital is so powerful that it can demand, and has received, the right to act without constraints in its own interests. As much as powerful capitalists possess the ability to bend government politics toward their preferred outcomes, finance is the only industry that has government departments dedicated to it, that its executives manage independently of any other government entity.
If it can’t be reformed, why not get rid of it? Eliminating central banks while keeping the rest of capitalism in place is a pointless idea because they are a necessity in advanced capitalist countries, which is why each has one. And, perversely, eliminating the central bank would actually increase the dominance of financiers and would make the booms and busts of the capitalist business cycle sharper than they already are.
Strange as it seems today, there was a populist component to the creation of the Federal Reserve. Populists of the late 19th century wanted a more elastic currency so that the government could extend emergency credit when the economy collapsed (as it then frequently did) rather than be handcuffed by the gold standard. In those days, when a crash happened, the U.S. government had to turn to the biggest robber barons of the day, such as J.P. Morgan, and ask them directly for a bailout.
Banks hoarded their reserves during crashes, making the downturns worse, and could issue their own banknotes, helping to fuel bubbles. But, since we are talking about the United States, it took a consensus on Wall Street and not popular demand for a central bank to be created in 1913. Financiers had come to believe that a central bank would temper the extremes of booms and busts, thereby stabilizing the economy. Industrialists joined financiers in that consensus.
The Federal Reserve Annex in Washington (photo by AgnosticPreachersKid)
Needless to say, the capitalists and not the populists were the drivers of Fed policy from the beginning. But a central bank does, albeit in a highly inegalitarian manner, stabilize a national economy through regulating credit and alternately tightening and loosening monetary policy. Central banks in all advanced capitalist countries manage domestic money supplies and currencies, a crucial task in today’s world in which markets subject to wild swings set prices for everything.
Somewhat similarly, the Bank of England, created in 1694 by royal charter, “was founded to ‘promote the public Good and Benefit of our People,’ ” according to its website. Despite that lofty sentiment, the bank admits it was created primarily to fund a war against France. The Bank of England was nationalized in 1946 and although it remains wholly owned by the British government, it, like central banks generally, is “independent” — in other words, completely free of democratic accountability. That independence” was granted by Prime Minister Tony Blair in 1997. Not for nothing did Margaret Thatcher say her greatest accomplishment was “Tony Blair and New Labour.”
It won’t come as a surprise that financial institutions are skilled at finding ways around central bank policies. Not that central banks don’t act in those interests — the Fed under Alan Greenspan encouraged the 1990s stock market bubble and the real estate bubble of the 2000s, and following the 2008 crash, Ben Bernanke was focused on the then long non-existent phantom of inflation while ignoring the all too real problem of high unemployment. The European Central Bank is, if anything, even more guilty of that than the Federal Reserve.
If central banks went away, financiers wouldn’t
The entire capitalist system acts to benefit capitalists (industrialists and financiers) to the detriment of working people. Why should we expect an arm of a capitalist government to act any different? If central banks were eliminated, the exact same powerful capitalist interests would continue to bend government policy to their preferred outcome and would continue to exercise the same dominance over government, social institutions and the mass media. The only difference would be that the economy would become more unstable than it already is because there would be less ability on the part of governments to dampen excesses. Why would that be good?
Capitalism is an unstable system that will always have booms and busts, and as time goes on the busts tend to worsen. (That tendency was temporarily kept at bay after the Great Depression by significant reforms, but those reforms have been undone and the tendency has reasserted itself.) Capitalism is a system in which those who amass the capital thereby amass power, and power translates into the ability to bend the rules to preferred outcomes or to bypass the rules. Money concentrates into fewer hands and wages are squeezed to facilitate the upward flow of money. Those who succeed are the people endowed with outsized desires to acquire and the personality traits that enable those desires to be met.
Yes, those people so endowed can and do create policy for central banks. Eliminating those banks wouldn’t touch the ability of people so endowed to suffuse their viewpoints and favored policy outcomes throughout a capitalist society, nor would it touch their ability to leverage their outsized wealth and the power their wealth gives them to shape government policy and public opinion making to benefit themselves. Getting rid of government would actually intensify the dominance of industrialists and financiers in all spheres of life. The dominance of a globalized class that maintains power through a web of institutions and scrambles to manage ceaseless instability — not a small cabal of bankers who somehow control everything, an idea rooted in Right-wing conspiracy theories that easily shade off into anti-Semitism.
None of the foregoing is to suggest that we should simply accept the brutal, dehumanizing capitalist system. But rather than hankering for reforms that might actually make it worse, a better world with an economy designed for human needs is what we should be after. If we blame central banks instead of the system that it is a component of, then we are doing nothing more than blaming the messenger. Capitalist markets are nothing more than the composite expression of the interests of the largest industrialists and financiers, and allowing those markets even greater freedom is what we should be fighting, not tacitly helping.
Donald Trump’s recent rant that the U.S. Constitution should be “terminated” so that he can be installed as president for life merits no response, given the Orange one-man crime wave’s tenuous connection to reality. Laughter is the appropriate riposte as Trump’s futile attempts at becoming the fascist dictator he clearly aspires to be become ever more futile.
But is his latest childish tantrum really something to be laughed off? Having skipped the “tragedy” phase and gone straight to “farce,” Trump is facing what is likely to become a politically terminal case of irrelevancy as new contenders for Mussolini’s crown, most notably but not only Ron DeSantis, emerge. The nascent fascist movement that has coalesced around Trump, and the varieties of extreme right menace that shade into it that are now expressed through the Republican Party, are no laughing matter. And while embarrassed silence or a quick change of subject might be Republicans’ default position when asked to comment on Trump’s increasing irrationality due to their fear of the Frankenstein monster they have let loose, eviscerating the Constitution is actually on their agenda.
Let us have no illusions about the U.S. Constitution, the world’s oldest. Hopelessly archaic and undemocratic, it is a document that was designed to keep the country’s slave owners and commercial bourgeoisie firmly in power — going so far as to enshrine slavery in its text — through setting up institutions like the Electoral College and the Senate (the world’s most undemocratic legislative body) to ensure that power could never be extracted from the hands of the commercial and plantation elite. Ambiguously written to exclude women, Blacks, Indigenous peoples and the poor, its stilted language is open to interpretation by judges who see protection of the most powerful and wealthy capitalists, and the maintenance of inequality, as their holy mission.
Cartoon by Polyp.
This mission has reached such proportions that the absurd doctrine of “originalism” is not only proclaimed with straight faces, but judges on courts up to the Supreme Court rely on it to impose their hard right political agendas. “Originalism” is the farce of an idea that asserts only those rights explicitly mentioned in the Constitution exist, and that any interpretation of its text has to be based on what the writers of the Constitution — the “Framers” as they are usually called in legal circles — intended. In other words, judges must read the minds of people dead for more than 200 years to decide cases. By a remarkable coincidence, those long-dead minds are opposed to all social progress.
It must be difficult for the rest of the world to imagine such laughably transparent silliness being offered as legitimate legal theory, but such is the state of politics in the global hegemon. We might go so far as to suggest U.S. politicians will do anything for a laugh, but as the Supreme Court erases one right after another, there is nothing funny going on here.
What is certainly not funny is the quite serious, albeit quiet, movement by the hard right to put an end to constitutional rights through wholesale changes to the Constitution. Their chosen route to do this is the convening of a constitutional convention, and this movement has moved forward by a frightening amount.
Among the leading voices for a new constitutional convention — one that would have few if any limitations on its power — is none other than the American Legislative Exchange Council (ALEC). Lavishly funded with undocumented millions of dollars, ALEC is a secretive group that writes “model legislation” for state legislatures across the United States that benefits corporate interests. The watchdog group Center for Media and Democracy’s ALEC Exposed website calls ALEC “much more powerful” than a typical lobbyist or front group. “ALEC is a pay-to-play operation where corporations buy a seat and a vote on ‘task forces’ to advance their legislative wish lists and can get a tax break for donations, effectively passing these lobbying costs on to taxpayers,” ALEC Exposed reports.
What do legislators who work with, or are members of, ALEC do with the organization’s “model” bills? According to ALEC Exposed:
“Participating legislators, overwhelmingly conservative Republicans, then bring those proposals home and introduce them in statehouses across the land as their own brilliant ideas and important public policy innovations—without disclosing that corporations crafted and voted on the bills. ALEC boasts that it has over 1,000 of these bills introduced by legislative members every year, with one in every five of them enacted into law. ALEC describes itself as a ‘unique,’ ‘unparalleled’ and ‘unmatched’ organization. We agree. It is as if a state legislature had been reconstituted, yet corporations had pushed the people out the door.”
Extreme-right state legislators met at an ALEC conference in late 2021, vowing to push for a constitutional convention. The ALEC proposal calls for a balanced-budget amendment and term limits for political office holders. The first is dangerous enough, given that forcing the federal government to balance its budget every year would mean permanent austerity would be imposed; working people would be hit hard by any such limitations on government spending. Not only would the government be unable to respond to a recession, basic programs like Social Security would be put at risk. Medicare and government pensions would also be subject to budgetary axes. That outcome is of course very much intended. But any constitutional convention would not have to limit itself to a finite set of topics. Because there are no rules or laws governing what a convention could do, a seated convention could easily become a runaway body, imposing a full set of far-right and corporate wish lists. Calls for retrogressive legislation, including bans on abortion, are routinely called for by proponents of seating a convention.
The movie “Greed” (1924)
The far right drive for a convention to wipe out as many gains achieved by social movements as possible has been quietly going on for years. In 2017, for example, Truthout reported on an effort by state legislators affiliated with ALEC and promoted by another shadowy group, Citizens for Self Governance, whose co-leaders have strong ties to the Koch Brothers and who routinely label Black Lives Matter and other Left groups as “thugs” and “criminals.” A year earlier, the group practiced for a constitutional convention by holding a mock convention in which it passed a far-right wish list that included making it easier to repeal federal regulations, requiring a supermajority to impose federal taxes and eliminating federal taxation by repealing the 16th amendment.
To help guarantee the far-right outcome desired, this initiative would “appoint seven delegates to the convention, and attempts to provide for the replacement of delegates if they go off-script,” Truthout reported. The intended script could be very dangerous. “[A]ny convention call, no matter how narrowly written, could result in a ‘runaway’ convention,” the report said. “Why? Because the Constitution doesn’t provide any guidance or constraints on how a convention would operate once called. State politicians or Congress could write their own agenda and rules about the way delegates are chosen, the number of delegates allowed from each state, and whether or not a supermajority is required to approve amendments. Once in the room, delegates to a convention can ignore [any] limits.”
As recently as last month, an ALEC conference in Washington was attended by some of the most notorious extreme-right mouth-frothers, including former House of Representatives Speaker Newt Gingrich and several current members of Congress. A rouges’ gallery of far-right pressure groups, including some who agitate for a total ban on abortion. Among the offensives endorsed at this conference were to fight “woke capitalism” (what this chimera might be was not specified) and a bill that would “bar companies with 10 or more employees from receiving state contracts if they take into account any ‘social, political, or ideological interests’ to limit their commercial relationships with fossil fuel, logging, mining, or agriculture businesses—and that instructs legislatures to ‘insert additional industries if needed.’ ” In other words, promotion of fossil fuels would become mandatory. Another ALEC “model bill” promoted at the conference was legislation intended to enforce right-wing censorship in public universities.
How close is the United States to a convention?
To seat a constitutional convention, two-thirds of the states (34) would need to ratify a resolution. Although current constitutional law mandates that three-quarters of the states (38) would then have to approve, a convention could change the ratification requirements to whatever it wanted, with no constraints. There is precedence for this — the only constitutional convention in U.S. history, in 1787, “went far beyond its mandate,” the Center on Budget and Policy Priorities (CBPP) wrote. “Charged with amending the Articles of Confederation to promote trade among the states, the convention instead wrote an entirely new governing document” and drastically altered the approval process.
How many states have ratified? Convention proponents claim that 28 states have already passed resolutions. The CBPP, by contrast, reports that since ALEC released “a handbook for state legislators that includes model state legislation calling for a constitutional convention” in 2010, only 12 states have adopted it. ALEC gets to 28 states by counting any state that has ever passed any resolution calling for a convention, no matter different wording nor that some of these resolutions are more than three decades old. “Whether Congress would agree to count all such other state resolutions is unknown” the CBPP wrote. “The question is important, because the Constitution grants solely to Congress the power to determine whether the 34-state threshold has been met.”
“Greed” (Nicholas Kwok)
Alternate counts include the 19 states claimed by a pro-convention group calling itself “Convention of States Project” that avoids any mention of who or what might be behind the group but quotes Ron DeSantis and Sean Hannity among a host of far-right extremists. Another shadowy group that fails to mention its backers, “US Term Limits,” admits that only five states have ratified its favored version but claims that if other versions are included, the total reaches 19. The right-wing news magazine Newsweek claims 17 states have ratified. The liberal citizens’ group Common Cause writes that “more than a dozen state legislatures” have passed balanced-budget convention resolutions since 2011, while five states have rescinded resolutions since 2016. Fortunately, the far-right drive to re-write the Constitution has not been well organized, although there is significant danger that the backing of ALEC will likely put this retrograde movement on firmer footing.
None of the above is in any way intended to deny that the U.S. Constitution is badly out of date. A better world for United Statesians certainly would mean a far more progressive constitution, one guaranteeing democratic rights and expanding the concept of rights to economic questions, and creating new legislative bodies based on democratic outcomes. Such a document would be much different than the current Constitution. Although it would be natural for the Left to be tempted to support a convention to advance progressive reforms, the current balance of social forces quickly puts a kibosh on such ideas. Given the vast power that the corporate mass media holds, the relentless promotion of right-wing talking points as “news,” and the hold the Republican Party has on state legislatures across the country, the time for a convention is nowhere near.
The Democratic Party certainly isn’t going to be of any help, given the intellectual dead end of liberalism that it exemplifies and the austerity it has embraced, as this month’s vote to force a bad contract on rail workers was the latest demonstration in an endless series of capitulations to capitalists.
Any move for a convention needs to wait until the balance of forces is tilted in favor of the Left, and that can only come about through a sustained mass movement sure of its goals. In such a scenario, movements would likely be aiming much higher than a constitutional convention — a better world necessitates drastically different ways of organizing politics and the economy than what currently exists. There would be no need to tinker with an archaic document long overdue for replacement; it would be necessary to re-imagine what a constitution should be. For now, we are in the world we are in, and while we remain on the defensive, any convention would be for the worse. Capitalist formal democracy is already farcical. The current backsliding toward a harder right-wing domination doesn’t need yet more impetus.
This has become, sadly, a yearly ritual by now. The world’s governments gather together to discuss what should be done about global warming, and finish their time together by issuing statements of concern while doing little concrete to actually solve the problem. And so it is with COP27.
The 27th Conference of the Parties to the United Nations Framework Convention on Climate Change, to use the formal name for COP27, ended with what has the appearance of a breakthrough: An agreement on the establishment of a “loss and damage” fund for Global South countries severely affected by weather and environmental disasters triggered by global warming, and for which they bear almost no responsibility. This finally fulfills a pledge made at the 2009 Climate Summit in Copenhagen.
Will this fund truly provide compensation to offset the costs borne by underdeveloped countries most at risk from climate upheaval? Given the past records of pledge fulfillment, you may be excused for being skeptical that the fund will come to full fruition, or that sufficient action will be taken to fulfill the goal of previous COPs to cap global warming at 1.5 degrees C. above the pre-industrial level.
On the latter, there is not much time remaining to reverse the ongoing increases in greenhouse gas emissions that continue to be poured into Earth’s atmosphere. According to an analysis published a year ago, Carbon Brief says:
“In total, humans have pumped around 2,500bn tonnes of CO2 (GtCO2) into the atmosphere since 1850, leaving less than 500GtCO2 of remaining carbon budget to stay below 1.5C of warming. This means that, by the end of 2021, the world will collectively have burned through 86% of the carbon budget for a 50-50 probability of staying below 1.5C, or 89% of the budget for a two-thirds likelihood.”
A view from Mount Sinai in Egypt’s Sinai peninsula (photo by Daniel Fafard)
Despite this looming disaster, the “implementation plan” announced at COP27, “excluded any mention of winding down the use of fossil fuels. It also provided little indication that nations were serious about scaling up efforts to cut emissions,” Carbon Brief reports.
The implementation plan “requests” countries that have not yet done so “revisit and strengthen” their 2030 climate targets by the end of 2023 so as to to align with the Paris Agreement.
Maybe if they are asked politely, polluters will stop?
Note that word: “requests.” Oh please consider stopping your environmental destruction if it’s not too inconvenient. Weak-tea wording that is consistent with past COPs. The “we were happy to talk and we will be happy to talk some more” concluding themes of past years wasn’t quite the case this year — the “loss and damage” fund would be a concrete victory should it actually be seriously implemented — but there was no noticeable move to prod the world’s governments, and the polluters and greenhouse-gas emitters they protect, to make it possible to cap global warming at 1.5 degrees. Consider the most recent conference results.
COP26, held last year in Glasgow, concluded with the world’s governments agreeing to strengthen their greenhouse-gas emission reduction goals, but the commitments were well short of meeting stated goals nor did they have enforcement mechanisms.
COP25, two years ago in Madrid, ended with a statement that the conference “Notes with concern the state of the global climate system” but limited its action to announcing two more years of roundtables.
COP23 in Bonn ended with a promise that people will get together and talk some more.
Lots of talking and not much doing is, unfortunately, par for the course. Last year saw a strong push to have the COP26 negotiators agree to a “phase out” of coal that was ultimately watered down to a “phase down,” a vague formulation with no specific meaning. Representatives from dozens of countries at COP27 wanted to expand that call to a “phase down” of all fossil fuels, but pushback from Russia and Saudi Arabia and reported foot dragging by the conference’s Egyptian presidency apparently succeeded. There is no such reference to fossil fuels in the conference’s communiqués.
Graphic from Carbon Brief
There was some success in getting the “loss and damage” fund for Global South countries passed, overcoming opposition from the United States and European Union. This was a last-minute triumph for proponents, with the G77 group representing underdeveloped countries and China pushing for the fund to be established. No funding mechanism, however, was agreed to. How much Global North countries will pay and how money will be distributed are to be decided in a series of workshops in 2023. The 2009 agreement that committed developed countries to pay $100 billion per year has never been reached. Some years barely more than half that total was paid and Oxfam argues those reported totals actually overstate what was really delivered.
The official COP27 website is dominated by propaganda, full of baseless articles with titles like “Egypt Climate Champion.” The Egyptian city of Sharm el-Sheikh was the conference host, despite Cairo’s relentless human rights violations and poor environmental record, including repression of environmentalists. The United Nations Climate Change website offers breathless coverage of what it calls a “breakthrough agreement to provide ‘loss and damage’ funding for vulnerable countries hit hard by climate disasters,” but does acknowledge that “a global transformation to a low-carbon economy is expected to require investments” of US$4 trillion to $6 trillion per year, and that “Delivering such funding will require a swift and comprehensive transformation of the financial system and its structures and processes.”
Noting concern, but not matching words with action
Alas, that transformation was not so much as hinted at in the communiqués issued at the conclusion of COP27. Past conferences have ended in a series of statements expressing concern and alarm, but little sense of actually doing something about those concerns and alarms. COP27 has not been an exception.
The Sharm el-Sheikh Implementation Plan, which functions as the “final communiqué” that had been issued at the conclusion of past conferences, “Underlines the urgent need to address, in a comprehensive and synergetic manner, the interlinked global crises of climate change and biodiversity loss.” Furthermore, the conference “Notes with serious concern the existing gap between current levels of adaptation and levels needed to respond to the adverse effect of climate change” and “Notes with grave concern … the adverse effects of climate change, resulting in devastating economic and non-economic losses.” The conference also “Takes note of the report on the determination of the needs of developing country Parties related to implementing the Convention and the Paris Agreement and in this context urges developed country Parties to provide resources.”
Is there something other than hand-wringing here? Alas, no. The plan merely “Reiterates its invitation to Parties to consider further actions to reduce by 2030 noncarbon dioxide greenhouse gas emissions, including methane.”
So there remains no enforcement mechanisms or globally agreed standards for any country to meet.
The world’s governments agreed at the Paris Climate Summit in 2015 to hold the global temperature increase to 1.5 degrees Celsius above the pre-Industrial Age average, a change from the previous commitment of 2 degrees. This goal is nowhere near being met. Following last year’s COP26, Climate Action Tracker found that if there were full implementation of submitted and binding long-term targets and 2030 targets, the world’s temperature would increase by 2.1 degrees Celsius from the pre-Industrial Age average. Worse, what the Tracker calls “real world action based on current polices” would result in a temperature increase of 2.7 degrees.
And now? The Tracker, in assessing the latest pledges, this month found that if all current pledges and targets for 2030 and longer-term emissions are met, a temperature rise of 2 degrees C. would be likely be endured by 2100. If only all 2030 emissions targets are met, then a rise of 2.4 degrees is likely. But current trends are for even these inadequate levels to not be met. The “real world action based on current polices” — what is actually currently being done — would see a rise of 2.7 degrees by the end of the 21st century.
“The world is heading for 2.4°C of warming under current 2030 targets. If that number looks familiar, it’s because it is the same as last year,” the Tracker said in its report. “There have been no substantial improvements of existing net zero pledges since COP26. Warming could be 1.8°C, if all targets under discussion are fully implemented, unchanged from last year. Stronger 2030 targets and policy implementation are needed to make these pledges believable and actually provide a reason for optimism.”
Grassroots activists vs. corporate interests
Other environmental organizations are not impressed, either. For example, Sanjay Vashist, the director of Climate Action Network South Asia, had this to say:
“Even as we welcome the announcement of the Loss and Damage funding facility, it is indeed unfortunate that the COP27 failed to deliver on any of the three key outcomes that could have accelerated climate action to avert the worst impacts of the climate crisis. In a year when Pakistan floods reminded the world of the need for urgency, COP 27 had nothing new to offer on ambition to reduce greenhouse gas emissions. At a time when island nations like Sri Lanka are teetering under economic and climate crises, it has failed to find ways to expedite the delivery of promised billion dollars per annum, forget any new or additional financial assistance.”
Asad Rehman, executive director of War on Want and the lead spokesperson for the Climate Justice Coalition, in an interview with Democracy Now, called the conclusion of COP27 “a recipe for disaster.” He said:
“Rich countries have long blocked that idea of an equitable phaseout of fossil fuels. What they’ve wanted to concentrate on is coal, because, largely, developed countries have moved away from coal. And, of course, they’re expanding. I mean, it’s shocking that President Biden, for example, has authorized more permits for expansion of fossil fuels than even Donald Trump did. And, of course, we would widely recognize that President Trump was a climate denialist. So, what we’re seeing is not that kind — not the language that we need in terms of actually a phaseout. Now, what we’ve seen also, of course, because of the pressure of the hundreds of fossil fuel lobbyists and many countries who are relying on fossil fuels for their own economic development, they began to water down their language around fossil fuels.”
Fossil fuel lobbyists attended COP27 in even larger numbers than previous conferences. A report by Corporate Accountability, Corporate Europe Observatory and Global Witness said that 636 fossil fuel lobbyists registered for COP27, an increase of over 25% from COP26. There were more fossil fuel lobbyists than any single national delegation, excepting only the United Arab Emirates. “The extraordinary presence of this industry’s lobbyists at these talks is therefore a twisted joke at the expense of both people and planet,” the report said.
Graphic from Carbon Brief
The United Arab Emirates, the host for next year’s COP28 meeting, at COP27 promoted oil and gas as a clean source of energy and used the Egypt meeting to promote its state oil company. The UAE also promoted its state oil company’s carbon capture and storage efforts, which even if these could be scaled to its 2030 projection, would “absorb the equivalent of just over two percent of the country’s current overall emissions.” Carbon capture and storage, or sequestration, means “capturing” carbon dioxide before it escapes into the atmosphere and “permanently” storing it underground or underwater, thereby removing it from the air and negating its greenhouse effects. The technology required to achieve this at scale does not exist and has both cost and logistical problems significant enough that sequestration is unlikely to be viable in the foreseeable future.
That oil and gas interests are unambiguously present and shaping policy is perhaps not surprising because 18 of the 20 companies listed as sponsoring COP27 either directly support or partner with oil and gas companies.
Corporate greenwashing not limited to fossil fuel interests
Fossil fuel companies were not alone in attempting to thwart any progress. The number of registered COP27 delegates who were either directly linked to the world’s largest agribusiness firms or participating in the UN talks as part of delegations that represent industry interests more than doubled from the Glasgow conference. DeSmog reported 160 representatives of Big Agriculture at COP27, compared to 76 at Glasgow last year. Further, “The number of delegates linked to the world’s top five pesticide producers (which between them have 27 lobbyists registered this year), are greater than some country delegations,” DeSmog reports.
“Agribusiness delegates attending the climate talks at the Sharm el-Sheikh resort include the head of a U.S. meat lobby group that until recently claimed the extent of man-made climate change was ‘unknown’, as well as influential trade groups that have lobbied against climate action,” DeSmog said. “The world’s largest meat corporation JBS was also found to have gained privileged access to all negotiations, via the Brazil country delegation.” That is all the more alarming considering the dire situation of the Amazon rainforest, often referred to as the “Earth’s lungs.” The World Wildlife Fund reports that 35% of the Amazon rainforest is either totally lost or highly degraded.
The report says, “The situation has begun to show signs of nearing a point of no return: seasons are changing, surface water is being lost, rivers are becoming increasingly disconnected and polluted, and forests are under immense pressure from increasingly devastating waves of deforestation and fire. This could lead to irreversible change in the near future.” As a further insult, Coca-Cola is one of the sponsors of COP27 despite being called the “world’s leading polluter of plastic in 2021.” Coke has long been connected to human rights abuses in Latin America, as allegations reported in detail by the activist group Killer Coke document.
Human rights violations are nothing new in Egypt. Civil society groups reported surveillance and intimidation at COP27 and the case of Alaa Abd el-Fattah has drawn renewed attention to Cairo’s contempt for human rights. “The rights to freedom of expression and association were severely repressed,” Amnesty International reports in its Egypt report. Arbitrary detention, torture, cruel and inhuman detention, and systematic crackdowns on labor strikes, independent unions and workers expressing grievances or criticism is routine. Why would a conference said to be open to the world’s activists be held in such a country?
What else can be expected when corporate lobbyists swarm climate conferences in such large numbers? When the world’s governments not only make themselves subordinate to multi-national corporations but site the conference in one of the world’s most repressive régimes? The world’s economic system can’t function without endless growth, funnels wealth and therefore power into a minuscule number of hands, causes massive inequality, and forces all to engage in a ruthless competition that requires ever harsher measures to survive. A system designed to deliver massive profits, without regard to social or environmental costs and at the expense of communities and employees.
We’ll need all the energy and effort that environmental groups can muster if humanity is to have any chance at a livable planet in the future, but it will take more than that. After decades of evidence, it is clear that our environmental and climatic crises can not be solved under capitalism.
If there is one message that seemed to surface through last month’s crucial meetings of the Communist Party of China it is continuity. The inference that might best be taken is no significant change from the path on which the party has led China in recent years should be expected.
That path, despite the oft-used slogan “Socialism with Chinese Characteristics for a New Era,” has been a restructuring of the economy toward capitalism, albeit a gradual entry on Chinese terms and keeping the “commanding heights” of the economy in state hands. If we attempt to grasp the meaning of the communiqués and reports issued surrounding the party’s 20th National Congress, it would be better to observe through a holistic lens rather than fixating on personalities.
The Western corporate media obsessively dwelled on President Xi Jinping’s third term, as if nothing else was of note or as if President Xi is an all-powerful sole dictator single-handedly deciding the fate of 1.4 billion Chinese. To be sure, communiqués, internal press reports and speeches repeatedly stressed the party leader’s “core position” and urged all Chinese to fully study and implement “Xi Jinping Thought” along with the ritualistic panegyrics to the party. There appears to be no doubt as to his leadership, both through the extravagant praises for him and that the top leadership body, the Politburo Standing Committee, appears to consist solely of those aligned with him.
Mount Emei/Emei Shan in Sichuan province. (Photo by McKay Savage, London.)
But nobody in a country ruled by a communist party is a sole dictator, excepting the unique circumstances of the Josef Stalin dictatorship and Enver Hoxha in Albania. Given the opaqueness of the Communist Party of China (CPC) it is impossible for us to say with any certainty what is going on behind closed doors. Is President Xi truly all-powerful, or does he lead a faction that has gained majority backing among party leaders? Does his third term, breaking two decades of precedent, represent not a grab for power but rather a reflection of opinion alignment behind closed doors and a desire for continuity in a time when more difficulties are almost assuredly coming? Certainly this is possible.
Let’s turn away from parsing personalities and instead examine key communiqués and reports, and how we might reasonably interpret them.
Prominently continuing to honor all past leaders
The most important document to read is arguably the Resolution of the 20th National Congress of the CPC on the Report of the 19th Central Committee adopted at the closing session of the Congress on Oct. 22. The very first paragraph reads:
“The Congress has held high the great banner of socialism with Chinese characteristics; adhered to Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory, the Theory of Three Represents, and the Scientific Outlook on Development; and fully applied Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.”
This list is repeated five paragraphs later. Why would this be significant? That it is the opening of the resolution is significant because it is nearly identical to the equivalent statement issued in 2017 when the 19th Communist Party Congress adopted the report of the then outgoing Central Committee. Then, as now, every Chinese leader is mentioned. The “Scientific Outlook on Development” is the product of President Xi’s predecessor, Hu Jintao, who declared that China must end its reliance on cheap labor and invest more in science and technology. The “Theory of Three Represents” was laid down by former President Hu’s predecessor, Jiang Jemin. (Incidentally, this tends to throw cold water on the idea that former President Hu was “ejected” from the Congress; if the current leaders were intent on “humiliating” him as corporate media commentaries assert, why would the party enshrine his policy in their most important communiqués?)
That October 2017 party Congress confirmed that the role of the market would be “decisive” rather than “basic,” consistent with the CPC leadership switching the role of the market from “basic” to “decisive” in 2013 at a key Central Committee plenum. That would certainly seem to contradict the stress on Mao Zedong Thought, a major pillar that the party consistently upholds as a source of authority. That pillar is in contradiction with the era of Deng, who inaugurated China’s move from its Maoist path and toward the introduction of capitalism. It is in particular a contradiction with former President Jiang’s “Theory of Three Represents,” a declaration that the party should represent the most advanced productive forces, the most advanced culture and the broadest layers of the people. That is an assertion that the interests of different classes are not in conflict and that the party can harmoniously represent all classes simultaneously.
The skyline of Beijing (photo by Picrazy2)
Because there is no way to reconcile these divergent programs, the consistent listing of all party leaders since the 1949 revolution can reasonably be read as a statement of continuity with the decades of China’s current capitalist path, stretching back to the early Deng years. Yet the Resolution of the 20th Congress, in apparent contradiction to China’s growing private sector, the stress on the “decisive” nature of markets and China’s integration into the world capitalist system, declared that Marxism remains central to the party’s work. The resolution states:
“The Congress stresses that Marxism is the fundamental guiding ideology upon which our Party and our country are founded and thrive. Our experience has taught us that, at the fundamental level, we owe the success of our Party and socialism with Chinese characteristics to the fact that Marxism works, particularly when it is adapted to the Chinese context and the needs of our times. [The party] has achieved major theoretical innovations, which are encapsulated in Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. … Only by integrating the basic tenets of Marxism with China’s specific realities and fine traditional culture and only by applying dialectical and historical materialism can we provide correct answers to the major questions presented by the times and discovered through practice and can we ensure that Marxism always retains its vigor and vitality.”
“The sound theoretical guidance of Marxism is the source from which our Party draws its firm belief and conviction and which enables our Party to seize the historical initiative. … Taking Marxism as our guide means applying its worldview and methodology to solving problems in China; it does not mean memorizing and reciting its specific conclusions and lines, and still less does it mean treating it as a rigid dogma.”
Drawing on past triumphs to justify present policies
Understood properly, Marxism is a living body of work and not a catechism, and can only be applied with creativity and analysis of concrete conditions. Nobody can rebuke the Chinese for adapting it to their particular circumstances and need to develop rapidly. But at what point does a “socialist market” economy tip over to a capitalist-oriented economy? There is no bright line that can be drawn but at some point, the rubicon has been crossed. Then there is the matter of what lessons might be drawn. Another clue as to what might be expected from the party in the near future might be derived from a visit by the Politburo Standing Committee to Yan’an, the old revolutionary base in northwest China. A report by Xinhua, China’s news service, quoted President Xi as stating that “the firm and correct political direction was the essence of the Yan’an Spirit.”
The lesson to derive from that spirit, according to President Xi, is that progress depends on the party and that party leadership is unquestionable. Xinhua summarized his interpretation of that spirit as follows:
“All Party members must adhere to the correct political direction, resolutely implement the Party’s basic theory, line, and policy, thoroughly implement the Party Central Committee’s decisions and plans, so as to further advance the great cause pioneered by revolutionaries of the older generation. … All Party members must stand firmly with the people, act on the Party’s purpose, put into practice the mass line, maintain close ties with the people, take the initiative to apply the people-centered development philosophy to all work, and achieve solid progress in promoting common prosperity, so that the people share more fully and fairly in the gains of modernization.”
Shanghai (photo by dawvon)
So there won’t be any slackening of party discipline, nor of any loosening of authoritarian party control over society. Nor will there be any swerving from the long-standing goal of achieving “common prosperity.” To return to the Resolution of the 20th Congress, the party states its goal as:
“[F]irst, basically realizing socialist modernization from 2020 through 2035; second, building China into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful from 2035 through the middle of this century. [One of the main objectives in the next five years is to] Make new strides in reform and opening up; make further progress in modernizing China’s system and capacity for governance; further improve the socialist market economy; put in place new systems for a higher-standard open economy. We should continue reforms to develop the socialist market economy, promote high-standard opening up, and accelerate efforts to foster a new pattern of development that is focused on the domestic economy and features positive interplay between domestic and international economic flows.”
The reference to “positive interplay between domestic and international economic flows” is another signal of continuity. In May 2020, the Politburo announced a policy of “dual circulation” development. This policy represents lessening China’s reliance on exports and imports — “international circulation” — and rebalancing with production for the domestic market. This is intended to lessen China’s reliance on imports for its production and become more self-reliant in the wake of U.S.-led Western hostility to Chinese technological development. Just last month, the Biden administration announced sweeping prohibitions on the sale of semiconductors, advanced computing chips, chip-making equipment and other high-technology products to curb China’s ability to indigenously develop these technologies.
“The plan places a greater focus on the domestic market, or internal circulation, and is China’s strategic approach to adapting to an increasingly unstable and hostile outside world,” according to an explanatory article in the South China Morning Post. “Officially, China will look inward to tap the potential of its huge domestic market and rely on indigenous innovation to fuel growth. But despite the increased emphasis on the domestic market and on self-reliance in some sectors, President Xi has said repeatedly that China will not completely close itself off from the outside world, and will instead open up more.”
The dual-circulation policy is also a response to an expected reduction in reliance on exports on the part of China’s export destinations in the wake of economic disruptions caused by the Covid-19 pandemic. The Morning Post writes, “It is essentially a defensive approach by Beijing to prepare for the worst-case scenario as the world undergoes significant geopolitical and economic changes. The coronavirus exposed how dependent the world was on China for critical supplies of medical equipment, with nations around the world vow[ing] to be more self reliant on such products, amid a push by the US for a sharp decoupling of the world’s two largest economies.”
Investment, not consumer consumption, continues to drive economy
The dual-circulation policy has been integrated into China’s 14th five-year plan, covering 2021 to 2025. But this policy doesn’t represent any jarring change from past policy, as China has long sought to re-balance its economy to improve consumer consumption. Progress here has been slow — household consumption there was reported at only 40% in 2021, little improved from 36% in 2007. (Household consumption is all the things that people buy for personal use from toothbrushes to automobiles.) By comparison, advanced capitalist economies tend to have household consumption account for 60% to 70% of their economies. China will remain an investment-dependent economy for some time to come.
The funds necessary for China’s massive domestic investments don’t come simply from trade surpluses; they also come from depressed living standards. That means low wages for most Chinese and increased inequality.
“[T]he vast majority of China’s citizens still have a disposable income of less than 5,000 yuan per month, and over two-thirds of the population make substantially less,” according to the China Labor Bulletin, a a non-governmental organization based in Hong Kong that “supports and actively engages with the workers’ movement in China.” For comparison, 5,000 yuan equals US$686. And even that paltry amount is well above the minimum wage. The Bulletin report says, “The highest monthly minimum wage as of July 2020 was in Shanghai (2,480 yuan), which was roughly double the minimum wage in smaller cities in provinces such as Hunan, Hubei, Liaoning and Heilongjiang. In setting this wage, local governments are focused on industry concerns and local investment rather than on ensuring a liveable wage for workers, and employers likewise still find ways to avoid paying the minimum wage.” For comparison, 2,480 yuan equals US$340.
Chinese regulations mandate that each region should set its minimum wage at between 40 and 60 percent of the local average wage, but very few cities have ever reached that target, the Bulletin report says. “Moreover, the discrepancy between the average and the minimum wage has actually increased over the last decade as higher wages for the privileged few has pushed the average wage up and wages for the lowest-paid have stagnated. In many cities such as Guangzhou and Chongqing, the minimum wage is now less than 24 percent of the average wage, while in Beijing, which has some of the highest-paid employees in the country, it is just under 20 percent.”
People’s Grand Hall in Chongqing (photo by Chen Hualin)
Similar to advanced capitalist countries, inequality is worsening in China. “The annual average per capita disposable income of the richest 20 percent in China’s cities increased by nearly 34,000 yuan in the seven years from 2013 to 2019, while the disposable income of the poorest 20 percent in urban areas grew by just over 5,500 yuan during the same period,” the Bulletin report says. The report makes a damning conclusion familiar to those living in places with harsh inequality like the United States:
“A superficial glance at China’s major cities seems to show a reasonably affluent society: young, hard-working, middle-class families, determined to make a better life for themselves. This illusion was shattered however in late 2017 when the municipal government of Beijing embarked on a 40-day high-profile campaign to clean out the city’s shanty towns and evict the so-called ‘low-end population’ who produce, market, and deliver the goods, services and lifestyle products that Beijing’s middle class families aspire to have. The evictions revealed the harsh truth that the affluence of China’s cities depends almost entirely on the impoverishment of the underclass.”
There is no independent organization pushing against inequality. The All-China Federation of Trade Unions is the sole legal union confederation in China; independent unions are not tolerated. Although the ACFTU is tasked with protecting workers and sometimes stands up for them, overall it “has rarely been a staunch advocate for workers” and is “dedicated to ensuring ‘harmonious labour relations’ and smooth economic development for the nation.” Strikes are often carried out in defiance of the ACFTU but as a consequence tend to be localized and uncoordinated. The Bulletin has recorded 666 strikes thus far in 2022, roughly on pace with 2020 although down from 1,095 in 2021.
Development, but who is benefiting?
Who is enjoying the fruits of “smooth economic development”? China has 1,133 billionaires in 2022, up 75 from previous year, the most in the world and ahead of the U.S., according to the party newspaper Global Times. The paper celebrated this in its report, saying the high number of billionaires “underlined robust growth in various industries in China.”
Somehow that is not consistent with the construction of a socialist, egalitarian economy. Nor does it meet with disapproval from “think tanks” in the West that are dedicated to upholding and strengthening corporate domination.
Interestingly, separate papers recently issued by the Peterson Institute for International Economics and Citibank both predict further privatization in China, which, naturally, they approve. It’s good to remember here that although the corporate mass media routinely lies and passes off propaganda as news for popular audiences, those sources are truthful when the audience is big business; the bourgeoisie wants accurate information. (A nice example illustrating this is a general strike in Copenhagen in the late 1990s in which a key demand was a sixth week of mandatory paid vacation for Danish workers. I read not a word about it in general newspapers but there was daily coverage in the Dow Jones Newswire, an expensive service used by financiers, where I worked at the time.)
Although the state sector of the Chinese economy slightly increased this year, reversing a long trend of shrinkage, there seems little concern from capitalist boosters. The Peterson Institute, which has never seen a corporate-promoting so-called “free trade” agreement it didn’t like, declared that global commodity price increases and China’s property crisis were behind the “pause in the rise of the private sector.” It would be “simplistic and premature” to conclude 2022’s reverse is permanent, assuring its wealthy readers that “the drop in the previous private-sector advance should not be viewed as the start of a new trend of continuous decline, at least not yet.”
Nor are Citibank economists worried. A Citibank report similarly called the idea of a reversal of privatization “superficially attractive.” Rather, “support for private sector development is evident in a number of ways in recent years, from the effort to simplify the process of registering businesses to a new bankruptcy law and greater reliance on the court system to successfully adjudicate commercial disputes.” As to the “dual circulation” strategy, the bank notes that a fear that the U.S. might impose sanctions on China similar to those on Russia are driving China’s move toward self-reliance, and that reliance in turn will lead to reduced export opportunities for U.S., Germany, Japan, South Korea and Taiwan. That trend nonetheless dates back to the Trump administration’s moves against Beijing.
In contrast to continual forecasts in the corporate mass media predicting collapse for the Chinese economy, Citibank economists seem to believe China will be fine, in part due to the big trade agreement it signed in November 2020 with Asia-Pacific countries while subtly acknowledging growing critiques of runaway neoliberalism. “China’s engagement with the Regional Comprehensive Economic Partnership is a sign that even if the world is experiencing deglobalization, a growing regionalization might end up being the most likely replacement for the kind of globalization that now seems anachronistic,” the Citibank report says.
More state-owned enterprises would help Chinese workers
Corporate interests across the West would of course like more and faster privatization, as would the governments, especially the White House, that cater to those interests. But would that be a good idea? In contrast to standard discourse that mindlessly intones “private good, government bad,” when actual studies are conducted — naturally, only done by heterodox economists not interested in parroting propaganda for public consumption — a much different picture arises.
A study published in the March 2022 issue of Review of Radical Political Economics concludes that “a higher share of state-owned enterprises is favorable to long-run growth and tends to offset the adverse effect of economic downturns on the regional level.” The paper’s authors, Hao Qi and David M. Kotz, found that China’s state-owned enterprises (SOEs) in 2015 had average wages 65% higher than private enterprises; most SOE employees have access to social security, while only a few private-enterprise employees have access to it; and SOE working hours are less than in the private sector. (These findings should be no surprise to anybody familiar with conditions in China’s many sweatshops.)
SOEs are not just good for employees; they are better for the economy as well. The authors write:
“SOEs have played a pro-growth role in the Chinese economy in several ways: first, SOEs play the role of an economic stabilizer, offsetting the adverse effect of economic downturns; second, SOEs promote technical progress by carrying out investments in riskier technical areas. In addition, SOEs have established a high-road approach to treating workers by providing workers with a living wage, which is crucial for the reproduction of labor power. We suggest that this high-road approach has a potential pro-growth role, which is favorable for the transition of the Chinese economy to a more sustainable growth model in the near future. SOEs appear to be less profitable than private enterprises; however, the higher profitability of private enterprises to a large extent results from the intense exploitation of their workers. If the profits of private enterprises are invested, the result is growth—but profits of private enterprises also go to dividends and non-productive uses such as speculative purchase of existing assets.”
Three Gorges Dam, a project funded by the World Bank that displaced 1.3 million people (photo by Christoph Filnkössl)
The low wages paid by the private sector — which gives the appearance of those enterprises being more efficient — weakens the Chinese economy. An over-reliance on investment and exports are also de-stabilizing factors, the authors write.
“With low wages, the consumption demand of the economy has been insufficient, making the economy vulnerable to overinvestment, trade conflicts, and external shocks from the global economy. Thus, moving to a more sustainable growth model requires steadily increasing wages and consumption in aggregate demand and moving away from reliance on investments and exports. It is easier for SOEs to accept higher wages given their high-road approach to treating workers. Thus, SOEs can be the bridge that connects the old and a more sustainable new economic model.”
Noting that most economic literature “fails to consider that private enterprises treat their workers badly,” the role of SOEs in stabilizing economic growth is ignored. The study by Dr. Qi and Dr. Kotz concludes that “privatization would be harmful to economic growth in the long run. In our view, privatization would destroy a central pillar for China to be able to achieve sound economic growth under unfavorable conditions.”
Too much reliance on private sector counter-productive
Another heterodox economist, Michael Roberts, also argues that privatization would be counter-productive. “[I]t is China’s large capitalist sector that threatens China’s future prosperity,” he writes. Debt and rising housing prices are products of a reliance on the private sector:
“The real problem is that in the last ten years (and even before) the Chinese leaders have allowed a massive expansion of unproductive and speculative investment by the capitalist sector of the economy. In the drive to build enough houses and infrastructure for the sharply rising urban population, central and local governments left the job to private developers. Instead of building houses for rent, they opted for the ‘free market’ solution of private developers building for sale. Beijing wanted houses and local officials wanted revenue. The capitalist housing projects helped deliver both. But the result was a huge rise in house prices in the major cities and a massive expansion of debt. Indeed, the real estate sector has now reached over 20% of China’s GDP.”
There will not be a financial crash in China, Mr. Roberts writes, because the country’s big banks are in state hands and the government can order them to take whatever measures are necessary to stabilize the financial system, tools not available elsewhere. Nonetheless, the CPC’s “common prosperity” project has been launched due to the pandemic exposing “huge inequalities to the general public,” with China’s billionaires reaping benefits while ordinary people suffer lockdowns. The share of personal wealth for China’s billionaires doubled from 7% in 2019 to 15% of GDP in 2021, Mr. Roberts reports. What China needs, he writes, is more planning and accountability:
“These zig zags are wasteful and inefficient. They happen because China’s leadership is not accountable to its working people; there are no organs of worker democracy. There is no democratic planning. Only the 100 million CP members have a say in China’s economic future, and that is really only among the top. Far from the answer to China’s mini-crisis requiring more ‘liberalising’ reforms towards capitalism, China needs to reverse the expansion of the private sector and introduce more effective plans for state investment, but this time with the democratic participation of the Chinese people in the process. Otherwise, the aims of the leadership for ‘common prosperity’ will be just talk.”
Before and during President Xi’s reign, privatization and reliance on exports have increased. The reforms inaugurated in the Deng era and continuing into the 2000s brought forth special economic zones to draw in foreign direct investment (FDI), job security guarantees replaced with contracts, welfare provisions scrapped, privatizations, state-run companies converted to state-owned enterprises expected to maximize profits, 50 million laid off and an intensification of work. Fifty millions layoffs! The government has sought to retain the “commanding heights” of the economy while divesting itself of smaller and medium-sized enterprises through closings and bankruptcies, a policy begun in the late 1990s of “grasping the large and letting the small go.”
Privatization and layoffs on China’s path toward capitalism
A couple of numbers illustrate how far-reaching China’s move toward capitalism has been. As late as the end of 2010, among China’s 100 largest corporations, 78% of aggregate market value was held by SOEs vs. 8% for the private sector. By June 30, 2022, it was 42% for SOEs and 45% for the private sector. That’s just the largest enterprises. When we look at the Chinese economy as a whole, SOEs accounted for about 25% of the economy in 2021, according to a source that wishes that total to be far lower. Finally, China’s debt is estimated at 350% of its gross domestic product, an extraordinarily high sum even if that is not an immediate problem given the country’s large trade surpluses.
China’s winding road toward capitalism needn’t be seen as intentional or the product of any cabal. A strong critic of China from a Left perspective, Ralf Ruckus, who is highly critical of what he calls China’s definitive return to capitalism, nonetheless offers this explanation: “This transition was not the result of a detailed master plan or blueprint but of a series of — often experimental — reform steps taken to improve the country’s economic performance, save the socialist system, and stabilize CCP rule. This is the meaning of the phrase ‘crossing the river by feeling the stones’ that Deng Xiaoping allegedly used to describe his understanding of the course of reform.”
Of course, none of us outside the party leadership, and certainly those of us outside the country, can know for sure what the long-term intentions might be. Our guides are the communiqués following important party meetings, the speeches of party leaders and, most importantly, the policies carried out and the concrete results of those policies.
President Xi had begun taking steps to reign in certain Chinese capitalists and has more frequently talked about Marxism, even before last month’s party gatherings. Whether these are the opening moves of a future reversal back toward socialism or simply an assertion of party rule will not be known for some time. Even if it were true that the moves toward capitalism since the 1990s are intended to be a temporary expedient, as some pro-China Leftists in the West like to argue, becoming more deeply entangled in markets and the world capitalist system carries its own momentum, a drift not at all easy to check. There are industrial and party interests that favor the path China has been on since the 1990s, and those interests represent a significant social force that would resist structural moves toward socialism.
Whatever long-term intentions the party leadership may have, its short-term tactical policies are likely to be driven by a need to counteract U.S.-led aggression against it, which implies a high likelihood of increased diversion of internal resources toward a continuing military buildup. Increased tensions between Beijing and Washington are not in the interests of working people on either side of the Pacific. The U.S. maintains its global hegemony through its stranglehold on the global financial system even more than through military strength, and that domination, while eroding, remains far from any danger of being toppled. China, then, will surely be focused on internal development for some time to come. That development is increasingly capitalist-based, a direction that is fraught with contradictions and dangers.
In the former Soviet bloc, socialism came to be seen as simply expropriation and building industry. But placing production in public or state hands is merely a pre-condition, not the actual content, of socialism. Moreover, China is moving toward, not away, from privatization. A fuller definition of socialism mandates that democracy be extended to economic and political matters, beyond what is possible in capitalism. Socialism can be defined as a system in which production is geared toward human need rather than private profit for a few; where everybody is entitled to have a say in what is produced, how it is produced and how it is distributed; that these collective decisions are made in the context of the broader community and in quantities planned to meet needs; political decision-making is the hands of the communities affected; and quality health care, food, shelter and education are human rights. There is no class, vanguard or other group that stands above society, arrogating decision-making, wealth and/or privileges to itself.
It is easy enough to point out that such conditions are far from reality in any capitalist country. But such conditions are far from reality in China as well. The Chinese nation must develop within a world capitalist system deeply hostile to any attempt at building an alternative, has its own strong cultural traditions, and must find its own path toward development while navigating a complex set of economic pressures. Nor can any expectation that any socialist path can be easy or short be realistic, as history as amply proven. At the same time we shouldn’t mechanically make assumptions because of the label a country’s ruling party uses to name itself. Better to analyze with a clear eye.
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Systemic Disorder 