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.”
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.
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.
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.
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.
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.
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.”
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.”
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.”
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.
There is no respite from class warfare. Past annual Global Rights Index reports issued by the International Trade Union Confederation have invariably shown that there is no country on Earth that fully protects workers’ rights and the 2022 edition is not only not an exception but finds that repression of labor organizing is increasing.
The best any country scored for the 2022 ITUC Global Rights Index was “sporadic violations of rights,” and only nine countries, all in Europe, managed that. That’s down from the dozen classified at this rating two years ago. Capitalism, and its neoliberal variant now four decades old, is not becoming more gentle. It is doing what it must do, what the holders of capital must do to keep their party going.
Let’s take a look at a few general highlights before we highlight individual countries. Or should we say lowlights? Then again, they are “highlights” for industrialists and financiers.
87% of countries violated the right to strike.
79% of countries violated the right to collective bargaining.
77% of countries excluded workers from the right to establish or join a trade union.
74% of countries impeded the registration of unions.
In its executive summary, the Global Rights Index report says:
“Workers are on the front lines as they face the impact of multiple areas of crisis: historic levels of inequality, the climate emergency, the loss of lives and livelihoods from the pandemic, and the devastating impact of conflict. And workplaces are the front line in the fight for democracy. Brutal governments know how much this matters when four out of five countries block collective bargaining and one third of countries violently attack workers. Trade unionists have been murdered on every continent. Where people stand up for rights and social justice they are silenced with brutal repression.”
Lest we think these are problems only in undeveloped countries, there are Global North countries that score poorly in the index, including Australia, Belgium, Britain, Canada and the United States. Almost all trends are getting worse, in all parts of the world. Several indicators — including the right to strike, the right to establish and join a trade union, the right to trade union activities and the right to civil liberties — have steadily worsened since the survey’s annual reports began being issued in 2014. “The number of countries which exclude workers from their right to establish or join a trade union increased from 106 in 2021 to 113 in 2022,” the report said.
The Global Rights Index ranks the world’s countries from 1 to 5, with 1 the best category, denoting “sporadic violations of rights,” defined as where “Violations against workers are not absent but do not occur on a regular basis.” The nine countries given a rating of 1 are Austria, Denmark, Finland, Germany, Iceland, Ireland, Italy, Norway and Sweden. (These are green on the report’s maps.)
Rating 2 countries are those with “repeated violations of rights,” defined as where “Certain rights have come under repeated attacks by governments and/or companies and have undermined the struggle for better working conditions.” Countries with this rating include the Czech Republic, France, Japan, Netherlands, New Zealand and Spain. (These are yellow on the report’s maps.)
Rating 3 countries are those with “regular violations of rights,” defined as where “Governments and/or companies are regularly interfering in collective labour rights or are failing to fully guarantee important aspects of these rights” due to legal deficiencies “which make frequent violations possible.” Countries with this rating include Argentina, Britain, Canada, Mexico and South Africa. (These are light orange on the report’s maps.)
Rating 4 countries are those with “systematic violations of rights,” defined as where “The government and/or companies are engaged in serious efforts to crush the collective voice of workers, putting fundamental rights under threat.” Countries with this rating include Australia, Chile, Greece, Peru, Senegal and the United States. (These are dark orange on the report’s maps.)
Rating 5 countries are those with “no guarantees of rights,” defined as “workers have effectively no access to these rights [spelled out in legislation] and are therefore exposed to autocratic regimes and unfair labour practices.” Countries with this rating include Brazil, China, Colombia, South Korea and Turkey. (These are red on the report’s maps.) In addition, there are countries with a 5+ rating, those with “No guarantee of rights due to the breakdown of the rule of law.” Afghanistan, Libya, Syria and Yemen are among the 10 counties listed in this category, and are colored deep red.
The ITUC says it represents 200 million workers in 163 countries and has 332 national affiliates. It determines its ratings by checking adherence to a list of 97 standards derived from International Labour Organization conventions. Those 97 standards pertain to civil liberties, the right to establish or join unions, trade union activities, the right to collective bargaining and the right to strike.
Worth noting is the poor rating of the United States and Britain, the two countries that most like to scold other governments and present themselves as democratic beacons that the world should emulate (or else). The United States has consistently been given a 4 rating, including in 2020 and 2019. The 2022 report notes a myriad of union-busting offensives used by employers there. The United Kingdom, which has had 3 and 4 ratings in past years, has seen workers summarily sacked and replaced with agency workers at below minimum wage.
Conditions are not appreciably better in those countries most eager to follow U.S. and British leads. In Canada, failures to comply with collective-bargaining agreements are a “common occurrence,” union leaders are prosecuted for participating in strikes and workers participating in strikes are fired. In Australia, criminal charges are filed against unions and union leaders as intimidation tactics, and governments not only allow employers to refuse to bargain with unions but intervene in disputes on the side of employers. Both countries are ranked worse than where they had been two years ago.
And so it goes, to channel Kurt Vonnegut. In its latest report on “the world of work,” the International Labour Organization (ILO) said “three out of five workers lived in countries where labour incomes had not yet recovered to their level prior to the crisis,” while inequality and the gender gap in pay remain large. A separate ILO report said “a return to pre-pandemic performance is likely to remain elusive for much of the world over the coming years,” with a global deficit of 52 million full-time equivalent jobs. Tens of millions of adults fell into extreme poverty during the Covid-19 pandemic.
These dismal results aren’t any surprise to anyone paying attention. The wealthy, and especially billionaires, have only gotten richer at everyone else’s expense during the pandemic. In just the first year of the pandemic, 2020, the world’s billionaires accumulated an additional trillion dollars. At the same time, corporations across the Global North enrich speculators and their top executives with trillions of dollars in dividend payments and stock buybacks and the world’s governments, through their central banks, handed out an astounding $10 trillion in free money to the financial industry through “quantitative easing” programs, the technical name for intervening in financial markets by creating vast sums of money specifically to be injected into them and thereby inflating stock-market bubbles. Despite these incredible sums of money, there is never more than crumbs for working people. It’s always austerity for those whose work actually creates the wealth that industrialists and financiers divvy up between themselves.
But central bank interventions are profitable for the financial industry, and that’s all that matters. The object of capitalism is to make the biggest possible profit, regardless of cost to employees, consumers, anybody else, the environment or the community; providing a useful product or service is incidental to the goal. Forcing down wages and working conditions through legal manipulation and outright force and violence is always prominent among capitalists’ methodologies to accomplish their goals. The International Trade Union Confederation’s sad results are not the result of some mysterious failure; they come standard with the system.
The reasons for the fall of the Soviet Union are myriad and can’t be laid solely at the feet of one person. Mikhail Gorbachev is widely despised by Russians as well as by activists and partisans of the Left. There are good reasons for that. It is impossible to imagine the collapse of a superpower and the catastrophic effects of imposing capitalism via “shock therapy” that immiserated a vast country without him.
But if we are serious about analyzing history, and the ongoing effects that history has on the present day, we must take a dialectic approach, and examine this history in all its complexities. Amid the triumphalist accolades heaped upon Gorbachev upon his death from Western capitalists and the opprobrium heaped on upon him by his many critics — continuing a pattern of three decades since the Soviet Union’s dissolution at the end of 1991 — we might take a more nuanced view.
The preceding is not to deny that Gorbachev was, ultimately, a failure who disorganized an economy and set in motion one of the greatest economic collapses ever recorded. But to pin all blame on him ignores not only other personalities but the stultifying effects of an economy badly in need of modernization and democratization, a sclerotic political system and the social forces and corruption set in motion during the reign of Leonid Brezhnev. Nor would it be fair to exclude the unrelenting pressure put on the Soviet Union and other countries calling themselves “socialist” that did much to distort and undermine those societies.
Nonetheless, a serious examination must concentrate on internal factors, those the responsibility of Gorbachev, and those where responsibility lies elsewhere. That was the approach taken in my book It’s Not Over: Learning From the Socialist Experiment, and it is that book’s fifth chapter, The Dissolution of the Soviet Union — that forms the basis of this article. Indeed, the mounting problems of the Soviet Union were not unnoticed within its borders — from the 1960s, academic institutions published reports detailing the bottlenecks built into the system and reform plans were drawn up within the government, but mostly were ignored.
The edifice of the Soviet Union was something akin to a statue undermined by water freezing inside it; it appears strong on the outside until the tipping point when the ice suddenly breaks it apart from within. The “ice” here were black marketeers; networks of people who used connections to obtain supplies for official and illegal operations; and the managers of enterprises who grabbed their operations for themselves. Soviet bureaucrats eventually began to privatize the economy for their own benefit; party officials, for all their desire to find a way out of a deep crisis, lacked firm ideas and direction; and Soviet working people, discouraged by experiencing the reforms as coming at their expense and exhausted by perpetual struggle, were unable to intervene.
Five years of reform with meager positive results in essence caused Gorbachev to throw in the towel and begin to introduce elements of capitalism. Gorbachev intended neither to institute capitalism nor bring down the Soviet system, but by introducing those elements of capitalism, the dense network of ties that had bound it together unraveled, hastening the end. To say this, however, is not at all to agree with some simplistic and unrealistic ideas out there that Gorbachev was a trojan horse intent on destruction. Every so often, over a period of many years, an article circulates online purporting to quote Gorbachev that he was intent on destroying the Soviet Union from the beginning of his career and worked patiently until he was in a position to do so. But this “confession” has allegedly appeared in many different publications in several different countries. The last time I saw this peddled it was an alleged article published in a Turkish newspaper. One might ask: Why would he make a spectacular confession such as this to an obscure publication in Turkey?
People who circulate such nonsense are simply seeking a scapegoat, and either can’t be bothered to study the actual conditions of the Soviet Union or are so blinded by a rigid ideology that they have ceased thinking. Again, this in no way suggests Gorbachev doesn’t have a huge responsibility to history. One can be a firm critic of the Soviet Union and still lament what happened.
Changes needed, but what changes?
Serious reforms were necessary; that is why the members of the Politburo, the Communist Party of the Soviet Union’s highest body, finally named Gorbachev general secretary. There was also strong support for his elevation among the party’s regional and provincial first secretaries, who formed the backbone of the Central Committee. When Andrei Gromyko, the foreign minister for a quarter-century and stalwart of the party’s old guard, endorsed Gorbachev’s ascension, that essentially clinched the promotion. Reforms had been attempted since 1965, when Prime Minister Aleksei Kosygin first proposed reforms that went nowhere. But by 1985, even the most doctrinaire party leader knew changes were necessary. The political and economic systems were out of date. A Soviet book published 20 years earlier declared that “a system which is so harnessed from top to bottom will fetter technological and social development; and it will break down sooner or later under the pressure of the real processes of economic life.”
Gorbachev started by stressing the “strengthening of discipline,” cracked down on alcohol, readily discussed the need for improvements in consumer products and consolidated several ministries to retool industry. He also pushed out several high-ranking officials opposed to any reforms, demanded “collectivity of work” in all organizations and declared that collective work is a “reliable guarantee against the adoption of volitional, subjective decisions, manifestations of the cult of personality, and infringements of Leninist norms of party life.”
Even before he became general secretary, Gorbachev had begun meeting with intellectuals working in Soviet institutions, later recalling that his safe was “clogged” with proposals. “People were clamoring that everything needed to be changed, but from different angles; some were for scientific and technical progress, others for reforming the structure of politics, and others still for new organizational forms in industry and agriculture. In short, from all angles there were cries from the heart that affairs could no longer be allowed to go on in the old way.”
First major reform more stick than carrot
Yet when it came to making concrete changes, there was a lack of imagination. To put it bluntly, Gorbachev had no plan and little idea of what to do. So when concrete structural changes began being implemented in 1987, they mostly were on the backs of working people. Eventually, the early enthusiasm for a new course gave way to anger and disillusionment. The first major reform, the Law on State Enterprises, approved in June 1987 by the party Central Committee, was more stick than carrot. The basic concept of the enterprise law was to liberate enterprises from some of the more rigid controls of the ministries, put them on profit-and-loss accounting, reduce the amount of product required to be produced for the state plan, reduce subsidies in order to make enterprises more efficient, and to bring a measure of democracy into the workplace with the creation of “labor-collective councils” and workforce elections of enterprise directors.
State planning remained in force, but would become less of a hard numerical total and more of a guide, although the requirement of fulfilling the (reduced) plan requirements would continue. Production sold to the state under the plan would still constitute most sales and would continue to be paid at rates specified by the state, but production beyond plan fulfillment could be sold at any price, subject to volume limitations to prevent unnecessary production beyond any reasonable social need.
In conjunction with these reforms, measures were implemented aimed at putting pressure on wages. Basic wage rates were increased, but individual output quotas (or “norms”) were also raised, to make it much more difficult to earn bonuses. Bonuses would no longer be essentially automatic; they could only be earned through more effort — and the new wage levels made up only part of the differences between the new basic wage and the old basic wage plus bonus. Put plainly, workers would have to work harder to earn the same amount of money. The basic idea behind these sets of reforms was to introduce a mechanism that would provide a better understanding of demand while retaining central planning. In turn, more efficiency would be wrung out of the system through the use of shop-floor and enterprise-wide incentives and the introduction of some workplace democracy, thereby alleviating both some of the alienation on the part of the workforce and the incentive of management to avoid introducing technological or other improvements.
The de facto wage cuts, and accompanying ability of factory managers to force workers into lower skill grades (thereby forcing reductions in wages), was implemented immediately, but the rest was to be phased in. “Labor-collective councils” were supposed to be formed to give workers a say in managing their workplace since they were asked to shoulder some of the profit-and-loss responsibility. These were stillborn. In most factories, either there was no council, it did nothing or the enterprise director headed it, neutralizing its potential. The trade unions, as before, did nothing to intervene, remaining silent or backing management.
The enterprise law text was ambiguous — it made references to “one-man management,” the foundation of the existing top-down command structure; did not specify the powers of labor-collective councils and the workforce; and stated that, although directors are elected, those elections must be confirmed by a ministry, a veto power supposedly needed to avoid cases of unspecified excesses. Not only did managements remain unanswerable to workforces, government ministries refused to relinquish their grips. Government bureaucrats owed their privileges and power to the ability to command, and naturally most of them did not relish losing such positions. Ministry officials continued to issue detailed orders to enterprise managements that left no room for enterprises to make their own decisions and continued to require enterprises to buy from a specific supplier, acting as a crucial brake on democratization; they also continued to impose management personnel. The traditional top-down economic structure remained largely untouched.
Workers announce their response by striking
During these years, serious reforms to the structure of the Communist Party were made, with Gorbachev maintaining his hold on power and steadily placing his followers into high-level positions. There may have been a quickening pace of events in the political sphere during 1988 and 1989, but everyday matters such as the economy and living standards stagnated. Failing to see sufficient improvement from the promises of perestroika, working people began to take a more direct approach — by striking.
The first mass strike was conducted by the country’s miners in 1989. More than 400,000 miners ultimately walked out across the country. The fastest advancing strikers were in Ukraine’s Donetsk province. Strikers there occupied the square in front of the regional party headquarters, and all 21 area mines sent representatives to occupation meetings. Abandoned by their union and all other institutions, the miners set up their own strike committee, and began making contact with the striking miners in other regions, who then also set up committees. The strike committees became the effective local governments, setting up patrols, acting as arbitrators for problems citizens brought to them and closing all sources of alcohol. Strikers this time refused to negotiate with the coal industry minister, and would only end the strike when Prime Minister Nikolai Ryzhkov signed a detailed agreement and Gorbachev announced his personal approval.
Further strikes in other industries broke out. These were often strictly local affairs, however, and there was little attempt at national coordination, rendering them politically ineffective. Nor was there coordination with the miners. The Soviet trade union central umbrella was widely seen as irrelevant, but new unions that began to form by 1990 were very small and unorganized, and even the very few unions that did work well had no links with other unions. A lack of a coherent plan and a lack of grassroots pressure meant that perestroika, as the restructuring was called in Russian, was failing.
All social groups seemed to lose faith in perestroika. By 1990, polling found that 85 percent believed that economic reform had achieved nothing or made the situation worse. As the miners’ strike, the failure of the labor-collective councils and mounting disillusionment demonstrated, efforts by the reformers to gain the support of working people had failed. Two important reasons for this failure were the ongoing shortages of consumer goods, which, if anything, were becoming worse, and the realization that the economic reforms were, in large part, going to come on their backs. The timid effort at workplace democratization through the labor-collective councils was intended to compensate people on the shop floors for the harsher work conditions and lower basic pay, and when the councils proved a farce the reformers were empty-handed.
The 1987 enterprise law, in addition to the profit-and-loss accounting and its other reforms, also legalized “cooperative” retail and service enterprises. These cooperatives, although not altogether new, helped exacerbate shortages and trigger inflation. Farmers’ markets, which sold produce at higher prices than charged in state markets while offering greater variety, were long a part of Soviet retail, as was street trading and peddling. But the new cooperatives quickly took advantage of the differential between what the new market would bear and the level of prices set in state shops. For example, when a shipment of meat would arrive at a state store, where it was intended to be sold at the low, state-controlled price, more than half of the shipment would be illicitly resold to a cooperative, which would then sell it at a far higher price, and leaving a shortage in the state store.
Another report found that, although the Soviet Union enjoyed an excellent harvest in 1990, only 58 percent of produce that was supposed to be delivered to state stores actually made it; the remainder was siphoned off by black marketeers or rotted due to a distribution system that was breaking down. Consumers feared future shortages, which became self-fulfilling prophecies when wide-spread hoarding helped empty store shelves.
Why manage factories when you can own?
By now, black marketeering and corruption, which blossomed during the Brezhnev “era of stagnation,” were worse than ever. Now adding to the picture was that the government and industrial bureaucracy (known as the “nomenklatura”) had begun thinking bigger. Their privileges were based on their management of the Soviet Union’s industry and commerce, and this control rested completely on the state ownership of that property because they did not own the means of production themselves.
Some among the nomenklatura began to dream of capitalism — then they would be able to dramatically upgrade their lifestyle. Economic malaise was becoming more pervasive as the dense web of threads that held the Soviet system together were starting to be snipped through corruption, local protectionism and supply disruptions, the last of which was exacerbated because many component parts were produced in only one factory. The move to profit-and-loss accounting helped to bring about an “all against all” mentality: Instead of simply continuing to manage state property, why not grab it for yourself?
It was against these backdrops that in 1990 Gorbachev began to abandon his efforts to renew the system he inherited. On the political level, the general secretary began eliminating the party’s monopoly on power and, through creating a new freely elected legislature, built himself a power base outside the party. His power was soon used to begin to introduce elements of capitalism. To bring about these “market reforms,” the limited ability of working people to defend themselves had to be eliminated. A series of laws designed to do this began with a new enterprise law stealthily passed by the Supreme Soviet in June 1990. Gorbachev continued to insist that market reforms were to remain within the boundaries of a socialist system (and there was a widespread belief in the country that the conditions for an outright restoration of capitalism didn’t exist), but in reality from this time the debate within Gorbachev’s government and among his closest advisers was about how far and how fast the transition to a capitalist-type system should go.
The new law eliminated what little opportunity workers had to influence their management in addition to legalizing private ownership of enterprises. More would quickly come in the following months. Subsequent laws completely freed wages of any central control, reducing wage labor to a commodity as it is in capitalist countries; granted guarantees to investors, including compensation in the event that future legislation affects an investment; created unemployment insurance but failed to authorize any money to pay for it, in expectation of mass unemployment; and legalized the privatization of state enterprises.
Simultaneous with the passages of the above legislation, two competing economic plans were floated. One called for a phase-in of some market mechanisms over five years while retaining state control over pricing, the other called for a sweeping transition to a capitalist economy in 500 days with no working plan on how to accomplish that. Gorbachev, increasingly unable to make a decision, asked the backers of the competing plans to reach a compromise between them. But Boris Yeltsin, having maneuvered himself into the newly created presidency of the Russian Republic, undercut Gorbachev by unilaterally declaring the 500-day plan adopted.
The Russian Republic constituted about 80 percent of the area of the Soviet Union and was by far the dominant republic among the Soviet Union’s 15 republics. The other, much smaller 14 republics had their own party apparatus, albeit completely subordinate to Moscow, and a Russian republic party would have been almost redundant. But as nationalism rapidly gripped peoples across the country, a Russian party body was created. Yeltsin gained control of it, using it to accelerate and deepen a path toward capitalism, undermine Gorbachev, dismantle the Soviet Union and ultimately impose brutal shock therapy on Russians after the Soviet Union’s dissolution.
In essence, Yeltsin set up a dual government in competition with the Soviet government headed by Gorbachev. But unlike 1917, when a brief period of dual government would end with the taking of power by the Bolsheviks, this time the capitalist restorationists led by Yeltsin would win.
The period of a dual government must always be brief
As 1990 drew to a close, many reformers became convinced that Gorbachev had gotten cold feet, and would call a halt to reform or even turn back. His appointment of hard-liners as prime minister (Valentin Pavlov), interior minister (Boris Pugo) and vice president (Gennadii Yanayev) fueled this fear; enough so that Gorbachev’s long-time ally and foreign minister, Eduard Shevardnadze, resigned in December with a warning that “dictatorship is coming.” Ironically, hard-liners — those who had been opposed to any reforms and wanted a return to the Brezhnev era — were needed so that capitalism could be imposed on a country that didn’t want it.
Gorbachev, until the end, maintained that he was committed to a long-term strengthening of socialism through the introduction of market mechanisms, although the concrete results of the decisions that he and the Supreme Soviet took from June 1990 formed a reality of a phased transition to capitalism. Yeltsin, in contrast to his populist image and public proclamations in favor of democracy, stood firmly for a much more rapid transition to capitalism — when the time came, the change would be so sudden and so cruel it would become known as “shock therapy.” Yeltsin was already assembling a team of young technocrats itching to upend the entire economy, and there would be absolutely no popular consultation nor any consideration of the social cost. Yeltsin was also a skilled political tactician; he turned back an attempt by the Russian parliament to remove him as parliament chair by calling for demonstrations in his support and gathering enough support so that a referendum to create a new post of Russian president be put to voters. Voters approved, and in June 1991 Yeltsin was elected president of the Russian republic. The dual government was more firmly in place.
Separate from all the political maneuvering, no true popular mass movement developed. If the creation of a better society, with popular control over all aspects of life, including the workplace, was in a position to happen, it was now, before widespread privatization. The workers of Czechoslovakia, during the Prague Spring, had begun working out a national system of workers’ control and self-management; they could attempt to create an economic democracy because the economy was in the hands of the state, and therefore could be placed in collective hands under popular control. But once the means of production become private property, the task of wresting control becomes vastly more difficult. The owners of that privatized production dominate a capitalist economy, enabling the accumulation of wealth and wielding that wealth to decisively influence government policy; the state becomes an agent of the dominant bourgeois class and the force available to the state is used to reinforce that dominance.
Although it probably is impossible to overstate the exhaustion of Soviet society as a factor in the failure to develop national grassroots organizations, perhaps the people of the Soviet Union didn’t believe that they had nothing left to lose as their ancestors had in 1917. Back then, Russians lived in miserable material conditions and under the constant threat of government violence. By no means were material conditions satisfactory during perestroika, but they were not comparable to the wretchedness endured under tsarist absolutism nor did the urgency of having to remove a violent dictatorship exist. A social safety net, tattered and weakened, still existed, and most Russians believed that, despite whatever dramatic economic and political changes still lay ahead, they would be able to retain the social safety net they were used to under Communist Party rule.
Pushing back against economic and political changes, hard-liners thought they would be able to turn the clock back and reinstitute some variation of the orthodox Soviet system. They, too, did not understand the social forces that were gathering. The Soviet Union could not stand still — if it could not find a path forward to a pluralistic, democratic socialist society that would be defended from across the country, then capitalism was poised to burst in as if a dam holding back a sea burst.
The Soviet Union could not find such a path — working people were unable to create a society-wide movement, perestroika was unable to solve the massive economic problems that had only become worse, and introducing capitalistic reforms had severed the supply and distribution links among enterprises without putting anything in their place. The Soviet command system did not function well and had been long overdue for radical changes to convert it into a more modern system — but it did function. What had begun to replace it, elements of capitalism, disorganized the country’s economy into disaster.
Yeltsin grabs power and imposes shock therapy
The August 1991 putsch brought an end to communist rule. Although the coup was badly executed and failed within three days, with Gorbachev reinstalled as Soviet president, the failure of the party to condemn the coup and Yeltsin’s opportunistic speeches loudly condemning the coup, despite his antipathy toward Gorbachev, meant that Yeltsin emerged as the winner. The party was swiftly banned, its publications suspended, and the brief period of the dual government effectively ended. Yeltsin quickly assembled a team of young technocrats itching to dismantle all institutions of planning and began doing so despite having no legal authority to alter Soviet agencies. That no longer mattered; Gorbachev was now irrelevant. He resigned at the end of the year, having no country to lead.
The three leaders of the Slavic republics — Yeltsin, Leonid Kravchuk of Ukraine and Stanislav Shushkevich of Belarus — met in a forest to sign an accord declaring that the Soviet Union had ceased to exist. One week after Mikhail Gorbachev’s resignation, the shock therapy would begin on January 2, 1992, with complete liberation of prices (except for energy), the concomitant ending of all subsidies of consumer products and for industry, and allowing the ruble to float against international currencies instead of having a fixed exchange rate. The strategy was to radically reduce demand, a devastating hardship considering that most products were in short supply already. The freeing of prices meant that the cost of consumer items, including food, would skyrocket, and the ruble’s value would collapse because the fixed value given it by the Soviet government was judged as artificially high by international currency traders. This combination would mean instant hyper-inflation.
Yeltsin was already ruling by decree at the end of 1991, and his team of reformers used the president’s authority to force through their plans. Inflation for 1992 was 2,600 percent and for 1993 was nearly 1,000 percent — that alone wiped out all savings held in banks. The excess cash that had accumulated in banks, instead of being put back into circulation by stimulating demand or used toward productive investment, was simply made worthless. A large surplus of personal savings parked in banks had built up during the previous three years because there had not been enough production for consumers to buy. Yeltsin’s economic aide, Yegor Gaidar, considered liquidation of the money in savings accounts part of the effort to reduce Russia’s “monetary hangover.” In other words, Russians possessed too much money — another “technical” issue because too large a supply of money causes inflation, Chicago School economists believe, a problem cured here through hyper-inflation.
In the first days of January, what little food was available in state stores completely disappeared, as state-store managers diverted their supplies to private operators for a cut of their profits. State enterprises were also crippled by new high taxes levied only against them. Reduced to penury, Russians took to the streets to begin peddling their personal possessions to survive. At the same time, a handful of speculators, mostly arising out of black-market networks, made fortunes through smuggling consumer items and exporting oil, the latter particularly lucrative because the oil was bought at extremely low subsidized Soviet prices and sold abroad at international market prices. Organized crime networks blossomed, demanding “protection” money from all merchants and street peddlers.
Yeltsin would, in 1993, maintain power by launching a military assault on parliament that killed about 500 people and wounded another 1,000. Yeltsin ordered the parliament disbanded and, for good measure, also disbanded the Moscow city council. He was loudly applauded by the U.S. government and financial institutions for preserving democracy for that. Yeltsin would go on to give away Russia’s natural resources to oligarchs who had him re-elected in 1996 despite an approval rating of 3 percent.
Further economic disasters would come. By the end of 1998, on the heels of another crash that again wiped out savings, Russia’s economy had contracted 45 percent from 1990, when capitalism began to be introduced. Investment in industry declined by almost 80 percent in the same period and the murder rate skyrocketed to become one of the world’s highest. Two million children were orphaned with more than half of them homeless. The World Bank estimated that 74 million Russians lived in poverty; two million had been in poverty in 1989. In the Ural Mountains, competing organized-crime groups fought armed battles for control of factory complexes, backed by different police forces, with the winners then proceeding to strip the assets.
The stagnation of Gorbachev gave way to collapse under Yeltsin. Capitalism de-developed Russia. The weakness of Russian institutions, both cause and effect of the oligarchs, had the perverse effect of enabling a vigorous proponent of nationalism, Vladimir Putin, to arise. How much of Russian history can we assign to Mikhail Gorbachev? A lot. But not all. History is always far more complicated than the career of one human being. What if the Soviet peoples had rallied to their cause and built a system of economic democracy? History would be far different. Gorbachev must be assigned much responsibility for the inability of Soviet peoples to organize, but the long history of Soviet-style communism that atomized and alienated people while shutting them out of political participation can’t be overlooked, nor can the Soviet bureaucracy’s willingness to adopt capitalism for personal enrichment be over-estimated.
There was a poverty of imagination: In a mirror of the West, Soviet officials could not see beyond an impoverished and unimaginative choice of either Soviet-style centralism or Chicago School runaway capitalism. No one leader could, or can, be responsible for all that.
The size of the financial industry bears no relation to the economy. Self-mythological panegyrics aside, the finance industry confiscates money; it doesn’t create it. How much? Get out your calculators, and maybe you’ll have to find a way to add a couple of digits to what your screen can hold.
Perhaps the total amount of money extracted by financiers (or, more to the point, speculators) is not quite as large as Douglas Adams’ description of space in the, yes, increasingly inaccurately named Hitchhikers’ Trilogy, as “Really big. You just won’t believe how vastly hugely mind-bogglingly big it is.” But it’s close.
OK, let’s put down a couple of numbers here. The numbers on their own are so absurd as to defy easy comprehension, so let’s try to find a way to situate them.
Total amount of financial instruments traded, on average, per day: US$9.68 trillion (€9.65 trillion).
Yep, that’s a whole lot of money. So big that the imagination struggles to grasp such numbers. One way to put those numbers in perspective is that the size of the world economy (global gross domestic product for all the world’s countries) was US$96.1 trillion (€95.8 trillion) in 2021.
In other words, the volume of currency trading (foreign exchange), stocks, bonds and their derivatives exceeds the size of the global economy in 10 business days. (The period is almost certainly a little less, as that US$9.68 trillion in average daily trading doesn’t include most government bonds, trading figures for which are difficult to come by.) To create another comparison, the amount of debt owed by the world’s governments, businesses and households (the $305 trillion total above) is more than three and a half times of the value of all economic activity produced in a year.
Still another way to look at this activity is that foreign exchange trading (including swaps, options, spot transactions and outright forwards) in one day is bigger than the economies of all countries other than the United States and China. Given that the U.S. dollar, the world’s reserve currency, is involved in 88 percent of foreign exchange trades, trading in the dollar by itself totals more than a year’s production of all countries other than itself and China.
A multi-headed monster that is never satiated
Rolling Stone magazine once memorably described Goldman Sachs as a “great vampire squid wrapped around the face of humanity.” That makes finance capital as a whole a multi-headed monster with the attributes of a tyrannosaurus rex, killer whale, giant squid and elephant that can swallow ships at sea whole, fly through the air at supersonic speed and never stops eating. Or something like that. Perhaps some planet-eating monster in a science fiction potboiler? Maybe we can fall back on Douglas Adams after all, and just consider the financial industry vastly hugely mind-bogglingly big.
And getting bigger. When I last did this exercise 10 years ago, it took about 11 business days for speculators to trade financial instruments and contracts valued at all the products and services produced by the entire world in one year. Now it’s 10 days. There’s progress for you.
There is no rational economic reason for a financial industry — and “bloated” would be woefully inadequate to describe it — even a fraction of this size. Most of the action on stock exchanges is simply speculation. Greed is certainly a part of the picture, but by no means the entire picture. Because there are insufficient opportunities for investment, more money is diverted into speculation. As ever bigger piles of money are diverted into speculation, the size of the financial industry and the percentage of corporate profits claimed by the financial industry steadily grows. This capital is a function of the amount of money flowing upward to the rich becoming larger than they can use for personal luxury consumption or investment; these torrents of money are diverted into increasingly risky pure speculation.
Too much money comes to chase too few assets, rapidly bidding up prices until there is no possible revenue stream that can sustain the price of assets bought at inflated levels. Not altogether different from those Warner Brothers cartoons in which the character walks off a cliff, takes several steps suspended in air before looking down, sees there is nothing but air below and then falls, at some point speculators look down and notice they have no support, mass panic commences and prices collapse, bringing on another economic downturn. One that working people, not speculators, will pay for.
The very size of financial markets is a major contributing cause of economic instability. Financial companies, having extracted immense sums of bailout money after the 2008 collapse, have leveraged their power to become even bigger through consolidation, thereby enabling them to divert more capital from productive use. But even during the “boom” portion of business cycles financiers are destructive to an economy by rewarding manufacturers for mass layoffs, moving production to low-wage developing countries with few or no effective labor or environmental laws, and setting up subsidiaries overseas and using creative accounting to shift profits offshore to avoid paying taxes. Financiers provide rewards for such behavior in the form of rising stock prices, and those stock prices in turn provide top executives a rationale to give themselves stratospheric pay packages because they “enhanced shareholder value.”
In turn, there is continual downward pressure on wages — an increasing share of corporate revenues go toward executive pay and profits as the share going toward wages declines. And much of those corporate profits are quickly funneled into dividends and stock buybacks, yet more ways for money to move upward into the ever grasping hands of super-wealthy speculators.
As I wrote back in June, the corporations of North America, Europe and Japan handed out an astounding US$2.75 trillion (€2.63 trillion at then exchange rates) to shareholders in 2021 through dividend payments and stock buybacks. By February 2022, the amount of money created by the central banks of five of the world’s biggest economies for the purpose of artificially propping up financial markets since the beginning of the Covid-19 pandemic totaled US$9.94 trillion (€8.76 trillion). That is on top of the US$9.36 trillion (€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. That’s US$19.3 trillion (€17.1 trillion) in the span of 14 years, and this astounding sum of subsidies and handouts represents only one program of the many used by the U.S. Federal Reserve, the European Central Bank, Bank of Japan, Bank of England and Bank of Canada.
Crash to crash, but it’s you who is supposed to fall down
How could a parasitic industry grow to such gargantuan proportions? In theory, stock markets exist to distribute investment capital to where it is needed and to enable corporations to raise money for investment or other purposes. In real life, neither is really true. A corporation with stock traded on an exchange can use that status to issue new shares, raising money without the burden of dealing with lenders and paying them interest. But large corporations can raise money in a variety of ways, for example by issuing bonds or other interest-bearing debt, or by selling shares directly to private investors. Nor do corporations necessarily wish to float new stock — doing so is disliked by investors because profits are diluted when spread among more shares. Instead, it is more common for large companies to buy back shares of their stock (at a premium to the trading price), which means less sharing of distributed profits. And thus the steady increase in buybacks, which combined with dividends, in some years exceeds the total of profits!
And what of distributing investment capital to where it is needed? That is saying, in so many words, that stock markets make finance more efficient — that capital will be put to use in the industries or companies in which a high profit is seen as a good bet because a company is filling a need with a product but lacks sufficient capital to take full advantage, or that the company already has a history of delivering profits. At bottom, buying stock is a gamble on the future profits of the company in which stock is bought. An investor is betting that profits will not only rise, but rise at a faster rate than in the past. I at one time worked on a financial news wire service, and one day was surprised when the stock price of a well-known technology company fell despite announcing it had earned a profit of $800 million for the previous three months, a higher profit than the same quarter in the previous year. On closer examination, the company was punished by speculators because the rate of the increase of the profit did not increase — this gigantic profit was lower than what stock market “analysts” had predicted.
This illustrates that trading is primarily done for speculation, not for any rational economic reason. The beginnings of the financial industry lie in the very slow rate of business in the early days of capitalism; it could take years for an investment made on the other side of the globe to pay off. Thus financiers stepped in to provide cash liquidity. But because financial speculation doesn’t have the physical limitations of the production of tangible goods, speculation would become prominent. Indeed, financial crashes long predate the crashes of 1929 and 2008. “Tulip mania” consumed the Dutch in the 1630s, speculation fueled by the first futures contracts; uncontrolled speculation in the 1710s in the English South Sea Company and the French Company of the Indies led to the collapse of stock in both, a bubble in which short selling was born; an 1830s bubble in U.S. real estate burst when banks stopped making payments; and an 1870s bubble inflated by speculation in railroads and construction in North America and Europe burst when the Vienna stock market crashed, followed by waves of bank failures, to note some of the more well-known examples.
The world’s billionaires and multi-national corporations profited enormously from the Covid-19 pandemic, enormously inflating their wealth. Not surprisingly, debt increased dramatically as well. The 2020 increase in debt was the biggest for any year since World War II, according to the International Monetary Fund.
Half of the 2020 increase in debt was governmental, again no surprise given the trillions handed out to financial institutions that year. According to the IMF, “Debt increases are particularly striking in advanced economies, where public debt rose from around 70 percent of GDP, in 2007, to 124 percent of GDP, in 2020. Private debt, on the other hand, rose at a more moderate pace from 164 to 178 percent of GDP, in the same period. … Public debt now accounts for almost 40 percent of total global debt, the highest share since the mid-1960s.”
Extracting money from those who work
It should always be remembered that profit comes from a capitalist paying to employees much less than the value of what they produce. In turn, the financial industry extracts money from the producers of tangible goods and services, and often from governments as well. Finance capital seeks to profit off any and all economic activity anywhere, regardless of cost to everybody else. It’s incredibly profitable — not only are investment banks among the most profitable corporations, but speculators can rake in hundreds of millions and even billions of dollars annually — and they pay less in taxes that you do!
Not even the biggest corporations are immune from financial industry pressure. Several years ago, DuPont, the chemical multi-national that produces many products that dominate their market, had racked up about US$17.8 billion in profits over five years, handed out $4 billion to shareholders from the proceeds of selling its performance chemicals business and boasted a one-year increase in its stock price of 20 percent. Yet a powerful hedge-fund manager declared war on DuPont management, demanding DuPont be broken up into two companies, under the theory that more profit could be extracted. The speculator did not get what he wanted, but DuPont did lay off workers to appease speculators despite its massive profitability. Ultimately, DuPont merged with Dow Chemical and then the combined conglomerate split into three companies, maneuvering done mainly to throw more cash at speculators.
Even Wal-Mart is not ruthless enough for Wall Street. After five years of massive profits (US$80 billion), speculators began driving down the price of Wal-Mart stock in part because the company had raised its minimum wage to $9 an hour. Wal-Mart did attempt to offset that news by also announcing a new $20 billion buyback of shares, but not even blowing that kiss to financiers served to lift speculator moods. Thus the company that is the most ruthless in accelerating the trend of moving manufacturing to the locations with the lowest wages, legendary for its relentless pressure on its suppliers to manufacture at such low cost that they have no choice but to move their production to China, or Bangladesh, or Vietnam, because the suppliers can’t pay more than starvation wages and remain in business, was deemed by financiers to be insufficiently brutal.
As always, it’s heads, Wall Street wins and tails, Wall Street wins. Those fantastic values of financial instruments traded don’t fall from the sky and aren’t because of some rare acumen of speculators. Those sums of money, which would put orbiting satellites at risk if they were stacked up, are the direct result of exploitation of those who work.
It is bewildering to see the Russia/Ukraine war be reduced to a cheering contest, as if a football game were being watched. For those along much of the political spectrum, this cheering for “our side” is not a surprise given the well-oiled propaganda apparatus that constitutes most of the corporate media. But many on the Left have substituted cheerleading for analysis, on both sides.
On one side, we have a capitalist country run on behalf of selected oligarchs in which a reactionary church aligns itself with a powerful authoritarian ruler who oversees an intensely patriarchal social policy featuring deep sexism and violent homophobia (Russia). On the other side, we have a capitalist country controlled by shifting alignments of oligarchs in which a virulent nationalism long intertwined with fascist ideologies are backed by far right militias given free rein (Ukraine).
Why should we be rooting for either of these? To say this is not to deny the brutality of Vladimir Putin’s invasion of Ukraine or to condone it, nor to deny the reality of U.S. imperialism and the aggressive, destabilizing NATO expansion that contributed to the tensions that detonated into war. But it is ordinary Ukrainian people who are paying the biggest price of this war — if we are anti-war, then perhaps our efforts might be directed toward bringing the war to a negotiated end. Both sides still believe they can win militarily, but as the war increasingly develops stagnant front lines, it seems that negotiation may be the only way to bring the fighting to an end. From a humanitarian standpoint, ending hostilities not only will save Ukrainian and Russian lives, it will also save lives elsewhere, given the blockades on Ukraine’s Black Sea ports that have prevented the export of grain.
The July 22 agreement among Russia, Ukraine, Turkey and the United Nations to allow grain shipments to resume was a hopeful sign, although the bombing of Odessa’s port a day later demonstrates there are many difficulties to come and that humanitarian concerns are not at the forefront of military minds.
A serious look at the two combatant countries might provide us ample reason to not engage in cheerleading. Is Russia really classifiable as a progressive bulwark because of its opposition to U.S. domination of the world as some would have us believe? Is Ukraine really a democratic beacon in which fascist groups are so minuscule as to be completely irrelevant as some others would have us believe? Let’s take a look.
Putin represents a continuation of Yeltsin
To understand President Putin’s rise and continuing grip on power, it is necessary to summarize Russia’s post-communist history. Boris Yeltsin was able to out-maneuver Mikhail Gorbachev in the last years of the Soviet Union, and upon the breakup, Yeltsin was already Russia’s leader. Yeltsin immediately imposed a program of “shock therapy” — the sudden simultaneous lifting of all price and currency controls and withdrawal of state subsidies in conjunction with rapid mass privatization of public assets and properties. The immediate purpose of such a program is to place everything into private hands so that as much profit as possible can be extracted, in conjunction with the concomitant broader goals of blocking the creation of more socially harmonious economic models. This would be a very specific ideological experiment — a “pure” capitalism. “Pure” because this would be capitalism without constraints.
There was nothing democratic about this. The plans for shock therapy were not placed before the public nor the Russian parliament; they were presented only to the International Monetary Fund. A large majority of Russians opposed full privatization, instead backing the transformations of enterprises into cooperatives and state guarantees of full employment. The shock therapy program of complete liberation of prices (except for energy), the concomitant ending of all subsidies of consumer products and for industry, and allowing the ruble to float against international currencies instead of having a fixed exchange rate was a disaster. The freeing of prices meant that the cost of consumer items, including food, would skyrocket, and the ruble’s value would collapse because the fixed value given it by the Soviet government was judged as artificially high by international currency traders. This combination would mean instant hyper-inflation. At the same time, oligarchs quickly arose, mostly from the black-market networks that flourished during the corruption of the Brezhnev era, taking control of Russia’s productive enterprises. Western governments, while doing everything they could to have shock therapy imposed, slated Russia to be reduced to a natural resources exporter as Russian industrial output drastically decreased.
The Russian economy collapsed so steeply that Yeltsin could only “win” re-election in 1996 through massive cheating, and handing the biggest prizes, giant natural resources enterprises that had not yet been privatized, to the seven biggest oligarchs for almost nothing in exchange for their financial and media support. The result of the first years of capitalism was that the Russian economy contracted by an astonishing 45 percent by 1998 as poverty and crime rates skyrocketed. Yeltsin appointed Vladimir Putin as his last prime minister, then appointed him his successor as president in exchange for a blanket pardon for him and his family. Rising prices of oil and gas helped the Russian economy strengthen during Putin’s first set of terms as president. Nonetheless, he cut taxes for the rich while reducing benefits for pensioners. Corruption became so rampant that, in Putin’s first years as president, the amount of money spent on bribes exceeded the amount of revenue paid to the Russian government.
It is a commonplace cliché to say that he is a product of the KGB who oversees a personal dictatorship that represents a sharp break from Yeltsin’s reign. That is not so. An excellent analysis of the Putin régime is found in Tony Wood’s book Russia Without Putin. The author demonstrates well that the Putin era is in large part a continuation of the Yeltsin era, that corruption is endemic among Russian elites and that Putin is at the apex of a system that predates him. The kleptocratic, autocratic variety of Russian capitalism was well established before Putin’s ascent to power. Putin was shaped in the massive corruption of the post-communist 1990s and the Yeltsin régime. He was brought into the St. Petersburg city government in 1990 and became a functionary in the Yeltsin national government in the mid-1990s. Loyalty to superiors and to Yeltsin enabled his swift rise. There was a gradual drift of Putin’s government from seeking cooperation with the West to dogged opposition, a change cemented by the 2014 overthrow of the Ukrainian government and the U.S. hand-picking the new prime minister for Kyiv. Unrelenting hostility from the U.S. despite Russian overtures, and NATO expansion as the U.S. pressed its strength over Russian weaknesses, played a significant role in this evolution.
Mr. Wood offers this summation of Putin’s rule:
“Putin’s first administration, from 2000 to 2004, was perhaps the most energetically neoliberal, introducing a series of measures designed to extend the reach of private capital: in 2001, a flat income tax set at 13 per cent; in 2002, a labour code scaling back workers’ rights; tax cuts for businesses in 2002 and 2003. These moves were widely applauded in the West at the time: the right-wing Heritage Foundation praised ‘Russia’s flat tax miracle’, while Thomas Friedman gushed about Russia’s embrace of ‘this capitalist thing’, urging readers of the New York Times to ‘keep rootin’ for Putin’. His second presidency, too, was marked by moves to increase the private sector’s role in education, health and housing, and by the conversion of several in-kind social benefits to cash payments — a ‘monetization’ that prompted popular protests in the winter of 2004-05, but which was carried through in modified form all the same.”
Reactionary social policies grounded in misogyny and homophobia
Not very progressive, is it? Nor is the Putin régime in social matters. Here’s an excerpt from a Human Rights Campaign press release issued after an anti-LGBT law was passed:
“Last year, the law banning ‘propaganda of nontraditional sexual relations’ was passed by Russia’s Federal Assembly and signed into law by President Vladimir Putin. Under the guise of protecting children from ‘homosexual propaganda,’ the law imposes fines or jail time on citizens who disseminate information that may cause a ‘distorted understanding’ that LGBT and heterosexual relationships are ‘socially equivalent.’ The fines are significantly higher if such information is distributed through the media or Internet.”
“The politicization of homophobia in post-Soviet Russia came to a head in the 2013 ‘gay propaganda law,’ under the terms of which individuals and organizations can be fined for disseminating information about ‘non-traditional sexual orientations’ among minors, promoting the ‘social equivalence of traditional and non-traditional relationships’ or ‘the depiction of homosexual people as role models, including mention of any famous homosexuals.’ ”
Sounds just like what right-wing Christian fundamentalists promote in the United States, doesn’t it? If we, correctly, energetically oppose such hate in the West, shouldn’t we also energetically oppose it elsewhere? Directly related to these developments, Russian Orthodox is again the official state religion — in an echo of tsarist rule, the ruler and the church are reinforcing one another. The Russian Orthodox Church is so extreme in its hatred that its top-ranking official equated same-sex marriage to “Nazism” and also “a form of ‘Soviet totalitarianism’ that threaten[s] humanity.” He has called Vladimir Putin’s rule “a miracle” while Putin grants the church “generous economic support from state-allied energy giants.” The church is deeply misogynistic, with the church opposing laws against domestic violence because such concepts are “Western imports” and church officials claiming women are less intelligent than men.
Putin is also in lockstep with the church when it comes to women. He signed into law a measure that decriminalizes domestic violence — in a country in which an estimated 14,000 women per year die from injuries inflicted by husbands or partners. Russia also has one of the world’s widest pay gaps between men and women, and numerous jobs are closed to women.
The far right ideologist who gives Putin his worldview
Although Russia is increasingly aligning with China, that alliance is perhaps more grounded in pragmatism than in any shared economy-building project. China has given rhetorical support of Russia’s invasion of Ukraine, but appears to have given no material aid. In any event, Moscow will be the junior partner in any formal alignment with Beijing. Who are Putin’s ideological allies around the world? Donald Trump, Brazil’s Jair Bolsonaro, France’s Marine Le Pen and her National Rally, Italy’s Matteo Salvini and his far right League, Hungary’s Viktor Orbán and his reactionary Fidesz party, and Nigel Farage, former leader of Britain’s absurdly named United Kingdom Independence Party. Might there be a pattern here?
Taking all this into account, plus Putin’s wildly inaccurate claims that Ukraine is an artificial construct, might leave a reasonable observer in less than shock that the person believed to be Putin’s biggest ideological influence is Aleksandr Dugin. Who is this person who is frequently described as “Putin’s brain”? “Alexander Dugin is quite possibly, after Steve Bannon, the most influential fascist in the world today,” writes Dan Glazebrook, a journalist and activist who writes frequently on fascism. “His TV station reaches over 20 million people, and the dozens of think tanks, journals and websites run by him and his employees ultimately have an even further reach.”
Mr. Glazebrook wrote a most interesting article on Dugin in the now lamentably discontinued CounterPunch print magazine (Volume 25, No. 6). Dugin’s strategy is using Left-sounding phrases as a way of coopting the Left, a classic strategy of the far right. (This has echoes of so-called “9/11 truthers” on the far right who are trying to use the issue as a way of worming their way into the Left; a strategy that, sadly, all too many fail to observe.) It is worthwhile to quote extensively from Mr. Glazebrook’s article so we get a full sense of the Dugin strategy. He writes of Dugin:
“His strategy is that of the ‘red-brown alliance’ — an attempt to unite the far left and far-right under the hegemonic leadership of the latter. On the face of it, much of his programme can at first appear superficially attractive to leftists — opposition to US supremacy; support for a ‘multipolar’ world; and even an apparent respect for non-western and pre-colonial societies and traditions. In fact, such positions — necessary as they may be for a genuine leftist programme — are neither bad nor good in and of themselves; rather, they are means, tools for the creation of a new world. And the world Dugin wishes to create is one of the racially-purified ethno-states, dominated by a Euro-Russian white power aristocracy (the ‘Moscow-Berlin axis’) in which Asia is subordinated to Russia by means of a dismembered China. This is not an anti-imperialist programme. It is a programme for an inter-imperialist challenge for the control of Europe and Asia: for a reconstituted Third Reich.”
And what does Dugin propagate? “His first journal, Elementy, founded in 1993, praised the Nazis and the Conservative Revolutionaries which preceded them, and published the first Russian translations of esoteric interwar fascist Julius Evola.” Dugin’s work, Mr. Glazebrook writes, is frequently re-published on a U.S. white supremacist website. That is no aberration, as Dugin “has close links to the American far right — he has links to former KKK leader David Duke; one of his disciples, Nina Kouprianova, is married to leading US fascist Richard Spencer; whilst him and Alex Jones feature on each other’s TV shows.” But, sadly, Dugin was once invited by a Syriza government minister in Greece to give a lecture.
“Dugin’s outlook essentially boils down to a combination of “ethnopluralism” and what he disingenuously terms Neo-Eurasianism,” Mr. Glazebrook writes. “Both ideas lend themselves well to the building of a ‘red-brown’ fascist-led alliance, as both have elements which are superficially appealing to the left whilst in fact providing theoretical cover for genocide and imperial war.” While superficially saying that different land masses belong to the people who originate there, the corollary is that non-Europeans should be removed from Europe. This is white supremacist and anti-Semitic, demonstrated when Dugin condemns what he calls “subversive, destructive Jews without a nationality.” The Dugin project “is essentially the reconstitution of the territories of the Third Reich (including the parts of Russia it never conquered) under joint German-Russian tutelage. … The real inspiration Dugin appears to have gained from classic Eurasianism was its strategy of the infiltration and colonization of the left rather than direct confirmation with it.”
Mr. Glazebrook’s article concludes that “Duginism is a classic fascist blend of ‘anti-elite’ rhetoric, demands for ethnic purification, and an imperial foreign policy agenda, all dressed up in politically-correct appeals to cultural distinctiveness and anti-western tubthumping. Its particular danger comes from the deep inroads it has made into anti-imperialist and leftist circles.”
The reactionary source for claiming Ukraine doesn’t exist
The article just summarized does not mention Putin. But plenty of writers have made the connection between the Russian leader and Dugin. Writing in the March/April 2015 issue of World Affairs, Andrey Tolstoy and Edmund McCaffray write, “Dugin is the intellectual who has Vladimir Putin’s back in the emerging ideological conflict between Russia and the West. At home, Putin uses him to create a nationalist, anti-liberal voting bloc.” And not only the Russian leader: “Dugin has also been actively involved in the politics of Russia’s elite, serving as an adviser to State Duma chairman and key Putin ally Sergei Naryshkin. His disciple Ivan Demidove serves on the Ideology Directorate of Putin’s United Russia party, while Mikhail Leontiev, allegedly Putin’s favorite journalist, is a founding member of Dugin’s own Eurasia Party.” Dugin is a former sociology professor at Moscow State University, founded the Center for Conservative Studies and lectures at police academies, military schools and other law enforcement institutions.
Dugin, in 2016, praised the election of Trump as U.S. president. Olivia Goldhill, writing in Quartz, said “Dugin’s ideas are reminiscent of the alt-right movement in the US, and indeed there are ties between the two. … The Russian philosopher has published articles on Spencer’s website, Alternative Right, reports Business Insider, and recorded a speech titled ‘To my American Friend in Our Common Struggle,’ for a nationalist conference in 2015. … Dugin has also identified an ally in Donald Trump, viewing him as a triumphant opponent to the liberal global elite. After Trump was elected, Dugin told the Wall Street Journal he was elated at the result. ‘For us it is joy, it is happiness,’ he said. ‘You must understand that we consider Trump the American Putin.’ ”
Other friends of Dugin’s include the Greek fascist party Golden Dawn. The party has a picture of Dugin standing with a Golden Dawn member who was also a member of an anti-Semitic group that “praised the gas chambers of Auschwitz.”
Dugin’s ideology is also sometimes characterized as “Traditionalist.” But regardless of what term might be used for his far right ideology, there seems little doubt that he is a strong influence on Putin. Interviewed in Jacobin, Benjamin Teitelbaum, an International Affairs professor who has written works on the far right, said:
“[I]t seemed quite obvious that Putin was listening to Dugin speak, because when Putin went out afterward he was recycling and learning from Dugin, almost letting him teach him how to characterize the war and Russia’s role in the world. But throughout all of this, he has basically had no significant official role in the Russian government. That’s what makes him so hard to characterize. … If Russia is being characterized or ever characterized itself as a beacon of the immaterial and the spiritual in the world (which you do hear from Putin occasionally — we heard a version of it at the beginning of his speech on Ukraine right before the invasion — that’s Dugin territory. It’s in the most deeply messianic and eschatological framings of this war that you can see Dugin’s influence.”
Dugin’s use of the term “Novorossiya” (New Russia) for territories of Eastern Ukraine, has been taken up by Putin. Three days before the invasion of Ukraine, Putin asserted that Ukraine is a fiction. He said, “Modern Ukraine was entirely created by Russia, more precisely, Bolshevik, communist Russia. This process began immediately after the revolution of 1917. … As a result of Bolshevik policy, Soviet Ukraine arose, which even today can with good reason be called ‘Vladimir Ilyich Lenin’s Ukraine.’ He is its author and architect.” Earlier, in December 2019, Putin said, “When the Soviet Union was created, primordially Russian territories that never had anything to do with Ukraine were turned over to Ukraine,” referencing Ukraine’s southeast, including the entire Black Sea region. But, according to a London School of Economics blog post linking to the 1926 Soviet census, ethnic Ukrainians “far outnumbered ethnic Russians” in eastern Ukraine, including today’s contested areas, at that time. Internal Soviet republic borders tended to be drawn very carefully as to the local populations; the highly complicated borders of the former Soviet Central Asian republics remain a good demonstration.
Putin’s assertions, resting on anti-communism no less, have no basis in reality. Present-day Ukraine is where Slavic peoples settled in the fifth century CE; from there Slavic tribes expanded their territories, including tribes that would eventually become the Russian nationality. A state centered on Kyiv was founded in the late ninth century, and the name “Ukraine” has been used for centuries. It is true that for six centuries there was no independent Ukraine — it was overrun by several empires and often divided — but Poland was similarly wiped from the map for more than two centuries and Slovakia spent a thousand years under the Hungarian yoke. Does anybody deny the existence of the Polish and Slovak peoples? Putin’s statement is ahistorical nonsense.
Ukrainian attacks on its Russian minority
Now let us turn to Ukraine. The country experienced a collapse and oligarch domination similar to Russia. Ultimately, the Ukrainian economy shrank by about 60 percent in the first five years of independence, and didn’t resume growth until 2000, one of the worst performances of any former Soviet republic under capitalism. As late as 2013, Ukraine’s economy was 20 percent smaller than it was in 1990. In 2014, with the economy still floundering, the International Monetary Fund proposed more shock therapy for Ukraine. The IMF program required Ukraine to impose drastic austerity, in the usual fashion. In accepting the IMF deal, Prime Minister Arseniy Yatsenyuk said the austerity package would result in inflation as high as 14 percent that year and a further economic contraction of 3 percent.
Earlier that year, U.S. diplomat Victoria Nuland imposed Yatsenyuk as prime minister, famously caught on tape saying “Yats is the guy” and offering a vulgar dismissal of any potential European Union concerns. Yatsenyuk had a reputation as “rabidly anti-Russian,” which surely featured prominently in the U.S. decision. That of course was hardly the only occasion of U.S. interference.
Ukraine, despite the previous close relationship between Russians and Ukrainians, became a bitterly divided country in the years after independence. Fighting in the Donbas provinces of Donetsk and Luhansk has gone on since 2014. The Minsk Accords were to have been the solution. Under these accords, the Donbas provinces were to have been given measures of autonomy with full Russian language rights. The Ukrainian government, spurred by nationalist agitation, had put strong prohibitions on the public use of the Russian language, making Ukrainian the only official language. The Minsk Accords would have also kept Ukraine neutral. Given the deep divides of the country, having trading links to both the EU and to Russia, and allowing Russian as an official language given the millions who speak it, would be in the country’s interest.
Unfortunately, nationalists, and in particular the far right, had different ideas. Contrary to those proffering one-sided pro-Ukrainian viewpoints, the far right is a significant factor in Ukrainian politics, regardless of the tiny size of their official parliamentary presence.
The Ukrainian refusal to implement the Minsk Accords
As we did above with Dan Glazebrook’s work, an article on Ukraine, “Towards the Abyss” in the January-April 2022 issue of New Left Review, is worth an extended study. The article is an interview with Volodymyr Ishchenko, a Ukrainian sociologist now based in Berlin. Extreme nationalists and the far right took advantage of the 2014 “Euromaidan” coup that overthrew the administration of Viktor Yanukovych, but not only them. According to Dr. Ishchenko, the 2014 Euromaidan, like previous “color” revolutions in former Soviet republics, were captured by “agents” who participated in the uprising but “were very far from representing” ordinary Ukrainians. The four major agents that grew stronger after the Euromaidan were the oligarchic opposition parties, structured around a “big man” and patron-client relations; NGOs funded by the West; the far right, organizing into militias and espousing extreme nationalism while taking advantage of a weakening state; and “Washington–Brussels.”
“The competing oligarchs exploited nationalism in order to cover the absence of ‘revolutionary’ transformations after the Euromaidan, while those in nationalist-neoliberal civil society were pushing for their unpopular agendas thanks to increased leverage against the weakened state,” Dr. Ishchenko said. Those who gained the upper hand were opposed to the Minsk Accords. “The Minsk agreements specified a ceasefire, Ukrainian recognition of local elections in the separatist-controlled areas, the transfer of control over the border to the Ukrainian government, and a special autonomy status for Donbas within Ukraine, including the possibility of institutionalizing the separatist armed forces. … The general logic of the Minsk Accords demanded recognition of significantly more political diversity in Ukraine, far beyond the bounds of what was acceptable after the Euromaidan.”
Multiple political currents that had been mainstream before Euromaidan became stigmatized as “pro-Russia,” leading to online and physical harassment. Left organizing had to be done clandestinely due to persistent unchecked threats from the far right. Although the far right comprised only a tiny portion of the post-Euromaidan governments, their ultra-nationalist agenda became government policy. Petro Poroshenko, elected after Yanukovych fled Kyiv, became widely unpopular. As a result, Volodymyr Zelensky was elected in a landslide (in part on his promise to implement Minsk), but had no pool of people behind him to fill out his government.
Poroshenko began opposing the Minsk Accords despite his campaign promises to implement them. According to Dr. Ishchenko:
“Although in the end it appeared to be Putin who put an end to the Minsk Accords by recognizing the independence of the Donetsk and Luhansk People’s Republics in February 2022, there had been multiple statements from Ukrainian top officials, prominent politicians and those in professional ‘civil society’ saying that implementing Minsk would be a disaster for Ukraine, that Ukrainian society would never accept the ‘capitulation’, it would mean civil war. Another important factor was the far right, which explicitly threatened the government with violence should it try to implement the Accords. In 2015, when parliament voted on the special status for Donetsk and Luhansk, as required by Minsk, a Svoboda Party activist threw a grenade into a police line, killing four officers and injuring, I think, about a hundred. They were showing they were ready to use violence.”
After his election, Zelensky proved to be too weak to control the far right militias, which had continued fighting in the Donbas provinces.
“At the same time, Azov and other far-right groups were disobeying Zelensky’s orders, sabotaging the disengagement of Ukrainian and separatist forces in Donbas. Zelensky had to go to a village in Donbas and parlay with them directly, even though he is the Commander in Chief. The ‘moderate’ anti-capitulation people could use the protests of the hard right to say that implementation of the Minsk Accords would mean a civil war because Ukrainians wouldn’t accept this ‘capitulation’, and so there would be some ‘natural’ violence.”
The weakness of the Ukrainian state and the strength of fascist fighting groups, doesn’t absolve Russia of responsibility, Dr. Ishchenko concludes:
There has been an “incapacity of the post-Soviet and specifically Russian ruling class to lead, not simply to rule over, subaltern classes and nations. Putin, like other post-Soviet Caesarist leaders, has ruled through a combination of repression, balance and passive consent legitimated by a narrative of restoring stability after the post-Soviet collapse in the 1990s. But he has not offered any attractive developmental project. Russia’s invasion should be analyzed precisely in this context: lacking sufficient soft power of attraction, the Russian ruling clique has ultimately decided to rely on the hard power of violence, starting from coercive diplomacy in the beginning of 2021, then abandoning diplomacy for military coercion in 2022.”
The adoption by Ukrainian governments of fascist demands
It would be grossly unfair to characterize Ukraine as a country of fascists. Nonetheless, the extent to which fascists have gained control within the country is likely understated by Dr. Ishchenko despite his well-informed commentary. They are definitely understated by those who blindly defend all things Ukrainian. A February 2019 article in The Nation provides a dire picture of fascists running nearly unchecked. Written by Lev Golinkin, the article, “Neo-Nazis and the Far Right Are On the March in Ukraine,” pulls no punches. Mr. Golinkin, widely published on Russian and Ukrainian topics, flatly states, “There are neo-Nazi pogroms against the Roma, rampant attacks on feminists and LGBT groups, book bans, and state-sponsored glorification of Nazi collaborators.”
The fascist Azov Battalion, which has been folded into the Ukrainian army, is the best known of these formations but is not the only one, Mr. Golinkin wrote.
“The Azov Battalion was initially formed out of the neo-Nazi gang Patriot of Ukraine. Andriy Biletsky, the gang’s leader who became Azov’s commander, once wrote that Ukraine’s mission is to ‘lead the White Races of the world in a final crusade … against the Semite-led Untermenschen.’ Biletsky is now a deputy in Ukraine’s parliament. In the fall of 2014, Azov—which is accused of human-rights abuses, including torture, by Human Rights Watch and the United Nations—was incorporated into Ukraine’s National Guard. … In January 2018, Azov rolled out its National Druzhina street patrol unit whose members swore personal fealty to Biletsky and pledged to ‘restore Ukrainian order’ to the streets. The Druzhina quickly distinguished itself by carrying out pogroms against the Roma and LGBT organizations and storming a municipal council.”
Militia leaders have also been given high-ranking positions in the security apparatus. “The deputy minister of the Interior—which controls the National Police—is Vadim Troyan, a veteran of Azov and Patriot of Ukraine,” Mr. Golinkin wrote. Far right influence has extended beyond personnel, and to the rewriting of history. “In 2015, the Ukrainian parliament passed legislation making two WWII paramilitaries—the Organization of Ukrainian Nationalists (OUN) and the Ukrainian Insurgent Army (UPA)—heroes of Ukraine, and made it a criminal offense to deny their heroism. The OUN had collaborated with the Nazis and participated in the Holocaust, while the UPA slaughtered thousands of Jews and 70,000-100,000 Poles on their own volition.”
Is the above report alarmist? Somehow exaggerated? Here are two U.S.-centric sources that also paint a disturbing picture. A group of four human rights organizations — Human Rights Watch, Amnesty International, Front Line Defenders and Freedom House — issued a joint statement, “Ukraine: Investigate, Punish Hate Crimes,” that condemns unchecked hate crimes in Ukraine. The statement says:
“Since the beginning of 2018, members of radical groups such as C14, Right Sector, Traditsii i Poryadok (Traditions and Order), Karpatska Sich and others have carried out at least two dozen violent attacks, threats, or instances of intimidation in Kyiv, Vinnitsa, Uzhgorod, Lviv, Chernivtsi, Ivano-Frankivsk, and other Ukrainian cities. Law enforcement authorities have rarely opened investigations. In the cases in which they did, there is no indication that authorities took effective investigative measures to identify the attackers, even in cases in which the assailants publicly claimed responsibility on social media.”
Among the statement’s organizations, Human Rights Watch is known to tilt its reportage toward U.S. interests, and Freedom House is funded by the U.S. government and is notorious for its conservative biases. Not the sort of groups going out of their way to condemn U.S. allies. Want more? How about a report from Radio Free Europe/Radio Liberty, one of the U.S. government’s leading propaganda arms. A 2019 article by the combined organization reported on the arrest and quick release of far right militants that resulted in several police commanders declaring themselves “Banderites.” That is a reference to Stepan Bandera, a 1940s Ukrainian Nazi collaborator whose Ukrainian Insurgent Army massacred tens of thousands of Jews and Poles, and issued anti-Semitic statements as virulent as those of Hitler.
Radio Free Europe/Radio Liberty reported that after a riot police officer taking part in the arrest of “ultranationalists” called them “Banderites,” Interior Department and police senior officials issued apologies for the use of “Banderite” in a derogatory way, and the arrestees were released. “National Police chief Serhiy Knyazev says he is one. So does Interior Ministry and National Police spokesman Artem Shevchenko. Interior Ministry adviser Zoryan Shkyryak is, too. From the top on down, cops and their bosses are lining up to air their admiration for Stepan Bandera,” Radio Free Europe/Radio Liberty wrote.
Not a government or society free of fascism, is it?
Should we cheer or should we think?
Lurking in the background, there is the specter of NATO expansion. Many advocates for Ukraine (although, here, not from people on the Left) try to claim that the U.S. never promised Russian officials there would be no eastward expansion of the military alliance. Soon after the invasion, a New York Daily News article “assured” its readers that no such promises were ever made, even claiming that Mikhail Gorbachev had “no recollection” of such a promise. Either Mr. Gorbachev has a short memory or, more likely, the Daily News writer made up that claim out of thin air. It was quite well known at the time that assurances were in fact made. For those requiring proof, George Washington University’s National Security Archive has published an extensive collection of documents demonstrating that such assurances were repeatedly made. “Not one inch” was the well-known formulation of James Baker, then the secretary of state for the Bush I administration. Such promises were made in the context of securing Soviet approval of German unification.
Finally, there are U.S. commercial interests involved. The U.S. has long sought to wean Europe off Russian natural gas and instead buy liquified natural gas from U.S. energy companies. Thus an excuse for Europeans to drop Russia as an energy supplier is not unwelcome among U.S. political and corporate leaders. At this time we have no proof, but it is likely that such considerations contributed to U.S. encouragement for Ukraine to refuse the Minsk Accords.
This has been a long discussion of Ukraine and Russia, but unavoidable if we are to seriously grapple with the complex issues of the war and the combatant countries. Who among us really has a rooting interest in this? Or in either of these two dismal régimes? The United States may be willing to fight a proxy war to the last Ukrainian and Russia is conducting its war in a savage, inhumane manner — and Ukraine has the right, as does any country, to defend itself — but this does not require us to act as cheerleaders for either side. Neither side is remotely a beacon of democracy. Russia’s severe crackdown on dissent is heavily reported, since Russia is now the No. 1 enemy of the West, but parallel actions by Ukraine are ignored in the corporate media. Ukraine has outlawed several parties for being on the Left, or simply because they were in opposition to President Zelensky, including parties holding parliamentary seats. Ukraine, as has Russia, shuts down television stations it doesn’t control.
Cheerleading for Russia simply because it opposes U.S. imperialism without regard for the nature of the country’s government represents a lack of thinking; nothing more than a simplistic chasing of anything that appears to contradict corporate media discourse and U.S. foreign policy. Cheerleading for Ukraine represents a similar lack of critical thinking; an unreflective regurgitation of U.S. government and corporate media propaganda. We really can, and should, do much better than either. War is not a football game.
It seems vastly easier to imagine the future as a dystopian nightmare than as a time when today’s problems are mostly behind humanity. For every work of optimism, such as Star Trek, there are dozens of works imagining a nightmare world of deprivation, environmental destruction and severe repression amidst a world of people scrambling to survive anyway they can in a war of all against all.
Even if a cultural byproduct rather than an intentional construction, this depressing ratio of future scenarios is the inevitable result of capitalism. From cradle to grave, we are endlessly bombarded with propaganda incessantly telling us that humans are competitive, not cooperative, and that individualism is the highest expression of “freedom.” Cut-throat competition is the natural way of the world, as natural as the tides of the ocean, and that participation in struggles against other human beings is the only possible method of organization in a world in which countries and nations also compete fiercely because the world must be organized into “winners” and “losers” through competition. Greed is not only good, it is the primary characteristic driving human behavior because markets sort who those “winners” and “losers” are.
All in the above paragraph is nothing more than propaganda in the service of capitalist elites, the “ruling class” of any capitalist country. Markets, in a capitalist economy, are not dispassionate entities sitting loftily in the clouds making judgements. In reality, they are nothing more than expressions of the aggregate interests of the most powerful and largest industrialists and financiers. Who is this individualistic “freedom” for? It is “freedom” for industrialists and financiers to rule over, control and exploit the vast majority of humanity. “Justice” becomes the unfettered ability to enjoy this freedom, a justice reflected in legal structures. Those who have the most — obtained at the expense of those with far less — have no responsibility to the society that enabled them to amass such wealth. Working people are “free” to compete in a race to the bottom set up by capitalists.
It can’t be repeated too often that capitalism is just another system created by human beings, and everything of human creation comes to an end. It is simply one more system of exploitation, one more system to advantage a numerically tiny class at the expense of everybody else. Increasing numbers of people do realize that the days of capitalism are numbered, and with the deprivation that capitalism increasingly imposes on people, and the stunting of human potential that goes with that, it is no surprise that multiple polls have shown young people about equally in favor of capitalism and socialism. That half of respondents are able to overcome the bombardment of capitalist propaganda issued through every imaginable channel is a harbinger that the phrase “a better world is possible” is not pie in the sky.
Imagining a concrete future better world, one based on realistic prognosis using some of the bricks of today to build tomorrow because a tabula rasa is not possible, and realistically meeting human needs in a sustainable economy, is an under-appreciated task. Especially given the endless production of dystopian futures churned out by Hollywood and other corporate cultural producers, it is vital that scenarios of better future worlds be conjured and communicated widely.
That future better world will have to be socialist, in some form. It can’t be capitalist — the system that is driving humanity toward catastrophe and shows no ability to deviate from rushing toward a cliff can’t save itself. There will be new technologies in a future better world, but there won’t be magic techno-fixes. A sustainable world will also be a world in which the peoples of the advanced capitalist countries will have to consume less and more sustainably. But limits won’t be imposed by a government, socialist or otherwise; limits will be imposed by nature and the limits to resources it provides. When fossil fuels dwindle, reduced energy usage will be forced upon us. We can begin to adjust and develop renewable alternatives now on a systemic basis, or have it imposed in a more difficult fashion later.
An extraordinary solution for an extraordinary problem
A worthy addition to the literature of a better world of the future is Half-Earth Socialism: A Plan to Save the Future from Extinction, Climate Change, and Pandemics* by environmental historian Troy Vettese and environmental engineer doctoral student Drew Pendergrass. The two authors have produced a lively, interesting book that sketches out a sustainable world that is socialist. The Half-Earth in its title refers to the thesis that 50 percent of Earth’s land surface needs to be “re-wilded” — allowed to return to forests and grasslands — because that is the only way that the majority of the planet’s species can survive.
At first glance, the concept of “re-wilding” half our planet’s land sounds nearly insane. Under present political conditions, it certainly is impossible and unthinkable. Similar to working people flocking to work in oil and gas production, even tar sands and fracking, despite the environmental damage of such work because capitalist economies offer them no alternatives, who today would have any incentive to leave their homes in the service of returning land to nature? Such a concept could only be possible in a people-centric system that would incentivize people to move and do so over a timescale of decades so that those who wished to stay where they are could do so, free of any pressures, and in a time when environmental needs are at the forefront of popular thinking.
Let us acknowledge that a concept such as re-wilding half of Earth is a proposition that seems fantastic to almost all of us, myself included. An extraordinarily drastic solution, even when acknowledging that humanity faces an extraordinary problem. So let’s take a step back for the moment from this idea, and instead allow the authors to build their case and give us a sense of what such a world might look like.
Half-Earth Socialism opens by sketching out what the world might be like in 2047 if present conditions continue unchecked. This is a future in which geo-engineering is unilaterally undertaken by the U.S. government after a catastrophic hurricane devastates the Northeast U.S., and it goes bad, causing a cascade of problems including atmospheric ozone depletion. There is a temporary planetary cooling because of the aerosols thrown into the atmosphere by the geo-engineering project, but in response fossil fuel usages begins to increase again, more climate disruptions cause more problems, ozone depletion becomes worse, agriculture is disrupted and the threat to the prevailing order by social movements peaks and subsides. Capitalist business as usual prevails.
“The problem was that the greens mistook slowing down the pace of the environmental crisis for victory, rather than merely a defeat postponed,” Dr. Vettese and Mr. Pendergrass write in imaging this business-as-usual scenario of 2047. “Despite briefly tasting power, the environmentalists accomplished little because they never elucidated how the various facets of the environmental crisis — climate change, pandemics, and mass extinctions — were interlinked; nor did they articulate what a post-crisis society might actually look like. The ruling class had long been clever and ruthless, but they were also fortunate to face such hapless opponents.”
Does that judgment seem harsh? It shouldn’t. Mainstream environmental groups, who mostly subscribe to liberal ideas and concepts, today do seek piecemeal solutions to systemic problems, staying within the “acceptable” boundaries of capitalist discourse. This is not to suggest that a typical leader of a national environmental group is insincere, but rather that imaginations are often circumscribed and that leaders often seek “practicality” in the sense of staying within accepted parameters, failing to challenge larger capitalist orthodoxies and being mindful of how far their corporate funders would be willing to go. So although a typical leader of a large environmental group likely believes that they are doing what is possible, they nonetheless often lag well behind their rank-and-file, grassroots members. Can we really expect the totalizing ideology of capitalism not to infiltrate environmental thinking?
Why is the environment outsourced to the market?
The dystopia with which Half-Earth Socialism opens is not inevitable, the authors write, saying that they seek to encourage the environmental movement to take seriously the challenge of creating a better society in a stabilized biosphere. A rapid growth of alternative renewable energy sources is not enough if fossil fuel usage doesn’t decline drastically. The authors ask: Why is the environment outsourced to the market? They then lead the reader through a discussion of neoliberalism, as most of the world calls the present stage of capitalism, tracing its birth to a conference led by Friedrich Hayek in 1947. Hayek believed that markets “communicated information” and that neoliberals are committed to “simple and powerful axioms” that enable them to offer prescriptions and act. Neoliberals can be beaten, the authors write, if socialists and environmentalists create a diverse coalition and learn from one another. In the absence of such a coalition, “racist-libertarians” such as the “alt-right,” Brexiteers and the Alternative for Germany (AfD) will be neoliberalism’s only competition.
A crucial point that Half-Earth Socialism repeatedly makes is that nature is unknowable. “Nature is more unknowable than the market” and deserving of awe as unimaginably complex. This idea is backed up by a discussion of Biosphere 2, the 1990s experiment in which a living, sustainable biosphere was created inside a dome but failed badly, with the human “biospherians” left short of food and oxygen while most life and the coral reefs died. The neoliberal goal of “humanizing” nature — in essence, turning all of nature into exploitable capital — is not realistic. The inventor of “cap and trade” carbon and pollution schemes actually believed that clean air and water were “luxury goods”! Thus “the humanization of nature must proceed in conditions of ignorance,” Dr. Vettese and Mr. Pendergrass write; with a continuation of that process, zoonotic diseases (those jumping from animals to humans) and other dangers will continue unabated.
Readers are also led through a discussion of why mainstream panaceas proposed by environmentalists are not feasible or realistic. Bioenergy with carbon capture and storage (BECCS), a favorite scheme often promoted as a way of reversing atmospheric carbon dioxide buildup, is a chimera. The technology to remove carbon dioxide and store it underground sufficient to reverse global warming doesn’t exist and can’t be a solution. To do what it is advertised to do, BECCS would require land bigger than India — so much land would have to be cleared that BECCS would become a net producer of greenhouse gases. This sort of concept is an example of mainstream environmentalists seeing a “set of discrete technical problems” to be tackled through piecemeal reform while leaving capitalist foundations untouched. Nuclear energy is also no solution, despite its promotion by some environmentalists, not only because of radiation and radioactive waste, but because nuclear is more carbon-intensive than renewables. (The authors don’t mention the finances of nuclear power, but the entire industry only exists because of massive subsidies; nuclear is completely uneconomical.)
Such proposals have “almost no chance of being implemented” despite concessions that are made by proponents; BECCS, nuclear power and biofuels will fail due to “lack of utopian imagination” and because the environmental crisis can’t be understood outside the structure of the society causing the crisis.
Any half-Earth coalition “must be a broad one,” the authors stress, and suggest that the wide popularity of anti-nuclear movements would provide a firm pillar of any such coalition. Advocates of BECCS and nuclear power are trying to maintain as much of the status quo as possible. Instead, it is better to be realistic about what lies ahead and the trade-offs that must be made. Half-Earth Socialism acknowledges that giving up meat and energy quotas won’t be popular for many people, but are nonetheless better and more viable than mainstream alternatives.
Balancing human needs with planetary boundaries
So what are the specifics of half-Earth socialism? The goals, Dr. Vettese and Mr. Pendergrass write, are to prevent the sixth mass extinction, “natural geo-engineering” to draw down carbon dioxide from the atmosphere and create a fully renewable energy system. Re-wilding means re-forestation, renewed grasslands, restoring wild animals and rebuilding stocks of fish and whales. Likely the only way to accomplish all this and have enough food for 10 billion people would be through “widespread veganism” and energy quotas. A quota of 2,000 watts per person would be a significant reduction for most living in the Global North but a large increase for the Global South. Needless to say, farming would become all organic. Trade-offs are inevitable, and should be addressed honestly rather than “cooking the books” as mainstream environmentalists can do:
“We offer an honest reckoning of Half-Earth socialism because we believe that a feasible utopia is one where its costs are democratically appraised rather than hidden by the pseudorational measure of money.” [page 84]
What is proposed is half-Earth socialism, with heavy stress on socialism. This is to differentiate from reactionary promoters of half-Earth re-wilding that should be rejected. “Half-Earth must be socialist,” Dr. Vettese and Mr. Pendergrass write. That means fully democratic and publicly supported. The proposals of far-thinking economists in the former Soviet Union failed to gain ground due to lack of a democratic movement to support them and the inability of Western climate scientists’ models to be taken with the necessary seriousness follows from the absence of social movements strong enough to put them into practice.
Half-Earth socialism would need to balance human needs with planetary boundaries, working through a myriad of factors. A fully democratically accountable planning organization could offer several scenarios with differing parameters and trade-offs, with decisions made either by elected representatives or a global referendum where everybody is eligible to vote. The authors whimsically call their planning agency “Gosplant,” quickly adding “forgive us” with the introduction. (The name is a play on “Gosplan,” the name of the planning agency in the Soviet Union, but unlike Gosplan, “Gosplant” would be fully democratic and based on public input.)
This wouldn’t be easy at the start, and realistically shouldn’t be expected to be easy. The planning agency would need to determine energy quotas and to balance land use and greenhouse gas emissions. This would be made more challenging by the difficulty of electrifying transport and some industrial processes. Widespread veganism would make this much easier because animal agriculture uses up so much land and is responsible for significant greenhouse gas emissions. Trade-offs would be required in every plan or scenario. There would also be some temporary measures that would be phased out when practical.
“Wide-ranging improvements to industrial processes to reduce pollution, fuel use, and waste are undertaken in just about every industry. Large swathes of manufacturing become rationalized when ‘planned obsolescence’ itself is made obsolete. Resources are directed towards building solar panels, wind turbines, super-efficient insulation, and railways. Immediately after the Half-Earth socialist revolution, much of the world’s pasture is converted into biofuel plantations for the short-term decarbonization of transport and industry, while the remainder is rewilded, which in turn requires an expanded cadre of ecologists and foresters trained in both conventional science and traditional Indigenous knowledge.” [pages 110-111]
The planning agency does not dictate what the future should be or how the economy should be run, but rather would provide the public and its representatives with blueprints. Making economics understandable for everyone is a pre-condition for a socialist democracy. The planning agency would educate citizens on how the economy and the biosphere work. “Half-Earth socialism would not be some distant, top-down technocracy but rather a relatively simple democratic system, based on robust public education and involvement. An informed citizenry would be well-equipped to choose among the competing plans devised by the planners.”
Planning would need a balance of flexible local decision-making with some measure of central control, with continual refinement for specific outcomes. The idea here would be that an approved plan, whether approved by a world parliament or by popular referendum, would be “coarse” — it would be a general guide with local and regional economic plans based on it being more detailed and tailored to those local and regional needs. Decisions on plans would occur after copious popular discussion and would be flexible so that changes in raw materials and component allocations could be made as shortages appear in one area and excesses in another.
Building the future with tools we already possess
The technology to make this level of planning a reality already exists, Dr. Vettese and Mr. Pendergrass write:
“Every element of Half-Earth socialism’s ‘vast machine’ of planetary calculation is based on already existing technologies. The central algorithms in the model would take advantage of many of the insights and engineering designs that climate scientists have spent decades developing. Its tiered structure could draw on the nesting pattern found in environmental and atmospheric models, with global and local simulations constantly interacting and updating one another. … All this data does not mean that we fully know nature, only that Half-Earth socialist planners would have access to the vital signs of the planet so they could modify humanity’s interchange with nature when necessary.” [pages 129-130]
Lurking in the background is the experience of the Soviet Union and its Central European satellites, which collapsed. In acknowledging this history, the authors note that those failures must be reckoned with and that people must have a direct say in social and economic decisions.
“Socialism is a society emancipated from the relentless, unconscious, and irrational power of capital. Living in a planned society should feel better and freer, with a sense of solidarity and freedom from the threat of poverty. Democracy and meaningful work are not mere side effects of a socialist economy but central for planning to function.” [page 130]
Accepting limits and trade-offs is also central to such a project. Postulating that socialism leads to shortages just as capitalism leads to surplus production that results in inequality, unemployment and environmental catastrophe, disadvantages must be accepted if we want the benefits. Crucially, the sketches of the book are “starting points for a deeper discussion of how socialism should function in an age of ecological crisis.” The book concludes with a fictional chapter describing a functioning half-Earth socialist democracy in western Massachusetts, written with a nod to William Morris’ utopian novel News From Nowhere. Bicycling is the main transport method here because public transport, as is the case across the U.S., badly lags other countries, something the people of this region are coping with.
Half-Earth Socialism is not a utopia, even though the authors have a practical utopian streak in them. They conclude by stating that humanity’s choices are “further humanization of nature through mad [geo-engineering] schemes” or “to plan an economy within planetary boundaries.” Everyone would have the essentials but “occasionally it might be necessary to stand in queue.” As the authors put it, there will be more comfort than what Cubans experienced during the early 1990s “special period” but “less than a typical eco-Yuppie in the Global North who installs solar panels on the roof of their McMansions … and has a $70,000 electric car in the garage.”
As I have said in previous book reviews, the judgment to be made is whether an excellent contribution to the literature has been made, not whether we agree with all the details and theses. I will say here that I do agree with a huge majority of the contents but even if I had more disagreements, I would still recommend Half-Earth Socialism. Dr. Vettese and Mr. Pendergrass have provided us with a marvelous, needed concept for how to organize a realistic better world, one recognizable from the standpoint of today. The one thing missing, however, is substantial — there are no ideas provided on how we might get from today to a half-Earth socialist democracy tomorrow. Also missing is how a transition to re-wilding half the land could be carried out, other than it would be a slow, decades-long transition.
I won’t consider these fatal flaws, for how to ignite and see through a successful revolution is something none of us possess today, nor can we alone. I have long said if I knew the secret, I’d tell everybody and not keep it to myself. What is essential is that we have practical, realistic ideas based on the limits our planet imposes on us if we are ever going to be in a position to create a better world. On that important metric, Half-Earth Socialism should be widely read.