New right-wing government cedes Argentina’s sovereignty to Wall Street

Argentina’s new right-wing president, Mauricio Macri, pledged to put an end to the country’s sovereignty, and on that he has been true to his word. The capitalist principal that windfall profits for speculators is the raison d’état for the world’s governments has been upheld.

Or, to put it in a different way, the government of Argentina will again be allowed to borrow on international financial markets — so that it can borrow money for the sole purpose of paying billions of dollars to speculators.

Argentina had been one of the few countries that refused to bleed its population to pay off odious debt under the 12-year husband and wife rule of Néstor Kirchner and Cristina Fernández. Their left-wing populism has been overstated — they left capitalist relations untouched and at best merely tolerated the movement of recovered factories — but they did consistently put the interests of Argentine working people ahead of international financiers. The election of the right-wing President Macri has put an end to that, along with his introducing the repression that austerity requires.

Entre Rios province, Argentina (photo by Felipe Gonzalez)

Entre Rios province, Argentina (photo by Felipe Gonzalez)

Argentina’s difficulties have a long history. The fascistic military dictatorship of 1976 to 1983 laid waste to the Argentine economy while unleashing horrific human rights abuses, and subsequent civilian governments sold off state enterprises at fire-sale prices while imposing austerity until the economy crashed at the end of 2001. Upon assuming office, President Kirchner suspended debt payments that would have impoverished the country. He offered to negotiate with bond holders, 93 percent of whom ultimately agreed to accept 30 percent of their bonds’ face value.

There were holdouts, most notably two hedge funds that waged a 15-year battle to extract the full value of the bonds, even though they bought them from the original holders for a fraction of the price. These two funds leading the holdouts were NML Capital, a subsidiary of Paul Singer’s Elliot Capital Management, and another hedge fund, Aurelius Capital Management. Mr. Singer, the type of character for which the term “vulture capitalist” was coined, is notorious for his scorched-earth tactics. At different points, he had an Argentine naval training ship seized in Ghana and attempted to seize Argentina’s presidential plane. His dedication to extracting every possible dollar regardless of cost to others was nicely summarized in 2011 by investigative journalist Greg Palast:

“Singer’s modus operandi is to find some forgotten tiny debt owed by a very poor nation (Peru and Congo were on his menu). He waits for the United States and European taxpayers to forgive the poor nations’ debts, then waits a bit longer for offers of food aid, medicine and investment loans. Then Singer pounces, legally grabbing at every resource and all the money going to the desperate country. Trade stops, funds freeze and an entire economy is effectively held hostage.

Singer then demands aid-giving nations pay monstrous ransoms to let trade resume. … Singer demanded $400 million from the Congo for a debt he picked up for less than $10 million. If he doesn’t get his 4,000 percent profit, he can effectively starve the nation. I don’t mean that figuratively — I mean starve as in no food. In Congo-Brazzaville last year, one-fourth of all deaths of children under five were caused by malnutrition.”

Buy low, demand very high

He’ll make a windfall profit off Argentina as well. The “special master” who presided over negotiations between the holdouts and the Argentine government — a veteran corporate lawyer who specializes in representing financiers and banks opposed to regulation — announced that NML Capital, Aurelius Capital and two other big hedge funds will receive 75 percent of the full principal and interest demanded by the holdouts. How big of a profit will this be? Only the funds themselves know for certain, but the lowest public estimate is a profit of nearly 400 percent.

Even that lowest estimate likely understates the profit. Bloomberg News reports that Mr. Singer will be paid $2.3 billion, or close to four times the $617 million in principal his firm holds. But as he likely paid only a small fraction of that principal, his profit is likely far greater. A Columbia University researcher estimates that NML Capital will receive $620 million for a portion of bonds for which it paid $48 million in 2008. That’s nearly a 13-fold profit in six years! As former President Fernández remarked when refusing to pay anything more than the 30 percent to which the other bondholders agreed, “I don’t even think that in organized crime there is a return rate of 1,608 per cent in such a short time,” adding that Argentina would not “submit to such extortion.”

President Fernández was referring to the profit Mr. Singer would have reaped had she given in to his full demands. She was speaking in a national address following two U.S. Supreme Court decisions in 2014 that upheld U.S. District Judge Thomas Griesa’s ruling that Argentina is not allowed to continue to pay the bondholders who agreed to accept 30 percent (or “haircuts” in financial parlance) until it reached an agreement with the holdouts. The Supreme Court also ruled that federal courts in the U.S. can order sovereign countries to hand over information on their assets to speculators. In other words, U.S. law, wielded to generate windfall profits for the most greedy, was decreed to apply to other countries, as if they are not sovereign.

The Kirchner-Fernández governments refused to yield their country’s sovereignty, but President Macri took office promising to pay off the vulture capitalists. Not only was Argentina’s ability to determine its own policy at risk, but the very concept of debt relief has been put in danger. The bondholders who agreed to take 30 percent made the calculation that something is better than nothing, and it enabled Argentina to recover from a severe economic crisis. The Kirchner-Fernández governments consistently offered the same deal to the holdouts. But now that the holdouts extracted so much more, will those who accepted the earlier deal now demand the same 75 percent given to the holdout funds? If they do, will they seek to enforce that after-the-fact better deal in the courtroom of Judge Griesa, who consistently showed himself biased in favor of the vulture capitalists?

Consider the assessment of two United Nations officials, Juan Pablo Bohoslavsky, the U.N. independent expert on the effects of foreign debt on human rights, and Alfred de Zayas, the the independent expert on the promotion of a democratic and equitable international order:

“A settlement would validate the type of predatory litigation that has been on the increase during the last decade. Such deals will make it more difficult to solve debt crises in a fair, timely and efficient manner by emboldening and rewarding the behavior of those who refuse to participate in debt restructuring efforts. These are no good news for attempts to solve debt crises in a timely and human rights sensitive manner.”

Paying debt through taking on more debt

The Macri government has now committed itself to paying $6.4 billion to the holdouts. How will it pay for that? By borrowing. Argentina had been blocked from borrowing in international credit markets, and as part of the deal will be allowed to borrow in those markets again. Judge Griesa’s injunction against resuming payments to the 93 percent of bondholders is also to be lifted. (That was enforceable because Argentina paid its debts to those bondholders through the Bank of New York, which was prohibited by the judge to pass through those payments under pain of legal penalties. Alternative routes through non-U.S. banks are difficult to use because of U.S. control over the global financial system.)

The deal also requires that the Argentine parliament reverse a law that blocks the country from offering any deal to holdouts better than terms agreed to by others. President Macri’s Let’s Change bloc does not hold a majority in the Chamber of Deputies, but picked up votes from the Peronist opposition to effect the necessary legal reversal this week. The Senate must still vote, but the expectation has been that the bill would have an easier time there.

The Puerto Madero district of Buenos Aires. (Photo by Juan Ignacio Iglesias)

The Puerto Madero district of Buenos Aires. (Photo by Juan Ignacio Iglesias)

Why is President Macri ceding his country’s sovereignty? Right-wing ideology of course plays a significant role here, but it is also self-interest. While the military dictatorship was conducting a reign of terror against Argentines that ultimately led to hundreds of thousands murdered, “disappeared,” tortured, kidnapped, arrested or forced to flee into exile, Mauricio Macri and his family were adding to their wealth. (Remember that this régime had the approval of Henry Kissinger and was blessed by David Rockefeller, whose loans financed it, with his infamous statement that “I have the impression that Argentina has a regime which understands the private enterprise system.”)

The Macri Society, or Socma, the family business, had close ties to the dictatorship. TeleSUR English reports that Socma “directly benefited” from the dictatorship:

“In 1973, prior to the 1976 military coup that ousted the civilian Peronist government of President Maria Estela de Peron and installed a dictatorship, Socma owned seven companies. When the dictatorship ended 10 years later, in 1983, the Socma corporate empire had expanded to 46 companies. Among Socma’s dozens of companies were various businesses that benefited the Macri family economically by providing services to the dictatorship regime.”

The new president, a director of the family conglomerate from a young age, is opposed to an Argentine parliamentary decision to launch an investigation of people and businesses that participated in the military dictatorship’s crimes, TeleSUR reports. La Nacion, a conservative Buenos Aires newspaper that backed President Macri, the day after the election published an editorial calling for an end of efforts to seek justice for the dictatorship’s victims, denouncing the quest for justice as a “culture of revenge.” Perhaps to emphasize this, the president has appointed as the new secretary for religious affairs Santiago Manuel de Estrada, who served as secretary for social security during the military dictatorship, which presided over severe reductions in wages and living conditions to go along with its death squads and torture facilities.

A monopoly for press backers, repression for opponents

Argentina’s biggest media conglomerate, Clarín, also backs President Macri, and no wonder: He has already moved to eliminate Argentina’s anti-monopoly law, which restricts the number of TV, cable and radio licenses a company can hold at one time, so that a handful of corporations can completely control the mass media. Such laws have precedent; for example, U.S. communications law long restricted anyone from owning more than 14 radio stations and seven television stations until overturned during the Reagan era. The Macri government is moving swiftly to silence opposition — it has forced a popular radio broadcaster, Victor Morales, off the air. According to the Buenos Aires Herald:

“ ‘I’m being kicked out because this company needs government advertising … No radio in Argentina can survive without government ads. They can’t mess with Macri,’ said the journalist.”

Demonstrations against these developments have already taken place, as have a public-sector strike against massive layoffs, demonstrations against the new government’s anti-protest law and protests against the imprisonment of Indigenous leader Milagro Sala. A total of 25,000 public workers have been dismissed as part of the Macri government’s austerity policies, and a new “security protocol” enables indiscriminate arrests and restricts the press’ ability to cover such events, opponents say. A coalition organizing against these new repressive policies states:

“The new protocol implies that every protest is now a criminal offense, and empowers the Security Forces — the same forces that played an active role in Argentina’s last military dictatorship — to allow or forbid any protests. The criminalization of protests violates several judicial decisions that state the right to demonstrate supersedes any occasional traffic problems that may be caused.

This year, on the 40th anniversary of the military coup in Argentina, the Mauricio Macri government has begun a campaign to eliminate an essential human right — the fundamental right to protest and demonstrate. With this new protocol, the government will try to prevent workers from protesting against redundancies or demanding salary increases, or mobilize against power outages and mining projects. This protocol openly defies the constitutional rights of the Argentine people as well as international treaties on human rights.”

Ms. Sala, imprisoned for the past two months, was arrested after protesting the policies of a provincial governor aligned with the president. She was acting in support of an organization she heads that provides social services. Parliamentarians, civil organizations and human rights campaigners across South America have denounced her arrest as political, and the United Nations has called for an explanation of her continued detention. The Buenos Aires Provincial Commission for Memory has issued this statement:

“Organizing collective action does not mean ‘inciting crimes,’ a massive demonstration is not ‘public disturbance’ and to oppose a government decision is not ‘an act of sedition.’ They are all democratic freedoms.”

They should be. But not when a right-wing government is determined to impose the rule of capital, or, in the case of the Macri government, to be a willing subaltern of international capital. The logic of the rule of financiers can only lead to not only intensified austerity, but increased repression.

The forgotten workers’ control movement of Prague Spring

At the time of the [August 1968] Soviet invasion [of Czechoslovakia], two months after the first workers’ councils were formed, there were perhaps fewer than two dozen of them, although these were concentrated in the largest enterprises and therefore represented a large number of employees. But the movement took off, and by January 1969 there were councils in about 120 enterprises, representing more than 800,000 employees, or about one-sixth of the country’s workers. This occurred despite a new mood of discouragement from the government from October 1968.

From the beginning, this was a grassroots movement from below that forced party, government, and enterprise managements to react. The councils designed their own statutes and implemented them from the start. The draft statutes for the Wilhelm Pieck Factory in Prague (one of the first, created in June 1968) provide a good example. “The workers of the W. Pieck factory (CKD Prague) wish to fulfill one of the fundamental rights of socialist democracy, namely the right of the workers to manage their own factory,” the introduction to the statutes stated. “They also desire a closer bond between the interests of the whole society and the interests of each individual. To this end, they have decided to establish workers’ self-management.”

Prague (photo by Beentree)

Prague (photo by Beentree)

All employees working for at least three months, except the director, were eligible to participate, and the employees as a whole, called the “workers’ assembly,” was the highest body and would make all fundamental decisions. In turn, the assembly would elect the workers’ council to carry out the decisions of the whole, manage the plant and hire the director. Council members would serve in staggered terms, be elected in secret balloting and be recallable. The director was to be chosen after an examination of each candidate conducted by a body composed of a majority of employees and a minority from outside organizations.

A director is the top manager, equivalent to the chief executive officer of a capitalist corporation. The workers’ council would be the equivalent of a board of directors in a capitalist corporation that has shares traded on a stock market. This supervisory role, however, would be radically different: The workers’ council would be made up of workers acting in the interest of their fellow workers and, in theory, with the greater good of society in mind as well.

By contrast, in a capitalist corporation listed on a stock market, the board of directors is made up of top executives of the company, the chief executive officer’s cronies, executives from other corporations in which there is an alignment of interests, and perhaps a celebrity or two, and the board of directors has a duty only to the holders of the corporation’s stock. Although this duty to stockholders is strong enough in some countries to be written into legal statutes, the ownership of the stock is spread among so many that the board will often act in the interest of that top management, which translates to the least possible unencumbered transfer of wealth upward. But in cases where the board of directors does uphold its legal duty and governs in the interest of the holders of the stock, this duty simply means maximizing the price of the stock by any means necessary, not excepting mass layoffs, wage reductions and the taking away of employee benefits. Either way, the capitalist company is governed against the interests of its workforce (whose collective efforts are the source of the profits), and by law must be.

National meeting sought to codify statutes

The Wilhelm Pieck Factory statutes were similar to statutes produced in other enterprises that were creating workers’ councils. It was only logical for a national federation of councils to be formed to coordinate their work and for economic activity to have a relation to the larger societal interest. Ahead of a government deadline to produce national legislation codifying the councils, a general meeting of workers’ councils took place on 9 and 10 January 1969 in Plzeň, one of the most important industrial cities in Czechoslovakia (perhaps best known internationally for its famous beers). A 104-page report left behind a good record of the meeting (it was also tape-recorded); representatives from across the Czech Lands and Slovakia convened to provide the views of the councils to assist in the preparation of the national law.

Trade union leaders were among the participants in the meeting, and backed the complementary roles of the unions and the councils. (Trade unions, as noted earlier, convened two-thirds of the councils.) One of the first speakers, an engineer who was the chair of his trade union local in Plzeň, said a division of tasks was a natural development: “For us, the establishment of workers’ councils implies that we will be able to achieve a status of relative independence for the enterprise, that the decision-making power will be separated from executive powers, that the trade unions will have a free hand to carry out their own specific policies, that progress is made towards a solution of the problem of the producers’ relationship to their production, i.e., we are beginning to solve the problem of alienation.”

Some 190 enterprises were represented at this meeting, including 101 workers’ councils and 61 preparatory committees for the creation of councils; the remainder were trade union or other types of committees. The meeting concluded with the unanimous passage of a six-point resolution, including “the right to self-management as an inalienable right of the socialist producer.”

The resolution declared,

“We are convinced that workers’ councils can help to humanize both the work and relationships within the enterprise, and give to each producer a proper feeling that he is not just an employee, a mere working element in the production process, but also the organizer and joint creator of this process. This is why we wish to re-emphasize here and now that the councils must always preserve their democratic character and their vital links with their electors, thus preventing a special caste of ‘professional self-management executives’ from forming.”

It's Not Over coverThat democratic character, and the popularity of the concept, is demonstrated in the mass participation—a survey of 95 councils found that 83 percent of employees had participated in council elections. A considerable study was undertaken of these 95 councils, representing manufacturing and other sectors, and an interesting trend emerged from the data in the high level of experience embodied in elected council members. About three-quarters of those elected to councils had been in their workplaces for more than ten years, and mostly more than 15 years. More than 70 percent of council members were technicians or engineers, about one-quarter were manual workers and only 5 percent were from administrative staffs. These results represent a strong degree of voting for the perceived best candidates rather than employees simply voting for their friends or for candidates like themselves—because the council movement was particularly strong in manufacturing sectors, most of those voting for council members were manual workers.

These results demonstrated a high level of political maturity on the part of Czechoslovak workers. Another clue to this seriousness is that 29 percent of those elected to councils had a university education, possibly a higher average level of education than was then possessed by directors. Many directors in the past had been put into their positions through political connections, and a desire to revolt against sometimes amateurish management played a part in the council movement. Interesting, too, is that about half the council members were also Communist Party members. Czechoslovak workers continued to believe in socialism while rejecting the imposed Soviet-style system.

Government sought to water down workers’ control

The government did write a legislative bill, copies of which circulated in January 1969, but the bill was never introduced as Soviet pressure on the Czechoslovak party leadership intensified and hard-liners began to assert themselves. The bill would have changed the name of workers’ councils to enterprise councils and watered down some of the statutes that had been codified by the councils themselves. These pullbacks included a proposed state veto on the selection of enterprise directors, that one-fifth of enterprise councils be made up of unelected outside specialists, and that the councils of what the bill refers to as “state enterprises” (banks, railroads and other entities that would remain directly controlled by the government) could have only a minority of members elected by employees and allow a government veto of council decisions.

This proposed backtracking was met with opposition. The trade union daily newspaper, Práce, in a February commentary, and a federal trade union congress, in March, both called the government bill “the minimum acceptable.” In a Práce commentary, an engineer and council activist, Rudolf Slánský Jr. (son of the executed party leader), put the council movement in the context of the question of enterprise ownership.

“The management of our nation’s economy is one of the crucial problems,” Slánský wrote.

“The basic economic principle on which the bureaucratic-centralist management mechanism rests is the direct exercise of the ownership functions of nationalized industry. The state, or more precisely various central organs of the state, assume this task. It is almost unnecessary to remind the reader of one of the principal lessons of Marxism, namely he who has property has power…The only possible method of transforming the bureaucratic-administrative model of our socialist society into a democratic model is to abolish the monopoly of the state administration over the exercise of ownership functions, and to decentralize it towards those whose interest lies in the functioning of the socialist enterprise, i.e. the collectives of enterprise workers.”

Addressing bureaucrats who objected to a lessening of central control, Slánský wrote,

“[T]hese people like to confuse certain concepts. They say, for example, that this law would mean transforming social property as a whole into group property, even though it is clearly not a question of property, but rather one of knowing who is exercising property rights in the name of the whole society, whether it is the state apparatus or the socialist producers directly, i.e. the enterprise collectives.”

Nonetheless, there is tension between the tasks of oversight and of day-to-day management. A different commentator, a law professor, declared,

“We must not…set up democracy and technical competence as opposites, but search for a harmonious balance between these two components…It would perhaps be better not to talk of a transfer of functions but rather a transfer of tasks. It will then be necessary for the appropriate transfer to be dictated by needs, rather than by reasons of dogma or prestige.”

These discussions had no opportunity to develop. In April 1969, Alexander Dubček was forced out as party first secretary, replaced by Gustáv Husák, who wasted little time before inaugurating repression. The legislative bill was shelved in May, and government and party officials began a campaign against councils. The government formally banned workers’ councils in July 1970, but by then they were already disappearing.

This is an excerpt from It’s Not Over: Learning From the Socialist Experiment, officially published February 26 by Zero Books. Citations omitted. The omitted sources cited in this excerpt are: Robert Vitak, “Workers Control: The Czechoslovak Experience,” Socialist Register, 1971; Oldřich Kyn, “The Rise and Fall of the Economic Reform in Czechoslovakia,” American Economic Review, May 1970; and several articles anthologized in Vladimir Fišera, Workers’ Councils in Czechoslovakia: Documents and Essays 1968-69 [St. Martin’s Press, 1978]

Colonialism and nationalism in the building of liberation movements

The Sandinistas, in their difficulties with the Indigenous peoples of the Atlantic, had not reflected on the irony of being on the opposite side of the nationalist equation than they were when, as the representatives of Nicaragua, they encountered the United States. It had not initially occurred to the Spanish-speaking majority of Nicaragua that they, too, walked in the shoes of a colonialist. Larger nations have long dominated smaller nations, but a nation can be both a larger and a smaller nation at the same time, in relation to various other nations.

Nicaragua, a small country of 3 million, was long the plaything of far larger neighbors. But Nicaragua is an artificial construct: the dominant people of Spanish descent are dominant because their ancestors decimated the people who had already lived there. The concept of a Nicaraguan nationality is itself a legacy of colonialism, but also the peculiarities of local geography. Why are there seven countries on the narrow strip of land between Mexico and Colombia? Five of those countries, all speaking the same language, were part of a single Central American Federation. Yet that federation broke apart, unlike Mexico, because communication and travel were so difficult due to the mountainous terrain.

Over time, patriotisms developed, separate in each country created by the breakup. Domination by more powerful countries, and repeated direct interventions in the twentieth century by the latest, and most powerful yet, of those more powerful countries helped forge strong national identities. But those identities did not include the people who were already there, and had seen their numbers decimated through war, disease and plunder—in plain language, through a hemispheric genocide. It is easy to understand a colonial relationship when you are on the wrong end; it is far more difficult to understand this when you are on the power side of the equation.

Celebrating the 10th anniversary of the Nicaraguan revolution in Managua, in 1989 (photo by tiarescott from Managua)

Celebrating the 10th anniversary of the Nicaraguan revolution in Managua, in 1989 (photo by tiarescott from Managua)

Nicaragua’s nationalism was forged in its colonial relationship to the European powers and then to the United States. Augusto Sandino was able to articulate these feelings, and Sandino’s writings and example were strong enough to form a key pillar of a movement decades later. But as the majority Nicaraguans found their voices, found the confidence to create a revolution and to attempt to develop their culture free of colonial domination, the minorities in their midst, the descendants of those Indigenous nations decimated centuries earlier, felt themselves oppressed by those very same people who were so motivated by their own oppression at the hands of the giant neighbor to the north.

The movement of the majority, the Sandinistas, were not oblivious to their country’s history nor to the minorities of the Atlantic east, and were acutely aware of the poverty, underdevelopment and cultural trampling endured by the Indigenous minorities. But the Sandinistas had thought and acted in a mechanical manner, and so, initially, inflamed rather than soothed.

“The Left here did not incorporate anthropological concepts because it was married completely to the strict classical scheme: bourgeoisie versus proletariat without analyzing the cultural differences and the ‘civilizing’ conflicts that took place,” is the assessment of journalist and feminist activist Sofía Montenegro, who was one of the leading figures of the official Sandinista newspaper, Barricada. “What has happened here is not a mixing of the races but a clash of two civilizations, the Occidental and the Indigenous, in which one imposed itself on the other but was never able to completely conquer it.”

Marxist difficulties with nationalism

Marxism’s practitioners have often had a difficult time coming to terms with nationalism. The downgrading of the nation-state was articulated clearly in the movement’s most important early document, The Communist Manifesto written by Karl Marx and Friedrich Engels in 1848. The two wrote: “The workingmen have no country. We cannot take from them what they have not got…National differences between peoples are daily vanishing, owing to the development of the bourgeoisie, to freedom of commerce, to the world market, to uniformity in the mode of production and in the conditions of life corresponding thereto.”

Corporate globalization is not a new phenomenon, although of course the process has vastly accelerated since those words were written in the nineteenth century. Despite the increasing cross-cultural fertilizations in which better communications and increased commerce played no small role, the strength of nationalism only increased through the nineteenth century as disunited nations such as Germany and Italy struggled to unify their many pieces and other nations struggled to end their domination by stronger powers.

Those ongoing developments led to a current within Marxist theory that saw a difference between the nationalism of a colonial power and that of a captured nation seeking to throw off the hegemony bonding it. Self-determination for all nations had to be backed and therefore support should be given to independence movements. Independence was the right of all peoples in the name of self-determination. But it was also believed that national struggles were a “distraction” for the vast majority of a nation in that as long as they were oppressed by another nation they would not be able to fight for their emancipation as a class—they would not be able to free themselves of their domination by their native capitalists and aristocracy.

Humans can have multiple motivations, of course. World War I provided an excellent example: Nationalism was whipped up successfully in order to get millions to willingly fight a war that was fought to determine the capitalist division of the world’s resources. There was no other way to get those millions to fight. The war had to be brought to an end when those millions started to think more in terms of class, and of their common interests with the soldiers in the opposite trench, rather than in solely national terms. Very different feelings were unleashed, thanks to bitter practical experience.

Nationalism seen as a distraction from class

But the nonetheless still living body of nationalism continued to engender strong debates among the various strains of Marxism. A forceful argument against advocacy of self-determination of nations was put forth by Rosa Luxemburg, one of the outstanding contributors to twentieth-century political theory. Regardless of how valid a reader finds Luxemburg’s argument, she had the moral authority to make it. She was triply oppressed—as a woman in a male-dominated world, as a Jew in a Central Europe riddled with anti-Semitism and as a Pole (until the last days of her life, Poland was occupied and divided among three empires: Tsarist Russia, Prussian-dominated Germany and monarchal Austria-Hungary). Luxemburg adamantly refused to endorse independence for her native Poland, or any other nation.

It's Not Over cover“[T]he duty of the class party of the proletariat to protest and resist national oppression arises not from any special ‘right of nations’…[but] arises solely from the general opposition to the class régime and to every form of social inequality and social domination, in a word, from the basic position of socialism…The duty to resist all forms of national oppression [under an apolitical ‘right of nations’] does not include any explanation of what conditions and political forms” should be recommended, Luxemburg wrote in 1909. Generic calls for self-determination don’t provide any analysis of underlying social conditions and therefore cannot provide a guide to action.

A further basic weakness of generic calls for self-determination, Luxemburg argued, is that they do not take into consideration the highly differentiated status of nations. “The development of world powers, a characteristic feature of our times growing in importance along with the progress of capitalism, from the very outset condemns all small nations to political impotence,” she wrote. “Apart from a few of the most powerful nations, the leaders in capitalist development, which possess the spiritual and material resources necessary to maintain their political and economic independence, ‘self-determination,’ the independent existence of smaller and petit nations, is an illusion, and will become even more so.”

Further, within each nation, there exist a multitude of interests that cannot be reconciled. “In a class society, ‘the nation’ as a homogeneous sociopolitical entity does not exist,” Luxemburg wrote.

“Rather, there exist within each nation classes with antagonistic interests and ‘rights.’ … There can be no talk of a collective and uniform will, of the self-determination of the ‘nation’ in a society formed in such a manner. If we find in the history of modern societies ‘national’ movements, and struggles for ‘national interests, ’ these are usually class movements of the ruling strata of the bourgeoisie, which can in any given case represent the interest of the other strata of the population only insofar as under the form of ‘national interests’ it defends progressive forms of historical development.”

Luxemburg here argued that movements for national independence or self-determination are effectively controlled by the nation’s capitalists who, by virtue of their economic dominance, will control the movement to establish their own narrow rule and thereby subjugate the working people of the nation. Therefore, only the widespread adoption of socialist economic relations can truly free the working people of any nation.

Seventy years after those words were written, the capitalists of Nicaragua indeed sought to control the liberation movement of their country. Nicaragua wasn’t fighting for independence in the formal sense, but it was a country with very little self-determination. In the modern system of capitalism, the interests of local capitalists in subordinate countries align with the capitalists of the dominant nation. The interests of the Nicaraguan plantation owners and industrialists were simply to rid themselves of their local dictator, Anastasio Somoza, and establish their own rule. Rule by these local capitalists would be dependent on capitalists from the dominant power, through the medium of multinational corporations, and therefore compatible.

When direct rule of a colonized nation is no longer possible because of resistance, formal “independence” is granted, but a compliant dictator can be put in charge. When the rule of the dictator is no longer viable, a more “modern” form of domination is put in place, the rule of a local oligarchy. The local industrialists and plantation owners are ready to step in and assume domination of society; eager to fulfill what they see as their natural role, they seek to topple the dictator. Nicaragua’s capitalists could not do that on their own (they are numerically minuscule) and so joined the rapidly building mass liberation movement in an attempt to wrest the movement’s leadership from the Sandinistas. The capitalists were unable to do so because the working people of Nicaragua took an expanded, rather than narrow, view of self-determination, and this understanding led them to swell the ranks of Sandinista organizations.

But should nationalism be ‘skipped’ as a stage?

But although Nicaraguans were aware of their class interests, and that their liberation necessitated changes in their societal institutions and social relations, nationalism played a significant role. Sandinista National Liberation Front co-founder Carlos Fonseca had helped create the FSLN’s philosophy by skillfully blending the nationalism of Sandino with Marxism. The importance of nationalism was a consequence of the force of colonialism upon Nicaragua. Therefore, for the colonized, nationalism can potentially play a partly progressive role if it is combined with other political ideas. Another outstanding political theorist, Frantz Fanon, writing in the middle of the twentieth century at the peak of the Global South’s national liberation movements, argued that nationalism is an important stage that can’t be skipped.

National and racial differences are used to create and continue colonial situations, Fanon argued, and therefore, for the colonized, this divide adds to the complexities of a class analysis.

“In the colonies the economic infrastructure is also a superstructure. The cause is effect: You are rich because you are white, you are white because you are rich. This is why a Marxist analysis should always be slightly stretched when it comes to addressing the colonial issue. It is not just the concept of the pre-capitalist society, so effectively studied by Marx, which needs to be re-examined here. The serf is essentially different from the knight, but a reference to divine right is needed to justify this difference in status. In the colonies the foreigner imposed himself using his cannons and machines. Despite the success of his pacification, in spite of his appropriation, the colonist always remains a foreigner.”

The urban and rural working people of Nicaragua could not free themselves without “kicking out” the foreigner (the US commercial interests that dominated their country) and instead institute balanced trading relationships with interests outside their borders. No colonized country can attempt such a liberation without developing a sense of itself as a nation, and that sense of nationhood can’t be separated from the differences between the newly awakened nation and the nation that dominates it. During Nicaragua’s domination, just as throughout Latin America, the Caribbean, Africa and elsewhere, these differences were pointed to by the colonizing power as justification for the colonial nature of the relationship.

It is the recovery of nationalism, Fanon wrote, that provides the basis for an independence struggle. “A culture is first and foremost the expression of a nation, its preferences, its taboos, and its models…The nation is not only a precondition for culture…it is a necessity. Later on it is the nation that will provide culture with the conditions and framework for expression.” It is impossible to skip this stage of development. “Humanity, some say, has got past the stage of nationalist claims,” Fanon wrote.

“The time has come to build larger political unions, and consequently the old-fashioned nationalists should correct their mistakes. We believe on the contrary that the mistake, heavy with consequences, would be to miss out on the national stage. If culture is the expression of the national consciousness, I shall have no hesitation in saying, in the case in point, that national consciousness is the highest form of culture. ”

Sandinistas used national understanding as a scaffold

Fanon wrote as a Caribbean activist deeply involved in Algeria’s 1950s struggle against brutal occupation by France, and so it may seem that his expressions of nationalism and equating those expressions with a definition of culture are too strong, but if a people are oppressed on a national basis, then it is only natural that a culture takes on that oppression in that form. It is not necessary to agree with Fanon’s elevation of nationalism to such heights to find merit in his formulation. The course of the past century demonstrated the validity of Fanon’s theories: Nationalism has been, and continues to be, an extremely powerful political force.

Fanon’s integration of nationalism (grounded in profound sympathy for the distortions imposed by colonialism) with Marxism provides a more realistic analysis than Luxemburg’s dismissal of national liberation movements. Not because Luxemburg’s analysis of the lack of autonomy for the world’s smaller nations is incorrect (in fact, it was fully accurate then as it still is today) but because it, to use Fanon’s phrase, “skips” an important stage of development. A national consciousness bound together Nicaraguans in the struggle against Somoza, but rather than make that struggle a purely nationalist movement, the Sandinistas built upon nationalism, using it as a scaffolding upon which they erected a much larger understanding of what would be needed for Nicaraguans to liberate themselves. A struggle against an internal dictator, underdevelopment, lack of education and external domination is necessarily, in part, a cultural struggle.

Such a struggle by a national majority, however, inevitably contains differences from the concurrent struggle experienced by national minorities, and these differences, too, are cultural. The Sandinistas, to their credit, did come to understand, in a concrete manner rather than in their previous abstract theoretical manner, that they had to provide sufficient space for their own minority nations to develop their culture, and that those minority cultures had been stultified to a degree more severe than their own cultural underdevelopment.

This is an excerpt from It’s Not Over: Learning From the Socialist Experiment, officially published February 26 by Zero Books. Citations omitted. The omitted sources cited in this excerpt are: Katherine Hoyt, The Many Faces of Sandinista Democracy [Ohio University Press, 1997]; Karl Marx and Friedrich Engels, The Communist Manifesto [Washington Square Press, 1964]; “The National Question and Autonomy (Excerpts),” Rosa Luxemburg, anthologized in Paul Le Blanc (ed.), Rosa Luxemburg: Reflections and Writings [Humanity Press, 1999]; and Frantz Fanon, The Wretched of the Earth [Grove Press, 2004]

What might a cooperative economy look like?

In any country in which a model of worker cooperation or self-management (in which enterprises are run collectively and with an eye on benefiting the community) is the predominant model, there would need to be regulations to augment good will. Constitutional guarantees would be necessary as well. Some industries are simply much larger than others. In a complex, industrialized society, some enterprises are going to be much larger than others. Minimizing the problems that would derive from size imbalances would be a constant concern.

Furthermore, if enterprises are run on a cooperative basis, then it is only logical that relations among enterprises should also be run on a cooperative basis. An alternative to capitalist markets would have to be devised—such an alternative would have to be based on local input with all interested parties involved. Such an alternative would have to be able to determine demand, ensure sufficient supply, allow for fair pricing throughout the supply chain, and be flexible enough to enable changes in the conditions of any factor, or multiple factors, to be accounted for in a reasonably timely and appropriate fashion.

It's Not Over coverCentral planning in a hierarchal command structure with little or no local input proved to not be a long-term viable alternative system. What of tight regulation? That is not a solution, either. Regulators, similar to central planners, can never possess sufficient knowledge to adequately perform their job and local enterprises can use their special knowledge to give themselves an advantage rather than share that knowledge with regulators.

Responsibility, then, would have to be tied to overall society. Negotiations among suppliers and buyers to determine prices, to determine distribution and a host of other issues would be necessary. Such negotiations are already common in certain industries; for example in the chemical industry, where companies negotiate commodity prices on a monthly or quarterly basis. Those are competitive negotiations in which the dominant position oscillates between buyer and supplier, resulting in dramatic price changes.

In a cooperative economy, negotiations would be done in a far more cooperative manner, with a wider group participating in the discussions. In this model, prices of raw materials, component parts, semi-finished goods, finished goods, consumer products and producer products such as machinery would be negotiated up and down the supply chain, leading to a rationalization of prices—markups to create artificially high profits or pricing below cost to undercut competitors would be unsustainable in a system where prices are negotiated and pricing information is widely available.

These would have to be fair negotiations—prices throughout the supply chain would have to be set with an eye on rational economics. Industry facilitators to assist negotiations and/or a government arbitration board to make decisions when parties are unable to agree to terms might be necessary. Community input would also be desirable, in the industries in which a given community is directly involved and for retail prices of consumer goods. It may be desirable to include these community interests in pricing negotiations directly. As more people take on more responsibility, more will gain the experience of fair negotiations, enabling more to peer over the shoulders of those involved in these decisions. In turn, more experience means more people within the community who can shoulder responsibility.

Regulating social standards

Although regulation, as noted above, is not in itself a solution, that is not a suggestion that regulation should be done away with. One method of using regulation to ensure socially positive economic activity might be a system of certification. Enterprises would be responsible for investment, production and financial decisions, but might be required to demonstrate full compliance with a range of standards on issues such as equal opportunity, workers’ rights, health and safety, environmental protection and consumer protection. Enterprises could be required to be certified on all relevant issues before conducting business, and perhaps be re-certified at specified intervals.

The allusion to “workers’ rights” in the preceding paragraph might seem a bit odd. These are enterprises under workers’ control already, so what rights are contemplated? That is a more specific question than can reasonably be answered in all situations ahead of time, but in large enterprises workers might still need protections codified in the laws covering the governance of enterprises. In the Czechoslovakia of Prague Spring, as we saw in Chapter 3, this issue was directly confronted. There, the enterprises were under state ownership, and no change was contemplated to that status—enterprises were to be managed directly by their employees on behalf of the country and its people. Activists had begun to set up (until the Soviet occupation stopped it) a system of workers’ councils as the instruments through which enterprises would be directed by all the employees.

Although these have a similar name, they should not be confused with the councils and soviets set up in 1917 and 1918 across Europe; these councils were enterprise-management bodies, not alternative government bodies. The Czechoslovak workers’ councils were designed to give the entire workforce of an enterprise a say in management and would also send representatives to national conventions that would coordinate production at the national level. These councils were to exist simultaneously with trade unions, which would represent the same workers as employees. The activists, mostly trade unionists and grassroots Communist Party members who worked in these factories, believed that separate organizations were necessary to represent workers properly in both their roles because there are potential conflicts between being a member of an organization and an individual worker.

Socialist triangleIn a country where capitalism has been transcended, and a new system of social control and democracy is being established, employees in those large enterprises that are to be formally owned by the state will have the same dual role of managing the enterprise collectively at the same time they remain workers. It is not impossible that biases or favoritism could slowly arise in such enterprises; a union would provide another source of protection that could defend a worker as an individual when necessary. Trade union membership, then, would remain a social value to be respected.

Workers in enterprises that are collectively owned, since they would be owners and not simply managers, might find less ambiguity between their two roles, as long as strategic decisions are made collectively. Still, it may be that there remains a place for trade unions even in these types of enterprises, or it could be that unionization is simply a social value and all members of the enterprise join or form a union for reasons of social solidarity or to provide another check against any centralizing tendencies emerging within the enterprise or within government.

Open information for social accountability

A system of democratic control and social accountability would require open information. Records and accounts of all enterprises and major production units of enterprises would have to be made available to all other parties to negotiations in order for the fairest deals to be reached and to prevent attempts to unfairly benefit at the expense of suppliers or customers. Social-justice organizations—such as those upholding civil rights, consumer rights or the environment—should also have a role, perhaps in enterprise negotiations when appropriate, but more likely in helping to set social goals, in monitoring compliance with standards and possibly being the bodies that issue certifications to enterprises that achieve the standards.

Some amount of planning and coordination would be necessary as part of the process of determining raw materials needs and ensuring that those needs are met. Any planning committee would have to be democratically controlled and have wide social representation to oversee production and to assist in the determination of investment needs.

Co-op symbolInvestment would need to go to where it is needed, a determination made with as many inputs as possible, but because of its importance banking is one area that would have to be in state hands and not in collectives. Financial speculation must be definitively ended, with banking reduced to a public utility. Enterprises seeking loans to finance expansions or other projects will have to prove their case, but should have access to investment funds if a body of decision-makers, which like all other bodies would be as inclusive as possible, agrees that the project is socially useful or necessary.

Government infrastructure projects should be subject to the same parameters as enterprises, with the added proviso that the people in the affected area have the right to make their voices heard in meaningful ways on local political bodies and on any other appropriate public boards. No private developer wielding power through vast accumulations of money will be able to destroy forests or neighborhoods to build a project designed for the developer to reap profits while the community is degraded. Development would be controlled through democratic processes at local levels, and regional or national infrastructure projects should require input from local bodies representing all affected areas.

Capitalist ideology holds that the single-person management that goes with private ownership produces the most efficient system, and soon after the October Revolution communist leadership agreed that single-person management is best. But in contrast to these “givens,” is it not true that a content workforce able to have control over its working life will produce better than a workforce that is alienated by a lack of control? Studies consistently conclude that measures of workers’ control increase satisfaction in work, productivity and solidarity. But workers’ control threatens the domination of elites.

An unprecedented level of democracy would be possible in a cooperative economy because the power of capital would be broken. Social constraints ensuring responsibility to the larger community would be required to prevent the accumulation of capital that translates into power, although such tendencies would be countered by a system that rewards cooperation rather than greed. The society that has been sketched out in these very broad strokes is a society with no classes. Working people—the overwhelming majority of society—have taken control. The (ex-)capitalists are just as free to go to work as everybody else. When the power of capital is abolished, capitalists are converted into ordinary people. Surely some, those with expertise and an ability to work well with others, would be among those cooperative members elected into administrative positions; regardless, they would have to become regular cooperative workers, contributing to the production of a quality product or service and having their say equal to all others who do the work.

This is an excerpt from It’s Not Over: Learning From the Socialist Experiment, officially published on February 26 by Zero Books. Citations omitted. Sources cited in this excerpt are: Pat Devine, “Self-Governing Socialism,” anthologized in William K. Tabb (ed.), The Future of Socialism: Perspectives from the Left [Monthly Review Press, 1990]; Diane Elson, “Socializing Markets, Not Market Socialism,” The Socialist Register, 2000; and Herbert Gintis, “The Nature of Labor Exchange and the Theory of Capitalist Production,” anthologized in Randy Albelda, Christopher Gunn and William Waller (eds.), Alternatives to Economic Orthodoxy, [M.E. Sharpe, 1987]

Belief in capitalism as a material force

Violence and coercion have driven the establishment and expansion of capitalism from its start, and continue to be an indispensable glue holding together what has become a world economic system. Yet no level of brutality can itself keep a system, or any ruling structure, in place for a long period of time, much less for centuries, unless there is some level of cooperation.

That cooperation must rest, at least partially, on belief. Why did so many people in the past believe that God picked one family to rule in perpetuity? Lack of education played no small part here but, whatever the reason, that peasants did believe helped keep monarchs on thrones. Today, with education so much more available, such a belief would be laughed at. Ideology accordingly must be much more sophisticated. There are no dynasties at the head of modern capitalist countries, nor even single political parties or groupings.

Black Lives Matter supporters inside Minneapolis City Hall on December 3, 2015, after an early morning raid and eviction of demonstrators occupying the space outside the Minneapolis Police Department's 4th Precinct, following the police shooting death of Jamar Clark. (photo by Tony Webster)

Black Lives Matter supporters inside Minneapolis City Hall on December 3, 2015, after an early morning raid and eviction of demonstrators occupying the space outside the Minneapolis Police Department’s 4th Precinct, following the police shooting death of Jamar Clark. (photo by Tony Webster)

But here we must distinguish between governing and ruling. Presidents, prime ministers and governors may govern for set periods of time, giving way to new officials, but these men and women do only that: govern. They manage the government on behalf of the dominant social forces within their borders, and those dominant social forces are in turn, depending where on the international capitalist pecking order the governed space lies, connected to and/or subordinate to more powerful social forces based elsewhere.

It is capitalists — industrialists and financiers — who actually rule. The more power capitalists can command, the more effectively they can bend government policy and legislation to their preferred outcomes. More aspects of human life are steadily put at the mercy of “market forces.” Those are not neutral, disinterested mechanisms sitting loftily above the clouds, as the corporate media incessantly promotes. Rather, market forces are nothing more than the aggregate interests of the most powerful industrialists and financiers. Thus capitalist fundamentalism is telling us that a handful of exceedingly powerful industrialists and financiers should decide social and economic matters; that wealth automatically confers on them the right to dominate society.

Is this so different from feudal beliefs in monarchs? Without significant numbers of people believing that the rule of capitalists is just and as natural as the tides of the ocean, capitalism would not endure. When people ceased to believe in monarchs, that system of rule crumbled. Feudalism was of human construction. Everything of human construction comes to an end.

Capitalism, another human construction, is no different. But as a global downturn stretches into its eighth year with no end in sight, as the period of stagnation, and associated cuts to wages and mounting inequality, is now measured in decades, belief in capitalism is becoming more difficult to sustain. Even that old bogey word, “socialism,” is losing its talismanic ability to stifle thinking about alternatives; among young adults in particular socialism is gaining attraction.

Counterposing new ideas for old beliefs

But let us not indulge in wishful thinking. Capitalism is as strong as ever today. Margaret Thatcher’s “there is no alternative” looms large in the popular psyche. For countless millions, capitalism is indistinguishable from society; being without it would be like a fish trying to live outside water. That a furious and never-ending propaganda barrage is necessary to maintain this is not in dispute. That it is still commonly believed is what matters here. Capitalism is what people know and belief that anything else would be worse widespread. Until that belief is broken down — through persuasion and, most likely in bigger portion, an economic breakdown serious enough to compel people to confront their deteriorating living conditions — capitalism will be nearly impossible to dislodge.

Thus belief is a material force, if a sufficient number of people hold that belief. I recently had my attention drawn to an interesting article published on the Waging Nonviolence web site (tip of the hat to regular commenter Alcuin) that discussed a couple of seemingly unrelated events in Uganda. The article’s title, “Did grandmothers kill a government minister, nonviolently?,” asks a provocative question. The incidents in question here center on a group of grandmothers who stripped naked while blocking a road to prevent two government ministers and their convoys from seizing communal lands on behalf of an “investor.”

One of the two ministers died in a plane crash soon afterward. Was this an accident? Was it caused by the minister’s rumored falling out of favor with Uganda’s strong-willed president? Or, as the Waging Nonviolence article discusses, was it because of those grandmothers’ form of protest? The article’s author, Phil Wilmot, wrote, “the idea of a cultural omen or curse killing someone was hard to conceive.” He recounts his discussion of the death of the first minister, General Aronda Nyakairima, with a group of local activists:

“In November, I was participating in a training of activists in Kampala, Uganda’s capital. One young man was present who had organized [the grandmothers] and their community on that April day. Our group dialogue deviated from its intended path, and we found ourselves discussing the incident and its alleged relationship to Aronda’s death.

‘How many of you believe that Aronda died because he was poisoned by the government?’ I asked. A few hands rose.

‘How many of you believe that Aronda died because the women of Amuru stripped naked?’

‘Phil, we are Africans. Of course we believe that’s why he died,’ interjected activist Hamidah Nassimbwa, speaking on behalf of the mostly well-educated group. The majority of the room raised their hands to concur that Aronda’s fatality originated in Amuru in April.”

Beliefs in omens or curses are found in virtually every culture. The point isn’t where these believers are from or what culture they live in, but that these beliefs can have a material effect. The sight of the protesting grandmothers was enough to induce enough fear that high representatives of a government who could have easily used lethal force against them instead fled, and that the protestors’ action had further consequences in many minds. (The other minister subsequently lost his seat in the next election.) These are beliefs that likely arose organically in the distant past, and have survived into a time when science rather than magic or religious belief explains natural phenomenons or social interactions.

The hegemony of ideas that serve elites

How more powerful are beliefs that are intentionally inculcated by elites to maintain themselves in a position of power? Tsars and kings proclaimed they were representatives of God, and fear of divine wrath surely played a significant role in monarchal longevity, no matter how much violence was inflicted on those who stepped out of line. Belief works in the same way today, even if for a different ruling structure.

Antonio Gramsci’s concept of “hegemony” is useful to understand this concept. A definition found on the Marxist Archives web site provides this summation:

“Hegemony is a class alliance by means of which one, leading [hegemonic] class assumes a position of leadership over other classes, in return guaranteeing them certain benefits, so as to be able to secure public political power over society as a whole. … The term was … popularised by Antonio Gramsci who demonstrated that every nation state requires that some class is able to establish a hegemony capable of unifying the nation and resolving its historical problems. Gramsci posed the problem of the working class in Italy in terms of the need for the Italian workers, especially in the industrialised North, to understand the problems of the Southern peasantry and make the demands and aspirations of the Southern peasants their own, while refusing any corporatist bloc with the Northern industrial bourgeoisie.”

Gramsci, in his Prison Notebooks, himself wrote:

“The capitalist entrepreneur creates alongside himself the industrial technician, the specialist in political economy, the organizer of a new culture, of a new legal system, etc. … If not all entrepreneurs, at least an elite amongst them must have the capacity to be an organizer of society in general, including all its complex organism of services, right up to the state organism, because of the need to create the conditions most favorable to the expansion of their own class; or at least they must possess the capacity to choose the deputies (specialized employees) to whom to entrust this activity of organizing the general system of relationships external to the business itself.”

A result of this “social hegemony” is:

“The ‘spontaneous’ consent given by the great masses of the population to the general direction imposed on social life by the dominant fundamental group; this consent is ‘historically’ caused by the prestige (and consequent confidence) which the dominant group enjoys because of its position and function in the world of production.”

Capitalist ‘freedom’ can only be a formal freedom

Because in advanced capitalist countries there is formal democracy rather than an open dictatorship, it is easy to lose sight of where power derives and therefore the limits of formal democracy. In a series of lectures collected in his book The Unfinished Revolution: Russia, 1917-1967, the great historian Isaac Deutscher said:

“[I]n bourgeois society [freedom] can be a formal freedom only. Prevailing property relations render it so, for the possessing classes exercise an almost monopolistic control over nearly all the means of opinion formation. The working classes and their intellectual mouthpieces manage to get hold of, at best, marginal facilities for social and political self-expression. Society, being itself controlled by property, cannot effectively control the State. All the more generously is it allowed to indulge in the illusion that it does so. … Capitalism could afford to enfranchise the working classes, for it could rely on its economic mechanism to keep them in subjection; the bourgeoisie maintains its social preponderance even when it exercises no [direct] political power.” [page 106]

Even allowing for the rise of the Internet, and the better ability for dissenting news and viewpoints to be circulated (Deutscher wrote those words a half-century ago), it is indisputable the corporate media remains dominant and allows only a narrow range of perspectives to be given a hearing. The very competitive nature of mass media ownership helps dominant ideologies prevail — if so many different outlets report the same news item in a nearly identical way, that “spin” can easily gain wide acceptance. Or if stories are reported differently by competing media outlets, but with the same dominant set of presumptions underlying them, those dominant presumptions, products of ideologies widely propagated by elite institutions, similarly serve as ideological reinforcement.

Anti-war demonstrators in London, September 2002 (photo by William M. Connolley)

Anti-war demonstrators in London, September 2002
(photo by William M. Connolley)

In a society where the state owns and controls the media, it is easy to disregard what is disseminated as all emanating from a single source, even when there is scope for differing opinions. In capitalist countries, the profusion of private ownership (even though increasingly concentrated into a few corporations) gives the appearance of competing multiple perspectives. Extremist, mad-dog outlets like Murdoch newspapers or Fox News do no more than provide reinforcement for maleducated holders of extremist viewpoints and conspiracy theories.

Public opinion is shaped by repetition, and not repetition in a handful of obviously biased publications or networks, but rather repetition of viewpoints, reporting angles and underlying themes and assumptions, across the entire corporate media.

An array of institutions to convey one basic message

There are a vast array of institutions, including corporations, “think tanks,” schools and armed forces, to suffice a society with the viewpoints of the dominant, which in a capitalist society are its industrialists and financiers. The admonishment that everything — including schools and especially government — should be “run like a business” is pervasive. This propaganda does not fall out of the sky; its seeming pervasiveness flows from the ability of capitalists to disseminate their viewpoints through a variety of institutions, those they directly set up and control, and those starved of funds that in an era of deepening austerity increasingly must accept corporate money to make up for the loss of state support.

Something as fundamental as who generates the wealth of society, and how wealth is generated, is obscured as part of this process of opinion formation. It can’t be otherwise, for this is the building block on which capitalist ideology rests. Incessant spin claims that profit is the result of the acumen of the capitalist and the capitalist’s magical ability to create profit out of thin air, when in actuality corporate profit comes from the difference between what an employee produces and what the employee is paid.

If the enterprise were a cooperative run by the workers, the product would be sold for the same price and thus the same profit would be achieved, but distributed equitably. Many people must be poor for one person to be rich, because the private profit of a few is taken from the underpayment of work to the many.

The modern working person has faced a lifetime of the most sophisticated propaganda, and the task of undoing it in ourselves and for others should not be under-estimated. Millions of people, nonetheless, have done it and more are doing it. The continuing stagnation, erosion of social protections, promise of more austerity and the looming environmental catastrophe of global warming are bound to open more eyes. Many more eyes will need to be opened, with a concomitant willingness to struggle and organize, if a better world is to be created. A “counter-hegemony” is necessary: We provide our own leaders or they won’t be provided at all.

Or, to put it another way, we have to believe that a better world is not only possible but can be created. Once a sufficient portion of society comes to believes in this, then belief in, or resignation to, capitalist exploitation goes the way of trembling at the feet of monarchs. A belief in ourselves, that cooperation rather than dog-eat-dog competition is the route to a stable economy with enough for all, becomes a new material force.

More unemployment and less security

The bad news is that the world’s number of unemployed workers and those with precarious employment is expected to rise during 2016 and 2017. The worse news is that the true number of those in these categories are probably significantly undercounted.

The International Labour Organization, a United Nations agency that just issued its “World Employment Social Outlook,” predicts that 200 million people will be unemployed in 2016, three million more than last year. This will be most acute in middle-income and poor countries, where unemployment is forecast by the ILO to increase by 2.4 million with a slight decrease in unemployment in the most developed countries. Brazil and China alone are expected to add 1.5 million to the unemployment rolls in the next two years.

(Mural by Ben Shahn)

(Mural by Ben Shahn)

Not that having employment is necessarily a marker of stability. The ILO report says that nearly half of the world’s workers — 1.5 billion people — hold “vulnerable employment.” This total includes subsistence and informal workers, and unpaid family workers. This vast cohort (the “reserve army of labor” although the ILO never uses such direct terminology) will not be getting smaller in the foreseeable future. All these factors add up to more inequality. Nor is it limited to any one part of the world, the ILO report says:

“The improvement in the labour market situation in developed economies is limited and uneven, and in some countries the middle class has been shrinking, according to various measures. Income inequality, as measured by the Gini index, has risen significantly in most advanced G20 countries. Since the start of the global crisis, top incomes have continued to increase while the poorest 40 per cent of households have tended to fall behind.” [page 4]

In one-third of the world’s countries, the “precariat” constitutes at least two-thirds of the total workforce. The percentages of those with precarious employment is much higher in developing countries than in the advanced capitalist countries, but in all parts of the world the labor force participation rate — that is, the percentage of those of working age who are employed — is slowly shrinking and is forecast by the ILO to continue to do so through the rest of the decade. Here it is the developed countries that have the lowest participation rate (60.5 percent in 2015), more than two percentage points lower than the global average.

The massive size of the precariat

A gloomy picture, indeed. A picture, however, that does not fully capture the bleakness of stagnation. The number of precarious workers is likely higher than what the ILO calculates. In their book The Endless Crisis, John Bellamy Foster and Robert W. McChesney estimate that the true size of the precariat is actually significantly larger than those with regular employment. They write:

“If we take the categories of the unemployed, the vulnerably employed, and the economically inactive population in prime working ages (25-54) and add them together, we come up with what might be called the maximum size of the global reserve army in 2011: some 2.4 billion people, compared to 1.4 billion in the active labor army. It is the existence of a reserve army that in its maximum extent is more than 70 percent larger than the active labor army that serves to restrain wages globally, and particularly in the poorer countries.” [page 143]

Capitalism is unable to create sufficient employment, and thus considers such people to be “excess population.” Mass migrations from Latin America to the United States, or from Africa and the Middle East to Europe, are consequences. In the 19th century, industrializing European countries had a safety valve in massive emigration (not so good for Indigenous peoples in the target countries of course), but there are no longer large areas into which capitalism can expand. Professors Foster and McChesney put this in stark terms:

“While such mass emigration was a possibility for the early capitalist powers, which moved out to seize large parts of the planet, it is not possible for countries of the global South today. Consequently, the kind of reduction in peasant population currently pushed by the system points, if it were effected fully, to mass genocide. An unimaginable 7 percent annual rate of growth for fifty years across the entire global South, [economist Samir] Amin points out, could not absorb even a third of this vast surplus agricultural population. …

“Aside from the direct benefits of enormously high rates of exploitation, which feed the economic surplus flowing into the advanced capitalist counties, the introduction of low-cost imports from ‘feeder economies’ in Asia and other parts of the global South by multinational corporations has a deflationary effect. This protects the value of money, particularly the dollar as the hegemonic currency, and thus the financial assets of the capitalist class. The existence of an enormous global reserve army of labor thus forces income deflation on the world’s workers, beginning in the global South, but also affecting the workers of the global North, who are increasingly subject to neoliberal ‘labour market flexibility.’ ” [pages 147, 149]

These trends become more acute as high unemployment persists. The true level of unemployment is approximately double official numbers across North America, Europe and Australia. The reason for this is that all those countries do not include discouraged workers, those employed part time but not able to secure full-time work nor all persons marginally attached to the labor force (those who wish to work but have given up).

Less pay to go with less security

With all these factors working against them, wages for working people are stagnant while productivity continues to increase — the one percent is grabbing all the wealth created. This is a global phenomenon. Employees in the United States, Canada, Germany, France, Britain and Japan have seen their pay lag behind productivity gains and income inequality widen.

Thus it comes as no surprise that labor rights are under attack everywhere. How bad? In a 2014 study, the International Trade Union Confederation determined the degree to which five basic rights — fundamental civil liberties; the right to establish or join unions; trade union activities; the right to collective bargaining; and the right to strike — are upheld, and then assigned a numerical grade. Every country in the world had a ranking of below 50 percent. In other words, every country flunked when graded on respect for labor rights.

What to do about all this? The ILO offers these conclusions as part of its call for a “shift in economic and employment policies”:

“It is particularly important to strengthen labour market institutions and ensure that social protection systems are well designed, in order to prevent further increases in long-term unemployment, underemployment and working poverty. A rebalancing in reform efforts is also needed. In particular, financial reforms need to ensure that banks perform their role of channelling resources into the real economy and into investment for sustainable enterprise expansion and job creation.” [page 5]

We should be long past the time when it was possible to believe we could wag our fingers at bad policy-makers and expect they will see the light of day. The unceasing competition of capitalism, its relentless drive to enclose ever more human activity within its logic of profit at any cost, mandates the world we now live in. Drastic imbalances in power are inherent in capitalism; these can’t be legislated away. Thus the ILO’s prescriptions are meaningless. Reforms are possible with enough movement organization, but reforms are eventually taken back, as the past four decades has amply demonstrated.

Desires by industrialists and financiers to press their offensive against working people are behind “free trade” agreements that eliminate barriers to the movement of capital, encourage shifting of production to places with ever lower wages, and impose restrictions on the ability of governments to implement, or even maintain, laws safeguarding health, safety, labor rights and the environment. These are simply the expected outcomes under the logic of capitalism. No regulation can change that. Only a change of economic system can achieve that.

Fanaticism and fantasy drive purported TPP ‘benefits’

So-called “free trade” agreements are continually advertised as creators of jobs, yet jobs are lost and wages decline once they go into effect. As representatives of the 12 countries participating in the Trans-Pacific Partnership gather this week in New Zealand to begin their final push for it, the usual unsubstantiated claims are being put forth.

Why is this so? I mean beyond the obvious answer that such claims are propaganda in the service of corporate elites and financiers. Corporate-funded “think tanks” that pump out a steady barrage of papers making grandiose claims for “free trade” deals that are relied on by the political leaders who push these deals require some data, no matter how massaged. One organization prominent in this process is the Peterson Institute for International Economics, which has issued rosy reports in expectation of deals like the North America Free Trade Agreement — for example, it predicted 170,000 new jobs would be created in the U.S. alone in 1995 and that the Mexican economy would grow by four to five percent annually under NAFTA.

Protest against the Trans-Pacific Partnership, October 2015 (photo by Lorena Müller, Pirate Times)

Protest against the Trans-Pacific Partnership, October 2015 (photo by Lorena Müller, Pirate Times)

One way to look at this is that the Peterson Institute is to “free trade” agreements as the Heartland Institute is to global warming. Heartland began as a Big Tobacco outfit issuing reports denying links between smoking and cancer. As late as 1998, Heartland President Joe Bast claimed that there were  “few, if any, adverse health effects” associated with smoking and boasted to a Phillip Morris executive that “Heartland does many things that benefit Philip Morris’s bottom line, things that no other organization does.”

Heartland later began specializing in global-warming denial, receiving $676,500 from Exxon Mobil alone between 1996 and 2006; after which it stopped identifying its contributors. Mr. Bast seems to have no shame, writing that “Most scientists do not believe human activities threaten to disrupt the Earth’s climate” in an article describing global warming as a “scam.” In fact, 97 percent of climate scientists agree that human activity is behind global warming.

It is this same attitude toward the truth that pervades papers predicting wondrous results from “free trade” agreements. In contrast to the Peterson Institute’s rosy projections, the first 20 years of NAFTA proved to be a lose-lose-lose proposition for Canada, Mexico and the United States. Almost 5 million Mexican farmers have been displaced with inflation-adjusted wages in Mexico barely above the level of 1980; U.S. food prices have risen 67 percent since NAFTA took effect and two-thirds of displaced manufacturing workers in the U.S. have been forced to take work with reduced wages; and Canadians suffered drastic cuts in government benefits while their environmental laws were reversed in the wake of corporate challenges.

Rosy reports rest on ideology, not real world

The Peterson Institute is at it again, first claiming the Trans-Pacific Partnership (TPP) will result in gains of US$1.9 trillion, and in a new report once again making extravagant claims even if scaled back. In its latest report, the Institute claims there will be no net job losses, while annual income in the U.S. would increase by $131 billion. These sorts of predictions are routine, and not the product of any single corporate organization. How is it that, all actual experience to the contrary, these sorts of calculations are presented with a straight face?

The political economist Martin Hart-Landsberg, in his book Capitalist Globalization: Consequences, Resistance, and Alternatives, writes that economic models that presume wondrous benefits from “free trade” agreements assume, inter alia:

  • There are only two inputs, capital and labor, which are able to move instantaneously but never cross national borders.
  • Total aggregate expenditures in each economy will be sufficient, and automatically adjust, to ensure full use of all resources.
  • Flexible exchange rates will prevent lowered tariffs from causing changes in trade balances.

Thanks to these starting points, Professor Hart-Landsberg writes:

“[T]his kind of modeling assumes a world in which liberalization cannot, by assumption, cause or worsen unemployment, capital flight or trade imbalances. Thanks to these assumptions, if a country drops its trade restrictions, market forces will quickly and effortlessly lead capital and labor to shift into new, more productive uses. And since trade always remains in balance, this restructuring will generate a dollar’s worth of new exports for every dollar of new imports. Given these assumptions, it is no wonder that mainstream economic studies always produce results supporting ratification of free trade agreements.”

Given the strong biases in favor of “free trade” agreements, all the more skeptical of the TPP we may be when we see the tiny gains forecast by the World Bank. Vietnam is expected to see the biggest boost among the 12 TPP countries, according to the World Bank forecast — a 10 percent gain in gross domestic product cumulative through 2030. In other words, less than one percent per year. As a TechDirt summation of this report noted:

“So according to the World Bank’s figures, the US will gain an extra 0.04% GDP per year on average, as a result of TPP; Australia an extra 0.07% annually, and Canada a boost of 0.12% per year.”

If this is the best that promoters of corporate hegemony can come up with for the TPP, its likely effect will surely be dismal.

The vanishing “gains”

Jane Kelsey, a New Zealand law professor who has long sounded the alarm on the TPP, notes that even the slightly larger gain forecast for that country would actually constitute a statistical blip that may or may not actually exist. She writes:

“[The] National [government]’s glitzy new ‘TPP fact’ page is bad wine repackaged in new bottles. Here’s a few facts they don’t tell you. The projected economic gains of 0.9 per cent of GDP by 2030 are within their own margin of error, even before costs are factored in and disregarding unrealistic modelling.”

One of several blockades in New Zealand on February 4 in protest of the TPP (photo via Real Choice NZ)

One of several blockades in New Zealand on February 4 in protest of the TPP (photo via Real Choice NZ)

A more balanced investigation conducted by Tufts University researchers Jeronim Capaldo and Alex Izurieta led to the conclusion that the TPP, if enacted, would result in the loss of three-quarters of a million jobs through 2025, including 448,000 jobs to be lost in the U.S. alone. Canada, Mexico, Japan and Australia would each suffer jobs losses in the tens of thousands. The Tufts report concludes:

“The TPP would lead to higher inequality, with a lower labor share of national income. We expect competitive pressures on labor incomes, combined with employment losses, to push labor shares of national income further down, redistributing income from labor to capital in all countries. In the USA, this would exacerbate a multi-decade trend.”

Working people in the 11 other TPP countries would get to experience the stagnant wages and declining living standards that United Statesians have been treated to during the past three decades.

More than 330,000 manufacturing jobs are expected to be lost in the U.S. alone if TPP is passed, according to a separate calculation by the United Steelworkers, and Unifor estimates that 20,000 Canadian jobs in auto manufacturing alone are at risk.

If no gain, there will be pain for you

Underlying all this further tilting of the scales already heavily weighted toward corporate money and power is the “investor-state dispute settlement” provision, whereby multi-national corporations can sue governments to overturn laws and regulations they don’t like under the excuse that measures to protect safety, health or the environment constitute a “taking” of their expected profits — not even actual profits. The secret tribunal that will hear corporate complaints (the same as the one used under NAFTA) must assume the corporation’s claim is true under some circumstances.

Canada, because it has higher standards than do the U.S. or Mexico, is most frequently sued under NAFTA, although the Canadian pipeline company TransCanada has committed the latest outrage, suing the U.S. government for $15 billion because the Obama administration declined to permit the Keystone XL pipeline. TransCanada is suing for $15 billion even though it has spent $2.4 billion on the pipeline.

Although the governments of the 12 TPP countries are “signing” the agreement this week, that is a formality: The deal must still be approved by legislatures and implementing legal changes enacted.

The TPP would enter into force 60 days after all 12 signatories ratify it or, if that doesn’t happen within two years, in April 2018 if at least six of the 12 countries accounting for 85 percent of the combined gross domestic product of the original signatories have ratified the agreement. That 85 percent can’t be reached without the U.S. or Japan, effectively giving those countries a veto and thus placing extra responsibility on opponents in both those countries. It also can’t be reached if Canada, Australia and Mexico each fail to ratify, so opponents there can also stop it.

The TPP, even more so that previous deals, has very little to do with trade and much to do with solidifying corporate control over life, arguably the most significant erosion of what is left of formal democracy yet. Regardless of where you live, the TPP can be defeated if we continue to organize. And once the TPP is sent to the trash heap, it will be time to go on the offensive to roll back existing trade pacts.