In the Ruins of the Present
✑ TRICONTINENTAL | 4,426 words
‟An idealist approach to human history is not adequate. Neoliberalism did not appear out of thin air.
In the Ruins of the Present (Tricontinental's first Working Document) traces the challenges posed by globalization and what these challenges produce for our society. The first attempt to address the problems of globalization was neo-liberalism. It failed. Next came cruel populism, which expresses itself in narrow, hateful terms. It will also fail. The Left is weak – decomposed by globalization. The need of the hour is for the Left to recompose itself, to become a vital force for a fragile humanity.
Originally published by Tricontinental: Institute for Social Research (March, 2018). The following presents only the first two paragraphs of a longer Working Document of Tricontinental. Read the entire document on the original source.
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Ağaca balta vurmuşlar ‘sapı bendendir’ demiş.
When the axe came into the forest, the trees said:
the handle is one of us.
(Turkish proverb)
Raoul Peck, the Haitian filmmaker, opens his film—Der Junge Karl Marx (2017)—in the forests of Prussia. Peasants gather fallen wood. They look cold and hungry. We hear horses in the distance. The guards and the aristocrats are near. They have come to claim the right to everything in the forest. The peasants run. But they have no energy. They fall. The whips and lances of the aristocrats and the guards strike them. Some of the peasants die. Even fallen wood is not allowed to them.
Young Karl Marx, sitting in Cologne in 1842, is dismayed at the violence against the German peasants. The peasants, he wrote, know the punishment. They are being beaten, even killed. But what they do not know is the crime. For what crime are they being punished?
Peck is clever to open his film with this dilemma, for it is the question that every sensitive person should ask today. What is the crime for which the world’s poor are being punished? Poverty and war produce refugees of hunger and bombardment, but they are denied mobility, denied any exit from their predicament. They know the punishment that they face: indignity, starvation and death. This they know. What they do not know is their crime. What have they done to deserve this?
The Dominican-American writer Junot Diaz visited Haiti after the devastating earthquake of 2010. In a memorable essay titled ‘Apocalypse’, Junot Diaz noted that Haiti warned us of the new ‘zombie stage of capitalism, where entire nations are being rendered through economic alchemy into not-quite-alive. In the old days, a zombie was a figure whose life and work had been captured by magical means. Old zombies were expected to work around the clock with no relief. The new zombie cannot expect work of any kind—the new zombie just waits around to die’.
And the new zombie cannot be allowed to forage for food or to seek shelter or medicine. The new zombie, truly, must just wait to die. This is the punishment. But what is the crime?
- Vijay Prashad
PART I: STRUCTURE
International Division of Humanity
US President Donald Trump threatens to annihilate North Korea, Iran and Venezuela. This is the new Axis of Evil, a concept his predecessor George W. Bush used in 2002 but that then did not include Venezuela. It included Iraq, which the United States bombed in 2003 as part of its illegal invasion of the country. Since then, the U.S. has also destroyed Libya and other countries that include Haiti, now substantially under U.S. and UN occupation. Like a wounded dragon, the United States whips its tail across the planet and breathes fire on people—destroying countries, vanquishing its enemies. Its wounds are not fatal, but strategic. The United States still possesses the most powerful military in the world and is capable of destroying any country by aerial bombardment and by the use of weapons of mass destruction. But it uses this power in ways that do not always benefit its ambitions. Because the United States is the most powerful country in the world does not make it godlike; it has its own errors, which are to be carefully tracked by those who favour humanity over submission.
There is iron in the soul of imperialism. It uses its immense military power against human beings and then—conveniently—forgets the human cost of suffering that follows. There has never been any accountability for the use of nuclear weapons on Japan in 1945 nor for the hideous bombardment of Korea in the 1950s nor the massive bombardment of Vietnam in the 1960s and 1970s nor indeed the endless war on Afghanistan and the destruction of Iraq and Libya. The iron is so lodged in the soul that there is barely any concern when the United States drops a massive bomb on Afghanistan. The local authorities—pushed by the United States and the Afghan government—declined to allow journalists into the site on the grounds of security. When the people around the bombsite spoke, their words were chilling. ‘The earth felt like a boat in a storm’, said Mohammed Shahzad. ‘It felt like heaven was falling’. Achin’s mayor—Naveed Shinwari—reflected, ‘There is no doubt that ISIS was brutal, and that they have committed atrocities against our people. But I don’t see why the bomb was dropped. It terrorised our people. My relatives thought the end of the world had come’.
This feels like the era of annihilation, when the world seems poised at the brink of capitalist-induced planetary climate chaos and of nuclear war.
It is fitting, therefore, to pause and register the grave words of those who have already experienced annihilation—the survivors of the U.S. use of weapons of mass destruction against Japan. Torako Hironaka, who survived the U.S. atomic bomb attack on Hiroshima made a list in her diary of what she recalled,
In his Hiroshima Diary (1955), written in the aftermath of the nuclear attack, Dr. Michihiko Hachiya wrote,
The words of the hibakusha, the survivors of the nuclear attack, are essential for our times, when it appears that annihilation is on the horizon. These are warnings against complacency. they provide the warmth of human survival against the harshness of iron and hatred.
Catastrophic natural events—hurricanes and rising sea levels—capture our imagination, as the Caribbean islands are wracked by wind and flood and as the South Sea islands disappear into the oceans. Water drowns land as capital drowns the dreams of human survival. Data from international agencies show us that formal employment is an impossible dream for millions of our fellows on the planet. there is, however, always a job with the military. Wars continue endlessly. Pitiless futures stand before the young. their trust in humanity is fragile.
How to understand a world of unemployment and annihilation, of poverty, climate catastrophe and war? What concepts do we have to grasp these complex realities? The modes of thought that come from North American positivism—game theory, regression analysis, multi-level models, inferential statistics—are at a loss to offer a general theory of our condition. Seeped in common sense understandings of power and naive about the role of elites in our world, these approaches might explain this or that aspect of our world.
But can they explain the relationship between the endemic crisis produced by globalisation, the failure of neoliberalism to manage this crisis and the emergence of neofascism as its current consensus? Do they have the concepts—such as imperialism—that are essential to an investigation of the real world that we live in and not the illusory world dreamt up by the first principles of bourgeois social science? Can we understand why the North Atlantic Treaty Organization (NATO) wants to bomb this country or why the International Monetary Fund (IMF) wants to extract its pound of flesh from that country? Do they have an explanation for why the countries of the world spend more money on the arsenal of repression than on the production of social goods, why there are more police on our streets than social workers and artists?
Globalization
The concept used to explain the desiccation of social life across the planet is neoliberalism. Neoliberalism is essentially a policy platform designed by multinational agencies such as the International Monetary Fund (IMF) and the World Bank as well as by intellectuals who circle these institutions. These intellectuals have absorbed the bourgeois logic that it is corporate ingenuity that makes history rather than the social labour of human beings. It is corporations, they say, that make jobs, and so therefore to make an economy hum one has to cater to the needs of the corporations. The motor of history is seen to be Capital—corporations and entrepreneurs. It is not seen to be social labour—the workers who design our future and whose hard work produces the commodities that enhance our present.
Scholars critical of the neoliberal policy slate turn to the projects of the UK’s Prime Minister Margaret Thatcher and the U.S. President Ronald Reagan to explain how neoliberalism changed the world. It is as if these leaders were like sorcerers, conjuring up public policy as if from no-where, driving their agenda through the institutions of the planet. They championed the privatisation of the protected commons and the cannibalisation of social resources. That is indeed the case. But why? Why did they move towards privatisation and cannibalisation?
An idealist approach to human history is not adequate. Neoliberalism did not appear out of thin air. It was brought to bear by these governments to solve practical problems produced by structural changes in the global mode of production. Capitalism has always sought a global market, eager to break free of the limits set upon it by national governments, eager to find new resources and new techniques to produce goods for lower costs and to find new markets to sell these goods at higher prices. But capital’s great global ambitions were held in check by technological limitations—such as the inability to access information in real time from across the planet—and by working-class movements that demanded that nation-states restrict capital to benefit labour. But by the 1970s, certain technological barriers had been overcome and working-class power had been relatively depleted. Capital was now able to ascend its chariot and observe the planet from above, looking down at it from its satellites, hoarding information on its computers and seeking the cheapest workers and the dearest markets. This god-like position for capital inaugurates the era of globalisation.
A truly magical era opened up for capital. Technological developments came swiftly as a flood of workers marched in single-file towards its global factories, and as a new intellectual property regime developed to protect capital’s gains despite political objections from weakened states around the world. What state power workers and peasants had was now delivered comprehensively to capitalists. Now truly one could say that the state functions as a committee for managing the common affairs of the bourgeoisie.
The political condition for globalisation was set by the Western financial system’s induced debt crisis for the Third World. A sharp increase in U.S. interest rates in 1979—the Volcker Shock (named after U.S. Federal Reserve chair Paul Volcker)—jolted the economies of the Third World. What Volcker did by his monetary policy was to export inflation from the shores of the United States to the rest of the world. High interest rates for the dollar meant that the London Inter-Bank Offer Rate (LIBOR) skyrocketed. For no fault of their own, Third World states now found themselves at catastrophic levels of debt against commercial banks and Western governments. The situation of the fifteen heavily indebted countries (based on the World Bank’s assessment) is illustrative. In 1970, these fifteen countries carried a total external public debt of $17.9 billion (9.8% of their Gross National Product, GNP). By 1987—in the heat of the debt crisis—the figure rose to $402.2 billion (47.5% of their GNP). The debt service or interest payments on this loan was monumental—from a high payment of $2.8 billion (1970), it rose to an unmanageable $36.3 billion (1987). By 1991, the numbers had gone out of control. The total external debt for the Third World states was at $1.4 trillion, which amounted to 126.5% of the total exports of these countries. This means that the amount owed to commercial banks and governments was greater than the amount earned by the export of goods and services.
The debt crisis in the third World had destroyed the political confidence of many of the states in Africa, Asia and Latin America—which meant that they had little to bargain with when companies arrived to negotiate for ‘free trade zones’ and other advantages. It was the debt crisis that weakened the bargaining power of the post-colonial states, weakening their leaders’ resolve and the cultural con dence of the nationalist elites. Dependence is a consequence of a lack of independence. ‘He who feeds you’, warned Burkina Faso’s Thomas Sankara,‘controls you’. So it has become.
The debt crisis in the Third World had destroyed the political confidence of many of the states in Africa, Asia and Latin America—which meant that they had little to bargain with when companies arrived to negotiate for ‘free trade zones’ and other advantages. It was the debt crisis that weakened the bargaining power of the post-colonial states, weakening their leaders’ resolve and the cultural confidence of the nationalist elites. Dependence is a consequence of a lack of independence. ‘He who feeds you’, warned Burkina Faso’s Thomas Sankara,‘controls you’. So it has become.
It was on the graves of these children and on the weakness of the Third World states that the new architecture of globalisation would be built. There were three elements to this new dynamic: the development of new technologies, the delivery of millions of new workers to the accumulation strategies of the monopoly firms and the creation of a new intellectual property regime.
First, new technologies—such as satellite communications, computerisation and container ships—provided firms with the ability to manage global, real-time databases and to move goods as fast as possible. Firms could break-up factories and set them up in several countries at the same time—a process known as the disarticulation of production. Each factory could produce one part of the final commodity, with the firm able—thanks to detailed information held on its proprietary database—to judge which country would be best able to provide the cheapest location for which production need. Capital did not need to build factories near markets or to build one giant factory. Those days were over. Now capital could take advantage of small changes in prices of input costs to build smaller factories in many locations. Because of advances in transportation—containerisation, for instance—capital could move the parts of the commodity swiftly and relatively cheaply as well as shift commodities to markets with relative ease. The technological means to remove production from one territory and to spread production across the planet now became available.
Second, barriers erected by the October Revolution, the Chinese Revolution and the Third World Project began to tumble in the 1980s because of the Third World debt crisis, the fall of the USSR and the opening of the Chinese labour market to foreign capital. Millions of workers, previously sheltered from full-scale capitalist demands, now became prey to the capitalist market. They would await the disarticulated factory to descend into their lives.
Thirdly, capital went into the final round of the General Agreement on Trade and Tariffs (GATT)’s Uruguay Round from 1986 to 1994 to ensure that intellectual property rights would be in the hands of capital rather than society. Previously, intellectual property was vested in the process by which a good was produced, not in the good itself. That allowed people to find new ways to make goods and to therefore enhance science and technology. Reverse engineering of goods was possible, which was crucial to the pharmaceutical sector in the poorer nations where they could develop life-saving medicines for the poor. After the final round of GATT, which produced the World Trade Organisation (WTO) in 1994, the idea of intellectual property changed. Now, the good itself was to be patented, which means that capital can collect rent from anyone who makes this good—regardless of their own innovations. It also means that the value of goods produced outside the core territory of capital—North America and Western Europe—will be protected by this new intellectual property regime. Furthermore, the new intellectual property framework—through the patenting of nanotechnologies, genomics and transgenics—provided major food corporations with new power over agriculture that transcended control over land. It also provided ‘information firms’ with the basis for the new drive to ‘digital colonisation’—namely the theft of data by large ‘information firms’ towards the consolidation of new desires through new means of consumer surveillance and by the delivery of mainly Western content to people across the planet (the slow death of ‘net neutrality’ as a principle for a social Internet is another indicator of digital colonisation). This was the new legal framework of the architecture of disarticulated production.
The World Trade Organisation came about as a result of a so-called ‘Grand Bargain’, as the economist Omar Dahi put it. Most of the global South, crippled by the debt crisis, gave up its industrial policy and protection of its workers and markets in return for exporting its agriculture and its extracted raw materials. In reality, what was lost was economic sovereignty in both industry and agriculture.
These technological developments, the delivery of millions of potential workers and the new intellectual property rules allowed firms to operate on a global scale. They used two different strategies along the global commodity chain for the production of goods and services. First, they moved their entire production processes overseas to one country. This is known as Foreign Direct Investment (FDI) outsourcing. Here, the multinational firm would still have to invest money elsewhere to build up the physical infrastructure for production. Second, to produce their commodities the multinational firms would merely hire subcontractors, who would struggle against each other in a race to the bottom. This ‘arms-length outsourcing’—as political economist John Smith put it—allowed multinational firms to save their capital and to bear almost no risk in the production process. Either way—by FDI or by arm-length outsourcing—capital found its advantage in labour arbitrage, using cheaper and weaker labour to make its products, while hollowing out societies in the North and the South.
This new geography of production weakens the power of workers by removing the two institutional frameworks for the building of worker power—trade unions and nationalisation. How can workers build unions in these arms-length sub-contracted firms that are run on low margins by owners who use every brutal means to extract work from replaceable workers? How can states, if they are taken over by workers, nationalise parts of the production process if they do not control the entire process of the production of a commodity? Neither of these means is available to workers. Their own motion to change the world is stifled by the concentration camp features of the Export Processing Zones and by the maquiladora factories.
Arms-length outsourcing enables firms of the North to no longer invest their capital into the production process. Nike, Apple and others like them do not invest money into factories. They are brand firms. The profits they make from the rent they collect against their brand is astronomical—and it does not get substantially reinvested into productive enterprises. Little wonder that firms are sitting on vast amounts of cash or that they have turned over mountains of capital into the unproductive financial casino. Rather than invest this money for productive enterprises or for the social good, they hoard it in financial circuits where they attempt to produce more money from money without the intermediation of production. No surprise then that the people who control some of these large firms become obscenely wealthy. Eight men, says an Oxfam study, now hold as much wealth as the entire bottom half of humanity. Their wealth is a direct result of the arms-length outsourcing established by disarticulated production and by the ballooning financial sector as a result of the lack of need to invest in production.
Not only have the rich and corporations amassed vast amounts of cash, but they have also been—over the past forty years—stingy with that money. North American corporations—by themselves—are holding $1.9 trillion in cash within the U.S. and an additional $1.1 trillion in their offshore accounts. U.S. banks are holding $1 trillion in cash reserves. That’s a total of $4.0 trillion. Add in the cash held by corporations and banks in Europe and Japan and the total amounts to $7.3 trillion, a number that does not include the ‘black money’ hoarded in Luxembourg, Singapore, Switzerland and other such banking havens. That figure—according to a study by the National Bureau of Economic Research and based on numbers from the Bank for International Settlements—indicates that tax havens hold an estimated $5.6 trillion (in 2007). Offshore wealth—held in these havens—amounts to about 10% of total global GDP. In some countries (such as the UAE), the offshore wealth is above 70% of GDP. The elites of the UAE, Venezuela, Saudi Arabia, Russia and Argentina make their countries the highest states with offshore wealth as a percentage of GDP. This vast hoard of accumulated money capital means that the richest firms and individuals have outsourced stagnation into the heart of the world—they have refused to invest this cash into the world of social labour, while they insist on cuts to national budgets paid for by taxes on workers and peasants and lower living standards for workers and peasants. There is no greater scandal than this structural constipation of capital, this ‘investment strike’.
If housing prices provided the U.S. middle class and upper sections of the working class with the dream of retirement, credit from banks allowed them to consume at rates that were far above their own incomes. The United States market operates as the ‘buyer of last resort’ for the world market, continuing to vacuum up goods and services as well as resources of all kinds from across the planet. The scale of U.S. consumption is astronomic. Merely 5% of the world’s population, the U.S. consumes at least a quarter of its energy. If everyone on the planet lived like a U.S. resident, then at least four Earths would be needed to sustain that level of consumption. The scale of consumption, fuelled by the Greenspan Put and by credit delivered through the international banking system, allows the U.S. consumer to become essential to the manufacturers from China to Mexico. So the inflation of the asset markets and the entry of cheap credit into the U.S. consumer sector is not irrational for this system, but perfectly rational. The system is designed in this way, its rationality driving the system from one crisis to another, from chaos to chaos.
When the U.S. housing market—an overinflated bubble—burst, Greenspan, one of America’s leading monetarist practitioners, said he was ‘shocked’. When Greenspan came before the U.S. Congress in 2008, he faced sharp questions from Representative Henry Waxman (California):
Greenspan’s ideology, his theory, was flawed, and he was shocked—and yet it had no impact on the Economics profession or on their public policy frameworks. Monetarism came out of this crisis unscathed. Macro-economic policy remained in the hands of technocrats who pushed the view that there need not be any political discussion about their choices. They were above politics, in the land of theory, a theory that Greenspan himself had told the U.S. Congress had been wrong. The former Greek Finance Minister Yanis Varoufakis said quite clearly, ‘The danger of a coup these days comes not from a tank, but from a bank’. No need for a military coup (except in certain countries) when the well-paid lobbyists and the well-behaved bankers tied democracy up in chains.
The tax strike enabled individuals to hold large—unimaginable—quantities of social wealth. This wealth, beyond what an individual or a family could consume, created the morbid cult of philanthropy. Rich donors became the hero of our times, with Bill Gates lionised for his work on medicine and with other wealthy men and women seen as champions against poverty. It was these individuals who became key drivers of social policy against the democratically produced needs of a country. In this way, public policy is now driven less by democratic institutions and more by donor-driven agendas. As Sarah Mukasa of the African Feminist Forum put it, ‘We must caution against attempts to de-politicise economics and development and prevent this [new development] agenda from being completely donor-driven’.
Tax strikes come alongside the insistence from the official policy makers (backed by the full force of big capital) that public officials must balance the books of public finances. Governments must balance their budgets, even as capital reduces its payments into the public exchequer. This means that governments are forced to either sell assets to raise funds so as to continue to maintain social institutions or else they slice away at these social goods. Fiscal responsibility alongside the tax strike means impoverished government finances. No wonder then that the pressure on society is now defrayed from the state onto society. What the hidden hand destroyed, the hidden heart had to hold together—the social costs of globalisation frayed society, whose loose bonds had to be held together by triple time labour mainly from women in families.
Young Karl Marx, sitting in Cologne in 1842, is dismayed at the violence against the German peasants. The peasants, he wrote, know the punishment. They are being beaten, even killed. But what they do not know is the crime. For what crime are they being punished?
Peck is clever to open his film with this dilemma, for it is the question that every sensitive person should ask today. What is the crime for which the world’s poor are being punished? Poverty and war produce refugees of hunger and bombardment, but they are denied mobility, denied any exit from their predicament. They know the punishment that they face: indignity, starvation and death. This they know. What they do not know is their crime. What have they done to deserve this?
The Dominican-American writer Junot Diaz visited Haiti after the devastating earthquake of 2010. In a memorable essay titled ‘Apocalypse’, Junot Diaz noted that Haiti warned us of the new ‘zombie stage of capitalism, where entire nations are being rendered through economic alchemy into not-quite-alive. In the old days, a zombie was a figure whose life and work had been captured by magical means. Old zombies were expected to work around the clock with no relief. The new zombie cannot expect work of any kind—the new zombie just waits around to die’.
And the new zombie cannot be allowed to forage for food or to seek shelter or medicine. The new zombie, truly, must just wait to die. This is the punishment. But what is the crime?
- Vijay Prashad
PART I: STRUCTURE
International Division of Humanity
Aadmi tha, bari mushqil se insaan hua.
We were people. With great difficulty we became human.
- Akbar Illahabadi
- Akbar Illahabadi
US President Donald Trump threatens to annihilate North Korea, Iran and Venezuela. This is the new Axis of Evil, a concept his predecessor George W. Bush used in 2002 but that then did not include Venezuela. It included Iraq, which the United States bombed in 2003 as part of its illegal invasion of the country. Since then, the U.S. has also destroyed Libya and other countries that include Haiti, now substantially under U.S. and UN occupation. Like a wounded dragon, the United States whips its tail across the planet and breathes fire on people—destroying countries, vanquishing its enemies. Its wounds are not fatal, but strategic. The United States still possesses the most powerful military in the world and is capable of destroying any country by aerial bombardment and by the use of weapons of mass destruction. But it uses this power in ways that do not always benefit its ambitions. Because the United States is the most powerful country in the world does not make it godlike; it has its own errors, which are to be carefully tracked by those who favour humanity over submission.
There is iron in the soul of imperialism. It uses its immense military power against human beings and then—conveniently—forgets the human cost of suffering that follows. There has never been any accountability for the use of nuclear weapons on Japan in 1945 nor for the hideous bombardment of Korea in the 1950s nor the massive bombardment of Vietnam in the 1960s and 1970s nor indeed the endless war on Afghanistan and the destruction of Iraq and Libya. The iron is so lodged in the soul that there is barely any concern when the United States drops a massive bomb on Afghanistan. The local authorities—pushed by the United States and the Afghan government—declined to allow journalists into the site on the grounds of security. When the people around the bombsite spoke, their words were chilling. ‘The earth felt like a boat in a storm’, said Mohammed Shahzad. ‘It felt like heaven was falling’. Achin’s mayor—Naveed Shinwari—reflected, ‘There is no doubt that ISIS was brutal, and that they have committed atrocities against our people. But I don’t see why the bomb was dropped. It terrorised our people. My relatives thought the end of the world had come’.
This feels like the era of annihilation, when the world seems poised at the brink of capitalist-induced planetary climate chaos and of nuclear war.
It is fitting, therefore, to pause and register the grave words of those who have already experienced annihilation—the survivors of the U.S. use of weapons of mass destruction against Japan. Torako Hironaka, who survived the U.S. atomic bomb attack on Hiroshima made a list in her diary of what she recalled,
1. Some burned work clothes.
2. A naked woman.
3. Naked girls crying ‘Stupid America’.
4. A field of watermelons.
5. What with dead cats, pigs and people, it was just a hell on earth.
2. A naked woman.
3. Naked girls crying ‘Stupid America’.
4. A field of watermelons.
5. What with dead cats, pigs and people, it was just a hell on earth.
In his Hiroshima Diary (1955), written in the aftermath of the nuclear attack, Dr. Michihiko Hachiya wrote,
"Those who were able walked silently towards the suburbs in the distant hills, their spirits broken, their initiative gone. When asked whence they had come, they pointed to the city and said, ‘That way’, and when asked where they were going, pointed away from the city and said, ‘ is way’. They were so broken and confused that they moved and behaved like automatons. Their reactions had astonished outsiders, who reported with amazement the spectacle of long les of people holding stolidly to a narrow, rough path when close by was a smooth, easy road going in the same direction. The outsiders could not grasp the fact that they were witnessing the exodus of people who walked in the realm of dreams."
The words of the hibakusha, the survivors of the nuclear attack, are essential for our times, when it appears that annihilation is on the horizon. These are warnings against complacency. they provide the warmth of human survival against the harshness of iron and hatred.
Catastrophic natural events—hurricanes and rising sea levels—capture our imagination, as the Caribbean islands are wracked by wind and flood and as the South Sea islands disappear into the oceans. Water drowns land as capital drowns the dreams of human survival. Data from international agencies show us that formal employment is an impossible dream for millions of our fellows on the planet. there is, however, always a job with the military. Wars continue endlessly. Pitiless futures stand before the young. their trust in humanity is fragile.
‟There is an international division of humanity. It is as if there is wall that separates our humanity.There is an international division of humanity. It is as if there is wall that separates our humanity; those who live in zones of great war and tragedy are separated from those who live with the illusion of peace, in countries that produce the conditions for war but deny that they have a hand in it.
How to understand a world of unemployment and annihilation, of poverty, climate catastrophe and war? What concepts do we have to grasp these complex realities? The modes of thought that come from North American positivism—game theory, regression analysis, multi-level models, inferential statistics—are at a loss to offer a general theory of our condition. Seeped in common sense understandings of power and naive about the role of elites in our world, these approaches might explain this or that aspect of our world.
But can they explain the relationship between the endemic crisis produced by globalisation, the failure of neoliberalism to manage this crisis and the emergence of neofascism as its current consensus? Do they have the concepts—such as imperialism—that are essential to an investigation of the real world that we live in and not the illusory world dreamt up by the first principles of bourgeois social science? Can we understand why the North Atlantic Treaty Organization (NATO) wants to bomb this country or why the International Monetary Fund (IMF) wants to extract its pound of flesh from that country? Do they have an explanation for why the countries of the world spend more money on the arsenal of repression than on the production of social goods, why there are more police on our streets than social workers and artists?
Globalization
The concept used to explain the desiccation of social life across the planet is neoliberalism. Neoliberalism is essentially a policy platform designed by multinational agencies such as the International Monetary Fund (IMF) and the World Bank as well as by intellectuals who circle these institutions. These intellectuals have absorbed the bourgeois logic that it is corporate ingenuity that makes history rather than the social labour of human beings. It is corporations, they say, that make jobs, and so therefore to make an economy hum one has to cater to the needs of the corporations. The motor of history is seen to be Capital—corporations and entrepreneurs. It is not seen to be social labour—the workers who design our future and whose hard work produces the commodities that enhance our present.
Scholars critical of the neoliberal policy slate turn to the projects of the UK’s Prime Minister Margaret Thatcher and the U.S. President Ronald Reagan to explain how neoliberalism changed the world. It is as if these leaders were like sorcerers, conjuring up public policy as if from no-where, driving their agenda through the institutions of the planet. They championed the privatisation of the protected commons and the cannibalisation of social resources. That is indeed the case. But why? Why did they move towards privatisation and cannibalisation?
An idealist approach to human history is not adequate. Neoliberalism did not appear out of thin air. It was brought to bear by these governments to solve practical problems produced by structural changes in the global mode of production. Capitalism has always sought a global market, eager to break free of the limits set upon it by national governments, eager to find new resources and new techniques to produce goods for lower costs and to find new markets to sell these goods at higher prices. But capital’s great global ambitions were held in check by technological limitations—such as the inability to access information in real time from across the planet—and by working-class movements that demanded that nation-states restrict capital to benefit labour. But by the 1970s, certain technological barriers had been overcome and working-class power had been relatively depleted. Capital was now able to ascend its chariot and observe the planet from above, looking down at it from its satellites, hoarding information on its computers and seeking the cheapest workers and the dearest markets. This god-like position for capital inaugurates the era of globalisation.
A truly magical era opened up for capital. Technological developments came swiftly as a flood of workers marched in single-file towards its global factories, and as a new intellectual property regime developed to protect capital’s gains despite political objections from weakened states around the world. What state power workers and peasants had was now delivered comprehensively to capitalists. Now truly one could say that the state functions as a committee for managing the common affairs of the bourgeoisie.
The political condition for globalisation was set by the Western financial system’s induced debt crisis for the Third World. A sharp increase in U.S. interest rates in 1979—the Volcker Shock (named after U.S. Federal Reserve chair Paul Volcker)—jolted the economies of the Third World. What Volcker did by his monetary policy was to export inflation from the shores of the United States to the rest of the world. High interest rates for the dollar meant that the London Inter-Bank Offer Rate (LIBOR) skyrocketed. For no fault of their own, Third World states now found themselves at catastrophic levels of debt against commercial banks and Western governments. The situation of the fifteen heavily indebted countries (based on the World Bank’s assessment) is illustrative. In 1970, these fifteen countries carried a total external public debt of $17.9 billion (9.8% of their Gross National Product, GNP). By 1987—in the heat of the debt crisis—the figure rose to $402.2 billion (47.5% of their GNP). The debt service or interest payments on this loan was monumental—from a high payment of $2.8 billion (1970), it rose to an unmanageable $36.3 billion (1987). By 1991, the numbers had gone out of control. The total external debt for the Third World states was at $1.4 trillion, which amounted to 126.5% of the total exports of these countries. This means that the amount owed to commercial banks and governments was greater than the amount earned by the export of goods and services.
‟Tanzania’s President Julius Nyerere put it clearly, ‘Must we starve our children to pay our debts?’.The Third World debt crisis crushed the ability of these states to provide social goods to their populations. UNICEF — the UN Children’s Agency—noted that this debt crisis resulted in a 25% drop in average incomes in the 1980s, a lost decade. The 37 poorest countries in the world reduced their spending per capita on health by 25% and on education by 50%. UNICEF’s interest was in the children. It estimated that in 1988 half a million children died of preventable ailments as a result of the debt crisis. That means, UNICEF noted, that 40,000 children died every day because of the financial system. At this time, Tanzania’s President Julius Nyerere put it clearly, ‘Must we starve our children to pay our debts?’.
The debt crisis in the third World had destroyed the political confidence of many of the states in Africa, Asia and Latin America—which meant that they had little to bargain with when companies arrived to negotiate for ‘free trade zones’ and other advantages. It was the debt crisis that weakened the bargaining power of the post-colonial states, weakening their leaders’ resolve and the cultural con dence of the nationalist elites. Dependence is a consequence of a lack of independence. ‘He who feeds you’, warned Burkina Faso’s Thomas Sankara,‘controls you’. So it has become.
The debt crisis in the Third World had destroyed the political confidence of many of the states in Africa, Asia and Latin America—which meant that they had little to bargain with when companies arrived to negotiate for ‘free trade zones’ and other advantages. It was the debt crisis that weakened the bargaining power of the post-colonial states, weakening their leaders’ resolve and the cultural confidence of the nationalist elites. Dependence is a consequence of a lack of independence. ‘He who feeds you’, warned Burkina Faso’s Thomas Sankara,‘controls you’. So it has become.
It was on the graves of these children and on the weakness of the Third World states that the new architecture of globalisation would be built. There were three elements to this new dynamic: the development of new technologies, the delivery of millions of new workers to the accumulation strategies of the monopoly firms and the creation of a new intellectual property regime.
First, new technologies—such as satellite communications, computerisation and container ships—provided firms with the ability to manage global, real-time databases and to move goods as fast as possible. Firms could break-up factories and set them up in several countries at the same time—a process known as the disarticulation of production. Each factory could produce one part of the final commodity, with the firm able—thanks to detailed information held on its proprietary database—to judge which country would be best able to provide the cheapest location for which production need. Capital did not need to build factories near markets or to build one giant factory. Those days were over. Now capital could take advantage of small changes in prices of input costs to build smaller factories in many locations. Because of advances in transportation—containerisation, for instance—capital could move the parts of the commodity swiftly and relatively cheaply as well as shift commodities to markets with relative ease. The technological means to remove production from one territory and to spread production across the planet now became available.
Second, barriers erected by the October Revolution, the Chinese Revolution and the Third World Project began to tumble in the 1980s because of the Third World debt crisis, the fall of the USSR and the opening of the Chinese labour market to foreign capital. Millions of workers, previously sheltered from full-scale capitalist demands, now became prey to the capitalist market. They would await the disarticulated factory to descend into their lives.
Thirdly, capital went into the final round of the General Agreement on Trade and Tariffs (GATT)’s Uruguay Round from 1986 to 1994 to ensure that intellectual property rights would be in the hands of capital rather than society. Previously, intellectual property was vested in the process by which a good was produced, not in the good itself. That allowed people to find new ways to make goods and to therefore enhance science and technology. Reverse engineering of goods was possible, which was crucial to the pharmaceutical sector in the poorer nations where they could develop life-saving medicines for the poor. After the final round of GATT, which produced the World Trade Organisation (WTO) in 1994, the idea of intellectual property changed. Now, the good itself was to be patented, which means that capital can collect rent from anyone who makes this good—regardless of their own innovations. It also means that the value of goods produced outside the core territory of capital—North America and Western Europe—will be protected by this new intellectual property regime. Furthermore, the new intellectual property framework—through the patenting of nanotechnologies, genomics and transgenics—provided major food corporations with new power over agriculture that transcended control over land. It also provided ‘information firms’ with the basis for the new drive to ‘digital colonisation’—namely the theft of data by large ‘information firms’ towards the consolidation of new desires through new means of consumer surveillance and by the delivery of mainly Western content to people across the planet (the slow death of ‘net neutrality’ as a principle for a social Internet is another indicator of digital colonisation). This was the new legal framework of the architecture of disarticulated production.
The World Trade Organisation came about as a result of a so-called ‘Grand Bargain’, as the economist Omar Dahi put it. Most of the global South, crippled by the debt crisis, gave up its industrial policy and protection of its workers and markets in return for exporting its agriculture and its extracted raw materials. In reality, what was lost was economic sovereignty in both industry and agriculture.
These technological developments, the delivery of millions of potential workers and the new intellectual property rules allowed firms to operate on a global scale. They used two different strategies along the global commodity chain for the production of goods and services. First, they moved their entire production processes overseas to one country. This is known as Foreign Direct Investment (FDI) outsourcing. Here, the multinational firm would still have to invest money elsewhere to build up the physical infrastructure for production. Second, to produce their commodities the multinational firms would merely hire subcontractors, who would struggle against each other in a race to the bottom. This ‘arms-length outsourcing’—as political economist John Smith put it—allowed multinational firms to save their capital and to bear almost no risk in the production process. Either way—by FDI or by arm-length outsourcing—capital found its advantage in labour arbitrage, using cheaper and weaker labour to make its products, while hollowing out societies in the North and the South.
This new geography of production weakens the power of workers by removing the two institutional frameworks for the building of worker power—trade unions and nationalisation. How can workers build unions in these arms-length sub-contracted firms that are run on low margins by owners who use every brutal means to extract work from replaceable workers? How can states, if they are taken over by workers, nationalise parts of the production process if they do not control the entire process of the production of a commodity? Neither of these means is available to workers. Their own motion to change the world is stifled by the concentration camp features of the Export Processing Zones and by the maquiladora factories.
Arms-length outsourcing enables firms of the North to no longer invest their capital into the production process. Nike, Apple and others like them do not invest money into factories. They are brand firms. The profits they make from the rent they collect against their brand is astronomical—and it does not get substantially reinvested into productive enterprises. Little wonder that firms are sitting on vast amounts of cash or that they have turned over mountains of capital into the unproductive financial casino. Rather than invest this money for productive enterprises or for the social good, they hoard it in financial circuits where they attempt to produce more money from money without the intermediation of production. No surprise then that the people who control some of these large firms become obscenely wealthy. Eight men, says an Oxfam study, now hold as much wealth as the entire bottom half of humanity. Their wealth is a direct result of the arms-length outsourcing established by disarticulated production and by the ballooning financial sector as a result of the lack of need to invest in production.
Not only have the rich and corporations amassed vast amounts of cash, but they have also been—over the past forty years—stingy with that money. North American corporations—by themselves—are holding $1.9 trillion in cash within the U.S. and an additional $1.1 trillion in their offshore accounts. U.S. banks are holding $1 trillion in cash reserves. That’s a total of $4.0 trillion. Add in the cash held by corporations and banks in Europe and Japan and the total amounts to $7.3 trillion, a number that does not include the ‘black money’ hoarded in Luxembourg, Singapore, Switzerland and other such banking havens. That figure—according to a study by the National Bureau of Economic Research and based on numbers from the Bank for International Settlements—indicates that tax havens hold an estimated $5.6 trillion (in 2007). Offshore wealth—held in these havens—amounts to about 10% of total global GDP. In some countries (such as the UAE), the offshore wealth is above 70% of GDP. The elites of the UAE, Venezuela, Saudi Arabia, Russia and Argentina make their countries the highest states with offshore wealth as a percentage of GDP. This vast hoard of accumulated money capital means that the richest firms and individuals have outsourced stagnation into the heart of the world—they have refused to invest this cash into the world of social labour, while they insist on cuts to national budgets paid for by taxes on workers and peasants and lower living standards for workers and peasants. There is no greater scandal than this structural constipation of capital, this ‘investment strike’.
‟Those who hold capital, who are the masters of property, have been—essentially—on strike against regimes of taxation.Based on this grim reality, it is necessary to develop—in our common sense language—the concept of the ‘tax strike’. Those who hold capital, who are the masters of property, have been—essentially—on strike against regimes of taxation. They use their vast wealth to either hide their money or change tax laws to offer them increasing protections. This vast pool of wealth is not used substantially in any productive way. If it is used, it is put to work to inflate the stock market and various asset bubbles. The most obscene version of this use of capital is in the centre of finance: in Wall Street. The turbulence that this dynamic can produce was shown in the 2007-08 explosion of the largest asset bubble to burst as of yet—the U.S. housing market. In the heyday of the housing boom, the U.S. government’s delivery of liquidity to banks was called the Greenspan Put—the U.S. Federal Reserve’s chair was famous for flooding the markets with capital, which was used to inflate asset bubbles such as housing prices. Without any real social security or pension scheme, retirement for older middle-class U.S. residents had come to be premised on increased home prices. This was the main asset, so the country’s middle class acceded willingly to the Greenspan Put and cheered on finance to develop out of control for their own short-term benefit. This is what Greenspan’s Put enabled—the North American Dream for the middle-class and upper levels of the working-class was now cemented in the foundations of rising property prices.
If housing prices provided the U.S. middle class and upper sections of the working class with the dream of retirement, credit from banks allowed them to consume at rates that were far above their own incomes. The United States market operates as the ‘buyer of last resort’ for the world market, continuing to vacuum up goods and services as well as resources of all kinds from across the planet. The scale of U.S. consumption is astronomic. Merely 5% of the world’s population, the U.S. consumes at least a quarter of its energy. If everyone on the planet lived like a U.S. resident, then at least four Earths would be needed to sustain that level of consumption. The scale of consumption, fuelled by the Greenspan Put and by credit delivered through the international banking system, allows the U.S. consumer to become essential to the manufacturers from China to Mexico. So the inflation of the asset markets and the entry of cheap credit into the U.S. consumer sector is not irrational for this system, but perfectly rational. The system is designed in this way, its rationality driving the system from one crisis to another, from chaos to chaos.
When the U.S. housing market—an overinflated bubble—burst, Greenspan, one of America’s leading monetarist practitioners, said he was ‘shocked’. When Greenspan came before the U.S. Congress in 2008, he faced sharp questions from Representative Henry Waxman (California):
Greenspan: I made a mistake in presuming that the self-interest of organisations, specifically banks and others, were such as that they were capable of protecting their own shareholders and their equity in the firms.
Waxman: In other words, you found that your view of the world, your ideology, was not right, it was not working.
Greenspan: Absolutely, precisely. You know that’s precisely the reason I was shocked, because I have been going for forty years or more with very considerable evidence that it was working exceptionally well.
Waxman: In other words, you found that your view of the world, your ideology, was not right, it was not working.
Greenspan: Absolutely, precisely. You know that’s precisely the reason I was shocked, because I have been going for forty years or more with very considerable evidence that it was working exceptionally well.
Greenspan’s ideology, his theory, was flawed, and he was shocked—and yet it had no impact on the Economics profession or on their public policy frameworks. Monetarism came out of this crisis unscathed. Macro-economic policy remained in the hands of technocrats who pushed the view that there need not be any political discussion about their choices. They were above politics, in the land of theory, a theory that Greenspan himself had told the U.S. Congress had been wrong. The former Greek Finance Minister Yanis Varoufakis said quite clearly, ‘The danger of a coup these days comes not from a tank, but from a bank’. No need for a military coup (except in certain countries) when the well-paid lobbyists and the well-behaved bankers tied democracy up in chains.
The tax strike enabled individuals to hold large—unimaginable—quantities of social wealth. This wealth, beyond what an individual or a family could consume, created the morbid cult of philanthropy. Rich donors became the hero of our times, with Bill Gates lionised for his work on medicine and with other wealthy men and women seen as champions against poverty. It was these individuals who became key drivers of social policy against the democratically produced needs of a country. In this way, public policy is now driven less by democratic institutions and more by donor-driven agendas. As Sarah Mukasa of the African Feminist Forum put it, ‘We must caution against attempts to de-politicise economics and development and prevent this [new development] agenda from being completely donor-driven’.
Tax strikes come alongside the insistence from the official policy makers (backed by the full force of big capital) that public officials must balance the books of public finances. Governments must balance their budgets, even as capital reduces its payments into the public exchequer. This means that governments are forced to either sell assets to raise funds so as to continue to maintain social institutions or else they slice away at these social goods. Fiscal responsibility alongside the tax strike means impoverished government finances. No wonder then that the pressure on society is now defrayed from the state onto society. What the hidden hand destroyed, the hidden heart had to hold together—the social costs of globalisation frayed society, whose loose bonds had to be held together by triple time labour mainly from women in families.
☞ Read the entire Working Document of Tricontinental here.
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