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Newsletter Articles ‘Actually Existing Capitalism’: Its Crisis and the Left
Newsletter Articles ‘Actually Existing Capitalism’: Its Crisis and the Left | ‘Actually Existing Capitalism’: Its Crisis and the Left |
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by Joel Rocamora (Excerpts from the paper, February 12, 2009) “It’s a classic financial mania. You live in a little world of greed and everybody around you is interested in spinning the story to make the greed sound like a good investment.”
International Herald Tribune
January 13, 1998
“The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal. Looking back at that belief during hearings this fall on Capitol Hill, Alan Greenspan said out loud, "I have found a flaw." Congressman Henry Waxman pushed him, responding, "In other words, you found that your view of the world, your ideology, was not right; it was not working." "Absolutely, precisely," Greenspan said.” Joseph Stiglitz, “Capitalist Fools”, Vanity Fair, December 10, 2008 The death of neo-liberalism does not mean the death of international capitalism. Neither does it mean that workers and the poor will now get the fruits of their labor, that economic justice will now reign. What it means is that the ideological hegemony of neo-liberalism is finished, that the main thrust of ongoing discussions, regulating finance capital and government stimulus plans, run counter to neo-liberalism. To be sure, the corporations, opinion makers and governments who benefited from neo-liberal economic arrangements are, even now, attempting to shape a new economic ideology which will enable them to retain their economic and political power. But they are doing it under less than ideal conditions. To start with, the crisis is not just in the ideological sphere. By one estimate, as much as US$17 trillion in stock values have been lost internationally. The main form of accumulating asset value in the past decade, financial speculation, cannot be availed of. As Peter Wahl put it: ”The main problem for the Western elites is the fact, that the neo-liberal system in place is not capable any more to guarantee an orderly and stable accumulation.” (Wahl 2008) American capitalism has been called “casino capitalism”. One measure of neo-liberalism's decline is that it is now being called a “Ponzi scheme”. As Tim Lee, an American financial consultant put it: “The financial system as a whole has had the characteristic of a Ponzi scheme if we look at it fundamentally. ... we should think of the true value of assets as being derived from the future flow of goods and services that the assets can lay claim to or produce. If market prices of financial and real estate assets rise a lot but there is no increase in the ability of the economy to provide goods and services in the future, then the apparent increase in wealth is illusory.” (IHT 2 Jan 2009, p.14) The Left This crisis is what the Left has been dreaming about for years, one that validates predictions, that is deep enough to shake the very foundations of capitalism, so deep that the very attempt at finding solutions has seriously divided the main centers of capitalism. There is a new openness to alternatives in the general public. There is a lot of activity among progressives to respond to this challenge. But I do not yet see intellectual or political logic to the response of the Left thus far, certainly not in the Philippines, nor in international circuits accessible to me. One problem is that different levels of discourse are mixed together. There is no clarity about audiences; often progressives sound like they are only talking to each other. Emotive words like “socialism” are bandied about as if everyone knows what it means. It would be useful therefore to differentiate between different intellectual tasks, identify end goals, orientational statements, how to mobilize public support for proposals, how to engage the official process. It would also be useful if people understood that these levels of discourse interpenetrate. Everyone agrees that “…civil society actors’ strategy has to be at the level of the radicalism of the crisis …They must seize the chance to influence the basic direction of the reform process.” But as the AEPF Beijing Declaration says. “To capture people’s attention and support, proposals must be “practical and immediately feasible.” Commenting on the Declaration, TNI says “There is no “maximalism” here. The Declaration points a path between merely reestablishing the status quo and assuming that actions must be “revolutionary or nothing.” Unfortunately, many progressives do not follow this sensible advice. (www.casinocrash.org) Within the Left, in the Philippines, within Laban ng Masa, we have to seriously confront the need to organize discourse on “socialism”. We cannot use “socialism” to demarcate differences among us unless we specify what it means. The only theoretically elaborated meaning of “socialism” that I know of, one connected to actual practice, relates to its Marxist-Leninist interpretation. There are experiences in places like North Korea, Cuba and Venezuela, but they have not succeeded in becoming iconic the way Marxism-Leninism did through a good part of the 20th century. Within our ranks, sometimes I feel that our understanding of “socialism” does not go much beyond, “as long as it is not ‘actually existing capitalism’.” I fully agree with Walden Bello that “The challenge is to overcome the limits to the progressive political imagination imposed by the aggressiveness of the neo-liberal challenge in the 1980s combined with the collapse of the bureaucratic socialist regimes in the early 1990s. Progressives should boldly aspire once again to paradigms of social organization that unabashedly aim for equality and participatory democratic control of both the national economy and the global economy as prerequisites for collective and individual liberation.” I think that much of civil society internationally already “aspire … to paradigms of social organization that unabashedly aim for equality and participatory democratic control of both the national economy and the global economy... ” Another problem is civil society’s uncertain stance towards national and international structures of power. TNI, for example, says “practical and immediately feasible” proposals are “possible because, even under the domination of globalization from above, people have been developing alternatives within the world’s nooks and crannies.” True enough. But we cannot change the world if we only stay in its “nooks and crannies”. We have to aspire to seize our societies’ ‘commanding heights’ the better to democratize command structures, to move those ‘heights’ closer to the plains where people are. TNI asks “What is the agency for pursuing constructive alternatives and resisting destructive ones? It starts with the “powerful movements against neo-liberalism” that have been built over past decades. These will grow along with public anger at the abuse of public funds for private subsidy, the crises of food, energy, and the environment, and the deepening recession.” Again, I cannot but agree. But TNI itself has a “New Thinking” project focused on Left political parties that go beyond social movements. Outside of Latin America, TNI knows more than any other NGO about the progressive governments which have resulted from these political projects. There are questions of tactics. TNI says “These programs may well fail in halting the downward spiral of the global economy. But they open the door to new forms of more social and public economy. This raises a key issue: do we propose steps that will make things worst the better to create openings for more thoroughgoing change? If we say our program has to be “the opposite of the five trillion dollars of bail-outs, rescues, and subsidies provided to business in the past couple of months” does it mean we oppose all of these programs? The UK government’s nationalization of key banks? Certainly the Bush/Paulson “rescue” of banks by buying toxic debt, but also the Obama program of stimulating economic activity through social services and relief for home owners? Progressive organizations such as FDC often mix longer term economic goals with specific short term demands. An early January 2009 statement identifies the following, imminently reasonable long term goals: 1. replacing the free trade approach with managed trade, which would promote domestic industry and agriculture; 2. moving towards a healthy mixed economy in which private enterprises coexist with cooperatives, private-public partnerships, and state enterprises; 3. undertaking income and asset redistribution to create a dynamic internal market that will fuel demand and provide a long-term stimulus to ecologically sustainable economic growth. (Freedom from Debt Coalition Statement, 13 January 2009) More careful reassessment of short term demands have to be made in the new context. Old FDC demands such as “a moratorium on debt servicing, the cancellation of illegitimate debt” have to be reassessed in the context of the greatly changed international financial situation. In the past, these demands were made as “waving the banner” demands with no expectation of the government taking the demands seriously. Repackaged as negotiating positions in the current discombobulated international financial situation, it might actually be possible to get some concessions that would alleviate the Philippines debt situation. Focusing discourse on “socialism” and “participatory policy-making” takes us out of contention in mainstream discourse. Its not that I am against these ideas, but unless we introduce more detail, unless we connect these ideas to what has to be done, to getting loans out, to new regulations for the financial system, to getting out of recession, we are only barking at the moon. I am not saying we should concentrate our intellectual energies on these highly technical immediate policy level issues. We should concentrate instead on connecting “socialism” to these issues by developing discursive foci on the political economy of labor, on national economic production, and on the role of government. Framing a Progressive Response I hesitate to use “socialism” because after the collapse of “actually existing socialism”, if someone asks me what socialism is, I would not be able to answer. Those who continue to use “socialism” in countries like China and Vietnam, and in social democratic countries in Europe cannot, I insist, differentiate it from capitalism. Those who control international capitalism are even now busy crafting a new ideological paradigm to replace neo-liberalism. We cannot effectively counter this process unless we admit that our ideal, socialism, still needs to be re-created, that some of the elements of a twenty-first century socialism may be found in European varieties of capitalism in countries like Sweden. In contrast to the Marxist-Leninist “socialist” paradigm, which was anchored on authoritarian politics, our socialism should be recreated in a democratic, and participatory process. There are more than enough ideas in the anti-globalization movement, many of them exchanged enthusiastically in the progressive bazaars of World Social Forums. The bulk of these ideas tend to be small scale and community-based, defensive responses to globalization. The challenge is to translate these ideas and the ethos behind them into identifiable goals out of which concrete policies can be derived. We can go further with these ideas if we bring them into the state instead of always operating outside of it. Without letting go of paradigmatic goals such as “socialism” and “participatory democracy”, I want to suggest a number of goals, which, under current conditions, are within the range of possibility, or at least can serve as bases for broad societal coalitions that the Left can lead or minimally participate in. Because of time constraints and my own limited knowledge of detailed economic analysis, this is only a sketchy outline. These goals can serve as criteria for judging more specific policy proposals and at the same time as a rough guide for future discussions on alternatives. ● Control finance capitalism The dominance of finance over the real economy has to be broken. I do not know enough about economics to lay out all that needs to be done to achieve this. I do know that there are civil society proposals for this, including re-regulation to the taxation of capital transfers to reduce the hypertrophy and power of the financial sector. Proposals for regulating the financial sector have focused on transparency and accountability. Achieving a reversal of GDP shares will require more than this. ● Demand-side economics Supply side economics and its focus on macroeconomic instruments has biased economics towards the financial sector. We need a “demand side economics” for pushing a change in the balance of power towards the demand side, towards wages and salaries, towards social equity both nationally and in relations between advanced capitalist countries and the South. Finance capitalism, in particular its Anglo-American variant, exacerbates income distribution. The logic of the crisis is that short of creating another bubble, the only candidate for stimulating growth is the demand side, simply, wages. But who said capitalism is logical. To push this reversal, the power of labor has to be rebuilt. Obama’s political debts to the AFL-CIO should help in the US. In Europe, pressure on labor has been accompanied by pressure on the social security system, so labor can get support from middle classes. In the South, labor has no choice but to work with other social movements to elect progressive governments. • Stable and predictable national and international financial system We have to work out how to relate to the “official” process, to policy options that are only now within the range of possibility. Current conditions make reducing exchange rate volatility an option. Together with keeping inflation under control, we might be able to build coalitions with segments of business to push for the government to regain control over exchange rates. Given the speed of contagion from the American crisis, capital controls should sound much more reasonable. This part is the most complex because it involves international relations. But it is also an arena where civil society has had a lot of experience. The terrain for civil society intervention today offers many opportunities because ideologically international capital is in retreat. Progressives will not have a voice in G20 and other official discussions. But there are at least two G20 countries that might carry some of the advocacies of the Left, Brazil and Argentina, possibly South Africa and India. G20 and other “official” discussions, however, can be influenced through public discourse, in the media and academe. This is where it is important to shape advocacies, which are not so distant from what will be discussed in official meetings. What I mean here is not that we shape the ‘intent’ of our advocacies close to those of capital, more that the “discursive location” of our advocacies cannot be too distant from what is discussed in official circles. ● Seize the state This is where the “participatory democracy” ethos of international civil society comes in. Participation despite repression may be most satisfactory emotionally, invited participation suspicious, participation as in Sao Paolo remains the most productive. The maximization of opportunities for changing both national and international economies is possible only where there are governments who support change. The “return of the state” necessitated by the current crisis makes this arena of struggle more important than in the “downsize the state” years. But civil society still has to develop capacities for relating to the state in other than “watchdog” roles. “The vision of such democratic control, however, is not of either a centralized national or a centralized global economy. It is closer to what Walden Bello elsewhere described as the “co-existence” of a variety of “international organizations, agreements and regional groupings” that would allow “a more fluid, less structured, more pluralistic world with multiple checks and balances” in which nations and communities can “carve out the space to develop based on their values, their rhythms, and the strategies of their choice.” (TNI ) The fact that the main centers of capitalism have had to move from the G8 to G20 is a small step towards Walden Bello’s “more fluid, less structured, more pluralistic world.” There are challenges specific to Asian progressives. In the aftermath of the Asian financial crisis of the 1990s, Japan proposed a fund that could be accessed by Asian governments facing speculative attack on their currency. This was vetoed by the IMF and by the US Treasury Department. This has since been set up in the Chiangmai Initiative, then recently the fund was significantly increased without comment from its former oppositors. Regionalism in Asia, in East and Southeast Asia, is complex. For progressives, APEC is a dead end, so big it is unwieldy, and dominated by the US. ASEM at least provides a forum for Asia – Europe discussions and has not tried too hard to suppress its “shadow”, the Asia-Europe Peoples’ Forum (AEPF). ASEAN is ineffective politically and economically. But ASEAN Plus Three (China, Japan and South Korea) has the potential to become a significant regional economic body. Its not ALBA, but then we don't have a Chavez in our region. If the US ceases to be the repository of Chinese and Japanese surplus, and developing the Chinese domestic economy cannot be rushed, there could be a large influx of capital to Southeast Asia akin to what happened in the second half of the 1980s. In the Philippines, discourse on the financial crisis has not been joined. The government follows an 'ostrich strategy' not realizing that when you stick your head in the sand, you make yourself vulnerable to being kicked in the butt. Progressive discourse has tended to take the “gloom and doom” stance. In fact there are perfectly useful positions taken by people such as Ben Diokno. Even if our financial system, if only because of its limited size has not been too badly hit, the international recession is going to affect our already difficult jobs situation. The Left should make itself responsible for responding in a way that maximizes the potential for change in the situation. Much of public discourse has focused on threats. We should also look at opportunities for shifting economic policy. Walden’s recent piece for FDC (“The Change We Want”) provides a good beginning for the kind of discussion on policy direction (not just specific policies) in the Philippines that is needed. The situation at this time provides an opening for the kind of reorientation that Walden proposes. Control of financial flows, industrial policy, focusing on the domestic market, these are all policies that everyone is getting into. Even if they wanted to, the enforcers of international capitalism are not in a position to punish new policy initiatives. What is needed is political will. But that’s a whole other discussion.# Joel Rocamora is Chairperson of Akbayan Party and Fellow of the Institute for Popular Democracy. |
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