By PAUL SIEGEL
Following is the first chapter of a new pamphlet by Paul Siegel on the theory and practice of socialism. It is scheduled to be published by Socialist Action Books (formerly Walnut Publishing Co.) in March 2002.
After the collapse and dissolution of the Soviet Union, the “death of socialism” and the definitive triumph of capitalism were widely proclaimed. Scarcely 10 years after, however, following the great demonstration against “globalization” in Seattle, there have been numerous such demonstrations in many different countries by youthful activists, labor, and environmentalists.
These demonstrations have not been for socialism or even explicitly against capitalism. However, the fight against the giant corporations that dominate the world economy and against the international agencies dominated by the governments of the leading capitalist powers, primarily the United States, must become a fight for the victory of socialism over capitalism if it is to be successful.
Attempts to govern the conduct of the transnational corporations or to revise the rules of the international agencies in order to provide protections for the impoverished masses of people can no more be successful than was the attempt by small business at the beginning of the 20th century to stem the tide of monopolization through the “trust-busting” movement.
“Globalization” is an intensification of the main lines of development of capitalism set forth in “The Communist Manifesto” in 1848. The insights of this youthful work of genius have proven to be remarkably valid.
To sketch the Marxist analysis of capitalism and of the possibility of the new social system of socialism for which capitalism itself is opening the way, it will be useful to refer to the seminal source that foresaw the future so well. This does not mean, however, that “The Communist Manifesto” is a sacred text that cannot be added to or altered in any respect. Developments that have taken place since it was written must be taken into account.
Marxism is not the dogma that its opponents, themselves often the adherents of religious dogmatic faith in the “magic of the market,” assert it to be. It is a constantly evolving doctrine whose accretions come from the analysis of additional historical experience through the use of the invaluable tool of the method of inquiry presented in the “Manifesto” itself.
This method is the materialist concept of history, which sees the economic development of society as both acting upon and being acted upon by political, legal, cultural, philosophical, and religious developments but which, as the basic underlying force, ultimately has the decisive effect.
The trends in capitalism that Marx and Engels saw in their early stages were the growth of big business, the concentration of wealth, the expansion of the world market-with the consequent shaking up of civilizations that had been asleep for centuries-and the periodic plunges of the system into crises of “over-production.”
These trends have proceeded uninterruptedly since the “Manifesto” and were greatly accelerated in the 1990s. The crisis of “over-production,” deferred in the United States during this decade as it absorbed foreign capital, acting as a safe haven in an uncertain world, is manifesting itself in the new millennium.
Capitalism, says the “Manifesto,” has increasingly “concentrated property in a few hands.” By 1962 the process had reached the point where the 20 largest manufacturing corporations in the United States held 25 percent of all assets, the same amount as the 419,000 smallest companies, while the 200 largest manufacturing concerns held 56 percent of all assets.
Since then mega-merger has succeeded mega-merger, especially in the 1990s, so that today the spectacle of a giant corporation swallowing a competitor has become a commonplace.
Wealth, says the “Manifesto,” has been concentrated into the hands of “industrial millionaires,” who are “the leaders of the whole industrial armies.”
Today the personal wealth of Bill Gates alone (more than $85 billion) exceeds the combined wealth of the bottom 45 percent of the U.S. population, and the richest 1 percent of households has more wealth than the bottom 95 percent. On a world scale the world’s 225 richest people have a combined wealth equal to the annual income of the poorest 47 percent of the world’s people (2.5 billion).
The expansion of the world market (“globalization”) that we are witnessing is generally represented as something utterly new, a process brought into being by technological inventions that made possible the instantaneous direction of capital and of corporate activity from one end of the world to the other. These technological inventions, however, have only given a strong impetus to an inherent drive within capitalism to search worldwide for markets and fields of investment, a drive whose early manifestation was discerned by Marx and Engels.
Their description of this drive might have been written today: “The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. … [I]ndustries … work up … raw material drawn from the remotest zones, industries whose products are consumed … in every quarter of the globe. … The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication … compels all nations, on the pain of extinction, to adopt the bourgeois mode of production.”
However, although the advanced capitalist countries have introduced features of capitalism into backward countries, these backward countries are dependent on the advanced ones: “Just as it [the bourgeoisie] has made the country dependent on the towns, so it has made … dependent … nations of peasants on nations of bourgeois, the East on the West.”
Today the governments of underdeveloped countries, experiencing “the pain of extinction,” desperately seek investments from the advanced countries. One hundred countries, however, comprising almost a third of the world’s population, have experienced a “serious economic decline” over the last three decades. According to the latest report of the United Nations Population Fund, half of the world’s population of 6.1 billion is living on two dollars a day or less.
In those few underdeveloped countries that have received the bulk of the capital invested by the advanced capitalist countries, there has been rapid economic growth, but this growth has almost entirely benefited just an elite, the agents and allies of foreign capital, not the masses of people.
According to the United Nations Economic Commission for Latin America and the Caribbean, 36 percent of the people in the region live in poverty, even greater than the 35 percent that existed in 1980. As Anthony DePalma, The New York Times reporter who has studied the effect of neoliberal policies in Latin America, said in commenting on the commission’s report, “Capitalism unbound puts lower-wage people at the mercy of global market forces.”
The “Asian Tigers” were hailed by Ronald Reagan in his 1985 State of the Union address as examples of what free enterprise can do for the developing countries. However, their dependence on the global financial market dominated by the advanced capitalist countries was demonstrated in the East Asian financial crisis of 1997.
The efforts of the United States and the International Monetary Fund rescued the creditors, but the deep recession that followed the financial crisis reduced millions to increased poverty. The Indonesian government officially declared that “the number of Indonesians living in poverty has reached 130 million [out of a population of 206 million], a sharp increase from 80 million last year.”
Although subsequently the sick “Asian Tigers” were said to have recovered, their economies did not come close to pre-crisis levels. Today, like the rest of the capitalist world, they are suffering from the economic slump in the United States, which has communicated itself to them.
It is evident that global capitalism is a highly unstable system. The economic slump of the United States is what Marx and Engels called the “epidemic that, in all earlier epochs, would have seemed an absurdity: the epidemic of over-production.”
Each capitalist is driven by competition and the desire to maximize his profit to cut down on labor costs and to invest in labor-saving machinery. The overall effect is to reduce purchasing power among the masses of consumers and to lower the rate of profit among capitalists generally, as each one cuts his prices to gain a larger portion of the market and reduces the number of workers but incurs the fixed cost of machinery. The consequence is too many goods-not more than are needed but more than can be profitably sold.
What Marx and Engels called “over-production” mainstream economists now refer to as “excess capacity.”
As Louis Uchitelle, The New York Times economics commentator, summarized their explanation of the slump: “With profits shrinking, why invest in added capacity, particularly when the nation’s companies can already produce much more in goods and services than the population is willing to buy.”
This is the absurdity of production for profit, not for use. Homelessness grows, but low-cost houses are not built because capitalists do not find it remunerative to do so. Machines are idle, but workers who would want to operate them have been thrown into unemployment. Agricultural production is restricted in order to “stabilize prices” while millions go hungry.
Defenders of capitalism have frequently thought that the problem of the recurrent crises of “over-production” has been conquered. This was heard during the post-World War I boom, during what mainstream economists have called “the Golden Age” that lasted from the post-World War II period to the mid-1970s, and during what they hailed as the “new economy” of the 1990s.
A few months before the inception of the Great Depression, the financier Bernard Baruch, regarded as a sage, stated that “the economic condition of the world seems on the verge of a great forward movement,” and Yale professor Irving Fisher, regarded as the leading American economist, stated, “Stock prices have reached what looks like a permanently high plateau.”
The Nobel Prize-winning economist Paul Samuelson, disagreeing with the Marxist economist Paul Sweezy, predicted just before a recession (The New York Times, March 14, 1973) that “the ancient scourge of intermittent-shortage-of-purchasing-power” would not recur in the next hundred years.
Recently, Federal Reserve Chairman Alan Greenspan, in endorsing George W. Bush’s tax cut, spoke glowingly of the productivity miracle that would sustain the boom and continue to provide a budget surplus. But Greenspan, like his predecessors, was wrong: the boom ended in a bust and the budget surplus disappeared.
The crises of over-production, comment Marx and Engels, are overcome “by enforced destruction of a mass of productive forces …, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.”
This was how capitalism climbed out of the Great Depression. The sharpened competition for markets, raw materials, and fields of investment led to World War II, which acted as a blood transfusion for moribund capitalism.
The gigantic destruction of European and Japanese productive forces in the war, the thwarting of the threat of revolution through the Marshall Plan resuscitation and through the Japanese industrial build-up under the U.S. occupation, the market provided by the permanent war economy and the export of arms-these produced a boom in the United States and enabled the rest of the capitalist world to get back on its feet.
By the mid-1970s, however, the contradictions of capitalism manifested themselves again. The force that will finally replace the system that produces these recurring crises in which millions of workers are thrust into idleness in the midst of unused industrial capacity and worldwide need, comments the “Manifesto,” is the working class created by capitalism.
When it, not the capitalist class, becomes the ruling class that organizes production, a new social system will come into being. This new social system is socialism.
(continued in our next issue.)
