The economic crisis is forcing a reshaping of political superstructural elements in every capitalist country….

The crisis raises deep questions about the nature of capitalism for those who would like to find a way beyond this madness as well. The global parasitism of financial capital has been revealed in many of its interlinked parts…. Most importantly, global capitalism has severely weakened itself economically and politically through the course of this economic crisis, presenting opportunities for it to be deliberately weakened much further from without, both politically and ideologically. But its current condition is only the starting point for the more profound, active and deliberate social critique that is required.

Great Recession, Age 3

by Eddy Laing
8/30/2010

“There are many contradictions in the process of development of a complex thing, and one of them is necessarily the principal contradiction whose existence and development determines or influences the existence and development of the other contradictions.” – Mao Tsetung, On Contradiction

September 2010 marks the second anniversary of the grand collapse of the global debt markets on which so much of the world imperialist system has depended for the last 35 years. This fourth quarter will also mark the third anniversary of the onset of the ‘technical’ recession of which the banking collapse is a major part. Three years later, despite all their best efforts to manipulate debt markets and monetary ‘tools,’ the world capitalist economy remains the metaphorical overturned cart in the ditch, horses splayed on the ground beside it, legs broken and twitching. Even their champion horse whisperer Ben Bernanke says it will remain as it is for several years.

Those financial circuits were and remain key segments of speculative money capital from which the ‘shining city on the hill’ derived its glow and was able to lord it over the rest of the world. The power for those circuits has always been the labor of billions of real people, throughout the colonial and neo-colonial world.

In the imperial homelands, for many people the old price of security meant averting your eyes from everything being done by imperialism in the Third World, keeping your shoulder to the wheel, staying in line, and making a deal with the devil in the form of a mortgage and personal debts so that you could pretend to live a ‘good life.’ The current recession, the most recent and most severe economic crisis in many decades, has brought that charade to an abrupt end and posed exceptionally serious questions for those who just a few years ago led rather different economic lives under this system.

This essay examines the reality of the recession three years later and presents evidence that it is ongoing, deepening, and that the measures taken by the ruling classes have only exacerbated their problems. This recession is effecting the political superstructures of many of those societies and effecting the ideological frames with which individuals and groups in them are interpreting and interacting with current socio-economic situations. In sum, this essay suggests how the current economic recession emerged as the overarching contradiction that is influencing the development of the other social contradictions currently inherent in most capitalist societies.

I

Three years after the ‘technical’ onset of the recession (in the U.S. as defined by the National Bureau of Economic Research) at the end of 2007, the impact is very real on thousands of millions of people globally. The official rate of unemployment in the U.S. — which is skewed downward to count only those who have just been sacked and are collecting the small government stipend, which normally terminates after 26 weeks — was at 4.3% in November and December 2007 when the recession began. It rose gradually throughout the year to 7.1% in December 2008, and hit 9.7% by June 2009. It fluctuated around that level through the rest of 2009, rising to 10.6% in January 2010. It is currently at 9.7%, or about 14,600,000 persons, not including everyone the Labor Department considers to be ‘out of the labor force’ or ‘discouraged’. Adding in those ‘not in the labor force’ (6,500,000) brings the count to 21,000,000, or 14%. ^(1,2,3)

In any event, there are millions more who are not included in these government statistics. People who have never been part of the ‘official’ labor force or who dropped out of it years ago or were forced out and have not been able to get back in. Consider this: in some states, persons who have been convicted of a felony are nearly unemployable as well as ineligible for any type of social assistance, including food stamps. During the last 25 years, the incarceration rate in the U.S. has skyrocketed for all types of newly criminalized acts — or simply for being a young African-American male! Multiple misdemeanors have also been ‘felonized’ with ‘three strike’ sentencing laws, resulting in many more ex-felons now than ever before. For these and many more reasons the real unemployment rate in the U.S. is probably twice the official rate.

For those employed, with the threat of unemployment held overhead, productivity drives and wage reductions have become the routine. It is not an aberration that in the midst of financial crisis, capitals are enhancing their profitability by rationalization regimes intended to wring the very last bit of surplus-value out of ‘their’ workforces. In the U.S., hourly wages in manufacturing have averaged a decline in six of the ten quarters since the start of the recession in December 2007. But before that, wages declined overall in 2004 (coming out of the prior recession) and in 2006, while the rises in 2007 (0.4%) and 2008 (0.1%) were both essentially nil. ⁽⁴⁾

Conversely, manufacturing output per hour showed large quarterly rises (+6.2% in Q2, +16.9% in Q3, +8.1% in Q4) through 2009 before halting in the first quarter of 2010 (+1.2%) as the last drops of profit were squeezed out of workers at capital’s command. ⁽⁵⁾ Indeed, as it has historically, and most recently in the 1997-1999 and the 2001-2004 recessions, capital responds to its market dysfunction by ‘disciplining’ labor. Both unit labor costs ⁽⁶⁾ and hourly compensation have been almost flat throughout the last decade, and when compared to inflationary pressures during this period — the ‘cost of living’ — workers’ wages have declined even further than the ‘official’ numbers indicate.

The productivity drives are hitting limits, no doubt both in terms of resistance and inefficiency. But undoubtedly they are also hitting limits of safety as well. The disaster on the Deepwater Horizon that killed eleven oil workers and released millions of barrels of oil into the Gulf of Mexico was caused by a series of ‘risk-reward’ decisions by British Petroleum managers who expected to save $10 million in drilling costs. ⁽⁷⁾

Reuters quoted one business analyst groping for a truth: ‘If working people longer and harder is no longer bringing large returns to businesses, executives may have to find other ways to expand production — they might actually have to hire more workers.’ ⁽⁸⁾ The requirement that they draw surplus-value out of human labor is locked up against the short-range horizon of the next quarter’s balance sheet of costs, which is further clouded by the persistent anxiety and confusion of the recession itself.

Instead, unemployment, productivity drives and wage reductions, along with the dramatic effects that the housing market has had on personal finances, have combined to dramatically reduce the level of domestic consumer spending in the U.S. Since the end of 2007, retail sales have declined steadily, and as wholesale inventories increase, this puts further pressure on production and ultimately on some prices. Some of this effect is already being seen in so-called durable goods, such as automobiles and light trucks, prices of which have declined significantly since the end of 2007. There is growing concern (by capital) that this type of deflationary pressure will spread to other retail sectors and/or impact the sectors behind the retail sectors, such as the financial sector. There is also increasing concern about the global effects of deflationary pressures at a distance, in particular to/from China and India, which are both important manufacturing workshops and consumer markets.

Deflation is especially deadly in regard to the circuits of capital. Many people have now heard of the home mortgage that is ‘under water’ — the mortgage loan that is priced higher than the appraised value of the house. That is an example of the lethal problem of deflation. It will be catastrophic if that phenomenon spreads into the debt markets. All of capital’s attempted recovery mechanisms have consisted of piling on ever-larger amounts of mid-term and long-term debt. On August 11, 2010, Reuters quoted the president of the St. Louis Federal Reserve Bank saying that he thought the U.S. was closer to a period of prolonged deflation than at any time in recent history. Not coincidentally, the Federal Reserve Bank, through its avatar Ben Bernanke, pronounced at its August 27, 2010 meeting that its priority going forward would be to ‘strongly resist deviations from price stability in the downward direction’ — in other words, to try to control deflation. ⁽⁹⁾

Deflation has not been a concern for capital in regard to consumer food prices, which have remained stable or increased slightly during the recession. Back in the early 1980s, Ronald Reagan famously declared that hunger did not exist in America and ordered the US Department of Agriculture to undertake a series of measures to ‘rationalize’ how it monitored the sector. The most recent salmonella infestations of hundreds of millions of chicken eggs are a tribute to those efforts, of course, but in 1981 a sterling moment was the USDA’s failed effort to reclassify tomato ketchup and pickle relish as ‘vegetables’ for the purpose of its school lunch program.

Every fall, this same Department of Agriculture surveys what it now euphemistically calls the level of food security in the country; the number of people who have ‘access at all times to enough food for an active, healthy life.’ In the course of doing that, it conversely measures the level of food insecurity; the number of people who have ‘limited or uncertain availability of nutritionally adequate and safe foods or limited or uncertain ability to acquire acceptable foods in socially acceptable ways.’ The survey released at the start of 2010 showed that 49.1 million people in the U.S. were ‘food insecure’ at some point during the preceding 12 months, a rise of 11% over the year earlier. ⁽¹⁰⁾

II

The collapse in the financial sector that took place in September 2008 was the tipping point in an inherently unstable maze of global debt processes. Having happened, it accelerated reactions throughout the web of debt mechanisms, triggering further defaults and liquidations, and dragging other capitals over or very close to the edge. Very quickly, during the first several weeks of that financial crisis, more than a trillion dollars of obligations were wiped from the ledger sheets of scores of U.S. banking institutions; a pattern that was followed in all of the major OECD economies — the UK, Germany, France, Netherlands, Spain, etc. U.S. commercial banks lost more than $2.5 trillion in assets between the end of 2008 and the end of 2009. ⁽¹¹⁾

Even as some of the biggest banks were being forced into mergers or liquidation, key players in the ruling class and the news media stepped forward to direct public attention to the home mortgage market, and especially to the sub-prime lending sector (along with a few investment swindlers, like Bernard Madoff). In retrospect, this stands out ever more clearly as scape-goating particularly small (lower-income) home owners as ‘deadbeat borrowers’ and distracting attention from the spectacles of capitalist speculation, debt, anarchy and blatant ignorance in the centers of finance in New York, London, Zurich, Hong Kong, etc.

Behind the foregrounded home mortgage market collapse, the much larger markets of corporate and financial debt were contracting at quickening rates. This caused the near liquidation of the entire US automobile sector (and the formation of Government Motors), the herding of forced mergers and acquisitions of (until recently) Fortune 500 firms, the prying open of equity stakes in still other corporations by ‘ready and willing’ lenders (such as Berkshire Hathaway’s loan/purchase of a large chunk of General Electric at ‘preferred’ terms), and the demise of tens of thousands of smaller capital formations. For example, from October 2008 to mid-August 2010, 270 U.S. banks with assets once totaling hundreds of billions of dollars were seized by the Federal Deposit Insurance Corporation and sold — at marked down prices — to larger banks. 43% of those failures (118) have taken place since January 1, 2010. ⁽¹²⁾

Outstanding U.S. domestic financial sector debt, a key speculative mechanism for capital expansion over the past thirty-five years, has declined from its late 2008 high of $17.1 trillion (Q4 2008) by about $2.1 trillion (11%). Undoubtedly, this includes a significant amount of defaults. ⁽¹³⁾

Conversely, U.S. federal government debt has grown by about 12% during this period, or about $1.8 trillion, to $8.16 trillion, as the central government through its treasury and central bank (Federal Reserve Bank system) injects money capital to prop up the financial sectors, primarily banking and insurance, but also manufacturing such as in the case of General Motors.

(Corporate debt as a category has remained flat, perhaps signaling its position as a holy ground among capitals, with a slight increase from $7.1 trillion in Q4 2008 to $7.2 trillion in the first quarter of 2010.) ⁽¹³⁾

By comparison, the amount of outstanding home mortgage debt in the U.S. over this same period has declined about 3% from about $10.5 trillion to $10.23 trillion (about 270 billion) and the amount of outstanding consumer credit debt has declined 9.5% from $2.59 to $2.47 trillions (about 220 billion).⁽¹³⁾ These reductions result from increasing numbers of people driven to destitute conditions (personal bankruptcies, mortgage defaults), from individuals being denied access to credit, and from practical frugality in the face of the deepening recession. The residential housing market is at a 15-year low (if not lower, since data collection is only partial).⁽¹⁴⁾ The cumulative result is that the housing and retail markets that have depended upon ‘consumer spending’ now have much less of it to appropriate, and many retail capitals are pitching over into the void of bankruptcy as a result.

III

The fundamental qualities of the Great Recession have replicated all around the world. If it has been significantly felt by sectors of the population in the United States it has been felt ever more so by those living in smaller capitalist economies. Within the European Union, the collapse has devastated Greece, Portugal, Ireland, Spain, and the more recent members in eastern Europe. Reported unemployment is 20% in Spain, 13% in Ireland, 12% in Greece, 11.4% in Poland, and 11.1% in Hungary. The average across the entire Euro zone is 10%.⁽¹⁵⁾

In response to the collapse of the financial markets, those European economies that are structured to include centralized social service schemes (much more so than the US) have responded with austerity measures that refinance public debt in large part by eliminating public services, sacking government workers, raising taxes, and borrowing funds from other EU countries or the IMF. All of this further borrowing takes place with more austerity strings attached.

The UK recently went through a parliamentary change and has begun implementing a range of new austerity measures of just this type. The current coalition is eliminating or cutting back various agencies and departments (such as the National Health Service, and the Museums, Libraries & Archives Council), raising taxes (VAT was raised to 20%) and implementing various other measures across the board to extract additional revenue, reduce costs and meet debt obligations. There is also an important additional ideological message being sent, invoking the phantom of Margaret Thatcher who declared back in the ’80s that ‘there is no such thing as society.’

Within the EU economies, the high ratio of government debt to GDP translates into very high risk debt and a growing fear by lenders that not only might specific central banks default on their obligations but that in doing so they will drag other central banks down with them. Two of the leading debtor countries in the EU are Greece, with a public debt obligation that is now more than 113% of its $333Bn GDP, and Italy, with a public debt that exceeds 115% of its $2.11 trillion GDP.⁽¹⁶⁾

This pattern is systemic, however, and most of the EU states exhibit the same weaknesses. The international banking community singled out Portugal (77% of a 228Bn GDP), Ireland (56% of a $228Bn GDP) and Spain (53% of a $1.46Tn GDP) as special dysfunctional cases and, along with Italy and Greece, they were referred to as the PIIGS economies for a time last year until a banker with apparently more public sense read the memo. But they are hardly isolated examples. Germany’s public debt is 72% of its $3.335Tn GDP; France’s public debt is at 77.5% of its $2.67Tn GDP; and the UK’s pubic debt is 68% of its $2.18Tn GDP.⁽¹⁶⁾

Austerity measures in Greece have been met with vocal and militant protests from workers, students, small farmers and others, alternately aimed at the Greek government, the IMF, the European Commission, universities, as well as other sectors of the population such as teachers, trash collectors and health care professionals (all public sector workers). One of the Greek government’s major creditors in the current round of debt re-negotiations with the European Central Bank is the German central bank and this situation has also been used to further promote nationalist politics and ideology, particularly in Germany.^(17,18,19)

Only a few years ago, the so-called emerging markets of Brazil, Russia, India and China (BRIC) were held up as economic engines that would pull global capitalism forward into the 21st century. But of course none of these markets stood outside the international debt cartels or the effects of their collapse. China, being the third or second largest national economy is a case in point. Despite the absolute size of its GDP ($4.9 trillion), the per capital GDP is less than $6,600^(20,21), the official unemployment rate stands at 9.6%, and there are several hundred million additional migrant workers roaming the country in search of work. Many academic and government economists in China consider the period of fast economic growth to have come to an end and that a major concern now is how to control price deflation.⁽²²⁾ This fear of deflation has long been underlying U.S. complaints about Chinese monetary policy — e.g. not allowing the yuan to ‘float’ — and as one market analyst recently remarked regarding trade, ‘it is easy to forget that one of the largest exports from China is deflation’ in terms of inexpensive manufactured goods.⁽²³⁾ Global finance capital worries about the wider impact if price deflation in China spills over into other sectors, such as real estate with its more extensive foreign creditor ties.

In much of the rest of Asia, the Americas, and through all of Africa, the recession has greatly exacerbated the ‘normal’ conditions of neo-colonialism and grinding poverty in ways that may be unimaginable to many people living in ‘high-income’ countries in North America or Europe.

As it has been for more than 600 years, Africa is the source of tremendous wealth for global capitalism. In a recent newsletter, business consultants McKinsey & Co. were glowing in their description of ways in which the savvy capitalist could further rip long-term profits out of Africa workers, where the ‘average return on capital (is) around two-thirds higher than that of comparable companies in China, India, Indonesia, and Vietnam’ and since China’s ‘days as the low-wage factory of the world are limited, Africa will soon be the last remaining major low-wage region.’⁽²⁴⁾

In South Africa, recent host of the FIFA World Cup, the official unemployment rate stood at 25.3% for the second quarter of 2010. As the games got underway in June, the stadium security staff in Durban staged a small protest over the fact that they had been paid only 190 Rand of the 1500 Rand wage they had been promised. The police responded by attacking them with rubber bullets, gas, clubs and arrests.^(25,26) This is a small example of the larger iniquity: an estimated £2.5 billion was spent preparing for the games, but the construction workers who actually labored on building or repairing the 10 stadiums were paid an average of £1.20/hour.⁽²⁷⁾ Replicating the nationalism within the games, during the final week leaflets began circulating in some townships warning immigrants to ‘leave now or be burnt alive,’ recalling the pogroms against Zimbabweans in 2008.⁽²⁸⁾

Workers, students, the unemployed, as well as younger factions within the ruling African National Congress itself, are confronting various power centers about the social and especially the economic conditions within the country. In August, strikes were engaged by autoworkers, teachers, police, health workers, customs officials and other public sector workers, and by students protesting financial assistance cuts.^(29,30,31)

IV

In the United States, since the start of the recession, millions of people have lost their jobs, had their pay cut or been compelled into part-time employment. The number and rate of residential mortgage foreclosures continues to grow and exceeded 325,000 in July 2010.⁽³²⁾ Since the start of 2008 about six million mortgages have been foreclosed. It is an understatement to say that all of this has had a dramatic physical impact on millions of peoples’ lives. What should not be overlooked is the impact this has had and is having on the mentality of those most ideologically invested in the American Dream.

The Pew Research Center conducted a sociological study in May 2010 to evaluate public attitudes about the economy. It found that a majority (54%) of respondents thought that the U.S. was still in a recession, not in a recovery despite the claims that were then being made by government and in the press. And notably this number roughly paralleled the finding that 55% of respondents reported experiencing some type of work-related cut-back during the previous 30 months, such as a pay-cut, unpaid leave, reduction in hours or lay-off.⁽³³⁾

In the Pew study, those respondents who were most likely to report dissatisfaction with their current status included those who may have taken the hardest jolts to their former social status: ‘whites’ and registered Republicans. Coincidentally, we see this same demographic assembling in Tea Party rallies, cheering the proto-fascist demagogues on Fox TV, and joining in anti-immigrant and anti-Islamic pogroms in Arizona, Florida and New York.

The economic crisis is forcing a reshaping of political superstructural elements in every capitalist country, from the U.S. and UK outward. Those restructurings will continue to present themselves as arenas of sharp struggle, which may stay confined mainly to economic issues, as in South Africa or Greece, or which may grow into challenges (although not necessarily fundamental) of political status quo. In many parts of the world (other than the U.S.), this economic and political restructuring, through the instrumentality of the World Bank and IMF, for example, often raises questions of the global relationships of imperialism and political power, including geo-political power.

The crisis is also compelling millions of people to rethink their perceptions of themselves in society and even to consider how a society should operate. And certainly, many other personal and social events and phenomenon are contributing to each of these ideological re-formations. This is where the fascist right’s revivalism and its nostalgia for the triumphalism of the 1980s (or some other imaginary past) come into play, providing the ideological reassurance that what’s wrong with the current picture is simply that some people don’t appreciate their place in the grand imperial scheme of things (but join with the Tea Party to bring them to their senses and share the spoils, or else).

The crisis raises deep questions about the nature of capitalism for those who would like to find a way beyond this madness as well. The global parasitism of financial capital has been revealed in many of its interlinked parts; the greed of individual capitals has been the subject of discussion at regular intervals throughout the last two years as has their egregious modes of behavior; the intentional refusal of governments to ‘regulate’ or take any action to control the banks as they looted clarified what role governments play in all this. Most importantly, global capitalism has severely weakened itself economically and politically through the course of this economic crisis, presenting opportunities for it to be deliberately weakened much further from without, both politically and ideologically. But its current condition is only the starting point for the more profound, active and deliberate social critique that is required.

Notes

1. Labor Force Statistics from the Current Population Survey. Series ID LNS13000000. (Seas) Unemployment Level. Bureau of Labor Statistics (BLS). Data compiled July 2010. Accessed 26 August 2010.

2. Labor Force Statistics from the Current Population Survey. Series ID LNU05026639. (Unadj) Not in Labor Force, Want a Job Now. BLS. Data compiled July 2010. Accessed 26 August 2010.

3. Labor Force Statistics from the Current Population Survey. Series ID LNU04000000. (Unadj) Unemployment Rate. BLS. Data compiled July 2010. Accessed 26 August 2010.

4. Major Sector Productivity and Costs Index. Series ID PRS30006152. % change quarter ago, at annual rate, Real Hourly Compensation, Manufacturing. BLS. Data compiled July 2010. Accessed 26 August 2010.

5. Major Sector Productivity and Costs Index. Series ID PRS30006092. % change quarter ago, Output Per Hour, Manufacturing. BLS. Data compiled July 2010. Accessed 26 August 2010.

6. Major Sector Productivity and Costs Index. Series ID PRS30006112. % change quarter ago, Unit Labor Costs, Manufacturing. BLS. Data compiled July 2010. Accessed 26 August 2010.

7. BP manager, boss both ignored warnings before Deepwater Horizon blew, panel learns at oil spill hearings. The Times Picayune (New Orleans). 26 August 2010. Accessed 28 August 2010 at http://www.nola.com/news/gulf-oil-spill/index.ssf/2010/08/bp_manager_boss_both_ignored_w.html#incart_rh

8. Productivity falls, Fed mulls stimulus. Reuters. Tue Aug 10 15:07:06 UTC 2010.

9. Bernanke Signals Fed Is Ready to Prop Up Economy. New York Times. 27 August 2010. Accessed at http://www.nytimes.com/2010/08/28/business/economy/28fed.html

10. Household Food Security in the United States, 2008. USDA. Economic Research Report Number 83. November 2009.

11. Report Z.1. Flow of Funds Accounts of the United States, 10 June 2010. Table F.109. Federal Reserve Bank of the United States.

12. Federal Deposit Insurance Corporation. 2010. Failed Bank List. Accessed 27 August 2010 at http://www.fdic.gov/bank/individual/failed/banklist.html

13. Report Z.1. Flow of Funds Accounts of the United States, 10 June 2010. Table D.3. Federal Reserve Bank of the United States.

14. Home sales at multiyear lows. Reuters. 24 August 2010. 3:05 EDT.

15. Economic and financial indicators. The Economist. 28 August 2010. p. 81.

16. CIA World Fact Book. 2010. Accessed 28 August 2010 at https://www.cia.gov/library/publications/the-world-factbook/index.html

17. Neither a borrower nor a lender be. The Economist. 1 May 2010. p. 65

18. The spectre that haunts Europe. The Economist. 13 February 2010. p. 26.

19. The labours of Hercules. The Economist. 13 February 2010. p. 27.

20. CIA World Fact Book. 2010. Accessed 28 August 2010 at https://www.cia.gov/library/publications/the-world-factbook/index.html

21. China’s economy as No. 2: How it’s playing in Japan. Christian Science Monitor. 17 August 2010.

22. Slowdown ahead but no hard landing. Chinadaily.com.cn. 7 July 2010.

23. Trading Ideas: Shanghai downtrend has strong confirmation. The Edge (Singapore). 10 May 2010.

24. Collier, P. 2010. The case for investing in Africa. McKinsey Quarterly. June 2010.

25. Police break up Cup wages protest. Mail & Guardian (South Africa). 14 June 2010.

26. Police clash with workers in first unrest. Mail & Guardian (South Africa). 14 June 2010.

27. Poverty in the Shadow of Pounds 5bn World Cup. Daily Record (Scotland). 4 June 2010. p.22-23.

28. World Cup is over: leave now or be burnt alive. The Sunday Times (London). 11 July 2010. Edition 1. Scotland. p. 28.

29. S.Africa autoworkers, firms in deal to end strike. Reuters. 20 August 2010.

30. S.Africa court stops some state workers from striking. Reuters. 21 August 2010.

31. DUT suspends academic activity. Mail & Guardian. 18 August 2010.

32. http://www.realtytrac.com/home/

33. The Great Recession at 30 Months. Pew Research Center Publications. 30 June 2010.

No related posts.

By Eddy Laing

“And how does the bourgeoisie get over these crises? On the one hand by enforced destruction of a mass of productive forces; on the other, 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.” (Karl Marx and Frederick Engels, Manifesto of the Communist Party, “Bourgeois and Proletarians.”)

The neo-liberal quagmire

Among its other qualities, capitalist production is governed by an incessant chase to realize exchange-value. The circuit of capital is only concluded by selling the commodity, whatever it is, and converting the surplus-labor concretized in it into money (which can then be re-activated in the next circuit).

While every commodity must meet a social use-value in order for it to find a buyer, there is no over-all conceptualization of the extent of the social need that any set of commodities might fulfill. There are quite typically many more commodities produced than can be circulated (at a profit) by capitalist markets. This applies to bushels of corn as well as clothing as well as sport utility vehicles.

This anarchic character of capitalism comprises a risk to the capitalist, who can never know whether or how many units of the commodities that he is trying to sell will actually be sold.

An important feature of contemporary global capitalism (imperialism) is the export of capital; that is, the transfer of capital processes by highly concentrated (e.g. monopoly) formations into local and regional economies elsewhere around the planet. This process has reached such an extent that not only do local neo-colonial economies (such as Nigeria) come to be dominated by externally-centered formations (such as ExxonMobil and Royal Dutch Shell), but also entire circulatory processes are set-up ‘off shore’, away from the ‘original’ center of the formation.

For example, most US electronics and computer equipment firms conduct their production processes not in the US but in Thailand, Singapore, China, or some other country. Many of the commodities so produced are not returned to the US for sale, they are sent on to be sold elsewhere in the world. The sale of those commodities realizes further money-capital which is re-energized off-shore (by the labor of workers) in further production and circulation circuits. Profits from this process might also be banked off-shore as well (although ultimately they accrue to the owners of the capital process in whatever form those capitalists demand and wherever they reside).

Increasingly, capitalism – and especially US capital – has relied on this export of capital to reproduce itself. A key quality of late 20th C. ‘neo-liberalism’ has been an ever increasing domestic ‘down-sizing’ along with ‘out sourcing’ of capital reproduction processes to other countries, especially to Asia and Latin America.

As this out-sourcing comes to typify capital, it introduces new risks into the circulation process. For example, when capital circuits are freed from the economic relationships of the home country they are also freed from its legal and political superstructure, which was constituted to serve those capitalists who own the out-sourced capital process. Likewise, risks emerge from fluctuating currency valuations or other ‘dis-equalibria’ that might arise between the home economy and the satellite economies, among multiple off-shore economies, and so on.

Hazards of empire

The effort to control economic risk is not a new concept, but it is specific to capitalism. Risk control is the basis of the insurance sectors, and the reason there are commodity exchanges that buy and sell ‘futures’ – contracts to deliver X amount of something — such as corn or pork or eurodollars — in amounts and prices decided well in advance of delivery. This future-trading mechanism is applied to precious metals, stock (equity) prices, bond (debt) obligations, and so on. The earliest risk-management instruments were 18th C. shipping insurance companies (e.g. Lloyd’s of London) that offered guarantees of trans-oceanic deliveries of slave labor to and raw materials from the colonies to capital formations in England, the Netherlands, the USA, etc. By the second half of the 20th C., capital was confronted with many types of risks it had not faced 200 years earlier, including the consequences of anti-colonial social movements and the global imperial contention formalized in NATO and the Warsaw Pact.*

In the post-World War 2 period, several mechanisms were implemented to try to control risks. In the geo-political arena, various treaties and alliances — backed by imperial militaries — were entered into around the world. In the economic arena, the Bretton-Woods agreement was devised to control economic variability by imposing the US gold reserves and currency as the ‘Western’ (as distinct from the USSR, China and the Warsaw Pact states) standard against which all others would be measured.

With the collapse of the Bretton-Woods arrangement in 1971 — a collapse that was prompted by then-current economic instabilities and political realignments within international capitalism — new mechanisms for mitigating risk were sought out.

It is from this time forward – accelerating quickly during the so-called Thatcher-Reagan era of the 1980s – that contemporary arbitrage and financial ‘derivatives’ enter the capitalist world. Derivatives are contracts that promise a specific financial outcome (e.g. delivery date, sale, purchase) or change in market factors. For example, grain ‘futures’ are derivative contracts and can be traded without either party ever taking possession of the grain that is supposedly the basis of the contract. Financial derivatives are used to trade in interest rates, currency exchange rates, commodity, credit, and equity prices. Arbitrage is a type of trading which operates on the price differentials between markets.

In 1973, financial derivatives were almost non-existent. (1) In fact, in the US and the UK, financial derivatives were considered to be covered by gaming statutes. Financial futures were disallowed as wagering at the Chicago exchanges until 1982, and the status of financial derivative trading in London wasn’t resolved until 1986. (2) By the second quarter of 2008, US commercial banks (alone) held derivatives valued at $182 trillion. (3) The October 9, 2008 New York Times placed the global trading value of derivatives and similar instruments at over $531 trillion. (4)

As we’ve seen in recent months, financial derivatives are the objects of extensive trading and speculation, since they cover money-capital itself and have come to comprise large percentages of the assets held by the biggest commercial banks and insurance companies. The circulation of derivatives is now the single largest market in the capitalist world economy. As objects of speculation, these debt obligations are even further separated from the underlying economic relationships they presumably represent. The capitalists themselves complain that ‘no one understands’ the specific sources of these derivatives, their composition in money-capital or collateral.

The reality of the matter — while encompassing defaulted mortgages and illicit lending practices — is much more profound and general. The speculative trade in these obligations has diverted money-capital from value-creating (productive, ‘real economy’) sectors and exacerbated global currency disparities. This has in turn affected international trade and lending, resulting in corporate debt defaults, runs on bank deposits and money market funds, the collapse of hedge funds and still greater trade imbalances between states.

“[People] think of derivatives as being everything toxic about the market they don’t like. That’s not true. Markets have been toxic for many, many years before derivatives arrived. And we’ve always thought of having a hedge as desirable.” (New York University finance professor to Reuters, 31 October 2008)

It is an enduring feature of capitalism that even the mechanisms devised to mitigate risks are subject to the most rapacious types of speculation, thus increasing the risks that the mechanism was intended to prevent.

“everything but the squeal”

Tremendous debt has emerged as a central, enduring feature of US imperialism.

Among the most favored objects of derivative trading have been collections of debts: corporate bonds, municipal bonds, mortgage-backed securities, and so on. This speculation on debt has been revealed as an important trigger of the current crisis. The trade in debt-based derivatives is euphemistically called ‘exposure to risk based capital’ — a truly revealing description.

At the end of the second quarter of 2008 (July 1), US commercial banks ‘owned’ $182 trillion in derivatives. The vast majority of these derivatives ($176.6 trillion) were held by just five banks: HSBC, JP Morgan Chase, Citibank, Bank of America and Wachovia. The single largest category of derivative ($114 trillion) in all that is the ‘credit default swap’ — a ‘future’ contract to guarantee full or partial payment on one or more debts. (3)

Several factors have influenced this accumulation of debt, including the lending rates set by the Federal Reserve Bank and by the speculation in financial derivatives itself. But at bottom, it reflects the international parasitism of the US economy in relation to the rest of the world, and specifically the massive amounts of money-capital created through the super-exploitation of human labor in Asia, Africa and Latin America.** For the past several decades, US society has been held together with great amounts of debt, both short-term and long-term.

For the week ending October 22, US commercial banks held loan obligations worth $7.2 trillion. Of that amount, $1.7 trillion were commercial real estate debts; $1.6 trillion were loans to commercial and industrial formations; $1.4 trillion were residential mortgage debts; and $870 billion was credit card and other short-term consumer debt. (5) Including borrowing through finance companies, credit unions, savings & loans, etc., the aggregate short-term consumer debt in August 2008 was $2.58 trillion. (6)

Total US domestic non-financial sector debt at mid-2008 stood at $31.72 trillion — approximately 229% of GDP. Within that figure, $13.8 trillion represented household debt, a figure essentially equal to the current annual GDP, and the US financial sector owed $16 trillion, or 116% of GDP. (7) By comparison, the reserve assets held by US Federal Reserve Banks, in cash, gold and foreign currencies came to just $70.5 billion in 2007. (8)

But that is just the current snapshot. Since 1974, debt in the US economy has grown exponentially, from $2.4 trillion to $49.7 trillion (2070%). Within that figure: foreign debt grew from $81 billion to $2 trillion (2488%); state and local government debt grew from $208 billion to $2.2 trillion (1050%); federal government debt grew from $358 billion to $5.1 trillion (1430%); household debt rose from $680 billion to $13.8 trillion (2036%); and financial sector debt expanded from $258 billion to $16 trillion (6200%)! (7)

According to their own definitions, the US economy — the largest and ‘most-favored’ capitalist economy on the planet — is a highly leveraged fiction.

Next: The ideological importance of home-ownership, global economic disparity, and the real costs of empire maintenance.

notes:

* It is also a feature of capitalism that social relationships are hidden behind abstracted economic transactions. Just as the human source of value is hidden behind the exchange-value of commodities, other highly differentiated and unequal social relationships are abstracted as generic ‘risks’ that should be priced into the circulation of commodities rather than negotiated ‘face to face’ in the real social world.

** A view into this super-exploitation was provided in the essay “Thieves fall out Ñ Growing Imperialist Contention”, posted on Kasama october 28, 2008. Further examples are provided in the next installment of this series.

1. LiPuma, E. and B. Lee, “Financial derivatives and the rise of circulation.” Economy and Society, 34(3), August 2005.
2. MacKenzie, D. “The material production of virtuality: innovation, cultural geography and facticity in derivatives markets.” Economy and Society, 36(3), August 2007.
3. OCCÕs Quarterly Report on Bank Trading and Derivatives Activities Second Quarter 2008. Comptroller of the Currency. Washington, DC.
4. “Taking a hard look at a Greenspan legacy,” New York Times, 9 October 2008.
5. Federal Reserve statistical release. H.8 (510). October 31, 2008. Board of Govenors of the Federal Reserve System.
6. Federal Reserve statistical release. G.19 Consumer Credit August 2008. October 7, 2008. Board of Govenors of the Federal Reserve System.
7. Flow of Funds Accounts of the United States. Z.1. September 18, 2008. Board of Govenors of the Federal Reserve System.
8. Statistical Supplement to the Federal Reserve Bulletin, September 2008. U.S. Reserve Assets/Foreign Official Assets Held at Federal Reserve Banks.

Related posts:

1. Costs of Empire: Time-bombs, Guns, Risk and Anarchy (part 2)
2. Costs of Empire: ‘Time-bombs’, Guns, Risk and Anarchy (part 3)
3. Financialisation, empire, crisis: how to get out?

part 1 , part 3 , pdf version 

By Eddy Laing

“Investors said, ‘I don’t want to be in equities anymore and I’m not getting any return in my bond positions,’” said William T. Winters, co-chief executive of JPMorgan’s investment bank … “Two things happened. They took more and more leverage, and they reached for riskier asset classes [i.e. derivatives]. Give me yield, give me leverage, give me return.” — New York Times, 9 November 2008. (20)

The drive for profit characterizes capital. But the rates of return being realized within the finance sectors in recent years fall far behind other sectors and typically below 1% (whereas the manufacturing sectors have 4-7% rates of return and petroleum yields a return of almost 10%). This situation exerts pressure in every direction, like air filling an balloon. It is not surprising that one of those directions was on the need for housing, but there’s more to that particular story.

The toxicity of home ownership

Residential mortgage debt is a specific feature of capitalism and merits additional discussion. Throughout the last century in the US and at an increasing rate since 1945, ideological and economic pressures have been brought to bear on millions of middle strata and working class people to purchase a dwelling. Home ownership has been lauded as an ‘american dream’ and the relatively privileged position of large sections of American society in relation to the rest of the world has supported this pressure. All major US cities are ringed with suburbs that have displaced agricultural land with tract homes, shopping centers, six- and eight-lane highways, and millions of acres of parking lots. Even in the densest cities where apartment dwelling is the norm, rental housing has steadily been replaced with co-op corporation and condominium property formations, so that even in the City of New York about 35% of the housing stock is now owner occupied. (9) Nationally, in 1890, 37% of non-farm households owned their homes. (10) Today 68% of adults live in ‘owner-occupied’ housing and of those about 66% have mortgages. (11) For most of those adults, their house represents nearly all of their financial ‘net worth’. (12)

In this push toward petty property ownership, capitalism gains twice. In the first instance, it transforms a large population of workers and renters into home owners, who now have a landed stake in the status quo. American history, especially 20th C. history is overflowing with examples of how the minor privilege of home ownership has been marshaled for the most reactionary social movements — and outright pogroms — aimed at people of color, the poor and the disenfranchised. In the second instance, for most buyers, owning a home really means many years (and decades) of monthly payments to a bank that end up equaling twice or more of the appraised price of the dwelling. Housing represents the largest single annual expense for most adults, typically 25-30% of income. Before the current crisis, the development, sale, maintenance and insurance of single family dwellings represented as much as 10% of the US GDP, with new housing starts comprising about half of that figure. (13) The rising rate of mortgage delinquencies is framed by these social features.

The current crisis has already forced millions of those home owners into mortgage default and wiped out whatever financial stake they held in the house or apartment. For them, homelessness is a growing reality. For millions more, the great devaluation of housing means that they are now chained to their dwelling, unable to recover anything close to the amount of money they still owe the bank on their mortgage. Current estimates are that 20% of current mortgage borrowers owe more to the bank than their home is worth, and that number continues to grow. (11)

A recession in housing began in late-2006 with the drop-off in unit prices and a growing stock of new homes that had been built on speculation, especially in Arizona, Florida and California. An important factor in this was the rise of the Federal Reserve System’s reserve deposit (aka Fed Funds or inter-bank rate) interest rate** which, among its other effects, is the base rate with which banks calculate their own rates, including those for short-term credit and adjustable rate mortgages. The Fed steadily lowered its reserve funds rate (as a stimulus) during the last recession so that it was at or below 1.25% throughout 2003. From mid-2004 forward, the Fed began raising this rate again and by late 2005 the reserve rate was back up to 4.25%. Perhaps recognizing this as ‘counter-stimulating’, the Fed again gradually lowered its reserve deposit rate, to 3% on January 30 and 2% on April 30, 2008. (14) By that time, however, the chain-reaction of delinquencies and defaults was well underway.

As the credit crisis intensified through 2008, the growing number of mortgage defaults was chronicled by newspaper accounts of people simply ‘walking away’ from their defaulted mortgages, abandoning their former homes in despair, despite the wages they had already paid over to the banks. As the crisis deepens, despair may transform into something more volatile, with who knows what as its object.

“[The] solution of the housing question by means of chaining the worker to his own ‘home’ is arising spontaneously in the neighborhood of big or rapidly rising American towns … the worker must shoulder heavy mortgage debts in order to obtain even these dwellings, and now become slaves of their employers for fair. They are tied to their houses, they cannot go away, and must put up with whatever working conditions are offered them.”

(Engels, The Housing Question, “How Proudhon solves the housing question.” note by Engels to 1887 edition.)

To the ends of the world

“The first act of the agricultural revolution was to sweep away the huts situated on the field of labour. This was done on the largest scale, and as if in obedience to a command from on high. Thus many labourers were compelled to seek shelter in villages and towns. There they were thrown like refuse into garrets, holes, cellars and comers, in the worst back slums.” (Karl Marx, Capital, Vol. 1, Chapter 25, “The General Law of Capitalist Accumulation.”)

The desperate conditions being created by ballooning mortgage payments and increasing numbers of defaults and evictions in cities (and suburbs) across the USA provides a glimpse into just one of the ways capital literally herds people about the planet. It is not just that international capital produces a dramatic and harmful effect upon the lives of billions around the world but that it does this as a matter of course in its continual grasp for surplus-value.

Throughout the past century, as agricultural economies have been displaced with cash crop mono-cultures and other ‘Green Revolution’† innovations, throughout the ‘developing’ world of subaltern states and neo-colonies, hundreds of millions of people have been driven out of rural areas into urban ones. According to the UN, between 1975 and 2005, urban populations in the ‘less developed’ world regions grew from 816,725,000 to 2,264,787,000. (15)

Approximately 75% of the population in Latin America and the Caribbean live in cities as do a third of the populations of Africa and Asia. Between 1975 and 2005, the population of Mexico City grew from 10.6 to 18.7 million; Karachi (Pakistan) grew from 3.9 to 11.9 million; Manilla grew from 4.9 to 10.7 million; Krung Thep (Bangkok) grew from 3.8 to 6.5 million; Jakarta grew from 4.8 to 8.8 million; Delhi grew from 4.4 to 15 million; Mumbai (Bombay) grew from 7 to 18.2 million; Lagos grew from 1.8 to 8.7 millions. (15)

But these growing urban populations are not mainly moving into or building expanses of single-family bungalows or large apartment blocks. Quite the opposite, the urban centers in most of the the ‘developing world’ (the neo-colonies and former neo-colonies of Euro-American imperialism) are ringed with shanty towns in which millions and tens of millions of people try to subsist without sanitation, without drinkable water, in patched-together shacks built from recycled trash.

The World Bank considers ‘poverty’ in the developing world to be an intake equivalent of $1.25/day and estimates that 1.4 billion people try to survive in this condition. Further, 2.6 billion people struggle to survive on the equivalent of less than $2/day. (By this logic, if you consume more than the equivalent of $1.25/day, you are not poor.) (16) And so, a ‘lucky’ subset of the new urbanites is employed for a few dollars per day churning out electronic gadgets, athletic shoes and clothing; driving a truck or loading ships on the dock; or perhaps working in a smelter or refinery, processing raw materials for export from these ‘emerging markets.’

In these parts of the world, neo-liberalism produces grinding poverty as the necessary by-product of its accumulation of super-profits; “Give me yield, give me leverage, give me return.”

Nigeria, for example, with a population of 141 million is the most populous country in Africa. It has proven oil reserves of 36 billion barrels and natural gas reserves of 100 trillion cu ft. At one time many decades ago, it was agriculturally self-sufficient, but as a colony of the UK and then neo-colony of the UK and US, its agricultural sectors were redirected to producing cash crops such as cocoa and rubber, and raising poultry for export. Those sectors have been in decline in recent decades as international capital has sought out cheaper and alternative commodities elsewhere.

The UK and US remain Nigeria’s largest trading partners, primarily in the form of petroleum products. Natural resources – petroleum (81%) and minerals (8%) – make up most of sub-Saharan Africa’s exports to the US, and 60% of that oil comes from Nigeria. (21) Nigeria’s GDP is $99 billion; average life expectancy is 43.7 years. (17) ExxonMobil extracted 416,000 barrels/day from Nigeria is 2007, with an average net return of $17.37 per barrel, (18) meanwhile the workers who drive petroleum tanker trucks in Nigeria are paid the equivalent of 3.85 US$/day. (19)

Yields from an ‘emerging’ economy

“We had no punch-out time. Sometimes we would work through the night until dawn.” — textile worker in Guatemala City. (23)

If you live in the USA, chances are good that some of the clothes you wear were made in Guatemala, Honduras or another of the Central American economies, where scores of textile factories produce finished goods for name brands including Docker, Fossil, Hanes, Levi’s and Wrangler. The average wage among the 114,000 Honduran textile workers is the equivalent of about US$7/day (about 60¢/hour for a 12 hour shift). (22,23)

Officially, 40% of Latin America is below the 1.25/day poverty level, with economies that function largely as stores of raw material (oil, minerals, cash crops) and as sites for maquiladoras in ‘Free Trade Zones’ where foreign capitals extract super-profits from the local working class. (The ‘free’ in ‘free trade’ means free of trade restrictions, taxes or import tariffs, such as when shipped between CAFTA or NAFTA states.)††

In addition to providing opportunities to work 12 or 14 hour shifts at minimal wages, the Central American Free Trade Agreement requires signatories to ‘privatize’ national telecom, energy and banking sectors, and adroitly excludes any definition of ‘employment discrimination’ from its discussion of labor law. About 80% of the workers in the textile and apparel maquilas are young women, whose conditions of employment typically include mandatory pregnancy testing and coerced use of birth control pills to ensure they won’t take maternity leave. (23,24,25)

The global apparel and textiles industry is a $1.6 trillion/year process. Almost 35% of that value is created in the Americas. (31) Several large apparel companies, including Hanesbrands and Gildan Activewear have subsidiaries in these countries, but an important characteristic of the sector is factories that operate under contract to the big clothing monopolies. The ownership of these operations often involves still other foreign capitals. For example, about a third of the operations in Guatemala City are owned by Korean textile concerns. Chinese firms also have factories in Honduras and Guatemala and use Panama as a base to re-export to other CAFTA states.

Textile production circuits are classic examples of neo-liberal out-sourcing. The manufacture of brand-name jeans might involve an order for denim produced in Mexico from cotton grown in Peru. The fabric is then shipped to Guatemala for cutting according to computer-aided designs from Europe. Those pieces might then be sent on to the Dominican Republic for final sewing and packaging before ending up in stores in the US or Canada. (26,27,28)

Just over one-half of the T-shirts sold in the US are produced by workers in Central America. (29) Meanwhile workers and peasants in Latin America and Africa clothe themselves with used garments purchased from dealers who are supplied by brokers who buy up the surplus stocks of Goodwill Industries and Salvation Army thrift shops in the US. (30)

The condition of the textile sector in Central America is a sub-set of the methods by which capitalism impoverishes the overwhelming majority of people on the planet. Capital expands into every available corner of the globe. In the neo-colonial period, the process of enmeshing ‘emerging markets’ has enlisted the helping hands of local compradors and oligarchs and military juntas. But none of this ‘progress’ would arrive without the use or threatened use of machine guns, cruise missiles, 2000-pound bombs, and the expeditionary armies of the imperialist states themselves.

Part 3: The BRIC emergent neo-liberal dystopias, and the costs of missiles and armies in imperial risk management.

Notes:

** The Federal Reserve System requires commercial banks to maintain funds on deposit in the regional Federal Reserve banks to offset their own deposits and other assets. This was implemented as a guarantee against bank failures that typified the depression of the early 1930s. The Fed then pays interest to the banks on these reserves. That interest rate is the ‘federal funds rate’. The prime interest rate is an average of the best commercial bank lending rates in effect at any one time — typically 3 to 4 percentage points above the ‘Fed Funds’ rate.

† The Green Revolution describes the compulsory introduction of intensive cash-crop and industrial farming in the developing states by late-20th C. imperialism, through its various governmental and NGO agents: the IMF, the World Bank, the US Agency for International Development, etc. These policies were presented by USAID as a road to food self-sufficiency and as counterpoint to the anti-colonial struggles sweeping through Asia, Africa and Latin America in the 1950s and 1960s.

†† CAFTA stands for Central American Free Trade Agreement and includes the US, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. NAFTA stands for North American Free Trade Agreement and includes the US, Mexico and Canada.

9. “State of New York City’s Housing & Neighborhoods 2007.” Furman Center for Real Estate & Policy. New York University School of Law.

10. “Housing, Housing Finance, and Monetary Policy.” speech by Chairman Ben S. Bernanke at the Federal Reserve Bank of Kansas City’s Economic Symposium, Jackson Hole, Wyoming. August 31, 2007

11. “One in five homeowners with mortgages under water.” Reuters. 31 October 2008.

12. Bucks, Brian K., Arthur B. Kennickell, and Kevin B. Moore. “Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances.” Federal Reserve Bulletin, vol. 92 (February 2006), pp. A1-A38.

13. “Fed’s Poole on Real Estate in the US Economy.” 9 October 2007. Market News International.

14. “Open Market Operations. Intended federal funds rate. Change and level, 1990 to present.” accessed at http://www.federalreserve.gov/fomc/fundsrate.htm

15. “World Urbanization Prospects: The 2007 Revision Population Database.” Accessed at http://esa.un.org/unup/

16. Chen S. and M. Ravallion. “The developing world is poorer than we thought, but no less successful in the fight against poverty.” Policy Research Working Paper 4703. World Bank. August 2008.

17. “Nigeria (01/08).” Bureau of African Affairs. United States State Department Documents and Publications. 24 January 2008.

18. “ExxonMobil 2007 Financial & Operating Report.” ExxonMobil. Irving, TX, USA.

19. “NUPENG suspends tank-truck drivers’ strike for multi-party talks to take hold.” ICEM InBrief. 14 July 2008.

20. Morgenson, G. “How the thundering herd faltered and fell.” New York Times: BU1. 9 November 2008.

21. Langton, D. “U.S. trade and investment relationship with Sub-Saharan Africa: the African Growth and Opportunity Act and Beyond; CRS Report for Congress.” Congressional Research Service. 1 May 2008.

22. “Honduran textile groups hope trade deal will sew up future.” Financial Times. 27 July 2007.

23. “Violations of labour rights in the textile factories in the tax-free zone; Guatemala: Labour rights mean little in maquila factories.” IPS Latin America. 16 August 2007.

24. Faber, E. M. “Pregnancy discrimination in Latin America: the exclusion of ‘employment discrimination’ from the definition of ‘labor laws’ in the Central American Free Trade Agreement.” Columbia Journal of Gender & Law, 16(1). January 2007.

25. “China trade hurts many.” Atlanta Journal-Constitution. 12 June 2007.

26. “Dominican Republic, Guatemalan firms to trade in textiles.” Florida Shipper. 5 March 2007.

27. “Mexico: Textile industry readying for neighborly exports.” El Economista. 9 October 2007.

28. “Central America: Costa Rica discusses free trade with China.” Interpress Service. 8 January 2008.

29. “In 2006 the EU imported $9US bn worth of T-shirts according to new report “World Trade in T-shirts’.” Business Wire. 21 February 2008.

30. “Your cast-offs, their profits; Items donated to Goodwill and Salvation Army often end up as part of a $1 billion-a-year used clothing business.” Atlanta Journal-Constitution. 24 December 2006.

Related posts:

1. Costs of Empire: ‘Time-bombs’, Guns, Risk and Anarchy (part 3)
2. Costs of Empire: ‘Time-Bombs’, Guns, Risk, and Anarchy (Part1)
3. Marx’ theory and the crisis this time

part 1 , part 2, pdf version

by Eddy Laing

Capital roams the planet seeking out markets to acquire and human labor to exploit. Success is the ability to yield super-profits. This neo-liberal dystopia comes to define every aspect of ‘developing world’ economies. The methods and scale of exploitation engineered in Central America by US and other capitals is typical of imperial socio-economic relationships established throughout Asia, Africa and Latin America.

At the same time that Guatemala provides sweatshops to the global textile sector, it provides a market for US agribusiness which — thanks to free trade agreements — can now export cotton, wheat, beef and processed foods into Guatemala and all of Central America. This trade will further ruin the already-stunted local agricultural sectors which cannot compete with large-scale industrial agri-business. This same dynamic also increases pressure on Guatemalan agriculture toward growing cash-crops, such as sugar cane for ethanol production in the US, rather than grains, vegetables or fruits for local consumption.

Just before the current financial crisis erupted, some of the biggest US and European banks were embroiled in what one observer called “a battle over the best assets in Latin America’s last big banking opportunity,” (32) a mad dash to acquire stakes in the financial sectors throughout Central and South America. During the last half of 2006, HSBC bought up Grupo Banistmo (Panama) and Citigroup acquired both Grupo Financiero Uno (multi-national) and Grupo Cuscatln (El Salvador), while Scotiabank bought Banco Interfin (Costa Rica) and GE Money (division of General Electric Co.) bought 49.9% of BAC International Bank (Panama).

Likewise, infrastructure has been mis-developed for as long as Euro-American colonialism and its local compradors have ruled the region. What surplus there is left behind in the country is expropriated by the local oligarchs and their military governments. In Guatemala, for example, that means primitive roads, little or no electrification, no sanitation or water systems in rural areas, and so on. The priorities for the government are in developing industrial parks for foreign-owned maquiladoras, building new airports and expanding the existing seaports to service import/export shipping, or making local improvements to telecommunications that can support ‘call centers’ for foreign businesses. (33) But even making basic improvements to infrastructure betrays the inequity of global capitalism. One maquiladora, the Villa Nueva textile mill, now gets its electricity from a re-commissioned rust-encrusted coal-fired power plant that was shipped in pieces from the town of Turners Falls, Connecticut for US$22 million. (34) †††

The neo-liberal paradigm

Neo-liberalism as an economic, political and ideological framework emerged in the mid-1970s. It privileges ‘free market’ over so-called ‘demand side’ capitalism which typified US state policies such as in the ‘Great Society’ programs of the 1960s and the ‘New Deal’ programs of the 1930s. Politically, neo-liberalism was ushered in by Ronald Reagan in the US and Margaret Thatcher in the UK, the latter declaring that “There is no such thing as society. There are individual men and women, and there are families.”

Neo-liberalism includes a powerful ideological component, therefore, which has preceded its economic forays and has been used to cover its tracks in the wake of its repeated failures (the 80-82 recession, 1987 equity market collapse, the East Asian financial collapse of the late 1980s, the US savings bank collapses of the late 1980s and early 1990s, the 90-92 recession, the ITC/’dot.com’ collapse in the mid-90s, the Enron/WorldCom/Tyco scandals of 2001-02, the 2001-04 recession, etc.) This ideological element deprecates ‘society’ and ‘citizen’ in favor of disparate groups of individual consumers, whose chief goal in life is to consume more. In academic circles, neo-liberalism has found resonance among certain ‘post-modernists’ who likewise situate the individual as an atom within a loose constellation of co-consumers, each with their own proclivities and market-niche identities.

The neo-liberal ‘supply side’ economic policies of capitalist states have included cannibalizing public infrastructure, deregulating or reducing existing state oversight responsibilities (such as in finance, common carrier transport, communications), and the sell-off of publicly held assets, such as water supplies, telecom infrastructure, broadcast communications, and so on.

These sell-offs should be understood as methods for accumulation by capital, as well as for pursuing ideological schema. Indeed, these accumulation activities further reveal just how moribund imperial societies are that they turn to feed on their own infrastructures in a desperate search for profits. For examples, during the period 1983-2005, the deregulation of the global telecom sector enabled no less than 20,210 mergers and acquisitions worth $4.3 trillion; the global broadcast communications sector was reformed through 10,233 deals worth $2.1 trillion. (35) These examples are joined by recombinations and sell-offs of rail and air transport, of water and sewage treatment operations, of electricity generation utilities, of public lands and seabed to the mining and oil sectors, and so on. This is the best of all possible worlds or, more accurately, the best that can be done with a stagnant capitalism.

The metrics of success in the BRIC markets

Extending out from the imperial metropoles, neo-liberal capitalism attempts to refashion the world in its image. While each regional or local formation has its own important specificities, the common feature is the parasitic feeding off the local working class and peasantry. The metric for capital ‘success’ in the ‘emerging markets’ of Brazil, Russia, India and China (BRIC) is the extent to which imperialism has reshaped those economies in its interest and distorted the social relationships that preceded its arrival.

In China, 30 years after the counter-revolution, a new big bourgeoisie has emerged along with increasing stratification and oppression. In 2004, the Chinese proletariat manufactured 75% of the world’s toys, 58% of the world’s clothes, and 29% of the world’s mobile telephones. (36) Average per capita income was 2765 yuan (about US$400). World Bank analysts estimate that in 2004, unemployment for those under 60 years old stood at 30%, a figure that equates to hundreds of millions. Using the threshold of $1.50/day, the poverty level among city dwellers in 2004 was 13.5% and among the rural population it was 22.4% (37) Meanwhile, the anarchic expansion of industrial production spews huge amounts of toxic wastes into ground water and the atmosphere. An estimated 98% of the population is continually breathing polluted air and as many as 400,000 die each year as a result. (38)

The ratio of risk to super-profits, and the importance of this equation to imperialism, is further illustrated by the Brazilian economy. On one hand, imperialism lauds Brazil as a key ‘emerging market,’ full of opportunities for exploitation and resources for capital to extract. It is the largest economy in South America, with a GDP of $1.3 trillion (larger than all other South American economies combined) and a recent GDP growth rate of 5.4%. Comparatively, Brazil is highly and diversely industrialized (about 29% of GDP), and has been growing rather than contracting. For instance, the state-owned company Petrobras — which extracts and refines petroleum globally — had 2007 revenues that were one-fifth to one-third of any one of the three major oil monopolies (Exxon, Shell, BP), but its rate of return was twice that of BP and 50% higher than Exxon.

However, Brazil presents capital with various obstacles to the neo-liberal model. The distended economy has by-passed most of the people of Brazil, where official unemployment stands at 9.5% and 31% live below the World Bank’s poverty line (of US$1.25/day). These crushing conditions of life, needless to say, militate against widespread participation as ‘consumers’ in the neo-liberal model. In fact, the global business consulting firm McKinsey & Co. estimates that more than one-half of the Brazilian work force — and up to 90% in rural areas — are working ‘off the books’ and outside the legal economy. McKinsey estimates that this so-called informal economy accounts for 40% of Brazil’s gross national income! This dysfunction, compelled by the proletariat’s inability to find ‘legal’ work as wage slaves, in turn deprives foreign capital and the Brazilian ruling class their full measure of expropriated surplus. McKinsey & Co. advises that the Brazilian state improve its judicial mechanisms for finding and prosecuting the poor, following the example of Alberto Fujimori’s fascist government of early 1990s Peru. (39)

One of Brazil’s success stories has been its early development of a bio-fuel sector. Unlike the ethanol sector in the US which is based on corn farming and which requires at least as much fossil fuel to produce what it might replace (40), Brazil’s sector is based in sugar cane, with which it has emerged as the leading exporter of ethanol. Similarly, Brazilian soy cultivation has been fed into producing bio-diesel fuel. As in other agricultural sectors, the Brazilian capitalists and their global investors (such as BP and other major oil companies) have expanded arable land at the expense of the Amazonian rainforest and the Cerrado savannah (described by conservation biologists as the most diverse grassland on the planet). (41) Recommendations (from IMF, World Bank, et al) that Brazil’s ruling class expand ethanol production and export that onto the world market are bundled with requirements to turn yet more arable land over to cane growing and the infrastructure to support it. Thousands of square miles of Amazonia are cleared each year for agriculture; nearly 2,300 square miles in the last four months of 2007. (42,43,44,45,46) At the same time, Brazil’s sugarcane workers are paid about US$1.35/hour and as many as 500,000 of them are expected to be thrown out of work as the sector is further mechanized. (47)

India, the “I” in the BRIC acronym, is upheld as another example of a ‘developing’ economy meeting with neo-liberal success as a site for foreign capital investment. There the imprint of its English-speaking colonial past is especially evident in the siting of ‘back-office’, IT and customer service call centers for US and UK banks and other corporations.

In 2008, as many as 1.5 million worked in India’s IT and business-process sector. These services represent one of India’s biggest exports and produce about $40 billion in annual revenue. A software developer with an engineering degree might earn the equivalent of $6,600/year (averaging $2.80/hr for the typical 2,350 hour year). The sector is exempt from labor regulations limiting work-day hours and overtime pay, but even so, salaries are higher than the $5.50/day average income ‘enjoyed’ by the great majority (74%) in an economy with tens of millions of unemployed adults. (48,49)

While the total amount of foreign direct investment in India amounts to ‘just’ 1% of 2007 GDP, those tens of billions of money-capital are joined with billions more and ‘revitalized’ in some of the most hazardous and environmentally dangerous manufacturing processes. The very word Bhopal instantly reminds people around the world of the terrible industrial disaster at a Dow Chemical plant in 1984 which resulted in 22,000 deaths and left tens of thousands more permanently disabled. (Dow shielded its stockholders’ money from litigation by declaring bankruptcy.)

The chemical industry continues to be an active part of the Indian economy, and the conditions that created Bhopal are still evident in cities such as Ankleshwar, site of the largest industrial estate in Asia and an estimated 1700 chemical factories producing dyes, paints, fertilizers and basic chemicals for the global market. These plants discharge an estimated 250 million liters of effluent each day and another 50,000 tons of solid waste annually, often directly into ditches and waterways without treatment. (50) Many of these are local or regional concerns, but alongside are subsidiaries of multinational chemical and pharma companies such as Ciba and Novartis. (51)

Indeed, ‘success’ in Brazil, Russia, India and China means ever-increasing super-profits extracted from super-low wage basic industries such as metals and chemicals, and from local natural resource extraction. This super-exploitation has provided the 8-10%+ annual growth rates much coveted by international finance capital.

But these same economic sectors are no less immune to the present global economic crisis. The metals sectors in both India and China are now being shaken by the precipitous drop-off in world-wide demand as construction projects are deferred or abandoned, truck and auto factories shuttered, and infrastructure projects cancelled. Indian truck sales have fallen off by 50% over a year ago, Tata Steel has cut its planned output by 30% through next March, 150 blast furnaces in China have been closed in recent months, and the two biggest auto concerns in Brazil — Fiat and GM — have reduced projected output and closed down production units. (52,53,54,55) And for the first time in its history, the US Federal Reserve Bank agreed to loan $30 billion to each of the central banks of Brazil, Mexico, South Korea and Singapore, in an effort to ‘re-liquify’ those money markets, and keep them tightly joined to the US empire. (56)

Meanwhile, for the masses of people in these emerging markets, life remains hellish. While Western commentators discuss an emerging “iPod India” — alongside an existing “Mother Theresa India” (57) — for the vast majority of people in the ‘emerging’ and the developing world the chief problem of the day is basic survival. Since January of this year, the value of the rupee has fallen 20% against the US dollar and inflation has hovered around 11% all year. (58) As noted above, hundreds of millions of workers are unemployed throughout Brazil, China and India. The schemes promoted by the local ruling elites for further enmeshing their economies in global capitalism bring nothing but more poverty for the masses.

Where does this lead? Consider two last and very recent examples. The Indian state of West Bengal acquired the small plots of 13,000 poor peasants with promises of future employment for them or their children in a proposed Tata Motors factory. The company changed its plans in September and decided not to open the plant after all, leaving 13,000 more peasants landless with no opportunity to reclaim their lost land, which is now devastated by the construction work anyway. (59) Laid-off workers at the Graziano Trasmissioni automobile parts factory near Delhi met with management September 24 to learn the terms of their possible reinstatement. The workers who had been paid the equivalent of $10/week were enraged by the ‘job offer’, which included a pay cut, and chased the factory manager from the factory, where he was beaten to death by an angry crowd. (60,61) Factory owners across India expressed outrage at this ‘lynching’ and began or increased deployment of armed guards at their factories. (62)

Arms and the state

“Here was a society which by all its economic conditions of life had been forced to split itself into freemen and slaves, into the exploiting rich and the exploited poor; a society which not only could never again reconcile these contradictions, but was compelled always to intensify them. Such a society could only exist either in the continuous open fight of these classes against one another, or else under the rule of a third power, which, apparently standing above the warring classes, suppressed their open conflict and allowed the class struggle to be fought out at most in the economic field, in so-called legal form. The gentile constitution was finished. It had been shattered by the division of labor and its result, the cleavage of society into classes. It was replaced by the state.” (Frederick Engels, Origins of the Family, Private Property, and the State. Chapter 9: “Barbarism and Civilization.”)

An important illusion of contemporary class society, especially in America, is that the state exists as a third force in society, the neutral arbitrator between exploited and exploiters. The brutal truth is that the state exists to enforce the rule of the exploiting class over all others. It does this through laws, courts, prisons, police and its organized military.

In the age of imperialism, this resort to armed force extends globally. Mid-19th century ‘gunboat diplomacy’ and the threat of force has been steadily replaced with large and complex ‘force projections’ that combine infantry, artillery, long-distance bombers, aircraft carriers and battle cruisers, capable of delivering tremendous destruction upon any rebellious or malfunctioning sector of the empire. This was an important part of the gangster logic behind the US war against Iraq in 1991, and it was reemphasized by war minister Rumsfeld’s vow to deliver ‘shock and awe’ as part of the invasions of Afghanistan in 2001 and Iraq in 2003.

A sub-narrative within the view of the state as ‘impartial’ or ultra-social is the concept that a ‘military industrial complex’ likewise exists as a supra-social formation, unduly influencing or even directing government and the economy, apart from the ‘regular’ capital formations. The contemporary avatar for this ‘complex’ might be Dick Cheney, who together with Donald Rumsfeld, is often credited with crafting current US military policy and the expeditions in southwest Asia.

It is certainly true that Cheney the imperialist bourgeois is a ruthless and malevolent capitalist. He does personify US imperialism for millions around the world. But it is dangerously mistaken to conclude from his performance that changing the cast means changing the function of the state and its armed forces. The danger of this illusion will soon be demonstrated by the actions of President Obama, Secretary of State Clinton, Secretary of Defense Gates (!) and the rest, continuing in southwest Asia and quite possibly expanding from there.

Not ‘good business’ but the drastic measure of an empire

If anything, Bush, Cheney, Rumsfeld, Wolfowitz, and company have demonstrated that war is not just another sector of global business. Remember that Cheney and others not only predicted that the expedition against Iraq would be short and swift but that it would ‘pay for itself’ via the oil fields and refineries that would be seized intact by the invading armies. Five years later, Iraq’s economy is non-existent, its oil production is a minor fraction of even the stunted pre-2003 levels. Iraq is among the top five ‘failed states’ as ranked by the US think-tank Fund for Peace. Far more serious, the social fabric of Iraq has been completely destroyed and replaced by protracted civil war. The CIA Fact Book reports that Iraq’s current GDP is about $60 billion with an unemployment rate of almost 19%. How they have calculated those figures is undisclosed. But for Afghanistan, six years after the installation of the current comprador regime, the data is much worse: a GDP of just $8.3 billion, unemployment of 40% and an official rate of poverty (below the $1.25/day World Bank level) of 53%.

Most capitalists would probably prefer ‘profits without tears,’ but that isn’t a result produced by a system of exploitation and oppression. If now sections of the bourgeoisie have second thoughts about their policy in southwest Asia, they didn’t express any when the die was cast in 2001 or when it was rolled again in 2003. At those points, they were much more concerned about consolidating their position as chief imperialist power, including their domination of the central and southwest Asian oil fields.

It is true that the military (and ergo war) provides a market for various sectors of capital. Specifically in the US, several monopolies — Boeing, General Dynamics, Lockheed Martin and Northrop Grumman are four examples — have ‘defense’ and aerospace production as their core operations. This sector collected revenues of $329.1 billion in 2007 and is expected to grow by 6.3% through 2012. (64) But this sector — accounting for less than 3% of GDP — is not so large as to dominate or direct society, is it?

Of course, not all military spending goes into that ‘defense’ sector. Billions are spent on the wages of soldiers and sailors, and on the operation and maintenance of the more than 700 military bases around the world. Several billion are also expended annually at the Department of Energy, producing, testing and maintaining nuclear warheads for ICBMs, SLBMs and cruise missiles. Including expenditures for the expeditions in Iraq and Afghanistan, the non-profit Center for Arms Control and Non-proliferation calculates the real military budget for FY 2009 is $711 billion.§

Such an amount certainly impacts the larger economy and society. The fact that the government is spending upwards of $195 billion annually to wage wars against Iraq and Afghanistan has a significant effect on national debt, on the financial bond markets, on international commerce, and so on. That $195 billion is not ‘productive capital’ and the concept of military service as some deranged Works Progress Administration§§ is full of flaws. The National Guard certainly wasn’t coming to the aid of the displaced immediately after Hurricane Katrina, for one recent and glaring example. (It did play its intended role as occupying army, however.)

Throughout most of the 1800s, the principal expenditures of the Federal government were military-related and funded through customs duties, excise taxes and the sale of ‘public’ lands (inhabited by Native Peoples). The 1860-1865 civil war and then advent of an actively imperial mission in the later 1800s required the Federal government to borrow in order to pay for increasing military expenses. The national income tax was implemented to address this imbalance, but was quickly subsumed by the huge deficits incurred during 1917-1919 (US participation in the world war). Since the mid-1930s (the advent of Social Security income) and then again in the mid-1960s (the addition of Medicare and Medicaid), Federal expenditures tilted toward these mandatory social service programs. The Federal government has incurred budget deficits and borrowed to pay its expenses throughout the 20th century until the 1998-2000 period, when a slight surplus was realized. (65) Since 2000, the Federal debt has grown to the current level of 60% GDP.

Within that current level of debt, military spending represents a significant but minority percentage. Outlays for ‘national defense’ in 2004 were 3.9% of GDP. The estimate for 2009 is still ‘just’ 4% GDP. Notably, this rate is several percentage points lower than the spending incurred during the 1950s (ranging from 5.0% to 14.2%) and the 1960s (7.4% to 9.5%), when the US actively confronted the Warsaw Pact bloc, invaded Korea, occupied Vietnam, and was engaged in other ‘counter-insurgency’ wars in Latin American, Southeast Asia and Africa. During Ronald Reagan’s first term and build-up of strategic and nuclear forces (1981-1985) defense outlays rose from 5.2% to 6.1% GDP (282.2 to 356.5 billion in Y2K dollars). (65)

Comparing military spending with total government outlays provides a different perspective. Here we see the burden that a war footing places on the state, and through it, the economy as a whole. Recall that many economists point to the USSR’s military spending burden as a chief cause of its dissolution in 1991. The US was accumulating a similar debt burden, but it was sitting atop a much more parasitic, more extractive empire, which it could ‘collateralize.’

During the height of the war against Vietnam (1965 – 1971) military spending comprised an average of 44% of total government spending, but it declined to 34.3% in 1972 and further to 26% by 1975. During the Carter administration (and anti-colonial upheavals in the Philippines, Nicaragua and Iran), military spending averaged 23.1% of total government outlays. During Reagan’s two terms, war spending as percent of total outlays gradually increased from 23.2% in 1981 to 28.1% in 1987. During Bush senior, the military portion actually declined from 26.5% in 1989 to 21.6% in 1992, and has continued to decline in relation to overall government spending to its current point of about 17%.

Since about 1994, the US government has tried to maintain a ‘steady-state’ military program. This has been criticized by neo-conservatives as a missed opportunity given the dissolution of the Warsaw Pact and the USSR, but it also reflects the realities of empire. The heightened outlays during the second half of the 1960s placed tremendous pressure on the national economy in the form of increased public debt which found twin expression in price inflation and currency devaluation. This pressure was so significant it prompted the US to abandon a silver and gold backed currency and consequently prompted the collapse of the Bretton Woods arrangement. The renewed build-up during the 1980s in direct and heightened confrontation with the USSR, both in terms of the threat of all-out war and in regard to ‘proxy’ battles around the world, also put great pressure on the US financial system, including more inflationary pressure.

In short, high military spending is not sustainable and is only to be incurred by the empire under special circumstances: when the empire is being gravely threatened, either by other imperialists or by significant revolutionary upsurges in the neo-colonies. War in itself is as risky as geo-politics can get. There is no guarantee who will prevail, the longer it lasts the higher the toll it places on the empire, and even when the outcome has been ‘favorable’ in the past, the economic damage has still required years to repair.

The war they are planning to fight

A further sign of what the planners are planning for is seen in how the state is directing its actions now. As is well known, for example, the US is pressing some of its junior partners in NATO (Poland, the Czech Republic) to site a new Ballistic Missile Defense system on their territories. Few seriously believe the US claim that these weapons are intended to defend Europe from Iran, especially with the US Fifth Fleet sitting in the Persian Gulf and the Sixth Fleet in the Mediterranean. This missile defense program is not confined to the missiles and radars proposed for eastern Europe, it also includes space-based radars, space tracking & surveillance systems, ‘multiple kill vehicles’ and other components first envisioned as part of the ‘strategic defense initiative’ (aka ‘star wars system’) of the 1980s.

Other weapon systems in the 2009 budget include 59 new fighter and 22 new attack aircraft, an undisclosed number of B-2 bombers, an SSN-774 attack submarine, a CVN-21 aircraft carrier, 207 Tomahawk cruise missiles, 24 Trident II D-5 missiles, 6400 more ‘smart bombs’, 750 short-range guided missiles (‘stand off’ systems), 850 unmanned (e.g. Predator, Reaper, Raven) aerial vehicles as well as an assortment of invasion and occupation equipment; troop landing ships, armored personnel carriers, humvees, helicopters, etc. (66)

Tomahawk cruise missiles and B-2 bombers are designed for either nuclear or ‘conventional’ warfare. The sole purpose of the Trident II D-5 missile is to carry MIRV (multiple-warhead) nukes. In addition to the Department of Defense budget, another $56 billion at the Department of Energy is devoted to providing the materials for nuclear weapon and reactor systems.

As has also been widely noted, at $711 billion, the aggregate US war budget far outstrips that of any of its perceived rivals. It is six times the military budget of China, ten times that of Russia, thirteen times that of France, almost nineteen times that of Germany, thirty-one times India’s military budget, ninety-eight times Iran’s military budget, etc. etc. (66) In short, the US war preparations are not planned in reaction to a specific threat, they are intended for preemptive war fighting — the current, explicit war-fighting doctrine of the state — and the strategic maintenance of the empire.

In this light, Wesley Clark’s November 18 opinion piece in the International Herald Tribune is both noteworthy and ominous in emphasizing that “aiding the American automobile industry is not only an economic imperative, but also a national security imperative.” He was not primarily referring to the production of HUMVEEs. (67)

Importantly, however, there is no pre-destined arc that either US imperialism or capital as a world system is following. Each economic crisis and each war contains as much of an opportunity for demise as for any other outcome. In the present period, racked with deepening financial crisis, imperialism will be increasingly challenged to take extreme measures — far more ‘extreme’ than bailing out even the biggest bank or automotive company. Those measures may not be on the table right now, but they are surely in the top desk drawer. (That is, after all, why ‘defense planners’ plan.)

Challenges and Opportunities

The first part of this essay demonstrated how financial derivative trading arose as a method for containing international risk as capital moves out from under the political umbrella of state superstructures. Likewise, the imperialist military functions as an agency to control risk through direct force.

Today, US imperialism is in the twin grips of ever-deepening economic crisis and two expeditionary quagmires that it is not winning but is not yet ready to concede. Both of these problems are seen to be of its own design, results of its rapacious nature as expressed militarily, geo-politically and financially. It is increasingly challenged for its dominant position within the global capital system, both by imperial competitors (France, Russia, Germany) and by those who would like to exert their own regional or wider hegemony (China, India, Brazil, Venezuela). Sarkozy convenes an economic summit without the United States. (68) India’s defense budget is on course to exceed the UK’s by 2013. (69) The US pushes for NATO’s expansion, Germany and Spain push back. (70) Russia sells Venezuela $1 billion in arms and they hold joint naval exercises in the Caribbean. (71) And empire is most importantly challenged by those who would dare to put an end to it altogether: the revolutionary people around the world.

The US is accelerating toward a wall. The closer it gets to impact, the more desperate it will become. At that point, the question will not be whether it can ‘sustain’ war spending of 20, 30 or 40%, but whether it can sustain and grow its empire by throwing the die one more time.

Rather than consider militarism and imperialist war as the project of autonomous actors (e.g. Obama, Bush, Clinton, Reagan), we should understand it as the further extension of the narrow interests of specific aggregates of capital, as an extension of the political interests of a specific ruling capitalist class and, foremost, of their necessity (and desire) to maintain and expand their empire.

In crisis, risk management becomes a class project; the continuation of politics by other, more violent, means.

notes:

††† Recycling the discards of the imperial metropoles is common practice. For example, 90% of the textile machinery in Thailand is second-hand, and 35% of machinery imports to Morocco are used equipment. The German social research firm Adelphi Research estimates that this older machinery requires 20% more energy to operate than would new equipment. (33)

§ Others have calculated ‘war costs’ as an even larger sum. Chalmers Johnson estimates the 2008 military budget at $1 trillion (“The economic disaster that is military Keynesianism.” Le Monde Diplomatique. February 2008), and Thomas E. Woods, Jr. repeats estimates by Joseph Stiglitz that actual annual war costs are $2 trillion by including ‘the economic impact of lives lost, jobs interrupted and oil prices driven higher’ (“What the warfare state really costs.” LewRockwell.com. 12 September 2007.)

§§ The Works Progress Administration — WPA — was a New Deal program implemented in 1935 to organize infrastructure renewal as well as new construction, such as building post offices and other government buildings.

32. “The last big Latin opportunity.” Euromoney. March 2007.

33. “Guatemala infrastructure insufficiency. Guatemala’s poor infrastructure puts off investors and makes the country less able to fully profit from free-trade deals.” The Banker. 1 March 2007.

34. “US castoffs resuming dirty career. Old plants, buses are sold to poorer nations.” Boston Globe. 19 August 2007.

35. Dal Yong Jin. “Neoliberal restructuring of the global communication system: mergers and acquisitions.” Media, Culture & Society. 30(3). 2008.

36. Levy, B. “The interface between globalization, trade and development.” International Business Review. October 2007.

37. Xubei Luo and Nong Zhu. “Rising Income Inequality in China: A Race to the Top.” Policy Research Working Paper 4700. World Bank. August 2008.

38. “Cleaning up their act for companies that produce and source goods outside the US.” Women’s Wear Daily. 30 October 2007.

39. Capp, J., H-P Elstrodt, W. B. Jones. “Reining in Brazil’s informal economy.” The McKinsey Quarterly. January 2005.

40. “The Great Biofuels Con.” The Sunday Telegraph (London). 13 July 2008.

41. “Are we fueling the destruction of life on Earth?” Sunday Express (UK). 2 March 2008.

42. “Destruction of the Amazon rainforest surges despite outcry from scientists.” The Independent (London). 18 January 2008.

43. “Amazon balancing act: Farm growth vs. forests.” St. Petersburg Times (Florida). 8 December 2007.

44. “Brazil’s experience testifies to the downside of this energy revolution.” The Independent (London). 15 April 2008.

45. “Amazon rainforest faces new threats.” The Advertiser (Australia). 18 December 2007.

46. “BP invests $589m in Brazil’s ethanol industry.” Weekend Australian. 26 April 2008.

47. “Sun sets on Brazil’s sugar-cane cutters: half a million jobs will go in drive for mechanisation.” The Guardian (London). 5 June 2008.

48. Farrell, D., N. Kaka, S. Sturze. “Ensuring India’s offshoring future.” The McKinsey Quarterly. 2005 special edition.

49. Farrel, D. and S. Zainulbhai. “A richer future for India.” The McKinsey Quarterly. 2004 special edition.

50. “World’s Worst Pollution Problems.” Blacksmith Institute, New York. Accessed at http://www.blacksmithinstitute.org/projects/regions/south_asia

51. “India grapples with poisonous legacy.” Financial Times (London). 13 November 2008.

52. “India’s truckmakers suspend output.” Financial Times (London). 10 November 2008.

53. “JSW delays $1.4bn plant.” Financial Times (London). 10 November 2008.

54. “Mittal fatigue.” Financial Times (London). 31 October 2008.

55. “Emerging markets’ car sales moving into the slow lane.” Financial Times (London). 10 October 2008.

56. “ECB may follow as Fed, BOJ, India ‘shocked’ into cuts.” Bloomberg News. 1 November 2008.

57. “Mother Theresa India v iPod India.” Financial Times (London). 19 September 2008.

58. “India unexpectedly cut interest rates to spur growth.” Bloomberg News. 1 November 2008.

59. “Indians count cost of pyrrhic victory over Tata.” Financial Times. 6 October 2008.

60. “Workers who killed boss were pushed too hard, says minister.” The Times (London). 25 September 2008.

61. “Fired Indian Workers Kill Boss.” National Public Radio. 25 September 2008.

62. “Sugar industry in western up learns to live by the gun.” Indian Express. 3 October 2008.

63. “Failed State Index.” The Fund for Peace. Accessed at http://www.fundforpeace.org/

64. “Aerospace & Defense in the United States.” Datamonitor Industry Profile. #0072-10002. January 2008.

65. Historical Tables, Budget of the United States Government, Fiscal Year 2006. US Government Printing Office. Washington, DC.

66. Hellman, C. and T. Sharp. “Fiscal Year 2009 Pentagon Spending Request Briefing Book.” Washington, DC. Center for Arms-Control and Non-Proliferation.

67. Clark, W. “What’s good for GM is good for defense.” International Herald Tribune. 18 November 2008.

68. “Sarkozy, Barroso to discuss EU stimulus plan.” Reuters. 20 November 2008.

69. “Indian defence budget to exceed UK’s by 2013.” Sunday Telegraph (London). 14 September 2008.

70. “As U.S. pushes NATO growth, Western ties to Russia hand in balance.” Intenational Herald Tribune. 11 November 2008.

71. “Russia flexes its military muscle in new exercise.” Intenational Herald Tribune. 21 October 2008.

Related posts:

1. Costs of Empire: Time-bombs, Guns, Risk and Anarchy (part 2)
2. Costs of Empire: ‘Time-Bombs’, Guns, Risk, and Anarchy (Part1)

By Eddy Laing

At the core of Marxism is the methodology of historical materialism (HM), which “regards every historically developed social form as in fluid movement, and therefore takes into account its transient nature not less than its momentary existence.” ¹ As developed by Marx and Engels, the dialectical materialist conception of history is not just an interpretation of the world; it is a guide to active transformation and “in its essence critical and revolutionary.”²

Of course, it can be argued that any study of history is necessarily a study of social development. Unlike histories defined by the acts of presidents, generals, bankers or other elites, and measured against the Idea, or Moment or other ideological abstractions, historical materialism proceeds from an analysis of how society as a whole functions, “starting with the material production of life itself and comprehending the form of intercourse connected with and created by this mode of production.”³ In other words, historical materialism is a study of societies as they really are – as diverse and complex assemblies of people with various needs and aspirations. In order to do that, we need to examine society in all its stages and component reciprocal actions; how people make their lives, enact the state (laws, governance), and conduct themselves ideologically through religion, philosophy, ethics, morality, art, literature, music, etc. These activities and expressions are in fact social practices and, taken together, form the cultural matrix of the given society.

In 1848, Europe was still emerging from the centuries-long hold of feudalism and monarchism. From that vantage point, Marx and Engels had a palpable sense of the old social formations – dying but not yet dead – as well as the newly emerging ones, especially a rising class of proletarians for whom social revolution was on the immediate agenda.⁴ Thus, Marx and Engels developed their framework in active opposition to the idealism which, then as now, reinforced the dominant narratives of the day. And it was through that struggle that they were able to stand Hegel’s dialectical method ‘right side up’ and develop a science of the general laws of motion of the external world and of human thought, so that the real world was approached as the source of ideas, and not the other way around.⁵

HM proceeds from the hypothesis that our social being produces our consciousness; how we think and what we think are construed from our collaborations and communication with others. We devise our ways of life through networks of economic, political, and ideological social relationships, which we usually call ‘society.’ This sociality is a defining characteristic of humans; we could not exist, much less create culture, outside our social practices. Furthermore, the reciprocal interaction of our thinking and being is transformative; through our social practices we intentionally – and unintentionally in some cases – change our conditions of life, including how and what we think.

In this way, we produce our history, not as a recurring series of equivalent events, but as ongoing transformative experiences. Thus, human cultural history is oriented; it is a continuum of social practices that intersect in a complex matrix and which extend from and build upon collective past practices. How we live today is not how people lived two hundred or two thousand or two hundred thousand years ago. Neither are societies identical; each contains its own specificity and history. That said, how we live today is based in some part on how we have lived in the past and societies often share features that are built from similar social practices. An analogy can be drawn from biology: natural history is oriented in its evolution in that new species derive from species, body plans and organs that already exist, not according to a metaphysical system of phylogenetic progress. Furthermore, as biology, geology, astrophysics, and other sciences have subsequently shown, all life on this planet and all matter in the universe have histories too.

Orientation – the continuum of formative practices – does not preclude accident or obviate contingency. Social development is inexorable through time, but not in regard to its structure. Societies are what we make them to be, but we operate “under circumstance directly encountered, given and transmitted from the past.”⁶ Societies arise according to specific conditions of material life, and as history demonstrates, they continue to undergo various subtle and dramatic changes over time: technologies are invented and become obsolete, forms of symbolization are transformed and deprecated, shared knowledge (oral or written) of the world is gained, forgotten or destroyed. As history also demonstrates emphatically, when the functional conditions of life of enough members of a society come into sharp conflict with how that society is directed or organized, resolutions are found in climactic and sudden events, often pitting one section against another, or pitting all against nature. Mass migrations, epidemics, wars and revolutions are all examples of resolving events.

Marx and Engels first presented their ‘materialist conception of history’ in polemics against the ‘idealist conception of history’ espoused by certain academic Hegelians⁷ and Ludwig Feuerbach. Starting with those polemics and specifically with The German Ideology, written in 1847, historical materialism provides a bright red thread running through their subsequent decades of collaboration, as demonstrated in their many practical applications: The Manifesto of the Communist Party; Capital; The Eighteenth Brumaire of Louis Boneparte; The Civil War in France; Origin of the Family, Private Property and the State; and their many other investigations of history, contemporary society and the struggle for socialism.

Since all scientific theories are developed from fact, my intent here is to illustrate the validity of HM by drawing on the empirical evidence of human social history: anthropology, psychology, archaeology, and other social sciences. Marx’s own study of the history of law and philosophy provided him with a starting point (e.g. the ideological and political superstructure of societies) for developing this theory, and his extensive study of capitalism, using England as its primary data set, is summarized in his famous critique.⁸ However, the data available today is more extensive than that obtainable in 1847 or 1867.

I do not presume to exhaust this subject, which is not possible in any event. Neither am I interested in compiling a set of rules or formulas or mechanistic ‘just so’ statements. What I do hope to accomplish is a cogent explanation of key theses within the HM methodology and an exploration of certain misconceptions, in the spirit of “revolutionizing the existing world, of practically coming to grips with and changing the things found in existence.”⁹

Humans as Social Animals

More than a simple statement of fact, we are animals and so we have a natural history. Our species, Homo sapiens, is a sub-set of the Hominidae family within the Primates order. We share a common ancestral species with and are most closely related to other hominids – chimpanzees, gorillas and orangutans. Those animals (with the possible exception of Borneo orangutans) as well as the Old World monkeys and some other primates are social-banding creatures from which we can infer that earliest members of our species also lived that way. Early humans in Eastern Africa very likely lived in groups that jointly gathered food, secured shelter and biologically reproduced. It is also likely that early human bands observed some form of internal hierarchy aligned with age and sex. Based on ethnographic analogy, it is reasonable to suggest that the exploitation of female and juvenile labor emerged early as expressions of such a hierarchy, ^10,11,12 and rudimentary manifestations of exploitive practice have been observed among collateral species ^13,14,15,16 (e.g. adult males aggressively taking food that has been gathered by females or juveniles).

Successful population groups are by definition those that solve the problems of maintenance and reproduction of the group, which of course takes place in relation to the group’s environment. This is a necessary quality for biological evolution, and it is a necessary quality of social evolution.¹⁷ Functional groups are able to cooperate and are multi-generational. They have a need to communicate and they have learned behavior that can be shared among peers and with the younger generation. It is in these functions that we can begin to discriminate the capabilities of humans from those of other hominids. Very significantly, comparative observations of humans and other great apes show that the human infants display a capacity for understanding shared intentions. In other words, as part of our cognitive development we learn – before we can speak – that other humans are agents with whom we can cooperate.^18,19,20,21

It is in the course of cooperation that we learn vocabulary and other cultural information. As everyday events show us, speech acquisition is an on-going social practice. We are continually encountering – and inventing – new words and new meanings for words. While infant vocalization may begin as signaling, it rather quickly evolves into something more. We are not learning a set of signals when we acquire speech.²² Rather, our speech is comprised of a logically formed and extensible system of symbols.²³ Here again, we are the only animal known to be capable of symbolizing and symbolic recursion.²⁴ Taken together, these capabilities enable an expandable matrix of social practices, which reciprocally comprise intra-group social relationships.

“The production of life, both of one’s own labour and of the fresh life in procreation, now appears as a twofold relation: on the one hand as a natural, on the other as a social relation – social in the sense that it denotes the co-operation of several individuals, no matter under what conditions, in what manner and to what end. It follows from this that a certain mode of production, or industrial stage is always combined with a certain mode of co-operation, or social stage, and this mode of co-operation is itself a ‘productive force’.”²⁵

Modern society has developed – over several thousand generations – from those beginnings. As our social history illustrates, those specific capacities do not prescribe one type or direction for our cultural evolution. Our capacity for shared intentionality, for example, has not obviated social conflict; our ability to create tools produced Zyklon B and the H-bomb. Social contradictions do not result simply because we are not as ‘wise’ as our taxon sapiens suggests, but they do demonstrate the innovative variability inherent in our transformative actions.

Thought and Social Practice

The phenomenon of consciousness has been the object of speculation – what is it, how does it happen – throughout written history. A well-known Zen koan frames the subject-object question by asking whether the dreamer is a man or a butterfly, but an entomologist might point out that the Lepidoptera nervous system is too primitive to support memory. Historical materialism, developed in opposition to philosophical idealism, answers this question directly: it is not human consciousness that produces our being; it is our social being which produces our consciousness.

This statement should not be interpreted to mean only that the brain is an organ for thought or memory, or that thoughts are simply biochemical signals transmitted through a central nervous system. Although it is required for and enables thinking and memory, the physiology of the brain is not thinking. Brains do not produce symbols or memories from within. Thinking proceeds from interactions with others. The dialectical materialist psychologist Lev Vygotsky and his colleagues conducted path-breaking investigations of cognition during the revolutionary 1920s in Russia, demonstrating that cognitive ability develops through social interaction.²⁶ Human infants learn how to learn through dialogic exchange with others. Thus, we are not born ‘human’; we are made so through our interactions. We continue to acquire knowledge throughout our lives by internalizing direct and indirect shared experience, through social practices, including those of semiotic mediation – the forms through which we communicate with each other. ^27,28,29 In this process, we create our thoughts: as memories of dialogic experiences, as physical perceptions, and through a process of comparison and association that we sometimes experience as an ‘inner monologue.’³⁰

This assumes still greater significance when we consider the full history of our species. Humans migrated out from Africa in perhaps several waves, reaching across Asia as well as into Europe, out onto the Pacific, across the Bering Sea, and the length of the Western Hemisphere. This in itself demonstrates a range of transformative and transmitted behaviors that enabled ‘success’ in a tremendously wide range of habitats – from the African savannah to the Arctic tundra, from the Tibetan plateau to the Amazonian basin. While human presence has created habitat opportunities for fellow travelers (rodents and domestic cats are two examples), no other animal has demonstrated such a capacity for adapting to widely different climates and habitat.

Humans have not only responded to the environment, we have learned to remake it. The earliest details of how we learned are lost to the oral histories of the thousands of generations who came before the advent of written language about 5,000 years ago. Relying on their oral folklore our distant ancestors learned to predict climate and seasons, learned to control fire, learned to cultivate plants, learned to domesticate certain mammals, learned to create their own shelter, and with various other assembled skills and affinities eventually stepped into a more settled world; produced by their own hands and minds in dialogue with each other.

An ongoing argument within anthropology for most of the last century has been whether the breadth of human culture has been mainly a process of diffusion – the communication of practices from one group to another – or independent invention responding to specific similar or distinct conditions of life. Writing, for example, is thought to have developed independently in at least two cultures (Mayan and Sumerian) and possibly others (Indus), based on distinct glyphic systems and proto-grammars. Other examples can be inferred from the invention of crop cultivation, for while varieties of the same grains might be transplanted to different locales with similar climate (for example from east to west or vice versa), the same transfer would not be successful when moving longitudinally (south-north) or across elevations (into or out of significantly different climate zones).³¹ It would appear that both the social, interactive practices of innovation and of interchange are foundational to human cultural history, and have been employed by various – distinct and related – population groups at different times and in different places.³²

The Core of Culture is the Mode of Production

Every human society, regardless of its simplicity or complexity, coheres around modes of activity that solve the prerequisites of food, shelter, clothing and other basic physical and ideological needs. Generally, modes of production are comprised of the activities through which the group provides for this subsistence and reproduction, including the rules, customs, techniques, beliefs, and other ideas that have arisen from and in turn enable those basic activities, such as how those activities are communicated across generations and geography.

Marx described the capitalist mode of production as distinguished by two characteristics. First, the social product takes the form of commodities (a useful product of human labor created for exchange), and second, the aim of production is the creation of surplus-value (the value created by labor beyond its cost as labor-power), which is appropriated as interest, ground rent and profit by capitalists.³³ In this mode of production, the capitalists direct the kinds of social production and how the social surplus (the surplus-labor of the society as a whole) will be used as they compete to exchange commodities in various markets. Within this type of economy, human labor is one of the commodities produced and traded. The proletarian sells her labor-power for wages with which she feeds, clothes and shelters herself and her dependants, and thereby lives to work another day (and create more surplus-value for the capitalists).

This does not mean that only one mode of production is possible in any society. Social practices are dynamic and human culture is constantly in process. For example, during the 12th and 13th centuries and continuing into the 18th, mercantile and small-scale productive capitalism co-existed with feudal agrarianism in much of Europe. Likewise, in some aboriginal North American societies observed during the 18th and 19th centuries, as well as among some Amazonian groups in the 20th, hunting/gathering co-exist with crop cultivation. In addition, from the 15th until the late 19th centuries, slave labor was essential to large-scale Euro-American capitalist farming and natural resource extraction in the Western Hemisphere. Nonetheless, within a given society at a specific period in time, one mode is dominant “whose relations thus assign rank and influence to the others. It is a general illumination which bathes all the other colours and modifies their particularity.”³⁴

The transformative quality of human culture both requires and enables the ensemble of ideological activities that explain, reproduce and challenge the underlying social practices of the society. We are not only capable of symbolizing; we require language, other sound and visual expression to enable our consciousness and our sociality. Our cultures are matrices of social practices. In order to operationalize a mode of life (hunting, cultivating, manufacturing, singing, painting, storytelling, writing) we cooperatively invent tools and techniques, which further transform our shared existence. All of this requires semiotic mediation – the expression and internalization of ideas – and that social interactivity in turn promotes new knowledge and expressions (words, meanings, etc.).

Early human advances in cognition were most likely confronted with many practical obstacles, not the least of which was recognizing cognition as the rationalization and internalization of social practice.³⁵ Consequently, in the course of thinking about themselves and the world, people developed belief systems and ‘world views’, some of which were partially accurate or largely inaccurate. For example, long ago humans observed various manifestations of seasonality and learned to track the passing of time in order to predict their requirements for migratory hunting, agriculture, ceremonies, and other activity planning. Thus were created lunar and solar calendars. In various ancient societies, supernatural forces were assumed responsible for many of the phenomena being observed; the sun, the moon, major rivers, certain marine mammals, were ascribed with motive force. Coincidence was confused with causality, and successful predictions in one circumstance (seasonality as applied to cultivation) were sometimes generalized into ideological systems (the sun as an omnipotent god) in order to explain other phenomenon. We can recognize similar gaps between being and understanding in contemporary capitalist society, for example, ascribing the processes of economic exchange to supra-social ‘market forces,’ or the fetishism of commodities in which “a definite social relation between men assumes … the fantastic form of a relation between things.” ³⁶

Our awareness is created through our interactions with the rest of the world, but it can never be fully aligned to it: first, because material reality is expansive and continually changing and second, because our thinking is a symbolic interpretation, an abstraction formed from that reality. A hallmark of human cognition is ‘predictive thinking’ and being able to form hypotheses that describe probable events or outcomes. We can’t actually ‘see into the future’; we anticipate based on prior experience.

Division of Labor and Social Stratification

As far as is known, within nearly every society to date, regardless of the mode, production has been engaged according to a division of labor. The regular production of a surplus enables such a division – more is collected or produced than is consumed by those collecting or producing it – and reciprocally, a division of labor may enable producing a surplus by concentrating specific skills on specific social functions. Alternately, if the band, ethno-unit or society is unable to maintain a productive surplus, it typically collapses (rather than contract to a less complex productive mode) and its members die out, migrate, or merge as bands with other groups.³⁷ In just the last few decades, we have seen societies and state forms that have ‘failed,’ dissolved, been annexed or partitioned, and of course, throughout recorded history many states have been formed or dissolved because of social revolution or inter-state warfare.

Turning again to ethnography in search of historically analogous examples, at least some recent societies that have been primarily engaged in a combination of cultivation and hunting have done so through a division of labor between hunters and cultivators, reinforced with customs, rules, and other specialized behaviors that were developed and transmitted according to that division.³⁸ In addition to expressly productive tasks, a division of labor also developed between manual activities and ideological tasks, such as conducted by shamans, priests or medicine societies. These specializations were required to ensure the life and growth of the group; to develop specific practices, such as birthing, dying, hunting, cultivating and symbolizing; to innovate new practices, such as plant or animal domestication; and to communicate specific practices as knowledge, especially across generations.

The first division of labor within human ethno-units was likely between women and men and may have arisen from one of the qualities of human biological dimorphism; within a given breeding population group of our species, males are typically larger than females. This hypothesis contradicts some well-known earlier assertions following L. H. Morgan³⁹ who hypothesized that early human societies practiced a ‘primitive communalism’ in which labor was equally shared. Arguments contra Morgan have been proposed by various anthropologists who cite the behaviors of closely related hominids (as mentioned earlier). Others refer to analogous social relations as recorded by ethnographers over the past Å 200 years, such as J. H. Moore’s 1978 survey of Human Relations Area Files⁴⁰ for evidence of exploitation of women by men in hunting and gathering societies. The only examples Moore found of ‘agalitarian’ societies – where there was no indication of such exploitation – were four groups who live or lived in marginal ecological zones that did not support a regular productive surplus (such as the Arctic coast and the North American Great Basin). However, those marginal zones were inhabited only after exploitative societies had fully occupied the more productive areas. Moore further argued that the subjugation of women provided a cultural model for the subjugation of men.⁴¹

Regardless of the moment and practice of origin, the differentiation of labor very early in human social history suggests the production of some amount of surplus. On that basis, societies cleaved according to provision and task. Those divisions would have promoted or reinforced in-group and cross-generational knowledge and technology transfer apropos to cultivation, hunting, healing, tool making, etc. As noted earlier, recorded oral histories of many hunter-gatherer societies describe divisions between hunters and cultivators and between mental and manual activities. Those ethnographies (as well as other data, such as archaeological evidence) also suggest that those two divisions are linked, and that within the resulting strata further hierarchy, primary leaders, and inter-strata conflicts emerged shortly thereafter. These earliest divisions provide the starting points for later and more complex stratification. Out of this process, sections of society come to be ‘fixed’ in their social relationships as classes that are comprised of specific relationship types, distinct from other classes. In many societies, these class definitions are transferred across generations, as heredity. Stratification also promotes – and increasingly requires in order to reproduce those relationships – the further development of an ideological and political superstructure, which soon comes to direct every aspect of the society’s activities.

“The division of labor implies from the outset the division of the conditions of labor, of tools and materials, and thus the fragmentation of accumulated capital among different owners, and thus, also, the fragmentation between capital and labor, and the different forms of property itself.”⁴² It is in this division of labor (including the division between town and countryside) that private property and class distinctions are based. Marx and Engels considered this essential to understanding the dynamics of class society as well as to understanding how to create a new kind of society, free of class distinctions, exploitation and oppression.

Stratification Produces Class Struggle

“The history of all hitherto existing society is the history of class struggles.” With this statement in the Communist Manifesto, Marx and Engels introduced their analysis that through all of human history “oppressor and oppressed stood in constant opposition to one another, carried on a now hidden, now open fight, a fight that each time ended, either in a revolutionary re-constitution of society at large, or in the common ruin of the contending classes.” ⁴³

The division of societies into distinct classes is enabled by the economic exploitation of subaltern classes by the dominant class: slave by master, serf by landlord, proletarian by capitalist. These classes exist as social contradictions. There is dialectical unity between the opposing classes in such a society; one requires the other, but this is not a static relationship. The dominant class exists at the economic, political and ideological expense of the subaltern class. The economic disadvantage is generally evident in the respective life-ways of the opposed classes. The political disadvantage is evident in the nature of the laws and customs that promote those disadvantages. Ideologically, the ruling classes have free rein (by law as well as by economic control) to dominate the intellectual life of the society through philosophies, aesthetics, traditions and other sentiments that champion their position as elites and justify the subjugation of the other class. Beyond that fact, the ruling class also expropriates the symbolic innovations of the subaltern groups; the visual art, music, dance, poetry, prose and song created by the oppressed often become property of the dominant class in the intellectual market.⁴⁴

This socio-political contention between strata and classes is grounded in the division of society according to labor that, as proposed earlier, emerged first between men and women and between mental and manual labor. Here, the reciprocity between different forms of social practice is critically important. The division of labor as it has evolved is not incidental much less inconsequential to the society; it is a requisite component of the social order and its continued existence.

Without devising solutions to shared necessities – such as how to hunt most effectively, what plants to cultivate and when or how to attend to the sick and dying – the band cannot survive and thrive. Over time, these shared practices are explained and encoded as ideology. Knowledge is not acquired in the abstract or equally by all members of the group concurrently; as a process, it proceeds unevenly among individuals and is intentionally withheld or shared. Those discrepancies, transferred across generations, eventually come to comprise distinct ideological systems shared within specific sub-groups, strata or classes.

Given the burden of knowledge acquisition and transfer, especially for the many tens of thousands of years before the advent of writing, specialization of activity was both vitally important and subject to tremendous pressures. Nature (climate, weather, geology, biology) appeared as mysterious and dominating forces. Predation by other animals was always present. An unsuccessful collection or hunt could produce internal strife over causes and results, under the constant specter of starvation. The spontaneous emergence of division morphed into codifications deemed necessary for survival and which came to be perceived as complementary to the conditions of life, as ‘natural’ as nature itself. From this process emerge concepts of medicine, taboo, morality, ethics, etc.

These ideological practices are tethered to how the society is structured and functions. The anthropologist Leslie White pithily noted that “religion is, at bottom, an affair of the emotions,”⁴⁵ but emotions – affective responses – are an interpretation of the real world. Marriage traditions and incest taboos promote exogamy⁴⁶ which can foster productivity by the group (by expanding its size) and reinforce peaceful coexistence with neighboring groups in their mutual use of resources (for hunting, cultivation, etc.). Origin stories explain in-group distinctions and traditions and thus promote social cohesion.

These interactions work in reverse as well. Shocks to the lifeways of the society call into question the ideologies that support and promote those lifeways. The 19th century encroachment of the US Army and European settlers onto the North American Plains undermined the status and role of the traditional Cheyenne clan system of Council Chiefs, prompting its replacement by the Soldier Chiefs.⁴⁷ The economic dislocations and prolonged slaughter of the First World War, combined with subaltern demands for peace and bread and land, prompted the overthrow of the 300 year-old Romanov dynasty and its replacement by a revolutionary socialist government. ⁴⁸ In both cases, long-standing ideological support for the traditional order was overturned in favor of new worldviews.

The struggle within societies between strata and classes, and which appears to erupt more or less ‘spontaneously,’ takes as its starting point any of a wide variety of practices in politics, ideologies and/or economics. In times of acute social crisis, any aspect of how society operates is liable to be interrogated, and at such times, “(new) beginnings are to be seen literally on all sides.”⁴⁹

Economic Base, Political-Ideological Superstructure and the Need for Revolution

In their historical analysis, Marx and Engels specifically noted and partly described several types of societies that have existed over the past two thousand years, primarily citing the Mediterranean and Europe. Tribal societies, slave societies, feudal societies, and capitalist societies have each been characterized by distinctive but generalizable economic relationships and technologies (e.g. estate agriculture using slave labor together with small-scale handicraft production) and ideo-political superstructures (Roman or common law, literature and music, religions and customs, etc.) In every stratified society, the dominant class exerts hegemonic control over the rest of society, including over intellectual life, aspirations, and the ability of subaltern strata to express ideas independent of that dominant, ruling class narrative. The proletariat (and every other non-dominant class) is not only expropriated economically; they are expropriated in every aspect of culture including their intellectual life. Consider, for example, how the ruling class narrative defines popular discussions of ‘democracy’, ‘dictatorship’, ‘violence’, ‘peace’, ‘terrorism’, ‘economic crisis’, and so on.

The oppressed classes’ struggle – as individuals and in groups – not just against the surface phenomenon of economic conditions, they push up against all of these other types of subjugation too, although often without awareness of the real nature of the contradiction or of potential outcomes. Within the system of class divisions, the boundaries of oppression – just like the actual composition of the classes – shift over time, depending upon the resistance of the oppressed, the rate of success/failure of the social economy, the relative political/military strength of the classes facing each other, and environmental conditions. Bourgeois revolutions often set out to overturn the hereditary rights that characterized earlier class societies, and replace those with the so-called ‘inalienable rights of man.’ Yet, as the history of the last 350 years shows, social status remains inheritably constrained (but not completely fixed) within capitalism; through inheritable property; through the bourgeois family; through literacy and a stratified education system; through acculturation in literature and arts; through national/ethnic oppression and racism, and so on.⁵⁰ As Marx and Engels observed, “class in its turn assumes an independent existence against the individuals, so that the latter find their conditions of life predetermined, and have their position in life and hence their personal development assigned to them by their class, thus becoming subsumed under it.” This “subjection of the separate individuals to the division of labor … can only be removed by the abolition of private property and of labor [i.e. the sale of labor-power] itself.”⁵¹ In other words, class societies reproduce themselves by reproducing the classes of social practices on which that mode of life is based.

Based on their analysis of historical succession, Marx and Engels theorized that class society was itself historical; that the blind necessity that had driven all prior class societies was being eclipsed by the current capabilities of social reproduction; and that therefore exploitative capitalist society could and should be brought to an end by the revolutionary class struggle of the proletariat. This struggle, aimed immediately at the capitalist state, must account for all the other components of the social superstructure and not only production relationships.

“The alteration of men on a mass scale is necessary, an alteration which can only take place in a practical movement, a revolution; the revolution is necessary therefore, not only because the ruling class cannot be overthrown any other way, but also because the class overthrowing it can only in a revolution succeed in ridding itself of all the muck of ages and become fitted to found society anew.”⁵²

As 20th C. history shows, while an essential and great leap, the revolutionary transformation of the superstructure requires much more than ‘smashing the state’ and establishing a new regime of workers or their representatives. It is increasingly evident that the revolutionary transformation of all social relationships (economic, political and ideological) must be the program for the entire period of socialist transition. Short of that type of movement, the economic relationships at the outset of socialist reconstruction not only bear “the birth marks of the old society,”⁵³ they stand in active opposition to moving forward: an extensive division of labor; wage scales and the exchange of labor-power; various forms of small-scale production and commerce; the administration of public property, etc.

In order to create a society that has rid itself of the ‘muck of ages’ we need to refashion all of the ways in which we interact with each other; transform all of the social relationships upon which society is based. This is not just a matter of enacting laws or restructuring the economy, although those are enabling actions from which we must start. This again speaks to the relationship between being and thinking; between the ways society is organized and functions and the ways we conceptualize each other. We cannot re-conceptualize ourselves without changing the ways in which we live; we cannot change those social relationships without re-conceptualizing our peers and ourselves.

Is Human History Directionally Orientated?

Marx wrote to Joseph Weydermeyer that “no credit is due to me for discovering the existence of classes or the struggle between them … what I did new was to prove: 1) that the existence of classes is only bound up with particular historical phases of the development of production, 2) that the class struggle necessarily leads to the dictatorship of the proletariat, 3) that this dictatorship itself only constitutes the transition to the abolition of all classes and to a classless society.”⁵⁴

This has led some to view socialist revolution and the demise of capitalism as inevitable and bound to occur, under the pressure of its own internal contradictions. There are indeed fundamental contradictions inherent in capitalist societies, not the least of which are those internal contradictions between exploitation and accumulation, between the proletarian and capitalist classes. However, patterns and trends in social history do not necessarily indicate all potential or future actions; human societies are inherently dynamic and variable, even – perhaps especially – when large numbers of its members attempt to act in concert, such as classes struggling to become conscious of their collective and strategic interests.

Engels spoke to social contingency in his notes on Ludwig Feuerbach and the End of Classical German Philosophy, and is worth citing at length here. “In spite of the consciously desired aims of all individuals, accident apparently reigns on the surface. That which is willed happens but rarely; in the majority of instances the numerous desired ends cross and conflict with one another, or these ends themselves are from the outset incapable of realization, or the means of attaining them are insufficient. … The ends of the actions are intended, but the results which actually follow from these actions are not intended; or when they do seem to correspond to the end intended, they ultimately have consequences quite other than those intended. … Men make their own history, whatever its outcome may be, in that each person follows his own consciously desired end, and it is precisely the resultant of these many wills operating in different directions, and of their manifold effects upon the outer world, that constitutes history.”⁵⁵

The struggle for communist society is a struggle to overcome and do away with all of the inequalities that arise from the historic divisions of society and the division of labor. As the struggle between classes is fought out through every social relationship, it creates further potential for revolutionary transformation of all social relationships. The object of the socialist revolution is not simply an equal (or even generally-increased) distribution of the social product – such an equity between sellers and buyers can only reproduce the old social relations of capitalist exchange⁵⁶ – rather, the object must be the creation of new and non-exploitative social relationships in every field of activity. Most importantly, this applies to the proletariat itself, which must “rid itself of everything that still clings to it from its previous position in society.”⁵⁷

Instead of life’s work as compulsory and alienated (so many units of labor-power within a capital process), communism envisions emancipatory ‘life’s work’ unfettered of narrow economic relationships. To arrive at that mode of life, we need to reorganize society beyond the narrow confines of the “bourgeois right,”⁵⁸ beyond an ‘equality’ grounded in commodity exchange and which masks the relationships among people with relationships between things. As Marx and Engels envisioned it, classless society enables the full realization of individuals through the full realization of society as a whole. In capitalist society, the prime objective for the worker is the sale of her labor-power for purposes directed by capital. Even one’s ‘free (unpaid) time’ and compensatory (in lieu of truly self-directed) activities are narrowly defined by capitalist relations, such as the periodic ‘freedom’ to purchase – or more often, borrow against – ‘non-essential’ consumer goods, make a holiday excursion, etc. As Marx and Engels envisioned it, communist society is one where “each can become accomplished in any branch he wishes, [since] society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow.”⁵⁹ This vision of the future suggests but cannot propose specific solutions to every form of social contradiction, and it certainly strains an imagination subsumed in the present-day ideologies of late capitalism and the age-old traditions of class society. (e.g., how can everyone be competent or enabled to engage in every type of activity?) However, the scope and sociality of this vision stands exactly opposed to all of the brutality, muck and ennui of imperialist society, with its ruling class of loathsome parasites.

The oppressed can make their own history only through overcoming the ‘dead hand of the past’ – ideologies and practices that perpetuate exploitation and oppression. Historical materialism is an essential tool for decrypting those social practices. Especially important to the theory is the observation that “it is not a question so much of the motives of single individuals, however eminent, as of those motives which set in motion great masses, whole peoples, and again whole classes of people in each people. … Everything which sets men in motion must go through their minds; but what form it will take in the mind will depend very much on the circumstances.”⁶⁰ We are who we are through our social practices and our socially transformative capabilities arise from that sociality, especially as class struggle.

Up through the mid-19th century, materialist philosophy had largely been constrained by mechanistic and reductionist interpretations: the world as an aggregate of things, each with a cause and effect. Marx and Engels liberated materialism from this conundrum by applying dialectical analysis; instead of a series of isolates, the physical world and human society were revealed as complex webs of interactive processes. Within the web of human culture is the communist project, based on the premise that overthrowing capitalism and building a new form of society is historically possible; the proletariat can act in that direction because of its position as a class within the matrices of contemporary social relationships. Our actions are generally deliberate, but not ‘inevitable’ or automatic, and often produce unanticipated consequences. For all of that, by acting we are transformative of society, the world and ourselves.

Of course, the advent of dialectical HM has not meant the demise of idealist and subjectivist modes of thought. It did however expand the proletarian class struggle – already taking place over economic and political relationships – into the realm of philosophy and within the ideological superstructure more broadly. In that way, by providing a framework for interpreting the world, HM dialectically enables the communist hypothesis to change it. The manifestations of this ideological struggle (such as against idealism and subjectivism) are of critical importance for those struggling to revolutionize society.

For example, in their examination and analysis of society, Marx and Engels adopted the approach of isolating and dissecting various social relationships in their phenomenal forms – such as labor-power, surplus-value, constant capital, economic base, political and ideological superstructure – in order to describe internal features and specific categories of interaction. These specific features were examined by Marx in order to understand society as a whole process, as a ‘rich totality of many relations.’

“It seems to be correct to begin with the real and the concrete, with the real precondition, thus to begin, in economics, with e.g. the population, which is the foundation and the subject of the entire social act of production. However, on closer examination this proves false. The population is an abstraction if I leave out, for example, the classes of which it is composed. These classes in turn are an empty phrase if I am not familiar with the elements on which they rest. e.g. wage labour, capital, etc. These latter in turn presuppose exchange, division of labour, prices, etc. For example, capital is nothing without wage labour, without value, money, price etc. Thus, if I were to begin with the population, this would be a chaotic conception [Vorstellung] of the whole, and I would then, by means of further determination, move analytically towards ever more simple concepts [Begriff], from the imagined concrete towards ever thinner abstractions until I had arrived at the simplest determinations. From there the journey would have to be retraced until I had finally arrived at the population again, but this time not as the chaotic conception of a whole, but as a rich totality of many determinations and relations.”⁶¹

This approach remains vulnerable to one-sided and reductionist interpretations and, indeed, some activists have made those types of mistakes; adopting mechanical and atomized perspectives – over that of capitalism as a matrix of international process – fragmenting the relationships between economics, politics and ideology in the near-term revolutionary class struggle and as they affect the longer struggle for communism. Those misinterpretations have had harmful and often disastrous effects. For example, various conceptualizations of socialism have been advanced over the past century which give priority to productive capacity, types of technology, or amounts of output as the ‘key link’ for creating socialism and for revolutionizing society, substituting these for the truly key objectives of socialist revolution: the radical transformations of all economic, political and ideological social relationships. Similarly, various visions of anti-capitalist social change center on organizing incremental economic oppositions to individual capital formations, policies or capitalists in place of advancing the struggle to challenge all of the oppressive and exploitative social relationships inherent in capitalist society, including and especially the character of the state. Within the ranks of the proletarian movement, the failure to recognize and accurately advance the struggle over key matters of ideology, of materialist dialectics, as well as of the analysis of specific socio-political moments, contributed to the reversals of socialism in the USSR and China, and to the misdirection of many revolutionary movements in other countries worldwide.⁶² Our practical and theoretical work today is very much grounded in those past practices – successes and failures – and on the struggle to accurately assess them.

As current events continually remind us, the social world is not frozen, waiting for the oppressed and exploited to seize the day. The outrages and atrocities of capitalism are an ongoing assault on the great majority of the people of the world and on the planet itself. The clock is always ticking. For us, the project for the future will only advance if we assume among our component tasks the critical opposition to such mechanistic and ‘metaphysical’ conceptualizations and the further critical development of dialectical, revolutionizing, historical materialist practice and theory.

Notes:

[Abbreviations for multi-volume book sets: MECW = Marx and Engels Collected Works; MESW = Marx and Engels Selected Works; LCW = V.I. Lenin Collected Works]

1. Marx, K. 1967/1867. Capital. Vol. 1. New York. p 29.
2. Capital. Vol. 1. p 29.
3. Marx, K. and F. Engels. 1976/1848. The German Ideology. MECW 5. New York. p 53.
4. Describing 1848, Engels wrote “the Paris uprising found its echo in the victorious insurrections in Vienna, Milan and Berlin; when the whole of Europe right up to the Russian frontier was swept into the movement.” see Marx, K. 1969/1850. The Class Struggles in France. MESW Vol. 1. Moscow. p. 189.
5. Capital. Vol. 1. p. 29. See also: Engels, F. 1969/1886. Ludwig Feuerbach and the End of Classical German Philosophy. MESW Vol. 3. Moscow. esp. Part IV on Marx.
6. Marx, K. 1969/1869. The Eighteenth Brumaire of Louis Boneparte. MESW Vol. 1. Moscow. p. 398.
7. German philosopher G. W. F. Hegel was a very strong influence for Marx and other radical thinkers of the day.
8. Capital, Vol. 1. p. 19.
9. The German Ideology. p 38.
10. Moore, J. H. 1977. The Evolution of Exploitation. Critique of Anthropology 2(8): 33-48.
11. Moore, J. H. 1978. The Exploitation of Women in Evolutionary Perspective. Critique of Anthropology 3(9-10): 83-100.
12. Terray, E. and J. S. Kahn. 1979. On Exploitation: Elements of an Autocritique. Critique of Anthropology 4(13-14): 29-39.
13. Brennan, J. and J. Anderson. 1988. Varying responses to feeding competition in a group of rhesus monkeys (Macaca mulatta). Primates 29(3): 353-360.
14. Starin, E. D. 2006. Patterns of food transfer in temminck’s red colobus. Aggressive Behavior 32(3): 181-186.
15. Whiten, A. and C. P. van Schaik. 2007. The evolution of animal ‘cultures’ and social intelligence. Philosophical Transactions of the Royal Society B: Biological Sciences 362(1480): 603-620.
16. Cheney, D., R. Seyfarth, B. Smuts. 1986. Social relationships and social cognition in nonhuman primates. Science 234(4782): 1361-1366.
17. By evolution, I mean simply ‘the change in properties of populations of organisms over time’ as per Ernst Mayr.
18. Tomasello, M. 2001. Cultural Transmission: A View from Chimpanzees and Human Infants. Journal of Cross-Cultural Psychology 32(2): 135-146.
19. Tomasello, M., M. Carpenter, J. Call, T. Behne, and H. Moll. 2005. Understanding and sharing intentions: The origins of cultural cognition. Behavioral and Brain Sciences 28(05): 675-691.
20. Herrmann, E., J. Call, M. V. Hernandez-Lloreda, B. Hare, M. Tomasello. 2007. Humans Have Evolved Specialized Skills of Social Cognition: The Cultural Intelligence Hypothesis. Science 317(5843): 1360-1366.
21. Tomasello, M. and H. Rakoczy. 2003. What Makes Human Cognition Unique? From Individual to Shared to Collective Intentionality. Mind & Language 18(2): 121-147.
22. Wertsch, J. V. 1985. Vygotsky and the Social Formation of Mind. Cambridge and London, Harvard University Press.
23. Vygotsky, L. 1986. Thought and Language. Cambridge, MIT Press. p. 68-95.
24. Hauser, M. D., N. Chomsky, et al. 2002. The Faculty of Language: What Is It, Who Has It, and How Did It Evolve? Science 298(5598): 1569-1579.
25. The German Ideology. p 43.
26. Vygotsky. Thought and Language. p. 68-95.
27. Moll, H. and M. Tomasello. 2007. Cooperation and human cognition: the Vygotskian intelligence hypothesis. Philosophical Transactions of the Royal Society B: Biological Sciences 362(1480): 639-648.
28. Fernyhough, C. 1996. The dialogic mind: A dialogic approach to the higher mental functions. New Ideas in Psychology 14(1): 47-62.
29. Wertsch, J. V. and P. Tulviste. 1992. L. S. Vygotsky and Contemporary Developmental Psychology. Developmental Psychology 28(4): 548-557.
30. Vygotsky. Thought and Language. p. 210-256.
31. Several examples are discussed in Diamond, J. 1997. Guns, Germs, and Steel. New York, W.W. Norton.
32. For tens of thousands of years this may also have involved interchange between Homo sapiens and Homo neanderthalensis, another, somewhat earlier species of humans who also populated areas of Africa and Eurasia. c.f. Mellars, P. 1988. The Origins and Dispersal of Modern Humans. Current Anthropology 29(1): 186-188.
33. Marx, K. 1967. Capital. Vol. 3. New York. p. 879-880.
34. Marx, K. 1973. Grundrisse. New York. p. 107-108.
35. A related illustration might be the schizophrenic perceiving their own thoughts to be external voices. c.f. Fernyhough, C. 2004. Alien voices and inner dialogue: towards a developmental account of auditory verbal hallucinations. New Ideas in Psychology 22(1): 49-68.
36. Capital, Vol. 1. p. 77. < http://www.marxists.org/archive/marx/works/1867-c1/ch01.htm#S4>
37. c.f. Diamond, J. 2005. Collapse: How Societies Choose to Fail or Succeed. New York. Viking.
38. Ethnography is rich on this topic, but an illustrative sample would be: Sharrock, S. R. 1974. Crees, Cree-Assiniboines, and Assiniboines: Interethnic Social Organization on the Far Northern Plains. Ethnohistory 21(2): 95-122. Moore, J. H. 1974. Cheyenne Political History, 1820-1894. Ethnohistory 21(4): 329-359. Southall, A. 1976. Nuer and Dinka Are People: Ecology, Ethnicity and Logical Possibility. Man 11(4): 463-491. Moore, J. H. 1994. Putting Anthropology Back Together Again. American Anthropolgist 96(4): 925-948. Masco, J. 1995. “It is a Strict Law That Bids Us Dance”: Cosmologies, Colonialism, Death, and Ritual Authority in the Kwakwaka’wakw Potlatch, 1849 to 1922. Comparative Studies in Society and History 37(1): 41-75.
39. Morgan’s survey Ancient Society (1877) is cited by Engels throughout The Origin of the Family, Private Property and the State.
40. HRAF is a collaborative archive at Yale University that catalogues worldwide ethnographic data.
41. Moore. ‘Exploitation of Women’.
42. The German Ideology. p. 86.
43. Marx, K. and F. Engels. 1969/1848. Manifesto of the Communist Party. MESW Vol. 1. Moscow. p. 109.
44. This is obviously the case in many fields of intellectual activity, where patents, copyright and other contracts assign ‘intellectual property’ rights to the employer, not the intellectual employee.
45. White, L. A. 1926. An Anthropological Approach to the Emotional Factors in Religion. The Journal of Philosophy 23(20): 546-554.
46. White, L. A. 1948. The Definition and Prohibition of Incest. American Anthropologist 50(3): 416-435.
47. Moore. ‘Cheyenne Political History’.
48. c.f. Lenin, V.I. 1964/1917. Lessons of the Revolution. LCW Vol. 25. Moscow.
49. Lenin, V.I. 1964/1920. ‘Left-wing’ Communism - An infantile disorder. LCW Vol. 31. Moscow. p. 101.
50. Studies of education practices in the US have shown that a large majority of low-income and ethnic-minority students are regularly placed in ‘low-skilled’ educational tracks. c.f. Condron, D. J. 2007. Stratification and Educational Sorting: Explaining Ascriptive Inequalities in Early Childhood Reading Group Placement. Social Problems 54(1): 139-160.
51. The German Ideology. p. 77.
52. The German Ideology. p. 53.
53. Marx, K. 1969/1875. Critique of the Gotha Programme. MESW Vol. 3. Moscow. p. 17.
54. Marx, K. 1969. Letter to J. Weydermeyer in New York. 5 March 1852. MESW Vol. 1. Moscow. p. 528.
55. Engels, F. 1969/1888. Ludwig Feuerbach and the End of Classical German Philosophy. MESW Vol. 3. p. 366.
56. Where “he, who before was the money-owner, now strides in front as capitalist; the possessor of labour-power follows as his labourer.” Capital Vol. 1 p. 172.
57. The German Ideology. p. 88.
58. Critique of the Gotha Programme. p. 18.
59. The German Ideology. p. 47.
60. Ludwig Feuerbach. p. 367.
61. Grundrisse. p. 107-108.
62. c.f. Ely, M. 1980. Slipping into Darkness, ‘Left’ economism, the CPUSA, and the Trade Union Unity League (1929 – 1935). Revolution 5(2-3).

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