Part 2 of Saker’s interview with Straight-Bat on Marxism in the 21st century

Posted on January 1, 2023 by fada1

December 31, 2022

Note: the first part of this interview was posted here

Foreword: Apologies for the delay in contributing to the interview part 2 – I had to be busy with my professional life. Coming back to this interview, I feel that, adding supporting documents, statements and excerpts to my arguments has always been my strength. I’m extra careful this time while responding the questions put down by The Saker in the interview part 2 – each argument has been justified with logic, rationality, besides (as usual) facts and figures. I followed the suggestions of Mark Grimsley, who once remarked “A statement that fits an accepted world view requires little explanation and can therefore be outlined in a few words. In order to have any chance of being persuasive, a statement that challenges an accepted world view needs more than a sound bite.“

This write-up covers the significant Marxist socialist movements and its leaders during the period of 1860 to 1955 CE. If Almighty wishes, interview part-3 will cover 1955 to the present times.

During the course of this discussion, I will mention WEST EUROPE time and again. It may be noted that, I have assumed (from north to south) the western border of Finland, eastern coastline of Baltic Sea, the western border of the countries Poland, Czechia, Slovakia, Hungary, Croatia, Montenegro, Albania, Greece as the eastern limit of West Europe.

Question: Was there any Marxist movement in Europe in 19th / 20th Century? Why it failed in the advanced West Europe?

Let me recall from the texts of part I of this interview –

“The Communist League, the FIRST MARXIST COMMUNIST PARTY with an international presence was established in June 1847 in London, Britain through the merger of the League of the Just and the Communist Correspondence Committee. It was on behalf of this party that, Marx and Engels wrote the ‘Manifesto of the Communist Party’ late in 1847” … “The Communist League was formally disbanded in November 1852 CE, following the Cologne Communist Trial. Hence, even if Marx and Engels represented one of the ‘communist’ groups among the early socialists, both of them mostly used the term ‘socialist’ in their works – it helped them to avoid uncalled for legal problems. Socialism was the word predominantly used by Marxists until WW-I, after which Lenin made the decision to restart use of the term communism (renaming the Russian Social Democratic Labour Party to the All-Russian Communist Party).”

Both Marx and Engels being German, hence their writings needed to be translated into other major European languages like English, French, Spanish, Portuguese, Italian, Dutch, Russian, Polish, Hungarian, Bulgarian etc. for the Europeans living in different west and east European kingdoms, empires, later on nation-states, and world-wide colonies before the nascent ideology propagated by Marx and Engels could make any impact among the politicians, revolutionaries, and trade-unionists (beyond Germany and Austria). In order to assess the Marxist movements in the 19th century Europe, we need to turn our attention to the political economy and society in Europe till 1914 CE (i.e. outbreak of WW I)

(A) Political Economy, and Social Structure in Europe till 1917 CE

To comprehend the status of Europe in the 19th century, one must take a glance backward to find that the early modern world including Europe was “one vast peasantry, where between eighty and ninety percent of the people lived from the land and from nothing else” (refer ‘Civilization and Capitalism: 15th-18th Century Volume I’ by Fernand Braudel). However, Europe was also the home to the thriving mercantile capitalism (though Bubonic Plague temporarily caused a damage) till 16th century CE particularly in the Italian Peninsula, the Low countries, and the Baltic coast. Economic historian John Day (1987) wrote “By the mid-14th century, merchant capitalism has already perfected the instruments of economic power and business organization that were to serve it for the next four hundred years: foreign exchange, deposit banking, risk insurance, public finance, international trading companies, commercial book-keeping”. Another ‘variant’ of capitalism, agrarian capitalism was in full bloom in England, and the Low countries 15th century CE onwards. Medieval era practice of farming on large open fields (and cultivation by individual yeomen or tenant farmers on strips of land) got transformed into enclosed holdings ‘consolidated into individually-owned or rented fields since late 15th century in England. Initiatives to enclose came mainly from England estate-owners (to maximise rental from their estates), with tenant farmers as a distant second (objective to improve their farms). Hence we come to know from the British parliament statistics that, “Between 1604 and 1914 over 5,200 enclosure Bills were enacted by Parliament which related to just over a fifth of the total area of England, amounting to some 6.8 million acres.” (refer link: https://www.parliament.uk/about/living-heritage/transformingsociety/towncountry/landscape/overview/enclosingland/) What happened that transformed the society in Europe (to start with), and thereafter whole world towards urban industrial civilization? There have been intense debates among economists and historians about the evolution of human society (in Europe) from feudalism in the medieval ages to industrial capitalism after 1760 CE primarily in England, France, Low countries, and Germany – Dobb-Sweezy debate, and Brenner debate being most remarkable among them. The ‘endogenous’ side represented by Maurice Dobb and Robert Brenner locate the generative sources of capitalist social relations in the internal contradictions between serfs and landlords of feudal European societies, while the ‘exogenous’ side led by Paul Sweezy and Immanuel Wallerstein view capitalism as having developed from the growth of markets and trade in Europe over the 16th Century. It appears very logical that, both the ‘endogenous’ and the ‘exogenous’ factors played their roles simultaneously in the transformation towards industrial capitalism.

We notice two fundamental changes in the characteristics of how the sovereign political entities (like principalities, kingdoms, and empires) in Europe carried out their foreign affairs 1450 CE onwards –

Firstly, unlike the ancient and early medieval era when ruling aristocracy of a country would invade the contiguous lands and sea regions to annex the same and its people, and treat them as its own subjects, the late medieval era European entities would invade a distant land and proactively slaughter as many local people as possible (Portugal, probably was an exception in this matter – it invaded distant lands to set up colonies, but lacked the genocidal nature). Then they would setup a ‘colony’ in the new territory populated by their own elites and other people to control the annexed land and remaining local population in the newly acquired dominion – all of these were aimed at exploring new land, people, and natural resources for the sake of business and commercial interests (which itself gave rise to second aspect mentioned hereafter);

Secondly, the commercial relations were no longer established on the basis of spontaneous human endeavour to fulfil the necessities of common people and the political entities, but ‘economic systems’ occupied a central place around which most of the activities will get coordinated. The invader would engage remnants of the local population and would deploy slaves (people who were forcibly migrated from their society in Africa and Asia) in economic activities in the colony, benefit of which would be appropriated by the invading aristocracy and the exchequer of the kingdom. Thus, while the monarchy, and the aristocracy of Spain, and Portugal expropriated mineral resources and profited from plantation of cash crops in American colonies, in case of Holland, England, and France the beneficiaries primarily included joint-stock companies, beside the monarchy, and the aristocracy. In ‘The Colonial Origins of Comparative Development: An Empirical Investigation’ Daron Acemoglu, and James Robinson stated that, “the main purpose of the extractive state was to transfer as much of the resources of the colony to the colonizer, with the minimum amount of investment possible.” Let us also quote Karl Marx from ‘Capital: A Critique of Political Economy, Volume I’ to throw light on how capitalism took root in Europe, “The discovery of gold and silver in America, the expiration, enslavement and entombment in mines of the indigenous population of that continent, the beginnings of the conquest and plunder of India, and the conversion of Africa into a preserve for the commercial hunting of blackskins, are all things which characterize the dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation….The different moments of primitive accumulation can be assigned in particular to Spain, Portugal, Holland, France, and England, in more or less chronological order. These moments are systematically combined together at the end of the seventeenth century in England; the combination embraces the colonies, the national debt, the modern tax system, and the system of protection. These methods depend in part on brute force, for example, the colonial system. But, they all employ the power of the state, the concentrated and organised force of society, to hasten, hot-house fashion, the process of transformation of the feudal mode of production into the capitalist mode, and to shorten the transition.” Between 1490s and 1890s CE ‘plantation capitalism’ (wherein the businessmen of west European colonial empires setup plantations of commercial corps like cotton, sugarcane, rubber, indigo, poppy in the invaded territories in North America, South America, Asia, Africa continents using slaves who were Africans forcefully evicted from their villages in African coasts or landless poor Asians) was in vogue. Similarly, during the same period ‘extractive capitalism’ (wherein the businessmen of west European colonial empires will setup a number of mining apparatus to extract gold, silver, mica etc. in the invaded territories in North America, South America, Asia, Africa continents using African slaves and Asian labourers) got developed as another vulgar expression of capitalism driven by the European capitalists. Substantially high portion of the benefits from the colonies would enrich the state coffers in each of the colonial empires which would engage in continuous struggle among themselves in order to expand their empire across the world.

The industrial capitalist society in the modern era originated in west Europe after 1760 CE with the First Industrial Revolution that brought mechanisation of factory production using steam power – weaving looms powered by steam engines, and steam-powered locomotives and ships introduced the practice of large-scale production of goods in factory (for consumption by general population and for usage by other factories as input materials) and moving goods across long distance in short time. Let me note down how the key aspects of the industrial capitalist system was facilitated by the previous forms of capitalism in Europe and its colonies:

  1. Finance Capital – By 1650 CE, the flow of precious metals from the colonies in Americas that reached Europe is estimated to be around at least 180 tons of gold and 17,000 tons of silver. This provided the capital for European merchants’ trade with Asia in textiles and spices, which in turn generated huge accumulation of capital that was later on channelled into industrial capitalism. It is said that, ‘The plundering of the Americas thus functioned as a central means of so-called primitive accumulation on a European wide basis. For throughout the 16th and 17th centuries, Spain and Portugal acted as conduits for the transfer of much of the American bullion into the coffers of financiers in London, Amsterdam, Paris and Genoa. It is perhaps no coincidence that almost half of the gold and silver acquired by Spain ended up in Holland, the first state to experience a bourgeois revolution, ending up Marx’s ‘model capitalist nation of the seventeenth century’.’
  2. Labour – the (African) slave-trade by European traders provided the labour required to operate plantations and mines in the colonies in the Americas. Back home, surplus landless poor who were evicted from their rural households during the onset of agrarian capitalism in Europe formed the ‘labour class’ who will work for 12 hours in factory to earn a meagre wage
  3. Raw materials – not only European lands, but all colonies in South America, North America, Africa, Asia provided the raw materials like coal, minerals, and agro-products. By 1800, 25 percent of the cotton that landed in Liverpool, Britain originated in the USA (former colony of Britain); 50 years later, by 1850, 72 percent of the cotton consumed in Britain was grown in the USA
  4. Finished Goods market – large number of factory workers, and unemployed people became the source of ‘domestic demand’ (for finished goods). But more importantly, the colonies and large slave population became source of ‘external demand’ that propelled the industrial manufacturing system. Europe itself being too small a landmass, it possessed limited consumer markets (beside limited source of raw material and energy). With Asia, Africa, and Americas continents under the European empires, industrial capitalism boomed.

During the first wave of Industrialization, power of steam was harnessed (through burning of coal) and various consumer goods as well as industrial goods were manufactured using cotton (textile), and iron (heavy engineering). Britain led the way in textile, mining, shipping, railways with application of new technology to enhance productivity. As per Christian (2005), time taken for 100 pounds of cotton spinning was reduced from 300 hours in 1790s to 135 hours in 1830. British production of pig iron quadrupled between 1796 and 1830, and quadrupled again between 1830 and 1860 (Darwin 2009: 19). British foreign direct investment, rose from $500m in 1825 to $12.1b in 1900 and $19.5b by 1915 (Woodruff 1966: 150; Sassen 2006: 135-6).

After 1870, a second wave of industrialization took place, during which German and USA took the lead to explore new frontiers in electrical, electronics, pharmaceuticals, and chemicals. Energy from petroleum acted as catalyst to industrialization – the use of refined petroleum as liquid fuel ‘provided an impetus to the development of cars, planes, and ships’. Communication and transportation transformed beyond imagination – “by 1840 there were 4,500 miles of track worldwide, expanding to 23,500 miles by 1850, and 130,000 miles by 1870, by the end of the century, there was half a million miles of track worldwide, over a third of which was in Europe; Communication times between Britain and India dropped from a standard of around six months in the 1830s via sailing ship, to just over one month in the 1850s via rail and steamship, to the same day in the 1870s via telegraph”. The agrarian fear of famine was joined by modern industrial concerns of overproduction, and price collapse, as well as financial crisis (Hobsbawm 1975: 209). The 19th century’s great depression between 1873 and 1896 was the precursor to 20th century economic cycles (Hobsbawm 1975: 85-7). As a whole during the 19th century, global trade increased twenty-five times over (Darwin 2007: 501).

The socio-political environment of west Europe in modern times witnessed the rise of four new categories of SOCIAL ELITES in the society – (a) owners of manufacturing industry and related business, (b) controllers of banking and finance, (c) leaders of political parties, and bureaucrats who jointly controlled the state apparatus, (d) specialists who operated factories and mines in the era of industrial capitalism like engineers, managers, accountants – over and above the traditional five groups of social elites prevalent in medieval period like (a) aristocracy and state-officials which owned estate/land and controlled the state apparatus, (b) traders, and moneylenders, (c) clergy who controlled the Church and the religious affairs, (d) big farmers who owned much more land than required for subsistence, (e) burghers including guild craftsmen, legal and medical professionals. The new sub-class didn’t get created one fine morning, rather it was a slow but steady process of transformation of the old elite sub-classes into the new elites (which was again reclassified by Marx and Engels as ‘bourgeois’ and petit-bourgeois depending on their ownership of the means of production in the new economy). Apparently, between 1450 and 1870 CE there were significant social transformations that took place in the upper strata of the European society:

  1. Most of the families in medieval elite category (a) moved towards modern elite category (a), (b), (c)
  2. Most of the families in medieval elite category (b) moved towards modern elite category (a), (b)
  3. Most of the families in medieval elite category (c) moved towards modern elite category (c), (d)
  4. Most of the families in medieval elite category (d) moved towards modern elite category (b), (c).
  5. Most of the families in medieval elite category (e) moved towards modern elite category (a), (d).

During the same period, COMMONERS, the plebs so to say, were found to be loosely grouped into (a) peasants, (b) unskilled general population, (b) especially skilled population, (c) industrial workers, (d) slave population. Unskilled general population would be toiling in their various professions that will require low degree of skill but needed physical labour for their livelihood (such as services like helper in farming, cart-pulling, garbage cleaning etc.), while the especially skilled population would have relatively better lifestyle through earning by providing services related to carpentry, tailoring, bakery, or selling grocery items etc. A significant part of the unskilled general population would remain unemployed, and would always be ready to grab any opportunity of temporary work. The serfdom of the medieval Europe got abolished in Europe only to be replaced by slavery in the colonies in Americas, Africa, and Asia established as a result of imperialist invasions. Between 1760 CE, the onset of industrial economy and 1914 CE, when the ENTIRE world was reeling under competitive European imperialism, the nine categories of elites of Europe morphed into a structure where a core group of plutocrats (around 0.1% of population) became ‘masters’ surrounded by a well-knit team of ‘managers’, ‘engineers’, and ‘accountants’ (may be around 2% of population). This bourgeois ‘entity’ which was ‘localised’ in the sense of becoming the (bourgeois national) motive force behind each of the European countries, was simultaneously taking shape into a global force by means of interdependency in the banking and finance; it had two primary objectives:

(i) continue to wield power in every country of Europe and, the world

(ii) continue to accumulate wealth through economic activities in every country of Europe and, through robbery (disguised as commerce) across the world.

The bourgeois revolutions in England and France actually defeated the feudalist forces conclusively and brought the bourgeois forces near to the political power that was still with the aristocracy. As Hobsbawm mentioned, ‘Would it lead to the advance of civilization in the sense in which the youthful John Stuart Mill had articulated the aspirations of the century of progress: ‘a world, even a country, more improved; more eminent in the best characteristics of Man and Society; farther advanced in the road to perfection; happier, nobler, wiser’?. In a sordid tale of broken promises, outright lies, sneaky deception, and odious hypocrisy, the west European liberal and radical ‘revolutionaries’ first used the ‘social contract theory’ (advocating rights of citizens) during 17th and 18th centuries (embellished by Locke and Rousseau earlier) to find grounds for rejecting the conservative feudal beliefs and for destroying the social and political systems that rested on them through the English Revolution and the French Revolution, and then retreated to the ‘classical liberal theory’ (in which economic liberalism, laissez faire featured prominently) for establishing world-wide imperialist colonies either by butchering almost entire existing population (USA, Canada, Australia, New Zealand) or by stationing military garrison (India, Myanmar, Indonesia, and many other Asian countries, and entire Africa except Ethiopia). Thus, during the 150-year period from 1760 to 1914 CE, while European societies slowly converted themselves into ‘bourgeois liberal democratic republics’ where structures of government and processes of governance across Europe got transformed, the entire world became the arena of their ‘capitalist imperialism’. During this period, interplay of six vectors of political economy in Europe shaped the political and economic contour of the modern world:

  1. Subjugation of science and technology to the interests of capital, as a result of which industrial capitalism made tremendous progress on using energy and machinery to replace human efforts; research and innovation became a permanent feature of both state-funded education system and private capital owning industrialists – ‘General Electric set up a research lab in commercial dynamos in 1900, followed by DuPont’s chemicals lab in 1902’ (even after passing of another century i.e. in the 2010s government funded research labs and private capitalist multinational corporations carry out pioneering developments in west Europe and USA in every sphere of knowledge to explore business benefits);
  2. Struggle among the ‘conservative’, ‘liberal’, and ‘radical’ lines of political thought, where the liberals imbued with democratic concepts (in reality, that was ‘bourgeois liberal democracy’) increasingly outmanoeuvred the conservatives who were still trying to balance feudal sentiments with (bourgeois capitalist) democracy AND the radicals trying to make sense of different hues of socialism; monarchy in Europe in the beginning of 19th century steadily transformed into bourgeois liberal democracy which took root along with the industrial capitalist economy in Europe (and Anglo-colonies like USA, Canada, Australia) – 80% population (the commoners) were hoodwinked to believe that they exercise their voting rights during ‘free and fair’ elections for electing their representative to country’s parliament and that their ‘democratic rights’ are non-violable and that the country’s elected government operates in their best interest (even after passing of another century i.e. in the 2010s people in Europe and Anglo-colonies behave similarly);
  3. The emergence of industrialization helped the governments on collection of large amount of tax revenue which was spent on modern infrastructural developments and poverty alleviation programmes. System of governance was further strengthened through civil services using which the state apparatus exercised its authority and controlled its people through modernised methods of repression. ‘States provided the institutional guarantees for market transactions, and assumed the monitoring and coercive functions required for capitalist expansion’. Simultaneously, ‘rational’ and ‘welfare’ state-policies were developed by the staunchly elitist ruling oligarchy to (a) provide a sustained pro-commoner façade of the government (b) influence the group of people with radical socialist views towards reformism;
  4. As noted by Marx, in peasant societies before the development of any form of capitalism, people lived off the crops they produced in their own plot, and exchange played a significant role only for rural artisans (only insignificant amount of surplus crops were sold at the local market). With the advent of capitalism, most of the rural (peasant) producers and urban industrial workers produce commodities targeted for exchange in the market. Capitalist class relations dictate that (unlike slaves bonded to their master or feudal serfs bonded to their lord’s estate) direct producers are neither personally tied to their exploiter nor have any significant ownership of means of production. But this ‘freedom’ is more than nullified by the fact that the industrial and farm workers are compelled to sell their labour to (bourgeoisie) class owning the means of production to secure their material necessities of survival. As the new era engulfed the European societies more and more people from rural areas internally migrated to urban regions to escape the poverty in village life, ending up in slums and ghettos of industrial towns and trading cities of Europe; thus between 1800 and 1900 CE, London grew from just over 1 million to 6.5 million inhabitants, while he population of Berlin rose by 1000%;
  5. Fake ideologies that legitimised brutal occupation, systematic extermination in imperialist colonies for making profits as nothing but mission to civilize the ‘uncivilized’ Africans, Asians and Latin Americans (the concept was mockingly called ‘the white men’s burden’), as a result of which elites/aristocrats of the victim societies became unabashed proponents of such western ‘missions’ and ‘values’; it must be noted that in some regions like Africa, and India the European imperialist ventures, western education and Christian missions gave rise to new social elite class that derided the commoners of their own countries. Virtually the whole of the other world belonged to west Europe, except for Japan, systematically ‘westernizing’ since mid-1800 and overseas territories settled by large populations of European descent;
  6. Political repression and economic deprivation in Europe resulted in massive forced migration of about “50 million Europeans … between 1800 and 1914, most of them to the United States, helping to increase the population of the US from 5 million in 1800 to 160 million in 1914” (refer Rosenberg 1994: 163-4, 168) who collectively became the torchbearer of industrialisation of USA, and unwittingly helped USA becoming the leader in Zionist-Capitalist world order.

A.1 Political Economy of Imperialism in the Era of Industrial Capitalism:

The extent of colonial empires built by west European powers can be guessed from Imperialism (edition 2) penned by J A Hobson. Table A.1.1 provide details of the comparative colonisation by the Western nations in 1905 (compiled from Statesman’s Year Book for 1900) and in 1935 (compiled from the Statesman’s Year Book for 1935, the Armaments Year Book for 1935, the League of Nations Year Book for 1934-35); the data for Britain and France colonies in 1876 CE has been picked up from V I Lenin’s Imperialism, the Highest Stage of Capitalism:

Table A.1.1

CountryNo. of ColoniesMother countryArea (sq. mile)ColoniesArea (sq. mile)Mother countryPopulationColoniesPopulation
Britain: 187619051935——8,687,250—251,900,000
50120,97911,605,23840,559,954345,222,239
—94,63313,270,79346,610,000449,378,000
France: 187619051935——347,490—6,000,000
33204,0923,740,75638,517,97556,401,860
—212,7504,617,51441,880,00065,179,000
Netherlands: 19051935312,648782,8625,074,63235,115,711
—13,128791,9078,290,00060,971,000
Germany: 1905193513208,8301,027,12052,279,90114,687,000
—181,822—65,350,000—
Italy: 190519352110,646188,50031,856,675850,000
—119,696906,21342,217,0002,393,000
Portugal: 19051935936,038801,1005,049,7299,148,707
—35,699807,6377,090,0008,426,000
Spain: 190519353197,670243,87717,566,632136,000
—194,21610,99324,242,0001,000,000
USA: 1905193563,557,000172,09177,000,00010,544,617
—3,026,000711,726126,000,00015,014,000

The outright loot and banditry that the west European colonial countries engaged in since 1760 CE resulted in a stunning reversal of economic state of affairs across the world – Bairoch (1981) estimated that, total GNP 35 billion USD of Europe and Anglo-colonies in 1750 increased more than 12 times to reach 430 billion USD in 1913 while the colonised continents‘ combined GNP didn’t even see a twofold rise!

Table A.1.2

YearTotal GNP (billion $)GNP per capita ($)
Developed countriesThird worldWorldDeveloped countriesThird worldWorld
175035112147182188187
180047137184198188191
183067150217237183197
1860118159277324174220
1880180164344406176250
1900297184481540175301
1913430217647662192364

To understand the mechanism of such massive transfer of wealth from every region of world to west Europe, as a case study, let’s look at the significant aspects of the economy of Indonesia when it was a colony of the Netherlands. Wikipedia mentions (link: https://en.wikipedia.org/wiki/Dutch_East_Indies), “Between 1830 and 1870, 840 million guilder (€8 billion in 2018) were taken from the East Indies [by Dutch East India Company – by the interviewee], on average making a third of the annual Dutch government budget. The Cultivation System, however, brought much economic hardship to Javanese peasants, who suffered famine and epidemics in the 1840s … Dutch private capital flowed in after 1850, especially in tin mining and plantation estate agriculture. The Martavious Company’s tin mines off the eastern Sumatra coast was financed by a syndicate of Dutch entrepreneurs, including the younger brother of King William III. Mining began in 1860. In 1863 Jacob Nienhuys obtained a concession from the Sultanate of Deli (East Sumatra) for a large tobacco estate (Deli Company). From 1870, the Indies were opened up to private enterprise and Dutch businessmen set up large, profitable plantations. Sugar production doubled between 1870 and 1885; new crops such as tea and cinchona flourished, and rubber was introduced, leading to dramatic increases in Dutch profits. Changes were not limited to Java, or agriculture; oil from Sumatra and Kalimantan became a valuable resource for industrialising Europe … The colonial exploitation of Indonesia’s wealth contributed to the industrialisation of the Netherlands, while simultaneously laying the foundation for the industrialisation of Indonesia. The Dutch introduced coffee, tea, cacao, tobacco and rubber … The Dutch East Indies produced most of the world’s supply of quinine and pepper, over a third of its rubber, a quarter of its coconut products, and a fifth of its tea, sugar, coffee and oil. The profit from the Dutch East Indies made the Netherlands one of the world’s most significant colonial powers.” All three factors responsible for the success of Dutch imperialists – (a) superiority of European military technology, (b) modern technology based infrastructure, and (c) forced marketization of production relations in Indonesian society – were so absolute that, Dutch government had to spend a measly sum to govern Indonesia – in 1900 CE, only 250 European and 1,500 indigenous civil servants, 16,000 Dutch officers and 26,000 hired native troops, were required to rule 35 million colonial subjects.

Another example of extraordinary imperialist sophistry by British government was India. After 1814 CE Indian textiles were almost banned from Britain, while textiles manufactured in Britain were forcibly imported in India without duty – thus between 1814 and 1828, British textile exports to India rose from 800,000 yards to over 40 million yards, while during the same period, Indian cloth exports to Britain halved (refer J Goody 1996: 131).

In the colonies across the continents of Asia, Africa, and South America, forced transformation of agrarian class relations, forceful commercialization of agriculture, introduction of industrial economy, introduction of market, ebbs and flows of European metropolitan markets, commodity speculations and price fluctuations created havoc where old agrarian production was the cornerstone of economy. Famines and epidemics in the 1870s and 1890s killed millions of people around the world (Davis 2002: 6-7). In India, lands were privatized under British rule so that they could be used as a taxable resource. Simultaneously, communal granary was forcibly removed from villages so that basic food grains could be marketed. When droughts hit in 1877, at least 15 million people in India starved to death. “The British reacted by reducing rations to male coolies to just over 1,600 calories per day – less than the amount later provided in Nazi experiments to determine minimum levels of human subsistence” (Davis 2002: 38-9). Similar processes took place in China (whose normal granaries were closed to pay for trade deficits caused by military defeat in the Opium Wars and the unequal treaties signed with European powers.

Britain was the largest imperialist power in Europe controlling about 12 million sq. mile of foreign lands by 1905. One couldn’t fail to notice that two of the expenditure categories – military and national debt servicing – consumed between 70% to 80% of the annual net national expenditure of Britain for the period 1870 to 1901 CE (refer J A Hobson’s Imperialism edition 1). British bourgeois politicians never got tired to extol the virtues of modern imperialism. V I Lenin stated in Imperialism, the Highest Stage of Capitalism, “Chamberlain advocated imperialism as a “true, wise and economical policy”, and pointed particularly to the German, American and Belgian competition which Great Britain was encountering in the world market. Salvation lies in monopoly, said the capitalists as they formed cartels, syndicates and trusts. Salvation lies in monopoly, echoed the political leaders of the bourgeoisie, hastening to appropriate the parts of the world not yet shared out. And Cecil Rhodes, we are informed by his intimate friend, the journalist Stead, expressed his imperialist views to him in 1895 in the following terms: “I was in the East End of London (a working-class quarter) yesterday and attended a meeting of the unemployed. I listened to the wild speeches, which were just a cry for ‘bread! bread!’ and on my way home I pondered over the scene and I became more than ever convinced of the importance of imperialism…. My cherished idea is a solution for the social problem, i.e., in order to save the 40,000,000 inhabitants of the United Kingdom from a bloody civil war, we colonial statesmen must acquire new lands to settle the surplus population, to provide new markets for the goods produced in the factories and mines. The Empire, as I have always said, is a bread and butter question. If you want to avoid civil war, you must become imperialists.” Writing in 2013 in ‘The global transformation: the nineteenth century and the making of modern international relations‘ (published in International studies quarterly, 59/1) Buzan, Barry and Lawson, George said, “During the mid-to-late 19th century, the industrial powers established a global economy in which the trade and finance of the core penetrated deeply into the periphery. During the century as a whole, global trade increased twenty-five times over (Darwin 2007: 501). As the first, and for a time only, industrial power, it was British industrial and financial muscle that led the way. British production of pig iron quadrupled between 1796 and 1830, and quadrupled again between 1830 and 1860 (Darwin 2009: 19). British foreign direct investment, led by London’s role as the creditor of last resort, rose from $500m in 1825 to $12.1b in 1900 and $19.5b by 1915 (Woodruff 1966: 150; Sassen 2006: 135-6). The industrial economy was constructed on the back of improvements engendered by railways and steamships, and by the extension of colonization in Africa and Asia – between 1815 and 1865, Britain conquered new territories at an average rate of 100,000 square miles per year (Kennedy 1989: 199). The opening-up of new areas of production greatly increased agricultural exports, intensifying competition and pushing down agricultural incomes (Davis 2002: 63). The agrarian fear of famine remained. But this fear was joined by modern concerns of overproduction, price collapse, and financial crisis (Hobsbawm 1975: 209).

While attempting to define modern capitalist IMPERIALISM, V I Lenin noted in his Imperialism and the Split in Socialism, “Imperialism is a specific historical stage of capitalism. Its specific character is three-fold: imperialism is

(1) monopoly capitalism;

(2) parasitic, or decaying capitalism;

(3) moribund capitalism.

The supplanting of free competition by monopoly is the fundamental economic feature, the quintessence of imperialism. Monopoly manifests itself in five principal forms:

(1) cartels, syndicates and trusts – the concentration of production has reached a degree which gives rise to these monopolistic associations of capitalists;

(2) the monopolistic position of the big banks – three, four or five giant banks manipulate the whole economic life of America, France, Germany;

(3) seizure of the sources of raw material by the trusts and the financial oligarchy (finance capital is monopoly industrial capital merged with bank capital);

(4) the (economic) partition of the world by the international cartels has begun. There are already over one hundred such international cartels, which command the entire world market and divide it “amicably” among themselves – until war re-divides it. The export of capital, as distinct from the export of commodities under non-monopoly capitalism, is a highly characteristic phenomenon and is closely linked with the economic and territorial political partition of the world;

(5) the territorial partition of the world (colonies) is completed.”

Identifying the distinct stages of the transformation of ‘competitive’ capitalism into ‘monopoly’ capitalism, Lenin mentioned (refer Imperialism, the Highest Stage of Capitalism), “the principal stages in the history of monopolies are the following: (1) 1860-70, the highest stage, the apex of development of free competition; monopoly is in the barely discernible, embryonic stage. (2) After the crisis of 1873, a lengthy period of development of cartels; but they are still the exception. They are not yet durable. They are still a transitory phenomenon. (3) The boom at the end of the nineteenth century and the crisis of 1900-03. Cartels become one of the foundations of the whole of economic life. Capitalism has been transformed into imperialism.”

Looking into the presence of concentration of industrial production and business through the big corporates and industrial organisations, Lenin provided interesting readings on Germany and USA. He mentioned (refer Imperialism, the Highest Stage of Capitalism), “If we take what in Germany [in 1907] is called industry in the broad sense of the term, that is, including commerce, transport, etc., we get the following picture. Large-scale enterprises [those employing more than 50 workers], 30,588 out of a total of 3,265,623, that is to say, 0.9 per cent. These enterprises employ 5,700,000 workers out of a total of 14,400,000, i.e., 39.4 per cent; they use 6,600,000 steam horse power out of a total of 8,800,000, i.e., 75.3 per cent, and 1,200,000 kilowatts of electricity out of a total of 1,500,000, i.e., 77.2 per cent.” …

“[In USA] in 1904 large-scale enterprises with an output valued at one million dollars and over, numbered 1,900 (out of 216,180, i.e., 0.9 per cent). These employed 1,400,000 workers (out of 5,500,000, i.e., 25.6 per cent) and the value of their output amounted to $5,600,000,000 (out of $14,800,000,000, i.e., 38 per cent). Five years later, in 1909, the corresponding figures were: 3,060 enterprises (out of 268,491, i.e., 1.1 per cent) employing 2,000,000 workers (out of 6,600,000, i.e., 30.5 per cent) with an output valued at $9,000,000,000 (out of $20,700,000,000, i.e., 43.8 per cent).” …

Various estimates suggest that ‘the share of the leading 100 companies in British output rose from 15 per cent in 1907 to around 26 per cent in the later 1920s’.

Analysing the genesis of big corporates and industrial organisations, Lenin mentioned (refer Imperialism, the Highest Stage of Capitalism), “a very important feature of capitalism in its highest stage of development is so-called combination of production [integrated value chain – by the interviewee], that is to say, the grouping in a single enterprise of different branches of industry, which either represent the consecutive stages in the processing of raw materials (for example, the smelting of iron ore into pig-iron, the conversion of pig-iron into steel, and then, perhaps, the manufacture of steel goods) – or are auxiliary to one another (for example, the utilisation of scrap, or of by-products, the manufacture of packing materials, etc.).”

“Combination,” writes Hilferding, “levels out the fluctuations of trade and therefore assures to the combined enterprises a more stable rate of profit. Secondly, combination has the effect of eliminating trade. Thirdly, it has the effect of rendering possible technical improvements, and, consequently, the acquisition of super-profits over and above those obtained by the ‘pure’ (i.e. non-combined) enterprises. Fourthly, it strengthens the position of the combined enterprises relative to the ‘pure’ enterprises, strengthens them in the competitive struggle in periods of serious depression, when the fall in prices of raw materials does not keep pace with the fall in prices of manufactured goods.”

Tracing the development of cartels, Lenin (refer Imperialism, the Highest Stage of Capitalism) wrote, “Cartels come to an agreement on the terms of sale, dates of payment, etc. They divide the markets among themselves. They fix the quantity of goods to be produced. They fix prices. They divide the profits among the various enterprises, etc.” …

“The number of cartels in Germany was estimated at about 250 in 1896 and at 385 in 1905, with about 12,000 firms participating. But it is generally recognised that these figures are underestimations. From the statistics of German industry for 1907 we quoted above, it is evident that even these 12,000 very big enterprises probably consume more

than half the steam and electric power used in the country. In the USA, the number of trusts in 1900 was estimated at 185 and in 1907, 250. American statistics divide all industrial enterprises into those belonging to individuals, to private

firms or to corporations. The latter in 1904 comprised 23.6 per cent, and in 1909, 25.9 per cent, i.e., more than one-fourth of the total industrial enterprises in the country. These employed in 1904, 70.6 per cent, and in 1909, 75.6 per cent, i.e., more than three-fourths of the total wage-earners. Their output at these two dates was valued at

$10,900,000,000 and $16,300,000,000, i.e., 73.7 per cent and 79.0 per cent of the total, respectively.” …

“Monopolist capitalist associations, cartels, syndicates and trusts first divided the home market among themselves and obtained more or less complete possession of the industry of their own country. But under capitalism the home market is inevitably bound up with the foreign market. Capitalism long ago created a world market. As the export of capital increased, and as the foreign and colonial connections and “spheres of influence” of the big monopolist associations expanded in all ways, things “naturally” gravitated towards an international agreement among these associations, and towards the formation of international cartels”.

In his Imperialism, the Highest Stage of Capitalism Lenin referred to the German economist, Kestner, who listed the methods the monopoly cartels/associations resort to for fending off competition: “(1) stopping supplies of raw materials … “one of the most important methods of compelling adherence to the cartel”); (2) stopping the supply of labour by means of “alliances” (i.e., of agreements between the capitalists and the trade unions by which the latter permit their members to work only in cartelised enterprises); (3) stopping deliveries; (4) closing trade outlets; (5) agreements with the buyers, by which the latter undertake to trade only with the cartels; (6) systematic price cutting (to ruin “outside” firms, i.e., those which refuse to submit to the monopolists. Millions are spent in order to sell goods for a certain time below their cost price; there were instances when the price of petrol was thus reduced from 40 to 22 marks, i.e., almost by half!); (7) stopping credits; (8) boycott”.

As industrial organisations grew in to monopoly cartels, there was a parallel transformation of numerous modest funding agencies into a handful of powerful banking monopolies “having at their command almost the whole of the money capital of all the capitalists and small businessmen and also the larger part of the means of production and sources of raw materials in any one country and in a number of countries.” In 2012 USA had two very big banks – Rockefeller and Morgan – who controlled a capital of 11,000 million marks. As per Eugen Kaufmann, in 1909 in France three very big banks (Crédit Lyonnais, the Comptoir National and the Société Générale) had a total of 1229 branches/offices with 887 million francs own capital and 4,363 million francs deposits. At the end of 1913 in Germany, Schulze-Gaevernitz estimated the deposits in the nine big Berlin banks at 5,100 million marks (49%) out of a total of about 10,000 million marks. Taking into account not only the deposits, but the total bank capital, this author wrote: “At the end of 1909, the nine big Berlin banks, together with their affiliated banks, controlled 11,300 million marks, that is, about 83 per cent of the total German bank capital.” In the next forty-eight mid-sized banks (with a capital of more than 10 million marks) 36% of total deposits were kept. One of the largest German bank, the Deutsche Bank group comprises directly and indirectly, 87 banks; and the total capital under its control was estimated at between 2000 and 3000 million marks. The Deutsche Bank had … > direct or 1st degree dependence in 30 other banks >

14 of the 30 had 2nd degree dependence in 48 other banks >

6 of the 14 had 3rd degree dependence in 9 other banks.

Commenting on the rise of finance capital during the 1890s and beginning of 20th century, in Finance Capital book R. Hilferding said, “A steadily increasing proportion of capital in industry ceases to belong to the industrialists who employ it. They obtain the use of it only through the medium of the banks which, in relation to them, represent the owners of the capital. On the other hand, the bank is forced to sink an increasing share of its funds in industry. Thus, to an ever greater degree the banker is being transformed into an industrial capitalist. This bank capital, i.e., capital in money form, which is thus actually transformed into industrial capital, I call ‘finance capital’.” … “Finance capital is [monopoly – by the interviewee] capital controlled by banks and employed by industrialists.”

In Imperialism, the Highest Stage of Capitalism Lenin explored the same phenomenon as, “At the same time a personal link-up, so to speak, is established between the banks and the biggest industrial and commercial enterprises, the merging of one with another through the acquisition of shares, through the appointment of bank directors to the Supervisory Boards (or Boards of Directors) of industrial and commercial enterprises, and vice versa. The German economist, Jeidels, has compiled most detailed data on this form of concentration of capital and of enterprises. Six of the biggest Berlin banks were represented by their directors in 344 industrial companies; and by their board members in 407 others, making a total of 751 companies. In 289 of these companies they either had two of their representatives on each of the respective Supervisory Boards, or held the posts of chairmen. We find these industrial and commercial companies in the most diverse branches of industry: insurance, transport, restaurants, theatres, art industry, etc. On the other hand, on the Supervisory Boards of these six banks (in 1910) were fifty-one of the biggest industrialists, including the director of Krupp, of the powerful “Hapag” (Hamburg-Amerika Line), etc. From 1895 to 1910, each of these six banks participated in the share and bond issues of many hundreds of industrial companies (number ranging from 281 to 419).”

“The “personal link-up” between the banks and industry is supplemented by the “personal link-up” between both of them and the government. “Seats on Supervisory Boards,” writes Jeidels, “are freely offered to persons of title, also to ex-civil servants, who are able to do a great deal to facilitate (!!) relations with the authorities.”… “Usually, on the Supervisory Board of a big bank, there is a member of parliament or a Berlin city councillor.”

Lenin in his Imperialism, the Highest Stage of Capitalism quoted the German economist, Heymann to describe the holding system in detail, “The head of the concern controls the principal company (literally: the “mother company”); the latter reigns over the subsidiary companies (“daughter companies”) which in their turn control still other subsidiaries (“grandchild companies”), etc. In this way, it is possible with a comparatively small capital to dominate immense spheres of production. Indeed, if holding 50 per cent of the capital is always sufficient to control a company, the head of the concern needs only one million to control eight million in the second subsidiaries. And if this ‘interlocking’ is extended, it is possible with one million to control sixteen million, thirty-two million, etc.” Thus it was sufficient to own 40 per cent of the shares of a company in order to direct its affairs, since in reality a number of small and geographically scattered shareholders (of the company) would not be able to influence its business. In 1912, General Electric Company, Germany (A.E.G.) held shares in 175 to 200 other companies, dominating them through controlling a total capital of about 1,500 million marks. In Imperialism, … Lenin went on to add, “The “democratisation” of the ownership of shares, from which the bourgeois sophists and opportunist so-called “Social-Democrats” expect (or say that they expect) the “democratisation of capital”, the strengthening of the role and significance of small scale production, etc., is, in fact, one of the ways of increasing the power of the financial oligarchy.”

Lenin in Imperialism, the Highest Stage of Capitalism, quoted from the book Big Banks and the World Market written by E. Agalid, who divided the big Russian banks into two main groups: (a) banks that come under the “holding system”, and (b) “independent” banks (meaning independence of foreign banks). Agalid divided the first group into three subgroups: (1) German holdings, (2) British holdings, and (3) French holdings, and found that out of approximately 4,000 million roubles of invested capital of the big banks in Russia, more than three-fourths i.e. more than 3,000 million, belonged to banks which in reality were just “daughter companies” of foreign banks.

(a) banks under the “holding system”: Total Capital Invested 3,054.2 million roubles in October 1912. Break-up:

Four banks with German holdings – Siberian Commercial, Russian, International, Discount Bank – total 1,272.8 million roubles as ‘Capital Invested’

Two banks with British holdings – Commercial & Industrial, Russo-British – ‘Capital Invested’ total 408.4 million roubles

Five banks with French holdings – Russian-Asiatic, St. Petersburg Private, Azov-Don, Union Moscow, Russo-French Commercial – had total 1,373.0 million roubles as ‘Capital Invested’

(b) “independent” banks: Total Capital Invested 895.3 million roubles in October 1912. Break-up:

Eight local Russian banks: Moscow Merchants, Volga-Kama, Junker and Co., St. Petersburg Commercial (formerly

Wawelberg), Bank of Moscow (formerly Ryabushinsky), Moscow Discount, Moscow Commercial, Moscow Private.

Commenting on the extraordinarily high rate of profit obtained from the issue of bonds/securities (one of the principal features of finance capital) Lenin noted in Imperialism, the Highest Stage of Capitalism, “Neymarck estimates the total amount of issued securities current in the world in 1910 at about 815,000 million francs. Deducting from this sum amounts which might have been duplicated, he reduces the total to 575,000-600,000 million, which is distributed among the various countries as follows (I take 600,000 million):”

Table A.1.3

Financial Securities Current in 1910 (billion Francs)
CountrySecuritiesCountrySecuritiesCountrySecurities
Britain142Russia31Japan12
USA132Austria-Hungary24Belgium7.5
France110Italy14Spain7.5
Germany95Holland12.5Switzerland6.2

Hence, in 1910 four of the richest capitalist countries owned about 80% of world’s finance capital. Lenin analysed the transformation: capitalism 🡪 monopoly capital 🡪 surplus finance capital 🡪 export of finance capital and noted in Imperialism, the Highest Stage of Capitalism, “Capitalism is commodity production at its highest stage of development, when labour-power itself becomes a commodity. … England became a capitalist country before any other, and by the middle of the nineteenth century, having adopted free trade, claimed to be the “workshop of the world,” the supplier of manufactured goods to all countries, which in exchange were to keep her provided with raw materials. … On the threshold of the twentieth century we see the formation of a new type of monopoly: firstly, monopolist associations of capitalists in all capitalistically developed countries; secondly, the monopolist position of a few very rich countries, in which the accumulation of capital has reached gigantic proportions. An enormous “surplus of capital” has arisen in the advanced countries.”

“As long as capitalism remains what it is, surplus capital will be utilised not for the purpose of raising the standard of living of the masses in a given country, for this would mean a decline in profits for the capitalists, but for the purpose of increasing profits by exporting capital abroad to the backward countries. In these backward countries profits are usually high, for capital is scarce, the price of land is relatively low, wages are low, raw materials are cheap. The export of capital is made possible by a number of backward countries having already been drawn into world capitalist intercourse”

While British capital were invested in the British colonies, French capital exports went mainly into Europe including Russia. Germany exported capital that were evenly between Europe and America (which were not colonies). The export of capital becomes a means of the export of commodities. Lenin mentioned in Imperialism… “A report from the Austro-Hungarian Consul at San-Paulo (Brazil) states: “The Brazilian railways are being built chiefly by French, Belgian, British and German capital. In the financial operations connected with the construction of these railways the countries involved stipulate for orders for the necessary railway materials.”

Table A.1.4

Approximate Distribution of Foreign Capital in Different Parts of the Globe in 1910 (trillion marks)
RegionBritainFranceGermanyTotal
Europe4231845
Americas3741051
Asia, Africa, Australia298744
Total703535140

Writing about Britain’s income from investments in colonies and other foreign countries Hobson noted (refer his Imperialism), “no exact or even approximate estimate of the total amount of income … is possible. We possess, however, in the income-tax assessments an indirect measurement of certain large sections of investments”.

Table A.1.5

Income From Foreign Investments Assured to Income Tax (British Pounds)
Elements188418921900
From Indian public revenue2,607,9423,203,5733,587,919
Indian Rails4,544,4664,580,7974,693,795
Colonial and foreign public securities etc.13,233,27114,949,01718,394,380
Railways out of UK3,777,5928,013,83814,043,107
Foreign and colonial investments9,665,85323,981,54519,547,685
Total33,829,12454,728,77060,266,886

During mid-19th century in six European countries did agriculture employ less than a majority of the male population – and these six: Britain, France, Belgium, the Netherlands, Switzerland, Germany were the core of the original industrial capitalism. Interestingly, except Britain, in all other five countries agriculture provided employment to about 40 – 45% of total employment. While industrial capitalism became the dominant driver of the economy of those six European countries in mid-19th century, it will take another half a century for USA to move into the same club. (it needs to be pointed out that these industrially advanced countries transformed their agriculture by implementing technology-driven commercialized farming).

While USA burst into the world of exports with both agricultural produces and manufactured items, the west European powers like Britain and France witnessed a steady shift of economic fortunes from the agriculture to industrial manufacturing and service activities which was made possible through colonial imperialism. As P.J. Cain and A.G. Hopkins noted in British Imperialism 1688-2015, “the predominance of non-landed wealth over land was not apparent until the end of the century; but since the statistics are for fortunes declared at death it can usually be assumed that the greater part of this wealth had been accumulated a generation earlier and that 1880 is roughly the point at which land ceased to be the outstanding source of great wealth in Britain. Working on the same generational principle, it is also apparent that there was a strong surge in the growth of large fortunes made in manufacturing, if the food, drink and tobacco industries are included, but that these sectors did not make further relative gains during the next 30 years.”

Table A.1.6

Non-landed fortunes at death, 1860 to 1939 (people who owned 0.5 million British Pound or more)
Source of Wealth1860-791880-991900-191920-39
Wealth%Wealth%Wealth%Wealth%
Manufacturing and mining4435.78236.712434.215330.4
Food, drink, and tobacco32.43616.14813.29719.3
Finance4032.54721.17921.99017.9
Commerce2923.54721.110127.913827.4
Other75,6114.9102.8244.8
Total non-landed123—223—362—502—
(Land)(280)—(174)—(140)—(91)—

Hobson further explored in Imperialism on how British economic power actually fared poorly vis-à-vis other West European industrial powers in terms of exports while remaining parts of the world became the destination of its exports (Fig. 5.5). Needless to say that, British power found the new challenges from the industrial powers like Germany unpalatable, and that became one of the most formidable backgrounds of WW-I.

Table A.1.7

CountryBritish trade in manufacturing, 1913 (in million British Pound)
ImportsExports & Re-exportsNet exports
Germany( – ) 56.1( + ) 30.2( – ) 25.9
Belgium( – ) 17.4( + ) 9.0( – ) 8.4
France( – ) 29.6( + ) 19.2( – ) 10.4
Switzerland( – ) 9.2( + ) 4.4( – ) 4.8
Other Foreign Countries( – ) 58.0( + ) 196.0( + ) 138.0
British Empire( – ) 23.4( + ) 181.0( + ) 157.6
Total( – ) 193.7( + ) 439.8( + ) 246.1

A.2 Military Face of Imperialism in the Era of Industrial Capitalism:

The enmeshing of ‘big capital’ (primarily owned by capitalist industrialists-bankers, and to a lesser extent the landed aristocracy) and the ‘big state’ (primarily managed by a combination of monarchy, bureaucracy, bourgeois liberal democratic political parties), shaped by protectionism in trade and commerce ratcheted up geopolitical competition after 1870. The proximity of industry and the state became a crucial factor to establish imperialist colonies.

Barry Buzan and George Lawson (in the paper ‘The global transformation: the nineteenth century and the making of modern international relations’ published in International studies quarterly, 59/1) gave a categorical description how even very small European country/ society like Belgium could transform into a colonial power: “Although many important changes to military techniques, organization, and doctrine took place in the centuries preceding the 19th century (Parker 1988; Downing 1992), modernity served as a new foundation for achieving great power standing. Manpower still mattered, so that a small country such as Belgium could not become a great power no matter how industrialized it was (although it could still become an imperial power). But the level of wealth necessary to support great power standing could now come only from an industrial economy. Equally important was the way in which industrial economies supported a permanent rate of technological innovation. Firepower, range, accuracy, and mobility of existing weapons improved, and new types of weapons offering new military options began to appear … The transformation from wood and sail to steel and steam took just fifty years. Across this half-century there was: a 33-fold increase in weapons range from 600 yards (HMS Victory 1850) to 20,000 yards (HMS Dreadnought 1906); a 26-fold increase in weight of shot from 32 pounds solid shot to 850 pounds explosive armour-piercing shell; more than a doubling of speed from 8-9 knots (HMS Victory) to 21 knots (HMS Dreadnought); and a shift from all sail (HMS Victory) to steam turbines (HMS Dreadnought), permitting all-weather navigation for the first time.” A ruthless western wit put it, with a little oversimplification: “Whatever happens, we have got || the Maxim Gun, and they have not” (refer Hobsbawm, The Age of Empire). Mentioning the extent of military expenditure by European powers, J A Hobson collated the following table in ‘Imperialism’ to show how they were armed to the teeth:

Table A.2.1

CountryMilitary Expenditure in 1869-1870 (million L)Military Expenditure in 1897-1898 (million L)Military Expenditure in 1934 (million L)
Britain22.4440.09114.2
France23.5537.0090.0
Germany11.2132.8043.8
Austria9.1016.0446.4
Italy7.0713.51—

Hobson specifically mentioned in Imperialism how Britain spent exuberantly to achieve unparalleled military power during initial two decades of 20th century – in Britain, at the lowest, the contribution of military expenditure towards gross expenditure was 30.4% during 1920 CE, while highest 67.8% was registered during 1914 (at the start of WW-I):

Table A.2.2

YearBritain – Net National Expenditure during 1904 to 1920 (in million British Pound)Ratio of Military & Total Expr.
Military & MunitionsCivil Services & Cost of CollectionEducationGrant to Local AuthorityNational DebtTOTAL
190466.0511.0415.5712.1231.36136.1748.5%
190659.198.4216.9412.5335.93133.0544.4%
190859.0213.0417.369.8234.91134.1743.9%
191067.8326.5918.749.8829.24152.3144.5%
191272.4329.1219.539.6534.85165.5943.7%
1914361.15118.8320.039.5222.66532.2267.8%
19151001.33530.0320.289.7560.241561.4064.1%
19161414.28697.7720.099.89127.252269.3062.3%
19171767.55954.3124.709.73189.852946.1560.0%
19181977.75820.1125.719.68269.963103.2363.7%
1919959.19645.2042.6110.74332.031989.7948.2%
1920386.49462.1458.3110.78349.591267.3430.4%

The academia and media in the post-industrial era never seriously traced the root cause of the prevailing geopolitical tensions in the world – however, anybody with the basic understanding of the history of the modern era will unanimously point out to the era of colonial imperialism as the root cause of all evils plaguing the society. In 2013, in ‘The global transformation: the nineteenth century and the making of modern international relations‘ Buzan, Barry and Lawson, George pointed out the five features of international relations that attempted to trace its origin to the era of brutal colonial imperialism:

“a) the emergence and institutionalization of a core-periphery international order which was first established during the global transformation;

b) the ways in which global modernity has served to intensify inter-societal interactions, but also amplify differences between societies;

c) the closeness of the relationship between war, industrialization, rational state-building, and standards of civilization;

d) the central role played by ideologies of progress in legitimating policies ranging from scientific advances to coercive interventions; and

e) the centrality of dynamics of empire and resistance to the formation of contemporary international order.”

(B) Socialist Movements & Marxist Inspiration in the Post-1848 Europe till 1917 CE

Revolutions of 1848 CE began in Sicily and spread to France, Switzerland, Sweden, Denmark, Belgium, Ireland, Spain, German states, Italian states, the Netherlands, the Austrian Habsburg Empire, and Romanian Principalities. Failure followed by state repression became the norm. Liberal (bourgeois) democrats and nationalists joined at the hip, looked to 1848 as a democratic revolution with demands for more participative democracy and reorganization of Europe into nation-states. Non-Marxist Socialists and Marxist Communists demanded better living standards and economic rights for the working class – but they were neither united nor organized. There was no dearth of revolutionary ideas and impetus during 1848 uprisings across Europe, but the most important aspects were certainly absent – political ideology and political organisation.

‘Communists denounced 1848 as a betrayal of working-class ideals by a bourgeoisie indifferent to the legitimate demands of the proletariat’. And, the Communists were NOT off the mark! English Revolution initiated the process of removing the feudalist aristocracy from power (to be replaced by bourgeois elites), French revolution repeated the process, finally 1848 Revolution cleared the path for the bourgeois elites to wrest power (allying with the transformed feudalist aristocracy). Thus, the journey that commenced in 1640 CE to crush the monarchy as the epitome of European feudalism (by the agents of bourgeois class) ended around 1890 CE through establishment of liberal (read, capitalist) democracy where social-political-economic power would be bestowed upon a ‘political party’ (created and managed by the feudalist aristocracy, capitalist bourgeois, wealthy petty-bourgeois, and the Church elites). However, during this entire process spanning across two and a half centuries, 90% of the European population – the peasants, artisans, small shopkeepers, low-skilled industrial workers, jobless lower middle class people – didn’t have any platform, ideological and/or political to organize and rebel against their lords and exploiters! Not only the bourgeois reactionaries, but a sizeable section of the upper middle-class petty-bourgeois radicals took such confusing stand that ultimate failure of revolutions were foreseen by most of the rebel leaders half-way through the struggle.

Repressions were swift. Among the feudal monarchies, the Prussian Junkers, the House of Habsburg, and the House of Romanov were particularly repressive, working overtime to destroy any semblance of revolutionary and socialist ideas.

Astute readers of European history can’t help but notice that, the three modern society ‘phenomenon’ – ‘nationalism’ (quest to achieve ‘nation-states’), ‘democracy’ (quest to achieve universal suffrage), and ‘mass media’ (vehicle to form public opinion) – blossomed all over European landmass all of a sudden after 1848 CE. It was not that those concepts were entirely new (as a matter of fact, the concept of ‘democracy’ was about two and a half millennia old), but those concepts stole the thunder away from revolutionary enthusiasm. As if some invisible Director suddenly decided to introduce a new scene of the drama being staged on the socio-political arena of Europe. Through it, the common plebs of Europe were dragged out from the ‘dangerous’ association of revolutionary ideas – to control them ‘nationalism’, ‘democracy’ and ‘mass media’ were rapidly introduced which would actually prove to be the permanent infatuations (at least till now!). Meanwhile, the invisible drama Director – the Zionist-Capitalist oligarchy – merrily chugged along the track of colonial imperialism and industrial capitalism that militarily occupied the entire globe and siphoned off wealth from all possible sources. With the help of sheer luck, the economy took an upward turn and maintained the positive vibes till 1914 CE except some temporary setbacks – a part of the European plebs got miniscule share of the global-scale loot (in Hobsbawm’s words, “… the small but genuine improvement which the great capitalist expansion brought to a substantial part of the working classes in the third quarter of the nineteenth century. And the gap which separated them from the bourgeois world was wide – and unbridgeable.”) and hence rapidly the popular mood swung away from revolution against the oligarchy to collaboration with the Zionist-Capitalist oligarchy – exceptions were there in Paris and in Germany, but that only prove the general environment.

B.1 Spread of Marxism-inspired Movements in Europe and Anglo Colonies till 1914

After 1948, largest trade union of that era, the Chartist movement in Britain, friendly societies, syndicalist movements, anarchists, and other radical groups died out primarily because non-Marxist socialist thinkers turned out to be more philosophers than political activists during the eventful mid-19th century. Governments’ fear of the social problem resulted in ‘pressures for absolutism to become more ‘enlightened’ and for parliamentary systems to become more republican fostered demands for political representation (met by successive British Reform Acts), the provision of welfare (as in Bismarck’s ‘social insurance’ scheme), and mass education (which helped to increase rates of literacy and, in turn, fuel the rise of the mass media). Some of this was ‘decoration’ as old regimes sought to maintain their authority (refer Tombs 2000: 11). Marx-inspired Socialist movements took root in post-1848 Europe which can be traced more appropriately and thoroughly if we identify the movements, institutions and the political parties that were formed directly by Marx and Engels or formed by local figures with support from Marx and Engels.

  1. First International

In 1864 CE the International Association of Workingmen was formed in London under the guidance of Karl Marx. The ‘liberal-radical British trade-union Owenites’ and ‘left-wing French union militants’ and ‘old continental revolutionaries’ combined into one association couldn’t however co-exist for long. At its peak the First International reported having 8 million members. But, there was a wide and growing gulf between the ultimate goal of the First International, the communist revolution, and its immediate activities, coordination of the labour movements of the workers in different European countries. Thus, there were two principal contradictions within the First International:

(i) contradiction among the five different groups – Marx’s communist/socialist group, British liberal-radical Owenites, Proudhonist militant group, Blanquist proletarian revolutionaries, and Bakunin’s anarchist group;

(ii) ideological objectives of the association and day-to-day practice of labour movements

Unable to control the association, in 1872 CE Marx and Engels quietly transferred the First International’s headquarters to New York, where it was officially dissolved in 1876 CE. Founding the First International in London, in my opinion, was one of the major political mistakes in the life of Marx and Engels. Marx actually had a negative view of Blanquist proletarian revolutionaries in France, since he could never accept their underground mode of organization. It was one of the historic irony that Marx praised the Paris Commune (of 1871 CE) as a model of “proletarian revolution” (where Blanquists were in the forefront). Marx and Engels should have analysed beforehand that among all the groups of early socialists, and early communists, Blanquists would be the most promising partners for Marxist communist/ socialist groups to coordinate proletarian revolution across different European countries. Hence, instead of founding the headquarters of the International in London, Marx and Engels should have selected Paris.

  1. Marxist Socialist Movement in Germany

General German Workers’ Association founded in 1863 CE by Ferdinand Lassalle and Socialist Democratic Workers’ Party of Germany founded in1869 CE by Wilhelm Liebknecht and August Bebel joined together in 1875 CE to create Social Democratic Party of Germany, the first politically powerful Marxist socialist party in the world. Under the universal suffrage implemented by Bismarck, the socialist party became so popular (102,000 socialist vote in 1871 crossed 0.5 million in 1877) that Bismarck prohibited socialist political activity by law. Marx and Engels opined that elections in a democracy might provide a ‘peaceful power transfer’ to workers’ political party in Britain, and USA.

In one of the most profound and far-reaching turn of history, the mighty SPD took a path towards reformist ideology where nationalist and democratic tenets initially diluted the Marxist socialist ideology, and finally transformed SPD into an apologist of German colonialism-imperialism-capitalism at the onset of WW-I. (‘With two or three exceptions Socialist papers daily point out to the German workingman that a victory of the German arms is his victory. The capture of Maubeuge, the sinking of three English warships, or the fall of Antwerp aroused in the Social Democratic press the same feelings that otherwise are excited by the gain of a new election district or a victory in a wage dispute. We must not lose sight of the fact that the German labour press, the Party press as well as the trade union papers, is now a powerful mechanism that in place of the education of the people’s will for the class struggle has substituted the education of the people’s will for military victories’) It was foretold by Marx and Engels in a private circulation letter (First drafted by Engels) written in September 1879 to German SPD leadership – Bebel, Liebknecht, Fritzsche, Geiser, Hasenclever, Bracke – in response to an August 1879 article written by Karl Hochberg, Eduard Bernstein, and Carl August Schramm, entitled “Retrospect on the Socialist Movement in Germany” that advocated transforming the German Social-Democratic party from a revolutionary to a reformist platform — “It is inconceivable to us how the party can any longer tolerate in its midst the authors of that [Hochberg, Bernstein, Schramm] article. If the party leadership more or less falls into the hands of such people, the party will simply be emasculated and, with it, an end to the proletarian order.” Trotsky lamented (1923) in ‘The New Course’, “History offers us more than one case of degeneration of the “Old Guard.” Let us take the most recent and striking example: that of the leaders of the parties of the Second International. We know that Wilhelm Liebknecht, Bebel, Singer, Victor Adler, Kautsky, Bernstein, Lafargue, Guesde, and many others were the direct pupils of Marx and Engels. Yet we know that in the atmosphere of parliamentarism and under the influence of the automatic development of the party and the trade union apparatus, all these leaders turned, in whole or in part, to opportunism. We saw that, on the eve of the war, the formidable apparatus of the social democracy, covered with the authority of the old generation, had become the most powerful brake upon revolutionary progress.”

  1. Marxism-inspired Socialist Movements in Rest of Europe

Socialism became increasingly associated with newly formed trade unions, and later with newly formed political parties. Between 1871 and 1900 CE, about 30 parties representing as many European nationalities were formed that called themselves as social democrat, or socialist or labour party, some of which were:

(1) Portuguese in 1871

(2) Danish in 1876

(3) Czech in 1878

(4) French in 1879

(5) Spanish in 1879

(6) Dutch in 1881

(7) Belgian in 1885

(8) Norwegian in 1887

(9) Armenian in 1887

(10) Swiss in 1888

(11) Austrian in 1889

(12) Swedish in 1889

(13) Hungarian in 1890

(14) Bulgarian in 1891

(15) Italian in 1892

(16) Serbian in 1892

(17) Polish in 1893

(18) Romanian in 1893

(19) Independent Labour Party in UK was founded in 1893

(20) Croatian in 1894

(21) Slovenian in 1896

(22i) Russian in 1898

(23) Finnish in 1899

(24) Ukrainian in 1899

Hobsbawm mentioned, “The prospects of revolution, let alone socialist revolution, in the developed countries of Europe, were no longer a matter of practical politics and, … Marx discounted them.” For Marx and Engels, the main task became to help the union and political leaders of the European socialist and socialist-dominated parties to strengthen their respective parties’ (ideological and organisational) position in their own countries. But their efforts were in vain – not long after Marx and Engels departed, these parties took decisively ideologically reformist turn while being part of the Second International.

  1. Second International

The Second International was formed in July 1889 at two simultaneous Paris meetings in which 384 delegates from 20 countries representing about 300 labour and socialist organisations participated. Out of the three prominent proletarian political groups in the then Europe, anarcho-syndicalist group was excluded from the beginning (because of non-reconciliatory antagonistic relationship between Anarchists and Marxists), while the other two factions – revolutionary Marxists and non-revolutionary reformist Possibilists – somehow managed to co-exist in the International till 1914 CE. The Possibilist faction of the Federation of the Socialist Workers of France was supported by the British Social Democratic Federation, and the Marxist faction of the Federation of the Socialist Workers of France was supported by the German SPD, the British Socialist League, and most of the other European delegates.

According to Moira Donald, for the nine congresses, France contributed 26%, Germany 16%, UK 16%, Belgium 9%, Switzerland 5%, Austria 4.5%, Russia 3.5%, Italy/ Sweden/ Bohemia/ Poland/ Denmark/ the Netherlands almost 3% of the delegates. Among the Second International’s far-reaching actions were its 1889 declaration of 1st May as the International Workers’ Day, and the international campaign for the eight-hour working day.

But the Second International finally turned into a den of reactionary apologists for militarism and imperialism. As Wikipedia noted, in July 1914, [..they..] declared “that it shall be the duty of the workers of all nations concerned not only to continue but to further intensify their demonstrations against the war, for peace, and for the settlement of the Austro-Serbian conflict by international arbitration.”’ But, the factional rift in 1889 CE developed into an unbridgeable gulf by 1914 CE – all the parties / unions who subscribed to the revolutionary Marxist concepts in 1889 were found to had transformed into reformist non-Marxist socialist nationalist outfits, while Russian social democrats and break-away group of German socialist democrats were found to defend revolutionary Marxism. The Zionist-Capitalist oligarchy who were the main power behind every ruling party in Europe always camouflaged its imperialist colonialist objectives of expanding its territory to find raw materials, get markets for its produces, and indulge in highly profitable business of selling military machinery, behind high-sounding sloganeering like ‘defending our nation against aggressors’ and ‘defending democracy against autocracy’ etc. while rushing ahead in WW-I. Due to treacherous upper level leadership of social democrat parties, the Zionist-Capitalist oligarchy got full support from the established social democrat parties of belligerent nations. As a result, immediately after the outbreak of WW-I, German SPD and most of the major socialist parties in belligerent nations had issued statements in full support of war. Only Russian social democrats and Romanian social democrats proved to remain truly Marxist. And, few leaders like Lenin and Trotsky in Russia, and Karl Liebknecht and Rosa Luxemburg in Germany raised their voice of Marxist reasoning and internationalist proletarianism against the imperialists’ war WW-I.

The last congress of the Second International was held at Geneva in July 1920. The WW-I split the Second International into three factions:

  1. the pro-war social democratic parties in the Central Powers
  2. the pro-war parties of the Triple Entente
  3. the anti-war parties, including the pacifist parties in neutral countries and revolutionary socialist parties

After the war, three international associations were created after realignment of ideological factions:

  1. The Communist International founded in March 1919 in Moscow led by Lenin, Trotsky and Zinoviev [refer link 🡪 https://en.wikipedia.org/wiki/Communist_International ] — the communist parties of Russia (Bolsheviks), Germany, German Austria, Hungary, Poland, Finland, Ukraine, Latvia, Lithuania and Byelorussia, Estonia, Armenia, the Volga German region; the Swedish Social Democratic Left Party (the opposition), Swiss Social Democratic Party (the opposition), Balkan Revolutionary Social Democratic Federation; Norwegian Labour Party, Zimmerwald Left Wing of France; the Czech, Bulgarian, Yugoslav, British, French and Swiss Communist Groups; the Dutch Social-Democratic Group; Socialist Propaganda League and the Socialist Labour Party of America; Socialist Workers’ Party of China; Korean Workers’ Union were the main participants
  2. The International Working Union of Socialist Parties founded in February 1921 in Vienna led by Friedrich Adler, Otto Bauer, and Julius Martov – the Independent Social Democratic Party of Germany (USPD), the French Section of the Workers’ International (SFIO), the Independent Labour Party (ILP) of Britain, the Social Democratic Party of Switzerland (SPS), the Social Democratic Party of Austria (SPÖ), and the Federation of Romanian Socialist Parties (FPSR, created by splinter groups of the Socialist Party of Romania), the Spanish Socialist Workers’ Party, the Maximalist faction of the Italian Socialist Party (PSI) were the significant constituents of this what was also called as Vienna International
  3. The Labour and Socialist International founded in 1923 in Hamburg led by Karl Kautsky, Eduard Bernstein, Rudolf Hilferding (of the Social Democratic Party of Germany), Arthur Henderson, Sidney Webb (of the British Labour Party); Friedrich Adler, Otto Bauer, Karl Renner (of Social Democratic Workers Party of Austria),as a merger between the Vienna International and the former Second International [refer link 🡪 https://en.wikipedia.org/wiki/Labour_and_Socialist_International ] — Social Democratic Party of Germany, Armenian Revolutionary Federation, Social Democratic Workers Party of Austria, Czechoslovak Social Democratic Workers Party (in Austria), Belgian Labour Party, British Guiana Labour Union, Bulgarian Social Democratic Workers Party (Broad Socialists), Social Democratic Party of China, Czechoslovak Social Democratic Workers Party, German Social Democratic Workers Party (in Czechoslovakia), Hungarian-German Social Democratic Party (in Czechoslovakia), Polish Socialist Workers Party (in Czechoslovakia), Social Democratic Federation of Denmark, Estonian Socialist Workers Party, Social Democratic Party of Finland, French Section of the Workers’ International, Social Democratic Labour Party of Georgia, Labour Party of Britain, Independent Labour Party (ILP) of Britain, Socialist Party of Greece, Hungarian Social Democratic Party, Világosság Socialist Emigrant Group, Social Democratic Party of Iceland, United Socialist Party of Italian Workers, Italian Socialist Party, Latvian Social Democratic Workers Party, Lithuanian Social Democratic Party, Workers Party of Luxembourg, Social Democratic Workers Party of the Netherlands, Social Democratic Labour Party of Norway, Norwegian Labour Party, Polish Socialist Party, German Socialist Labour Party of Poland, Independent Socialist Workers Party of Poland, General Jewish Labour Bund in Poland, Ukrainian Socialist-Radical Party (in Poland), Portuguese Socialist Party, Romanian Social Democratic Party, Russian Social Democratic Labour Party (Mensheviks), Socialist Revolutionary Party of Russia, Spanish Socialist Workers’ Party, Social Democratic Labour Party of Sweden, Social Democratic Party of Switzerland, Socialist Party of Yugoslavia, Independent Socialist Party of Turkey, Ukrainian Social Democratic Labour Party, Socialist Party of Uruguay, Socialist Party of Argentina, Socialist Party of America were the significant constituents

B.2 Failure of Marxism-inspired Movements in Europe and Anglo Colonies till 1914

To mention that any other socialist/similar movement also failed in Europe would be fairly unnecessary but for the fact that ALL of those socialists (followers of leaders like Owen, Fourier, Saint-Simon and Condorcet), and anarchists (followers of leaders like Proudhon, and Bakunin) actually got completely marginalised through self-inflicted damages (like lack of robust political objectives and planning for execution) by 1900 CE.

As Eric Hobsbawm wrote in ‘Age Of Revolution 1789 -1848’ about early (non-Marxist) Socialists, “Indeed, the ‘utopian’ socialists (the Saint-Simonians, Owen, Fourier and the rest) tended to be so firmly convinced that the truth had only to be proclaimed to be instantly adopted by all men of education and sense, that initially they confined their efforts to realize socialism to a propaganda addressed in the first plate to the influential classes — the workers, though they would undoubtedly benefit, were unfortunately an ignorant and backward group — and to the construction of, as it were, pilot plants of socialism—communist colonies and co-operative enterprises, mostly situated in the open spaces of America, where no traditions of historic backwardness stood in the way of men’s advance. Owen’s New Harmony was in Indiana, the USA contained some thirty-four imported or home-grown Fourieristic ‘Phalanxes’, and numerous colonies inspired by the Christian communist Cabet and others. The Saint-Simonians, less given to communal experiments, never ceased their search for an enlightened despot who might carry out their proposals, and for some time believed they had found him in the improbable figure of Mohammed AIi, the ruler of Egypt. … The extraordinary sect of the Saint-Simonians, equally suspended between the advocacy of socialism and of industrial development by investment bankers and engineers, temporarily gave him their collective aid and prepared his plans of economic development.” Hobsbawm further mentioned, “In France men who were to be the captains of high finance and heavy industry (the Saint-Simonians) were in the 1830s still undecided as to whether socialism or capitalism was, the best way of achieving the triumph of the industrial society. In the USA men like Horace Greeley, who have become immortal as the prophets of individualist expansion (‘Go west, young man’ is his phrase), were in the 1840s adherents of Utopian socialism, founding and expounding the merits of Fourierist ‘Phalanxes’”.

Theoretically and philosophically Marx and Engels provided documented inputs, which, even if were incomplete, nevertheless adequate to create an everlasting hope for a new dawn in human civilization. Having said that, I must point out towards the five key factors that frustrated the entire political processes in Europe between 1860 to 1914 CE that were being undertaken by the Marxism-inspired trade unions and socialist parties. Because of that the socialist movements in industrially advanced west Europe didn’t taste any success to seize state political power on their own.

1) Organizational factor – Appearance of “Labour Aristocracy”

Frederick Engels first mentioned about the “labour aristocracy” in a number of letters to Marx (late 1850s through the late 1880s). Engels argued that the British workers who established trade unions in factory – skilled workers in the iron, steel, machinery industries, cotton textiles – constituted a privileged and “bourgeoisified” layer of the working class, that can be termed as a “labour aristocracy.” British capital’s industrial and financial monopoly (discussed in the section A) permitted the employers to provide a better remuneration to the leaders of workers. Engels found the resulting privilege, as the material basis of the growing conservatism of the British labour movement (unlike Chartist movement).

Lenin expected that the European socialist leaders would oppose their ruling classes’ militarism with labour strikes and disruption. But he noted the triumph of opportunism in the socialist labour movements. In his article ‘The Collapse of the Second International’, Lenin argued: “The period of imperialism is the period in which the distribution of the world among the ‘great’ and privileged nations, by whom all other nations are oppressed, is completed. Scraps of the booty enjoyed by the privileged as a result of this oppression undoubtedly fall to the lot of certain sections of the petty-bourgeoisie and the aristocracy and bureaucracy of the working class.” This segment represents “an infinitesimal minority of the proletariat and the working masses”. While writing the preface to the French and German Editions of ‘Imperialism, the Highest Stage of Capitalism’ Lenin mentioned categorically “Obviously, out of such enormous super profits (since they are obtained over and above the profits which capitalists squeeze out of the workers of the country) it is possible to bribe their labour leaders and an upper stratum of the labour aristocracy. And the capitalists of the ‘advanced’ countries do bribe them: they bribe them in a thousand different ways, direct and indirect, overt and covert.”. In the most scathing appropriate and accurate analysis Lenin laid bare how the labour aristocracy among the socialists turned into stooges of the then Zionist-Capitalist oligarchy, “This stratum of bourgeoisified workers or ‘labour aristocracy,’ who have become completely petty-bourgeois in their mode of life, in the amount of their earnings, and in their point of view, serve as the main support of the Second International and, in our day, the principal social (not military) support of the bourgeoisie. They are the real agents of the bourgeoisie in the labour movement, the labour lieutenants of the capitalist class, the real carriers of reformism and chauvinism. In the civil war between the proletariat and the bourgeoisie they inevitably, and in no small numbers. take the side of the bourgeoisie, the ‘Versaillese’ against the ‘Communards’.”

The theory of the labour aristocracy was/is an important explanation of the tendency of labour unions and socialist parties towards reformism and conservatism in European countries. While the Communist Parties distanced themselves from the notion of the labour aristocracy since 1914, in course of time some pro-reformist factions also grew within the Communist Parties. During the post-WW-II period, this has been analysed again and again. In an incisive article with a mischievous headline ‘The Myth of the Labour Aristocracy – Part 2’, Charles Post (first published in ‘Against the Current’, No. 124, September–October 2006) deconstructed the background and architecture of labour aristocracy:

“The working class cannot be, as a whole, permanently active in the class struggle. The entire working class cannot consistently engage in strikes, demonstrations and other forms of political activity because this class is separated from effective possession of the means of production, and its members compelled to sell their labour power to capital in order to survive. They have to go to work!

“Put simply, most workers, most of the time are engaged in the individual struggle to sell their capacity to work and secure the reproduction of themselves and their families – not the collective struggle against the employers and the state. The “actually existing” working class can only engage in mass struggles as a class in extraordinary, revolutionary or pre-revolutionary situations. Because of the structural position of wage labour under capitalism, these must be of short duration. Most often, different segments of the working class become active in the struggle against capital at different times.

“In the wake of successful mass struggles, only a minority of the workers remain consistently active. Most of this workers’ vanguard – those who “even during a lull in the struggle…do[es] not abandon the front lines of the class struggle but continues the war, so to speak, ’by other means’” – attempts to preserve and transmit the traditions of mass struggle in the workplace or the community. However, a sector within this active minority, together with intellectuals who have access to cultural skills from which the bulk of the working class is excluded, must take on responsibility for administering the unions or political parties created by periodic upsurges of mass activity.

“This layer of fulltime officials – the bureaucracy of the labour movement – is the social foundation for “unconditional” reformist practice and ideology in the labour movement. Those workers who become officials of the unions and political parties begin to experience conditions of life very different from those who remain in the workplace.

“The new officials find themselves freed from the daily humiliations of the capitalist labour process. They are no longer subject to either deskilled and alienated labour or the petty despotism of supervisors. Able to set their own hours, plan and direct their own activities, and devote the bulk of their waking hours to “fighting for the workers,” the officials seek to consolidate these privileges.

“As the unions gain a place in capitalist society, the union officials strengthen their role as negotiators of the workers’ subordination to capital in the labour-process. In defence of their social position, the labour bureaucracy excludes rank and file activists in the unions and parties from any real decision-making power… The preservation of the apparatus of the mass union or party, as an end itself, becomes the main objective of the labour bureaucracy. The labour bureaucrats seek to contain working-class militancy within boundaries that do not threaten the continued existence of the institutions which are the basis of the officials’ unique life-style.

2) Organizational factor – Inadequate Support Base

In Europe during the 19th century Britain (the UK) was the most industrially advanced country, hence considering Britain will not be an appropriate approach for discussion – we also avoid non-industrialised countries of east Europe for the same reason. Hobsbawm in ‘Age of Empire’, “Though with a few special exceptions towns were more numerous and played a more significant role in the economies of the first world, the ‘developed’ world remained surprisingly agricultural. In only six European countries did agriculture employ less than a majority – generally a large majority – of the male population: but these six were, characteristically, the core of the older capitalist development – Belgium, Britain, France, Germany, the Netherlands, Switzerland. However, only in Britain was agriculture the occupation of a smallish minority of about one-sixth; elsewhere it employed between 50 and 45 per cent.” Let me consider France as an archetypal case, and draw the readers’ attention to the following table B.2.1 that provides economy sector-wise percentage of employment in France between 1806 to 1931 as available in ‘French Occupational Structure, Industrialisation, and Economic Growth, 1695 to The Present’ authored by Alexis Litvine [refer link 🡪 https://www.campop.geog.cam.ac.uk/research/occupations/outputs/preliminary/france_1695_present_al.pdf ]:

Table B.2.1

Economy SectorYear-wise Percentage of Occupation in France
180618311851188119111931
Primary66.762.558.648.539.032.0
Secondary19.322.124.428.432.736.5
Tertiary13.815.517.023.228.331.5
Active Population * (million)———13.2419.71 (1906)—
Total Population ** (million)29.1032.5735.7837.6239.6041.52

Note:

* marked data sourced from ‘Classifying Individuals by Their Participation in the Production System: The ‘Active’ and ‘Inactive’ Populations in Late 19th-Century France’ by Agnès Hirsch, Translated by Paul Reeve in ‘Population’ Volume 77, Issue 1, January 2022 [refer link 🡪 https://www.cairn-int.info/journal-population-2022-1-page-113.htm ]

** marked data sourced from Wikipedia [refer link 🡪 https://en.wikipedia.org/wiki/Demographics_of_France ]

Marxism not only identified the working-class people i.e. the proletarian class as the most exploited one, but more importantly Marx and Engels assigned the leading role of social transformation to the proletarian class (who should lead the other classes into a socialist/communist class-less society in the long run). As an astute observer noted, “In the decades leading up to the First World War, socialists influenced by Marx brought to workers in towns, villages, and urban precincts a new “single identity: that of ‘the proletarian’” along with a conveyance for acting upon that identity: the party or the trade union.” Hence, the socialist parties in Europe who used to call themselves as socialist / social democrat / labour party, officially represented the group of working people who were working in the secondary economic sector – however, in absolute numbers, secondary sector represented the minority portion of the total employed population. Whether France was still having Agriculture (i.e. primary) as dominant industry sector in 1831 or Industry (i.e. secondary and tertiary) fully dominated the economy as in 1931, France always had the manufacturing (i.e. secondary) employing less number of people than primary and tertiary combined. Further, if the ratio of secondary occupation and total population is considered, which in my opinion is the MOST IMPORTANT ratio – as per the information given in table B.2.1, in 1881 CE, in France people belonging to secondary occupation formed only 10% of the total population. In contrast, if primary and secondary occupation could join hands (meaning 77% of the working active people), in 1881 France, it would had meant 27% of the total population. (Any guess, what would had happened in Paris Commune?)

Most of the European leaders and activists of Marxist/socialist movements were drawn from secondary sector of economy with a few of them from the tertiary sector. It was not that the Marxists/socialists were unaware of the problem. In reality, ‘how the peasants can be pulled into the socialist political movement’ was a question that every top ideological / philosophical leaders had pondered with at some point of time. Alas, no one built a suitable organisational structure to get the entire primary classes of toiling mass on board!

3) Political Economy factor – Establishment of a New World-System Centred on USA

The imperialist colonies and empires built by the UK, France, the Netherlands, Germany witnessed substantial economic growth after 1850 CE that catapulted the industrial capitalism into the forefront of the global trade and commerce. Soon USA joined the fray and replaced the UK as the top most economy in terms of GDP output and technology base. The following tables provide key statistics on total population, immigrated population, total labour force, key sector-wise break-up of employment etc. of USA during 1830 to 1930 CE.

During the 17th century, approximately 400,000 English people migrated to the central part of North America continent, which came to be known as USA. They comprised 83.5% of the white population at the time of the first census in USA in 1790 CE (out of a total of 3,929,214). 400,000–450,000 of the 18th century migrants were Scots, Scots-Irish from Ulster, Germans, Swiss, French Huguenots – they made up about 16% of the white population at 1790 census. As Wikipedia mentioned [refer link 🡪 https://en.wikipedia.org/wiki/Immigration_to_the_United_States ], “The National Origins Formula was a unique computation which attempted to measure the total contributions of “blood” from each national origin as a share of the total stock of White Americans in 1920, counting immigrants, children of immigrants, and the grandchildren of immigrants (and later generations), in addition to estimating the colonial stock population descended from the population who had immigrated in the colonial period and were enumerated in the 1790 census.” Following this concept, the population that each national origin had contributed to the total stock of the USA population in 1920 CE has been presented below in table B.2.2:

Table: B.2.2

Country of originTotalColonial stockPostcolonial stock
TotalImmigrantsChildren ofGrandchildren of
#%#%#%#%#%#%
Austria843,0510.8914,1100.03828,9511.55305,6572.23414,7942.16108,5000.53
Belgium778,3280.82602,3001.46176,0280.3362,6860.4662,0420.3251,3000.25
Czechoslo1,715,1281.8154,7000.131,660,4283.10559,8954.08903,9334.71196,6000.95
Denmark704,7830.7493,2000.23611,5831.14189,9341.39277,1491.44144,5000.70
Finland339,4360.364,3000.01335,1360.63149,8241.09146,6120.7638,7000.19
France1,841,6891.94767,1001.861,074,5892.01155,0191.13325,2701.69594,3002.88
Germany15,488,61516.333,036,8007.3612,451,81523.261,672,37512.204,051,24021.116,728,20032.61
Greece182,9360.19−–182,9360.34135,1460.9946,8900.249000.00
Hungary518,7500.55−–518,7500.97318,9772.33183,7730.9616,0000.08
Ireland10,653,33411.241,821,5004.418,831,83416.50820,9705.992,097,66410.935,913,20028.66
Italy3,462,2713.65−–3,462,2716.471,612,28111.761,671,4908.71178,5000.87
Latvia140,7770.15−–140,7770.2669,2770.5156,0000.2915,5000.08
Lithuania230,4450.24−–230,4450.43117,0000.8588,6450.4624,8000.12
Netherlans1,881,3591.981,366,8003.31514,5590.96133,4780.97205,3811.07175,7000.85
Norway1,418,5921.5075,2000.181,343,3922.51363,8622.65597,1303.11382,4001.85
Poland3,892,7964.118,6000.023,884,1967.261,814,42613.231,779,5709.27290,2001.41
Portugal262,8040.2823,7000.06239,1040.45104,0880.76105,4160.5529,6000.14
Romania175,6970.19−–175,6970.3388,9420.6583,7550.443,0000.02
Russia1,660,9541.754,3000.011,656,6543.09767,3245.60762,1303.97127,2000.62
Spain150,2580.1638,4000.09111,8580.2150,0270.3624,5310.1337,3000.18
Sweden1,977,2342.09217,1000.531,760,1343.29625,5804.56774,8544.04359,7001.74
Switzerlnd1,018,7061.07388,9000.94629,8061.18118,6590.87203,5471.06307,6001.49
Turkey134,7560.14−–134,7560.25102,6690.7531,4870.166000.00
UK39,216,33341.3631,803,90077.027,412,43313.851,365,3149.962,308,41912.033,738,70018.12
Yugoslavia504,2030.53−–504,2030.94220,6681.61265,7351.3817,8000.09
Other Countries170,8680.183,5000.01167,3680.3171,5530.5293,8150.492,0000.01
All Quota Countries89,506,558100.040,324,40045.0549,182,15854.9512,071,28213.4917,620,67619.6919,490,20021.78
Non-quota Countries5,314,3575.60964,1702.344,350,1878.131,641,47211.971,569,6968.181,139,0195.52
USA Total94,820,915100.041,288,57043.5453,532,34556.4613,712,75414.4619,190,37220.2420,629,21921.76

Starting from mid-1840s USA experienced very high degree of population growth that continued till mid-1930s. As a result of which, during the 1920 census it was concluded that the post-colonial era migration (between 1790 and 1920 CE) resulted in about 56% of the population in 192. Now, the data related to the labour force and industry sector-wise employment has been presented below in table B.2.3 from ‘Output, Employment, and Productivity in the United States after 1800’ edited by Dorothy S. Brady [refer link 🡪 http://www.nber.org/books/brad66-1 ]:

Table: B.2.3

YearTotal Population (million)*1st Gen. Immigrant (million)**Labour-force (million)Industrial sectors of employment (in millions)
AgriculMiningConstrManufTradeRailwyTeacherDomestc Services
183012.7850.114.202.960.02————0.030.16
18405.663.570.030.290.500.35—0.040.24
185023.1912.248.254.520.100.411.200.530.020.080.35
186011.115.880.170.521.530.890.080.110.60
187012.936.790.180.782.471.310.160.171.00
188050.1556.6817.398.920.280.903.291.930.410.231.13
189023.329.960.441.514.392.960.750.351.58
190075.99410.3429.0711.680.631.665.893.971.040.431.80
191037.4811.771.071.958.335.321.850.592.09
192041.6110.791.181.2311.195.842.230.751.66
1930122.77514.2048.8310.561.011.999.888.121.661.042.27
194056.299.570.921.8711.319.331.161.082.30
195065.477.870.903.0315.6512.151.371.271.99

Note: * and ** marked data has been provided from Wikipedia.

A couple of points need to be noted from tables B.2.2 and B.2.3:

  1. A total population of 12.78 million (0.8% from 1st generation immigrants) and labour force of 4.20 million in 1830 CE jumped to a total population of 50.15 million (13.3% from 1st generation immigrants) and labour force of 17.39 million in 1880 CE showed that the immigration from Europe contributed immensely to 400% increase in the population and labour force of USA in just 50 years
  2. Whether colonial-period settlement before 1790, or post-colonial immigration after 1790, Europeans flocked to USA as a result of which 94% of the 94.82 million population of USA in 1920 belonged to the European ethnicities
  3. In 1830, 70% of the workforce belonged to agriculture occupation, while only 26% of the labour force were engaged in agriculture during 1920; it has been proved in research on 19th century work-force in USA, that the descendants of the colonial-period settlers were mostly reluctant to join the secondary economic sector as proletarian and semi-proletarian workforce – the economic transformation of the USA from an agriculture economy in 1830 to world’s leading industrial state in 1920 happened largely due to the emigration from European states who left Europe to settle in USA in droves!

People from all over Europe who were unemployed, destitute, low-skilled workers, skilled workers with low-pay jobs made a beeline for migrating to USA (and to an extent to other Anglo colonies like South Africa, Australia, Canada), where industrial capitalism firmly spread its wings and a huge workforce got employed at somewhat decent salary/ wages. Even if Marx himself was actively organising socialist trade unions and/or revolutionary communism in USA, it never took roots there because of ‘labour aristocracy’ and conspiratorial murders of organisers. More or less, the largest section of USA urban population was from the working class and they found themselves as a privileged class (when compared to most of the urban Europe of that era except Britain, the Netherlands, and France). The not-so-secret charm of finding a better lifestyle in the ‘new world’ for the European proletarians, semi-proletarians, and petty bourgeois families proved to be more compelling than joining in the struggle against bourgeois Zionist-Capitalists in Europe!

In Imperialism, Hobson provided detail data to show how USA became a dominant country (which had only few colonial ventures unlike most of the west European powers) in the world export within four decades, with a very rapid rate of growth (even though exports net of imports would be a more robust parameter, in case of USA with abundant natural resources it can be safely assumed that imports were at very low level, hence exports as the parameter is appropriate):

Table B.2.4

YearExports of USA (million dollar)
TotalCrude (raw) materialsCrude (raw) foodstuffsManufactured foodstuffsSemi ManufacturesFinished ManufacturesRatio of Raw Material / Total Exports
1880663.6213.9158.8161.930.198.756.1%
1885774.6261.6162.7197.437.0115.754.7%
1890725.6276.7108.7181.540.0118.753.1%
1895876.3295.0150.8238.555.3136.450.8%
19001136.0296.6214.7272.7109.5242.345.0%
19051427.0432.0173.9316.2161.2343.542.4%
19101750.9554.7155.8317.3249.1473.840.5%
19152716.1591.2506.9454.5355.8807.440.4%
19208080.41882.5917.91116.6958.43204.834.6%

We should take a pause and ask a question: since 1495 CE Spain and Portugal has been brutally expanding their empire in North and South America that in course of time created a new variant of capitalism – plantation capitalism – apart from the ubiquitous mercantile capitalism, but in the 16th, 17th, 18th, and 19th century the lands which we know as Brazil, Argentina, Peru, or Colombia no USA type state sprang up which will challenge the European industrially advanced states and within 50 years surpass all of them in economic output and technology! So, was there any special traits in the Europeans who entered the USA as immigrants? Was there a magic wand with the USA ruling party leadership? Answer is resoundingly, NO. It was the Zionist-Capitalist oligarchy based in west Europe who understood after 1848 that the European masses can actually turn against the oppressors and exploiters someday in future, and made two simultaneous moves – firstly, corrupt the leadership of socialist unions and parties, and co-opt them so that they became lackeys instead of fighters for proletarians, secondly, create a new ‘core’ for capitalist economy where finance-trade-manufacturing all will grow unhindered in a new country that has large landmass, huge natural resources, free from socialist ideological past, and central banking controlled by the Zionist-capitalist oligarchy. History of 1914 to 1920 proved that both these moves ended in complete success both across Europe, and the USA!

It was said that ‘Imperialism has the tendency to create privileged sections among the workers, and to detach them from the broad masses of the proletariat’ – it was true with those European proletariats who moved to USA. But even those European masses who migrated to USA and their descendants realised much later that they were simply pawns in the game of political economy (of the Zionist-capitalist oligarchy) – history didn’t record their silent reactions on the ‘great depression’ that swept the USA economy during 1929 for at least half a decade. As it happened, during an economic growth phase, industry workers in the secondary and tertiary economic sectors employed by the large monopoly/ duopoly/ oligopoly business houses (the bourgeois owners of these business entities started controlling the state governments, political parties, media in order to establish firm ownership of the raw materials, energy, and markets in foreign lands) would be paid much better compared to the highly competitive medium/ small organisations – so the workers silently join the reformist trade union leaders (labour aristocracy). During economic downturn those workers would be worse off, but still better than the fiercely competitive medium & small sector workers. Only during closure of a factory, those employees would stare at a ruinous future – however, at that point of time those same opportunists corrupt labour leaders turn their follower’s attention towards a few ‘bogeyman’ of foreign (country) enemy and different ethnic or religious communities of same society and suggest that those bogeyman’ were responsible for the economic downturn. This privileged class of workers in Europe and USA (before 1914 CE there were hardly any modern industrial facility in Africa, Asia, and South America continents) simply never understood their potential as vanguard of revolutionary change in the way human civilization functions – instead many in Germany, Italy, USA became ultra-nationalist and racist. Moreover, the religious-minded workers would compare their lifestyle with the unemployed people and low-paid workers of Europe (their original home) and conclude that, God has given them a better lifestyle! The mass of workers seldom understood Marxist concepts and tenets let alone philosophy!

There were a few other aspects of the then Europe-centred global economy which favoured the Zionist-Capitalist programmes immensely:

(1) Discovery gold deposits in California and Australia that encouraged the expansion of credit. As noted by Hobsbawm, “within seven years the world gold supply increased between six and sevenfold, and the amount of gold coinage issued by Britain, France, and the United States multiplied from an annual average of 4.9 million pounds in 1848-49 to one of 28.1 million in each year between 1850 and 1856. Joining the UK as the Core — Sudden upward turn in economy & supply of credit after 1848

(2) In 30 years railways not only became the most stable and fast medium of transportation, but it opened a new area of business in capital sector. Between 1845 when Britain exported 1.29 million tons of rail iron and steel and 4.9 thousand tons of rail machinery and 1875 when the corresponding figures were 4.04 and 44.1, Britain achieved a mind-blowing growth of 3 times and 9 times!

(3) In two decades, between 1850 and 1870 world trade increased by 260%. It was ‘immaterial’ that the Chinese empire didn’t want opium in their country, but British Zionist-Capitalists earned astronomical profits from opium trade (exported from British India to Qing China)! It was a boom time for British and French foreign investments.

4) Political factor – Conspiracy by the Zionist-capitalist Oligarchy Against Marxists

With the successive publications of books/pamphlets on communism/socialism and active participation in 1848 CE revolutions by Marx and Engels, the Zionist-Capitalist oligarchy of west Europe identified both of them as the long-term intellectual threat to their wealth-power-prestige. The publication of Marx’s ‘On the Jewish Question’ in February, 1844, the publication of Engels’ ‘The Condition of the Working Class in England’ in 1845, the publication of Marx’s ‘Wage Labour and Capital’ in April, 1849, and finally the publication of ‘The Manifesto of the Communist Party’ in February, 1848 convinced the new bourgeois class (mostly Jews, crypto-Jews, and Anglos) as well as the old feudal aristocrats (mostly Anglo-Saxon, French, German) that their future plan of JOINTLY maintaining the political power and controlling the economy and trade-commerce would be in jeopardy unless the new movement of Marxist socialist/communist groups can be discredited and nullified. The members of the oligarchy (joined through common aspirations) found out that the ‘new addition’ (followers of Marx-Engels) to the list of existing (early) socialist groups was a tough nut to crack – the communists led by two scholar-activists expressed deep empathy with the toiling masses which was tempered with rationality, they proposed an ideology that was rooted in the history-sociology-economics of Europe, they built the organizations and created support base that were reinforced by flawless logic! The Zionist-Capitalist oligarchy noted that, the socialist and communist leaders before Marx and Engels appeared on the horizon, would either approach the oligarchs requesting for funds/lands for setting up cooperative communities or would lead movements for more wage or would petition for voting rights or would hatch conspiracy to overthrow a government, none of which had potential to become long-term existential threat. Marxist communists (realised as existential threat to capitalist system and its beneficiary, the oligarchy), because of their robust ideological basis backed by facts, reason and logic, soon became the target for obliteration through disinformation, hate, and violence campaigns.

Bourgeois capitalists, feudal aristocrats, and bankers influenced the governments in countries across Europe so that they put up maximum resistance to the bourgeoning movements led by Marxist communists, in every possible way – detention by department of internal security, blind judiciary denying natural justice, summary execution etc. all types of state-sponsored repressions. The Zionist-Capitalist ruling oligarchy deployed a more sinister programme to destroy Marxist communist movements. They recruited two outstanding intellectual-activists (who were scholars of Marxism, socialism) as agents within the Marxist communist/socialist organisations at an early stage when the socialist movement was on the upswing, who would work for creating confusion within the ranks and derail the movement. The third element of the troika was not a human being, but a British organisation called Fabian Society.

Eduard Bernstein – [refer link 🡪 https://en.wikipedia.org/wiki/Eduard_Bernstein ] Bernstein was a former Rothschild banker and private secretary to “gold uncle” Karl Höchberg, a wealthy donor to the German SPD. It seems Bernstein was the first recruit of the Zionist-Capitalist oligarchy much before the death of Marx in 1883. From 1896 to 1898 Bernstein wrote a series of articles “Problems of Socialism” in the SPD party theoretical journal, Der Neue Zeit, suggesting that Marxism needed a ‘revision’, he wanted to purge it of what he considered to be its dogmatic errors. He laid out his ideas in Voraussetzungen des Sozialismus and die Aufgaben der Sozialdemokratie in 1899 which was partially translated into English as Evolutionary Socialism and published in 1909.

Karl Kautsky – [refer link 🡪 https://en.wikipedia.org/wiki/Karl_Kautsky ] It appears that Kautsky was recruited following the death of Engels’ in 1895. One of the close associates of Engels, Kautsky actually blocked publication of some of the works of Engels after his death. He wrote in 1887 ‘The Economic Doctrines of Karl Marx’ in which Marxism was presented as an economic theory. Kautsky reduced the Marxist historical dialectic to a sort of (social) evolutionism. He rejected the idea of an alliance between the working class and the peasantry. From 1905 Kautsky turned into an avowed opportunist reformist.

Berstein-Kautsky duo went on to become the main conspirators against the revolutionary wing of the German communists (which ended in killing of the revolutionary leaders). During the Socialist revolution of 1918, Bernstein’s disciple Friedrich Ebert became Germany’s new Chancellor and later President. Bernstein was appointed Under-Secretary of State for the Treasury, while his collaborator Kautsky was appointed to the Foreign Office.

Fabian Society – [refer link 🡪 https://en.wikipedia.org/wiki/Fabian_Society ] It was founded in January 1884 in London as an offshoot of a society founded a year earlier, called ‘The Fellowship of the New Life’. Most prominent contemporary figures like Sidney Webb, Beatrice Webb, Arthur Henderson, George Bernard Shaw, H. G. Wells, Annie Besant, Graham Wallas, Charles Marson, Sydney Olivier, Oliver Lodge, Ramsay MacDonald were members of the society. Britain’s Fabian Socialists who preached “evolutionary Socialism” were assisted by Kautsky and Bernstein regularly. British socialists who were reformists, created the Labour Party (that always considered Fabian Society as their basis/ foundation).

An observer noted, “The Fabians’ financial backers who held interests in mining, industrial plants, railway networks and other international ventures across the globe were leading advocates of “moral capitalism” and “liberal or enlightened imperialism”. In other words, they were at the forefront of the principal force that was transforming the world: the monopolistic tendencies within capitalism which secretly aimed to control natural resources, industries, markets and economies through financial means, while publicly calling for policies claiming to be “for the public good”. While the Fabians benefitted from the imperialists’ financial support, the imperialists used the Fabians’ “impartial” intellectual and academic output, such as works on international government, to legitimise their own internationalist policies.”

A prominent sponsor of Fabianism was David Rockefeller who in the 1930s wrote a senior thesis on Fabian Socialism at Harvard and did a post-graduate at the Fabians’ London School of Economics that was funded by Rockefeller family. While pursuing a successful banking career, he was also a leading sponsor of Fabian projects across the world. Willy Brandt, the German Chancellor ‘became president of the Fabians’ Socialist International and was appointed by US presidential adviser and World Bank president Robert McNamara, a Rockefeller associate, as chair of the UN Independent Commission on International Development Issues. In this role, he worked closely with Rockefeller associates such as Peter G Peterson, chairman and CEO of Lehman Brothers, Kuhn Loeb (an ally of Rockefeller and Rothschild), on a new plan to restructure the world economy’ in line with the policies of the international bankers.

Frederick Engels (in Letters to Sorge, pg. 390) wrote about the Fabians on January 18, 1893: “a band of careerists who have understanding enough to realise the inevitability of the social revolution, but who could not possibly entrust this gigantic task to the raw proletariat alone. . . . Fear of the revolution is their fundamental principle“

And on November 11, 1893 (in Letters to Sorge, pg. 401), he wrote: “these haughty bourgeois who kindly condescend to emancipate the proletariat from above if only it would have sense enough to realise that such a raw, uneducated mass cannot liberate itself and can achieve nothing without the kindness of these clever lawyers, writers and sentimental old women.”

5) Ideological factor – Emergence of Britain as a ‘Model’ Nation-State

Earlier I mentioned that three modern society ‘phenomenon’ – ‘nationalism’ , ‘democracy’, and ‘mass media’ blossomed all over European landmass all of a sudden after 1848 CE. Certainly the European elites, aristocrats, intelligentsia, and Zionist-Capitalist bourgeois wanted to see a state that can be projected as a role model incorporating all three aspects. U.K. (as the core of British empire across the globe) soon became the poster boy for modernity or more aptly ‘the model nation-state in the modern era’.

The first electoral reform bill was introduced in Parliament in March 1831 and adopted in June 1832 that officially put an end to the political monopoly of the landed aristocracy, bankers and usurers. The doors of Parliament were opened only to the representatives of the industrial bourgeoisie. The proletariat and the petty bourgeoisie remained disfranchised. The second electoral reform law adopted in August, 1867 granted the franchise only to house-owners, householders and tenants of flats who paid an annual rent of no less than £10. Thus the petty bourgeoisie and the labour aristocracy were enfranchised. The urban proletariat, the small farmers, and the rural proletariat did not receive the right to vote. The third reform carried out in 1884 extended the 1867 law to rural district. Still about two million men and all women were barred from the polls.

Every single word V I Lenin wrote in his ‘Imperialism and The Split in Socialism’ was 100% accurate and appropriate for Britain and all other European states which were busy copying the British model, “On the economic basis referred to above, the political institutions of modern capitalism—press, parliament associations, congresses etc.—have created political privileges and sops for the respectful, meek, reformist and patriotic office employees and workers, corresponding to the economic privileges and sops. Lucrative an soft jobs in the government or on the war industries committees, in parliament and on diverse committees, on the editorial staffs of “respectable”, legally published newspapers or on the management councils of no less respectable and “bourgeois law-abiding” trade unions—this is the bait by which the imperialist bourgeoisie attracts and rewards the representatives and supporters of the “bourgeois labour parties”.

“The mechanics of political democracy works in the same direction. Nothing in our times can be done without elections; nothing can be done without the masses. And in this era of printing and parliamentarism it is impossible to gain the following of the masses without a widely ramified, systematically managed, well-equipped system of flattery, lies, fraud, juggling with fashionable and popular catchwords, and promising all manner of reforms and blessings to the workers right and left—as long as they renounce the revolutionary struggle for the overthrow of bourgeoisie. I would call this system Lloyd-Georgism, after the English Minister Lloyd George, one of the foremost and most dexterous representatives of this system in the classic land of the “bourgeois labour party”. A first-class bourgeois manipulator, an astute politician, a popular orator who will deliver any speeches you like even r-r-revolutionary ones, to a labour audience, and a man who is capable of obtaining sizable sops for docile workers in the shape of social reforms (insurance, etc.), Lloyd George serves the bourgeoisie splendidly, and serves it precisely among the workers, brings its influence precisely to the proletariat, to where the bourgeoisie needs it most and where it finds it most difficult to subject the masses morally.”

The following table provides the economic interests of the MPs in British House of Commons – most of the MPs were from elite, aristocrat, and bourgeois class. Could anything else happen? No. Because democracy, nationalism and mass media jointly acted as a glue to pull the plebs, the proletariat, semi-proletariat, and petty bourgeois classes towards the political parties that were the facades of the wealthy patricians, the landed aristocracy, bourgeois, military services etc.

 Table: B.2.5

Question: Are you for Gulags, political repressions, class warfare and world revolution?

The question and its choice of words clearly points out to the Russian Revolution and its aftermath, even if that has not been stated explicitly. Well, let me respond only with appropriate facts and figures.

After the departure of the two great masters of Marxism/socialism/communism, the Zionist-Capitalist oligarchy influenced and indirectly established ideological control over most of the socialist/labour/social democrat parties and unions in European countries through the troika I mentioned above under section B.2. The minority factions of those European parties/unions who still thought revolutionary socialism was the only way, parted ways with the parent organisations. And, THIS WAS THE SITUATION IN EVERY COUNTRY OF EUROPE FROM BRITAIN IN THE WEST TO RUSSIA IN THE EAST. Marx and Engels were present with all their revolutionary concepts within the books in libraries! In 1910 CE, in the political/ economic/ social life of Europe, Marx and Engels didn’t make any difference whatsoever.

It was Lenin, a leader of the minority revolutionary faction of Russian Social Democratic Labour Party (RSDLP) in the first decade of 20th century, who rediscovered the original thoughts of Marx and Engels through a careful study of their works. It was Lenin who analysed theories of Marxism/socialism/communism, explored how the concepts can be practically implemented using a political party as a vanguard, formulated the strategies for successful takeover of the state power, analysed how capitalism manifested itself through colonial imperialism, and prepared for a revolution at the world stage. If Marx and Engels were the theoretical leaders, Lenin was the implementer of what the world came to know as Marxist Communism! Lenin brought Marx and Engels to the centre stage of the world politics in 1905 CE with the failed First Russian Revolution, ever since Marx-Engels-Lenin simply refused to move away from the limelight!

During the entire decade of 1901 to 1910, Lenin handled all the deficiencies that plagued the European socialist/labour/ social democratic parties. In ‘What Is To Be Done?’ in 1902 Lenin called for a party of professional revolutionaries, disciplined and directed, capable of defeating the police whose aim should be to establish the dictatorship of the proletariat. For Lenin Russian revolutionary workers’ movement must include the peasants – in 1903, at the third congress of the party, he secured a resolution to this effect, after which ‘the dictatorship of the proletariat’ became ‘the dictatorship of the proletariat and the peasantry’.

Lenin’s interpretation of Marxism (termed as ‘Leninism’ by Martov in 1904) was surely an orthodox one. Like Marx and Engels, he firmly believed that, ‘humanity would eventually reach pure communism, becoming a stateless, classless, egalitarian society’ where workers would be free from exploitation and alienation, people would control their own destiny, and abided by the rule “from each according to his ability, to each according to his needs.” According to Volkogonov, Lenin deeply believed that the path he was setting Russia on would ultimately lead to the establishment of this targeted communist society. In order to build socialism, and then communism, Lenin thought bringing the Russian economy under state control to be the primary task of Bolshevik Party. ‘He believed that the representative democracy of capitalist countries gave the illusion of democracy while maintaining the dictatorship of the bourgeoisie’. He described the representative democratic system of the USA as the “spectacular and meaningless duels between two bourgeois parties led by astute multimillionaires”.

In 1908, in an article dedicated to the twenty-fifth anniversary of the death of Karl Marx, Lenin characterised reformism as “It is quite natural that the petty bourgeois world outlook should again and again break into the ranks of the broad workers’ parties. It is quite natural that this should be so, and it will always be so, until the climax of the proletarian revolution; for it would be a great mistake to think that the “complete” proletarianisation of the majority of the population is necessary in order to bring about such a revolution. What we now experience more often on the mental plane only — discussions with theoretical additions to Marx what now emerges in working practice only on certain particular questions of the labour movement as tactical differences with the revisionists and splits on these grounds — the working class will have to experience to an immeasurably greater extent when the proletarian revolution makes all debatable questions acute, concentrates all the differences upon points which have most direct significance in determining the attitude of the masses and compels us, in the heat of the battle, to separate enemies from friends, and to expel bad allies in order to deliver decisive blows against the enemy.”

In ‘The Historical Destiny of the Doctrine of Karl Marx’ published in 1913 CE Lenin mentioned, “Socialist parties, basically proletarian, were formed everywhere, and learned to use bourgeois parliamentarism and to found their own daily press, their educational institutions, their trade unions and their co-operative societies. Marx’s doctrine gained a complete victory and began to spread. The selection and mustering of the forces of the proletariat and its preparation for the coming battles made slow but steady progress.

“The dialectics of history were such that the theoretical victory of Marxism compelled its enemies to disguise themselves as Marxists. Liberalism, rotten within, tried to revive itself in the form of socialist opportunism. They interpreted the period of preparing the forces for great battles as renunciation of these battles. Improvement of the conditions of the slaves to fight against wage slavery they took to mean the sale by the slaves of their right to liberty for a few pence. They cravenly preached “social peace” (i.e., peace with the slave-owners), renunciation of the class struggle, etc. They had very many adherents among socialist members of parliament, various officials of the working-class movement, and the “sympathising” intelligentsia.

“We do not regard Marx’s theory as something complete and inviolable,” wrote Lenin “on the contrary, we are convinced that … socialists must develop it in all directions if they wish to keep pace with life.”

(C) Russia Showed the Way to Marxism-inspired Socialism After 1917 Revolution

During the most eventful 8 months of Russian Revolution during 1917 CE, too many events of small and great significance happened in Russia which were part of history. I found Stalin’s version the main events as the most concise and crisp write-on on this subject. J V Stalin wrote (refer Trotskyism OR Leninism? … speech delivered at the Plenum of the Communist Group in the A.U.C.C.T.U. on November 19, 1924):

“Let us briefly review the history of the preparation for October according to periods.

1) The period of the Party’s new orientation (March-April). The major facts of this period:

a) the overthrow of tsarism;

b) the formation of the Provisional Government (dictatorship of the bourgeoisie);

c) the appearance of Soviets of Workers’ and Soldiers’ Deputies (dictatorship of the proletariat and peasantry);

d) dual power;

e) the April demonstration;

f) the first crisis of power.

The characteristic feature of this period is the fact that there existed together, side by side and simultaneously, both the dictatorship of the bourgeoisie and the dictatorship of the proletariat and peasantry; the latter trusts the former, believes that it is striving for peace, voluntarily surrenders power to the bourgeoisie and thereby becomes an appendage of the bourgeoisie. There are as yet no serious conflicts between the two dictatorships. On the other hand, there is the “Contact Committee.” …

2) The period of the revolutionary mobilisation of the masses (May-August). The major facts of this period:

a) the April demonstration in Petrograd and the formation of the coalition government with the participation of Socialists;

b) the May Day demonstrations in the principal centres of Russia with the slogan of “a democratic peace”;

c) the June demonstration in Petrograd with the principal slogan: “Down with the capitalist ministers!”;

d) the June offensive at the front and the reverses of the Russian army;

e) the July armed demonstration in Petrograd; the Cadet ministers resign from the government;

f) counter-revolutionary troops are called in from the front; the editorial offices of Pravda are wrecked; the counter-revolution launches a struggle against the Soviets and a new coalition government is formed, headed by Kerensky;

g) the Sixth Congress of our Party, which issues the slogan to prepare for an armed uprising;

h) the counter-revolutionary Conference of State and the general strike in Moscow;

i) Kornilov’s unsuccessful march on Petrograd, the revitalising of the Soviets; the Cadets resign and a “Directory” is formed.

The characteristic feature of this period is the intensification of the crisis and the upsetting of the unstable equilibrium between the Soviets and the Provisional Government which, for good or evil, had existed in the preceding period. Dual power has become intolerable for both sides. The fragile edifice of the “Contact Committee” is tottering. “Crisis of power” and “ministerial re-shuffle” are the most fashionable catchwords of the day. The crisis at the front and the disruption in the rear are doing their work, strengthening the extreme flanks and squeezing the defencist compromisers from both sides. The revolution is mobilising, causing the mobilisation of the counter-revolution. The counter-revolution, in its turn, is spurring on the revolution, stirring up new waves of the revolutionary tide. The question of transferring power to the new class becomes the immediate question of the day. …

3) The period of organisation of the assault (September-October). The major facts of this period:

a) the convocation of the Democratic Conference and the collapse of the idea of a bloc with the Cadets;

b) the Moscow and Petrograd Soviets go over to the side of the Bolsheviks;

c) the Congress of Soviets of the Northern Region; the Petrograd Soviet decides against the withdrawal of the troops;

d) the decision of the Central Committee on the uprising and the formation of the Revolutionary Military Committee of the Petrograd Soviet;

e) the Petrograd garrison decides to render the Petrograd Soviet armed support; a network of commissars of the Revolutionary Military Committee is organised;

f) the Bolshevik armed forces go into action; the members of the Provisional Government are arrested;

g) the Revolutionary Military Committee of the Petrograd Soviet takes power; the Second Congress of Soviets [from which the Mensheviks and the SRS and the Menshevik Internationalists all walked out leaving Bolsheviks in power] sets up the Council of People’s Commissars.“

Side-lining the endless discussions on the economic stage (i.e. feudal or capitalist or semi-feudal) at which socialist revolution would be successful in a society, Lenin held his ground convincingly, broke with the majority within RSDLP, and continuously year after year preached that the proletarians could organize and lead the democratic revolution in a predominantly agriculture economy if organisation and strategy are appropriate (so that the peasants join the revolution from the beginning). By then Lenin’s faction already became majority and came to be known as Bolsheviks.

The adversaries of Bolshevik communism, who also saw through the despicable lies of the Zionist-Capitalist media, noted the undeniable integrity of the Russian Bolshevik revolutionaries. “The Russian Communists,” wrote the American sociologist, Edward Alsworth Ross, after few years of the revolution, “were men with a vision of a regenerated society which they sought to realize. All the party leaders who in November, 1917, laid rude hands on Russian society to remould it by force were sincere men, since, for the sake of their ideal, they had made themselves targets for the inhuman persecutions that went on under the Czars. When freedom arrived in March, nobody had any standing with the Russian masses who had not stood up for them in those ghastly years when every spokesman for the robbed toilers had to skulk and run and burrow if he would remain at large. These fire-tested revolutionaries had behind them a record of personal disinterestedness and heroism which should put to the blush our smug captains of conservative opinion, who have never risked their lives or freedom for others yet affect to dwell on a higher moral plane than the Russian fighters.” (published in The Russian Soviet Republic, pg.8. New York, 1928.)

Pic C.1: Third All-Russian Congress of Soviets of Workers’, Soldiers’ and Peasants’ Deputies, January 1918.

Lenin and his communist revolutionary comrades captured the state power in Russian, which finally proved that a Marxist movement could become a reality in a state. I will not discuss in detail how the Bolshevik Party led the workers’, peasants’, and soldiers’ into Russian Revolution in 1917 – for that, so many well-documented books are available in the market. I will, instead, discuss the significant milestones and the myths that were constructed and propagated by the media and academia during the 20th century in European languages owned by the Zionist-Capitalist oligarchy.

MYTH 1 – Since 1917 CE, there had been a consistent media and academia campaign across the world that, the Russian Revolution in November 1917 was a coup engineered by a ‘tiny group of zealots’ or ‘small band of conspirators’ unconnected to the Russian masses.

Reality –

I quote Dr. Alexander Rabinowitch, ex-Professor Emeritus, Indiana University and author of history books on Russian revolution, whose family fled Russia in 1918 CE during the terror unleashed by the Bolshevik Party [link 🡪 https://www.versobooks.com/blogs/3615-myths-of-the-october-revolution-an-interview-with-alexander-rabinowitch ]:

“I found that far from being the small band of “conspiratorial followers by the numbers” of Lenin in seizing power, from February on the Bolsheviks tried to develop a mass party. They grew enormously among workers and soldiers. They made a great effort to build connections with factory committees in factories and in trade unions getting strength and among garrison troops. More than any other party they were concerned with building roots among the masses and they helped shape mass views but they also were shaped by mass views. The party and in 1917 – far from being a centralized troop movement that …, they became a mass party and a decentralized party with relatively democratic decision-making and this was terribly important in their success. It almost was catastrophic in July 1917 during the abortive July uprising when the left-wing of the party tried to overthrow the Provisional Government and transfer power to the Soviets too early. My sense was that Lenin was opposed to that and that was part of the price of having a decentralized party. But in the long run that internal democracy and that decentralization was critical to the party’s success. On two or three occasions in July, in September and October, Lenin issued orders to overthrow the Provisional Government which leaders on the spot turned down because they could see that it was very risky and probably doomed to failure with Trotsky helping lead and Lenin giving general directions from his hiding place in Finland they developed a strategy that ultimately led to their coming to power, their successful seizure of power. All the moves against the Provisional government were made in the name of “All power to the Soviets,” in the name of “Immediate peace” in the name of transferring power to the Constituent Assembly. When they came to power they got widespread support precisely because the masses were concerned that there would be another counter revolutionary attempt. There had been one attempt in August – the abortive Kornilov coup – they were afraid of another and they looked at the Bolsheviks not as “All power to the Bolsheviks” – that was never said – but “All power to the Soviets,” multi-party Soviets. What enabled the Bolsheviks to take power by themselves was that the Mensheviks and the SRS and the Menshevik Internationalists all walked out of the second Congress of Soviets that proclaimed the new government. The Left SR’s [and Menshevik-Internationalists’ – by the author] refused to get into the government with the Bolsheviks and so the Bolsheviks were able to form a government of their own …

“The April conference, Bolshevik conference, was the first conference after the revolution of the party and Lenin was able to participate. It was sharply divided into a Leninist, a center group and moderate Bolsheviks, right wing Bolsheviks — people like Kamenev and Zinoviev. They fought it out and while Lenin sort of won the main fight regarding the direction of the revolution and the continuation of the revolution and transfer of power to the Soviets, the voice of the moderates was very strong and almost half of the Central Committee were made up of moderates. And when some people on the Left said “Well wait a minute we don’t want all those moderates,” Lenin said, “No we need them. They have ties to the masses and Kamenev’s voice is important.” You’ll find that in the April conference protocols. So that Lenin tolerated that lively debate and that lively debate was essential in September when Lenin called for the immediate seizure of power in mid-September. It was way too early — it’s clear to all historians now that would have been too early — and a majority of the Central Committee and there was a National Conference in Petrograd at the time — a majority of it voted to ignore Lenin’s directives and that was to the good of the party. After the Revolution Lenin more or less conceded it.”

Organisation, not doctrine, was the chief contribution of Lenin’s Bolshevik communism to changing the world. So, three fundamental myth-busting points came out of the above excerpts:

(a) there was a well-established political organisation – RSDLP (Bolshevik communists/socialists) – which was steering the movement

(b) the Bolshevik party also had factions – left wing, centre wing, right wing – which engaged in lively debates before finalizing the course of action

(c) the Bolshevik party was indeed a mass-based party where workers, peasants, soldiers of Russia were preparing to seize power alone since Mensheviks and Socialist Revolutionaries refused to join

MYTH 2 – Since 1917 CE, there has been a consistent campaign across the media world that, the top atheist leaders of Russian Revolution – Lenin and Trotsky – were stooges of Jewish bankers in USA and west Europe, who were instructed to utilise the money given by those bankers to wreck Tsarist Russian empire, Orthodox Church, and Orthodox society.

Reality –

After a decade of investigation into 10 largest archives in USSR, Dr. Alexander Rabinowitch stated, “what I found was that the Bolsheviks came to power not simply without an authoritarian legacy but also without a preconceived plan or concept of how they would govern.… The fact is that the Petrograd Bolsheviks had to transform themselves from rebels into rulers without benefit of an advance plan or even a concept.… Soviet political system were the realities the Bolsheviks faced in their often seemingly hopeless struggle for survival“

As it happened, after the Paris Commune, where for the first time in world history, a leftist revolutionary committee seized power and operated government from 18 March to 28 May 1871, Bolshevik communists repeated that feat for the second time in November 1917 – however, there was NO concept, plan, policy, or procedure of socialist/ communist governance that were successfully followed by the Paris communards or documentation prepared by any other source, for the Bolshevik leadership to refer to. Trotsky and Lenin took loans from the international banking families for managing the expenditures during 1917 revolution, which were repaid by the Bolshevik government after they came to power (post-revolution). But Lenin outmanoeuvred the Zionist-Capitalist oligarchy and their governments like the USA, the UK, and France completely. Their revulsion about Lenin was so complete that they refused to recognise USSR while Lenin was alive! Only after his death on 21st January 1924, USSR was recognised by European and American imperialist powers – UK on 2nd February 1924, France on 28th October 1924, Italy on 7th February 1924, and USA on 16th November 1933. It was a completely different affair during the 1917 March revolution – within 12 days of abdication by Tsar, USA, UK, France, Italy governments recognised the Russian government by 24 March 1917.

For at least two centuries, Russian empire was one of the most unequal oppressive hierarchical feudal society, and people from industrial working class, peasantry, soldiers were spontaneously agitating for most basic of the rights – right for food. Historian Alexander Rabinowitch summarised the causes of February 1917 revolution: “The February 1917 revolution… grew out of pre-war political and economic instability, technological backwardness, and fundamental social divisions, coupled with gross mismanagement of the war effort, continuing military defeats, domestic economic dislocation, and outrageous scandals surrounding the monarchy”.

In ‘How The Bourgeois Utilises Renegades’ that was published in September 1919, Lenin copied from a letter written by an American observer that would provide an honest depiction of political instability and violence in Soviet Russia during the immediate aftermath of the Russian Revolution:

“ Sir:

The Allied governments have refused to recognise the Soviet Government of Russia because, as they state:

1. The Soviet Government is — or was — pro-German.

2. The Soviet Government is based on terrorism.

3. The Soviet Government is undemocratic and unrepresentative of the Russian people.

Meanwhile the Allied governments have long since recognised the present whiteguard Government of Finland under the dictatorship of General Mannerheim, although it appears:

1. That German troops aided the whiteguards in crushing the Socialist Republic of Finland, and that General Mannerheim sent repeated telegrams of sympathy and esteem to the Kaiser. Meanwhile the Soviet Government was busily undermining the German Government with propaganda among troops on the Russian front. The Finnish Government was infinitely more pro-German than the Russian.

2. That the present Government of Finland on coming into power executed in cold blood within a few days’ time 16,700 members of the old Socialist Republic, and imprisoned in starvation camps 70,000 more. Meanwhile the total executions in Russia for the year ended November 1, 1918, were officially stated to have been 3,800, including many corrupt Soviet of officials as well as counter-revolutionists. The Finnish Government was infinitely more terroristic than the Russian.

3. That after killing and imprisoning nearly 90,000 socialists, and driving some 50,000 more over the border into Russia — and Finland is a small country with an electorate of only about 400,000 — the white guard government deemed it sufficiently safe to hold elections. In spite of all precautions, a majority of socialists were elected, but General Mannerheim, like the Allies after the Vladivostok elections, allowed not one of them to be seated. Meanwhile the Soviet Government had disenfranchised all those who do no useful work for a living. The Finnish Government was considerably less democratic than the Russian.

And much the same story might be rehearsed in respect to that great champion of democracy and the new order, Admiral Kolchak of Omsk, whom the Allied governments have supported, supplied and equipped, and are now on the point of officially recognising.

Thus every argument that the Allies have urged against the recognition of the Soviets, can be applied with more strength and honesty against Mannerheim and Kolchak. Yet the latter are recognised, and the blockade draws ever tighter about starving Russia.

Stuart Chase Washington, D.C.

An American liberal [Stuart Chase – author] realises — not because he is theoretically equipped to do so, but simply because he is an attentive observer of developments in a sufficiently broad light, on a world scale — that the world bourgeoisie has organised and is waging a civil war against the revolutionary proletariat and, accordingly, is supporting Kolchak and Denikin in Russia, Mannerheim in Finland, the Georgian Mensheviks, those lackeys of the bourgeoisie, in the Caucasus, the Polish imperialists and Polish Kerenskys in Poland, the Scheidemanns in Germany, the counter-revolutionaries (Mensheviks and capitalists) in Hungary, etc., etc.”

Moreover, Lenin did NOT possess any extra feelings or agenda against the Orthodox religion or society other than his disdain for all that were part of bourgeois society and culture. In ‘Socialism and Religion’ published in Novaya Zhizn, No. 28, December 3. 1905, Lenin stated some obvious sociological facts and simply suggested that atheism could NOT be a programme even in a communist party [personally I had to agree to these statements even if I’m a deeply spiritual person – author], “Those who toil and live in want all their lives are taught by religion to be submissive and patient while here on earth, and to take comfort in the hope of a heavenly reward. But those who live by the labour of others are taught by religion to practise charity while on earth, thus offering them a very cheap way of justifying their entire existence as exploiters and selling them at a moderate price tickets to well-being in heaven.

Religion must be declared a private affair…. Religion must be of no concern to the state, and religious societies must have no connection with governmental authority.

That is the reason why we do not and should not set forth our atheism in our Programme; that is why we do not and should not prohibit proletarians who still retain vestiges of their old prejudices from associating themselves with our Party. We shall always preach the scientific world-outlook, and it is essential for us to combat the inconsistency of various “Christians”. But that does not mean in the least that the religious question ought to be advanced to first place, where it does not belong at all.

Everywhere the reactionary bourgeoisie has concerned itself, and is now beginning to concern itself in Russia, with the fomenting of religious strife — in order thereby to divert the attention of the masses from the really important and fundamental economic and political problems, now being solved in practice by the all-Russian proletariat uniting in revolutionary struggle. This reactionary policy of splitting up the proletarian forces, which today manifests itself mainly in Black-Hundred pogroms, may tomorrow conceive some more subtle forms. We, at any rate, shall oppose it by calmly, consistently and patiently preaching proletarian solidarity and the scientific world-outlook – a preaching alien to any stirring up of secondary differences.”

I would also like to put to rest another myth which is an offshoot of this myth#2 – that the Russian Revolution is a Jewish conspiracy to destroy the Russian orthodox society. It was true that (Ashkenazi) Jews were a persecuted ethnic community across European states – mostly because they were hated across the European societies for being in the business of usury. It was / is true that the world-wide banking and financing system had been under the Jewish oligarchs since past one millennium. But there can be NO simple arithmetic calculation that ALL JEWS were banking elites. On the contrary there would be probably 200 such Jewish families across the world. Hence, majority population of the European Jewish community, who lived in urban ghettos, were still in petty-bourgeois or proletarian class in 19th and 20th century. They were drawn to revolutionary ideas more easily than the rural population of ethnic Europeans. Thus in Russian Revolution, Jews were in disproportionately high numbers compared to ethnic Russians and other minorities. It can’t be ruled, however, that a few of the Jewish leaders of Russian Revolution also formed close coterie (like Zinoviev, Kamenev, Trotsky) and carried out repression against ethnic Russian people (as vengeance) which were NOT part of the Bolshevik Party agenda! That would be completely un-communist behaviour of those leaders, if true.

MYTH 3 – Since 1917 CE, there has been a consistent media and academia campaign in English, French, and Russian language that the leaders of Russian Revolution – the Bolsheviks – were selling out to Germany through signing of the peace treaty of Brest-Litovsk.

Reality –

At the onset of WW-I in 1914, Russian Empire consisted of the following regions which are geographically Europe:

• North-Eastern Warsaw-Lublin region of Poland

• Finland

• Estonia

• Latvia

• Lithuania

• Moldova (and Transnistria region)

• Russia (west of Ural Mountains)

• Ukraine except Galicia in western end

• Crimea

• Belorussia

German-Austrian advance was stopped at the end of 1915 on the line Riga–Dvinsk–Dünaburg–Baranovichi–Pinsk–Lutsk–Ternopil. Thus, the Russian Empire already lost the following regions/countries in Europe before 1915:

• Lithuania

• Large part of Ukraine

• Large part of Belarus

• Large part of Poland

Russian front line did not change significantly until March 1917 when ‘February Revolution’ was instigated by 3 parties – RSDLP-Menshevik (support base: industrial labour, intellectuals), Socialist Revolutionary Party (support base: peasantry, agrarian labour), and Constitutional Democratic Party (support base: professionals, academicians, lawyers) – to form a Provisional Government in Petrograd by the Provisional Committee of the State Duma. Gross industrial production in 1917 decreased by around 36% of what it had been in 1914. Real wages (inflation adjusted) fell to about 50% compared to what they had been in 1913. In and around Petrograd, discontent with the monarchy erupted into mass protests mainly against food rationing on 23 February (8 March). Mass demonstrations, violent clashes with police and gendarmes, industrial strikes continued for days. On 27 February (12 March) mutinous Russian forces sided with revolutionaries – 3 days later on 15 March Tsar Nicholas II abdicated ending Romanov dynastic rule. In the new post-Tsarist era, State Duma was led first by Prince Georgy Lvov and then by Alexander Kerensky. UK, France, Italy governments recognised the new Russian government on 24 March 1917, while recognition from USA government reached on 22 March.

Various estimates suggest Russian empire had around six million casualties (dead, missing, and wounded) during WW-I before January 1917. On the war front, by January 1917 everything was bleak – inadequate supply of arms-ammunition, food, incompetent officers, war-weariness among soldiers, mutinies among soldiers demanding end to war efforts, abnormally low level of morale among officers and soldiers, etc. And, on the home front burning issues like inflation, poverty, scarcity of food and consumer goods, overstretched railway network, and millions of refugees from German-occupied Russia combined to bring a nightmare in Russian empire. To restore Army’s morale Kerensky launched an offensive (Kerensky Offensive) on 1st July which ended in a military catastrophe – morale of the Russian Army went down further. The utter failure of Kerensky government in all aspects actually became a boon for Bolshevik party.

As soon as Bolshevik party came into power, Lenin issued The Decree on Peace called “upon all the belligerent nations and their governments to start immediate negotiations for peace” – peace may be decorative item for oligarchy and aristocracy, but peace is an essential element of plebeian life. Lenin’s call for cessation of hostilities in WW-I was backed by hard realities of poverty among common Russians and shortage of supplies for Russian Army – Lenin was neither swayed by the aristocratic ‘glory and glamour’ of the Tsarist empire nor influenced by ritualistic ‘patriotism’ parroted by bourgeois and Menshevik socialist politicians.

Trotsky was appointed Commissar of Foreign Affairs in new Bolshevik government. Trotsky appointed Adolph Joffe to represent the Bolsheviks at the peace conference with the Central Powers. The key events were:

(i) An armistice between Russia and the Central Powers (German empire, Austro-Hungarian empire, Bulgaria, and Ottoman empire) was concluded on 15th December 1917. A week later peace negotiations started in Brest-Litovsk

(ii) Kaiser Wilhelm II, Chief of Imperial German Army Paul Hindenburg, Army General Max Hoffmann, Army General Erich Ludendorff, Foreign Minister Richard Kuhlmann, these five high priests of German imperialism were the main actors on German side during negotiation. On the Russian side Lenin, Trotsky, Bukharin, Stalin were main actors during negotiation.

(iii) Germany agreed to Russian demand of peace with “no annexations or indemnities”, but with proposition that Poland and Lithuania will be independent on the basis of ‘self-determination’ (obviously both the so-called independent state will align with German empire). One of the Russian negotiation team member, noted Marxist historian Mikhail Pokrovsky wept and asked how they could speak of “peace without annexations, when Germany was tearing eighteen provinces away from the Russian state”

(iv) On 1st January 1918, the Kaiser discussed with Hoffmann on future German-Polish border during which Hoffman suggested Germany should take a small slice of Poland. Hindenburg and Ludendorff were of different opinion who, being the winning side, wanted much more territorial acquisitions including Baltic countries. Ukrainian Rada declared independence from Russia, and demanded the Polish city of Cholm and its surroundings.

(v) During 1st week of February 1918, a group of ‘Left’ Communists comprising of Nikolai Bukharin and Karl Radek wanted to continue the war with a newly-raised revolutionary force while wait for socialist revolution in Germany, Austria, and Turkey. Trotsky wanted to “announce the termination of the war and demobilization without signing any peace”. Lenin advocated for signing an early deal rather than having even more disastrous treaty after a few more weeks of military defeats.

(vi) Peace negotiation started on 10th February 1918 and Trotsky proposed the German side his concept of ‘no war and no peace’, and abstained from drawing any conclusion

(vii) German General Hoffmann notified Russian team on 16th February 1918 that German Army would resume their attack on Russia because peace treaty was not signed. On 18th February 1918 Lenin’s resolution that Russia sign the

treaty was supported by Central Committee. Lenin convinced the majority of Bolshevik party leadership (most of whom, as a first choice, wanted a new war to be waged against imperialist Central Powers) that a peace treaty with the Central Powers is a must for the new Bolshevik revolution to sustain in the long run – historical facts show, extremely unfavourable environment at that point of time in Russia because (a) Food shortage was rampant which created large scale civil unrest, (b) Tsarist Army was in complete disorder while Red Army was being built from scratch, and (c) lack of strength of German socialist party to compel their government to cease offensive (as part of WW-I) on Russian front

(viii) Germany launched Operation Faustschlag on 18th February 1918. General Hoffmann advanced further into Russian territory till 22nd February 1918, and on 23rd February 1918 he tabled new terms for peace treaty that included withdrawal of all Russian troops from Finland and Ukraine

(ix) Trotsky resigned as foreign minister. Sokolnikov arrived at Brest-Litovsk to represent Soviet Russian Bolshevik government, and the peace treaty (called as Treaty of Brest-Litovsk) was signed on 3rd March 1918

(x) With this treaty, Russia had to renounce all territorial claims in

• Finland

• Estonia

• Latvia

• Lithuania

• Ukraine

• Crimea

• Belarus

• Bessarabia

• Russian part of Poland (was under possession of White Army);

Russia was also fined 300 million gold marks. Consequently, Russia lost one third of its population, half of its industrial land, one-fourth of its railway, three quarters of iron ore, and nine-tenth of its coalfields as German side insisted that

Russia has to cede more than 150,000 sq. km. of territories.

(xi) This treaty was annulled by the Armistice of 11th November 1918 when Germany surrendered to the Entente Powers (excluding Russia). The Bolshevik legislature (VTsIK) annulled the treaty on 13th November 1918.

There exists a view shared by so-called “nationalist” and “patriotic” leaders of past and present Russia – had Bolshevik party led by Lenin not interfered with Russia’s involvement in WW-I to sign a peace treaty with Germany (and its allies), Russia would have been in the ‘winning team’ of the Entente Powers and would have got a share of the booty flowing out of the Versailles Treaty signed just 8 months later. This view is untenable when scrutinised deeply. Had Russia been active on the WW-I war front even after February 1918, they could have lost even more territory that could include Russia proper. ‘By 1916, Russian Army was not only hopelessly short of food, clothing, ammunitions, and other logistics in the war front, but Russian Army morale was, to a large extent, shattered; moreover, Red Army was not yet in complete shape. Strategically, Lenin proved to be far-sighted – he could sense that, with USA officially entering the WW-I on 6th April 1917, Entente Powers would win against Central Powers, and those Zionist-Capitalist powers would directly control the vast east European territories (earlier part of Tsar Russia, but lost to Germany during WW-I). Lenin assessed that concluding a peace treaty with Germany in February 1918, while control of at least Russia proper was still with Bolshevik party, was administratively better than, simultaneously facing onslaught of German Army (in absence of a peace treaty) plus assault of White Army buttressed by active support from anti-communist governments of about 15 countries that included significant imperialist power like: UK, France, Italy, Japan, USA etc. History proved Lenin’s sagacity – after the conspiracy by British diplomat Bruce Lockhart to sabotage the Bolshevik government in 1918 got exposed, from 1918 till 1921 the Zionist-Capitalist hyenas were out to dismember Russia proper in dozens of pieces using the White Army generals Yudenich, Kolchak, Denikin, and few others, but with German Army neutralized along most of the front, the Red Army valiantly fought against them for unification of Soviet Russia.’

MYTH 4 – Since 1917 CE, there has been a world-wide propaganda across ALL European, Asian language media and academia about how Soviet Communist Party top leaders indulged in unlimited repression thereby murdering twenty to eighty millions of Russians from 1917 to 1942, of which Gulag was a special type.

Reality –

As per the first and only census done by Tsarist Russian empire, total population in January 1897 across entire empire was 125.640 million. Deducting the population of Poland (including western Ukraine and western Byelorussia), Finland, Latvia, Lithuania, Moldova and Romania, part of Bulgaria which were under the Russian Tsar empire but not part of Soviet Union after World War I when Bolshevik party came into power, the population in January 1897 was only about 95.602 million.

As per the first full census done by USSR after World War I, total population in December 1926 across entire union was 147.028 million – almost 50% increase from the corresponding figure of 95.602 million in 1897. Within this period during 1914 to 1917, WW-I killed-in-action, missing-in-action, and prisoner-of-war caused about 9 million reductions in population:

  • A study by the Russian military historian G.F. Krivosheev estimated the total mobilization as 15,378,000. Total war dead at 2,254,369 (killed in action 1,200,000; missing and presumed dead 439,369; died of wounds 240,000, gassed 11,000, died from disease 155,000, POW deaths 190,000, deaths due to accidents and other causes 19,000). Wounded 3,749,000. POW 3,343,900.
  • The USA War Dept. figures for Russian casualties are: Total mobilized force 12,000,000. Total casualties 9,150,000 (including Killed and died 1,700,000, wounded 4,950,000, prisoners and missing 2,500,000).
  • The UK War Office based on a telegram from Petrograd to Copenhagen in December 1918 listed military casualties of 9,150,000 (including 1,700,000 killed, 1,450,000 disabled, 3,500,000 wounded and 2,500,000 POW).

Apart from WW-I, there was another source of loss of population during the 1897 to 1926 period: loss of population during the civil war between 1917 and 1922 in Russia and other Soviet Union states due to terror-war-disease-famine-emigration. Anti-Bolshevik groups landowners, bankers, middle-class citizens, monarchists, army senior officers, and politicians like liberals-conservatives-democrats as well as non-Bolshevik socialists aligned against the Bolshevik Communist government. The anti-Bolshevik groups were collectively known as ‘White Army’ who controlled significant majority parts of the former Russian Empire between 1918 and 1920. White Army was actively supported by the anti-communist governments of about 15 countries that included UK and its colonies Australia-Canada, France, Italy, Japan, USA, Czechoslovakia, Romania etc. The infamous ‘Red Terror’ of Bolsheviks was actually a response to the ‘White Terror’ unleashed by the anti-revolution forces. The Red Terror was really initiated on August 30, 1918 following attack on Lenin. As the counter-move to the formation of White Army, Lenin entrusted Trotsky the task of creating the Red Army. From 1917 revolution to 1922 formation of the USSR, loss of population could be to the tune of 6 million:

  • 4 million civilian deaths due to disease and famine
  • 1 million deaths due to civil war including red terror and white terror killings
  • 1 million emigrations of elites and aristocrats sympathetic to the ‘White Army’

Let’s do a simple arithmetic calculation as below:

Census population in 1897 adjusting for loss of lands in WW-I = 96 million

Average annual rate of population growth till 1917 = 1.8%

In 1917, calculated population would become = 137.16 million

Deduct 9 million losses in WW-I, revised population in 1917 = 128.16 million

Average annual rate of population growth till 1922 = 1.8%

In 1922, calculated population would become = 140.11 million

Deduct 6 million losses in civil war, revised population in 1922 = 134.11 million

Average annual rate of population growth till 1926 = 1.8%

In 1926, calculated population would become = 144.0 million

Census population in 1926 = 147.0 million

My assumption that the Russian population experienced an annual growth rate of 1.8% during 1897 to 1926 period is probably an over-optimistic one, for Russian regions had notoriously low rate of survival due to extremely heavy death rates on account of disease, cold, and liquor. And, if that assumption holds good, the assumption on loss of population must have been slightly inflated that resulted in calculation of lower than actual population in 1926!

Now, let’s move into the next period 1927 to 1942. During 1927 to 1942 period there were two primary sources of unnatural reduction of population:

  • The Soviet famine of 1930–1933 was a famine in the major grain-producing regions of Ukraine, Northern Caucasus, Volga Region, Kazakhstan, South Urals, and West Siberia. Wikipedia noted, “Estimates conclude that 5.7 to 8.7 million people died of famine across the Soviet Union. Major contributing factors to the famine include: the forced collectivization in the Soviet Union of agriculture as a part of the First Five-Year Plan, and forced grain procurement, combined with rapid industrialization and a decreasing agricultural workforce. Sources disagree on the possible role of drought”. In 2008, the Russian State Duma issued a statement about the famine, stating that within territories of Povolzhe, Central Black Earth Region, Northern Caucasus, Ural, Crimea, Western Siberia, Kazakhstan, Ukraine, and Belarus the estimated death toll was about 7 million people.

It is very easy to identify Stalin as the leader who made terrible mistake about the forced collectivization and the first 5-year plan. But, it is very difficult to point out the alternatives to Stalin even after 90 years! Hobsbawm wrote in his ‘Age of Extremes’, “One of the most sophisticated socialist economists of the 1930s, Oskar Lange, returned from the USA to his native Poland to build socialism, until he came to a London hospital to die. On his death-bed he talked to the friends and admirers who came to visit him, including myself. This, as I recall, is what he said: “If I had been in Russia in the 1920s, I would have been a Bukharinite gradualist. If I had advised on Soviet industrialization, I would have recommended a more flexible and limited set of targets, as indeed the able Russian planners did. And yet, as I think back, I ask myself, again and again: was there an alternative to the indiscriminate, brutal, basically unplanned rush forward of the first Five-Year Plan? I wish I could say there was, but I cannot. I cannot find an answer.” The First Five Year Planning truly changed USSR beyond recognition. “The vast scope of industrialization in the Soviet Union, as against a background of stagnation and decline in almost the whole capitalist world, appears unanswerably in the following gross indices. Industrial production in Germany, thanks solely to feverish war preparations, is now returning to the level of 1929. Production in Great Britain, holding to the apron strings of protectionism, has raised itself 3 or 4 per cent during these six years. Industrial production in the United States has declined approximately 25 per cent; in France, more than 30 per cent. First place among capitalist countries is occupied by Japan, who is furiously arming herself and robbing her neighbours. Her production has risen almost 40 per cent! But even this exceptional index fades before the dynamic of development in the Soviet Union. Her industrial production has increased during this same period approximately 3 1/2 times, or 250 per cent. The heavy industries have increased their production during the last decade (1925 to 1935) more than 10 times. In the first year of the five-year plan (1928 to 1929), capital investments amounted to 5.4 billion roubles; for 1936, 32 billion are indicated.

If in view of the instability of the rouble as a unit of measurement, we lay aside money estimates, we arrive at another unit which is absolutely unquestionable. In December 1913, the Don basin produced 2,275,000 tons of coal; in December 1935, 7,125,000 tons. During the last three years the production of iron has doubled. The production of steel and of the rolling mills has increased almost 2 1/2 times. The output of oil, coal and iron has increased from 3 to 3 1/2 times the pre-war figure. In 1920, when the first plan of electrification was drawn up, there were 10 district power stations in the country with a total power production of 253,000 kilowatts. In 1935, there were already 95 of these stations with a total power of 4,345,000 kilowatts. In 1925, the Soviet Union stood 11th in the production of electro-energy; in 1935, it was second only to Germany and the United States. In the production of coal, the Soviet Union has moved forward from 10th to 4th place. In steel, from 6th to 3rd place. In the production of tractors, to the 1st place in the world. This also is true of the production of sugar.”

  • Repression of Communist Party led by Stalin certainly caused huge numbers of death between 1934 and 1940. But question remains – how many? Equally important question remains – why the CPSU led by Stalin had to resort to execution in a large scale? The media and academia owned and controlled by the Zionist-Capitalist oligarchy had been propagating the outright lies on 10 to 20 million deaths due to ‘Stalinist repression’ during this period in the USSR. To dispel the west European myth, in table 3.1, I will quote extensively from “Victims of the Soviet Penal System in the Pre-war Years”, written by an international team consisting of Viktor N. Zemskov (Russian researcher), Gabor T. Rittersporn (French researcher), Peter A. Coclanis, J. Arch Getty, James L. Huston, Marc Raeff, Paul W. Schroeder, Carl Strikwerda (all USA professors) and first published in American Historical Review, October 1993. The statistics in table 3.1 shows not even 1 million deaths happened between 1934 and 1942. The statistics in table C.2 shows that only 12% to 33% of the Gulag inmates were due to politically motivated imprisonment

Table: C.1

Table: C.2

I wonder, after considering the above mentioned statistics, how could anybody continue to preach that Lenin-Stalin-Trotsky murdered 20 to 60 million Russians! However, I’m sure about a few of the commenters who will shut their eyes and repeat ad nauseam. HENCE IT IS CLEAR THAT THE ENTIRE GLOBAL MEDIA & ACADEMIA HAD BEEN LYING FOR OVER A CENTURY ABOUT THE COMPLETELY FABRICATED TALE OF A MASS MURDER BY THE BOLSHEVIK PARTY… AND THE FRAUD IS STILL GOING ON! – BUT EVEN IF THE ENTIRE WORLD REPEAT THE SAME LIE, THE LIE DOES NOT BECOME TRUTH!!!

A crucial point still remains to be discussed – why did Stalin resort to large scale repression after 1934? The most profound tragedies of pre-WW-II USSR were intertwined – (i) Sergei Kirov, the most brilliant communist leader among the youth, was killed in 1934 at the age of 48 years by a conspiracy in which most senior Bolshevik leaders (many of them were comrades of Lenin) were involved, (ii) Marshall Tukhachevsky, the most brilliant military general of the Red Army conspired with Nazi Germany to seize state power from CPSU and thereafter surrender large tract of the then USSR to Germany to make peace, (iii) many of the senior leaders of CPSU who were organisers of the revolution and ideologues, including Trotsky, Kamenev, Zinoviev, Bukharin, Rykov, Radek conspired with militarist German and Japanese leaders to stage a coup and wrest state power from CPSU led by Stalin. People who would like to say that, all those tragedies were not real but fabrication by Stalin need to go through the well-researched book ‘Khruschev Lied’ by Grover Furr [refer link 🡪 https://ia802707.us.archive.org/5/items/pdfy-nmIGAXUrq0OJ87zK/Khrushchev%20Lied.pdf ].

Moscow trials – ‘Trial of the Sixteen’ in August 1936, ‘Trial of the Seventeen’ in January 1937, ‘Trial of the Twenty-One’ in March 1938 – conclusively proved that the defendants were guilty of conspiracy to overthrow the communist government of USSR. The defendants were neither threatened, nor tortured for any false confessions. The Zionist-Capitalist stooges among CPSU leadership of post-Stalin era (like Khrushchev, and Gorbachev) tried in vain to discredit the Moscow trials and prove the defendants’ confessions were false. However, the truth couldn’t be falsified!

Even considering and acknowledging the facts that:

After 1930 when Trotsky and other leaders of his coterie were completely thrown out of CPSU, they started conspiring with the Zionist bankers based in Europe/USA as well as German/Japanese leaders in order to create disturbances in USSR which would further weaken the USSR economy, and finally Trotsky could capture power, and Marshall Tukhachevsky and his team of Generals tried to seize state power with the help of German/Japanese military leaders

It must be mentioned that somewhat paranoid and autocratic behaviour of Stalin created a problem within the CPSU in terms of organisational disarray which pushed more and more senior leaders to become uneasy with Stalin’s style of functioning, that again created even more distrust in Stalin who finally resorted to massive purge; faced with impending purge, those senior leaders grouped among themselves and conspired, which got finally exposed. The organisational weaknesses were to be covered through increasing bureaucratisation. Hence during the Stalin-era, party congress was NOT held regularly – the 16th Congress of the Russian Communist Party (Bolsheviks) was held during 26 June to 13 July 1930, the 17th Congress of the All-Union Communist Party (Bolsheviks) was held during 26 January to 10 February 1934, the 18th Congress of the Russian Communist Party (Bolsheviks) was held during 10 to 21 March 1939, finally the 19th Congress of the CPSU was held from 5 to 14 October 1952, the last under Stalin’s leadership.

MYTH 5 – Since 1924 CE, especially in the Russian, German, and English language media and academia there had been a continuous campaign that Lenin wanted to remove Stalin from leadership position in his ‘last testament’ and entrust Trotsky to lead the party, but Stalin manipulated to stay on.

Reality –

Lenin’s last testament on December 25, 1922 was taken down by M.V; Lenin didn’t want it to be published an discussed other than the CC; it was first published in 1956 in Kommunist (No. 9). It read:

“Our Party relies on two classes and therefore its instability would be possible and its downfall inevitable if there were no agreement between those two classes. In that event this or that measure, and generally all talk about the stability of our C.C., would be futile. No measure of any kind could prevent a split in such a case. But I hope that this is too remote a future and too improbable an event to talk about.

I have in mind stability as a guarantee against a split in the immediate future, and I intend to deal here with a few ideas concerning personal qualities.

I think that from this standpoint the prime factors in the question of stability are such members of the C.C. as Stalin and Trotsky. I think relations between them make up the greater part of the danger of a split, which could be avoided, and this purpose, in my opinion, would be served, among other things, by increasing the number of C.C. members to 50 or 100.

Comrade Stalin, having become Secretary-General, has unlimited authority concentrated in his hands, and I am not sure whether he will always be capable of using that authority with sufficient caution. Comrade Trotsky, on the other hand, as his struggle against the C.C. on the question of the People’s Commissariat of Communications has already proved, is distinguished not only by outstanding ability. He is personally perhaps the most capable man in the present C.C., but he has displayed excessive self-assurance and shown excessive preoccupation with the purely administrative side of the work.

These two qualities of the two outstanding leaders of the present C.C. can inadvertently lead to a split, and if our Party does not take steps to avert this, the split may come unexpectedly.

I shall not give any further appraisals of the personal qualities of other members of the C.C. I shall just recall that the October episode with Zinoviev and Kamenev was, of course, no accident, but neither can the blame for it be laid upon them personally, any more than non-Bolshevism can upon Trotsky.

Speaking of the young C.C. members, I wish to say a few words about Bukharin and Pyatakov. They are, in my opinion, the most outstanding figures (among the youngest ones), and the following must be borne in mind about them: Bukharin is not only a most valuable and major theorist of the Party; he is also rightly considered the favourite of the whole Party, but his theoretical views can be classified as fully Marxist only with great reserve, for there is something scholastic about him (he has never made a study of the dialectics, and, I think, never fully understood it).

As for Pyatakov, he is unquestionably a man of outstanding will and outstanding ability, but shows too much zeal for administrating and the administrative side of the work to be relied upon in a serious political matter.”

In the above note (known as Lenin’s Last Testament) Lenin didn’t assign any role to Trotsky other than mentioning that Trotsky probably was the ‘most capable man’ among the leaders. Neither Lenin mentioned that Stalin had to resign from the position of Secretary-General of the party. He was concerned with the possible break-up between two top leaders, and he was more concerned about the negative characteristics of each of the young promising leaders! The supporters of Trotsky made the entire episode look like Stalin plotted against Trotsky.

Let us consider the track record of Stalin in Bolshevik Party – one of oldest members of the party and a man of the organisation who never distanced himself from the party, Stalin had support of the maximum numbers of the lower and middle level party leaders and activists. Stalin had been one of Lenin’s closest associates all along. Lenin valued Stalin’s traits like ‘firmness of character, tenacity, stubbornness, even ruthlessness and craftiness’.

Trotsky wasn’t a Bolshevik to begin with. Trotsky left the Menshevik Party and would join the Bolshevik Party only during the month of October’1917 when he became sure about the impending revolution. Undoubtedly Trotsky had been one of the most brilliant socialist revolutionary of that era, but his associations proved that he always desired power and position – in 1896 he was a Nardonik, in 1898 he joined RSDLP, in 1903 he joined the Menshevik faction, in 1904 he became a neutral social democrat, in 1915 he came back to the Menshevik Party, in October 1917 he joined the Bolshevik Party, in 1923 Trotsky led the Left Opposition faction of Bolsheviks, in 1926 he was part of the United Opposition of the Bolshevik Party. Thus, even if Trotsky played a leading role in both the Russian Revolution of 1905 and that of 1917, after Lenin’s death he fell out with Stalin primarily on the question of party leadership. After Lenin’s death Stalin would submit his resignation from the Politburo (of the CC):

“August 19, 1924

To the Plenum of the CC RCP

One and a half years of working in the Politburo with comrades Zinoviev and Kamanev after the retirement and then the death of Lenin have made perfectly clear to me the impossibility of honest, sincere political work with these comrades within the framework of one small collective. In view of which I request to be considered as having resigned from the Political Buro of the CC.

I request a medical leave for about two months.

At the expiration of this period I request to be sent to Turukhansk region or to the Iakutsk oblast’, or to somewhere abroad in any kind of work that will attract little attention.

I would ask the Plenum [of the C.C. – GF) to decide all these questions in my absence and without explanations from my side, because I consider it harmful for our work to give explanations aside from those remarks that I have already made in the first paragraph of this letter.

I would ask comrade Kuibyshev to distribute copies of this letter to the members of the CC.

With communist greetings,

J. Stalin.”

Not only the rank and file of the Bolshevik Party, but most of its leaders supported Stalin as the Secretary-General, because it was Stalin with whom they struggled shoulder-to-shoulder during two and a half decades – it was obvious that any newcomer like Trotsky would not be as familiar as an old comrade! Had Trotsky accepted that reality, things would not become too messy for him in future – it was a crying shame that the a revolutionary communist leader like Trotsky, the proponent of the theory of ‘permanent revolution’ (complementing Lenin’s attempt of world revolution) would stoop so low as to join hands with Fascist foreign leaders and Zionist international bankers for the sake of wresting political power in USSR.

MYTH 6 – This myth was created and transformed as a new curriculum in the subject of history in European languages – how the Communists under Stalin befriended the Fascists under Hitler to grab good old Poland. God knows how many PhD. Thesis were written and approved in Europe during past 80 years using this myth!

Reality –

It was the master plan of the Zionist-Capitalist oligarchy who created the Nazi war-machinery in Germany so that it would fight against the USSR, and when both the sides would become weak due to continuous war of attrition, the Zionist-Capitalist dominated countries like the USA, the UK, and France would appear in the horizon as ‘peace-maker’ and occupy the Eurasian landmass – something which they tried during the Russian civil war but failed miserably!

Mao ZeDong wrote in ‘The Identity of Interests Between The Soviet Union And All Mankind’ on September 28, 1939,

“Some people say that the Soviet Union does not want the world to remain at peace because the outbreak of a world war is to its advantage, and that the present war was precipitated by the Soviet Union’s conclusion of a non-aggression treaty with Germany instead of a treaty of mutual assistance with Britain and France. I consider this view incorrect. The foreign policy of the Soviet Union over a very long period of time has consistently been one of peace, a policy based on the close links between its own interests and those of the overwhelming majority of mankind. For its own socialist construction, the Soviet Union has always needed peace, has always needed to strengthen its peaceful relations with other countries and prevent an anti-Soviet war; for the sake of peace on a world scale, it has also needed to check the aggression of the fascist countries, curb the warmongering of the so-called democratic countries and delay the outbreak of an imperialist world war for as long as possible. The Soviet Union has long devoted great energy to the cause of world peace. For instance, it has joined the League of Nations, signed treaties of mutual assistance with France and Czechoslovakia and tried hard to conclude security pacts with Britain and all other countries that might be willing to have peace. After Germany and Italy jointly invaded Spain and when Britain, the United States and France adopted a policy of nominal “non-intervention” but of actual connivance at their aggression, the Soviet Union opposed the “non-intervention” policy and gave the Spanish republican forces active help in their resistance to Germany and Italy. After Japan invaded China and when the same three powers adopted the same kind of “non-intervention” policy, the Soviet Union not only concluded a non-aggression treaty with China but gave China active help in her resistance. When Britain and France connived at Hitler’s aggression and sacrificed Austria and Czechoslovakia, the Soviet Union spared no effort in exposing the sinister aims behind the Munich policy and made proposals to Britain and France for checking further aggression. When Poland became the burning question in the spring and summer of this year and it was touch-and-go whether world war would break out, the Soviet Union negotiated with Britain and France for over four months, despite Chamberlain’s and Daladier’s complete lack of sincerity, in an endeavour to conclude a treaty of mutual assistance to prevent the outbreak of war. But all these efforts were blocked by the imperialist policy of the British and French governments, a policy of conniving at, instigating and spreading war, so that eventually the cause of world peace was thwarted and the imperialist world war broke out. The governments of Britain, the United States and France had no genuine desire to prevent this war; on the contrary, they helped to bring it about. Their refusal to come to terms with the Soviet Union and conclude a really effective treaty of mutual assistance based on equality and reciprocity proved that they wanted not peace but war. Everybody knows that in the contemporary world rejection of the Soviet Union means rejection of peace. Even Lloyd George, that typical representative of the British bourgeoisie, knows this. It was in these circumstances, and when Germany agreed to stop her anti-Soviet activities, abandon the Agreement against the Communist International and recognize the inviolability of the Soviet frontiers, that the Soviet-German non-aggression treaty was concluded. The plan of Britain, the United States and France was to egg Germany on to attack the Soviet Union, so that they themselves, “sitting on top of the mountain to watch the tigers fight”, could come down and take over after the Soviet Union and Germany had worn each other out. The Soviet-German non-aggression treaty smashed this plot. In overlooking this plot and the schemes of the Anglo-French imperialists who connived at and instigated war and precipitated a world war, some of our fellow-countrymen have actually been taken in by the sugary propaganda of these schemers. These crafty politicians were not the least bit interested in checking aggression against Spain, against China, or against Austria and Czechoslovakia, on the contrary, they connived at aggression and instigated war, playing the proverbial role of the fisherman who set the snipe and clam at each other and then took advantage of both. They euphemistically described their actions as “non-intervention”, but what they actually did was to “sit on top of the mountain to watch the tigers fight”.

None could express the geopolitical setup of Europe more succinctly than Mao did, as noted above. 1934 Onwards, the period when Hitler went on a steady military build-up in Europe, UK (world’s foremost colonial empire) Prime Ministers Neville Chamberlain and Ramsay MacDonald as well as French (world’s second largest colonial empire) leader Edouard Daladier followed a compromising policy towards Nazi Germany – it was known as the ‘policy of appeasement’ (with German Nazi government). Soviet People’s Commissar for Foreign Affairs, Maxim Litvinov, who led foreign policy initiatives since 1934 (centred on concept of ‘collective security’ among all big European powers), commented on such policy of appeasement, “England and France are now unlikely to retreat from the policy they have set out for themselves, which boils down to unilateral satisfaction of the demands of all three aggressors – Germany, Italy and Japan. They will present their claims in turn, and England and France will make them one concession after another. I believe, however, that they will reach a point where the people of England and France will have to stop them. Then, probably, we will … return to the old path of collective security, because there are no other ways for preserving peace“.

Stalin delivered a speech that was broadcast on Soviet Union television on 10th March 1939, in which he not only identified the policy of appeasement, but, he also outlined the objectives of such policy, “The war is being waged by aggressor nations, which in every way infringe upon the interests of non-aggressor states, primarily England, France, and the United States, and the latter withdraw and retreat, making concession after concession to the aggressors. Thus, we are witnessing a blatant carving up of the world and its spheres of influence, at the expense of the non-aggressor states, without any attempt at resistance, and with even a bit of their acquiescence.”

Britain, France and Poland continued to sabotage the collective security talks proposed by Soviet Union. UK and France wouldn’t give any guarantees of attacking Germany in the West in case of war – on the contrary, the Zionist-Capitalist Anglo oligarchy was, in fact, in collusion with Nazi Germany. Poland was generally viewing Russia as a victim for its own colonial war (war between Russia and Poland after Russian Revolution over the Tsarist territory claims counterclaims

still were resonating with Polish leader Pilsudski) and Poland saw Germany as an ally for such an adventure. Poland would not agree to let the Red army engage Germans on Polish territory. Basically the USSR was offered nothing but would have to declare a war on Germany and wait till Germany is done with Poland and invades the USSR.

On March 18 1939, Litvinov again suggested convening a pan-European conference to be attended by Britain, France, Poland, Russia, Romania, and Turkey. During March and April 1939 Europe witnessed hectic parleys over possible tripartite alliance among UK-France-USSR as suggested by USSR through a documented proposal. In the UK Cabinet Committee on Foreign Policy on 24th April 1939, Neville Chamberlain opposed the Soviet proposition saying that, “The Soviet’s present proposal was one for a definite military alliance between England, France and Russia; It could not be pretended that such an alliance was necessary in order that the smaller countries of Eastern Europe should be furnished with munitions… Then there was the problem of Poland.” (Who oppose any agreement with USSR based on which USSR participate in fighting against Nazi Germany within Poland boundary). Communist USSR’s Joseph Stalin removed Maxim Litvinov and installed Vyacheslav Molotov thinking Molotov to be a dynamic negotiator. Molotov spent May and June 1939 to work out on the same tripartite alliance, but in vain.

In July 1939 Germany proposed a non-aggression pact to Molotov in which they suggested USSR can get control of most part of the former Tsar empire like:

  • The western parts of Ukraine and Byelorussia following the Curzon line of demarcation discussed during closure of WW-I (both erstwhile Tsar empire provinces, part of which were taken by Poland between 1918 to 1922)
  • Bessarabia (erstwhile Tsar empire province, part of which were taken by Romania),
  • Karelia (part of erstwhile Tsar empire Dutchy of Finland),
  • Latvia, Estonia, Lithuania in Baltic (erstwhile Tsar empire provinces, independent countries after WW-I)

And, as per the German proposal, rest of the East Europe will come under Nazi Germany sphere of influence either by direct annexation or formation of protectorate. Soviet leadership, after exasperating failure of 5 years of discussions on military pact with UK and France, and in the midst of a massive war since May 1939 with Japanese empire in Khalkhin Gol near Mongolian border, couldn’t miss ‘opportunity’ of getting few extra years (before Nazi assault). On 23rd August 1939 the German–Soviet nonaggression pact (Molotov-Ribbentrop Pact) was signed.

USSR regained control of western part of Ukraine and western part of Byelorussia in September 1939 from Poland, and Karelia region from Finland in November 1939. Then USSR moved into Baltic region and Bessarabia in June 1940. While discussing on the land annexation by Soviet Union, on 4th October 1939 Britain’s Foreign Secretary Lord Halifax said in the House of Lords “… the Soviet government’s actions were to move the border essentially to the line recommended at the Versailles Conference by Lord Curzon… I only cite historical facts and believe they are indisputable.”

Formal military alliance i.e. ‘Berlin Pact’ was signed by Germany-Italy-Japan in September 1940 (original Axis Power). Later on Hungary joined in November 1940, Romania joined in November 1940, Bulgaria joined in March 1941. When Nazi Wehrmacht launched ‘Operation Barbarossa’, the largest military operation in documented history of humankind on 22nd June 1941 (officially authorized by Adolf Hitler on 18 December 1940, but got delayed due to delay in finishing Balkan campaign) across western border of USSR along a 2,900-kilometer war-front with nearly 4 million military personnel from ‘Berlin Pact’ countries, USSR found itself in life-death struggle against the Nazi Wehrmacht. After Red Army won in the most terrifying land battles of Stalingrad and Leningrad, it was the Battle of Kursk (largest tank battle in history) in July 1943 which completely turned the tide in favour of Soviet Red Army. Every passing day the Red Army became unconquerable force that decimated Nazi Wehrmacht single-handedly and liberated entire east Europe before capturing Berlin in May 1945. As analysed by Mikhail Meltyukhov (Russian military historian working at the Russian Institute of Documents and Historical Records Research), during a period of two and half years (from 1 January 1939 to 22 June 1941) when the non-aggression pact with Germany was in effect, USSR increased their military strength assiduously that finally helped the final destruction of Nazi Germany in their eastern front:

• Battle Divisions increased from about 131 to 316 (140% increase)

• Military Personnel increased from 2,485,000 to 5,774,000 (132% increase)

• Battle Tanks increased from about 21,100 to 25,700 (22% increase)

• Aircrafts increased from about 7,700 to 18,700 (143% increase)

On 28th April 1942, FD Roosevelt addressed to the USA: “These Russian forces have destroyed and are destroying more armed power of our enemies – troops, planes, tanks, and guns – than all the other United Nations put together.” Considering the four key perspectives – mobilization, viciousness of struggle, loss of life, and loss of infrastructure – Eastern front was far more significant compared to Western front of WW-II. In the opinion of Norman Davis: “German losses on the Eastern Front accounted for about 80 per cent of the total…”. At the end of the WW-II, Soviet Union had lost about 27 million people, Western Allies lost less than 2 million, Germany lost around 4 million troops in the Eastern front and 1 million on the Western front. Europe and indeed, the world was saved from Fascism by the Soviet citizens.

MYTH 7 – Stalin not only proposed a theory of ‘socialism in one country’ but practically went on to wreck the world revolution after he fell out with Trotsky. The same Zionist-Capitalist media and academia which castigated Stalin for causing harm to Soviet Union society with his ‘authoritarian rule’ simultaneously propagated that Stalin ditched the world revolution to establish order at home!

Reality –

Lenin advocated the core principles of Marx and Engels at every possible opportunity. While writing in ‘Opportunism And The Collapse of The Second International’ that was published in January 1916 in Vorbote No. 1, he mentioned, “What is the economic substance of defencism in the war of 1914-15? The bourgeoisie of all the big powers are waging the war to divide and exploit the world, and oppress other nations. A few crumbs of the bourgeoisie’s huge profits may come the way of the small group of labour bureaucrats, labour aristocrats, and petty-bourgeois fellow-travellers. Social-chauvinism and opportunism have the same class basis, namely, the alliance of a small section of privileged workers with “their” national bourgeoisie against the working-class masses; the alliance between the lackeys of the bourgeoisie and the bourgeoisie against the class the latter is exploiting.

Opportunism and social-chauvinism have the same political content, namely, class collaboration, repudiation of the dictatorship of the proletariat, repudiation of revolutionary action, unconditional acceptance of bourgeois legality, confidence in the bourgeoisie and lack of confidence in the proletariat. Social-chauvinism is the direct continuation and consummation of British liberal-labour politics, of Millerandism and Bernsteinism.

The struggle between the two main trends in the labour movement — revolutionary socialism and opportunist socialism — fills the entire period from 1889 to 1914. Even today there are two main trends on the attitude to war in every country. Let us drop the bourgeois and opportunist habit of referring to personalities. Let us take the trends in a number of countries. Let us take ten European countries: Germany, Britain, Russia, Italy, Holland, Sweden, Bulgaria, Switzerland, Belgium and France. In the first eight the division into opportunist and revolutionary trends corresponds to the division into social-chauvinists and internationalists. In Germany the strongholds of social-chauvinism are Socialistische Monatshefte and Legien and Co., in Britain the Fabians and the Labour Party (the I.L.P has always been allied with them and has supported their organ, and in this bloc it has always been weaker than the social-chauvinists, whereas three-sevenths of the B.S.P. are internationalists); in Russia this trend is represented by Nasha Zarya (now Nashe Dyelo ), by the Organising Committee, and by the Duma group led by Chkheidze; in Italy it is represented by the reformists with Bissolati at their head; in Holland, by Troelstra’s party; in Sweden, by the majority of the Party led by Branting; in Bulgaria, by the so-called “Shiroki” socialists; in Switzerland by Greulich and Co. In all these countries it is the revolutionary Social-Democrats who have voiced a more or less vigorous protest against social chauvinism. France and Belgium are the two exceptions; there internationalism also exists, but is very weak….

Lenin, while preparing for the revolution in Russian Empire, was fervently looking forward to world revolution. Like Marx and Engels, Lenin was a complete internationalist and a keen supporter of world revolution. He wanted to reverse the direction of Euro-socialism that was nothing but opportunist treachery against the toiling masses, with a sincere belief that in a socialist society, the world’s nation-states would inevitably merge and result in a single world government.

While Lenin was abreast of the world-wide politics, economics, and cultural trends, and consequently he could clearly see the reasons for failure of the socialist parties and unions in Europe to seize power at state-level (discussed in detail in this write-up under section B.2 ‘Failure of Marxism-inspired Movements in Europe and Anglo Colonies till 1914’) we don’t have enough evidences to conclude if Lenin could see through the designs of the then Zionist-Capitalist oligarchy in creation of a new world-system centred on USA. However, I still feel had Lenin seen through those sinister plannings (post–1848 Revolutions) of the Zionist-Capitalist oligarchy, he would certainly had postponed the world revolution at least for five years until the USSR mustered enough (economic and social) strength internally.

Under the direct guidance of Lenin, the Communist International (Comintern), also known as the Third International, was founded at a Congress held in Moscow on 2–6 March 1919 that advocated world-wide communism through world revolution. The Comintern resolved at its Second Congress to “struggle by all available means, including armed force, for the overthrow of the international bourgeoisie and the creation of an international Soviet republic as a transition stage to the complete abolition of the state”.

During Lenin’s lifetime there were three significant failures of the revolutionary movements by the communists in European states as noted below [refer link 🡪 https://en.wikipedia.org/wiki/Communist_International ]:

  1. In Germany the Communist Party of Germany (KPD), led by Karl Liebknecht and Rosa Luxemburg led the party activists into a general strike and armed struggles in Berlin from 5 to 12 January 1919. It was against the SPD led by Friedrich Ebert (and Bernstein-Kautsky duo) programmes of social democracy. In 1914 Liebknecht and Luxemburg had founded the Marxist Spartacus League (Spartakusbund). The revolt was crushed by the overwhelming strength of government/paramilitary troops. The leaders – Karl Liebknecht and Rosa Luxemburg were murdered in cold blood with the approval of SPD leaders;
  2. The Hungarian Soviet Republic, a short-lived Communist state existed from 21 March 1919 to 1 August 1919 which controlled about one-fourth of the Hungary’s historic territory. The leaders Sándor Garbai (head of the government) and Béla Kun (the foreign minister) from the Hungarian Communist Party led the government where in the beginning the majority were socialists. The governing councils exercised power in the name of the working class. The new regime failed to reach an agreement with the Triple Entente that would lead to the lifting of the ongoing economic blockade. A small volunteer army was organized primarily from Budapest factory workers who attempted to recover the lost territories at the hands of neighbouring countries. Initially, with support from the citizens and officers, the republican forces advanced against the Czechoslovakians. However, they finally lost out to the Romanian Army who managed to stop the offensive, and reached Budapest. After a few days, the soviet republic ended on 2 August.
  3. The Italian revolutionary period (Biennio Rosso) between 1919 and 1920 was followed by the violent reaction of the fascist blackshirts militia and eventually Benito Mussolini marched to wrest power at Rome in 1922. The economic crisis at the end of the WW-I with rising inflation, high unemployment and political instability in Italy was characterized by mass strikes and ‘self-management experiments through land and factories occupations’. The Italian Socialist Party (PSI) and the socialist trade union, the General Confederation of Labour (Confederazione Generale del Lavoro, CGL) increased its membership along with the anarchist Italian Syndicalist Union (Unione Sindacale Italiana, USI). In Turin and Milan, factory councils – which Antonio Gramsci considered to be the Italian equivalent of Russia’s soviets – were formed and many factory occupations took place under the leadership of revolutionary socialists and anarcho-syndicalists. ‘The agitations also extended to the agricultural areas of the Padan plain and were accompanied by peasant strikes, rural unrests, and armed conflicts between left-wing and right-wing militias. Industrial action and rural unrest increased significantly: there were 1,663 industrial strikes in 1919, compared to 810 in 1913. More than one million industrial workers were involved in 1919, three times the 1913 figure. The trend continued in 1920, which saw 1,881 industrial strikes. Rural strikes also increased substantially, from 97 in 1913 to 189 by 1920, with over a million peasants taking action. On July 20–21, 1919, a general strike was called in solidarity with the Russian Revolution. In April 1920, Turin metal-workers, in particular at the Fiat plants, went on strike demanding recognition for their ‘factory councils’, a demand the PSI and CGL did not support.’ By 1921, the movement was declining due to massive layoffs and wage cuts. The Fascist blackshirts militia created a reign of terror with the support of Italian industrialists and landowners. The March on Rome of Benito Mussolini installed the first fascist government in October 1922.

It was not that the socio-economic conditions of the common people in the states like Germany, Hungary and Italy were good due to which the people didn’t provide enough support to the revolutionary socialist/communist leaders – on the contrary, the organisational preparedness and campaign among the toiling masses were inadequate in those countries during 1918 to 1922 period. That was the single biggest reason for the successive defeats for the communist internationalists. And, it was also true that just one more success story (apart from Russia) would have created a domino effect in the European continent. After Lenin’s death in January 1924, Trotsky and Zinoviev didn’t find enough support within the Bolshevik Party to continue the programmes on world revolution. Stalin and Bukharin both became doubtful about communist success in Europe. The abandonment of world revolution was finalized as the state policy with Bukharin’s article ‘Can We Build Socialism in One Country in the Absence of the Victory of the West-European Proletariat? (April 1925)’ and Stalin’s article ‘On the Issues of Leninism’ (January 1926). Thereafter Comintern’s main objective became ‘defending the USSR’ while communist takeover of the state was turned into the secondary objective.

Geoff Eley summed up the change in attitude at this time as follows (refer p. 228 of ‘Forging Democracy: The History of the Left in Europe, 1850–2000’ published by Oxford University Press): “By the Fifth Comintern Congress in July 1924 […] the collapse of Communist support in Europe tightened the pressure for conformity. A new policy of “Bolshevization” was adopted, which dragooned the CPs toward stricter bureaucratic centralism. This flattened out the earlier diversity of radicalisms, welding them into a single approved model of Communist organization. Only then did the new parties retreat from broader Left arenas into their own belligerent world, even if many local cultures of broader cooperation persisted. Respect for Bolshevik achievements and defence of the Russian Revolution now transmuted into dependency on Moscow and belief in Soviet infallibility. Depressing cycles of “internal rectification” began, disgracing and expelling successive leaderships, so that by the later 1920s many founding Communists had gone.”

Stalin’s political purges of the 1930s affected Comintern activists. At his direction, the Comintern was infused with Soviet secret police and foreign intelligence operatives, which impeded the normal revolutionary activities by the local activists. To an extent this was also the response of the Bolshevik Party towards the saboteurs implanted by the foreign powers.

On 15 May 1943, a declaration of the Executive Committee was sent out to all sections of the third International, calling for the dissolution of the Comintern. In the international media and academia, the dissolution of Comintern was interpreted as Stalin’s message to his WW-II allies – FD Roosevelt and Winston Churchill – for full cooperation and to ‘keep them from suspecting the USSR of pursuing a policy of trying to foment revolution in other countries’ especially which were allies of the USA and the UK.

It won’t be out of place to discuss a VERY SIGNIFICANT BACKGROUND of the world revolution. Marx and Engels definitely suggested world-wide revolution in which the proletarian class would seize power from the bourgeois class. But, none of them actually wrote that the proletarians would win the power struggle directly with the semi-feudal/ feudal class. Lenin and Trotsky opined that in world revolution, the proletarians could win the power struggle directly with any of the feudal / semi-feudal / bourgeois class. Lenin insisted that the proletarians must join with peasant (semi-proletariat) class to be successful while Trotsky’s original theory of permanent revolution assigned the lead role only to the proletarians. After 1917, Trotsky revised his permanent revolution theory to accept Lenin’s thesis. Interestingly, approach-wise Lenin created a new way which assumed that the bourgeoisie domination of the world was complete with the emergence of world-wide colonial imperialism in the late 19th century (something which Marx and Engels didn’t experience in totality), and hence at the national level the struggle could be against any of the classes that was in power. The relationship between international and national parameters in relation to capital and class remained uncertain and disputed during the 19th and 20th century world. WE WOULD COME BACK TO THIS POINT AGAIN IN ‘SECTION D’ TO DISCUSS HOW MAO ZEDONG OF CHINA WENT EVEN FURTHER TAKING A CUE FROM LENIN!

A note on Economic & Social Rejuvenation of the USSR Till mid-1950s

Since 1917, the Bolshevik Party had to go through a very unstable and unorganised turn of events which impacted the economy and the wellbeing of its citizens. The economic events, management of economy, and economic planning in Soviet Union had always been a much debated subject. Instead of following a standard process of describing what happened and how it happened (such descriptions were/are widely available), I’m more interested in providing some thoughtful clue as to conclude how much the Soviet leaders did correctly and what went wrong. In an article named ‘The rise and decline of the Soviet economy’ (published in Canadian Journal of Economics, Vol. 34, No. 4, November 2001), Robert C. Allen of University of British Columbia wrote:

“In 1928 the country had a small capital stock and a large, ineffectively employed, rural population. The rapid accumulation of capital was the key to rapid growth. The investment rate was pushed up from 8 per cent in 1928 to over 20 per cent in the mid-1930s (Moorsteen and Powell 1966, 364). As a result, the capital stock grew rapidly,” (table C.3).

Table C.3

ParameterPeriod: 1928 to 1940Period: 1950 to 1960
GNP5.85.7
Labour3.31.2
Capital9.09.5
Land1.63.3
Total inputs4.04.0
Productivity1.71.6

Allen continues, “The central issue is explaining this rise in investment. There are three policies or institutions that need to be analysed. The first was the allocation of producer goods. In the 1930s the Five Year Plans increased the fraction of producer goods – machinery and construction – allocated to the producer goods sector itself. Steel and machinery output were high priorities, and their output expanded explosively as the ever greater volumes of steel and machines were ploughed back into those sectors. How much of the accumulation was due to this investment policy?

The second was the collectivization of agriculture. In the industrialization debate of the 1920s Preobrazhensky (1926) is famous for having advocated that heavy industry be financed by the state’s turning the terms of trade against the peasants. In the ‘standard story’ Stalin accomplished this by herding the peasants into collective farms where they were forced to hand over a large fraction of agricultural output at low prices dictated by the state (Millar 1970). While important features of this story have been refuted – for example, agriculture’s terms of trade actually improved during the first Five Year Plan, owing to the thirty-fold inflation of food prices on the unregulated farmers’ markets (Ellman 1975) – the question remains whether investment could have been increased without impoverishing the rural population…

The third was the use of output targets and the corresponding provision of soft budgets to direct industrial enterprises. During the New Economic Policy, industry was organized into trusts and directed to maximize profits. Soft budgets first appeared in the mid-1920s, when the state tried to increased agricultural sales by lowering the prices of manufactured goods (Johnson and Temin 1993). In the 1930s soft budgets became general, as firms were given output targets and the bank credits to finance them. Kornai (1992) criticized these practices in the 1980s, when there was full employment. The question is whether employment-creating policies like soft budgets may have accelerated growth under the surplus labour conditions of the 1930s.”

Allen carried out extensive economic simulations, as he wrote in that article, “The simulations show that collectivization had a negative effect on all indicators – GDP, investment, consumption, and, of course, population – in the mid-1930s. However, collectivization pushed up the growth rate enough in the rest of the decade to raise GDP, capital accumulation, and consumption above the 1939 levels they would have realized had the agrarian system of the

1920s been preserved. Collectivization raised growth by increasing rural-urban migration: First, low procurement prices lowered farm incomes below the level they would have otherwise reached. Migration increased in consequence, since it was a function of the ratio of urban to rural income. Second, the deportation of ‘kulaks’ and state terrorism in general increased the rate of rural-urban migration at every ratio of urban to rural consumption. Terrorism increased economic growth to that small degree.”

Allen’s findings point towards three significant conclusions about economic development of the USSR under Stalin:

  1. “The New Economic Policy, which involved the preservation of peasant farming and a market relationship between town and country, was a conducive framework for rapid industrialization. Collectivization made little additional contribution to this effort”
  2. “The autarchic development of the producer goods sector was a viable source of new capital equipment. Exporting wheat and importing machinery – that is, following comparative advantage – was not necessary for rapid growth
  3. “The central planning of firm output in conjunction with the soft-budget constraint was effective in mobilizing otherwise unemployed labour. This additional employment made a significant contribution to output as well as distributing consumption widely”

The above inferences were more nuanced than the conclusions which were drawn from a position of bias – in short they proved (a) Central planning was effective as a concept and resulted in significant gains, (b) NEP was not an ineffective programme at all.

On the social front, Soviet Union achieved a tremendous success in improving the key index of ‘total life expectancy at birth’. Due to government-sponsored food-for-all, healthcare-for-all, education-for-all, housing-for-all programmes, the commoners benefitted the most – the life expectancy at birth increased phenomenally till 1958 CE (Figure C.1 as given below).

Figure C.1

https://cepr.org/sites/default/files/styles/flexible_wysiwyg/public/image/FromMay2014/harrisonfig5.png?itok=lHcMWI8v

‘By 1953 when Stalin died, USSR already changed beyond imagination. A country that had, 30 years back, one of the most oppressive society with extreme poverty, widespread illiteracy, very high mortality, and high concentration of wealth within the aristocracy, got transformed into a society where ALL citizens had guaranteed food-education-healthcare-housing-employment-vacation facilities. Soviet Union was the second most powerful country in terms of scientific research, atomic research (second country to test atomic bomb), space research (first country to send space craft), military machinery, and industrial machinery.’ Within three decades, the Communist party under Stalin transformed the Soviet Union into world’s second most powerful state struggling almost singlehandedly against the Zionist-Capitalist oligarchy, their governments in Europe and colonies, and their monstrous Fascist offspring. Born to a shoemaker and a house cleaner, with a few years of studies in an Christian Orthodox seminary in Georgia, Stalin turned into a true anti-elitist Marxist Leninist revolutionary who even sacrificed his son during WW-II by refusing to exchange him (in German captivity) with German General (in Soviet captivity).

(D) Communist Party of China Followed Soviet Union With A Splendid Victory

The prospect of partitioning China by the colonial imperialist powers during the end of 19th century elicited from J A Hobson (refer Imperialism, London, 1902) the following economic appraisal: “The greater part of Western Europe might then assume the appearance and character already exhibited by tracts of country in the South of England, in the Riviera, and in the tourist-ridden or residential parts of Italy and Switzerland, little clusters of wealthy aristocrats drawing dividends and pensions from the Far East, with a somewhat larger group of professional retainers and tradesmen and a larger body of personal servants and workers in the transport trade and in the final stages of production of the more perishable goods: all the main arterial industries would have disappeared, the staple foods and semi-manufactures flowing in as tribute from Asia and Africa…. We have foreshadowed the possibility of even a larger alliance of Western states, a European federation of Great Powers which, so far from forwarding the cause of world civilisation, might introduce the gigantic peril of a Western parasitism, a group of advanced industrial nations, whose upper classes drew vast tribute from Asia and Africa, with which they supported great tame masses of retainers, no longer engaged in the staple industries of agriculture and manufacture, but kept in the performance of personal or minor industrial services under the control of a new financial aristocracy. Let those who would scout such a theory [he should have said: prospect] as undeserving of consideration examine the economic and social condition of districts in Southern England today which are already reduced to this condition, and reflect upon the vast extension of such a system which might be rendered feasible by the subjection of China to the economic control of similar groups of financiers, investors [rentiers] and political and business officials, draining the greatest potential reservoir of profit the world has ever known, in order to consume it in Europe. The situation is far too complex, the play of world forces far too incalculable, to render this or any other single interpretation of the future very probable; but the influences which govern the imperialism of Western Europe today are moving in this direction, and, unless counteracted or diverted, make towards such a consummation.”

Among all the passionate groups of political activists around the world who would consider themselves as communists and/or Marxists, the Communist Party of China (CPC) was the most outstanding for two reasons: (a) the young leaders were very knowledgeable and analytical about the realities of their society from the Marxist point of view – apart from the Bolshevik leaders such capabilities were indeed rare, (b) those youthful leaders and their followers had tremendous perseverance that was matched ONLY by two other parties in the then world – Russian Bolshevik Party led by Lenin, and Vietnamese Communist Party led by Ho Chi Minh.

CPC leaders were quick to understand the social stratification and the political economy of China during 1920s – with the formal abolition of empire just a decade back, rise of a bourgeoisie democratic party, Kuomintang (KMT) few years back, and foreign imperialist powers recklessly manipulating the economy for their gain, the CPC leaders did their homework quite assiduously as Mao ZeDong wrote in March 1926 in ‘Analysis of the Classes in Chinese Society’:

“What is the condition of each of the classes in Chinese society?

The landlord class and the comprador class. In economically backward and semi-colonial China the landlord class and the comprador class are wholly appendages of the international bourgeoisie, depending upon imperialism for their survival and growth.

The middle bourgeoisie. This class represents the capitalist relations of production in China in town and country. The middle bourgeoisie, by which is meant chiefly the national bourgeoisie, … the idea cherished by China’s middle bourgeoisie of an “independent” revolution in which it would play the primary role is a mere illusion.

The petty bourgeoisie. Included in this category are the owner-peasants, the master handicraftsmen, the lower levels of the intellectuals–students, primary and secondary school teachers, lower government functionaries, office clerks, small lawyers–and the small traders.

Although all strata of this class have the same petty-bourgeois economic status, they fall into three different sections. The first section consists of those who have some surplus money or grain, that is, those who, by manual or mental labour, earn more each year than they consume for their own support… while they have no illusions about amassing great fortunes, they invariably desire to climb up into the middle bourgeoisie.

The second section consists of those who in the main are economically self-supporting. They are quite different from the people in the first section; … They feel they cannot earn enough to live on by just putting in as much work as before. To make both ends meet they have to work longer hours, get up earlier, leave off later,

The third section consists of those whose standard of living is falling. Many in this section, who originally belonged to better-off families, are undergoing a gradual change from a position of being barely able to manage to one of living in more and more reduced circumstances…. They are in great mental distress because there is such a contrast between their past and their present.

The semi-proletariat. What is here called the semi-proletariat consists of five categories: (1) the overwhelming majority of the semi-owner peasants, (2) the poor peasants, (3) the small handicraftsmen, (4) the shop assistants and (5) the pedlars. … They feel the constant pinch of poverty and dread of unemployment, because of heavy family burdens and the gap between their earnings and the cost of living;

The proletariat. The modern industrial proletariat numbers about two million. It is not large because China is economically backward. These two million industrial workers are mainly employed in five industries–railways, mining, maritime transport, textiles and shipbuilding–and a great number are enslaved in enterprises owned by foreign capitalists…. The coolies in the cities are also a force meriting attention. They are mostly dockers and rickshaw men, and among them, too, are sewage carters and street cleaners…. By rural proletariat we mean farm labourers hired by the year, the month or the day. Having neither land, farm implements nor funds, they can live only by selling their labour power. Of all the workers they work the longest hours, for the lowest wages, under the worst conditions, and with the least security of employment.

To sum up, it can be seen that our enemies are all those in league with imperialism – the warlords, the bureaucrats, the comprador class, the big landlord class and the reactionary section of the intelligentsia attached to them. The leading force in our revolution is the industrial proletariat. Our closest friends are the entire semi-proletariat and petty bourgeoisie. As for the vacillating middle bourgeoisie, their right-wing may become our enemy and their left-wing may become our friend but we must be constantly on our guard and not let them create confusion within our ranks.”

In another interesting writing, Mao in May 1930 gave an instruction to party comrades about the approach of problem resolution in a relatively unknown pamphlet ‘Oppose Book Worship’:

“Unless you have investigated a problem, you will be deprived of the right to speak on it. Isn’t that too harsh? Not in the least. When you have not probed into a problem, into the present facts and its past history, and know nothing of its essentials, whatever you say about it will undoubtedly be nonsense.

It must be borne in mind that the bourgeois parties, too, constantly discuss their tactics of struggle. They are considering how to spread reformist influences among the working class so as to mislead it and turn it away from Communist Party leadership, how to get the rich peasants to put down the uprisings of the poor peasants and how to organize gangsters to suppress the revolutionary struggles.”

With such categorical understanding of the social-economic-political tenets of Marxism and problem-solving as noted above, it was no wonder that the disastrous policies of the Third International (Comintern) couldn’t result in complete rout of the CPC after the Shanghai massacre of April 1927 when the KMT butchered about 5000 CPC cadres followed by execution of another 10,000 communists in Guangzhou, Xiamen, Fuzhou, Ningbo, Nanjing, Hangzhou and Changsha during June 1927. The Soviet Union was forced to officially terminate its cooperation with the KMT. In August 1927 CPC founded the Red Army to fight the KMT military, that grew under Mao Zedong and Zhu De to about 130,000 in 1933 before going down to about 8,000 after three Red Army fronts successfully completed their retreat journey over 8000 kilometre to north-west China in October 1935 escaping from the KMT forces (history called it as the Long March). Holding that “political power grows out of the barrel of a gun” Mao ZeDong and Zhou EnLai emphatically followed Leninist principle of revolutionary struggle of the vast majority of people (read proletarians and peasants) against the exploiting classes. Lenin added peasants to the original leading force of proletarians, Mao did the opposite – China being completely feudal agricultural economy with minimum industrial output, he created peasant army in rural China, waged guerrilla warfare, and simultaneously formed unions in the urban centres who would support the armed struggle by the Chinese Red Army (later renamed as People’s Liberation Army).

It was only a matter of time before the CPC bounced back into action. It won’t be an exaggeration to state that CPC was the most loyal follower of Lenin’s teachings – in July 1937 Mao wrote a pamphlet ‘On Practice: On the Relation Between Knowledge And Practice’ in which he stated: “From the Marxist viewpoint, theory is important, and its importance is fully expressed in Lenin’s statement, “Without revolutionary theory there can be no revolutionary movement.” But Marxism emphasizes the importance of theory precisely and only because it can guide action. If we have a correct theory but merely prate about it, pigeonhole it and do not put it into practice, then that theory, however good, is of no significance. Knowledge begins with practice, and theoretical knowledge is acquired through practice and must then return to practice… Stalin has well said, “Theory becomes purposeless if it is not connected with revolutionary practice, just as practice gropes in the dark if its path is not illumined by revolutionary theory.“

On 1 October 1949, CCP Chairman Mao Zedong formally proclaimed the establishment of the People’s Republic of China at the new nation’s founding ceremony and inaugural military parade in Tiananmen Square, Beijing. During the long and protracted civil war Mao Zedong lost his wife, a son, two brothers, and sister, Zhou Enlai lost all his children, while Zhu De found decapitated head of his pregnant wife nailed to the city gate. At the time, China was a backward agrarian economy with widespread poverty, lawlessness and illiteracy; of its five hundred million people, eight in every ten people were illiterate, one in every eight people was drug addict. It was a time when peasants had to give away two-thirds of their produce in rent/tax, and people sold themselves to avoid starvation.

The successful Chinese Revolution was a confirmation of the interplay between theory and practice – not in a static state but under a dynamic condition where managing the contradictions became the key to success. Mao was a perfect and sincere student of the teachings of Marx-Engels-Lenin so far his intellectual orientation was concerned. Blended with, what we can call as the Chinese characteristics, Mao and Zhou were in perfect position to implement the Marxist tenets under Chinese conditions. Mao revised the Marxist theory to relate it to the Chinese socio-political conditions. An observer remarked that, “In the 1930s, when Mao talked about contradiction, he meant the contradiction between subjective thought and objective reality. In Dialectal Materialism of 1940, he saw idealism and materialism as two possible correlations between subjective thought and objective reality. In the 1940s, he introduced no new elements into his understanding of the subject-object contradiction. In the 1951 version of On Contradiction, he saw contradiction as a universal principle underlying all processes of development, yet with each contradiction possessed of its own particularity”.

In one of the most outstanding declaration in the post WW-II world, Zhou EnLai in December 1953 (during discussions with India about how to maintain relationship) outlined the shortest but most thoughtful policy of international relations in ‘Five Principles For Peaceful Coexistence’: “The principles that should govern relations between our two countries were put forward soon after the founding of New China, namely, the principles of mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other’s internal affairs, equality and mutual benefit, and peaceful coexistence.

A note on PLA Till mid-1950s

To assess the role of armed struggle in communist-dominated revolutions would be in itself a humongous task. In Russia, during 1917 Revolution ‘Red Army’ was created from scratch primarily under Trotsky; it fought against the White Army + forces of all bourgeois democratic European countries; after winning the civil war in December 1922 Soviet Union was proclaimed; it went through transformation after Marshal Tukhachevsky’s conspiracy was unearthed – Stalin rebuilt the Red Army; during the WW-II Red Army singlehandedly crushed combined European forces under Nazi command and USSR regained most of Tsar era lands by 1945. SO, ANY SERIOUS READER WOULD FIND THAT RED ARMY WAS A KEY INSTRUMENT OF THE COMMUNIST PARTY TO GAIN POWER IN USSR.

In China, the role of armed struggle was even MORE important. Unlike Russia, the Communist Party of Chinese created and nurtured Red Army / Peoples’ Liberation Army much early in the process. During 1927 ‘Red Army’ was created; it fought the civil war against the Kuo Mintang forces and undertook the ‘Long March’ in order to create a safe base by 1934; during the Second Sino-Japanese War from 1937 to 1945, the Red Army formed two units (the Eighth Route Army and the New Fourth Army) and battled the Japanese forces as a united front (with Kuo Mintang); after Japanese surrender in WW-II the two units of Red Army was merged and renamed as Peoples’ Liberation Army which resumed their fight against the Kuo Mintang forces; regular fighting in which PLA (assisted by the USSR) was engaged with the Kuo Mintang forces aided by the USA and the UK went on till 1950; from October 1950 to July 1953 the volunteer forces of PLA fought alongside the army of North Korean workers party/communists against the UNO forces led by the USA – PLA lost more than 100 thousand of soldiers, Mao ZeDong’s son being one of them. AGAIN, A DISCERNING READER CAN CONCLUDE THAT RED ARMY / PLA PLAYED A STELLAR ROLE IN ESTABLISHING THE COMMUNIST PARTY TO GAIN POWER IN CHINA.

A note on Economy of the PRC Till mid-1950s

Initial acts after taking over the state power, were swift and effective. The banking system was nationalized and People’s Bank of China became the central bank for the country. The government tightened credit, established value of the currency, implemented centrally controlled government budgets – all of these ensured that inflation was under strict control. CPC undertook a land reform programme through which 45% of the arable land were redistributed to the 65% of peasant families who owned little or no land. These peasants were encouraged to form sort of mutual aid teams among 7-8 households. CPC also nationalised most of the industrial units as soon as they came to power. By 1952, 17% of the industrial units were outside state-owned enterprises compared to about 65% during Kuo Min Tang government.

Senior leaders like Mao, Zhou, and Liu and their factions debated exhaustively on what would the 1st stage of socialism look like and how to achieve that. ‘Marx-Engels-Lenin mostly engaged in deliberating the advent of capitalism in European society, hence theoretical discussions and writings on socialism in ‘Asiatic’ society remained a far cry from what was expected by the 20th century socialist revolutionaries in China, India, Vietnam, and Indonesia. ‘Treading on the same path taken by Soviet Union, 1949 onwards China went on to implement a mode of production which was essentially ‘state capitalism’. Soviet Union as a state was the owner of the means of production and ‘commodity’ (which by definition is integrated with exchange-value i.e. ‘price’ in the ‘market’) that were produced. Following similar model, China created a new economy that also revolved around commodity production by state-owned enterprises, agricultural output production by state-owned communes and accumulation of capital by the state (through extraction of surplus from the rural agriculture and light industry). In Soviet Union and China, the ideologues termed it ‘socialist commodity’, however, socialism’ can’t theoretically accommodate production of ‘commodity’ that inherently refers to ‘market’. In fact, as Marxism suggests, the concepts of ‘commodity’, ‘market’, ‘capital’ and ‘surplus capital’ are intricately joined with ‘ownership’ of means of production. Marx and Engels were clear that these concepts don’t have place in socialist/ communist society. It is not true that ownership pertains to only ‘private’ citizens, even ‘state’ can own assets to be used as ‘capital’ and the profits out of business gets appropriated by the state authority and its close followers. Undoubtedly, Stalin and Mao being the most committed followers of philosophy and ideology of Marx-Engels-Lenin, were well aware of the final destination of the Marxist journey.’ But then for both of them, accumulation of enough capital was the first milestone which would provide opportunity to implement socialism afterwards. Mao wrote in ‘On State Capitalism on July 9, 1953 (as a comment on a document of the National Conference on Financial and Economic Work held in the summer of 1953), “The present-day capitalist economy in China is a capitalist economy which for the most part is under the control of the People’s Government and which is linked with the state-owned socialist economy in various forms and supervised by the workers. It is not an ordinary but a particular kind of capitalist economy, namely, a state-capitalist economy of a new type. It exists not chiefly to make profits for the capitalists but to meet the needs of the people and the state. True, a share of the profits produced by the workers goes to the capitalists, but that is only a small part, about one quarter, of the total. The remaining three quarters are produced for the workers (in the form of the welfare fund), for the state (in the form of income tax) and for expanding productive capacity (a small part of which produces profits for the capitalists). Therefore, this state-capitalist economy of a new type takes on a socialist character to a very great extent and benefits the workers and the state.”

‘The First Five-Year Plan (1953–57) followed the Soviet Union model which assigned primacy to development of heavy industry. Government of China controlled about 67% as directly state-owned enterprise and 33% as joint state-private enterprise. There was no more privately owned company. Key sectors like Coal and Iron ore mining, Electricity generation, Heavy Machinery manufacturing, Iron and Steel manufacturing, Cement manufacturing etc. were modernised by construction of hundreds of new factories with help from engineers sent by Soviet Union. Growth of industrial production increased at average rate of 19% per year during this period. During this period, more than 90% of cottage/handicraft industries were organized into cooperatives.’

The agricultural sector however didn’t perform as per expectation and only clocked average growth rate of 4% per year. From loosely constructed ‘mutual aid teams’, peasants were encouraged to form ‘cooperatives’, in which individual families still received some income on the basis of their contribution of land. In the next stage, ‘collectives’ were formed on which income was based only on the amount of labour contributed by each family. In addition, each family was allowed to retain a small plot to grow vegetables and fruit for their personal consumption. By 1957 the collectivization process covered 93% of all farm households.

A note on Chinese ‘New Democracy’ & Its Possible Impact On World Revolution

Under section C, while writing on MYTH 7, I discussed about the ‘world revolution’ from theoretical perspective – Marx-Engels, Lenin, Trotsky, Stalin, Bukharin were the main theorists on this VERY SIGNIFICANT subject. And, Mao took the thread from Lenin and developed it further with ingenuity. [I have never indulged in simulations on future geopolitics, before I started writing in The Saker. Here also, I couldn’t help myself but note down a very interesting ‘what-if’ scenario built on the last century. What would had happened if Stalin lived another 10 years when Mao was leading China? Possibility of almost entire Asia and Africa forming a socialist / revolutionary democratic block with USSR as the ‘leader’ and China as the ‘manager’ was VERY REAL! That was not really because of military strength, but because of two fundamentally important vectors in the then international relations – (a) entire Asia and Africa were reeling under colonial imperialism of the Zionist-Capitalist oligarchy and its pet bourgeois democratic governments in Europe and the USA, to those oppressed countries 1945 to 1965 was the period of liberation, (b) Lenin’s hypothesis which was further embellished by Mao in 1940 could potentially line up all classes of the Asian and African nations against the colonial imperialist European powers during their liberation struggle. And, it need not be stated that, both Stalin and Mao had that capability, sagacity, and sincerity to complete the journey of ‘world revolution’ in the lands where three-fourth of the world’s population lived!]

The theory Mao suggested in ‘On New Democracy’ in January 1940 contained the following key concepts:

(i) “In terms of social classes, it was a united front of the proletariat, the peasantry, the urban petty bourgeoisie and the [national – by author] bourgeoisie.”

(ii) “a socialist state [USSR – by author] has been established and has proclaimed its readiness to give active support to the liberation movement of all colonies and semi-colonies”

(iii) “In this era, any revolution in a colony or semi-colony that is directed against imperialism, i.e., against the international bourgeoisie or international capitalism, no longer comes within the old category of the bourgeois-democratic world revolution, but within the new category. It is no longer part of the old bourgeois, or capitalist, world revolution, but is part of the new world revolution, the proletarian-socialist world revolution.”

(iv) “Although such a revolution in a colonial and semi-colonial country is still fundamentally bourgeois-democratic in its social character during its first stage or first step, and although its objective mission is to clear the path for the development of capitalism, it is no longer a revolution of the old type led by the bourgeoisie with the aim of establishing a capitalist society and a state under bourgeois dictatorship. It belongs to the new type of revolution led by the proletariat with the aim, in the first stage, of establishing a new-democratic society and a state under the joint dictatorship of all the revolutionary classes. Thus this revolution actually serves the purpose of clearing a still wider path [means development and accumulation of initial capital – author] for the development of socialism. In the course of its progress, there may be a number of further sub-stages, because of changes on the enemy’s side and within the ranks of our allies, but the fundamental character of the revolution remains unchanged.

(v) “Such a revolution attacks imperialism at its very roots, and is therefore not tolerated but opposed by imperialism. However, it is favoured by socialism and supported by the land of socialism and the socialist international proletariat…Therefore, such a revolution inevitably becomes part of the proletarian-socialist world revolution.”

I would like to conclude with my understanding on this issue in a few simple and straight-forward sentences –

If a communist revolutionary has to follow Marx-Engels line-by-line and word-by-word, then Marxism would essentially become another religion with a dedicated band of followers who will worship Marx and Engels along with coded rituals.

Lenin created the channels that will route the ‘sacred texts’ of Marxism towards practical implementation – he had established that (i) the proletarians could ONLY win in a revolution if they get the peasants, (ii) under a bourgeois-led imperialist economy a semi-feudal (industrially) backward country i.e. Russia, the communists could stage a revolution.

Mao went a step further and proved that (i) the combination of the proletarians, the peasants, the petty-bourgeois, the national bourgeois could ALSO win a revolution where the proletarians+the peasants would lead, (ii) in a semi-feudal semi-colonial (industrially) backward country i.e. China the economic growth would be supported by the inclusion of the national bourgeois, only if the proletarians+the peasants dominate the governance.

None of the Marxist leader-cum-theorists however seriously tried to develop any hypothesis/theory on how to achieve the first stage and second stage of communism. We will have to wait.

ANNEXURES

A note on annexures: The two great masters (Marx and Engels) penned dozens of books, and hundreds of pamphlets, all of which are priceless repository for Marxism-Socialism-Communism; outstanding leader-cum-philosophers (controversial or not) of Marxist movements like Lenin, Mao, Gramcsi, Lukács contributed hundreds of serious documents. I have selected 15 pieces — from the writings of the Marxist thinkers and leaders like Engels, Lenin, Mao, Stalin, Trotsky & few modern intellectuals like Robert Brenner, Charles Post — all of which, in my opinion, should be read, analysed and debated by every Marxist and non-Marxist political-social activists (who firmly believe in a new humanitarian dawn for the society will come through socialism/communism). These articles / thesis / chapter of book provide the most penetrating analysis regarding the significant undercurrents of history-economic-politics-sociology of the human society in the modern world – it is not that these are unquestionable, far from it, these call for lively debates through which the Marxist and non-Marxist revolutionary movements across the world can LEARN TO WIN IN FUTURE!!!

Annexure1: The English Elections by Frederick Engels

[First published in Der Volkstaat 4 March 1874 (published in book format in ‘Marx Engels On Britain’ by Progress Publishers in 1953)]

The English Parliamentary elections are now over. The brilliant Gladstone, who could not govern with a majority of sixty-six, suddenly dissolved Parliament, ordered elections within eight to fourteen days, and the result was — a majority of fifty against him. The second Parliament elected under the Reform Bill of 1867 and the first by secret ballot has yielded a strong conservative majority. And it is particularly the big industrial cities and factory districts, where the workers are now absolutely in the majority, that send Conservatives to Parliament. How is this?

This is primarily the result of Gladstone’s attempt to effect a coup d’état by means of the elections. The election writs were issued so soon after the dissolution that many towns had hardly five days, most of them hardly eight, and the Irish, Scotch and rural electoral districts at most fourteen days for reflection. Gladstone wanted to stampede the voters, but coup d’état simply won’t work in England and attempts to stampede rebound upon those who engineer them. In consequence, the entire mass of apathetic and wavering voters voted solidly against Gladstone.

Moreover, Gladstone had ruled in a way that directly flouted John Bull’s traditional usage. There is no denying that John Bull is dull-witted enough to consider his government to be not his lord and master, but his servant, and at that the only one of his servants whom he can discharge forthwith without giving any notice. Now, if the party in office time and again allows its ministry, for very practical reasons, to spring a big surprise with theatrical effect on occasions when taxes are reduced or other financial measures instituted, it permits this sort of thing only by way of exception in case of important legislative measures. But Gladstone had made these legislative stage tricks the rule. His major measures were mostly as much of a surprise to his own party as to his opponents. These measures were practically foisted upon the Liberals, because if they did not vote for them they would immediately put the opposition party in power. And if the contents of many of these measures, e.g., the Irish Church Bill and the Irish Land Bill, were for all their wretchedness an abomination to many old liberal-conservative Whigs, so to the whole of the party was the manner in which these bills were forced upon it. But this was not enough for Gladstone. He had secured the abolition of the purchase of army commissions by appealing without the slightest need to the authority of the Crown instead of Parliament, thereby offending his own party. In addition he had surrounded himself with a number of importunate mediocrities who possessed no other talent than the ability to make themselves needlessly obnoxious. Particular mention must be made here of Bruce, Minister of Home Affairs, and Ayrton, the real head of the London local government. The former was distinguished for his rudeness and arrogance towards workers’ deputations; the latter ruled London in a wholly Prussian manner, for instance, in the case of the attempt to suppress the right to hold public meetings in the parks. But since such things simply can’t be done here, as is shown by the fact that the Irish immediately held a huge mass meeting in Hyde Park right under Mr. Ayrton’s nose in spite of the Park ordinance, the Government suffered a number of minor defeats and increasing unpopularity in consequence.

Finally, the secret ballot has enabled a large number of workers who usually were politically passive to vote with impunity against their exploiters and against the party in which they rightly see that of the big barons of industry, namely, the Liberal Party. This is true even where most of these barons, following the prevailing fashion, have gone over to the Conservatives. If the Liberal Party in England does not represent large-scale industry as opposed to big landed property and high finance, it represents nothing at all.

Already the previous Parliament ranked below the average in its general intellectual level. It consisted mainly of the rural gentry and the sons of big landed proprietors, on the one hand, and of bankers, railway directors, brewers, manufacturers and sundry other rich upstarts, on the other; in between, a few statesmen, jurists and professors. Quite a number of the last-named representatives of the “intelligentsia” failed to get elected this time, so that the new Parliament represents big landed property and the money-bags even more exclusively than the preceding one. It differs, however, from the preceding one in comprising two new elements: two workers and about fifty Irish Home Rulers.

As regards the workers it must be stated, to begin with, that no separate political working-class party has existed in England since the downfall of the Chartist Party in the fifties. This is understandable in a country in which the working-class has shared more than anywhere else in the advantages of the immense expansion of its large-scale industry. Nor could it have been otherwise in an England that ruled the world market; and certainly not in a country where the ruling classes have set themselves the task of carrying out, parallel with other concessions, one point of the Chartists’ programme, the People’s Charter, after another. Of the six points of the Charter two have already become law: the secret ballot and the abolition of property qualifications for the suffrage. The third, universal suffrage, has been introduced, at least approximately; the last three points are still entirely unfulfilled: annual parliaments, payment of members, and, most important, equal electoral areas.

Whenever the workers lately took part in general politics in particular organisations they did so almost exclusively as the extreme left wing of the “great Liberal Party” and — in this role they were duped at each election according to all the rules of the game by the great Liberal Party. Then all of a sudden came the Reform Bill which at one blow changed the political status of the workers. In all the big cities they now form the majority of the voters and in England the Government as well as the candidates for Parliament are accustomed to court the electorate. The chairmen and secretaries of Trade Unions and political working-men’s societies, as well as other well-known labour spokesmen who might be expected to be influential in their class, had overnight become important people. They were visited by Members of Parliament, by lords and other well-born rabble, and sympathetic enquiry was suddenly made into the wishes and needs of the working-class. Questions were discussed with these “labour leaders” which formerly evoked a supercilious smile or the mere posture of which used to be condemned; and one contributed to collections for working-class purposes. It ,thereupon quite naturally occurred to the “labour leaders” that they should get themselves elected to Parliament, to which their high-class friends gladly agreed in general, but of course only for the purpose of frustrating as far as possible the election of workers in each particular case. Thus the matter got no further.

Nobody holds it against the “labour leaders” that they would have liked to get into Parliament. The shortest way would have been to proceed at once to form anew a strong workers’ party with a definite programme, and the best political programme they could wish for was the People’s Charter. But the Chartists’ name was in bad odour with the bourgeoisie precisely because theirs had been an outspokenly proletarian party, and so, rather than continue the glorious tradition of the Chartists, the “labour leaders” preferred to deal with their aristocratic friends and be .’respectable,” which in England means acting like a bourgeois. Whereas under the old franchise the workers had to a certain extent been compelled to figure as the tail of the radical bourgeoisie, it was inexcusable to make them go on playing that part after the Reform Bill had opened the door of Parliament to at least sixty working-class candidates.

This was the turning point. In order to get into Parliament the “labour leaders” had recourse, in the first place, to the votes and money of the bourgeoisie and only in the second place to the votes of the workers themselves. But by doing so they ceased to be workers’ candidates and turned themselves into bourgeois candidates. They did not appeal to a working-class party that still had to be formed but to the bourgeois “great Liberal Party.” Among themselves they organised a mutual election assurance society, the Labour Representation League,[1] whose very slender means were derived in the main from bourgeois sources. But this was not all. The radical bourgeois has sense enough to realise that the election of workers to Parliament is becoming more and more inevitable; it is therefore in their interest to keep the prospective working-class candidates under their control and thus postpone their actual election as long, as possible. For that purpose they have their Mr. Samuel Morley, a London millionaire, who does not mind spending a couple of thousand pounds in order, on the one hand, to be able to act as the commanding general of this sham labour general staff and, on the other, with its assistance to let himself be hailed by the masses as a friend of labour, out of gratitude for his duping the workers. And then, about a year ago, when it became ever more likely that Parliament would be dissolved, Morley called his faithful together in the London Tavern. They all appeared, the Potters, Howells, Odgers, Haleses, Mottersheads, Cremers, Eccariuses and the rest of them — a conclave of people every one of whom had served, or at least had offered to serve, during the previous Parliamentary elections, in the pay of the bourgeoisie, as an agitator for the “great Liberal Party.” Under Morley’s chairmanship this conclave drew up a “labour programme” to which any bourgeois could subscribe and which was to form the foundation of a mighty movement to chain the workers politically still more firmly to the bourgeois and, as these gentry thought, to get the “founders” into Parliament. Besides, dangling before their lustful eyes these “founders” already saw a goodly number of Morley’s five-pound notes with which they expected to line their pockets before the election campaign was over. But the whole movement fell through before it had fairly started. Mr. Morley locked his safe and the founders once more disappeared from the scene.

Four weeks ago Gladstone suddenly dissolved Parliament. The inevitable “labour leaders” began to breathe again: either they would get themselves elected or they would again become well-paid itinerant preachers of the cause of the “great Liberal Party.” But alas! the day appointed for the elections was so close that they were cheated out of both chances. True enough, a few did stand for Parliament; but since in England every candidate, before he can be voted upon, must contribute two hundred pounds (1,240 thaler) towards the election expenses and the workers had almost nowhere been organised for this purpose, only such of them could stand as candidates seriously as obtained this sum from the bourgeoisie, i.e., as acted with its gracious permission. With this the bourgeoisie had done its duty and in the elections themselves allowed them all to suffer a complete fiasco.

Only two workers got in, both miners from coal pits. This trade is very strongly organised in three big unions, has considerable means at its disposal, controls an undisputed majority of the voters in some constituencies and has worked systematically for direct representation in Parliament ever since the Reform Acts were passed. The candidates put up were the secretaries of the three Trade Unions. The one, Halliday, lost out in Wales; the other two came out on top: MacDonald in Stafford and Burt in Morpeth. Burt is little known outside of his constituency. MacDonald, however, betrayed the workers of his trade when, during the negotiations on the last mining law, which he attended as the representative of his trade, he sanctioned an amendment which was so grossly in the interests of the capitalists that even the government had not dared to include it in the draft.

At any rate, the ice has been broken and two workers now have seats in the most fashionable debating club of Europe, among those who have declared themselves the first gentlemen of Europe.

Alongside of them sit at least fifty Irish Home Rulers. When the Fenian (Irish-republican) rebellion of 1867 had been quelled and the military leaders of the Fenians had either gradually been caught or driven to emigrate to America, the remnants of the Fenian conspiracy soon lost all importance. Violent insurrection :had no prospect of success for many years, at least until such time as England would again be involved in serious difficulties abroad. Hence a legal movement remained the only possibility, and such a movement was undertaken under the banner of the Home Rulers, who wanted the Irish to be “masters in their own house.” They made the definite demand that the Imperial Parliament in London should cede to a special Irish Parliament in Dublin the right to legislate on all purely Irish questions; very wisely nothing was said meanwhile about what was to be understood as a purely Irish question. This movement, at first scoffed at by the English press, has become so powerful that Irish M.P.’s of the most diverse party complexions- Conservatives and Liberals, Protestants and Catholics (Butt, who leads the movement, is himself a Protestant) and even a native-born Englishman sitting for Golway — have had to join it. For the first time since the days of O’Connell, whose repeal movement collapsed in the general reaction about the same time as the Chartist movement, as a result of the events of 1848 — he had died in 1847 — a well-knit Irish party once again has entered Parliament, but under circumstances that hardly permit it constantly to compromise A la O’Connell with the Liberals or to have individual members of it sell themselves retail to Liberal governments, as after him has become the fashion.

Thus both motive forces of English political development have now entered Parliament: on the one side the workers, on the other the Irish as a compact national party. And even if they may hardly be expected to play a big role in this Parliament — the workers will certainly not — the elections of 1874 have indisputably ushered in a new phase in English political development.

Annexure2: The Peasant Question in France and Germany by Frederick Engels

[Written: between November 15-22, 1894; First Published: in Die Neue Zeit, 1894-95; Translated: by Progress Publishers; Transcribed: by director@marx.org, October 1993]

Part 1: France

The rural population in which we can address ourselves consists of quite different parts, which vary greatly with the various regions.

In the west of Germany, as in France and Belgium, there prevails the small-scale cultivations of small-holding peasants, the majority of whom own and the minority of whom rent their parcels of land.

In the northwest — in Lower Saxony and Schleswig-Holstein — we have a preponderance of big and middle peasants who cannot do without male and female farm servants and even day labourers. The same is true of part of Bavaria.

In Prussia east of the Elbe, and in Mecklenburg, we have the regions of big landed estates and large-scale cultivation with hinds, cotters, and day laborers, and in between small and middle peasants in relatively unimportant and steadily decreasing proportion.

In central Germany, all of these forms of production and ownership are found mixed in various proportions, depending upon the locality, without the decided prevalence of any particular form over a large area.

Besides, there are localities varying in extent where the arable land owned or rented is insufficient to provide for the subsistence of the family, but can serve only as the basis for operating a domestic industry and enabling the latter to pay the otherwise incomprehensibly low wages that ensure the steady sale of its products despite all foreign competition.

Which of these subdivisions of the rural population can be won over by the Social-Democratic party? We, of course, investigate this question only in broad outline; we single out only clear-forms. We lack space to give consideration in intermediate stages and mixed rural populations.

Let us begin with the small peasant. Not only is he, of all peasants, the most important for Western Europe in general, but he is also the critical case that decides the entire question. Once we have clarified in our minds our attitude to the small peasant, we have all the data needed to determine our stand relative to the other constituent parts of the rural population.

By small peasant we mean here the owners or tenant — particularly the former — of a patch of land no bigger, as a rule, than he and his family can till, and no smaller than can sustain the family. This small peasant, just like the small handicraftsman, is therefore a toiler who differs from the modern proletarian in that he still possesses his instruments of labour; hence, a survival of a past mode of production. There is a threefold difference between him and his ancestor, the serf, bondman, or, quite exceptionally, the free peasant liable to rent and feudal services. First, in that the French Revolution freed him from feudal services and dues that he owed to the landlord and, in the majority of cases, at least on the left bank of the Rhine, assigned his peasant farm to him as his own free property.

Secondly, in that he lost the protection of, and the right to participate in, the self-administering Mark community, and hence his share in the emoluments of the former common Mark. The common Mark was whisked away partly by the erstwhile feudal lord and partly by enlightened bureaucratic legislation patterned after Roman law. This deprives the small peasant of modern times of the possibility of feeding his draft animals without buying fodder. Economically, however, the loss of the emoluments derived from the Mark by far outweighs the benefits accruing from the abolition of feudal services. The number of peasants unable to keep draft animals of their own is steadily increasing.

Thirdly, the peasant of today has lost half of his former productive activity. Formerly, he and his family produced, from raw material he had made himself, the greater part of the industrial products that he needed; the rest of what he required was supplied by village neighbours who plied a trade in addition to farming and were paid mostly in articles of exchange or in reciprocal services. The family, and still more the village, was self-sufficient, produced almost everything it needed. It was natural economy almost unalloyed; almost no money was necessary. Capitalist production put an end to this by its money economy and large-scale industry. But if the Mark emoluments represented one of the basic conditions of his existence, his industrial side line was another. And thus the peasant sinks ever lower. Taxes, crop failures, divisions of inheritance and litigations drive one peasant after another into the arms of the usurer; the indebtedness becomes more and more general and steadily increases in amount in each case — in brief, our small peasant, like every other survival of a past mode of production, is hopelessly doomed. He is a future proletarian.

As such, he ought to lend a ready ear in socialist propaganda. But he is prevented from doing so for the time being by his deep-rooted sense of property. The more difficult it is for him to defend his endangered patch of land, the more desperately he clings to it, the more he regards the Social-Democrats, who speak of transferring landed property to the whole of society, as just as dangerous a foe as the usurer and lawyer. How is Social-Democracy to overcome this prejudice? What can is offer to the doomed small peasant without becoming untrue to itself?

Here we find a practical point of support in the agrarian programme of the French Socialists of the Marxian trend, a programme which is the more noteworthy as it comes from the classical land of small-peasant economy.

The Marseilles Congress of 1892 adopted the first agrarian programme of the Party. It demands for propertyless rural workers (that is to say, day laborers and hinds): minimum wages fixed by trade unions and community councils; rural trade courts consisting half of workers; prohibition of the sale of common lands; and the leasing of public domain lands to communities which are to rent all this land, whether owned by them or rented, to associations of propertyless families of farm laborers for common cultivation, on conditions that the employment of wage-workers be prohibited and that the communities exercise control; old-age and invalid pensions, to be defrayed by means of a special tax on big landed estates.

For the small peasants, with special consideration for tenant farmers, purchase of machinery by the community to be leased at cost price to the peasants; the formation of peasant co-operatives for the purchase of manure, drain-pipes, seed, etc., and for the sale of the produce; abolition of the real estate transfer tax if the value involved does not exceed 5,000 francs; arbitration commissions of the Irish pattern to reduce exorbitant rentals and compensate quitting tenant farmers and sharecroppers (me’tayers) for appreciation of the land due to them; repeal of article 2102 of the Civil Code which allows a landlord to on the distraint crop, and the abolition of the right of creditors to levy on growing crops; exemption from levy and distraint of a definite amount of farm implements and of the crop, seed, manure, draft animals, in shirt, whatever is indispensable to the peasant for carrying on his business; revision of the general cadastre, which has long been out of date, and until such time a local revision in each community; lastly, free instruction in farming, and agricultural experimental stations.

As we see, the demands made in the interests of the peasants — those made in the interests of the workers do not concern us here, for the time being — are not very far-reaching. Part of them has already been realised elsewhere. The tenants’ arbitration courts follow the Irish prototype by express mention. Peasant co-operatives already exist in the Rhine provinces. The revision of the cadastre has been a constant pious wish of all liberals, and even bureaucrats, throughout Western Europe. The other points, too, could be carried into effect without any substantial impairment of the existing capitalist order. So much simply in characterisation of the programme. No reproach is intended; quite the contrary.

The Party did such a good business with this programme among the peasants in the most diverse parts of France that — since appetite comes with eating — one felt constrained to suit it still more to their taste. It was felt, however, that this would be treading on dangerous ground. How was the peasant to be helped — not the peasant as a future proletarian, but as a present propertied peasant — without violating the basic principles of the general socialist programme? In order to meet this objection, the new practical proposals were prefaced by a theoretical preamble, which seeks to prove that it is in keeping with the principles of socialism to protect small-peasant property from destruction by the capitalist mode of production, although one is perfectly aware that this destruction is inevitable. Let us now examine more closely this preamble as well as the demands themselves, which were adopted by the Nantes Congress in September of this year.

The preamble begins as follows:

Whereas according to the terms of the general programme of the Party producers can be free only in so far as they are in possession of the means of production;

Whereas in the sphere of industry these means of production have already reached such a degree of capitalist centralisation that they can be restored to the producers only in the collective or social form, but in the sphere of agriculture — at least in present-day France — this is by no means the case, the means of production, namely, the land, being in very many localities still in the hands of the individual producers themselves as their individuals possession;

Whereas even if this state of affairs characterized by small-holding ownership is irretrievably doomed (est fatalement appete’ a dispaitre), still it is not for socialism to hasten its doom, as its task does not consist in separating property from labour but, on the contrary, in uniting both of these factors of all production by placing them in the same hands, factors the separation of which entails the servitude and poverty of the workers reduced to proletarians;

Whereas, on the one hand, it is the duty of socialism to put the agricultural proletarians again in possession — collective or social in form — of the great domains after expropriating their present idle ownership, it is, on the other hand, on less its imperative duty to maintain the peasants themselves tilling their patches of land in possession of the same as against the fisk, the usurer, and the encroachments of the newly-arisen big landowners;

Whereas it is expedient to extend this protection also to the producers who as tenants or sharecroppers (me’tayers) cultivate the land owned by others and who, if they exploit day laborers, are to a certain extent compelled to do so because of the exploitation to which they themselves are subjected —

Therefore the Workers’ Party — which unlike the anarchists does not count on an increase and spread of poverty for the transformation of the social order but expects labour and society in general to be emancipated only by the organisation and concerted efforts of the workers of both country and town, by their taking possession of the government and legislation — has adopted the following agrarian programme in order thereby to bring together all the elements of rural production, all occupations which by virtue of various rights and titles utilise the national soil, to wage an identical struggle against the common for: the feudality of landownership.

Now, for a closer examination of these “whereases”.

To being with, the statement in the French programme that freedom of the producers presupposes the possession of the means of production must be supplemented by those immediately following: either as individual possession, which form never and nowhere existed for the producers in general, and is daily being made more impossible by industrial progress; or as common possession, a form the material and intellectual preconditions of which have been established by the development of capitalist society itself; that therefore taking collective possession of the means of production must be fought for by all means at the disposal of the proletariat.

The common possession of the means of production is thus set forth here as the sole principal goal to be striven for. Not only in industry, where the ground has already been prepared, but in general, hence also in agriculture. According to the programme, individual possession never and nowhere obtained generally for all producers; for that very reason, and because industrial progress removes it anyhow, socialism is not interested in maintaining but rather in removing it; because where it exists and in so far as it exists it makes common possession impossible. Once we cite the programme in support of our contention, we must cite the entire programme, which considerably modifies the proposition quoted in Nantes; for it makes the general historical truth expressed in it dependent upon the conditions under which alone it can remain a truth today in Western Europe and North America.

Possession of the means of production by the individual producers nowadays no longer grants these producers real freedom. Handicraft has already been ruined in the cities; in metropolises like London, it has already disappeared entirely, having been superseded by large-scale industry, the sweatshop system and miserable bunglers who thrive on bankruptcy. The self-supporting small peasant is neither in the safe possession of his tiny patch of land, nor is he free. He, as well as his house, his farmstead, and his new fields, belong to the usurer; his livelihood is more uncertain than that of the proletarian, who at least does have tranquil days now and then, which is never the case with the eternally tortured debt slave. Strike out Article 2102 of the Civil Code, provide by law that a definite amount of a peasant’s farm implements, cattle, etc., shall be exempt from levy and distraint; yet you cannot ensure him against an emergency in which he is compelled to sell his cattle “voluntarily”, in which he must sign himself away, body and soul, to the usurer and be glad to get a reprieve. Your attempt to protect the small peasant in his property does not protect his liberty but only the particular form of his servitude; it prolongs a situation in which he can neither live nor die. It is, therefore, entirely out of place here to cite the first paragraph of your programme as authority for your contention.

The preamble states that in present-day France, the means of production — that is, the land — is in very many localities still in the hands of individual producers as their individual possession; that, however, it is not the task of socialism to separate property from labour, but, on the contrary, to unite these two factors of all production by placing them in the same hands. As has already been pointed out, the latter in this general form is by no means the task of socialism. Its task is, rather, only to transfer the means of production to the producers as their common possession. As soon as we lose sight of this, the above statement becomes directly misleading in that it implies that it is the mission of socialism to convert the present sham property of the small peasant in his fields into real property — that is to say, to convert the small tenant into an owner and the indebted owner into a debtless owner. Undoubtedly, socialism is interested to see that the false semblance of peasant property should disappear, but not in this manner.

At any rate, we have now got so far that the preamble can straightforwardly declare it to be the duty of socialism, indeed, its imperative duty,

“to maintain the peasants themselves tilling their patches of land in possession of the same as against the fisk, the usurer and the encroachments of the newly-arisen big landowners.”

The preamble thus imposes upon socialism the imperative duty to carry out something which it had declared to be impossible in the preceding paragraph. It charges it to “maintain” the small-holding ownership of the peasants although it itself states that this form of ownership is “irretrievably doomed”. What are the fisk, the usurer, and the newly-arisen big landowners if not the instruments by means of which capitalist production brings about this inevitable doom? What means “socialism” is to employ to protect the peasant against this trinity, we shall see below.

But not only the small peasant is to be protected in his property. It is likewise

“expedient to extend this protection also to the producers who, as tenants or sharecroppers (Metayers), cultivate the land owned by others and who, if they exploit day laborers, are to a certain extent compelled to do so because of the exploitation to which they themselves are subjected”.

Here, we are entering upon ground that is passing strange. Socialism is particularly opposed to the exploitation of wage labour. And here it is declared to be the imperative duty of socialism to protect the French tenants when they “exploit day laborers”, as the text literally states! And that because they are compelled to do so to a certain by “the exploitation to which they themselves are subjected”!

How easy and pleasant it is to keep on coasting once you are on the toboggan slide! When now the big and middle peasants of Germany come to ask the French Socialists to intercede with the German Party Executive to get the German Social-Democratic Party to protect them in the exploitation of their male and female farm servants, citing in support of the contention the “exploitation to which they themselves are subjected” by usurers, tax collectors, grain speculators and cattle dealers, what will they answer? What guarantee have they that our agrarian big landlords will not send them Count Kanitz (as he also submitted a proposal like theirs, providing for a state monopoly of grain importation) and likewise ask for socialist protection of their exploitation of the rural workers, citing in support “the exploitation to which they themselves are subjected” by stock-jobbers, money lender, and grain speculators?

Let us say here, at the outset, that the intentions of our French friends are not as bad as one would suppose. The above sentence, we are told, is intended to cover only a quite special case — namely, the following: In Northern France, just as in our sugar-beet districts, land is leased to the peasants subject to the obligation to cultivate beets, on conditions which are extremely onerous. They must deliver the beets to a state factory at a price fixed by it, must but definite seed, use a fixed quantity of prescribed fertilizer, and on delivery are badly cheated into t he bargain. We know all about this in Germany, as well. But,if this sort of peasant is to be taken under one’s wing, this must be said openly and expressly. As the sentence reads now, in its unlimited general form, it is a direct violation not only of the French programme, but also of the fundamental principle of socialism in general, and its authors will have no cause for complaint if this careless piece of editing is used against them in various quarters to their intention.

Also capable of such misconstruction are the concluding words of the preamble according to which it is the task of the Socialist Workers’ Party

“to bring together all the elements of rural production, all occupations which, by virtue of various rights and titles, utilize the national soil, to wage an identical struggle against the common foe: the feudality of landownership”.

I flatly deny that the socialist workers’ party of any country is charged with the task of taking into its fold, in addition to the rural proletarians and the small peasants, also the idle and big peasants and perhaps even the tenants of the big estates, the capitalist cattle breeders and other capitalist exploiters of the national soil. To all of them, the feudality of landownership may appear to be a common foe. On certain questions, we may make common cause with them and be able to fight side by side with them for definite aims. We can use in our Party individuals from every class of society, but have no use whatever for any groups representing capitalist, middle-bourgeois,or middle-peasant interests. Here, too, what they mean is not as bad as it looks. The authors evidently never even gave all this a thought. But unfortunately they allowed themselves to be carried away by their zeal for generalization and they must not be surprised if they are taken at their word.

After the preamble come the newly-adopted addenda to the programme itself. They betray the same cursory editing as the preamble.

The article providing that the communities must procure farming machinery and lease it at cost to the peasants is modified so as to provide that the communities are, in the first place, to receive state subsidies for this purpose and, secondly, that the machinery is to be placed at the disposal of the small peasants gratis. This further concession will not be of much avail to the small peasants, whose fields and mode of production permit of but little use of machinery.

Furthermore,

“substitution of a single progressive tax on all incomes upward of 3,000 francs for all existing direct and indirect taxes”.

A similar demand has been included for many years in almost every Social-Democratic programme. But that this demand is raised in the special interests of the small peasants is something new and shows only how little its real scope has been calculated. take Great Britain. There the state budget amounts to 90 million pounds sterling, of which 13.5 to 14 million are accounted for by the income tax. The smaller part of the remaining 76 million is contributed by taxing business (post and telegraph charges, stamp tax), but by far the greater part of it by imposts on articles of mass consumption, by the constantly repeated clipping of small, imperceptible amounts totalling many millions from the incomes of all members of the population, but particularly of tis poorer sections. In present-day society, it is scarcely possible to defray state expenditures in any other way. Suppose the whole 90 million are saddled in Great Britain on the incomes of 120 pounds sterling = 3,000 francs and in excess thereof by the imposition of a progressive direct tax. The average annual accumulation, the annual increase of the aggregate national wealth, amounted in 1865 to 1875, according to Giffen, to 240 million pounds sterling. Let us assume it now equals 200 million annually; a tax burden of 90 million would consume almost one-third of the aggregate accumulation. In other words, no government except a Socialist one can undertake any such thing. When the Socialists are at the helm there will be things for them to carry into execution alongside of which that tax reform will figure as a mere, and quite insignificant, settlement for the moment while altogether different prospects open up before the small peasants.

One seems to realize that the peasant will have to wait rather long for this tax reform so that “in the meantime” (en attendant) the following prospect is held out to them:

“Abolition of taxes on land for all peasants living by their own labour, and reduction of these taxes on all mortgaged plots.”

The latter half of this demand can refer only to peasant farms too big to be operated by the family itself; hence, it is again a provision in favor of peasants who “exploit day laborers”.

Again:

“Hunting and fishing rights without restrictions other than such as may be necessary for the conservation of game and fish and the protection of growing crops.”

This sounds very popular, but the concluding part of the sentence wipes out the introductory part. How many rabbits, partridges, pikes, and carps, are there even today per peasant family in all rural localities? Would you say more than would warrant giving each peasant jut one day a year for free hunting and fishing?

“Lowering of the legal and conventional rate of interest” —

hence, renewed usury laws, a renewed attempt to introduce a police measure that has always filed everywhere for the last two thousand years. If a small peasant finds himself in a position where recourse to a usurer is the lesser evil to him, the usurer will always find ways and means of sucking him dry without falling foul of the usury laws. This measure could serve at most to soothe the small peasant, but he will derive no advantage from it; on the contrary, it makes it more difficult for him to obtain credit precisely when he needs it most.

“Medical service free of charge and medicines at cost price” —

this at any rate is not a measure for the special protection of the peasants. The German programme goes further and demands that medicine too should be free of charge.

“Compensation for families of reservists called up for military duty for the duration of their service” —

this already exists, though most inadequately, in Germany and Austria and is likewise no special peasant demand.

“Lowering of the transport charges for fertilizer and farm machinery and products” —

is on the whole in effect in Germany, and mainly in the interest — of the big landowners.

“Immediate preparatory work for the elaboration of a plan of public works for the amelioration of the soil and the development of agricultural production” —

leaves everything in the realm of uncertitude and beautiful promises and is also above all in the interest of the big landed estates.

In brief, after the tremendous theoretical effort exhibited in the preamble, the practical proposals of the new agrarian programme are even more unrevealing as to the way in which the French Workers’ Party expects to be able to maintain the small peasants in possession of their small holdings, which, on its own territory, are irretrievably doomed.

Part 2: Germany

In one point our French comrades are absolutely right: No lasting revolutionary transformation is possible in France against the will of the small peasant. Only, it seems to me, they have not got the right leverage if they mean to bring the peasant under their influence.

They are bent, it seems, to win over the small peasant forthwith, possibly even for the next general elections. This they can hope to achieve only by making very risky general assurances in defence of which they are compelled to set forth even much more risky theoretical considerations. Then, upon closer examination, it appears that the general assurances are self-contradictory (promise to maintain a state of affairs which, as one declares oneself, is irretrievably doomed) and that the various measures are either wholly without effect (usury laws), or are general workers’ demands or demands which also benefit the big land-owners or finally are such as are of no great importance by any means in promoting the interests of the small peasants. In consequence, the directly practical part of the programme of itself corrects the erroneous initial part and reduces the apparently formidable grandiloquence of the preamble to actually innocent proportions.

Let us say it outright: in view of the prejudices arising out of their entire economic position, their uprising and their isolated mode of life, prejudices nurtured by the bourgeois press and the big land-owners, we can win the mass of the small peasants forthwith only if we can make them a promise which we ourselves know we shall not be able to keep. That is, we must promise them not only to protect their property in any event against all economic forces sweeping upon them, but also to relieve them of the burdens which already now oppress them: to transform the tenant into a free owner and to pay the debts of the owner succumbing to the weight of his mortgage. If we could do this, we should again arrive at the point from which the present situation would necessarily develop anew. We shall not have emancipated the peasant but only given him a reprieve.

But it is not in our interests to win the peasant overnight, only to lose him again on the morrow if we cannot keep our promise. We have no more use for the peasant as a Party member, if he expects us to perpetuate his property in his small holding, than for the small handicraftsman who would fain be perpetuated as a master. These people belong to the anti-Semites. Let them go to the anti-Semites and obtain from the latter the promise to salvage their small enterprises. Once they learn there what these glittering phrases really amount to, and what melodies are fiddled down from the anti-Semitic heavens, they will realize in ever-increasing measure that we who promise less and look for salvation in entirely different quarters are after all more reliable people. If the French had the strident anti-Semitic demagogy we have, they would hardly have committed the Nantes mistake.

What, then, is our attitude towards the small peasantry? How shall we have to deal with it on the day of our accession to power?

To begin with, the French programme is absolutely correct in stating: that we foresee the inevitable doom of the small peasant, but that it is not our mission to hasten it by any interference on our part.

Secondly, it is just as evident that when we are in possession of state power, we shall not even think of forcibly expropriating the small peasants (regardless of whether with or without compensation), as we shall have to do in the case of the big landowners. Our task relative to the small peasant consists, in the first place, in effecting a transition of his private enterprise and private possession to cooperative ones, not forcibly but by dint of example and the proffer of social assistance for this purpose. And then, of course, we shall have ample means of showing to the small peasant prospective advantages that must be obvious to him even today.

Almost 20 years ago, the Danish Socialists, who have only one real city in their country — Copenhagen — and therefore have to rely almost exclusively on peasant propaganda outside of it, were already drawing up such plans. The peasants of a village or parish — there are many big individual homesteads in Denmark — were to pool their land to form a single big farm i order to cultivate it for common account and distribute the yield in proportion to the land, money, and labour contributed. In Denmark, small landed property plays only a secondary role. But, if we apply this idea to a region of small holdings, we shall find that if these are pooled and the aggregate area cultivated on a large scale, part of the labour power employed hitherto is rendered superfluous. It is precisely this saving of labour that represents one of the main advantages of large-scale farming. Employment can be found for this labour in two ways. Either additional land taken from big estates in the neighborhood is placed at the disposal of the peasant co-operative, or the peasants in question are provided with the means and the opportunity of engaging in industry as an accessory calling, primarily and as far as possible for their own use. In either case, their economic position is improved and simultaneously the general social directing agency is assured the necessary influence to transform the peasant co-operative to a higher form, and to equalize the rights and duties of the co-operative as a whole as well as of its individual members with those of the other departments of the entire community. How this is to be carried out in practice in each particular case will depend upon the circumstance of the case and the conditions under which we take possession of political power. We may, thus, possibly be in a position of offer these co-operatives yet further advantages: assumption of their entire mortgage indebtedness by the national bank with a simultaneous sharp reduction of the interest rate; advances from public funds for the establishment of large-scale production (to be made not necessarily or primarily in money but in the form of required products: machinery, artificial fertilizer, etc.), and other advantages.

The main point is, and will be, to make the peasants understand that we can save, preserve their houses and fields for them only by transforming them into co-operative property operated co-operatively. It is precisely the individual farming conditioned by individual ownership that drives the peasants to their doom. If they insist on individual operation, they will inevitably be driven from house and home and their antiquated mode of production superseded by capitalist large-scale production. That is how the matter stands. Now, we come along and offer the peasants the opportunity of introducing large-scale production themselves, not for account of the capitalists but for their own, common account. Should it really be impossible to make the peasants understand that this is in their own interest, that it is the sole means of their salvation?

Neither now, nor at any time in the future, can we promise the small-holding peasants to preserve their individual property and individual enterprise against the overwhelming power of capitalist production. We can only promise then that we shall not interfere in their property relations by force, against their will. Moreover, we can advocate that the struggle of the capitalists and big landlords against the small peasants should be waged from now on with a minimum of unfair means and that direct robbery and cheating, which are practiced only too often, be as far as possible prevented. In this we shall succeed only in exceptional cases. Under the developed capitalist mode of production, nobody can tell where honesty ends and cheating begins. But always it will make a considerable difference whether public authority is on the side of the cheater or the cheated. We, of course, are decidedly on the side of the small peasant; we shall do everything at all permissible to make his lot more bearable, to facilitate his transition to the co-operative should he decide to do so, and even to make it possible for him to remain on his small holding for a protracted length of time to think the matter over, should he still be unable to bring himself to this decision. We do this not only because we consider the small peasant living by his own labour as virtually belonging to us, but also in the direct interest of the Party. The greater the number of peasants whom we can save from being actually hurled down into the proletariat, whom we can win to our side while they are still peasants, the more quickly and easily the social transformation will be accomplished. It will serve us nought to wait with this transformation until capitalist production has developed everywhere to its utmost consequences, until the last small handicraftsman and the last small peasant have fallen victim to capitalist large-scale production. The material sacrifice to be made for this purpose in the interest of the peasants and to be defrayed out of public funds can, from the point of view of capitalist economy, be viewed only as money thrown away, but it is nevertheless an excellent investment because it will effect a perhaps tenfold saving in the cost of the social reorganization in general. In this sense, we can, therefore, afford to deal very liberally with the peasants. This is not the place to go into details, to make concrete proposals to that end; here we can deal only with general principles.

Accordingly, we can do no greater disservice to the Party as well as to the small peasants than to make promises that even only create the impression that we intend to preserve the small holdings permanently. It would mean directly to block the way of the peasants to their emancipation and to degrade the Party to the level of rowdy anti-Semitism. On the contrary, it is the duty of our Party to make clear to the peasants again and again that their position is absolutely hopeless as long as capitalism holds sway, that it is absolutely impossible to preserve their small holdings for them as such, that capitalist large-scale production is absolutely sure to run over their impotent antiquated system of small production as a train runs over a pushcart. If we do this, we shall act in conformity with the inevitable trend of economic development, and this development will not fail to bring our words home to the small peasants.

Incidentally, I cannot leave this subject without expressing my conviction that the authors of the Nantes programme are also essentially of my opinion. Their insight is much too great for them not to know that areas now divided into small holdings are also bound to become common property. They themselves admit that small-holding ownership is destined to disappear. The report of the National Council drawn up by Lafargue and delivered at the Congress of Nantes likewise fully corroborates this view. It has been published in German in the Berlin Sozialdemokrat of October 18 of this year. The contradictory nature of the expressions used in the Nantes programme itself betrays the fact what the authors actually say is not what they want to say. If they are not understood and their statements misused, as has already happened, that is of course their own fault. At any rate, they will have to elucidate their programme and the next French congress revise it thoroughly.

We now come to the bigger peasants. Here as a result of the division of inheritance as well as indebtedness and forced sales of land we find a variegated pattern of intermediate stages, from small-holding peasant to big peasant proprietor, who has retained his old patrimony intact or even added to it. Where the middle peasant lives among small-holding peasants, his interests and views will not differ greatly from theirs; he knows, from his own experience, how many of his kind have already sunk to the level of small peasants. But where middle and big peasants predominate and the operation of the farms requires, generally, the help of male and female servants, it is quite a different matter. Of course a workers’ party has to fight, in the first place, on behalf of the wage-workers — that is, for the male and female servantry and the day laborers. It is unquestionably forbidden to make any promises to the peasants which include the continuance of the wage slavery of the workers. But, as long as the big and middle peasants continue to exist, as such they cannot manage without wage-workers. If it would, therefore, be downright folly on our part to hold out prospects to the small-holding peasants of continuing permanently to be such, it would border on treason were we to promise the same to the big and middle peasants.

We have here again the parallel case of the handicraftsmen in the cities. True, they are more ruined than the peasants, but there still are some who employ journeymen in addition to apprentices, or for whom apprentices do the work of journeymen. Let those of these master craftsmen who want to perpetuate their existence as such cast in their lot with the anti-Semites until they have convinced themselves that they get no help in that quarter either. The rest, who have realized that their mode of production is inevitably doomed, are coming over to us and, moreover, are ready in future to share the lot that is in store for all other workers. The same applies to the big and middle peasants. It goes without saying that we are more interested in their male and female servants and day laborers than in them themselves. If these peasants want to be guaranteed the continued existence of their enterprises, we are in no position whatever to assure them of that. They must then take their place among the anti-Semites, peasant leaguers, and similar parties who derive pleasure from promising everything and keeping nothing. We are economically certain that the big and middle peasants must likewise inevitably succumb to the competition of capitalist production, and the cheap overseas corn, as is proved by the growing indebtedness and the everywhere evident decay of these peasants as well. We can do nothing against this decay except recommend here too the pooling of farms to form co-operative enterprises, in which the exploitation of wage labour will be eliminated more and more, and their gradual transformation into branches of the great national producers’ co-operative with each branch enjoying equal rights and duties can be instituted. If these peasants realize the inevitability of the doom of their present mode of production and draw the necessary conclusions they will come to us and it will be incumbent upon us to facilitate, to the best of our ability, also their transition to the changed mode of production. Otherwise, we shall have to abandon them to their fate and address ourselves to their wage-workers, among whom we shall not fail to find sympathy. Most likely, we shall be able to abstain here as well from resorting to forcible expropriation, and as for the rest to count on future economic developments making also these harder pates amenable to reason.

Only the big landed estates present a perfectly simple case. Here, we are dealing with undisguised capitalist production and no scruples of any sort need restrain us. Here, we are confronted by rural proletarians in masses and our task is clear. As soon as out Party is in possession of political power, it has simply to expropriate the big landed proprietors, just like the manufacturers in industry. Whether this expropriation is to be compensated for or not will, to a great extent, depend not upon us but the circumstances under which we obtain power, and particularly upon the attitude adopted by these gentry, the big landowners, themselves. We by no mens consider compensation as impermissible in any event; Marx told me (and how many times!) that, in his opinion, we would get off cheapest if we could buy out the whole lot of them. But, this does not concern us here. The big estates, thus restored to the community, are to be turned over by us to the rural workers who are already cultivating them and are to be organized into co-operatives. They are to be assigned to them for their use and benefit under the control of the community. Nothing can as yet be stated as to the terms of their tenure. At any rate, the transformation of the capitalist enterprise into a social enterprise is here fully prepared for and can be carried into execution overnight, precisely as in Mr. Krupp’s or Mr. von Stumm’s factory. And the example of these agricultural co-operatives would convince also the last of the still resistant small-holding peasants, and surely also many big peasants, of the advantages of co-operative, large-scale production.

Thus, we can open up prospects here before the rural proletarians as splendid as those facing the industrial workers, and it can be only a question of time, and of only a very short time, before we win over to our side the rural workers of Prussia east of the Elbe. But once we have the East-Elbe rural workers, a different wind will blow at once all over Germany. The actual semi-servitude of the East-Elbe rural workers is the main basis of the domination of Prussian Junkerdom and thus of Prussia’s specific overlordship in Germany. It is the Junkers east of the Elbe who have created and preserved the specifically Prussian character of the bureaucracy as well as of the body of army officers — the Junkers, who are being reduced more and more to ruin by their indebtedness, impoverishment, and parasitism, at state and private cost and for that very reason cling the more desperately to the dominion which they exercise; the Junkers, whose haughtiness, bigotry, and arrogance, have brought the German Reich of the Prussian nation [3] within the country into such hatred — even when every allowance is made for the fact that at present this Reich is inevitable as the sole form in which national unity can now be attained — and abroad so little respect despite its brilliant victories. The power of these Junkers is grounded on the fact that within the compact territory of the seven old Prussian provinces — that is, approximately one-third of the entire territory of the Reich — they have at their disposal the landed property, which here brings with it both social and political power. And not only the landed property but, through their beet-sugar refineries and liquor distilleries, also the most important industries of this area. Neither the big landowners of the rest of Germany nor the big industrialists are in a similarly favorable positions. Neither of them have a compact kingdom at their disposal. Both are scattered over a wide stretch of territory and complete among themselves and with other social elements and compete among themselves and with other social elements surrounding them for economic and political predominance. But, the economic foundation of this domination of the Prussian Junkers is steadily deteriorating. Here, too, indebtedness and impoverishment are spreading irresistibly, despite all state assistance (and since Frederick II, this item is included in every regular Junker budget). Only the actual semi-serfdom sanctioned by law and custom and the resulting possibility of the unlimited exploitation of the rural workers, still barely keep the drowning Junkers above water. Sow the seed of Social-Democracy among these workers, give them the courage and cohesion to insist upon their rights, and the glory of the Junkers will be put to an end. The great reactionary power, which to Germany represents the same barbarous, predatory element as Russian tsardom does to the whole of Europe, will collapse like a pricked bubble. The “picked regiments” of the Prussian army will become Social-Democratic, which will result in a shift of power that is pregnant with an entire upheaval. But, for this reason, it is of vastly greater importance to win the rural proletariat east of the Elbe than the small peasants of Western Germany, or yet the middle peasants of Southern Germany. It is here, in East-Elbe Prussia, that the decisive battle of our cause will have to be fought and for this very reason both government and Junkerdom will do their utmost to prevent our gaining access here. And should, as we are threatened, new violent measures be resorted to to impede the spread of our Party, their primary purpose will be to protect the East-Elbe rural proletariat from our propaganda. It’s all the same to us. We shall win it nevertheless.

Annexure3: British Pacifism and the British Dislike of Theory by V I Lenin

[Written in June 1915, First published in Pravda No. 169 on July 27, 1924]

Political freedom has hitherto been far more extensive in Britain than elsewhere in Europe. Here, more than anywhere else, the bourgeoisie are used to governing and know how to govern. The relations between the classes are more developed and in many respects clearer than in other countries. The absence of conscription gives the people more liberty in their attitude towards the war in the sense that anyone may refuse to join the colours, which is why the government (which in Britain is a committee, in its purest form, for managing the affairs of the bourgeoisie) are compelled to bend every effort to rouse “popular” enthusiasm for the war. That aim could never be attained without a radical change in the laws, had the mass of proletarians not been completely disorganised and demoralised by the desertion to a Liberal, i.e., bourgeois, policy, of a minority of the best placed, skilled and unionised workers. The British trade unions comprise about one-fifth of all wage workers. Most trade union leaders are Liberals; Marx long ago called them agents of the bourgeoisie.

All these features of Britain help us, on the one hand, better to understand the essence of present-day social-chauvinism, that essence being identical in autocratic and democratic countries, in militarist and conscription-free countries; on the other hand, they help us to appreciate, on the basis of facts, the significance of that compromise with social-chauvinism which is expressed, for instance, in the extolling of the slogan of peace, etc.

The Fabian Society is undoubtedly the most consummate expression of opportunism and of Liberal-Labour policy. The reader should look into the correspondence of Marx and Engels with Sorge (two Russian translations of which have appeared). There he will find an excellent characterisation of that society given by Engels, who treats Messrs. Sidney Webb & Co. as a gang of bourgeois rogues who would demoralise the workers, influence them in a counter-revolutionary spirit. One may vouch for the fact that no Second International leader with any responsibility and influence has ever attempted to refute this estimation of Engels’s, or even to doubt its correctness.

Let us now compare the facts, leaving theory aside for a moment. You will see that the Fabians’ behaviour during the war (see, for instance, their weekly paper, The New Statesman[2]), and that of the German Social-Democratic Party, including Kautsky, are identical. The same direct and indirect defence of social-chauvinism; the same combination of that defence with a readiness to utter all sorts of kindly, humane and near-Left phrases about peace, disarmament, etc., etc.

The fact stands, and the conclusion to be drawn—however unpleasant it may be to various persons—is inescapably and undoubtedly the following: in practice the leaders of the present-day German Social-Democratic Party, including Kautsky, are exactly the same kind of agents of the bourgeoisie that Engels called the Fabians long ago. The Fabians’ non-recognition of Marxism and its “recognition” by Kautsky and Co. make no difference whatever in the essentials, in the facts of politics; the only thing proved is that some writers, politicians, etc., have converted Marxism into Struvism. Their hypocrisy is not a private vice with them; in individual cases they may be highly virtuous heads of families; their hypocrisy is the result of the objective falseness of their social status: they are supposed to represent the revolutionary proletariat, whereas they are actually agents charged with the business of inculcating bourgeois, chauvinist ideas in the proletariat.

The Fabians are more sincere and honest than Kautsky and Co., because they have not promised to stand for revolution; politically, however, they are of the same kidney.

The long history of Britain’s political freedom and the developed condition of her political life in general, and of her bourgeoisie in particular, have resulted in various shades of bourgeois opinion being able to find rapid, free and open expression in that country’s new political organisations. One such organisation is the Union of Democratic Control, whose secretary and treasurer is E. D. Morel, now a regular contributor to The Labour Leader, the Independent Labour Party’s central organ. This individual was for several years the Liberal Party’s nominee for the Birkenhead constituency. When Morel came out against the war, shortly after its outbreak, the committee of the Birkenhead Liberal association notified him, in a letter dated October 2, 1914, that his candidature would no longer be acceptable, i.e., he was simply expelled from the Party. Morel replied to this in a letter of October 14, which he subsequently published as a pamphlet entitled The Outbreak of the War. Like a number of other articles by Morel, the pamphlet exposes his government, proving the falseness of assertions that the rape of Belgium’s neutrality caused the war, or that the war is aimed at the destruction of Prussian imperialism, etc., etc. Morel defends the programme of the Union of Democratic Control—peace, disarmament, all territories to have the right of self-determination by plebiscite, and the democratic control of foreign policy.

All this shows that as an individual, Morel undoubtedly deserves credit for his sincere sympathy with democracy, for turning away from the jingoist bourgeoisie to the pacifist bourgeoisie. When Morel cites the facts to prove that his government duped the people when it denied the existence of secret treaties although such treaties actually existed; that the British bourgeoisie, as early as 1887, fully realised that Belgium’s neutrality would inevitably be violated in the event of a Franco-German war, and emphatically rejected the idea of interfering (Germany not yet being a dangerous competitor!); that in a number of books published before the war French militarists such as Colonel Boucher quite openly acknowledged the existence of plans for an aggressive war by France and Russia against Germany; that the well-known British military authority, Colonel Repington, admitted in 1911 in the press, that the growth of Russian armaments after 1905 had been a threat to Germany—when Morel reveals all this, we cannot but admit that we are dealing with an exceptionally honest and courageous bourgeois, who is not afraid to break with his own party.

Yet anyone will at once concede that, after all, Morel is a bourgeois, whose talk about peace and disarmament is a lot of empty phrases, since without revolutionary action by the proletariat there can be neither a democratic peace nor disarmament. Though he has broken with the Liberals on the question of the present war, Morel remains a Liberal on all other economic and political issues. Why is it, then, that when Kautsky, in Germany, gives a Marxist guise to the self-same bourgeois phrases about peace and disarmament, this is not considered hypocrisy on his part, but stands to his merit? Only the undeveloped character of political relations and the absence of political freedom prevent the formation in Germany, as rapidly and smoothly as in Britain, of a bourgeois league for peace and disarmament, with Kautsky’s programme.

Let us, then, admit the truth that Kautsky’s stand is that of a pacifist bourgeois, not of a revolutionary Social-Democrat.

The events we are living amidst are great enough for us to be courageous in recognising the truth, no matter whom it may concern.

With their dislike of abstract theory and their pride in their practicality, the British often pose political issues more directly, thus helping the socialists of other countries to discover the actual content beneath the husk of wording of every-kind (including the “Marxist”). Instructive in this respect is the pamphlet Socialism and War,[1] published before the war by the jingoist paper, The Clarion. The pamphlet contains an anti-war “manifesto” by Upton Sinclair, the U.S. socialist, and also a reply to him from the jingoist Robert Blatchford, who has long adopted Hyndman’s imperialist viewpoint.

Sinclair is a socialist of the emotions, without any theoretical training. He states the issue in “simple” fashion; incensed by the approach of war, he seeks salvation from it in socialism.

“We are told,” Sinclair writes, “that the socialist movement is yet too weak so that we must wait for its evolution. But evolution is working in the hearts of men; we are its instruments, and if we do not struggle, there is no evolution. We are told that the movement [against war] would be crushed out; but I declare my faith that the crushing out of any rebellion which sought, from motive of sublime humanity to prevent war, would be the greatest victory that socialism has ever gained—would shake the conscience of civilisation and rouse the workers of the world as nothing in all history has yet done. Let us not be too fearful for our movement nor put too much stress upon numbers and the outward appearances of power. A thousand men aglow with faith and determination are stronger than a million grown cautious and respectable; and there is no danger to the socialist movement so great as the danger of becoming an established institution.”

This, as can be seen, is a naïve, theoretically unreasoned, but profoundly correct warning against any vulgarising of socialism, and a call to revolutionary struggle.

What does Blatchford say in reply to Sinclair?

“It is capitalists and militarists who make wars. That is true. . . ,” he says. Blatchford is as anxious for peace and for socialism taking the place of capitalism as any socialist in the world. But Sinclair will not convince him, or do away with the facts with “rhetoric and fine phrases”. “Facts, my dear Sinclair, are obstinate things, and the German danger is a fact.” Neither the British nor the German socialists are strong enough to prevent war, and “Sinclair greatly exaggerates the power of British socialism. The British socialists are not united; they have no money, no arms, no discipline”. The only thing they can do is to help the British Government build up the navy; there is not, nor can there be, any other guarantee of peace.

Neither before nor since the outbreak of the war have the chauvinists ever been so outspoken in Continental Europe. In Germany it is not frankness that is prevalent, but Kautsky’s hypocrisy and playing at sophistry. The same is true of Plekhanov. That is why it is so instructive to cast a glance at the situation in a more advanced country, where nobody will be taken in with sophisms or a travesty of Marxism. Here issues are stated in a more straightforward and truthful manner. Let us learn from the “advanced” British.

Sinclair is naïve in his appeal, although fundamentally it is a very correct one; he is naïve because he ignores the development of mass socialism over the last fifty years and the struggle of trends within socialism; he ignores the conditions for the growth of revolutionary action when an objectively revolutionary situation and a revolutionary organisation exist. The “emotional” approach cannot make up for that. The intense and bitter struggle between powerful trends in socialism, between the opportunist and revolutionary trends, cannot be evaded by the use of rhetoric.

Blatchford speaks out undisguisedly, revealing the most covert argument of the Kautskyites and Co., who are afraid to tell the truth. We are still weak, that is all, says Blatchford; but his outspokenness at once lays bare his opportunism, his jingoism. It at once becomes obvious that he serves the bourgeoisie and the opportunists. By declaring that socialism is “weak” he himself weakens it by preaching an anti-socialist, bourgeois, policy.

Like Sinclair, but conversely, like a coward and not like a fighter, like a traitor and not like the recklessly brave, he, too, ignores the conditions making for a revolutionary situation.

As for his practical conclusions, his policy (the rejection of revolutionary action, of propaganda for such action and preparation of it), Blatchford, the vulgar jingoist, is in complete accord with Plekhanov and Kautsky.

Marxist words have in our days become a cover for a total renunciation of Marxism; to be a Marxist, one must expose the “Marxist hypocrisy” of the leaders of the Second International, fearlessly recognise the struggle of the two trends in socialism, and get to the bottom of the problems relating to that struggle. Such is the conclusion to be drawn from British relationships, which show us the Marxist essence of the matter, without Marxist words.

Annexure4: Marxism and Revisionism by V I Lenin

[Published in 1908 in the symposium Karl Marx—1818-1883. Transcription by Marxists Internet Archive]

There is a well-known saying that if geometrical axioms affected human interests attempts would certainly be made to refute them. Theories of natural history which conflicted with the old prejudices of theology provoked, and still provoke, the most rabid opposition. No wonder, therefore, that the Marxian doctrine, which directly serves to enlighten and organise the advanced class in modern society, indicates the tasks facing this class and demonstrates the inevitable replacement (by virtue of economic development) of the present system by a new order—no wonder that this doctrine has had to fight for every step forward in the course of its life.

Needless to say, this applies to bourgeois science and philosophy, officially taught by official professors in order to befuddle the rising generation of the propertied classes and to “coach” it against internal and foreign enemies. This science will not even hear of Marxism, declaring that it has been refuted and annihilated. Marx is attacked with equal zest by young scholars who are making a career by refuting socialism, and by decrepit elders who are preserving the tradition of all kinds of outworn “systems”. The progress of Marxism, the fact that its ideas are spreading and taking firm hold among the working class, inevitably increase the frequency and intensity of these bourgeois attacks on Marxism, which becomes stronger, more hardened and more vigorous every time it is “annihilated” by official science.

But even among doctrines connected with the struggle of the working class, and current mainly among the proletariat, Marxism by no means consolidated its position all at once. In the first half-century of its existence (from the 1840s on) Marxism was engaged in combating theories fundamentally hostile to it. In the early forties Marx and Engels settled accounts with the radical Young Hegelians whose viewpoint was that of philosophical idealism. At the end of the forties the struggle began in the field of economic doctrine, against Proudhonism. The fifties saw the completion of this struggle in criticism of the parties and doctrines which manifested themselves in the stormy year of 1848. In the sixties the struggle shifted from the field of general theory to one closer to the direct labour movement: the ejection of Bakuninism from the International. In the early seventies the stage in Germany was occupied for a short while by the Proudhonist Mühlberger, and in the late seventies by the positivist Dühring. But the influence of both on the proletariat was already absolutely insignificant. Marxism was already gaining an unquestionable victory over all other ideologies in the labour movement.

By the nineties this victory was in the main completed. Even in the Latin countries, where the traditions of Proudhonism held their ground longest of all, the workers’ parties in effect built their programmes and their tactics on Marxist foundations. The revived international organisation of the labour movement—in the shape of periodical international congresses—from the outset, and almost without a struggle, adopted the Marxist standpoint in all essentials. But after Marxism had ousted all the more or less integral doctrines hostile to it, the tendencies expressed in those doctrines began to seek other channels. The forms and causes of the struggle changed, but the struggle continued. And the second half-century of the existence of Marxism began (in the nineties) with the struggle of a trend hostile to Marxism within Marxism itself.

Bernstein, a one-time orthodox Marxist, gave his name to this trend by coming forward with the most noise and with the most purposeful expression of amendments to Marx, revision of Marx, revisionism. Even in Russia where—owing to the economic backwardness of the country and the preponderance of a peasant population weighed down by the relics of serfdom—non-Marxist socialism has naturally held its ground longest of all, it is plainly passing into revisionism before our very eyes. Both in the agrarian question (the programme of the municipalisation of all land) and in general questions of programme and tactics, our Social-Narodniks are more and more substituting “amendments” to Marx for the moribund and obsolescent remnants of their old system, which in its own way was integral and fundamentally hostile to Marxism.

Pre-Marxist socialism has been defeated. It is continuing the struggle, no longer on its own independent ground, but on the general ground of Marxism, as revisionism. Let us, then, examine the ideological content of revisionism.

In the sphere of philosophy revisionism followed in the wake of bourgeois professorial “science”. The professors went “back to Kant”—and revisionism dragged along after the neo-Kantians. The professors repeated the platitudes that priests have uttered a thousand times against philosophical materialism—and the revisionists, smiling indulgently, mumbled (word for word after the latest Handbuch) that materialism had been “refuted” long ago. The professors treated Hegel as a “dead dog”,[2] and while themselves preaching idealism, only an idealism a thousand times more petty and banal than Hegel’s, contemptuously shrugged their shoulders at dialectics—and the revisionists floundered after them into the swamp of philosophical vulgarisation of science, replacing “artful” (and revolutionary) dialectics by “simple” (and tranquil) “evolution”. The professors earned their official salaries by adjusting both their idealist and their “critical” systems to the dominant medieval “philosophy” (i.e., to theology)—and the revisionists drew close to them, trying to make religion a “private affair”, not in relation to the modern state, but in relation to the party of the advanced class.

What such “amendments” to Marx really meant in class terms need not be stated: it is self-evident. We shall simply note that the only Marxist in the international Social-Democratic movement to criticise the incredible platitudes of the revisionists from the standpoint of consistent dialectical materialism was Plekhanov. This must be stressed. all the more emphatically since profoundly mistaken attempts are being made at the present time to smuggle in old and reactionary philosophical rubbish disguised as a criticism of Plekhanov’s tactical opportunism.[1]

Passing to political economy, it must be noted first of all that in this sphere the “amendments” of the revisionists were much more comprehensive and circumstantial; attempts were made to influence the public by “new data on economic development”. It was said that concentration and the ousting of small-scale production by large-scale production do not occur in agriculture at all, while they proceed very slowly in commerce and industry. It was said that crises had now become rarer and weaker, and that cartels and trusts would probably enable capital to eliminate them altogether. It was said that the “theory of collapse” to which capitalism is heading was unsound, owing to the tendency of class antagonisms to become milder and less acute. It was said, finally, that it would not be amiss to correct Marx’s theory of value, too, in accordance with Böhm-Bawerk.[3]

The fight against the revisionists on these questions resulted in as fruitful a revival of the theoretical thought in international socialism as did Engels’s controversy with Dühring twenty years earlier. The arguments of the revisionists were analysed with the help of facts and figures. It was proved that the revisionists were systematically painting a rose-coloured picture of modern small-scale production. The technical and commercial superiority of large-scale production over small-scale production not only in industry, but also in agriculture, is proved by irrefutable facts. But commodity production is far less developed in agriculture, and modern statisticians and economists are, as a rule, not very skilful in picking out the special branches (sometimes even the operations) in agriculture which indicate that agriculture is being progressively drawn into the process of exchange in world economy. Small-scale production maintains itself on the ruins of natural economy by constant worsening of diet, by chronic starvation, by lengthening of the working day, by deterioration in the quality and the care of cattle, in a word, by the very methods whereby handicraft production maintained itself against capitalist manufacture. Every advance in science and technology inevitably and relentlessly undermines the foundations of small-scale production in capitalist society; and it is the task of socialist political economy to investigate this process in all its forms, often complicated and intricate, and to demonstrate to the small producer the impossibility of his holding his own under capitalism, the hopelessness of peasant farming under capitalism, and the necessity for the peasant to adopt the standpoint of the proletarian. On this question the revisionists sinned, in the scientific sense, by superficial generalisations based on facts selected one-sidedly and without reference to the system of capitalism as a whole. From the political point of view, they sinned by the fact that they inevitably, whether they wanted to or not, invited or urged the peasant to adopt the attitude of a small proprietor (i.e., the attitude of the bourgeoisie) instead of urging him to adopt the point of view of the revolutionary proletarian.

The position of revisionism was even worse as regards the theory of crises and the theory of collapse. Only for a very short time could people, and then only the most short-sighted, think of refashioning the foundations of Marx’s theory under the influence of a few years of industrial boom and prosperity. Realities very soon made it clear to the revisionists that crises were not a thing of the past: prosperity was followed by a crisis. The forms, the sequence, the picture of particular crises changed, but crises remained an inevitable component of the capitalist system. While uniting production, the cartels and trusts at the same time, and in a way that was obvious to all, aggravated the anarchy of production, the insecurity of existence of the proletariat and the oppression of capital, thereby intensifying class antagonisms to an unprecedented degree. That capitalism is heading for a break-down—in the sense both of individual political and economic crises and of the complete collapse of the entire capitalist system—has been made particularly clear, and on a particularly large scale, precisely by the new giant trusts. The recent financial crisis in America and the appalling increase of unemployment all over Europe, to say nothing of the impending industrial crisis to which many symptoms are pointing—all this has resulted in the recent “theories” of the revisionists having been forgotten by everybody, including, apparently, many of the revisionists themselves. But the lessons which this instability of the intellectuals had given the working class must not be forgotten.

As to the theory of value, it need only be said that apart from the vaguest of hints and sighs, à la Böhm-Bawerk, the revisionists have contributed absolutely nothing, and have therefore left no traces whatever on the development of scientific thought.

In the sphere of politics, revisionism did really try to revise the foundation of Marxism, namely, the doctrine of the class struggle. Political freedom, democracy and universal suffrage remove the ground for the class struggle—we were told—and render untrue the old proposition of the Communist Manifesto that the working men have no country. For, they said, since the “will of the majority” prevails in a democracy, one must neither regard the state as an organ of class rule, nor reject alliances with the progressive, social-reform bourgeoisie against the reactionaries.

It cannot be disputed that these arguments of the revisionists amounted to a fairly well-balanced system of views, namely, the old and well-known liberal-bourgeois views. The liberals have always said that bourgeois parliamentarism destroys classes and class divisions, since the right to vote and the right to participate in the government of the country are shared by all citizens without distinction. The whole history of Europe in the second half of the nineteenth century, and the whole history of the Russian revolution in the early twentieth, clearly show how absurd such views are. Economic distinctions are not mitigated but aggravated and intensified under the freedom of “democratic” capitalism. Parliamentarism does not eliminate, but lays bare the innate character even of the most democratic bourgeois republics as organs of class oppression. By helping to enlighten and to organise immeasurably wider masses of the population than those which previously took an active part in political events, parliamentarism does not make for the elimination of crises and political revolutions, but for the maximum intensification of civil war during such revolutions. The events in Paris in the spring of 1871 and the events in Russia in the winter of 1905 showed as clearly as could be how inevitably this intensification comes about. The French bourgeoisie without a moment’s hesitation made a deal with the enemy of the whole nation, with the foreign army which had ruined its country, in order to crush the proletarian movement. Whoever does not understand the inevitable inner dialectics of parliamentarism and bourgeois democracy—which leads to an even sharper decision of the argument by mass violence than formerly—will never be able on the basis of this parliamentarism to conduct propaganda and agitation consistent in principle, really preparing the working-class masses for victorious participation in such “arguments”. The experience of alliances, agreements and blocs with the social-reform liberals in the West and with the liberal reformists (Cadets) in the Russian revolution, has convincingly shown that these agreements only blunt the consciousness of the masses, that they do not enhance but weaken the actual significance of their struggle, by linking fighters with elements who are least capable of fighting and most vacillating and treacherous. Millerandism in France—the biggest experiment in applying revisionist political tactics on a wide, a really national scale—has provided a practical appraisal of revisionism that will never be forgotten by the proletariat all over the world.

A natural complement to the economic and political tendencies of revisionism was its attitude to the ultimate aim of the socialist movement. “The movement is everything, the ultimate aim is nothing”—this catch-phrase of Bernstein’s expresses the substance of revisionism better than many long disquisitions. To determine its conduct from case to case, to adapt itself to the events of the day and to the chopping and changing of petty politics, to forget the primary interests of the proletariat and the basic features of the whole capitalist system, of all capitalist evolution, to sacrifice these primary interests for the real or assumed advantages of the moment—such is the policy of revisionism. And it patently follows from the very nature of this policy that it may assume an infinite variety of forms, and that every more or less “new” question, every more or less unexpected and unforeseen turn of events, even though it change the basic line of development only to an insignificant degree and only for the briefest period, will always inevitably give rise to one variety of revisionism or another.

The inevitability of revisionism is determined by its class roots in modern society. Revisionism is an international phenomenon. No thinking socialist who is in the least informed can have the slightest doubt that the relation between the orthodox and the Bernsteinians in Germany, the Guesdists and the Jaurèsists (and now particularly the Broussists) in France, the Social Democratic Federation and the Independent Labour Party in Great Britain, Brouckère and Vandervelde in Belgium, the Integralists and the Reformists in Italy, the Bolsheviks and the Mensheviks in Russia, is everywhere essentially similar, notwithstanding the immense variety of national conditions and historical factors in the present state of all these countries. In reality, the “division” within the present international socialist movement is now proceeding along the same lines in all the various countries of the world, which testifies to a tremendous advance compared with thirty or forty years ago, when heterogeneous trends in the various countries were struggling within the one international socialist movement. And that “revisionism from the left” which has taken shape in the Latin countries as “revolutionary syndicalism”,[4] is also adapting itself to Marxism, “amending” it: Labriola in Italy and Lagardelle in France frequently appeal from Marx who is understood wrongly to Marx who is understood rightly.

We cannot stop here to analyse the ideological content of this revisionism, which as yet is far from having developed to the same extent as opportunist revisionism: it has not yet become international, has not yet stood the test of a single big practical battle with a socialist party in any single country. We confine ourselves therefore to that “revisionism from the right” which was described above.

Wherein lies its inevitability in capitalist society? Why is it more profound than the differences of national peculiarities and of degrees of capitalist development? Because in every capitalist country, side by side with the proletariat, there are always broad strata of the petty bourgeoisie, small proprietors. Capitalism arose and is constantly arising out of small production. A number of new “middle strata” are inevitably brought into existence again and again by capitalism (appendages to the factory, work at home, small workshops scattered all over the country to meet the requirements of big industries, such as the bicycle and automobile industries, etc.). These new small producers are just as inevitably being cast again into the ranks of the proletariat. It is quite natural that the petty-bourgeois world-outlook should again and again crop up in the ranks of the broad workers’ parties. It is quite natural that this should be so and always will be so, right up to the changes of fortune that will take place in the proletarian revolution. For it would be a profound mistake to think that the “complete” proletarianisation of the majority of the population is essential for bringing about such a revolution. What we now frequently experience only in the domain of ideology, namely, disputes over theoretical amendments to Marx; what now crops up in practice only over individual side issues of the labour movement, as tactical differences with the revisionists and splits on this basis—is bound to be experienced by the working class on an incomparably larger scale when the proletarian revolution will sharpen all disputed issues, will focus all differences on points which are of the most immediate importance in determining the conduct of the masses, and will make it necessary in the heat of the fight to distinguish enemies from friends, and to cast out bad allies in order to deal decisive blows at the enemy.

The ideological struggle waged by revolutionary Marxism against revisionism at the end of the nineteenth century is but the prelude to the great revolutionary battles of the proletariat, which is marching forward to the complete victory of its cause despite all the waverings and weaknesses of the petty bourgeoisie.

Annexure5: Marxism and Reformism by V I Lenin

[Published on September 12, 1913 in Pravda Truda No. 2. Transcription\Markup: R. Cymbala. Credit “Marxists Internet Archive”]

Unlike the anarchists, the Marxists recognise struggle for reforms, i.e., for measures that improve the conditions of the working people without destroying the power of the ruling class. At the same time, however, the Marxists wage a most resolute struggle against the reformists, who, directly or indirectly, restrict the aims and activities of the working class to the winning of reforms. Reformism is bourgeois deception of the workers, who, despite individual improvements, will always remain wage-slaves, as long as there is the domination of capital.

The liberal bourgeoisie grant reforms with one hand, and with the other always take them back, reduce them to nought, use them to enslave the workers, to divide them into separate groups and perpetuate wage-slavery. For that reason reformism, even when quite sincere, in practice becomes a weapon by means of which the bourgeoisie corrupt and weaken the workers. The experience of all countries shows that the workers who put their trust in the reformists are always fooled.

And conversely, workers who have assimilated Marx’s theory, i.e., realised the inevitability of wage-slavery so long as capitalist rule remains, will not be fooled by any bourgeois reforms. Understanding that where capitalism continued to exist reforms cannot be either enduring or far-reaching, the workers fight for better conditions and use them to intensify the fight against wage-slavery. The reformists try to divide and deceive the workers, to divert them from the class struggle by petty concessions. But the workers, having seen through the falsity of reformism, utilise reforms to develop and broaden their class struggle.

The stronger reformist influence is among the workers the weaker they are, the greater their dependence on the bourgeoisie, and the easier it is for the bourgeoisie to nullify reforms by various subterfuges. The more independent the working-class movement, the deeper and broader its aims, and the freer it is from reformist narrowness the easier it is for the workers to retain and utilise improvements.

There are reformists in all countries, for everywhere the bourgeoisie seek, in one way or another, to corrupt the workers and turn them into contented slaves who have given up all thought of doing away with slavery. In Russia, the reformists are liquidators, who renounce our past and try to lull the workers with dreams of a new, open, legal party. Recently the St. Petersburg liquidators were forced by Severnaya = Pravda[1] to defend themselves against the charge of reformism. Their arguments should be carefully analysed in order to clarify an extremely important question.

We are not reformists, the St. Petersburg liquidators wrote, because we have not said that reforms are everything and the ultimate goal nothing; we have spoken of movement to the ultimate goal; we have spoken of advancing through the struggle for reforms to the fulness of the aims set.

Let us now see how this defence squares with the facts.

First fact. The liquidator Sedov, summarising the statements of all the liquidators, wrote that of the Marxists’ “three pillars” two are no longer suitable for our agitation. Sedov retained the demand for an eight-hour day, which, theoretically, can be realised as a reform. He deleted, or relegated to the background the very things that go beyond reforms. Consequently, Sedov relapsed into downright opportunism, following the very policy expressed in the formula: the ultimate goal is nothing. When the “ultimate goal” (even in relation to democracy) is pushed further and further away from our agitation, that is reformism.

Second fact. The celebrated August Conference (last year’s) of the liquidators likewise pushed non-reformist demands further and further away—until some special occasion—instead of bringing them closer, into the heart of our agitation.

Third fact. By denying and disparaging the “old” and dissociating themselves from it, the liquidators thereby confine themselves to reformism. In the present situation, the connection between reformism and the renunciation of the “old” is obvious.

Fourth fact. The workers’ economic movement evokes the wrath and attacks of the liquidators (who speak of “crazes”, “milling the air”, etc., etc.) as soon as it adopts slogans that go beyond reformism.

What is the result? In words, the liquidators reject reformism as a principle, but in practice they adhere to it all along the line. They assure us, on the one hand, that for them reforms are not the be-all and end-all, but on the other hand, every time the Marxists go beyond reformism, the liquidators attack them or voice their contempt.

However, developments in every sector of the working-class movement show that the Marxists, far, from lagging behind, are definitely in the lead in making practical use of reforms, and in fighting for them. Take the Duma elections at the worker curia level—the speeches of our deputies inside and outside the Duma, the organisation of the workers’ press, the utilisation of the insurance reform; take the biggest union, the Metalworkers’ Union, etc.,—everywhere the Marxist workers are ahead of the liquidators, in the direct, immediate, “day-to-day” activity of agitation, organisation, fighting for reforms and using them.

The Marxists are working tirelessly, not missing a single “possibility” of winning and using reforms, and not condemning, but supporting, painstakingly developing every step beyond reformism in propaganda, agitation, mass economic struggle, etc. The liquidators, on the other hand, who have abandoned Marxism, by their attacks on the very existence of the Marxist body, by their destruction of Marxist discipline and advocacy of reformism and a liberal-labour policy, are only disorganising the working-class movement.

Nor, moreover, should the fact be overlooked that in Russia reformism is manifested also in a peculiar form, in identifying the fundamental political situation in present-day Russia with that of present-day Europe. From the liberal’s point of view this identification is legitimate, for the liberal believes and professes the view that “thank God, we have a Constitution”. The liberal expresses the interests of the bourgeoisie when he insists that, after October 17, every step by democracy beyond reformism is madness, a crime, a sin, etc.

But it is these bourgeois views that are applied in practice by our liquidators, who constantly and systematically “transplant” to Russia (on paper) the “open party” and the “struggle for a legal party”, etc. In other words, like the liberals, they preach the transplanting of the European constitution to Russia, without the specific path that in the West led to the adoption of constitutions and their consolidation over generations, in some cases even over centuries. What the liquidators and liberals want is to wash the hide without dipping it in water, as the saying goes.

In Europe, reformism actually means abandoning Marxism and replacing it by bourgeois “social policy”. In Russia, the reformism of the liquidators means not only that, it means destroying the Marxist organisation and abandoning the democratic tasks of the working class, it means replacing them by a liberal-labour policy.

Annexure6: Imperialism and the Split in Socialism by V I Lenin

[Published in Sbornik Sotsial-Demokrata No. 2, December 1916. Transcription by Marxists Internet Archive]

Is there any connection between imperialism and the monstrous and disgusting victory opportunism (in the form of social-chauvinism) has gained over the labour movement in Europe?

This is the fundamental question of modern socialism. And having in our Party literature fully established, first, the imperialist character of our era and of the present war, and, second, the inseparable historical connection between social-chauvinism and opportunism, as well as the intrinsic similarity of their political ideology, we can and must proceed to analyse this fundamental question.

We have to begin with as precise and full a definition of imperialism as possible. Imperialism is a specific historical stage of capitalism. Its specific character is threefold: imperialism is monopoly capitalism; parasitic, or decaying capitalism; moribund capitalism. The supplanting of free competition by monopoly is the fundamental economic feature, the quintessence of imperialism. Monopoly manifests itself in five principal forms:

(1) cartels, syndicates and trusts—the concentration of production has reached a degree which gives rise to these monopolistic associations of capitalists;

(2) the monopolistic position of the big banks—three, four or five giant banks manipulate the whole economic life of America, France, Germany;

(3) seizure of the sources of raw material by the trusts and the financial oligarchy (finance capital is monopoly industrial capital merged with bank capital);

(4) the (economic) partition of the world by the international cartels has begun. There are already over one hundred such international cartels, which command the entire world market and divide it “amicably” among themselves—until war redivides it. The export of capital, as distinct from the export of commodities under non-monopoly capitalism, is a highly characteristic phenomenon and is closely linked with the economic and territorial-political partition of the world;

(5) the territorial partition of the world (colonies) is completed.

Imperialism, as the highest stage of capitalism in America and Europe, and later in Asia, took final shape in the period 1898–1914. The Spanish-American War (1898), the Anglo-Boer War (1899–1902), the Russo-Japanese War (1904–05) and the economic crisis in Europe in 1900 are the chief historical landmarks in the new era of world history.

The fact that imperialism is parasitic or decaying capitalism is manifested first of all in the tendency to decay, which is characteristic of every monopoly under the system of private ownership of the means of production. The difference between the democratic-republican and the reactionary-monarchist imperialist bourgeoisie is obliterated precisely because they are both rotting alive (which by no means precludes an extraordinarily rapid development of capitalism in individual branches of industry, in individual countries, and in individual periods). Secondly, the decay of capitalism is manifested in the creation of a huge stratum of rentiers, capitalists who live by “clipping coupons”. In each of the four leading imperialist countries—England, U.S.A., France and Germany—capital in securities amounts to 100,000 or 150,000 million francs, from which each country derives an annual income of no less than five to eight thousand million. Thirdly, export of capital is parasitism raised to a high pitch. Fourthly, “finance capital strives for domination, not freedom”. Political reaction all along the line is a characteristic feature of imperialism. Corruption, bribery on a huge scale and all kinds of fraud. Fifthly, the exploitation of oppressed nations—which is inseparably connected with annexations—and especially the exploitation of colonies by a handful of “Great” Powers, increasingly transforms the “civilised” world into a parasite on the body of hundreds of millions in the uncivilised nations. The Roman proletarian lived at the expense of society. Modern society lives at the expense of the modern proletarian. Marx specially stressed this profound observation of Sismondi. Imperialism somewhat changes the situation. A privileged upper stratum of the proletariat in the imperialist countries lives partly at the expense of hundreds of millions in the uncivilised nations.

It is clear why imperialism is moribund capitalism, capitalism in transition to socialism: monopoly, which grows out of capitalism, is already dying capitalism, the beginning of its transition to socialism. The tremendous socialisation of labour by imperialism (what its apologists-the bourgeois economists-call “interlocking”) produces the same result.

Advancing this definition of imperialism brings us into complete contradiction to K. Kautsky, who refuses to regard imperialism as a “phase of capitalism” and defines it as a policy “preferred” by finance capital, a tendency of “industrial” countries to annex “agrarian” countries. Kautsky’s definition is thoroughly false from the theoretical standpoint. What distinguishes imperialism is the rule not of industrial capital, but of finance capital, the striving to annex not agrarian countries, particularly, but every kind of country. Kautsky divorces imperialist politics from imperialist economics, he divorces monopoly in politics from monopoly in economics in order to pave the way for his vulgar bourgeois reformism, such as “disarmament”, “ultraimperialism” and similar nonsense. The whole purpose and significance of this theoretical falsity is to obscure the most profound contradictions of imperialism and thus justify the theory of “unity” with the apologists of imperialism, the outright social-chauvinists and opportunists.

We have dealt at sufficient length with Kautsky’s break with Marxism on this point in Sotsial-Demokrat and Kommunist. Our Russian Kautskyites, the supporters of the Organising Committee (O.C.), headed by Axelrod and Spectator, including even Martov, and to a large degree Trotsky, preferred to maintain a discreet silence on the question of Kautskyism as a trend. They did not dare defend Kautsky’s war-time writings, confining themselves simply to praising Kautsky (Axelrod in his German pamphlet, which the Organising Committee has promised to publish in Russian) or to quoting Kautsky’s private letters (Spectator), in which he says he belongs to the opposition and jesuitically tries to nullify his chauvinist declarations.

It should be noted that Kautsky’s “conception” of imperialism—which is tantamount to embellishing imperialism—is a retrogression not only compared with Hilferding’s Finance Capital (no matter how assiduously Hilferding now defends Kautsky and “unity” with the social-chauvinists!) but also compared with the social-liberal J. A. Hobson. This English economist, who in no way claims to be a Marxist, defines imperialism, and reveals its contradictions, much more profoundly in a book published in 1902[4] . This is what Hobson (in whose book may be found nearly all Kautsky’s pacifist and “conciliatory” banalities) wrote on the highly important question of the parasitic nature of imperialism:

Two sets of circumstances, in Hobson’s opinion, weakened the power of the old empires: (1) “economic parasitism”, and (2) formation of armies from dependent peoples. “There is first the habit of economic parasitism, by which the ruling state has used its provinces, colonies, and dependencies in order to enrich its ruling class and to bribe its lower classes into acquiescence.” Concerning the second circumstance, Hobson writes:

“One of the strangest symptoms of the blindness of imperialism [this song about the “blindness” of imperialists comes more appropriately from the social-liberal Hobson than from the “Marxist” Kautsky] is the reckless indifference with which Great Britain, France, and other imperial nations are embarking on this perilous dependence. Great Britain has gone farthest. Most of the fighting by which we have won our Indian Empire has been done by natives; in India, as more recently in Egypt, great standing armies are placed under British commanders; almost all the fighting associated with our African dominions, except in the southern part, has been done for us by natives.”

The prospect of partitioning China elicited from Hobson the following economic appraisal: “The greater part of Western Europe might then assume the appearance and character already exhibited by tracts of country in the South of England, in the Riviera, and in the tourist-ridden or residential parts of Italy and Switzerland, little clusters of wealthy aristocrats drawing dividends and pensions from the Far East, with a somewhat larger group of professional retainers and tradesmen and a larger body of personal servants and workers in the transport trade and in the final stages of production of the more perishable goods: all the main arterial industries would have disappeared, the staple foods and semi-manufactures flowing in as tribute from Asia and Africa…. We have foreshadowed the possibility of even a larger alliance of Western states, a European federation of Great Powers which, so far from forwarding the cause of world civilisation, might introduce the gigantic peril of a Western parasitism, a group of advanced industrial nations, whose upper classes drew vast tribute from Asia and Africa, with which they supported great tame masses of retainers, no longer engaged in the staple industries of agriculture and manufacture, but kept in the performance of personal or minor industrial services under the control of a new financial aristocracy. Let those who would scout such a theory [he should have said: prospect] as undeserving of consideration examine the economic and social condition of districts in Southern England today which are already reduced to this condition, and reflect upon the vast extension of such a system which might be rendered feasible by the subjection of China to the economic control of similar groups of financiers, investors [rentiers] and political and business officials, draining the greatest potential reservoir of profit the world has ever known, in order to consume it in Europe. The situation is far too complex, the play of world forces far too incalculable, to render this or any other single interpretation of the future very probable; but the influences which govern the imperialism of Western Europe today are moving in this direction, and, unless counteracted or diverted, make towards such a consummation.”

Hobson, the social-liberal, fails to see that this “counteraction” can be offered only by the revolutionary proletariat and only in the form of a social revolution. But then he is a social-liberal! Nevertheless, as early as 1902 he had an excellent insight into the meaning and significance of a “United States of Europe” (be it said for the benefit of Trotsky the Kautskyite!) and of all that is now being glossed over by the hypocritical Kautskyites of various countries, namely, that the opportunists (social-chauvinists) are working hand in glove with the imperialist bourgeoisie precisely towards creating an imperialist Europe on the backs of Asia and Africa, and that objectively the opportunists are a section of the petty bourgeoisie and of a certain strata of the working class who have been bribed out of imperialist superprofits and converted to watchdogs of capitalism and corruptors of the labour movement.

Both in articles and in the resolutions of our Party, we have repeatedly pointed to this most profound connection, the economic connection, between the imperialist bourgeoisie and the opportunism which has triumphed (for long?) in the labour movement. And from this, incidentally, we concluded that a split with the social-chauvinists was inevitable. Our Kautskyites preferred to evade the question! Martov, for instance, uttered in his lectures a sophistry which in the Bulletin of the Organising Committee, Secretariat Abroad[9] (No. 4, April 10, 1916) is expressed as follows:

“…The cause of revolutionary Social-Democracy would be in a sad, indeed hopeless, plight if those groups of workers who in mental development approach most closely to the ‘intelligentsia’ and who are the most highly skilled fatally drifted away from it towards opportunism….”

By means of the silly word “fatally” and a certain sleight-of-hand, the fact is evaded that certain groups of workers have already drifted away to opportunism and to the imperialist bourgeoisie! And that is the very fact the sophists of the O.C. want to evade! They confine themselves to the “official optimism” the Kautskyite Hilferding and many others now flaunt: objective conditions guarantee the unity of the proletariat and the victory of the revolutionary trend! We, forsooth, are “optimists” with regard to the proletariat!

But in reality all these Kautskyites—Hilferding, the O.C. supporters, Martov and Co.—are optimists… with regard to opportunism. That is the whole point!

The proletariat is the child of capitalism—of world capitalism, and not only of European capitalism, or of imperialist capitalism. On a world scale, fifty years sooner or fifty years later—measured on a world scale, this is a minor point—the “proletariat” of course “will be” united, and revolutionary Social-Democracy will “inevitably” be victorious within it. But that is not the point, Messrs. Kautskyites. The point is that at the present time, in the imperialist countries of Europe, you are fawning on the opportunists, who are alien to the proletariat as a class, who are the servants, the agents of the bourgeoisie and the vehicles of its influence, and unless the labour movement rids itself of them, it will remain a bourgeois labour movement. By advocating “unity” with the opportunists, with the Legiens and Davids, the Plekhanovs, the Chkhenkelis and Potresovs, etc., you are, objectively, defending the enslavement of the workers by the imperialist bourgeoisie with the aid of its best agents in the labour movement. The victory of revolutionary Social-Democracy on a world scale is absolutely inevitable, only it is moving and will move, is proceeding and will proceed, against you, it will be a victory over you.

These two trends, one might even say two parties, in the present-day labour movement, which in 1914–16 so obviously parted ways all over the world, were traced by Engels and Marx in England throughout the course of decades, roughly from 1858 to 1892.

Neither Marx nor Engels lived to see the imperialist epoch of world capitalism, which began not earlier than 1898–1900. But it has been a peculiar feature of England that even in the middle of the nineteenth century she already revealed at least two major distinguishing features of imperialism: (1) vast colonies, and (2) monopoly profit (due to her monopoly position in the world market). In both respects England at that time was an exception among capitalist countries, and Engels and Marx, analysing this exception, quite clearly and definitely indicated its connection with the (temporary) victory of opportunism in the English labour movement.

In a letter to Marx, dated October 7, 1858, Engels wrote: “…The English proletariat is actually becoming more and more bourgeois, so that this most bourgeois of all nations is apparently aiming ultimately at the possession of a bourgeois aristocracy and a bourgeois proletariat alongside the bourgeoisie. For a nation which exploits the whole world this is of course to a certain extent justifiable.” In a letter to Sorge, dated September 21, 1872, Engels informs him that Hales kicked up a big row in the Federal Council of the International and secured a vote of censure on Marx for saying that “the English labour leaders had sold themselves”. Marx wrote to Sorge on August 4, 1874: “As to the urban workers here [in England], it is a pity that the whole pack of leaders did not get into Parliament. This would be the surest way of getting rid of the whole lot.” In a letter to Marx, dated August 11, 1881, Engels speaks about “those very worst English trade unions which allow themselves to be led by men sold to, or at least paid by, the bourgeoisie.” In a letter to Kautsky, dated September 12, 1882, Engels wrote: “You ask me what the English workers think about colonial policy. Well, exactly the same as they think about politics in general. There is no workers’ party here, there are only Conservatives and Liberal-Radicals, and the workers gaily share the feast of England’s monopoly of the world market and the colonies.”

On December 7, 1889, Engels wrote to Sorge: “The most repulsive thing here [in England] is the bourgeois ‘respectability’, which has grown deep into the bones of the workers…. Even Tom Mann, whom I regard as the best of the lot, is fond of mentioning that he will be lunching with the Lord Mayor. If one compares this with the French, one realises, what a revolution is good for, after all.”[10] In a letter, dated April 19, 1890: “But under the surface the movement [of the working class in England] is going on, is embracing ever wider sections and mostly just among the hitherto stagnant lowest [Engels’s italics] strata. The day is no longer far off when this mass will suddenly find itself, when it will dawn upon it that it itself is this colossal mass in motion.” On March 4, 1891: “The failure of the collapsed Dockers’ Union; the ‘old’ conservative trade unions, rich and therefore cowardly, remain lone on the field….” September 14, 1891: at the Newcastle Trade Union Congress the old unionists, opponents of the eight-hour day, were defeated “and the bourgeois papers recognise the defeat of the bourgeois labour party” (Engels’s italics throughout)….

That these ideas, which were repeated by Engels over the course of decades, were so expressed by him publicly, in the press, is proved by his preface to the second edition of The Condition of the Working Class in England, 1892. Here he speaks of an “aristocracy among the working class”, of a “privileged minority of the workers”, in contradistinction to the “great mass of working people”. “A small, privileged, protected minority” of the working class alone was “permanently benefited” by the privileged position of England in 1848–68, whereas “the great bulk of them experienced at best but a temporary improvement”…. “With the break-down of that [England’s industrial] monopoly, the English working class will lose that privileged position…” The members of the “new” unions, the unions of the unskilled workers, “had this immense advantage, that their minds were virgin soil, entirely free from the inherited ‘respectable’ bourgeois prejudices which hampered the brains of the better situated ‘old unionists’” …. “The so-called workers’ representatives” in England are people “who are forgiven their being members of the working class because they themselves would like to drown their quality of being workers in the ocean of their liberalism…”

We have deliberately quoted the direct statements of Marx and Engels at rather great length in order that the reader may study them as a whole. And they should be studied, they are worth carefully pondering over. For they are the pivot of the tactics in the labour movement that are dictated by the objective conditions of the imperialist era.

Here too, Kautsky has tried to “befog the issue” and substitute for Marxism sentimental conciliation with the opportunists. Arguing against the avowed and naive social-imperialists (men like Lensch) who justify Germany’s participation in the war as a means of destroying England’s monopoly, Kautsky “corrects” this obvious falsehood by another equally obvious falsehood. Instead of a cynical falsehood he employs a suave falsehood! The industrial monopoly of England, he says, has long ago been broken, has long ago been destroyed, and there is nothing left to destroy.

Why is this argument false?

Because, firstly, it overlooks England’s colonial monopoly. Yet Engels, as we have seen, pointed to this very clearly as early as 1882, thirty-four years ago! Although England’s industrial monopoly may have been destroyed, her colonial monopoly not only remains, but has become extremely accentuated, for the whole world is already divided up! By means of this suave lie Kautsky smuggles in the bourgeois-pacifist and opportunist-philistine idea that “there is nothing to fight about”. On the contrary, not only have the capitalists something to fight about now, but they cannot help fighting if they want to preserve capitalism, for without a forcible redivision of colonies the new imperialist countries cannot obtain the privileges enjoyed by the older (and weaker) imperialist powers.

Secondly, why does England’s monopoly explain the (temporary) victory of opportunism in England? Because monopoly yields superprofits, i.e., a surplus of profits over and above the capitalist profits that are normal and customary all over the world. The capitalists can devote a part (and not a small one, at that!) of these superprofits to bribe their own workers, to create something like an alliance (recall the celebrated “alliances” described by the Webbs of English trade unions and employers) between the workers of the given nation and their capitalists against the other countries. England’s industrial monopoly was already destroyed by the end of the nineteenth century. That is beyond dispute. But how did this destruction take place? Did all monopoly disappear?

If that were so, Kautsky’s “theory” of conciliation (with the opportunists) would to a certain extent be justified. But it is not so, and that is just the point. Imperialism is monopoly capitalism. Every cartel, trust, syndicate, every giant bank is a monopoly Superprofits have not disappeared; they still remain. The exploitation of all other countries by one privileged, financially wealthy country remains and has become more intense. A handful of wealthy countries—there are only four of them, if we mean independent, really gigantic, “modern” wealth: England, France, the United States and Germany—have developed monopoly to vast proportions, they obtain superprofits running into hundreds, if not thousands, of millions, they “ride on the backs” of hundreds and hundreds of millions of people in other countries and fight among themselves for the division of the particularly rich, particularly fat and particularly easy spoils.

This, in fact, is the economic and political essence of imperialism, the profound contradictions of which Kautsky glosses over instead of exposing.

The bourgeoisie of an imperialist “Great” Power can economically bribe the upper strata of “its” workers by spending on this a hundred million or so francs a year, for its superprofits most likely amount to about a thousand million. And how this little sop is divided among the labour ministers, “labour representatives” (remember Engels’s splendid analysis of the term), labour members of War Industries Committees, labour officials, workers belonging to the narrow craft unions, office employees, etc., etc., is a secondary question.

Between 1848 and 1868, and to a certain extent even later, only England enjoyed a monopoly: that is why opportunism could prevail there for decades. No other countries possessed either very rich colonies or an industrial monopoly.

The last third of the nineteenth century saw the transition to the new, imperialist era. Finance capital not of one, but of several, though very few, Great Powers enjoys a monopoly. (In Japan and Russia the monopoly of military power, vast territories, or special facilities for robbing minority nationalities, China, etc., partly supplements, partly takes the place of, the monopoly of modern, up-to-date finance capital.) This difference explains why England’s monopoly position could remain unchallenged for decades. The monopoly of modern finance capital is being frantically challenged; the era of imperialist wars has begun. It was possible in those days to bribe and corrupt the working class of one country for decades. This is now improbable, if not impossible. But on the other hand, every imperialist “Great” Power can and does bribe smaller strata (than in England in 1848–68) of the “labour aristocracy”. Formerly a “bourgeois labour party”, to use Engels’s remarkably profound expression, could arise only in one country, because it alone enjoyed a monopoly, but, on the other hand, it could exist for a long time. Now a “bourgeois labour party” is inevitable and typical in all imperialist countries; but in view of the desperate struggle they are waging for the division of spoils it is improbable that such a party can prevail for long in a number of countries. For the trusts, the financial oligarchy, high prices, etc., while enabling the bribery of a handful in the top layers, are increasingly oppressing, crushing, ruining and torturing the mass of the proletariat and the semi-proletariat.

On the one hand, there is the tendency of the bourgeoisie and the opportunists to convert a handful of very rich and privileged nations into “eternal” parasites on the body of the rest of mankind, to “rest on the laurels” of the exploitation of Negroes, Indians, etc., keeping them in subjection with the aid of the excellent weapons of extermination provided by modern militarism. On the other hand, there is the tendency of the masses, who are more oppressed than before and who bear the whole brunt of imperialist wars, to cast off this yoke and to overthrow the bourgeoisie. It is in the struggle between these two tendencies that the history of the labour movement will now inevitably develop. For the first tendency is not accidental; it is “substantiated” economically. In all countries the bourgeoisie has already begotten, fostered and secured for itself “bourgeois labour parties” of social-chauvinists. The difference between a definitely formed party, like Bissolati’s in Italy, for example, which is fully social-imperialist, and, say, the semi-formed near-party of the Potresovs, Gvozdyovs, Bulkins, Chkheidzes, Skobelevs and Co., is an immaterial difference. The important thing is that, economically, the desertion of a stratum of the labour aristocracy to the bourgeoisie has matured and become an accomplished fact; and this economic fact, this shift in class relations, will find political form, in one shape or another, without any particular “difficulty”.

On the economic basis referred to above, the political institutions of modern capitalism—press, parliament associations, congresses etc.—have created political privileges and sops for the respectful, meek, reformist and patriotic office employees and workers, corresponding to the economic privileges and sops. Lucrative an soft jobs in the government or on the war industries committees, in parliament and on diverse committees, on the editorial staffs of “respectable”, legally published newspapers or on the management councils of no less respectable and “bourgeois law-abiding” trade unions—this is the bait by which the imperialist bourgeoisie attracts and rewards the representatives and supporters of the “bourgeois labour parties”.

The mechanics of political democracy works in the same direction. Nothing in our times can be done without elections; nothing can be done without the masses. And in this era of printing and parliamentarism it is impossible to gain the following of the masses without a widely ramified, systematically managed, well-equipped system of flattery, lies, fraud, juggling with fashionable and popular catchwords, and promising all manner of reforms and blessings to the workers right and left—as long as they renounce the revolutionary struggle for the overthrow of bourgeoisie. I would call this system Lloyd-Georgism, after the English Minister Lloyd George, one of the foremost and most dexterous representatives of this system in the classic land of the “bourgeois labour party”. A first-class bourgeois manipulator, an astute politician, a popular orator who will deliver any speeches you like even r-r-revolutionary ones, to a labour audience, and a man who is capable of obtaining sizable sops for docile workers in the shape of social reforms (insurance, etc.), Lloyd George serves the bourgeoisie splendidly,[6] and serves it precisely among the workers, brings its influence precisely to the proletariat, to where the bourgeoisie needs it most and where it finds it most difficult to subject the masses morally.

And is there such a great difference between Lloyd George and the Scheidemanns, Legiens, Hendersons and Hyndmans, Plekhanovs, Renaudels and Co.? Of the latter, it may be objected, some will return to the revolutionary socialism of Marx. This is possible, but it is an insignificant difference in degree, if the question is regarded from its political, i.e., its mass aspect. Certain individuals among the present social-chauvinist leaders may return to the proletariat. But the social-chauvinist or (what is the same thing) opportunist trend can neither disappear nor “return” to the revolutionary proletariat. Wherever Marxism is popular among the workers, this political trend, this “bourgeois labour party”, will swear by the name of Marx. It cannot be prohibited from doing this, just as a trading firm cannot be prohibited from using any particular label, sign or advertisement. It has always been the case in history that after the death of revolutionary leaders who were popular among the oppressed classes, their enemies have attempted to appropriate their names so as to deceive the oppressed classes.

The fact that is that “bourgeois labour parties,” as a political phenomenon, have already been formed in all the foremost capitalist countries, and that unless determined and relentless struggle is waged all along the line against these parties—or groups, trends, etc., it is all the same—there can be no question of a struggle against imperialism, or of Marxism, or of a socialist labour movement. The Chkheidze faction, Nashe Dyelo and Golos Truda in Russia, and the O.C. supporters abroad are nothing but varieties of one such party. There is not the slightest reason for thinking that these parties will disappear before the social revolution. On the contrary, the nearer the revolution approaches, the more strongly it flares up and the more sudden and violent the transitions and leaps in its progress, the greater will be the part the struggle of the revolutionary mass stream against the opportunist petty-bourgeois stream will play in the labour movement. Kautskyism is not an independent trend, because it has no roots either in the masses or in the privileged stratum which has deserted to the bourgeoisie. But the danger of Kautskyism lies in the fact that, utilising the ideology of the past, it endeavours to reconcile the proletariat with the “bourgeois labour party”, to preserve the unity of the proletariat with that party and thereby enhance the latter’s prestige. The masses no longer follow the avowed social-chauvinists: Lloyd George has been hissed down at workers’ meetings in England; Hyndman has left the party; the Renaudels and Scheidemanns, the Potresovs and Gvozdyovs are protected by the police. The Kautskyites’ masked defence of the social-chauvinists is much more dangerous.

One of the most common sophistries of Kautskyism is its reference to the “masses”. We do not want, they say, to break away from the masses and mass organisations! But just think how Engels put the question. In the nineteenth century the “mass organisations” of the English trade unions were on the side of the bourgeois labour party. Marx and Engels did not reconcile themselves to it on this ground; they exposed it. They did not forget, firstly, that the trade union organisations directly embraced a minority of the proletariat. In England then, as in Germany now, not more than one-fifth of the proletariat was organised. No one can seriously think it possible to organise the majority of the proletariat under capitalism. Secondly—and this is the main point—it is not so much a question of the size of an organisation, as of the real, objective significance of its policy: does its policy represent the masses, does it serve them, i.e., does it aim at their liberation from capitalism, or does it represent the interests of the minority, the minority’s reconciliation with capitalism? The latter was true of England in the nineteenth century, and it is true of Germany, etc., now.

Engels draws a distinction between the “bourgeois labour party” of the old trade unions—the privileged minority—and the “lowest mass”, the real majority, and appeals to the latter, who are not infected by “bourgeois respectability”. This is the essence of Marxist tactics!

Neither we nor anyone else can calculate precisely what portion of the proletariat is following and will follow the social-chauvinists and opportunists. This will be revealed only by the struggle, it will be definitely decided only by the socialist revolution. But we know for certain that the “defenders of the fatherland” in the imperialist war represent only a minority. And it is therefore our duty, if we wish to remain socialists to go down lower and deeper, to the real masses; this is the whole meaning and the whole purport of the struggle against opportunism. By exposing the fact that the opportunists and social-chauvinists are in reality betraying and selling the interests of the masses, that they are defending the temporary privileges of a minority of the workers, that they are the vehicles of bourgeois ideas and influences, that they are really allies and agents of the bourgeoisie, we teach the masses to appreciate their true political interests, to fight for socialism and for the revolution through all the long and painful vicissitudes of imperialist wars and imperialist armistices.

The only Marxist line in the world labour movement is to explain to the masses the inevitability and necessity of breaking with opportunism, to educate them for revolution by waging a relentless struggle against opportunism, to utilise the experience of the war to expose, not conceal, the utter vileness of national-liberal labour politics.

In the next article, we shall try to sum up the principal features that distinguish this line from Kautskyism.

Annexure7: Imperialism, the Highest Stage of Capitalism by V I Lenin

[Chapter VII. Imperialism as a Special Stage of Capitalism.

Written: January-June, 1916. Published: First published in mid-1917 in pamphlet form, Petrograd. Transcription\Markup: Tim Delaney & Kevin Goins (2008). Credit – Marxists Internet Archive]

We must now try to sum up, to draw together the threads of what has been said above on the subject of imperialism. Imperialism emerged as the development and direct continuation of the fundamental characteristics of capitalism in general. But capitalism only became capitalist imperialism at a definite and very high stage of its development, when certain of its fundamental characteristics began to change into their opposites, when the features of the epoch of transition from capitalism to a higher social and economic system had taken shape and revealed themselves in all spheres. Economically, the main thing in this process is the displacement of capitalist free competition by capitalist monopoly. Free competition is the basic feature of capitalism, and of commodity production generally; monopoly is the exact opposite of free competition, but we have seen the latter being transformed into monopoly before our eyes, creating large-scale industry and forcing out small industry, replacing large-scale by still larger-scale industry, and carrying concentration of production and capital to the point where out of it has grown and is growing monopoly: cartels, syndicates and trusts, and merging with them, the capital of a dozen or so banks, which manipulate thousands of millions. At the same time the monopolies, which have grown out of free competition, do not eliminate the latter, but exist above it and alongside it, and thereby give rise to a number of very acute, intense antagonisms, frictions and conflicts. Monopoly is the transition from capitalism to a higher system.

If it were necessary to give the briefest possible definition of imperialism we should have to say that imperialism is the monopoly stage of capitalism. Such a definition would include what is most important, for, on the one hand, finance capital is the bank capital of a few very big monopolist banks, merged with the capital of the monopolist associations of industrialists; and, on the other hand, the division of the world is the transition from a colonial policy which has extended without hindrance to territories unseized by any capitalist power, to a colonial policy of monopolist possession of the territory of the world, which has been completely divided up.

But very brief definitions, although convenient, for they sum up the main points, are nevertheless inadequate, since we have to deduce from them some especially important features of the phenomenon that has to be defined. And so, without forgetting the conditional and relative value of all definitions in general, which can never embrace all the concatenations of a phenomenon in its full development, we must give a definition of imperialism that will include the following five of its basic features:

(1) the concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life; (2) the merging of bank capital with industrial capital, and the creation, on the basis of this “finance capital,” of a financial oligarchy; (3) the export of capital as distinguished from the export of commodities acquires exceptional importance; (4) the formation of international monopolist capitalist associations which share the world among themselves and (5) the territorial division of the whole world among the biggest capitalist powers is completed. Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capital is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed.

We shall see later that imperialism can and must be defined differently if we bear in mind not only the basic, purely economic concepts—to which the above definition is limited—but also the historical place of this stage of capitalism in relation to capitalism in general, or the relation between imperialism and the two main trends in the working-class movement. The thing to be noted at this point is that imperialism, as interpreted above, undoubtedly represents a special stage in the development of capitalism. To enable the reader to obtain the most well-grounded idea of imperialism, I deliberately tried to quote as extensively as possible bourgeois economists who have to admit the particularly incontrovertible facts concerning the latest stage of capitalist economy. With the same object in view, I have quoted detailed statistics which enable one to see to what degree bank capital, etc., has grown, in what precisely the transformation of quantity into quality, of developed capitalism into imperialism, was expressed. Needless to say, of course, all boundaries in nature and in society are conventional and changeable, and it would be absurd to argue, for example, about the particular year or decade in which imperialism “definitely” became established.

In the matter of defining imperialism, however, we have to enter into controversy, primarily, with Karl Kautsky, the principal Marxist theoretician of the epoch of the so-called Second International—that is, of the twenty-five years between 1889 and 1914. The fundamental ideas expressed in our definition of imperialism were very resolutely attacked by Kautsky in 1915, and even in November 1914, when he said that imperialism must not be regarded as a “phase” or stage of economy, but as a policy, a definite policy “preferred” by finance capital; that imperialism must not be “identified” with “present-day capitalism”; that if imperialism is to be understood to mean “all the phenomena of present-day capitalism”—cartels, protection, the domination of the financiers, and colonial policy—then the question as to whether imperialism is necessary to capitalism becomes reduced to the “flattest tautology”, because, in that case, “imperialism is naturally a vital necessity for capitalism”, and so on. The best way to present Kautsky’s idea is to quote his own definition of imperialism, which is diametrically opposed to the substance of the ideas which I have set forth (for the objections coming from the camp of the German Marxists, who have been advocating similar ideas for many years already, have been long known to Kautsky as the objections of a definite trend in Marxism).

Kautsky’s definition is as follows:

“Imperialism is a product of highly developed industrial capitalism. It consists in the striving of every industrial capitalist nation to bring under its control or to annex all large areas of agrarian [Kautsky’s italics] territory, irrespective of what nations inhabit it.” [1]

This definition is of no use at all because it one-sidedly, i.e., arbitrarily, singles out only the national question (although the latter is extremely important in itself as well as in its relation to imperialism), it arbitrarily and inaccurately connects this question only with industrial capital in the countries which annex other nations, and in an equally arbitrary and inaccurate manner pushes into the forefront the annexation of agrarian regions.

Imperialism is a striving for annexations—this is what the political part of Kautsky’s definition amounts to. It is correct, but very incomplete, for politically, imperialism is, in general, a striving towards violence and reaction. For the moment, however, we are interested in the economic aspect of the question, which Kautsky himself introduced into his definition. The inaccuracies in Kautsky’s definition are glaring. The characteristic feature of imperialism is not industrial but finance capital. It is not an accident that in France it was precisely the extraordinarily rapid development of finance capital, and the weakening of industrial capital, that from the eighties onwards gave rise to the extreme intensification of annexationist (colonial) policy. The characteristic feature of imperialism is precisely that it strives to annex not only agrarian territories, but even most highly industrialised regions (German appetite for Belgium; French appetite for Lorraine), because (1) the fact that the world is already partitioned obliges those contemplating a redivision to reach out for every kind of territory, and (2) an essential feature of imperialism is the rivalry between several great powers in the striving for hegemony, i.e., for the conquest of territory, not so much directly for themselves as to weaken the adversary and undermine his hegemony. (Belgium is particularly important for Germany as a base for operations against Britain; Britain needs Baghdad as a base for operations against Germany, etc.)

Kautsky refers especially—and repeatedly—to English writers who, he alleges, have given a purely political meaning to the word “imperialism” in the sense that he, Kautsky, understands it. We take up the work by the English writer Hobson, Imperialism, which appeared in 1902, and there we read:

“The new imperialism differs from the older, first, in substituting for the ambition of a single growing empire the theory and the practice of competing empires, each motivated by similar lusts of political aggrandisement and commercial gain; secondly, in the dominance of financial or investing over mercantile interests.” [2]

We see that Kautsky is absolutely wrong in referring to English writers generally (unless he meant the vulgar English imperialists, or the avowed apologists for imperialism). We see that Kautsky, while claiming that he continues to advocate Marxism, as a matter of fact takes a step backward compared with the social-liberal Hobson, who more correctly takes into account two “historically concrete” (Kautsky’s definition is a mockery of historical concreteness!) features of modern imperialism: (1) the competition between several imperialisms, and (2) the predominance of the financier over the merchant. If it is chiefly a question of the annexation of agrarian countries by industrial countries, then the role of the merchant is put in the forefront.

Kautsky’s definition is not only wrong and un-Marxist. It serves as a basis for a whole system of views which signify a rupture with Marxist theory and Marxist practice all along the line. I shall refer to this later. The argument about words which Kautsky raises as to whether the latest stage of capitalism should be called imperialism or the stage of finance capital is not worth serious attention. Call it what you will, it makes no difference. The essence of the matter is that Kautsky detaches the politics of imperialism from its economics, speaks of annexations as being a policy “preferred” by finance capital, and opposes to it another bourgeois policy which, he alleges, is possible on this very same basis of finance capital. It follows, then, that monopolies in the economy are compatible with non-monopolistic, non-violent, non-annexationist methods in politics. It follows, then, that the territorial division of the world, which was completed during this very epoch of finance capital, and which constitutes the basis of the present peculiar forms of rivalry between the biggest capitalist states, is compatible with a non-imperialist policy. The result is a slurring-over and a blunting of the most profound contradictions of the latest stage of capitalism, instead of an exposure of their depth; the result is bourgeois reformism instead of Marxism.

Kautsky enters into controversy with the German apologist of imperialism and annexations, Cunow, who clumsily and cynically argues that imperialism is present-day capitalism; the development of capitalism is inevitable and progressive; therefore imperialism is progressive; therefore, we should grovel before it and glorify it! This is something like the caricature of the Russian Marxists which the Narodniks drew in 1894-95. They argued: if the Marxists believe that capitalism is inevitable in Russia, that it is progressive, then they ought to open a tavern and begin to implant capitalism! Kautsky’s reply to Cunow is as follows: imperialism is not present-day capitalism; it is only one of the forms of the policy of present-day capitalism. This policy we can and should fight, fight imperialism, annexations, etc.

The reply seems quite plausible, but in effect it is a more subtle and more disguised (and therefore more dangerous) advocacy of conciliation with imperialism, because a “fight” against the policy of the trusts and banks that does not affect the economic basis of the trusts and banks is mere bourgeois reformism and pacifism, the benevolent and innocent expression of pious wishes. Evasion of existing contradictions, forgetting the most important of them, instead of revealing their full depth—such is Kautsky’s theory, which has nothing in common with Marxism. Naturally, such a “theory” can only serve the purpose of advocating unity with the Cunows!

“From the purely economic point of view,” writes Kautsky, “it is not impossible that capitalism will yet go through a new phase, that of the extension of the policy of the cartels to foreign policy, the phase of ultra-imperialism,” [3] i.e., of a superimperialism, of a union of the imperialisms of the whole world and not struggles among them, a phase when wars shall cease under capitalism, a phase of “the joint exploitation of the world by internationally united finance capital.” [4]

We shall have to deal with this “theory of ultra-imperialism” later on in order to show in detail how decisively and completely it breaks with Marxism. At present, in keeping with the general plan of the present work, we must examine the exact economic data on this question. “From the purely economic point of view,” is “ultra-imperialism” possible, or is it ultra-nonsense?

If the purely economic point of view is meant to be a “pure” abstraction, then all that can be said reduces itself to the following proposition: development is proceeding towards monopolies, hence, towards a single world monopoly, towards a single world trust. This is indisputable, but it is also as completely meaningless as is the statement that “development is proceeding” towards the manufacture of foodstuffs in laboratories. In this sense the “theory” of ultra-imperialism is no less absurd than a “theory of ultra-agriculture” would be.

If, however, we are discussing the “purely economic” conditions of the epoch of finance capital as a historically concrete epoch which began at the turn of the twentieth century, then the best reply that one can make to the lifeless abstractions of “ultra-imperialism” (which serve exclusively a most reactionary aim: that of diverting attention from the depth of existing antagonisms) is to contrast them with the concrete economic realities of the present-day world economy. Kautsky’s utterly meaningless talk about ultra-imperialism encourages, among other things, that profoundly mistaken idea which only brings grist to the mill of the apologists of imperialism, i.e., that the rule of finance capital lessens the unevenness and contradictions inherent in the world economy, whereas in reality it increases them.

R. Calwer, in his little book, An Introduction to the World Economy, made an attempt to summarise the main, purely economic, data that enable one to obtain a concrete picture of the internal relations of the world economy at the turn of the twentieth century. He divides the world into five “main economic areas”, as follows: (1) Central Europe (the whole of Europe with the exception of Russia and Great Britain); (2) Great Britain; (3) Russia; (4) Eastern Asia; (5) America; he includes the colonies in the “areas” of the states to which they belong and “leaves aside” a few countries not distributed according to areas, such as Persia, Afghanistan, and Arabia in Asia, Morocco and Abyssinia in Africa, etc.

Here is a brief summary of the economic data he quotes on these regions.

Principal
economic
areas		AreaPopulationTransportTradeIndustry
Millionsq. mileMillionsRailways
(thou. km)		Mercantile
fleet(mill. ton)		Import-export
(thou. mill.
mark)		OutputNumber of cotton spindle
(million)
Of coal(mill. ton)Of pig iron
(mill. ton)
1) Central Europe27.6
(23.6)		388
(146)		2048412511526
2) Britain28.9
(28.6)		398
(355)		1401125249951
3) Russia2213163131637
4) Eastern Asia1238981280.022
5) America301483796142451419

NOTE: The figures in parentheses show the area and population of the colonies.

We see three areas of highly developed capitalism (high development of means of transport, of trade and of industry): the Central European, the British and the American areas. Among these are three states which dominate the world: Germany, Great Britain, and the United States. Imperialist rivalry and the struggle between these countries have become extremely keen because Germany has only an insignificant area and few colonies; the creation of “Central Europe” is still a matter for the future, it is being born in the midst of a desperate struggle. For the moment the distinctive feature of the whole of Europe is political disunity. In the British and American areas, on the other hand, political concentration is very highly developed, but there is a vast disparity between the immense colonies of the one and the insignificant colonies of the other. In the colonies, however, capitalism is only beginning to develop. The struggle for South America is becoming more and more acute.

There are two areas where capitalism is little developed: Russia and Eastern Asia. In the former, the population is extremely sparse, in the latter it is extremely dense; in the former political concentration is high, in the latter it does not exist. The partitioning of China is only just beginning, and the struggle for it between Japan, the U.S., etc., is continually gaining in intensity.

Compare this reality—the vast diversity of economic and political conditions, the extreme disparity in the rate of development of the various countries, etc., and the violent struggles among the imperialist states—with Kautsky’s silly little fable about “peaceful” ultra-imperialism. Is this not the reactionary attempt of a frightened philistine to hide from stern reality? Are not the international cartels which Kautsky imagines are the embryos of “ultra-imperialism” (in the same way as one “can” describe the manufacture of tablets in a laboratory as ultra-agriculture in embryo) an example of the division and the redivision of the world, the transition from peaceful division to non-peaceful division and vice versa? Is not American and other finance capital, which divided the whole world peacefully with Germany’s participation in, for example, the international rail syndicate, or in the international mercantile shipping trust, now engaged in redividing the world on the basis of a new relation of forces that is being changed by methods anything but peaceful?

Finance capital and the trusts do not diminish but increase the differences in the rate of growth of the various parts of the world economy. Once the relation of forces is changed, what other solution of the contradictions can be found under capitalism than that of force? Railway statistics [6] provide remarkably exact data on the different rates of growth of capitalism and finance capital in world economy. In the last decades of imperialist development, the total length of railways has changed as follows:

RegionsRailways (000 kilometres)
18901913Net Addition
Europe224346+122
U.S.268411+143
All colonies82210+128
Independent and semi-independentstates of Asia and America43137+94
TOTAL6171104

Thus, the development of railways has been most rapid in the colonies and in the independent (and semi-independent) states of Asia and America. Here, as we know, the finance capital of the four or five biggest capitalist states holds undisputed sway. Two hundred thousand kilometres of new railways in the colonies and in the other countries of Asia and America represent a capital of more than 40,000 million marks newly invested on particularly advantageous terms, with special guarantees of a good return and with profitable orders for steel works, etc., etc.

Capitalism is growing with the greatest rapidity in the colonies and in overseas countries. Among the latter, new imperialist powers are emerging (e.g., Japan). The struggle among the world imperialisms is becoming more acute. The tribute levied by finance capital on the most profitable colonial and overseas enterprises is increasing. In the division of this “booty,” an exceptionally large part goes to countries which do not always stand at the top of the list in the rapidity of the development of their productive forces. In the case of the biggest countries, together with their colonies, the total length of railways was as follows:

Country / EmpireRailways (000 kilometres)
18901913Net Addition
USA268413+145
British Empire107208+101
Russia3278+46
Germany4368+25
France4163+22
TOTAL491830

Thus, about 80 per cent of the total existing railways are concentrated in the hands of the five biggest powers. But the concentration of the ownership of these railways, the concentration of finance capital, is immeasurably greater since the French and British millionaires, for example, own an enormous amount of shares and bonds in American, Russian and other railways.

Thanks to her colonies, Great Britain has increased the length of “her” railways by 100,000 kilometres, four times as much as Germany. And yet, it is well known that the development of productive forces in Germany, and especially the development of the coal and iron industries, has been incomparably more rapid during this period than in Britain—not to speak of France and Russia. In 1892, Germany produced 4,900,000 tons of pig-iron and Great Britain produced 6,800,000 tons; in 1912, Germany produced 17,600,000 tons and Great Britain, 9,000,000 tons. Germany, therefore, had an overwhelming superiority over Britain in this respect. [7] The question is: what means other than war could there be under capitalism to overcome the disparity between the development of productive forces and the accumulation of capital on the one side, and the division of colonies and spheres of influence for finance capital on the other?

Annexure8: ON CONTRADICTION by Mao ZeDong

[First published in August 1937; Credit – Marxists Internet Archive]

I. THE TWO WORLD OUTLOOKS

The metaphysical or vulgar evolutionist world outlook sees things as isolated, static and one-sided. It regards all things in the universe, their forms and their species, as eternally isolated from one another and immutable. Such change as there is can only be an increase or decrease in quantity or a change of place. Moreover, the cause of such an increase or decrease or change of place is not inside things but outside them, that is, the motive force is external. Metaphysicians hold that all the different kinds of things in the universe and all their characteristics have been the same ever since they first came into being. All subsequent changes have simply been increases or decreases in quantity. They contend that a thing can only keep on repeating itself as the same kind of thing and cannot change into anything different. In their opinion, capitalist exploitation, capitalist competition, the individualist ideology of capitalist society, and so on, can all be found in ancient slave society, or even in primitive society, and will exist for ever unchanged. They ascribe the causes of social development to factors external to society, such as geography and climate. They search in an over-simplified way outside a thing for the causes of its development, and they deny the theory of materialist dialectics which holds that development arises from the contradictions inside a thing. Consequently they can explain neither the qualitative diversity of things, nor the phenomenon of one quality changing into another.

As opposed to the metaphysical world outlook, the world outlook of materialist dialectics holds that in order to understand the development of a thing we should study it internally and in its relations with other things; in other words, the development of things should be seen as their internal and necessary self-movement, while each thing in its movement is interrelated with and interacts on the things around it. The fundamental cause of the development of a thing is not external but internal; it lies in the contradictoriness within the thing. There is internal contradiction in every single thing, hence its motion and development. Contradictoriness within a thing is the fundamental cause of its development, while its interrelations and interactions with other things are secondary causes. Thus materialist dialectics effectively combats the theory of external causes, or of an external motive force, advanced by metaphysical mechanical materialism and vulgar evolutionism. It is evident that purely external causes can only give rise to mechanical motion, that is, to changes in scale or quantity, but cannot explain why things differ qualitatively in thousands of ways and why one thing changes into another. As a matter of fact, even mechanical motion under external force occurs through the internal contradictoriness of things. Simple growth in plants and animals, their quantitative development, is likewise chiefly the result of their internal contradictions. Similarly, social development is due chiefly not to external but to internal causes. Countries with almost the same geographical and climatic conditions display great diversity and unevenness in their development. Moreover, great social changes may take place in one and the same country although its geography and climate remain unchanged. Imperialist Russia changed into the socialist Soviet Union, and feudal Japan, which had locked its doors against the world, changed into imperialist Japan, although no change occurred in the geography and climate of either country. Long dominated by feudalism, China has undergone great changes in the last hundred years and is now changing in the direction of a new China, liberated and-free, and yet no change has occurred in her geography and climate. Changes do take place in the geography and climate of the earth as a whole and in every part of it, but they are insignificant when compared with changes in society; geographical and climatic changes manifest themselves in terms of tens of thousands of years, while social changes manifest themselves in thousands, hundreds or tens of years, and even in a few years or months in times of revolution. According to materialist dialectics, changes in nature are due chiefly to the development of the internal contradictions in nature. Changes in society are due chiefly to the development of the internal contradictions in society, that is, the contradiction between the productive forces and the relations of production, the contradiction between classes and the contradiction between the old and the new; it is the development of these contradictions that pushes society forward and gives the impetus for the supersession of the old society by the new. Does materialist dialectics exclude external causes? Not at all. It holds that external causes are the condition of change and internal causes are the basis of change, and that external causes become operative through internal causes. In a suitable temperature an egg changes into a chicken, but no temperature can change a stone into a chicken, because each has a different basis.

…

The famous German philosopher Hegel, who lived in the late 18th and early 19th centuries, made most important contributions to dialectics, but his dialectics was idealist. It was not until Marx and Engels, the great protagonists of the proletarian movement, had synthesized the positive achievements in the history of human knowledge and, in particular, critically absorbed the rational elements of Hegelian dialectics and created the great theory of dialectical and historical materialism that an unprecedented revolution occurred in the history of human knowledge. This theory was further developed by Lenin and Stalin.

II. THE UNIVERSALITY OF CONTRADICTION

The universality or absoluteness of contradiction has a twofold meaning. One is that contradiction exists in the process of development of all things, and the other is that in the process of development of each thing a movement of opposites exists from beginning to end.

Thus it is already clear that contradiction exists universally and in all processes, whether in the simple or in the complex forms of motion, whether in objective phenomena or ideological phenomena. But does contradiction also exist at the initial stage of each process?

What is meant by the emergence of a new process? The old unity with its constituent opposites yields to a new unity with its constituent opposites, whereupon a new process emerges to replace the old. The old process ends and the new one begins. The new process contains new contradictions and begins its own history of the development of contradictions.

III. THE PARTICULARITY OF CONTRADICTION

In order to reveal the particularity of the contradictions in any process in the development of a thing, in their totality or interconnections, that is, in order to reveal the essence of the process, it is necessary to reveal the particularity of the two aspects of each of the contradictions in that process; otherwise it will be impossible to discover the essence of the process.

In studying a problem, we must shun subjectivity, one-sidedness and superficiality. To be subjective means not to look at problems objectively, that is, not to use the materialist viewpoint in looking at problems. I have discussed this in my essay “On Practice”. To be one-sided means not to look at problems all-sidedly, for example, to understand only China but not Japan, only the Communist Party but not the Kuomintang, only the proletariat but not the bourgeoisie, only the peasants but not the landlords, only the favourable conditions but not the difficult ones, only the past but not the future, only individual parts but not the whole, only the defects but not the achievements, only the plaintiff’s case but not the defendant’s, only underground revolutionary work but not open revolutionary work, and so on.

Not only does the whole process of the movement of opposites in the development of a thing, both in their interconnections and in each of the aspects, have particular features to which we must give attention, but each stage in the process has its particular features to which we must give attention too.

It can thus be seen that in studying the particularity of any kind of contradiction–the contradiction in each form of motion of matter, the contradiction in each of its processes of development, the two aspects of the contradiction in each process, the contradiction at each stage of a process, and the two aspects of the contradiction at each stage–in studying the particularity of all these contradictions, we must not be subjective and arbitrary but must analyse it concretely. Without concrete analysis there can be no knowledge of the particularity of any contradiction. We must always remember Lenin’s words, the concrete analysis of concrete conditions.

IV. THE PRINCIPAL CONTRADICTION AND THE PRINCIPAL ASPECT OF A CONTRADICTION

There are still two points in the problem of the particularity of contradiction which must be singled out for analysis, namely, the principal contradiction and the principal aspect of a contradiction.

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 determine or influence the existence and development of the other contradictions.

For instance, in capitalist society the two forces in contradiction, the proletariat and the bourgeoisie, form the principal contradiction. The other contradictions, such as those between the remnant feudal class and the bourgeoisie, between the peasant petty bourgeoisie ant the bourgeoisie, between the proletariat and the peasant petty bourgeoisie, between the non-monopoly capitalists and the monopoly capitalists, between bourgeois democracy and bourgeois fascism, among the capitalist countries and between imperialism and the colonies, are all determined or influenced by this principal contradiction.

Hence, if in any process there are a number of contradictions, one of them must be the principal contradiction playing the leading and decisive role, while the rest occupy a secondary and subordinate position. Therefore, in studying any complex process in which there are two or more contradictions, we must devote every effort to funding its principal contradiction. Once this principal contradiction is grasped, all problems can be readily solved. This is the method Marx taught us in his study of capitalist society.

the principal and the non-principal aspects of a contradiction transform themselves into each other and the nature of the thing changes accordingly. In a given process or at a given stage in the development of a contradiction, A is the principal aspect and B is the non-principal aspect; at another stage or in another process the roles are reversed–a change determined by the extent of the increase or decrease in the force of each aspect in its struggle against the other in the course of the development of a thing.

in the contradiction between the productive forces and the relations of production, the productive forces are the principal aspect; in the contradiction between theory and practice, practice is the principal aspect; in the contradiction between the economic base and the superstructure, the economic base is the principal aspect; and there is no change in their respective positions. This is the mechanical materialist conception, not the dialectical materialist conception…. in certain conditions, such aspects as the relations of production, theory and the superstructure in turn manifest themselves in the principal and decisive role. When it is impossible for the productive forces to develop without a change in the relations of production, then the change in the relations of production plays the principal and decisive role.

V. THE IDENTITY AND STRUGGLE OF THE ASPECTS OF A CONTRADICTION

Identity, unity, coincidence, interpenetration, inter-permeation, interdependence (or mutual dependence for existence), interconnection or mutual co-operation–all these different terms mean the same thing and refer to the following two points: first, the existence of each of the two aspects of a contradiction in the process of the development of a thing presupposes the existence of the other aspect, and both aspects coexist in a single entity; second, in given conditions, each of the two contradictory aspects transforms itself into its opposite.

The contradictory aspects in every process exclude each other, struggle with each other and are in opposition to each other. Without exception, they are contained in the process of development of all things and in all human thought. A simple process contains only a single pair of opposites, while a complex process contains more. And in turn, the pairs of opposites are in contradiction to one another.

The fact is that no contradictory aspect can exist in isolation. Without its opposite aspect, each loses the condition for its existence. Just think, can anyone contradictory aspect of a thing or of a concept in the human mind exist independently? Without life, there would be no death; without death, there would be no life. Without “above”, there would be no “below” without “below”, there would be no “above”. Without misfortune, there would be no good fortune; without good fortune, these would be no misfortune. Without facility, there would be no difficulty without difficulty, there would be no facility. Without landlords, there would be no tenant-peasants; without tenant-peasants, there would be no landlords. Without the bourgeoisie, there would be no proletariat; without the proletariat, there would be no bourgeoisie. Without imperialist oppression of nations, there would be no colonies or semi-colonies; without colonies or semicolonies, there would be no imperialist oppression of nations. It is so with all opposites; in given conditions, on the one hand they are opposed to each other, and on the other they are interconnected, interpenetrating, interpermeating and interdependent, and this character is described as identity. In given conditions, all contradictory aspects possess the character of non-identity and hence are described as being in contradiction. But they also possess the character of identity and hence are interconnected.

When we said above that two opposite things can coexist in a single entity and can transform themselves into each other because there is identity between them, we were speaking of conditionality, that is to say, in given conditions two contradictory things can be united and can transform themselves into each other, but in the absence of these conditions, they cannot constitute a contradiction, cannot coexist in the same entity and cannot transform themselves into one another. It is because the identity of opposites obtains only in given conditions that we have said identity is conditional and relative. We may add that the struggle between opposites permeates a process from beginning to end and makes one process transform itself into another, that it is ubiquitous, and that struggle is therefore unconditional and absolute.

The combination of conditional, relative identity and unconditional, absolute struggle constitutes the movement of opposites in all things.

VI. THE PLACE OF ANTAGONISM IN CONTRADICTION

Contradiction and struggle are universal and absolute, but the methods of resolving contradictions, that is, the forms of struggle, differ according to the differences in the nature of the contradictions. Some contradictions are characterized by open antagonism, others are not. In accordance with the concrete development of things, some contradictions which were originally non-antagonistic develop into antagonistic ones, while others which were originally antagonistic develop into non-antagonistic ones.

Economically, the contradiction between town and country is an extremely antagonistic one both in capitalist society, where under the rule of the bourgeoisie the towns ruthlessly plunder the countryside, and in the Kuomintang areas in China, where under the rule of foreign imperialism and the Chinese big comprador bourgeoisie the towns most rapaciously plunder the countryside. But in a socialist country and in our revolutionary base areas, this antagonistic contradiction has changed into one that is non-antagonistic;

The law of contradiction in things, that is, the law of the unity of opposites, is the fundamental law of nature and of society and therefore also the fundamental law of thought. It stands opposed to the metaphysical world outlook. It represents a great revolution in the history of human knowledge. According to dialectical materialism, contradiction is present in all processes of objectively existing things and of subjective thought and permeates all these processes from beginning to end; this is the universality and absoluteness of contradiction. Each contradiction and each of its aspects have their respective characteristics; this is the particularity and relativity of contradiction. In given conditions, opposites possess identity, and consequently can coexist in a single entity and can transform themselves into each other; this again is the particularity and relativity of contradiction. But the struggle of opposites is ceaseless, it goes on both when the opposites are coexisting and when they are transforming themselves into each other, and becomes especially conspicuous when they are transforming themselves into one another; this again is the universality and absoluteness of contradiction. In studying the particularity and relativity of contradiction, we must give attention to the distinction between the principal contradiction and the non-principal contradictions and to the distinction between the principal aspect and the non-principal aspect of a contradiction; in studying the universality of contradiction and the struggle of opposites in contradiction, we must give attention to the distinction between the different forms of struggle. Otherwise we shall make mistakes.

Annexure9: ON THE TEN MAJOR RELATIONSHIPS by Mao ZeDong

[Written April 25, 1956 ; Credit – Marxists Internet Archive]

In the past we followed this policy of mobilizing all positive factors in order to put an end to the rule of imperialism, feudalism and bureaucrat-capitalism and to win victory for the people’s democratic revolution. We are now following the same policy in order to carry on the socialist revolution and build a socialist country. Nevertheless, there are some problems in our work that need discussion. Particularly worthy of attention is the fact that in the Soviet Union certain defects and errors that occurred in the course of their building socialism have lately come to light. Do you want to follow the detours they have made? It was by drawing lessons from their experience that we were able to avoid certain detours in the past, and there is all the more reason for us to do so now.

I will now discuss the ten problems.

I. THE RELATIONSHIP BETWEEN HEAVY INDUSTRY ON THE ONE HAND AND LIGHT INDUSTRY AND AGRICULTURE ON THE OTHER

The problem now facing us is that of continuing to adjust properly the ratio between investments in heavy industry on the one hand and in agriculture and light industry on the other in order to bring about a greater development of the latter. Does this mean that heavy industry is no longer primary? No. It still is, it still claims the emphasis in our investment. But the proportion for agriculture and light industry must be somewhat increased.

What will be the results of this increase? First, the daily needs of the people will be better satisfied, and, second, the accumulation of capital will be speeded up so that we can develop heavy industry with greater and better results.

II. THE RELATIONSHIP BETWEEN INDUSTRY IN THE COASTAL REGIONS AND INDUSTRY IN THE INTERIOR

About 70 per cent of all our industry, both light and heavy, is to be found in the coastal regions and only 30 percent in the interior. This irrational situation is a product of history. The coastal industrial base must be put to full use, but to even out the distribution of industry as it develops we must strive to promote industry in the interior.

III. THE RELATIONSHIP BETWEEN ECONOMIC CONSTRUCTION AND DEFENCE CONSTRUCTION

One reliable way is to cut military and administrative expenditures down to appropriate proportions and increase expenditures on economic construction. Only with the faster growth of economic construction can there be greater progress in defence construction.

IV. THE RELATIONSHIP BETWEEN THE STATE, THE UNITS OF PRODUCTION AND THE PRODUCERS

The relationship between the state on the one hand and factories and agricultural co-operatives on the other and the relationship between factories and agricultural co-operatives on the one hand and the producers on the other should both be handled well. To this end we should consider not just one side but all three, the state, the collective and the individual …

It’s not right, I’m afraid, to place everything in the hands of the central or the provincial and municipal authorities without leaving the factories any power of their own, any room for independent action, any benefits….

What proportion of the earnings of a co-operative should go to the state, to the co-operative and to the peasants respectively and in what form should be determined properly. The amount that goes to the co-operative is used directly to serve the peasants….

In short, consideration must be given to both sides, not to just one, whether they are the state and the factory, the state and the worker, the factory and the worker, the state and the co-operative, the state and the peasant, or the co-operative and the peasant.

V. THE RELATIONSHIP BETWEEN THE CENTRAL AND THE LOCAL AUTHORITIES

The relationship between the central and the local authorities constitutes another contradiction. To resolve this contradiction, our attention should now be focussed on how to enlarge the powers of the local authorities to some extent, give them greater independence and let them do more, all on the premise that the unified leadership of the central authorities is to be strengthened….

There is also the relationship between different local authorities, and here I refer chiefly to the relationship between the higher and lower local authorities. Since the provinces and municipalities have their own complaints about the central departments, can it be that the prefectures, counties, districts and townships have no complaints about the provinces and municipalities?

VI. THE RELATIONSHIP BETWEEN THE HAN NATIONALITY AND THE MINORITY NATIONALITIES

The minority nationalities have all contributed to the making of China’s history. The huge Han population is the result of the intermingling of many nationalities over a long time. All through the ages, the reactionary rulers, chiefly from the Han nationality, sowed feelings of estrangement among our various nationalities and bullied the minority peoples.

VII. THE RELATIONSHIP BETWEEN PARTY AND NON-PARTY

In our country the various democratic parties, consisting primarily of the national bourgeoisie and its intellectuals, emerged during the resistance to Japan and the struggle against Chiang Kai-shek, and they continue to exist to this day. In this respect, China is different from the Soviet Union. We have purposely let the democratic parties remain, giving them opportunities to express their views and adopting a policy of both unity and struggle towards them. We unite with all those democratic personages who offer us well-intentioned criticisms. We should go on activating the enthusiasm of such people from the Kuomintang army and government as Wei Li-huang and Weng Wen-hao, who are patriotic. We should even provide for such abusive types as Lung Yun, Liang Shu-ming and Peng Yi-hu and allow them to rail at us, while refuting their nonsense and accepting what makes sense in their rebukes. This is better for the Party, for the people and for socialism.

VIII. THE RELATIONSHIP BETWEEN REVOLUTION AND COUNTER-REVOLUTION

The suppression of counter-revolutionaries still calls for hard work. We must not relax. In future not only must the suppression of counter-revolutionaries in society continue, but we must also uncover all the hidden counter-revolutionaries in Party and government organs, schools and army units.

IX. THE RELATIONSHIP BETWEEN RIGHT AND WRONG

A clear distinction must be made between right and wrong, whether inside or outside the Party. How to deal with people who have made mistakes is an important question. The correct attitude towards them should be to adopt a policy of “learning from past mistakes to avoid future ones and curing the sickness to save the patient”, help them correct their mistakes and allow them to go on taking part in the revolution

X. THE RELATIONSHIP BETWEEN CHINA AND OTHER COUNTRIES

Our policy is to learn from the strong points of all nations and all countries, learn all that is genuinely good in the political, economic, scientific and technological fields and in literature and art. But we must learn with an analytical and critical eye, not blindly, and we mustn’t copy everything indiscriminately and transplant mechanically. Naturally, we mustn’t pick up their shortcomings and weak points.

We must firmly reject and criticize all the decadent bourgeois systems, ideologies and ways of life of foreign countries. But this should in no way prevent us from learning the advanced sciences and technologies of capitalist countries and whatever is scientific in the management of their enterprises.

…

In my opinion, China has two weaknesses, which are at the same time two strong points.

First, in the past China was a colonial and semi-colonial country, not an imperialist power, and was always bullied by others. Its industry and agriculture are not developed and its scientific and technological level is low, and except for its vast territory, rich resources, large population, long history, The Dream of the Red Chamber in literature, and so on, China is inferior to other countries in many respects, and so has no reason to feel conceited. However, there are people who, having been slaves too long, feel inferior in everything and don’t stand up straight in the presence of foreigners.

Second, our revolution came late. Although the Revolution of 1911 which overthrew the Ching emperor preceded the Russian revolution, there was no Communist Party at that time and the revolution failed. Victory in the people’s revolution came only in 1949, some thirty years later than the October Revolution. On this account too, we are not in a position to feel conceited.

Being “poor” and “blank” is therefore all to our good. Even when one day our country becomes strong and prosperous, we must still adhere to the revolutionary stand, remain modest and prudent, learn from other countries and not allow ourselves to become swollen with conceit.

…

These ten relationships are all contradictions. The world consists of contradictions. Without contradictions the world would cease to exist. Our task is to handle these contradictions correctly. As to whether or not they can be resolved entirely to our satisfaction in practice, we must be prepared for either possibility; furthermore, in the course of resolving these contradictions we are bound to come up against new ones, new problems.

Annexure10: Analysis of The Classes in Chinese Society, by Mao ZeDong

[Written March 1926; Transcription by the Maoist Documentation Project. HTML revised 2004 by Marxists.org]

Who are our enemies? Who are our friends? This is a question of the first importance for the revolution. The basic reason why all previous revolutionary struggles in China achieved so little was their failure to unite with real friends in order to attack real enemies. A revolutionary party is the guide of the masses, and no revolution ever succeeds when the revolutionary party leads them astray. To ensure that we will definitely achieve success in our revolution and will not lead the masses astray, we must pay attention to uniting with our real friends in order to attack our real enemies. To distinguish real friends from real enemies, we must make a general analysis of the economic status of the various classes in Chinese society and of their respective attitudes towards the revolution.

What is the condition of each of the classes in Chinese society?

The landlord class and the comprador class.[1] In economically backward and semi-colonial China the landlord class and the comprador class are wholly appendages of the international bourgeoisie, depending upon imperialism for their survival and growth. These classes represent the most backward and most reactionary relations of production in China and hinder the development of her productive forces. Their existence is utterly incompatible with the aims of the Chinese revolution. The big landlord and big comprador classes in particular always side with imperialism and constitute an extreme counterrevolutionary group. Their political representatives are the Étatistes [2] and the right-wing of the Kuomintang.

The middle bourgeoisie. This class represents the capitalist relations of production in China in town and country. The middle bourgeoisie, by which is meant chiefly the national bourgeoisie, [3] is inconsistent in its attitude towards the Chinese revolution: they feel the need for revolution and favour the revolutionary movement against imperialism and the warlords when they are smarting under the blows of foreign capital and the oppression of the warlords, but they become suspicious of the revolution when they sense that, with the militant participation of the proletariat at home and the active support of the international proletariat abroad, the revolution is threatening the hope of their class to attain the status of a big bourgeoisie. Politically, they stand for the establishment of a state under the rule of a single class, the national bourgeoisie. A self-styled true disciple of Tai Chi-tao [4] wrote in the Chen Pao, [5] Peking, “Raise your left fist to knock down the imperialists and your right to knock down the Communists.” These words depict the dilemma and anxiety of this class. It is against interpreting the Kuomintang’s Principle of the People’s Livelihood according to the theory of class struggle, and it opposes the Kuomintang’s alliance with Russia and the admission of Communists [6] and left-wingers. But its attempt to establish a state under the rule of the national bourgeoisie is quite impracticable, because the present world situation is such that the two major forces, revolution and counter-revolution, are locked in final struggle. Each has hoisted a huge banner: one is the red banner of revolution held aloft by the Third International as the rallying point for all the oppressed classes of the world, the other is the white banner of counterrevolution held aloft by the League of Nations as the rallying point for all the counter-revolutionaries of the world. The intermediate classes are bound to disintegrate quickly, some sections turning left to join the revolution, others turning right to join the counter-revolution; there is no room for them to remain “independent”. Therefore the idea cherished by China’s middle bourgeoisie of an “independent” revolution in which it would play the primary role is a mere illusion.

The petty bourgeoisie. Included in this category are the owner-peasants, [7] the master handicraftsmen, the lower levels of the intellectuals–students, primary and secondary school teachers, lower government functionaries, office clerks, small lawyers–and the small traders. Both because of its size and class character, this class deserves very close attention. The owner-peasants and the master handicraftsmen are both engaged in small-scale production. Although all strata of this class have the same petty-bourgeois economic status, they fall into three different sections. The first section consists of those who have some surplus money or grain, that is, those who, by manual or mental labour, earn more each year than they consume for their own support. Such people very much want to get rich and are devout worshipers of Marshal Chao; [8] while they have no illusions about amassing great fortunes, they invariably desire to climb up into the middle bourgeoisie. Their mouths water copiously when they see the respect in which those small moneybags are held. People of this sort are timid, afraid of government officials, and also a little afraid of the revolution. Since they are quite close to the middle bourgeoisie in economic status, they have a lot of faith in its propaganda and are suspicious of the revolution. This section is a minority among the petty bourgeoisie and constitutes its right-wing. The second section consists of those who in the main are economically self-supporting. They are quite different from the people in the first section; they also want to get rich, but Marshal Chao never lets them. In recent years, moreover, suffering from the oppression and exploitation of the imperialists, the warlords, the feudal landlords and the big comprador-bourgeoisie, they have become aware that the world is no longer what it was. They feel they cannot earn enough to live on by just putting in as much work as before. To make both ends meet they have to work longer hours, get up earlier, leave off later, and be doubly careful at their work. They become rather abusive, denouncing the foreigners as “foreign devils”, the warlords as “robber generals” and the local tyrants and evil gentry as “the heartless rich”. As for the movement against the imperialists and the warlords, they merely doubt whether it can succeed (on the ground that the foreigners and the warlords seem so powerful), hesitate to join it and prefer to be neutral, but they never oppose the revolution. This section is very numerous, making up about one-half of the petty bourgeoisie.

The third section consists of those whose standard of living is falling. Many in this section, who originally belonged to better-off families, are undergoing a gradual change from a position of being barely able to manage to one of living in more and more reduced circumstances. When they come to settle their accounts at the end of each year, they are shocked, exclaiming, “What? Another deficit!” As such people have seen better days and are now going downhill with every passing year, their debts mounting and their life becoming more and more miserable, they “shudder at the thought of the future”. They are in great mental distress because there is such a contrast between their past and their present. Such people are quite important for the revolutionary movement; they form a mass of no small proportions and are the left-wing of the petty bourgeoisie. In normal times these three sections of the petty bourgeoisie differ in their attitude to the revolution. But in times of war, that is, when the tide of the revolution runs high and the dawn of victory is in sight, not only will the left-wing of the petty bourgeoisie join the revolution, but the middle section too may join, and even tight-wingers, swept forward by the great revolutionary tide of the proletariat and of the left-wing of the petty bourgeoisie, will have to go along with the “evolution.” We can see from the experience of the May 30th Movement [9] of 1925 and the peasant movement in various places that this conclusion is correct.

The semi-proletariat. What is here called the semi-proletariat consists of five categories: (1) the overwhelming majority of the semi-owner peasants, [10] (2) the poor peasants, (3) the small handicraftsmen, (4) the shop assistants [11] and (5) the pedlars. The overwhelming majority of the semi-owner peasants together with the poor peasants constitute a very large part of the rural masses. The peasant problem is essentially their problem. The semi-owner peasants, the poor peasants and the small handicraftsmen are engaged in production on a still smaller scale than the owner-peasants and the master handicraftsmen. Although both the overwhelming majority of the semi-owner peasants and the poor peasants belong to the semi-proletariat, they may be further divided into three smaller categories, upper, middle and lower, according to their economic condition. The semi-owner peasants are worse off than the owner-peasants because every year they are short of about half the food they need, and have to make up this deficit by renting land from others, selling part of their labour power, or engaging in petty trading. In late spring and early summer when the crop is still in the blade and the old stock is consumed, they borrow at exorbitant rates of interest and buy grain at high prices; their plight is naturally harder than that of the owner-peasants’ who need no help from others, but they are better off than the poor’ peasants. For the poor peasants own no land, and receive only half the harvest or even less for their year’s toil, while the semi-owner` peasants, though receiving only half or less than half the harvest of land rented from others, can keep the entire crop from the land they own. The semi-owner peasants are therefore more revolutionary than the owner-peasants, but less revolutionary than the poor peasants. The poor peasants are tenant-peasants who are exploited by the landlords. They may again be divided into two categories according to their economic status. One category has comparatively adequate farm implements and some funds. Such peasants may retain half the product of their year’s toil. To make up their deficit they cultivate side crops, catch fish or shrimps, raise poultry or pigs, or sell part of their labour power, and thus eke out a living, hoping in the midst of hardship and destitution to tide over the year. Thus their life is harder than that of the semi-owner peasants, but they are better off than the other category of poor peasants. They ate more revolutionary than the semi-owner peasants, but less revolutionary than the other category of poor peasants. As for the latter, they have neither adequate farm implements nor funds nor enough manure, their crops are poor, and, with little left after paying rent, they have even greater need to sell part of their labour power. In hard times they piteously beg help from relatives and friends, borrowing a few tou or sheng of grain to last them a few days, and their debts pile up like loads on the backs of oxen. They are the worst off among the peasants and are highly receptive to revolutionary propaganda. The small handicraftsmen are called semi-proletarians because, though they own some simple means of production and moreover are self-employed, they too are often forced to sell part of their labour power and are somewhat similar to the poor peasants in economic status. They feel the constant pinch of poverty and dread of unemployment, because of heavy family burdens and the gap between their earnings and the cost of living; in this respect too they largely resemble the poor peasants. The shop assistants are employees of shops and stores, supporting their families on meagre pay and getting an increase perhaps only once in several years while prices rise every year. If by chance you get into intimate conversation with them, they invariably pour out their endless grievances. Roughly the same in status as the poor peasants and the small handicraftsmen, they are highly receptive to revolutionary propaganda. The pedlars, whether they carry their wares around on a pole or set up stalls along the street, have tiny funds and very small earnings, and do not make enough to feed and clothe themselves. Their status is roughly the same as that of the poor peasants, and like the poor peasants they need a revolution to change the existing state of affairs.

The proletariat. The modern industrial proletariat numbers about two million. It is not large because China is economically backward. These two million industrial workers are mainly employed in five industries–railways, mining, maritime transport, textiles and shipbuilding–and a great number are enslaved in enterprises owned by foreign capitalists. Though not very numerous, the industrial proletariat represents China’s new productive forces, is the most progressive class in modern China and has become the leading force in the revolutionary movement. We can see the important position of the industrial proletariat in the Chinese revolution from the strength it has displayed in the strikes of the last four years, such as the seamen’s strikes, [12] the railway strike, [13] the strikes in the Kailan and Tsiaotso coal mines, [14] the Shameen strike [15] and the general strikes in Shanghai and Hong Kong [16] after the May 30th Incident. The first reason why the industrial workers hold this position is their concentration. No other section of the people is so concentrated. The second reason is their low economic status. They have been deprived of all means of production, have nothing left but their hands, have no hope of ever becoming rich and, moreover, are subjected to the most ruthless treatment by the imperialists, the warlords and the bourgeoisie. That is why they are particularly good fighters. The coolies in the cities are also a force meriting attention. They are mostly dockers and rickshaw men, and among them, too, are sewage carters and street cleaners. Possessing nothing but their hands, they are similar in economic status to the industrial workers but are less concentrated and play a less important role in production. There is as yet little modern capitalist farming in China. By rural proletariat we mean farm labourers hired by the year, the month or the day. Having neither land, farm implements nor funds, they can live only by selling their labour power. Of all the workers they work the longest hours, for the lowest wages, under the worst conditions, and with the least security of employment. They are the most hard-pressed people in the villages, and their position in the peasant movement is as important as that of the poor peasants.

Apart from all these, there is the fairly large lumpen-proletariat, made up of peasants who have lost their land and handicraftsmen who cannot get work. They lead the most precarious existence of all. In every part of the country they have their secret societies, which were originally their mutual-aid organizations for political and economic struggle, for instance, the Triad Society in Fukien and Kwangtung, the Society of Brothers in Hunan, Hupeh, Kweichow and Szechuan, the Big Sword Society in Anhwei, Honan and Shantung, the Rational Life Society in Chihli [17] and the three northeastern provinces, and the Green Band in Shanghai and elsewhere [18] One of China’s difficult problems is how to handle these people. Brave fighters but apt to be destructive, they can become a revolutionary force if given proper guidance.

To sum up, it can be seen that our enemies are all those in league with imperialism–the warlords, the bureaucrats, the comprador class, the big landlord class and the reactionary section of the intelligentsia attached to them. The leading force in our revolution is the industrial proletariat. Our closest friends are the entire semi-proletariat and petty bourgeoisie. As for the vacillating middle bourgeoisie, their right-wing may become our enemy and their left-wing may become our friend but we must be constantly on our guard and not let them create confusion within our ranks.

Annexure11: The Year 1905 by Leon Trotsky

[Chapter4: The Driving Forces of the Russian Revolution; First Published 1907 as part of Our Revolution; 1909 in German; 1922, first full edition, revised, in Russian. This edition by Vintage, by permission of Ralph Schoenman; Translated: Anya Bostock; Transcription/HTML Markup: David Walters; Credit – Marxists Internet Archive]

A population of 150 million people, 5.4 million square kilometers of land in Europe, 17.5 million in Asia. Within this vast space every epoch of human culture is to be found: from the primeval barbarism of the northern forests, where people eat raw fish and worship blocks of wood, to the modern social relations of the capitalist city, where socialist workers consciously recognize themselves as participants in world politics and keep a watchful eye on events in the Balkans and on debates in the German Reichstag. The most concentrated industry in Europe based on the most backward agriculture in Europe. The most colossal state apparatus in the world making use of every achievement of modern technological progress in order to retard the historical progress of its own country.

In the preceding chapters we have tried, leaving aside all details, to give a general picture of Russia’s economic relations and social contradictions. That is the soil on which our social classes grow, live and fight. The revolution will show us those classes at a period of the most intensive struggle. But there are consciously formed associations which intervene directly in a country’s political life: parties, unions, the army, the bureaucracy, the press and, placed above these, the ministers of state, the political leaders, the demagogues and the hangmen. Classes cannot be seen at a glance – they usually remain behind the scenes. Yet this does not prevent political parties and their leaders, as well as ministers of state and their hangmen, from being mere organs of their respective classes. Whether these organs are good or bad is by no means irrelevant to progress and the final outcome of events. If ministers are merely the hired servants of the “objective intelligence of the state,” this by no means relieves them of the necessity of having a modicum of brain inside their own skulls – a fact which they themselves are too often apt to overlook. On the other hand, the logic of the class struggle does not exempt us from the necessity of using our own logic. Whoever is unable to admit initiative, talent, energy, and heroism into the framework of historical necessity, has not grasped the philosophical secret of Marxism. But, conversely, if we want to grasp a political process – in this case, the revolution – as a whole, we must be capable of seeing, behind the motley of parties and programs, behind the perfidy and greed of some and the courage and idealism of others, the proper outlines of the social classes whose roots lie deep within the relations of production and whose flowers blossom in the highest spheres of ideology.

The Modern City

The nature of capitalist classes is closely bound up with the history of the development of industry and of the town. It is true that in Russia the industrial population coincides with the urban population to a lesser extent than anywhere else. Apart from the factory suburbs which, for purely formal reasons, are not included within the boundaries of towns, there exist several dozen important industrial centers in the countryside. Of the total number of existing enterprises, 57 per cent, employing 58 per cent of the total number of workers, are located outside the towns. Nevertheless the capitalist town remains the most complete expression of the new society.

The urban Russia of today is a product of the last few decades. During the first quarter of the eighteenth century Russia’s urban population was 328,000, that is, approximately 3 per cent of the total population of the country. In 1812, 1.6 million people were living in towns, which still represented only 4.4 per cent of the total. In the middle of the nineteenth century the urban population amounted to 3.5 million people, or 7.8 per cent. Finally, according to the census of 1897, the urban population by then already amounted to 16.3 million or approximately 13 per cent of the total. Between 1885 and 1897 the urban population had grown by 33.8 per cent, whereas the rural population had increased by only 12.7 per cent. The growth of individual cities during this period was more dramatic still. The population of Moscow rose from 604,000 to 1,359,000, that is, by 123 per cent. The southern towns – Odessa, Rostov-on-Don, Yekaterinoslav, Baku – developed at an even faster rate.

Parallel with the increase in the number and size of towns, the second half of the nineteenth century saw a complete transformation of the economic role of the town within the country’s internal class structure.

Unlike the artisanal and guild towns of Europe, which fought with energy and often with success for the concentration of all processing industries within their walls, but rather like the towns of the Asian despotic systems, the old Russian cities performed virtually no productive functions. They were military and administrative centers, field fortresses or, in some cases, commercial centers which, whatever their particular nature, drew their supplies entirely from outside. Their population consisted of officials maintained at the expense of the treasury, of merchants, and, lastly, of landowners looking for a safe harbor within the city walls. Even Moscow, the largest of the old Russian cities, was no more than a vast village dependent on the Tsar’s private lands.

The crafts occupied a negligible position in the towns, since, as we already know, the processing industries of the time took the form of cottage industries and were scattered over the countryside. The ancestors of the four million cottage craftsmen listed in the census of 1897 performed the productive functions of the European town artisan but, unlike the latter, had no connection whatever with the creation of manufacturing workshops and factories. When such workshops and factories did make their appearance, they proletarianized the larger part of the cottage craftsmen and placed the rest, directly or indirectly, under their domination.

Just as Russian industry has never lived through the epoch of medieval craftsmanship, so the Russian towns have never known the gradual growth of the third estate in workshops, guilds, communes, and municipalities. European capital created Russian industry in a matter of a few decades, and Russian industry in its turn created the modern cities in which the principal productive functions are performed by the proletariat.

The Big Capitalist Bourgeoisie

Thus large-scale capital achieved economic domination without a struggle. But the tremendous part played in this process by foreign capital has had a fatal impact on the Russian bourgeoisie’s power of political influence. As a result of state indebtedness, a considerable share of the national product went abroad year by year, enriching and strengthening the European bourgeoisie. But the aristocracy of the stock exchange, which holds the hegemony in European countries and which, without effort, turned the Tsarist government into its financial vassal, neither wished nor was able to become part of the bourgeois opposition within Russia, if only because no other form of national government would have guaranteed it the usurers’ rates of interest it exacted under Tsarism. As well as financial capital, foreign industrial capital, while exploiting Russia’s natural resources and labour power, had its political basis outside Russia’s frontiers – namely, the French, English, and Belgian parliaments.

Neither could our indigenous capital take up a position at the head of the national struggle with Tsarism, since, from the first, it was antagonistic to the popular masses – the proletariat, which it exploits directly, and the peasantry, which it robs indirectly through the state. This is particularly true of heavy industry which, at the present time, is everywhere dependent on state activities and, principally, on militarism. True, it is interested in a “firm civil rule of law,” but it has still greater need of concentrated state power, that great dispenser of bounties. The owners of metallurgical enterprises are confronted, in their own plants, with the most advanced and most active section of the working class for whom every sign that Tsarism is weakening is a signal for a further attack on capitalism.

The textile industry is less dependent on the state, and, furthermore, it is directly interested in raising the purchasing power of the masses, which cannot be done without far-reaching agrarian reform. That is why in 1905 Moscow, the textile city par excellence, showed a much fiercer, though not perhaps a more energetic, opposition to the autocratic bureaucracy than the Petersburg of the metalworkers. The Moscow municipal duma looked upon the rising tide with unquestionable goodwill. But when the revolution revealed the whole of its social content and, by so doing, impelled the textile workers to take the path that the metalworkers had taken before them, the Moscow duma shifted most resolutely, “as a matter of principle,” in the direction of firm state power. Counter-revolutionary capital, having joined forces with the counter-revolutionary landowners, found its leader in the Moscow merchant Guchkov, the leader of the majority in the third Duma.

The Bourgeois Intelligentsia

European capital, in preventing the development of Russian artisanal trade, thereby snatched the ground from under the feet of Russia’s bourgeois democracy. Can the Petersburg or Moscow of today be compared with the Berlin or Vienna of 1848, or with the Paris of 1789, which had not yet begun to dream of railways or the telegraph and regarded a workshop employing 300 men as the largest imaginable? We have never had even a trace of that sturdy middle class which first lived through centuries of schooling in self-government and political struggle and then, hand in hand with a young, as yet unformed proletariat, stormed the Bastilles of feudalism. What has Russia got in place of such a middle class? The “new middle class,” the professional intelligentsia: lawyers, journalists, doctors, engineers, university professors, schoolteachers. Deprived of any independent significance in social production, small in numbers, economically dependent, this social stratum, rightly conscious of its own powerlessness, keeps looking for a massive social class upon which it can lean. The curious fact is that such support was offered, in the first instance, not by the capitalists but by the landowners.

The Constitutional-Democratic (Kadet) party, which dominated the first two Dumas, was formed in 1905 as a result of the League of Landed Constitutionalists joining the League of Liberation. The liberal fronde of the Landed Constitutionalists, or zemtsy, was the expression, on the one hand, of the landowners’ envy and discontent with the monstrous industrial protectionism of the state, and, on the other hand, of the opposition of the more progressive landowners, who recognized the barbarism of Russia’s agrarian relations as an obstacle to their putting their land economy on a capitalist footing. The League of Liberation united those elements of the intelligentsia which, by their “decent” social status and their resulting prosperity, were prevented from taking the revolutionary path. The landed opposition was always marked with pusillanimous impotence, and our Most August dimwit was merely stating a bitter truth when, in 1894, he described its political aspirations as “senseless dreams.” Neither were the privileged members of the intelligentsia, those directly or indirectly dependent on the state, on state-protected large capital or on liberal landownership, capable of forming a political opposition that was even moderately impressive.

Consequently, the Kadet party was, by its very origins, a union of the oppositional impotence of the zemtsy with the all-around impotence of the diploma-carrying intelligentsia. The real face of the agrarians’ liberalism was fully revealed by the end of 1905, when the landowners, startled by the rural disorders, swung sharply around to support the old regime. The liberal intelligentsia, with tears in its eyes, was obliged to forsake the country estate where, when all is said and done, it had been no more than a fosterchild, and to seek recognition in its historic home, the city. But what did it find in the city, other than its own self? It found the conservative capitalist bourgeoisie, the revolutionary proletariat, and the irreconcilable class antagonism between the two.

The same antagonism has split to their very foundations our smaller industries in all those branches where they still retain any importance. The craft proletariat is developing in a climate of large-scale industry and differs only little from the factory proletariat. Other Russian craftsmen, under pressure from large-scale industry and the working-class movement, represent an ignorant, hungry, embittered class which, together with the lumpenproletariat, provides the fighting legions for the Black Hundreds demonstrations and pogroms.

As a result we have a hopelessly retarded bourgeois intelligentsia born to the accompaniment of socialist imprecations, which today is suspended over an abyss of class contradictions, weighed down with feudal traditions and caught in a web of academic prejudices, lacking initiative, lacking all influence over the masses, and devoid of all confidence in the future.

The Proletariat

The same factors of a world-historical nature which had transformed Russia’s bourgeois democracy into a head (and a pretty muddled head at that) without a body, also determined the outstanding role of Russia’s young proletariat. But, before we inquire into anything else, how large is that proletariat?

The highly incomplete figures of 1897 supply the following answer:

NUMBER OF WORKERS:

Mining and processing industries,transport, building and commercial enterprises3,322,000
Agriculture, forestry, fisheries and hunting2,725,000
Day laborers and apprentices1,195,000
Servants, porters, janitors etc.2,132,000
Total (men and women)9,272,000

In 1897, the proletariat, including dependent family members, comprised 27.6 per cent of the total population, that is, slightly over one-quarter. The degree of political activity of separate strata within this mass of workers varies considerably, the leading role in the revolution being held almost exclusively by workers in group A in the table above. It would, however, be a most flagrant error to measure the real and potential significance of the Russian proletariat by its relative proportion within the population as a whole. To do so would be to fail to see the social relations concealed behind the figures.

The influence of the proletariat is determined by its role in the modern economy. The nation’s most powerful means of production depend directly on the workers. Not less than half the nation’s annual income is produced by 3.3 million workers (group A). The railways, our most important means of transport, which alone are able to convert our vast country into an economic whole, represent – as events have shown – an economic and political factor of the utmost importance in the hands of the proletariat. To this we should add the postal services and the telegraph, whose dependence on the proletariat is less direct but nonetheless very real.

While the peasantry is scattered over the entire countryside, the proletariat is concentrated in large masses in the factories and industrial centers. It forms the nucleus of the population of every town of any economic or political importance, and all the advantages of the town in a capitalist country – concentration of the productive forces, the means of production, the most active elements of the population, and the greatest cultural benefits – are naturally transformed into class advantages for the proletariat. Its self-determination as a class has developed with a rapidity unequaled in previous history. Scarcely emerged from the cradle, the Russian proletariat found itself faced with the most concentrated state power and the equally concentrated power of capital. Craft prejudices and guild traditions had no power whatsoever over its consciousness. From its first steps it entered upon the path of irreconcilable class struggle.

In this way the negligible role of artisanal crafts in Russia and of minor industry in general, together with the exceptionally developed state of Russia’s large-scale industry, have led in politics to the displacement of bourgeois democracy by proletarian democracy. Together with its productive functions, the proletariat has taken over the petty bourgeoisie’s historical role as played in previous revolutions, and also its historical claims to leadership over the peasant masses during the epoch of their emancipation, as an estate, from the yoke of the nobility and the state fiscal organization.

The agrarian problem proved to be the political touchstone by which history put the urban political parties to the test.

The Nobility and Landowners

The Kadet (or, rather, former Kadet) program of enforced expropriation of large and medium landholdings on the basis of “just assessments” represents, in the Kadets’ view, the maximum of what can be achieved by means of “creative legislative effort.” But in reality the liberals’ attempt to expropriate the large landed estates by legislative means led only to the government’s denial of electoral rights and to the coup d’état of June 3, 1907. The Kadets viewed the liquidation of the landowning nobility as a purely financial operation, trying conscientiously to make their “just assessment” as acceptable as possible to the landowners. But the nobility took a very different view of the matter. With its infallible instinct it realized at once that what was at stake was not simply the sale of 50 million dessyatins, even at high prices, but the liquidation of its entire social role as a ruling estate; and, therefore, it refused point blank to allow itself to be thus auctioned off. Count Saltykov, addressing the landowners in the first Duma, cried: “Let your motto and your slogan be: not a square inch of our land, not a handful of earth from our fields, not a blade of grass from our meadows, not the smallest twig on a single tree from our forests!” And this was not a voice crying in the wilderness: the years of revolution were precisely the period of estate concentration and political consolidation for the Russian nobility.

During the time of darkest reaction, under Alexander III, the nobility was only one of our estates, even if the first among them. The autocracy, vigilantly protecting its own independence, never for a moment allowed the nobility to escape from the grip of police supervision, putting the muzzle of state control on the maw of its natural greed. Today, on the other hand, the nobility is the commanding estate in the fullest sense of the word: it makes the provincial governors dance to its tune, threatens the ministers and openly dismisses them, puts ultimata to the government and makes sure that these ultimata are observed. Its slogan is: not a square inch of our land, not a particle of our privileges!

Approximately 75 million dessyatins are concentrated in the hands of 60,000 private landowners with annual incomes of more than 1,000 roubles; at a market price of 56 billion roubles, this land produces more than 450 million roubles net profit per annum for its owners. Not less than two-thirds of this sum is the nobility’s share. The bureaucracy is closely linked with land ownership. Almost 200 million roubles are spent annually on maintaining 30,000 officials receiving salaries of more than 1,000 roubles. And it is precisely in these middle and higher ranges of officialdom that the nobility is noticeably preponderant. Lastly, it is once more the nobility which is in full control of the organs of rural local government and the incomes derived therefrom.

Whereas, before the revolution, a good half of the rural administrations were headed by “liberal” landowners who had come to the fore on the basis of their “progressive” activities in the rural sphere, the years of revolution have entirely reversed this situation, so that, as a result, the leading positions are now occupied by the most irreconcilable representatives of the land owners’ reaction. The all-powerful Council of the United Nobility is nipping in the bud all attempts by the government, undertaken in the interests of capitalist industry, to “democratize” the rural administrations or to weaken the chains of estate slavery which bind our peasantry hand and foot.

In the face of these facts, the agrarian program of the Kadets as a basis for legislative agreement has proved hopelessly utopian, and it is hardly surprising that the Kadets themselves have tacitly abandoned it.

The social democrats criticized the Kadet program principally on the grounds of the “just assessment,” and they were right to do so. From the financial viewpoint alone, the purchase of all landed estates bringing in a profit of over 1,000 roubles a year would have added a round sum of 5 to 6 billion roubles to our national debt, which already amounts to 9 billion roubles; which means that interest alone would have begun to swallow up three-quarters of a billion roubles a year. However, what matters is not the financial but the political aspect of the question.

The conditions of the so-called liberation reform of 1861, with the help of the excessive redemption fees paid for peasant lands, in fact compensated the landowners for the peasant “souls” lost (roughly to the extent of one-quarter of a billion roubles, that is, 25 per cent of the total redemption fees). On the basis of a “just assessment” the important historical rights and privileges of the nobility would really have been liquidated; the nobility therefore preferred to adapt itself to the semi-liberation reform, and was quickly reconciled to it. At that time, the nobility showed correct instinct, as it does today when it resolutely refuses to commit suicide as an estate, however “just” the “assessment.” Not a square inch of our land, not a particle of our privileges! Under this banner the nobility has finally acquired dominance over the government apparatus so badly shaken by the revolution; and it has shown that it is determined to fight with all the ferocity of which a governing class is capable in a matter of life or death.

The agrarian problem cannot be solved by means of parliamentary agreement with the landed estate, but only by means of a revolutionary onslaught by the masses.

The Peasantry and the Towns

The knot of Russia’s social and political barbarism was tied in the countryside; but this does not mean that the countryside has produced a class capable, by its own forces, of cutting through that knot. The peasantry, scattered in 500,000 villages and hamlets over the 5 million square versts of European Russia, has not inherited from its past any tradition or habit of concerted political struggle. During the agrarian riots of 1905 and 1906, the aim of the mutinous peasants was reduced to driving the landowners outside the boundaries of their village, their rural area and finally, their administrative area. Against the peasant revolution the landed nobility had in its hands the ready-made weapon of the centralized apparatus of the state. The peasantry could have overcome this obstacle only by means of a resolute uprising unified both in time and in effort. But, owing to all the conditions of their existence, the peasants proved quite incapable of such an uprising. Local cretinism is history’s curse on all peasant riots. They liberate themselves from this curse only to the extent that they cease to be purely peasant movements and merge with the revolutionary movements of new social classes.

As far back as the revolution of the German peasantry during the first quarter of the sixteenth century, the peasantry placed itself quite naturally under the direct leadership of the urban parties, despite the economic weakness and political insignificance of German towns at that time. Socially revolutionary in its objective interests, yet politically fragmented and powerless, the peasantry was incapable of forming a party of its own, and so gave way – depending on local conditions – either to the oppositional-burgher or to the revolutionary-plebeian parties of the towns. These last, the only force which could have ensured the victory of the peasant revolution, were however (although based on the most radical class of the society of that time, the embryo of the modern proletariat) entirely without links with the rest of the nation or any clear consciousness of revolutionary aims. They were without them because of the country’s lack of economic development, the primitive means of transport, and state particularism. Hence the problem of revolutionary cooperation between the mutinous countryside and the urban plebs was nor solved at that time because it could not be solved; and the peasant movement was crushed.

More than three centuries later, correlations of a similar kind were seen again in the revolution of 1848. The liberal bourgeoisie not only did not want to arouse the peasantry and unite it around itself, it actually feared the growth of the peasant movement more than anything else, precisely because this growth would have the primary effect of intensifying and strengthening the position of the plebeian, radical urban elements against the liberal bourgeoisie itself. Yet these elements were still socially and politically amorphous and fragmented and consequently were unable to displace the liberal bourgeoisie and place themselves at the head of the peasant masses. The revolution of 1848 was defeated.

Yet, six decades previously, the problems of revolution were triumphantly resolved in France, precisely through the cooperation of the peasantry with the urban plebs, that is, the proletariat, semi-proletariat, and lumpenproletariat of the time. This “cooperation” took the form of the Convention, that is, of the dictatorship of the city over the countryside, of Paris over the provinces, and of the sans-culottes over Paris.

Under contemporary Russian conditions, the social preponderance of the industrial population over the rural population is incomparably greater than at the time of the old European revolutions, and further, a clearly defined industrial proletariat has replaced the chaotic plebs. One thing, however, has not changed: only a party which has the revolutionary urban masses behind it, and which is not afraid, out of pious respect for bourgeois private property, to revolutionize feudal ownership, can rely on the peasantry at a time of revolution. Today only the Social Democrats are such a party.

The Nature of the Russian Revolution

So far as its direct and indirect tasks are concerned, the Russian revolution is a “bourgeois” revolution because it sets out to liberate bourgeois society from the chains and fetters of absolutism and feudal ownership. But the principal driving force of the Russian revolution is the proletariat, and that is why, so far as its method is concerned, it is a proletarian revolution. Many pedants who insist on determining the historical role of the proletariat by means of arithmetical or statistical calculations, or establishing it by means of formal historical analogies, have shown themselves incapable of digesting this contradiction. They see the bourgeoisie as the providence-sent leader of the Russian revolution. They try to wrap the proletariat – which, in fact, marched at the head of events at all stages of the revolutionary rising – in the swaddling-clothes of their own theoretical immaturity. For such pedants, the history of one capitalist nation repeats the history of another, with, of course, certain more or less important divergences. Today they fail to see the unified process of world capitalist development which swallows up all the countries that lie in its path and which creates, out of the national and general exigencies of capitalism, an amalgam whose nature cannot be understood by the application of historical cliches, but only by materialist analysis.

There can be no analogy of historical development between, on the one hand, England, the pioneer of capitalism, which has been creating new social forms for centuries and has also created a powerful bourgeoisie as the expression of these new forms and on the other hand, the colonies of today, to which European capital delivers ready-made rails, sleepers, nuts and bolts in ready-made battleships for the use of the colonial administration, and then, with rifle and bayonet, drives the natives from their primitive environment straight into capitalist civilization: there can be no analogy of historical development, certainly, but there does exist a profound inner connection between the two.

The new Russia acquired its absolutely specific character because it received its capitalist baptism in the latter half of the nineteenth century from European capital which by then had reached its most concentrated and abstract form, that of finance capital. The previous history of European capital is in no way connected with the previous history of Russia. In order to attain, on its native ground, the heights of the modern stock exchange, European capital had first to escape from the narrow streets and lanes of the artisanal town where it had learned to crawl and walk; it was obliged, in ceaseless struggle with the Church, to develop science and technology, to rally the entire nation around itself, to gain power by means of uprisings against feudal and dynastic privileges, to clear an open arena for itself, to kill off the independent small industries from which it had itself emerged, having severed the national umbilical cord and shaken the dust of its forefathers from its feet, having rid itself of political prejudice, racial sympathies, geographical longitudes and latitudes, in order, then, at last to soar high above the globe in all its voracious glory, today poisoning with opium the Chinese craftsman whom it has ruined, tomorrow enriching the Russian seas with new warships, the day after seizing diamond deposits in South Africa.

But when English or French capital, the historical coagulate of many centuries, appears in the steppes of the Donets basin, it cannot release the same social forces, relations, and passions which once went into its own formation. It does not repeat on the new territory the development which it has already completed, but starts from the point at which it has arrived on its own ground. Around the machines which it has transported across the seas and the customs barriers, it immediately, without any intermediate stages whatever, concentrates the masses of a new proletariat, and into this class it instills the revolutionary energy of all the past generations of the bourgeoisie – an energy which in Europe has by now become stagnant.

During the heroic period of French history we see a bourgeoisie which has not yet realized the contradictions of its own position, a bourgeoisie upon which history has placed the leadership of a struggle for a new order, not only against the outdated institutions of France, but also against reactionary forces in Europe as a whole. The bourgeoisie, personified by all its factions in turn, gradually becomes conscious of itself and becomes the leader of the nation; it draws the masses into the struggle, gives them slogans to fight for, and dictates the tactics of their fight.

Democracy unifies the nation by giving it a political ideology. The people – the petty bourgeoisie, the peasants and the workers – appoint the bourgeoisie as their deputies, and the orders issued to these deputies by the communes are written in the language of a bourgeoisie becoming conscious of its Messianic role. During the revolution itself, although class antagonisms become apparent, the powerful momentum of revolutionary struggle nevertheless consistently removes the most static elements of the bourgeoisie from the political path. No layer is stripped off before it has handed its energy over to the succeeding layers. The nation as a whole continues during all this time to fight for its objectives, using increasingly more radical and decisive means. When the uppermost layers of the property-owning bourgeoisie cut themselves off from the national nucleus which had thus been set in motion, and when they entered into an alliance with Louis XVI, the democratic demands of the nation, now directed against the bourgeoisie as well, led to universal franchise and to the Republic as being the logically inevitable form of democracy.

The great French Revolution was truly a national revolution. But more than that: here, within a national framework, the world struggle of the bourgeois order for domination, for power, and for unimpaired triumph found its classic expression.

By 1848 the bourgeoisie was already unable to play a similar role. It did not want to, and could not, assume responsibility for a revolutionary liquidation of the social order which barred the way to its own dominance. Its task – and this it fully realized – consisted in introducing into the old order certain essential guarantees, not of its own political dominance, but only of co-dominance with the forces of the past. It not only failed to lead the masses in storming the old order; it used the old order as a defence against the masses who were trying to push it forward. Its consciousness rebelled against the objective conditions of its dominance. Democratic institutions were reflected in its mind, not as the aim and purpose of its struggle, but as a threat to its well-being. The revolution could not be made by the bourgeoisie, but only against the bourgeoisie. That is why a successful revolution in 1848 would have needed a class capable of marching at the head of events regardless of the bourgeoisie and despite it, a class prepared not only to push the bourgeoisie forward by the force of its pressure, but also, at the decisive moment, to kick the political corpse of the bourgeoisie out of its way.

Neither the petty bourgeoisie nor the peasantry were capable of this. The petty bourgeoisie was hostile not only to the immediate past, but also to the possible future – to the morrow. Still fettered by medieval relations, but already incapable of resisting “free” industry; still centering itself on the cities, but already yielding its influence to the middle and higher bourgeoisie; sunk in its prejudices, deafened by the roar of events, exploiting and exploited, greedy and impotent in its greed, the provincial petty bourgeoisie was incapable of directing world events.

The peasantry was deprived of independent initiative to a still greater extent. Dispersed, cut off from the cities which were the nerve centers of politics and culture, dull-minded, its intellectual horizons hedged in like its meadows and fields, indifferent towards everything that the cities had created by invention and thought, the peasantry could not assume any leading significance. Appeased as soon as the burden of feudal tithes was removed from its shoulders, it repaid the cities, which had fought for its rights, with black ingratitude: the liberated peasants became fanatics of “order.”

The democratic intellectual, devoid of class force, trotted after the liberal bourgeoisie as after an older sister. It acted merely as its political tail. It abandoned it at moments of crisis. It revealed only its own impotence. It was confused by its contradictions – which had not yet fully ripened – and it carried this confusion with it wherever it went.

The proletariat was too weak and had too little organization, experience, and knowledge. Capitalist development had gone far enough to necessitate the destruction of the old feudal relations, but not far enough to advance the working class, the product of the new production relations, to the position of a decisive political force. The antagonism between the proletariat and the bourgeoisie had gone too far to enable the bourgeoisie to assume the role of national leadership without fear, but not far enough to enable the proletariat to grasp that role.

Austria provided a particularly acute and tragic example of this political unreadiness in the revolutionary period. The Vienna proletariat in 1848 gave evidence of selfless heroism and great revolutionary energy. Again and again it faced the fire of battle, driven solely by an obscure class instinct, having no general idea of the objective of the struggle, groping its way blindly from one slogan to the next. Surprisingly, the leadership of the proletariat passed into the hands of the students, the only democratic group which, because of its active nature, enjoyed considerable influence over the masses and, consequently, over the events.

But although the students could fight bravely on the barricades and fraternize sincerely with the workers, they were quite incapable of directing the general progress of the revolution which had handed over to them the “dictatorship” of the streets. When, on the twenty-sixth of May, the whole of working Vienna followed the students’ call and rose to its feet to fight against the disarming of the “academic legion,” when the population of Vienna took de facto possession of the city, when the monarchy, by this time on the run, had lost all meaning, when, under the people’s pressure, the last troops were removed from the city, when it seemed that Austrian state power could be had for the asking, no political force was available to take over. The liberal bourgeoisie consciously did not wish to seize power in so cavalier a fashion. It could only dream of the return of the Emperor, who had betaken himself from orphaned Vienna to the Tyrol. The workers were courageous enough to smash the reaction, but not organized nor conscious enough to become its successors. The proletariat, unable to take over, was equally unable to impel the democratic bourgeoisie – which, as often happens, had made itself scarce at the most crucial moment – to take this historic and heroic action. The situation which resulted was quite correctly described by a contemporary writer in the following terms: “A de facto republic was established in Vienna, but unfortunately, no one saw this . . .” From the events of 1848-49, Lassalle drew the unshakable conviction that “no struggle in Europe can be successful unless, from the very start, it declares itself to be purely socialist; no struggle into which social questions enter merely as an obscure element, and where they are present only in the background; no struggle which outwardly is waged under the banner of national resurgence or bourgeois republicanism, can ever again be successful.”

In the revolution whose beginning history will identify with the year 1905, the proletariat stepped forward for the first time under its own banner in the name of its own objectives. Yet at the same time there can be no doubt that no revolution in the past has absorbed such a mass of popular energy while yielding such minimal positive results as the Russian revolution has done up to the present. We are far from wanting to prophesy the events of the coming weeks or months. But one thing is clear to us: victory is possible only along the path mapped out by Lassalle in 1849. There can be no return from the class struggle to the unity of a bourgeois nation. The “lack of results” of the Russian revolution is only the temporary reflection of its profound social character. In this bourgeois revolution without a revolutionary bourgeoisie, the proletariat is driven, by the internal progress of events, towards hegemony over the peasantry and to the struggle for state power. The first wave of the Russian revolution was smashed by the dull-wittedness of the muzhik, who, at home in his village, hoping to seize a bit of land, fought the squire, but who, having donned a soldier’s uniform, fired upon the worker. All the events of the revolution of 1905 can be viewed as a series of ruthless object lessons by means of which history drums into the peasant’s skull a consciousness of his local land hunger and the central problem of state power. The preconditions for revolutionary victory are forged in the historic school of harsh conflicts and cruel defeats.

Marx wrote in 1852 (The Eighteenth Brumaire of Louis Bonaparte)

“Bourgeois revolutions storm swiftly from success to success; their dramatic effects outdo each other; men and things seem set in sparkling brilliance; ecstasy is the everyday spirit; but they are short-lived; soon they have attained their zenith, and a long crapulent depression lays hold of society before it learns soberly to assimilate the results of its storm-and-stress period. On the other hand, proletarian revolutions … criticize themselves constantly, interrupt themselves continually in their own course, come back to the apparently accomplished in order to begin it afresh, deride with unmerciful thoroughness the inadequacies, weaknesses and paltrinesses of their first attempts, seem to throw down their adversary only in order that he may draw new strength from the earth and rise again, more gigantic, before them, recoil ever and anon from the indefinite prodigiousness of their own aims, until a situation has been created in which all turning back is impossible, and the conditions themselves cry out:

Hic Rhodus, hic salta!”

Annexure12: Marxism and the National Questio by J V Stalin

[Chapter 1. The Nation, Chapter 2. The National Movement; First Published: Prosveshcheniye, Nos. 3-5, March-May 1913; Transcription/Markup: Carl Kavanagh; Credit: Marxists Internet Archive]

I. THE NATION

What is a nation?

A nation is primarily a community, a definite community of people.

This community is not racial, nor is it tribal. The modern Italian nation was formed from Romans, Teutons, Etruscans, Greeks, Arabs, and so forth. The French nation was formed from Gauls, Romans, Britons, Teutons, and so on. The same must be said of the British, the Germans and others, who were formed into nations from people of diverse races and tribes.

Thus, a nation is not a racial or tribal, but a historically constituted community of people.

On the other hand, it is unquestionable that the great empires of Cyrus and Alexander could not be called nations, although they came to be constituted historically and were formed out of different tribes and races. They were not nations, but casual and loosely-connected conglomerations of groups, which fell apart or joined together according to the victories or defeats of this or that conqueror.

Thus, a nation is not a casual or ephemeral conglomeration, but a stable community of people.

But not every stable community constitutes a nation. Austria and Russia are also stable communities, but nobody calls them nations. What distinguishes a national community from a state community? The fact, among others, that a national community is inconceivable without a common language, while a state need not have a common language. The Czech nation in Austria and the Polish in Russia would be impossible if each did not have a common language, whereas the integrity of Russia and Austria is not affected by the fact that there are a number of different languages within their borders. We are referring, of course, to the spoken languages of the people and not to the official governmental languages.

Thus, a common language is one of the characteristic features of a nation.

This, of course, does not mean that different nations always and everywhere speak different languages, or that all who speak one language necessarily constitute one nation. A common language for every nation, but not necessarily different languages for different nations! There is no nation which at one and the same time speaks several languages, but this does not mean that there cannot be two nations speaking the same language! Englishmen and Americans speak one language, but they do not constitute one nation. The same is true of the Norwegians and the Danes, the English and the Irish.

But why, for instance, do the English and the Americans not constitute one nation in spite of their common language?

Firstly, because they do not live together, but inhabit different territories. A nation is formed only as a result of lengthy and systematic intercourse, as a result of people living together generation after generation.

But people cannot live together, for lengthy periods unless they have a common territory. Englishmen and Americans originally inhabited the same territory, England, and constituted one nation. Later, one section of the English emigrated from England to a new territory, America, and there, in the new territory, in the course of time, came to form the new American nation. Difference of. territory led to the formation of different nations.

Thus, a common territory is one of the characteristic features of a nation.

But this is not all. Common territory does not by itself create a nation. This requires, in addition, an internal economic bond to weld the various parts of the nation into a single whole. There is no such bond between England and America, and so they constitute two different nations. But the Americans themselves would not deserve to be called a nation were not the different parts of America bound together into an economic whole, as a result of division of labour between them, the development of means of communication, and so forth.

Take the Georgians, for instance. The Georgians before the Reform inhabited a common territory and spoke one language. Nevertheless, they did not, strictly speaking, constitute one nation, for, being split up into a number of disconnected principalities, they could not share a common economic life; for centuries they waged war against each other and pillaged each other, each inciting the Persians and Turks against the other. The ephemeral and casual union of the principalities which some successful king sometimes managed to bring about embraced at best a superficial administrative sphere, and rapidly disintegrated owing to the caprices of the princes and the indifference of the peasants. Nor could it be otherwise in economically disunited Georgia … Georgia came on the scene as a nation only in the latter half of the nineteenth century, when the fall of serfdom and the growth of the economic life of the country, the development of means of communication and the rise of capitalism, introduced division of labour between the various districts of Georgia, completely shattered the economic isolation of the principalities and bound them together into a single whole.

The same must be said of the other nations which have passed through the stage of feudalism and have developed capitalism.

Thus, a common economic life, economic cohesion, is one of the characteristic features of a nation.

But even this is not all. Apart from the foregoing, one must take into consideration the specific spiritual complexion of the people constituting a nation. Nations differ not only in their conditions of life, but also in spiritual complexion, which manifests itself in peculiarities of national culture. If England, America and Ireland, which speak one language, nevertheless constitute three distinct nations, it is in no small measure due to the peculiar psychological make-up which they developed from generation to generation as a result of dissimilar conditions of existence.

Of course, by itself, psychological make-up or, as it is otherwise called, “national character,” is something intangible for the observer, but in so far as it manifests itself in a distinctive culture common to the nation it is something tangible and cannot be ignored.

Needless to say, “national character” is not a thing that is fixed once and for all, but is modified by changes in the conditions of life; but since it exists at every given moment, it leaves its impress on the physiognomy of the nation.

Thus, a common psychological make-up, which manifests itself in a common culture, is one of the characteristic features of a nation.

We have now exhausted the characteristic features of a nation.

A nation is a historically constituted, stable community of people, formed on the basis of a common language, territory, economic life, and psychological make-up manifested in a common culture.

It goes without saying that a nation, like every historical phenomenon, is subject to the law of change, has its history, its beginning and end.

It must be emphasized that none of the above characteristics taken separately is sufficient to define a nation. More than that, it is sufficient for a single one of these characteristics to be lacking and the nation ceases to be a nation.

It is possible to conceive of people possessing a common “national character” who, nevertheless, cannot be said to constitute a single nation if they are economically disunited, inhabit different territories, speak different languages, and so forth. Such, for instance, are the Russian, Galician, American, Georgian and Caucasian Highland Jews, who, in our opinion, do not constitute a single nation.

It is possible to conceive of people with a common territory and economic life who nevertheless would not constitute a single nation because they have no common language and no common “national character.” Such, for instance, are the Germans and Letts in the Baltic region.

Finally, the Norwegians and the Danes speak one language, but they do not constitute a single nation owing to the absence of the other characteristics.

It is only when all these characteristics are present together that we have a nation.

It might appear that “national character” is not one of the characteristics but the sole essential characteristic of a nation, and that all the other characteristics are, properly speaking, only conditions for the development of a nation, rather than its characteristics. Such, for instance, is the view held by R. Springer, and more particularly by O. Bauer, who are Social-Democratic theoreticians on the national question well known in Austria.

Let us examine their theory of the nation.

According to Springer, “a nation is a union of similarly thinking and similarly speaking persons.” It is “a cultural community of modern people no longer tied to the ‘soil.’” [5] (our italics).

Thus, a “union” of similarly thinking and similarly speaking people, no matter how disconnected they may be, no matter where they live, is a nation.

Bauer goes even further.

“What is a nation?” he asks. “Is it a common language which makes people a nation? But the English and the Irish … speak the same language without, however, being one people; the Jews have no common language and yet are a nation.” [6]

What, then, is a nation?

“A nation is a relative community of character.”

But what is character, in this case national character?

National character is “the sum total of characteristics which distinguish the people of one nationality from the people of another nationality – the complex of physical and spiritual characteristics which distinguish one nation from another.”

Bauer knows, of course, that national character does not drop from the skies, and he therefore adds:

“The character of people is determined by nothing so much as by their destiny…. A nation is nothing but a community with a common destiny” which, in turn, is determined “by the conditions under which people produce their means of subsistence and distribute the products of their labour.”

We thus arrive at the most “complete,” as Bauer calls it, definition of a nation:

“A nation is an aggregate of people bound into a community of character by a common destiny.”

We thus have common national character based on a common destiny, but not necessarily connected with a common territory, language or economic life.

But what in that case remains of the nation? What common nationality can there be among people who are economically disconnected, inhabit different territories and from generation to generation speak different languages?

Bauer speaks of the Jews as a nation, although they “have no common language”; but what “common destiny” and national cohesion is there, for instance, between the Georgian, Daghestanian, Russian and American Jews, who are completely separated from one another, inhabit different territories and speak different languages?

The above-mentioned Jews undoubtedly lead their economic and political life in common with the Georgians, Daghestanians, Russians and Americans respectively, and they live in the same cultural atmosphere as these; this is bound to leave a definite impress on their national character; if there is anything common to them left, it is their religion, their common origin and certain relics of the national character. All this is beyond question. But how can it be seriously maintained that petrified religious rites and fading psychological relics affect the “destiny” of these Jews more powerfully than the living social, economic and cultural environment that surrounds them? And it is only on this assumption that it is possible to speak of the Jews as a single nation at all.

What, then, distinguishes Bauer’s nation from the mystical and self-sufficient “national spirit” of the spiritualists?

Bauer sets up an impassable barrier between the “distinctive feature” of nations (national character) and the “conditions” of their life, divorcing the one from the other. But what is national character if not a reflection of the conditions of life, a coagulation of impressions derived from environment? How can one limit the matter to national character alone, isolating and divorcing it from the soil that gave rise to it?

Further, what indeed distinguished the English nation from the American nation at the end of the eighteenth and the beginning of the nineteenth centuries, when America was still known as New England? Not national character, of course; for the Americans had originated from England and had brought with them to America not only the English language, but also the English national character, which, of course, they could not lose so soon; although, under the influence of the new conditions, they would naturally be developing their own specific character. Yet, despite their more or less common character, they at that time already constituted a nation distinct from England! Obviously, New England as a nation differed then from England as a nation not by its specific national character, or not so much by its national character, as by its environment and conditions of life, which were distinct from those of England.

It is therefore clear that there is in fact no single distinguishing characteristic of a nation. There is only a sum total of characteristics, of which, when nations are compared, sometimes one characteristic (national character), sometimes another (language), or sometimes a third (territory, economic conditions), stands out in sharper relief. A nation constitutes the combination of all these characteristics taken together.

Bauer’s point of view, which identifies a nation with its national character, divorces the nation from its soil and converts it into an invisible, self-contained force. The result is not a living and active nation, but something mystical, intangible and supernatural. For, I repeat, what sort of nation, for instance, is a Jewish nation which consists of Georgian, Daghestanian, Russian, American and other Jews, the members of which do not understand each other (since they speak different languages), inhabit different parts of the globe, will never see each other, and will never act together, whether in time of peace or in time of war?!

No, it is not for such paper “nations” that Social-Democracy draws up its national programme. It can reckon only with real nations, which act and move, and therefore insist on being reckoned with.

Bauer is obviously confusing nation, which is a historical category, with tribe, which is an ethnographical category.

However, Bauer himself apparently feels the weakness of his position. While in the beginning of his book he definitely declares the Jews to be a nation, he corrects himself at the end of the book and states that “in general capitalist society makes it impossible for them (the Jews) to continue as a nation,” by causing them to assimilate with other nations. The reason, it appears, is that “the Jews have no closed territory of settlement,” whereas the Czechs, for instance, have such a territory and, according to Bauer, will survive as a nation. In short, the reason lies in the absence of a territory.

By arguing thus, Bauer wanted to prove that the Jewish workers cannot demand national autonomy, but he thereby inadvertently refuted his own theory, which denies that a common territory is one of the characteristics of a nation.

But Bauer goes further. In the beginning of his book he definitely declares that “the Jews have no common language, and yet are a nation.” But hardly has he reached p. 130 than he effects a change of front and just as definitely declares that “unquestionably, no nation is possible without a common language” (our italics).

Bauer wanted to prove that “language is the most important instrument of human intercourse,” but at the same time he inadvertently proved something he did not mean to prove, namely, the unsoundness of his own theory of nations, which denies the significance of a common language.

Thus this theory, stitched together by idealistic threads, refutes itself.

II. THE NATIONAL MOVEMENT

A nation is not merely a historical category but a historical category belonging to a definite epoch, the epoch of rising capitalism. The process of elimination of feudalism and development of capitalism is at the same time a process of the constitution of people into nations. Such, for instance, was the case in Western Europe. The British, French, Germans, Italians and others were formed into nations at the time of the victorious advance of capitalism and its triumph over feudal disunity.

But the formation of nations in those instances at the same time signified their conversion into independent national states. The British, French and other nations are at the same time British, etc., states. Ireland, which did not participate in this process, does not alter the general picture.

Matters proceeded somewhat differently in Eastern Europe. Whereas in the West nations developed into states, in the East multi-national states were formed, states consisting of several nationalities. Such are Austria-Hungary and Russia. In Austria, the Germans proved to be politically the most developed, and they took it upon themselves to unite the Austrian nationalities into a state. In Hungary, the most adapted for state organization were the Magyars – the core of the Hungarian nationalities – and it was they who united Hungary. In Russia, the uniting of the nationalities was undertaken by the Great Russians, who were headed by a historically formed, powerful and well-organized aristocratic military bureaucracy.

That was how matters proceeded in the East.

This special method of formation of states could take place only where feudalism had not yet been eliminated, where capitalism was feebly’ developed, where the nationalities which had been forced into the background had not yet been able to consolidate themselves economically into integral nations.

But capitalism also began to develop in the Eastern states. Trade and means of communication were developing. Large towns were springing up. The nations were becoming economically consolidated. Capitalism, erupting into the tranquil life of the nationalities which had been pushed into the background, was arousing them and stirring them into action. The development of the press and the theatre, the activity of the Reichsrat (Austria) and of the Duma (Russia) were helping to strengthen “national sentiments.” The intelligentsia that had arisen was being imbued with “the national idea” and was acting in the same direction….

But the nations which had been pushed into the background and had now awakened to independent life, could no longer form themselves into independent national states; they encountered on their -path the very powerful resistance of the ruling strata of the dominant nations, which had long ago assumed the control of the state. They were too late!…

In this way the Czechs, Poles, etc., formed themselves into nations in Austria; the Croats, etc., in Hungary; the Letts, Lithuanians, Ukrainians, Georgians, Armenians, etc., in Russia. What had been an exception in Western Europe (Ireland) became the rule in the East.

In the West, Ireland responded to its exceptional position by a national movement. In the East, the awakened nations were bound to respond in the same fashion.

Thus arose the circumstances which impelled the young nations of Eastern Europe on to the path of struggle.

The struggle began and flared up, to be sure, not between nations as a whole, but between the ruling classes of the dominant nations and of those that had been pushed into the background. The struggle is usually conducted by the urban petty bourgeoisie of the oppressed nation against the big bourgeoisie of the dominant nation (Czechs and Germans), or by the rural bourgeoisie of the oppressed nation against the landlords of the dominant nation (Ukrainians in Poland), or by the whole “national” bourgeoisie of the oppressed nations against the ruling nobility of the dominant nation (Poland, Lithuania and the Ukraine in Russia).

The bourgeoisie plays the leading role.

The chief problem for the young bourgeoisie is the problem of the market. Its aim is to sell its goods and to emerge victorious from competition with the bourgeoisie of a different nationality. Hence its desire to secure its “own,” its “home” market. The market is the first school in which the bourgeoisie learns its nationalism.

But matters are usually not confined to the market. The semi-feudal, semi-bourgeois bureaucracy of the dominant nation intervenes in the struggle with its own methods of “arresting and preventing.” The bourgeoisie – whether big or small – of the dominant nation is able to deal more “swiftly” and “decisively” with its competitor. “Forces” are united and a series of restrictive measures is put into operation against the “alien” bourgeoisie, measures passing into acts of repression. The struggle spreads from the economic sphere to the political sphere. Restriction of freedom of movement, repression of language, restriction of franchise, closing of schools, religious restrictions, and so on, are piled upon the head of the “competitor.” Of course, such measures are designed not only in the interest of the bourgeois classes of the dominant nation, but also in furtherance of the specifically caste aims, so to speak, of the ruling bureaucracy.

But from the point of view of the results achieved this is quite immaterial; the bourgeois classes and the bureaucracy in this matter go hand in hand – whether it be in Austria-Hungary or in Russia.

The bourgeoisie of the oppressed nation, repressed on every hand, is naturally stirred into movement. It appeals to its “native folk” and begins to shout about the “fatherland,’; claiming that its own cause is the cause of the nation as a whole. It recruits itself an army from among its “countrymen” in the interests of … the “fatherland.” Nor do the “folk” always remain unresponsive to its appeals; they rally around its banner: the repression from above affects them too and provokes their discontent.

Thus the national movement begins.

The strength of the national movement is determined by the degree to which the wide strata of the nation, the proletariat and peasantry, participate in it.

Whether the proletariat rallies to the banner of bourgeois nationalism depends on the degree of development of class antagonisms, on the class consciousness and degree of organization of the proletariat. The class-conscious proletariat has its own tried banner, and has no need to rally to the banner of the bourgeoisie.

As far as the peasants are concerned, their participation in the national movement depends primarily on the character of the repressions. If the repressions affect the “land,” as was the case in Ireland, then the mass of the peasants immediately rally to the banner of the national movement.

On the other hand, if, for example, there is no serious anti-Russian nationalism in Georgia, it is primarily because there are neither Russian landlords nor a Russian big bourgeoisie there to supply the fuel for such nationalism among the masses. In Georgia there is anti-Armenian nationalism; but this is because there is still an Armenian big bourgeoisie there which, by getting the better of the small and still unconsolidated Georgian bourgeoisie, drives the latter to anti-Armenian nationalism. .

Depending on these factors, the national movement either assumes a mass character and steadily grows (as in Ireland and Galicia), or is converted into a series of petty collisions, degenerating into squabbles and “fights” over signboards (as in some of the small towns of Bohemia).

The content of the national movement, of course, cannot everywhere be the same: it is wholly determined by the diverse demands made by the movement. In Ireland the movement bears an agrarian character; in Bohemia it bears a “language” character; in one place the demand is for civil equality and religious freedom, in another for the nation’s “own” officials, or its own Diet. The diversity of demands not infrequently reveals the diverse features which characterize a nation in general (language, territory, etc.). It is worthy of note that we never meet with a demand based on Bauer’s all-embracing “national character.” And this is natural: “national character” in itself is something intangible, and, as was correctly remarked by J. Strasser, “a politician can’t do anything with it.” [7]

Such, in general, are the forms and character of the national movement.

From what has been said it will be clear that the national struggle under the conditions of rising capitalism is a struggle of the bourgeois classes among themselves. Sometimes the bourgeoisie succeeds in drawing the proletariat into the national movement, and then the national struggle externally assumes a “nation-wide” character. But this is so only externally. In its essence it is always a bourgeois struggle, one that is to the advantage and profit mainly of the bourgeoisie.

But it does not by any means follow that the proletariat should not put up a fight against the policy of national oppression.

Restriction of freedom of movement, disfranchisement, repression of language, closing of schools, and other forms of persecution affect the workers no less, if not more, than the bourgeoisie. Such a state of affairs can only serve to retard the free development of the intellectual forces of the proletariat of subject nations. One cannot speak seriously of a full development of the intellectual faculties of the Tatar or Jewish worker if he is not allowed to use his native language at meetings and lectures, and if his schools are closed down.

But the policy of nationalist persecution is dangerous to the cause of the proletariat also on another account. It diverts the attention of large strata from social questions, questions of the class struggle, to national questions, questions “common” to the proletariat and the bourgeoisie. And this creates a favourable soil for lying propaganda about “harmony of interests,” for glossing over the class interests of the proletariat and for the intellectual enslavement of the workers.

This creates a serious obstacle to the cause of uniting the workers of all nationalities. If a considerable proportion of the Polish workers are still in intellectual bondage to the bourgeois nationalists, if they still stand aloof from the international labour movement, it is chiefly because the age-old anti-Polish policy of the “powers that be” creates the soil for this bondage and hinders the emancipation of the workers from it.

But the policy of persecution does not stop there. It not infrequently passes from a “system” of oppression to a “system” of inciting nations against each other, to a “system” of massacres and pogroms. Of course, the latter system is not everywhere and always possible, but where it is possible – in the absence of elementary civil rights – it frequently assumes horrifying proportions and threatens to drown the cause of unity of the workers in blood and tears. The Caucasus and south Russia furnish numerous examples. “Divide and rule” – such is the purpose of the policy of incitement. And where such a policy succeeds, it is a tremendous evil for the proletariat and a serious obstacle to the cause of uniting the workers of all the nationalities in the state.

But the workers are interested in the complete amalgamation of all their fellow-workers into a single international army, in their speedy and final emancipation from intellectual bondage to the bourgeoisie, and in the full and free development of the intellectual forces of their brothers, whatever nation they may belong to.

The workers therefore combat and will continue to combat the policy of national oppression in all its forms, from the most subtle to the most crude, as well as the policy of inciting nations against each other in all its forms

Social-Democracy in all countries therefore proclaims the right of nations to self-determination.

The right of self-determination means that only the nation itself has the right to determine its destiny, that no one has the right forcibly to interfere in the life of the nation, to destroy its schools and other institutions, to violate its habits and customs, to repress its language, or curtail its rights.

This, of course, does not mean that Social-Democracy will support every custom and institution of a nation. While combating the coercion of any nation, it will uphold only the right of the nation itself to determine its own destiny, at the same time agitating against harmful customs and institutions of that nation in order to enable the toiling strata of the nation to emancipate themselves from them.

The right of self-determination means that a nation may arrange its life in the way it wishes. It has the right to arrange its life on the basis of autonomy. It has the right to enter into federal relations with other nations. It has the right to complete secession. Nations are sovereign, and all nations have equal rights.

This, of course, does not mean that Social-Democracy will support every demand of a nation. A nation has the right even to return to the old order of things; but this does not mean that Social-Democracy will subscribe to such a decision if taken by some institution of a particular nation. The obligations of Social-Democracy, which defends the interests of the proletariat, and the rights of a nation, which consists of various classes, are two different things.

In fighting for the right of nations to self-determination, the aim of Social-Democracy is to put an end to the policy of national oppression, to render it impossible, and thereby to remove the grounds of strife between nations, to take the edge off that strife and reduce it to a minimum.

This is what essentially distinguishes the policy of the class-conscious proletariat from the policy of the bourgeoisie, which attempts to aggravate and fan the national struggle and to prolong and sharpen the national movement.

And that is why the class-conscious proletariat cannot rally under the “national” flag of the bourgeoisie.

That is why the so-called “evolutionary national” policy advocated by Bauer cannot become the policy of the proletariat. Bauer’s attempt to identify his “evolutionary national” policy with the policy of the “modern working class” is an attempt to adapt the class struggle of the workers to the struggle of the nations.

The fate of a national movement, which is essentially a bourgeois movement, is naturally bound up with the fate of the bourgeoisie. The -final disappearance of a national movement is possible only with the downfall of the bourgeoisie. Only under the reign of socialism can peace be fully established. But even within the framework of capitalism it is possible to reduce the national struggle to a minimum, to undermine it at the root, to render it as harmless as possible to the proletariat. This is borne out, for example, by Switzerland and America. It requires that the country should be democratized and the nations be given the opportunity of free development.

Annexure13: The Problem of Reformism by Robert Brenner

[First published in Against the Current, No. 43, March/April 1993]

I WAS ASKED to talk about the historical lessons of revolution in the twentieth century. But since we are primarily interested in historical lessons that are likely to be relevant to the twenty-first century, I think it would be more to the point to consider the experience of reform and reformism.

Reformism is always with us, but it rarely announces its presence and usually introduces itself by another name and in a friendly fashion. Still, it is our main political competitor and we had better understand it.

To begin with, it should be clear that reformism does not distinguish itself by a concern for reforms. Both revolutionaries and reformists try to win reforms. Indeed, as socialists, we see the fight for reforms as our main business.

But reformists are also interested in winning reforms. In fact, to a very large extent, reformists share our program, at least in words. They are for higher wages, full employment, a better welfare state, stronger trade unions, even a third party.

The inescapable fact is that, if we want to attract people to a revolutionary-socialist banner and away from reformism, it will not generally be through outbidding reformists in terms of program. It will be through our theory—our understanding of the world —and, most important, through our method, our practice.

What distinguishes reformism on a day-to-day basis is its political method and its theory, not its program. Schematically speaking, reformists argue that although, left on its own, the capitalist economy tends to crisis, state intervention can enable capitalism to achieve long-term stability and growth. They argue, at the same time, that the state is an instrument that can be used by any group, including the working class, in its own interests.

Reformism’s basic political method or strategy follows directly from these premises. Working people and the oppressed can and should devote themselves primarily to winning elections so as to gain control of the state and thereby secure legislation to regulate capitalism and, on that basis, to improve their working conditions and living standards.

The Paradox of Reformlsm

Marxists have, of course, always counterposed their own theories and strategies to those of reformists. But, probably of equal importance in combatting reformism, revolutionaries have argued that both reformist theory and reformist practice are best understood in terms of the distinctive social forces on which reformism has historically based itself—in particular, as rationalizations of the needs and interests of trade union officials and parliamentary politicos, as well as middle-class leaders of the movements of the oppressed.

Reformism’s distinctive social basis is not simply of sociological interest it is the key to the central paradox that has defined, and dogged, reformism since its origins as a self-defined movement within the social democratic parties (evolutionary socialism) around 1900. That is, the social forces at the heart of reformism and their organizations are committed to political methods (as well as theories to justify them) that end up preventing them from securing their own reform goals—especially the electoral legislative mad and state-regulated labour relations.

As a result, the achievement of major reforms throughout the twentieth century has generally required not only breaking with, but systematically struggling against, organized reformism, its chief leaders and their organizations. This is because the winning of such reforms has, in virtually every instance, required strategies and tactics of which organized reformism did not approve because these threatened their social position and interests—high levels of militant now action, large-scale defiance of the law, and the forging of increasingly class-wide ties of active solidarity—between unionized and ununionized, employed and unemployed, and the like.

The Reformist View

The core proposition of the reformist world view is that, though prone to crisis, the capitalist economy is, in the end subject to state regulation.

Reformists have argued—in various ways—that what makes for crisis is unregulated class struggle. They have thus often contended that capitalist crisis can arise from the “too great” exploitation of workers by capitalists in the interests of increased profitability. This causes problems for the system as a whole because it leads to inadequate purchasing power on the part of working people, who cannot buy back enough of what they produce. Insufficient demand makes for a “crisis of underconsumption”—for example (according to reformist theorists), the Great Depression of the 1930s.

Reformists have also argued that capitalist crisis can arise, on the other hand, from “too strong” resistance by workers to capitalist oppression on the shop floor. By blocking the introduction of innovative technology or refusing to work harder, workers reduce productivity growth (output/worker). This, in turn means a slower growing pie, reduced profitability, reduced investment, and ultimately a “supply-side crisis”—for example (according to reformist theorists), the current economic downturn beginning at the end of the 1960s.

It follows from this approach that, because crises are the unintended result of unregulated class struggle, the state can secure economic stability and growth precisely by intervening to regulate both the distribution of income and capital-labour relations on the shop floor. The implication is that class struggle is not really necessary, for it is in the long term interest of neither the capitalist class nor the working class, if they can be made to coordinate their actions.

The State as Neutral Apparatus

The reformist theory of the state fits very well with its political economy. In this view, the state is an autonomous apparatus of power, in principle neutral, capable of being used by anyone. It follows that workers and the oppressed should try to gain control of it for the purpose of regulating the economy so as to secure economic stability and growth and, on that basis, win reforms in their own material interests.

Reformism’s political strategy flows logically from its view of the economy and the state. Workers and the oppressed should concentrate on electing reformist politicos to office. Because state intervention by a reformist government can secure long-term stability and growth in the interests of capital, as well as labour, there is no reason to believe that employers will stubbornly oppose a reformist government.

Such a government can prevent crises of underconsumption by implementing redistributive tax policies and prevent supply-side crises by establishing state regulated worker-management commissions in the interest of raising productivity. On the basis of a growing, increasingly productive economy, the state can continually raise spending on state services, while regulating collective bargaining so as to insure fairness to all parties.

Reformists would maintain that workers need to remain organized and vigilant—especially in their unions—and prepared to move against rogue capitalists who won’t be disciplined in the common interest: ready to take strike action against employers who refuse to accept mediation at the level of the firm or, in the worst case, to rise en masse against groups of reactionary capitalists who can’t abide giving over governmental power to the great majority and seek to subvert the democratic order.

But presumably such battles would remain subordinate to the main electoral-legislative struggle and become progressively less common since reformist state policy would proceed in the interest not only of workers and the oppressed, but of the employers, even if the latter did not at first realize it.

Responding to Reformism

Revolutionaries have classically rejected the reformists’ political method of relying on the electoral/legislative process and state-regulated collective bargaining for the simple reason that it can’t work.

So long as capitalist property relations continue top, the state cannot be autonomous. This is not because the state is always directly controlled by capitalists (social democratic and labour party governments, for example, often are not). It is because whoever controls the state is brutally limited in what they can do by the needs of capitalist profitability … and because, over any extended period, the needs of capitalist profitability are very difficult to reconcile with reforms in the interest of working people.

In a capitalist society, you can’t get economic growth unless you can get investment, and you can’t get capitalists to invest unless they can make what they judge to be an adequate rate of profit. Since high levels of employment and increasing state services in the interest of the working class (dependent upon taxation) are predicated upon economic growth, even governments that want to further the interests of the exploited and the oppressed—for example social democratic or labour party governments—must make capitalist profitability in the interest of economic growth their first priority.

The old saying that “What’s good for General Motors is good for everyone,’ unfortunately contains an important grain of truth, so long as capitalist property relations continue in force.

This is not of course to deny that capitalist governments will ever make reforms. Especially in periods of boom, when profitability is high, capital and the state are often quite willing to grant improvements to working people and the oppressed in the interests of uninterrupted production and social order.

But in periods of downturn, when profitability is reduced and competition intensifies the cost of paying (via taxation) for such reforms can endanger the very survival of firms and they are rarely granted without very major struggles in the workplaces and in the streets. Equally to the point, in such periods, governments of every sort—whether representative of capital or labour—so long as they are committed to capitalist property relationships, will end up attempting to restore profitability by seeing to it that wages and social spending are cut, that capitalists receive tax breaks, and so forth.

The Centrality of Crisis Theory

It should be evident why, for revolutionaries, so much is riding on their contention that extended periods of crisis are built into capitalism. From this standpoint, crises arise from capitalism’s inherently anarchic nature, which makes for a path of capital accumulation that is eventually self-contradictory or self-undermining. Because by nature a capitalist economy operates in an unplanned way, governments cannot prevent crises.

This is not the place for an extended discussion of debates over crisis theory. But one can at least point out that capitalist history has vindicated an anti-reformist viewpoint Since the later nineteenth century, if not before, whatever type of governments have been in power, long periods of capitalist boom (185Os-187(, 1890s-1913, late 1940s.c.1970) have always been succeeded by long periods of capitalist depression (1870s-1890s, 1919-1939, c1970to the present). One of Ernest Mandel’s fundamental contributions in recent years has been to emphasize this pattern of capitalist development through long waves of boom and downturn.

During the first two decades of the postwar period, it seemed that reformism had finally vindicated its political world view. There was unprecedented boom, accompanied by—and seemingly caused by—the application of Keynesian measures to subsidize demand, as well as the growing government expenditures associated with the welfare state. Every advanced capitalist economy experienced not only fast-rising wages, but a significant expansion of social services in the interest of the working class and the oppressed.

In the late ’60s or early 170s, it thus appeared to many that the way to insure continually improved conditions for working people was to pursue “class struggle inside the state—the electoral/ legislative victories of social democratic and labour parties (the Democratic Party in the United States).

But the next two decades entirely falsified this perspective. Declining profitability brought a long-term crisis of growth and investment Under these conditions, one after another reformist government in power—the Labour Party in the late 70s, the French and Spanish Socialist Parties in the ’80s, and the Swedish Social Democratic Party in the ’80s—found itself unable to restore pros-parity through the usual methods of subsidizing demand and concluded that it had little choice but to increase profitability as the only way to increase investment and restore growth.

As a result, virtually without exception, the reformist parties in power not only failed to defend workers’ wages or living standards against employers’ attack, but unleashed powerful austerity drives designed to raise the rate of profit by cutting the welfare state and reducing the power of the unions. There could be no more definitive disproof of reformist economic theories and the notion of the autonomy of the state. Precisely because the state could not prevent capitalist crisis, it could not but reveal itself as supinely dependent upon capital.

Why Reformism Doesn’t Reform

It remains to be asked why the reformist parties in power continued to respect capitalist property rights and sought to restore capitalist profits. Why didn’t they instead seek to defend working class living and working standards, if necessary by class struggle? In the event that that approach led capitalists to abstain from investing or to capital flight, why could they not then have nationalized industries and moved toward socialism? We are back to the paradox of reformism.

The key is to be found in the peculiar social forces that dominate reformist politics, above all the trade union officialdom and the social democratic party politicos. What distinguishes these forces is that, while they are dependent for their very existence on organizations built out of the working class, they are not themselves part of the working class.

Above all, they are off the shop floor. They find their material base, their livelihood, in the trade union or party organization itself. It’s not just that they get their salaries from the trade union or political party, although this is very important The trade union or party defines their whole way of life—what they do, whom they meet—as well as their career trajectory.

Asa result, the key to their survival, to the fluctuations in their material and social position, is their place within the trade union or party organization itself. So tong as the organization is viable, they can have a viable form of life and a reasonable career.

The gulf between the form of life of the rank and file worker and even the low level paid official is thus enormous. The economic position—wages, benefits, working conditions—of ordinary work-era depends directly on the course of the class struggle at the workplace and within the industry. Successful class struggle is the only way for them to defend their living standards.

The trade union official, in contrast, can generally do quite well even if one defeat follows another in the class struggle, so long as the trade union organization survives. It is true that in the very long run the very survival of the trade union organization is dependent upon the class struggle, but this is rarely a relevant factor. More to the point is the fact that, in the short run, especially in periods of profitability crisis, class struggle is probably the main threat to the viability of the organization.

Since militant resistance to capital can provoke a response from capital and the state that threaten the financial condition or the very existence of the organization, the trade union officials generally seek studiously to avoid it The trade unions and reformist parties have thus, historically, sought to ward off capital by coming to terms with it.

They have assured capital that they accept the capitalist property system and the priority of profitability in the operation of the firm. They have at the same time sought to make sure that workers, inside or outside their organizations, do not adopt militant, illegal, and class-wide forms of action that might appear too threatening to capital and call forth a violent response.

Above all, with implacable class struggle ruled out as a means to win reforms, trade union officials and parliamentary politicians have seen the electoral/legislative road as the fundamental political strategy left to them. Through the passive mobilization of an election campaign, these forces thus hope to create the conditions for winning reforms, while avoiding too much offending capital in the process.

This is not to adopt the absurd view that workers are generally chomping at the bit to struggle and are only being held back by their misleaders. In fact, workers often are as conservative as their leaders, or more so. The point is that, unlike the trade union or party officials, rank and file workers cannot, over time, defend their interests without class struggle.

Moreover, at those moments when workers do decide to take matters into their own hands and attack the employers, the trade union officials can be expected to constitute a barrier to their struggle, to seek to detour or derail it.

Of course, trade union leaders and party officials are not in every case averse to class struggle, and sometimes they even initiate it The point is simply that, because of their social position, they cannot be counted on to resist Therefore, no matter how radical the leaders’ rhetoric, no strategy should be based on the assumption that they will resist.

It is the fact that trade union officials and social democratic politicians cannot be counted onto fight the class struggle because they have major material interests that are endangered by confrontations with the employers that provides the central justification for our strategy of building rank and file organizations that are independent of the officials (although they may work with them), as well as independent working class parties.

Reformism Today and Regroupment

Understanding reformism is no mere academic exercise. It affects just about every political initiative we take. This can be seen particularly clearly with respect both to today’s strategic tasks of bringing together anti-reformist forces within a common organization (regroupment) and that of creating a break from the Democratic Party.

Today, as for many years, Solidarity’s best hope for regrouping with organized (however loosely) left forces comes from those individuals and groups which see themselves as opposed from the left to official reformism. The fact remains that many of these leftists, explicitly or implicitly, still identify with an approach to politics that may be roughly termed “popular frontism.”

Despite the fact that it was framed entirely outside the camp of organized social democracy, popular frontism takes reformism to the level of a system.

The Communist International first promulgated the idea of the popular front in 1935 to complement the Soviet Union’s foreign policy of seeking an alliance with the “liberal” capitalist powers to defend against Nazi expansionism (“collective security”). In this context, the Communists internationally put forward the idea that it was possible for the working class to forge a very broad alliance across classes, not only with middle class liberals, but with an enlightened section of the capitalist class, in the interest of democracy, civil liberties, and reform.

The conceptual basis for this view was that an enlightened section of the capitalist class preferred a constitutional order to an authoritarian one. In addition, enlightened capitalists were willing to countenance greater government intervention and egalitarianism in order to create the conditions for liberalism, as well as to insure social stability.

Like other reformist doctrines, the popular front based itself, in economic terms, on an underconsumptionist theory of crisis Underconsumptionism was in fact receiving a wide hearing in liberal, as well as radical-socialist, circles during the 1930s, receiving a particularly strong boost with the promulgation and popularization of Keynes’ ideas.

In the United States, the implication of the popular front was to enter the Democratic Party. The Roosevelt administration, containing as it did certain relatively progressive establishment types, was seen as an archetypical representative of capitalism’s enlightened wing. And the imperative of working with the Democrats was very much increased with the sudden rise of the labour movement as a power in the land.

The Communists had originally been in the lead in organizing the CIO, and had, in fact, spectacularly succeeded in auto largely by virtue of their adoption, for a very brief but decisive period (1935-early 1937), of a rank-and-file strategy much like that of Solidarity today. This strategy had, at the start, found its parallel in Communist refusal to support Roosevelt.

But by 1937, soon after the adoption of the popular front with its implied imperative not to alienate the Roosevelt administration, the CF had come to oppose labour militancy (sitdown strikes, wildcats) in the interest of the classically social democratic policy of allying with the “left wing of the trade union officials.

The implication of this policy was to reject the notion that the labour officialdom represented a distinct social layer that could be expected to put the interests of its organizations ahead of the interests of the rank and file—a notion that had been at the core of the politics of the left-wing of pre-World War I social democracy (Luxemburg, Trotsky, etc.) and of the Third International since the days of Lenin.

Instead, trade union officials ceased to be differentiated in social terms from the rank and file and came to be distinguished (from one another) by their political line alone (left, center, right).

This approach fit very well with the Communists strategic objective of getting the newly-emergent industrial unions to enter the Democratic Party. Of course, much of the trade union officialdom was only too happy to emphasize its political role inside the emergent reform wing of the Democratic Party, especially in comparison with its much more dangerous economic role of organizing the membership to fight the employers.

The dual policy of allying with the left” officials inside the trade union movement and working for reform through electoral/legislative means within the Democratic Party (hopefully along. side the progressive trade union leaders) has remained to this day powerfully attractive to much of the left.

A Rank-and-File Perspective

In the trade unions during the 1970s, representatives of tendencies that eventually ended up inside Solidarity were obliged to counterpose the idea of the rank-and-file movement independent of the trade union officials to the popular front idea of many leftists of supporting the extant “progressive” leadership.

This meant, in the first place, countering the idea that the progressive trade union officials would be obliged to move to the left and oppose the employers, if only to defend their own organizations.

Revolutionaries contended that, on the contrary, precisely because of the viciousness of the employers’ offensive, trade union officials would for the most part be willing to make concessions in the interest of avoiding confrontation with the employers. They would thereby allow the bit-by-bit chipping away of the labour movement virtually indefinitely.

The latter perspective has been more than borne out, as officials have by and large sat on their hands as the concessions movement has reached gale proportions and the proportion of workers in trade unions dropped from 25-30% in the ’60s to 10-15% today.

Equally to the point, revolutionaries in the trade union movement had to counter the popular front idea that the trade union leaders were “to the left of the rank and file. If you talked with many leftists in that period, sooner or later you’d get the argument that the rank and file were politically backward.

After all, many “progressive” trade union leaders opposed U.S. intervention in Central America (and elsewhere) more firmly than did the membership, stood much more clearly than did the membership for extensions of the welfare state, and, even, in a number of cases, came out for a labour party.

Our response to this argument was to contrast what “progressive” trade union leaders are willing to do verbally, “politically,” where relatively little is at stake, with what they are willing to do to fight the bosses, where virtually everything may be at risk It cost the well-known head of the IAM William Winpisinger virtually nothing to be a member of DSA and promulgate a virtually perfect social democratic world view on such questions as the reconversion of the economy, national health care, and the like.

But when it came to class struggle, we pointed out, Winpisinger not only came out clearly against Teamsters for a Democratic Union, but sent his machinists across the picket line in the crucial PATCO (air controllers) strike.

Over the past decade or so, many leftists have broken with the Soviet Union or China and become open to reexamining their entire political world view. But this does not mean that they automatically move in our direction. For their popular front political strategy corresponds in central ways with a still (relatively) powerful and coherent political trend—Le. social democratic reformism.

If we are to win over these comrades, we will have to demonstrate to them, systematically and in detail, that their traditional popular front strategy of working with the trade union “lefts” and penetrating the Democratic Party is in fact self-defeating.

Annexure14: The Myth of the Labour Aristocracy Part 1 by Charles Post

[First published in Against the Current, No. 123, July–August 2006]

THE PERSISTENCE OF reformism and outright conservatism among workers, especially in the imperialist centers of North America, Western Europe and Japan, has long confounded revolutionary socialists. The broadest outlines of Marxist theory tell us that capitalism creates its own “gravediggers” – a class of collective producers with no interest in the maintenance of private ownership of the means of production. The capitalist system’s drive to maximize profits should force workers to struggle against their employers, progressively broaden their struggle and eventually overthrow the system and replace it with their democratic self-rule.

The reality of the last century seems to challenge these basic Marxist ideas. Despite occasional mass militancy and even proto-revolutionary struggles, the majority of the working class in the developed capitalist countries have remained tied to reformist politics – a politics premised on the possibility of improving the condition of workers without the overthrow of capitalism.

While living and working conditions for workers in the “global North” have deteriorated sharply since the late 1960s, the result has not been, for the most part, the growth of revolutionary consciousness. Instead we have seen reactionary ideas – racism, sexism, homophobia, nativism, militarism – strengthened in a significant sector of workers in the advanced capitalist countries. Since the late 1970s, nearly one-third of U.S. voters in union households have voted for right-wing Republicans. (1)

This paradox poses a crucial challenge for revolutionary Marxists. However, we need to avoid “mythological” explanations, imagined explanations for real phenomena, whether to interpret natural events or to explain the nature of society. Unfortunately, one of the most influential explanations within the left for working class reformism and conservatism – the theory of the “labour aristocracy” – is such a myth.

Theory of the “Labour Aristocracy”

Frederick Engels first introduced the notion of the “labour aristocracy” in a number of letters to Marx stretching from the late 1850s through the late 1880s. (2) Engels was grappling with the growing conservatism of the organized sectors of the British working class. He argued that those British workers who had been able to establish unions and secure stable employment – skilled workers in the iron, steel and machine making industries and most workers in the cotton textile mills – constituted a privileged and “bourgeoisified” layer of the working class, a “labour aristocracy.”

British capital’s dominance of the world economy – its industrial and financial “monopoly” – allowed key employers to provide a minority of workers with relatively higher wages and employment security. Engels saw the resulting relative privilege, especially when compared with the mass of poorly paid workers in unstable jobs, as the material basis of the growing conservatism of the British labour movement.

The contemporary theory of the labour aristocracy is rooted in the work of V.I. Lenin on imperialism and the rise of “monopoly capitalism.” Lenin was shocked when the leaders of the European socialist parties supported “their” capitalist governments in the First World War. The victory of what he called “opportunism” (his term for reformism) confounded Lenin, who had dismissed the development of “revisionism” (Edward Bernstein’s challenge to classical Marxism in 1899) as the ideology of socially isolated, middle-class intellectuals. Lenin believed the “orthodox Marxist” leadership of the socialist parties and unions had long ago vanquished the revisionist challenge.

Lenin had therefore expected that the European socialist leaders would fulfill their pledge, ratified at numerous congresses of the Socialist International, to oppose their ruling classes’ war drive with strikes and social disruption. By 1915, Lenin had begun to develop his explanation for the victory of opportunism in the socialist and labour movements. In his article The Collapse of the Second International, Lenin argued:

“The period of imperialism is the period in which the distribution of the world among the ‘great’ and privileged nations, by whom all other nations are oppressed, is completed. Scraps of the booty enjoyed by the privileged as a result of this oppression undoubtedly fall to the lot of certain sections of the petty-bourgeoisie and the aristocracy and bureaucracy of the working class.” (3)

This segment “represents an infinitesimal minority of the proletariat and the working masses” whose “adherence … with the bourgeoisie against the mass of the proletariat” was the social basis of reformism.

Lenin located the economic foundation of the labour aristocracy in the “super-profits” generated through imperialist investment in what we would today call the “third world” or “global South.” According to his 1920 preface to Imperialism: The Highest Stage of Capitalism:

“Obviously, out of such enormous super profits (since they are obtained over and above the profits which capitalists squeeze out of the workers of the country) it is possible to bribe their labour leaders and an upper stratum of the labour aristocracy. And the capitalists of the ‘advanced’ countries do bribe them: they bribe them in a thousand different ways, direct and indirect, overt and covert.

“This stratum of bourgeoisified workers or ‘labour aristocracy,’ who have become completely petty-bourgeois in their mode of life, in the amount of their earnings, and in their point of view, serve as the main support of the Second International [the reformist socialists – CP] and, in our day, the principal social (not military) support of the bourgeoisie. They are the real agents of the bourgeoisie in the labour movement, the labour lieutenants of the capitalist class, the real carriers of reformism and chauvinism.” (4)

The theory of the labour aristocracy remains an important explanation of working-class reformism and conservatism for important segments of the far left in the industrialized countries. While the mainstream Communist Parties generally distanced themselves from the notion of the labour aristocracy as they moved toward reformist politics in the late 1930s (5), certain left-wing opponents of the Communist Parties continue to defend the theory.

Thus, in the “New Communist Movement” of the 1970s and 1980s, various currents defended the notion that a layer of U.S. workers shared in the “super profits” of imperialism and monopoly capitalism. Max Elbaum (the author of the influential Revolution in the Air (6)) and Robert Seltzer, then leaders of the prominent “new communist” group Line of March, published a three part explication and defence of the theory of the labour aristocracy in the early 1980s. (7)

More recently, Jonathan Strauss of the Australian Democratic Socialist Party (DSP), one of the larger revolutionary organizations in the English-speaking world whose origins lie in Trotskyism, has published a series of articles in the DSP sponsored journal Links (8) that elaborates upon Elbaum and Seltzer’s defence of the theory of the labour aristocracy.

Important groups of activists, in particular those working with low-wage workers, are also drawn to the theory of the labour aristocracy. Four members of the People Organized to Win Employment Rights (POWER), a workers’ center organizing mostly “low-wage/no-wage” workers of color in the San Francisco area, argued that:

”Another feature of imperialism that distinguishes it from earlier eras of capitalism is the imperialist powers’ creation of a ‘labour aristocracy.’ The dominant position of the imperialist nations allows these nations to extract super-profits. The ruling elite of imperialist nations use some of the super-profits to make significant economic and political concessions to certain sectors of that nation’s working class. Through higher wages, greater access to consumer goods and services and expanded social wage such as public education and cultural institutions, the imperialist elite are able to essentially bribe those sections of the working class …

”For a contemporary example of this, all we have to do is look at the 2004 presidential elections. Statistics show that working class whites in the United States voted overwhelmingly for George W. Bush in an election that could be read as a referendum of the empire’s war on the Iraqi people. An analysis that solely focuses on class would suggest that working class whites had and have an interest in opposing a war that, if nothing else, is costing them billions in dollars. But clearly that ain’t what happened. Working class whites voted overwhelmingly in support of the war on the Iraqi people. The majority of working class whites, despite their own exploitation, tie their own interests to white supremacy and the dominance of “America” in the world.” (9)

Most current versions of the labour aristocracy thesis recognize some of the grave empirical problems (see below) with Lenin’s claims that higher wages for a significant minority of workers in the imperialist countries comes from the super profits earned from the exploitation of lower paid workers in Africa, Asia and Latin America. (10) Instead, they tend to emphasize how the emergence of “monopoly capitalism” allows large corporations that dominate key branches of industry to earn super profits, which they share with their workers in the form of secure employment, higher wages and benefits.

Contemporary defenders of the labour aristocracy thesis argue that prior to the rise of large corporations in the late 19th and early 20th centuries, capitalism was in its “competitive” stage. Under competitive capitalism most branches of industry saw a large number of relatively small firms competing with one another through price cutting.

If any particular firm or industry began to experience higher than average profits because of the introduction of new machinery, it was relatively easy for its competitors to either adopt the new technology or shift investment from industries with lower profits to industries with higher profits. Through this process of competition within and between branches of production, new technology was rapidly diffused and capital easily moved between different sectors of the economy, resulting in uniform technical conditions within an industry and equal profit rates within and between industries.

According to Elbaum and Seltzer, Marx’s analysis of the equalization of the rate of profit (11) applied to the “competitive” phase of capitalism:

”In the era of competitive capitalism, profits above the average rate, i.e. surplus profits, were generally spasmodic and temporary. They were usually derived as a result of technological advances that enabled a capitalist to reduce costs below the industry average, or entrepreneurial skills that opened new markets. However, an abnormally high rate of profit by an individual firm, or in a particular branch of industry, was soon undermined by an inflow of capital seeking the higher rate of profit or by the relatively rapid adoption of cost-cutting innovations by competitors.” (12)

The rise of large scale corporations in the 20th century create “institutional or structural restrictions of this process” which “result in monopoly super profits.” (13) “Monopoly” or “oligopoly” – where a small number of firms dominate a given industry – replaced competition. Specifically, the enormous cost of new capital’s entering these industries (auto, steel, etc.) – the barriers to entry – allow these firms to limit competition and sustain above average profits in several ways.

These barriers to entry prevent the rapid diffusion of new methods of production across industries, creating what Ernest Mandel called “technological rents” or super-profits (14) for these monopoly corporations. These barriers also prevent capital from moving from low profitability to high profitability industries, blocking the equalization of profit rates. Finally, barriers to entry and restricted competition allow corporations to raise prices above their prices of production, securing super profits for the largest firms in the economy. (15)

In this view competition does not disappear under monopoly capitalism, but tends to operate primarily in those sectors of the economy where large numbers of relatively small firms continue to predominate. Cut-throat competition and the rapid depression of above average profits to the average rate persist in the “competitive” sectors (garment, electronics, etc.) of the economy. There the small scale of investment necessary to start a competitive firm lowers barriers to entry and allows a large number of small firms to survive.

The result is a “dual economy,” with two distinct profit rates:

”In the monopoly stage of capitalism, the tendency to form an average rate of profit still exists, since monopoly doesn’t obliterate competition in the system as a whole. But it is modified by monopoly power. Therefore, the surplus value of society is distributed both according to size of capital through inter-industry competition (which yields equal profit on equal capital as in competitive capitalism); and according to the level of monopolization (which yields monopoly super profits). Monopolies receive both the average profit and monopoly super profit. Consequently, there arise the phenomena of a relatively permanent hierarchy of profit rates ranging from the highest in the strategic industries with large-scale production and the strongest monopolies, to the lowest in weaker industries with small-scale production, intense competition and market instability.” (16)

According to Strauss, Elbaum and Seltzer, monopoly super profits become the primary source of the “bribe” for the contemporary labour aristocracy. The monopoly industries’ higher than average profit rates allow these firms to provide higher than average wages and benefits and secure employment to their workers. By contrast, competitive industries earn average (or below average) profit rates and doom workers in these industries to below average wages and benefits and insecure employment.

From this perspective, effective unions are only possible in the monopoly sector of the economy, where the absence of competition creates super profits and allows corporations to “bribe” workers with higher wages and more secure employment. Given the realities of racism and national oppression, “white” workers tend to be overrepresented in the higher paid sectors of the economy, while workers of color tend to be overrepresented in the lower paid sectors of the economy.

The labour aristocracy, as today’s theorists see it, is no longer made up primarily of skilled machinists and other industrial workers, as was the case in the early 20th century. Today, the more highly paid workers in the unionized monopoly and public sector constitute a labour aristocracy whose higher wages derive from the super-exploitation of workers in the competitive sectors of the advanced capitalist economies. (17)

Despite its intellectual pedigree and longevity, the labour aristocracy thesis is not a theoretically rigorous or factually realistic explanation of working-class reformism or conservatism. This essay undertakes an examination of the theoretical and empirical economic claims of the labour aristocracy thesis.

We will first evaluate the claim that super profits pumped out of workers in the global South underwrite a “bribe” in the form of higher wages for a minority of the working class in the global North. The essay then evaluates the claim that limits on competition flowing from industrial concentration in key sectors of the economy produces differential profits rates and wages. We will conclude our critique of the theory of the labour aristocracy with an analysis of the actual history of radical and revolutionary working-class activism in the 20th century.

Finally, I will present an alternative explanation of the persistence of working class reformism and conservatism – one rooted in the necessarily episodic character of working-class self-organization and activity, the emergence of an officialdom (bureaucracy) in the unions and pro-working class political parties, and the inability of reformist politics to effectively win or defend working-class gains under capitalism. (18)

Investment, Wages and Profits

Imperialist investment, particularly in the global South, represents a tiny portion of global capitalist investment. (19) Foreign direct investment makes up only 5% of total world investment – that is to say, 95% of total capitalist investment takes place within the boundaries of each industrialized country.

Of that five percent of total global investment that is foreign direct investment, nearly three-quarters flow from one industrialized country – one part of the global North – to another. Thus only 1.25% of total world investment flows from the global North to the global South. It is not surprising that the global South accounts for only 20% of global manufacturing output, mostly in labor-intensive industries such as clothing, shoes, auto parts and simple electronics.

Data for profits earned by U.S. companies overseas do not distinguish between investments in the global North and global South. For purposes of approximation, we will assume that the 25% of U.S. foreign direct investment in labor-intensive manufacturing in Africa, Asia and Latin America produces profits above those earned on the 75% of U.S. foreign direct investment in more capital-intensive production in western Europe, Canada and Japan. It is unlikely, however, that more than half of the profits earned abroad by US companies are earned in the global South.

Thus, assigning 50% of foreign profits of U.S. companies to their investments in the global South probably biases the data in favor of claims that these profits constitute a significant source of total U.S. wages. Yet even accepting such a biased estimate, the data (Table I and Graph I) for the period 1948–2003 supports Ernest Mandel’s assertion that U.S. profits from investment in the global South “constitute a negligible sum compared to the total wage bill of the American working class.” (20)

Prior to 1995 total profits earned by U.S. companies abroad exceeded 4% of total U.S. wages only once, in 1979. Foreign profits as a percentage of total U.S. wages rose above 5% only in 1997, 2000 and 2002, and rose slightly over 6% in 2003. If we hold to our estimate that half of total foreign profits are earned from investment in the global South, only 1–2% of total U.S. wages for most of the nearly 50 years prior to 1995 – and only 2–3% of total U.S. wages in the 1990s – could have come from profits earned in Africa, Asia and Latin America.

Such proportions are hardly sufficient to explain the 37% wage differentials between secretaries in advertising agencies and “labour aristocracy” machinists working on oil pipelines, or the 64% wage differentials between janitors in restaurants and bars and automobile workers. (21)

Does this analysis mean that imperialism – rooted in the export of capital (and capitalist class relations) across the globe – has no impact on profits and wages in the global North? No – but the impact is quite different from what the labour aristocracy thesis predicts.

In Capital, Volume III (22), Marx recognized that foreign investment was one of a number of “countervailing” tendencies to the decline of the rate of profit. Put simply, the export of capital from the global North to the global South, especially when invested in production processes that are more labour intensive than those found in the advanced capitalist countries, tends to raise the mass and rate of profit in the North. There is indeed some evidence that foreign profits – from investments in both the global North and global South – constitute an important counter tendency to declining profits in the United States.

Profits earned abroad by U.S. companies as a percentage of total U.S. profits (Table I and Graph I) have risen fairly steadily since 1948, rising from a low of 5.19% in 1950 to a high of 30.56% in 2000. (23) The proportion of U.S. profits earned abroad jumped sharply after the onset of the long-wave of stagnation in 1966, jumping from 6.43% in 1966 to 18.36% in 1986.

Even more indicative is the relationship between annual percentage changes in domestic and foreign U.S. profits (Table II). In a number of years (1967–1970, 1972–1974, 1978–1980, 1986–1990, 1994–1995, 1997–2001, 2003), the annual percentage change for foreign profits was higher than the annual percentage change for domestic profits. In some of these years (1967, 1969–1970, 1974, 1979–1980, 1989, 1998, 2000–2001), total profits earned in the U.S. declined while total profits earned abroad increased.

Higher profits result in more investment across the board in the industrialized countries. More investment eventually brings a growing demand for labour (within limits set by investment in newer, more capital intensive technology), falling unemployment and rising wages for all workers in the industrialized capitalist countries.

Put simply, this means that imperialist investment in the global South benefits all workers in the global North – both highly paid and poorly paid workers. Higher profits and increased investment mean not only more employment and rising wages for “aristocratic” steel, automobile, machine-making, trucking and construction workers, but also for lowly paid clerical, janitorial, garment and food processing workers. As Ernest Mandel put it, “the real ‘labour aristocracy’ is no longer constituted inside the proletariat of an imperialist country but rather by the proletariat of the imperialist countries as a whole.” (24) That “real ‘labour aristocracy’” includes poorly paid immigrant janitors and garment workers, African-American and Latino poultry workers, as well as the multi-racial workforce in auto and trucking. (25)

Clearly, these “benefits” accruing to the entire working class of the industrialized countries from imperialist investment are neither automatic nor evenly distributed. Rising profits and increased investment do not necessarily lead to higher wages for workers in the absence of effective working- class organization and struggle.

During the post-World War II long wave of expansion, the industrial unions that had arisen during the mass strike wave of 1934–37 were able to secure rising real wages both for their own members and the bulk of the unorganized working classes. However, since 1973, the labour movement in the United States and the rest of the industrial countries has been in retreat.

Real wages for U.S. workers, both union and nonunion, have fallen to about 11% below their 1973 level, despite strong growth beginning in the late 1980s. (26) Higher than average profits have accrued, first and foremost, to capital, allowing increased investment; and to the professional-managerial middle class in the form of higher salaries.

Nor are the “benefits” of increased profitability and growth due to imperialist investment distributed equally to all portions of the working class. As we will see below, the racial-national and gender structuring of the labour market result in women and workers of color being concentrated in the labor-intensive and low-wage sectors of the economy.

Whatever benefits all workers in the global North reap from imperialist investment in the global South are clearly outweighed by the deleterious effects of the expansion of capitalist production on a world scale. This is especially clear today, in the era of neoliberal “globalization.”

Although industry is clearly not “footloose and fancy free” as some theorists of globalization claim – moving from one country to another in search for the cheapest labour (27) – the removal of various legal and judicial obstacles to the free movement of capital has sharpened competition among workers internationally, to the detriment of workers in both the global North and South.

The mere threat of moving production “off-shore,” even if the vast majority of industrial investment remains within the advanced capitalist societies, is often sufficient to force cuts in wages and benefits, the dismantling of work rules and the creation of multi-tiered workforces in the United States and other industrialized countries. Neoliberalism’s deepening of the process of primitive accumulation of capital – the forcible expropriation of peasants from the land in Africa, Asia and Latin America – has created a growing global reserve army of labour competing for dwindling numbers of fulltime, secure and relatively well paid jobs across the world.

Put simply, the sharpening competition among workers internationally more than offsets the “benefits” of imperialism for workers in the global North. (28)

Annexure15: The Myth of the Labour Aristocracy Part 2 by Charles Post

First published in Against the Current, No. 124, September–October 2006

Explaining Working-Class Reformism

How do we explain the fact that most workers, most of the time, do not act on their potential power? Why do workers embrace reformist politics – support for bureaucratic unionism (reliance on the grievance procedure, routine collective bargaining) and Democratic party electoral politics – or worse, reactionary politics in the forms of racism, sexism, homophobia, nativism, militarism?

The key to understanding working-class reformism (and conservatism) is the necessarily episodic nature of working-class struggle and organization. The necessary condition for the development of class consciousness is the self-activity and self-organization of the workers themselves. The experience of mass, collective and successful struggles against capital and its state in the workplace and the community is what opens layers of workers to radical and revolutionary political ideas. (5)

The working class cannot be, as a whole, permanently active in the class struggle. The entire working class cannot consistently engage in strikes, demonstrations and other forms of political activity because this class is separated from effective possession of the means of production, and its members compelled to sell their labour power to capital in order to survive. They have to go to work!

Put simply, most workers, most of the time are engaged in the individual struggle to sell their capacity to work and secure the reproduction of themselves and their families – not the collective struggle against the employers and the state. The “actually existing” working class can only engage in mass struggles as a class in extraordinary, revolutionary or pre-revolutionary situations. Because of the structural position of wage labour under capitalism, these must be of short duration. Most often, different segments of the working class become active in the struggle against capital at different times.

In the wake of successful mass struggles, only a minority of the workers remain consistently active. Most of this workers’ vanguard – those who “even during a lull in the struggle…do[es] not abandon the front lines of the class struggle but continues the war, so to speak, ’by other means’” (6) – attempts to preserve and transmit the traditions of mass struggle in the workplace or the community. However, a sector within this active minority, together with intellectuals who have access to cultural skills from which the bulk of the working class is excluded, must take on responsibility for administering the unions or political parties created by periodic upsurges of mass activity.

This layer of fulltime officials – the bureaucracy of the labour movement – is the social foundation for “unconditional” reformist practice and ideology in the labour movement. Those workers who become officials of the unions and political parties begin to experience conditions of life very different from those who remain in the workplace.

The new officials find themselves freed from the daily humiliations of the capitalist labour process. They are no longer subject to either deskilled and alienated labour or the petty despotism of supervisors. Able to set their own hours, plan and direct their own activities, and devote the bulk of their waking hours to “fighting for the workers,” the officials seek to consolidate these privileges.

As the unions gain a place in capitalist society, the union officials strengthen their role as negotiators of the workers’ subordination to capital in the labour-process. In defence of their social position, the labour bureaucracy excludes rank and file activists in the unions and parties from any real decision-making power. (7)

The consolidation of the labour bureaucracy as a social layer, distinct from the rest of the working class under capitalism, gives rise to its distinctive political practice and world-view. The preservation of the apparatus of the mass union or party, as an end itself, becomes the main objective of the labour bureaucracy. The labour bureaucrats seek to contain working-class militancy within boundaries that do not threaten the continued existence of the institutions which are the basis of the officials’ unique life-style.

Thus what Ernest Mandel called the “dialectic of partial conquests,” the possibility that new struggles may be defeated and the mass organizations of the working class weakened, buttress the labour bureaucracy’s reliance on electoral campaigns and parliamentary pressure tactics (lobbying) to win political reforms, and on strictly regimented collective bargaining to increase wages and improve working conditions.

The labour bureaucracy’s stake in stable bargaining relationships with the employers and their credibility in the eyes of the capitalists as negotiators further reinforce their conservative ideology and practice. From the bureaucracy’s point of view, any attempt to promote the militant self-activity and organization among workers must be quashed. At this point, the bureaucracy’s organizational fetishism (giving priority to the survival of the apparatus over new advances in the struggle) produces a world-view that demands the workers’ unquestioning obedience to leaders who claim they know “what is best for the workers.”

While the unconditional ideological commitment to reformism grows organically from the privileged social position of the labour officialdom, how do we explain the conditional reformism of most workers? Why do most workers, most of the time accept reformism? Put bluntly, why is this conditional reformism the normal state of working class consciousness under capitalism?

In “normal times” – of working class quiescence and passivity – the majority of workers come to accept the “rules of the game” of capitalist competition and profitability. They seek a “fair share” of the products of capitalist accumulation, but do not feel capable of challenging capitalist power in the workplace, the streets or society. For most workers during “normal times,” mass, militant struggle seems unrealistic; they tend to embrace the labour officialdom’s substitution of liberal and reformist electoral politics, institutionalized collective bargaining and grievance handling.

However, the continued hold of reformism over the majority of workers requires that labour officials “deliver the goods” in the form of improved wages, hours and working conditions. As Bob Brenner points out:

”(G)iven even a minimum of working-class organization, reformism tends to be widely attractive in periods of prosperity precisely because in such periods the threat of limited working-class resistance – symbolized by the resolution to strike or a victory at the polls – actually can yield concessions from capital. Since filling orders and expanding production are their top priorities in the boom, capitalists will tend to find it in their interests to maintain and increase production, even if this means concessions to the workers, if the alternative is to endure a strike or other forms of social dislocation.” (8)

When capitalism enters one of its unavoidable periods of crisis and restructuring – like the one that began in the late 1960s through most of the capitalist world – the paradox of reformism becomes manifest. In a world of declining profits and sharpened competition, capitalists throughout the world went on the offensive at the workplace and at the level of the capitalist state. The restructuring of the capitalist production along the lines of lean production, and the neoliberal deregulation of capital and labour markets (9), required all-out war against workers and their organizations across the capitalist world.

At this point, reformism becomes ineffective. Workers can and have made gains against their employers in the past fifteen years – the success of the UPS strike and the “Justice for Janitors” campaigns in various cities cannot be ignored. However, these victories often required substantive rank-and-file organization and mobilization – including independent organizations, like Teamsters for a Democratic Union (TDU).

In fact, the reformist officialdom of the unions and social-democratic parties embraced realpolitik – adapting to the new “reality” of declining living and working conditions. As Mandel pointed out:

”(T)he underlying assumption of present-day social-democratic gradualism is precisely this: let the capitalists produce the goods, so that governments can redistribute them in a just way. But what if capitalist production demands more unequal, more unjust distribution of the ’fruits of growth’? What if there is no economic growth at all as a result of capitalist crisis? The gradualists can then only repeat mechanically: there is no alternative; there is no way out.” (10)

Eschewing militancy and direct action by workers and other oppressed people, the labour bureaucracy and reformist politicians in the West have no choice but to make concessions to the employers’ offensive and to administer capitalist state austerity. The spectacle of reformist bureaucrats shunning the struggle for reforms has been repeated across the capitalist world in the last three decades, with tragic results.

Again and again, the reformist bureaucrats have surrendered to the requirements of capitalist profitability. The Italian Communist party embraced austerity in the 1970s. The U.S. AFL-CIO officials have accepted concession bargaining since 1979, usually without even the pretense of struggle. Social-democratic regimes across Europe (Mitterand and Jospin in France, Blair in Britain, Schroeder in Germany) embraced neoliberal realism – cutting social services, privatizing public enterprises, and deregulating capital and labour markets.

Nor has the reformist retreat been limited to the imperialist countries. In the early 1990s, the ANC-COSATU-led government in post-apartheid South Africa has embraced what some have called the “sado-monetarism” of the IMF and World Bank. The debacle of the Lula regime in Brazil – attacking workers’ rights, opening the agricultural economy to transnational investment and systematically retreating from its promise of popular reform – fits the pattern all too well. Today, even the most moderate forms of social-democratic gradualism have become utopian, as the labour bureaucracy across the world has been unable to defend the workers’ past gains much less win significant new reforms in an era of crisis and restructuring.

Why Working-Class Conservatism?

The inability of reformism to “deliver the goods” for most working people also helps us make sense of the appeal of right-wing politics – racist, sexist, homophobic, nativist and militarist – for a segment of workers. The objective, structural position of workers under capitalism provides the basis for collective, class radicalism and individualist, sectoralist and reactionary politics.

Bob Brenner and Johanna Brenner point out, “workers are not only collective producers with a common interest in taking collective control over social production. They are also individual sellers of labour power in conflict with each other over jobs, promotions, etc.” As Kim Moody put it, capitalism “pushes together and pulls apart” the working class. As competing sellers of labour power, workers are open to the appeal of politics that pit them against other workers – especially workers in a weaker social position:

It appears possible for the stronger sections of the working class to defend their positions by organizing on the basis of already existing ties against weaker, less-organized sections. They can take advantage of their positions as Americans over and against foreigners, as whites over and against blacks, as men over and against women, as employed over and against unemployed, etc. In so doing, working people may act initially only out of what they perceive to be their most immediate self-interest. But over time they inevitably feel the pressure to make sense of these actions and they adopt ideas which can make their actions reasonable and coherent. These ideas are, of course, the ideas of the right. (12)

Bruce Nelson’s recent study of steelworkers details how relatively white workers in the steel industry struggled to defend their privileged access to better paying and relatively more skilled work after the establishment of industrial unionism. The rise of the CIO opened the possibility of classwide organization that began to reduce the racial/national segmentation of the working class.

As the CIO offensive ground to passed its peak by the late 1930s, and the industrial unions became bureaucratized during the second world war, white workers increasingly moved to defend their privileged access to employment (and with it housing, education for their children, etc.) against workers of color. In the steel industries, white workers militantly defended departmental seniority in promotion and layoffs against demands of Black and Latino workers for plant wide seniority and affirmative action in promotions in the 1960s and 1970s. (13)

As Marxists, we understand that such strategies are counter-productive in the medium to long term. Divisions among workers and reliance on different segments of the capitalist class only undermine the ability of workers to defend or improve their conditions of life under capitalism. (14) However, when reformism proves incapable of realistically defending workers’ interests – as it has since the early 1970s – workers embrace individualist and sectoralist perspectives as the only realistic strategy.

This is particularly the case in the absence of a substantial and influential militant minority in the working class that can organize collective resistance to capital independently of, and often in opposition to the reformist labour officials. (15)

Conclusion

Kim Moody has pointed out that everyday working class “common sense” is not “some consistent capitalist ideology” but instead:

”a clashing collection of old ideas handed down, others learned through daily experience, and still others generated by the capitalist media, education system, religion, etc. It is not simply the popular idea of a nation tranquilized by TV and weekends in the mall. “Common sense” is both deeper and more contradictory because it also embodies experiences that go against the grain of capitalist ideology.” (16)

Only through the experience of collective, class activity against the employers, starting at but not limited to the workplace, can workers begin to think of themselves as a class with interests in common with other workers and opposed to the capitalists. Workers who experience their collective, class power on the job are much more open to class – and anti-racist, anti-sexist, anti-militarist, anti-nativist – ways of thinking.

As Marx pointed out, it is through the workplace and union struggles that the working class “becomes fit to rule” – develops the organization and consciousness capable of confronting capital. Such organization will require a struggle not only against “backward ideas” among workers, but against the officialdom of the unions and other popular mass organizations that are committed to reformist strategies, no matter how blatantly ineffective.

Workers’ self-organization and self-activity in the workplace struggles is the starting point for creating the material and ideological conditions for an effective challenge to working class reformism and conservatism. Clearly, militant workplace struggle is not a sufficient condition for the development of radical and revolutionary consciousness among workers. Struggles in working-class communities around housing, social welfare, transport and other issues; and political struggles against racism and war are crucial elements in the political self-transformation of the working class.

Successful workplace struggles, however, are the necessary condition for the development of class consciousness. Without the experience of such struggles, workers will continue to passively accept reformist politics or, worse, embrace reactionary politics.

This does not mean that workers of color, women and other oppressed groups in the working class should “wait” to fight until white and male workers are ready to act. White and male workers, because of the temporary but real advantages they gain in the labour market – preferential access to better jobs -are not likely to initiate struggles against racism, sexism or homophobia in the workplace or anywhere else. Self-organization and self-activity of racially oppressed groups are crucial to the development of anti-racist struggles and anti-racist consciousness.

However, a mass working-class audience for anti-racist, anti-sexist and anti-militarist ideas will most likely be created in the context of mass, class struggles against capital. Today, the main audience for the idea that workers need to stand up to right-wing ideas and practices are the small layer of rank and file activists who are trying to promote solidarity, militancy and democracy in the labour movement.

Only if these activists, with the help of socialists in the labour movement, can succeed in building effective collective fight back will these ideas – the politics of class radicalism – achieve mass resonance.

Filed under: China, Europe, France, Germany, Hitler, Japan, Poland, Russia, Spain, United Kingdom UK, USA, USSR | Tagged: , , , , , , , , , , , , , , , , , | Comments Off on Part 2 of Saker’s interview with Straight-Bat on Marxism in the 21st century

Michael Hudson gives an interview to a German magazine

Posted on December 17, 2022 by uprootedpalestinians

December 16, 2022

Posted with the author’s permission

Boos German interview Dec 15 2022

Dear Prof Hudson,

Once again: Herzliche Grüße aus Berlin!

Last time we spoke for German print magazine “Four” in June. Right now I also work for MEGA Radio, a radio news station for Germany, Austria and Switzerland. We broadcast from Vienna and are located in Berlin, Bavaria and Austria.

Hereby I would like to invite you to another interview via ZOOM to record it for our radio program. It would be an update on our last interview. Maybe around 20-30 Minutes long.

See also our last talk: https://www.vierte.online/2022/06/03/ukraine-a-trojan-for-germanys-us-dependence/

I don’t know if that’s too short notice, but would you have time for such a conversation next week or the week after?

Otherwise, also at the beginning of January.

Here are my questions:

(1.) You made some predictions in our last interview for “Four” magazine which became true.

You talked about crisis for German companies in the production of fertilizer. This just hit the headlines weeks after our interview.

You also said: “What you characterize as “blocking Nord Stream 2” is really a Buy-American policy.” This now also became more than clear after the destroyed Nord Stream pipelines.

Could you comment that?

MH: U.S. foreign policy has long concentrated on control of the international oil trade. This trade is a leading contributor to the U.S. balance of payments, and its control gives U.S. diplomats the ability to impose a chokehold on other countries.

Oil is the key supplier of energy, and the rise in labor productivity and GDP for the leading economies tends to reflect the rise in energy use per worker. Oil and gas are not only for burning for energy, but are also a basic chemical input for fertilizers, and hence for agricultural productivity, as well as for much plastic and other chemical production.

So U.S. strategists recognize that cutting countries off from oil and its derivatives will stifle their industry and agriculture. The ability to impose such sanctions enables the U.S. to make countries dependent on compliance with U.S. policy so as not to be “excommunicated” from the oil trade.

U.S. diplomats have been telling Europe for many years not to rely on Russian oil and gas. The aim is twofold: to deprive Russia of its major trade surplus, and to capture the vast European market for U.S. oil producers. U.S. diplomats convinced German leaders not to approve the Nord Stream 2 pipeline, and finally used the excuse of the NATO war with Russia in Ukraine to act unilaterally to arrange the destruction of both Nord Stream 1 and 2 pipelines.

(2.) For our audience, our listeners: In your new book “The Destiny of Civilization: Finance Capitalism, Industrial Capitalism, or Socialism”

You state that the world economy is now fracturing between two parts, the United States and Europe is the dollarized part.

And this Western neoliberal unit is driving Eurasia and most of the Global South into a separate group. You just stated this in an interview from November.

The Rentier Economy is a Free Lunch

Could you explain this for our outlet?

MH: The split is not only geographic but above all reflects the conflict between Western neoliberalism and the traditional logic of industrial capitalism. The West has deindustrialized its economies by replacing industrial capitalism with finance capitalism, initially in an attempt to keep its wages down by moving abroad to employ foreign labor, and then to try and establish monopoly privileges and captive markets or arms (and now oil) and high-technology essentials, becoming rentier economies.

A century ago, industrial capitalism was expected to evolve into industrial socialism, with governments providing subsidized basic infrastructure services (such as health care, education, communication, research and development) to minimize their cost of living and doing business. That is how the United States, Germany and other countries built up their industrial power, and it also is how China and other Eurasian countries have done so more recently.

But the West’s choice to privatize and financialize its basic infrastructure, dismantling the role of government and shifting planning to Wall Street, London and other financial centers, has left it with little to offer other countries – except or the promise not to bomb them or treat them as enemies if they seek to keep their wealth in their own hands instead of transferring it to U.S. investors and corporations.

The result is that when China and other countries build up their economies in the same way that the United States did from the end of its Civil War to World War II, they are treated as enemies. It is as if U.S. diplomats see that the game is lost, and that their economy has become so debt-ridden, privatized and high-cost that it cannot compete, that it simply hopes to keep making other countries dependent tributaries for as long as it can until the game finally is over.

If the U.S. succeeds in imposing financial neoliberalism on the world, then other countries will end up with the same problems that the United States is experiencing.

(3.) Now the first terminals for LNG from the US are opened in Germany. How will this effect trade and interdependence / dependency between Germany and United States?

MH: The U.S. sanctions and destruction of Nord Stream 1 and 2 have made Europe dependent on U.S. supplies, at so high a cost of LNG gas (about six times what Americans and Asians have to pay) that Germany and other countries have lost their ability to compete in steel making, glass making, aluminum and many other sectors. This creates a vacuum which U.S. affiliates home to fill from their investments in other countries or even from the U.S. itself.

The expectation is that German and other European heavy industry, chemical and other manufacturing will have to move to the United States to obtain oil and other essentials that they are told not to buy from Russia, Iran or other alternatives. The assumption is that they can be blocked from relocating in Russia or Asia by imposing sanctions, fines and political meddling European politics by U.S. NGOs and National Endowment for Democracy satellites in, as has been the case since 1945. We can expect a new Operation Gladio to promote politicians willing to sustain this Global Fracture and the shift of European industry to the United States.

One question is whether Germany’s skilled labor will follow. That typically is what occurs in such situations. This kind of demographic shrinkage is what the Baltic states have experienced. It is a byproduct of neoliberal policies.

(4.) What is your view on the current military situation in the Russian/Ukrainian war?

MH: It looks like Russia will easily win in February or March. It probably will create a Demiliarized Zone to protect the Russian-speaking areas (probably incorporated into Russia) from the pro-NATO West in order to prevent sabotage and terrorism.

Europe will be told to continue to boycott Russia and its allies instead of seeking mutual gains by reciprocal trade and investment. The U.S. may urge Poland and other countries to “fight to the last Pole” or Lithuanian, emulating Ukraine. It will put pressure on Hungary. But most of all, it will insist that Europe spend an immense sum to re-arm, mainly with U.S. arms. This expense will crowd out social spending to help Europe cope with its spreading industrial depression or subsidies to revive its industry. So a militarized economy will become a rising overhead – while consumer and industrial debt increase, along with government debt.

As this occurs, Russia may demand that NATO roll back its borders to pre-1991 boundaries. That is the most likely flash point of conflict.

(5.) What is your view on the current financial situation in this war. The G7 and EU governments talk already about rebuilding and reconstruction of Ukraine after the war. What does this mean for Western businesses and finance capitalism?

MH: Ukraine hardly can be rebuilt. First of all, much of its population has left, and is unlikely to return, given the destruction of housing and infrastructure – and husbands.

Second, Ukraine is owned mainly by a narrow group of kleptocrats – who are trying to sell out to Western agricultural investors and other vultures. (I think you know who they are.)

Ukraine is already debt-ridden, and has become a fiefdom of the IMF (meaning in practice, of NATO). Europe will be asked to “contribute,” and the foreign reserves seized from Russia may be spent on hiring U.S. companies to make a financial killing rebuilding a pretense of an economy in Ukraine – leaving the country even more debt ridden.

A new Democratic Party secretary of state will echo Madeline Albright and say that the killing of Ukraine’s economy, children and soldiers “was all worth it” as the cost of spreading democracy U.S.-style.

(6.) I’ve read lots of background reports on the sanctions against Russia. It seems more and more the sanctions hit Russia hard, because they cannot produce all products, esp. technology, by themselves. On the other hand Russia have now more stable business and buyers with and in China, India.

What real effect do the sanctions have according to your analysis?

MH: The U.S. sanctions have turned out to be an unanticipated godsend for Russia. In agriculture, for instance, sanctions against Lithuanian and other Baltic dairy exports has led to a flowering of a domestic Russian cheese and dairy sector. Russia is now the world’s largest grain exporter, thanks to the Western sanctions that have had much the same effect as protective tariffs and import quotas of the sort that the United States used in the 1930s to modernize its agricultural sector.

If President Biden were a secret Russian agent, he hardly could have helped Russia more. Russia needed the economic isolation of protectionism, but was still too entranced by neoliberal free-trade policy to do this by itself. So the U.S. did it for it.

Sanctions oblige countries to become more self-reliant, at least in basic needs such as food and energy. This self-reliance is the best defense against U.S. economic destabilization to force regime change and similar compliance.

One effect is that Russia will need to buy much less from Europe even after the fighting in Ukraine ends. So there will be less need for Russia to export raw materials to Europe. It can work these up themselves. The industrial core that was Europe may end up more in Russia and its Asian allies than in the United States.

That is the ironic result of NATO’s new Iron Curtain.

(7.) How would you describe China, Russia and India: Do you see Industrial Capitalism or Socialism there?

MH: RIC was the original core of the BRICS, now greatly extended to include Iran and much of Central Asia and the roads involved with China’s Belt and Road initiative. The goal is for Eurasia no longer to have to rely on Europe or North America.

Secretary of Defense Donald Rumsfeld often referred to “Old Europe” as a shrinking dead zone. It failed to follow its plans a century ago to evolve into an increasingly socialized economy with government subsidy of rising living standards and labor productivity, science and industry. Europe rejected not only Marxism but the basis of Marxist analysis in the classical economics of Adam Smith, John Stuart Mill and their contemporaries. That path has been followed in Eurasia, while the right-wing anti-government liberalism of the Austrian and Chicago Schools has destroyed the NATO economies from within.

As the locus of industrial and technological leadership moves eastward, European investment and labor probably will follow.

The Eurasian countries will still visit Europe as tourists, as Americans like to visit England as a kind of theme park of post-feudal gentry, the posting of the palace guards and other quaint memories of the days of knights and dragons. European countries will look more like that of Jamaica and the Caribbean, with hotels and hospitality becoming the main growth sectors, with Frenchmen and German waiters dressed in their quaint quasi-Hollywood costumes. Museums will do a thriving business as Europe itself turns into a kind of museum of post-industrialism.

(8.) Currently we saw the collapse and bankruptcy of the crypto exchange FXT. The management of this company seems to be highly criminal. How do you judge that?

MH: Crime is what made crypto a growth sector for the past few years. Investors bought crypto because it is a vehicle for the fortunes being made in international drug dealing, the arms trade, other crime and tax evasion. These are the great post-industrial growth sectors in Western economies.

Ponzi schemes often are good investment vehicles in their take-off stage – the pump-and-dump stage. It was inevitable that criminals would not only use crypto to transfer funds, but actually set up their own currencies “free of oppressive government regulation.” Criminals are the ultimate Chicago School free market libertarians.

Anyone can create their own currency, much as U.S. wild-west banks did in the mid-19th century, printing currency at will. When one went shopping in the early 20th century, the stores still had lists of the shifting valuations of various bank notes. The best designed ones tended to be the most successful.

(9.) Do you have any knowledge about business relations between FTX and Ukraine, the government in Kyiv? There were some rumours and press articles in the alternative media about it?

MH: The IMF and Congress have paid large amounts of money to the Ukraine government and its kleptocrats in charge. Newspapers report that much of this money has been turned over to FTX – which has become the second largest funder of the Democratic Party (behind George Soros, who also is said to be trying to buy up Ukrainian assets). So a circular flow seems to be at work: U.S. Congress votes for funding for Ukraine, which puts some of this money in FTX crypto to pay or the political campaign of pro-Ukrainian politicians.

(10.) Some months ago there were articles in the US press about plans by the FED: They are planning to establish a digital Dollar, a Central Bank Digitcal Currency (CBDC). Also in Europe ECB president Madame Lagarde and the German minister for finance, Lindner, talk about an introduction of the digital Euro.

Here in Germany some critical experts are warning this will only push the total surveillance of the population and customers.

What is your take on digital currencies?

MH: It’s not my department. All banking is electronic, so what does “digital” mean? To libertarians, it means no government oversight, but in government hands, the government will have a record of everything that anyone spends.

(11.) What is your view on the current weakness or strength of the US dollar, the Euro, the British Pound, Gold and Silver?

MH: The dollar will remain in demand, thanks to its success in making the Eurozone dependent on it. The British pound has little means of support, and little reason for foreigners to invest in it. The euro is a junior satellite currency to the dollar.

Without a dollar or other currency to hold their monetary reserves in, governments will continue to increase the proportion held in gold, because it doesn’t have government liabilities attached to it – so U.S. officials can’t simply grab it, as they did with Russia’s foreign reserves. Eurozone countries cannot be trusted not to follow U.S. orders to grab foreign countries’ reserves, so it will be shunned.

As the euro’s exchange rate declines against the dollar, foreign investment will decline, because investors will not want to invest in (1) a shrinking market, and (2) companies that earn domestic euros that are worth fewer and fewer dollars or other hard currency for head offices.

Of course, gold will have to be kept at home, so that it can’t simply be grabbed, as the Bank of England grabbed Venezuela’s gold and gave it to the right-wing U.S. proxy. Germany would be wise to accelerate its airlift of its own gold supply from the U.S. Federal Reserve Bank vaults in New York City.

(12.) What is your current analysis of the energy and financial crises in the world?

MH: No real crisis as much as a slow crash. Rising prices paid for what America exports: oil, food and IT monopoly goods, with living costs for consumers rising faster than wages. So there will be a tightening squeeze or most families. The middle class will discover that it really is the wage-earning class after all, and will go deeper into debt – especially if it tries to protect itself by taking out a mortgage to buy a home.

I’ve been studying the 11th and 12th centuries for my history of debt, and I came across a story that may have relevance to the questions that you’ve asked. NATO keeps claiming that it is a defensive alliance. But Russia has no desire to invade Europe. The reason is obvious: No army can invade a major country. More important, Russia does not even have a motive to destroy Europe as a U.S.-puppet adversary. Europe already is self-destructing.

I am reminded of the battle of Manzikert in 1071, when the Byzantine Empire lost to the Seljuk Turks (largely because its general on whom the emperor had depended, Andronikos Doukas, defected, and then overthrew the Emperor. Crusade of Kings, a game supplement, covers the battle extensively, and claims the following conversation took place between Alp Arslan and Romanos:[52]

Alp Arslan: “What would you do if I were brought before you as a prisoner?”

Romanos: “Perhaps I’d kill you, or exhibit you in the streets of Constantinople.”

Alp Arslan: “My punishment is far heavier. I forgive you, and set you free.”

That is the punishment that Europe will receive from Eurasia. Its leaders have made their choice: to be a U.S. satellite.

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Assisted Suicide of Europe (MUST SEE)

Posted on August 24, 2022 by uprootedpalestinians

August 23, 2022

Filed under: EU, Europe, Mass media, Russia, Targeted killings, Uncategorized, USA, Western Propaganda | Tagged: , , , , , | Comments Off on Assisted Suicide of Europe (MUST SEE)

Finance Capitalism’s Self-Destructive Nature

Posted on July 22, 2022 by fada1

July 20, 2022

Posted with Michael Hudson’s permission

Transcript of Interview on The Left Lens with Danny Haiphong May 25th, 2022

DANNY HAIPHONG: Good afternoon, everyone. Happy Wednesday, May 25th, welcome to the stream, to another left lens. Today we have a very special guest so as you’re coming in make sure you are liking the stream sharing it, make sure that you are subscribing to the channel and hitting that notifications bell, and as always you know please do support this work here at this channel and all the work that I do at patreon.com/dannyhaiphong. But with that said I want to introduce our guests because we have a lot to talk about over the next hour and it is economist Michael Hudson.

He is the author of the new book, The Destiny of Civilization: Finance capitalism, Industrial Capitalism or Socialism and I’ll pull that up from his website very soon but I want to just say about Michael Hudson is that he’s been someone I’ve been following for quite some time. He has been making the rounds on various programs talking about political economy and he’s one of the foremost voices of understanding political economy today. Hi Michael, good to be with you thanks so much for joining us today

MICHAEL HUDSON: Good to meet you, Danny.

DANNY HAIPHONG: Very very good to meet you. So I’m going to pull up your new book in a second just on your website so people know where to go and I’ll make sure to link that in the chat so people know where to get it but I want to talk about first, so I mean we’re in an economic catastrophe in a lot of ways currently and there’s a lot of talk about, inflation and money, prices are skyrocketing, and one thing I really appreciate about your work is that you really do focus on political economy and you have been talking a lot about finance capital and something called super imperialism which you’ve written a book about and that has been updated several times even just last year so I wanted to get your take on the role of finance capital uh under this imperialist arrangement and in this time of the neo-liberal era in the united states and across much of the West in the world.

What is finance capital’s role? It seems so dominant now, it seems like the dominant class at this moment that really does control the levers of economic development. Could you talk about what role it plays and how it has spurred the crises that we’re going through today and you could talk about inflation but I definitely want to just kick it to you there so our viewers can get an understanding of the economics and an analysis of this.

MICHAEL HUDSON: Well, most people think of all kinds of capitalism as being the same and the assumption is that industrial capitalism of the nineteenth century somehow was always financialized because there were always banks but financial capitalism is you just pointed out is a political system and as a political system it’s very different from the industrial capitalism dynamic. In industrial capitalism, the whole aim or the hope of the industrial capitalists in the late nineteenth century, especially in Germany and central Europe was that banking would no longer be just usury, it wouldn’t be just consumer lending to exploit labor, and it wouldn’t be lending to the government somehow.

The financial system  would recycle the economy savings and money creation and credit into industrial production and would finance the means of production to make that productive instead of predatory and parasitic as it became and that seemed to be the way that industrial capitalism was evolving up until World War I. Everything changed after that all of a sudden you had the financial system take over as a result of the crisis caused in the 1920s by the German reparations debt that couldn’t be paid and the inter-ally debt that was insisted upon to repay the United States for the arms that have supplied Europe for a century into World War I. Well, the result was a huge depression.

The allies said, well, we didn’t expect to actually have to pay the United States. If we have to pay the United States, then we have to charge reparations on Germany and for a decade there was a debate between John Maynard Keynes and Harold Moulton and others saying that these debts can’t be paid. How are you going to handle a situation where the debts can’t be paid?

The finance capitalists then were the basically the ancestors of today’s neoliberals and they said any amount of debt can be paid by any country if it just lowers the living standards and squeezes labor enough and that’s what basically the philosophy of the IMF ever since world war II when third world countries can’t pay the debt, the IMF comes in with an austerity program and say you have to lower wages, you have to break up labor unions, if necessary you have to have a democracy, and you can’t have a democracy unless you’re willing to assassinate and arrest the labor leaders and the advocates of land redistribution because a democracy means basically rule by the financial sector  centered in the united states. And so finance capitalism ever since WWI and especially WWII and especially since 1980 is the nationalistic doctrine of American banks and the American one percent, and the American financial sector that is sort of merged into a symbiotic unit with the finance insurance and real estate.

In other words, finance capitalism instead of trying to promote overall economic growth for the 99 percent, instead of financing the industrialization of an economy with rising productivity and rising living standards, is now cannibalizing the industrial sector, cannibalizing the corporate sector. As you’re seeing in the U.S., finance capitalism is the economic doctrine of deindustrialization that has occurred in America in England and is now occurring in Europe.

Well, the problem is how do you survive if you’re not industrializing, if you’re not producing your own means of subsistence and how are you going to get this from other countries? Well, the answer is you don’t go to war with them like countries used to go to war with each other to grab their money and their land, you use finance as the new means of war so finance capitalism is the tactic of economic warfare by the United States against Europe and the global south to sort of draw all of the economic surplus of these countries in the form of debt service and the debt service is supplied by basically economic rent seeking from land rent, natural resource rent,  and just plain interest charges on economy. So, none of these are really the result of industrial profits that are made by employing labor and uh selling its products at a markup.

Finance capitalism is not based on surplus value like industrial capitalism was. In fact, it destroys industry and in this cannibalizing of industrial capital, it basically dries out the economy and makes it unable to break even or even to function and in the United States today, for instance, if you look at the balance sheets of corporate revenue much of it is spent on stock buybacks. You buy back your own stock or dividend payouts. Only eight percent of corporate earnings are spent on new capital investment research and development: factories, machinery, and means of production to employ labor.

How did General Electric (GE) go broke? Basically, Jack Welch said let’s use our income not to continue to invest in making more electronic goods and services and appliances, let’s use it to buy our own stock that’ll push up our stock and essentially, we’ll just sell off our divisions and we’ll use the money of selling off our washing machine companies and stoves and sell it off and we’ll just pay it to the stockholders. That’ll push it up and by the way his salary was based on how much he could push up the stock of GE and he was paid in the form of stock options. Well, all of this is now the normal corporate behavior in the United States and corporations are no longer led by industrial engineers as they were a few centuries ago in the nineteenth and twentieth century.

They’re led by financial engineers of the chief financial officer and the ideal of these corporations is to make money financially not by industrial investment….. so on the narrow microeconomic level finance capitalism is a way of basically selling out a company and giving the proceeds to the stockholders and the bondholders but as a political system, because it is so destructive of the economy as you’ve seen in the United States and you’ve seen in Britain through de-industrializing it, it becomes belligerent in an attempt to make other countries just as equally paralyzed by making these countries pay tribute to the U.S. and England and the financialized economies by means of financial engineering, by means of debt service, by means of selling their mineral resources, their public utilities, their land, their roads all to foreign investors–basically to who borrows the money that’s just simply created in the U.S.  and to save all of their money in their central bank reserves in the forms of loans to the U.S. treasury holding treasury bonds which is how the international monetary system worked until just a few months ago when everything changed.

So if you’re England and America right now you can look at President Biden’s speeches and he said well, China is our number one enemy because it’s competing unfairly. China is actually subsidizing industrial development by having its own infrastructure. It gives free education instead of privatizing education and making its labor pay for it. It has public health instead of privatizing social medicine like we do in the United States and making employers and workers pay for it.

Well, industrial capitalism in the nineteenth century was all in favor of strong government infrastructure. The ideal of industrial capitalism was to keep the wage costs of production down not by reducing wages but having government provide a basic infrastructure to cover the basic
needs of employees. The governments would provide free education so that employers didn’t have to pay for it. The governments would provide medical care so that employees didn’t have to pay for it and employers wouldn’t have to pay employees enough money to cover the education costs and to cover the medical care costs. The government would build roads and infrastructure and everything to facilitate the overall cost of doing business by industrial capital.

Well finance capitalism is just the reverse. Finance capitalism wants to privatize and take education, medical care, roads, turn the roads into toll roads, and take all of these and privatize them and make them financial  corporations that will essentially pay out their economic rent to the bondholders and the stockholders and this economic rent adds to the cost of education and everything else that workers need to live on so the result is to make it a high cost economy and that’s why Biden has said China and Russia are America’s enemies because the only way that America can succeed given our privatized economy, given the fact that Americans have to pay up to forty three percent of their income for rent, given the fact that eighteen percent of America’s GDP is for medical care, given the heavy student loan debt–only if other countries tie themselves in the same knot, only if other countries impose the same economic overhead on their labor force and on their industry can there be equal competition.

If other countries have a mixed economy and are more efficient because they have an active government providing basic needs, that’s “autocracy” and that’s the opposite of “democracy.” Democracy is where everything is privatized and ultimately the one percent own everything.

Autocracy is any government that’s strong enough to have its own public investment. Any government strong enough to tax or regulate the financial sector is called “autocracy” so the U.S. in the 19th century would be called an autocracy as I guess the Austrian school called it  – civilization is basically an “autocracy.”

There never has been an unmixed economy without government regulation, without a government investment, although Rome began to get to that point at the end of its empire and we all know what happened to it. So basically, finance capitalism is a predatory international economic policy aimed at draining the rest of the world all to pay the leading one percent of wealth holders in the U.S. and their satellite oligarchy in England and a few European countries.

DANNY HAIPHONG: Well, I mean that was an incredible summary with so much in there. I mean what you describe reminds me of what we have called at Black Agenda Report, this Great Race to the Bottom, like that is what finance capital facilitates because it’s you know there’s a lot of talk about outsourcing and production going from the U.S. and the West to other places, the global south, poor countries, oppressed nations, and all of it is underwritten by finance capital because it’s this international monetary system that you describe which is actually plundering the Global South for super profits and also plundering the United States and the West’s economic base for super profits.

So it’s like the super profits come rolling in from all sides and oftentimes the jingoists and the chauvinists will frame things as oh well China is taking our jobs. They rarely say Bangladesh or some other country that is actually being super exploited. So in many ways it’s framed like that to distract us from everything that you described. The fact that this class and this policy are plundering from all sides.

MICHAEL HUDSON: Well, you use the word super profit and, in a way, what is super profit? Super profit is what the classical economists called economic rent. It’s over and above profit. Profits are made by employing labor and basically that’s not how most wealth is created in today’s world. A financialized economy sees wealth is not created by making profits by investing in factories and plant and equipment and employing labor to make a profit, it’s made on getting a third world country, a global south country in debt and saying well if you can’t pay the debt yeah that we’ve given you then you have to sell off your raw materials, your land, all of your natural monopolies and the way to make money in finance capitalism is to buy up the monopolies and the whole idea of industrial capitalism was to get rid of economic rent.

The main aim was to get rid of the landlord class that was the carryover from feudalism, the warrior warlords that had conquered England and France and other countries. Land was to be brought into the public domain. That was the first item in the communist manifesto. You tax the land rent and then nationalize and socialize the land. The idea was to get rid of monopoly rent because monopoly rent is unearned income and to get rid and essentially to get rid of financial rent of interest that is just made as John Stewart Mill said and you ‘make it in the sleep’ if you’re a bond holder or a landlord. You get the rents not from playing any productive service at all but making this money in the sleep and so that has nothing to do with profits.

Unfortunately, the national income accounts don’t label economic rent as a distinct category they call any income that someone makes whether it’s a Goldman Sachs and Citibank or GE or any country and call it earnings and the theory is that everybody earns what they make but that wasn’t the idea of industrial capitalism.

The idea of industrial capitalism is from the physiocrats and Adam Smith and John Stewart Mill and Marx was that earnings were something that was actually made productively with money by employing labor to produce a surplus that would be reinvested but economic rent was unearned and that’s why natural monopolies should all be kept in the public domain instead of being available to be monopolized. So, like in America when Indiana ran into trouble it privatized and sold out the roads to be made into a toll road and now almost everybody avoids the toll roads and drives on the side roads.

When Chicago had problems paying its local debt, they sold the rights to the sidewalk and parking meters causing vast increases in the cost of living and doing business if you live in downtown Chicago where you have to park a car. So the ideal of industrial capitalism was I guess what Schumpeter called creative destruction by lowering the cost of production the way that a country would, an industrial country would win out in the world market, first England then the United States, Germany, Japan, and the way that they went out was by underselling competitors.

But finance capitalism adds as much as it can to the cost of production. It adds as much as it can to the cost of living because instead of treating education and healthcare and transportation as a public right, a natural human right, it’s all privatized by the one percent.

DANNY HAIPHONG:  Yeah, I mean it’s so true. Even in the Communist Manifesto there’s a section where Marx outlines the very idea of what socialism would look like and in it, it’s explicit how socialism will begin with the commanding heights of the economy, as you said these natural monopolies, they were going to be public owned like that’s the only way that you can have anything remotely socialist and now we’ve gotten to the point where finance capital has usurped them, has completely privatized them or is attempting to with whatever is left of the public domain, the public sector so to speak globally. And you bring up this really interesting point about the cost of everything going up, especially the cost of production.

I mean that’s just seen in how a lot of these big corporations have enormous amounts of debt now, corporate debt is at this astronomical level and you think well, look at all these super profits they’re making, look at all these huge profits they’re making. We always hear about all these corporations making these huge profits but we rarely hear about all the debt that these corporations are accumulating because of finance capital and so it’s really incredible.

I love talking about this because it’s these things that we don’t hear about because finance capital really is writing the rules and they have such undue influence over the media and over so many things. So I wanted to ask though about China so let’s just jump there because I want to ask you a question because I recently got into a debate with this, I don’t even know if I want to call a journalist but he’s a commentator, Matt Stoller. He’s very anti-China and this is a talking point especially on the far right but I would say that a lot of people think this, a lot of people think China and Wall Street are merged together, that they work together to undermine workers across the world especially in the capitalist epicenters, of the finance capitalist epicenters so to speak, U.S. and the Western countries.

Could you talk about China and its monetary system? You mentioned it briefly about why the U.S. is so hostile right now, why Biden can’t stop talking about competition and autocracy versus democracy. You talk about the differences in the monetary systems and how China treats finance because I think this is not really well understood and it has global implications. I think it has huge implications because I think there’s a general shift in a direction of how we address this flailing dollar-led economy, the global economy of imperialism and China is really at the center of this so could you speak on this if you would?

MICHAEL HUDSON: Well, what gets Americans so upset is that China’s getting rich by doing
exactly what the United States did in the 19th century. I’ve written a book America’s protectionist takeoff where I described the whole idea of American protectionism was tariff protection for its industry, government subsidized research and development, government subsidy of industry by having infrastructure as a fourth factor of production alongside land labor and capital – and it was supposed to have public banking.

So basically China, like the United States, said we want to raise the living standards of labor not because of an abstract ideal but because highly paid labor is more efficient labor, a highly paid labor is more educated, it’s better fed, it’s healthier and the Americans in the nineteenth century pointed out that America was the highest paid labor in the world but it was also the most productive and high paid labor outsold pauper labor.

Well China began under Mao with, you’d look at pictures back in the fifties, and even early sixties and you’d see masses of beggars and I’d look at the pictures and I said how on earth are they going to solve this problem? Well, they actually did it and China realized that in order to survive in the modern world you had to have uh well-paid, well-housed, well-fed, well-educated labor and they’ve done it.

The difference is that America had kept money creation in the hands of the treasury ever since the greenbacks in America’s Civil War. Basically, the government created money but in 1913, JP Morgan and the financial sector got together and they said we’ve got to get the government out of money and credit. If we can control money and credit, we can control the economy so they convinced President Wilson to have the Federal Reserve. They said we’re not even going to let a treasury official be on the Federal Reserve.

We’re going to move the Federal Reserve banks out of Washington. We’re going to have the key bank in New York where Wall Street is the ideal of a Federal Reserve to make a centrally planned economy and America is a much more centralized planned economy than China but its centralized planning is on Wall Street by the financial sector, by the leading financial corporations instead of the government.

So, where America took economic forward planning out of the hands of the government in 1913, China has kept the financial system in the hands of the government. Let’s look at how these two countries create money in a different way since the Obama depression began in 2008.

The Federal Reserve has created a tidal wave of credit, all into the stock market, in the bond market, all of this recent zero interest policy. This flood, these nine trillion dollars of federal reserve credit has only been to support banks, real estate prices, bond and stock prices, to support property prices. That’s not what they do in China, although the prosperity that China has created has increased uh housing prices and there has been private credit increasing housing prices. China has kept money creation in the hands of the government itself so that when the government creates money it can finance the creation of factories plant and equipment, dams, transportation infrastructure, public housing.

It doesn’t create money to lend to financial speculators and stockholders to increase their holdings, it creates actual tangible means of production. Now of course, if you create tangible means of production and employ labor and have high speed railroads and research laboratories,  you’re going to overtake countries that are busy closing down the factories and cutting back research and development because they want quick payouts.

So the chief public utility to be kept in the public domain, (China realizes and has realized from the beginning) is the banking system and credit creation even so there’s still private credit creation to some extent. They’ve also let some participation by American Wall Street firms such as Goldman Sachs because it’s hoped, it wants to avoid war and it hopes that it can by providing opportunities for financial profit to American companies that will somehow uh convince Wall Street to resist the Biden administration’s race hatred of China and the attempt to move towards a new war against China.

Obviously, the assumption that China made that seemed rational at the time was well the American economy is run by Wall street so if we can have Wall Street say we’re doing just fine with China, everything’s going to be okay. But Wall Street and the Federal Reserve bank and the  treasury have not even been consulted on this year’s war, NATO’s war with Russia in Ukraine at all. It’s Blinken and Biden and the neocons basically are waging a war that has sidelined finance and the result is to create the present crash in stock market prices and the parallel decline in bond prices.

So, finance capitalism is intrinsically self-destructive whereas industrial capitalism is self-expansive. Finance capitalism is self-destructive and that’s exactly what’s happening today and that’s what China wants to avoid by basically following the logic of what used to be called industrial capitalism.

By the 19th century, everybody used the word socialism and it wasn’t only the Marxists that were using the word socialism. There were Christian socialists, libertarian socialists, anarchist socialists and all different kinds of socialists. They recognized that you have to have the government sponsorship of a balanced and fair economic development. You have to prevent people from getting rich not by providing any productive service at all but just by being good rip-off artists and that’s basically what finance capitalism is: opportunity for rip-off artists to get rich uh by taking money away from the 99 percent, into their own hands.

DANNY HAIPHONG: Yeah, and that’s exactly what has happened and we’ve seen the differing results between China and the United States since that crash. China was able to sustain growth despite the worldwide economic crisis. As you said, living standards still rose. I think wages were going up something like seven to ten percent every year after the financial crisis and a lot of that was because of investment in jobs.

I’ve spoken to people in China and they say well in China if you go work for a factory, wages tend to rise and actually workers want to go there and sometimes they don’t want to leave even though China is trying to move more into the high-tech sector and the service sector. A lot of people want to stay in the factory jobs because it’s paying and it has some of these benefits and subsidies that are very alien here now.

I tell people there’s a housing allowance and they’re like what’s that? Like how could you say that? It’s China! China’s horrible! It’s like, well, you know factory workers have a housing allowance. How are you going to reproduce labor? We look at Marx and China’s very big on Marx. Look at what Marx was saying you got to reproduce the worker, you got to make sure that the worker has what they need, like that’s the bare minimum of what any economy should do but that’s what capitalism was originally supposed to do.

You reproduce the worker so you can extract the surplus. Finance capital is a great race to the bottom that workers oftentimes are not reproducing themselves. There’s a huge crisis of life expectancy and all sorts of things that didn’t used to be characteristic of capitalism. Standards used to rise as capitalism developed more advanced productive forces.

You mentioned this current crisis of the dollar and finance capital kind of being sidelined in the Ukraine crisis. I find this very interesting because finance capital is so hegemonic and it has so much influence over Washington and Europe but what you’re saying is very true because and we just see it that there’s just a catastrophe. There’s this huge inflation and there’s the crisis of the dollar like what’s happening here?

How come it seems that the further and further the United States gets into this proxy war with Russia over Ukraine, the more and more it deepens its involvement, and it’s been a long involvement, it’s not just since February, but ever since this period we’ve seen just this impending economic collapse. So, what’s happening here? Why is it that finance capital is sidelined and how do you see this going with the Ukraine crisis especially around the dollar?

MICHAEL HUDSON:  What do you mean by crisis of the dollar?

DANNY HAIPHONG: Well, it seems like what the United States is trying to impose its hegemony through its foreign sanctions, is having this blowback effect where now you have countries seeking alternatives to the dollar and the U.S. seems to be more economically vulnerable even though it’s expanding and trying to dominate. It’s this very strange contradiction that feels very unstable and it feels like the dollar is artificially inflating itself as it is also dealing with the fact that there is no end game here in Ukraine. It seems like messing with a big country like Russia and its relationship to Europe is moving us toward economic catastrophe, an economic crisis if there’s not already one underfoot.

MICHAEL HUDSON:  No that’s not what’s happening with the dollar at all. People with all of the emphasis on America’s war against Russia to try to break it away from China before going to war with China, the first thing that America wanted to do was to lock in its control over Europe because that’s the easiest way to get things is you want to take over the richest economies in the
world and lock them into the United States and that means taking over the Eurozone, England and Japan. And the dollar has been soaring against these currencies.

To put it another way, the Euro has been plunging toward one dollar per Euro. The pound sterling has been plunging to one dollar per sterling. The Japanese yen has been plunging even more so there’s a huge movement to safety into the dollar.

The Americans have successfully destroyed the basis of European industry. They’ve finally beaten Germany. They’ve left Germany without energy and GDP in any country compared to energy per worker and basically the productivity that makes goods is basically embodied energy and Europe has been getting its energy from Russia in the form of gas and oil.

Well, the United States has asked Europe to commit economic suicide basically by saying, “don’t buy Russian gas, wait three or four years, spend five billion dollars on building new ports so that you can import American liquefied natural gas at seven or eight times the price and meanwhile let your chemical industry, your car industry, your basic industries go bankrupt.  Take it on the chin for America and Europe said, “okay not Europe but the politicians that America have meddled in European politics to promote to sign on the dotted line for treaties” made that decision so even if the Europeans don’t want to commit suicide, America has its proxy politicians in its Tony Blairs, in the head of the social Democratic Party in the advocates of pollution and global warming at the head of the Green Party.

You have in England you have a Boris Yeltsin and in Japan you have leaders who are willing to continue to sacrifice Japan’s growth to serve the United States. So these countries, the investors in Europe, England, and Japan are moving their money into the United States especially because the United States is raising its interest rates through the Federal Reserve and that’s telling Japan and Europe not to do it so the Eurozone has very low rates.

People are borrowing at under one percent and moving it into the United States to make two, two and a half percent. Japan has almost interest-free money from the central bank. It’s moved its money into the U.S. so the dollar, while I won’t say it’s soaring against these currencies, other currencies in the U.S. orbit are collapsing against the dollar because they’re following U.S. advice.

So, I think when you say other countries are breaking away, you’re talking about the bulk of the world, Central Asia and Latin America and China and the key to the present New Cold War is America has to achieve its almost dictatorial dominance over Europe and Japan. It’s the client oligarchies and client dictatorships and without realizing that this is American democracy, where the leaders of the whole world follow what the United States tells them to do because the United States identifies itself as the democratic center.

So democracy no longer means a political system where voters get to determine who is in charge, democracy is the policy dictated by the United States State Department. Any country that goes its own way or develops the power potentially to go its own way such as China and Russia is called an autocracy. So, you have to realize in today’s world democracy is autocracy and autocracy is democracy.

You could say yeah, the question is of course will the world really break into two halves and it looks like it is breaking into parts and there will be the U.S. and its allies, the U.S., Europe, and Japan against a Eurasian core that will go hand in hand with Africa and Latin America and other Asian countries who are able to rely on trade and investment among themselves. And the United States by seeming to isolate Russia and China and Iran and other countries actually is isolating its own dollar from the rest of the world. So, there is an iron curtain but it’s not to keep other countries out, it’s to keep its own allies within.

DANNY HAIPHONG: Do you see this succeeding? We’ve been hearing a lot about Russia’s relationship with Europe and just how deep its energy sector is with Europe and how that relationship is a very difficult relationship to break economically. Although Europe is doing everything it can, everything you’ve described. It made me think about how throughout this crisis Europe, because of the dominance of the U.S. and just listening to whatever the U.S. said, was actually going way above and beyond what the U.S. would commit to in terms of Russia and how economically they would wage this kind of warfare. But China and Russia, with Russia’s energy and its natural resources but China I think in a broader kind of portfolio, have so much to offer to Europe, do you think that this will succeed?

Europe has been going the road of austerity for many years but this seems like such a huge step in that direction. Europe could look very much like the United States very soon. Do you see this working given how China has so much to offer it and already has a lot of countries in Europe maybe not the biggest of the clients like the UK for example but a lot of European countries have big relationships with China even the UK does despite all of the nonsense, all the New Cold War stuff. What do you think? Do you think this will work?

MICHAEL HUDSON: There’s a lot of crap that futurists tend to fall into and that’s imagining that countries are going to act in their self-interest. This is the mistake Stalin made with Hitler. He thought if Germany attacks Russia in World War II, it’s obviously going to lose. No sane country would attack Russia just as winter’s coming but Hitler attacked Russia. You’d think that if you tried to say what is a logical future.

Let’s go back to 1991 when the Soviet Union self-dissolved. The whole idea, the dream at that point according to Russia’s leaders was well, if we can have peace, we’re not going to have a war budget anymore. Europe is going to invest in us and help us rebuild a rationalized, efficient industry and we will trade with Europe and we’ll both get rich on mutual trade.

Well, this terrified the United States. It said, “oh my! We want it, we Americans want to be the beneficiaries of Russia.” We don’t want to trade with it. We want to carve it up and privatize it and take over. Basically, have Wall Street take over its oil resources, its gas resources, its nickel resources, its electric utilities. The last thing America wanted was this symbiotic mutual gain between Europe and Russia and I think that Putin and most of the leaders at that time expected that Europe would act in its self-interest and they could both end up gaining.

But that’s not what happened obviously. Europe followed American dictates and continues to because it’s, again, its leaders follow, its leaders are really just like Zelensky in Ukraine, they’re just as dependent on what the State Department dictates to them to do as Zelensky is. And there’s something evangelistic about it.

The Europeans I’ve spoken to really believe that America is the land of the future and that neoliberalism, that finance capitalism, somehow is going to be an ideal of private enterprise. They’ve bought the rat poison, they’ve eaten the rat poison, and they actually believe it and think of themselves not simply as servants of the United States following what it’s doing. As the Pakistan former Prime Minister said a few weeks ago, slaves of the United States policy, they actually are evangelistic promoters of neoliberalism and as sort of disciples, just as bishops you could say really. It’s like a religion and they treat the American-centered neoliberalism as the new religion . It’s literally a crusade against Russia and Europe and I think this has shocked Putin.

I would imagine the Chinese leadership also thinking: How can Europe be so completely unrealistic? How can its media lie so constantly about what’s really happening in Ukraine? How can Europe deify the neo-Nazis in Ukraine as freedom fighters, as heroes, as wonderful people to be supported? I think this has been such a shock to the Russian leadership that they realize finally that, well, Europe is not going to act in its self-interest.

There is not going to be any mutual gain.  Europe again and again is just going to grab any money that we have there like they’ve grabbed our whatever was in European or American banks. There’s really nothing we can do. So there’s been a fundamental reorganization with Russia and the rest of the Shanghai Cooperation Organization (SCO), meaning not only with China but with Iran, with India, with all of the other Eurasian countries. So, in that sense the United States has brought about exactly what it feared. The whole rest of the world is going its own way productively in a capital investment way, raising living standards, things that democracies are supposed to do well.

In the United States, we really don’t have democracy because the political parties are controlled by the donor class, the one percent, that’s what the Citizens United Supreme Court ruling meant. The United States is left without any means of self-support and Europe will be left without any means and self-support at some point. Europe may say, gee we made a mistake, maybe we should have tried to profit from Russia because everybody else is profiting with and getting Russian gas and nickel and China and other countries are rebuilding Russian industry and we could have had our car industry build up Russia but we don’t have a car industry anymore because it doesn’t have the gas that it needs and the raw materials and titanium it needs from Russia so now, we’ve seen other countries replace us.

And so, Europe has been rendered pretty much obsolete and even if it says we made a mistake, let’s be friends again, I don’t think Russia or other countries will trust it mainly because they can afford not to trust it.

They say, why take a risk with trusting Europe may not just continue to be America’s poodle?

Why take a risk? Why not just say, we’re doing just fine the way we are? Why not just work with each other peacefully? And all that the United States can do about this is threaten to bomb it and the way to stay away from this threat is simply to say look, you go your way, we’ll go our way and to have enough of the military between them to defend themselves against the American potential military attack despite the almost eight hundred military bases the United States has. If the United States is not getting foreign exchange from these countries anymore, the dollar with the euro and the yen and the sterling will all go way down against the Eurasian currency block and they’re going to move into a common block with their own counterpart to the IMF, their own counterpart to the World Bank, their own trade organization and the world will be split into two parts – just like the world split when the Roman empire fell apart and the east went forward, Western Europe went down. This is really the final submergence of western Europe.

DANNY HAIPHONG:  Yeah, I mean you have more activity now in the BRICS plus, right. The BRIC countries are trying to move forward and add more partners and expand their financial operations. I mean there’s so many multilateral institutions mainly led by China with Russia’s heavy involvement and in other countries that are building a kind of independent monetary system and economic development system that can as you said ‘avoid the risks’.

The Ukraine crisis is such a huge deal in part because of how geopolitics like you were saying, geopolitics plays such a big role. What the United States has done and what Europe has done during this Ukraine crisis is show countries like Russia and China that they not only cannot be trusted but it’s almost a guarantee that not only will this Ukraine situation have no quick ending right, there’s no like, we’re pulling out! The ball is rolling and they can’t catch it. They’re not going to be able to stop what they’re doing. There’s so many issues with that but they’ve even escalated the situation. You have countries like Finland and Sweden saying we’re going to join NATO. You have just so many, just all of these points that show that the United States and Europe can’t be trusted.

What are you to do other than make sure that you can keep the right, as China says, to sovereign economic development safe? And the only way you do that is by increasing that sovereign part, sovereignty, and I think Russia learned a big lesson here. I mean you mentioned those assets that were stolen. They were just stolen. It was bigger than Afghanistan which had the same situation happen to it but with Russia it was probably the biggest problem with all the economic moves that were made against Russia, the assets being stolen right out from under it. That’s a huge blow economically and it facilitated so much change.

But I wanted to and you know this is the last question because I feel like a lot of these developments are leading to a positive thing that we see countries like China and Russia increase the sovereignty of their economic development models. Can you end with talking about socialism and you know, where do you see this concept of socialism going as an economy, as
a political economy?

We know China has its model, other countries are trying their own models, but what do you think are its prospects now in this environment because China has its particular model, it seems like a lot of countries want to emulate that. You see Cuba and other countries wanting to understand how to do what China has done because it is an economic miracle in a lot of ways.

You were talking about how China was living, how people were living in China just in the sixties and seventies, it’s just a completely different situation. What do you see the prospects of it in this a very chaotic environment, the geopolitics imperialist finance capital it’s creating all this chaos, what do you think the prospects are and could you I guess enlighten our audience about socialism and your work on it?

MICHAEL HUDSON: Well socialism is really how industrial capitalism of the 19th century was
supposed to evolve. Everybody thought that it was going to evolve into a more democratic system because the first aim of industrial capitalism, what it really needed politically was to get rid of the landlord class because there’s no way that, as David Ricardo pointed out, there’s no way that England could become the workshop of the world if you let the landlord class continue to get more and more land rent and force labor to pay more and more for its food.

Today, it’s housing as well as food. There’s no way that it could be competitive so in order to get rid of the landlord class, you had to get rid of the house of lords in England and the upper house in every European country because the upper house and the senate were controlled by the hereditary landlords and so industrial capitalism backed democracy.

Already by 1848, the year that the Communist Manifesto was written, that led to revolutions all over European countries getting rid of the old aristocracy. Well, the rentiers fought back and actually it was wasn’t until World War I that the monarchies were overthrown and the aristocracies connected to the monarchies and land no longer was owned by a hereditary class. It was democratized but it was democratized on credit and that you had the banking system replay the role that the landlord class had played out before and the bankers were the new rentier class. The bankers were the new people whose interest charges and debt services and privatization of economic rents prevented economies from underselling non-rentier economies.

So, socialism was basically getting rid of the free lunch. Marx described capitalism as being revolutionary because he said what was revolutionary was getting rid of all of the unnecessary cost of production and that meant the unnecessary rentiers, the rent seekers, the coupon clippers, the financiers, and the monopolists. Everybody could agree that socialism was getting rid of this parasitic class that was not necessary for economies to grow and actually whose takings slowed the economy.

Socialism was to free economies and free markets from rent seeking, not freedom for rent seeking. After the 1890s, socialism was to get rid of a free lunch income whereas finance capitalism is all about how to get a free lunch if you’re a member of the one percent.

So in one sense, socialism is freeing economies from the legacy of feudalism which fought back in the modern world into a kind of neo-feudalism operating through financial control, not simply land ownership and monopoly ownership. And China has been able to get rid of this and at the same time avoid the central planning that gave socialism a bad name under Stalinism because China said well, let one hundred flowers bloom and we’re going to we realize that we can’t plan all sorts of innovations because there are so many possibilities of productive innovations.

We’re going to let people get rich by being creative, by being productive, by adding but we’re not going to let them get super rich. They can get pretty rich but then at a certain point they’re so rich that they’re getting rid of a monopoly we’re going to sort of cut down the high grains of wheat as they say so they’ve got a sort of consensus government where this occurs.

Other countries will have great difficulty putting this in place because there really isn’t any economic doctrine of socialism that’s been developed recently. There’s been just an out of hand rejection of all discussion of what socialism really was and what makes a socialist economy more efficient than a finance capitalist economy and that really is the key.

If countries, if economic theory, would talk about what makes a socialist country more efficient- lower cost with higher living standards-then it wouldn’t be economics anymore because economics are what gets published in the University of Chicago economic journals. I don’t know what you should call it, futurism or reality economics. There has to be a new discipline that our countries are going to develop to try to explain how to think about developing a world that doesn’t have parasites in it.

DANNY HAIPHONG: Right, so true. I mean what you were saying about all this, it just gets you thinking about what China has done to be able to control these forces. You see it in the tech sector especially, now you see it with this common prosperity drive. Like there is a drive to control these forces that can, as industrial capitalism found out of the old in America and Europe, you let those forces get out of control and then finance capital turns around and takes everything. And China has prevented that and you don’t hear it, even in like the Bernie Sanders social democracy milieu, you don’t hear them talk about this.

They’ll say like socialism is when you have Medicare for All but it’s not just that, it’s how as you were saying, what are the forces that need to be arrested? What are the forces that need to be strengthened to be able to ensure that the public good and public wealth is protected? That’s not in the discussion. It’s still not in the discussion.

I mean, it’s not on discussion even among the most so-called progressives. But they don’t talk about it like that because as you said earlier, it’s like autocracy or authoritarianism or something when a government is strong in the interests of economic development for people. It’s almost like finance capital has dominated even just the idea of it and the idea of what socialism is and what it could be.

But Michael, do you have like five to ten more minutes for a couple of questions? We had some in the audience and I think one of them is very good and I wanted to know your take on it.
Thank you for the super chat. So, they said that the People’s Republic of China has three trillion in USD foreign exchange reserves. What measures, I know that you’ve done a lot of work in China and you’ve done a lot of work around this. This person’s asking, what measures should the central government take to ensure they don’t get seized just like how the U.S. seized Russia’s foreign exchange reserves but I’ll let you answer that because I think that’s a great question.

MICHAEL HUDSON: Well, I bet this is just what they’re discussing right now in China. Because of COVID, I haven’t gone there since 2019 because I’d have to be isolated in a hotel room for two weeks so I’m not party to their discussion but they’re obviously worried that the Americans can do to them what they did to Russia. What are they going to do?

They need to keep some dollars just to intervene in the foreign exchange market to stabilize their exchange rate but they don’t need too many dollars and in fact in the third edition of my book Super Imperialism, which is coming out in Chinese now, the first edition sold about sixty thousand copies there and it is the first book of mine translated in China. So that was all about this question that you asked. This is very much in discussion now.

How do they run down their dollar holdings and what are they going to replace it with? Well, in principle they can replace it with holding each other’s currencies: Rubles, Indian currency and Pakistan currency and with gold because gold doesn’t have a liability attached to it. It’s a pure asset.

The world, the whole world is now de-dollarizing. America has, or Biden has, killed the dollar standard. This was America’s free lunch, being able to print dollars and never have to pay them back and now countries are all going to be dumping the dollars. They realize that America is just a gangster state financially and obviously they’re going to dump the dollars and this probably will push up China’s exchange rate and countries selling the dollars will increase their exchange rate against the dollar and that will hurt their relative exports. So, I think they’re trying to figure out how we can all do this together and keep a rough parity among our own currencies while really de-dollarizing. I don’t know what they’re doing but you can be sure this is what is on the forefront of everybody’s mind there.

DANNY HAIPHONG: Indeed indeed. It’s a huge question. I mean it really is trying to unravel and get oneself out of this hegemonic system, the dollar system. It’s something that you cannot escape and there’s been so much unfair, I feel like unfair condemnation and criticism of China and other countries trying to go their own path, for just their participation, it’s something you need to participate in right now to survive absent of another system.

Last question and I mean this isn’t so related to what we’re talking about but it is I think a good super chat question and I think it gets into economics too. What are the chances that China will simply not open back up for the next ten years or so looking at this long term because of COVID-19. I don’t know what you think Michael. My opinion of that from what I’ve learned about China there is a huge domestic tourism industry and foreign tourism is very important but I don’t know for me it feels like it’s going to open up before that. It seems like the economic situation that COVID-19 restrictions are difficult to continue on permanently but what do you think? Do you think that China could maintain these kinds of hard travel restrictions for a long period? I hope not. I want to go back; I need to go back and learn more but what do you think?

MICHAEL HUDSON:  Well, I asked that very question of the universities that I’m associated with yesterday. We had a long discussion and the answer is nobody has a clue. They’ve been criticized in the West for avoiding COVID-19 but there’s no discussion in America or Europe of
long COVID and now that there’s a report that a million Americans have long COVID and it really seems awful, your IQ goes down by ten percent and it’s almost like inheriting a trust fund. You’re stupefied. As a result of that they’re also tired. Some professors I know there say that they still have not fully recovered from COVID months and months ago. They still had very low energy. There’s no way of knowing. This doesn’t look good and if the thought of staying in you know traveling all the way over there, staying in an isolated hotel for two weeks just to have a few days of meetings and then come back and be isolated again, nobody has a clue but it doesn’t look good.

DANNY HAIPHONG: No, it doesn’t and I myself, I’ve avoided COVID unironically like the plague like I am so lucky not to have caught it and part of it is U don’t want, exactly what you’re saying, long COVID. I don’t want that. I don’t want that in my life and I feel like you know I know so many people who have gotten COVID-19 and they lived through it and while they had it, it was awful. It was bad but they lived but now they have all of these other symptoms like I know people who had their whole lives kind of turned upside down because they just can’t get the energy back or the motivation or whatever it is.

It has an effect on your breathing and mental health and there’s so many aspects of long COVID that are difficult to understand and I think China you know at one point it was like a twenty one day quarantine. I know people who are traveling there and who go there often and they were staying twenty-one days you know in a quarantine hotel. I mean you know China has done such a great job containing and addressing COVID as best that they can under these circumstances. And so well of course I have my own deep desires to go back, but I totally understand why the government and why the people there who support this policy would be very careful because you have in China a population so huge. If they did what the United States did, I think the recent estimates are like one point seven million would die and then how many would have long COVID? Millions upon millions more because the case numbers would be astronomical through the roof.

MICHAEL HUDSON I am sure they’re watching what happens in North Korea which is just experiencing its first outbreak. I mean that’s sort of an example. The difference of course is that China is inoculating people and there are also pills the Chinese have sent me and many kinds of medicine in case I get COVID.

DANNY HAIPHONG: That’s great. Amazing, so before we depart Michael, I’ll stay on for another fifteen minutes or so but I definitely want you to plug whatever you’d like to plug now I will pull up the book again and your website. So, if there’s anything you’d like to plug please everyone, keep liking the stream, keep sharing and subscribing to the channel all that good stuff supporting the work at patreon.com/dannyhaiphong but Michael is there anything you would like to plug?

MICHAEL HUDSON: All of my articles are on my website michael-hudson.com and I’m also on patreon and they can join on patreon and I have an ongoing discussion there so the website, patreon are my favorite sites where I publish, and Naked Capitalism, the Saker, Counterpunch, my articles are usually on a lot of these different websites and you’re showing it now so yeah and the books are available on Amazon or Xlibris and you can all buy them and they’re well printed and priced not very expensively.

DANNY HAIPHONG: Great conversation Michael. Thanks so much for coming. We will have to talk again as things continue to develop so thanks so much.

MICHAEL HUDSON. It’s good to be here Danny. Thanks for having me.

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هكذا غيّر بوتين ونصرالله قانون الحرب

Posted on June 20, 2022 by uprootedpalestinians

 الإثنين 20 حزيران 2022

ناصر قنديل

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منذ العام 2000 والعالم يعيش إيقاع صعود حركتين، حركة يقودها الرئيس فلاديمير بوتين في روسيا، وحركة يقودها السيد حسن نصرالله في لبنان، وقد اعتمدت كل منهما منهجاً خاصاً ومختلفاً وجديداً في صناعة التوازن، وصولاً لتحقيق التفوق الاستراتيجي، ما أتاح لهما التربع على عرش القوة، وتغيير قانون الحرب.

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انطلق بوتين من روابط الدين والقومية التي تجمع مواطنيه على استعادة أمجاد تاريخ العظمة التي أصيبت في الصميم مع انهيار الاتحاد السوفياتي، ما أعقبه من إذلال ومهانة للروس بصفتهم ينتمون للدولة الروسيّة لا غير، واستثمر بوتين على هذه النهضة ليبني معادلة القوة على توظيف الأصول الثابتة للأمة الروسية، بوجه معادلات العالم الافتراضي التي تصنع قوة الغرب. فاستند إلى الطاقة البشرية لبناء جيش مقاتل يستعدّ ضباطه وجنوده للموت والتضحية، مقابل شركات متخصصة للخدمات العسكرية والأمنية واللوجستية وشركات تجنيد المرتزقة والجامعات الإرهابية الرديفة القابلة للتوظيف مثل تنظيمات داعش والقاعدة وفرق النازيين الجدد، تحل مكان الجيش الوطني بمفهومه المتوارث من الحربين العالميتين، ووظف بوتين موارد روسيا من الأصول الثابتة في المعادن والخامات والقمح والحبوب والنفط والغاز، لتكوين اقتصاد يخدم بناء فائض القوة الذي تستدعيه الحروب، مقال اقتصاد المصارف والأسهم والبورصة الذي يستند إليه الغرب ويسيطر عبره على العالم.

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بالتوازي انطلق السيد نصرالله، من منسوب الكرامة الذي حملته ومثلته المقاومة وعزّزه انتصارها الأول في تحرير الشريط الحدودي المحتل عام 2000، وانتصاره بالصمود والثبات والقدرة على منع جيش الاحتلال من دخول الأرض اللبنانية وتحقيق أهدافه بتدمير المقاومة عام 2006، ومعادلات الردع التي أنتجتها الانتصارات، لتشكيل نواة جيش صغير لا ينام وهو يتجهّز ويستعدّ بكل ما تحتاجه منازلة حاسمة مع الكيان الذي يمثل صفوة ونخبة وطليعة جيوش الغرب المقاتلة، راسماً معادلات التسليح والتمكين التقني بمعايير حرب حديثة تستند الى مشاة البر والصواريخ الدقيقة والطائرات المسيّرة، مقابل جيش يملك مئات الطائرات وآلاف الدبابات وقوة نار هائلة ونصف مليون جندي، ويصنف من أقوى جيوش العالم، وقد سبق وخاض حرباً شاملة على جيوش خمس دول عربية مجتمعة على ثلاث جبهات وانتصر فيها بصورة ساحقة خلال ستة أيام، وقد جاءت وقائع الحرب في أوكرانيا تقول إن الحرب الجديدة باتت حرب مشاة البر والصواريخ والدقيقة والطائرات المسيّرة، بعدما كانت كل الحروب التي سبقت منذ الحرب العالمية الأولى حرب الطائرات والدبابات.

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جاءت حرب أوكرانيا لتضع وجهاً لوجه قانون الحرب الأميركية مقابل قانون الحرب الروسية، وفي مقابل عجز جيوش الغرب عن تحمل نزف الدماء قياساً بالجيش الروسي، بفعل تباين التكوين والبنية والأهداف، ولتجنب حرب نووية مدمّرة وغير مضمونة النتائج، مع الفوارق التي راكمها بوتين لصالح التفوق الروسي، بينما اعتمد بوتين على ضباطه وجنوده وتضحياتهم وثباتهم ومن خلفهم شعبهم، واعتمد الغرب وعلى رأسه الأميركيون، على الجيش الأوكراني، ومنظمات القومية المتطرفة والنازية الجديدة، وشركات تجنيد المرتزقة، وشركات الحروب الرديفة والاستخبارية، وقدموا أسلحة وذخائر بمليارات الدولارات لتأمين أعلى نسبة توازن ممكنة في الميدان، حتى يتسنى ربح الحرب في ميدان آخر، حملته حزمات العقوبات القاتلة الأميركية والغربية، التي تستند بصورة محورية على فعالية أنابيب المال الافتراضية والى جانبها أنابيب الاعلام والمعلومات الافتراضية ايضاً، لإسقاط روسيا بالضربة القاضية؛ وبالمقابل حافظ بوتين على برودة إدارته للحرب في الميدان المباشر لضمان تقدم ثابت وتدمير منهجي لمصادر القوة المقابلة، وكان محسوماً ان يأتي التفوق لصالح روسيا في ميدان الحرب التقليدية للجيوش بفعل فوارق القدرة البشرية والتسليحية الهائلة لصالح روسيا، ولذلك وضع بوتين مطمئناً ثقله في ميادين الحرب الموازية، والرئيسية، حرب صمود الاقتصاد الروسي، وحرب بدء إنهاك اقتصادات الغرب، ومع مئة يوم من بدء الحرب ظهر أن أنابيب الغاز والموارد الطبيعية أقوى من أنابيب المال المصارف، وان الأصول الثابتة تنتصر على الاقتصاد الافتراضي، وتكرّست معادلة قانون حرب جديد، حيث قوة الأنابيب الافتراضية تكمن في تدفقها، بينما قوة أنابيب الأصول الثانية تظهر عند توقفها، وعندما تتوقف الأنابيب، يربح من يملك أنابيب الأصول الثابتة ويفقد صاحب الأنابيب الافتراضية قدرة التأثير.

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في احتفال حزب الله بأربعين ربيعاً على التأسيس وانطلاق المقاومة، يحضر كشف حساب التوازن في معادلة المواجهة بين فائض القوة المادي الناتج عن مراكمة المال والسلاح والقوة النارية، مقابل فائض قوة آتٍ من التأسيس على قيمة مضافة تمثلها القضية والفكرة والمعنويات والروح، ويثبت أن فائض القوة الناتج عن قيمة مضافة قابل بصورة متكررة للتحوّل إلى قيمة مضافة جديدة وفائض قوة جديد في عملية مستدامة لا تتوقف، والحفاظ على التفوّق الأخلاقي، يتيح تكرار العملية وتصاعدها، بينما فائض القوة الصافي قابل للتآكل، فيتحوّل إلى مجرد أكوام من الحديد والمعادن، أقرب إلى الخردة، يديرها روبوتات بلا روح، وحيث تهزم الروح تحسم الحرب لصاحب الروح المتوثبة بوجه الروح الخامدة، وتتكرس معادلة انتصار فائض القوة الآتي من قيمة مضافة لقدرته على العودة الى الأصل مجدداً كقيمة مضافة، بينما يبقى فائض القوة الجاف مجرد أرقام في جداول الحساب، تفقد قيمتها عند اختبار الميدان.

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معادلتا الأصول الثابتة والقوة الافتراضية، وفائض القوة والقيمة المضافة من جهة موازية، معادلتان جديدتان نظرياً في علم الحرب، تؤكدان نظرية الاستقطاب التفاعليّ لكتابة التاريخ، حيث الحروب ليست مجرد تقابل بين الجيوش عدداً وعدة، وبين الدول مالاً ومقدرات.

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Economic Rent and Exploitation: Michael Hudson, Shepheard Walwyn

Posted on June 19, 2022 by uprootedpalestinians

June 18, 2022

Michael Hudson, Shepheard Walwyn recording May 23, 2022
Part one:  https://www.youtube.com/watch?v=XDo7HykYN9k

Part two here:  https://www.youtube.com/watch?v=I-xWgLertkg

Jonathan Brown
Michael, welcome to the podcast.

Michael Hudson
It’s good to be here. I’m looking forward to it.

Jonathan Brown
Michael, I think you have one the most extraordinary upbringings and journeys into economics. And I just wanted to give our listeners just some sense of how you got from being the godson of Leon Trotsky all the way to what I consider to be probably the most important economist in the world today.

Michael Hudson 00:23
There’s no direct causality there that could have been anticipated. I never studied economics in college, because I went to school at the University of Chicago. We know that there were some students at the university who were at that business school. They were such strange people that we never even thought of going near them, because there was something otherworldly about them, something abstract.

My degree was in German language and history of culture, because the head of the History of Culture Department was Matthijs Jolles, a German professor and translator of von Clausewitz, On War. And in at the time, my intention was to become a musician. And I had to learn German in order to read the works of Heinrich Schenker. In music theory, my teachers were German. And for the History of Culture, most of the books that I was reading were, were all in German. And the German professors were also heads of the Comparative Literature Department and other departments. That meant that I could take all the courses cafeteria style at the university that I wanted.

I had to go to work when I graduated. I went to work for a while for direct mail advertising for the American Technical Society, a publisher a block away from the university, and then went to work for Free Press that was headed by Jerry Kaplan, a Trotskyist follower of Max Shachtman. And he wanted to send me to New York to help set up Free Press there.

Soon after I came to New York, Trotsky’s widow died. And Max Shachtman was the executor of her estate. He thought I should go into publishing by myself. And I had already had the copyrights for George Lukacs, the Hungarian Marxist and I thought tried to get funding for a publishing company with Trotsky’s works and other works. I’ve been writing a history of music and art theory. And needless to say, I didn’t get any funding because nobody was at all interested in publishing the works of Trotsky. I even tried to get Dwight Eisenhower the write the introduction to his military papers, wouldn’t work.

I was urged to meet Terence McCarthy, the father of a girlfriend of one of my schoolmates, Gavin MacFadyen. He was the first English-language translator of the first history of economic thought that was written: Karl Marx’s Theories of Surplus Value (Mehrwert), reviewing the value theory of classical economics. Terence said that he would help guide me in economic thinking if I’d get a PhD in economics and go to work on Wall Street to see how the world works. But I had to read all of the bibliography in Marx’s Theories of Surplus Value. So I had to begin buying the books, and ended up working as a sideline with one of the reprinters, Augustus Kelly, who was reprinting many of the classical economists. He was a socialist. There were other dealers in New York: Samuel Ambaras, Sydney Millman. I began buying all of the 19th-century classical economic books that I could, sinse that was the only way that I could get copies.

I took graduate classes in the evening while working at a bank for three years, the Savings Banks Trust Company. It was a commercial bank, but was acting as a central bank for the savings banks that in America finance mortgages. All their savings are reinvested in mortgages. So for three years my job was to track the real estate market, the mortgage market, interest rates, the funding of mortgages, the growth of assets by the savings banks, all growing at compound interest. All the growth in savings in the New York savings banks in the early 1960s was simply the accrual of dividends. So you’d have a step function at dividend time every quarter, going up exponentially. There was hardly any new savings inflow. It’s as if you’ve just left a given amount of savings in 1945, and let the amount rise exponentially. All this increase in savings was recycled into the real estate market.

The New York banks wanted to extend their market so they couldn’t just keep bidding up New York housing prices. They won the right to lend out of state, especially the Florida. So my job was basically seeing that real estate prices were whatever a bank would lend. At that time, banks would not lend you a mortgage if the debt service exceeded 25% of your income. And you had to put up usually 30% of the purchase price as a down payment, but possibly 10%. So housing was affordable. You could buy a really nice house for you know, $20 or $30,000. Now, it costs $400,000 to buy just a one room apartment in a condominium.

I bought a house for $1 down – it was $45,000 total. I took out a mortgage from Chase for half the price, and the other half was a purchase-money mortgage. So it was easy. Anybody coul get a house in New York at that time. Housing was readily affordable.

After I finished my PhD courses, I changed jobs. My real interest at the time was international finance and the balance of payments. So I went to work at Chase Manhattan as their balance of payments economist. This was at a time when the balance of payments and even balance-sheet analysis was not taught in schools. It was very specialised. I realised that what I was taught, especially in monetary theory, had nothing at all to do with what I was learning in practice.

In monetary theory, for instance, that was the era of Milton Friedman in the 60s and 70s. He thought that when you create more money, it increases consumer prices. Well, I thought that obviously was not how things worked. When banks create money, they don’t lend for people for spending. About 80% of bank loans in America, as in England, are mortgage loans. They lend against property already in place. They also lend for corporate mergers and acquisitions, and by the 1980s for corporate takeovers.

The effect of this lending is to increase asset prices, not consumer prices. You could say that money creation actually lowers consumer prices, because 80% is to increase housing prices. Banks seek to increase their loan market by lending more and more against every kind of real estate, whether it’s residential or commercial property. They keep increasing the proportion of debt to overall real estate price. So by 2008 you could buy property with no money down at all, and take 100% mortgage, sometimes even 102 or 103% so that you would have enough money to pay the closing fees. The government did not limit the amount of money that a bank could lend against income. The proportion of income devoted to mortgage service that was federally guaranteed increased to 43%. Well, that’s a lot more than 25%. That’s 18% of personal income more in 2008 than in the 1960s – simply to pay mortgage interest in order to get a house. So I realised that this was deflationary. The more money you have to spend on mortgage interest to buy a house as land and real estate is financialized, the less you have left to spend on goods and services. This was one of the big problems that was slowing the economy down.

Well, it was obvious to me that rent was being paid out as interest. Rent is for paying interest. If I talked with various developers about buying buildings, they said, “Well, we try to buy our buildings without any money at all. The banks will lend us the money to buy a building, and they calculate how much is your rental income going to be? That rental income will carry how much of a bank loan at a given interest charge, and lend the money to buy it.” That is how real estate rent was financialized.

Democratization of real estate on credit means turns rental income into interest, not taxes
This meant that the role that had been played in the 19th century by landlords is now played by banks. In the 19th century, the problem was absentee landlords, the heirs of the warlords who conquered England or other European countries in the Middle Ages. You had hereditary rent. Well, now our rent has been democratised. But it’s been democratised on credit, because obviously, the only way that a wage earner can afford to buy is is on credit. For an investor you can buy whole buildings on credit.

Finance has transformed real estate into a financial vehicle. So that that’s what rent is for paying interest means. There’s a symbiotic sector, Finance, Insurance and Real Estate – the FIRE sector. It’s the key to today’s financialised economy. Most real estate tax in America is at the local level, because after the income tax was introduced, commercial real estate was made tax exempt by the pretence that buildings depreciate in value, as if they don’t in fact rise in price. The pretence is that they wear out, even though landlords normally pay about 10% of the rental income for repairs and upgrades to keep the building from wearing out.

Today in New York, and I’m sure in London too, the older a building is, the better it’s built. Real-estate developers have crapified building codes so that the newer the building, the more shoddily it’s built. They call shoddy buildings “luxury” real estate, meaning is built with really not very thick walls. I think the junkiest building in New York is Trump Tower, which is sort of the model of shadiness which they call luxury. It’s very high-priced.

The academic economics curriculum finds unproductive credit to embarrassing to acknowledge
While I saw the importance of finance and real estate, none of that was discussed in the university’s economics courses at all. The pretense is that money is created by banks lending to investors who build factories and employ labour to produce more. All credit is assumed to be productive, and taken on to finance productive investment in the form of tangible capital formation. Well, that that was the hope in the 19th century, and actually was the reality in Germany and in Central Europe, where you had banking becoming industrialised. But after World War I, you had a snap back to the Anglo-Dutch-American kind of banking, which was really just the Merchant banking. It was bank lending against assets already in place.

Classical economics as a reform program to free economies from economic rent and rentier income

I realised that the statistics that I worked on showed the opposite of what I was taught. I had to go through the motions of the PhD orals. and avoided conflict by writing my dissertation on the history of economic thought, because anything that I would have written about the modern economy would have driven the professors nutty. Needless to say, none of the academic professors I had ever actually worked in the real world. It was all very theoretical. So that basically how I came to realise that the 19th century fight for 100 years – we can call it the long 19th century, from the French Revolution, up to World War I, and from the French Physiocrats, to Adam Smith, Ricardo and Malthus, John Stuart Mill, Marx, Simon Patton and Thorstein Veblen – was the value and price theory of classical economics to quantify economic rent as unearned income.

The purpose of value and price theory was to define the excess of market price over actual cost value. The difference was economic rent. The essence of classical economics was a reform campaign – that of industrial capitalism. It was a radical campaign, because the basic cost-cutting dynamic of industrial capitalism was radical. It realised that in order to make Britain, France or Germany, or any country competitive with others, you had to get rid of the landlord class and its demands for economic rent. You also had to get rid of monopolies and their economic rent. You had to get rid of all payments of income that were not necessary for production to take place. The aim was to bring prices in line with the actual cost value of production, to free economies from this rake-off to unproductive investment, unproductive labour and economic rent – land rent, monopoly rent and financial interest charges. Those were the three basic categories of rent on which classical political economy focused.

To translate classical rent theory into practice, you needed a political reform, You had to get rid of the landlord class’s political power to block reform. It wasn’t enough simply to say that economic rent was not a necessary cost of production, not part of real value. The landlord class would simply say, “Well, what are you going to do about it?”

The proponents of industrial capitalism saw that the constitution of England, France and America required giving governments the power to pass laws to free economies from economic rent. in order to do that, they needed democratic reform of the political system. In England they needed to empower the House of Commons over the House of Lords. That effort led to a constitutional crisis in 1909 and 1910, when the House of Commons, Parliament, passed a land tax. That was rejected, as I’m sure you know, by the House of Lords. The crisis was resolved by saying the Lords could never again reject a Revenue Act passed by the House of Commons. That political reform was part and parcel with classi9cal economic theory defining rent as an unnecessary cost of production.

But where did this leave the interests of labor – the majority of the population? As a broad social reform, classical economics began to falter by 1848. You had revolutions in almost every European country. These revolutions were not fully democratic in the sense of they weren’t really for wage labour, which was the bulk of society. They were bourgeois revolutions, including land reform. They were all for getting rid of the landed aristocracy and the special privileges that the aristocracy held. But they were not very interested in helping consumers, and labour’s working conditions, shortening the workweek, shortening the workday and promoting safety. There was nothing really about public health, or public social infrastructure spending. So things began to falter by 1848.

But they still made progress through the balance of the 19th century. By the time World War I broke out in 1914, it looked like the world was moving towards socialism. Almost everybody in the 19th century, across the political spectrum, whatever you were advocating was called socialism.

Socialism and strong government as the program of post-rentier industrial capitalism
At the broadest level, socialism meant collecting economic rent and getting rid of the landlords and the aristocracy, either by taxing away rent or nationalizing land and natural monopolies, in hope that that by itself would create a viable industrial economy. you had libertarian socialism, Marxist socialism, anarchist socialism, industrial socialism and Christian socialism. Almost every reformer wanted that as a label. The question is, what kind of socialism were are you going to have?

That was what the aftermath of World War I was fought about. The fight was largely shaped by the Russian Revolution, which unfortunately went tragically wrong under Stalin and gave socialism and communism a bad name. But it still had a good name in England after World War II. And also in America in the 1930s, as a result of Franklin Roosevelt’s New Deal that saved capitalism by investing in public infrastructure.

I can give you an example of where pro-capitalist theory was in the 1890s. In the United States. The industrial interests in America faced a problem once the Civil War ended in 1865. They wanted to create an industrial society – ideally, a fair society with rising living standards. How do you do that without training people to administer such an economy? You need to train people in a university. You have to teach them how economies worked. But the main universities in America were religious colleges, founded to train the clergy. Yale, Harvard, Princeton and most taught British free-trade theory, which trivialized economic theory.

So the business interests and the government saw the need to teach reality-based economics. They saw that there was little hope in trying to reform the existing universities. Their economics departments – called moral philosophy – were unreformable. So it was necessary to create new universities. All through America, each state was given a land grant to enable it to create a new university and teach reality economics. They also would teach economic history and how the world actually works. Most of all, they would teach protectionist trade theory and how to create a society and economy that is more efficient than other economies?

Well, the first business school in America was the Wharton School at the University of Pennsylvania. Its first economics professor was Simon Patton, a protectionist. And he explained that if you’re going to make industrial products at prices that outcompete those of England, you need public infrastructure spending. You need as much of the cost of living as possible to not to be paid by the employers to factor into the price of their products, but to be paid by the government.

Patten cited public roads and canals to lower the cost of doing business. He also noted that every time you build a road or railroad, you’re going to raise the land value along these routes – and lower land prices for areas replaced by the now-more-accessible producers. You can simply self-finance the cost of these by taxing the rent.

You also need public education, and that should be free so that you don’t have like today, to earn enough money to pay an enormous student debt – and receive a high salary to afford to pay that. If the government would provide free education, you wouldn’t have to pay workers enough to pay this student debt, so they wouldn’t need such high wages simply to break even.
Today 18% of America’s national income is from medical insurance. If you have a public health system and socialized medicine, as England had after World War II and as Bernie Sanders advocates today, then you wouldn’t have to pay workers a high enough salary to afford this enormous medical expense. England realised this already in the 1870s and ‘80s, when Benjamin Disraeli campaigned as a conservative for health.

So the movement towards public infrastructure towards government spending was led by the industrialists. It was they themselves who wanted strong government. The common denominator of politics from Adam Smith through all of the 19th century was to free economies from the unnecessary economic rent, to free them from unearned income, from the free lunch. To do that, you have to have a government strong enough to take on the vested interests – first the landlord class in the House of Lords, and then the financial class behind it.

Jonathan Brown 26:00
Well, just to clarify that, Michael, I think what you’re, what you’re saying is, I know in some of your writing you talk about the view of government or the public sector was it was a fourth means of production. So you got land, labour, capital and the public sector.

Michael Hudson 26:16
That was the term that Simon Patten used. Government infrastructure is a fourth means of production. But what makes it different from profits and wages is that if you’re a wage earner, you want to make as high a wage as possible. If you’re a capitalist, you want to make as high a profit as possible. But the job of public investment is not to make an income, not to do what was done under Thatcher and Tony Blair, not to treat public utilities, education and health as profit making opportunities. Instead, Patten said, you should measure their productivity by how much they lower the cost of doing business and the cost of living for the economy at large.

Jonathan Brown 27:03
And what that allows a country to do, so if you’re good at it, is to get together and ask how to educate our people, lower the cost of transportation so we’ve got we’ve got a mobile workforce, all those things. We can then start to compete against other nations who are ahead of us, who may have more expensive means of production, and we can maintain that advantage. We’re not stuck in a lower level of the economy where we’re basically working for someone else. We’re able to develop ourselves as a nation. And I guess the benefit of us doing it collectively is that we can minimise the cost, then use a natural monopoly power in government hands to provide efficient services across the board. Is that right?

Michael Hudson 27:46
Yes, but they went further. Protectionists in America said the way to minimise costs – and it may seem an oxymoron to you – the way you minimise costs is to have high-wage labour. You raise the wages of labour, or more specifically, you want to raise the living standards, because highly paid labour, highly educated labour, well fed labour, well rested labour is more productive than pauper labour. So they said explicitly, America’s going to be a high wage economy. We’re not like Europe. Our higher wages are going to provide high enough living standards to provide high labour productivity. And our higher labour productivity, shorter working day, better working conditions, healthy working conditions, public health, well educated labor will undersell that of countries that don’t have an active public sector.

Jonathan Brown 28:45
and Henry Ford being the poster boy for that approach, of doubling his employees’ salaries and so on.

Michael Hudson 28:53
Yes.

Jonathan Brown 28:54
Amazing.

<h4>The fight against classical economics and its concept of rent as unearned income</h4>
Michael Hudson 28:55
Needless to say, the fight for the kind of democracy that will free economies from economic rent was not easy. By the late 1880s, and especially the 1890s, you had the rentiers fighting back. In America the fight was led by John Bates Clark. There was a movement, which today is called neoliberalism, to deny the entire thrust of classical economics. Clarke said that there is no such thing is unearned income. That meant that economic rent does not exist. Whatever a businessman makes, he is said to earn. Whatever a landlord makes, he earns – so there was no unearned income.

This came to a head around 1890 the Journal of Ethics. Clark wrote the first essay, and it was refuted by Simon Patton. There was a fight against the concept of economic rent by academic economics, especially in New York City at Columbia University, where Clark ended up, This is really the dividing line: You recognise that much of the economy is unearned income and you want to get rid of it. To do that, you have to pass laws that will tax away the unearned income, or better yet, you put land and other natural resources and natural monopolies in the public domain where the public sector directly sets prices. That was what Teddy Roosevelt did with his trust busting.

Jonathan Brown 31:13
Michael, I just want to say reading your work is something of a revelation. I’ve got a degree in economics for what it’s worth. And I would say the only valuable thing that I found from a getting a degree in economics is that I know, resolutely when an economist is talking bullshit. How do you know that? It’s when his lips move.

Michael Hudson 31:32
If it’s an economist, they’re talking bullshit – let me make it easy, right!

Jonathan Brown 31:36
And then the thing is, that reading your work, for example, going back to Thorstein Veblen, his work, which only made it into the mainstream when I was getting a degree in the 90s, was conspicuous consumption. It had nothing to do with absentee landlords or, and the profound importance of that, and then I’m looking in J is for Junk Economics, and you talk about the free lunch, and how Milton Friedman said that there’s no such thing as a free lunch.

When you look at your work, you prove that actually there is, and that he’s having it! And you say, “Most business ventures seek such free lunches not entailing actual work or real production costs, and to deter public regulation or higher taxation of rent-seeking recipients of free lunches. They have embraced Milton Friedman’s claim that there’s no such thing as a free lunch”.

And you talk about: “Even more aggressively rent extractors accused governments of taxing their income to subsidise freeloaders, pinning the label of free lunches on public welfare recipients, job programs, beneficiaries of higher minimum wage, when the actual antidote to free lunches is to make governments strong enough to tax economic rent, and keep the potential rent extracting opportunities and natural monopolies in the public domain.”

Michael Hudson 32:51
Veblen was indeed was the last great classical economist. He coined the term neoclassical economics. I think that’s an unfortunate term. When I went to school in my 20s, I thought neoclassical meant ‘Oh, it’s a new version of classical economics’. It’s not that at all. What Veblen meant was there used to be the old classical economics of Adam Smith, John Stuart Mill and Marx, all about economic rent and exploitation. “Neo” means there’s a new body of completely different, post-classical economics aiming to make classical economics obsolete. That is the new mainstream economics of today, trying to make itself “classical.” So Veblen he should have used the terms post-classical or anti-classical economics.

Jonathan Brown 33:44
Or even pseudo classical?

Michael Hudson 33:49
It’s antithetical, because the root of classical value and price theory was to isolate and define economic rents statistically. To deny economic rent is to deny the whole point of classical value and price theory. That is where economics became untracked.

Unfortunately, it became untracked largely by Henry George, who rejected classical economics and very quickly followed J.B. Clark and accepted his mushy value and price theory. Removing all elements the cost of production from value theory, analysing prices simply in terms of consumer demand and what people want, and not analysing what determines land and other asset prices, loses focus.

George became very popular as a journalist. He wrote wonderful journalism to expose the railroads in California as landlords, and he wrote a wonderful book on the Irish land question. But when he tried to talk about the whole economy, he didn’t want any competition. He said, in effect, “Economics begins and ends with me. Forget everything, Adam Smith and classical economics.” He’s sort of an early Margaret Thatcher. There’s no such thing as society or the economy. Only “tax the landlords.”

Jonathan Brown 35:35
What are you doing? You’re destroying my view of Henry George! He’s an early Margaret Thatcher? How, how could that possibly be?

Michael Hudson 35:47
Well, in two ways. The first way is that in the 19th century, in order to tax the land rent, you had to take on the most powerful vested interests of all: the real estate interests and the financial interests. But Henry George was a libertarian. He was for small government. He broke with the socialists, because he warned that socialism had a potential for authoritarianism. Well, we know that he was right in that warning, because we saw what happened in Stalinist Russia. But obviously, what you want is a government that is strong and democratic, and with enough authority to tax and regulate the vested interests. (That term is Veblen’s, by the way.) That was the ideal in America, but it needed a strong enough government so that Teddy Roosevelt could come in and be able to bust the trusts.

The government was strong enough in 1913-14 to impose an American income tax that fell just on 1% of the population, almost entirely on economic rent, on land rent, mineral rent on monopoly rent of the big corporations. If you’re a libertarian, your government is too small to take on these vested interests. And you’ll never win. You’ll end up like the Social Democrats or like today’s Labour Party under Mr. Starmer, not able to be very efficient. So that was George’s first problem.

The second problem was when he said that all you have to do is tax the land and everything else will take care of itself. Well, as you know, he was nominated as a celebrity candidate by the socialist and labour groups in New York City in 1876 to run for mayor. They gave him their programme – safe housing, workers housing, safe working conditions, food laws that protect people from poison, like you don’t want to use chromium for cake frosting to make it yellow.
Well, George threw out the whole labour programme and said that there’s only one thing that mattered: If you tax the land rent, the cakes will take care of themselves, worker safety conditions will take care of themselves. You don’t need socialism; just tax land rent.

Well, the word “panacea” came into popular use in the English language at that time, because George didn’t see the economy as a whole. That was a tragedy. He was great as a journalist describing rent and the machinations of the railroads. But once he tried to talk about the economy, without really describing how it worked as a system, saying there really isn’t any economic system, it’s just about land rent. That separated him from the other reformers.

By the 1890s you had many of reformers in America, who had been inspired by George’s journalism in the 70s and early 80s, including attacks on the oil monopoly and the Rockefellers. They asked what happened to George? Well, he became a sectarian. He formed his own party and said, we’re only going to talk about land rent. This diverted attention away from how the overall economy works. And if you don’t understand how the economy is all about providing a free lunch in one way or another, not only to landlords but to the financial sector primarily, then you’re really not going to address the interests of most of the population.

So his sectarian party shrank. Still, in the first decade of the 20th century you had followers of Henry George and socialists going around the country debating each other. They had great debates, they spelled out the whole problem. I wanted to reprint all these debates somewhere, what both the socialists and the Georgists said: “One thing we can agree on is that society is going to get go either your way or our way. We’re talking about how is the future of the political system and the economic relations and taxes that follow from this system. How are they going to evolve?”

The socialists focused on labour’s working conditions, because these were getting worse and worse. In America the fight for labour unionisation got quite violent, and corrupt. The abuse of consumers, the growth of monopolies, all these were growing problems. The socialists focused on these problems – and decided to leave the discussion of rent to followers of George. I think that was very unfortunate, because George had pried the discussion of economic rent away from the classical value theory and its political dimension, which was socialist.

I find little interest in today’s socialist movement or the socialist movement 50 years ago about land rent. They are more concerned about international issues, about war, about almost everything except land rent. And today I find the greatest interest in rent theory as a guide to a tax system in the context of an overall economic system to be in China. So that’s really where the debate over how to keep the price of housing down by keeping the financial sector from trying to capitalise the land rent into a bank loan.

That’s a big fight in China today. It should have been also in Russia. Fred Harrison, in the early 1990s, brought a group of people including me over to Russia. We made two trips to the Duma and did everything we could to explain that Russia could have a great advantage to rebuild its industry into a productive economy. The first thing that it should have done was to keep housing prices down. It could have given everybody their houses, free and clear, without any debt. Of course, some places would be more valuable than others, but Russia would have had the lowest-priced economy in the world. In America, the rent can take up to 43% of a home buyer’s income.

Well, there was pushback from the Russians. They had no rent in a socialist economy. Ted Gwartney, an American real estate appraiser, walked down the streets of St. Petersburg with the local mayor, I think on a fall or winter days. He pointed out that one side of the street was very sunny. The other street was in the shade. That’s how the sun is in the northern latitudes in the winter. Most people were walking on the sunny side of the street. That means that if you’re going to have a store, whether it’s a bakery, a food store or a restaurant, the store on the sunny side of the street is going to be able to attract more customers. Their site has more economic rent than the dark side of the street. Same thing with buildings near a subway. They will be worth more than sites far away from transportation.

The mayor said understood the point, and asked how to actually make a land value tax so to collect this rent? Ted explained that St. Petersburg’s layout was much like that of Boston, where a land map was easy to make. It showed that there was a peak centre of values near the subway, with rents tapering off further away. He suggested to apply Boston as a scale model to St. Petersburg. Just plug in a few prices, and you have a land-valuation map.

Russia could have been a low-cost economy. It could have kept the oil and gas, Yukos, GazProm, nickel and platinum resources all in the public domain to finance investment in re-industrialization, to become independent of the West. But as we all know, Ted and the people that Fred Harrison bought were completely overwhelmed by the billions of dollars that U.S. diplomats spent on promoting kleptocracy and shock therapy in Russia. Its officials and insiders worked for themselves, not Russia.

And it wasn’t only Russia that missed opportunities. I brought Ted Gwartney and his mathematical model-maker to Latvia, where I was Economic Research Director of the Riga Graduate School of Law. I was asked by the leading political party of Latvia, the Centre Party – basically the party of Russian speakers, with 1/3 of the population and votes – to draw up a model for how Latvia could restructure its post-Soviet economy and industry. Ted met with the tax authorities and housing authorities and explained how to use land rent as the tax base. They were amazed and said, “This is great. We can hire a separate appraiser for every single building. This will create a lot of employment”. No he said. He had been the appraiser for Greenwich, Connecticut, the state’s wealthiest city. He said, “We can do a whole city in about one week.” They couldn’t believe this in Latvia.

Around the time of his visit there was a meeting in Boston of the Eastern Economics Association. It was largely created by John Kenneth Galbraith to go off the economic mainstream. I think the Schalkenbach Foundation had a session on political critics of Henry George, so there were a lot of Georgists. Other people who came to the Eastern Economic Association meeting were socialists, including Alan Freeman who was the assistant to Ken Livingston, the Mayor of London.

When everybody was having lunch after the economic meetings, I brought Alan over to sit down with Ted Gwartney. Ted explained what he did, and Alan said, “Oh, I’ve never heard of this! I’ve got to come and meet you some more.’ So he came to New York and we went up to visit Ted in Connecticut. He explained how to make a land value map. Alan said, “You should win the Nobel Prize for this! This is amazing! There’s nothing like this in England.”

Ted explained that there are about 20,000 appraisers in America that do what he did. There are abundant statistics. Every city has a map of land and building appraisals: here’s the value of the building, here’s the value of the land. So smoothing out a land value map is pretty easy to do. Alan could hardly believe it.

Well, I went back to London shortly and met with Alan. It turned out that political pressures in England, especially from the Labour Party, led London to hire Weatheralls, a real estate company, do appraisals. So we never got to do our version of a real estate appraisal of London to calculate land rent.

But this is what all of the theories of the Physiocrats, Adam Smith, Ricardo, John Stuart Mill, Marx, Veblen, Alfred Marshall, all of them were focusing on. Yet this idea is so alien that from London to St. Petersburg, they don’t have any idea of how the simple concept can be done. The economics profession is in denial. It’s followed the idea that there’s no such thing as unearned income, everybody gets what they make.

The National Income and Product Accounts treat rent as a product, not a subtrahend
A byproduct of this value-free doctrine is how countries calculate their national income and product accounts. And if you look at the GDP accounts for the United States (and I’ve published a number of articles on my website and in major economic journals), rent is counted as part of GDP.

This is easiest to see in real estate and finance. The Bureau of Labor Statistics sends its employees around to ask homeowners what the rental income of their home would be if they had to rent it. If you were a landlord and rented yourself how much rent would that be? This appears in the NIPA statistics as “homeowners imputed rent.” That’s 8% of GDP. But it is not really income, because it is not actually paid. Nobody gets it. But value-free designers of GDP want to describe all of the income that landlords make as contributing to GDP. They say that landlords provide a productive service, they provide housing to people who need it, and they provide commercial properties to businesses that need it. Well, that’s not exactly how John Stuart Mill put it. He said that rent is what landlords make ‘in their sleep’. So how can you rationalize how productive landlords are?

Another element of American GDP is financial services. I called up the Commerce Department where they make the NIPA statistics and asked what happens when credit card companies increase their interest charges. And where do penalty charges for late payments appear? Credit card companies in America make billions of dollars in interest a year and even more billions in fees, late fees and penalties. Most of the income that credit card companies make are actually on these fees and penalties. So where does that appear in that GDP? I was told, in “financial services.’ So the “service” of calculating how far the debtors must pay for falling behind in their payments. They typical charge 29%. That’s all counted as a contribution to GDP. But in reality it is a subtrahend, leaving less to spend on real “product.”

This raises the question of just what income and product actually mean. Well, this brings us back to what classical economics is all about. The “product” should be measured by what its actual necessary cost of production is. But there’s a lot of income over and above this necessary cost of production. Namely, economic rent, that’s unearned income. But the income and product accounts don’t say how much is “earned” and how much is “unearned” land rent, monopoly rent, natural resource rent, interest and financial charges.

A classical economic accounting format would show how much of the prices for what our society produces is actually necessary, and how much is a subtrahend. Classical economists treat the land rent that you pay, interest charges and monopoly prices as a rake-off. So not all of your income is income equals “product,” because only a portion of that income represents a real product.

In America, the head of Goldman Sachs a few years ago said Goldman Sachs partners – a financial management firm – make more money than almost anyone else in America, because they’re the most productive. If you make a lot of money, by definition, you make it by being productive. That’s the false identity.

Jonathan Brown 55:25
That’s really the John Bates Clark idea that if you make the money, you’ve earned it. And it’s not just because you control the gate. You’re the gatekeeper, to stop people and make them pay the toll. You’re the troll under the bridge, taking people’s money as they cross, which is essentially what financial economics is about.

Michael Hudson 55:48
Right. I have spoken with a number of political advisors, many of whom were followers of Henry George. They’ve described to me how political all of this definition of the economy is. A number of friends of mine have been trying to show how much of what the United Nations calculates as income and product is actually economic rent. Steve Keen, Dirk Bezemer and Jacob Assa are in this group. There are a number of others who do it. We publish in places like the Review of Keynesian Economics, Journal of Economic Issues and other not-mainstream journals. A lot of this was taught where I was a professor for decades, at the University of Missouri in Kansas City.

Our graduates had problems getting jobs, because in order to get an appointment at a university, you have to publish articles in prestige journals. The University of Chicago, the Milton Friedman boys, the Chicago Boys control the editorial boards of all these prestige magazines, just like they control the Nobel Economics Prize Committee. The prize basically is given to Chicago Boys every year for not explaining how the economy works.

A precondition for what you call an economist, especially a Nobel Prize winning economist, is not to understand how the economy works. Because if you understand that, you’re going to threaten the vested interests that are getting the free lunch. You have to say there’s no such thing as a free lunch, everybody earns whatever they can get. Robbers and criminals like that idea. “Yeah, we stole it fair and square!”

Crime pays, and rent seeking also pays.

You can get much more money quicker by extractive means – by rent extraction – than you can by investing in plant and equipment and developing products and marketing them and making a profit over time, and spending on research and development. That’s why in today’s United States, 92% of corporate revenue, called earnings, (although not all of it is earned – that’s a euphemism) is spent on stock buybacks and dividend payouts, not on new capital investment.

So the way that the economy works today is no longer industrial capitalism; it is finance capitalism. Instead of Industrial Engineering, making society produce more with all of the environmental protection cost included, you have financial engineering, making wealth by increasing stock-market prices. Wealth is not achieved by earning it. You don’t save up your earnings and get wealthy. I think half of Americans are unable to raise $400 In an emergency. They have no savings at all.

For most people it’s very hard to save up money, especially if they have student debt, credit-card debt, medical debt and mortgage debt. After paying this, there’s really no income left to be saved. So you have the 1% of society, the rentier portion that had to pay income tax back in 1914, getting huge amounts of income and the rest of the society getting less and less. The result is economic polarisation. The dynamics of society are financial and basically rely on rent seeking that has been financialized.

I’ll give you another example of the GDP. One of the problems that makes GDP statistics meaningless is depreciation, the idea that buildings depreciate. When Ronald Reagan came in, the real estate interests and their banks basically took over the government. Henry George and the Libertarians oppose central planning by elected democratic governments, and that leaves central planning to Wall Street’s financial interests. Every economy is planned, and if you don’t have a government strong enough to do the planning, then the planning is done by the financial sector and the real estate sector, and they were given free rein under Ronald Reagan.

Under Reagan’s 1981 tax “reform” you could pretend that if you buy a big commercial building, you can write off 1/7 of the entire costs every single year as tax deductible income. At the end of seven years, you change your ownership from one name to another name, and you start all over again. The same building can be re depreciated again and again and again.

Donald Trump wrote in his autobiography, he loves depreciation, because he said thanks to the pretence of depreciation, his buildings are all going up in value, but he gets to pretend they’re falling, and deduct all of that fictitious over-depreciation from his taxable income. It’s actually economic rent. But if you look at the national income statistics, you can’t find economic rent in them at all. I was able to piece it together by adding up what goes into economic rent: Real estate taxes are part of economic rent, and also interest payments, because interest is paid out of economic rent. But fictitious depreciation tax loopholes also should be there.

But nowhere in the national income statistics is a report of how much income real estate owners actually claim as depreciation. They haven’t done that because if they showed this, people would think, ‘Wait a minute, this is a giveaway. This is utterly unrealistic.” So they only put in a figure for how much they [think] buildings are actually depreciating over a period of decades. So you have a fictitious national income accounting format that makes it impossible to calculate what land rent is – and that was the major focus of classical economics.

How are you going to get a statistical system that actually reflects this? Well, one associate of mine, Jacob Assa, has written a few books on this criticising economic rent. He worked in the United Nations here in New York until quite recently. But as I said, our graduates can’t publish in the University of Chicago economic journals whose party line is that ‘there’s no such thing as economic rent’, just like there’s no such thing as society is beyond “the market.”

I wanted to publish statistics on this and in 1994 the Henry George School in New York asked me to calculate what rent was and the land value. I found out that the value of land, the market price of land in the United States was twice what the government reported.

The government pretends that real estate prices rise mainly because buildings keep growing in value, even though they’re supposed to depreciate. They pretend that buildings grow in value by taking the original cost of the building, and multiplying it by the Construction Price Index. Whatever is left is reported as land value. Well, in 1994 the Federal Reserve reported that the land value of all of the commercially owned real estate in the United States was negative $4 billion. This is crazy.

The statistics are drawn up by a methodology that the real estate interests lobbied for. When I calculated this, the Georgists in America got furious. They said that I was showing that land value and rents were much higher than they thought. They worried that this might lead people to want to tax real estate. Lowell Harriss of Schalkenbach explained that Georgists today represent mainly real estate developers, and that their major audience was local mayors, whose biggest campaign funders are the real estate interest.

These Georgists called themselves “two raters,” wanting to keep overall real estate taxes unchanged (“revenue-neutral”) but shift the tax from commercial landlords onto homeowners by taxing land, not buildings – e.g., electric utilities, office buildings and other capital-intensive structures.

By representing the developers, Georgists proposed to save society by having the developers build up those slums, build up those vacant lots. Like George, they said that there was no need to worry about ecology or any problem except cutting property taxes for large real estate owners. You don’t need to worry about workers conditions or anything else. Let’s just give an economic incentive (i.e., a tax cut) to help contractors build up those vacant lots.

I was told if I published a new explanation of my statistics showing that most rent was paid out as interest, I could never have any relations with Schalkenbach and the Henry George school again. So I published them in a Harper’s Magazine cover story and have lived happily ever after.

Jonathan Brown 1:06:13
And was that “The New Road to Serfdom”?

Michael Hudson 1:06:22
Yes. I chose that title because the purpose of industrial capitalism was to free economies from the legacy of feudalism. And the legacy of feudalism was the landlord-warrior class collecting hereditary rent and the predatory banks that were not making loans for industry. None of the industrialists got their money to invest in banks. The inventors of the steam engine couldn’t get loans except by mortgaging their houses. Banks don’t lend money to create capital, only for the right to foreclose on it.

Jonathan Brown 1:07:02
This is all included in your in your latest book that just came out, The Destiny of Civilization: Finance Capitalism, Industrial capitalism, or Socialism, which I gather was a series of lectures to a Chinese University. Is that correct?

Michael Hudson 1:07:16
Yes. There were 160,000 viewers for the first lecture, and there’s a huge interest in this in China, because they realise that higher housing prices make them poorer and more highly indebted, not richer. What is pushing up housing prices in China is the amount of credit that banks will lend against the property.

A land tax would keep housing prices down, because the rent could not be available, to be capitalized into a bank loan. As China gets more productive and more prosperous, people obviously are going to be able to afford housing, which is how most people define their status. If a site gets more valuable because of public investment in transportation, or schools or parks nearby, that’s going to make it more valuable. But if you tax this rental income, then you’re going to keep the housing price down.

I think Fred Harrison and Don Riley wrote a book Taken for a Ride where they show that the money that London spent on extending the Jubilee Line increased real estate prices by twice as much as the line cost. London could have simply collected the land’s increase in rental value that this public investment created and made it self-financing.

Instead it was a giveaway.

They ended up taxing labour and business, and the effect was to increase Britain’s cost of living and hence the cost of production, which is why Britain is de-industrialising. It’s been de-industrialising because despite the attempts through 1909 and 1911, to free itself from landlordism, the bankers have taken the place of the landlords. They are the class today that the landlords were in the 19th century. So we’re back on the revival of what really was feudalism – a rake-off by a hereditary privileged class.

America’s monetary imperialism coming to an end with de-dollarization
Jonathan Brown 1:09:47

I’m wondering where we go next. I want to get into the conversations that you started with the 1972 first edition of Super Imperialism. I know we had a third edition fairly recently, with your prescience of the predictions in analyzing the situation for America, and how the balance of payments deficit was a result of U.S. expenditure by the military. Getting into the current manifestation of the de-dollarization challenge that seems to be accelerating through the Ukraine and Russia crisis, I wonder what background we need to give the listeners just to tell them about how that system works.

Michael Hudson 1:10:39
One of the things that most people don’t understand is money, largely because of the academic discussion confusing matters. Until 1971, countries running a balance of payments deficit would have to settle it either in gold or by selling off their industry to investors in the payments-surplus countries. Well, beginning with the war in Korea in 1950-1951, the U.S. balance of payments moved into deficit. The entire U.S. balance of payments deficit from the Korean War to the 1970s was a result of its foreign military spending.

By the time the Vietnam war was ending, the Americans had to sell its gold every month. Vietnam had been a French colony, so the banks there were French. As America spent more dollars in Southeast Asia, these dollars were sent from local French bank branches to their head offices in Paris. The Paris bank would turn over these dollars to the central bank for francs, and the central bank, under General de Gaulle, would cash in these dollars for gold.

Germany was doing the same thing, using its export proceeds that were paid in dollars to buy gold. So America’s gold stock was steadily going down, until finally it had to withdraw from the London Gold pool and stop making the dollar gold convertible. Back in 1950 when the Korean War began, the American Treasury had 75% of the world’s monetary gold. It had used this monetary power to control diplomacy in other countries. The basis of America’s political power was its gold stock.

Once they left the gold-exchange standard there was hand wringing. How was the United States going to dominate the world if it didn’t have gold anymore, if the military spending abroad had made it run out of gold? My Super Imperialism pointed out that henceforth when foreign central banks got more dollars, what were they going to use them for? Well, there’s only one thing that central banks at that time did: That was to buy government securities. So the central banks of France, Germany and other payment-surplus countries had little option except to buy U.S. Treasury bills and bonds. Some of these were special non-marketable bonds that they couldn’t sell, but they were stores of value.

So the money that America was spending abroad was simply recycled to the United States. It didn’t mean that America had to devalue the dollar through running a balance-of-payments deficit, like today’s Global South countries do, or do as England had to do with its’ stop-go policies, always raising interest rates to borrow when its deficits threatened to force the pound sterling to depreciate.

Jonathan Brown 1:13:57
Michael, this insight was that was that when you were working at Chase Manhattan, and you were advising the State Department on what to do with the fact that they were having these balance of payments problem, because of military spending?

Michael Hudson 1:14:07
My job at Chase was to analyse basically the balance of payments of Third World countries and then of the oil industry. I had to develop an accounting format to find how much does the oil industry actually makes in the rest of the world. I had to calculate natural-resource rent, and how large it was. I did that from 1964 till October 1967. Then I had to quit to finish my dissertation to get the PhD. And then I developed the system of balance-of-payments analysis that actually was the way it had been calculated before GDP analysis.

I went to work for Arthur Andersen and spent a year calculating the whole U.S. balance of payments. That’s where I found that it was all military in character, and I began to write in popular magazines like Ramparts, warning that America’s foreign wars were forcing it to run out of gold. That was the price that America was paying for its military spending abroad.

I realised as soon as it went off gold in 1971 that America now had a cost-free means of military spending. Suppose you were to go to the grocery store and just pay in IOUs. You could just keep spending If you could convince the owner, the grocer to use the IOU to pay the farmers and the dairy people for their products. What if everybody else used these IOUs as money? You would continue to get your groceries for free.

That’s how the United States economy works under the dollar standard, at least until the present. This is what led China, Russia, Iran and other countries to say that they don’t want to keep giving America a free ride. These dollarized IOUs are being used to surround them of military bases, to overthrow them and to threaten to bomb them if we don’t do what American diplomats tell them to do.

That led already a few years ago to pressure to de-dollarize the world economy and make it multipolar, not simply an extension of the U.S. military, U.S. investors, mining and oil companies. The post-dollar aim was for other countries to keep their economic surplus among themselves to promote their own economic growth, instead of imposing IMF dictated austerity programmes to impose austerity so that they can pay foreign dollarized bondholders.

Just about everybody thought that it would take many years for China, Russia, Iran, India, Indonesia and other countries to get their act together and create an alternative. But this year the Biden administration itself destroyed America’s free ride for the dollar. First the United States grabbed Venezuela’s foreign exchange, then Biden grabbed all of the foreign exchange of Afghanistan, just confiscated it. And then a month ago he confiscated $300 billion of Russia’s foreign exchange reserves. He said, in effect, that we are the leading democracy in the world, and global democracy means that America’s military gets to appoint foreign presidents.

And so we don’t like the person you’ve voted in as president for Venezuela. We’re going to hire this little nitwit that we bought out, Juan Guaido, and appoint him president. To force you to accept this, we’re going to take away all of your gold reserves held in the Bank of England, and we’re going to give it to Mr. Guaido as our nominee for the bastion of democracy, to do what a democratic regime is supposed to do: hiring terrorist groups to kill all land reformers and labour leaders, to finance a neo-Nazi takeover like we did in Chile under Pinochet, and just like we’ve done in democratic Ukraine with our funding of neo-Nazis to fight against the Russians there.

This confiscation of foreign reserves and foreign money held in U.S. banks shocked the rest of the world. Nobody had believed that countries would actually grab other countries’ financial savings. If you go back to the wars in the 19th century, the Crimean War and others, countries would continue to pay their foreign debts.

All this was ended by President Biden rejecting the international rule of law. He said that “We have a ‘rules-based’ order, in which we can make up the rules. Number one, we are exempt from the rules. Only you have to follow them. Number two, the rules or whatever we say.” China, Russia and India would have taken years by themselves to denominate their trade in their own currencies. Biden’s money grab has impelled them to create a new economic order independently of the United States and Europe, whose euro and sterling are satellite currencies of the United States.

Jonathan Brown 1:19:54
So Michael, this is a crazy situation that we’ve got. Even If you have deposits in a bank, the deposits don’t really belong to you, but they used to be respected.

Michael Hudson 1:20:07
Well they belong to you, but they can be stolen.

Jonathan Brown 1:20:09
Yeah, but then they don’t belong to me, do they? They’re kind of mine, but not. Likewise, if I annoy the wrong person, I could have my car impounded, because I’ve just annoyed the local politician, which is essentially what’s happened to a Russian oligarch. Now, whether or not the oligarch deserved that $500 million yacht, obviously, they didn’t, but it was technically theirs. So what Americans are doing is showing that if you piss them off, they will take all your resources, which has happened in other countries, right? We’ve stolen it.

The British did that, right? We appropriated resources and stole resources from other nations. If you want the best example of that, you can just go into the very beautiful British Museum and see all the artefacts that we’ve appropriated, one of which was a Rosetta Stone, which I know you write about.

So we’ve got this situation now that the Americans have declared the most profound economic war on Russia, threatening China that we can do the same. China’s got trillions of U.S. dollars. And one of the things that I don’t quite understand, looking at your philosophy and Super Imperialism, was in demonstrating that the Americans can have a free lunch by getting people to buy U.S. Treasury bonds. How is it that the U.S. dollar has gone up against all currencies pretty much other than the rouble since declaring war in Ukraine?

Michael Hudson 1:21:43
Europe has committed economic suicide, United States offered its leaders a lot of money in their offshore accounts, and made sure that their kids got free education in the United States. But in return, they would have to represent the United States, not Germany, France or other countries. The Americans have been meddling in European politics for years. European politicians do not represent their own countries. They represent the American State Department and American diplomacy. And they were told to lock their countries into the U.S. economy.
For instance, European businesses had a hope that Americans really hated. The Europeans hoped that after 1991, now that communism was over, they could invest in Russia to make money. They could sell exports to Russia and make mutual gains from each other. But the Americans wanted to make all the money off Russia for themselves, mainly by using the kleptocrats they backed to sell the natural resources that they grabbed to U.S. investors. The Harvard Boys wanted to make sure that rent-yielding natural resources were given the kleptocrats – who could only make their money in hard currency by selling shares abroad in the assets they grabbed, keeping their payments in England or the United States.

So they’ve asked Europe not to buy Russian gas, but to spend seven times as much buying American liquefied natural gas, and spend $5 billion to build the ports to accept this gas – while going without gas for about three or four years…let their pipes freeze… stop making fertiliser… Don’t feed your land, we’ll take it on the chin for America. Your standard of living is going to have to drop by 20%, but it’s all for American democracy. And the European heads said that’s fine.

America said that you Europeans are bothering them by trying to stop global warming. That’s a direct attack on a major arm of U.S. diplomacy, the oil industry. American companies control almost all the world’s oil trade. It’s the highest rent-yielding sector in the world. And it’s income-tax free. It’s politically powerful, and as long as America can control the oil trade, it can talk to Latin American countries or African countries and say if they elect a leader that U.S. officials don’t like, it can impose sanctions and stop exporting oil to them to freeze them out. They won’t get fertilizer, so the U.S. can starve you out. It can put a sanction on their food trade. 

Agriculture is Americans biggest trade surplus.

Jonathan Brown 1:25:14
That’s what they’re doing with the conflict in Ukraine to Russia, and also China as well. Are there other major sources of grain, wheat and rice?

Michael Hudson 1:25:26
Yes. But President Biden has blamed Putin for creating a world food shortage and threatening to cause a famine, because Ukraine can’t export its grain. Ukraine, at American direction, has put mines all over the Black Sea. So the Black Sea’s ports have mines around them. If a ship hits them, it’ll blow a hole in the hull and will sink.
As a result, if you’re a shipping company and want to transport grain, you have to get insurance, because if you don’t have insurance, then you’re in danger of going bust if your ship goes under. But no insurance company will insure it until the Ukrainians remove the mines that they put. You need minesweepers for that. Needless to say, Russia doesn’t want American minesweepers in, because they may very well attack as there’s a war on.

So you have the United States blocking Ukrainian grain exports, which was a huge export. You’ve had the American dollar area, the NATO countries, refusing to import food from Russia, which is the world’s largest agricultural exporter. This is creating a crisis for Global South countries, for Latin America and Africa.

Meanwhile, global warming is causing droughts that are reducing the harvest. The Green Party in Germany has a pro-war policy that is making global warming rise faster. By supporting military warfare against Russia, and U.S. military adventurism in general, they are becoming major lobbyists for the air polluters. The largest air polluter is the American military. The Green Party in Germany advocates fighting Russia more, providing it with more arms, and thus supporting the military that is now the largest new contributor to global warming. In effect, this means that Europe is willing to say, ‘Okay, we are willing to have the sea levels rise another 10 feet, as long as we can help America dominate Russia’.

Europe even is letting America keep the Trump tariffs on its exports, in place, so it can’t export more for America. It looks like Europe will have to de-industrialize, maybe we’ll go back to the 19th century and become a country of farmers. That basically is the situation that its subservience is imposing.

Jonathan Brown 1:28:49
I’d like to come back to the just what China and Russia can do, given their reserves. They understand they’ve got… they’ve got lots of reserves of gold, and also large grain stores, China having the most as I understand it, but can you help me understand why all these nations around the world have U.S. dollar reserves in some form or other, most of it in bonds? Why is the dollar still increasing at this moment in time?

Michael Hudson 1:29:28
Because the Euro was going down. The Japanese Yen is going down. The Yen is the worst performing currency, because they’ve held their interest rates very low. Their aim is for banks to make money by borrowing low at low rates and lending to foreign countries at a higher rate. Europe is also keeping its interest rates low. The American Federal Reserve is raising the interest rate, and that is money from low interest rate countries. Capital from Europe and Japan is flowing to America.

Currency values are primarily set by relative interest rates and capital flows. They’re not set by the cost of production for imports and exports. They are not caused by trade, unless there’s a radical breakdown of trade. All these zigzags that you see are short-term capital movements. America tells other countries to keep their interest rates low, so that money will flow from their banks and financial to the United States to buy American securities that yield higher returns. As long as the Euro is a satellite currency to the dollar, it’s going to continue to go down. So the both the euro and the British Sterling are now moving towards $1 per pound and $1 per euro.

Jonathan Brown 1:28:49
That’s a short-term measure. The long-term measure is that countries have to start selling the bonds that they’ve got in U.S. currency. So long term, it has to come down. Is that right?

Michael Hudson 1:29:28
Yes. They’re going to hold each other’s currencies. Especially now that Russia is denominating its exports, in roubles instead of dollars. The American banks have lost the trade financing of the world oil trade, certainly Russian oil and agricultural trade. Instead of holding dollars, countries will hold rouble reserves to stabilise their currencies via the rouble, China is holding rouble reserves, and Russia is holding Chinese yuan reserves.

The balance will be held more in gold and some kind of assets without a liability attached to them. I think the logical direction in which this is moving is that the non-dollar countries will create their own version of the International Monetary Fund, their own World Bank, their own trade organization. So there will be one set of trade and financial and development organisations and military organisations in the U.S. and Europe, in NATO, that is, in the white countries, and another set of relations and the non-white countries that are actually developing while America and Europe shrink.

Jonathan Brown 1:33:06
So what’s your idea of how much gold China actually holds, because there’s the published numbers [which] are really extraordinarily small aren’t they for an economy that’s so big.

Michael Hudson 1:33:18
I don’t know. Governments can hold gold not only through their own treasury, but through some subordinate agency. I no longer go into the financial statistics like I used to, because it takes a whole year to do a balance sheet that is comprehensive. All I know is that they saw how America simply grabbed Russia’s dollar holdings, and they don’t want the same thing done to them. President Biden has said China is America’s number one long-term enemy, and he wants to destroy the Russian economy first and then attack China after prying them apart.

Obviously, China is reading the newspapers and wants to avoid that fate.

Jonathan Brown 1:34:16
The other thing that I find utterly remarkable, for example, is that Biden in his speech said that he wants to get rid of Putin. I think if it was a U.S. Defence Secretary or Secretary of State saying that he wants to arm Taiwan……. If I ran China and I said I want to arm Mexico, or if anyone in South America wants any weapons then my doors open to you, I would expect the Americans to be very upset with that because I’m breaching the Monroe Doctrine. Can you help me understand, having been in the corridors of power, whether Chase Manhattan or the contacts you’ve got, how can …. how can politicians be so delusional to think they can say stuff like that without having a negative consequence?

Michael Hudson 1:35:18
Well you know who’s really upset by that? The Taiwanese! They say, Oh, they want to make Taiwan into another Ukraine, to fight to the last Taiwanese, just like the Ukrainians have been used. They see two choices before them. If they do arm and get weapons that can hit China, then China is likely to bomb them. On the other hand, I’ve met Taiwanese officials for 40 years, and many have said that their long-term hope is to be reintegrated. They want to be investors in China, but they want to merger under terms where they can be sort of like Hong Kong, able to have a merger that will make them prosperous too.

So Taiwan’s choice is between following the Americans and becoming the Ukraine of the Pacific, or joining with China. Given the fact that China is growing and America is shrinking, what are they going to choose? Well, I would imagine that you will see a strong, peaceful integrationist movement with China. But China remembers that Chiang Kai Shek massacred the communists in 1927.

Jonathan Brown 1:36:47
So what are we looking at then, who is in charge, President Biden or other people?

Michael Hudson 1:36:56
President Biden is a front man. They’re all the front men for the faceless people in the State Department, the neocons who are controlling things. Biden has always been right-wing, just a corrupt party politician. He does what he’s paid to do. He’s unimaginative. He’s brought in some real Russia haters – people who have a visceral hatred of Russia because of their family background under the tsars or under Stalin. Blinken said that his family was Jewish and lost under the tsars, and maybe under Stalin. He wants to kill Russians because he’s so angry at what they did to his ancestors. That is the neocon mentality in a nutshell. It’s a crazy mentality.

The Federal Reserve and the Treasury officials say they were not consulted in the political moves that Biden and Blinken and the neocons are making. There is the kind of single-minded tunnel vision at work. They really are Russia haters and China haters. There is a lot of racism you’re seeing in New York, where it’s very dangerous for Asian women to take a subway. Almost every week, the lead news item is yet another Asian woman attacked or pushed in front of a subway. There’s a there’s a new race hatred in America. And they are treating Russians as the Ukrainians do, as if Slavic speaking people are a separate race.

Jonathan Brown 1:38:49
Extraordinary. So Super Imperialism came out, as I understand it, and was used by the State Department to figure out how to continue running their economics …

Michael Hudson 1:39:04
At first U.S. officials thought that going off gold was going to be a disaster. Herman Khan told me, “You’ve shown that we’ve run rings around the British Empire.” He hired me for the Hudson Institute, which is a national security institute, and brought me to the State Department for meetings and to Army War colleges and Air Force war colleges to talk about it. I guess I shouldn’t be surprised that the main people who wanted to learn how imperialism works were the imperialists themselves. I had thought that the anti-imperialists were going to be my main audience, but the imperialists really needed to know what was new.

Jonathan Brown 1:39:50
They took your book, Super Imperialism and they read it as a love letter, right.

Michael Hudson 1:39:56
Not a love letter. They saw it as a “how to do it” book. I was a technician.

Jonathan Brown 1:40:04
Right. And working for Herman Kahn, he’s a powerful guy that people don’t talk about so much anymore, but he was, he was extraordinarily influential at the time, right?

Michael Hudson 1:40:14
Yes, he had a great sense of humour. He was a great speaker. He was absolutely brilliant. He wrote a book on thermonuclear war, saying that even if there were to be a war, somebody would be left to survive. That made him one of the models for Dr. Strangelove in the movies. I would sit and hear Herman talk about military strategy, and was awed by how he thought it all through. He was a brilliant military tactician. He would bring me and sit down with generals, and they would explain things. I don’t have a good military sense, or any military training at all. He wrote that, personally, he wanted to be right under the first hydrogen bomb. He didn’t want to live in the post-nuclear world. But there would be some survivors somewhere. That made him notorious. He was so reviled for even having brought up discussion of the topic that needed to be discussed, that he wanted to have ideas that people liked. And that was the corporate environment study. That was what I was pretty much in charge of. I was the economist, he was the military. We had the same salary there.

We would go around the world disagreeing with each other. It would be like a show. He’d talk about the world being a cup half full. I talked about the cup being half-empty, as he put it. I talked about the debt overhead, and how debt was growing and would ultimately stifle the economy. He talked about how productivity would be sufficient to pay debt, although productivity doesn’t necessarily give you the money to pay the debt. Productivity does not grows exponentially, but tapers off. As debt grows, any rate of interest is a doubling time. And it doubles quicker than the economy can double.

Jonathan Brown 1:42:24
And this is really coming back to one of your initial questions from Terrence McCarthy, which was to focus on productivity, wasn’t it?

Michael Hudson 1:42:33
Yes. And the idea was focusing on productivity, you realise that it all comes down to labour ultimately. How do you make labour more productive? How do you make industry more productive? You get rid of what is unproductive – and the unproductive overhead is rent. So how much corporate spending is just plain overhead? How much is unnecessary for corporate industry to take place? That line of questioning brings you back into the classical economics.
Marx is really the last great classical economist who pushed it all to its logical end. His contribution was to explain that just as the landlord exploits by taking rent, the industrial capitalist exploits labour by charging more for the products of labour than it costs to hire labour to produce.

However, unlike the rentier, unlike the landlord, the capitalist uses this economic surplus value to expand production, to build yet more factories, to employ yet more labour. This is an expanding society, whereas the rent paid to landlords is a kind of exploitation that is pure overhead and shrinks industrial capitalism. That’s why Marx said that the political aim of industrial capitalism was to free society from the landlords, predatory bankers and monopolists. That’s why the Communist Manifesto‘s program begins with collecting rent for the public sector. You can tax the land as a transition to socialising it. That was the Communist Manifesto’s classical economics.

Jonathan Brown 1:44:26
You have these views, and yet you were still a valued member of the team at the Hudson Institute.

Michael Hudson 1:44:33
Yes, because I was explaining how the world worked. Herman and I disagreed so much, we were genuine friends. I liked him, and we couldn’t believe that the other would actually believe something so different. But we said okay, if the arguments that we’re having is the “big argument,” it’s going to determine where the economy is going. Either he’s right or I’m right.
This is like the debates between Henry George’s followers and the socialists in the early 1900s. It was going to be one world or another.

What is the key to analysing the economy? Is it to focus on rent and finance, or on technological potential? My point is that technological potential can be smothered by so much overhead paid to the rentier class via the FIRE sector – finance, insurance and real estate – that there’s no money left to invest, no income left for wage earners to spend on buying the goods and services that they produce.

Jonathan Brown 1:45:48
And yet the technology sector in my opinion is actually the new monopolist. Instead of having a competition, in that sense they’re the new landowners. So Google is a spectrum landowner. If I want to host these videos, then I’ve got to negotiate or accept the terms of the landowner YouTube. I’m posting them there, but I won’t be making any money on it. Because I’m one of the serfs on YouTube.

Michael Hudson 1:46:16
This is the problem that China is dealing with in its own way. What do you do when Jack Ma and other IT specialists end up as billionaires? Well, China did not have an anti-monopoly group. It let 100 flowers bloom and let billionaires develop, but would then have them transfer their money to the government in one way or another. They haven’t done this in the way that Western economies do, by an anti-monopoly tax, but by a political consensus way.

In countries like Russia, I’m trying to get them to formalise this into formally calculating the magnitude of economic trends. You want innovation to take place, you want people to make the fortune, but at a certain point they can’t somehow make so big a fortune that it ends up crashing the economy.

Jonathan Brown 1:47:37
But looking at your writing from the Byzantine times and the ancient Near East, is the importance of the leader of that particular economy or society to make sure that no one got so rich that they could overthrow the leader? Which is really what you’ve got with someone like Zuckerberg, the power that he was able to wield in the election, whether you agree with him or not, was extraordinary. And likewise, if you look at the fight that’s currently going on with Elon Musk and Twitter, is to recognise that actually we want, we want our people to own these resources that we pretend are private, but actually have tremendous social power.

Michael Hudson 1:48:24
Yes, they financialized politics in America, by the Supreme Court’s Citizens United ruling. Anyone can contribute as much as they want, if you’re a corporation. The rentier interests give to pro-rentier politicians to act as their puppets. The money goes for advertising airtime on television and the media to overwhelm all the people who normally would want to minimise the rentier class. So essentially, you’ve financialized politics in America much more than has occurred in Europe. But in Europe, it’s the right wingers who basically control the press, commercial television and media. So if the media are controlled by the right wing with their own agenda, they frame the economic issues from the vantage point of the rentier class instead of from the vantage point of how an economy actually develops and grows wealthier in a fair manner.

Jonathan Brown 1:49:48
I know we need to need to wrap up. Just thinking about the scenarios for Russia and China currently. Everybody who is part of the original white economies of Europe, realises that if they don’t side with America, they get overthrown. But also right now they have a short-term challenge that the Americans are going to let them starve because they’re stopping wheat exports coming through the European ports. But then you’ve also got Russia with resources, you’ve got China with grain resources.

So there is a potential that when people start to starve, and you look at the challenges in Sri Lanka, with politicians being murdered and people running out of food, there’s a chance for China to step in and say, we can send you grain exports. And by lucky coincidence, because of the all the lock downs that China’s got right now, a lot of the world’s boats and ships are currently waiting outside ports in China.

Michael Hudson 1:50:54
[Missing part here] Computer chips are part of the problem. And that’s probably going to make them friendlier with Taiwan. Taiwan has the computer chips.

Jonathan Brown 1:51:03
And by your assessment, because Taiwan do not want to be another Ukraine, American actions are likely to accelerate the reintegration.

Michael Hudson 1:51:12
There’s a bell shaped curve, I haven’t met with the Taiwanese in quite a few years so I don’t know, up to date what the dynamic is. But just by logic, you can see the international environment in which they’re operating. You wonder how they are going to calculate the plusses and minuses of the U.S. versus China? What economy do they want to attach themselves to so that they can get richer fastest?

Jonathan Brown 1:51:46
And also stay safe and not get involved in unnecessary wars. When you look at the tragedy in Ukraine, all these people dying when you’ve got such a strong opponent in Russia, how can you go to war with them for any period of time?

Michael Hudson 1:52:07
Well, that’s what the world is divided into. The U.S. and European society is built on war. It’s the only foreign policy they have, because they don’t have an economic power anymore. They’ve de-industrialised and the rest of the world that is trying to industrialise and trying to feed itself. China, Russia, India, the Global South are the anti-war part of the world. So the world is dividing into two parts: a rentier part supporting finance capitalism [that] is trying to impose it on other countries, to financialize China and Russia to make them put a Margaret Thatcher or Boris Yeltsin in charge of China. While they try to put their own candidates in charge, a la General Pinochet, the rest of the world is trying to defend itself against this terrorism.

So the Western world that calls itself democracy is the terrorist military world. The nations that it calls authoritarian are any authority strong enough to control and tax the financial interests – that is, any government strong enough to regulate finance and real estate. Such an economy is by definition authoritarian as opposed to a democracy, where Wall Street and the financial centres are the democratically elected central planners. So what’s at issue is who’s going to plan society: the financial sector, or the people as in China and other countries.

Jonathan Brown 1:53:41
I think that says it. From a Western lens it’s a different type of democracy.

Michael Hudson 1:53:48
Yes. But democracy really means an economy run to benefit the great bulk of the population, who happen to be wage earners? Or is it going to be for the 1%? Is the economy run for on behalf of the 99% and the 1%? Well, the 99% need a strong government to run it in their own interests and cope with the counter-revolutionary policies, the neo-feudal rentier policies of the 1%.

Jonathan Brown 1:54:22
Okay, so knowing China, then your take on its zero-COVID policy that the authorities are implementing in some parts of the country?

Michael Hudson 1:54:32
The more I read about long COVID here, the worse it seems. I’m 83 years old, so my wife and I have not gone to a restaurant since 2020. We haven’t even gone to our friends’ houses for dinner. We’re isolating ourselves. China has isolated itself at great cost, but it saved the population not only from having COVID itself, but from having long COVID. There are now a million Americans with long COVID. They also say that long COVID lowers your, your IQ by 10%.

It’s almost as dangerous is inheriting a trust fund when it comes to impairing your IQ. It’s debilitating.

My webmaster in Australia and his family have COVID. So I’m very sympathetic with what China’s doing, even though it means that I can’t go there, because I’d have to be isolated in a hotel room for two weeks just to give a few days’ meeting – and then be isolated again when I come back. So China is making a huge effort not to sicken its population with COVID. And now of course, since the Russians have began to publish all their findings of the US bio-warfare labs in Ukraine that were designed to spread a COVID like diseases by migrating birds and bats and manmade aircraft over Russia.

Now, they’ve reopened the question ‘was COVID a US bio-warfare from the very beginning’? And the Chinese are looking at it and saying ‘was it engineered’? If the Americans are trying to engineer COVID to affect mainly Slavic population and their DNA signatures, could they have been doing the same thing against Asians? So all of this is suddenly opened up. The World Health Organisation has refused to divulge any of the USA biowarfare efforts, and the U.S. has stonewalled all efforts to find out about the bio-warfare. This is isolating America and Europe.

If American Europe is left with its current foreign policy, biowarfare and atomic bombs, NATO will be shunned by the civilised world. As Rosa Luxemburg said a century ago, the choice is between socialism or barbarism. NATO, Europe and America represent the new barbarism. The alternative is socialism. That is how the world seemed to be developing in Europe and America until World War I untracked everything. The rest of the world now has a chance to get back on track. I don’t know what’s going to happen in the West.

Jonathan Brown 1:57:47
Michael, as always, you always get more into your stuff than I expected. Are there any things that you’d like to say to our listeners, before we finish up,

Michael Hudson 1:57:56
I’ve probably said too much. And I hope you can edit out anything that’s embarrassing.

Jonathan Brown 1:58:01
I may get thrown off YouTube for publishing some of your comments. So you may have to go back and review a few of them. But as always, Michael, thanks so much your time what we’ll do is we’ll send a link to everybody for the website and also for the new book, as well which I think and those series of lectures when I was researching for this conversation were the single best economic lectures I’ve ever listened to – truly extraordinary levels of insight and real economics rather than theoretical or textbook stuff. So as always from ShepherdWalwyn, thanks so much for your time and for your contribution.

Michael Hudson 1:58:41
Well, if you transcribe it all in will be worth it. \

Jonathan Brown 1:58:45
That’s, that’s our promise 100%. So thanks very much.

Michael Hudson 2:00:05
Thanks a lot.

Filed under: American Racism, China, EU, Europe, India, Russia, Russophobia, Taiwan, Ukraine, United Kingdom UK, USA | Tagged: , , , , , , , , , , , | Comments Off on Economic Rent and Exploitation: Michael Hudson, Shepheard Walwyn

Will the Global South break free from dollarized debt?

Posted on June 10, 2022 by martyrashrakat

In his latest book, economist Michael Hudson pits socialism against finance capitalism and tears apart the ‘dream civilization’ imposed by the 1 percent.

June 09, 2022

By Pepe Escobar

Let’s jump straight into the fray. Hudson begins with an analysis of the “take the money and run” ethos, complete with de-industrialization, as 90 percent of US corporate revenue is “used to share buybacks and dividend payouts to support company stock prices.”

Michael Hudson’s new book on the world’s urgent global economic re-set is sure to ruffle some Atlanticist feathers.Photo Credit: The Cradle

With The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism, Michael Hudson, one of the world’s leading independent economists, has given us arguably the ultimate handbook on where we’re at, who’s in charge, and whether we can bypass them.

That represents the apex of “Finance Capitalism’s” political strategy: to “capture the public sector and shift monetary and banking power” to Wall Street, the City of London and other western financial centers.

The whole Global South will easily recognize the imperial modus operandi: “The strategy of US military and financial imperialism is to install client oligarchies and dictatorships, and arm-twist allies to join the fight against designated adversaries by subsidizing not only the empire’s costs of war-making (“defense”) but even the imperial nation’s domestic spending programs.” This is the antithesis of the multipolar world advocated by Russia and China.

In short, our current Cold War 2.0 “is basically being waged by US-centered finance capitalism backing rentier oligarchies against nations seeking to build up more widespread self-reliance and domestic prosperity.”

Hudson presciently reminds us of Aristotle, who would say that it is in the interest of financiers to wield their power against society at large: “The financial class historically has been the major beneficiary of empires by acting as collection agents.”

So inevitably the major imperial leverage over the world, a true “strategy of underdevelopment,” had to be financial: instrumentalizing IMF pressure to “turn public infrastructure into privatized monopolies, and reversing 20th century pro-labor reforms” via those notorious ‘conditionalities’ for loans.

No wonder the Non-Aligned Movement (NAM), established in Belgrade in 1961 with 120 nations and 27 observers, became such a threat to US global strategy. The latter predictably fought back with a slew of ethnic wars and the earliest incarnations of color revolution – fabricating dictatorships on an industrial scale, from Suharto to Pinochet.

The culmination was a cataclysmic Houston get-together in December 19, 1990 “celebrating” the dissolution of the USSR, as Hudson reminds us how the IMF and the World Bank “laid out a blueprint for Russia’s leaders to impose austerity and give away its assets – it didn’t matter to whom – in a wave of ‘shock therapy’ to let the alleged magic of free enterprise create a neoliberal free-for-all.”

Lost in a Roman wilderness of debt

To a large extent, nostalgia for the rape-and-pillaging of 1990s-era Russia fuels what Hudson defines as the New Cold War, where Dollar Diplomacy must assert its control over every foreign economy. The New Cold War is not waged only against Russia and China, “but against any countries resisting privatization and financialization under US sponsorship.”

Hudson reminds us how China’s policy “followed almost the same path that American protectionism did from 1865 though 1914 – state subsidy for industry, heavy public-sector capital investment…and social spending on education and health care to upgrade the quality and productivity of labor. This was not called Marxism in the United States; it was simply the logical way to look at industrialization, as part of a broad economic and social system.”

But then, finance – or casino – capitalism gained steam, and left the US economy mainly with “agribusiness farm surpluses, and monopolies in information technology (largely developed as a by-product of military research), military hardware, and pharmaceutical patents (based on public seed-money to fund research) able to extract monopoly rent while making themselves largely tax-exempt by using offshore banking centers.”

That’s the current State of Empire: relying only “on its rentier class and Dollar Diplomacy,” with prosperity concentrated in the top one percent of establishment elites. The inevitable corollary is US diplomacy imposing illegal, unilateral sanctions on Russia, China and anyone else who defies its diktats.

The US economy is indeed a lame post-modern remake of the late Roman empire: “dependent on foreign tribute for its survival in today’s global rentier economy.” Enter the correlation between a dwindling free lunch and utter fear: “That is why the United States has surrounded Eurasia with 750 military bases.”

Delightfully, Hudson goes back to Lactantius, in the late 3rd century, describing the Roman empire on Divine Institutes, to stress the parallels with the American version:

“In order to enslave the many, the greedy began to appropriate and accumulate the necessities of life and keep them tightly closed up, so that they might keep these bounties for themselves. They did this not for humanity’s sake (which was not in them at all), but to rake up all things as products of their greed and avarice. In the name of justice they made unfair and unjust laws to sanction their thefts and avarice against the power of the multitude. In this way they availed as much by authority as by strength of arms or overt evil.”

Socialism or barbarism

Hudson succinctly frames the central issue facing the world today: whether “money and credit, land, natural resources and monopolies will be privatized and concentrated in the hands of a rentier oligarchy or used to promote general prosperity and growth. This is basically a conflict between finance capitalism vs. socialism as economic systems.”

To advance the struggle, Hudson proposes a counter-rentier program which should be the Global South’s ultimate Blueprint for responsible development: public ownership of natural monopolies; key basic infrastructure in public hands; national self-sufficiency – crucially, in money and credit creation; consumer and labor protection; capital controls – to prevent borrowing or denominating debts in foreign currency; taxes on unearned income such as economic rent; progressive taxation; a land tax (“will prevent land’s rising rental value from being pledged to banks for credit to bid up real estate prices”); use of the economic surplus for tangible capital investment; and national self-sufficiency in food.

As Hudson seems to have covered all the bases, at the end of the book I was left with only one overarching question. I asked him how he analyzed the current discussions between the Eurasia Economic Union (EAEU) and the Chinese – and between Russia and China, further on down the road – as being able to deliver an alternative financial/monetary system. Can they sell the alternative system to most of the planet, all while dodging imperial financial harassment?

Hudson was gracious enough to reply with what could be regarded as the summary of a whole book chapter: “To be successful, any reform has to be system-wide, not merely a single part. Today’s western economies have become financialized, leaving credit creation in private hands – to be used to make financial gains at the expense of the industrial economy… This aim has spread like leprosy throughout entire economies – their trade patterns (dependency on US agricultural and oil exports, and IT technology), labor relations (anti-unionism and austerity), land tenure (foreign-owned plantation agriculture instead of domestic self-reliance and self-sufficiency in food grains), and economic theory itself (treating finance as part of GDP, not as an overhead siphoning off income from labor and industry alike).”

Hudson cautions that “in order to break free of the dynamic of predatory finance-capitalism sponsored by the United States and its satellites, foreign countries need to be self-sufficient in food production, energy, technology and other basic needs. This requires an alternative to US ‘free trade’ and its even more nationalistic ‘fair trade’ (deeming any foreign competition to US-owned industry ‘unfair’). That requires an alternative to the IMF, World Bank and ITO (from which Russia has just withdrawn). And alas, an alternative also requires military coordination such as the SCO [the Shanghai Cooperation Organization] to defend against the militarization of US-centered finance capitalism.”

Hudson does see some sunlight ahead: “As to your question of whether Russia and China can ‘sell’ this vision of the future to the Global South and Eurasian countries, that should become much easier by the end of this summer. A major byproduct (not unintended) of the NATO war in Ukraine is to sharply raise energy and food prices (and shipping prices). This will throw the balance of payments of many Global South and other countries into sharp deficit, creating a crisis as their dollar-denominated debt to bondholders and banks falls due.”

The key challenge for most of the Global South is to avoid default:

“The US raise in interest rates has increased the dollar’s exchange rate not only against the euro and Japanese yen, but against the Global South and other countries. This means that much more of their income and export revenue must be paid to service their foreign debt – and they can avoid default only by going without food and oil. So what will they choose? The IMF may offer to create SDRs to enable them to pay – by running even further into dollarized debt, subject to IMF austerity plans and demands that they sell off even more of their natural resources, forests and water.”

So how to break free from dollarized debt? “They need a critical mass. That was not available in the 1970s when a New International Economic Order was first discussed. But today it is becoming a viable alternative, thanks to the power of China, the resources of Russia and those of allied countries such as Iran, India and other East Asian and Central Asian countries. So I suspect that a new world economic system is emerging. If it succeeds, the last century – since the end of World War I and the mess it left – will seem like a long detour of history, now returning to what seemed to be the basic social ideals of classical economics – a market free from rent-seeking landlords, monopolies and predatory finance.”

Hudson concludes by reiterating what the New Cold War is really all about:

“In short, it is a conflict between two different social systems, each with their own philosophy of how societies work. Will they be planned by neoliberal financial centers centered in New York, supported by Washington’s neo-cons, or will they be the kind of socialism that the late 19th century and early 20th century envisioned – a ‘market’ and, indeed, society free from rentiers? Will natural monopolies such as land and natural resources be socialized and used to finance domestic growth and housing, or left to financial interests to turn rent into interest payments eating into consumer and business income? And most of all, will governments create their own money and steer banking to promote domestic prosperity, or will they let private banks (whose financial interests are represented by central banks) take control away from national treasuries?”

The views expressed in this article do not necessarily reflect those of The Cradle.

Filed under: American Hegemony, China, Dictatorship, Eurasia, Russia, US-led NATO Alliance, USA | Tagged: , , , , , , , , , , , , | Comments Off on Will the Global South break free from dollarized debt?

Michael Hudson: Interview with the newly founded German magazine “ViER”

Posted on June 4, 2022 by martyrashrakat

June 03, 2022

Source

By Michael Hudson

“Taken from an interview with the newly founded German magazine “ViER” which will be published in August 2022.” ViER (FOUR), stands for the media as fourth power in checks and balances.

(1.) Prof. Hudson, your new book “The Destiny of Civilization” is out now. This lecture series on finance capitalism and the New Cold War presents an overview of your unique geo-political perspective.
You talk about an ongoing ideological and material conflict between financialized and de-industrialized countries like United States against the mixed-economies of China and Russia. What is this conflict about and why is the world right now at a unique “point of fracture” as your book states?

Today’s global fracture is dividing the world between two different economic philosophies: In the US/NATO West, finance capitalism is de-industrializing economies and has shifted manufacturing to Eurasian leadership, above all China, India and other Asian countries in conjunction with Russia providing basic raw materials and arms.

These countries are a basic extension of industrial capitalism evolving into socialism, that is, into a mixed economy with strong government infrastructure investment to provide education, health care, transportation and other basic needs by treating them as public utilities with subsidized or free services for these needs.

In the neoliberal US/NATO West, by contrast, this basic infrastructure is privatized as a rent-extracting natural monopoly.

The result is that the US/NATO West is left as a high-cost economy, with its housing, education and medical expenses increasingly debt financed, leaving less and less personal and business income to be invested in new means of production (capital formation). This poses an existential problem for Western finance capitalism: How can it maintain living standards in the face of de-industrialization, debt deflation and financialized rent-seeking impoverishing the 99% to enrich the One Percent?

The first U.S. aim is to deter Europe and Japan from seeking a more prosperous future to lie in closer trade and investment ties with Eurasia and the Shanghai Cooperation Organization (SCO, a more helpful way of thinking about the global fracture from the BRICS). To keep Europe and Japan as satellite economies, U.S. diplomats are insisting on a new economic Berlin Wall of sanctions to block trade between East and West.

For many decades U.S. diplomacy has meddled in European and Japanese internal politics, sponsoring pro-neoliberal officials into government leadership. These officials feel that their destiny (and also their personal political fortunes) is closely allied with U.S. leadership. Meanwhile, European politics has now become basically NATO politics run from the United States.

The problem is how to hold the Global South – Latin America, Africa and many Asian countries – in the US/NATO orbit. Sanctions against Russia have the effect of hurting the trade balance of these countries by sharply raising oil, gas and food prices (as well as prices for many metals) that they must import. Meanwhile, rising U.S. interest rates are drawing financial savings and bank credit into U.S.-dollar-denominated securities. This has raised the dollar’s exchange rate, making it much harder for SCO and Global South countries to pay their dollarized debt service falling due this year.

This forces a choice on these countries: either go without energy and food in order to pay foreign creditors – thereby putting international financial interests before their domestic economic survival – or defaulting on their debts, as occurred in the 1980s after Mexico announced in 1982 that it could not pay foreign bondholders

(2.) How do you see the ongoing war/special military operation in Ukraine? Which economic consequences do you foresee?

Russia has secured the Russian-speaking Eastern Ukraine and its southern Black Sea coastline. NATO will continue to “poke the bear” by sabotage and new ongoing attacks, especially by Polish fighters.

NATO countries have dumped their old and obsolete weapons into Ukraine, and now must spend immense sums modernizing their military hardware. The outflow of payments to the U.S. military-industrial complex will put downward pressure on the euro and British sterling – all coming on topo of their own rising energy and food deficits. So the euro and sterling are headed down toward parity with the U.S. dollar. The euro is almost there now (about $1.07). This means sharply rising price inflation for Europe.

I read and hear conflicting information on the new sanctions. Some experts in the East and West believe this will harm the national economy of the Russian Federation tremendously. Other experts tend to believe this will backfire or have a huge boomerang-effect on the Western countries indeed.

The overriding U.S. policy is to fight against China, hoping to break of the Western Uighur regions and divide China into smaller states. To do that, it is necessary to break away Russian military and raw-materials support for China – and in due course to break it up into a number of smaller states (the Western large cities, northern Siberia, a southern flank, etc.).

Sanctions were imposed in hopes of making living conditions so unpleasant for Russians that they would press for regime change. The NATO attack in Ukraine was designed to drain Russia militarily – by having the bodies of Ukrainians deplete Russia’s supply of bullets and bombs by giving their lives simply to absorb Russian arms.

The effect has been to increase Russian support for Putin – just the opposite of what was intended. There is a growing disillusion with the West, after seeing what the Harvard Boys did to Russia when the United States backed Yeltsin to create a domestic kleptocrat class that tried to “cash out” its privatizations by selling shares in oil, nickel and public utilities to the West, and then spurring military attacks from Georgia and Chechnya. There is a general agreement that Russia is making a long-term turn Eastward instead of Westward.

So the effect of U.S. sanctions and military opposition to Russia has been to impose a political and economic Iron Curtain locking in Europe to dependency on the United States, while driving Russia together with China instead of prying them apart. Meanwhile, the cost of European sanctions against Russian oil and food – much to the benefit of U.S. LNG gas suppliers and agricultural exporters – threatens to create long-term European opposition to U.S. unipolar global strategy. A new “Ami go home” movement is likely to develop.

But for Europe, the damage already has been done, and neither Russia nor China are likely to trust that European government officials can withstand the bribery and personal pressure brought to bear by U.S. interference.

Here in Germany I’m listening to the new Minister for Economy, Mr Robert Habeck from the Green Party, who talks about activating the federal “emergency gas” and asks the Emirates for resources (this “deal” seems to be failed already, news say). We see the end of North Stream II and huge dependency for Berlin and Brussels on Russian resources. How this will all sum up?

In effect, U.S. officials have asked Germany to commit economic suicide and bring on a depression, higher consumer prices and lower living standards. German chemical companies have already begun to shut down their fertilizer production, given Germany’s acceptance of trade and financial sanctions that prevent it from buying Russian gas (the raw material for most fertilizer). And German car companies are suffering from supply cut-offs.

These European economic shortages are a huge benefit to the United States, which is making enormous profits on more expensive oil (which is controlled largely by U.S. companies, followed by British and French oil companies). Europe’s replenishment of the arms that it donated to Ukraine also is a boon to the U.S. military-industrial complex, whose profits are soaring.

But the United States is not recycling these economic gains to Europe, which is looking like the big loser.

Arab oil producers already have rejected U.S. demands that they charge less for their oil. They look to be windfall gainers from the NATO attack on the Ukraine proxy battlefield.

It seems unlikely that Germany can simply give back to Russia Nord Stream 2 and the Gazprom affiliates that have conducted trade with Germany. Trust has been broken. And Russia is afraid to accept payments by European banks since the theft of $300 billion of its foreign reserves. Europe is no longer economically safe for Russia.

The question is just how soon Russia will simply stop supplying Europe altogether.

It looks like Europe is becoming an appendage of the U.S. economy, in effect bearing the fiscal burden of America’s Cold War 2.0, with no political representation in the United States. The logical solution is for Europe to join the United States politically, giving up its governments but at least getting a few Europeans in the U.S. Senate and House of Representatives.

(3.) Which role does the a) New Cold War and the b) neoliberal finance capitalism play in the current war between Russia and Ukraine? According to your recent research.

The US/NATO war in Ukraine is the first battle in what looks like a 20-year attempt to isolate the Dollar Area West from Eurasia and the Global South. U.S. politicians promise to keep the Ukraine war going indefinitely, hoping that this may become Russia’s “new Afghanistan.” But this tactic now looks like it may threaten to be America’s own Afghanistan. It is a proxy war, whose effect is to lock in Europe’s dependency on the United States as a client oligarchy with the euro as a satellite currency to the dollar.

U.S. diplomacy tried to disable Russia in three major ways. First, isolating it financially by blocking it from SWIFT bank clearing, system. Russia responded by smoothly moving over to China’s bank-clearing system.

The second tactic was to seizing Russian deposits in U.S. banks and holdings of U.S. financial securities. Russia responded by picking up U.S. and European investments in Russia on the cheap as the West dumped them.

The third tactic was to block NATO members from trading with Russia. The effect has been that Russian imports from the West have declined, while its exports of oil, gas and food are soaring. That has raised the ruble’s exchange rate instead of hurting it. And as sanctions block Russia’s imports from the West, President Putin has announced that his government will invest heavily in import substitution. The effect will be a permanent loss of Russian markets for European suppliers and exporters.

Meanwhile, the Trump tariffs against European exports to the United States remain in place, leaving European industry with shrinking business opportunities. The European Central Bank may continue to buy European stocks and bonds to protect the wealth of the One Percent, but if anything will cut back on domestic social spending so as to comply with the 3% limit of budget deficits that the eurozone has imposed on itself.

In the medium and long run, the US/NATO sanctions are therefore aimed mainly against Europe. And Europeans don’t even seem to see that they are the primary victims of this new U.S. economic war for self-serving energy, food and financial dominance.

(4.) In Germany the stopped energy project Nord Stream II is still a big political issue. In your recent online article “The Dollar Devours the Euro” you wrote: “It is now clear that today’s escalation of the New Cold War was planned over a year ago. America’s plan to block Nord Stream 2 was really part of its strategy to block Western Europe (“NATO”) from seeking prosperity by mutual trade and investment with China and Russia.” Could you explain this to our readers?  source: https://michael-hudson.com/2022/04/the-dollar-devours-the-euro/

What you characterize as “blocking Nord Stream 2” is really a Buy-American policy. The United States has persuaded Europe not to buy in the lowest-price market, but to pay as much as seven times more for its gas from U.S. LGN suppliers, and to spend a reported $5 billion on expanding port capacity – that will not even be available for a year years.

This threatens a very uncomfortable interregnum for Germany and other European countries following U.S. dictates. Basically, national parliaments are now subservient to NATO, whose policies are run from Washington.

One price that Europe will pay, as noted above, is declining exchange rate against the U.S. dollar. European investors are likely to move their savings and investments out of Europe to the United States in order maximize their capital gains and simply avoid price declines for their stocks and bonds as measured in dollars.

(5.) Prof. Hudson, let’s take a look at further developments in Germany. In May the German parliament – Bundestag – passed a new bill: German lawmakers approved possible expropriation of energy companies. This could enable the Berlin government to put energy companies under trusteeship if they can no longer fulfil their tasks and if the security of supply is at risk. According to REUTERS, the renewed law – which still needs to pass the upper house of parliament – could be applied for the first time if no solution is found on the ownership of the PCK Refinery oil refinery in Schwedt/Oder (East Germany), which is majority-owned by Russian state-owned Rosneft.

It looks like Europe and America will confiscate Russian investments in their countries, and sell off (or have Russia confiscate) NATO-country investments in Russia. This means a de-linking of the Russian economy from the West, and a closer linking with China – which looks like the next economy to be sanctioned by NATO as it becomes an Eastern Pacific Treaty Organization involving Europe in tis confrontation in the China Sea.

I would be surprised if Russia resumes selling oil and gas to Europe without being reimbursed for what Europe (and also the United States) has seized. This demand would help bring European pressure on the United States to give back the $300 billion in foreign reserves that it has grabbed.

But even after such a give-back and reparations settlement, trade seems unlikely to be resumed. A phase change has occurred, a change in consciousness as to how the world is splitting up under U.S. diplomatic attacks on allies and adversaries alike.

My question would be: Socialism is a big topic in your new book. What’s your view on those “socialist” measures taken now by a capitalist country like Germany?

source: https://www.reuters.com/business/energy/german-lawmakers-approve-possible-expropriation-energy-companies-2022-05-12/

A century ago, the “final stage” of industrial capitalism was expected to be socialism. There were many different kinds of socialism: State socialism, Marxian socialism, Christian socialism, anarchist socialism, libertarian socialism. But what occurred after World War I was the antithesis of socialism. It was finance capitalism and a militarized Finance capitalism.

The common denominator of all socialist movements, from the right to the left of the political spectrum, was stronger government infrastructure spending. The transition to socialism was being led (in the United States and Germany) by industrial capitalism itself, seeking to minimize the cost of living (and hence the basic living wage) and the cost of doing business by government investment in basic infrastructure, whose services were to be provided freely, or at least at subsidized prices.

That aim would prevent basic services from becoming opportunities for monopoly rent. The antithesis was the Thatcher-neoliberal doctrine of privatization. Governments turned over public utilities to private investors. Companies were bought on credit, adding interest and other financial charges to profits and payments to management. The result has been to turn neoliberal Europe and America into high-cost economies unable to compete in production prices with countries pursuing socialist polities instead of financialized neoliberalism.

This opposition in economic systems is the key to understanding today’s world global fracture.

(6.) Especially Russian oil and gas are in the focus right now. Moscow demands payments in Rouble only and is expanding their field of buyers filling it with China, India or Saudi-Arabia. But it seems Western buyers can still pay in Euro or US Dollar. What is your take on this ongoing war on resources? The Rouble appears to be a winner.

The rouble certainly is rising. But this does not make Russia a “winner” if its economy is disrupted by the sanctions blocking its own imports needed for its supply chains to operate smoothly.

Russia will end up the winner if it can mount an industrial import-substitution program, and re-create public infrastructure to replace what has been privatized under U.S. direction by the Harvard Boys in the 1990s.

Do we see the end of the petro-dollar and a rise of a new financial architecture in the East accompanied by a strengthening of BRICS and Shanghai Cooperation Organization (SCO)?

There will still be petrodollars, but also a variety of currency-area blocs as the world de-dollarizes its international trade and investment arrangements. In late May, Foreign Secretary Lavrov said that Saudi Arabia and Argentina want to join BRICS. As Pepe Escobar recently noted, BRICS+ may expand to include MERCOSUR and the South African Development Community (SADC)

These arrangements probably will call for a non-U.S. alternative to the IMF to create credit and provide a vehicle for official foreign-exchange reserves for the non-NATO countries. The IMF will still survive to impose austerity on U.S. satellite countries while subsidizing capital flight from Global South countries and creating SDRs to finance U.S. military spending abroad.

Summer 2022 will be a testing ground as Global South countries suffer a balance-of-payments crisis from the rising oil and food deficits alongside the higher domestic-currency costs of carrying their foreign dollar debts. The IMF may offer new SDRs for them to pay US dollar bondholders to keep the illusion of solvency going. But the SCO countries can offer oil and food – IF countries give assurances of repaying credit by repudiating their dollar debts to the West.

This financial diplomacy promises to introduce “interesting times.”

(7.) In your recent interview with Michael Welch (“Accidental Crisis?”) you have a specific analysis on the current events in Ukraine/Russia:
“The war isn’t against Russia. The war isn’t against Ukraine. The war is against Europe and Germany.” Could you please elaborate on that?

source: https://michael-hudson.com/2022/03/accidental-crisis/

As I explained above, the U.S. trade and financial sanctions are locking in Germany to dependency on U.S. exports of LNG, and purchases of US military arms to upgrade NATO into the de facto European Governing Authority.

The effect is to destroy any European hopes for mutual trade and investment gains with Russia. It is being turned into the junior partner (very junior) in its new trade an investment relations with the increasingly protectionist and nationalistic United States.

(8.) The real problem for United States seems to be this: “The only way of maintaining prosperity if you can’t create it at home is to get it from abroad.” What is Washington’s strategy in there?

My book Super Imperialism has explained how, for the past 50 years, ever since the United States went off gold in August 1971, the U.S. Treasury Bill standard has given the United States a free ride at foreign expense. Foreign central banks have recycled their dollar inflow resulting from the U.S. balance-of-payments deficit into loans to the U.S. Treasury – that is, to buy U.S. Treasury securities to hold their savings. This arrangement has enabled the United States to undertake foreign military spending for its nearly 800 military bases around Eurasia without having to depreciate the dollar or tax its own citizens. The cost has been borne by countries whose central banks have built up their dollar loans to the U.S. Treasury.

But now that it has become unsafe for countries to hold dollar-denominated U.S. bank deposits or government securities or investments if they “threaten” to defend their own economic interests or if their policies diverge from those dictated by U.S. diplomats, how can America continue to get a free ride?

In fact, how can it import basic materials from Russia to fill parts of its industrial and economic supply chain that is being broken down by the sanctions?

That is the challenge for U.S. foreign policy. One way or another, it aims to tax Europe and make other countries into economic satellites. The exploitation may not be as blatant as the U.S. grabbing of Venezuelan, Afghan and Russian official reserves. It is likely to involve undercutting foreign self-sufficiency to force other countries into economic dependency on the United States, so that the U.S. can threaten these countries with disruptive sanctions if they seek to put their own national interests over what U.S. diplomats want them to do.

(9.) How will all this affect Western Europe’s (Germany / France / Italy) balance of payments and hence the euro’s exchange rate against the dollar? And why do you think the European Union is on a path to become new “Panama, Puerto Rico and Liberia”?

The euro already is a satellite currency to the United States. Its member countries cannot run domestic budget deficits to cope with the coming inflationary depression resulting from the U.S.-sponsored sanctions and resulting Global Fracture.

The key is turning out to be military dependency. This is “cost sharing” for the U.S. sponsored Cold War 2.0. That cost sharing is what has led U.S. diplomats to realize that they need to control domestic European politics to prevent its populations and businesses from acting in their own interests. Their economic squeeze is “collateral damage” to today’s New Cold War.

(10.) A philosopher from Switzerland wrote a critical essay in mid of March for the German socialist newspaper „Neues Deutschland“, a former news outlet for the GDR government. Ms Tove Soiland criticized the international Left for current behaviours regarding Ukraine crisis and covid management. The Left, she says, is too much pro authoritarian government/state – and thereby copying methods of the traditional right-wing parties. Do you share this view? Or is it too harsh?

How would you answer this question, esp. regarding the thesis in your new book: “… the alternative path is broadly mixed-economy industrial capitalism leading to socialism …”. source: https://www.nd-aktuell.de/artikel/1162247.die-linke-und-corona-ein-postideologischer-totalitarismus.html

The State Department and CIA’s “mighty Wurlitzer” has focused on gaining control of Europe’s Social Democratic and Labour parties, anticipating that the great threat to U.S.-centered finance capitalism will be socialism. That has included the “green” parties, to the point where their pretense of opposing global warming is shown to be hypocritical in light of the vast carbon footprint and pollution of the NATO military warfare in Ukraine and related air force and naval exercises. You can’t be pro-environment and pro-war at the same time!

This has left the right-wing nationalist parties less influenced by U.S. political meddling. That is where the opposition to NATO is coming from, as in France and Hungary.

And in the United States itself, the only votes against the new $30 billion contribution to military spending against Russia came from Republicans. The entire “left wing” Democratic Party “squad” voted for the war spending.

The Social Democratic parties are basically bourgeois parties whose supporters have hopes of rising into the rentier class, or at least becoming stock and bond investors in miniature. The result is that neoliberalism has been led by Tony Blair in Britain and his counterparts in other countries. I discuss this political alignment in The Destiny of Civilization.

U.S. propagandists call governments that keep natural monopolies as public utilities “autocratic.” To be “democratic” means to let U.S. firms by control of these commanding heights, being “free” of government regulation and taxation of finance capital. So “left” and “right,” “democracy” and “autocracy,” have become an Orwellian Doublespeak vocabulary sponsored by America’s oligarchy (which it euphemizes as “democracy”).

(11.) Could the war in Ukraine be a landmark to show a new geopolitical map in the world? Or is the neoliberal New World Order on its rise? How do you see it?

As I explained in your Question #1, the world is being split into two parts. The conflict is not merely national by the West against the East, but is a conflict of economic systems: predatory finance capitalism against industrial socialism aiming at self-sufficiency for Eurasia and the SCO.

The non-aligned countries were not able to “go it alone” in the 1970s because they lacked a critical mass to produce their own food, energy and raw materials. But now that the United States has de-industrialized its own economy and outsourced its production to Asia, these countries have an option not to remain in dependency on U.S. Dollar Diplomacy.

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(Updated with transcript) Ben Norton aka Multipolarista interviews Michael Hudson: Destiny of Civilization

Posted on May 12, 2022 by fada1

May 12, 2022

Source

The decline of the US dollar, the three ‘systems’, the sanctions war on Russia, on the eve of the publication of Prof. Hudson’s new book:  The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”

UPDATE:  This wonderful transcript is now available just underneath the video

Transcript

BENJAMIN NORTON: Hey, everyone. I’m Ben Norton, and this is the Multipolarista podcast. And I have the great pleasure of being joined today by one of my favorite guests, one of I think the most important economists in the world today. I’m speaking with Professor Michael Hudson.

If you’ve seen any of the interviews I’ve done with Professor Hudson over the past few years, you probably know that he’s a brilliant analyst. He always has, I think, the best analysis to understand what’s going on economically and also politically, geopolitically, in the world today.

And right now is, I think, a very important moment to have Professor Hudson on today. We’re going to talk about the economic war on Russia and the process of economic decoupling between Russia and China and the West, which is something that Professor Hudson has talked about for many years. And that really has accelerated with the Western sanctions on Russia over Ukraine.

We’re also going to talk about the decline in U.S. dollar hegemony. A recent report from the International Monetary Fund, which is dominated by the U.S., acknowledged that the use of the dollar in foreign bank reserves is gradually declining.

Now, it’s not going to disappear overnight. But even the IMF is acknowledging that dollar hegemony is eroding. And, of course, the IMF acknowledged that the Western sanctions on Russia are going to further erode the hegemony of the U.S. dollar.

We now see Russia doing business with China in the Chinese yuan. Russia is also doing business with India with the Indian rupee. And of course Russia has been telling Europe that if it wants to buy Russian energy, it has to do so with Russian rubles.

So there’s so much to talk about today, Professor Hudson, but I want to begin in the first half of this interview today talking about a new book that you’re just about to publish.

Today is Monday, May 9th. You said on Wednesday, May 11th, the book comes out. And it’s called “The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”

And everything that I just prefaced this interview with, discussing the economic war in Russia and sanctions and decoupling, this is all deeply related to what you talk about in this book. And I had the pleasure of getting an early copy and reading through it. It’s a really important book, I think.

And you talk about this fundamental divide internationally – and this is a divide that actually goes back historically as well – between these three models for different economic systems you discuss: finance capitalism, industrial capitalism, and socialism.

And your argument is that the U.S. empire has been a force for imposing neoliberalism, which is a particular form of finance capitalism, which is nonproductive, in which finance capital destroys productive industries in pursuit of rent-seeking, and what you call the rentier class.

So instead of producing, as the classical bourgeois economists had said capitalism would be a productive system instead, finance capitalism is fundamentally a system of destruction and debt.

And your argument is that this is deeply rooted in U.S. foreign policy. This is the U.S. foreign policy strategy for expanding its economic power, is imposing this finance capitalist model on the world.

So can you expand further on your argument about the fight between finance capitalism, industrial capitalism, and socialism, and why you decided to publish this book now?

MICHAEL HUDSON: Well the book came out of a series of 10 lectures that I did for my Chinese audience. I’ve been a professor at Peking University for a number of years in economics, and have professorships at other universities, Wuhan and Hong Kong.

And I have a fairly large audience of about 65,000 people per lecture there. And I was asked to give my general overview, sort of a history of economic development in the West, for the Chinese.

And in order to understand today’s finance capitalism, you have to understand what industrial capitalism was, as it was described in the 19th century.

And it’s often forgotten, or played down, that industrial capitalism was revolutionary. What it was trying to do – from the physiocrats in France in the late 18th century to Adam Smith, John Stuart Mill, Marx, and the whole late-19th century flowering of socialism – the ideal of classical value theory and rent theory, was to say what is the actual value, the cost value of producing goods and services?

And what is earned by the capitalist, when he employs labor to make a profit, and what is unearned? And what is unearned was the landlord class. That was the hereditary warrior class that conquered all of the European kingdoms in the Middle Ages.

And the attempt by England’s industrialists was saying, look, we cannot become the workshop of the world; we cannot undersell foreign countries if we have a landlord class ripping off all of the money in land rent.

And if we have predatory banking, or the wealthy people just lend really for buying property, or making distressed loans or predatory loans that have nothing to do with financing actual capital formation.

Well, what made this capitalism revolutionary was the British industrialists and advocates of industry, even the bankers in Ricardo’s time, said, well, in order to overthrow the landlord class, which controls the House of Lords and all of the upper chambers of government in Europe, we have to have democratic reform.

If we have democratic reform and give voting to the people, they’re going to vote against the landlord class, and then we can have an efficient economy where our prices of our exports and our goods and services reflect the actual cost of production, not the rake off for the rentiers class, not the rake off of what landlords take, not the rake off of what predatory bankers take.

And the whole long 19th century leading up to World War One was this revolutionary value theory that depicted land rent and monopoly rent and financial returns as being unearned income and wanting to strip it away.

And all of this seemed to be moving toward socialism. The industrialists were all in favor of government public utilities, of government enterprise, because they said, if the government doesn’t provide health care, then individuals are going to have to pay it, and it’ll cost a lot of money, like it does in the United States.

And so you had the conservative prime minister of England, Benjamin Disraeli, saying, health, all is health, we’ve got to provide public health for the people.

And it was the conservative Bismarck in Germany that said, we’ve got to provide pensions. If labor has to save up for the pensions, then it’s not going to have enough money to buy the goods and services that we Germans are producing. We have got to make pensions public.

So all of this move towards socialism was not only in favor of increasing living standards, which soared in the 19th century, but also in freeing the economy from the rentier class, from the landlords, from the bankers.

And for the classical economists, a free market was a market free from landlords, free from bankers, free from monopolists.

Well, needless to say, the rentiers fought back. And by after World War Two, we’ve seen a continual anti-classical theory replacing the classical idea of free markets with a value of free theory, saying, well, everybody earns whatever they they have. All wealth is earned, not unearned. And if Goldman Sachs partners are paid more than anyone else, that’s because they’re so productive.

So you had a move rejecting classical economics, a junk economics, and a kind of artificial economics that doesn’t really talk about how finance capitalism has worked.

And as it turns out, the business plan of finance capitalism was so predatory that it was anti-industrial.

That’s why President Clinton in the United States moved to invite China into the International Labor Organization, saying, well, we can fight wage rises in America by a race to the bottom. We can we can hire Asians to do work, and that will cause unemployment here. And that’s wonderful for the industrialists. It will basically cut wages and keep American wages down.

Well, that basically is the strategy of finance capitalism, and the aim of finance capitalism is not to invest in factories, and plant equipment, and research and development, but to live in the short term, but to make money by financial engineering, not industrial engineering.

And it becomes predatory, and so you have the whole ideological attack on public enterprise. You have Frederick Hayek’s “The Road to Serfdom,” where you say, if government provides public healthcare, that’s “the road to serfdom,” where actually it’s finance capitalism that is the road to debt peonage and serfdom.

And you have now a whole disparagement of government. And all of this is a counter-revolution to the revolutionary impetus of industrial capitalism in its early stages.

And it’s true that corporations now are just as right-wing as the the banks and the hedge funds. But that’s because corporate industry has been taken over by the financial sector, and the heads of almost every industrial corporation are rewarded the how high they can push the stock price, to exercise the stock options they’re paid in.

And you increase the stock price not by investing more, not by hiring more labor or increasing productivity or increasing sales, but simply by using whatever income you have to buy back your stocks. And by buying back your stocks, this forces up their price.

And, most of all, by giving political contributions in this country to the Democrats and Republicans alike, who appoint Federal Reserve heads that have spent $7-9 trillion buying up stocks and bonds to increase the price of buying a retirement income, to increase Wall Street prices, to increase housing prices, and make America even less competitive industrially.

So finance capitalism is what has essentially de-industrialized the United States and turned the Midwest into a Rust Belt.

Well, the alternative, obviously, are the societies that have not followed this neoliberal finance capitalist plan. And the most successful economy, obviously, has been China, which is why it has been spending so much time there.

And China has done exactly what 19th-century United States, Germany, England, and France did. It has kept basic utilities, basic needs, housing, and above all, finance and banking, in the public domain, as public utilities.

Instead of having an independent financial sector operating on its own self-interest, the Bank of China creates the money. And the Bank of China lends money by deciding, where do we need to have investment in real estate to provide housing for the population at as low a price as we can make it? How do we build up the industry? How do we provide an educational system with training? How do we provide health?

And the fact is that the central planning in an efficient socialist style, not the Stalinist planning that everybody refers to of Russia, but a mixed economy as you have in China, which is truly a mixed economy, with guidance, like the French planification.

Well, that is obviously the way in which you survive and you avoid the kind of overloading the economy with debt service, with high rents, with high payments to the health-care monopoly in the United States, by avoiding all of this payment to a rentier class that has what the classical economists call unearned income, predatory income.

And instead of unseating them, we’ve put them in charge, and made the banks and Wall Street, and the city of London, and the Paris Bourse, the central planners.

So we do have central planning much more centralized than anything that was dreamed by the socialists. But the planning, the centralized planning is done by the financial sector.

And financial planning is short-termism; it’s short-term planning; it’s take your money and run. And that’s what is stripping and impoverishing the global economy today.

BENJAMIN NORTON: Absolutely. And, in your book, you write about the important distinction between the classical economic idea of a so-called free market, and how, you argue that, neoliberals turn that idea on its head.

So this is what you write in your book. And this is, again, Michael Hudson’s new book, “The Destiny of Civilization,” which is out this week. You write:

“The neoliberal ideology inverts the classical idea of a free market from one that is free from economic rent to one that is free for the rentier classes” – that is the rent-extracting classes – “to extract rent and gain dominance.”

So they they completely flip the idea of what it means to have a free market.

And then you note that, “in contrast to classical political economy, this neoliberal ideology promotes tax favoritism for rentiers, privatization, financialization, and deregulation.” And you discuss all of that.

That is, of course, what we could call the Washington consensus.

And then you argue that “U.S. foreign policy seeks to extend this neoliberal rentier program throughout the world.”

And you have a very interesting section of your book where you discuss this concept as “free-trade imperialism.”

So can you talk about what your idea of “free-trade imperialism” is and how it relates to U.S. foreign policy?

MICHAEL HUDSON: Well, the Nobel Prize is given basically for junk economics. And probably the worst junk economist of the century was Paul Samuelson.

He made the absurd claim that he proved mathematically that, if you have free trade then, and don’t have tariffs, and don’t have any government protection, then everyone will become more equal. At least the proportions between labor and capital will be more equal. Well, the reality is just the opposite.

And the term “free-trade imperialism” was actually created by a British historian of trade theory who pointed out that, wait a minute, when England went for free trade, the idea was, if we have free trade, we can stifle other countries from being able to industrialize, because if we have free trade, then we can tell America, we will open our doors to your markets – meaning the markets of the slave South, that Britain supported – and in exchange, you will open your markets to our industrial goods.

And America followed that until the Civil War, which was fought not only over slavery, but by the Republican Party after 1853 that said very explicitly, if we’re going to win the election – the Whigs never could win – if we, the new party, are going to win the election and industrialize America, we’ve got to integrate ourselves with the anti-slavery issue, with emancipation, but for us, the economic war of America is a war of, either we’re going to have protective tariffs in the North, or we’re going to end up as a non-industrial, raw materials-producing society, as the South wants.

And that was the debate from 1815, when the Napoleonic wars ended and world trade began again, until really the Civil War.

And America became strong in the way that Germany became strong too, by having protective tariffs, in order to have prices large enough to nurture what was called infant industry, to nurture American manufacturing.

And I wrote a long book about this, published some years ago based on my PhD dissertation, “America’s Protectionist Takeoff.”

Well, the English tried to fight against other countries protecting their economy, saying that if you just have free trade, you’ll get rich. Whereas the reality is, if we have free trade, you’ll get poor, if you’re not already able to have industrial and labor productivity and agricultural productivity on par with the most advanced countries.

Free trade was an attempt to prevent other countries from investing government money and building up their agriculture, and building up their industry, and building up their productivity, and creating a school system, to raise wages, to make wages more productive.

And the American protectionists said, well, we’re going to have a high-wage economy because high-wage labor undersells pauper labor. And skilled, well-fed, well-rested American labor can produce much more than the pauper labor of other countries that have free trade.

Well, what the leading American protectionist economist, Erasmus Peshine Smith, went to Japan and helped industrial help Japan break away from British free trade, helped Japan industrialize.

And other American economists, other foreign economists, all picked up the ideas of the American protectionist, like Friedrich List went to Germany promoting protectionism.

And Peshine Smith’s book, “The Manual of Political Economy,” was translated into all the foreign languages – Japanese, Italian, French, German.

And you had Europe realizing that free trade polarizes economies. Well, it was this that after World War One, and especially World War Two, when you had orthodox economics turning into basically propaganda.

That’s where you and Samuelson and others try to convince other countries, governments are bad, leave everything to the wealthy people, to the finance people, trickle-down economies, it’s all going to trickle down, don’t worry, just give more money to the rich, and don’t have any government interference with markets.

Whereas America had got rich by interfering with markets, to shape them in the years leading up to World War One.

But after World War One, America had already achieved its industrial dominance. And it was after World War One that America said, ok, now our protective tariffs have enabled us to outproduce all the other countries, and our protectionist agriculture especially – the most protected sector in America, has always been agriculture, since the 1930s.

Basically it said, well, now we can outproduce other countries, we can undersell them, now we can tell them to go for free trade.

And after World War Two, the Americans created the World Bank for economic impoverishment, and the International Monetary Austerity Fund.

And the World Bank’s leading objective was to prevent other countries from investing in their own food production.

The guiding line of the World Bank was, we’ve got to provide infrastructure for building up plantation agriculture in Latin America, and Africa, and other countries, so that they will grow tropical export crops, but they cannot be permitted to grow grain or wheat to feed themselves; they must be dependent on the United States.

And so the function of free trade, the World Bank, and the International Monetary Fund has been to finance dependency, backed up by the American support of dictatorships throughout Latin America who agree to have client oligarchies supporting pro-American trade patterns and avoiding any kind of self-reliance, so that the United States can do what it has recently done to Russia and other countries, impose sanctions – say, well, now that you depended on us for your grain, we can now impose sanctions, and you can’t feed yourself if you don’t follow the policies we want.

That was the policy that America tried to use against China after Mao’s revolution. And fortunately for China, Canada broke that monopoly, and said, well, we’re going to sell grain to China. And China was always very friendly to Canada in those earlier decades.

So basically, free trade means no government, no socialism. It means central planning essentially by Wall Street – countries should let American firms come in, buy control of their raw materials, resources, control of their oil and gas, and mineral rights, and forests and plantations, and basically let other countries send their whole economic surplus to the United States, where it will be duly financialized to buy out other countries’ raw materials and rent yielding resources.

BENJAMIN NORTON: Yeah, and in your book, you have a very funny passage that I think really encapsulates this ideology that you’re talking about here.

You referred to Charles Wilson, who was the secretary of defense under Eisenhower in the U.S., and he was also the former CEO of General Motors.

And he famously said, “What’s good for General Motors is good for the country.” And that idea has morphed into the idea that, “What’s good for Wall Street is good for America.”

And then you note that “this merged with evangelistic U.S. foreign policy that says ‘What’s good for America is good for the world.’ And therefore the logical syllogism is clear: ‘What’s good for Wall Street is good for the world.’”

And you describe this, you link it to the new cold war, this idea that what’s good for the U.S. is good for the world and what’s good for Wall Street is good for the U.S., therefore, what’s good for Wall Street is good for the world.

You argue, “We must recognize how finance capitalism has gained power over industrial economies, above all in the United States, from which it seeks to project itself globally, led by the financialized U.S. economy. Today’s new Cold War is a fight to impose rentier-based finance capitalism on the entire world.”

And this is such an important analysis. Because among those very few people of us who talk about this idea of the new cold war and how dangerous it is, there are very few people who frame it in economic terms.

Usually we frame it in political terms, right, the geopolitical interests between the US and the EU on one side, and China and Russia on the other.

And going back to Brzezinski and The Grand Chessboard, his 1997 book, where he talks about the importance of preventing near strategic competitors from emerging in Eurasia. That’s of course a geopolitical discussion and economics is part of it, but it’s often not at the forefront.

But your analysis I think is even more important, and more accurate, because your argument is not only is it geopolitical, but the geopolitical struggle is rooted in economics. And this is an economic struggle between systems.

So talk talk more about the new cold war and how you see it.

MICHAEL HUDSON: Well, as we’re seeing now, the world is dividing into two parts. We can see that in the fight against Russia, which is also a fight against China, and against India, as you noted. And it seems Indonesia and other countries as well.

The United States is pushing a world that can be controlled by American investors. The ideal of the American neoliberal plan is to do to other countries what it did to Russia after 1991: take all of your public domain, your oil companies, your nickel mines, your electric utilities, give them all to the wealthy oligarchy, that can only make money once it’s taken control of these companies, by selling the stocks to the West.

The West will buy out oil, just like Mikhail Khodorkovsky tried to sell Yukos oil to Standard Oil in the West. And we’ve got to put an oligarchy that will sell all of the national domain, all of the patrimony and natural resources, and all the companies, to American investors on the cheap.

The Russian stock market led all the stock markets in the world from 1994 up to about 1998. This was a huge rip off. The United States wants to be able to do that to the rest of the world.

And it was furious when Russia said, we’ve lost more population as a result of neoliberalism than we did in all of World War Two fighting against Nazism. We’ve got to stop.

And Russia began to say, we’ve got to use Russia’s population, and industry, and natural resources for Russia’s benefit, not for the United States’ benefit.

Well, the United States was absolutely furious with this. And the fury has erupted in the NATO war against Russia in the last few months, and what’s ongoing now.

And the United States says, U.S. State Department officials have said, what we want to do is carve up Russia into maybe four different countries: Siberia, western Russia, southern Russia or Central Asia, maybe northern Russia.

And once we’ve done that, we cut Russia off from China, then we go into China. We finance, we send ISIS and al-Qaeda into the Uyghur areas, the Muslim areas, and we start a color revolution there. And then we break up China, into a northern part, a southern part, a central part.

And once we break them up, we can more or less control them. And we can then come in, buy up their resources, and take over their industry, their labor, and their government, and get richer to obtain from China, Russia, India, Indonesia, and Iran the wealth that we’re no longer producing in the United States, now that we de-industrialized.

So the world is dividing into two parts. And it’s not simply the United States and its European satellites on the one hand versus the non-white population on the other hand; it’s finance capitalism versus the rest of the world, which is protecting itself by socialism, which in many ways fulfills what was the ideal of industrial capitalism during the 19th century, when industrial capitalism was actually progressive.

And it was progressive. That’s part of the whole theme of my book. It was revolutionary. It tried to free economies from the legacy of feudalism, from the legacy of hereditary landlords.

And now the financial class is no longer the landlord class, but the landlord class pays most of its rent to the financial class in the form of mortgage interest, as it borrows money to buy property and housing and commercial sites on credit.

And you have the kind of financialization that has increased housing prices in the United States to over 40% of income, that is officially guaranteed for mortgages. That has priced American labor out of the market.

Privatized health care, 18% of GDP, that is pricing America out of the world market. Debt, auto debt, student debt, which in other countries education is free; that’s pricing America out of the market.

So you have a basically un-competitive economy that’s committing financial suicide, following the same dynamic that destroyed the Roman empire, where a predatory oligarchy took over and maintained power by an assassination policy of its critics, just very similar to what America has been doing in Latin America and other countries.

So you’re having history repeat itself with this same kind of world split. And this split couldn’t have occurred back in the 1970s, with the Bandung Conference in Indonesia. There were other attempts by the Non-Aligned nations to break free of American imperialism, but they didn’t have a critical mass.

So right now, for the first time, you have a critical mass. And you have the ability of China, Iran, Russia, India, other countries together to be self-sufficient. They don’t need relations with the United States.

They can handle their own; they can create their own monetary system outside of the International Monetary Fund, which is basically an arm of the Defense Department. They can give loans to build up the infrastructure of countries outside of the World Bank, which is basically an arm of the Defense Department, the deep state.

So you have the American economy – essentially a merger between the military-industrial complex and the Wall Street FIRE sector, finance, insurance, and real estate – really cannot develop any more than the Roman Empire could develop, by trying to obtain militarily what it could not produce at home anymore.

Well, China and other countries, now that they have their industrial base, the raw materials, the food, the ability to feed themselves, the agriculture, and the technology, they can go their own way.

And so we’re seeing in the last few months the beginning of a war that is going to go on for, I think, 20 years, maybe 30 or 40 years. The world is splitting away.

And it won’t be a pretty sight, because the United States and its European satellites are trying to fight to prevent an inevitable break away they cannot prevent, any more than Europe’s landlord class could prevent industrial capitalism from developing in the 19th century.

BENJAMIN NORTON: Yeah, and this is a good segue to what I wanted to ask you about, Professor Hudson, which is the economic war on Russia.

And I should say, of course, that today is May 9th. Today is Victory Day in Russia, celebrating the Soviet Union’s victory over Nazi Germany in World War Two. Not the US and British victory over Nazi Germany, the Soviet victory, in which 27 million Soviets died.

And actually I should say that, here on YouTube, in the comment section, there are some Russians who are your fans, Professor Hudson, saying they’re thanking you for your cogent analysis of Russia.

But on the subject of Russia, Professor Hudson, we now have seen that since Russia’s military intervention in Ukraine on February 24th, we saw really what could be referred to as financial shock-and-awe. That’s a term that’s been used.

Just as when the U.S. invaded Iraq, it waged a military shock-and-awe campaign on Iraq. Well, now it is waging economic or financial shock-and-awe on Russia.

And Russia has been referred to as the most heavily sanctioned country in history. Which I think is probably accurate, although maybe the DPRK, maybe North Korea, is more sanctioned. But I mean we’re talking about levels of sanctions not seen against a country of this size ever.

And you can also refer to it as the contemporary equivalent of medieval siege warfare against Russia.

Joe Biden, in a speech in Poland, made it clear what Washington’s goal is: it’s regime change. The U.S. wants to overthrow the Russian government, as it did in the Soviet Union in 1991, and clearly install a a pliant alcoholic neoliberal puppet like Boris Yeltsin.

So can you talk about, from an economic perspective, what do you see as the effects of this economic war on Russia?

And specifically in terms of the concept of decoupling, which you have talked about for years, and you have said that the Western sanctions on Russia and China were accelerating that process of decoupling. And this was before the financial shock-and-awe we’ve seen.

So you talked about a move away from this neoliberal globalization where everything is interconnected, or at least capital is interconnected globally, to the creation of a kind of, what you could say is kind of an economic iron curtain.

But how do you see that also in terms of integrating the Eurasian economies more deeply?

And also what is the effect on the European economies, which my impression is that Europe is going to become what you call an economic dead zone, more and more reliant on the U.S., whereas Russia, China, and Iran, and even potentially India, Pakistan, Bangladesh, Indonesia – we’re seeing much more economic integration of Asia, which is, of course, where the majority of humanity lives.

MICHAEL HUDSON: Well you have used the words shock-and-awe, picking it up from the U.S. statements of shock-and-awe. There hasn’t been any shock-and-awe; there’s been a self-defeating piffle, and laughter.

That’s not all. There was an attempt to grab $300 billion of Russia’s foreign reserves, saying, well, any country that leaves their reserves in American banks or in the American Monetary Fund to stabilize their currency, we can grab if we don’t like their policy.

So the idea was, now Russia is going to go broke. It can’t afford to buy anything without U.S. dollars. And the people are going to get so angry, they’re going to vote against Putin. And then we can pour in our money to twerps like Navalny and other right-wingers who have promised to be the new Yeltsins.

Well, it didn’t work that way. They did grab the $300 billion of Russia’s reserves. Russia immediately said, ok, we have our own money. We now, fortunately, have enough oil and gas that we don’t have to sell to Europe and Germany. If they want to freeze in the dark and let their pipes burst when the weather gets cold, that’s their problem. We’ll sell to India, and China, and other countries.

And there was, for a few days, the ruble plunged, by saying, uh oh, what is Russia going to do? So all the foreign exchange traders thought, you can trust Biden to have a really brilliant policies.

I think Paul Krugman, the Nobel Prize winner, said Biden is the greatest American president since Roosevelt, or since Truman, that he was so smart. Well, that’s why Krugman got the Nobel Prize, for making statements like that.

So immediately Russia said, well, obviously we can’t get paid in dollars anymore, or in euros, because, you’ll just grab them, so you’ll have to buy oil and gas in rubles. We’re going to price it in our own currency. Just like China had talked about pricing its exports in yuan.

And so what has happened is that immediately the ruble not only recovered, but is now selling at a higher rate than it was before the American sanctions. So there was no shock at all. The Americans felt shock.

The Americans are shocked. The Americans are awed. The Russians are laughing and everything is going their way.

So it’s almost as if – I would not accuse Biden of being on the pay of Russia, and I would not say that the leaders of Congress are the Russian agents, but if they were Russian agents, if they were paid by Russia, they could not have done a better job of helping Russia catalyzing its protectionism that it wouldn’t do itself.

The fact is that President Putin and many of the people around him still were neoliberals. I mean, they began as neoliberals, in the ’90s.

They began by hoping that they could make an arrangement with Germany and Europe, that Europe would develop their industry and make Russia as efficient an economy as Germany or the United States. Well, obviously that hasn’t happened.

All the same, they didn’t think of imposing protective tariffs as the United States did. They didn’t protect their agriculture. They bought grain, and cheese, and other agricultural products from the Baltics, and from other countries.

Well, now that, once the Americans put on the sanctions, beginning already under the Trump administration, all of a sudden Russia had to produce its own food.

And it did. It made the investment. It is now the largest agricultural exporter in the world, not a food-deficit country. It’s not importing any more cheese from Lithuania and the Baltics. It has its own cheese segment.

And the sanctions are forcing Russia to do exactly what the United States, Germany, and other protectionist countries did in the 19th century, developing their own industry by isolating it from low-priced foreign imports that would be priced so low that the Russians otherwise could not afford to make the investment in factories, plants, equipment, research, and development.

So what the United States has done is actually catalyze Russia moving together.

And also, for three or four years, I have been talking with Russians, and with the Chinese, and other countries about the need to de-dollarize. If you want to develop your own economy, you have to develop your economy in your own interest with public spending and planning, independent from the United States.

Well, now everybody thought that, well, in a few years it may take a decade for China, Russia, Iran, all these countries to break away from the U.S. But America said, we’re going to help you, we’re going to speed up the breakaway process. We’re going to isolate you. So you’ve got to band together against us.

So that’s exactly what it has done. You can just imagine how the Russians are crying all the way to the bank about this.

And how China is watching what the Americans are doing to Russia, and listening to President Biden saying, you know, Russia is not our real enemy, our real enemy of China. And when we’re finished with Russia, then we’re going to go against China and do the same thing to it.

Well you can imagine what this is leading the Chinese government to try to plan to be sufficiently independent from the United States, so that similar type sanctions will not hurt it.

And President Xi in the last few weeks has said we’ve got to make China as independent as possible. We’ve got to make our own computer chips. We’ve got to not depend on the United States for anything, except maybe Walt Disney movies. That’s basically about it.

So it’s as if – you know, I had mentioned earlier that finance lives in the short term. American policy, being financial policy, lives in the short term. And it’s looking at if it can make a quick, a quick victory, and forget about what’s going to happen next.

I’m told that, years ago, already from the war with Iran, and then Iraq and Syria, in the State Department, if there were Arab specialists who spoke Arabic, they were all fired. Because they said, well, if you can speak Arabic, you must’ve learned Arabic because you’re sympathetic with them. You’re fired. We won’t have anyone who can read Arabic here.

Well, now in the last decade or so, they fired all the Russia specialists from the the State Department and CIA, saying, well, if you can read Russian, why would you want to learn Russian? You must like something in Russia. You wanted to learn it. You’re fired.

So they have people who have no idea of what’s happening in Russia, no idea what’s happening in these other countries. And they’re blinded by their ideology.

And if anyone would say, wait a minute now, public planning and making education a public utility is actually making them more competitive, well, that’s against the ideology. That’s not the corporate type.

And they’re taught, well, we really can’t trust people, maybe they’re tending toward socialism, and they’re out the door.

So you’re having American policy pretty much run by the blind, and the Europeans are simply taking orders, and money in little white envelopes from the United States, to just show their loyalty, and basically are willing to spend three to seven times as much for their energy, for their liquefied natural gas and oil, by buying from the United States, than they are by a long-term contract with Russia.

Europe is willing to spend now $5 trillion on putting together ports that can handle shipping tankers for liquefied natural gas instead of relying on the Russian pipeline, the Nord Stream Two, that’s already there.

So Europe is making an enormous sacrifice. If it doesn’t have Russian gas, and it refuses to pay rubles, it says, if you don’t give us our gas and oil for free, you’re attacking us, because we’ve been getting all of your oil and gas for free, because all the dollars, all the money we pay, you’ve recycled to the United States in your foreign reserves. Thank heavens, the U.S. can grab it all. If you don’t continue to give it to us for free, then you’re attacking us.

To the United States, other countries protecting their economy, other countries trying to raise their living standards, and especially other countries undertaking land reform, are viewed as enemies of the United States, because they’re an enemy of the neoliberal American financial system.

And the idea of the unipolar world where the United States gets all of the profits, and rents, and interests of the world economy, just as ancient Rome stripped its provinces by getting all of their wealth and income for themselves, not producing it at home, while impoverishing their own domestic population. It’s just an exact parallel.

So Europe is willing to say, well, ok, if we don’t have a Russian gas, well, that means that our chemical companies cannot buy the gas to make the fertilizer to make our crops grow, and our agricultural productivity is going to fall by about 50%.

We’re also going to spend a lot more money on America’s military, NATO arms to support NATO. So higher food, higher military spending, higher energy costs.

This ends Europe as an industrial rival to Asia, and Eurasia, I should say, because now the Chinese Belt and Road Initiative and other spending investment, capital investment, throughout Western Asia is creating a new productive plant that is not only self-sufficient, but is leaving the United States and Europe without any industrial competitive power. They’ve priced themselves out of the world market. They’re no longer competitive.

So the world is developing. And I’m sure the only way that the NATO countries can fight against it is militarily, by threatening to bomb. But they can’t fight economically. They can’t fight financially. They tried by disconnecting Russia from the SWIFT system. It put it in its own system very quickly.

It really is left without a strategy, except that it’s done a wonderful job of controlling the public relations dimension of this war, making it appear as if somehow other countries are the aggressors, in not letting America exploit them, and making it appear as if Russia is the aggressor in Ukraine, instead of NATO prodding and prodding Russia to say, we’re going to capture your port at Crimea, and we’re going to attack the Russian-speakers if you don’t fight back, and we’re going to keep bombing them year after year, from 2014 on, we’re going to keep bombing them until you protect them.

So all of this is treated as if America is purely defending itself. Well, this is what the Nazis said in World War Two. Hitler and Goebbels said, we can always mobilize a population to support our war by saying it’s a war to defend ourselves.

And that’s how the United States in Europe are doing it. Not only are they pulling a strategy out of Goebbels’ Nazi book, but a few weeks ago, Germany went to the museums, the military museums, where they had the old Panzer tanks from World War Two, and they sent the Panzer tanks, the Nazi tanks from World War II, to Ukraine, saying this is symbolic, now we can fight Russia with the same German Nazi tanks run by the neo-Nazi groups, that Zelensky is supporting, the same Nazi fight against Russia. We can reenact World War Two with the same tanks, even symbolically, to show that this is a fight of Naziism, and neoliberalism, against Eurasia.

BENJAMIN NORTON: We’ve also seen Germany not only re-militarizing, but also boosting its relations with Japan. There are some terrifying echoes of of World War Two.

But you mentioned something that I want to analyze a little bit more, which is the strength of the Russian ruble. I talked about the concept of financial shock-and-awe that was waged on Russia. And President Biden said, “the Russian ruble has become rubble,” he joked. He said the Russian ruble has become rubble.

Well, that’s actually not at all what happened. This is the value of the dollar to Russian rubles, right now [showing a graph]. Russian rubles are at 69 to the dollar. A few days ago, it was at 64, or 65 to the dollar, which is actually better than it was even before the Russian war in Ukraine, which began in February 24th.

And it did spike, and there was a peak here, at which it was devalued to 139 to the dollar, about half the value it has now. But in the months leading up to the Russian military intervention, in November and December, it was around 75 to the dollar.

So the ruble has actually strengthened despite these sanctions. And here’s a report from Reuters from five days ago, that was May 4th: the “Rouble leaps to over 2-year high vs dollar, euro as EU ups sanctions.” So the ruble is doing quite well.

And you talked about the Russian mechanism to force Europe to buy energy exports from Russia in the Russian ruble. And this graphic here, for people watching, it’s in Russian, but really it just shows this mechanism in which a European firm that wants to buy gas from Russia’s state owned gas giant Gazprom, it has to send the money in euros to the Gazprombank, which is the obviously the bank that works with Gazprom, and then it puts it in a special account in euros, and then that is sold in the Moscow exchange for Russian rubles.

And then those rubles are put in another special account, called a K account, that belongs to that European firm. It has two accounts, two special accounts with Gazprombank, one in euros, one in rubles. And then this special ruble account sends that money to Gazprom. And then once the money reaches Gazprom, that’s when Russia considers that the payment officially went through.

So this is the mechanism by which Russia is getting paid in rubles. And much of Europe claimed at first that they would not do so, but eventually they gave in. So that’s an incredible development.

And related to that, what I wanted to ask you about, is I think another reason that the Russian ruble has strengthened and stabilized is not only because Russia continues to maintain constant exports of energy to Europe and other parts of the world.

You can talk about the central bank policies. But one of the policies is that the Russian central bank has basically put the ruble on gold, which I think is a very interesting and historic development.

And we saw that from the beginning of April until the end of June, the Bank of Russia says that it’s going to buy gold at a fixed price of 5000 rubles per gram of gold. And then the question is whether or not in July, when this policy ends, if it’s going to continue, and if the ruble will basically become fixed, it become pegged to gold like the U.S. dollar was up until 1971.

So you don’t think it will be? So talk about this policy. Do you think that that the gold standard is going to come back? Or apparently you don’t think so.

MICHAEL HUDSON: No, Russia is not going on on the gold standard. What it is doing is investing, its foreign exchange in the only way that is not grabbable. It’s investing it in gold; it’s putting gold in its reserves.

It is not setting its exchange rate according to the price of gold, but it is buying gold with what it has been getting.

I want to go back to your talk about rubble. You talked about, “from ruble to rubble,” what President Biden said.

There have been a lot of pictures of rubble in the news for the last few days. For instance, there are talks of, here’s a Ukrainian picture, and look at this picture of a Russian tank, we shot it down, it’s rubble. Turns out it’s a Ukrainian tank, that they just say it was the Russian tank we shot down.

So basically, they’re taking their own destruction, and they’re saying that, while they’re being destroyed, they’re saying, no, this is a picture of Russia being destroyed, Russian assets, not Ukrainian assets being destroyed.

Well, the similar thing is with the Russian ruble. America says, look, we’ve isolated the the ruble. Well, what has happened? If you isolate the ruble and you say we’re not going to export anything more to Russia, so it’s not going to be able to spend any of its rubles on buying American or European products.

Well, meanwhile, Russia can continue to earn rubles from Germany and Europe, and it can continue to earn foreign exchange from other countries that it’s selling its agriculture to at rising prices, its oil and gas at rising prices, too. So obviously, the balance of payments is going way up.

And they believe that what is in store is a new monetary system that is an alternative to the dollar IMF system.

And in this system other countries will hold their reserves in each other’s currencies. In other words, Russia will hold Indian rupees and Chinese yuan. China will hold rupees and Russian rubles.

There will be the equivalent of what Keynes thought of as something like artificial special drawing rights that the banks will be able to create to help fund governments to undertake capital investment.

But for settlements settling balance of payments deficits among countries, once they don’t have enough foreign exchange to make a swap, they will use gold as the means of settlement, because gold is a pure asset. It’s not a liability.

Any foreign currency basically is held in a foreign country that has the power to do what America did to Russia and just grab it all, and say, we’re just wiping it all out.

It’s as if you have a bank account, and the bank says, we’ve just emptied out your account to give it to one of our friends, and you don’t have it anymore. You can’t do that if gold is held in your own country.

Venezuela made the problem of keeping its gold in England, trusting England, saying that, even if there is war, they’ll never interrupt gold and finance. And England just grabbed Venezuela’s gold.

So, obviously, countries are not going to leave their gold in other countries. Even little Germany has asked America to begin sending back the gold that it has in the Federal Reserve Bank of America because it’s worried that what if it ever buys Russian gas again? America will grab all of Germany’s gold, grab all the German money, and it’ll be like World War One all over again.

So this act that America did of grabbing Russian money, Afghanistan’s foreign reserves it grabbed, this is telling all the other countries, pull all your money out of dollars. What are they going to put it in? There’s not that much they can put it in that it is absolutely safe.

So gold is a flight to safety today, because it’s one of the things that all of the world realizes as having an international value for settling balance of payments deficits, that is independent of world politics.

So that’s the explanation. Russia is not going on gold. It’s going on an independent standard from the United States with gold as an element of its foreign reserve, just as it’s holding Chinese yuan and Indian rupees.

It’s not going on the rupee standard. It’s not going on the yuan standard. And it’s not going on the gold standard. But these are elements of its foreign reserves.

BENJAMIN NORTON: I have a question for you. It’s kind of a more technical question that I’ve always wondered. And I’ve tried to do research on this, because there’s not much information.

So we know that that the U.S. and European Union have frozen over $300 billion from Russia’s central bank foreign exchange reserves. And of course they did this after doing the same to Iran, to Venezuela, to Afghanistan, which is now threatening a famine in Afghanistan that could kill more people than died in the 20-year NATO-U.S. military occupation of Afghanistan, which is another topic that really needs to get more coverage.

And I should add, by the way, that the US and the EU, they’ve frozen nearly half of Russia’s central bank’s foreign exchange reserves, and are now saying they’re not going to give it back. So they stole it. I mean, they stole half of its reserves.

My question is, what is the mechanism by which they effectively freeze and steal those reserves?

Because my understanding is that there is of course a physical element of those reserves, which you’re talking about, which is gold. But not all of the $640 billion in Russia’s central bank reserves is physical currency, right? A lot of it is just computerized? It’s number in computers and bank accounts.

So when when the U.S. and the EU steal this money from central banks like in Russia or Afghanistan – obviously in the case of Venezuela, as you mentioned, they physically stole the gold. But if it’s not gold, is it physical cash stored in Moscow, like physical dollars and euros? Or it’s mostly just numbers in a computer, which is why they can steal it?

MICHAEL HUDSON: Every country needs to manage its exchange rates, and there’s always like an up-and-down and a zigzag in the flow of payments for imports and exports, investment, capital movements, debt service, all of that.

So countries want to stabilize their exchange rate. How do they do that? Well, most of the big exchange markets are in New York and in London.

So countries would leave their money in correspondent banks. Like when Iran, at the time under the shah, kept that foreign reserve in the Chase Manhattan Bank. So when Iran, after the revolution and Khomeini came in, and Iran wanted to pay interest on the foreign debt that the shah had run up, they told Chase, please, here’s our bondholders, please pay them.

Well Chase was told by the Treasury, don’t pay them, just take the money and hold it. So Chase said, we put a freeze on your account. And so Iran defaulted, and then Chase and the State Department said, oh, Iran defaulted, it missed the payment. Now, all the money that it’s due for foreign debt has to be paid all at once. And Chase paid all of the bondholders off. No more money in the account. It was all emptied out.

Suppose you had an account in Chase Manhattan. And they said, ok, now you’ve done something really bad, you put Michael Hudson on the show. We’re going to grab your account. We’re going to give it to Mr. Guaidó, because he needs the money in Venezuela because the people still are not voting for him. So all of a sudden, you won’t have money in your account. It’ll go to Mr. Guaidó’s account.

Well, that’s what happened with Russia. They took the money. They grabbed the money from Russia’s account. And they said, half the money we’re going to give to, I think, to the 9/11 people, because we all know that it was Russia that bombed the World Trade Center on 9/11.

And we’re going to give it to all sorts of other people who suffered all over the world. It’s all Russia’s fault.

BENJAMIN NORTON: But Professor Hudson, when you say that they seized Russia’s assets, you mean the assets held by the Russian central bank in foreign bank accounts?

MICHAEL HUDSON: Yes, yes.

BENJAMIN NORTON: And these are not physical assets, these are numbers in a computer, right?

MICHAEL HUDSON: In Venezuela’s case, Venezuela had used some of its oil company earnings to buy oil stations and refining companies and the United States actually grabbed the ownership of the gas stations and the refineries and distribution system that Venezuela had in America.

BENJAMIN NORTON: It’s called Citgo.

MICHAEL HUDSON: Citgo, yeah. Russia doesn’t really have any capital investments in the United States. It did have bank accounts, and that was all that the United States could grab.

BENJAMIN NORTON: So when you say that, when Russia, at least for now, the central bank is allowing convertibility of rubles at a set rate into gold, that’s a temporary policy to make sure that they have a physical asset that their central bank can hold on to, because if they have dollars or euros in their reserves, my understanding is that’s not physical cash, it’s actually just numbers in a computer, so they don’t have it physically in their bank reserves, so it’s easy to steal that money.

Obviously, if they had billions of dollars worth of cash, of paper cash, it would be much harder to steal it, but if it’s just on a bank account, if it’s numbers in a computer, then they can just freeze it.

So I think this is also a reflection of a point that you’ve also made about the financialization of the economy, is it’s also just a lot of this capital is not even physical capital.

MICHAEL HUDSON: Yes. Savings take the form – one person’s savings is another person’s debt. So these are Russia’s deposits in American banks that it used to buy or sell rubles, or to buy goods from America, or to receive payments in, if Russia exports something such as oil. Americans buyers of Russian oil would put the money into the Russian bank account.

They never dreamed that this would be grabbed. But now Russia says, ok, you’ve grabbed our money, now that means that we get to grab all of your assets in Russia. This is great! All of your stock holdings in nickel, and Yukos, and all these other companies, ok, you’ve got the money, we have the assets, look at us as just buying the assets on the cheap.

And the Western investors in Russia have all been selling their Russian assets to show that they’re good American citizens in NATO, and the Russians are buying up these European and American assets on the cheap, largely by borrowing money from the banks, that get the money from the central bank, now that they’re so wealthy, and all of the foreign exchange reserves is a result of the American shock-and-awe statement, that’s sort of shock-and-awe in reverse.

So Russia is coming through just fine. And you can imagine how the American strategists are gnashing the teeth. They don’t understand how Russia was able to avoid being bankrupted by this.

They really are not economists. They’re not really financiers. They’re foreign-policy strategists. They’re ideologues that are not very well educated in how to think about the future and how to recognize the fact that the world can actually change from what it is today into something else. And sometimes that change is not in America’s interests. That is sort of not a permitted thought over here.

So essentially, Americans and Europe are operating in the blind, and Russia and China, and Iran, and India, are all looking at how are we going to restructure the world so that we come out of it more prosperous than we were before, not more impoverished. That’s really what the world is dividing into.

BENJAMIN NORTON: Professor Hudson, I don’t know if this is directly related, but it’s it’s something that’s always been a very curious question in my mind.

Germany, back in 2016 and 2017, it moved, physically moved, its central bank’s gold reserves, which had been stored in New York, London, and Paris, and it physically moved those reserves, those gold reserves, to Frankfurt.

Now this was before the U.S. and Britain stole Venezuela’s gold reserves and other reserves. But do you know anything about what motivated Germany’s central bank to move the physical location of its gold reserves into Germany itself?

MICHAEL HUDSON: I don’t think it’s all moved yet. It’s still going on. Gold is very heavy, as heavy has lead, basically. And America said, well, we can only do a little bit, trickle by trickle. So America has been returning the gold very slowly.

So I think Germany, with all of its history of hyper inflation, I think just realizes that, now that gold is not used to settle balance of payments deficits anymore – the gold that Germany had in America was all of the exports that it made to the United States during the Vietnam War. This is Vietnam War gold.

You remember that President de Gaulle would every month cash in, the dollars that America spent in Vietnam would all be spent from Vietnam to Paris, the dollars would end up there, the central bank of Paris would essentially buy gold on the London exchange and keep the gold either in New York or in London.

Well, Germany, because America defeated Germany, and it wasn’t going to keep its gold in Russia, that defeated it even more, it said, well, ok, we’re cashing in our surplus dollars for gold, but we’re going to hold the gold in America.

But now it says, well, America is never going to settle its balance of payments deficits and its foreign debt in gold again, because it doesn’t have any balance of payments surplus, any ability to do that.

It’s going to spend its export surplus and its investment surplus on war. So it’s never going to be able to pay. That’s obvious. Let’s get the gold back.

That was the calculation that every country was making already a decade ago. They realized that America can never repay its foreign debt, unlike other countries.

When other countries can’t pay their foreign debt, they have to go to the International Monetary Fund, that tells them, well, we’ll make you a loan, but you have to sell off your natural resource reserves to the Americans, or we won’t lend you the money.

Well, basically, that’s not going to happen anymore. They realized that America is just going to say, haha, we’re just not going to pay.

Well, now other countries are saying, wait a minute, if America’s never going to repay its foreign debt, why do the Global South countries have to pay their debt to the IMF and the World Bank, all this dollar debt to dollar bondholders?

If America won’t pay, we don’t have to pay. Let’s have a clean slate. Let’s start from the beginning. And we’re only going to have debt and credit relations with friendly countries, not countries that want to go to war with us like America did in Afghanistan, Syria, Iraq, Iran, and now Russia.

So that’s basically what’s happening.

BENJAMIN NORTON: Great. And just to wrap up here, I have another question. And I know your time is limited, so I really appreciate you being here.

I have a quick question about the decline in U.S. dollar hegemony. We were talking about the strength of the ruble, the economic war on Russia; we talked about the bilateral trade that’s growing between Russia and China using the Chinese yuan, between Russia and India using the Indian rupee. And Iran also is talking about doing business with a basket of currencies.

I want to point to a report that was recently published by economists who work with the IMF. And I published an article about this over at Multipolarista.com, “IMF admits US dollar hegemony declining due to rise of Chinese yuan and sanctions on Russia.”

And there is this report that was published by the IMF, by these economists, and I cite you, Professor Hudson, in this report. It’s a working paper from the IMF, published in March, titled “The Stealth Erosion of Dollar Dominance.”

And here’s a graph, for people watching, here’s a graph from the report. And it shows not a large, but a noticeable and consistent decline in the use of the holding of the U.S. dollar in the foreign exchange reserves of central banks around the world. So this is around the world.

And it has declined in the past years from about 70% of central bank exchange reserves to about 60%. So a 10% decline. That’s not massive, but it’s steady and I think it’s going to accelerate.

And at the same time they’ve also found an increase in the use of what they call “non-traditional currencies” in the foreign exchange reserves of central banks around the world.

And here you can see this graph. I mean it looks like a significant influence because if you look at the y-axis it’s only from 90 to 100. But there is a significant increase in the use of other currencies in foreign exchange reserves, aside from the U.S. dollar, the euro, the Japanese yen, and the British pound. And the currency that is increasingly popular is the Chinese yuan.

So that’s one half of my question. The other half is about this interesting report that was published in the Financial Times, and it’s titled “Russia Sanctions Threaten to Erode Dominance of Dollar, says IMF.”

And the FT interviewed the IMF’s first deputy managing director, Gita Gopinath, who acknowledged that the sanctions imposed on Russia over its military intervention in Ukraine could lead to what she says “fragmentation at a smaller level.”

And she did say that the dollar is eroding influence, but “would remain the major global currency.”

So, that’s a two part question. I’m wondering if you could talk about the decline in U.S. dollar hegemony and how the sanctions will potentially erode that. And then the other half of the question is, can you comment on the declining use of dollars in foreign exchange reserves?

MICHAEL HUDSON: Well, this is what my book “Super Imperialism” was all about. When I first published it in 1972, I could see how the whole thing was unfolding for the next 50 years. And we just published last year a third edition of it, bringing it up to date.

Dollar hegemony means America’s entire balance of payments deficit in the ’50s, ’60s, and ’70s was military. So the dollars that were being pumped into the world economy were the result of military spending.

But the dollars would end up in foreign central banks, especially from Asia to France, Germany, others. What were they going to do with it? Well after 1971 they could not buy gold anymore, so all they could do was buy U.S. Treasury securities. IOUs.

And so they re-lent to the Treasury all the money that America was spending militarily. And the more money America spent in waging its cold war militarily against the world, the more money central banks would lend to the U.S. government to finance the U.S. deficit that was spent largely on the military-industrial complex and foreign military operations.

So dollar hegemony was a free lunch financing America’s almost 800 military bases across the world, to fight against communism, defined as any country that doesn’t let American industry and finance buy control of its raw materials, agriculture, resources.

And this has now come to an end. Right now America has grabbed Afghanistan’s, and Russia’s gold. All of a sudden it’s obvious that, this summer, there’s going to be an enormous squeeze on Third World countries, on the Global South.

Their energy prices are going to go way up, and that’s going to hurt them just like the oil shock of 1974 and 1975 did.

They’re going to have to pay higher food costs, because of food prices are going to go way up now that the Ukraine war is erupting.

And a lot of their foreign debt, dollarized debt service, is coming due. And they’re facing a choice: if they pay the foreign debt, they can’t afford to buy the oil and energy that they need to run their factories and heat their homes. They can’t afford to buy the food to feed their people. Whose interests are they going to put first?

Well of course their leaders are going to put America’s interests first, and their own interests second, because their leaders, if they’re a client oligarchy, are put in power by the U.S. military, as sort of miniature Pinochets, throughout Latin America and other countries.

So suppose other countries decide, well, we’re going to feed ourselves and we’re not going to wreck our economy just to pay foreign bondholders. We’re a sovereign country. We’re going to put our national interests first.

Well, then the United States can say, aha, we’re going to grab all of your foreign assets in the United States.

Well, other countries can say, oh, they’re going to do to us just what they did to Afghanistan and Russia. Let’s move our money out of the United States quickly. If we don’t have dollars, well, it’s true, we can’t pay our dollar bondholders, but at least we can, in international markets, we can buy the food and the energy we need.

And so the tensions, the disruption of world prices, and inflation, and trade that is a result of the NATO attack on Russia, now threatens to drive all of the southern hemisphere countries into an alliance with Russia, China, India, and all the rest.

So America basically is creating a new Berlin Wall, but the wall is isolating itself from other countries, and driving other countries all together into what I hope will be a happy, self-sufficient, non-U.S. globalized economy.

BENJAMIN NORTON: Well, I want to thank you, Professor Michael Hudson. It’s always a real pleasure having you. I know you’re very busy, so thank you for giving us so much of your time.

I’ll say that the comment section here on YouTube has been very vibrant, with some interesting conversation. And what’s nice is there are people from all over the world, from the U.S., Latin America, Europe, and from Russia. So it’s good to see a mix of people.

And for anyone who wants to listen to this, you can check out the podcast version if you look up Multipolarista on Spotify, and iTunes, and all the other podcast platforms.

And I’ll just say, while I wrap up here, that today we were talking about, at the beginning of this discussion, a new book that Michael Hudson is publishing this week. It is called “The Destiny of Civilization: Finance Capitalism, Industrial Capitalism, or Socialism.”

It’s a very good book. I had the privilege of getting a review copy early. So definitely check out that book.

You can also find all of Professor Hudson’s writings at michael-hudson.com.

Thanks, Professor Hudson.

MICHAEL HUDSON: It’s really good to be here. It was a good discussion.

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المشهد الدولي والإقليمي في ظلّ المواجهة الروسية الأطلسية في أوكرانيا

Posted on April 21, 2022 by uprootedpalestinians

الخميس 21 نيسان 2022

ـ مسار العملية العسكرية يدلّ بوضوح إلى أنّ النتيجة ستكون في منتهى السلبية للنظام القائم في أوكرانيا ومن خلال ذلك للحلف الأطلسي التي قد تكون ضُربت مصداقيته ضربة قاضية ـ كشفت جائحة كورونا التبعية للمواد الأساسية الموجودة في كلّ من روسيا والصين… والاتحاد الأوروبي منكشف تجاه روسيا في موضوع الطاقة ولا يستطيع الاستغناء عنها رغم التصريحات المعاكسة

زياد حافظ

لا يمكن أن نتصوّر تداعيات المواجهة المفتوحة بين روسيا والحلف الأطلسي في أوكرانيا دون التوقف على الأسباب. فهذه الأسباب التي دفعت إلى المواجهة هي التي ستلقي بظلالها على المشهد العالمي والإقليمي. فجوهر الصراع هو صراع بين مذهبين في منظومة واحدة. المنظومة هي الرأس المالية والمذهبان هما أولا الرأس المالية الريعية المالية التي تقوده الولايات المتحدة والحلف الأطلسي وثانياً الرأس المالية الإنتاجية التي تتماهى مع الاقتصاد الموجه التي تقوده الكتلة الأوراسية بقيادة روسيا والصين.

بهذا التعريف للمواجهة نضمّ الأبعاد الجيوسياسية والدوافع التوسعية لدى المحور الأطلسي قابلتها الهواجس الأمنية لروسيا والصين. وفي الإطار الأوسع للمواجهة هناك نموذجان من داخل العائلة الواحدة يتنافسان على قيادة العالم والنموذج الذي تتبناه الولايات المتحدة يخسر لصالح النموذج الآخر.

 يبقى علينا أن نستشرف ماذا بعد؟ والإجابة تتوقف على مسار العملية العسكرية القائمة في أوكرانيا ونهايتها. فالحلف الأطلسي وخاصة الولايات المتحدة غير متحمّسة على إنهاء الصراع بل على تمديده بهدف استنزاف روسيا عسكرياً واقتصادياً وفرض العزلة الدولية عليها. الهدف الأميركي بات واضحاً وهو تغيير النظام القائم في روسيا.

لكن الرياح الروسية لم تجر كما اشتهت السفن الأطلسية والأميركية. فمسار العملية العسكرية يدلّ بوضوح على أنّ النتيجة ستكون في منتهى السلبية للنظام القائم في أوكرانيا ومن خلال ذلك للحلف الأطلسي التي قد تكون ضُربت مصداقيته ضربة قاضية. فكيف ستكون تداعيات ذلك المسار على العالم بشكل عام والإقليم والمشهد العربي بشكل خاص؟

في هذه النقطة بالذات نريد أن نؤكّد أن قدرة روسيا على مواجهة الغرب لم تكن لتحصل لولا الصمود العربي خاصة في محور المقاومة. فالمقاومة في العراق أفشلت المشروع الأميركي واستنزفت قدراته بينما كانت روسيا تعيد بناء قواها العسكرية والاقتصادية. كما أنّ صمود المقاومة في لبنان منع تحقيق مشروع الشرق الأوسط الجديد بينما روسيا كانت أيضاً في إطار استعادة القدرات. كما أنّ صمود سورية في مواجهة العدوان الكوني ساهم في تعزيز الثقة بأنّ الغرب ليس قدراً على العالم. كما أنّ صمود المقاومة في فلسطين أفشل مشروع صفقة القرن والاتفاقات الابراهيمية وأنّ صمود اليمن ساهم في إعادة رسم الخارطة السياسية للأمن الإقليمي خارج النفوذ الأميركي. فهذا الدور العربي مكّن كلّ من روسيا والصين وحتى الجمهورية الإسلامية في إيران من تعزيز قدراتها وترسيخ تضمانها بل تحالفها والآن نرى روسيا تقف بوجه الهجمة الأطلسية في أوروبا الشرقية وتهزمها نيابة عن العالم. فلا بد للنظام العربي ان يتأثر بكلّ ذلك خاصة أنّ الجزء الخارج عن سيطرة ذلك النظام استطاع أن يقلب المعادلات التقليدية في الإقليم وبالتالي في العالم. هناك معادلة جيوسياسية بسيطة. من يريد السيطرة على العالم عليه أن يسيطر على الجزيرة الأوراسية لما لها من موارد وإمكانيات. ومن يريد أن يسيطر على تلك الجزيرة فالبوّابة لها هي المشرق بشكل عام والمشرق العربي بشكل خاص. هنا يبرز البعد الاستراتيجي لمحور المقاومة وما يمثله من دور في إعادة رسم التوازنات الدولية.

صحيح أنّ العملية العسكرية لم تضع أوزارها بعد عند إعداد هذا التقرير لكن هناك نتائج واضحة على الصعيد الدولي وبطبيعة الحال على الصعيد الإقليمي والعربي. أولى النتائج هو شبه إجماع على أنّ القوّامة الأميركية والأطلسية لم تعد كما كانت عليه. صحيح أنّ الولايات المتحدة لن تستسلم بسهولة إلى الواقع الجديد لكن ليس باستطاعتها تغيير موازين القوة والعوامل التي أدّت إلى ذلك التراجع. فهذه العوامل داخلية بالدرجة الأولى كما أنها خارجية تعود إلى التخطيط البعيد المدى الذي قامت بتنفيذه دول المحور الرافض للهيمنة الأطلسية والأميركية. فتقييم المشهد الداخلي لا يوحي بأن هناك إمكانية في تعديل الميزان. فليس هناك جهوزية عسكرية أميركية لمواجهة شاملة وحاسمة لكل من روسيا والصين كما أن قدرة اللجوء إلى الحرب بالوكالة عنها أصبحت شبه معدومة. فالتصدّعات داخل الحلف الأطلسي والاتحاد الأوروبي لا توحي بإمكانية حشد قوّات عسكرية تستطيع مواجهة روسيا وذلك رغم الكلام العالي النبرة لمكوّنات الحلف الاطلسي. ليس هناك من استعداد للتضحية في سبيل أوكرانيا. فالخطة هي فقط الاستنزاف عبر تحفيز الأوكرانيين والمرتزقة من الأوروبيين على مواجهة الالة العسكرية الروسية.

كذلك الأمر على الصعيد الاقتصادي حيث كشفت جائحة كورونا التبعية للمواد الأساسية الموجودة في كلّ من روسيا والصين. والاتحاد الأوروبي منكشف تجاه روسيا في موضوع الطاقة ولا يستطيع الاستغناء عنها رغم التصريحات المعاكسة لذلك. فالبديل للغاز الروسي هو الغاز الأميركي بأسعار مرتفعة تصل إلى أكثر من عشر أضعاف سعر الغاز الروسي ناهيك عن عدم وجود تجهيزات لاستيراد الغاز الأميركي قبل ثلاث سنوات على أحسن تقدير. فماذا تستطيع ان تفعل الدول الأوروبية طيلة الفترة غير الدخول في انكماش كبير أن لم يكن في كساد أكبر مما كان في الثلاثينات من القرن الماضي؟

أما على الصعيد المالي لن تستطيع الولايات المتحدة وحلفاؤها من منع قيام أنظمة مدفوعات دولية لا ترتكز إلى الدولار. كما أن التعامل بالدولار بدأ بالتراجع في دول واقتصادات وازنة كالصين والهند وروسيا على سبيل المثال. حتى بعض الدول العربية التابعة للقرار الأميركي بدأت تفكّر جدّيا بالتعامل مع الروبل الروسي واليوان الصين والروبية الهندية.

بناء على ذلك نستطيع أن نقول إن نتائج العملية العسكرية الروسية في أوكرانيا ستكرّس تراجع دور الولايات المتحدة وأوروبا في الهيمنة على مقدرات العالم.

اما النتيجة الثانية لذلك التراجع هو واقعياً بروز نظام دولي جديد متعدد القطبية يرتكز إلى القانون الدولي وقرارات مجلس الأمن واحكام المحكمة الدولية إضافة إلى الاتفاقات والمعاهدات بينما الطرح الأميركي ومعه الأوروبي هو نظام «أحكام قيم» لا قاعدة قانونية لها وملتبسة في أحسن الأحوال ولا تعترف بسيادة الدول. وهذا النظام سيشهد تجاذبا بين الدول التي تريد الخروج من الهيمنة الأميركية وبين الدول التي لا تستطيع الخروج عنها وعددها يتقلّص يوما بعد يوم ولن يضم في آخر المطاف إلاّ الحلف الانكلوساكسوني، أي الولايات المتحدة والمملكة المتحدة وأستراليا وكندا وربما نيوزيلاندا. أما أوروبا الغربية فهي عدة أقسام: المحور الألماني الفرنسي الذي يقود الاتحاد الأوروبي، دول أطراف أوروبا، ودول أوروبا الشرقية. ليس هناك من انسجام في المواقف داخل هذه الكتل الثلاث لأسباب عديدة تعود منها للتاريخ ومنها لبنيتها السياسية والاقتصادية لا وقت لنا شرحها. ما يهمنا هو أن عدم الانسجام سيحدّ من فعّالية موقف موحد. ولذلك سنرى أوروبا في تجاذب بين النظام المبني على القانون الدولي والمعاهدات وقرارات المحكمة الدولية وطبعا قرارات مجلس الأمن.

في ذلك السياق لا نستبعد إعادة النظر في تركيبة مجلس الأمن حيث الدول صاحبة حق النقض هي خمس فقط بينما قد تدخل إليه دول كالهند والبرازيل وجنوب إفريقيا ودولة عربية بالتداول مع الدول العربية وحتى الجمهورية الإسلامية في إيران. كما نتوقع تقليص دور ونفوذ الولايات المتحدة في المؤسسات العاملة والتابعة للمنظمة الدولية التي أصبحت ذراعا للسياسة الخارجية الأميركية. فهناك دول وازنة تستطيع أن تملأ الفراغ المالي الذي سينتج عن تخفيض مساهمة الولايات المتحدة في تمويل المؤسسة وربما خروجها من المنظمة ككل. لن يحصل ذلك في المنظور القريب بل ربما في فترة لا تتجاوز نهاية هذا العقد من الألفية الثالثة. كما أن منظمة الأمم المتحدة المعدّلة ستعمل بتنسيق واسع مع المنظمات الإقليمية وخاصة الآسيوية كمنظومة شانغهاي على سبيل المثال وليس الحصر. هذا يعني أن القضايا الدولية ستعالج من باب النظر بمصالح الجميع وعلى قاعدة رابح رابح وليس على قاعدة اللعبة الصفرية التي تفرضها والولايات المتحدة.

النتيجة الثالثة هو التحوّل إلى نظام اقتصادي عالمي جديد مبني على تكامل المصالح وليس على تصارعها أو تنافسها. فدول الجنوب الإجمالي أي كل الدول الإفريقية وأميركا اللاتينية والدول الاسيوية غير الصين والهند ستجد في العلاقات الدولية ما يساعدها على نهوضها والحفاظ على سيادتها بينما النظام الاقتصادي القائم مبني على تبعية الاطراف للمركز الذي هو الغرب بشكل عام والولايات المتحدة بشكل خاص وعلى حساب مصالح تلك الدول.

النتيجة الرابعة هي تراجع دور الدولار في المنظومة المالية الدولية. فعملات أخرى كالروبل الروسي واليوان الصيني والروبية الهندية وفيما بعد الراند الإفريقي الجنوبي ستكون ركيزة الاحتياطات النقدية الدولية كما أن تعاظم التعاطي بالعملات الوطنية سيخفّض الطلب على الدولار ليصبح عملة من بين العملات وليست أداة لتمويل الحروب والهيمنة على العالم.

النتيجة الخامسة تعود إلى تراجع المكانة الصناعية الأوروبية. فرغبة قياداتها في التخلّي عن الغاز الروسي سيقضي على القدرة التنافسية الأوروبية ما يجعل الدول الأوروبية تدخل مرحلة تفكيك التصنيع (de industrialization) للدخول في مرحلة ما بعد التصنيع (post industrialization) فتصبح تابعة لمراكز التصنيع الفعلية في دول الجنوب الإجمالي.

هذه النتائج لن تأتي بسرعة ولكن مسارها واضح وحتمي إذا ما كانت الإرادة الجماعية تهدف إلى تحقيق الاستقرار والأمن. فلا بد من التعديلات في المؤسسات الدولية ولا بد من تعديلات في التعاطي والعلاقات ولا بد من ترسيخ قاعدة الرابح رابح ونبذ قاعدة اللعبة الصفرية. وما يساعد على تحقيق ذلك موازين القوّة الجديدة التي تظهرها العملية العسكرية في أوكرانيا والتحالف الروسي الصيني ونهوض الكتلة الاوراسية وتعزيز منظومة البريكس.

لكن إلى أن تحصل تلك التحوّلات فالعالم دخل فعليا في مرحلة ترقّب ومراجعات في العلاقات حيث العديد من الدول تقوم بتقييم النتائج المرتقبة من العملية العسكرية في أوكرانيا. لذلك سنشهد توترات عديدة في الأسواق العالمية في الطاقة والمواد الغذائية وسلسلة المورّدين إلى أن تستقر الأمور وتستسلم الولايات المتحدة للوقائع الجديدة. هنا تكمن المشكلة لان حالة الانكار بين النخب الحاكمة وأو الطامحة للحكم في الولايات المتحدة ما زالت تعتبر أن القدر المتجلّي للولايات المتحدة واستثنائيتها يجعلها موكلة بقيادة العالم. النظرة التوراتية للأمور تتحكم في اللاوعي الأميركي وهنا الخطورة من الانزلاق نحو حماقات كارثية خاصة أن الهروب إلى الأمام هو السبيل الوحيد عند تلك النخب. الرهان لعدم حدوث ذلك هو على تيقّن العقول الباردة، وهي موجودة ولكن معزولة، في التغلّب على موجة الجنون الجماعي التي تتحكّم بتلك النخب. وبالتالي قد لا نستبعد حصول تغييرات داخل البيت الأبيض وفي منظومة الحكم بعد الإخفاقات الكارثية التي حققتها الإدارة الحالية.

أما على الصعيد الإقليمي فنتوقع تحوّلات كبيرة في الملفات الساخنة كفلسطين المحتلة وسورية واليمن. كما نتوقع ترسيخ قواعد لنظام عربي جديد قد يأخذ ما تبقّى من العقد الحالي حتى منتصف العقد القادم، أي منتصف الثلاثينات من القرن الحالي.

فعلى صعيد فلسطين فإن الكيان الصهيوني الاستيطاني المحتل يواجه أزمة وجود بحدّة لم يألفها منذ إقامته. فالخطر الوجودي الذي يشعر به بسبب فقدان الأمن وعبثية الرهان على تطبيع مع أنظمة لا تستطيع أن توفر الأمن للكيان يتلازم مع ارتفاع وتيرة المواجهة المسلحة من أبناء فلسطين. فتداعيات العملية العسكرية في أوكرانيا عرّت المواقف الغربية في توفير الحماية لأوكرانيا في مواجهة روسيا. والدرس بات واضحا للقيادات الصهيونية أن وعود الغرب لا تتجاوز الحبر على الورق وأن الغرب لن يقاتل في سبيل ما هو أهم من الكيان. فمستقبل أوروبا أهم من الكيان وتبيّن أن القادة الأوروبيين لن يقاتلوا في سبيل تصوّراتهم لأوروبا. فهل يعقل أن أوروبا ستقاتل في سبيل كيان تتشوّه سمعته يوما بعد يوم وتظهر على حقيقته البغيضة؟ وكذلك الأمر بالنسبة للولايات المتحدة التي أعلنت أنها لن تقاتل مع الكيان في مواجهة الجمهورية الإسلامية في إيران وأنها لن ترسل إلا السلاح للكيان وكأن مشكلة الكيان هي الضعف في التسليح. كما أن الولايات المتحدة لن تقاتل من أجل أوكرانيا وفقا لتصريحات قادتها. تداعيات الازمة الأوكرانية ستكون وخيمة على الكيان خاصة وان قادته كانوا مربكين في اتخاذ موقف من الأزمة. وعندما حسم الكيان تردّده ووقف مع الحكومة الأوكرانية ضد روسيا فإن لذلك تداعيات مباشرة على العلاقة بين الدولتين وخاصة في مقاربة المشهد العسكري في سورية.

من جهة أخرى نرى تحولين أساسيين في المشهد الفلسطيني. فنهاك تصاعد ملموس في المواجهة الشعبية الفلسطينية مع قوى الاحتلال تجلّى بتطوّر ملحوظ في طبيعة المواجهات. فبعد موجة المواجهات بالحجارة والدهس والطعن بالسكاكين برزت المواجهة بالسلاح الناري. لن نسترسل في مقاربة هذه التطوّرات لضيق المساحة بل نكتفي بملاحظة ظهورها مع العملية العسكرية في أوكرانيا ما يدل أن الشعب الفلسطيني يشعر بضعف الحلف المعادي له فيتجرّأ على الاقدام على عمليات لم تكن مألوفة.

أما التحوّل الثاني فهو تثبيت القوى الردعية لفصائل المقاومة في غزة ما يتيح الفرصة لانتفاضة شعبية ضد قوى الاحتلال في مختلف أنحاء فلسطين المحتلة. كما أن المقاومة وضعت الخطوط الحمراء فيما يتعلق بمستقبل القدس والاحياء العربية التي ما زالت تقاوم عمليات التهجير وأيضا فيما يتعلق بمحاولات المستعمرين لاقتحام الأقصى. أيضا القوّة الردعية للمقاومة تعزّزت مع الشعور بأن الحلف المعادي يعاني من الضعف ما يجعل آفاق النصر أكثر وضوحا وقربة.

ومن تداعيات العملية العسكرية في أوكرانيا الارباك في النظام التركي الذي تردّد بين مصالحه مع روسيا والشرق بشكل عام والتزاماته الأطلسية. لكن الضعف الأطلسي ستجعل تركيا أكثر استجابة للضغوط الروسية والإيرانية في الملفّ السوري خاصة أن أوراق الضغط الروسي ليست ضعيفة كصواريخ أس 400 والتدفق السياحي الذي يشكل خشبة الخلاص في الأزمة الاقتصادية التي تشهدها تركيا. فالخروج من سورية أصبح ضرورة لتجنّب التداعيات السلبية من رفض احترام السيادة السورية على أراضيها.

والتداعيات للعملية العسكرية في أوكرانيا تأتي في سياق أخفاقات كبيرة للسياسة الأميركية انعكست على سلوك العديد من الدول العربية المحسوبة على الولايات المتحدة والتي تدور في فلكها. ويمكن وصف الحال في تلك الدول بداية جادة لمراجعة العديد من مواقفها وتحالفاتها ومقارباتها للعديد من الملفات التي ساهمت في انقسام البيت العربي. نذكر في هذا الإطار الامتناع عن التصويت في الجمعية العمومية للأمم المتحدة لصالح قرارات تدين روسيا. كما نذكر عدم الموافقة على فرض عقوبات اقتصادية ومالية على روسيا. بل العكس نجد حكومات هذه الدول تفكّر جدّيا بالانفصال عن الدولار في تسعير براميل النفط التي تصدّرها وبدأت تدرس إمكانيات التعامل بالروبل الروسي واليوان الصيني. هذه الإشارات الصريحة لم تكن واردة منذ بضعة أشهر ونضعها في خانة تداعيات العملية العسكرية في أوكرانيا التي عرّت الأطلسي وأظهرت ضعفه وعجزه. فالدول العربية التي كانت تتبنّى نظرية ملكية ال 99 بالمائة من أوراق اللعبة الدولية بيد الولايات المتحدة بدأت بمراجعة لتلك النظرية.

وهذه المراجعة التي تأتي في سياق مشاهدة التراجعات الأميركية في أفغانستان وفي مفاوضاتها غير المباشرة مع الجمهورية الإسلامية في إيران في الملف النووي تدفع الدول المتخاصمة مع إيران إلى مفاوضات ما زالت في بدايتها والتي كانت غير ممكنة منذ سنة أو أكثر. كما أن المراجعات في الملفات المتعلقة بسورية واليمن والعراق ولبنان قد تصل إلى انفراجات ضرورية للنهوض من الحالة الكارثية التي تعيشها الدول. كل ذلك لم يكن ممكنا لولا وضوح الإخفاقات الأميركية في أوكرانيا التي لم تكن لتحصل لولا القدرات الروسية وحلفها مع الصين. فهذه القدرات كما أشرنا في البداية لم تكن لتقوم لولا صمود القوى المقاومة العربية في كل من العراق ولبنان وفلسطين وسورية واليمن.

الإخفاقات الأطلسية في أوكرانيا تتلازم مع التصعيد في المواجهة الشعبية في فلسطين ما يلغي جدوى التطبيع مع الكيان المحتل. فإذا كانت الأوراق بيد الولايات المتحدة غير فاعلة فإن البوّابة للحصول على الرضى الأميركي أي الكيان الصهيوني المحتل لم تعد ضرورة. هذا لا يعني التراجع الفوري أو القريب عن التطبيع بل سنرى اشتداد المقاومة الشعبية للتطبيع دون ان عوائق كبيرة ما يفرغ التطبيع من مضمونه.

أما في الساحة السورية فسنرى تصعيدا في المواجهة مع قوى التعصّب والغلو والتوحّش المحتشدة في إدلب وجوارها كما سنرى تصعيدا في مواجهة القوى المتحالفة مع الولايات المتحدة في شرق سورية ومواجهات متصاعدة مع القوات الأميركي التي ستخرج في نهاية المطاف في كل من سورية والعراق. الإخفاقات في أوكرانيا لن تمكن الولايات المتحدة في الاستمرار في العراق وسورية ومواجهات محتملة مع الحلف السورية الروسي.

وأخيرا فيما يتعلّق باليمن فقوى التحالف العدواني على اليمن مضطرة إلى إنهاء العدوان والتفاهم مع القوى اليمنية الصامدة. اما الحل السياسي للمشكلة اليمنية فهو في الحوار بين مكوّنات الشعب اليمني وليس عبر إملاءات خارجية سواء كانت دولية أو غربية أو إقليمية.

المراجعات والتحوّلات الميدانية في المشرق العربي وتراجع موجة التطبيع ستفرض حتما مراجعة للنظام الإقليمي العربي. من المبكر التكلّم عن شكل النظام الجديد بل نكتفي بالقول ان قاعدته ستكون المربع السوري العراقي الجزائري اليمني، وفيما بعد دول الجزيرة العربية بقيادة اليمن وبلاد الحرمين، ثم بلاد وادي النيل والتشبيك المتزايد بي مصر والسودان، وأخيرا دول المغرب الكبير محوره الجزائر والمغرب. وركيزة ذلك النظام هو التشبيك الاقتصادي والسياسي بين دول المجاورة في الأقاليم العربية ولكن لذلك حديث آخر في مناسبة منفصلة.

*باحث وكاتب اقتصادي سياسي والأمين العام السابق للمؤتمر القومي العربي وعضو الهيئة التأسيسية للمنتدى الاقتصادي والاجتماعي

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Bridging China’s past with humanity’s future – Part 3

Posted on July 2, 2020 by martyrashrakat

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July 01, 2020

Bridging China’s past with humanity’s future – Part 3

by Straight-Bat for the Saker Blog

This will be presented in 3 parts and in 3 different blog posts

Part 1

Part 2

PART – 3

2008 ONWARDS – PREPARATION FOR FINAL ACT

The financial crisis that started in USA in 2007 became global by 2008 which impacted countries and societies across the world. The year 2008 has already been identified as watershed moment for world economy. However, I would like to put forward a hypothesis stretching the arguments further on why 2008 will be remembered as historic moment that started new preparations:

a) Since 1990s, the latest version of capitalism – Financial capitalism – has been developing strong operations in Anglo countries USA-UK-Canada-Australia and west Europe on the back of Financial services-Insurance-Real estate (termed by economists as FIRE) sectors. That was in line with the political economy of ‘capitalism’ – capital, by definition, needs continuous expansion, the capitalists were/are always in search of new horizons which would provide them more profit that would continue the ‘endless accumulation of capital’.

Before the chapter on financial capitalism got initiated, the businessmen in USA and other Anglo countries carried out two rounds of well-planned outsourcing (by definition, outsourcing brings down the product cost on one hand, and on the other hand outsourcing relieves company management from mundane tasks to devote more time on core competences) of non-MIC non-Energy manufacturing activities: (i) in stage 1 during 1950s and 1960s, they outsourced such economic activities to Japan-South Korea-Taiwan in order to create an economic vassalage through which the living standards of the so-called east Asian tiger economies will be pulled upwards to show ‘miracles’ (happened due to western liberal capitalist democracy), (ii) in stage 2 during 1980s and 190s, they outsourced even larger part of such economic activities to China that in turn would provide massive employment opportunity in China (happened due to western liberal capitalism and technological superiority), which would entice the Chinese government to join the Zionist Capitalist camp.

During 2007 and 2008, all the financial engineering that designed and implemented the FIRE sectors came crashing down. Apparently, ‘financial capitalism’ wasn’t that fault-proof in the face of infinite greed of capitalists. The situation was salvaged through ‘socialising the losses’ suffered by the ‘too-big-to-fail’ banks and financial services companies in USA, and other Anglo countries – the government released trillions of USD to support the crisis-creators. But a much more significant incident was that, the Zionist Capitalist Deep State clique started introspection on how long they can depend on ‘financial capitalism’ to continue accumulation of capital, and as a natural corollary, it appeared to them that ‘industrial capitalism’ was a more secure version of capitalism that was sent abroad with much fanfare. Both the beneficiaries of outsourcing i.e. China and Japan-South Korea-Taiwan block were very well established in the nuances of complete business cycle of ‘industrial capitalism’. The Deep State headquarters (in USA) also remembered that most of the Zionist Capitalist elites of non-Anglo west Europeans were never very serious about outsourcing – as a result, even in late 2000s, Germany-France-Italy-Netherlands-Sweden could maintain a base of ‘industrial capitalism’ (though not a vibrant one under the competitive stress generated by east Asian industrialists)!

The fact that, the Chinese government steadfastly refused to carry out political reforms and to privatize state-owned enterprises came as addition of salt to injury for the Zionist Capitalist Deep State. There was unanimous consent – Chinese manufacturing ‘juggernaut’ would have to be rolled back, and along with that, the unfinished WW II task of destroying CPC would have to be completed.

b) If the Deep State elites were trying in vain, to create environment for Chinese top leadership to switch over to liberal capitalism, the same Deep State elites were dreaming about Russia being colonised by the London-based Zionist Capitalist businessmen and bankers. By the time when they woke up in 2008, Russia developed on all fronts including exports (USD 468 billion primarily from petroleum and natural gas) and Russian government was working all-out to improve the living conditions of the society. After 1991, the Russian capitalist-swindlers were in self-congratulatory mode about how they grabbed the resource extracting sector like petroleum, natural gas, aluminium etc. – with huge mineral and hydrocarbon reserves, using the Anglo-American technologies, the Russian capitalist-swindlers were confident to generate huge revenue and profit year after year. However, post-1991 ‘reformed political environment’ brought such a top leadership who would slowly but surely entrust the custody of most of the natural resources to the state-owned enterprises. Even more interesting event was that, Russian scientists and technologists were again engaged on research and development of military equipment. The military-industrial-complex of Soviet Union was decimated after 1991 mainly because no single successor country of Soviet Union had the entire production chain (it was distributed among different provinces like Russia, Ukraine, and Belarus etc.). Russian leadership intuitively developed the entire supply and production chain in their territory – as a result, very soon Russia became a potent force in arms export. It is not the total amount of export that mattered – the advancements in technology was far ahead in complexity and quality of armaments compared to the armaments owned by military forces of USA-5 Eyes-NATO, particularly in electronic warfare, missiles, and fifth generation military aircraft.

The writing on the wall was clear for the Zionist Capitalist Deep State – the resurgent Russia would utilise the energy export revenue to restructure its own military forces with such magnificent military machines, and Russia will curve-out a share of world-wide military arms export market. This entire cycle would create unwanted competition from technically strong Russia in energy sector and MIC sector, the only sectors of ‘industrial capitalism’ for which the Zionist Capitalist oligarchy still maintained their business portfolio. Again, there was unanimous consent – Russian energy export would have to be rolled back, and along with that, the Russian Federation would have to be dealt a decapitating blow to eliminate current leadership.

c) While all partners of the Deep State cabal were in agreement on the above mentioned points (a) and (b), there was complete lack of convergence on the long-term strategy and plan of action to achieve these objectives.

Such lack of strategic planning and coordination was evident after 2008. For the first time in five centuries the Zionist Capitalist Deep State cabal thought that, they need to include more ethnic groups – Barack Husain Obama (representing Afro-Americans) was selected as the President of USA for two terms from 2009 to 2016. It is doubtful, if that action really increased the strength of the cabal. The Zionist Capitalist cabal made a half-hearted initiative to create political-economic supranational blocks (through signing of TPP, TTIP, and TISA) that will impair all-round security of China-Russia and few other countries where governments were being run by anti-imperialist political parties. Such exclusive trade blocks, if materialised, would have (i) impinged on ‘state’ sovereignty of all member states where MNC business entities took priority over state, (ii) created ‘captive market’ for goods and services produced by MNC business entities owned by Jewish, Anglo, Dutch, French, German oligarchy plus Japanese and Korean oligarchy, and (iii) maintained US fiat Dollar as global exchange currency.

[ Link: http://www.globalresearch.ca/the-transatlantic-trade-and-investment-partnership-ttip-would-abolish-europes-sovereignty-the-eu-would-become-a-us-colony/5417382 ]

If such trade blocks would have been superimposed with EU and NATO, the world would have seen the birth of largest directly controlled empire in history spanning across east and south-east Asia, Europe, North America, most of South America. It is doubtful, if the Deep State elites ever pondered over the absurdity of such planning.

Donal Trump burst into the centre-stage in 2016 end without getting selected by the Zionist Capitalist Deep State cabal. But he was quick to get accustomed with the Deep State objectives and strategy – after all, the role of President of USA have been the façade of the Deep State since 1945 (replacing Prime Minister of UK who used to shoulder that ‘responsibility’ for previous couple of centuries). At the first place, Trump’s election as the President of USA itself showed the lack of coordination among the factions of Zionist Capitalist cabal. After Trump settled in, the policy appeared as ‘bring back the manufacturing industry from China any how’ without any arrangement for upstream and downstream supply chain. Any planning of this type of infantile disorder is bound to fail. On the other hand, Trump thinks that Russia would be immature enough to get mollycoddled by his words on how Russia is important in current world economy while maintaining the economic sanctions (which have been hitting Russian economy hard for past 6 years). Again, Trump alienated most of the west European partners through his repeated calls for increasing military budgets by west European NATO partners. Needless to say that, none of Trump’s action plans are backed by thorough study. Similar to immature strategic plans vis-à-vis China, the Deep State have been showing lack of ingenuity vis-à-vis Russia.

Across the world, the serious fact-based researchers and reporters are divided in their opinion – the larger group is of the opinion that the Deep State cabal is in deep crisis that have been brewing for decades (due to factors like ‘intrinsic crisis’ of capitalism, and ‘limitations’ of fiat US Dollar printing or QE, ‘limitations’ of imperial outreach etc.), while relatively smaller group feels that irrespective of such limitations, Deep State will continue to maintain its hegemonic hold over the world order through new tricks. I tend to side with the logic of the smaller group. Notwithstanding the obvious weaknesses of the Deep State cabal, they have wealth cumulatively built up for past five centuries and they have corrupted the educated group of people in all countries since the end of WW I – hence they would look to perpetuate their hegemonic world order in the foreseeable future.

d) Nevertheless the Zionist Capitalist cabal has made an impressive array of arrangements, even if that won’t be coherent enough to defeat either China or Russia:

i. USA Military forces through its regional commands across the world, along with the 5-Eyes military forces maintain high degree of military alertness and preparedness aimed at fighting at least two wars simultaneously at two different ‘theatres’. They have developed and deployed a ubiquitous comprehensive C4ISTAR system and standard operating procedure that will support ‘first strike’ to decapitate the adversary (with Hypersonic strike vehicles, Russia and China are the only countries that defy this). Among significant military assets, very strong naval force with 11 Carrier Strike Groups (CSG), largest fleet of nuclear submarines, largest fleet of ‘stealth’ multi-role military aircrafts, outdated Ballistic Missile Defence system (BMD) to strike down incoming (up to supersonic) projectiles through launching or midcourse or terminal stage, second largest stockpile of Nuclear warheads that can be delivered from land, air, and sea.

ii.  Apart from above mentioned weaponry (common across the world), USA possess highly sophisticated space based weapons like kinetic kill vehicle, and directed energy weapon which, apparently, can be launched by robotic orbital vehicle (X 37B); monitoring and surveillance of satellites sent by other countries to the high earth orbit (HEO) and low earth orbit (LEO) using four satellites of Geosynchronous Space Situational Awareness Program (GSSAP); special armaments researched by DARPA like robotic combat force, microsatellite-cum-drone, microbiological weapons, weather control techniques (HAARP etc.)

iii. USA (along with forces from Rest of 5Eyes, NATO, Israel, Japan) Deep State has been meticulously carrying out military encirclement of Russia and China around their geographical boundary for past two decades. Nuclear warheads in NATO bases in Turkey, Italy and other European countries, BMD system installation in at Poland, Romania, Japan, and South Korea, CSG in all the oceans, more than 700 military bases in Europe-Asia-Africa-Pacific Ocean-Indian Ocean-Atlantic Ocean, and agreements with dozens of non-NATO but pro-Deep State countries for sharing military facilities and logistics facility

e) The Zionist Capitalist oligarchy has been looking beyond the ‘industrial capitalism’ and ‘financial capitalism’. A set of new possibilities have appeared on the horizon – these are not completely ‘new’ because during past two centuries all of these formed a small segment of all-encompassing ‘industrial capitalism’. In the new century, however, any of these or a combination of these can grow into ‘opportunity’ of a new ‘version’ of capitalism:

  1. Exotic materials like Cobalt, Lithium, and Uranium etc.
  2. Genetic engineering and artificial life
  3. Climate engineering
  4. Artificial intelligence
  5. Surveillance and mind control
  6. Healthcare and medicine
  7. Space travel and settlement

Current geopolitical control-points of Deep State:

1. In East Asia, South-East Asia, South Asia, Pacific Ocean zone, Indian Ocean zone the key strategic control revolves around objectives like ‘All-round Containment of China’, ‘Military Partnership with India’ and ‘Creation of Indo-Pacific NATO’ through the programmes like:

  1. Installing Deep State followers as the ruling elites of Taiwan island who could declare formal independence from Chinese mainland
  2. Fomenting secessionist movements in Hong Kong, Xinjiang (East Turkestan), Xizang (Tibet) regions of China. The Deep State would utilize fault-lines of multi-ethnic and multi-religion society of China to tear apart the country into multiple vassal states
  3. Provoking trouble in South China Sea, East China Sea through mobilising the governments of littoral states like Vietnam, Malaysia, Indonesia, Philippines, Japan and nudging them towards confrontational behaviour with China
  4. Keeping the ‘Korean problem’ alive by manipulating successive South Korean governments to take aggressive stance towards North Korean government so that peace agreement (as logical settlement of Korean War armistice) never happens
  5. Keeping the ‘Kuril Islands problem’ alive by co-opting successive Japanese governments towards taking an illogical stand towards proposals of Russian government so that peace agreement (as logical end of WW II) never happens
  6. Keeping the land boundary dispute between India and China alive through co-opting the Indian ruling party leadership and nudging them towards confrontation
  7. Provoking Salafist Islamic terrorism in India, and then cozying up to the Indian government with offer for ‘generous support’, if India joins the USA-led multi-country military block mainly targeted against China
  8. Manipulating Indian leaders and bureaucrats to play a hegemonic role in the south Asian neighbourhood, which would seek to get elite followers of the Deep State camp elected as top leaders of countries like Sri Lanka, Nepal, Bangladesh, Maldives
  9. Forming an ‘informal’ naval alliance among India-Japan-Australia-South Korea which would keep navy of China and Russia under check, and if push comes to shove the ‘quad’ navy would block the Malacca strait to cripple Chinese trade
  10. Corrupting the political parties in Asia’s south-east and south region (countries like Vietnam, South Korea, Cambodia, Laos, Malaysia, Indonesia, Philippines, India, Pakistan, Nepal, Sri Lanka etc.) which had glorious anti-imperialist struggle for many decades to influence them against economic association with China and Russia
  11. Spreading concocted stories on global media identifying infrastructure projects under Chinese government’s BRI initiative as ‘debt trap’ and maligning Chinese manufacturing industry as ‘sweatshop’ to create a negative image

2. In West Asia, North-East Africa, North Africa zone, the key strategic control revolves around objectives like ‘Reorganize State boundaries’, ‘Turn the Region into Domain of Israel’, ‘All-round Containment of Russia and China’ through the programmes like:

  1. Destabilizing existing states through opposition political party (controlled by Deep State) who would manipulate the popular despair and anger against the autocratic rulers in North Africa, West Asia, North-East Africa;
  2. Creating multiple groups of Salafist terrorists by recruitment among the mostly unemployed and uneducated Arab youth from Sunni Islam communities living in the vast desert corridor stretching from Morocco to Afghanistan
  3. Portraying the army of Arab Salafist terrorists as army of ‘pan-Islamic Caliph’ through recruitment of non-Arab mercenary forces from Caucasus, Central Asia, South Asia to create a ‘legitimacy’ among the mostly unemployed and uneducated Asian and African Muslim population who have been brainwashed by religious preachers for generations about glorious ‘Islamic Caliphate’
  4. Mobilising multiple Salafist terrorist groups to bring down existing rulers and simultaneously creating as many fiefdoms by dividing the existing state boundary – thus existing ‘state’ would be converted into ‘statelet’ managed by the terrorist groups
  5. Positioning Israel as the de-facto politico-military leader for all governments in West Asia, North-East Africa, North Africa regions; Israel would act as coordinator entity for providing economic and military assistance to the series of satellite statelet
  6. Manipulating the Kurdish liberation forces spread over Turkey, Syria, and Iraq to break away from their parent countries and create new state of ‘Kurdistan’ that would be a NATO asset in west Asia
  7. Creating multiple power-centres within the Sunni Arab sheikhdoms which would be crucial to control the ambitious Saudi clan

Keeping Iran as a ‘pariah’ state in global affairs through sanctions and limited military strikes until the internal political situation would be ripe enough to be manipulated to overthrow the government of Shia Iranian revolutionaries

  1. Maintaining a high level of USA naval readiness in Persian Gulf through which would keep navy of Iran and Russia under check
  2. Spreading concocted stories on global media identifying Russian ruling party’s internal policies as corruption of ‘Putin faction’ to create negative image of Russian energy and defence industry

3) In Western Africa, Central Africa, Southern Africa zones, the key strategic control themes have been ‘All-round Containment of China’, ‘Military Partnership with Nigeria’ and ‘Transform Military Foothold into Large Bases’ driven through programmes like:

  1. Destabilizing existing state apparatus by arming various tribal warlords who are divided among religious lines (Christian, Sunni Islam) in central and western regions of Africa; state like Rwanda and Burundi would remain hotbeds for ever
  2. Deploying military detachments by USA, France, Israel citing old Zionist Capitalist rhetoric of ‘maintaining human rights, democracy and governance’
  3. Corrupting the political parties in Africa’s southern region (countries like South Africa, Angola, Mozambique, Namibia, Zimbabwe, Zambia, Tanzania etc.) where anti-imperialist struggle were in the global headlines for three decades (1950 to 1970) to influence them against economic association with China and Russia
  4. Building ‘client state’ in all regions of Africa where the entire spectrum of political leadership would follow the ideology and policies pushed by the deep State – countries like Malawi, Liberia, South Sudan etc.
  5. Keeping the ‘Katanga problem’ alive by manipulating the internal political parties, armed groups, neighbouring countries – either DR Congo would become satellite of the Deep State or Katanga would be curved out as ‘independent’ country
  6. Spreading concocted stories on global media identifying Chinese ruling party’s internal debates as ‘factional fight’ to create factionalism within the ruling party, and maligning Chinese manufacturing industry as ‘sweatshop’ to create a negative image

4. In West Europe, and East Europe zones, the key strategic control revolves around objectives like ‘All-round Containment of Russia’, ‘Every state under supranational EU’, ‘Create African-Germanic-Slavic Hybrid Society’, ‘Ruin the Slavic Civilization’ through the programmes like:

  1. Bringing all countries under ‘EU’ banner either as a direct member or as associate thereby diminishing the sovereignty of European states through shifting all governance and policy matters to EU – it ensures single point of contact for hegemonic empire run by Deep State
  2. Expanding NATO to the borders of current Russia through creating Deep State loyalist governments in ex-Soviet bloc countries like Poland, Romania, Bulgaria, Czechia, Slovakia, Hungary and creating USA army bases with nuclear missile installations
  3. Manipulating Turkey, Saudi, Libya political and bureaucratic leadership to mobilize millions of Arab Sunni Muslim low-skilled people into different countries of Europe
  4. Manipulating EU member states to take those ‘forced refugee’ and settle them in Europe to create a multi-ethnic multi-religion hybrid society in Europe – they will form the ‘working class’ people as well as form the backbone of a future European army
  5. Infiltrating the leadership of European political parties which profess ‘socialist’ ideologies (hence, ‘anti-imperialist’ but not Marxist) so that all these parties become ‘controlled opposition’ – in case Deep State supported elitist party loses election, the new government still maintain the capitalist and imperialist policies
  6. Staging false flag terrorist attacks in countries like France, Germany, Italy whenever the ruling leadership in those countries appear to deviate from policies of Deep State, particularly if these leaders try to develop economic relationship with China and Russia
  7. Spreading false propaganda in European media and academic institutions identifying fascist Germany’s territorial expansion and genocides as equivalent to communist Soviet Union’s defensive manoeuvres and administrative overbearingness, and vilifying present Russian government as authoritarian
  8. Provoking secessionist movements (using any fault-line – religion, language, ethnicity) in all geographical regions that come under erstwhile Yugoslavia and Soviet Union so that both these regions are destroyed beyond repair – thus, if ex-Yugoslavia now comprises of (say) 5 statelet, the Deep State would strive to make 10 splinters, similarly if ex-Soviet Union now comprises of (say) 15 statelet, the Deep State would strive to make 30 splinters
  9. Manipulating the political leadership and bureaucracy in all ex-USSR states towards taking government policy decisions/actions which will actively hurt Russian interests
  10. Creating hindrances for Russian access to deep sea ports in Baltic Sea and black Sea to not only restrict their economic activities but also to check the naval forces

5. In South America, and Central America zones, the key strategic control revolves around objectives like ‘All-round Containment of Russia and China’, ‘Creation of Latin American NATO’, ‘Keep Latin America as USA Playground’ through the programmes like:

  1. Bringing all countries under ‘OAS’ banner through which the Deep State will directly interfere in the governance and policy matters – in fact, this organisation coordinates the appointments to legislature, executive, and judiciary in all South American and Central American countries so that only Zionist Capitalist elites get into the top positions of political parties and bureaucracy
  2. Expanding NATO in South America so that the main anti-zionist anti-capitalist government of Venezuela can be directly invaded – to that effect, the Deep State has enrolled Colombia, Peru and Brazil governments to become host of the USA military bases
  3. Infiltrating the leadership of European political parties which profess ‘socialist’ ideologies (hence, ‘anti-imperialist’ but not Marxist) so that all these parties become ‘controlled opposition’ – in case Deep State supported elitist party loses election, the new government still maintain the capitalist and imperialist policies
  4. In case, political parties with Marxist ideology comes to state power through democratic elections, the Deep State will organise trouble within common people and Defence establishment and instigate them to seize power by overthrowing the elected government (Guatemala, Nicaragua, El Salvador, Chile, Brazil, Argentina, Venezuela, Ecuador, Bolivia etc.)
  5. Keeping Cuba under most severe economic sanction and blockade for over six decades – key objectives have been to wreck the Cuban economy and break the Marxist ruling party
  6. Creating a second ‘homeland’ for the Jewish elites and aristocrats, by acquiring very large tract of land and building townships in Patagonia region of Argentina – considering Israel, the first ‘homeland’ has been facing quite difficulty in accomplishing the target of direct control of the stretch of ‘Nile-to-Euphrates’ land, this move will ensure long-term control of Latin America
  7. Spreading concocted stories on global media identifying infrastructure projects under Chinese government’s BRI initiative as ‘debt trap’ and maligning Chinese manufacturing industry as ‘sweatshop’ to create a negative image

All dressed up, but nowhere to go!

As noted above, the Deep State has been making quite assiduous preparations for teaching China and Russia the final lessons on the consequences of violating the rules of “end of history” – the principles of capitalist market economy and electoral democracy. But nobody among the Zionist Capitalist oligarchy knows how such lessons will be taught – China and Russia together control the largest land area, together they house the largest population, together they store the largest reserve of natural resources, together they have most educated and most disciplined work force, together they process/ manufacture largest share of energy and manufactured goods, and together they deploy the largest and most sophisticated military forces. Considering only China, it has third largest land area, largest population, most educated and most disciplined work force, largest share of manufactured goods, and fourth largest military force.

The Deep State, within a span of 100 years forgot that, not only they became more sophisticated, but their biggest adversaries in ‘Eurasian Heartland’: Russia and China, also became more astute. This is not to conclude that Deep State would put to rest their final assault. They will, because ideology and political economy of the Zionist Capitalist oligarchy would compel them to do so. It is imperative that China (and Russia) plan and implement their strategy in the most opportune time.

8. ROAD AHEAD

Let me recall the first paragraph of the first section (INTRODUCTION) of this document. A question was put forward as “what would be the action plan of the global oligarchy who collectively own banking and industrial sectors and who maintain current unipolar world order through chosen members of the so-called Deep State”; most probable answer was “state policy and implementation of the same would be geared towards accumulation of capital in every country except the six countries”. If the global oligarchy remain busy in wealth accumulation, what would be the strategy and action plan of the local oligarchy (consists of industrialists, bankers, large landlords, leaders of main political parties, bureaucracy)? Answer to this question is complex – local oligarchy being directly integrated with the local society, they can’t act in a complete self-seeking manner like their global counterpart. Local oligarchy is bound to look after the arrangements for minimum subsistence of the citizens, and thereafter carry out wealth accumulation. Hence, there is a necessity of minimum economy and governance in every state in the world. With IMF, WBG, ADB banking institutions retreating into conservative procedures as well as USA, 5-Eyes, EU, Japan applying partial break on aids, at least 150 out of 194 UNO member countries would require loan, aid, other techno-economic help. China with largest GDP PPP, largest forex reserve, gigantic domestic market, and largest STEM pool of students would be in a position to fulfil this historic role, even if the leadership may not find it enviable.

Moreover, as noted in previous sections (CHINA IN DENG ERA, POST-DENG CHINA) China has been moving on a continuous journey initiated by Deng’s reforms and managed by successive leaders through tweaking some policy matters and effective coordination. Key statistical indicators during this entire period is given below:

[ Link: https://www.theguardian.com/news/datablog/2012/mar/23/china-gdp-since-1980 ]

Chinese government would have to reach a ‘logical destination’ in near future – CPC leaders have set their targets on what figure of common socio-economic indicators would be construed as ‘successes. Hence, China will stay on current course till 2028/ 2030 CE impacting global capitalist economy in fundamental way:

  1. Chinese companies will design and develop wide range of consumer products using Chinese patented technology and receive wide acceptance across the world;
  2. China will cease from being ‘factory of the world’ and develop relationship with Asian/African/ South American countries to spread the manufacturing activities there. A mix economy driven by domestic consumption plus exports in China will be healthy for the entire world
  3. Chinese government (along with Russian government) will develop an ecosystem across Europe and Asia in which Banking-Finance and Industry-Economy are intertwined
  4. The system of ‘capitalist market economy through state-owned and private-owned enterprises’ developed in China will evolve as a ‘model’ for many African and Asian countries
  5. Chinese government will continue with the BRI programme as a framework for investments in railways, roads, ports, electricity generation, communication network, mining, manufacturing factory projects in Asia, Europe, Africa, and South America
  6. While making investments in China or in any other country Chinese government will give due importance to environment and take necessary actions so that ecosystem is well-preserved
  7. Chinese government (along with Russian government) will establish an international monetary system to ensure that interests of the non-European and non-5 Eyes countries are maintained This should also include replacement of US Dollar as world’s reserve currency by a basket of currencies of world’s top ten economies (GDP in PPP terms) backed by gold/valuables

The quest for world-wide Zionist capitalist democratic empire (as noted in section GEOPOLITICS 1930 ONWARDS) will never end unless the oligarchy and aristocracy take such decision against their five century old collective psyche. So, it can be safely presumed that the Deep State will continue to look for destroying all sorts of resistance to their hegemony – it is simply immaterial whether the antagonist country profess liberal capitalist (Russia) or socialist (Cuba, China) or Shia Islamic (Iran) or nationalist (Venezuela) philosophy. For the Deep State, complete subjugation is the only way forward. Let’s go back to the first section (INTRODUCTION) again where I mentioned that, China (because of its large landmass and huge population) would be in ideal position to resist the unipolar world order and roll back the onward march of global capitalism in order to build a more equitable society (with crucial support from Russia). Current world order (even when Russia-China-Iran are putting up a brave resistance to the hegemonic Deep State) is anything but equitable. It is one thing to struggle against Zionist Capitalist world order to establish an order with cosmetic change, and it is entirely different thing to struggle to establish an ideal order that brings fundamental transformation. Whichever path Chinese leadership follow, there has to be a detail planning for the same. Let me play the role of a candid analyst.

Looking forward – Option 1:

Option 1 of simulation considers that CPC wishes to struggle against existing Zionist Capitalist world order to establish a parallel world order with cosmetic changes around 2030 CE, and there won’t be any change in ruling party in China during this journey when CPC top leadership maintains their current road – this road would lead the world into the following state of affairs:

  1. China will continue to grow in the path of ‘capitalist market economy’ which will result in further evolution of the private capitalist businessmen class – share of capital asset owned by private enterprises will crawl upwards and share of output by private enterprises will rise faster in GDP. Government will control corruption-inflation-unemployment strictly, will implement new policies to control the capitalist class, and will provide welfare schemes to commoners in order to maintain legitimacy of CPC within the society.
  2. Confrontation in South China Sea, Taiwan and North Korean border will continue to increase to such a level that the Deep State will find it completely embroiled without an easy exit – a ‘hot’ limited war will be fought between two sides: USA-Japan-South Korea and China-North Korea, which will end with effective departure of USA military from Asia region, and Chinese unification with Taiwan.
  3. Zionist Capitalist Deep State cabal would redefine their ‘territory’ by identifying core zone as Europe continent, North America continent, Australia-New Zealand-Japan (islands), and India-Israel (countries living with island mentality) – within these regions, the governance, the economy, the military, and socio-cultural affairs would be under sway of MNCs owned by the oligarchy clique.
  4. In Asia, Africa, South America continents, China will get accepted as the leader in economic and socio-cultural sphere, while Russia will evolve as the leader in military and energy sphere – within these regions, the governance, the economy, the military, and socio-cultural affairs would be more or less driven by the local political parties and local oligarchy who will have majority part of their business relationship with China and Russia; however the local oligarchy will also maintain minor trade and finance relationship with Deep State dominated regions.
  5. Fundamentals of capitalistic economy will remain intact in the China-Russia dominated regions with both state-owned and private-owned enterprises ruling the roost – the cycle of profit and endless accumulation of capital will continue, but under supervision of the state; also, general welfare and social security for all classes of citizens will be ensured by the state.
  6. 2050 CE onwards, the tussle between two ‘worlds’ will be reflected very badly in the realm of space and planetary exploration as well as environment of our planet – the Deep State-controlled ‘world’ will seek domination of space through advanced technology in the field of aerospace and defence, which may not become a priority for Chin-Russ civilizational combination.
  7. the Deep State-controlled ‘world’ will seek final revenge on the other ‘world’ by climate engineering during which weather manipulation in the form of substantial temperature rise, extreme cyclonic storm, long duration of drought, out of season rainfall etc. will be effected to destroy agriculture and urban society within a decade or so. Though the Deep State will attempt to become the uncontested hegemon the other world will continue to struggle independently as a block.

Looking forward – Option 2:

Option 2 of simulation considers that CPC wishes to struggle against existing Zionist Capitalist world order to establish a parallel world order with cosmetic changes around 2030 CE, and there will be unpredicted change in ruling party in China during which CPC will be replaced by a liberal capitalist political party supported by Deep State-led ‘democracy movement’ – this road would lead the world into the following state of affairs:

  1. China will continue to grow in the path of ‘capitalist market economy’ which will result in further evolution of the private capitalist businessmen class – share of capital asset owned by private enterprises will increase substantially and share of output by private enterprises will rise exponentially in GDP. Government will not be effective to control corruption-inflation-unemployment. The capitalist class will create political party with so-called nationalist ideology supported by local academia and media. CPC will move in the direction of legitimising such political party, which will seize power after election (it will be immaterial whether CPC really win or lose election – either way, the opposition will seize power).
  2. Confrontation in South China Sea, Taiwan and North Korean border will diminish after new political party form the government which will be completely under control of the Deep State. Without any ‘hot’ war mainland China and Taiwan will be unified – for USA Deep State this will be a revenge after a century. After all, Kuo Mintang was the favourite of Zionist Capitalist oligarchy from 1927 onwards when Chiang Kai-shek proved that he can fight against CPC ruthlessly. It has been USA’s economic and military support that kept Taiwan as viable ‘entity’ till now.
  3. Zionist Capitalist Deep State cabal will find the entire world (except Russia) as their ‘territory’– the governance, the economy, the military, and socio-cultural affairs, essentially everything under the Sun would be under sway of MNCs owned by the Zionist Capitalist oligarchy clique.
  4. Entire world (except Russia) will accept USA (along with Israel and 5-Eyes) as the leader in military, economic and socio-cultural spheres – everywhere, the governance, the economy, the military, and socio-cultural affairs would be more or less driven by the local political parties and local oligarchy who will be directly appointed by the Deep State; however the local oligarchy will also maintain minor trade relationship with Russia for energy import.
  5. Across the world capitalistic economy will remain intact through the cycle of profit and endless accumulation of capital – however, due to mismanagement of resources and brutal exploitation of common people, there will be wide-spread hunger. Population in Africa and Asia will decline. This will conform to the Zionist ideology which portrays earth as a settlement for the ‘golden billion’ – one billion of Jewish and Anglo population and their flunkies. Automated robots will be utilised for industrial and agricultural production – they neither require food, shelter and healthcare nor do they demand justice and equality!
  6. 2050 CE onwards, the tussle between the ‘one world’ owned by the Deep State and Russia will turn into a serious ‘hot’ war. The Deep State will seek final revenge on Russia by complete obliteration using military technology that apparently will confine the radioactive ashes and dust within the destroyed land itself instead of moving upwards to cover the entire atmosphere of earth – thus the Deep State will attempt to become the uncontested hegemon and will succeed, albeit with major losses.

Looking forward – Option 3:

Option 3 of simulation considers that CPC wishes to struggle against existing Zionist Capitalist world order to establish a parallel but new world order based on basic Marxist philosophy around 2035 CE, and there won’t be any change in ruling party in China during this journey when CPC top leadership changes their current track – this road would lead the world into the following state of affairs:

  1. China will continue to grow in the path of ‘capitalist market economy’ with restrictions on further evolution of the private capitalist class – share of capital asset owned by state enterprises will increase substantially and share of GDP output by state enterprises will surpass the private enterprises by a multiplier of two. Government will control corruption-inflation-unemployment strictly, will chalk out policies on transformation of economy into a Marxist economy in which private-owned and state-owned enterprises will be transferred to community ownership by 2035. However, both private capitalists (local, foreigner) and state capitalists (central, provincial, local) will have marginal share in the enterprises earlier owned by them – such benefits will construe as long-term compensation against the asset transfer, apart from an immediate compensation paid to the erstwhile owners.
    1. By 2030, the technology-based modernisation of the forces of production in China will be complete which can be interpreted as ‘creation of material basis is done’. CPC can plan with earnestness for achieving their original objective of achieving a Marxism-based society through a SINGLE-STAGE TRANSFORMATION. As Stalin and Mao faced socio-economic reality, two stage transformation has immanent difficulties – with completion of stage 1 (during which Capitalist society with bourgeoisie democracy transforms into Socialist society with dictatorship of proletariat), increasingly detrimental geopolitical and economic factors imposed by the opposing forces of monopoly capitalism will not provide opportunity or time for further progress into stage 2 (Socialist society with dictatorship of proletariat transforms into classless Communist society). CPC may make a thorough plan of action for a single-stage transformation with as minimum shock as possible – a point to remember: people never plan to fail, they fail to plan.
    2. While the planning for a single-stage transformation is undertaken by CPC, they need to make the fundamental action – replacement of ‘private ownership’ by COMMUNITY OWNERSHIP. Neither any citizen nor State will own any means of production (land, natural resources, machinery, real estate and other infrastructure, financial capital etc.) apart from their living houses/flats/bungalows/vehicles. Military Industry will be required for production of military machinery which should be owned and managed by the state. Rest everything will be owned by community. Only when the entire world has decisively transformed into an ocean of humanity without any presence of ‘private ownership’ anywhere, the ‘State’ will relinquish its ownership of MIC, and ideally, there should not be any necessity of the same. The cycle of profit and endless accumulation of capital need to stop for the sake of humanity.
  2. Confrontation in South China Sea, Taiwan and North Korean border will continue to increase to such a level that the Deep State will find it completely embroiled without an easy escape – a ‘hot’ limited war will be fought between two sides: USA-Japan-South Korea and China-North Korea. With major losses on both sides, China will reap the benefit of being ‘son of the soil’ while USA will bite the dust by acting as an invader to east and south-east Asia. At the end of such conflict, two of the WW II ‘problems’ will get resolved in favour of socialist and workers parties of China and Korea. This will also initiate the complete retreat of the USA military from Asia continent, North Pacific Ocean, Indian Ocean regions leaving Japan and India to reconcile itself with a new China.
  3. Zionist Capitalist Deep State cabal would redefine their ‘territory’ by identifying core zone as North America continent, west European region, Australia-New Zealand-Greenland (islands), and Brazil-Argentina-Chile-Paraguay. By then, Patagonia in Argentina would have become the second homeland of Jewish oligarchy and aristocracy – it will secede from Argentina to become an independent corporation (i.e. democratic capitalist country). Most interesting change will be in Europe – Germany, Austria, Italy, Hungary, Czechia, Slovakia, Poland, Bulgaria, Romania, and Serbia et. al will be left in the lurch by the Deep State. That action of the Deep State will be intelligent indeed – such ethnic groups who could be easily lured into any geopolitical activities that will finally result in their downfall, can’t be true ally! Since past three centuries the leaders of these countries proved time and again that, they will wreck their own economy and society (by unnecessarily fighting with Russian Slavic land) in lieu of hundreds of millions of Dollars credited into their offshore bank accounts. Within the ‘Anglo and Jewish enlightened world’ the governance, the economy, the military, and socio-cultural affairs would be under sway of MNCs owned by the oligarchy clique. A significant number of south Asians, Koreans, east Europeans will be given permanent citizenship because of their extraordinary greed, and socio-cultural servitude to the Zionist Capitalist ideology and Anglo/Jewish ethnicity.
  4. Across the world (excluding the zones of ‘Anglo and Jewish elite world’) China will get accepted as the leader in economic and socio-cultural sphere, while Russia will evolve as the leader in military and energy sphere – in these regions, the governance, the economy, the military, and socio-cultural affairs would be more or less driven by the local political parties and local oligarchy who will have majority of their business relationship with China and Russia; however the local oligarchy will also maintain minor trade and finance relationship with Deep State dominated regions. In the long run, most of the countries will follow the Chinese system of community-ownership of means of production within their country.
  5. 2040 CE onwards, the world will be the most safe and peaceful compared to the past five millenniums (during which conflicts used to be the rule rather exception). China and Russia will lead the way for research and development related to sustainable economy and environment. There will be significant use of technology in making the individual life and social life better and comfortable than before. New frontiers of space research and planetary exploration will open up. Human civilisation would proceed further in understanding the ‘reality’ of ‘universe’ – we will know how ‘life’ got created and what the ‘mystery’ of creation is!
  6. the Deep State-controlled ‘Anglo and Jewish elite world’ will seek final revenge on the ‘other world’ by complete destruction using military technology that apparently will confine the radioactive ashes and dust within the destroyed land itself instead of moving upwards to cover the entire atmosphere of earth. However, as history repeats itself, such research and development by the Deep State would be known to the leaders of ‘other world’ much before fruition – left with a choice between complete surrender and complete destruction, the Deep State will chose the former ‘to live and let others live’.

Conclusion:

China and CPC are fortunate to get Xi Jinping as the paramount leader. I’m not saying this because of his achievements and successes in governance or economy or defence or any other sphere. My point is – a top leader who remembers the origin and mission of his party and his ideology, can do wonders. In 2017, while visiting Shanghai and Jiaxing building/site where 1st National Congress of CPC was held in 1921, Xi stated “only by remaining true to our original aspiration, keeping our mission firmly in mind, and keeping on striving, could the Party stay young and live”. Such ideological plain-speaking is a sign of very rare honesty and sincerity. Hope, CPC leaders and core group of members will provide required strength and support to Xi.

I wonder, if top CPSU leaders in post-Stalin era ever remembered original aspiration and goal of CPSU. The ideological decomposition initiated by Khrushchev was so effective, that it wiped out all lofty ideals steered by none other than Lenin. Shouldn’t the true patriots in the land of Lenin start their journey once again and join forces with their Chinese comrades in the final stage of the long march?

China Communist Party tells members to celebrate 'political ...

Short profile:

By profession I’m an Engineer and Consultant, but my first love was and is History and Political Science. In retired life, I’m pursuing higher study in Economics.

I’m one of the few decade-old members of The Saker blog-site. Hope that this website will continue to focus on truth and justice in public life and will support the struggle of common people across the world.

An Indian by nationality, I believe in humanity.

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