On David Harvey’s Neoliberalism (‘with Chinese Characteristics’)

The is the third part of my lecture text on why foreign scholars as yet do not understand China’s socialist market economy. This part focuses on David Harvey’s influential yet deeply flawed book, A Brief History of Neoliberalism (2005).

The reaction to state monopoly capitalism was – as indicated already on a few occasions – the rise of neoliberalism at the end of the 1970s and its aggressive promotion in 1980s and 1990s. It may be defined as a ‘theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade’ (Harvey 2005, 2). I have taken this definition from David Harvey, since his work is the main focus of this section. The elaboration on this definition sounds very much like a reiteration of Adam Smith (1776 [2000]) as interpreted through the neoclassical economists (Alfred Marshall, William Stanley Jevons, and Leon Walras): minimal state presence, except for guaranteeing the basic institutional environment for a capitalist market economy, the inherent value of ‘self-interest’ and so the primacy of the private individual, with the addition that any state with too many possessions should ‘privatise’ them. In fact, for Harvey the process of privatisation is enough to designate a government’s project as neoliberal.

A Brief History traces the way this liberalism was rediscovered as neoliberalism (Friedrich von Hayek, Milton Friedman and others) and applied with gusto first in the UK and the United States under Thatcher and Reagan, two of the places where Western liberalism itself first arose (Losurdo 2011). In the 1980s and 1990s it was copied by like-minded countries and forced on others not so like-minded, through the standard mechanisms of United States colonial power play – known as ‘regime change’. Of course, states enacting neoliberal policies are bound to be quite ‘interventionist’, as Harvey notes, as were the international bodies such as the IMF and World Bank, which were tasked with the authoritarian imposition of such policies on less-than-willing countries.

All this is reasonably well-known, although Harvey is keen to emphasise the regular crises generated by neoliberal policies. The book was published before the major Atlantic crisis of 2008, so he was unable to realise that the crises were not merely due to internal causes, but also external ones. I mean here the cumulative effect of China’s Reform and Opening Up, which was beginning to have a global effect by the 1990s. Countries following the neoliberal agenda could not help being affected by the Chinese return to being a global power of some weight. This point, of course, brings us to Harvey’s most wayward chapter, ‘Neoliberalism with Chinese Characteristics’ (2005, 120-51).

Before I engage with this chapter, we need to pause for a moment to identify some problems that have already arisen. The key problem is that Harvey refuses to countenance both Marx’s theory of labour value and the falling rate of profit in capitalist enterprises. He has been criticised for such omissions (Harvey 2017; Roberts and Harvey 2018; Das 2017), although I do not need to engage with such debates here. More significant is the ramification: what is the cause for the move to neoliberalism? For Harvey, it is nothing more than the result of the political will of the capitalist ruling class (Harvey 2005, 19; see also here). It is a voluntary act by the ruling capitalist class that makes such decisions in order to respond to economic challenges and threats from anti-capitalist opposition. Not only is this approach focused on relations of production and determined by political rather than economic factors, but I am reminded of Marx and Engels’s criticism of Bakunin. At one point, Marx observes: ‘Willpower [Der Wille], not economic conditions, is the basis of his social revolution’ (Marx 1875 [1973], 633; 1875 [1989], 518).[1]

To be sure, Harvey likes to call his approach ‘uneven geographic development’, along with the invocation of multiple, complex and interwoven factors in the capitalist market relations. But he is unable to provide an adequate Marxist reason for the turn to neoliberalism and away from state monopoly capitalism (which he calls ‘embedded liberalism’). By contrast, had Harvey deployed the falling rate of profit (from Marx), he may have been able to account for the turn to neoliberalism. The earlier tendencies towards state monopoly capitalism  – popular in the context of two World Wars with states becoming active players in social and economic life through widespread militarisation, capitalist welfare states, and a spate of nationalisations of banks, railways and public utilities – had run to its limit in terms of the ability to extract more profit. A response was needed from the Western liberal tradition: the state had to retreat so as to enable ‘private’ capital to seek new fields to generate profit. Already I have invoked another possible reason in light of the previous section: the tension between bourgeois state control of the capitalist economy and its retreat to enable private capital to come into its own for a while.

With this point in mind we come to the China chapter. Harvey espies a neoliberal turn with the Reform and Opening Up, launched by Deng Xiaoping in 1978. Why? The only answer I can find in Harvey’s work is that it was due to the political will of the CPC, which decided for some unaccountable reason to move to private enterprises alongside state enterprises. I have said enough on the inadequacy of such a voluntarist approach and have more criticisms to make, but let us pause for a moment to see how Harvey unfolds his hypothesis. To begin with, he explicitly connects the Reform and Opening Up with the neoliberal turn elsewhere in the world, although he is careful to point out that it may also have been due to issues internal to China (he does not elaborate).

Harvey is perfectly willing to admit that the result has been stunning, with one of the fastest periods of economic growth in human history, the lifting of hundreds of millions out of poverty, and China’s re-emergence as a major international power. He also notes problems that arose, such as socio-economic inequality, exacerbation of city-country differences, environmental pollution, and labour unrest (his information is limited to the period up to the early 2000s). And he notes that the government has been adept at dealing with new problems that arose. However, Harvey is committed to the idea that this is neoliberal capitalism.

Apart from the fact that Harvey neither cites any reputable Chinese language material on the topic, nor engages in careful study of what Deng Xiaoping actually said and did (apart from some decontextualized ‘sound bites’), the key problem here is that he assumes that a market economy is the same as a capitalist market economy. This may seem like a simple point, but it is fraught with implications. It is also – and unfortunately – quite common among Western economists, social scientists and philosophers – Marxists included. But it is wrong, since a market economy is not by definition a capitalist market economy. I will return to this issue later, save to point out here the multiplicity of different types of market economy is supported by Marx’s own work in Capital, historical investigation, and Chinese research. It is perfectly feasible to have a socialist market economy, which unleashes the forces of production and which is not a capitalist market economy. But Harvey is unable to make this point.

David Harvey has been profoundly influential through his lectures – worldwide – on Marx’s Capital. His method in such talks is simple yet profound: he offers a careful reading, an exegesis, of a few pages of Capital, which he invites the audience to study once again. But the problem of influence is twofold: while Harvey may have encouraged a good number to study Capital once again, this very same influence has encouraged the perpetuation of a number of profound mistakes.

Bibliography

Das, Raju. 2017. ‘ David Harvey’s Theory of Uneven Geographical Development: A Marxist Critique’. Capital and Class 41 (3):511-36.

Harvey, David. 2007. A Brief History of Neoliberalism. Oxford: Oxford University Press.

———. 2017. Marx, Capital, and the Madness of Economic Reason.

Losurdo, Domenico. 2011. Liberalism: A Counter-History. Translated by Gregory Elliott. London: Verso.

Marx, Karl. 1875 [1973]. ‘Konspekt von Bakunins Buch “Staatlichkeit und Anarchie”‘. In Marx Engels Werke, Vol. 18, 597-642. Berlin: Dietz.

———. 1875 [1989]. ‘Notes on Bakunin’s Book Statehood and Anarchy‘. In Marx Engels Collected Works, Vol. 24, 485-526. Moscow: Progress Publishers.

Marx, Karl, and Friedrich Engels. 1845-1846 [1973]. ‘Die deutsche Ideologie. Kritik der neuesten deutschen Philosophie in ihren Repräsentanten Feuerbach, B. Bauer und Stirner und des deutschen Sozialismus in seinen verschiedenen Propheten’. In Marx Engels Werke, Vol. 3, 9-530. Berlin: Dietz.

———. 1845-1846 [1976]. ‘The German Ideology: Critique of Modern German Philosophy According to Its Representatives Feuerbach, B. Bauer and Stirner, and of German Socialism According to Its Various Prophets’. In Marx and Engels Collected Works, Vol. 5, 19-539. Moscow: Progress Publishers.

Roberts, Michael, and David Harvey. 2018. Marx’s Law of Value: A Debate between David Harvey and Michael Roberts. In The Next Recession. thenextrecession.wordpress.com/2018/04/02/marxs-law-of-value-a-debate-between-david-harvey-and-michaelroberts.

Smith, Adam. 1776 [2000]. The Wealth of Nations. London: Modern Library.

[1] See also the earlier observation on Max Stirner. who was – write Marx and Engels – committed ‘to mere change of will [eine bloße Veränderung des Willens]’ (1845-1846 [1973], 317; 1845-1846 [1976], 335). This is nothing more than the ‘domination of arbitrariness [Herrschaft der Willkür]’ (1845-1846 [1973], 317; 1845-1846 [1976], 335).

On State Monopoly Capitalism

This is the second part of a lecture I am preparing on why foreigners are still unable to understand a socialist market economy. This part examines state monopoly capitalism, which was a significant part of Soviet and European Marxist debates up to the end of the 1980. The text is as follows:

State monopoly capitalism is first and foremost a Marxist category, arising in Soviet thought (abbreviated as stamocap) and gaining widespread usage after the Second World War. Notably, in this tradition ‘state monopoly capitalism’ is used almost exclusively to speak of capitalist countries in light of the evolving stages of capitalism. With one exception: I have been able to find one example – an implicit one – where a certain type of state monopoly capitalism has been used more recently in relation to socialist countries (among others). I will deal with this exception towards the end.

State monopoly capitalism may be defined as a ‘distinct stage of capitalism characterised by the fusion of monopoly forces with the bourgeois state to form a single mechanism of economic exploitation and political domination’ (Jessop 1982, 32).[1] I have taken this definition from Bob Jessop, who provides what is arguably the most comprehensive critical overview of the theory. The date of publication is also telling, for in 1982 the theory was still relatively widespread. There were two main components: a new stage of capitalism in light of its internal crises, which entailed a closer alignment of monopoly capital and the bourgeois state; a development of communist strategy to exploit the contradictions through popular front activities.

The theory initially arose in the Soviet Union (Varga 1964, 1964 [1968], 1934) and became dominant from the 1950s to the 1980s, so much so that The Great Soviet Encyclopaedia has a major 1979 entry (Cheprakov 1979). The origins may be traced back to Marx and Engels, concerning the contradiction between competition and monopoly, and Lenin’s relatively undeveloped observation that imperialism entails the growth of state monopolies (Lenin 1916 [1964], 1917 [1964]-b),[2] so much so that – and here he quotes a resolution – ‘monopoly capitalism is developing into state monopoly capitalism’ (Lenin 1917 [1964]-a, 305; 1917 [1969]-b, 443).[3]

During its heyday, the theory of state monopoly capitalism developed in a number of directions, depending on the emphasis and context. Jessop identifies four, with copious references:

1) General crisis approach, in which the capitalist world faced yet another stage of crisis, generated by the increasing number of socialist countries, the collapse of European colonialism in light of anti-colonial liberation struggles. The response of a decaying capitalism was to find new domination through the merging of the state and monopoly capitalism.

2) Monopoly-theoretical tradition (strong in the Soviet Union and Germany), in which the contradiction of competition and monopoly leads to a permanent domination of the latter. This was seen as a new stage of capitalism, beyond imperialism – as Lenin had initially argued (Lenin 1916 [1964], 1916 [1969]). Here too we find the challenge of socialism, but now seen primarily in class terms: the international challenge of socialism leads to the fusion of monopolies and state, with resultant militarism and a focus on technological development.

3) The capital-theoretical tradition (England, but also in Germany and the Soviet Union), which focuses on the basic laws of capitalist motion. This approach emphasises that state monopoly capitalism is a crisis-driven response to the contradiction between the increasing socialisation of the forces of production and private nature of the relations of production. The state’s active role at multiple levels effectively further socialises the relations of production through the state. On the British side (Fine and Harris 1979, 120-45), this entails not a new stage of imperialism (see above), but a third stage in the capitalist mode of production, after laissez-faire and monopoly capitalism. The state’s active role – through nationalisation, taxation, and state credit – not only negates working class access to real state power through direct control, but also internationalises productive capital by working with multi-national companies and establishing international organisations such as the World Bank and the International Monetary Fund.

4) The French ‘overaccumulation’ approach, which was framed in terms of the contradiction between private monopoly capital’s overaccumulation and its revalorisation through the state. Basing its approach on the cyclical crises of capitalism, which at times reach a crescendo so that structural changes are needed, the French approach identified the increasing role of the state in ensuring that the falling rate of profit (which leads to overaccumulation) is arrested for a time by comprehensive structural changes. Thus, state monopoly capitalism becomes a necessary development to ensure, through the state’s central role, that private monopoly capital is able to produce surplus-value. And it does so through reorganising the relations of production, with the resultant increase in exploitation and polarisation of classes.

To sum up, most approaches agreed on a few basics: state monopoly capitalism was a new stage, either beyond imperialism or a third stage in capitalism (after laissez-faire and simple monopoly); this new stage was yet another systemic effort to deal with unsolvable contradictions, whether in terms of the relations of production and globalised class conflict or in terms of the means of production; it entailed new types of exploitation for workers and efforts to suppress of socialism. But they also differed in many ways, with a core difference determined by whether the focus was primarily political or economic. Thus, those who saw the development in political terms (monopoly-theoretical) were keen to find new approaches to political agitation, but they ran the risk of determining the economic analysis through such an agenda. By contrast, those who preferred to focus on the internal laws of capitalism (capital-theoretical and overaccumulation approaches) at times seemed to come close to Marxist ‘book worship’ and thus a type of economism.

I would like to close with two final questions. First, are there any abiding insights from this material? At a deeper level, it was very useful in identifying the inescapable role of the bourgeois state within a capitalist economy. Debates may continue as to the changing ways this happens, but it is a useful corrective to the neo-classical (and indeed neoliberal) approach which sees the market as a separate entity, within which the state intervenes from time to time.[4] One way of seeing the tensions within capitalist economics is in light of these two theoretical approaches: while the state is deeply and structurally involved, there are at the same time constant moves to delink the state, to privatise state assets and seek a ‘small state’. Periodically – such as during wartime or extensive economic crises – one approach dominates, but then we find a reactive move in the other direction.

This point brings me to the second question: why did state monopoly capitalism as a theory virtually disappear among foreign Marxists after 1989 and the counter-revolution in the Soviet Union and eastern Europe? One reason is that it was due to the tensions within capitalism outlined above: the drive to state monopoly capitalism produced a reaction in the 1980s, with the revival of laissez-faire economics under the label of ‘neoliberalism’. Another reason is that many of the theorists saw a major contradiction at a global level between capitalism and socialism. The latter was growing at the time, with successful revolutions in Asia, anti-colonial struggles and national liberation in Africa, Asia and elsewhere, while the capitalist world was shrinking. The counter-revolution in Eastern Europe seemed to suggest that this analysis was wrong. Instead, socialism seemed to be in retreat and capitalism was gaining momentum.

Or that is how it seemed to Western eyes in the 1990s and early 2000s. Since then, of course, much has changed. Socialist countries, especially China, are now more powerful and influential than they have been for a very long time. Many formerly colonised countries have found that the economic models borrowed from the West have not worked and they are looking for alternative models adapted to their own conditions. And these countries have also been active in international bodies, from the United Nations to the World Trade Organisation, transforming them from within to suit the conditions of a rapidly changing world.

Indeed, I suspect that ‘state monopoly capitalism’ may make a comeback as a category of analysis, albeit in a different way. Thus far, state monopoly capitalism has not been applied to socialist countries,[5] but there is a beginning of efforts to do so, albeit without any awareness of the Marxist origins and development of the term. Let me give one example, although it is implicit rather than explicit. It appears in the recent work by the neo-classical economist, Kurlantzick, who works within the framework of state capitalism but seeks to delimit its application. Realising that ‘state capitalism’ potentially applies to all states, he offers this definition: ‘countries whose government has an ownership stake in or significant influence over more than one-third of the five hundred largest companies, by revenue, in that country, a situation that gives these governments far greater control over the corporate sector than a government in a more free-market oriented nation like the United States or the United Kingdom’ (Kurlantzick 2016, 9). This definition is extremely intriguing, for Kurlantzick must work very hard to exclude a number of countries – such as France, Japan and the United States – from his list. In order to so, he adds:

  1. The ownership and control of key enterprises must be direct and not indirect (since the United States provides massive indirect subsidies to its military and automobile industries)
  2. This ownership and control must be long-term and not during economic crises, as we found after 2008 in some countries.
  3. Direct government spending on items such as welfare is also excluded.
  4. Sovereign wealth funds are excluded.

Only in this way can he focus on what are implicitly seen as state-monopoly capitalist countries. A major reason for the restrictions is that Kurlantzick is desperate to save mostly Western countries from being versions of state (monopoly) capitalism, for he sees their ‘free market’ approach and its attendant liberalism as under severe threat and failing. But even with these restrictions, the number of state monopoly capitalist countries is quite large, as the following table indicates (Kurlantzick 2016, 28):

More monopolised                    Hybrid           Less monopolised

Two socialist countries make the list, China and Vietnam, although they are by no means the most ‘monopolised’ according to Kurlantzick’s criteria. The question arises as to why this implicit state monopoly capitalism should be recurring now, albeit without awareness of the Marxist tradition. Has the effort to revive laissez-faire economics under the label of ‘neoliberalism’ run its course? I will say more on this question in the section on state capitalism.

Bibliography

Bollana, Primo. 1981. ‘Some Characteristics of State Monopoly Capitalism in the Soviet Union’. In Soviet Revisionism and the Struggle of the PLA to Unmask It, edited by Institute of Marxist-Leninist Studies at the CC of the PLA. Tirana: “8 Nëntori” Publishing House.

Cheprakov, V.A. 1979. ‘Gosudarstvenno-monopolisticheskiĭ kapitalizm’. In Bolʹshaia sovetskaia ėntsiklopediia. Moscow: Izdatel’stvo Sovetskaia Entsiklopediia.

Fine, Ben, and Laurence Harris. 1979. Rereading Capital. London: Macmillan.

Herzog, Phillippe. 1972. Politique économique et planification en regime capitaliste. Paris: Editions sociales.

Hoxha, Enver. 1978 [1985]. ‘Imperialism and the Revolution’. In Selected Works, 358-707. Tirana: “8 Nëntori” Publishing House.

Jessop, Bob. 1982. The Capitalist State: Marxist Theories and Methods. Oxford: Martin Robertson.

Kurlantzick, Joshua. 2016. State Capitalism: How the Return of Statism is Transforming the World. New York: Oxford University Press.

Lenin, V.I. 1916 [1964]. ‘Imperialism, the Highest Stage of Capitalism: A Popular Outline’. In Collected Works, Vol. 22, 185-304. Moscow: Progress Publishers.

———. 1916 [1969]. ‘Imperializm, kak vysshaia stadiia kapitalizma (Populiarnyĭ ocherk)’. In Polnoe sobranie sochinenii, Vol. 27, 299-426. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1917 [1964]-a. ‘Speech in Favour of the Resolution on the Current Situation, April 29 (May 12), 1917’. In Collected Works, Vol. 24, 305-8. Moscow: Progress Publishers.

———. 1917 [1964]-b. ‘War and Revolution: A Lecture Delivered May 14 (27), 1917’. In Collected Works, Vol. 24, 398-421. Moscow: Progress Publishers.

———. 1917 [1965]. ‘The Impending Catastrophe and How to Combat It’. In Collected Works, Vol. 25, 323-69. Moscow: Progress Publishers.

———. 1917 [1969]-a. ‘Groziashchaia katastrofa i kak s nei borot’sia’. In Polnoe sobranie sochinenii, Vol. 34, 151-99. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1917 [1969]-b. ‘Rech’ v zashchitu rezoliutsiia o tekushchem momente, 29 aprelia (12 maia)’. In Polnoe sobranie sochinenii, Vol. 31, 443-46. Moscow: Izdatel’stvo politicheskoi literatury.

———. 1917 [1969]-c. ‘Voina i revolutsiia: Lektsiia 14 (27) maia, 1917g’. In Polnoe sobranie sochinenii, Vol. 32, 77-102. Moscow: Izdatel’stvo politicheskoi literatury.

Varga, Evgenii. 1934. The Great Crisis and its Political Consequences: Economics and Politics, 1928-1934. London: Modem Books.

———. 1964. Ocherki po problemam politékonomii kapitalizma. Moscow: Gospolitizdat.

———. 1964 [1968]. Politico-Economic Problems of Capitalism. Moscow: Progress Publishers.

[1] Compare the definition in The Great Soviet Encyclopaedia: ‘new, more developed form of monopoly capitalism, characterized by the joining of the forces of capitalist monopolies with the power of the state to preserve and strengthen the capitalist system, enrich the monopolies, suppress the workers’ and national liberation movements, and unleash aggressive wars’ (Cheprakov 1979).

[2] Lenin speaks of ‘the beginnings of state-controlled capitalist production, combining the colossal power of capitalism with the colossal power of the state into a single mechanism and bringing tens of millions of people within the single organisation of state capitalism’ (Lenin 1917 [1964]-b, 403; 1917 [1969]-c, 83). For a comprehensive assessment of Lenin’s contribution, see Jessop (1982, 32-36).

[3] Lenin is, however, not entirely consistent in his usage and the theory remains somewhat undeveloped. Before the October revolution, he saw state monopoly capitalism as a development, especially in the context of war, to a new level of capitalism itself, although even here it was already seen as a step towards socialism (Lenin 1917 [1965], 361-63; 1917 [1969]-a, 191-93). Later, he quotes from this 1917 text – ‘The Impending Catastrophe and How to Combat It’ – in ‘The Tax in Kind’ from 1921, where he argues for the need for a muted verison of state capitalism during the New Economic Policy. In other words, he subsumed state monopoly capitalism under state capitalism (see below), which he saw as a (major) step towards socialism. This inconsistency is most likely due to different circumstances: the initial proposal was made before the October Revolution during the last phase of Russia’s engagement in the First World War, while his later development of the idea took place after the revolution and Civil War, particularly in light of the need to develop the New Economic Policy.

[4] Indeed, one of the debates over state monopoly capitalism concerned the relation between state and economy: were they fused under state monopoly capitalism, distinct, or did they function in terms of ‘contradictory separation in unity’ (Herzog 1972, 125)

[5] One does find very occasional accusations internal to the former Eastern Bloc that the Soviet Union and Yugoslavia had descended, from the time of Khrushchev, to a type of state monopoly capitalism (Bollana 1981; Hoxha 1978 [1985], 414-15).

On Bureaucratic Capitalism

I am preparing the text for an invited lecture on why foreigners are still unable to understand the socialist market economy in China. The main focus will be on a number of concepts that have been applied to China, but which are mistaken. The first of these concerns ‘bureaucratic capitalism’, which has an intriguing history. The concept arises from Max Weber, who saw it specifically in terms of the peculiar developments in Western Europe. The small number who apply ‘bureaucratic capitalism’ to socialist countries, such as China, are simply unaware of Weber’s work and indeed the realities of these countries. The text is as follows:

Let us begin with ‘bureaucratic capitalism’.[1] The term derives particularly from Max Weber, who made it a central category of his analysis of the rise of capitalism and the modern European bourgeois state (Weber 1921 [2015]; 1947, 324-40; 1968, 956-1005). Bureaucracy is the key, which Weber sees as a detailed and often hierarchical division of labour in which all follow objective and explicit rules that are applied impersonally. A bureaucracy is staffed by full-time professionals, who have developed the necessary skills but who live from a salary and do not in any way own the ‘means of administration’ or make a profit. This is, of course an ‘ideal type’ favoured by Weber, an abstract category used for analysis rather than a concrete description of a real life bureaucrat.

For our purposes, two features are important in Weber’s analysis: bureaucracy as a manifestation of rationalisation; and bureaucracy as crucial for the rise of capitalism in Europe. As for rationalisation, Weber speaks of three types of legitimate authority: rational, traditional and charismatic (Weber 1947, 328-29). Charismatic authority is derived from the Christian tradition and designates a system in which followers are devoted to a gifted or heroic leader. Traditional authority also entails being subject to an individual leader, but now because of tradition itself and its assumed duties. Whoever occupies the position of chief is regarded as legitimate due to tradition. By contrast rational authority is not personal but impersonal. It relies on a distinct set of laws that have their own moral legitimacy or are socially agreed to be legitimate. Weber calls this ‘legal authority’ and it is based on the Western approach to rule of law.

This ‘rational authority’ obviously relies on reason, but what type of reason. Weber (1947, 115) identifies two types:

  • Goal-rationality (Zweckrationalität]’, with Zweck meaning end, purpose or goal. Thus, one’s behaviour is rational if it works appropriately towards achieving a specific purpose or purposes. For Weber, this includes the careful weighing up of different purposes, considerations of the best means to achieve the purpose, and the relationships between the means and ends. Thus, if one’s purpose is the pursuit of profit, then one will – where reason is the assumed framework – seek to identify the most appropriate means to achieve this end. By contrast, if the goal is to serve the good of the community (gongtongti fuwu), then the very nature of the means will shift to enable this outcome.
  • Value-rationality [Wertrationalität]’, in which behaviour is determined by ‘some ethical, aesthetic, religious, or other form of behaviour, entirely for its own sake and independently of any prospects of external success’ (1947, 115). Contrary to one’s initial impression, this too is a rational approach, but now predicated on an absolute value that determines the appropriate action. For example, if an absolute value is Western liberal ideology and its attendant capitalist system, then one will engage in a series of actions to realise this value. By contrast, if the absolute value in question is communism, then the nature of rational actions will come out very differently.

Obviously there is an overlap between the two types of rationality, and Weber is not always clear about their relationship (with rationality often coming to mean efficiency), but I have deliberately used economic examples since they lead to the second implication: for Weber, bureaucracy was crucial to the growth of capitalism in Western Europe. The reason is that a bureaucracy based on rational authority, on the impersonal observation of a code of laws, and so it is more efficient than other forms of organisation. As Weber observes:

‘The decisive reason for the advancement of bureaucratic organizations has always been the purely technical superiority over all other administrative forms … A strictly bureaucratic administration produces an optimal efficiency for precision, speed, clarity, command of case knowledge, continuity, confidentiality, uniformity, and tight subordination. This is in addition to minimization of friction and the costs associated with materials and personnel’ (Weber 1921 [2015], 96; see also Weber 1947, 337).

He finds this new form of bureaucracy dominating across many fields, whether army, state, church, political parties, clubs, private associations, and – crucially – economic enterprises. It is nothing less than the ‘most crucial phenomenon of the modern Western state’ (Weber 1947, 337). In other words, for Weber, bureaucracy plays the foundational role in the development of the bourgeois state, bourgeois civil society and capitalism. It may be compared to Adam Smith’s focus on division of labour and Marx’s surplus value, although it also raises a number of questions.

First, Western analyses of Weber tend to focus on his influential work, The Protestant Ethic and the Spirit of Capitalism (1904-1905 [1992]), in which the vanishing mediator of capitalism was Reformed Protestantism. This focus is rather imbalanced, since for Weber the religious dimension was a means for achieving a rational bureaucratic organisation. Second, I have emphasised that Weber saw modern rational bureaucracy as the most efficient form developed thus far. He also balances this appreciation with the other side, in which rational bureaucracy dominates to the exclusion of all other, higher concerns (Adler 2012). However, critics too often stress the negative dimension and miss the balance of Weber’s analysis. Third, a more fundamental problem concerns the cause of the rise of rational bureaucracy. By now it is clear why one can speak of bureaucratic capitalism in light of Weber’s work, but it begs the crucial question: from where does such a system arise? Weber is willing to admit that ‘capitalism is the most rational economic basis for bureaucratic administration and enables it to develop in the most rational form’ (Weber 1947, 338; Stanisevski 2004). But Weber does not provide the type of systemic analysis of capitalism that we find in Marx.

Weber’s focus was strictly on Western Europe, particularly when he was analysing rationality, bureaucracy and capitalism. Thus, when he speaks of bureaucratic capitalism (to use a shorthand), he speaks of the Western European context for capitalism. And despite his misgivings over rationality and bureaucracy, he saw it as the highest form of political, social and economic organisation. As for socialism, it ‘would, in fact, require a still higher degree of formal bureaucratization than capitalism’ (Weber 1947, 339; see also Weber 1968, 224).

This final point brings us to a question I will ask on each occasion: has ‘bureaucratic capitalism’ been applied to socialist countries, including China? It has, but – crucially – without awareness of Weber’s balanced insights. One example is Cornelius Castoriadis, who follows a Trotskyite line (Trotsky 1937 [1972]) in hypothesising that the Soviet Union during Stalin’s time became a form of ‘bureaucratic capitalism’ (Castoriadis 1956 [1988]). Here ‘bureaucracy’ has only a negative sense (unlike Weber) and the use of ‘capitalism’ indicates a sneering dismissal of the Soviet project to the construct the world’s first socialist system.

We find similar, if not more extreme and unrealistic, proposals from a small group who inhabit the ‘grey zone’ of the internet. Self-described ‘activists’, they feel they are changing the world one blog post at a time. Their core approach is not merely to hypothesise that China turned towards capitalism with the Reform and Opening Up (itself a profound misinterpretation), but to deny that China has ever been socialist at all (La Botz 2012; Yu 2009; Yu et al. 2012; Lin 2017, 2019). This entails an all-out denial that the Communist Party of China is communist, a denial that the Liberation was in any sense communist, a denial that Mao Zedong was a Marxist, and a denial that China at any stage has attempted to construct socialism. How is this fanciful narrative constructed? It is based on the assumption that CPC is an evil and secretive organisation, terribly afraid of its own people and seeking world domination. ‘Bureaucracy’ thus means for them absolute control by the CPC – a position that is empirically wrong as well as being profoundly voluntarist and thus at odds with the Marxist dialectic. With this assumption – much like believing in ghosts – they can construct a narrative of bureaucratic control over the many phases of the New China of the last 70 years that is based on speculation, twisting of information and simple falsehoods.

To sum up, for Max Weber bureaucratic capitalism described the highly efficient yet ambivalent nature of capitalism in Western Europe and its attendant bourgeois state and society. He certainly did not apply the idea to other contexts, except to point out that socialism would require a whole new level of rational organisation. By contrast, a small number of ‘grey zone’ internet ‘activists’ apply the term in a purely negative way to speak of China – albeit without any sense of Weber’s work and without seeking truth from facts.

Bibliography

Adler, Paul. 2012. ‘The Sociological Ambivalence of Bureaucracy: From Weber via Gouldner to Marx’. Organization Science 23 (1):244-66.

Castoriadis, Cornelius. 1956 [1988]. ‘The Proletarian Revolution Against the Bureaucracy’. In Political and Social Writings, Vol. 2, 57-89. Minneapolis: University of Minnesota Press.

La Botz, Dan. 2012. ‘China: From Bureaucratic Communism to Bureaucratic Capitalism’. New Politics 2012 (20 November). https://newpol.org/china-bureaucratic-communism-bureaucratic-capitalism.

Lin, Kevin. 2017. ‘Remoulding the State Sector: Back to the 1990s?’. In Made in China Yearbook 2016: Disturbances in Heaven, edited by Ivan Franceschini, Kevin Lin and Nicholas Loubere, 20-23. Canberra: ANU Press.

———. 2019. ‘How Should the U.S. Think About China?’. New Politics 2019 (5 September). https://newpol.org/how-should-the-u-s-left-think-about-china.

Stanisevski, Dragan. 2004. ‘Economy and Bureaucracy: Handmaidens of Modern Capitalism’. Administrative Theory & Praxis 26 (1):119-27.

Trotsky, Leon. 1937 [1972]. The Revolution Betrayed: What Is the Soviet Union and Where is it Going? Translated by Max Eastman. New York: Pathfinder.

Weber, Max. 1904-1905 [1992]. The Protestant Ethic and the Spirit of Capitalism. Translated by Talcott Parsons. London: Routledge.

———. 1921 [2015]. ‘Bureaucracy’. In Weber’s Rationalism and Modern Society: New Translations on Politics, Bureaucracy, and Social Stratification, edited by Tony Waters and Dagmar Waters, 73-128. New York: Palgrave Macmillan.

———. 1947. The Theory of Social and Economic Organization. Translated by A.M. Henderson and Talcott Parsons. New York: Oxford University Press.

———. 1968. Economy and Society: An Outline of Interpretive Sociology. Edited by Guenther Roth and Claus Wittich. New York: Bedminster.

Yu, Ao Loong. 2009. ‘China: End of a Model … or Birth of a New One?’. New Politics 12 (3):31-56.

Yu, Ao Loong, Ruixue Bai, Bruno Jetin, and Pierre Rousset. 2012. China’s Rise: Strength and Fragility. London: Merlin.

[1] We should remember the different senses of the term ‘bureaucracy’ in English and Chinese. The English term ‘bureaucracy’ has two parts, ‘bureau’ (desk) and ‘cracy ‘from the classical Greek kratia, rule). Thus, ‘bureaucracy’ is rule conducted from a desk or office, that is, by the writing and sending or receiving of written documents – now their electronic equivalent.

Is it time to dump Google?

Last week my gmail account was cancelled without notice. Why? No reason was given.

But it happened the day after the United States regime announced it had blacklisted Huawei from engaging with the United States – arbitrarily and on the basis of vague and groundless accusations. The regime has also been using ham-fisted tactics to try and stop others from working with Huawei, although this will only mean that the USA will have even fewer friends in the world.

Interestingly, a number of US companies – including Google – enthusiastically threw themselves into the fray, indicating that the US regime actively intervenes in, directs and is supported by the major tech companies in the United States. The irony is obvious: they are actively doing what the regime is accusing Huawei of doing. A Danish saying comes to mind: a thief always thinks everyone else is a thief.

However, I do not use Huawei products, although I will make sure to get some from now on. Instead, I use a Xiaomi phone and laptop, which are far better than anything you can get from Apple or Samsung or whatever. I do use Chinese systems on these items, and I do so in China and other parts of the world. (In the current situation, they are the only global products that you can use everywhere.) The only reason that I can come up with for the cancellation of my gmail is that Google is targeting all Chinese products and systems.

Let us be clear, Google is banned in China, not only because it refuses to follow Chinese law for responsible internet management, but also because it willingly hands over its big data to the privatised spy agency in the United States, the NSA. So there is no great loss to China from Google cutting off its limited engagement. But to cut off anyone who as any engagement with China is another step.

Then again, I have never been a fan of Google. I used to have its search engine on my computer, but deleted it. My gmail had only a few addresses and was used for personal matters (I do not use it in China). Google maps is a notoriously bad product and often misleading. And I do not use Facebook, Twitter or the many other useless products US companies use to mine information from their users.

But I do know that many people use Google products, whether its search engines, gmail, maps, phones (they are terrible) or even a whole Google account. It has relied on its pervasiveness in the ‘Western’ world to dominate, manipulate, gather information, and – now – to act as an agent of US capriciousness.

The conclusion for me is clear: it is time to dump Google.

Why is the debate concerning the socialist market economy settled in China?

When I asked a Chinese colleague recently about the socialist market economy, he said ‘why would you be interested in that? The debate is settled and no-one is much concerned with it’. I did point out that some international observers still do not understand the socialist market economy. For example, the EU acknowledges that China has a socialist market economy, but then misunderstands it: for the EU, it entails state ‘intervention’ in an autonomous ‘market’. Nothing could be further from the truth, for they use the framework of a capitalist market economy.

In my ongoing research, I have come across what is widely recognised as the most influential study on the socialist market economy, one that largely settled debates and defined the breakthrough. It is by Huang Nansen and entitled (in English translation), ‘The Philosophical Foundations of the Theory of the Socialist Market Economy’ (Marxism and Reality, 1994, pp. 1-6). Huang identifies two philosophical questions that lie at the basis of the theory and practice of a socialist market economy: contradiction analysis of socialist society; the relationship between universality (pubianxing) and particularity (teshuxing).

Contradiction Analysis

In terms of the first, he draws on an assumed approach that has much depth in Chinese Marxism: contradiction analysis. Briefly put, in his 1937 Yan’an lectures on dialectical materialism, one of Mao’s major breakthroughs was the necessity of contradictions after a communist revolution and during the long construction of socialism. The key text would later, with revisions, appear as ‘On Contradiction’ (1937), to be followed by ‘On Correctly Handling Contradictions Among the People’ (1957). For Huang, the important points are, first, that Mao identified the basic contradiction as one between the forces and relations of production, or between the economic base and the superstructure, and, second, that such contradictions should always be managed in a way that is non-antagonistic (feiduikangxing de maodun). While the second point is a given and remains a cornerstone today, Huang faults Mao for his misdirected application of the first. Thus, Mao felt that the manifestation of this contradiction appeared in terms of ownership: if the basic contradiction of capitalist society is between socialised production and private ownership of the means of production, then socialism should overcome this contradiction through public ownership of all means of production. The result, argues Huang, was a decline in production.

Instead, the way the forces-relations of production contradiction appears is not in terms of productive forces and ownership, but between productive forces and economic structure (jingji tizhi). With this breakthrough – enabled by the circle around Deng Xiaoping – it was possible to develop a socialist market economy. To find out how, and indeed what ‘economic system’ means, we need to wait until the next section, for he now addresses the relationship between a planned economy and a socialist market economy. Was the former a mistake? No, for it is appropriate immediately after a communist revolution, but only for a specific period. A planned economy works initially to liberate and develop productive forces, but eventually its limits appear and further development requires a shift to a socialist market economy. I am not sure this temporal argument is the best way to see the relationship between planned and socialist market economies, for they both continue to work together (more later).

Finally (for this section on contradiction analysis), does this argument entail a shift away from public ownership? Not at all, but once ownership is not seen as the primary contradiction, both public and private may develop in a symbiotic relationship, albeit with private ownership in a recognised but subordinate role. Let me add here that twenty-five years later this question takes on a whole new dimension, so it requires further work.

Universality and Particularity

The second philosophical problem concerns universality (pubianxing) and particularity (teshuxing), or what he also calls commonality (gongxing) and individuality (gexing). Succinctly stated, Huang’s argument is while a market economy is a universal or common reality, its integration with a capitalist or socialist socio-economic system evinces the particularity of each type of market economy.

This argument is based on a crucial terminological distinction, between a structure and a system. The Chinese terms are tizhi (体制) and zhidu (制度), which are somewhat difficult to translate in a way that indicates their differences, for they are often rendered with the same words in English. Tizhi in this case is a specific organisation, arrangement, method or structure. For the sake of conciseness, I use ‘structure’. For example, Huang speaks of a ‘market economic structure [shichang jingji tizhi]’ In his argument, this structure is clearly a component or part of a larger system. The term for this overall and foundational system is zhidu, which embraces the realms of politics, economics and society. To make his usage clear, Huang refers to the ‘basic economic system of society [shehui de jiben jingji zhidu]’, which may – in this context – be either capitalist or socialist. It follows that a specific structure, whether a planned economic structure or a market economic structure, may be a universal, while the overall system is a particularity.

With this distinction, Huang points out that in the past it was not common to distinguish between the two, for reasonably good historical reasons. Thus, the market economic structure was seen as inseparable from a capitalist system, while a planned economic structure was part and parcel of a socialist system. But historical developments since the Second World War have indicated the increased tendency in capitalist systems for planned structures, while in socialist systems – he notes Yugoslavia – some elements of a market economic structure began to emerge. These developments enabled the awareness of the distinction between specific structure and overall system. The outcome: it is quite possible, if not necessary, for a basic socialist socio-economic system to make use of a market economic structure. This was, he points out, the distinct insight of Deng Xiaoping and his comrades.

Of course, this raises the question: is a market economy neutral, like machinery or the natural sciences. Not at all, for as a market economy is integrated within the overall system, its nature is shaped by that system. Thus, a socialist market economy is qualitatively different from a capitalist market economy. Now the relationship between universality and particularity takes another turn: while a market economy may have a basic commonality, in terms of the means and basis for the logistic functions of a market economy, it also takes on the specificity of the system in which it is shaped, whether socialist or capitalist. The conclusion is that one may therefore speak of a socialist market economic structure (tizhi) within a socialist system (zhidu).

The final matter concerns what distinguishes the socialist market economy. Huang identifies five features: 1) It contains a multiplicity of components, but public ownership remains the core economic driver; 2) While enterprises in a socialist market economy must be viable, their main purpose is not profit at all costs, but social benefit (gongtongti fuwu) and meeting the needs of all people; 3) It deploys the old socialist principle of from each according to ability and to each according to work, limiting exploitation and wealth polarisation, and seeking common prosperity; 4) The guide for action (to parse Engels) always remains Marxism; 5) The primary value should always be socialist collectivism (shehuizhuyi de jitizhuyi) rather than individualism.

Huang closes with a timely warning: the shift to a socialist market economy is by no means easy, for it entails profound social transformation, which will entail many unforeseen problems and challenges ahead.

I have taken some time with this contribution, since Huang’s sophisticated analysis effectively summed up debates and established the philosophical foundations for a socialist market economy. Many of his insights remain valid and one can see how they have been and are implemented, albeit not without a few significant problems on the way. At the same time, it is twenty-five years since Huang’s study and Chinese socialism, let alone the socialist market economy, have taken some major steps. The tell-tale signal is the awareness that China has almost achieved the ‘great leap [weida feiyue]’ to socio-economic wellbeing, and that it is embarking on the leap to become a strong socialistically modernised society. Or, as it was put at the nineteenth congress of the CPC, China has entered a ‘new era [xinshidai]’.

At least three questions remain from Huang’s analysis, especially in light of developments in the last two decades: 1) The delinking of ‘market economy’ from a capitalist system, in light of Marx’s analysis (in Capital, vol. 3) and historical examples; 2) The issue of ownership and the withering away of the distinction between ‘public’ and ‘private’; 3) The shift in a socialist market economy from being a component to basic logistical device. These are the subjects of further analysis.

Socialist economics: the secret to Soviet success in World War II?

What was the deep source of Soviet success during the Second World War? A number of obvious factors played a role, such as Stalin’s leadership, excellent generals, German mistakes, tough discipline, good morale, and deal of luck. But underlying it all, as Geoffrey Roberts points out, was ‘a tremendous economic and organisational achievement’ (Stalin’s Wars, p. 163).

To set the scene: by the time of the Battle of Stalingrad in 1942, the Germans occupied more than half of European Russia, about two million square kilometres. It was an area containing 40 per cent of the USSR’s population, about 80 million people. The occupied area covered 50 per cent of the USSR’s cultivated land, the production of 70 per cent of its pig iron, 60 per cent of its coal and steel and 40 per cent of its electricity. Still, by the end of 1942, the production of rifles had increased fourfold (to 6 million) compared to the previous year. Tank and artillery production increased fivefold to 24,500 and 287,000 per annum. The number of aeroplanes produced more than doubled from 8,200 to 21,700.

How was this possible? Roberts writes that it was due to the mass relocation of Soviet industry to the eastern USSR and out of harm’s way in 1941-2. One of Stalin’s first instructions after Hitler invaded was the establishment of an evacuation committee that arranged the move of more than 1,500 large industries to the east. With them went hundreds of thousands of workers and thereby the single most significant wave of resettlement in Siberia. It is not for nothing that you find cities in Siberia of more than a million people. On top of this, 3,500 new industries were established, most of them related to wartime production. It is no wonder that by the time of the battle of Stalingrad, the Soviets were able to field 90 fresh divisions, fully equipped with new weapons. Or indeed that after losing almost 5 million soldiers in the first months of Hitler’s invasion, they were able to field 11 million the following year. One million of those were women.

Initially, Roberts is in two minds on this achievement. He tends to sit on the fence, relating debates about wartime ‘free enterprise’ versus the planned economy. He mentions western aid (much emphasised in European and American accounts), but points out that it amounted to no more than 10 per cent of the total economy and that it came largely after the dire threat of 1941-2 and after victory at Stalingrad. In the end he comes down on the side of the planned economy. Stalin emphasised the need to keep the armies properly supplied, but otherwise he left the job to his economic managers. And they could do so only by means of ‘the mobilisation power of the Soviet economy’ (p. 163).

But what was that economy? Given the energetic collectivisation of farming in the late 1920s and 1930s and the Five Year Plans of industrialisation and economic transformation, the result was as full a communist economic system as one is likely to find. Does this mean that only a planned, communist economic system could have pulled it off? At the time, it seems so.

Cecil Rhodes: Colonialism as a way to forestall social revolution

In 1895 Cecil Rhodes opined as follows:

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.

(quoted by Lenin, Collected Works, volume 21, pp. 256-7)

Was the Russian Revolution a Success? Part 2

Last night I had a long discussion with a person who seemed quite intelligent, but still she trotted out the standard line concerning the Russian Revolution that has been propagated by Western media and exiled Russian bourgeois critics since about 1918 – now filled out with all manner of gory details of unmitigated disaster. The revolution was a palace coup undertaken by a small band of intellectuals, Lenin was a sectarian autocrat, Stalin a monster, Russia sank into a new age of barbarism, with massive famines, industrial chaos, rampant killings and decades of sheer terror for the people.

It is reasonably easy to attribute such a narrative to the ingrained ideological and economic fabric of the West’s own justification for existence, especially by those keen to defend a dodgy project. But it is less forgivable for those on the Left to do so. To be sure, the narrative on the Left it has its refinements. I am reading Lenin Reloaded, a collection that seeks to offer a corrective to the perception of Lenin as an autocratic and doctrinaire thug bent on power. But then you get the standard ‘Fall narrative’: at some point the revolution lost its way, retreating first under a disillusioned Lenin in his last years, then completely waylaid by a paranoid Stalin, and then cementing the place of an autocratic new ruling class under Brezhnev.

The problem is that such a Fall narrative has difficulty dealing with some developments during the USSR. To begin with, as Norman Davies argues in his recent Europe at War, 1939-1945,  a key reason why the USSR under Stalin’s leadership won the Second World War was the reorganisation of economic and social life under communism. Leave aside the fact (which I have mentioned before) that he brilliantly led the war effort and drew together the best generals and strategists of the War – Zhukov, Chief of Staff Alexander Vasilevsky, and Chief of Operations Aleksei Antonov, all men of penetrating intelligence, exceptional abilities, and extraordinary character, and all encouraged to be dynamic and innovative, to argue, debate and counsel Stalin himself. Aside from that, the USSR underwent what Davies calls a ‘miraculous’ economic recovery in the midst of the war and after Hitler attacked in a mode of unprecedented viciousness and extermination. Such a recovery was possible only under the reorganisation brought by a communist system.

Further, as George Hallam pointed out in a comment to my earlier post on the Russian Revolution, biometric analysis of data from the time shows that children began to grow taller and weigh more. This is a telltale sign of increased nutrition, more physical activity and healthier lives.

Closely related to this development was kukharka: mass education for women and men. As Robert Allen shows in a recent study (From Farm to Factory, 2003), before the revolution Russia had the same demographic pattern as, for example, India – a high death rate and a higher birth rate. However, the USSR did not have the same population explosion. Why? It had nothing to do with the ‘civil’ war, Second World War or even the famines that came as a result. It was due to the massive increase in education and opportunity for women, who were instrumental in reducing the birth rate at the same time that children became healthier. A crucial factor was the communist feminist movement. If education had been restricted to men and the economic reorganisation had proceeded more slowly, the USSR’s population would have exploded, with dire economic consequences.

A final factor was the more open attitude to sexuality, which makes the West look like a breathless latecomer to the party. That’s the topic for another post, but these developments make the narrative of unmitigated disaster look decidedly untenable.

Is life better under communism? On the economic crisis in post-Soviet states

Never waste a good economic crisis.

The problem is that the Right has been making hay in the latest one, especially in Eastern Europe. Faced with the vestiges of public assets – public transport, medecine, education and so on – the Right has aggressively offered the spurious claim that these are the source of ‘sovereign debt’ and has been jumping in to turn these dreadfully unprofitable ventures into sources of profit. And what better way than to force the sale of those public assets to your cronies in organised crime the business world. But it turns out to be the latest phase in a consistent assault of over two decades.

As Rossen Vassilev points out in ‘The Tragic Failure of “Post-Communism” in Eastern Europe‘ (10 March 2011):

In Romania:

Romania is mired in a severe recession and its battered economy is expected to decline by at least 2% in 2010, after contracting by 7.1% the previous year. Instead of trying to assist the unemployed and the socially weak, the Bucharest government, which is reportedly riddled with corruption, cronyism and nepotism, has slashed public-sector pay by one-quarter and trimmed all social expenditures, including heating subsidies for the poor as well as unemployment, maternity, and disability benefits. At the same time, the national sales tax was hiked from 19% to 24%, as the authorities are striving to hold the national deficit down to 6.8% in order to meet the stringent fiscal requirements of the European Union (EU), which Rumania had joined in January 2007.

In the Czech Republic:

20,000 hospital doctors were quitting their jobs en masse to protest the decision of Prime Minister Petr Necas’s cabinet to cut all public expenditures, including healthcare spending, by at least 10% in order to keep the country’s troubled finances afloat. These mass resignations were part of the “Thanks, We Are Leaving” campaign launched by disgruntled physicians across the country aimed at putting pressure on the Prague authorities to increase their low wages and provide better working conditions for all medical workers. Confronted with the worst healthcare crisis in the ex-Communist country’s history which was endangering the lives of many patients, the Czech government threatened to impose a state of emergency which would force doctors either to get back to work or face harsh legal and financial penalties.

In Latvia:

Latvia’s conservative government borrowed heavily from the EU and IMF on punishing repayment terms that have imposed such harsh austerity policies that the Latvian economy shrank by 25% (neighboring Estonia and Lithuania have experienced an equally steep economic decline) and unemployment, currently running at 22%, is still rising. With well over a tenth of its population now working abroad, Latvia’s guest-workers send home whatever they can spare to help their destitute families survive. Latvian children (what few of them there are as the Baltic country’s marriage and birth rates are plunging) have been thus “left orphaned behind,” prompting social scientists to wonder how this small nation of 2.3 million people can survive demographically. These are the results of post-Communist austerity budgets that have cut ordinary people off at the knees while international creditors and local bankers are bailed out.

In Bulgaria:

Official statistics show that both the annual gross national product (GNP) and the per capita income of the population have plummeted, the social-safety net has disintegrated, and even the physical survival of many impoverished Bulgarians is in peril. The immediate effects of market-oriented “reforms” have been the destruction of Bulgaria’s industry and agriculture, unemployment, inflation, flagrant inequality of incomes, crushing poverty, and even malnutrition. Organized crime and endemic corruption in the form of nepotism and cronyism, graft on the job, embezzlement, bribe-taking, influence-peddling, smuggling, protection rackets, illegal gambling, prostitution and pornography rings have exacted a heavy toll on post-Communist living standards and livelihoods. Another unfortunate effect is the widespread neglect of the economic and social rights of ordinary Bulgarians, for many of whom the 8-hour work day is now only a memory.

Right across ex-Soviet countries the story is the same:

Sharp government cutbacks in social welfare, education, healthcare, public transportation, and other basic social-infrastructure spending threaten to undermine economic security, long-term development, and political stability across the ex-Soviet bloc countries, young people are emigrating in droves to better their lives rather than suffer in an economy without any employment opportunities. The citizens of the ex-Communist nations now have to pay out of their own pockets for all previously free, government-provided medical services even though they also have to pay income, real-estate, and sales taxes—something they did not have to do under the Communist regimes. There is also the monetization and/or privatization of the previously free educational services, especially in higher education and the new private schools, colleges, and universities where students have to pay for their training, including many fees that each student must pay for taking entrance exams and other mandatory tests required at every level of schooling. Government subsidies for everything from healthcare, education, and legal representation to housing, energy, and public transportation are disappearing in the scramble to slash social spending and trim budget deficits, making it even harder for ordinary people to survive in their daily struggle for existence.

Who has gained from all this?

A new breed of rapacious and ruthless plutocrats with insatiable appetites for wealth and power has pillaged—through an unjust and corrupt process of privatization—the assets of the formerly state-owned economy.

In other words, capitalism as usual.

The upshot:

Nearly all of these twenty-eight Eurasian countries have experienced a long-term economic decline of catastrophic proportions (only Poland has thus far surpassed its Communist-era GDP). Grave economic setbacks, deep-rooted corruption, and widespread popular frustration with the hardships and deprivations of the seemingly endless post-Communist transition are undermining the prestige of the new authorities and even the population’s belief in Western-style democracy and market-based capitalism.

So is communism really better than this? As a 68-year old retired Romanian mechanic said:

I regret the demise of Communism—not for me, but when I see how much my children and grandchildren struggle. We had safe jobs and decent salaries under Communism. We had enough to eat and we had yearly vacations with our children.

In another time and in the same place, Lenin and the communists turned an economic crisis in a very different direction.

(ht tp)

The European Exception

The European tendency to make the constitutive exception a key philosophical concept gives voice to the semi-conscious awareness that Europe itself is an anomaly in world history. It may be Freud’s unconscious, Lacan’s Real or objet petit a, Žižek’s dialectical inversions, Badiou’s event, Benjamin’s or Jameson’s rupture, Agamben’s exception or Negri’s kairos, or … (fill in the blank), but they all trade on the constitutive exception. I would suggest that this is an ideological trace of history itself. For, as Diakonov argued in his little read The Paths of History, European economic history is an anomaly in terms of world history, a crucial anomaly, but an anomaly nonetheless. However, this constitutive exception has also produced a fundamental problem, if not a gross error, for the European path has been taken as the norm of world history. Only now, with Europe and its satellites trying to hang onto a mythical golden age now suddenly in the past, is Diakonov’s insight being realised.