01/07/2019

Can economic growth continue forever? This relatively simple question has posed some intellectual headaches for modern capitalism. In the Grundrisse, Karl Marx argued that capital cannot tolerate any limits, by which he meant that the drive for growth and the search for new markets are both necessary for the political and economic survival of capitalism.¹ Viewed in this light, the implications of the question present something of an existential challenge to the current order. Capitalism cannot acknowledge any natural limits to economic growth, for that would mean acknowledging its ultimate demise. To keep up the pretense that capitalism represents a quasi-eternal and invincible system, most political leaders and economists who support the current order have begun reciting a series of elaborate narratives about the relationship between human economies and the natural world.

These narratives all revolve around the central idea that we can decouple economic growth from the material needs of human civilization. Until the late twentieth century, economists generally understood that more economic growth required the use of more energy and materials. But as the postwar compromises between labor and capital began collapsing in the 1970s and ’80s, economic theories started to shift in emphasis and direction. Inspired by neoclassical theories, a new generation of economists began to argue that economic growth could continue without the consumption of additional resources from the environment.² They claimed that we could reach this economic nirvana by doing more with less, investing in clean energy, and developing energy-efficient technologies. In short, they were arguing for nothing less than the long-term sustainability of capitalism, ignoring all the science and evidence piling up along the way.

At a basic level, pundits and economists generally define decoupling as a process in which the size of the economy expands while resource impacts, usually either carbon emissions or primary energy consumption, decline.³ More specifically, relative decoupling occurs when resource impacts are rising at a slower rate than economic growth. Absolute decoupling occurs when resource impacts are declining in absolute terms, even as the economy keeps expanding.⁴ Macroeconomic theories supportive of capitalism measure economic size and activity by calculating the gross domestic product (GDP), which stands for the annual market value of goods and services produced in an economy by adding together gross private investment, consumer spending, government spending, and the trade balance. It should be noted that, although widely accepted by governments and most economists around the world, there are some fundamental scientific problems with using this measure as an accurate barometer of aggregate economic activity.⁵

Divergence between growth in carbon emissions and economic growth, and between economic growth and primary energy consumption, are often conflated in both public and academic discourse about the issue of decoupling, creating all sorts of confusions.⁶ Some economists have also looked at how aggregate demand relates to the consumption of raw materials. Other ideas and concepts related to decoupling regularly circulate in the literature, reflecting the general ambiguity surrounding the issue.

This article aims to synthesize and understand these disparate ideas and to offer a comprehensive overview of the relationships between energy, economic growth, and social development. On a practical level, this debate has become fluid and chaotic because wealth and power are at stake. Intellectually, however, many of the arguments amplify confusion by resorting to inaccurate theories and misleading phrases. People often equate the concept of energy consumption with the term energy use, suggesting that they are unaware of important distinctions in how energy accounting works, or even what energy actually means. Many economists think about concepts like energy and efficiency in vastly different ways than physicists, creating ample opportunity for interdisciplinary confusion. This web of definitions and conceptions cries out for some attempt at clarification. Here I explore the nature of the relationship between energy and economic growth, highlighting areas where it makes sense to talk about decoupling while also emphasizing some of the fundamental limits and problems of invoking the concept in relation to economics.

The Critical Role of Energetic Conversions

Energy consumption is a complex topic that touches on many different issues about the nature of civilization. When most governments and organizations talk about energy consumption, they are typically referring to a metric called primary energy consumption, which represents the direct use of energy sources without any prior conversions or transformations.⁷ Primary consumption includes burning coal at a power plant and distilling crude oil at a refinery. Primary forms of energy are not useful on their own, so they are converted and transformed into secondary forms of energy. For example, we burn coal so we can turn the resulting steam energy into electricity, and we distill crude oil so we can produce gasoline. Coal and crude oil are primary forms of energy while electricity and gasoline are considered secondary forms. The secondary sources can also be converted into other tasks and end uses, collectively known as tertiary sources. However, it must be emphasized that all primary energy sources are themselves the result of earlier conversions and transformations in nature, so they are not so primary after all. For example, the hydrocarbons of the dead plants and animals that make up petroleum are a secondary product of photosynthesis, which requires solar energy and water molecules. This fact hints at an important challenge for the usual methods of energy accounting: the concept of a primary form of energy is theoretically suspect.

There are two common methods of measuring primary energy: the partial-substitution method and the physical-energy content method.⁸ Let me explain them with some examples. When a power plant burns through coal, the primary energy simply equals the energy of the coal that goes up in flames. In the case of fossil fuels then, things are pretty easy: just record the amount of stuff that we burn and call that primary energy. But the situation is more complicated for renewable energy sources, such as wind, solar, and hydropower, because nothing was burning while these energy sources generated electricity. Enter the two methods above. In the physical-energy content method, we simply count the electrical energy produced by these sources as primary energy, even though electricity obviously qualifies as a converted form of energy. This is the method used by the International Energy Agency to measure energy consumption for renewables. In the partial-substitution method, we pretend that the produced electricity came from a hypothetical thermal power plant, and then we assume some efficiency for this plant. For example, if the plant has an efficiency of 20 percent, then we would multiply the electricity generated by a factor of five. In this case, the primary energy required to produce that electricity is five times larger. The company British Petroleum has adopted this partial-substitution method in its popular global energy reports.⁹ The main reason why these differences matter is because they can lead to diverging estimates of energy consumption, especially for nations that rely heavily on renewables.

We can always argue and wonder about which method is more correct, but this line of thinking entirely misses the central theme of the conversation. In reality, beyond the world of statistical accounting, only energetic conversions truly matter. The electrical energy produced by renewables came from dynamical flows in nature, such as sunlight hitting the earth and rivers roaring through dams. The concentration of fossil fuels at their points of processing and refinement required energetic conversions from machines and human labor, which first extracted these fuels and then transported them to a particular location. All of this happened before anything was burned and recorded on some logs and charts. Thinking in terms of primary energy consumption obscures the energetic flows and conversions that make all economic activities possible. It also establishes ample opportunities for confusion and misguided results in public discourse. When economists and media outlets show plots of GDP growth diverging from energy consumption, they are actually showing GDP growth diverging from primary energy consumption.¹⁰ They then assume that this alone somehow proves that economic growth has become detached from energy use.

This assumption is highly misleading. To understand why, it helps to review the significance of energy in a broader context beyond economics. We can generally define energy as constrained states of motion that can be exchanged among different physical systems. It can come in many different forms, such as chemical, thermal, kinetic, and potential, to name just a few. The following arguments do not even depend on any particular definition of energy; they just depend on the basic fact that certain forms of energy can be converted into other forms. For example, chemical energy can be transformed into mechanical energy, which is what happens when our car engines burn through fuel and convert the resulting heat energy into the mechanical motion of the wheels. Heat and mechanical energy can also be transformed into electrical energy, like when power plants burn through coal and use the resulting steam energy to drive a generator that produces electricity. Focusing exclusively on primary energy consumption completely ignores and marginalizes these energetic conversions, which should be the central elements of the story.

All conceivable economic transactions, from the exchange of money to the production of commodities, require energetic conversions from various sources. Energy is embedded in all human actions. It does not simply stop counting after we burn through natural resources at some power plant. The flow of energy through the various parts of civilization facilitates all possible human actions, such as driving to the grocery store, surfing the web, playing video games, watching television shows, and reading romance novels at the beach. In this fundamental sense, economic activities cannot be decoupled from energy use, for that would be like asking economics to step completely outside the laws of physics—a clear absurdity. But this clear absurdity is exactly what certain economic theories imply can actually happen: they artificially detach capital and labor from energetic constraints and effectively sever any and all links between physics and economics.¹¹ Many economists use primary energy consumption as a crutch for how energy impacts economic processes, and in so doing they make it seem like our lives are unfolding in some entirely separate realm from energetic constraints. Instead of focusing exclusively on primary consumption, we should emphasize the importance of what I call aggregate flow, defined as the total sum of all the energy converted through our economic activities. In other words, aggregate flow focuses on the energetic flows and transformations that make civilization possible. A related quantity of interest is the aggregate flow rate, or AFR, which measures the aggregate flow per unit of time. In general, richer societies have a higher AFR than poorer societies. This means that they can produce and circulate larger amounts of real surplus wealth, in the form of use values. However, an enormous portion of this wealth also takes the form of social, economic, and ecological waste.

In addition to the critical role of conversions, we must emphasize the related importance of energy quality. Not all primary sources of energy are made equal. Some are more efficient than others. Some yield more mechanical work. Others produce more electricity. For example, producing one kilowatt hour of electricity in 2017 required, on average, 7,812 British thermal units (BTUs) of natural gas and 10,465 BTUs of coal.¹² By this measure, natural gas is roughly 25 percent more efficient than coal at generating the same quantity of electricity. The energy thinker Vaclav Smil identified the power density of an energy source as an important feature for the economic growth and development of civilization.¹³ He defined power density as the energy flux per unit area that could be released in the conversion process of an energy source. Smil has argued that fossil fuels are uniquely important for capitalism because they have higher power densities than other energy sources, such as wind and solar. Larger power densities help generate more production, leading to higher profits by extension. Other measures of energy quality are conceivable, but the basic point is that natural energy sources can have very different uses and attributes. The only way to understand these differences is by looking at the conversions and transformations that follow primary consumption. Failing to take this critical but routinely ignored step makes it seem like all energy sources should be treated equally, as if they all have the same capacities in the process of economic production and consumption.

The Central Flaws in the Neoclassical Theory of Growth

The intellectual foundations of the decoupling narrative derive from neoclassical economic theory, the prevailing paradigm of explanation among orthodox economists that support capitalism. Neoclassical theory is generally plagued by unrealistic assumptions about society, numerous mathematical inconsistencies, and has no predictive power at all.¹⁴ In this piece, however, we focus on the cardinal sin of this intellectual train wreck: its rejection of physics and its ignorance of the natural order. In the 1950s, the economist Robert Solow developed one of the first major models to describe how economic growth happens.¹⁵ In these versions of neoclassical theory, the production inputs of capital and labor combine to produce outputs, or finished goods, that are traded in the economy. Growth in capital leads to more output, but depreciation in capital assets also drags down a portion of that output. The economy eventually reaches a stationary state where growth and depreciation balance each other out and there is no more growth. In order to produce continuous growth, neoclassical theory argues that the economy needs a steady stream of technological progress, defined as a gain in total productivity. This gain implies that productive output can increase while productive inputs are held constant. Solow came up with a mathematical scheme for detecting the impact of this technological growth on changes in GDP. Although his work earned widespread acclaim from other neoclassical thinkers, much of it was based on dubious mathematical results that did not actually validate his claims.¹⁶

In extensions of Solow’s original theory, the productive inputs have typically included capital, labor, and technology. Energy is sometimes subsumed under the three traditional inputs, or it may be treated as a separate input in and of itself. Critically, the production inputs are viewed as largely independent from one another, meaning that they can be substituted as necessary in order to maintain or to boost the maximum level of production. If societies are running short on natural resources, neoclassical theory argues that these shortages can be overcome through technological innovation, efficiency gains, or other forms of substitution. Indeed, neoclassical economists tend to assume that the long-run sustainability of capitalism is materially possible and all we need to do is figure out the social and institutional arrangements that can ensure that sustainability.¹⁷ Solow entertained the idea that the natural world does not provide limits to economic growth on the following grounds: “If it is very easy to substitute other factors for natural resources, then there is in principle no ‘problem.’ The world can, in effect, get along without natural resources, so exhaustion is just an event, not a catastrophe.”¹⁸ Although his model also showed that competition would eventually result in the exhaustion of natural resources, his statement nicely describes the general attitude that many economists hold about the inevitability of growth under capitalism.

For a highly simplified toy model of what this all means, consider your local pizza store. According to neoclassical theory, the pizza store can maintain or boost current levels of pizza production in the face of any shortfall. A shortage of workers can be overcome by adding more ovens. A shortage of cheese can be overcome through technical improvements that yield more efficient methods of making cheese. A shortage of electricity can be overcome by increasing labor productivity, perhaps by training the workers to make the pizzas faster under the new time constraints. Everything can be replaced. Everything can be substituted, seemingly without end. The ideas and principles just described represent fundamental assumptions in neoclassical economics and they are often used to explain the relationship between energy consumption and economic growth. If there were no hard limits to substitution, then it would be possible for our economies to keep growing even in an ecosphere with declining quantities of natural resources and with highly chaotic, nonlinear ecological consequences that result from the enormous energy losses of capitalist societies. In other words, better technologies and higher efficiencies would always be available to boost production, regardless of any depletions or instabilities in the wider natural world caused by those productivity gains.

To chip away at this elaborate fantasy, it helps to begin with some basic physics. The most fundamental limits to substitution come from thermodynamics, the branch of physics that studies quantities like heat, work, and energy. Thermodynamic limits impose constraints on the maximum efficiency of energy flows through technological systems.¹⁹ Car engines, power plants, and photovoltaic cells are all limited in their capacities to convert one type of energy into another. Technological progress cannot overcome these limits; no car engine can ever be more efficient than an engine running on the Carnot cycle.²⁰ In an earlier article for this magazine, I defined the aggregate efficiency of an economic system as the fraction of all primary energy consumption that produces mechanical work and electricity.²¹ I argued that aggregate efficiencies are highly inertial over time because improving them substantially requires enormous investments that would disrupt the reigning economic order.

Once a society has settled into a particular energy structure, changing it much further becomes a daunting task because of elite classes and groups that rely heavily on that structure for their wealth and influence. We can look to the recent experience of Germany for a prominent case study. In 2000, the German government launched its ambitious Energiewende, a comprehensive plan to reduce greenhouse gas emissions by shifting energy production towards renewable sources, such as wind and solar.²² For a time, the program made some notable achievements. Compared to 1990, greenhouse gas emissions had declined 28 percent by 2017. That same year, renewables reached a 13 percent share of primary energy consumption. Although these numbers are impressive, progress has recently come to a standstill. It has become increasingly clear that Germany will not reach the climate targets that it set for 2020. And once we dig into the numbers a bit deeper, even those that look impressive come with huge caveats. For example, the large reduction of carbon emissions since 1990 can be largely attributed to the collapse of heavy industry in East Germany after reunification.²³ Over the past eight years, greenhouse gas emissions from Germany have hardly changed. The variabilities associated with wind and solar power have opened up problems related to electricity storage. Prices fluctuate dramatically depending on weather conditions. To compensate for these and other issues, Germany began sabotaging its energy program by constructing a series of new coal power plants when the coal industry pressured Chancellor Angela Merkel’s government to relax its policies. The German example offers an important lesson: the necessary substitution of fossil fuels with renewables will never come fast enough under the market logic of capitalism.

Another major limit to substitution comes from the ecological instabilities associated with excessive levels of economic growth. These instabilities can combine to pump and amplify existing natural phenomena. The amplifier effect works as follows. Economies absorb energy from the natural world and then exploit that energy for cycles of production and consumption. For highly energy-intensive economies, these cycles necessarily yield extensive levels of waste and dissipation, or energy losses that are dumped back out to the environment. These energy losses are not “useless” from the standpoint of physics or ecology. Under the right circumstances, they can power the formation of other natural dynamical systems, including everything from viruses and bacteria to wildfires and hurricanes.²⁴ These highly chaotic effects associated with energy-intensive economies are largely ignored and dismissed by neoclassical theory, even though they have often played a central role in the evolution of human history.²⁵ As a highly dissipative system, capitalism regularly produces very powerful amplifier effects. Collectively, these amplifiers are now creating what Marx called a “metabolic rift” between nature and society, which means that the ecological basis of civilization is steadily eroding under profit-seeking and energy-intensive development that does not care about replacing what it extracts.²⁶ The natural world has major tipping points that we should not cross, but indefinite economic growth through substitution virtually guarantees that some of those critical thresholds will be breached, threatening the broader ecosphere that supports human civilization.²⁷

Consider another problem. Substitution can occur quite frequently on small and restricted scales of economic activity. A pizza store can always substitute certain ingredients for others. A homeowner can substitute heating fuel for insulation. A company can replace older light bulbs for more efficient lighting in its offices. And even some countries can substitute various forms of wealth for others, at least temporarily. The Pacific island nation of Nauru provides a classic example that highlights the central themes of the debate. In the twentieth century, Nauru possessed vast deposits of phosphate, which is highly prized as an agricultural fertilizer. These deposits were extensively mined, depleted, and then traded in global markets, allowing Nauru to reach a sky-high standard of living by 1990.²⁸ Nauru converted a portion of its earnings from the phosphate trade into a public trust fund, which invested in manufactured capital through financial markets. However, its impressive standard of living collapsed sharply after the phosphate vanished, along with most of the money in the trust fund.²⁹ Nauru offers a cautionary tale for the world as a whole. If global civilization runs out of natural resources, we cannot replace them by investing in commodities through financial markets. People cannot eat money. Substitution in the long run may be possible at the microlevel of economic activity, but long-term macrolevel substitution is downright wishful thinking.

We can better understand the limits to substitution on a global, macroscopic level by considering a specific example: a global economy meeting its electricity needs through the consumption of solar power. There are fundamental limits to the amount of solar energy absorbed by solar panels that can be converted into useful electrical energy. Most commercial photovoltaics convert less than 30 percent of the solar energy they absorb into electricity; the remaining energy balance is lost as heat and infrared radiation.³⁰ The theoretical efficiency limits for the most advanced photovoltaic designs are just under 90 percent, a number that not even the latest laboratory experiments have come close to matching.³¹ But suppose neoclassical theory is right about its eternal commitment to technological progress and that eventually we do manage to produce photovoltaics that are 90 percent efficient at converting solar energy. Once all theoretical efficiency limits are actually realized, boosting electricity production even further would require the construction of new solar panels, which takes up more land. As the earth has a finite surface area, indefinite growth would not be possible even with the proliferation of renewables. This argument underscores the central point that renewable technologies are important, but they cannot solve the global ecological crisis under the economic regime of capitalism, which is completely reliant on the false promise of eternal growth in production and consumption. Substituting fossil fuels for renewables while pushing for more growth would still lead to the total ruin of global civilization in a few centuries.

Economists love to pretend that technological innovation can yield greater “qualitative growth” without any corresponding “quantitative growth.”³² On the basis of improving knowledge and technological growth, they believe that the monetary value of stuff can keep increasing even as the quantity of stuff itself remains stable. But what they fail to grasp is that technological innovations do not happen magically—they also require energetic conversions. Changes to the production cycle are dependent on the stock of electrical, chemical, and mechanical energy available for research and training. A coder sitting in front of a computer writing a new program needs energy to think and type. The computer itself needs electricity to continue operating. No possible improvement can be made to computer programs without a continuous stream of energetic conversions. Expansions in productivity require energy flows, meaning that all forms of technological change are intertwined with the energetic transformations that facilitate human existence.

Technological changes are physically embedded in greater knowledge among people and the development of more productive assets, both of which need energy and material flows to continue operating. Thermodynamic limits also constrain the extent to which these flows can be reduced while sustaining labor and capital. In short, technological changes themselves are subject to hard physical limits, along with the qualitative growth that can be derived from them. Power plants provide one of the most well-known examples of the limits to technological growth. They have been hovering near their peak efficiency ratings for decades and getting them to go much further has proven to be extremely difficult.³³ The failure of breeder reactors for nuclear power plants highlights another prominent technological bust, and plenty of other exotic technologies, like fusion reactors, will inevitably end up in the same category. The bloated profit margins of capitalism depend critically on the energy-intensive basis of its entire existence. Take away that basis and there is no more capitalism.

How Energy and Growth Relate to Emissions

All economic activities, as we have seen, require energy. To better understand what this means, we examine the relationships between energy, growth, and emissions more concretely by looking at the economy of the United States. In recent decades, U.S. economic growth has continued, albeit at a declining rate, even though per-capita primary energy consumption has gone down.³⁴ In addition, costs associated with primary energy consumption increasingly represent a declining share of U.S. aggregate demand. From these observations, many economists and pundits have concluded that energy use and economic growth have decoupled from one another.³⁵ But even a quick analysis of the underlying energy shifts in the U.S. economy reveals the falsehood of this narrative. An economy that starts using natural resources with higher energy efficiencies and larger power densities can experience growth even as primary energy consumption declines. Understanding this process would be difficult, perhaps even impossible, if we only looked at primary consumption, which totally ignores conversions. But once we consider that burning a smaller quantity of natural gas, for example, can still yield more electricity than burning a larger amount of coal, then the significance of conversions becomes immediately apparent. Resources with larger power densities can convert more useful energy for economic activities, some of which constitute the basic elements measured by GDP. Economists like David Stern and Robert Kaufmann, among others, have clearly shown that growth in U.S. energy consumption is tightly coupled with growth in aggregate demand once differences in energy quality are factored into the analysis.³⁶

The energy crisis of the 1970s motivated the United States to reduce per-capita oil consumption and to focus on efficiency gains by using other natural resources. These efforts resulted in a trajectory of increased natural-gas consumption, which is much cleaner and more efficient as an energy source than coal. Both the switch to natural gas and the increasing proliferation of renewables helped substantially reduce carbon emissions. After peaking in 2005, greenhouse gas emissions in the United States had fallen 14 percent by 2016.³⁷ But the declines gradually stalled and emissions in 2018 actually increased by more than 3 percent, the largest rise in 8 years.³⁸ A hyperactive transportation sector, always critical to economic growth, was the leading culprit behind the latest surge. Recent U.S. experience further reinforces the notion that large-scale reductions in emissions are virtually impossible under an economic system that prioritizes growth above anything else. The unlimited pressure to increase consumption and production can lead to rising emissions even in the context of macrolevel efficiency gains and technological innovations.

For the world as a whole, a strong positive relationship exists between primary energy consumption and economic growth, and numerous studies on various countries and regions indicate that this relationship is fundamentally causal.³⁹ Over the last few decades, the rate of global economic growth has started to slow down, mirroring the declining rate of growth in global energy consumption. Some major economies, like those of Japan and the European Union, have already entered periods of stagnation associated with very low growth rates and aging populations. Because these economies are currently dominated by corrupt financial sectors, they are generating uneven growth patterns that mostly enrich wealthy capitalists. By contrast, ordinary people are increasingly drowning in debt so they can finance the cycles and crises of capitalism.⁴⁰ Economic progress for the vast majority of society has come to a screeching halt.⁴¹ The global economy may continue to grow at modest rates for the rest of this century, but the signs are already evident that our potential for future growth is limited and constrained by what kinds of energy sources we can collect from the natural world, as well as by the economic irrationalities of today’s financialized capitalism.

Capitalism is running out of steam, but not quickly enough to substantially reduce aggregate emissions. Global carbon emissions over the last century have closely followed changes in primary energy consumption. At the start of the decade, optimism about global warming was high. Greenhouse gas emissions flatlined for several years and the upper echelons of the global economy started to believe that economic growth could actually be decoupled from harmful emissions. In 2016, the International Energy Agency triumphantly declared: “Decoupling of global emissions and economic growth confirmed.”⁴² What a difference two years can make. In 2017, greenhouse gas emissions worldwide saw a sharp spike.⁴³ Against a backdrop of increasingly alarming scientific reports about the dangers of global warming, emissions rose again for 2018, at a faster pace than the previous year.⁴⁴ Even some advanced economies that had supposedly decoupled growth from pollution witnessed higher carbon emissions in 2018. Detaching emissions from economic growth has turned out to be a vastly more complicated problem than global elites originally believed.

A persistent albatross on this issue is the way that most elites talk about carbon emissions. When governments and organizations measure greenhouse gas emissions, they often do so at the point of manufacture and production. If a U.S. company sets up a factory in India to produce commodities that are then sold to U.S. consumers, the emissions coming from that factory are credited to India, not the United States. This basic process of what is referred to as geographic substitution, where corporations from the capitalist core transfer ecologically destructive manufacturing to developing nations with large pools of cheap labor, has been an important source of the observed divergence between carbon emissions and economic growth in the Western world.⁴⁵ In other words, measuring emissions from the point of consumption hardly reveals any decoupling at all. In any case, multinational corporations can only keep shifting production around so much before they run out of places to go. There are limits to geographic substitution as well.

Besides comparing aggregate demand to emissions, another approach for understanding the material foundations of economic growth focuses on the flow of raw materials on their way to the final point of consumption. In a landmark 2012 paper, a group of Australian researchers analyzed the aggregate raw materials exchanged among countries through international trade and introduced the concept of the material footprint, defined as the global allocation of used raw material extraction to the final demand of an economy. They concluded that “with every 10 percent increase in gross domestic product, the average national [material footprint] increases by 6 percent.”⁴⁶ In their view, “achievements in decoupling in advanced economies are smaller than reported or even nonexistent.” They also estimated that roughly 40 percent of all global raw materials are extracted to facilitate the export of goods and services to other nations, which indicates that reducing the international flows of global capital could be a critical strategy in addressing our intensifying ecological crisis.

For another perspective on why claims about decoupling are premature, consider the following fact: life expectancy in the United States has declined for three consecutive years, the first such sustained decline in a century.⁴⁷ The U.S. economy grew in every one of those years. But the press did not blare the sirens declaring that life expectancy has decoupled from economic growth. Such an admission would raise an unthinkable prospect for the reigning plutocracy: that the lives of common people might actually be getting worse while some billionaires become even richer by selling the rest of us more stuff that does not actually improve our lives. However, when two or three years of mixed and uncertain data suggest that the rise in harmful global emissions has slowed down, the story gets blown out of proportion and becomes a masterful causal narrative about how capitalism can be ecologically sustainable. The collapse of the decoupling delusion offers an important lesson—we should resist the temptation to make grand conclusions about the world when we notice marginal trends over just a few years.

The Accelerating Crisis and the Social Dimension

The early phases of the ecological crisis have already arrived. In 2017, Puerto Rico was struck and heavily damaged by a powerful hurricane lurking over unusually warm waters. That same year, a historic drought in Argentina crippled agricultural exports and triggered a massive recession, which eventually coupled with a currency crisis and forced the country to borrow billions from the International Monetary Fund for the second time in less than two decades.⁴⁸ Severe and unusual droughts in Central America are also disrupting agricultural production and playing a major role in convincing hundreds of thousands of migrants to head north.⁴⁹ Major droughts and water shortages in Afghanistan have fueled widespread resentment against the central government in Kabul and have incited tensions between the country and its neighbors.⁵⁰ These and thousands of other simultaneous developments are only the opening lines in a multiact play that human civilization will nervously witness and experience over the next few centuries.

Ecological and other left-wing economists have long criticized the dangerous fantasies of neoclassical thinkers. But there is evidence that some elites are also beginning to change their minds on the issue. In 2016, the International Resource Panel concluded that the global consumption of materials since 2000 had grown at a faster rate than global GDP, adding that “global material efficiency, for the first time in a century, has started to decline.”⁵¹ In 2017, the chief economist of Norway’s Equinor, Eric Waerness, wrote that decoupling economic growth from energy consumption “might be impossible.”⁵² In 2018, a major report from the International Panel on Climate Change stated that preventing catastrophic levels of global warming would require “rapid, far-reaching, and unprecedented changes in all aspects of society.”⁵³ Antonio Guterres, the Secretary General of the United Nations, told a climate conference in early December 2018 that “we are in deep trouble with climate change.”⁵⁴ Optimism has finally given way to realism, even if many of these individuals and organizations fail to notice the next required step: a full-blown social, political, and economic confrontation against capitalism.

An analysis of class and society remains critical to understanding the horizon of crisis spearheaded by capitalism. In large part, the ecological crisis is a product of very rich people using and consuming vast amounts of energy. Any proposed solutions to our current existential ills must thoroughly address the class differences responsible for creating them in the first place. Specifically, we must ensure that the transition to an ecological order ends up helping the poor and the working classes while hurting the capitalists, who are mostly responsible for global warming and the planet’s other ecological disasters. Western plutocracies have rolled out various market-based taxing and pricing schemes designed to reduce the consumption of fossil fuels, but have been largely oblivious to the fact that these proposals would hurt the livelihood of common people. The proper way to shield the masses during this transition is to establish stronger social control over the production and distribution cycles around fossil fuels and then to impose temporary price controls at the point of consumption. The capitalists lose out on their profits, as they should after having trashed our ecosphere, and the masses do not have to face any sudden sticker shocks.

Under modern capitalism, the class structure of our societies can be broadly divided into three categories: employees, managers, and capitalists. We define capitalists as individuals who earn such large incomes from their assets and companies that they can avoid wage work altogether, if they so choose. In the context of the United States, a rough approximation of a (small) capitalist would be anyone with a net worth greater than $10 million in liquid financial assets—which is not to deny the issue of scale here, with some capitalists having incomes of more than $100 million a year. Of course, plenty of capitalists do engage in wage work, such as CEOs of large multinational corporations. But the point is that, for the lucky capitalists, work is not a necessity; they could maintain their current standard of living without a formal salary. They could easily retire to the Bahamas next week and just live off the income flowing from their assets, such as stocks, equities, real-estate properties, and any companies they may own. However, this option is not available for the vast majority of people in society. Managers and employees both need salaries to survive and to purchase the commodities that enrich the capitalists. In addition, most workers increasingly live a life of debt servitude, in which they owe capitalists lots of money for going to school, buying a home, and using a credit card, among other things. The financial control that capital has over the rest of society also makes it very difficult for workers to demand higher wages and better living conditions. The result is a plutocracy in which a small group of rich people have completely hijacked the political process and thumbed their noses at any demands for democratic change.⁵⁵

Despite these challenges, the social and ecological imperatives for a new direction are growing rapidly every year. A democratic, ecological, and socialist civilization would substantially limit the commodification of natural resources while also linking the fate of the richest to that of the poorest. It would guarantee these six universals to all people: food, jobs, housing, health care, child care, and education. It would restrict and constrain the accretion of wealth. It could do so by imposing wealth taxes on capital and by socializing large parts of the economy, allowing a limited and tightly regulated market to survive. Capitalists all over the world are hoarding vast amounts of financial wealth, which they refuse to invest in the real economy because of low growth rates that offer few opportunities for excessive profits. Governments should seize the vast majority of this wealth and invest it in the improvement of social services, the rebuilding of infrastructure, and the delivery of affordable health care. To substantially reduce and permanently control income disparities, society could mandate that the highest salary in any company or organization be restricted to no more than ten times the lowest salary.

By providing greater resources to the masses, a democratic society would also rescue our families from an escalating list of crises. Capitalism has torn apart the social fabric and crippled modern families by treating workers like cogs in the corporate machinery. More and more families are stressed, depressed, and increasingly feeling alienated from a ruling class that no longer seems to care. An economic system that works for common people would empower families, strengthen relationships, and help kids grow into responsible adults. Part of helping families means that society should also invest in rural communities that have been destroyed as jobs and assets flow to wealthy cities. These public investments should include the creation of well-paying jobs, the construction of new clinics and hospitals for easier access to medical services, the delivery of regular cash payments to low-income households, the installation of fiber-optic cables for faster Internet, and infrastructure spending on roads, schools, and homes. Only by providing a critical balance of economic and political concessions to rural areas can we prevent the urban plutocracies from dictating terms to the rest of society. An ecological society would strive to make the allocation of resources between cities and the countryside far more equitable than the one-sided relationship that currently predominates under capitalism.

Our political and business leaders, indoctrinated by capitalist propaganda throughout their lives, have come to believe that economic growth is like a magical elixir capable of curing all evils. For most people in the modern world, it does not seem like an alternative to economic growth, as currently calculated under capitalism, is even conceivable. But imagining and realizing these important alternatives may be the only way to spare human civilization from a looming disaster. Instead of organizing our societies and economies around the principle of growth, we should organize them around the principle of sustainable human development, which requires the metabolic stability of the wider ecosphere. By tightly constraining the levels of production and consumption around some dynamic equilibrium and emphasizing qualitative human-social relations, as opposed to the cash nexus, we can avoid the periodic bubbles and crises of capitalism while also prolonging the duration of human civilization. And by distributing more wealth and resources to workers and common people, we can build a fair society untroubled by recurring spasms of political and economic instability. The social and the ecological are inseparable, and together they represent the intensifying political battleground of this millennium. Future generations will judge us harshly if we fail to seize this exceptional moment in history. The impending convergence of crises, from the economic to the ecological, demands nothing less than a new vision for our social order.

Notes

1. ↩ Marx writes that “the tendency to create the world market is directly given in the concept of capital itself. Every limit appears as a barrier to be overcome.” See Karl Marx, Grundrisse (London: Penguin, 1973), 334.
2. ↩ See Robert M. Solow, “The Economics of Resources or the Resources of Economics,” American Economic Review 64 (1974): 1–14.
3. ↩ For a prominent example of this line of thinking, see Barack Obama, “The Irreversible Momentum of Clean Energy,” Science, January 9, 2017. Obama writes: “This ‘decoupling’ of energy sector emissions and economic growth should put to rest the argument that combatting climate change requires accepting lower growth or a lower standard of living.”
4. ↩ See Tim Jackson, Prosperity Without Growth: Economics for a Finite Planet (Abingdon, UK: Routledge, 2011).
5. ↩ A major issue is the aggregation problem, one of the central weak points in all of macroeconomics. For an excellent, nontechnical introduction to the aggregation problem, see Blair Fix, “The Aggregation Problem: Implications for Ecological and Biophysical Economics,” BioPhysical Economics and Resource Quality 4, no. 1 (2019). For a more technical treatment, see Jesus Felipe and Franklin M. Fisher, “Aggregation in Production Functions: What Applied Economists Should Know,” Metroeconomica 54, no. 2 (2003): 208–62. The essence of the aggregation problem is the following question: Under what conditions can you add up a bunch of stuff and be certain that you have the right total value? The basic answer is that you can add things up when you have a stable unit of measurement, like mass or energy. In a natural science, like physics, unit stability is a critical requirement for measurement and aggregation. See Elizabeth Gibney, “Largest Overhaul of Scientific Units Since 1875 Wins Approval,” Nature, November 16, 2018. By contrast, aggregation is a meaningless concept with unstable units of measurement, such as commodity prices in economics. One cannot define or determine a “real,” inflation-adjusted aggregate through unstable units. Many economists find supposedly clever ways to get around this problem. In his famous 1956 paper, Robert Solow flatly declared: “There is only one commodity, output as a whole.… Thus we can speak unambiguously of the community’s real income.” In other words, he brushed aside the aggregation problem by creating an abstract economy with only one commodity. The flagrant absurdity of this move is par for the course in neoclassical theory, where ridiculous assumptions about the world are more common than breathing oxygen. See Robert M. Solow, “A Contribution to the Theory of Economic Growth,” The Quarterly Journal of Economics 70 (1956): 65–94. There are other critical concerns with using GDP as a measure of economic value, such as the fact that it does not take into account ecological degradation and vital social services. For more on this line of criticism, see James Ward et al., “The Decoupling Delusion: Rethinking Growth and Sustainability,” The Conversation, March 12, 2017.
6. ↩ For a recent example of this conflation, see Vincent Moreau, “Decoupling Energy Use and Economic Growth: Counter Evidence from Structural Effects and Embodied Energy in Trade,” Applied Energy 215 (2018): 54–62. The author starts off right away by saying: “Decoupling economic growth from energy consumption is a widespread attempt to decarbonize economic activities and increase energy security.”
7. ↩ See “Primary Energy Consumption,” Organization for Economic Cooperation and Development, November 20, 2001. For a list of things that are included under primary consumption in the United States, see the entry “Primary Energy Consumption” in the Glossary of the U.S. Energy Information Administration.
8. ↩ For an explanation of these methods, see “Statistical Resources” by the International Energy Agency.
9. ↩ BP assumes an efficiency rating of 38 percent for the hypothetical power plant. See BP Statistical Review of World Energy (London: British Petroleum, 2018), 52.
10. ↩ As a quick example, see the charts in Brad Plumer, “Can We Sever the Link between Energy and Economic Growth?” Washington Post, January 17, 2014.
11. ↩ David Stern, “Economic Growth and Energy,” in Encyclopedia of Energy, ed. C. J. Cleveland (San Diego: Academic Press, 2004), 43.
12. ↩ A BTU is equal to 1,055 joules, the standard unit of energy. A joule is roughly the amount of energy it takes to lift an apple up to your mouth. See Table 8.1, “Average Operating Heat Rate for Selected Energy Sources,” S. Energy Information Administration, October 22, 2018.
13. ↩ For his primary work on the subject, see Vaclav Smil, Power Density: A Key to Understanding Energy Sources and Uses (Cambridge, MA: MIT Press, 2015).
14. ↩ The silly assumptions that form the core of neoclassical theory are almost too numerous to recount. One can begin with utility, revealed preferences, and marginal productivity, for just a few metaphysical concepts that must be indirectly inferred from things like prices and wages. The economist Joan Robinson was one of the most brilliant critics of neoclassical economics. For her classic text on the subject, see Joan Robinson, Economic Philosophy (Middlesex, UK: Penguin, 1964). On the mathematical front, neoclassical theory has severe problems related to aggregation and general equilibrium. Refer to endnote 5 for an explanation of the aggregation problem. For the issues surrounding general equilibrium, see Frank Ackerman, “Still Dead After All These Years: Interpreting the Failure of General Equilibrium,” Journal of Economic Methodology 9 (2002): 119–39. Regarding its lack of predictive power, refer to every single dynamic stochastic model that somehow missed the Great Recession back in 2008.
15. ↩ See Solow, “A Contribution to the Theory of Economic Growth.”
16. ↩ Solow’s conclusions relied on a function known as the Cobb-Douglas production function, which was widely used in economics back then and remains popular to this very day. However, Anwar Shaikh brilliantly tore apart Solow’s results in 1974, when he showed that the Cobb-Douglas production function could accurately model data sets for which a production function should not exist. See Anwar Shaikh, “Laws of Production and Laws of Algebra: The Humbug Production Function,” The Review of Economics and Statistics 56 (1974): 115–20. It turns out that there is a kind of trivial and profound reason for this behavior. In 2005, Jesus Felipe and J. S. L. McCombie convincingly proved what had been widely suspected by Shaikh and others: that the Cobb-Douglas production function is nothing more than an identity equation, a different way of writing the additive equation capital plus labor, and reveals absolutely nothing about the neoclassical theory of distribution. See Jesus Felipe and J. S. L. McCombie, “How Sound Are the Foundations of the Aggregate Production Function?” Eastern Economic Journal 31 (2005): 467–88. The Cobb-Douglas function was picking up the factor shares inherent in the empirical data sets, most of which had roughly constant factor shares, because its exponents are the exact same as the factor shares from the identity equation. In sum, the Cobb-Douglas production function is an elaborate way of saying that one equals one.
17. ↩ Stern, “Economic Growth and Energy,” 40.
18. ↩ Solow, “The Economics of Resources or the Resources of Economics,” 11.
19. ↩ Stern, “Economic Growth and Energy,” 42.
20. ↩ John W. Jewett and Raymond A. Serway, Physics for Scientists and Engineers (Boston: Cengage Learning, 2008), 618.
21. ↩ See Erald Kolasi, “The Physics of Capitalism,” Monthly Review 70, no. 1 (May 2018): 29–43.
22. ↩ Stanley Reed, “Germany’s Shift to Green Power Stalls, Despite Huge Investments,” New York Times, October 7, 2017.
23. ↩ Tobias Buck, “Energy Shift Fails to Cut German Carbon,” Financial Times, October 8, 2018.
24. ↩ For a comprehensive guide to some recent research on hurricanes and climate change, see Jennifer M. Collins and Kevin Walsh, eds., Hurricanes and Climate Change, vol. 3 (New York: Springer, 2017). For a review of the role climate change plays in the spread of infectious diseases, see Xiaoxu Wu et al., “Impact of Climate Change on Human Infectious Diseases: Empirical Evidence and Human Adaption,” Environment International 86 (2016): 14–23.
25. ↩ See, for example, Jerry H. Bentley, “Environmental Crises in World History,” Procedia—Social and Behavioral Sciences 77 (2013): 108–15.
26. ↩ For more on Marx and his theory of the metabolic rift, see John Bellamy Foster, Marx’s Ecology (New York: Monthly Review Press, 2000).
27. ↩ See Johan Rockström et al., “A Safe Operating Space for Humanity,” Nature 461 (2009): 472–75.
28. ↩ Stephen E. Kesler, Adam C. Simon, and Adam F. Simon, Mineral Resources, Economics and the Environment (Cambridge: Cambridge University Press, 2015), 302.
29. ↩ Anne Davies and Ben Doherty, “Corruption, Incompetence and a Musical: Nauru’s Cursed History,” The Guardian, September 3, 2018.
30. ↩ For an excellent introduction to how photovoltaics work, see “Solar Cell Efficiency,” Energy Education, June 25, 2018.
31. ↩ Alexis De Vos, “Detailed Balance Limit of the Efficiency of Tandem Solar Cells,” Journal of Physics D: Applied Physics 13 (1980): 839–46.
32. ↩ See, for example, Tim Worstall, “When Physicists Do Economics We Seem Not to Get Economics as the Result,” Forbes, October 6, 2014.
33. ↩ Stern, “Economic Growth and Energy,” 42.
34. ↩ See Table 1.7, “Primary Energy Consumption, Energy Expenditures, and Carbon Dioxide Emissions Indicators,” S. Energy Information Administration, March 26, 2019.
35. ↩ For some relatively recent flavors of elite opinion on this topic, see John L. Seitz and Kristen A. Hite, Global Issues: An Introduction (Hoboken, NJ: John Wiley & Sons, 2012), 126. Also look at Devashree Saha and Mark Muro, “Growth, Carbon, and Trump: States Are ‘Decoupling’ EconomicGrowth from Emissions Growth,” Brookings Institution, December 8, 2016.
36. ↩ See Stern, “Economic Growth and Energy,” 35–51. In an important paper, Kaufmann also documented the structural shifts that occurred within the U.S. energy sector and analyzed their impact on economic growth. See Robert Kaufmann, “The Mechanisms for Autonomous Energy Efficiency Increases: A Cointegration Analysis of the US Energy/GDP Ratio,” The Energy Journal 25 (2004): 63–86.
37. ↩ Zeke Hausfather, “Analysis: Why US Carbon Emissions Have Fallen 14% Since 2005,” Carbon Brief, August 15, 2017.
38. ↩ Brad Plumer, “S. Carbon Emissions Surged in 2018 Even as Coal Plants Closed,” New York Times, January 8, 2019.
39. ↩ For one of the most influential studies in this field, see David I. Stern, “The Role of Energy in Economic Growth,” Crawford School Centre for Climate Economics & Policy Paper No. 3.10 (2011). For a review of the statistical relationship between energy use and GDP growth worldwide, see Rögnvaldur Hannesson, “Energy and GDP Growth,” International Journal of Energy Management 3 (2009): 157–70. For a major study on the link between energy and income in certain Asian countries, see John Asafu-Adjaye, “The Relationship between Energy Consumption, Energy Prices, and Economic Growth: Time Series Evidence from Asian Developing Countries,” Energy Economics 22 (2000): 615–25. For a general overview of how energy use has shaped human history, see Vaclav Smil, Energy and Civilization (Cambridge: MIT Press, 2017).
40. ↩ Jessica Dickler, “Consumer Debt Hits $4 Trillion,” CNBC, February 21, 2019.
41. ↩ Drew Desilver, “For Most U.S. Workers, Real Wages Have Barely Budged in Decades,” Pew Research Center, August 7, 2018.
42. ↩ See “Decoupling of Global Emissions and Economic Growth Confirmed,” International Energy Agency, March 16, 2016.
43. ↩ Zeke Hausfather, “Analysis: Global CO2Emissions Set to Rise 2% in 2017 After Three-Year Plateau,” Carbon Brief, November 13, 2017.
44. ↩ Damian Carrington, “Brutal News: Global Carbon Emissions Jump to All-Time High in 2018,” The Guardian, December 5, 2018.
45. ↩ See Ward et al., “The Decoupling Delusion.”
46. ↩ Thomas O. Wiedmann et al., “The Material Footprint of Nations,” Proceedings of the National Academy of Sciences 112 (2013): 6271–76.
47. ↩ Lenny Bernstein, “S. Life Expectancy Declines Again, a Dismal Trend Not Seen Since World War I,” Washington Post, November 29, 2018.
48. ↩ Nicolás Misculin and Gabriel Burin, “How a Year of ‘Endless Storms’ Battered Argentina’s Economy,” Reuters, December 20, 2018.
49. ↩ Adam Wernick, “Climate Change Is the Overlooked Driver of Central American Migration,” PRI, February 6, 2019.
50. ↩ Rupam Jain, “In Parched Afghanistan, Drought Sharpens Water Dispute with Iran,” Reuters, July 16, 2018.
51. ↩ Heinz Schandl et al., Global Material Flows and Resource Productivity (Paris: International Resource Panel, 2016), 40.
52. ↩ Frédéric Simon, “Decoupling Energy from GDP Growth ‘Might Be Impossible,’ Statoil Says,” Euractiv, June 15, 2017.
53. ↩ “Summary for Policymakers of IPCC Special Report on Global Warming,” Intergovernmental Panel on Climate Change, October 8, 2018.
54. ↩ Brady Dennis and Chris Mooney, “We Are in Trouble: Global Carbon Emissions Reached a Record High in 2018,” Washington Post, December 5, 2018.
55. ↩ See Ronald P. Formisiano, Plutocracy in America (Baltimore: John Hopkins University Press, 2015).

Energy, Economic Growth, and Ecological Crisis

https://monthlyreview.org/2019/06/01/energy-economic-growth-and-ecological-crisis/

01/07/2019

The single most influential work on imperialism remains V. I. Lenin’s classic study of a century ago, Imperialism: The Latest Stage of Capitalism (better known by the title given to it following its first publication, Imperialism: The Highest Stage of Capitalism).¹ Lenin employed the term modern imperialism or simply imperialism to refer to the age of concentrated capital, during which the entire world was being carved up by the leading states and their corporations, distinguishing the imperialist stage from the colonialism/imperialism of the mercantilist and freely competitive stages of capitalism that preceded it. “Colonial policy and imperialism,” Lenin insisted, “existed before this latest [imperialist] stage of capitalism, and even before capitalism.”²

The new imperialist stage, beginning in the last quarter of the nineteenth century and extending into the twentieth century, was seen as a product of the growth of giant capitalist firms with monopoly power, the close connection forged between these corporations and the nation-states in which they arose, and the resulting struggle for control of the world’s populations and resources—leading to intercapitalist competition and war. “If it were necessary to give the briefest possible definition of imperialism [as a “special stage”],” Lenin wrote, “we would have to say that imperialism is the monopoly stage of capitalism.”³

Lenin’s general analysis of imperialism belonged to a group of largely complementary theories in the Marxian tradition that included such works as Rudolf Hilferding’s Finance Capital (1910), Rosa Luxemburg’s The Accumulation of Capital (1913), and Nikolai Bukharin’s Imperialism and the World Economy (1915).⁴ Yet, Lenin’s own analysis was unrivaled in its ability to capture the dominant world conditions up through the Second World War, including accounting for the world wars themselves. A strong point in his analysis was its concrete, historical character, divorced from rigid theoretical formulae. It encompassed such varied phenomena as the growth of monopoly and financial capital, “division of the world among the international trusts,” capital export, the race for energy and raw materials, class struggle, geopolitical rivalry in the struggle for economic territory and spheres of influence, the emergence of a labor aristocracy in the capitalist core, and the contest for global and regional hegemony.⁵

While emphasizing intercapitalist competition, Lenin also pointed to the hierarchy of nation-states, which served to divide the core powers from the poorer nations of the periphery that fell within their imperial orbits. His analysis went beyond colonialism to discuss neocolonialism in relation to Latin America. In the 1920s, alert to the revolutionary struggles occurring in Mexico, Turkey, Persia, China, and India, Lenin pioneered in extending his analysis to the consideration of all “imperialist-oppressed colonies and countries” and all “dependent countries,” giving rise to revolution in the periphery against “international imperialism.”⁶

However, history in the Marxian conception is a dialectic of continuity and change. By the 1960s, Lenin’s analysis, despite its comprehensiveness, needed updating. In the post-Second World War era, the United States emerged with near absolute hegemony over the capitalist world economy. At the same time, the world saw the greatest revolutionary wave in history associated with the break with colonialism, the rise of neocolonialism, and the emergence of a rival sphere of post-revolutionary society, including states with socialist aspirations.⁷ In this changed atmosphere, corresponding with the Cold War, the United States and its allies presented a new ideology of economic growth, development, aid, and modernization within the capitalist ideological framework. An army of liberal and social democratic intellectuals, including such figures as Mark Blaug, Benjamin J. Cohen, Robert W. Tucker, and Barrington Moore Jr., were enlisted in the 1960s and ’70s to deny the existence of economic imperialism, if not imperialism more generally, aiming their analysis at various figures on the left and in the United States in particular, including Paul Baran, Paul Sweezy, William Appleman Williams, and Harry Magdoff.⁸

At the very center of the intense debate on U.S. imperialism in the 1960s and ’70s in the context of the Vietnam War was Magdoff’s The Age of Imperialism: The Economics of U.S. Foreign Policy (1969), written just over fifty years after Lenin’s great work. Taken together with Magdoff’s collection of historical and theoretical essays from the late 1960s and ’70s—Imperialism: From the Colonial Age to the Present (1978)—The Age of Imperialism stands as the single most integrated economic, historical, and theoretical analysis of U.S. imperialism at its peak, in the so-called golden age of monopoly capitalism.⁹

Magdoff, more than any other figure at the time, modeled the dialectic of continuity and change in the Marxian analysis of imperialism, linking his work to Lenin’s earlier analysis. Like other major Marxian theorists of imperialism from the mid–twentieth century to today, such as Baran, Sweezy, and Samir Amin, he continued to lay stress on the concentration and centralization of capital, along with the rise of monopolistic corporations, as the key to understanding late twentieth- and emerging twenty-first-century imperialism. In addition, Magdoff built on the complexity and multifaceted nature of Lenin’s original approach, attempting to replicate this for a later era. Magdoff had designed the statistical productivity measures (still used today by the U.S. Department of Labor) for the Works Progress Administration’s National Research Project on Re-employment Opportunities and Technological Development during the New Deal in the 1930s. He was a pivotal figure in the organization of U.S. war industry in the Second World War as chief of the Civilian Requirements Division of the National Defense Advisory Commission and in his role in the War Production Board, where he was put in charge of planning and controls in the machinery industries. He subsequently headed the Current Business Analysis Division of the Department of Commerce where he supervised the U.S. government’s Survey of Current Business and then served as economic adviser to U.S. Secretary of Commerce (and former U.S. Vice President) Henry Wallace. This extraordinary background in the construction and analysis of U.S. economic statistics and in wartime planning meant that Magdoff was well equipped to provide definitive empirical demonstrations of economic imperialism on the part of U.S. corporations and the U.S. state, along with its relation to the wider dimensions of world imperialism.¹⁰

In Magdoff’s treatment, imperialism could not be viewed at the high level of abstraction sometimes used for the analysis of the logic of capital. Rather, a reasonable approach to imperialism required attention to the inner workings of global capitalism, informed by theoretical abstraction, but ultimately confirmed and made meaningful at a concrete, historical level.¹¹ This conformed to the method of Karl Marx himself, who developed his critique of political economy by means of successive approximations moving from the abstract to the concrete. Marx thus began his critique with Capital (originally slated as volume 1 in a six-volume work), representing the most abstract level of analysis, and intended to complete it with volume 5 on International Trade and volume 6 on The World Economy and Crises—that is, in terms of the concrete analysis of what today would be called the imperialist world system. However, he never got beyond volume 1 of the original plan, which turned into the three volumes of Capital.¹²

Imperialism, Magdoff argued, was inherently complex and changing in its configurations, reflecting both the centripetal and centrifugal forces governing the system. Where U.S. imperialism was concerned, it had to be interpreted in such a way that the “essential one-ness” between economic, political, and military-strategic objectives/tendencies was revealed. The role of multinational corporations abroad could not be separated from the role of U.S. military bases spread across the planet or the need to control oil and other strategic resources. Magdoff was at his best in refuting those who attempted to claim: (1) that foreign direct investment and trade were of little economic significance to the United States (he demonstrated that foreign direct investment had risen from around 10 percent of U.S. after-tax nonfinancial corporate profits in 1950 to about 22 percent by 1964); (2) that the U.S. economy was not dependent on oil or other raw materials located abroad and had no inherent geopolitical interests; and (3) that U.S. profits were only marginally affected by surplus extracted from the periphery of the world system.¹³ The fact that the other major capitalist countries all acceded to U.S. hegemony did not mean that intercapitalist competition had entirely disappeared or would not resurface in the future. Responding to those who questioned whether “imperialism was really necessary” to the United States, Magdoff explained that “imperialism is the way of life of capitalism.”¹⁴

For Magdoff, writing in the late 1960s and early ’70s, the main changes in the structure of imperialism since Lenin’s time—beyond decolonization and the rise of U.S. hegemony—were all related to the further development of monopoly capital: (1) the emergence of the military-industrial complex; (2) the rise of multinational corporations (including multinational banking) and their growing penetration of the periphery; and (3) “the priority of the interests of military-multinational industry on the affairs of state.” This description, he noted, applied first and foremost to the United States itself, but reflected relations also materializing among rival imperial powers. In essence, he was pointing to a tendency within the system toward the formation of a more generalized monopoly capitalism, beginning in the United States, but lording itself over the entire globe. A key element in Magdoff’s Age of Imperialism was his chapter on the growth of “The Financial Network,” investigating the whole phenomenon of multinational banking and finance in general—a treatment that he was to carry forward in the early 1990s in Globalization: To What End?, which included his analysis of “The Globalization of Finance.”¹⁵

It will be argued here that the globalization of production (and finance)—which emerged along with neoliberalism out of the economic stagnation of the mid–1970s and then accelerated with the demise of Soviet-type societies and China’s reintegration into the capitalist world system—has generated a more generalized monopoly capitalism, theorized by thinkers such as Magdoff, Baran, Sweezy, and Amin. This ushered in what can be called late imperialism.

Late imperialism refers to the present period of monopoly-finance capital and stagnation, declining U.S. hegemony and rising world conflict, accompanied by growing threats to the ecological bases of civilization and life itself. It stands at its core for the extreme, hierarchical relations governing the capitalist world economy in the twenty-first century, which is increasingly dominated by mega-multinational corporations and a handful of states at the center of the world system. Just as it is now common to refer to late capitalism in recognition of the end times brought on by simultaneous economic and ecological dislocations, so it is necessary today to speak of late imperialism, reflecting the global dimensions and contradictions of that system, cutting across all other divisions, and posing a “global rift” in human historical development: an epochal crisis posing the question of “ruin or revolution.”¹⁶

The persistent failure of many on the left, particularly in the advanced capitalist states, to acknowledge these developments is largely the result of a growing abandonment of the theory of imperialism, substituting more reified conceptions related to globalization, seen as dissolving former imperial hierarchies. This is so much the case that a host of alternative frameworks are now offered suggesting: (1) the progressive and self-annihilating role of imperialism; (2) shifting hegemonies within the world system conceived as a substitute for the theory of imperialism; (3) “deterritorialized” (stateless, borderless) Empire; (4) abstract political imperialism led by the United States or rule by supranational organizations removed from economic forces; (5) the rise of transnationalism as an entity in itself largely independent of states and geography; and (6) the supposed reversal of imperialist dominance. Hence, before examining the historical phenomenon of late imperialism it is necessary to view some of these prevalent misconceptions on the left in the imperial countries themselves, resulting from a refusal to come to terms with the complex, many-sided structural realities of late imperialism in the twenty-first century.

The Western Left and the Denial of Imperialism

The issue of the abandonment of the critique of imperialism within much of the Western left was dramatically raised by Prabhat Patnaik in his November 1990 Monthly Review article entitled “Whatever Happened to Imperialism?” Writing two decades after Magdoff’s The Age of Imperialism and a little more than a decade after Imperialism: From the Colonial Age to the Present, Patnaik, an economist at Jawaharlal Nehru University in New Delhi, observed:

An outsider cannot help noticing a remarkable transformation that has taken place in the Marxist discourse in the United States over the last decade: hardly anybody talks about imperialism any more. In 1974, I left Cambridge, England, where I was teaching economics, and have now returned to the West, this time to the United States, after 15 years. When I left, imperialism occupied perhaps the most prominent place in any Marxist discussion, and nowhere was more being written about and talked about on this subject than in the United States—so much so that many European Marxists accused American Marxism of being tainted with “third worldism.”… Marxists everywhere looked to the United States for literature on imperialism.…

This is obviously not the case today. Younger Marxists [in the United States] look bemused when the term is mentioned. Burning issues of the day…are discussed, but without any reference to imperialism. Radical indignation over the invasion of Panama or military intervention in Nicaragua and El Salvador does not jell into theoretical propositions about imperialism. And the topic has virtually disappeared from the pages of Marxist journals, especially those of a later vintage.

Curiously, this is not because any one has theorized against the concept. The silence over imperialism is not the aftermath of some intense debate where the scales tilted decisively in favor of one side; it is not a theoretically self-conscious silence. Nor can it be held that the world has so changed in the last decade and a half that to talk of imperialism has become an obvious anachronism.¹⁷

At the time, Patnaik attributed the change in left perspectives in the United States to absence of a major war, such as the Vietnam War, in the 1975–90 period. But of equal importance in the 1980s and early ’90s, governing the mood in radical circles, was the evolving economic situation, with the U.S. economy, along with that of the other advanced capitalist countries, experiencing deepening economic stagnation in contrast to faster growth in some parts of Asia. On this shaky basis, the dependency thesis of the “development of underdevelopment,” made famous especially by Andre Gunder Frank, writing in Monthly Review, was designated as erroneous even by many on the left—in spite of the fact that the gap in national income between the leading imperial countries and the developing world as a whole continued to widen, with the share of world income received by the top 20 percent of the world’s population (divided into nation-states) rising from 66 percent in 1965 to 83 percent in 1990.¹⁸

Marxist theorist Bill Warren argued as early as 1973 in “Imperialism and Capitalist Industrialization” in New Left Review that dependency in poor countries was in “irreversible decline” due to “a major upsurge” in capitalist development in the third world. According to Warren, Marx, in articles such as “The British Rule in India,” had seen colonialism/imperialism as playing a constructive role in underdeveloped countries. This was later mistakenly “reversed” by Lenin in his Imperialism, which represented an “about-turn” in Marxist theory, giving rise to dependency theory. The problems of development facing the poorer countries, Warren argued, were not primarily external, as depicted by dependistas, but could be traced to “internal contradictions.” This outlook, though not widespread in the 1970s when Warren first introduced it, was to gain considerable influence within the Western left by 1980, when his posthumous Imperialism: Pioneer of Capitalism was published.¹⁹

A quite different departure from classical theories of imperialism appeared in the afterword to the 1983 edition of Giovanni Arrighi’s The Geometry of Imperialism. A leading Marxian-inspired world-systems theorist, Arrighi ended up abandoning the theory of imperialism, which he no longer considered relevant, replacing it with a more limited conception of struggles over world hegemony. The model of the capitalist world-system with its shifting hegemonies was seen by Arrighi as an adequate substitute for the more complex notion of imperialism. The decline of the nation-state in the wake of globalization meant that the old theories of imperialism had become “obsolete,” and the theory of monopoly capitalism was likewise seen as dated. What remained was a world-system and the jostling for hegemony.²⁰

However, the most far-reaching left rejections of the Marxian critique of imperialism were to await the present century. In 2000, Michael Hardt and Antonio Negri published Empire, arguing that imperialism was now a thing of the past—with the Vietnam War representing “the final moment of the imperialist tendency”—only to be replaced by a new deterritorialized global constitutional order and world market modeled on U.S. political-economic relations, in a left version of Francis Fukuyama’s “end of history.” The hierarchical imperialism of old, Hardt and Negri argued, had been succeeded by the “smooth space of the capitalist world market”—a view that anticipated by five years neoliberal globalization pundit Thomas L. Friedman’s claim that “the world is flat.” Hence, it was “no longer possible,” they wrote, “to demarcate large geographical zones as center and periphery, North and South.” This transcendence of imperialism in favor of the stateless, borderless sovereignty of Empire, based in a world market consisting of mere network relations without a center and periphery, was seen as emerging out of the inner logic of capitalism itself. “Imperialism,” Hardt and Negri stated, “actually creates a straitjacket for capital,” the inner logic of which ultimately requires a “smooth space” or flat world in which to operate.²¹

Such ideas were hardly novel, except within Marxian circles. What was innovative was the use of Marxian and postmodern terminology to boost views long promoted within establishment U.S. foreign policy, which resulted in Hardt and Negri’s work being highly praised by the New York Times, Time magazine, Foreign Affairs, and other mainstream publications. It was this that led Ellen Meiksins Wood to refer to Hardt and Negri’s Empire as, in effect, “a manifesto on behalf of global capital.”²²

Hardt and Negri’s rejection of any continuity with classical Marxian theories of imperialism opened the way to various sometimes insightful, but one-dimensional, approaches on the left, converging with mainstream ideology. In The Making of Global Capitalism in 2013, Leo Panitch and Sam Gindin stressed the ability of the U.S. state, primarily through actions of the Treasury Department and the Federal Reserve Board, to create a “world after its own image,” subordinating European capital to its influence. The argument, which was inspired in part by Peter Gowan’s critique of the “Dollar-Wall Street Regime,” while informative, was an almost exclusively political one, systematically downplaying the economic dimension of imperialism, including finance capital, multinational corporations, continuing international rivalry, and the deteriorating conditions of the underdeveloped world. Panitch and Gindin thus provided an analysis of U.S. empire, much more conversant with received views, as opposed to the classical conceptions of imperialism with their numerous critical dimensions. In The Making of Global Capitalism, the older structure of imperialist countries in the center and the dependent countries in the periphery gave way to smooth “networks of transnational production as well as finance” revolving around “American capitalism’s central place in global capitalism.” What was conveyed was a stable U.S. world hegemonic order, rooted in a Washington-Wall Street consensus and seemingly destined to continue indefinitely—a mirror image of the view prevailing within U.S. foreign policy circles but now emanating from the left. In this interpretation, global capitalism arising out of “American Empire” and managed by the U.S. state entirely subsumed the more complex and multifaceted, and at the same time more concrete analysis of imperialism offered by thinkers such as Lenin, Luxemburg, Magdoff, and Amin.²³

If Panitch and Gindin emphasized the rise of political empire, largely dispensing with what John Hobson had called the “economic taproot of imperialism,” transnationalization theorist William I. Robinson went in the opposite direction, arguing that capital in the age of globalization has completely swallowed up nation-states and created a new transnational order dominated by free-floating transnational corporations, giving rise to a “transnational capitalist class” and the “transnational state.” Writing in A Theory of Global Capitalism in 2004, Robinson declared that “globalization involves a supersession of the nation-state as the organizing principle of social life under capitalism.”²⁴

In 2018, in “Beyond the Theory of Imperialism” (a chapter in his Into the Tempest), Robinson made a clean break with classical theories of imperialism: “The class relations of global capitalism are now so deeply internalized within every nation-state that the classical image of imperialism as a relation of external domination is outdated” and must be abandoned, together with notions such as center, periphery, and surplus extraction. “The end of the extensive enlargement of capitalism is the end of the imperialist era of world capitalism.… It is not imperialism in the old sense either of rival national capitals” or the domination “by core states of precapitalist regions” that is needed, but “a theory of capitalist expansion” as a specifically transnational and supranational process characterized by shifting “spatial dynamics.”²⁵

Meanwhile, Marxist geographer David Harvey leaped beyond all of these perspectives, claiming in 2017 that the flows of capital have so changed direction that “the historical draining of wealth from East to West for more than two centuries has…been largely reversed over the last thirty years” (emphasis added). He admitted: “I don’t find the category of imperialism that compelling.” Imperialism was a concept not to be found in Marx, but mainly attributable to Lenin. The whole notion of global “peripheries” was said to be unclear as to its boundaries, and Arrighi’s notion of “shifting hegemonies” could be seen as displacing earlier Marxian theories of imperialism.²⁶

In his 2003 New Imperialism—a work he now says was not meant to promote the concept of imperialism so much as to combat neoconservative attempts to adopt the term as their own—Harvey praised Hardt and Negri’s depiction of “a decentered configuration of empire that had many new, postmodern, qualities.” His book ended by advocating a new “‘New Deal’ Imperialism,” viewed as a more progressive imperialism under a more enlightened Washington Consensus, replacing the current neoliberal/neoconservative global order. For Harvey, the left was to be chastised for its “icy reception” to Warren’s notion of the progressive character of imperialism.²⁷

If Harvey’s position on imperialism over the years has been somewhat incoherent, his current rejection of the notion of an imperialist world system in the name of a supposedly more dynamic view focusing on constantly shifting spatial configurations, which have “reversed” traditional center-periphery relations, could not be clearer in its implications. Referring to contemporary globalization tendencies, he explains that “it didn’t even make sense to try to cram all of this into some universal concept of imperialism.” The entire Marxian analysis of imperialism has become a theoretical “straitjacket.”²⁸ In conformity with Arrighi, he discards the “rigid geography of core and periphery…in favor of a more open and fluid analysis.”²⁹ In the process, however, it becomes necessary to break with the entire historical-materialist critique of imperialism. In his 2014 The Seventeen Contradictions of Capitalism, imperialism does not even warrant inclusion amongst his list of capitalism’s double-digit contradictions. His chapter on “Uneven Geographical Developments and the Production of Space” does not once mention imperialism, nor center and periphery. The only direct reference to Lenin’s Imperialism is aimed at downplaying the structural role of monopoly capital, which Lenin had associated with imperialism.³⁰

Late Imperialism

There is no question that world capitalism has changed in the century since the First World War, when Lenin developed his critique of the imperialist stage. Yet, this has to be seen in the context of a historical dialectic that embraces continuity as well as change. Imperialism is a historical as much as a theoretical category. If half a century ago it was still possible to refer, as Magdoff did, to “the age of imperialism,” even to the point of seeing this as imperialism’s “golden age,” today we are clearly in an era of late imperialism associated with: generalized monopoly-finance capital; the globalization of production; new forms of surplus extraction from the periphery to center; and epochal economic, military, and environmental challenges. The crises facing the system and human society as a whole are now so severe that they are creating new fissures in the state in both the advanced capitalist and emerging economies, with a rapid growth of protofascist and neofascist tendencies, on the one hand, and a revival of socialism, on the other.

Recognizing the continuity with earlier phases of imperialism is as crucial to our understanding of the present as our awareness of the distinguishing characteristics of the current phase. Each historical phase of imperialism relies on different means of exploitation and expropriation to feed accumulation on a world scale. Imperialist countries at the core of the system invariably attempt to restructure labor in the capitalist periphery (or in the precapitalist external areas) to reinforce power and accumulation at the center of the system. At the same time, the core imperial nations are often in competition with each other for global spheres of influence. The early colonial era in the mercantilist stage of capitalism during the sixteenth and seventeenth centuries centered not on free exchange but on “profit upon expropriation,” along with the “extirpation, enslavement and entombment in mines of the indigenous population” of the Americas and much of Africa and Asia.³¹

In the later, mid–nineteenth-century colonial era or stage of free competition under British hegemony, free trade operated in the core of the world economy, but this went hand in hand with colonialism in much of the world, where unequal exchange and outright robbery and plunder predominated. In 1875, Robert Arthur Talbot Gascoyne-Cecil, the 3rd Marquess of Salisbury, then secretary of state for British India, declared: “As India must be bled, the bleeding should be done judiciously.”³² Bled it was, but not “judiciously.” As Utsa Patnaik has demonstrated in detail, the present value of the “drain” of surplus from India to Britain from 1765 to 1938 amounts “on a highly underestimated basis” to £9.2 trillion, compared to a £2.1 trillion gross domestic product (GDP) for the United Kingdom in 2018.³³

Nineteenth-century colonial capitalism evolved by the end of the century into what Lenin called the imperialist stage, characterized by the rise of monopoly capital in all the great powers, the decline of British hegemony, and rising tension over the division of the entire world among the core capitalist powers. These conditions led to two world wars among the rival claimants to hegemony over economic territory. Following the Second World War, the United States emerged as the world hegemon within the capitalist world, in a context that also included a Cold War with the rival socialist-oriented world. While promoting an ideology of free trade and development, the U.S. hegemon nonetheless put in place a system of neocolonialism enforced by multinational corporations, dollar hegemony, and a globe-spanning string of military bases—from which numerous military interventions and regional wars were to be launched. This was accompanied by the siphoning off of much of the economic surplus of the global South.

With the rise of monopoly-finance capital, the world has entered a new phase of imperialism, late imperialism, rather than a superseding of imperial relations. Late imperialism, as we have seen, represents an epoch in which the global contradictions of the system are revealed in ever starker forms and in which the entire planet as a place of human habitation is now at risk—with the catastrophic effects falling disproportionately on the most vulnerable of the world population. All of this is bound to generate greater geopolitical conflict as capitalism’s failure as a society becomes evident.

None of this was a complete surprise for the more astute analysts of globalization. In 1992, Magdoff wrote that,

contrary to widespread expectations, sources of tension among the leading capitalist powers have increased side by side with their growing interdependence. Nor has the geographic spread of capital reduced the contradictions between the rich and poor nations. Although a handful of third world countries, benefiting from the globalization process, have made noteworthy progress in industrialization and trade, the overall gap between core and periphery nations has kept on widening.… The process of globalization has produced much that is new in the world’s economy and politics, but it has not changed the basic ways capitalism operates. Nor has it aided the cause of either peace or prosperity.³⁴

Indeed, there is something deeply ironic about the growing rejection of the theoretical critique of imperialism in the present global context. As Argentinian Marxist Atilio Borón observed in 2003 in “Empire” and Imperialism, imperialism today reflects those “fundamental features” with respect to the concentration and centralization of capital on a global scale portrayed by the classical Marxist theorists of imperialism, but in more developed forms:

This new stage [of imperialism in Lenin’s sense] is characterized, now even more than in the past, by the concentration of capital, the overwhelming predominance of monopolies, the increasingly important role played by financial capital, the export of capital and the division of the world into “spheres of influence.” The acceleration of globalization that took place in the final quarter of the last century, instead of weakening or dissolving the imperialist structures of the world economy, magnified the structural asymmetries that define the insertion of the different countries in it. While a handful of developed capitalist nations increased their capacity to control, at least partially, the productive processes at a global level, the financialization of the international economy and the growing circulation of goods and services, the great majority of countries witnessed the growth of their external dependency and the widening of the gap that separated them from the centre. Globalization, in short, consolidated the imperialist domination and deepened the submission of peripheral capitalisms, which became more and more incapable of controlling their domestic economic processes even marginally.³⁵

The new phase of imperialism that arose at the very end of the twentieth and the beginning of the twenty-first century has been described by Amin and various authors associated with Monthly Review as a system of global monopoly-finance capital or a capitalism of “generalized monopolies.”³⁶ In this more integrated imperialist system, five hundred corporations account for nearly 40 percent of world revenue while most other firms in the world economy are entangled in the webs of these giant firms and exist as mere subcontractors.³⁷ Production and circulation are now organized in the form of global commodity chains, serving to highlight the different roles of center and periphery within these commodity chains. This is in line with the global labor arbitrage, which serves to promote the intensified exploitation/expropriation of labor in the global South, leading to the capture of much of this extra value by the North. The heightened imperialist controls of global finance and communications are inherent parts of this process without which the globalization of production would not be possible.³⁸

The late 1970s and ’80s saw the growth of neoliberal globalization, which sought with considerable success to subordinate states, particularly in the global South, to the rules of a world market where, by definition, the financial center rules. Late imperialism can thus also be seen as the period in which economic stagnation, financialization, and the planetary ecological crisis all emerged as widening, irreversible fissures, inseparable from the system of monopoly-capitalist accumulation itself and finding its ideological justification in neoliberalism.

A distinguishing feature of globalized production and finance in the current century is the systematic exploitation of low unit labor costs in the South, a product of the fact that wages are kept at levels far below those of the North due to: (1) the enormous global reserve army located primarily in the South; (2) restrictions on the movement of labor between countries, and particularly from poor to rich countries; and (3) the force of imperialist pressures past and present.³⁹ As economist Tony Norfield, former executive director and global head of foreign exchange strategy in a major European bank, explained in 2015 in “T-Shirt Economics: Labour in the Imperialist World Economy,”

everybody knows that workers in developed capitalist countries are paid more than those in poorer countries. However, the divergence in average wages can nevertheless be surprising: not just 20 percent or 50 percent, but more like a factor of 2, 5, 10 or 20 between the richer countries and the poorer countries. Mainstream economic theory explains this—and justifies it—by arguing that workers in richer countries are more productive than in poorer ones, because the former are more educated and skilled, working with higher levels of technology. Yet this explanation does not sit well with the reality that many manufacturing employees in poor countries are employed, directly or indirectly, by major corporations, and working with technology that is often comparable to that in the richer country.⁴⁰

Production by (or contracted out by) foreign multinationals in poor countries relies on the same or near to the same technology utilized in the rich economies, leading to comparable levels of productivity. The result, combined with extremely low wages, is that unit labor costs in manufacturing in the so-called emerging economies of China, India, Indonesia, and Mexico in 2014 were only 46, 37, 62, and 43 percent, respectively, of U.S. levels.⁴¹ This generates vastly inflated gross profit margins for multinationals located in the North. The total production cost (reflected in the export price) for a T-shirt produced in 2010 through a subcontractor in Bangladesh working for the Swedish firm Hennes & Mauritz (H&M) was 27 percent of the final sales price in Europe, with the workers in Bangladesh receiving a mere pittance for their labor. One worker at the factory received €1.36 for a ten to twelve hour day.⁴² The price markup (or gross profit margin) on an iPhone assembled in China in 2009 was over 64 percent.⁴³ The widening gross profit margins associated with the global labor arbitrage have led to a rapid globalization of production, with the world share of industrial employment located in developing (including emerging) economies rising from 52 percent in 1980 to 83 percent in 2012.⁴⁴

Today, a large and rapidly growing portion of production is outsourced to the periphery in the form of arms-length contracting or what is known as the non-equity modes of production (such as leasing, licensing, franchising, and management-service contracts), constituting a kind of middle ground between foreign direct investment by multinationals and actual trade. In 2010, the non-equity modes of production generated over $2 trillion in sales.⁴⁵

Still, not all value-chain production exploiting low unit labor costs in the global South takes the form of subcontracting or the non-equity modes of production. Much of it occurs in the form of more traditional foreign direct investment by multinationals. In 2013 alone, U.S. receipts from investments abroad in foreign companies, equities, bonds, etc., amounted to $773.4 billion, while U.S. payments on its liabilities from investments that foreigners made in the United States added up to only $564.9 billion, resulting in a net gain of some $209 billion (equal to about 35 percent of total U.S. net private domestic investment for that year). This only accelerated problems of surplus capital absorption.⁴⁶ As Baran and Sweezy wrote in 1966 in Monopoly Capital, “foreign investment, far from being an outlet for domestically generated surplus, is a most efficient device for transferring surplus generated abroad to the investing country. Under these circumstances it is, of course, obvious that foreign investment aggravates rather than helps to solve the surplus absorption problem.”⁴⁷

Other factors as well enter into the transfer of value from developing countries, including capital flight from the global South estimated at more than a $1.7 trillion dollars in 2012.⁴⁸ Indeed, every single form of financial transaction between the global North and South includes an element of what Marx called “profit upon expropriation” or simple robbery, reflecting the uneven power relations.⁴⁹ As Norfield writes, finance “is a way for rich countries to draw income from the rest of the world economy.”⁵⁰ A 2015 report by the Centre for Applied Economics of the Norwegian School of Economics and the United States-based Global Financial Integrity estimates that net resource transfers, many of them illicit, from developing countries (independent of the hidden transfers associated with unequal exchange) amounted to $2 trillion in 2012 alone—rising to $3 trillion if estimates of same-invoice faking are included.⁵¹

A number of studies have been carried out to estimate the extent of the hidden value transfers due to unequal exchange relations between global South and North, whereby the latter gets “more labour in exchange for less.”⁵² One approach, pioneered by Canadian economist Gernot Köhler, utilized purchasing power parity (PPP) data to show how labor incorporated into export products from the global South—given the difference between nominal and real exchange rates—failed to reflect what that labor would be worth in terms of local purchasing power in the emerging economy. In the words of Jason Hickel in The Divide:

Köhler’s method is to calculate the difference between nominal exchange rates and real exchange rates (i.e. corrected for purchasing power) for goods traded. For example, imagine a nominal exchange rate between the US dollar and the Indian rupee of 1:50. Now imagine that India sends R1,000 worth of goods to the US, and receives $20 in return. That would be a perfectly equal exchange. Or at least so it would appear. The problem is that the nominal exchange rate isn’t exactly accurate. In India, R50 can buy much more than the equivalent of $1 worth of goods. For instance, perhaps it can buy closer to $2 worth. So the real exchange rate, in terms of purchasing power, is 1:25. This means that when India sent R1,000 worth of goods to the US, it was really the equivalent of sending $40 worth, in terms of the value that R1,000 could buy in India. And yet India received only $20 in return, which in real terms is worth only R500. In other words, because of the distortion between real and nominal exchange rates, India sent $20 (R500) more than it received. One way to think of this is that India’s export goods are worth more than the price they receive on the world market. Another way is that India’s labour is underpaid relative to the value that it produces.⁵³

Köhler’s empirical results, relying on PPP, could thus be seen as a rough measure of the transfer of value generated in the South (non-Organization for Economic Cooperation and Development [OECD]) countries, but credited to the North (OECD) countries, via what economists call unequal exchange. In this way, he was able to estimate that such value transfers in 1995 alone amounted to $1.75 trillion, representing losses equivalent to almost a quarter of total non-OECD GDP.⁵⁴ Although such empirical estimates are open to question in a number of respects, there can be little doubt about the underlying reality or the order of magnitude of the “imperialist rent.”⁵⁵

As John Smith argues, “the vast S-N flows of value” associated with unequal exchange are “rendered invisible in statistics on GDP, trade, and financial flows” precisely because the value generated in the South is “captured” in the North. All sources of income, whether wages, profits, rent, or interest, arising from the enormous gross profit margins on Southern production are simply booked as value-added in the global North, contributing to Northern GDP.⁵⁶

The huge profits from outsourcing and other means of global value capture further exacerbate problems of surplus capital absorption. Much of this imperialist rent ends up in tax havens and becomes a means of amassing financial wealth concentrated in a small number of corporations and wealthy individuals, while largely disconnected from the ongoing and increasingly problematic process of production, investment, and growth in the United States and other imperialist nations.⁵⁷ This then worsens the overall problem of stagnation, characterized by excess capacity, underemployment, slow growth, rising inequality, and periodic financial bubbles and crises.

Amin argued that imperialist rent had two distinct components. The first was the rent derived from the imperialist exploitation of Southern labor. The second was the draining of natural resources from the South and violations of its sovereignty in this respect by multinational corporations and imperialist states. Although the first form of imperialist rent was, at least in principle, measurable in value terms, the second form of rent, since it concerned use values (and capital’s appropriation of free gifts of nature), rather than exchange values, was not.⁵⁸ Nevertheless, Marx, he insisted, had provided ways of perceiving ecological contradictions and ecological imperialism.

Imperialism engages in an enormous struggle for the control of strategic resources. It has been estimated that the U.S. military spends approximately 16 percent of its base budget on directly safeguarding global oil supplies alone.⁵⁹ It is difficult to exaggerate, as Magdoff emphasized, the extent to which military and natural resource interests are interrelated. Military hegemony plays a key role in all issues of securing economic territory and strategic resources.

Multinational corporations are inextricably tied to the financial and political-military power of the particular states in which they are based, without which they could not exist for a moment, and on which their ability to engage effectively in international competition depends. In the case of the top hundred nonfinancial corporations in the world, three quarters have their home in just six countries: United States, United Kingdom, France, Germany, Japan, and Switzerland. According to Norfield,

what distinguishes an imperialist company is not its size or competitive success, or even its global importance as a major producer of goods or services, although it will often be a big company given the advantages it enjoys. What distinguishes it is the backing it receives from a powerful nation-state in the world economy, and any advantages it gets because it is located in and identified with that imperialist state. Likewise, what in economic terms distinguishes an imperialist state is its ability to exert power in the world economy on behalf of its “national” capitalist companies.”⁶⁰

End Times

Imperialism today is more aggressive and boundless in its objectives than ever.⁶¹ In the present period of declining U.S. hegemony, as well as economic and ecological decline, the dollar-oil-Pentagon regime, backed by the entire triad of the United States/Canada, Europe, and Japan, is exerting all of its military and financial power to gain geopolitical and geoeconomic advantages.⁶² The goal is to subordinate still further those countries at the bottom of the world hierarchy, while putting obstacles in the way of emerging economies, and overthrowing all states that violate the rules of the dominant order. Intercore conflicts within the triad continue to exist but are currently suppressed, not only due to the overwhelming force of U.S. power, but also as a result of the perceived need in the core to contain China and Russia, which are seen as constituting grave threats to the prevailing imperial order. In China and in Russia, for different but related historical reasons, global monopoly-finance capital lacks the dominant combination with the national capitalists within their political economies that is present in the other BRICS countries. Meanwhile, the European Union is in disarray, experiencing centrifugal, as opposed to centripetal tendencies, arising out of economic stagnation and the instability generated by imperial blowback emanating from adjacent regions, particularly the Middle East and North Africa.

Under these circumstances, global value/supply chains, along with energy, resources, and finance, are more and more viewed in military-strategic terms. At the center of this interlocked, globalized world order is the unstable hegemony exercised by Fortress America over both Europe and Japan. The United States today is pursuing a strategy of full-spectrum dominance, aimed at not only military, but also technological, financial, and even global “energy dominance”—against a backdrop of impending planetary catastrophe and economic and political disarray.⁶³

In these deteriorating conditions, neofascist tendencies have reemerged once again, constituting monopoly-finance capital’s final class-based recourse—an alliance between big capital and a newly mobilized reactionary lower-middle class.⁶⁴ More and more, neoliberalism is merging into neofascism, unleashing racism and revanchist nationalism. Anti-imperialist peace movements have waned in most of the capitalist core, even in the context of a revival of the left, raising once again the question of social imperialism.⁶⁵

There is a sense, of course, in which much of this is familiar. As Magdoff noted,

centrifugal and centripetal forces have always coexisted at the core of the capitalist process, with sometimes one and sometimes the other predominating. As a result, periods of peace and harmony have alternated with periods of discord and violence. Generally the mechanism of this alternation involves both economic and military forms of struggle, with the strongest power emerging victorious and enforcing acquiescence on the losers. But uneven development soon takes over, and a period of renewed struggle for hegemony emerges.⁶⁶

Late imperialism, however, represents a historical end point for the capitalist world order, presaging either planetary catastrophe or a new revolutionary beginning. Today’s Earth System emergency gives new urgency to the age-old collective struggle for “freedom in general.”⁶⁷ The wider human struggle must build on the continuing revolutionary resistance of the workers and peoples in the global South, aimed first and foremost at overthrowing imperialism, as the global manifestation of capitalism. Labor in core nations cannot be free until labor in periphery nations is free and imperialism is abolished.⁶⁸ What Marx called socialism, a society of sustainable human development, can only be constructed on a universal basis. All narrow, invidious, exploitative relations must go, and humanity must at last confront with sober senses its relations with its kind and its unity with the earth.⁶⁹

Notes

1. ↩ I. Lenin, Imperialism: The Highest Stage of Capitalism (New York: International, 1939). When published in 1917, the title of Lenin’s pamphlet was Imperialism: The Latest Stage of Capitalism. See V. I. Lenin, Selected Works in Three Volumes (Moscow: Progress, 1977), 640–41, 801. Emphasizing this fact, Witold Kula, a Polish historian, wrote in 1963: “The methodological differences between these formulations are fundamental. The determination ‘the newest [latest] stage’ refers to the past…whereas the determination ‘the highest stage’ says something more, also about the future; that in the future there will be no ‘higher stage’ than this one.” Kula quoted in John Bellamy Foster and Henryk Szlajfer, introduction to The Faltering Economy (New York: Monthly Review Press, 1984), 21. Consistent with this, Lenin generally refers in the actual text of his pamphlet to imperialism as the “latest phase” or “latest stage” of capitalism, in conformity with the subtitle to Rudolf Hilferding’s Finance Capital: The Latest Phase of Capitalism.
2. ↩ Lenin, Imperialism, 78, 81–82, 88, 92. It was in his October 1916 article “Imperialism and the Split in Socialism” that Lenin for the first time placed primary emphasis on the conception of imperialism as the highest stage, as opposed to the newest or latest stage, based on what he viewed as the “moribund” character of capitalism in the early twentieth century. This helps explain the later change in the title of his pamphlet, after its first publication in 1917. V. I. Lenin, Collected Works, vol. 23 (Moscow: Progress, 1964), 105–20. In response to Lenin, Samir Amin has written that “imperialism is not a stage, not even the highest stage of capitalism: from the beginning it is inherent in capitalism’s expansion.” Samir Amin, “Imperialism and Globalization,” Monthly Review 53, no. 2 (June 2001): 6. Lenin, however, used the term in a double sense, to refer both to imperialism in general, going back to the beginning of capitalism, and also (in a more focused way) to refer to what was called in his time the “new imperialism” or imperialist (monopoly) stage of capitalism.
3. ↩ Lenin, Imperialism, 13–14, 85, 88, 91. For those who think Lenin’s Imperialism was the work of a moment, it is useful to look at the more than 700 pages of notes, containing extracts from 148 books and 232 articles in English, French, and German, that he took in preparation for writing it. See V. I. Lenin, Collected Works, vol. 39 (Moscow: Progress, 1968), 20.
4. ↩ Rudolf Hilferding, Finance Capital (London: Routledge, 1981); Rosa Luxemburg, The Accumulation of Capital (New York: Monthly Review Press, 1951), Nikolai Bukharin, Imperialism and World Economy (New York: Monthly Review Press, 1929). Although in many ways complementary to Lenin’s later analysis, Luxemburg’s emphasis on imperialism as primarily destruction and assimilation of precapitalist external areas enormously weakens her theory, Utsa and Prabhat Patnaik note, “as an abiding relationship under capitalism.” Utsa and Prabhat Patnaik, A Theory of Imperialism (New York: Columbia University Press, 2017), 87.
5. ↩ Lenin, Imperialism, 89. With respect to the labor aristocracy, Lenin insisted that “a privileged upper stratum of the proletariat in the imperialist countries lives partly at the expense of hundreds of millions in the [so-called] uncivilized nations” (Collected Works, vol. 23, 107). (Note: While distinguishing between civilized and uncivilized nations, Lenin put scare quotes around the former and treated it, as in the socialist tradition, as a euphemism for capitalism.) For the historical basis of Lenin’s treatment of the labor aristocracy, see Eric Hobsbawm, “Lenin and the ‘Aristocracy of Labor,’” in Lenin Today, ed. Paul M. Sweezy and Harry Magdoff (New York: Monthly Review Press, 1970), 47–56.
6. ↩ I. Lenin, Selected Works in Three Volumes, vol. 3 (Moscow: Progress, 1975), 246, 372–78. Lenin’s analysis of imperialism has often been converted into a simplistic theory of excess surplus in the advanced capitalist states and capital export, rooted in underconsumption. This excessively crude interpretation of Lenin is exemplified by Bill Warren’s influential Imperialism: Pioneer of Capitalism (London: Verso, 1980), 50–83. For a strong critique of this simplistic view, see Prabhat Patnaik, Whatever Happened to Imperialism and Other Essays (New Delhi: Tulika, 1995), 80–101.
7. ↩ S. Stavrianos, Global Rift (New York: William Morrow and Company, 1981), 623–24.
8. ↩ Mark Blaug, “The Economics of Imperialism,” in Economic Imperialism, ed. Kenneth E. Boulding and Tapan Mukerjee (Ann Arbor: University of Michigan Press, 1972), 142–55; Benjamin J. Cohen, The Question of Imperialism (New York: Basic, 1973), 99–141; Barrington Moore, Jr., The Causes of Human Misery (Boston: Beacon, 1972), 117–32; Robert W. Tucker, The Radical Left and American Foreign Policy (Baltimore: Johns Hopkins University Press, 1971).
9. ↩ Harry Magdoff, The Age of Imperialism (New York: Monthly Review Press, 1969); Harry Magdoff, Imperialism: From the Colonial Age to the Present (New York: Monthly Review Press, 1978).
10. ↩ For an indication of how much more adept Magdoff was in the use of economic statistics than his critics, see “A Technical Note,” in Imperialism, 11–14.
11. ↩ Magdoff, The Age of Imperialism, 18–19.
12. ↩ Ernest Mandel, introduction to his planned Critique of Political Economy, vol. 1, Karl Marx (London: Penguin, 1976), 27–28; John Bellamy Foster, “The Imperialist World System,” Monthly Review 59, no. 1 (May 2007): 1–16. Samir Amin saw his work as addressing the range of questions that Marx intended for volumes 5 and 6 of Capital, but not as Marx would have approached it in the mid–nineteenth century but rather in relation to the late twentieth and early twenty-first centuries. See Samir Amin, Modern Imperialism, Monopoly Finance Capital, and Marx’s Law of Value (New York: Monthly Review Press, 2018), 131–35.
13. ↩ Magdoff, Imperialism, 239; Bernard Baruch, foreword to The Revolution in World Trade and American Economic Policy, Samuel Lubell (New York: Harper, 1955), xi; Magdoff, The Age of Imperialism, 182.
14. ↩ Magdoff, Imperialism, 260–61.
15. ↩ Magdoff, Imperialism, 110–11; Magdoff, The Age of Imperialism, 67–113; Harry Magdoff, Globalization: To What End? (New York: Monthly Review Press, 1992), 17–25.
16. ↩ Stavrianos, Global Rift. On “ruin or revolution,” see Karl Marx and Frederick Engels, Marx and Engels and the Irish Question (Moscow; Progress, 1971), 142.
17. ↩ Prabhat Patnaik, “Whatever Happened to Imperialism?,” Monthly Review 42, no. 6 (November 1990): 1–14.
18. ↩ Andre Gunder Frank, “The Development of Underdevelopment,” Monthly Review 18, no. 4 (September 1966): 17–31; Harry Magdoff, “A Note on the Communist Manifesto,” Monthly Review 50, no. 1 (May 1998): 11–13, reprinted in this issue.
19. ↩ Bill Warren, “Imperialism and Capitalist Industrialization,” New Left Review 181 (1973): 4, 43, 48, 82; Warren, Imperialism: Pioneer of Capitalism, 48. Warren, unlike many later Marxist theorists, was aware of Lenin’s role in the rise of dependency theory in the Second Congress of the Communist International in 1919. See Warren, Imperialism: Pioneer of Capitalism, 97–98; Research Unit for Political Economy, “On the History of Imperialism Theory,” Monthly Review 59, no. 7 (December 2007): 42–50. Warren’s claim that Marx saw imperialism as playing a constructive role with respect to industrialization was refuted in Kenzo Mohri, “Marx and ‘Underdevelopment,’”Monthly Review 30, no. 11 (April 1979): 32–42; and Suniti Kumar Ghosh, “Marx on India,” Monthly Review 35, no. 8 (January 1984): 39–53. A more recent refutation, relying on some new materials, is Kevin Anderson, Marx at the Margins (Chicago: University of Chicago Press, 2016).
20. ↩ Giovanni Arrighi, The Geometry of Imperialism (London: Verso, 1983), 171–73; Giovanni Arrighi, “Lineages of Empire,” in Debating Empire, ed. Gopal Balakrishnan (London: Verso, 2003), 35. In The Long Twentieth Century, Arrighi dispensed entirely with the analysis of monopoly capital and monopoly power in the evolution of the modern giant corporate enterprise—thereby abandoning the monopoly stage of capitalism that Lenin had identified with imperialism—choosing rather to substitute neoclassical transaction-costs analysis as an adequate explanation for the growth of multinational corporations. Giovanni Arrighi, The Long Twentieth Century (London: Verso, 1994), 218–19, 239–43.
21. ↩ Michael Hardt and Antonio Negri, Empire (Cambridge, MA: Harvard University Press, 2000), 178, 234, 332–35; Thomas L. Friedman, The World Is Flat (New York: Farrar, Strauss, and Giroux, 2005); Francis Fukuyama, The End of History and the Last Man (New York: The Free Press, 1992).
22. ↩ Ellen Meiksins Wood, “A Manifesto for Global Capitalism?,” in Debating Empire, 61–82; John Bellamy Foster, “Imperialism and ‘Empire,’” Monthly Review 53, no. 7 (December 2001): 1-9.
23. ↩ Leo Panitch and Sam Gindin, The Making of Global Capitalism (London: Verso, 2013), 12, 26, 275; Tony Norfield, The City (London: Verso, 2017), 14–17; Peter Gowan, The Global Gamble (London: Verso, 1999), 19–38.
24. ↩ William I. Robinson, A Theory of Global Capital (Baltimore: Johns Hopkins University Press, 2004), 44–49; John A. Hobson, Imperialism: A Study (London: James Nisbet and Company, 1902).
25. ↩ William I. Robinson, Into the Tempest (Chicago: Haymarket, 2018), 99–121. On the empirical weaknesses of the transnational capital thesis, see “Transnational Capitalism or Collective Imperialism,” Pambazuka News, March 23, 2011; Ha-Joon Chang, Things They Don’t Tell You About Capitalism (New York: Bloomsbury, 2010), 74–87; Ernesto Screpanti,Global Imperialism and the Great Crisis (New York: Monthly Review Press, 2014), 57–58.
26. ↩ David Harvey, “A Commentary on A Theory of Imperialism,” in A Theory of Imperialism, Patnaik and Patnaik, 169, 171; David Harvey, “Realities on the Ground: David Harvey Replies to John Smith,” Review of African Political Economy blog, February 5, 2018; David Harvey, “Imperialism: Is It Still a Relevant Concept?,” (contribution to discussion on this topic presented at Center for Public Scholarship, New School for Social Research, New York, May 1, 2017), available on YouTube. In his earlier works, Harvey was quite sympathetic to the notion of imperialism, as in his 1975 article on “The Geography of Capital Accumulation,” reprinted in David Harvey, Spaces of Capital (New York: Routledge, 2001), 260–61. See also David Harvey, The Limits to Capital (1982; repr., London: Verso, 2006), 439–42.
27. ↩ David Harvey, The New Imperialism (Oxford: Oxford University Press, 2003), 7, 27, 163, 209–11; Harvey, “Imperialism: Is It Still a Relevant Concept?”
28. ↩ Harvey, “Imperialism: Is It Still a Relevant Concept?”; Harvey, “A Commentary on A Theory of Imperialism,” 169.
29. ↩ Harvey, “Realities on the Ground.”
30. ↩ David Harvey, Seventeen Contradictions of Capitalism (Oxford: Oxford University Press, 2014), 135. Harvey says that “rent seeking,” as used by Joseph Stiglitz to refer to the taking of wealth rather than its creation, “is nothing more than a polite and rather neutral-sounding way of referring to what I call ‘accumulation by dispossession’” (Harvey, Seventeen Contradictions of Capitalism, 133). One might say, in turn, that “accumulation by dispossession” is merely a polite and rather neutral-sounding way of referring to what Marx called expropriation (or profit upon expropriation).
31. ↩ Karl Marx, Capital, vol. 1 (London: Penguin, 1976), 915. On Marx’s concept of “profit upon expropriation” (or profit upon alienation), see John Bellamy Foster and Brett Clark, “The Expropriation of Nature,” Monthly Review 69, no. 10 (March 2018): 1–27.
32. ↩ Marquess of Salisbury quoted in Paul A. Baran, The PoliticalEconomy of Growth (New York: Monthly Review Press, 1957), 145.
33. ↩ Utsa Patnaik, “Revisiting the ‘Drain,’ or Transfers from India to Britain in the Context of Global Diffusion of Capitalism,” in Agrarian and Other Histories, ed. Shubhra Chakrabarti and Utsa Patnaik (New Delhi: Tulika, 2017), 311.
34. ↩ Magdoff, Globalization, 4, 41.
35. ↩ Atilio Borón, “Empire” and Imperialism (London: Zed, 2005), 3.
36. ↩ Amin, Modern Imperialism, 162, 193–95.
37. ↩ John Bellamy Foster and Robert W. McChesney, The Endless Crisis (New York: Monthly Review, 2012), 76–77.
38. ↩ Intan Suwandi, R. Jamil Jonna, and John Bellamy Foster, “Global Commodity Chains and the New Imperialism,” Monthly Review 70, no. 10 (March 2019): 1–24.
39. ↩ On the global reserve army, see Foster and McChesney, The Endless Crisis, 125-54.
40. ↩ Tony Norfield, “T-Shirt Economics: Labour in the Imperialist World Economy,” in Struggle in a Time of Crisis, ed. Nicolas Pons-Vignon and Mbuso Nkosi (London: Pluto, 2015), 23–28; John Smith, Imperialism in the Twenty-First Century (New York: Monthly Review Press, 2016), 13–16.
41. ↩ Suwandi, Jonna, and Foster, “Global Commodity Chains and the New Imperialism,” 14–15.
42. ↩ Norfield, “T-Shirt Economics,” 25–26.
43. ↩ Foster and McChesney, The Endless Crisis, 140–41.
44. ↩ International Labour Organization, Table 4a. Employment by Aggregate Sector (by Sex), in Key Indicators of the Labour Market(KILM), 8th ed. (Geneva: International Labour Office, 2014); “Economic Groups and Composition,” United Nations Conference on Trade and Development, http://unctadstat.unctad.org.
45. ↩ United Nations Conference on Trade and Development, “Non-Equity Modes of International Production and Development,” in World Investment Report, 2011 (Geneva: United Nations, 2011), 123, 132.
46. ↩ Norfield, The City, 9, 169; Federal Reserve Bank of St. Louis Economic Research, FRED,Net Domestic Investment: Private: Domestic Business, accessed May 18, 2019; Stephanie E. Curcuru and Charles P. Thomas, “The Return on U.S. Direct Investment at Home and Abroad,” International Finance Discussion Papers, no. 1057, Board of Governors of the Federal Reserve System, October 2012.
47. ↩ Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966), 107–08.
48. ↩ Dev Kar and Guttorm Schjelderup, Financial Flows and Tax Havens (London: Global Financial Integrity, Norwegian School of Economics, 2015), 19; Jason Hickel, The Divide (New York: W. W. Norton, 2017), 27.
49. ↩ Karl Marx and Frederick Engels, Collected Works, vol. 30 (New York: International, 1975), 59.
50. ↩ Norfield, The City, 76.
51. ↩ Kar and Schjelderup, Financial Flows and Tax Havens, 15–17.
52. ↩ Karl Marx, Capital, vol. 3 (London: Penguin, 1981), 345.
53. ↩ Hickel, The Divide, 290–91.
54. ↩ Gernot Köhler, “The Structure of Global Money and World Tables of Unequal Exchange,” Journal of World-System Research 4 (1998): 145–68; Gernot Köhler, Global Keynesianism: Unequal Exchange and Global Exploitation (New York: Nova Science, 2002), 43–100; Gernot Köhler, “Unequal Exchange 1965–1995,” November 1988; Hickel, The Divide, 290–91. Zak Cope, relying on a number of different ways of calculating the transfer of value via unequal exchange, came up with figures for 2009 of $2.6–4.9 trillion depending on the method used. Zak Cope, Divided World Divided Class (Montreal: Kersplebedeb, 2012), 262.
55. ↩ Amin, Modern Imperialism, 223–25.
56. ↩ John Smith, “Marx’s Capital and the Global Crisis,” in The Changing Face of Imperialism, ed. Sunanda Sen and Maria Cristina Marcuzzo (London: Routledge, 2018), 43-45; Imperialism in the Twenty-First Century, 252; Tony Norfield, “Imperialism, a Marxist Understanding,” Socialist Economist, March 22, 2019. On the wider issues of value capture, see Mariana Mazzucato, The Value of Everything (New York: PublicAffairs, 2018).
57. ↩ The role of “treasure islands,” primarily in the Caribbean, highlights the enormous offshore capital in tax havens. See Nicholas Shaxson, Treasure Islands (New York: Palgrave-Macmillan, 2011). Thomas Piketty has also highlighted the growing gap between investment/growth (the traditional role of capital) and the amassing of wealth. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014).
58. ↩ Amin, Modern Imperialism, 110–11.
59. ↩ “The Military Cost of Defending the Global Oil Supply,” Securing America’s Future Energy, September 21, 2018.
60. ↩ Norfield, The City, 123, 126.
61. ↩ On the shift toward a more aggressive imperialism following the demise of the Soviet Union, see John Bellamy Foster, Naked Imperialism (New York: Monthly Review Press, 2006).
62. ↩ Geoeconomics stands for the revival of economic warfare. For the grand strategy in this respect emanating from the Council on Foreign Relations, see Robert D. Blackwill and Jennifer M. Harris, War by Other Means (Cambridge, MA: Harvard University Press, 2016).
63. ↩ Donald Trump, “President Trump Vows to Usher in Golden Era of American Energy Dominance,” June 30, 2017, http://whitehouse.gov.
64. ↩ See John Bellamy Foster, Trump in the White House (New York: Monthly Review Press, 2017).
65. ↩ On the history of social imperialism, see Bernard Semmel, Imperialism and Social Reform (Garden City, NY: Doubleday, 1960).
66. ↩ Magdoff, Globalization, 4–5.
67. ↩ Marx and Engels, Collected Works, vol. 1, 180.
68. ↩ “A radical labor movement [in the North] cannot become a reality unless it is adamantly opposed to imperial wars, arms production and sales, the infiltration of the military into local economies and daily life, the patriotism of flags and national anthems, the mantra that we must all support the troops. In the Global North nationalism is a disease that impedes the global working-class solidarity essential for human liberation.” Michael D. Yates, Can the Working Class Change the World? (New York: Monthly Review Press, 2018), 160.
69. ↩ Karl Marx and Friedrich Engels, The Communist Manifesto (New York: Monthly Review Press, 1964), 7

https://monthlyreview.org/2019/07/01/late-imperialism/

01/02/2019

The precarious state of migrant workers has become a major area of concern for the contemporary global economy. In Southeast Asian regions in particular, the number of migrant workers has spiked since the 1990s. In the city of Hong Kong, domestic migrant workers, predominantly Filipino and Indonesian women, now make up around a tenth of the total working population. Since the beginning of Southeast Asia’s labor diaspora, activists have been fiercely organizing against the rampant exploitation and abuse of migrant workers.

Promise Li: What was different about the issues facing migrant workers in the 1990s, when you first came to Hong Kong, compared to those they face now? How do you feel your approach to organizing has changed over the years? What are some examples of successful campaigns in Hong Kong led by migrant workers in recent years?

Eni Lestari: Migrant domestic workers, beginning with Filipino, Thai, Indian, and Nepali domestic workers, have been in the city of Hong Kong since the 1970s. Indonesians were actually latecomers, only arriving in the late ’80s and growing after the mid–’90s. I came here in the late ’90s and ran away from my employer in 1999. When I ran away, I began to understand the broader reality of migrant domestic workers. A common problem at the time, especially among Indonesian workers, was that we were underpaid—we received something like half of the minimum wage. For example, I was supposed to be paid around HK$3,600 a month, but actually received only about HK$1,800. Employers would make excuses for this, saying that it was because we don’t speak English, or were new, or any other reason. But in our survey, we found that almost 80 percent of Indonesians were underpaid at the time.

Another major issue for workers of all nationalities was that agencies overcharged us for fees. Many Indonesian workers even had their passports confiscated by their agencies. Agencies also denied us rest days. Most contracts grant workers Sundays off every week, but, in practice, most Indonesians were only allowed one day off per month—as was the case with me. At most, workers would maybe get two days off a month, but many others didn’t even get one day off. The routine violation of employment contracts was a huge problem. For example, agencies would assign workers illegal extra work; they would make us work in different houses, shops, and restaurants. Employers would make these types of arrangements, using domestic workers to do more work, in order to save money.

This is all part of the bigger context of the time. When I first came to Hong Kong, Filipinos were the most organized. Thais and Nepalis were somewhat organized, but their numbers were small even at the time. But these groups were all participating in a political organization called the Asia Migrant Coordinating Body (AMCB). When I helped form the Association of Indonesian Migrant Workers, we immediately joined and became very active in AMCB because it was the city’s oldest and biggest alliance of this sort. It was formed in 1994 for cultural exchange purposes, but was later politicized when the Hong Kong government began introducing policies to cut wages, including increasing taxes and taking away maternity benefits—in other words, ramping up efforts to eviscerate domestic workers’ rights and benefits. Under these conditions, from 1998 to 2003, AMCB was forced to become increasingly political and became very active in confronting the government’s austerity proposals. I focused mostly on organizing Indonesians, who eventually became the second biggest migrant-worker population after Filipinos. When I came to Hong Kong, I believe the number of Indonesians was less than 50 thousand; now, we are at 150 thousand and are growing by the tens of thousands each year. This is because the Indonesian government is keen to deploy more Indonesian workers to places like Hong Kong.

In the early 2000s, our main focus was to combat underpayment, denial of rest days, and agencies’ overcharging. From Causeway Bay to Kowloon and Yuen Long, we organized a lot of public education programs and mobile counseling services. We also began establishing networks with different institutions, like churches and mosques, so we could make sure to provide resources and shelter for Indonesian migrants who ran away from employers. After long years of education and awareness raising, I can at least say that, after 2007, the issues of underpayment and denial of rest days are improving. Fewer workers are being underpaid now, most Indonesians enjoy Sundays off, and most workers do not have their passports taken away. Of course, there are still loopholes that agencies exploit. For example, most newcomers still don’t have their passports and on Sundays, which are usually rest days, some employers only allow workers to leave the house after nine o’clock in the morning and make them come home by around six or seven o’clock in the evening so they can do household work. These are just some of the areas we became more aggressive about in terms of organizing and public education.

Around and after 2007, fighting against agencies overcharging workers for fees became a huge campaign. Overcharging, also known as an agency fee, remained fairly hidden. Whenever we would try to report the issue, the government claimed that the agency was responsible, so nothing could be done about it. It took us a while to review different policies and understand the root causes of the issue, especially the role played by the Indonesian government. Aided by internal corruption, the Indonesian government would issue policies without informing the public. Eventually, we obtained the documents necessary to engage with the national government in Jakarta. Among Indonesian migrants, it took us a while to generalize the understanding that overcharging is a crime and a violation of workers’ rights. While the Hong Kong government claimed it was illegal for agencies to collect fees from workers that amount to more than 10 percent of their monthly salary, in reality, agencies were collecting a lot more than that. One tactic they employed was not writing receipts for the fees collected from migrant workers, as well as keeping workers’ passports and using the Indonesian government to collect the money. In Indonesia, overcharging is legal up to the amount of HK$7,000 even though many agencies charge more than HK$20,000. However, the Indonesian government does not have any process in place to handle workers’ grievances. Thus, for a long time, agency fees were agreed on by the government and private agencies. Migrant workers had no role in these discussions; they were simply known as the so-called beneficiaries of the policies. Of course, we were subjected to pay whatever the government and the agencies decided, which was never to our benefit.

It took us a long time to discover these agreements between the governments and the private agencies. In 2007, we were able to uncover the agreements and publish our findings. We came out with our own statements and positions. In this context, United Indonesians Against Overcharging (UIAO) was formed and I became its chairperson. UIAO brought together twenty-five Indonesian groups in Hong Kong and we became very active in the public-education campaign against overcharging. Since then, we have been able to reform the law, which now covers most of our demands and was passed in 2017. This new law recognizes overcharging as a criminal offense, as well as migrant workers’ right to unionize and claim compensation. These have been our demands since 2007, when we realized that both the Hong Kong and Indonesian governments were using the law to legitimize the practice of extracting as much money as they could from migrants and legalizing private agencies to deploy and exploit this whole group of vulnerable workers.

It took decades to reform this law because of the conflicts not only between us and the Hong Kong government and agencies, but also between the government and the agencies themselves. Needless to say, a major obstacle was reaching an agreement on who is responsible for migrant rights. In practice, agencies have long been the sole authority in coordinating migrants’ labor processes, from recruitment to deployment. Now that the government is strengthening labor regulations and undercutting agencies’ authority, the agencies are complaining about the government. But through our campaign, the voice of migrants grew stronger and we were able to pressure all parties to agree to most of our demands.

PL: It is incredible to see migrant groups work together to fight for their rights and better working conditions. How did different nationalities unite to organize larger campaigns while navigating cultural and political differences? What were some of the challenges of trying to connect migrant struggles to larger, structural questions of neoliberalism, globalization, and imperialism?

EL: We really have to study the specific situation of migrant workers in Hong Kong and how they organize. What united us was that we were all domestic workers. Domestic work is by far the biggest sector for migrant workers in Hong Kong and everyone, for the most part, is under the same regime, rules, and arrangements. That’s what unified all these different nationalities into one campaign. Although there are migrants who work in other sectors, like the entertainment, construction, and service industries, they have been harder to reach since their working and living conditions differ. Unlike the overwhelming majority of domestic workers, most migrant workers in other industries enjoy permanent resident status in Hong Kong. Domestic workers receive minimal to no benefits and most of us do not have the legal rights to stay at or change our jobs.

As such, there is no point in each nationality organizing rallies and campaigns on their own. If only one nationality demands something, they are probably going to be ignored by the government. But by uniting all the nationalities into one campaign, it is more difficult for migrants to be ignored. Of course, we need to always make sure that we are not divided by the government and agencies. They have tried to pit us against each other. For example, agencies and the government would tell us that Filipinos want all the jobs for themselves and are hoping Indonesians complain so that we lose ours. It is extremely important to recognize our rights as workers and to make sure we are not divided.

As for our own governments, it is mainly the responsibility of each nationality. Filipinos and Indonesians are generally very active in campaigning against their own governments regarding various issues. They lobby, picket, rally, and so on. Workers of other nationalities, like Thai and Nepali workers, tend to take less action against their own governments. Importantly, we always invite workers of other nationalities to join these actions against our own regimes. There is a principle of building a united front against the Hong Kong government and there is also a mutual understanding that we support the campaigns of workers from different countries than our own. This is our way of maintaining unity while respecting each other’s cultural differences and campaigns.

Waging the campaign against neoliberalism, globalization, and imperialism is one of the bigger challenges in Hong Kong. Much of Hong Kong’s political movement does not recognize globalization as a major issue. While political groups would often organize against symptoms of capitalist exploitation, the deeper structural issues of globalization and imperialism are not talked about as much. Many groups understand their fights against the Hong Kong government as independent issues, so it is difficult for our movement to campaign, even among migrants, against neoliberal globalization. Even though we have been addressing these issues in our educational campaigns, the entry point is still a little tough for people.

Migrants are far away from their homeland so while they may not directly see the effects of globalization, they definitely feel them. They still have to send money back to their families and some of them are unable to return home for ten or twenty years. With social media, it is now easier for migrants to keep up with what is going on in their home countries, but it was not so easy in the past. When we say we are victims of poverty and displacement, they agree, but when we say we are victims of neoliberal exploitation, most still don’t get it. Workers in industries like mining or construction can immediately relate to how capitalist globalization has exploited their land. But migrants have been away for a long time. Often, their only connection to their homeland is family, to whom they still have to send money, so sometimes these larger struggles do not seem urgent.

In Hong Kong, the liberal economy still provides migrants the benefit of an income, so most often do not see their exploitation until they do not get paid. The key is to connect these individual instances to systemic exploitation, so we see one of the crucial roles of our organizations is to continue educating migrants about these larger systemic issues. The quick turnover with migrants makes these campaigns difficult, but, of course, they always come back.

PL: Organizing against larger systems of oppression is definitely difficult, especially for migrant workers whose jobs have left them with little free time and minimal labor protections. What does a typical week look like for migrants and what are some ways that workers organize despite their busy schedules?

EL: That is really the challenge of our organizing. Since we mainly organize live-in domestic workers, the only free time they really have is Sundays and major holidays. Aside from those times, we primarily communicate through the phone. Their free time on weekdays is before noon, in the afternoon before they cook dinner, and after ten o’clock at night. We would sometimes use these times to check up on them or hold phone meetings with larger groups. Sundays are our prime time to organize and educate workers and discuss our campaigns, while also helping to facilitate social activities and cultural events. Sundays are always full, from ten o’clock in the morning to six o’clock in the evening. Sometimes we hold meetings early on Sunday mornings, but some workers are only allowed to leave the house after nine or ten in the morning. Between one and four o’clock in the afternoon, we host cultural and social activities, English language courses, dance practice, political education, rallies, and the like. During weekdays, we mainly use social media and messaging platforms like WiiChat and WhatsApp to disseminate information and organize. In the past, we have had some trouble with social media becoming unhealthy, negative spaces. Since 2014, we have made it a point to teach people to raise and deal with problems formally, respectfully, and while maintaining organizational discipline.

PL: You mentioned that a majority of Hong Kong’s migrant workers are women and that the emotional toll of their labor conditions can be immense. Can you elaborate further on some ways that migrant workers find ways to maintain group solidarity among and provide support for one another?

EL: Migrants will naturally come together and support each other. They have no family in Hong Kong and many groups take part in political and cultural activities together, from observing religious holidays to raising funds for things that are needed back in their home countries, such as orphanages. There is a lot of sympathy among migrants and many will do anything to help their communities back home. They know what poverty feels like. These groups go beyond merely doing activities: they provide emotional support for migrant workers. Many workers need to talk about their family issues. They need a group just to listen or, at times, support them financially. For most, being part of these groups is a necessity. You see these groups everywhere in the city; on their days off, migrants do everything in groups.

And it is in the context of these already self-organized groups that we organize political activities. Like I said earlier, we use the issues they face as migrants to help them understand the larger system of exploitation. For example, one of our biggest educational programs is know-your-rights legal counseling for migrants to be able to identify and tackle common labor-rights violations, such as wage theft, employer abuse, and overcharging. We train our members to know their rights as workers and, whether or not they will use this knowledge themselves, this program becomes a key part of our organizations’ formal education. We also train members so they feel empowered to help other migrant workers beyond the framework of just legal rights. To this end, we created a peer system so that migrants can help each other with different skills, especially for those who can provide stress relief, massages, psychological counseling, and other similar resources. Our organizing is very active on Sundays because we don’t just rely on a few people—everyone contributes. In June, we just had our Muslim New Year and UIAO invited different groups of migrants to continue building connections, discussing the issues of today, and working with different groups in Indonesia to provide funds and resources for migrants’ families back home.

PL: What are some of the key goals of and strategies for the International Migrants Alliance (IMA) moving forward?

EL: All migrants today, regardless of nationality and immigration status (whether they are temporary residents or permanent citizens), face a common problem: their lives are tremendously insecure. Countries that used to be more open are closing their borders and citizens are convinced that their countries don’t have enough resources. This is true whether we are talking about the United States or Australia. While Hong Kong has always had an issue with immigration and borders, we enjoy even fewer protections now, regardless of our immigration status. We have to recognize that the only way to challenge this reality is to organize collectively. I’ve been in the United States recently, attending different forums, and I can see that many of the movements are divided—from those organizing against police brutality to those organizing for better housing. Only occasionally are there united fronts or unified movements.

For us in IMA, although we try to organize aggressively on a global scale, our political work has been challenging. For one, there are often not enough resources and, second, our membership is precarious. Even our core members may be deported, arrested, or faced with police violence, and this impacts the stability of our organizing. We are a constituency that continues to be legally unrecognized by the United Nations and other governments. Of course, the United Nations and governments publish many reports about migrants, but they still do not have actual mechanisms to recognize the 250 million migrants and 60 million refugees that exist in the world and bring them into decision-making processes. We are always harassed, attacked, and destabilized. We can’t expect much in terms of in-person organizing; we can’t operate as a regular nongovernmental organization. Even now, we can only meet by Skype and there are not a lot of ways to meet in person. But we do make sure that one thing is consistent: our politics. We continue to take a hard line on migrant and labor issues, as well as globalization, racism, and xenophobia. We also make sure that migrants’ voices are always heard, so that we can identify people in the movement who can represent us in different places. It is also difficult for us to travel. I know I’m under surveillance from the Hong Kong government, my home country’s government, and other regimes. And it is hard for domestic workers to do this type of political work with their busy schedules. But we continue to make sure that we are visible and proactive in our engagement and our solidarity with other labor sectors, groups, and organizations, like farmers, women, and indigenous people.

Ultimately, the only way that migrants’ rights will be recognized is if the message comes from migrants themselves. Social media also becomes an important tool for us to stay active and united. We can get creative in our messaging. Last year, IMA was present for our organization’s General Assembly in Mexico, where different migrant leaders presented on their country’s situations. We were also at the World Social Forum and the Global Forum on Migration and Development in Morocco, just to name a couple of international events we recently attended. IMA’s strength is in our members—we are a network of movements and we pay close attention to how the migrants’ movement is developing in different regions. If local grassroots movements of migrants are weakened, then the global movement against neoliberalism will also suffer a blow. Our organization does not focus on getting members to attend everything here and there. Instead, we use key global actions and platforms to declare our message and presence to the public: we are migrants, this is what we want, this is why we want it, and this is what you can do for us. A very simple message. And IMA will continue to fight to make sure migrants are recognized and their voices heard.

https://monthlyreview.org/2019/02/01/fighting-for-migrant-workers-in-hong-kong/

01/05/2019

Gabriel Thompson, ed., Chasing the Harvest: Migrant Workers in California Agriculture (New York: Verso, 2017), 320 pages, $24.95, paperback.

California is by far the most important source of fruits, vegetables, nuts, dairy, meat, and other products of the U.S. food system. The list of U.S.- grown foods produced almost exclusively in California by the state’s roughly eight hundred thousand farmworkers is a long one, including two thirds of the country’s fruits and nuts, and one third of its vegetables. California growers employ one out of three of the nation’s farmworkers. Some 70 percent of these workers were born in Mexico. Estimates are that at least 50 percent are undocumented, with little chance of changing that. They plant, cultivate, irrigate, harvest, pack, and haul a bountiful $47 billion worth of farm products each year—17 percent of the total value of farm products nationally according to 2013 statistics. Their average annual income is $14 thousand and 10 percent of farmworkers live in “informal dwellings” like garages, sheds, and abandoned vehicles. Despite many hazardous job conditions, only one out of three farmworkers has any kind of health insurance.

Telling the Stories

“No one comes out here. No one knows what we go through,” Roberto Valdez, a farmworker in the Coachella Valley town of Thermal, California, tells Gabriel Thompson, the interviewer and editor of Chasing the Harvest, a recently published book of interviews with farmworkers, growers, union activists, teachers, and others. And as one reads through the compelling stories that are told here, one gets a deep sense of what Roberto means, as well as a passionate urge to have others know of the life and work of those who labor in California’s fields.

That is the thread that binds the seventeen people whose narratives are found in Chasing the Harvest—all have worked or are still working in California’s fields.

As Executive Editor Mimi Lok notes in her introduction to Chasing the Harvest, the collected narratives, part of the Voice of Witness series, aimed to provide “a birth-to-now chronologized scope in order to portray narrators as individuals in all their complexity, rather than as case studies.” The narratives were collected in the spring and summer of 2016, a busy time for farmworkers. As Thompson explains, “there were no hard and fast rules for selecting narrators, only that they reflected some of the diversity of California’s farmworkers.” Chasing the Harvest applies a microscope to a section of a large panorama, bringing out graphic detail and insights into the lives and conditions of farmworkers today. This is what makes it such an informative and important book.

Here is a taste:

“I was sixteen or seventeen when the group I was with walked three days in the desert to get to Arizona.… We slept under the orange trees, and that’s also where we worked. In my group there were about six people. Ten trees that way, there’s another group, and so on. I think there were thirty, forty people living in that field of oranges.” —Fausto Sánchez

“In the fields they never had bathrooms. We’d go out, at least two or three girls, and find the furthest possible place. We always wore layers, and we’d take a shirt off and cover ourselves, make like a little tent around us, so we could go to the bathroom.” —Maria Elena Durazo

“When they fumigated the vineyards with pesticides, we slept nearby with our coolers blowing the chemicals into our trailer. We didn’t have any protection.” —Roberto Valdez

“But there are still mayordomos (foremen) that make their workers work ’til 4 p.m. From 6 a.m. to 4 p.m. in the heat. They’re still working that long when it’s over 100 degrees. Other mayordomos don’t give breaks. They just won’t give breaks.” —Ismael Moreno

“I’ve seen many farmworkers washing themselves in the canal, bathing themselves in their underwear, washing their clothes. And besides the dangers of the pollutants, I’ve heard of cases where people passing by called the police on these poor people, because they were in their underwear!” —José Saldívar

Changing Eras

These stories have a special importance now. Media attention focused on field workers in recent years has mainly been in the context of the xenophobic campaign to demonize and criminalize immigrants more generally. In August 2018, right-wing commentator Laura Ingraham railed at length on Fox News about “Massive demographic changes…foisted on the American people…that none of us ever voted for, and most of us don’t like.” As she spoke, video clips of farmworkers harvesting vegetables played in the background.

There was a time when a different kind of public attention was directed toward California farmworkers. It began in 1965, when a strike of Filipino and Mexican grape workers in the Coachella and southern San Joaquin valleys erupted. For more than fifteen years, national grape and lettuce boycotts, a series of powerful strikes that defied mass arrests, marches, rallies, and numerous other actions in California and elsewhere, brought farmworkers into view for millions across the country. As Thompson puts it, “the UFW [United Farmworkers Union] sent striking farmworkers into the cities [as part of the boycott effort] where they told their stories. What they revealed was hidden crisis of labor abuse, unfair wages, and unsafe working conditions.” In so doing, farmworkers and their union forged an alliance with religious communities, students, progressive and radical political activists, and other unions. This built unprecedented support in the struggle against powerful California agribusinesses.

That was many decades, wars, and crises ago, at a time when liberation struggles, civil rights, and revolutionary movements across the world and in the United States challenged racial injustice and imperialism. While the farmworker movement itself never broke beyond the bounds of a struggle for better wages, benefits, and working and living conditions, the energy and broader strategic vision that was part of the social movements of that time gave the farmworker struggle energy and initiative. The farmworker struggle hit up against a system of class and racial oppression, informing and inspiring the broader movement of which it was a part.

Entering the 1980s, a shift away from rebellion and liberation across the planet, and the rise of the conservative tide of neoliberalism, brought the era of upheaval in the fields to an end. Sharp conflicts emerged within the UFW over which direction it should take. Expulsions of key activists and disillusionment more broadly sent the union movement into retreat. The sapping of organized strength dissipated the gains previously won. A weakened union was devastated by the growers who had fought hard to oppose it.

In 1986, the Immigration Reform and Control Act, broadly known as “la amnistía,” brought a million new workers into the fields under the Special Agriculture Workers’ Program (SAW). Workers were able to gain legal status with a letter from a grower—and growers gave out a lot of letters. The flood of new workers under SAW allowed employers to push down wages, end benefits previously won under union contracts, and abandon reforms previously granted, further undermining living and working conditions.

The growers applied lessons learned fighting the union movement so as to make a repeat of that kind of movement more difficult. They blacklisted and otherwise drove union activists from their farms. They parceled out their work to “independent labor contractors,” thus fragmenting the workforce. They tore down many labor camps that had been centers for organizing in the days of upsurge.

As veterans of the farm struggle aged, new workers came. A new generation of farmworkers faced conditions similar to those their predecessors had risen against. Only the context now was different—memories had faded, political moods had changed. The rosy dawn of neoliberalism, privatization, and broad attack on unions had materialized.

Roberto Valdez, like most of those whose stories are told in Chasing the Harvest, came into the fields after the dust of the years of upsurge had settled. A few, such as Rosario Pelaya, had been in the ranks of the rebellion or witnessed its descent. Each would have to contend with the conditions as they now encountered them.

A Compulsion for Migration

In the narratives, all who come north from Mexico (there are several U.S.-born growers whose stories are also here) reflect on their personal reasons for migrating.

When Rafael Gonzalez Meraz, a young farmworker, is rejected by the girl he is pursuing because of his poverty, he leaves his home in Colima, Mexico, and goes north to find the work he hopes will change his life’s prospects.

Silvia Correra marries at fourteen to escape her difficult life in a small village near Puebla. When her husband is robbed of money borrowed to buy fireworks to sell in Acapulco, she comes north across the border with him and her young son.

Fausto Sanchez, from a large family of impoverished Oaxacan farmers, leaves his southern Mexican village to work as a migrant in the Mexican state of Sonora. When work in Sonora is slow, he joins fellow workers on a trip north of the U.S. border—part of a new migratory circuit of indigenous Oaxacans to California fields.

At the age of nine, Beatriz Machiche begins crossing the border at San Luis Rio Colorado, Sonora, with her family to work in the lemon orchards in Arizona. By age fourteen, she joins the farmworker struggle in the Coachella grape fields.

The Roots of Mass Migration

All these stories are part of what has been a mass migration north, rooted in a history of colonial domination, exploitation, and racial oppression.

Farming in California as we know it today has its origin in the mid–1800s, when U.S. merchant capitalists and slave holders briefly united to seize the vast northern Mexican territories. “Robber baron” opportunists rushed in after the conquest to grab the extensive Mexican land grants. Abundant labor was needed to realize the land’s enormous potential for wealth production. It was slavery—the powerful engine of capital accumulation in the early United States—that served as California growers’ ideological model for their labor system. A white supremacist society proclaimed its right to exploit nonwhite immigrants as its Manifest Destiny. Successive waves of mainly nonwhite immigrants supplied the labor to feed this so-called California dream.

It was not until the early 1900s, after previous waves of immigrants from Asia were banned or proved inadequate, that California and Southwest growers turned decisively to Mexico. Mexican workers first were brought north along the railroad routes built from the interior of Mexico to the U.S. border to facilitate U.S. economic domination and exploitation of Mexico. Over time, a plundered Mexican economy became a source of colonized labor on which California agriculture has fattened itself ever since.

And, it should be noted, around 80 percent of the U.S. farm labor force today are immigrants, the majority of whom are from Mexico. California’s farm labor system is now that of the whole country.

La Migra

Colonized labor can only be sustained by a system of repression and control.

Oscar Ramos, as the undocumented child of a migrant family, lived in fear of being taken away from his family who worked in Hollister and lived in a local labor camp. “Immigration agents would raid the camp regularly.… We’d stay with a baby sitter, someone’s grandma.… I remember one day when I must have been five…and Immigration showed up at the camp and took a few people. She [the babysitter] got put in their van. She’s in their van…looking back with a sad face, waving good bye.”

Fausto Sanchez worked in the onion and garlic fields in the small town of Kerman. He remembered “that you had to hide from Immigration. You couldn’t walk around during the day; you weren’t free to go to the store. When you got up at five in the morning, you went directly to the field.… At night, or on Saturdays or Sundays, you’d do your shopping because on Saturdays and Sundays the migra [Immigration] wasn’t out.”

One day, Silvia Correra is at the El Paso airport awaiting a flight to San Jose. She recalls: “I saw that all these Immigration agents were sitting near the stairs, at a table. Instead of crossing in front of the agents, we tried to sneak behind them, and when they saw us do that they became suspicious. That’s why they caught us.”

Beatriz Machiche remembers that “one day in the fields harvesting grapes, and people in the fields started to shout—’La migra is coming! They have dogs!’.… Immigration officers…started chasing people. They grabbed a few. My mom got some boxes out of our car and hid people under them.” Years later, Beatriz became the coordinator of a migrant education program for farmworker children. “But la migra is just a fact of life for many of these children.… As soon as there’s less work in the fields, that’s when la migra comes out looking for people…if you’re missing a tail light, or maybe they’ll stop you for some other reason. These children are losing family members all the time.”

“Where There’s Oppression, There’s Resistance”

“Where there’s oppression, there’s resistance” was a popular saying in the 1960s that came out of the Chinese Revolution. There is no mass resistance to conditions in the fields at present. But resistance in other forms continues.

In 2005, Roberto Valdez nearly lost his sixteen-year-old son to heat stroke. That same year, twelve farmworkers died from heat stroke. Later, standing before senators in a Sacramento hearing room, he said: “The hands that you see are the hands that harvest the lemons…the strawberries your children eat…the grapes you see in the market.… We’re dying out there in the fields.” Roberto has used a cell phone camera to make and post short films of what he has witnessed in the fields. “This is the labor force of the United States. These are the people that nobody wants, earning their bread every day. These are the people that the politicians don’t want, but while they sleep…all these people are working in the fields across California.” He invites Donald Trump to come take a look.

When Maricruz Ladino is raped by a supervisor at a Salinas vegetable-packing plant, she summons the courage to denounce him. She is fired from her job, then shunned by other employers. Then, “agents from ICE arrived at [her] apartment at six in the morning. It was April 27, 2007—a date [she]’ll never forget.” She is taken to San Jose, then Oakland, shackled and flown to Tijuana, where she is dropped off at four in the morning. Still, she continued to fight. In 2013, she was featured in a Frontline documentary, Rape in the Fields, exposing widespread sexual abuse of farmworker women.

Heraclio Astete takes a job as a sheepherder to help his family in Peru. He faces desperate conditions and contracts Valley Fever, which nearly ends his life. Recovered, he “began to organize a sheepherders’ union in Bakersfield.” He recounts: “Victor and I would go out at night to meet with sheepherders in all the different pastures and fields.… We also gathered their stories—we had to show that there was abuse of sheepherders going on.” A protracted struggle goes on. In 2001, the California legislature passed a law improving sheepherders wages and working conditions. The struggle to have that law enforced, however, persists.

Oscar Ramos finds his early life experience in the fields helps him connect with the children of farmworkers who are his students at a Salinas’ Sheridan middle school. “It used to be we’d lose half our students in the fall and winter, because most of those students had parents that were traveling for farm work.” He challenges that aspect of the migratory system and succeeds in helping students achieve better results, including entry to college.

Fausto Sanchez, a Mixteco speaker from Oaxaca learns English at night school and then gets a job with the California Rural Legal Assistance defending Mixteco-speaking workers from the myriad abuses they suffer as the most exploited of California’s farmworkers. “I remember a case.… There was a pesticide company spraying some carrot and potato fields here in Arvin. They didn’t follow guidelines for the pesticide they were using, and a cloud of it drifted into the homes of fieldworkers nearby.… We helped get compensation for twenty-five or thirty families.”

Maria Elena Durazo takes her experience in the fields as an inspiration in her work to turn an obtuse business union, UNITE HERE in Los Angeles, into a more responsive, democratic union. “There are a lot of similarities between the workers in our union and farmworkers. Undocumented status, for example: you have to get past that particular fear.… So when undocumented workers do commit to organizing, they really put a lot on the line. It’s a level of courage that is just so inspiring.”

Is It the Work?

Oscar Ramos spoke nostalgically of youthful days in the fields: “We’d be out there and there’d be a song that everyone liked and everyone would be singing.… The sharing of food was just wonderful.… We all had lunch together, and we’d share whatever we brought. Everyone!” Beatriz Machiche recalled, “I’ve always liked work in the fields.… You’re free, it’s sunny, filling up onion boxes, chilies, grape boxes. You bring your radio and you sing; you eat on the ground with your colleagues. You’re not afraid to get fired because you’re not dressed properly. And you’re the same as all the other workers, you can laugh and joke around.” Even Rafael Meraz, a crew foreman says, “I’m not really looking forward to retirement, because I’m happy here. Joking with the other workers, you don’t get bored.” Roberto Valdez remarks that “people who’ve worked in the field can do any work without difficulty.… The work itself isn’t the problem.” It is not the nature of the work that makes being a farmworker in the United State so oppressive, dangerous, difficult, and even deadly. It is toiling in a society where only the wealth extracted from the workers has real value. It is working in a society where the labor has value and the laborer is despised and treated as a disposable commodity or a necessary nuisance—a potential danger and a useful scapegoat. It is not the work, but the social system in which that work is performed.

Searching for Alternatives—Grower Narratives

Two California growers, Harold McClarity and Jim Cochran, are part of the narratives of Chasing the Harvest. Their experiences in the era of the civil rights and anti-Vietnam war movements and other struggles of the 1960s become an impetus in the search for alternatives to the prevailing farming and labor systems. Cochran becomes a pioneer of organic strawberry farming on his small central coast farm. McClarity becomes a large and successful Central Valley tree fruit and grape grower. Their experiences and outlook could well make for a useful discussion on the viability—or impossibility—of genuine alternatives to an exploiting system, within the framework of that same system.

Conclusion

In the era of Trump and his anti-immigrant fascist mongering, California stands out as a kind of fortress of tolerance—after all, it is a sanctuary state. This was not always the case. California was at one time, arguably, the most overtly racist state in the United States outside of the former slave states—ground zero for the Chinese Exclusion Act of 1882, Operation Wetback in 1954, and Proposition 187 in the mid–1990s. Something changed—partly demographically, partly due to persistent struggle, and partly because of the country’s dependence on the very people Trump and his kind like to bash.

But if we should become too taken by the signs of progress in California toward embracing diversity and opposing overt white supremacy, Chasing the Harvest will help bring us, literally, back down to earth. It is not a sweeping analysis of exploitation nor does it seek to unearth the mainsprings of that exploitation. But it does give a compelling and powerful picture of what exploitation and oppression—indeed, what an apartheid labor system—looks like up close. It brings us face to face with the fact that this is a society that cannot sustain itself, cannot feed itself, without a labor system that ensnares hundreds of thousands in a web of extremely oppressive social relations; a system that is, in all but in name, a caste system enforced by state power.

The interviews in Chasing the Harvest flesh out a part of this picture—an important part. And they are an important beginning for grappling with this history and this current reality.

These narratives are meant to be used also as material for school curriculum, so that students can engage with experiences that are both little known and intimately connected to our lives and well-being. They offer the possibility that these windows to the world of farmworkers will inspire students to seek out causes of injustice and to uncover the system that has produced them. They are a starting point for challenging that which needs to be upended, for this oppressive and life-crushing farm labor system cannot be allowed to stand.

https://monthlyreview.org/2019/05/01/californias-migrant-farmworkers/

01/02/2019

Less than two decades into the twenty-first century, it is evident that capitalism has failed as a social system. The world is mired in economic stagnation, financialization, and the most extreme inequality in human history, accompanied by mass unemployment and underemployment, precariousness, poverty, hunger, wasted output and lives, and what at this point can only be called a planetary ecological “death spiral.”¹ The digital revolution, the greatest technological advance of our time, has rapidly mutated from a promise of free communication and liberated production into new means of surveillance, control, and displacement of the working population. The institutions of liberal democracy are at the point of collapse, while fascism, the rear guard of the capitalist system, is again on the march, along with patriarchy, racism, imperialism, and war.

To say that capitalism is a failed system is not, of course, to suggest that its breakdown and disintegration is imminent.² It does, however, mean that it has passed from being a historically necessary and creative system at its inception to being a historically unnecessary and destructive one in the present century. Today, more than ever, the world is faced with the epochal choice between “the revolutionary reconstitution of society at large and the common ruin of the contending classes.”³

Indications of this failure of capitalism are everywhere. Stagnation of investment punctuated by bubbles of financial expansion, which then inevitably burst, now characterizes the so-called free market.⁴ Soaring inequality in income and wealth has its counterpart in the declining material circumstances of a majority of the population. Real wages for most workers in the United States have barely budged in forty years despite steadily rising productivity.⁵ Work intensity has increased, while work and safety protections on the job have been systematically jettisoned. Unemployment data has become more and more meaningless due to a new institutionalized underemployment in the form of contract labor in the gig economy.⁶ Unions have been reduced to mere shadows of their former glory as capitalism has asserted totalitarian control over workplaces. With the demise of Soviet-type societies, social democracy in Europe has perished in the new atmosphere of “liberated capitalism.”⁷

The capture of the surplus value produced by overexploited populations in the poorest regions of the world, via the global labor arbitrage instituted by multinational corporations, is leading to an unprecedented amassing of financial wealth at the center of the world economy and relative poverty in the periphery.⁸ Around $21 trillion of offshore funds are currently lodged in tax havens on islands mostly in the Caribbean, constituting “the fortified refuge of Big Finance.”⁹ Technologically driven monopolies resulting from the global-communications revolution, together with the rise to dominance of Wall Street-based financial capital geared to speculative asset creation, have further contributed to the riches of today’s “1 percent.” Forty-two billionaires now enjoy as much wealth as half the world’s population, while the three richest men in the United States—Jeff Bezos, Bill Gates, and Warren Buffett—have more wealth than half the U.S. population.¹⁰ In every region of the world, inequality has increased sharply in recent decades.¹¹ The gap in per capita income and wealth between the richest and poorest nations, which has been the dominant trend for centuries, is rapidly widening once again.¹² More than 60 percent of the world’s employed population, some two billion people, now work in the impoverished informal sector, forming a massive global proletariat. The global reserve army of labor is some 70 percent larger than the active labor army of formally employed workers.¹³

Adequate health care, housing, education, and clean water and air are increasingly out of reach for large sections of the population, even in wealthy countries in North America and Europe, while transportation is becoming more difficult in the United States and many other countries due to irrationally high levels of dependency on the automobile and disinvestment in public transportation. Urban structures are more and more characterized by gentrification and segregation, with cities becoming the playthings of the well-to-do while marginalized populations are shunted aside. About half a million people, most of them children, are homeless on any given night in the United States.¹⁴ New York City is experiencing a major rat infestation, attributed to warming temperatures, mirroring trends around the world.¹⁵

In the United States and other high-income countries, life expectancy is in decline, with a remarkable resurgence of Victorian illnesses related to poverty and exploitation. In Britain, gout, scarlet fever, whooping cough, and even scurvy are now resurgent, along with tuberculosis. With inadequate enforcement of work health and safety regulations, black lung disease has returned with a vengeance in U.S. coal country.¹⁶ Overuse of antibiotics, particularly by capitalist agribusiness, is leading to an antibiotic-resistance crisis, with the dangerous growth of superbugs generating increasing numbers of deaths, which by mid–century could surpass annual cancer deaths, prompting the World Health Organization to declare a “global health emergency.”¹⁷ These dire conditions, arising from the workings of the system, are consistent with what Frederick Engels, in the Condition of the Working Class in England, called “social murder.”¹⁸

At the instigation of giant corporations, philanthrocapitalist foundations, and neoliberal governments, public education has been restructured around corporate-designed testing based on the implementation of robotic common-core standards. This is generating massive databases on the student population, much of which are now being surreptitiously marketed and sold.¹⁹ The corporatization and privatization of education is feeding the progressive subordination of children’s needs to the cash nexus of the commodity market. We are thus seeing a dramatic return of Thomas Gradgrind’s and Mr. M’Choakumchild’s crass utilitarian philosophy dramatized in Charles Dickens’s Hard Times: “Facts are alone wanted in life” and “You are never to fancy.”²⁰ Having been reduced to intellectual dungeons, many of the poorest, most racially segregated schools in the United States are mere pipelines for prisons or the military.²¹

More than two million people in the United States are behind bars, a higher rate of incarceration than any other country in the world, constituting a new Jim Crow. The total population in prison is nearly equal to the number of people in Houston, Texas, the fourth largest U.S. city. African Americans and Latinos make up 56 percent of those incarcerated, while constituting only about 32 percent of the U.S. population. Nearly 50 percent of American adults, and a much higher percentage among African Americans and Native Americans, have an immediate family member who has spent or is currently spending time behind bars. Both black men and Native American men in the United States are nearly three times, Hispanic men nearly two times, more likely to die of police shootings than white men.²² Racial divides are now widening across the entire planet.

Violence against women and the expropriation of their unpaid labor, as well as the higher level of exploitation of their paid labor, are integral to the way in which power is organized in capitalist society—and how it seeks to divide rather than unify the population. More than a third of women worldwide have experienced physical/sexual violence. Women’s bodies, in particular, are objectified, reified, and commodified as part of the normal workings of monopoly-capitalist marketing.²³

The mass media-propaganda system, part of the larger corporate matrix, is now merging into a social media-based propaganda system that is more porous and seemingly anarchic, but more universal and more than ever favoring money and power. Utilizing modern marketing and surveillance techniques, which now dominate all digital interactions, vested interests are able to tailor their messages, largely unchecked, to individuals and their social networks, creating concerns about “fake news” on all sides.²⁴ Numerous business entities promising technological manipulation of voters in countries across the world have now surfaced, auctioning off their services to the highest bidders.²⁵ The elimination of net neutrality in the United States means further concentration, centralization, and control over the entire Internet by monopolistic service providers.

Elections are increasingly prey to unregulated “dark money” emanating from the coffers of corporations and the billionaire class. Although presenting itself as the world’s leading democracy, the United States, as Paul Baran and Paul Sweezy stated in Monopoly Capital in 1966, “is democratic in form and plutocratic in content.”²⁶ In the Trump administration, following a long-established tradition, 72 percent of those appointed to the cabinet have come from the higher corporate echelons, while others have been drawn from the military.²⁷

War, engineered by the United States and other major powers at the apex of the system, has become perpetual in strategic oil regions such as the Middle East, and threatens to escalate into a global thermonuclear exchange. During the Obama administration, the United States was engaged in wars/bombings in seven different countries—Afghanistan, Iraq, Syria, Libya, Yemen, Somalia, and Pakistan.²⁸ Torture and assassinations have been reinstituted by Washington as acceptable instruments of war against those now innumerable individuals, group networks, and whole societies that are branded as terrorist. A new Cold War and nuclear arms race is in the making between the United States and Russia, while Washington is seeking to place road blocks to the continued rise of China. The Trump administration has created a new space force as a separate branch of the military in an attempt to ensure U.S. dominance in the militarization of space. Sounding the alarm on the increasing dangers of a nuclear war and of climate destabilization, the distinguished Bulletin of Atomic Scientists moved its doomsday clock in 2018 to two minutes to midnight, the closest since 1953, when it marked the advent of thermonuclear weapons.²⁹

Increasingly severe economic sanctions are being imposed by the United States on countries like Venezuela and Nicaragua, despite their democratic elections—or because of them. Trade and currency wars are being actively promoted by core states, while racist barriers against immigration continue to be erected in Europe and the United States as some 60 million refugees and internally displaced peoples flee devastated environments. Migrant populations worldwide have risen to 250 million, with those residing in high-income countries constituting more than 14 percent of the populations of those countries, up from less than 10 percent in 2000. Meanwhile, ruling circles and wealthy countries seek to wall off islands of power and privilege from the mass of humanity, who are to be left to their fate.³⁰

More than three-quarters of a billion people, over 10 percent of the world population, are chronically malnourished.³¹ Food stress in the United States keeps climbing, leading to the rapid growth of cheap dollar stores selling poor quality and toxic food. Around forty million Americans, representing one out of eight households, including nearly thirteen million children, are food insecure.³² Subsistence farmers are being pushed off their lands by agribusiness, private capital, and sovereign wealth funds in a global depeasantization process that constitutes the greatest movement of people in history.³³ Urban overcrowding and poverty across much of the globe is so severe that one can now reasonably refer to a “planet of slums.”³⁴ Meanwhile, the world housing market is estimated to be worth up to $163 trillion (as compared to the value of gold mined over all recorded history, estimated at $7.5 trillion).³⁵

The Anthropocene epoch, first ushered in by the Great Acceleration of the world economy immediately after the Second World War, has generated enormous rifts in planetary boundaries, extending from climate change to ocean acidification, to the sixth extinction, to disruption of the global nitrogen and phosphorus cycles, to the loss of freshwater, to the disappearance of forests, to widespread toxic-chemical and radioactive pollution.³⁶ It is now estimated that 60 percent of the world’s wildlife vertebrate population (including mammals, reptiles, amphibians, birds, and fish) have been wiped out since 1970, while the worldwide abundance of invertebrates has declined by 45 percent in recent decades.³⁷ What climatologist James Hansen calls the “species exterminations” resulting from accelerating climate change and rapidly shifting climate zones are only compounding this general process of biodiversity loss. Biologists expect that half of all species will be facing extinction by the end of the century.³⁸

If present climate-change trends continue, the “global carbon budget” associated with a 2°C increase in average global temperature will be broken in sixteen years (while a 1.5°C increase in global average temperature—staying beneath which is the key to long-term stabilization of the climate—will be reached in a decade). Earth System scientists warn that the world is now perilously close to a Hothouse Earth, in which catastrophic climate change will be locked in and irreversible.³⁹ The ecological, social, and economic costs to humanity of continuing to increase carbon emissions by 2.0 percent a year as in recent decades (rising in 2018 by 2.7 percent—3.4 percent in the United States), and failing to meet the minimal 3.0 percent annual reductions in emissions currently needed to avoid a catastrophic destabilization of the earth’s energy balance, are simply incalculable.⁴⁰

Nevertheless, major energy corporations continue to lie about climate change, promoting and bankrolling climate denialism—while admitting the truth in their internal documents. These corporations are working to accelerate the extraction and production of fossil fuels, including the dirtiest, most greenhouse gas-generating varieties, reaping enormous profits in the process. The melting of the Arctic ice from global warming is seen by capital as a new El Dorado, opening up massive additional oil and gas reserves to be exploited without regard to the consequences for the earth’s climate. In response to scientific reports on climate change, Exxon Mobil declared that it intends to extract and sell all of the fossil-fuel reserves at its disposal.⁴¹ Energy corporations continue to intervene in climate negotiations to ensure that any agreements to limit carbon emissions are defanged. Capitalist countries across the board are putting the accumulation of wealth for a few above combatting climate destabilization, threatening the very future of humanity.

Capitalism is best understood as a competitive class-based mode of production and exchange geared to the accumulation of capital through the exploitation of workers’ labor power and the private appropriation of surplus value (value generated beyond the costs of the workers’ own reproduction). The mode of economic accounting intrinsic to capitalism designates as a value-generating good or service anything that passes through the market and therefore produces income. It follows that the greater part of the social and environmental costs of production outside the market are excluded in this form of valuation and are treated as mere negative “externalities,” unrelated to the capitalist economy itself—whether in terms of the shortening and degradation of human life or the destruction of the natural environment. As environmental economist K. William Kapp stated, “capitalism must be regarded as an economy of unpaid costs.”⁴²

We have now reached a point in the twenty-first century in which the externalities of this irrational system, such as the costs of war, the depletion of natural resources, the waste of human lives, and the disruption of the planetary environment, now far exceed any future economic benefits that capitalism offers to society as a whole. The accumulation of capital and the amassing of wealth are increasingly occurring at the expense of an irrevocable rift in the social and environmental conditions governing human life on earth.⁴³

Some would argue that China stands as an exception to much of the above, characterized as it is by a seemingly unstoppable rate of economic advance (though carrying with it deep social and ecological contradictions). Yet Chinese development has its roots in the 1949 Chinese Revolution, carried out by the Chinese Communist Party headed by Mao Zedong, whereby it liberated itself from the imperialist system. This allowed it to develop for decades under a planned economy largely free of constraints from outside forces, establishing a strong agricultural and industrial economic base. This was followed by a shift in the post-Maoist reform period to a hybrid system of more limited state planning along with a much greater reliance on market relations (and a vast expansion of debt and speculation) under conditions—the globalization of the world market—that were particularly fortuitous to its “catching up.” Through trade wars and other pressures aimed at destabilizing China’s position in the world market, the United States is already seeking to challenge the bases of China’s growth in world trade. China, therefore, stands not so much for the successes of late capitalism but rather for its inherent limitations. The current Chinese model, moreover, carries within it many of the destructive tendencies of the system of capital accumulation. Ultimately, China’s future too depends on a return to the process of revolutionary transition, spurred by its own population.⁴⁴

How did these disastrous conditions characterizing capitalism worldwide develop? An understanding of the failure of capitalism, beginning in the twentieth century, requires a historical examination of the rise of neoliberalism, and how this has only served to increase the destructiveness of the system. Only then can we address the future of humanity in the twenty-first century.

Neoliberalism and Capitalist Failure

Many of the symptoms of the failure of capitalism described above are well-known. Nevertheless, they are often attributed not to capitalism as a system, but simply to neoliberalism, viewed as a particular paradigm of capitalist development that can be replaced by another, better one. For many people on the left, the answer to neoliberalism or disaster capitalism is a return to welfare-state liberalism, market regulation, or some form of limited social democracy, and thus to a more rational capitalism. It is not the failure of capitalism itself that is perceived as the problem, but rather the failure of neoliberal capitalism.

In contrast, the Marxian tradition understands neoliberalism as an inherent outgrowth of late capitalism, associated with the domination of monopoly-finance capital. A critical-historical analysis of neoliberalism is therefore crucial both to grounding our understanding of capitalism today and uncovering the reason why all alternatives to neoliberalism and its capitalist absolutism are closed within the system itself.

The term neoliberalism had its origin in the early 1920s, in the Marxian critique of Ludwig von Mises’s Nation, State, and Economy (1919) and Socialism: An Economic and Sociological Analysis (1922), both of which were written as virulent anti-socialist tracts, constituting the foundational works of neoliberal-capitalist ideology.⁴⁵ In these works, Mises, then employed by the Vienna Chamber of Commerce, insisted that the “old liberalism” had to be “relaid” in such a way as to defeat socialism. In the process, he equated socialism with “destructionism,” insisted that monopoly was consistent with capitalist free competition, defended unlimited inequality, and argued that consumers exercised “democracy” through their purchases, which were equivalent to ballots. He strongly condemned labor legislation, compulsory social insurance, trade unions, unemployment insurance, socialization (or nationalization), taxation, and inflation as the enemies of his refurbished liberalism.⁴⁶ So extreme were Mises’s neoliberal views that he explicitly took the side of the crass, utilitarian pedagogue M’Choakumchild against the defiant young heroine Sissy Jupe, as portrayed by Dickens in Hard Times. Dickens, Mises claimed, had “taught millions to hate Liberalism and Capitalism.”⁴⁷

In 1921, Austro-Marxist Max Adler coined the term neoliberalism to designate Mises’s attempt to refurbish a fading liberal order through a new ideology of market fetishism. This was followed by a sharp criticism of Mises’s neoliberal ideology in 1923 by the gifted Austro-Marxist Helene Bauer. In 1924, the German Marxist Alfred Meusel wrote a lengthy critique of Mises, entitled “Neoliberalism” (“Der Neu-Liberalismus”) for the leading German socialist theoretical journal Die Gesellschaft, edited by Rudolf Hilferding.⁴⁸

Building on a wealth of Marxian analysis, Adler, Bauer, and Meusel attacked Mises’s claim that an unregulated capitalism was the only rational economic system and that socialism was equivalent to destructionism. They strongly challenged his ahistorical depiction of a harmonious capitalism that promoted free exchange and free trade through the market mechanism. A serious logical flaw in Mises’s analysis, they contended, was the systematic bifurcation built into his neoliberal ideology, whereby trade unions were considered constraints on trade while employers’ associations and monopolistic corporations were justified as consistent with free competition. Likewise, it was noted that Mises advocated a strong state to repress working-class struggles in the name of a self-regulating market system, even when state action on behalf of workers was condemned as anti-free market and a form of class terror. For Meusel, Mises was “a faithful servant of the mobile capitalist” or international finance capital. Later, in 1926, the protofascist economist Othmar Spann criticized the atavistic attempt to revert to a more extreme version of classical liberalism, referring to this in his Types of Economic Theory as “The Neo-Liberal Trend.”⁴⁹ In 1927, in his work Liberalism, Mises himself distinguished between “the older liberalism and…neoliberalism” on the basis of the commitment of the former to equality, in contrast to the rejection of equality (other than so-called equality of opportunity) by the latter.⁵⁰

Neoliberalism, as it first emerged from Mises’s pen, was thus viewed by Marxian critics in the 1920s (and even by some figures on the right) as an attempt to rationalize a monopoly or finance capital far removed from the precepts of classical liberalism. It was designed to provide the intellectual basis for capitalist class warfare against not only socialism, but all attempts at social regulation and social democracy: a no-quarter-given attack on the working class.

Mises’s assault on socialism, together with that of his protégé Friedrich Hayek, was motivated in part by a profound disenchantment with Red Vienna under the sway of Austro-Marxism, which was inspired by figures like Adler, Otto Bauer, and Karl Renner.⁵¹ Conversely, it was this same political environment of Red Vienna, which dominated Austrian politics from 1919–32, that inspired Karl Polanyi, who was strongly influenced by Adler and Otto Bauer, to develop a crushing critique of the neoliberal belief in the self-regulating market—later to form the basis of The Great Transformation (1946).⁵²

In the 1930s to 1960s, following the Great Depression and the Second World War, neoliberal ideology waned in the context of the deepening crisis of capitalism. In the early 1930s, as the storm clouds gathered over Europe, Mises served as an economic advisor to Austrofascist Chancellor-dictator Engelbert Dollfuss prior to the Nazi takeover of Austria.⁵³ He later emigrated to Switzerland and then to the United States, enjoying the support of the Rockefeller Foundation and teaching at New York University. Meanwhile, Hayek was recruited by the London School of Economics at the instigation of the early neoliberal British economist Lionel Robbins.

The post-Second World War years in the West were known as the age of Keynes. Spurred on by increased state spending (particularly on the military in the context of the Cold War), the rebuilding of the war-torn European and Japanese economies, the expansion of the sales effort, waves of automobilization in both the United States and Europe, and two major regional wars in Asia—capitalist economies grew rapidly for a quarter-century.⁵⁴ Meanwhile, faced with the threat of the alternative model represented by the Soviet Union, and the advent of strong unions as a result of the developments of the 1930s and ’40s, the West moved in the direction of Keynesianism, social democracy, and the welfare state.

Nevertheless, the tendency toward economic stagnation already exhibited in the 1930s remained as a structural flaw of the system, temporarily masked by the so-called Golden Age of rapid growth and increasing income for workers that immediately followed the Second World War. The giant corporations of monopoly capitalism succeeded in appropriating ever-greater surplus in both absolute and relative terms, which was concentrated in the hands of ever-fewer wealth holders, leading to a tendency toward overaccumulation of capital and manufacturing overcapacity, countered in part by a massive expansion of the sales effort, militarism, and imperialism, but with ever-lessening effect in stimulating the economy.

U.S. imperialism and the proliferation of dollars abroad led to a breakdown in the Bretton Woods system that had stabilized world trade in the early post-Second World War period, causing Richard Nixon to end the dollar-gold standard in 1971. This was associated with a slowdown in the U.S. economy from the late 1960s on, as the Vietnam War was winding down, resulting in a structural crisis of the capitalist system in the mid–1970s, which was to mark the beginning of decades of economic stagnation and a long decline in the trend rate of growth in the advanced capitalist economies. The major stimuli that sparked the post-Second World War boom had all waned, leaving the advanced capitalist economies in the doldrums.⁵⁵

The first response to the structural crisis of the capitalist system that emerged in the 1970s was to utilize Keynesian demand-promotion to expand state spending. U.S. civilian-government spending on goods and services as a percentage of gross domestic product thus reached a peak during the Nixon administration.⁵⁶ This, plus the struggles of unions to maintain their real wages in the crisis, while monopolistic corporations aggressively raised prices to increase their profit margins, led to a period of stagflation (economic stagnation plus inflation).

Inflation, which depreciates accumulated wealth held in the form of monetary assets, is a much greater immediate threat to the position of the capitalist class than is economic stagnation, while for the working class the situation is reversed. The result was the emergence of an anti-Keynesian movement within the capitalist class, which designated anything to the left of hardcore neoliberalism as socialist or totalitarian in the manner of Hayek’s Road to Serfdom, and sought to reverse decades of modest working-class gains.⁵⁷ There was a sharp turn toward austerity and economic restructuring, initially under the guise of monetarism and supply-side economics, and later taking a more amorphous free-market character. A concerted effort to destroy unions by combined political, economic, and juridical means was carried out, eliminating what John Kenneth Galbraith in his American Capitalism had once called the “countervailing power” of labor.⁵⁸

Key to the reemergence of neoliberalism in the post-Second World period was the Mont Pèlerin Society, named after the Swiss spa where Mises, Hayek, Robbins, Milton Friedman, George Stigler, Raymond Aron, and others met in 1947, to promote neoliberal economic and political ideas. The members of the Mont Pèlerin Society generally referred to themselves as classical liberals in the European sense. No doubt remembering the devastating Marxist critiques of neoliberal ideology in the 1920s, they eschewed the label neoliberal, which Mises himself had adopted in 1927, and which had been put forward in the 1938 Walter Lippmann Colloquium in Paris that Mises and Hayek attended.⁵⁹ Instead, neoliberalism was presented by its chief adherents in the Mont Pèlerin Society not as a separate political ideology from, but as an extension of, classical liberalism and attributable to inherent features of human nature. In this way, as Michel Foucault argued, it was converted into a kind of biopolitics.⁶⁰

Nevertheless, while abandoning the neoliberal label, the Mont Pèlerin Society, together with the Department of Economics at the University of Chicago, was to be a bastion of neoliberal ideology—in precisely the sense that it had first emerged between the world wars. In the Keynesian era of the 1950s and ’60s, figures like Mises, Hayek, Friedman, and James Buchanan remained on the margins, though heavily bankrolled by private foundations.⁶¹ But with the return of economic stagnation in the 1970s, neoliberal intellectuals were actively recruited at the apex of monopoly capital in order to provide the ideological basis for an ongoing corporate campaign to restructure the capitalist economy, deliberately targeting labor, the state, and the underdeveloped economies of the global South.

Central to neoliberal philosophy from the beginning was the defense of concentrated corporate capital and class dynasties, which were portrayed as representing free-market competition and entrepreneurship.⁶² The very virulence of neoliberal anti-socialism meant that it represented the drive to a complete market-privatization of social life. In Margaret Thatcher’s London and Ronald Reagan’s Washington, figures like Hayek and Friedman became the symbols of the neoliberal era, sometimes called the age of Hayek. The new so-called Nobel Prize in Economics, or the Sveriges Riksbank (Bank of Sweden) Prize in Economic Sciences in Memory of Alfred Nobel, established by the Bank of Sweden in 1969, was controlled from its inception by ultraconservative neoliberal economists. Seven members of the Mont Pèlerin Society, including Hayek, Friedman, Stigler, and Buchanan received the prize between 1974 and 1992, while even mildly social-democratic economists were all but excluded.⁶³

Neoliberalism as an economic ideology was largely ineffectual in normal economic-policy terms, judged by its lack of success in promoting growth, since, like neoclassical economics itself, it sought to deny (or rationalize) the reality of an economy dominated by big business and concentrated power.⁶⁴ Nevertheless, it served as an effective political-economic strategy for big business and the emerging billionaire class in an age where monopoly-finance capital sought to seize control of all monetary flows in society.⁶⁵ Although capitalist economies continued to stagnate with growth rates diminishing decade by decade, the surplus capital in the hands of the corporate rich not only increased, but by virtue of financialization, globalization, and the revolution in digital technology, new forms of amassing wealth were created.⁶⁶ Financialization—the relative shift of the economy from production to finance—opened up vast new avenues to speculation and wealth formation, relatively removed from capital investment in new productive capacity (that is, real capital accumulation).

Globalization meant not only new markets, but, more importantly—through the global labor arbitrage—the appropriation of huge economic surpluses from the overexploitation of low-wage labor in the periphery that ended up in the financial coffers of multinational corporations and wealthy individuals in the rich countries.⁶⁷ The benefits of imperialism to workers in the center of the capitalist economy no longer included incremental gains in employment and income associated with the global dominance of production, but, at best, could be said to contribute to cheaper prices from the outsourcing of production by multinational corporations, symbolized by the growth of Walmart. Meanwhile, digital technology created the basis of a new globalized surveillance capitalism, buying and selling information on the population, primarily motivated by the sales effort, leading to the creation of enormous information-technology monopolies.⁶⁸

Vast increases in inequality and wealth were justified as returns for innovation, always attributed to a very few rather than as the collective product of society. In the new era of expropriation, all was up for grabs: education, health systems, transportation, housing, land, cities, prisons, insurance, pensions, food, entertainment. All exchanges in society were to be fully commodified, corporatized, and financialized, with the funds flowing into financial centers and feeding speculation on capital gains, leveraged by debt. Human communication was itself to be turned into a commodity. All in the name of a free-market society.

For the powers that be, this strategy was enormously successful. Capitalism, despite Adam Smith, had never been about the wealth of nations so much as the wealth of the capitalist class. The financialization process managed to counter economic-stagnation tendencies to some extent, but at the cost of periodic financial crises layered over the normal business cycle. Nevertheless, the amassing of wealth at the top continued to accelerate, with financial crises themselves leading to even greater financial concentration and centralization. In this situation, neoliberalism increasingly took on the logic of financialized expropriation and accumulation.

The state too became subject to the financialization policy, shifting its overall role to protecting the value of money.⁶⁹ In the Great Financial Crisis of 2007–09, the big banks and corporations were almost all bailed out; the population was not. Rather than representing a severe crisis for neoliberalism itself, the Great Financial Crisis only gave it further impetus, reflecting the fact that neoliberal politics had become the ideological expression of an all-encompassing system of financial expropriation.⁷⁰

A characteristic of this new era of financialized accumulation is that it is progressively removed from the realities of production and use value, heightening the conflict between exchange value (the value form) and use value (the natural form) within the overall production and accumulation process.⁷¹ The result is “a social and ecological planetary emergency.”⁷² This is most evident in the rapid destruction of the natural environment. Fossil fuels are entered as financial assets on the books of corporations, even when they exist only in the form of reserves buried in the ground. In this way, they are integral to the entire financialized accumulation process of monopoly capitalism. Trillions of dollars of Wall Street assets are thus tied up in fossil capital.⁷³ This has made it doubly difficult to shift away from the extraction and use of fossil fuels to more sustainable alternatives, such as solar and wind power. No one owns the sun’s rays or the wind. Hence, there is less of a vested interest in these forms of energy. In today’s capitalism, more than ever before, current and potential future profits dictate all, at the expense of people and the planet. The human population stands by, seemingly helpless, watching the destruction of the climate and the loss of innumerable species, all imposed by the ostensibly overwhelming force of market society.

Neoliberalism has always been directly opposed to strict laissez faire since it has invariably emphasized a strong, interventionist, and constructionist relation to the state, in the direct service of private capital and market authoritarianism, or what James K. Galbraith has critically referred to as the predator state.⁷⁴ In the neoliberal view, capitalist absolutism is not a spontaneous product—it must be created. The role of the state is not simply to protect property, as maintained by Smith, but, as Foucault brilliantly explained in his Birth of Biopolitics, extends to the active construction of the domination of the market over all aspects of life.⁷⁵ This means refashioning the state and society on the model of the corporation or the market.

As Foucault put it, “the problem of neo-liberalism is…how the overall exercise of political power can be modeled on the principles of a market economy.” The state must not “correct the destructive effects of the market,” where these fall “on society” outside the market, but rather take advantage of these destructive effects to impose further measures that extend the reach and penetration of the market.⁷⁶ The goal is not to transcend the state altogether, but to shackle it to the monopolistic-competitive ends of capital, a view forcefully propagated by Buchanan.⁷⁷ The shackles imposed on the neoliberal state dominated by monopoly-finance capital are specially designed to limit any changes that would negatively affect the value of money. Hence, both fiscal and monetary policy are increasingly put out of reach of the government itself—in those cases where changes going against the vested interests are contemplated. Central banks have been transformed into largely autonomous branches of the state, in fact controlled by the banks. Treasury departments are shackled by debt ceilings. Regulatory agencies are captured by monopoly-finance capital and act, for the most part, in the direct interest of corporations outside governmental control.⁷⁸

The result of such an attempt to construct a so-called self-regulating market society—in fact requiring constant state interventions on behalf of capital and the creation of a predator state—is, as Polanyi powerfully demonstrated, to undermine the very foundations of society and life itself.⁷⁹ But, in terms of capitalism today, there is no going back. Stagnation, financialization, privatization, globalization, the marketization of the state, and the reduction of people to “human capital” and nature to “natural capital,” have made neoliberal politics an irrevocable characteristic of monopoly-finance capital, which only an anti-capitalist politics can supplant.

Neoliberalism has thus become integrated into the system in the context of the structural crisis of capitalism in its globalized monopoly-finance phase. It extends this structural crisis to all of society and makes it universal and insurmountable within the system. The answer to every failing of capitalism is thus to turn the screw further, which accounts for much of the allure of the market principle, since it is perpetually seen as the solution to the problems it causes—with each failure opening up new areas of profitability for a few. The result of this irrational logic is not merely economic and ecological disaster, but the gradual demise of the liberal-democratic state itself. Neoliberalism thus points inevitably to market authoritarianism and even neofascism. In this respect, Donald Trump is no mere aberration.⁸⁰

As Mises openly declared in 1927 in Liberalism: “It cannot be denied that Fascism and similar movements [on the right] aiming at the establishment of dictatorships are full of the best intentions, and that their intervention, has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.”⁸¹ Hayek, along with other neoliberals such as Friedman and Buchanan, actively supported General Augusto Pinochet’s coup in Chile in 1973, overthrowing the democratically elected socialist government of Salvador Allende and imposing an economic shock doctrine on the population. In this context, Hayek, in a trip he took to Chile in 1978, personally warned Pinochet against a resurrection of “unlimited democracy.” During a second visit in 1981, he stated that “a dictatorship…may be more liberal in its policies than a democratic assembly.”⁸² As he wrote in 1949 in Individualism and Economic Order, “we must face the fact that the preservation of individual freedom is incompatible with a full satisfaction of our views of distributive justice.”⁸³

Neoliberalism, in short, is not a mere paradigm that can be dispensed with, but represents the absolutist tendencies of the system in the age of monopoly finance. As Foucault pointed out, the “survival of capitalism” could only be ensured for a time by the singular application of its economic logic to all of sociological existence.⁸⁴ Reduced, however, to a pure Midas principle, capitalism could only end up by destroying everything in existence with which it came into contact. But if capitalism has now failed, the question becomes: What next?

What Next?

In his magisterial The Age of Extremes: A History of the World 1914–1991, Marxist historian Eric Hobsbawm, viewing the approach of the twenty-first century, indicated that there were reasons to be concerned that the new century might be even more threatening to humanity than the “age of extremes” that had preceded it, a century that had been punctuated by world wars, imperial conflicts, and economic depressions—and in which humanity was confronted for the first time with the possibility of its own self-annihilation. Yet, looking forward, he concluded, the new century (and millennium) offered even greater dangers.

“We live in a world,” Hobsbawm observed in 1994,

uprooted and transformed by the titanic economic and the techno-scientific process of the development of capitalism, which has dominated the past two or three centuries. We know, or at least it is reasonable to suppose, that it cannot go on ad infinitum. The future cannot be a continuation of the past, and there are signs, both externally, and, as it were, internally, that we have reached a point of historic crisis. The forces generated by the techno-scientific economy are now great enough to destroy the environment, that is to say, the material foundations of human life. The structures of human societies themselves, including even some of the social foundations of the capitalist economy, are on the point of being destroyed by the erosion of what we have inherited from the human past. Our world risks both explosion and implosion. It must change.

We do not know where we are going. We only know that history has brought us to this point and—if readers share the argument of this book—why. However, one thing is plain. If humanity is to have a recognizable future, it cannot be by prolonging the past or the present. If we try to build the third millennium on that basis, we shall fail. And the price of failure, that is to say, the alternative to a changed society, is darkness.⁸⁵

Hobsbawm left little doubt as to what the principal danger was at present, namely “the theological faith in an economy in which resources were allocated entirely by the totally unrestricted market, under conditions of unlimited competition,” carried out by evermore-concentrated corporations. Chief among the dangers of such a system was the likelihood of “irreversible and catastrophic consequences for the natural environment of this planet, including the human race which is part of it.”⁸⁶

Hobsbawm’s position was roundly criticized at the time, even by many on the left, as overly “pessimistic” with regard to the course of capitalist development.⁸⁷ Today, however, a quarter-century later, it is clear that he hit the mark, as the concerns that he voiced then are even more evident today. Nevertheless, such realism in approaching the failure of capitalism in our time is still rare on the part of left intellectuals in the wealthy countries, even in the face of decades of neoliberal assault combined with economic stagnation, financialization, growing inequality, and environmental decline. One common response is to refer to Polanyi’s notion of a double movement, in which the recurring myth of a self-regulating market society inevitably gives rise to defensive movements to protect society and the environment.⁸⁸ This has fed the hope that the pendulum will swing back again, leading to a more affirmative-style liberalism or social democracy. This sustains the belief that the failures of unregulated capitalism can be countered by a return to regulated capitalism, a new Keynesian age—as if history had stood still.

Pinning hopes on a double movement of this kind, however, denies four material realities. First, social democracy came about and persisted only as long as the threat of actually existing socialist societies was present and union strength endured, and faded immediately with the demise of both. Second, neoliberalism today is ingrained in capitalism itself, in the phase of monopoly-financial capital. The earlier age of industrial-capital dominance, on which Keynesian economics was based, is now gone. Third, social democracy was in practice reliant on an imperialist system that was opposed to the interests of the vast majority of humankind. Fourth, the liberal-democratic state and the dominance of a purportedly enlightened industrial-capitalist class willing to engage in a social accord with labor is largely a relic of the past, with its structural bases having all but disappeared.

Even when social democratic parties come to power in these circumstances, promising to work within the system and create a kinder and gentler capitalism, they invariably fall prey to the laws of motion of capitalism in this phase. As Michael Yates writes, in the context of a failed capitalism: “Today, it is impossible to believe that there will be a recovery of even the modest political and economic project that labor unions and political parties once embraced and helped bring to fruition.”⁸⁹

On the so-called liberal-left, some have adopted a broad technological-modernization approach, largely disregarding social relations. Here, in an implicit technological determinism, digital technology, social engineering, and wise liberal management are expected to reign supreme. It is true, such thinkers argue, that the capitalist absolutism of neoliberalism points to unending disaster. But capitalism can be altered, presumably from above, to fit any exigency, even the sidelining of profits and accumulation, conforming to current technological imperatives. What will remain of the system, in this conception, will be the bare frames of corporations and markets now devoid of any class or acquisitive drive, mere engines of efficiency.

As Jørgen Randers, one of the original Limits to Growth authors, declares in 2052—his forecast (in 2012) of the world society forty years into the future—that the “modified capitalism” that will emerge mid–point in this century “will be a system wherein collective well-being is set above the return of the individual.” Modified capitalism will be subject to the guidance of “wise government,” directed by technocrats, while being characterized by “less democracy and less market freedom.” Rather than directly facing up to the failures of capitalism—though he projects forty years of economic stagnation for the major economic powers and continued poverty in the “rest of the world”—Randers sees such questions as largely irrelevant to his vision of the world in 2052. The dominant reality, he predicts, will be a more efficient and sustainable, if more physically constrained, version of the present-day capitalist world.⁹⁰

Yet, in the barely seven years since his book was written, it is already clear that Randers’s predictions were wrong in every respect. The situation confronting the world is qualitatively more serious than it was in 2012, at a time when gradualist, technocratic solutions to climate change still seemed feasible to many even among those on the left and when the liberal-democratic state appeared perfectly stable. Today, in the context of accelerated climate change, continuing economic stagnation, political upheaval, and growing geopolitical instability, it is clear that the challenges that the world is facing will be both more cataclysmic and epoch-making than progressive ecological modernizers like Randers envisioned. The choices confronting us are now much harder.

Indeed, history has been unkind to all such attempts to provide detailed forecasts of the future, particularly if they simply extend current trends and leave the bulk of humanity and their struggles out of the picture. It is for this reason that a dialectical view is so important. The actual course of history can never be predicted. The only thing certain about historical change is the existence of the struggles that drive it forward and that guarantee its discontinuous character. Both implosions and explosions inevitably materialize, rendering the world for new generations different than that of the old. History points to numerous social systems that have reached the limits of their ability to adapt their social relations to allow for the rational and sustainable use of developing productive forces. Hence, the human past is dotted by periods of regression, followed by revolutionary accelerations that sweep all before them. As the conservative historian Jacob Burckhardt declared in the nineteenth century, “a historical crisis” occurs when “a crisis in the whole state of things is produced, involving whole epochs and all or many peoples of the same civilization.… The historical process is suddenly accelerated in terrifying fashion. Developments which otherwise take centuries seem to flit by like phantoms in months or weeks, and are fulfilled.” He called this the “acceleration of historical processes.”⁹¹

Burckhardt principally had in mind social revolutions, like the French Revolution of 1789. This was an acceleration of history that, as the modern French historian Georges Lefebvre explained, commenced as a series of widening revolutions, mutating with terrifying speed, from an aristocratic revolution to a bourgeois revolution to a popular revolution and then a peasant revolution—finally taking on the character of a historic “bloc, a single thing,” seemingly unconquerable, which reshaped much of world history.⁹²

Could such a revolutionary acceleration of history, though on an incomparably greater scale, happen in the twenty-first century? Most establishment commentators in the hegemonic countries of the world imperialist system would say no, based on their own narrow experience and limited view of history. Nevertheless, revolutions continue to break out in the periphery of the world system and are, even now, only put down by imperialist economic, political, and military interventions. Moreover, the failure of capitalism on a planetary scale today threatens all of civilization and life on the planet as we know it. If drastic changes are not made, global temperature this century will increase by 4° or even 6°C from preindustrial times, leading to conditions that will imperil humankind as a whole. Meanwhile, the extreme capitalism of today seeks to expropriate and enclose all the bases of material existence, siphoning off almost the entire net social surplus and robbing the natural environment for the direct benefit of a miniscule few.

As a direct result of capitalist social relations, the material challenges now facing humanity are greater than anything ever seen before, pointing to an accumulation of catastrophe along with the accumulation of capital.⁹³ Hundreds of millions of people under these circumstances are already being drawn into struggles with the system, creating the basis of a new worldwide movement toward socialism. In his book Can the Working Class Change the World? Yates answers yes, it can. But it can only do so through a unifying struggle by workers and peoples aimed at genuine socialism.⁹⁴

It may be objected that socialism has been tried and has failed and hence no longer exists as an alternative. However, like the earliest attempts at capitalism in the Italian city-states of the late Middle Ages, which were not strong enough to survive amongst the feudal societies that surrounded them, the failure of the first experiments at socialism presage nothing but its eventual rebirth in a new, more revolutionary, more universal form, which examines and learns from the failures.⁹⁵ Even in failure, socialism has this advantage over capitalism: it is motivated by the demand for “freedom in general,” rooted in substantive equality and sustainable human development—reflecting precisely those collective social relations, borne of historical necessity and the unending struggle for human freedom, crucial to human survival in our time.⁹⁶

The great conservative economist Joseph Schumpeter, who, as Austrian finance minister in Red Vienna, had allied himself for a time with the socialist government and found himself attacked on all sides, once wrote that capitalism would perish not because of “the weight of economic failure,” but rather because its “very success” in pursuing its narrow economic ends, had undermined the sociological foundations of its existence. Capitalism, Schumpeter exclaimed, “‘inevitably’ creates conditions in which it will not be able to live and which strongly point to socialism as its heir apparent.”⁹⁷ He was, it turns out, in many ways correct, though not entirely in the way he expected. The global development of monopoly capitalism and financialization spearheaded by the very same counterrevolutionary neoliberalism that first arose in response to Red Vienna in the interwar years—at a time when Schumpeter himself was a major actor—has now undermined the material bases, not so much of capitalism itself, but of global society and planetary ecology. The result has been the emergence of an “atmosphere of almost universal hostility” to the prevailing social order, though, playing out in the confused context of the present, less as opposition to capitalism itself than to neoliberalism.⁹⁸

It is capitalism’s undermining of the very basis of human existence that will eventually compel the world’s workers and peoples to seek new roads forward. An inclusive, class-based movement toward socialism in this century will open up the possibility of qualitative new developments that the anarchy of the capitalist-market society with its monopolistic competition, extreme inequality, and institutionalized greed cannot possibly offer.⁹⁹ This includes the development of a socialist technology, in which both the forms of technology utilized and the purposes to which they are put are channeled in social directions, as opposed to individual and class gain.¹⁰⁰ It introduces the prospect of long-term democratic planning at all levels of society, allowing decisions to be made and distributions to occur outside the logic of the cash nexus.¹⁰¹ Socialism, in its most radical form, is about substantive equality, community solidarity, and ecological sustainability; it is aimed at the unification—not simply division—of labor.

Once sustainable human development, rooted not in exchange values, but in use values and genuine human needs, comes to define historical advance, the future, which now seems closed, will open up in a myriad ways, allowing for entirely new, more qualitative, and collective forms of development.¹⁰² This can be seen in the kinds of needed practical measures that could be taken up, but which are completely excluded under the present mode of production. It is not physical impossibility, or lack of economic surplus, most of which is currently squandered, that stands in the way of the democratic control of investment, or the satisfaction of basic needs—clean air and water, food, clothing, housing, education, health care, transportation, and useful work—for all. It is not the shortage of technological know-how or of material means that prevents the necessary ecological conversion to more sustainable forms of energy.¹⁰³ It is not some inherent division of humanity that obstructs the construction of a New International of workers and peoples directed against capitalism, imperialism, and war.¹⁰⁴ All of this is within our reach, but requires pursuing a logic that runs counter to that of capitalism.

Humanity, Karl Marx wrote, “inevitably sets itself only such tasks as it is able to solve, since closer examination will always show that the problem itself arises only when the material conditions for its solution are already present or at least in the course of formation.”¹⁰⁵ The very waste and excess of today’s monopoly-finance capitalism, together with the development of new means of communication that allow for greater human coordination, planning, and democratic action than ever before, suggest that there are countless paths forward to a world of substantive equality and ecological sustainability once the world is freed from the fetters of capital.¹⁰⁶

The answers to the crises before us are both social and ecological. They require the rational regulation of the metabolism between human beings and nature under the control of associated humanity—regenerating and maintaining the flows, cycles, and other vital processes of healthy, local, regional, and global ecosystems (and species habitats)—in accord with the needs of the entire chain of human generations. The mainsprings of human action throughout history lie in the drive for human freedom and the struggle to master our relation to the world. The first of these ultimately demands equality and community; the second, human development and sustainability. It is on these struggles for collective advancement that we must ultimately rely if humanity is to have a future at all.

Notes

1. ↩ George Monbiot, “The Earth Is in a Death Spiral. It will Take Radical Action to Save Us,” Guardian, November 14, 2018; Leonid Bershidsky, “Underemployment is the New Unemployment,” Bloomberg, September 26, 2018.
2. ↩ For an insightful historical analysis of the general problem of the breakdown and disintegration of civilizations, see Arnold J. Toynbee, A Study of History, abridged by D.C. Somerveil (Oxford: Oxford University Press, 1946), 244–428.
3. ↩ Karl Marx and Frederick Engels, The Communist Manifesto (New York: Monthly Review Press, 1964), 2.
4. ↩ For analyses of stagnation and financialization, see Harry Magdoff and Paul M. Sweezy, Stagnation and the Financial Explosion (New York: Monthly Review Press, 1986); John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (New York: Monthly Review Press, 2009); John Bellamy Foster and Robert W. McChesney, The Endless Crisis (New York: Monthly Review Press, 2012); Costas Lapavitsas, Profits Without Production: How Finance Exploits Us All (London: Verso, 2013).
5. ↩ Drew Desilver, “For Most U.S. Workers, Real Wages Have Barely Budged in Decades,” Pew Research Center, August 7, 2018.
6. ↩ Yuki Noguchi, “Gig Economy Renews Debate Over whether Contract Laborers Are Really Employees,” NPR, March 7, 2018.
7. ↩ The concept of liberated capitalism is taken from Henryk Szlajfer (interviewed by Grzegorz Konat), “Liberated Capitalism,” forthcoming, Monthly Review.
8. ↩ John Smith, Imperialism in the Twenty-First Century (New York: Monthly Review Press, 2016).
9. ↩ Heather Stewart, “£13trn Horde Hidden from Taxman by Global Elite,” Guardian, July 21, 2012; Sam Ro, “The Mega Rich Are Holding at Least $21 Trillion in Offshore Tax Havens,” Business Insider, July 22, 2012; Nicholas Shaxson, Treasure Islands (London: Palgrave Macmillan, 2011).
10. ↩ Larry Elliott, “Inequality Widens as 42 People Hold Same Wealth as 3.7bn Poorest,” Guardian, January 21, 2018; Rupert Neate, “Bill Gates, Jeff Bezos, and Warren Buffett are Wealthier than Poorest Half of US,” Guardian, November 8, 2017.
11. ↩ World Inequality Report 2018 (World Inequality Lab, 2018).
12. ↩ Lant Pritchett, “Divergence, Big Time,” Journal of Economic Perspectives 11, no. 3 (1997): 3–17; Jason Hickel, “Global Inequality May Be Worse than We Think,” Guardian, April 8, 2016; John Bellamy Foster, “The New Imperialism of Globalized Monopoly-Finance Capital,” Monthly Review 67, no. 3 (July–August 2015): 11–12.
13. ↩ “More than 60 percent of the World’s Employed Population Are in the Informal Economy,” International Labour Organisation, April 30, 2018; Foster and McChesney, The Endless Crisis, 144–51.
14. ↩ “State of Homelessness,” National Alliance to End Homelessness, accessed January 9, 2019, http://endhomelessness.org.
15. ↩ Oliver Milman, “‘We Are at War’: New York’s Rat Crisis Made Worse by Climate Change,” Guardian, December 21, 2018.
16. ↩ Lisa Rapaport, “Life Expectancy Declines Seen in the US and Other High-Income Countries,” Reuters, August 22, 2018; “Life Expectancy in America Has Declined Two Years in a Row,” Economist, January 4, 2018; Rebecca Voelker, “Black Lung Resurgence Raises New Challenges for Coal Country Physicians,” JAMA Network, December 12, 2018; Thea Jourdan, “Return of the Victorian Diseases: Scarlet Fever, TB, Whooping Cough, Even Scurvy,” Daily Mail, April 4, 2016.
17. ↩ Claas Kirchelle, “Pharming Animals: A Global History of Antibiotics in Food Production (1935–2017),” Palgrave Communications 4, no. 96 (2018); Amanda Holpuch, “UN Meeting Tackles the ‘Fundamental Threat’ of Antibiotic Resistant Superbugs,” Guardian, September 21, 2016: “Antimicrobial Resistance a ‘Global Health Emergency,” UN, Ahead of Awareness Week,” UN News, November 12, 2018; Rob Wallace, Big Farms Make Big Flu (New York: Monthly Review Press, 2016).
18. ↩ Frederick Engels, The Condition of the Working Class in England (London: Penguin, 1987), 127–28.
19. ↩ Stephanie Simon, “K–12 Student Databases Jazzes Tech Startups, Spooks Parents,” Reuters, March 3, 2013; Sharon Lurye, “Why Your Student’s Personal Data Could Be Freely Bought and Sold,” Hechinger Report, June 14, 2018; Gerald Coles, Miseducating for the Global Economy (New York: Monthly Review Press, 2018); Howard Ryan, Educational Justice (New York: Monthly Review Press, 2017); John Bellamy Foster, “Education and the Structural Crisis of Capital,” Monthly Review 63, no. 3 (July–August 2011): 6–37.
20. ↩ Charles Dickens, Hard Times (London: Penguin, 1995), 10–15.
21. ↩ Erica R. Meiners and Therese Quinn, “Militarism and Education Normal,” Monthly Review 63, no. 3 (July–August 2011): 77–86.
22. ↩ “Half of Americans Have Family Members Who Have Been Incarcerated,” Equal Justice Institute, December 11, 2018; Michelle Alexander, The New Jim Crow (New York: New Press, 2012); Drew Kann, “Five Facts Behind America’s High Incarceration Rate,” CNN, July 10, 2018; “Criminal Justice Fact Sheet,” NAACP, accessed January 12, 2019 (data on incarceration from 2015); Jacqueline Howard, “Black Men Nearly 3 Times as Likely to Die from Police Use of Force, Study Says,” CNN, December 20, 2016; Keeanga-Yamahtta Taylor, From #BlackLivesMatter to Black Liberation (Chicago: Haymarket, 2016).
23. ↩ “Facts and Figures: Ending Violence Against Women,” UN Women, last updated in November 2018; L. A. Sharp, “The Commodification of the Body and Its Parts,” Annual Review of Anthropology 29 (2000): 287–328; Robin McKie, “Biologists Think 50% of Species Will Be Facing Extinction by End of the Century,” Guardian, February 25, 2017.
24. ↩ John Bellamy Foster and Robert W. McChesney, “Surveillance Capitalism,” Monthly Review 66, no. 3 (July–August 2014): 1–31.
25. ↩ “Who’s Working for Your Vote,” Tactical Technology Collective, November 29, 2018.
26. ↩ Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966), 155; Doug Henwood, “Trump and the New Billionaire Class,” in Socialist Register 2019, ed. Leo Panitch and Greg Albo (New York: Monthly Review Press, 2018), 100–25; Jane Mayer, Dark Money (New York: Random House, 2017).
27. ↩ Timothy M. Gill, “Why the Power Elite Continues to Dominate American Politics,” Washington Post, December 24, 2018.
28. ↩ John Pilger, “New Cold War and Looming Threats,” Frontline, December 21, 2018; Christi Parsons and W. J. Hennigan, “President Obama Who Hoped to Sow Peace, Instead Led the Nation in War,” Los Angeles Times, January 13, 2017.”
29. ↩ John Mecklin, “It is Now Two Minutes to Midnight,” Bulletin of the Atomic Scientists, accessed December 19, 2018.
30. ↩ Zack Beauchamp , “9 Maps and Charts that Explain the Global Refugee Crisis,” Vox, June 30, 2017; “International Migration Report 2017 Highlights,” United Nations, December 18, 2017; Philippe Rekacewicz, “Mapping Europe’s War on Immigration,” Le Monde Diplomatique, October 16, 2013; Joseph S. Nye, “2050: How Can We Avoid a Gated World,” World Economic Forum, January 19, 2014; James Randerson, “Expert Warns Climate Change Will Lead to ‘Barbarisation,’” Guardian, May 15, 2008; John Bellamy Foster, Trump in the White House (New York: Monthly Review Press, 2017), 104.
31. ↩ “2018 World Hunger and Poverty Facts,” Hunger Notes, accessed December 19, 2018, http://worldhunger.org; Fred Magdoff, “Twenty-First-Century Land Grabs: Accumulation by Agricultural Dispossession,” Monthly Review 65, no. 6 (November 2013): 1–18.
32. ↩ David Ruccio, “Dollarization in the United States,” Occasional Links and Commentary blog, December 10, 2018, http://anticap.wordpress.com; “41 Million People in the United States Face Hunger,” Feeding America, September 6, 2017.
33. ↩ Farshad Araghi, “The Great Global Enclosure of Our Times,” in Hungry for Profit, eds. Fred Magdoff, John Bellamy Foster, and Frederick H. Buttel (New York: Monthly Review Press, 2000), 145–60.
34. ↩ Mike Davis, Planet of Slums (London: Verso, 2006).
35. ↩ Vijay Prashad, “We Have No Choice But to Live Like Human Beings,” Tricontinental, December 14, 2018, http://thetricontinental.org; “‘Shameful’: What’s Driving the Global Housing Crisis?,” Al Jazeera, November 3, 2018.
36. ↩ Will Steffen, et al., “Planetary Boundaries,” Science 347, no. 6223 (2015); Ian Angus, Facing the Anthropocene (New York: Monthly Review Press, 2016); John Bellamy Foster, Brett Clark, and Richard York, The Ecological Rift (New York: Monthly Review Press, 2010).
37. ↩ Damian Carrington, “Humanity Has Wiped Out 60% of Animal Populations Since 1970, Report Finds,” Guardian, October 29, 2018; M. Grooten and R. E. A. Almond, eds., Living Planet Report—2018: Aiming Higher (Gland, Switzerland: World Wildlife Foundation, 2018); Ben Guarino, “Hyperalarming Study Shows Massive Insect Loss,” Washington Post, October 15, 2018; Rodolfo Dirzo, Hilary S. Young, Mauro Galetti, Geraldo Ceballos, Nick J. B. Isaac, and Ben Collen, “Defaunation in the Anthropocene,” Science 35, no. 6195 (2014): 401–6.
38. ↩ James Hansen, “Climate Change in a Nutshell: The Gathering Storm,” December 18, 2018, 25.
39. ↩ Will Steffen, et al., “Trajectories of the Earth System in the Anthropocene,” Proceedings of the National Academy of Sciences 115, no. 33 (2018). For estimated cumulative emissions from fossil-fuel use, cement production, and land-use change since the beginning of industrialization, see trillionthtonne.org.
40. ↩ Hansen, “Climate Change in a Nutshell,” 42–47; Kendra Pierre-Louis, “Greenhouse Gas Emissions Accelerate Like a ‘Speeding Freight Train’ in 2018,” New York Times, December 5, 2018; Brad Plumer, “U.S. Carbon Emissions Surged in 2018 Even as Coal Plants Closed,” New York Times, January 8, 2019.
41. ↩ Marcelo Gleiser, “ExxonMobil vs. the World,” NPR, November 30, 2016; Andy Rowell, “Exxon’s 25 Year ‘Drop Dead’ Denial Campaign,” Oil Change International, April 14, 2014.
42. ↩ K. William Kapp, The Social Costs of Private Enterprise (Cambridge, Massachusetts: Harvard University Press, 1950), 231.
43. ↩ Herman Daly, From Uneconomic Growth to a Steady State Economy (Brookfield, Vermont: Edward Elgar, 2016), 131–44.
44. ↩ Samir Amin, “China 2013,” Monthly Review 64, no. 10 (March 2013): 14–33.
45. ↩ Ludwig von Mises, Nation, State, and Economy (Indianapolis: Liberty Fund, 1983); Ludwig von Mises, Socialism: An Economic and Sociological Analysis (Indianapolis: Liberty Fund, 1981).
46. ↩ Mises, Socialism, 323–54, 399–406, 413–62, 488–92; Nation, State, and Economy, 36–37, 143, 163–65.
47. ↩ Mises, Socialism, 421–22.
48. ↩ Phillip W. Magness, “The Pejorative Origins of the Term ‘Neoliberalism,’” American Institute for Economic Research, December 10, 2018; Alfred Meusel, “Zur Bürgerlichen Sozialkritik der Gegenwart: Der Neu-Liberalismus (Ludwig von Mises),” Die Gesellschaft: Internationale Revue für Sozialismus und Politik 1, no. 4 (1924): 372–83. (The article “Der Neu-Liberalismus” was the first of a two-part series; the second article went on to critique Othmar Spann.) Peter Goller, “Alfred Meusel als Kritiker von Ludwig Mises und Othmar Spann: Gegen ‘Neolberalismus’ and ‘Neoromantik’ (1924),” Mitteilungen der Alfred Klahr Gesellschaft 2 (2003); Peter Goller, “Helene Bauer Gegen die Neoliberal Bürgliche Ideologie von Ludwig Mises (1923),” Mitteilungen der Alfred Klahr Gesellschaft 4 (2005), http://klahrgesellschaft.at—includes Helene Bauer, “‘Gemeine Mann’ und ein Besserer Herr.” Adler strongly criticized Mises’s attempt to claim that Marx’s ideas were closely related to the traditional authoritarian Prussian state, on the grounds that everything outside of neoliberalism was essentially the same and that even democratic socialism was authoritarian in its rejection of liberalism. Max Adler, “Excursus on Anarchism,” in Austro-Marxism: The Ideology of Unity, ed. Mark E. Blum and William Smalldone (Boston: Brill, 2016), 207.
49. ↩ Magness, “The Pejorative Origins of the Term ‘Neoliberalism’”; Meusel, “Der Neu-Liberalismus,” 383; Bauer, “‘Gemeine Mann’ und ein Besserer Herr”; Othmar Spann, Types of Economic Theory (London: George Allen and Unwin, 1930), 278–79 (reference to the “neoliberal trend” first appeared in the 1926 edition). In his 1925 book Trends of Economic Ideas, the Swiss economist Hans Honegger wrote on theoretical neoliberalism, but, in contrast to Meusel’s earlier treatment, he used it to address neoclassical economics instead of the neoliberalism of thinkers like Mises. See Dieter Plehwe, introduction to The Road from Mount Pèlerin, ed. Philip Morowski and Plehwe (Cambridge, Massachusetts: Harvard University Press, 2009), 10. The term mobile capital is often associated with Max Weber, where he made a brief allusion to it in his posthumous 1923 General Economic History, but the term in fact entered Marxian theory with the earlier analysis of international finance (and commercial) capital by Rudolf Hilferding. See Rudolf Hilferding, Finance Capital (London: Routledge, 1981), 342, 325–30; Max Weber, General Economic History (New York: Collier, 1961), 242.
50. ↩ Ludwig von Mises, Liberalism (Indianapolis: Liberty Fund, 2005), 9.
51. ↩ Kari Polanyi-Levitt and Marguerite Mendell, “The Origins of Market Fetishism,” Monthly Review 41, no. 2 (June 1989): 11–32; Johannes Maerk, “Plan Oder Markt: The Battle of Ideas Between Austro-Marxism and Neoliberalism in Vienna” (lecture, Institute for the Humanities, Simon Fraser University, Burnaby, British Columbia, Canada, September 13, 2016). Available at http://youtube.com.
52. ↩ Karl Polanyi, The Great Transformation (Boston: Beacon, 1944); Felix Schaffer, “Vorgartenstrasse 203: Extracts from a Memoir,” in Karl Polanyi in Vienna, ed. Kenneth McRobbie and Kari Polanyi-Levitt, (Montreal: Black Rose, 2006), 328–46; Kari Polanyi-Levitt, “Tracing Polanyi’s Institutional Political Economy to its Central European Source,” in Karl Polanyi in Vienna, 378–91; Eduard Márz, Joseph Schumpeter: Scholar, Teacher, and Politician (New Haven: Yale University Press, 1991), 101.
53. ↩ Gareth Dale, Karl Polanyi: A Life on the Left (New York: Columbia University Press, 2016), 102–3.
54. ↩ Harry Magdoff, “International Economic Distress and the Third World,” Monthly Review 33, no. 11 (April 1982): 3–5.
55. ↩ These economic developments are presented in great detail, as a running commentary, in the extraordinary set of books, based on collected articles, written by Harry Magdoff and Paul Sweezy in the late 1960s to the late 1990s: Paul M. Sweezy and Harry Magdoff, The Dynamics of U.S. Capitalism (New York: Monthly Review Press, 1972); Paul M. Sweezy and Harry Magdoff, The End of Prosperity (New York: Monthly Review Press, 1973); Paul M. Sweezy and Harry Magdoff, Stagnation and the Financial Explosion (New York: Monthly Review Press, 1987); and Paul M. Sweezy and Harry Magdoff, The Irreversible Crisis (New York: Monthly Review Press, 1988).
56. ↩ Hannah Holleman, Robert W. McChesney, John Bellamy Foster, and R. Jamil Jonna, “The Penal State in an Age of Crisis,” Monthly Review 61, no. 2 (June 2009): 2.
57. ↩ Friedrich von Hayek, The Road to Serfdom (London: Routledge, 1944). As Paul Sweezy wrote of Hayek’s The Road to Serfdom, “the choice of liberalism—in the sense of individualism and competition—as the standard of judgment, deviation from which is to be regarded as error, permits him to lump all anti-individualist thought and policy together as simply totalitarian.” Paul M. Sweezy, The Present as History (New York: Monthly Review Press, 1953), 285.
58. ↩ John Kenneth Galbraith, American Capitalism: The Concept of Countervailing Power (London: Hamish Hamilton, 1957).
59. ↩ Philip Mirowski, Never Let a Serious Crisis Go to Waste (London: Verso, 2013), 24, 37–50; David Stedman Jones, Masters of the Universe (Princeton: Princeton University Press, 2012). Mirowski and Jones, despite providing detailed accounts of the formation of neoliberalism in the post-Second World War years, have little or no awareness of the Marxian (and other) critiques of neoliberalism in the 1920s, nor of the conflict as it arose in the context of Red Vienna.
60. ↩ Michel Foucault, The Birth of Biopolitics (New York: Palgrave McMillan, 2008), 317. An extreme example of such naturalization is the corporate use of the term ecosystem to refer to commodity supply chains, such as Apple’s ecosystem—a way of avoiding reference to the system of exploitation embedded in the global labor arbitrage. See John Patrick Leary, Keywords: The New Language of Capitalism (Chicago: Haymarket, 2018), 72–76.
61. ↩ Friedman’s role as a spokesperson of neoliberalism is well known. On the role of James Buchanan, see Nancy McLean, Democracy in Chains (New York: Viking, 2017).
62. ↩ Foucault, The Birth of Biopolitics, 133–38; Mirowski, Never Let a Serious Crisis Go to Waste, 64; Mises, Socialism, 344–51. In his memoirs, Stigler emphasized that a key objective of the Chicago School of Economics, and of neoliberalism more generally, was the destruction of the concept of monopoly power in order to counter “the growing socialist critique of capitalism [that] emphasized monopoly”; “‘monopoly capitalism’ is almost one word in that literature.” George J. Stigler, Memoirs of an Unregulated Economist (New York: Basic, 1988), 92, 162–63.
63. ↩ Avner Offer and Gabriel Söderberg, The Nobel Factor (Princeton: Princeton University Press, 2016), 101, 130–31.
64. ↩ See John Cassidy, How Markets Fail (New York: Farrar, Straus, and Giroux, 2009), 3–110; Foster and McChesney, The Endless Crisis, 1–28.
65. ↩ On how neoliberalism took on new significance in the age of the financialization of the accumulation process, see Gérard Duménil and Dominique Levy, Capital Resurgent: Roots of the Neoliberal Revolution (Harvard: Harvard University Press, 2004), 119–20, 156–67; Foster and McChesney, The Endless Crisis, 44–45.
66. ↩ Foster and McChesney, The Endless Crisis, 4, 18. On the concentration of wealth, see Thomas Piketty, Capital in the Twenty-First Century (Cambridge, Massachusetts: Harvard University Press, 2014), 336–76.
67. ↩ Smith, Imperialism in the Twenty-First Century; Ernesto Screpanti, Global Imperialism and the Great Crisis (New York: Monthly Review Press, 2014).
68. ↩ Foster and McChesney, “Surveillance Capitalism.”
69. ↩ Prabhat Patnaik, The Value of Money (New York: Columbia University Press, 2009).
70. ↩ Mirowski, Never Let a Serious Crisis Go to Waste, 1–6.
71. ↩ Karl Marx, “The Value-Form,” Capital & Class no. 4 (1978): 134.
72. ↩ Fred Magdoff and Chris Williams, Creating an Ecological Society (New York: Monthly Review Press, 2017), 25–47.
73. ↩ Andreas Malm, Fossil Capital (London: Verso, 2016).
74. ↩ James K. Galbraith, The Predator State (New York: Free Press, 2008); Foucault, The Birth of Biopolitics, 133.
75. ↩ Mirowski, Never Let a Serious Crisis Go to Waste, 56–57; Foucault, The Birth of Biopolitics, 131.
76. ↩ Foucault, The Birth of Biopolitics, 131, 145.
77. ↩ Mirowski, Never Let a Serious Crisis Go to Waste, 57; McLean, Democracy in Chains.
78. ↩ Marco Boffo, Alfredo Saad-Filho, and Ben Fine, “Neoliberal Capitalism: The Authoritarian Turn,” in Socialist Register 2019, 256.
79. ↩ Polanyi’s Great Transformation was a critique of the neoliberalism of theorists like Mises and Hayek who in the context of Red Vienna had argued for a self-regulating market economy and devised the main tenets of what is now known as neoliberalism. However, Polanyi’s powerful critique was also meant to reflect a moment of triumph, the defeat of neoliberal tendencies in the form of the “great transformation.” It is ironic, therefore, that the Mont Pèlerin Society was established the year after the publication of Polanyi’s book, and it was only with the rise to power of neoliberalism in the 1970s and ’80s that the current fascination with Polanyi emerged.
80. ↩ See Robert W. McChesney, foreword to Trump in the White House, 7–13.
81. ↩ Mises, Liberalism, 30. See also Herbert Marcuse, Negations (Boston: Beacon, 1968), 10.
82. ↩ Hayek quoted in Renato Cristi, Carl Schmitt and Authoritarian Liberalism (Cardiff: University of Wales Press, 1998), 168.
83. ↩ Friedrich von Hayek, Individualism and Economic Order (London, 1949), 22; Paul A. Baran, “On Capitalism and Freedom,” Monthly Review 42, no. 6 (November 1990): 36.
84. ↩ Foucault, The Birth of Biopolitics, 164.
85. ↩ Eric Hobsbawm, The Age of Extremes (New York: Vintage, 1994), 584–85.
86. ↩ Hobsbawm, The Age of Extremes, 563, 569.
87. ↩ See Edward Said, “Contra Mundum,” London Review of Books 17, no. 5 (1995): 22–23; Justin Rosenberg, “Hobsbawm’s Century,” Monthly Review 47, no. 3 (July–August 1995): 139–56; Eugene Genovese, “The Age of Extremes—Review,” New Republic, April 17, 1995.
88. ↩ Polanyi, The Great Transformation, 76.
89. ↩ Michael D. Yates, Can the Working Class Change the World? (New York: Monthly Review Press, 2018), 134.
90. ↩ Jørgen Randers, 2052: A Report to the Club of Rome Commemorating the Fortieth Anniversary of the “Limits to Growth” (White River Junction, Vermont: Chelsea Green, 2012), 14–15, 19–23, 210–17, 248–49, 296–97.
91. ↩ Jacob Burckhardt, Reflections on History (Indianapolis: Liberty, 1979), 213, 224.
92. ↩ Georges Lefebvre, The Coming of the French Revolution (Princeton: Princeton University Press, 1947), 212.
93. ↩ John Bellamy Foster, “Capitalism and the Accumulation of Catastrophe,” Monthly Review 63, no. 7 (December 2011): 1–17.
94. ↩ Yates, Can the Working Class Change the World?, 184–85.
95. ↩ Paul M. Sweezy, “Socialism and Ecology,” Monthly Review 41, no. 4 (September 1989): 5.
96. ↩ Karl Marx and Frederick Engels, Collected Works, vol. 1 (New York: International, 1975), 157.
97. ↩ Joseph Schumpeter, Capitalism, Socialism, and Democracy (New York: Harper and Row, 1942), 61. Schumpeter was a genuine product of the Austrian School of Economics, but he was, at the same time, a very independent thinker. He was the first to provide a strong criticism of Mises’s notion that a rational price system could not be developed under socialism. His independence was shown by his willingness to serve as finance minister in a socialist government. See Márz, Joseph Schumpeter, 99–113, 147–63.
98. ↩ Schumpeter, Capitalism, Socialism, and Democracy, 143.
99. ↩ As Antonio Negri emphasizes, an inclusive, class-based movement starts with a “social concept” of class divorced from a merely economic construction. This means that the question of the working class cannot be separated from issues such as women’s domestic work, the environment, race formation, and so on. Antonio Negri, “Starting Again from Marx,” Radical Philosophy 203 (2018).
100. ↩ See the indispensable discussion of socialist technology in Victor Wallis, Red-Green Revolution: The Politics and Technology of Ecosocialism (Chicago: Political-Animal, 2018), 54–92.
101. ↩ As Sweezy remarked, there is “nothing in the [capitalist] system that lends itself to or is compatible with long-range planning of a kind that would be absolutely essential to the implementation of an effective ecological program,” much less the assurance that social progress would be equitably shared amongst all in society. Socialism, in contrast, is amendable to such developments on a democratic basis, precisely because it means a shift away from capital accumulation, profits, and commodity production as the supreme ends of society. Sweezy, “Socialism and Ecology,” 7–8. We can see the strengths of planning today in different ways in states like Venezuela, with its communes and communal councils, and in Cuba with its enormous social and ecological successes—despite both having been subjected to enormous economic and political pressures, as well as military threats, emanating from the United States. See John Bellamy Foster, “Chávez and the Communal State,” Monthly Review 66, no. 11 (April 2015): 1–17.
102. ↩ On sustainable human development, see Paul Burkett, “Marx’s Vision of Sustainable Human Development,” Monthly Review 57, no. 5 (October 2005): 34–62.
103. ↩ The issue of ecological conversion is systematically addressed in Wallis, Red-Green Revolution. See also Magdoff and Williams, Creating an Ecological Society, 283–329; Angus, Facing the Anthropocene, 189–208; and Fred Magdoff and John Bellamy Foster, What Every Environmentalist Needs to Know About Capitalism (New York: Monthly Review Press, 2011), 121–44. On a radical democratic and socialist strategy in the United States, see Robert W. McChesney and John Nichols, People Get Ready (New York: Nation, 2016), 245–76.
104. ↩ On a New International, see István Mészáros, The Necessity of Social Control (New York: Monthly Review Press, 2015), 199–217; Samir Amin, “It Is Imperative to Reconstruct the Internationale of Workers and Peoples,” IDEAS, July 3, 2018.
105. ↩ Karl Marx, A Contribution to a Critique of Political Economy (Moscow: Progress, 1970), 21.
106. ↩ See John Bellamy Foster, “The Ecology of Marxian Political Economy,” Monthly Review 63, no. 4 (September 2011): 5–14; Robert W. McChesney, Communication Revolution (New York: New Press, 2007)

https://monthlyreview.org/2019/02/01/capitalism-has-failed-what-next/

01/04/2019

Over two decades ago, the financialization of capitalism joined the list of topics most hotly discussed by intellectuals and economists who follow Marxist theory. François Chesnais was one of the first authors among them to address the topic directly. A closing chapter of his 1994 book La mondialisation du capital, which studied the reorganization of productive capital during the ongoing global wave of liberalization, was devoted entirely to the subject of financialization. That chapter would be expanded into two in the book’s second edition, published three years later.

Also in 1997, in Monthly Review, Paul Sweezy published the article “More (or Less) on Globalization,” in which he pointed to the links between the stagnation of the world’s major economies, the growth of multinational corporate production, and “the financialization of the capital accumulation process.” Given the succession of financial crises wracking the world, and conventional economic theory’s flailing before them, the term would soon be popularized, inspiring a growing range of studies and research projects, many along Marxist lines.

Chesnais’s latest book, Finance Capital Today, emerges as the most polished attempt yet to clarify a number of lingering questions around the matter. Chesnais is well-equipped to confront these problems: he provides an exhaustive review of the debate over financialization, drawing on a vast institutional and non-institutional financial literature and tackling conceptual issues head-on. His book takes the discussion to a new level entirely.

Chesnais’s main thesis is that financialization is the profound, widespread dissemination of the characteristics of interest-bearing capital (as identified by Marx in volume 3 of Capital) throughout the capitalist system as a whole, through which its activity becomes “organically embedded in the fabric of social life.” The omnipresence of interest-bearing capital—the most flagrant form of the mystification of capital, in Marx’s view—thus cannot be dissociated from a consideration of the extreme degree of the concentration and centralization of capital that now characterizes the accumulation process.

Chesnais treats these concepts with clarifying precision, arguing that we must distinguish “finance capital” from “financial capital.” The former, in the definition made famous by Rudolf Hilferding—though its meaning may have since shifted—refers to the simultaneous, interconnected processes of the concentration and centralization of capital. Through the intensification of mergers and acquisitions, this phenomenon has produced today’s internationalized global banks, major transnational industrial and service corporations, and global commerce giants, all of them closely intertwined. Financial capital, meanwhile, denotes finance stricto sensu—or, as Chesnais puts it, “finance qua finance”: the process associated with the spectacular growth, over the last forty years, of the assets (bonds, stocks, derivatives) held and traded by financial corporations (major banks and funds) and by the financial departments of major corporations and transnational businesses.

According to Chesnais, finance capital and financial capital refer to distinct but related dimensions of contemporary capitalism. The most important result of their combined influence is that a general vision of capital as property has come to permeate that of capital as function. From the perspective of the substance of value, this means that the appropriation of surplus value grows increasingly distant from its source—whether because highly concentrated industrial capital holds outsized market power and the capacity for monopsony, because the predatory appropriation of the surplus value of weaker businesses comes to prevail over the direct exploitation of labor, or because the search for valorization has come to rest on fictitious assets whose connection to the production of surplus value is increasingly remote.

The swelling of financial markets, in parallel with their growing complexity and interdependence, has only deepened the immanent tendency of capital to become autonomous from its material supports—or, as Marx put it, “the autonomization of the form of surplus-value, the ossification of its form as against its substance, its essence.” For Chesnais, this push toward autonomy by financial capital has reached heights never before seen in the history of capitalism, bolstered by the support of central banks and governments. But we are left with the question: how did we get here? What led financial capital to this degree of autonomization?

The answer is complex, because it is directly related to the nature of the crisis the capitalist system has been experiencing for more than four decades—that of very low or even negative GDP growth. This in turn prompts another, equally crucial question: whether financialization is here to stay, inaugurating a new stage in the history of the system, or is instead a passing (perhaps cyclical) phenomenon, meaning that we might see a resumption of relatively sustained accumulation rooted in the production and direct extraction of surplus value.

Chesnais answers firmly that financialization is a new stage in the history of the capitalist system. His argument, however, does not merely rubberstamp circulationist interpretations, much less those which allege that theories of financialization affirm the full autonomization of the accumulation of capital in relation to the exploitation of labor and the appropriation of surplus value—quite the contrary.

As Chesnais sees it, the crisis of the last forty years is one of overaccumulation and overproduction, aggravated by a declining rate of profit. He views overaccumulation as an excess of production capacity in relation to its valorization, indicating problems of realization and the overproduction of goods; this comes alongside the persistent and growing plethora of capital seeking interest and to transform itself into “fictitious capital.”

In his retrospective, Chesnais recalls that the crisis of the 1970s may be explained by the rise in the organic composition of capital and the emergence of overproduction among national economies that, while interdependent, remained self-centered and autonomous. The system responded to this crisis in three ways: what Chesnais calls the neoconservative revolution, with the creation and implementation of global policies of liberalization and the deregulation of finance, commerce, and foreign direct investment (in effect, taking autonomy away from national economies); staunch support for China’s entry into the capitalist system; and, after the run of crises in the late 1990s, mass recourse to the creation of credit, with the implementation of a “debt-led growth regime.”

The latter two measures seemed to have prolonged the life of the system somewhat, until the international financial crisis of 2007–08 set in. Unlike the depression of the 1930s, however, this period did not clear the way for a new phase of accumulation. Chesnais recalls that at the first G20 meeting after the peak of the crisis and the drastic interventions of the U.S. Federal Reserve, world elites and their governments were unanimous in their belief that they would not survive the political consequences of a large-scale purging of overaccumulation. That is why he sees the current crisis as one of capitalism tout court, marked above all by the completion of the world market (with the integration of China) and the deepening of financialization.

Turning to the tendency of the rate of profit to fall, and its importance in diagnosing the current crisis, Chesnais observes that ample attention has been paid to the rate itself, but hardly any to the mass of profit. However slowly it may rise, as long as overaccumulation persists, that mass must go somewhere in its attempt to grow. The expansion of capital looking to be transformed into fictitious capital—which the resolution of the 2007–08 crisis only accelerated—thus appears as the fuel that continues to drive the financialization process and to strengthen the financial corporations at the reins of these immense masses of money capital.

The power of this process can be seen today in two elements discussed at length and illustrated with a profusion of examples in Chesnais’s book. The first is that major transnational corporations that produce goods and services have expanded their financial operations so spectacularly that in some cases they have created their own banks; meanwhile, financial corporations have been venturing into commerce, with some even turning out key goods in the production process, such as aluminum. All these entangled operations, often involving derivatives, can make it quite difficult to distinguish financial and non-financial operations. Furthermore, we might recall here that, as Chesnais shows, it is the financial sphere which provides the instruments used to speed up the centralization of capital. The mergers and acquisitions that make this process possible—especially through the annexation of small capital companies by large transnational corporations—have benefited enormously from the work of private equity funds, whose leveraged buyout operations are among the most predatory forms of capital.

The second element showing the strength of “financial capital’s pretension to autonomy” is what Chesnais, in a deliberate pleonasm, dubs the “financialization of financial capital.” This is the exacerbation of the disintermediation of the credit system, a process ongoing since the mid-1980s, alongside the ascent of hedge funds, mutual funds, and even pension funds—and the simultaneous transformation of traditional banks into universal banks authorized to carry out all sorts of operations. Chesnais writes that the prevalence of direct finance and the consequent deterioration of the credit system, along with the massive spread of securitization processes, are at the root of the so-called shadow banking system, which played such a key role in the crisis sparked in 2007–08 by the U.S. housing market.

The completion of the world market with the full integration of China and the persistence and deepening of the process of the financialization of capital are together reproducing the overaccumulation crisis that has defined the system for several decades. According to Chesnais, this explains the disparity between the dynamism of financial markets and the lethargy of GDP growth, and for the stark contrast between this lethargy and the intensity of the exploitation of labor. The latter has been increasingly facilitated by the vertical structuring of major transnational corporations, the global oligopolies that now predominate in international markets, and the growth of the global industrial reserve army, thanks to the incorporation of the massive Chinese labor force. Capital’s greatest acquisition in the last forty years, Chesnais observes, was the creation of a global labor force.

The persistence of financialization in all its dimensions suggests that capitalism is increasingly running up against the limits created by its own development. In his conclusion, Chesnais wonders where a new surge of capitalist accumulation might arise. After investigating several possibilities, such as the complete commodification of public services, the growth of the middle classes in developing countries, and the technological changes wrought by the relentless growth of information and communication technology, his conclusion is less than sanguine: there seems to be no adjustment process capable of restoring capital accumulation and its necessary conditions.

Nevertheless, as Chesnais observes, capitalism comes out just fine. Its expiration date is nowhere in sight. In other words, the current situation may persist for a long time, in an increasingly unstable system that produces little growth and ever deeper inequality, brutally accelerating the exploitation of labor and the expropriation of surplus value. What is at stake, Chesnais concludes, is not the future of capitalism, but that of civilization itself.

It is increasingly clear that human society today is facing the consequences of capitalism’s historical limits. In Chesnais’s vision, the social and political effects of low growth and endemic financial instability, along with the political chaos already unleashed in certain regions and which may spread to others, will combine with the social and political fallout from climate change and the exhaustion of natural resources, making a descent into barbarism a real possibility. Desperate attempts to boost profitability, headed up by global oligopolies, will lead to increasingly destructive forms of agriculture, mining, and oil extraction. Ecological collapse, the signs of which have become impossible to ignore, and which may be accompanied by wars as well as ideological and cultural breakdown, stands here as the absolute limit of the system—one nonetheless produced by capital itself. Chesnais concedes that this is not a very encouraging way to end a book. But he concludes with Gramsci: “telling the truth is a revolutionary act.”

https://monthlyreview.org/2018/04/01/a-predatory-system/