The Twilight of Globalization - by Boris Kagarlitsky

I found The Twilight of Globalization - Property, State and Capitalism by Boris Kagarlitsky (Plutopress, 2000) extremely inspiring and useful for our discussion on the state. Boris Kagarlitsky, a Russian Marxist theoretician and sociologist, was a political prisoner under Brezhnev and latterly an adviser of the Chair of the Federation of Independent Trade Unions in Russia. He is now coordinator of the Transnational Institute Global Crisis Project and Director of the Institution of Globalization and Social Movements (IGSO) in Moscow.

Although The Twilight of Globalization was written 11 years ago, long before the financial crash, the analysis is still fresh and valid. Kagarlitsky argues that the socialist movement needs to develop a program for the transformation of the state, and formulate an agenda based on the notions of citizenship and human rights and its own new vision of a democratic and decentralised state.

Here’s an extended synthesis of this important book.    

In his preface, Kagarlitsky argues that the crisis of the left is by a lack of ideological vision. To overcome this crisis we need de-revise Marxism and revitalise its theoretical tradition basing our policies on class interests, although these have to be redefined on the basis of the new social contradictions. Kagarlitsky makes the case that the popular argument about the ‘impotence of the state’ in a globalized economy is not only wrong, but also deeply dishonest because it hides the use of state institutions by the organizations of financial capital and multinational corporations: “It is precisely the strength of these capitalist institutions that forces us to put even greater emphasis on strengthening the nation-state as a countervailing force and the basis of any democratic participation”.

With the triumph of neo-liberalism the state was dramatically weakened, says Kagarlitsky in his introduction. Neo-liberalism turned international institutions like the IMF, the World Bank, the WTO that were established to provide some degree of public control over the international market into instruments of deregulation. “These institutions operate in the same way as the Soviet Politburo under Brezhnev,” claims Kagarlitsky. “IMF and World Bank experts decide what to do with the coal industry in Russia, how to reorganize the companies in South Korea or how to manage the finances of Mexico. The greater the scale of the problems, the more simplistic and primitive are the proposed answers” and “(This) new Big Brother is global or multinational, but even more faceless and even less accountable than before”. In addition, global capitalism is wasteful because it is both market-dominated and over-centralized.

Sociologically and economically there is not such a thing as a global capitalist class, claims Kagarlitsky, “but there is an integrated global capitalist network, whose movements and variable logic ultimately determine economies and influence societies. Thus, above a diversity of human-flesh capitalists and capitalist groups there is a faceless collective capitalist, made up of financial flows operated by electronic networks.” This description looks surprisingly like the old Big Brother-type faceless bureaucracy. In such circumstances, the left has to defend national societies against the global elites and against the national state, which is transformed into their tool.

In the first chapter, The State and Globalization, Kagarlitsky explains that Marx and Engels spoke of state institutions as a system of organized and legalized class coercion. Lenin not only saw in the question of power the main question of any revolution, but also reduced it to the seizure and subsequent transformation of the ‘state machine’. By the 1970s, however, it had become obvious that the state no longer enjoyed a monopoly on power. “Too few leftists have posed the question of using the state as a bridgehead in the struggle of real power. Without this, any discussion on reforms loses its meaning,” claims Kagarlitsky. He points out that the main weakness of socialists has always been their underestimation of the need for links between socio-economic and political reforms. “The new problems of society require a qualitatively transformation of the state system” he argues.

“The state system, as an instrument of the ruling class, cannot fail to take account of the interests of other social layers as well,” Kagarlitsky explains. “If kings and lords constitute a link with the pre-capitalist past, the welfare state provides a link with the future. Neo-liberal reaction is aimed at breaking this link. (…) The representatives of the social sphere – those working in public services, science, education, etc. – do not like the state, but their situation becomes still worse when state institutions are weakened. Intellectuals cannot stand bureaucrats, but they constantly appeal to them for help. Without the state the secular intelligentsia cannot exist.”

And he goes on: “The contradiction between the theoretical need for the renewal of the state and the practical bankruptcy of the state in its present-day form spills over into the impotence of the political strategy of the left, the confused declarations of ideologues and the bewilderment of activists. A theoretical argument, which is frequently invoked to justify inaction, holds that the national state, as a central element in the strategy of leftists (whether Marxists or social democrats), is now losing its significance. The weakening of the role of the national state in the context of the ‘global market’ is an incontestable fact. But it is equally indisputable that, despite this weakening, the state remains a critically important factor in political and economic development. It is no accident that transnational corporations constantly make use of the national state as an instrument of their policies.”

Leftists need their own international economic strategy and have to act in a coordinated way on a regional scale. But the instrument and starting point of this new cooperation can only be a national state explains Kagarlitsky, who considers theories on ‘stateless socialism’ completely absurd.

The logic of Globalization

The image of the state as a demoralized bureaucratic machine, unable to carry out effective management and merely swallowing the money of taxpayers, is also held by many on the left. “But the problem of the state becomes insoluble for leftists from the moment they reject the idea of the radical transformation of the structures of power (…) The democratization of power and the participation of the masses in decision-making cannot in themselves guarantee that social reforms will be successful. But if leftists, on coming to power, do not begin promptly to democratize the institutions of the state, this can only end in the degeneration and ignominious collapse of the left government”.

The widespread thesis of the ‘impotence of the state’ amongst leftists has acquired three bases: governments are seen as powerless in relation to transnational corporations, to international financial institutions and to interstate formations such as the EU. But globalization is nothing new; capitalism was born and grew to maturity as a world system. Only towards the end of the eighteenth century national capitalism, rooted in the social structures of particular Western countries, began to develop. “This national capitalism, like modern nations themselves, was not a precondition for but a product of the development of capitalism as a world system,” argues Kagarlitsky. “At the end of the twentieth century, capitalism is again becoming directly global. This does not put an end to national societies or states, although these, as in the epoch of early capitalism, are in profound crisis”. The newest period of globalization is not the ‘ultimate’ phase of capitalism but rather a product of state policies linked to international economic institutions. But “the prediction by Marx and Engels in the Communist Manifesto that capitalism would overcome all state and national boundaries has been realized in full measure only 150 years later”, claims Kagarlitsky.

The ‘Impotence of the State’

According to Kagarlitsky, the thesis of the ‘impotence of the state’ is a self-fulfilling prophecy. “A state that acts strictly according to the rules dictated by neo-liberal ideology and the International Monetary Fund does in fact become impotent”. But “Anyone who tries to issue a challenge to the existing order discovers that the state remains quite strong enough to take up the struggle”. International financial institutions have acquired enormous influence, but they cannot pursue their policies except through the agency of the state. “For the left”, Kagarlitsky explains, “the whole point of conquering power is to change the rules of the game, and at the same time to destroy the present complex of relations between national governments and international financial and political institutions. For many of these institutions, hostility and massive non-compliance on the part of national governments would be a real catastrophe, especially if the dissatisfied states tried to set up their own parallel international structures or to transform the existing ones. It is precisely because many radical alternatives lie directly on the surface, ready to be picked up, that banishing any thought of the possibility of new approaches on the national and international levels is a matter of life and death for neo-liberal ideology.”

This last and also the following quotes are very useful in determining our position towards international and inter-state institutions: “The strength of the International Monetary Fund and other international financial institutions consists above all in the fact that they coordinate their actions on an international scale, while their opponents are isolated. Consequently, the answer to financial blackmail should not be to renounce reform, but to search for allies in the international area, combining this with a clear policy of change and with reliance on the mass movement within the country.”

Inter-state agents can become agents of regulation and the public sector can receive a new impulse for its development on the inter-state level. But “international structures created within the context of a neo-liberal project cannot simply be improved and reformed. The road to a new type of integration lies through an acute crisis and, possibly, through the dismantling of these structures”.

“An understanding of the fact that integration is essential cannot reconcile serious leftists either to the European Union and the Maastricht Treaty or to the Commonwealth of Independent States. On the contrary, it is necessary to wage an irreconcilable struggle against the present international order in the name of the principles of democratic integration. The decisive role in this struggle will be played by processes occurring within the framework of the ‘old’ national states”. And “Ultimately, all international institutions represent continuations of national states, rest upon them and are powerless to act without them. This applies to the European Union, to the United Nations Organization, to NATO, and even to the International Monetary Fund and the World Bank, which at times are perceived as independent global entities.”

The Weakness of Globalized Capitalism

Without the participation of the national state, transnational capital could not keep its indispensable markets open and its boarders closed; nor could it manipulate the price of labour power and raw materials. Capitalism is impossible without laws, and laws do not exist outside states. “During the 1980s and 1990s the scale of state intervention in economic, social and cultural life has not diminished, but on the contrary has grown,” argues Kagarlitsky. “Practice shows that keeping markets open demands no less activity from governments than protectionism”. Moreover, almost nowhere has neo-liberalism led to a sharp reduction in the size of the government apparatus. In Russia, the public sector was cut to a tenth of its former size, but the state apparatus increased approximately three-fold! In many other countries cuts in spending on social needs were accompanied by increases in spending on the repressive apparatus, the privatization of the public sector dramatically increases the load on the taxation service, and so forth.

The priorities of the state were revised under the pressure from he liberals, but they can also be altered under the pressure of the workers. According to Kagarlitsky, “The ‘impotence of the state’ is a propaganda myth. But in order for the state to be able once again to carry out its regulatory function in the interests of workers, it must itself be radically transformed and in a certain sense globalized (through democratically organized inter-state associations). Left organizations, struggling under changed conditions, no longer need only mutual solidarity but also direct coordination of their actions, making it possible to campaign effectively on the international level.”  

Neo-liberal Hegemony vs. Democracy

Kagarlitsky makes an important point that helps us understand the new nationalist movements better: “The economy can be global, although the significance and potential of national economies should not be underestimated. But society remains restricted by the frameworks provided by countries, just as the possibility of society making an impact on political and economic decisions is limited by the framework of the national state. Therefore the desire of peoples to retain the symbols and institutions of ‘their own’ states is due not only to traditionalism, nationalism or ‘sentimentality’, but to an instinctive understanding that if these symbols and institutions are lost, the final possibility for these peoples of influencing their own fate will be lost as well. Transnational bureaucracies are also state structures, and have quite obvious national roots. But they are not democratic institutions.”

And according to Jan Otto Anresson “Today – despite the internationalization of the economies – the nation-states are still supposed to be that community through witch people primarily identify themselves and through which they are able to make common decisions. The hollowing out of the nation-states thus implies a weakening of the possibilities to realize democratic communities”.

Finally, “There are no democratic institutions on the global level. Capital is being globalized, but not people. However cosmopolitan our culture might be, the overwhelming majority of people remain physically restricted by heir conditions of daily life, bound to some particular place. There is nothing intrinsically evil in this. National society and the state will remain the level on which social change is really possible and necessary. It is quite another matter that under the conditions of globalization not only revolution but also reform cannot be successful unless it spreads to a whole number of countries.”  

On a political level, the globalization of the economy has rendered the social democratic compromise pointless. “Enterprises work for the world market, but society remains national. The growth of wages does not guarantee demand for one’s own goods. The old social contract is collapsing, since it is impossible to ensure either general social discipline on the side of capital, or consumer discipline on the side of workers, who have developed the habit of spending their high wages on goods produced by the half-starved toilers in South Asian sweatshops.”

According to the theoretician of the German ‘greens’, Elmar Altveter, instead of complaining about the internationalization of capital, the left would do better to struggle for ‘social regulation yielding global results’ because regulation is impossible on the basis of the old state methods. So it has to rest on ‘global civil society’ that unfortunately only exists in the imagination of theoreticians. The so-called ‘free associations-‘ particularly on a world level are just as utopian as elitist. “Regulation really does need to become regional and global,” argues Kagarlitsky. “However, this cannot be on the basis of ‘civil society’, but must be on the basis of democracy and civil equality of rights, something which is impossible outside the state.”

The state needs to be used by the left, but also changed: “So long as workers, with the help of the state, do not succeed in changing the rules of the game, imposing countervailing limitations on capital, there cannot be any kind of balance, and consequently even the most moderate reformism is impossible. The weakness of the left arises from its unwillingness to use the force of the state against the bourgeoisie. The growth in influence of transnational structures requires the creation of a counter-weight. But at the same time the new situation demands the radical transformation of the state, of its institutions and of its social nature.”

“The general thesis of the ‘impotence of the state’ deliberately ignores the fact that there are very different states in the world – Belgium and the US, Hungary and Russia, Brazil and Costa Rica, China and Brunei.” And “In most cases the supposed ‘impotence of the state before the market’ is in fact a manifestation of the impotence or weakness of some states in the face of others, whose governments have taken on themselves the role of high priests and interpreters of the ‘logic of the market’. This is shown to perfection by the discussions surrounding the common European currency. (…) The conservative government of Germany literally compelled its partners to agree to limit their budget deficits to 3 percent as an essential condition for the introduction of a common monetary unit. (…) Any such criterion, like the planning targets of the Soviet area, is a product of formal bureaucratic thinking that has nothing at all in common with he ‘logic of the market’.

“The more the powers of the state are transferred to specialized private structures and independent (although formally state or inters-state) financial institutions, the more the sphere of democracy is narrowed. Involvement by the population in making decisions is reduced to a minimum, and once a choice has been made it becomes ‘irreversible’

Citizenship in decline

After the fall of the Berlin Wall from constituting an association of free citizens, democracy is being transformed into an oligarchy, a form of interaction of elites that are interested in democracy only as a means for legitimizing their power. Elections, free discussion and the struggle between parties are turning into a ‘democratic fa├žade’. The result is that “The new democracies are afflicted by the same ailments as the old. Corruption is eating away at their political institutions. Disillusionment with democratic institutions, with elections and parliamentarism, is on the rise, even in countries that have long traditions of the struggle for freedom.”  

“Classical capitalism, was characterized by a positive dynamic; civil rights were won by workers, by new immigrants, by women, and by the inhabitants of colonies and overseas departments. The principle of universality triumphed. But in present-day capitalism a countervailing tendency is starting to triumph for the first time. Citizenship is increasingly becoming a privilege, as in a slave-owning society or a feudal republic”.

“Modern society needs changes no less far-reaching than during the era of the great European revolutions of the seventeenth to the nineteenth centuries. What are required are not only social revolution, but also a fundamental change in perceptions of the state and society. Because of the complexity of modern society, radical approaches are rejected as unrealistic, but this complexity is itself among the causes of the present-day crisis. Increasing complexity is a sign that a civilization is in a Spenglerian impasse.”  However,  “Complexity is not necessarily a virtue. The task of social revolution is precisely to carry out a radical simplification. The false choice imposed by the liberals of ‘more state or less state’ has to be rejected. What is now required is neither a reduction nor a broadening of state participation, but its radical transformation, a different state.” (my emphasis)

Towards the New State

“In other words, the strategy of the left has to consist not of defending the old state, but of using the crisis of this state to ensure that the basis for new institutions is laid both on a national and also on an international, inter-state level. What’s required here is an all-permeating democratization that encompasses not only the structures of political power, but also the institutions of social security; self-government; the public sector; and last but not least, the mutual connections between these various structures and institutions.”

If the left does not take up this task, the radical right will step in: “It is necessary to overstep the bounds of the traditional institutions of formal democracy not because we can in theory create something better, but because these institutions in their earlier form no longer work in any case. If the left does not take on itself the task of radically reforming the state, then this goal will sooner or later be urged by the radical right. If democracy does not affirm itself as an extra-market and to a significant degree anti-market system, the masses will follow those who call for restricting the elemental forces of the market in the name of authority, hierarchy, the nation and discipline”.

Is Nationalization Dead?

From the time of Marx, the connection between state property and socialism represented the unshakable basis of left ideology. Kagarlitsky is critical towards the notion of “socialization”: “How does a concept of socialization (various forms of stakeholding capitalism and workers’ cooperatives) differ from social-democratic regulation?” and “It remains incomprehensible why the forms that became consolidated as a result of social conflict should be those of indirect socialization, rather than the most barbaric forms of private, or for that matter, state property. It is also quite unclear how these deliberately less radical approaches (…) would lead to more radical changes, which could not be achieved through nationalization”.

“Talk of the efficiency of the nationalized sector (…) makes no sense in isolation from the question of the social nature and structure of the state. ‘The conservative state guaranteed the ultimate failure of public ownership. In other words, the failure of earlier nationalizations was due not to the ‘inefficiency of state management in general’, but to the vices of particular state institutions, vices which also made their effects felt in other areas of life, including those in which private property predominated.” But “The main shortcoming of ‘soft’ socialization is that it never happens” and ”Any serious attempt to put a moderate programme into effect will engender the need for more radical measures, including the broadening of the state sector”.

Self-management alternative

Criticizing the Mondragon model, Kagarlitsky argues “On the overall social level it makes no difference whether a productive facility belongs to one person or to a group of people, if it does not belong to the community as a whole.” And “In essence, the transition from state to collective-labour property has served merely as a cover for the seizure of management and by private financial groups of control over enterprises, as well as for managerial irresponsibility and for intensified exploitation of the workforce.”

Perhaps even more importantly: “Not only does the transformation of workers into owners fail to overturn the logic of capitalist exploitation; on the contrary, it extends it to its very limit, transforming the ‘external’ contradiction between labour and capital into an ‘internal’ one, replacing the discipline of hired labour with the far harsher principle of self-exploitation. In the Mondragon cooperatives the worker-owners are forced to limit their own incomes in the name of accumulation. (…) The conclusion is irresistible that for a particular person a cooperative enterprise, subject to the same logic of the accumulation of capital, may turn out to be a much harsher exploiter than a private capitalist or a state company.”

“The transition from individual to collective entrepreneurship basically changes nothing; in both cases we are simply dealing with corporations. The key idea of socialists has always been to put capital under the control of society. Of society, and not simply of the producers. In its pure form productive democracy is just as elitist and anti-humane as any other ‘democracy of the elect’. Moreover, it is anti-environmental and anti-intellectual”.

“Ultimately, having an orientation to collective property does not spare us from having to make a choice between capitalism and socialism. If we choose capitalism, then the exploitation of a particular worker within an enterprise is replaced by the exploitation of the whole collective ‘from outside’. Hired labour has been done away with, but hat is so much worse for the workers, since it has been replaced by a feudal type of exploitation in which the workers use their own means of production, but are unable to dispose of their surplus product. This is a step backward with democratic capitalism, whose most important conquests have been free hired labour and the workers’ solidarity to which it gives rise”.

“The contradiction between labour and capital cannot be resolved on the level of an enterprise or of a group of enterprises. The economic interests of workers cannot be reduced to the interests of the labour collectives. Every worker is at the same time a consumer, who needs health care, education and environmental protection. The needs of workers often contradict one another. Integrating all these interests is possible only on the level of society. For the activity of enterprises to correspond to the real needs of society, producers must always be under control. Either this control is exercised by the ‘invisible hand of the market’, combined with a fully visible financial oligarchy, or the government takes on itself the same function.”

“Nor it is possible to justify collective property with reference to the need for a ‘mixed economy’. In itself, the combining within society of various forms of property, management and labour organization is neither a blessing nor a goal. A ‘mixed economy’ may transform society, transcending the logic of capitalism, or it may represent a backward and undeveloped form of the same capitalism. This depends above all on the nature of the state, and on the role and structure of the public sector.”

 The Mobilization Model

Nationalization is not a method for managing industry but a means of changing the social and economic structure of society. Kagarlitsky: “The centralized mobilizational system proved unsuited for day-to-day administration in the conditions of a developed industrial economy and consumer society. But it does not follow from this that the former successes should be doubted, or that the mechanisms of the mobilizational economy are completely unviable. They can work successfully where there is an objective need for them.”

“The rejection of nationalization signifies in practice the rejection of serious efforts to transform society. Unquestionably, the existence of state property on its own does not yet constitute socialism. It does not automatically ensure either a more just contribution of national income or a more harmonious development. But without a strong state sector, resolving all these problems is impossible in principle”.

“While fully recognizing the limitations of ‘state socialism’, we cannot fail to see the necessity of it. … Unless the state sector acts as the core of the productive system, ‘self-managed enterprises’ will be starved of investment and, ultimately, will be enslaved by financial capital.”

“The only way to break the economic power of large finance capital is through nationalization. Alternative strategies for modernization and restructuring then become possible. Only with the emergence of a state sector is it possible to speak of serious social control over the investment process”.

The myth of the inefficiency of the state sector

“The decentralization of power becomes a reality on the basis of decentralized socialization of property,” says Kagarlitsky. “Private capital is undergoing a rapid centralization and concentration not only on the national but also on the world level. Paradoxically, an association of regions can create more effective counterweights to this than a centralized bureaucratic state. The real rather than imaginary participation of workers in management can also be ensured on this basis. It is also possible on this level to resolve the contradictions between the productive, consumer, environmental, cultural and other interests of particular people”

Many late-twentieth-century writers note that the founders of socialism placed their faith not so much on the elements of socialism that had grown up within the framework of capitalism, but on the constructing of a new society, a task that would begin following victory in the class struggle. Collective property seems more attractive precisely because it arises and develops within capitalist society. However, the same can be said of the state sector. It is only necessary to make a critical study of the available experience, without restricting oneself to statements concerning the failures in the Soviet Union.

A peculiarity of the state sector   is that its future depends on the course of the political struggle and the relationship of class forces in society. For this very reason, however, the state sector is strategically important for any socialist and even democratic project. This struggle does not come to an end with nationalization, but merely takes on a different form.

The experience of China in the 1990s also shows the absurdity of the myth of the ‘inevitable inefficiency’ of state enterprises. “It was the work of the state enterprises that allowed the private and cooperative sector to make extra profits. It was the state sector that paved the way for the development of the social and productive infrastructure. (…) The losses of the state sector in China are in fact a hidden form of subsidy for the private sector. This is why the market reforms without privatization that have been implemented in China have led to a dramatic growth of private business ‘from below’, while the privatization in eastern Europe, and especially in Russia, has been accompanied by an extremely weak development of private entrepreneurship.”

What Can Nationalization Achieve?

“The results of nationalization depend in the first place on the condition of the state, on its structures and on its social character. The effectiveness of nationalization, its ability to resolve social problems and speed development, like the structure of the state sector, the position of the workers within it and the degree of democracy in management, all depend on the relationship of forces in the country.”

Historically, “The success stories include the activity of state firms in Austria and Norway. The state sector played a significant role in the modernization of French industry after the Second World War…. The nationalized banking sector served as one of the foundations of the ‘South Korean economic miracle’ of the 1970s and 1980s, showing the degree to which state property could operate successfully in the financial sphere, considered the holy of holies of capitalism.”

“Speaking of the economic achievements of state enterprises is impossible without mentioning the main success story of the late twentieth century, the Internet. This gigantic information network arise and for a long time existed as an ordinary state enterprise, organized and financed by the US government.”

“The experience of state entrepreneurship in the twentieth century shows that it is most effective when a need has appeared for assimilating new areas, for achieving new organizational and technological breakthroughs, and for creating the infrastructure and potential for further development.”

“Without public property the modern form of capitalism could simply not have developed. Globalization and liberalization became possible thanks to the preceding decades of economic expansion, which rested on the strength of the state economy”.

“The weakness of the state sector has always been its inability to catty forward its development on the basis of its own success. The state finds it easier to innovate than to administer. It finds it easier to create the new than to manage what has been created. This is why the state sector, after ensuring a breakthrough, loses the initiative and yields it to private enterprise. But does this lean that the state is doomed merely to plough the fields, the harvest from which will be gathered by private capital?”

Transforming the State

“It is clear that the model of the state enterprise, like the model of the state, needs to be dramatically altered. This is the essential task of radical reformism, the feature that distinguishes it from dogmatic currents of a communist or a social democratic stripe.”

“The degree of readiness to nationalize strategically important sectors of the economy or monopoly enterprises can be taken as a measure of the seriousness of a reformist government. Both ruling elites and left-wing politicians know very well that even successful nationalization does not mean the destruction of capitalist relations in society. But it does create the possibility that qualitatively new institutions and a new relationship of social forces may appear. Nationalization limits the options for international finance capital. It is precisely the threat of property losses that forces the elites to make serious concessions. In other words, until the question of property is posed, smaller, ‘individual’ problems will not be solved. “

“The environmental crisis demands changes in the approach taken to the use of resources. … Wherever possible, individual consumption has to be replaced by collective consumption. This applies above all to transport, and to heating and utilities (water, gas, electricity). The basis for effectiveness of collective consumption can only be high-quality socialized public services, under public control.”
“Forms and levels of socialization should be differentiated. Various types of production permit and demand different degrees of socialization. If the economy is complex, with a variety of different technological levels, the public sector can also only exist as a complex multi-level system, and not as the homogeneous, monolithic structure which socialists dreamed of in the past.”

New Approach to Property

“New technologies and new methods of organization also require changes in the approach taken to property. … The combining of market criteria with hierarchy is a fundamental principle of management under capitalism. But in present-day conditions this principle fails to work, or prevents firms from establishing between themselves the new ‘competition-cooperation’ relations that are essential if technological potential is to be used to the full. ‘New forms of governance’, based on other approaches and values, are indispensable. We shall not find out from the works of the economists how to make these approaches and values the dominant ones in society.”

“The expanded role of pension funds, like the growth in the number of worker-owned enterprises and the vitality of the often-condemned state firm, prove that the traditional capitalist system of property has been exhausted to the point where it inevitably gives birth, in the course of its development, to various ‘socialist’ experiments. However, these ‘buds of socialism’ will not be able to transform society on their own. Even capitalism, which arose within feudal society, could not get by without massive expropriation of the property of the church and the aristocracy, or without the abolition of the feudal rights which served as the economic prop of the old classes. In just the same way, it is hard to imagine that the new society will manage to arise without violating capitalist concepts of the right of property.”  

Property is above all an expression of social relations. It is another question to what degree formal legal concepts succeed in expressing the essence of these relations. “The task of the left consists of ‘generating new legal relations, new forms of property, new forms of rights and obligations’. In Specht’s view it is necessary to proceed both from the ‘dualism of private and state-owned property’ and from the counterposing of the collective enterprise to the nationalized one”.

“Partnerships between the state (as general partner) and working collectives or members of working collectives can be designed. Such variations can depend on sectors of the economy, on the sources of finance, on the management know-how sometimes to be obtained from an outside party, on contributions of assets to the companies. Issues such as liability for the state-owned enterprises, the role of enterprises in contributing to the general well being would influence the decision as to which property regime is to be applied. Yet the leading principle should be to restrict the choice of form and content of such property rights as little as possible.”

“It is quite obvious that future attempts at mechanically duplicating the Soviet model of centralized planning or of state enterprise are doomed to failure. But it is also obvious that a redistribution of power in the economy and society to the advantage of the majority, experimentation with property rights and radical changes in the position of workers on the job are all impossible without the state. If the sate is deliberately stripped of the right to hold property, there cannot be any guarantees of property for workers, and no legally secure defence of the collective interests of the majority of the members of society. Nor can state regulation have any hope of success.”

“The functions of ownership have to be redistributed, not in favour of the private entrepreneurship that has now outlived its time, but of decentralized managerial structures that ensure the democratic participation of workers in decision-making”.

“Historically, Marxism called for the nationalization of the means of production to the degree that capital was embodied in them. A democratic economy is impossible without the socialization of the process of reproduction of capital – that is, of the process of accumulation and investment.”

Nations and Nationalism

No one has ever managed to provide an exhaustive definition of a nation. According to Stalin, a nation is a stable, historically established community of people, which have arisen on the basis of a common language, territory, and economic and cultural life, and which has a common mentality manifesting itself in the field of culture.

A nation is a historical and political phenomenon.  “Nations, like classes, are not ‘natural’; they are born out of processes of political and economic development which include conscious work by political elites setting out to form their own ‘national’ culture”.

“The creation of national states in Europe coincided with the rise of industrial capitalism and was organically liked to it. The transformation of communities and tribes into peoples, and of peoples into nations, occurred as an integral part of the process of formation of the modern state.” Kagarlitsky agrees with Emmanual Wallerstein claiming that in almost every case statehood preceded nationhood, and not the other way around, despite a widespread myth to the contrary.

“The trouble is that in the process of modernization by no means all peoples have become nations. Meanwhile, states have arisen and collapsed, merged and split. Many peoples have developed within federations, at the same time possessing their statehood and not possessing it. Globalization, initiated by the centres of the world capitalist economy, has been superimposed on the continuing search for national self-identification and state self-organisation in the countries of the periphery and semi-periphery. The incompleteness of this process helps explain the dramatic nature of the conflicts that have arisen in the late twentieth century.”

“It is in the nature of human beings to idealize movements that have achieved success. Bolshevism became a worldwide political model of revolutionary organization for sixty years because Lenin and Trotsky succeeded on 7 November 1917 in taking and holding on to power in Petrograd. National liberation movements have been idealized in the same way. Only later has it become evident that all national movements, even those which on the whole adhered to leftist and democratic positions and have played a progressive role in history, have included reactionary components. Since the 1970s these reactionary tendencies in national movements have begun growing stronger, to a significant degree because of the growth of the general ideological and structural crisis of the left. In addition, the exhaustion of the democratic potential of traditional nationalism in a changed society is becoming more and more obvious.”

“It is obvious that attempts to solve traditional problems under qualitative different social, cultural and technological conditions will have quite different consequences. The national state is not the same in the twentieth century as it was in the period from the seventeenth to the nineteenth centuries. But to create modern forms of statehood without passing through a period of historical ripening is impossible. This means an inevitable repetition of the bloody conflicts in the past, of the injustices, cruelties and authoritarian methods that lie at the basis of any state. It means that the deliberate strengthening in society, even if only for a short time, of obsolete, archaic structures and relationships, the creation of new hierarchies clearly incompatible with the tasks of the modern world, and the implementation of policies which lag behind present-day life by a whole epoch. It is quite probable that the development of various peoples has been retarded and deformed because they have lacked their own states in the past. But the belated formation of a national state no longer compensates for this, just as gluttony in old age cannot make up for malnutrition in childhood. Moreover, he new state reflects all the contradictions and deformities of the earlier national development.”


“Self-determination has been achieved not by peoples but by territories, and not by nations but by elites, by the bureaucratic apparatus. On becoming the new state power, the old bureaucracy tries to legitimize itself through aggressive national rhetoric and symbolic actions aimed at defending ‘national interests’ from the ‘foreign adversary’.”

“Western leftists are inclined to sympathise with ‘small’ peoples and to show no special liking for ‘imperial’ ones. They are ready to speak out against German, French, Russian, Serbian and with certain reservations Croatian nationalism, while expressing sympathy for Ukraine, Bosnian, Catalan and Quebecois nationalism.  Meanwhile, they fail even to notice that ‘small’ nationalism usually becomes a real force when behind its back there looms the state interests of one or another of the ‘large’ ‘imperial’ nations – the very same United States, Russia or Germany. Moreover, the bearers of the ‘national idea’ are most often not the oppressed masses, but the local bureaucracy. “

“With the world economy becoming increasingly globalized, only large state formations are capable of pursuing autonomous financial and economic policies. In such circumstances it is quite obvious that world financial centres such as the International Monetary Fund and the World Bank, along with the ruling strata in the US, have an interest in combining increased economic integration with political disintegration.”

“The ‘national idea’ has its own internal logic of development. It moves rightward, in the direction of fascism, until blood begins t flow, and then will not be sated. Those who want to climb on board this idea will be forced to travel with it.”

“The idea of national statehood is linked closely with violence. A nation which no one threatens does not have an acute need for its own national state. A modern state cannot be reduced to, organized violence. Nevertheless, organized violence is in historical terms the first principle of the formation of states. It plays a huge role in the creation of national self-consciousness. It is not by chance that monuments to military leaders adorn the squares of most European cities, including the most peaceful.

Marx and Engels were absolutely right when they declared that no people can be free while it oppresses other people. But they were talking specifically about oppression; the existence of multi-national states did not in itself strike them as unnatural.

‘National  Question’ or the Problem of Democracy?

Socialist thinkers have advanced three alternatives for solving the national question: federalism, ‘self-determination up to the point of succession’ and cultural-national autonomy.

“Perhaps more strongly than anywhere else, the nationalism of the twentieth century has developed in the middle classes, in the bureaucratic milieu and among representatives of the ‘free professions’ for whom ‘ethnicity’ and a sense of participation in ‘their culture’ have been able to provide guarantees of earnings, career advancement and independence. Hence the anti-bourgeois essence’ of the national struggle in no way provides a guarantee that it will be democratic or leftist.”

According to Kagarlitsky, the weak point of Lenin’s concept of ‘self-determination’ is the stress it places on the administrative-political status of a particular territory: “What is the crucial element here – the people of the land? In principle, self-determination, according to Lenin, cannot be separated from a definite territorial area. For this reason it is not only prone to infringe upon the rights of  minorities inhabiting the same territory, but it also limits the realization of the national rights of that section of the people that lives outside of the territory’s boundaries.”

“The cases in which minorities have been successfully integrated show that the national question is ultimately one of civil and cultural rights. Where these rights are violated, nationalism is transformed from the ideology of narrow ethnic and corporative groups into a mass movement.”

National Liberation and Capitalism
“The approach taken by the left to the national question has traditionally been part of a general anti-capitalist strategy. (…) Once in power, the Bolsheviks were forced to abandon many of their initial theoretical positions and to improvise. (…) After the hopes of revolution in Germany had collapsed, the Russian revolutionaries placed increasing hopes on the colonial peoples. Until 1918 the ‘colonial question’ had not held a particular important place in socialist ideology. Now a rise in anti-colonial nationalism became an essential element in the general strategy for breaking the chain of capitalism ‘at its weakest link’.”

“Also, the anti-colonial movements did not always have the same priorities as the workers’ movements in industrialized countries. This was especially apparent during the years of struggle against fascism, when many representatives of Arab nationalism placed their hopes on Nazi Germany as a potential source of support in their struggle for liberation from Britain.”

“If the anti-colonial movements of the 1920s had often been traditionalist and even reactionary, headed by torpid feudal elites, after the Second World war and the proclaiming of Indian independence the situation changed. In colonial and semi-colonial countries where a native industrial proletariat, a bureaucracy and an educated middle class had arisen, interest in socialism was growing.”

“The situation changed radically in the 1980s. The West seized the initiative and began to use nationalist movements in the struggle against communism. … The situation was even more confused because many slogans of the anti-communist resistance were precisely the same as those of the earlier national liberation movement. … The weaker the democratic and socialist alternative, the more attractive nationalism appeared.”

“Then at last came the year 1989, when the communist system disintegrated and the left movement in Europe suffered an unmistakable moral collapse. Globalization and neo-liberalism meant that the old anti-imperialist and anti-colonial slogans became empty; the hegemony of the ‘centre’ was now being exercised through new methods. But radicals continued mechanically to repeat the old formulas that everyone had grown sick of hearing. (…)


“A part of the Western left tries to sit on two chairs at once, supporting the idea of national statehood for minorities and of a multicultural society. This indicates either the lack of a programme, or the kind of programmatic “flexibility” that allows one to occupy any position depending on the circumstance. “

“How does a ‘prison-house of nationalities’ differ from a multinational state? The difference lies in democracy. What leftists must defend is not the principle of self-determination or that of cultural-ethnic pluralism, but democracy and human rights as such. The only ways of solving the national question that deserve support are those that meet these criteria.”

“To the idea of the ‘national state’, leftists need to counterpose their own concept of multinational and multicultural civil society. The programme of socialists has to be based on the principle of equal civil rights, in contract to the nationalist ideology of ‘vertical solidarity’ of the masses with ‘their’ elites. If left-wing tradition presupposes social solidarity and the ‘horizontal’ unity of workers, nationalism presupposes hierarchy and vertical organisation. Leftists and national-conservatives alike see in the state a means of achieving their economic goals. But their views of the nature and social purpose of the state are diametrically opposed. This is why leftists and nationalists will never be able to unite successfully, even if they voice similar social demands.”

“There is not, and cannot be, a single universal principle making it possible to solve national problems. But there can be a single criterion: respect for democratic rights and freedoms. The positions of the left ion the national question must be assessed from this point of view as well.”

“It is clear that as internationalists, leftists must call for the preservation of multinational and multicultural federations. But it is no less clear that the association must be free and voluntary. Meanwhile, the right of peoples to unite with one another has to be respected no less than their right to independence. “    

“Even if the majority of the people are wrong in demanding independence, socialists cannot support great-power coercion and repression. But this does not in any way signify that leftists must support a positive programme advanced by nationalists. When nationalism is not a form of defence of democratic rights, it is reactionary through and through. A nationalism which calls for limitations on the civil rights of ‘settlers’, which denies them equal rights in the use of their language and so on, is anti-democratic in its very essence. Also thoroughly dubious is the idea of supporting a new nationalism as a form of moral recompense for old wrongs (this is typically of Western leftists who feel a historic guilt for the crimes of their colonial period).”

“It is precisely because of the political weakness of leftists themselves that national demands are becoming a trap for them. If these demands are just, if they are supported by the majority of workers and are rejected by the ruling class, they can become a legitimate part of the socialist programme. But leftists do not understand the degree to which these slogans are their own, and the degree to which they are not. These demands are ultimately realized without the participation of leftists, and often despite their opposition, giving rise to new injustices along the way. In this respect the position of the left is tragic. In any national struggle, it is doomed to defeat. But this defeat cannot be either decisive or final, since in the final reckoning it is not national but social contradictions that decide how society develops. Every ‘victory’ in the national struggle simply turns into fresh dramas, until the national contradictions are overtaken by social development. What is catastrophic for leftists is not their inability to solve the national question, but their attempts to give this question a central place in their programme, or to solve it in isolation on the basis of their own ideology. For socialists, the best solution to the national question is to go beyond its boundaries.

The Third World Labyrinth: Is a Democratic Model Possible?

“For most of humanity, the twentieth century has been a period of modernization. As we approach the century’s end, we can state that all of the projects that have been advanced for global modernization have failed, and that the few instances of success do not change this general picture.”

“Traditional oligarchs, capitalists, technocrats and bureaucrats have proven equally incapable of carrying out successful modernization, or at any rate, of ensuring democratic development.”

“The transformation of the state into a monopoly proprietor and the creation of a statocratic system in Russia and China represented the most radical attempts at imposing a ‘final solution’ to the problems posed by this systematic diversity. (…) The contradictions of real life in these societies meant that the numerous theoreticians who sought refuge in a face-saving formula (‘degenerated workers’ state’, ‘state capitalism’, and so on) merely headed into a dead end. (…) The synthesis was unsuccessful. As the end of the century has neared, the statocratic system everywhere has began disintegrating into its component parts. The crisis of state power has called a new systematic diversity into being, and has returned the societies of Eastern Europe to a state of dependency and backwardness.”

“Marxists in the early twentieth century saw the root of the evil as lying in colonial exploitation. But when the countries of Asia and Africa achieved political independence, the dilemma was not solved, and in many cases the situation became even worse. In the 1970s the main problem was considered to be unequal exchange between industrial and agrarian raw material economies.”

“The only structure able to ensure that the investment cycle and the process of accumulation operate in the interests of peripherical societies is the national state. … The state inevitably subordinates accumulation and investment policy to the solving tasks which are its own and which it finds more natural. This was already grasped by J.M. Keynes.”

“A consistent socialization of the investment process, meanwhile, inevitably leads us outside the logic of capitalism. This is why neo-liberal reaction directs such furious attacks against all forms of state participation in the economy, even when this participation is essential for the stability of the bourgeois system itself.
Despite the failures of state planning, it remains an incontrovertible fact that the lower the level of development, the greater the need for the ‘statization’ of the economy, making possible the implementation of policies aimed deliberately at overcoming backwardness. … Statization of the economy, however, cannot by itself solve the problem. Authoritarian-bureaucratic power structures doom the state sector to inefficiency. The greater the backwardness, the worse the bureaucracy. … That is why the mixed economy remains an attractive but still vacuous slogan. Without structural reforms in the economy, and without the renewal of the system of state power, the mixed economy simply combines the vices of all the ‘models’ that have been tried and found wanting. The statization of the economy, while creating the preconditions for accelerated development, simultaneously places obstacles in the way of progress. In other words, the greater the need for a cure, the less effective the medicine. Socialists, calling for changes in the ‘class character’ of the state, have been unable to resolve this contradiction, since they have retained their faith in the old Enlightenment concepts.”

“Instead of arguing pointlessly about whether we need a ‘big state’ or a ‘small state’, we have to understand that what is necessary is a different state. A radical change in the structures of power is the only alternative to wandering in the labyrinths of authoritarian modernization.”

“The ideology of ‘reform and development’ might perhaps be reborn, but it is still not going to work. … the rise of social democratic ideology in Latin America has merely reflected the crisis of the revolutionary perspective, ‘a mood of disillusionment and anti-utopianism, but in itself this approach ‘lacks historical depth and strategic realism.’ The call to reject ‘utopian goals’ is tantamount to demanding abstention from action itself.”

“It is essential to return to democracy its original sense of people’s power. It is well known that the parliamentary road to change is far from being the most rapid. No less familiar are the catastrophic results of numerous attempts, Jacobin and Bolshevik, to speed up the changes, clearing out of the path the democratic ‘restrictions’ that hindered progress. The history of the Russian soviets in 1917 amounted to an unsuccessful attempt by the masses themselves to resolve this contradiction, creating democratic power of a new type.”

“Lenin and the Bolsheviks made many speeches praising the concept of a workers’ democracy arising spontaneously from below, but this democracy proved incompatible with the Bolshevik concepts of the party and the revolutionary state.
Through recognizing the role of the soviets and resting on the self-organization of the masses, the Bolsheviks were able to take and hold power in the autumn of 1917. But having used the soviets as a springboard to power, the Bolshevik party was unwilling and unable to renounce its own Jacobin politics. Modern-day leftists who have escaped the hypnotic effect exercised by the Jacobin-Bolshevik tradition will, it must be hoped, prove capable of drawing lessons from this experience.
It is obvious that the model of power that was embodied in the multi-party soviets of 1917 was extremely crude. In many respects the advantages of ‘worker’s democracy’ over parliamentarism were simply the fruit of the imagination of radical ideologues. It was the weakness and ineffectiveness of the soviets that led to the downfall of this form of democracy. The soviets lost their real power because they were unable to defend themselves effectively either against the onslaught of counterrevolution under civil war conditions, or against the Jacobinism of the Bolsheviks.
Nevertheless, if we want to break out of the vicious circle of ‘either parliamentarism or authoritarianism’, we have to reject the search for simple solutions.   … Nonetheless, the alternative to parliamentarism lies not in the dissolving of parliaments, but in the combining of parliaments ‘above’ with organs of popular power ‘below’. In other words, what we need is not soviets instead of parliaments, but soviets in addition to parliaments.”

“There is a democratic alternative, but it is not a bourgeois or liberal alternative. In these countries democracy is impossible without a substantial element of socialism. If the public sector plays a decisive role in the economy, if power lies in the hands of workers and their parties, and if self-management is beginning to develop within the state structures, then we are approaching a society in which direct and representative democracy are combined. But even this is not enough. The private sector and transnational corporations cannot merely be counterbalanced by enterprises directly serving the public interest. The very approach taken to development has to be changed.”

Capitalist rationality

“The experience of the twentieth century not only forces us to recognize that attempts at the rational organization of society on the model of the ‘big factory’ create a monstrous and totally irrational bureaucracy, but, still more important, also demonstrate the narrowness of the capitalist or ‘Western’ notion of rationality.”

“We will have found the way out of the labyrinth when we come to understand that the main task is not to achieve the highest possible growth rates, but to combine democracy and development, to ensure that every decision that is taken serves to guarantee the rights of the individual. The utopia of the homogeneous society, that has possessed the minds of modernizers of all political persuasions, has to be rejected. To have a democratic perspective means opting for a ‘motley society’.”

“Paradoxically, the growth of entrepreneurship ‘from below’ can also represent the outcome of the successful application of socialists measures. The overcoming of dependency, and the banishing of the bureaucratic and comprador capitalist interests that have exploited the country’s backwardness and dependency, open up definite opportunities for the development of democratic capitalism. There is inevitably a period of transition, during which the actual movement toward socialism is accompanied by the parallel development of national capitalist entrepreneurship. Ahead lies the promise of progress along several tracks and on several levels, and this is the sole guarantee of genuinely organic development.”

“Inevitably, numerous transitional forms of democratic economy will appear, such as genuine cooperation and communal property ownership; these will not in their essence be either socialist or capitalist. The role played by the public sector and by the state, which must be in the hands of the workers, is absolutely decisive for the creation of a viable democracy. Only the public sector can create the technological base for disseminating intermediate technologies, and for progressive changes in other sectors. Social ownership can take various forms – state, municipal and cooperative-collective. The decentralization of public property provides a guarantee of dynamic and integrated development that is unattainable either under the way of private monopolies, or under bureaucratic rule.

Such a strategy is impossible without the implementation of one of the most important socialist principles – that is, without democratic control over investments.”

“Communists and their allies shared the traditional idea of rigid delineation between the ‘democratic’ and ‘socialist’ phases of the revolutionary process. This concept proved untrue in practice even in relation to the Russian Revolution of 1917, and ha shown itself to be still more inapplicable under modern conditions. (…) However, the task of democratic change is precisely to create socialist institutions, which can serve as the core element of further development. Unless this task is carried out, democracy will never be consolidated; the social contradictions of a poor society will either blow it apart, or turn it into an empty farce.”

Beyond models

“The democratization of the economic structures and the dominant position of various types of public property should ensure greater equality, and as a result, a more stable society. (…) To jump across historical stages is impossible. The success off anti-capitalist measures creates the illusion of a ‘leap to socialism’. Nevertheless, society still passes through this stage, only taking a different route.  (…) Doing violence to reality not only leads to the degeneration of the revolution, but compromises its ideals on a world scale, and thus plays an objectively reactionary role.”

“A revolutionary regime in a backward country faces three possible variants. These are defeat and the restoration of the old order; degeneration, Thermion and ultimately, as the Soviet experience showed, bureaucratic restoration; and the consolidation of revolutionary changes through democratic reforms. The last of these roads is the most difficult. Ti presupposes the rise and survival of a sector of socialist self-management in an economy which retains elements of various systems. The new model of development gives birth to a new model of the class against capitalist and statist ones.”

“For a long time it was accepted that the main danger faced by a revolution came from its enemies. This is an illusion. The main danger faced by a revolution is inherent in the revolution itself. Revolutions, which go to far, perish. But a revolutionary process cannot be haltered by decree at a predetermined spot. A revolution has its own logic and its own momentum. Nevertheless the revolutionary process can, and at times must, be redirected onto a reformist track. In such cases there is talk of ‘rightward shifts’ and of ‘deviations’, but it is through such methods that the achievements of the revolution can and must be consolidated.
Reformism has to become part of revolutionary strategy. Making the transition from revolutionary ardour to the everyday work of reform is difficult, but it is precisely this which makes it possible to bring reality more closely into accord with the revolutionary ideal. “

“Without revolutionary resolve, the reformist project will never be implemented. Reformist illusions can therefore prove just as dangerous as revolutionary ones. (…) Reformist moods have provided the source of many great revolutionary movements. (…) Faced to choose between reform and revolution, a society will generally prefer reform, unless mass consciousness is firmly convinced that the revolution will proceed in a peaceful and democratic manner. (…) Historical reality, therefore, does not give us the luxury of a choice between revolutionism and reformism. Reformism lacks a purpose unless it is combined with revolutionary perspectives, and revolution without reformist work is equally pointless. (…) The democratic model is full of contradictions, but this is precisely the reason why it is viable.


“The temptation for the left to become nostalgic and conservative is strong and deeply rooted in the minds of millions of working people who form the core constituency  of the socialist movement. It is true that their situation has worsened since the introduction of neo-liberal reforms. But there is no way back. And this is why the neo-liberal global elite is not afraid of the nostalgic left.”

“The neo-liberal model of capitalism is unstable in principle. Rejecting the criticisms of both Marx and Keynes, and destroying the regulatory structures established under the influence of their ideas, the new world economic order has returned us to the rules of ‘classical’ capitalism – including overproduction and over-accumulation of capital.” (…) Marx was right when he insisted that these contradictions logically led to revolution. But where are the revolutionaries? Where is the revolutionary project?”

“Regulation remains an empty word unless the power of the New Big Brother is undermined politically and economically. That can be done and must be done internationally but through nation-states. The left must not just fight to conquer the state but first of all to transform it. That was the core idea of the original Marxist project and it is as valid today as it was hundred years ago. The state is weakened by the neo-liberal model –so we must use its weaknesses in our struggles.”

“We do not fight for more state or less state but for a different state. The network society will not emerge as a result of capitalist evolution but it can become a product of socialist transformation. We must recreate the public sector as decentralised and democratic, connected to community and accountable. We must re-establish the social security system on the basis of self-organisation and representation. And society must penetrate the state as deeply as possible.  (…) The left must reinvent the state- based on social networks, participation and citizenship, as opposed to the totalitarian hierarchies of the corporate Big Brother and multinational capitalist giants. (…) New Big Brother has to be stopped.”

“That can be achieved through class struggle and –through expropriation of big corporations. If we are afraid of thinking in these terms we are doomed to defeat politically and morally. Is the left capable of responding to the challenges it faces? Maybe it is not. But in this case the loser will not –just be the socialist movement but the humanity as a whole. “  

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