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Critique Notes 62

Published: 22 January 2013

As usual there will be a Critique Conference on the crisis on the last Saturday in February. Hopefully we will have speakers from some of the countries most affected.

A lot has happened in the past few months. Important events have occurred in South Africa, Greece, Spain and Portugal, not to speak of China. The situation in the Middle East is discussed around a separate article on Syria by Yassamine Mather in this issue. The crisis is affecting all parts of the world but the depth of the crisis is different according to the class relations in each country. Paradoxically, in spite of the euphoria over the so-called Arab Spring little is changing for the majority of the population, unless it is for the worse.

As the crisis deepens, we are witnessing the political polarisation that has historically accompanied the failure of the economic system. During the thirties, the capitalist system was effectively saved by the pusillanimity of the social democrats and the barbarism of Stalinism. While remnants of both remain, their role is more that of minor obstacles than true blocks to the formation of a powerful socialist opposition. The first steps to the formation of a left opposition are hesitant and limited, given the numerous groups/parties and programmes/theories. The far right has an easier time in its path to the formation of a realistic party, given the assistance of the police and sections of the bourgeoisie. They are able to use funds provided for them to help poor workers survive, and they get generous space in the media, while the police look the other way, when they beat up or injure immigrants and the left. Greece is providing the classic example of this unfolding drama.

Sections of the bourgeoisie and its intellectual spokesmen are calling for property qualifications in order to vote. The decline in democracy is at last being remarked on.1


The strikes at Foxconn in China are clearly a harbinger of what is to come. The Taiwanese company employs something like a million people, making products for firms well known for their electronic products like Hewlett-Packard, Dell, Sony and Apple. There have been a series of strikes of which the most recent was in Shenzhen October 2012, and wages have been raised and conditions have improved somewhat.2 David Pilling makes the point in the Financial Times, that behind the changing economic scene in China lies a question of the supply of labour.3 He points to the declining numbers of workers coming to the towns and the shift from female to male labour. The implication is that the more limited supply of labour and the greater readiness of men to challenge authority has made for greater militancy.

There is the further point that, in the end, growth is dependent on quantity of labour time and the latter’s relative decline means lower rates of growth than the past couple of decades. The exact implications of such a statement require an analysis of China’s industrial political economy. It can be compared to that of the Soviet Union which experienced a similar shift from high growth rates to much lower ones. Factors like the need to provide long term training for skilled workers, their irreplaceability over time, the increasing difficulty in dismissing workers militate against high growth rates. The policy of mechanising away the problem by replacing workers with robots might reduce the likelihood of strikes by the remaining workers, but it will also make strikes more costly, when they do occur. It will also help to increase the intensity of the global crisis in that there will be fewer workers with sufficient income to buy things, if Foxconn’s example is repeated, as is likely. It will also be the case that the rate of profit, based on calculations using the labour theory of value, will go down.

There has been a view that China will be important in limiting the downturn because it did play such a role in the post 2008 period. It is true that the intermediate system existing does allow the Chinese government to provide the money for the nationalised or semi-nationalised firms to expand and spend large sums on the infrastructure. The problem is that there is no point in building more empty motorways/freeways and empty buildings in cities no one wants to go to. The system, such as it is, has almost reached its limits.

The reply to the latter statement is that the Chinese need to and can increase the urban standard of living and so provide the necessary increase in global demand to help the Chinese and global economy. This is to assume that the Chinese elite are so stupid that they cannot see this as a possible solution both to the Chinese economy and to the world crisis. Their surplus product to be redistributed among the Chinese working class is far too small to allow any real increase in per capita income. The regime can select the middle class as the recipients of its largesse but the discontent of the working class will make it politically dangerous. In addition, the external surplus is trivial in relation to that group of possibly 50 to 100 million Chinese. The precarious nature of that surplus is illustrated by a report showing that there are some 1 million Chinese citizens who have more than 10 million yuan or 1.6 million dollars, many of whom - some 60 per cent - have left or intend to leave the country. Partly as a result, there was an outflow of money from the country in the second quarter of 2012, a negative balance of payments.4 When one adds the amount of money owed by China to foreign investors, redistribution of the surplus above consumption appears a dangerous choice, only possible in a few decades time.

That removes China from the ranks of possible influences which can ameliorate the crisis. Given the continued huge number of protests per annum, it would make more sense to regard China as a source of instability rather than the reverse.

South Africa

In South Africa, the workers have, at last, exploded against a type of regime particular to the present stage of capitalism. The working class has now flexed its muscles with strikes across the different mining houses, producing a series of different metals and minerals, crucial to the world economy, but also in industries across the rest of the economy, not excluding agriculture.5 So far it has not been co-ordinated to produce clear political economic as opposed to economic demands. Although wage concessions have been made, strikers have continued to be shot and the wounded dispersed among various hospitals to avoid publicity. Torture has been used on those arrested, it would seem. Logically, one would expect the emergence of a left-wing or Marxist party, representing the working class. There are various left wing groups in South Africa but they lack both the cadre and the theoretical basis to form a rival to the South African Communist Party. Although such a grouping or a party must emerge, it is unlikely to do so until a new party ‘of a new type’ does form in Europe. Nonetheless, the South African proletariat has learned valuable lessons, not least being the nature of their friends and enemies.

It is a country in which capitalism has continued in the name of a future socialism, ruled, in part, by a party declaring itself to be Communist. The complexity of the last sentence arises from the peculiarity of contemporary Stalinism and the conflicted nature of our epoch. It is not surprising that South Africa has close relations with China, given the respective roles of the Communist Parties. While South Africa has clear affinities with China, it is different in that the Communist Party has opted to avoid nationalisation. In fact, unlike the Chinese who took a classical Stalinist line in trying to develop mass education and an extensive if primitive health service when Mao Tse Tung took power, the ANC government kept the largely private health system, with a limited free hospital service and restricted education provision.6 In China the economy is formally private but in reality most large firms are ultimately controlled by the state. In South Africa, the government has privatised nationalised concerns inherited from the Afrikaner nationalist government.

The ordinary South African has had a very limited education7, and has had to pass through an adolescence in which they would be lucky to avoid AIDS. Average life expectation has recently gone back over 50 with the mass supply of retrovirals. With real levels of unemployment over 40 per cent, probably considerably over that figure, with a continued extreme housing shortage where many have to live in shacks, wages below 300 pounds per month for the majority, and prices higher on average than in the UK, there exists only a hope, induced by the ANC when taking power, of maintaining stability. That period is now at an end. The fact is that the end of racial discrimination did not raise the standard of living of the majority.

This is summed up by the Economist editorial on South Africa8: ‘‘Foreign investment is drying up. Protests against the state’s failure to provide services are becoming angrier. Education is a disgrace: according to the World Economic Forum, South Africa ranks 132nd out of 144 countries for its primary education and 143rd in science and maths. The unemployment rate, officially 25%, is probably nearer 40%; half of South Africans under 24 looking for work have none. Of those who have jobs, a third earn less than $2 a day. Inequality has grown since apartheid, and the gap between rich and poor is now among the world’s largest.’’

Unlike China, the Communist Party has limited means of suppression at its disposal. Once the workers lost their illusions in the ANC/Communist Party, only force could keep them in line and force has been duly used.

The left in the West has had a dismal record in relation to South Africa. Taken in by the propaganda line of the SACP, it went along with the nationalist anti-apartheid line, as opposed to supporting and helping a socialist party take power, in the name of the working class. South Africa had a series of left, Trotskyist groups, which made a substantial contribution to the organisation of the working class. Marx Gordon, a Trotskyist, effectively founded the miners’ union but was imprisoned during World War 2. He handed over control to the CP. Others played important roles particularly in Cape Town where the Unity Movement, a Trotskyist group, was dominant on the left before 1970. The CP itself effectively split on the issue after being banned in 1950.

The history is important because the effective marginalisation of the left by the CP in the name of so-called national liberation allowed the bourgeoisie to drive home a right wing settlement. There was no pressing military or political force which had defeated the Afrikaner Nationalist government, but the global bourgeoisie found them an embarrassment. The transition itself was a bourgeois triumph. They quickly converted leading members of the African Congress/CP into supporters of capitalism not least by turning its leading cadres into dollar millionaires if not billionaires. The general secretary of the mineworkers’ union-Cyril Ramophosa epitomizes the real nature of the settlement. He quickly became a billionaire director of companies, not least of the platinum firm where the 34 workers were shot. From Mandela down the leading functionaries acquired large houses, luxury cars and enough money to last several lifetimes. None of this was corrupt, if one understands corruption as a form of bribery or theft from the public purse. It was generally legal. Transfers of wealth involved issues of shares, loans at low interest etc, placement on boards of directors with the appropriate salaries and share type bonuses etc.

Although much hot air is spent on talking of the rise of third world countries, the fact remains that only Japan, South Korea and China have industrialized, and then only because the first two were deliberately allowed to build themselves up during the Cold War, while China pursued its own path behind Stalinist barriers and controls. Even so, the USA remains the dominant finance capitalist power, with predominance in computing processors, pharmaceuticals, transport, aeronautics and military industry etc. Mass production has been increasingly though not entirely outsourced to third world countries. Design and advanced technology remain predominantly in US hands. European, particularly German industry has its own niches, as in the case of German cars and machine tools.

South Africa has been formed in this context. Although regarded as a middle income country, that is largely because of its export of metals: gold, platinum, iron, chrome, palladium etc. plus coal and diamonds. Although the Afrikaner nationalists tried to build up a South African industry, that was very limited. The protection and nationalisation favoured by the Afrikaner nationalists had allowed industry to develop, albeit in a limited way, but liberation from ‘apartheid’ brought about a period of effective industrial stagnation. The textiles, clothes and shoe industries were hit hard by the ending of tariffs and the importation of cheap Chinese goods. Firms were allowed to transfer their residence for stock exchange purposes to the UK. Unsurprisingly they exported their profits.

The orthodox line carried by journals like the Economist9 continues to attribute the failure of the South African economy to corruption and incompetence. This is simply nonsense, whatever the level of corruption. The failure was inevitable given the original terms of the settlement. On the one hand, the leading cadre were turned into junior members of the ruling class, while on the other the economy became a prime global example of so-called neo-liberalism, a poster-boy of the IMF. Tariffs were reduced, so cutting down the substantial textile and clothing sector. Privatisation left economic development to free enterprise, largely large corporations, particularly mining, who transferred their headquarters to London or Europe. Profits and dividends flowed overseas more freely than before. The orthodox free trade logic dictated that such largesse ought to have led to inflows of direct investment into South Africa. That did not happen. Today, South Africa is lower down the league table of economic development than it was 50 years ago. It is in dire need of an overhaul and extension of its infra-structure. The fault does not really lie with the individuals in the South African government so much as with the ideology of the ruling parties and their international allies. While socialism in one country is impossible, the government might have tried to go for state driven integrated mass education, ending private schools, and mass provision of health facilities, if it were to be faithful to the original ideology held by their Stalinist/nationalist leaders. Instead they have managed a transition from one strategy for the stability of capitalism to another.

This is not to argue that corruption is not an important part of South African economic life, but it is not the fundamental determinant of its class relations, its incompetence, and its extreme inequality. That is based on the rocky foundations of capitalism in South Africa. The controlling bourgeoisie is effectively international, sited in London, New York and Zurich, with a junior bourgeoisie accepting its strategy from its masters in direct and indirect forms. The export of profits, interest and capital from South Africa leaves little for internal investment to raise the standard of living of the majority. The emergent middle class among the majority population is too small to ensure long-term stability.

The present bourgeois strategy, of building a black ‘middle class’ and junior bourgeoisie, under the banner of ‘black empowerment’ has probably reached its limits. The future can only be a blend of repression and open if anarchic revolt. The South African currency, the rand has fallen and continues to fall. As international speculators had put money into South Africa to take advantage of the high interest rates, the rand had risen considerably. Conversely as they are taking money out of the country the rand is falling. Presumably it will now continue to fall, increasing the rate of inflation, and worsening the standard of living of the majority.

It is only to be expected that sections of the rising African bourgeoisie, who fear the future, will take a lead in demanding nationalisation of the mines and a protectionist strategy. (Malema represents this wing, not the proletariat, or the left.) They will hope to control and channel the mass discontent. At the moment, this grouping is being kept under control, but the failure of the government to fulfil its promises and the extreme inequality can only fuel the growth of spontaneous forms of protest, ultimately leading to mass action, and eventually as implied above to a new mass proletarian party.

Russia and Pussy Riot

The Pussy Riot trial showed the nature of the Russian regime. As reported by the media, Pussy Riot members Maria Alekhina, Yekaterina Samutsevich, and Nadezhda Tolokonnikova were sentenced to two years’ jail for hooliganism earlier this month, but Samutsevich was freed on appeal.

One can either say that this continues the Stalinist tradition or that Stalinism was like the Post-Soviet regime but under a different name. Putin represents only a different face to that of Yeltsin for the regime. A recent comment on the character of one of the most important founders of the post-Soviet regime, Berezovsky, may be revelatory to those who are not aware of the nature of the personnel who have been in power. Her judgment was very widely reported and hopefully has shredded what little credibility he retained.

Berezovsky was the oligarch who was responsible for re-electing Yeltsin and then advising the appointment of Putin.

A British judge, Mrs Justice Gloster, at the civil suit brought by Berezovsky against Abramovich in London had this to say of Berezovsky:10

In her ruling the judge said: ‘‘On my analysis of the entirety of the evidence, I found Mr Berezovsky an unimpressive, and inherently unreliable, witness, who regarded truth as a transitory, flexible concept, which could be moulded to suit his current purposes.’’

She said she dismissed Mr Berezovsky’s claims in relation to Sibneft -and a claim Mr Abramovich had broken a promise over a deal involving Russian aluminium company RusAl - ‘‘in their entirety’’.

One ought to regard the judge’s comment as a brilliant characterisation of the philosophy of Stalinism and its offspring. Berezovsky was a typical member of the new Russian elite formed after the USSR broke up, and played a critical role in developing the forms of the market introduced after 1992. It is clear that the market has failed in the territory of the former USSR, in that the economy has been reduced to a raw material producer and its substantial industry largely, though not entirely, turned into almost useless rustbelt.

At the same time, the current demonstrations are in the Berezovsky tradition, being led by such as Nemtsov, a former deputy Prime Minister under Yeltsin. The Pussy Riot people, however, are not in the same mould. Their iconoclastic taunting of the Russian Orthodox Church was itself very different. The regime had brought the Church back as a form of control. Historically, the Russian Church has played the role of an adjunct to the state for centuries, even under Stalinism. Under Tsar Nicholas Ist the priests reported subversive confessions to the state. Unsurprisingly Putin has his own chapel.11

Western reporting was often absurd in declaring that the Russian people were deeply conservative, and hence supported Putin’s persecution. The idea that Russians are inherently religious, impervious to modern education and science, is simply nonsense. Nor can one take opinion polls conducted in a police state as indicating the true nature of public opinion.

The mass demonstrations which took place in Moscow and in a number of other towns were led and formed by a section of the Russian elite, who want the regime to reduce the economic role of the state, leaving more room for private enterprise. They refused to allow groups who wanted to place working class demands on the agenda a place in the demonstrations. In fact, the extra-Parliamentary opposition, as presently constituted, is no more than the other side of the elite coin. Nor is there any reason to suppose that civil rights will be improved if they were to come to power. Whatever their present statements, they are more likely to adopt the programme of parties like the conservative parties in the West, which want to repress and control trade unions, reduce welfare benefits and pensions and continue the process whereby inequality increases. The resulting increased unrest will be met with the usual repression which follows such measures. Given the unstable nature of what remains a transitional regime, it is not surprising that the Putin regime is seen as more reliable by the elite as a whole, and that the population does not vote for this ‘middle class’ or elite opposition.

One can only salute the courage of the three Pussy Riot women, Yekaterina Samutsevich, Maria Alekhina, Nadezhda Tolokonnikova, their group and supporters, who are clearly of a different mind to this opposition. Smutsevich had this to say: ‘‘What I can say for sure is that we still madly want changes in Russia - toward anti- authoritarian leftist ideas. We, along with many citizens of our country, are burning even more with the desire to finally take from Putin his monopoly on power, since his image no longer seems so total and terrible,’’ she wrote. ‘‘In fact it is just an illusion, created by his spin doctors on government television channels.’’12

The oddity and embarrassment of the Russian state has been shown by its reaction to the protests, in which it has stood firm on demanding punishment for sacrilege, blasphemy, etc. The report of the reaction of the Russian Embassy in London shows the crudity and absurdity of the present regime. After a British citizen wrote to the Russian embassy about the repression of Pussy Riot, reports Private Eye ‘‘one might have expected a stock response from the Russian embassy. Instead the Pussy Riot supporter got sent an unsigned email from the embassy’s press and culture department in which he was invited to see the Art Collective to which they belong, Voina, indulging education.’’13

Equally interesting, but more important, has been the protest movement in support of the women, which has included intellectuals, artists of different callings and various oppositionists like Kasparov who was acquitted of trumped up charges, to his and everyone’s surprise. Although the intellectual movement in opposition to Putin includes different political currents, it contrasts with that of the late eighties opposing the Stalinist regime, where it was overwhelmingly of the right. The very fact that the Leningrad branch of the Russian Writers Union could hold an openly antisemitic meeting, in 1988,to demand a less Jewish branch indicates the political nature of significant parts of the intelligentsia in that period. The considerable role of anarchism, then and now, is a reaction to the crushing power of the state, looked at in a political rather than political-economic way. However, anarchism in that period and anarchism today cannot play the same role.

When a state embarks on repression of its opposition it is always an expression of its weakness. That does not mean that it can be immediately overthrown, but it does mean that it cannot last more than a few decades at most. The extreme forms of control in the Soviet Union cannot be replicated without its economic form. Today the repression is a shadow of its former self, though that does not mean that it is not oppressive, but it does indicate that the state cannot last very long.

The Crisis Continues

Businesses continue to pile up their unspent surpluses. The Economist has noted that the capitalist class has piled up its surpluses but that profits have now turned down.14 It seems a paradox that firms increased their money holdings since 2008, and that their rates of profit also went up. Both are easily explicable as is the turnaround in profit rates, which have now turned down. It is obvious that if businesses are reduced to using their profits to earn interest rather than to invest that their profits will turn down, particularly at a time when rates of interest are so low. In addition, of course, the market is constrained by the downturn itself.

Profits went up in part because firms could keep wages down, and raise productivity, by not replacing workers. Clearly under conditions of mass unemployment it is easier to enforce labour discipline. However, the process has reached its natural limits and the cash holdings of large corporations, widely estimated at 2 trillion for the S & P 500, which earn little or no interest, given current rates, is an additional drag on profit rates. While the holding of cash makes sense in a volatile environment, or as a precursor to further innovative reconstruction of the firm, it remains a cost, and an unjustified one in the absence of those conditions. We are in a depression and this is a natural concomitant, helping to intensify the deflationary tendencies of the period.

When we add the fact that workers in third world countries like South Africa are demanding higher wages, so reducing the profits and dividends from those countries, it is clear that pressures counter to any stimulus are building up.

The re-election of Obama as opposed to Romney, the man of finance capital, will probably make some limited difference in that Obama is more cautious in US global operations. There is always little to choose between one supporter of the system and another, but a kinder gentler ruling class operative is always preferable. That does not mean that the left ought to have obscured its politics by voting for Obama. The decline of capitalism is expressed most clearly in the decline of the global power, the United States, and its internal politics must also reflect that. We may look forward to a period of convoluted and agonising change in the established political parties in the USA, as the crisis continues.

Note on the Obituary to Neville Alexander (1936-2012)

Neville Alexander was a leading, if not the leading, left wing comrade in the movement in South Africa. There is an obituary in this issue, and we may print another in the following issue, when we receive it. As I knew him personally, having attended the University of Cape Town at the same time as he did, and having discussed and talked with him both individually and at his discussion groups over the years, I feel I ought to write a few words in tribute to him.

Neville Alexander was an exceptionally honest, sincere and dedicated man of the left. Although offered high office at various times, he refused to accept the proposals. He remained to the end a language scholar and professor at the University of Cape Town. His career is detailed in various obituaries including an entry in Wikipedia.

As with most left-wing students at the University of Cape Town he belonged to the Unity Movement, the dominant left wing movement in the Western Province and the premier Trotskyist group in Cape Town. When it split he went with the wing led by I.B.Tabata, Apdusa, which placed greater stress on the land as opposed to the proletariat. He left that grouping and belonged to a discussion group which was charged with subversion by the police. He told me many years later that they never did anything other than have theoretical discussions. One biography says that the group discussed guerrilla warfare. There is no evidence that they did anything. Nonetheless, he was sentenced to 10 years on Robben Island, where he met up with Nelson Mandela and other members of the South African Communist Party and ANC.

‘‘As a young man Professor Alexander was arrested in July 1963 along with a number of National Liberation Front members and convicted in 1964 of conspiracy to commit sabotage. He was jailed on Robben Island from 1964 to 1974 - a period that coincided with that of Nelson Mandela, Walter Sisulu and a number of the country’s most important political activists. Upon his release he was banned and placed under house arrest in Lotus River, Cape Town, until 1979. He later shared ideas with the leaders of the Black Consciousness Movement, including Steve Biko, and came to play a formative role in the establishment of activist groups in the Western Cape. After the reconciliation talks between the African National Congress and the National Party, Alexander was in the forefront of the establishment of the Workers’ Organisation for a Socialist Azania.’’15

He held no illusions about the ANC/CP but was on good terms with Mandela and various others. He set up and led a grouping which at one point had a substantial number of cadres. They contested the 1994 elections as the Workers Organisation of Socialist Azania. He was non-sectarian and easy to get along with. He received various grants for his academic work etc. and travelled widely and hence was well known to the left in Europe and the USA. He wrote several books.

He was not a Marxist scholar, and he was influenced by the hope that things in other parts of the world like Cuba and Venezuela were moving in the right direction. He came from the Trotskyist tradition so he was well aware of the argument that socialism in one country was worse than a dead end.

He adopted the concept of racial capitalism to explain racism and racial discrimination in South Africa. The concept is defined in an article by Robert Davies, Dan O’Meara and Sipho Dlamini:16 They declare that ‘‘The national oppression of black people in South Africa is a product of, and was indeed the necessary historical condition for, the historical development of capitalism in South Africa.’’ For them, apartheid and segregation was a system designed to extract high profits through cheap labour. In my view, this is simply wrong, as ought to be clear today in that South Africa is still capitalist without formal racial discrimination, and profits are not lower than in the previous period17. Indeed the strikes are testimony to the extreme inequality in modern South Africa. The viewpoint, was, effectively the one adopted by the ANC/CP and led to their strategy of national liberation, a term also used by Neville Alexander.

We disagreed on Marxist analysis, on the nature of the struggle in South Africa, and on the way forward. Neville Alexander, however, found a way to operate in South Africa and make his own honest and substantial contribution to humanity, under very difficult conditions. For that he will be remembered and we must salute him.


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