Critique Notes 91
Published: 03 September 2021
We are in a new economic and political period with the election of the Democratic Party in the USA led by the Biden faction. Sanders, the left opposition alternative candidate in the Democratic Party obviously felt the necessity to give way. Clearly there is no question of socialism, the centre-right of the Democratic Party is the party of ‘sensible capitalists’. When Jamie Dimon the head of JPMorgan-Chase Bank can support its present line, and he is not the only banker, two things are clear. First that the concessions are probably going to be real, and secondly that there is a limit to what is to be offered.
The situation of the global economy is defined in the first instance by the election in the USA and the covid-19 virus in the first instance. In the second instance US policy appears to be governed by three immediate imperatives: Internally by the programme of the Democratic party to raise taxes on the wealthy, raise incomes of the majority, in particular raise the minimum wage to $15 or thereabouts and thirdly decrease the percentage of unemployed. At the same time Biden wants to get the approval of the Republican party for these reforms. It is clear that there has been a limited revival of trade unions, and a number of members of the cabinet are in their favour.
This amounts to a reversal of the policy since Reagan-Thatcher from 1980 onwards. As the economic system has been stagnating since 2008, the injection of the proposed $1.9 trillion adds to the overall impression of the possibility of real change.
However, if Biden insists on getting Republican approval the reforms will take more time and be substantially below what was initially proposed as above. In effect, they will fail relatively quickly. On the other hand, if there is no compromise, it could lead to further reforms as workers organise to implement and extend the reforms.
This is the simple projection with which we are presented. If the optimistic scenario becomes real, the momentum might carry it considerably further not least because it will enable a more generous international policy.
There are already loud extended noises about continuing the Trump anti-Chinese policy. As the Chinese industrial economy is 60–80% private enterprise, justification largely based on the indoctrination of the Uighurs looks limited. There is no question of the undemocratic nature of the Chinese polity but other undemocratic countries, like Saudi Arabia, are regarded as friends. The fundamental reason for the tension with China is rather the reality that they are catching up economically with the USA. Within 20 to 30 years they will be on a par with the USA or have overtaken them, if they continue the present progress.
US policy has been consistently one in which it ensures its global hegemony, ultimately based on its industrial superiority and its consequent international domination of trade and investment. It is also clear, however, that the US position is less secure than it was. While the USA is the controlling international military power, patrolling the world, its domination is guaranteed.
On the other hand, its sphere of total economic dominance is a fraction of what it was in 1950. If they now produce a smaller total percentage of cars globally sold, as compared with 1950, there are, in contrast, no competitors for Amazon, Google, Microsoft, Facebook, Apple, IBM in the various economic spheres involved, not to speak of finance capital itself The fact is that the US firms remain at the head of technological research and production. Whereas other developed countries such as Japan, Germany, France and the UK continue to grow, it is at a snail’s pace overall. Germany has established itself as the second most developed capitalist power and established a close economic relationship with China.
Germany, however, is not alone in seeing the advantage of working with the Chinese ruling party. US investment firms like BlackRock, Vanguard and State Street can do the same by pouring investment into rapidly growing sectors in China. Trump’s war on China was and is backed by a substantial number of Western countries not excluding Biden’s USA but the nature of that war is more of an outward appearance, with a friendlier essence.
The critique of China for its maltreatment of the Uigher minority might resonate among intellectuals while the official support for the opposition in Hong Kong and Taiwan continues with little meaning. It is clear that there is no Marxist opposition in China, while there are even fewer Marxists or socialists in the Chinese Communist Party. Today the Chinese economy is called state-capitalist by both the right and left. It sets itself the goal of rapid economic expansion including a rise in the standard of living, with an expanding ruling elite. They have shifted the economy from largely agricultural to an increasingly industrial form. It is their unrelenting progress in industrial development that threatens Capital, even if it is neither as developed nor as successful as in the West. We continue to live in a transition period to socialism in which political economic forms express this duality.
Today, the meeting of the 7 leading capitalist nations which ended on 13th June 2021 made it clear that they supported the economic policy reversal in which austerity was to be replaced with economic expansion. Biden’s policy is very different from what had been expected. He is no socialist, but he is in favour of economic expansion, and a high standard of living for all in the USA. He supports the return of trade union growth and the role of trade unions within the overall economy. He produced a concrete programme before the election and he appears to be sticking to the overall direction.1 Since the election he has got an initial 1.9 trillion dollars through Congress. Investopedia calls it ‘the first leg of Biden’s economic plan’ and says it ‘is the law’. He intends ‘to invest $1.3 trillion in infrastructure over 10 years.’ ‘To the latter he proposes to add $4 trillion raising the ordinary tax rate to 39.6%, corporate tax rates to 28% and raising capital gains taxes to similar levels to ordinary taxation’.2
He talks of using the money so gained by making colleges free for those earning below $125,000 dollars, but also raise the minimum wage to $15 dollars per hour. His initial attempts for the latter have not been fully successful but they are on the way. Having joined those trying to delay the heating up of the global atmosphere he intends to spend 2 trillion dollars on clean energy. He also intends to try to get more goods produced and sold in the USA partly through subsidies and incentives.
There is no reason why he should not be able to raise the overall standard of living and abolish fees for higher education. Clearly if he manages also to provide free health insurance to 97% of the population he will have brought the USA closer to West European levels of income for ordinary ‘middle class’ citizens. Indeed it may even be much higher.
The question is whether Biden and the right wing of the Democratic Party, i.e. the central ruling class itself, really wants to change the distribution of income and allow for the working class, (i.e. more than 90% of the population) to play a central role economically, socially and politically in their own society. Do they really want a genuine democracy as opposed to the marginal or sham forms that now exist. Alternatively, have they recognised that such a form is inevitable and ultimately in the interests of their own descendants? There is no doubt that there is substantial support for the goals outlined.3
It has to be said that most left-wing commentators are sceptical as a quick read of the left and far left papers shows. The right is certainly not preparing for such a radical change. At the same time, there are no genuinely powerful Marxist or left parties. In most countries the organised left is at best to be counted in hundreds or possibly in a few countries in thousands. The half a million members of the UK Labour Party are well to the left of that party as they showed by voting consistently for Corbyn, and by their decline in numbers with the sharp rightwing shift of the party. Those below the age of 40 in the UK and USA show4 a clear overall tendency to vote left.
The question of China
Biden’s attitude to China has been proclaimed as critical to the point where it does not differ from that of Trump. Merkel’s view is in direct contrast. It appears to be one of making use of a unique opportunity, whatever her and her party’s personal view of the Chinese ruling class.
But Merkel has resisted attempts to push Germany into taking a confrontational posture. When she addressed the Munich Security Conference earlier this year, there was an obvious gulf between her and Biden on China. Merkel was also the main driver behind the EU’s overtures late last year and rush through the previously stalled China Investment Agreement the month before Biden was inaugurated.5
Germany is now the leading industrial power in Europe and is effectively competing with the USA in vehicles, steel, chemicals etc. Given the considerable level of investment by US firms, like BlackRock, Vanguard and State Street in China itself, it would appear that the USA is on to a guaranteed failure in its Chinese relationship. The obvious comparison is with the very successful Western boycott of the Soviet Union. Whether the latter was to the advantage of the USA, the World or Russia is far from clear but that is another matter. The Chinese, of course, are governed by its Communist Party, but the reality is that 60% to 80% of the non-agricultural economy is under private enterprise. It is clear that the Chinese Communist Party has little to do with Marxism or socialism, whether in the last 70 years or in the immediate past. It is also clear that with a considerable degree of integration in the world economy, whether in Africa or the West, China is likely to develop to the point where it might compete industrially at the same level as the USA. This is an increasingly obvious medium-term reality. There is, of course, always the possibility of an internal revolution, but however inevitable such a change throughout the world, the forces of change are not immediately visible in China.
It is not clear what the Biden government intends to do with its relations with China. It might have been hoping for concessions at its Alaska meeting with Chinese representatives, but there was no reason for the Chinese to cave in. The fact is that the USA itself is in decline and the Chinese are well aware of its problems. The use of weapons is clearly ruled out. While forms of economic boycott exist and may be extended,they are limited and ultimately likely to fail. At most they will reduce the speed with which the Chinese can raise the overall standard of living of the population. It is more likely that in a limited period of time, there will be a compromise in which the USA accepts an increasingly global role for China. Biden’s policies are not warlike, something more conceivable with Trump or his predecessors.
It has been said above that Biden’s other policies are intended to raise the standard of living and quality of life. He and his advisors have consciously taken the opposite road to Trump with his muddled challenges to China and other enemies. Moves to full employment, free health service, free education etc do not go with a permanent bellicosity with China, if only because of the cost, increasing with time. The Cold War, for instance, did cover a more limited rise in the standard of living than would have been possible. In other words, the nature of the redistributive and expansionary changes proposed for the population should presage a more humanist if not socialist approach to China.
Biden’s approach is contradictory in that he proclaims that he stands for progress, yet he wants to hold China back from competing with the USA, so delaying its industrial progress, and hence competitiveness, while his implicit regime change hopes or demands also seem to imply keeping China more backward. This is very similar to what the USA did to keep Russia from being internationally competitive. The globalist role of the USA is one of maintaining global equilibrium under US control and hence negates the emergence of challenges to the existing distribution of power.
It is inevitable that the Chinese economy will reach equilibrium with or even overtake the US economy as it stands, if no steps are taken to slow the progress of the economy. Given the integration of the Chinese economy today in the world economy and the large scale US investment in China, it is inevitable that China will catch up within 20 to 30 years. The only, or main, question is whether the Chinese elite can build a stable if temporary social system. There is no evidence of the emergence of a genuine socialist or Marxist opposition. Such evidence as comes to the West appears rather to show a high degree of stability. This does not mean that there is no other future. The most recent statistic of growth – 18% – for the first quarter of 2021, (but 8.5% for 2021) provides a boost for the existing system.6
Clearly, an egalitarian or socialist China would constitute a threat to capitalism, but it is far from that socialist goal. It is not the Soviet Union, and the system coming into being is closer to capitalism than was the USSR, which was a failed sui generis transitional form. And yet, its stability depends on the relative political and social weakness of the wealthy and the instability of the occupants of political power. For the USA, the fact that the Trump supporters attempted a coup d’etat has shown the fragility of capitalist political forms, with its threat that ultimately the right might take the absolutist road. For Marxists the transition period begins with October 1917 and Chinese political economy is a particular example whose social forces have yet to show all their possible evolutionary tendencies. The Soviet Union reached a dead-end, however complex. That does not seem likely with China, given its rapid rate of growth, and its close political-economic connection with the rest of the world. There can be no doubt that it is possible that the ruling class in the USA might try to prevent further Chinese evolution. It looks less likely today that the USA will attempt direct or indirect destruction of the Chinese political and economic system. Dealing with the threat of the heating up of the climate requires total international co-operation in the medium to long term and hence renders a Soviet style Western boycott out of the question. The evolution of China looks like going in a different direction from the USSR, but it is not certain to take the current capitalist road either. The Russian road out of the Soviet Union, as it were, was to a form of permanent failure under an undemocratic form of a semi- controlled market. It is inherently unstable, undemocratic and likely to explode at some point. 48% of those surveyed in Russia a few months ago apparently want to return to the Soviet form.7
The question of the transition period and the decline of the global power
No-one has mapped the future of the transition period, from this point onwards. It was assumed, from the time of Marx, that at a certain point capitalism would be overthrown by the majority in advanced capitalist countries. This scenario was upended by a series of ruling class victories from the later nineteenth century onwards. First came the completion of the conquest of the less developed countries: India, China, Africa, South America and the rest of Asia .Then the Second World War established a more thorough hierarchal relationship with the USA being the power dominating over the world with its global fleet and extensive airforce as well its ground bases in strategic areas. They were officially formed to protect the world from the USSR but the series of attempts to roll back the clock showed the nature of the real situation. The attempt by France, the UK etc to reclaim the Suez Canal from Egypt in 1956 and their failure consequent on the non-support of the USA pointed to the subordination of the European powers to the USA. The USSR was always subject to strict international controls and never constituted much of a threat. If anything it acted as an important obstacle to genuine left movements. Hence the relative decline of the USA from the ending of the USSR onwards was no accident. Today, Germany and China are the immediate challengers to US economic domination. The absence of an immediate threat of the kind that the USSR constituted has in itself weakened the power of the USA.8
Such descriptions of the Chinese economy shows that it has evolved very rapidly in the last 5 years towards a form of integration with the world economy. If China has to withdraw the registration of its firms on the American Stock Exchanges, under pressure from the Biden government the value of its stocks and shares is around 2 trillion dollars.9 ‘China was the largest investor in the world in 2020’10 Biden is effectively following the Trump policy towards China, but it is hard to see that he can succeed.11
The evolution of the west
A comparison of the European economy in 1917 and the present show: 1. The elimination of monarchy and its replacement with an elected Parliament based on the adult franchise; 2. The franchise extension to all men and women over 18; 3. Free school education 4. Availability of university education. The population remains divided by levels of family income, by the quality of the school attended, by manual/white collar jobs and by the importance of jobs in providing higher incomes and command over workers and resources. In other words, we live in a long-drawn out transition period.
South Africa
The riots/invasion of malls/robbery of supermarkets/shops which led to over 212 people being killed by Friday 16th July 2021, according to official reports,12 began on Monday 12th of July in Gauteng and KwaZulu-Natal and largely remained as the epicentre. Significantly the Eastern Cape was much less affected although other areas had some participation in this protest movement.13 Neither the official story provided by the present President, Cyril Ramaphosa and his wing of the African National Congress nor the line justifying this action on behalf of former President Jacob Zuma and his ANC supporters provides much guidance for those looking at the dynamics of the situation.
The African National Congress formally claims to have been founded in 1912 but it had little or no presence until the 1940s and 1950s. Its leadership was formally left-liberal in demanding equal rights for all inhabitants of South Africa. In reality, its genuine leadership belonged to the Stalinist Communist Party which had gone underground after being banned by the Nationalist Government, under the Suppression of Communist Act of 1950. The South African Communist Party, as it renamed itself after 1950, remained underground until the regime began to yield in the early 1990s. It was a strongly Stalinist party loyal to the USSR, to the point that they supported the invasion of Czechoslovakia in 1968. The party maintained internal discipline underground and in the African states where they were given succour, like Angola, Mozambique,Tanzania, Kenya etc. They received direct and indirect support from the USSR until its14 end, which unsurprisingly constituted a major blow to the party itself. It effectively lost its de facto monetary support, overall theoretical leadership and perspective. The ANC did not, in fact, have a genuinely independent existence until that point.
The end of the USSR coincided with the agreement to establish equal political rights for all adult inhabitants of South Africa, whatever their history or colour. At the same time, the leadership of the ANC shifted to dependence on big capital itself. The gates were opened to the export of capital. Afrikaaner capital had been protective of South African industry, which meant that South Africa stood at a similar level in industrial economic terms to other previous British Dominions like Canada and Australia until the eighties. Since then it has slid backwards, even if it is possible to call it the most industrialised African state. A leftwing government would have restricted the export of capital from South Africa and tried to establish a substantial industrial base. Its population has grown very rapidly from 12 million in 1960 to the point that it now has somewhere around 60 million population; but unemployment for 15–64 year old persons in January 2021 is stated to be 33% in the article cited.15 High as it is it is doubtful if that figure is correct. There is a history of understatement of the percentage of unemployed. Youth unemployment is also very high.
This outline has been necessary in order to explain the forces at work at the present time. Whereas in Europe where the parties are Conservative who are supporters of the capitalist system, Labour, who are reformist supporters of capital, and Left Labour of different kinds who are critical of capitalism, in South Africa the ANC dominates the voting patterns of the African population who are now roughly eighty per cent of the population.
The leadership of the ANC over the last 30 years has lost its belief in Stalinism without finding an alternative, other than an empirical capitalism. The Stalinist line which its founders propagated provides no understanding of the present and future. At the same time, its members are not getting any new understanding of the present world whether in South Africa or elsewhere. Some go along with the current Chinese doctrines but that only adds to the muddle. People have to survive so they get swept into a climate of opportunism combined with nonsensical justification. Hence we have the Economic Freedom Fighters who got 10.8% of the vote at the last election. They have weirdly managed to invent a policy which starts from the inherent unfairness of the capitalist distribution of income, largely based on colour, without an historically based programme for its replacement.
The essential point is that there is no substantial genuinely left wing party of any kind, even though a number of the most influential/powerful/ figures belong or belonged to the South African Communist Party. The fight between Cyril Ramaphosa and Jacob Zuma is over the considerable level of corruption and failure of the economy, as well as ‘the spoils’ as it were. Both either belonged to the South African Communist Party or had their support at some point during and after the 1980s. The need to change policy and go for industrial growth, the raising of the very low standard of living of the majority seems to have been left behind. The fact is that neither side is prepared to go for a more general nationalisation combined with a clampdown on the de facto export of capital which would permit such a policy. Still less is there any attempt to make the distribution of income egalitarian. On the contrary, South Africa has one of the widest distributions of income in the world.
The actual form of the ‘insurrection’ is shown by the reports ‘Many small businesses have been left in ruins after being ransacked by looters on Monday and Tuesday’. ‘These included a fast food food outlet owned by a football star … and two low cost private clinics’.16 Clearly those involved in the looting invaded outlets which were not guarded and were easier to access.
This has been called ‘a week of riotous looting’. There was also the burning of shopping malls. In response there was a closure of crucial industry and the calling in of the army.17
The reality is that South Africa is a capitalist country with all the aspects of control, discipline, poverty and lack of jobs or opportunities that go with it. To this, however, has to be added the limits on discipline which go with a regime which is not just exploitative but claims to be pro-worker. South Africa has had the dubious honour of having low productivity levels close to those of the descendants of the former USSR. This is the report of the OECD in 2018 on South Africa:
Labour productivity growth is particularly low. South Africa has the lowest productivity growth rate among emerging economies and with Brazil and Argentina the only negative rates. Low productivity performance in South Africa reflects the skills shortage, high cost of doing business and lack of competition in many markets. Student skills are below the OECD average, with the education system being characterised by high inequality as a small share of students excel but many others do very poorly.18
Unlike the USSR and its successors, South Africa does not have their disciplinary forces. When the army has been brought in and killed or wounded striking workers, as in the Marikana massacre of 2012, there was a huge international and national outcry. In other words, the situation is one in which private enterprise rules but under the cover of a parliamentary system in which the governing parties claim to be pro-worker, rather than pro-capitalist.
The company executives and the officials who back them have a pro-capital perspective but the African National Congress cannot take such a straightforward view. Black nationalism, Zulu nationalism etc has its disadvantages and its older members and officials come from Stalinism.
The logic of the situation is such that owners of capital who have connections in other parts of the world will speed up their attempts at exporting capital. The fact is that South Africa has privatised rather than the reverse over the period from the assumption of power by the ANC. However, the situation of the majority of citizens has not improved and may have got worse. In other words, the South African government needs to provide jobs for its citizens under conditions where the number of black citizens without jobs runs somewhere between 40% and 50% if not more.19
The Economist has taken a straight pro-capitalist line speaking of a ‘liberal democracy having been born against the odds 27 years ago after the brutality of apartheid’.20 Today it sees it re-asserting itself in the clean-up. There can be no doubt of the corruption of the faction replaced but the argument goes deeper. The implication that the ANC somehow got controlled by corruption sometime after it took power and that this explains its failure to raise the standard of living of the majority of the population is dubious. While the Economist clearly does not like continued nationalisation of a sector of the economy, privatisation has reduced its size, and there has been little renovation of the economy. Growth has been slow to negative, while the numbers unemployed remain high. At the same time the de facto export of capital through payment of dividends etc., has been considerable. ‘Adjusting for inflation, GDP per capita peaked in 2014 and has since been declining. This means that economic growth has been struggling to keep up with population growth’.21
The Economist is wrong in that both the personnel and the programmes of the ANC failed to cope with the reality of South Africa both before 1994 and after. Between the absolute poverty, poor training/education of most of the population and the de facto loss of capital and trained personnel, this was to be expected. A socialist party might have introduced crash training programmes, minimum and maximum incomes, mechanisation, and limits to the export of capital. It would have had to consider a programme of nationalisation of the mines. None of this was contemplated.
In effect, the capitalist class retained its assets, while the situation for most workers changed only in form. Those in nominal charge were now black rather than white. The fact that the politicians were not personally honest made things somewhat worse, but for most ordinary workers the difference between before and after 1994 was very limited, and could only be limited, until it became worse, given the nature of the economic situation under capitalism. Productivity in South Africa per worker reverted to the situation in 2012 as implied in the paragraph above but one.22
Notes
- See: Biden Harris, ‘A Tale of Two Tax Policiees: Trump Rewards Wealth, Biden Rewards Work’, https://joebiden.com/two-tax-policies/2020.
- Investopaedia: Joe Biden’s Economic Plan, 2021.
- https://iop.harvard.edu/: Harvard Youth Poll Spring 2021.
As more young Americans are likely to be politically engaged than they were a decade ago, they overwhelmingly approve of the job President Biden is doing, favor progressive policies, and have faith in their fellow Americans.By a margin of 2:1, young Americans expect their lives to become better (40%) under the Biden administration, rather than worse (19%); 25% tell us that they don’t expect much of a difference. We found significant differences based on race and ethnicity. • Whites: 30% better, 28% worse (net better: +2) • Blacks: 54% better, 4% worse (net better: +50) • Hispanics: 51% better, 10% worse (net better: +41).
Age and voting behaviour at the 2019 General Election The British Election Study Team 27/01/2021 Election Age and voting behaviour at the 2019 General Election
The British Election Study Team
27/01/2021
Recent British elections have seen much discussion about the relationship between age and voting behaviour. British politics seems increasingly polarised along age lines, with younger voters being more likely to support the Labour party and older voters more likely to support the Conservatives.
https://www.ft.com/content/e4c7df1a-5048-4cf1-8a2d-c9a2d721ba92
Will Europe sign up to Joe Biden’s plan to counter China? The EU has become more sceptical about Beijing but some leaders worry about Washington’s new cold war rhetoric
Demetri Sevastopulo in Washington and Sam Fleming and Michael Peel in Brussels
Financial Times: JUNE 7 2021 “Ever since he entered the White House in January, Joe Biden has articulated one foreign policy goal above others – to work with allies to restrain China.”
World Bank: 8.5% GDP growth projected for China in 2021
By Chen Jia | chinadaily.com.cn | Updated: 2021-06-29 10:06.
Nostalgia for the Soviet Union. Wikipedia. The latter cites year by year examples of regret at the end of the Soviet Union in the former area covered by it. “https://www.ft.com/content/e4c7df1a-5048-4cf1-8a2d-c9a2d721ba92”
Will Europe sign up to Joe Biden’s plan to counter China? The EU has become more sceptical about Beijing but some leaders worry about Washington’s new cold war rhetoric
Ever since he entered the White House in January, Joe Biden has articulated one foreign policy goal above others – to work with allies to restrain China.
Demetri Sevastopulo in Washington and Sam Fleming and Michael Peel in Brussels JUNE 7 2021
- “China Inc’s new inconspicuous expansion: Chinese companies are adapting to amore hostile global climate- and thriving” Sebastien Thibault, https://www.economist.com/business/2021/07/17/china-Incs-new-inconspicuous-expansion.
- Ibid.
- Ibid.
- Demetri Sevastopulo in Washington and Sam Fleming and Michael Peel in Brussels Financial Times: JUNE 7 2021.
Will Europe sign up to Joe Biden’s plan to counter China? The EU has become more sceptical about Beijing but some leaders worry about Washington’s new cold war rhetoric
Ever since he entered the White House in January, Joe Biden has articulated one foreign policy goal above others – to work with allies to restrain China.
- BBC NEWS: 16 July 2021 1303 BST, Shingai Nyoka, BBC NEWS, Durban.
- We can’t sit back :South Africans reel from riots – Jailing of former president ignites slow-burning tensions over unemployment and long lockdowns- Joseph Cotterill in Soweto – (13 hours ago on 15/07/2021) Financial Times, 15/07/2021.
- Ibid.
- Statistics SA,Statistical Release P0211 Quarerly Labour Force Survey Quarter 1:2021 Table 2.2: Labour Force characteristics by age group.
- Phumi Ramalepe, Business Insider SA, July 14th 2021, 08.20 pm.
- Phumi Ramalep: Businesss Insider SA, July 16th 2021, 12:55 pm.
- OECD: The new OECD Jobs Strategy Good jobs for all in a changing world of work How does South Africa compare? 2018.
- “End of the line for ANC economics: More than two decades of corruption and misgovernment have led to crisis.” Economist Jul 24th 2021 edition.
https://www.economist.com/leaders/2021/07/24/end-of-the-line-for-anc-economics.
- Ibid.
- Stats SA: https://www.statssa.gov.za/?p=14074.
- Ibid.