WAS CAPITALIST THE USSR?

Spanish

Robert Kurz : "As state bureaucracies, the Marxist workers parties not only had to take the bourgeois tasks in a much more emphatic way than what happened before in the West; in fact, paradoxically, had to generate the working class as human material for the explotation process itself, for the first time on a large social scale. "...." The goal was to conquer state power in order to install a modern state machinery responsible for the state capitalist industrialization, ... , "communism" worked just as a modernizing label for the impetus of state capitalism".

Neither "Soviet" or "Communist" or "Socialist" or "Democracies" or "Popular": Just capitalism.

If the Russian Revolution initially meant an inspiration to workers around the world, their subsequent impact is more ambiguous. The term "communism" was finally associated to an undemocratic and inefficient state control system of the means of production and a severe totalitarian repression of all opposition. The labor movements around the world were dominated by parties related to this model of "actually existing socialism" which turned lethally counterrevolutionary.

Static analysis and dynamic analysis

There is a widespread tendency to raise the issue of the nature of the Soviet Union, especially after his death, as a  static model or static system. It is argued about whether or not the law of value was working insida de system, whether or not there were social classes , whether the Soviet bourgeoisie was a caste or a new social class, if labor was wage labor or  not, whether there was  labor exploitation or not, etc...

Following the most common static perspective, the 1917  October Revolution of would have established a socialist-communist revolutionary regime that after a short consolidation phase would last unchanged until the fisrt years of the last decade of the twentieth century.

The reality was that the regim emerged in extraordinarily convulsive circumstances and evolved extremely rapidly during the first years. A revolutionary socialist movement was betrayed by the Bolshevik party.  Taken by surprise by the revolution in which initially  it played a rather marginal role they managed to impose their goals of leading the country down the path of economic development, relying on a leapfrogging use of the Marxist theoretical arsenal and doing it "drastically" relying on the socialist ideology, to put the country as quickly as possible under conditions to compete with other imperialist powers.

Obviously , this complex strategic development required maintaining a high degree of confusion in reconciling the interests of the new "Soviet" capitalism with a long list of suspicious genocidal strategies and tactics, gulags, pacts with fascist regimes, murderous purges, blatant betrayals of revolutionaries movements, etc.

Until the 1960s the USSR seemed to be holding in its particular race to catch the other imperialist powers but the problem was that imperialism itself was evolving towards a new phase in which the ancient state grounds were becoming archaic hindrances . Former nationally based capitalist monopolies ( which sought to emulate the USSR with its large industrial conglomerates) were transnationalising and globalizing , leaving at their fate their ancient territorial bases and achieving exploitation rates well above those of the previous phase.

While China tried to integrate into this new imperialist phase ( transnationalizing their monopolies), the USSR chose to refine its  localist autarkic model of development  by introducing market reforms. Eventually the model would collapse. Transnational monopolies and the same Soviet bourgeoisie* were part of that demolition crews that devastated  the area in favor of globalization.

* To characterize the "Soviet" bureaucratic as bourgeoisie is a recurrent discussion. The Russian revolutionaries imprisoned by the Bolsheviks were the first to define them in that way. I do not think it is worth further to discuss looking the actual situation of a perfect "bureaucratic-communist" bourgeoisie in China. One third of Chinese private capitalists are members of the PCC. The "more bureaucratic fraction" of this evolved "communist" bourgeoisie is occupying the most important positions in the vast network of branches of the party, government and army.

Transition to capitalism led by the Bolsheviks party

In Russia there was a socialist and democratic revolution in 1917. After three years of imperialist war, after which the state and the economy were in bankruptcy, soldiers, workers and peasants seized the military apparatus, took control of the factories, divided the land of the landlords, and created in the form of Soviets a democratic socialist organization.

The Russian Revolution and the creation of the first workers' state had a profound impact on the world. The apparent success of the Russian revolution renewed hope that it was possible a real alternative to capitalism. It showed that capitalism could be overthrown and a socialist, if not communist society, could be built on its ruins. As such it inspired generations of socialists and workers, and represented a determining influence both in its goals and in its methods.

The Bolsheviks took the lead in presenting themselves as the most revolutionary and radical party of the Revolution. Actually, his intentions were not immediately "socialist". According to them, the conditions for socialism were not right yet. Russia was not yet ripe for socialism. It was necessary to modernize it, make it competitive, and develop the productive forces to a level similar to that of the great powers of the time. Lenin intended to establish a system capable of promoting industrial development and modernization of the country, holding off colonialism and imperialist domination. A regime transition to modern capitalism, "led by socialists" since the Russian bourgeoisie was not yet sufficiently developed.

In practice, however, the ideology of "socialist" used to stand at the head of the revolutionary movement, socialism deflect, defeat and annihilate the true revolutionaries, and finally justify the appropriation " collective " of the means of production by a nationalist bourgeoisie capitalist newly minted, disguised as "bureaucracy" and "socialist" . The centralized planning system, was copied from the German war capitalism of WWI.

The takeoff of the USSR (takeoff and protection of infant industry)

Ante Ciliga : " During the Five Year Plan, there were no mass movements of industrial workers. When spontaneous demonstrations occurred in factories, the GPU arrested the more active people and sent them to labor camps or concentration camps, accusing them of "economic counterrevolution" or of being "bandits" or “kulaks".

Ante Ciliga : “Imagine a territory of six or seven thousand miles long by three hundred to fifteen hundred miles Wide, from Solovetsk and the White Sea Canal to the shores of the Pacific Ocean, to the Kamchatka peninsula and Vladivostok. This territory, as well as the whole of Central Asia, was strewn at all crossroads with concentration camps and “labor colonies” (the latter being the name given to camps with a specific task to fulfill) and centers of compulsory exile.”

The aim of the new "Soviet" capitalist bourgeoisie was the same as their European competitors. Accumulate capital as quickly as possible, exploiting its resources and manpower. But as it started from a more backward, to takeoff, to avoid being relegated to the colonial periphery subject to the imperialist powers, needed leapfrogging economic pace aiming at burning intermediate stages.

Protectionism and state intervention to promote economic takeoff and infant industry protection was not something out of the USSR. Japaness, Korean, Argentine, Brazilian, Spanish, ..., experimented with multiple exchange rate system, foreign trade control, state control of currency, state control of banks, nationalization of strategic sectors, plans development, etc. The particularity of the USSR was that to burn stages as quickly as possible, it was necessary, in addition to the nationalization of the economy, to subject the population to a inhuman totalitarian regime operating under the banner of Marxist socialism/communism. Central planning and the "absence" of formal "private" property enabled the new bourgeoisie still use the "socialist" verbiage in defense of the new system to justify terror and exploitation of the working class for decades.

It has been said that the USSR was a "deformed socialism" or a "society in transition" from capitalism to socialism. Actually it was a totalitarian defensive capitalist variant. If it was a "transitional society", it was traveling in only one direction towards capitalism.

Capitalists Variants

Capitalism is a historical form of social regulation and, as such, susceptible to multiple and often surprising adaptations. In the southern U.S. for decades ran a "slave" variant of capitalism in which the slaves were listed as assets in modern book-keeping books. They were amortizable items who needed biofuel to run at full capacity. In the Nazi variant SS prisoners were provided to large industrial groups as "renting" contracts (like modern photocopiers). If the worker was spoiled he/she was immediately replaced, without charge, for the efficient SS officer. In the Apartheid South African variant, the Apartheid turned the labor force in sub -humans susceptible to exploitation rates appropriate to their nature. Within the "Soviet" variant capitalists bureaucrats competed with each other for the investments in the exploitation of Russian workers who were terrorized and indoctrinated by the Stalinist big brother.

Obstacles for takeoff

After the Bolshevik seizure of power they had to overcome the enormous problems of underdevelopment and other internal obstacles to the modernization and industrialization of Russia. The two most pressing internal obstacles to the development of a national industrial capital were the "backwardness" in agriculture and the lack of funding.

Russian agriculture was based primarily on small-scale subsistence farms or on small farms for commercial production. This involved two major obstacles for industrialization. First, blocking the formation of an industrial proletariat, since most of the population still was attached to the ground. Second Russian agriculture was unable to produce a proper surplus to feed a growing industrial proletariat, let alone provide an exportable surplus to finance imports needed for the takeoff of the strategic industrial sector.

The second major obstacle to industrialization was financial. The backward character of Russian capitalism meant that it had accumulated little internal capital. Industrialization in Tsarist stage was promoted by the state and had been financed through foreign investments. But the revolutionaries had repudiated all foreign loans contracted under the Czarist regime and had expropriated foreign-owned capital in Russia, which could not be expected that the international banking trust the Bolsheviks.

Obviously, the main obstacle was the machinations of all kinds of imperialist capital for which the vast and rich territory of Russia had a special appeal and, at most, required a weak subordinate comprador elite (as in China) to exploit at pleasure the territory.

For the Bolsheviks "socialism" should be used to overcome these obstacles.

The theoretical justification

Traditional Marxism of the Second International considered state capitalism as the highest stage of capitalism. Monopoly capital, in symbiosis with the financial capital reinforced the state lever for imperialist expansion projects. Kautsky and Lenin, despite their differences, felt that this statelization of capitalism made it more susceptible to a takeover by socialist forces. Theorized that state capitalism was the most advanced stage of capitalism and prepared (and somewhat made easier) the socialist later stage, therefore, state capitalism could be seen as a necessary first step in the transition to socialism.

Consequently , Lenin could argue, with some consistency, that the imposition of one-man management in companies (former managers and CEOs bourgeoisie) and the dismantling of workers' councils, the reintroduction of Taylorism and the New Economic Policy (NEP ) , were the immediate task of the revolutionary government, given the conditions of backwardness in Russia. The same could be argued Stalin about their "unexpected? " turn to the " left" ( endorsing the most cherished thesis of Trotsky), with the abandon of the NEP and the collectivization of the countryside, with the creation of the forced labor camps of the Gulag, or the creation of the military-industrial complex.

Capitalism in the East and capitalism in the West

As workers in the West, the Russian workers were subordinated to a production process designed and developed to maximize production, with little regard to their actual needs. As such, the worker was reduced to a mere instrument of production and, like their counterparts in the West, exploited, working longer than necessary to reproduce the equivalent of their labor, and without any control over the fruits of their efforts.

The "collective" ownership structure of the "Soviet" bourgeoisie system matched with large monopolies, protectionism, exchanges control, and central planning. The particular kind of “collective” ownership manifested its traits in all kinds of privileges that were reserved and enjoyed by the "Soviets" owners, equivalent to those of their Western counterparts, but without the fear of being evicted by economic competition.

As in the case of Nazi capitalist variant, in Stalinism, rather than the figure of an omnipotent dictator, what was rampant was the discretion of hundreds of thousands of small dictators competing with each other for the control of the exploited mass.

Defensive and aggressive Capitalism variants

The Nazi-fascism represented another variant of totalitarian Capitalism, but of a purely offensive one. A "nationalistic" and ultra-aggressive variant of the system. In this case, protectionism, central planning, promoting of monopolies and market restrictions, were organized to strengthen an already established bourgeoisie, aiming rather than the defense of a take-off, to attack and expand. The Aryan Nazi cohesive ideology came to be the equivalent of socialist-communist ideology of the Soviet variant.

On the contrary, totalitarian "Soviet" capitalism was essentially defensive in nature. It was backward societies that required a protectionist incubator to develop without falling prey to imperialist. Hence the model of "Soviet" incubator were very attractive to other developing countries trying to shake off the yoke of colonialism or imperialism.

Socialist mentoring capitalist development?

Contrary to the thesis of Kautsky, Lenin and Trotsky, state capitalism was not the most developed stage of capitalism but a secondary variant which manifested in areas peripheral to the core of the system. There was not a “modern” symptom but, on the contrary, a symptom of a backward capitalism. The German state capitalism did not represent the summit of capitalist development but the manifestation of his weakness against the competition of Anglo-Saxon capitalism.

For capitalism, the State is an expensive tool that evolves with it in a contradictory manner and with globalization and the transnationalization of capital, has become progressively a throwaway tool. A growing black hole of "failed states" is running on the planet.

The theses of Lenin and Trotsky led them to the most contradictory of the inconsistencies. The revolutionaries had to advance capitalism to reach the maturity needed to finally convert it into "socialism. Socialist "mentoring" and monitoring the development of capitalism.

Capitalism is bad, it has always been bad, and each passing day is worse. Increase productivity and efficiency, but its grate micro-efficiency drives to a complete and deepening macro-inefficiency. This remarkable productivist attribute of Capitalism dazzled many Marxists who thought it was a necessary stage, if painful, prior to socialism, succumbing to alienation and constituting perhaps the worst case of fetishism and alienation of history.

Crisis and Class Struggle in the Soviet bloc

Ante Ciliga : “The forest industry of Northern Russia and Siberia employs servile manual labour, and the gold-mines employ it to a large extent. Similarly the coal mines of Kuznetsk and Karaganda. The Balmach copper industry and the electric-power stations of Central Asia are the work of prisoners in the “labour colonies”. Even in the Ukraine the factory for agricultural tractors has been built partly bay forced labour. In the heart of European Russia, the cutting of the Moscow-Volga canal is done with powerful assistance from hordes of slaves. As to the enormous military and economic development of the Far East, with its railways, motor-roads and lines of fortifications along the Manchurian border, is the work of an immense and constantly renewed army of convicts. I think it is no exaggeration to state that a third of the working class in Russia is composed of slaves. This servile labour, barely remunerated as it is, makes easier the task of keeping the wages of the theoretically free at a very low level.”

“The soviet leaders declared that there where no limits to the intensity of the work; the psychological limit that exist in capitalist production “is abolished with us”, they said, “in the land of socialism, owing to the enthusiasm of the workers”. The galey-slaves’ rhythm, the chain-gang work of capitalist countries, was to be exceeded"

 Crisis

The fundamental characteristic of "Soviet" capitalism was, apart from the substitution of market mechanisms by central planning, the use of socialist propaganda in combination with the "Red Terror" for the regimentation, exploitation and enslavement (forced labor) of the working class.

As the crisis of the 1930s expanded and affected most of the world's economies, the USSR recorded the largest growth rates in its history. Had overcome the "Soviet" capitalist system the crisis scourge that has accompanied capitalism from its inception?

It has been argued that the "Soviet" system was not free of cyclical patterns, and, in any case, the cyclical patterns were of a different type, associated with the planning cycle. One example was, on the one hand, the intense economic activity ('assault') towards the end of plan period when everyone was working hard to fulfill the plan on time and get their bonuses for meeting the plan, followed of calm in the period at the beginning of the next plan, when everyone was recovering from the previous 'assault', pending the arrival of new supplies. There were also longer cycles associated with investment planning.

If the regional and autarkic character of “Soviet” capitalism allowed some decoupling from the cyclical periodicity of global capitalist system, crisis were not going to leave out one of the weakest links in the system.

Class Struggle

Although workers resistance continued from the Kronstadt uprising, ( Parbigskii , ... ) during the last years of Stalinism worker resistance strengthened (strikes and uprisings of slaves workers in Vorkuta in July 1953, Norilsk, Gorlag, Norillag) and the "Soviet" bourgeoisie had to yield, again and again, to popular pressure (Soviet welfare state) despite his last claws (annihilation of the uprising of workers' councils in Hungary 1956).

With the weakening of terror on the working class, the "Soviet" capitalist system of exploitation began to lose steam. While in the West capitalism imposed the flexibilization and casualization to increase capitalist productivity in the East workers resistance kept the working class exploiters at bay.

While in the West the Social dismounted after another labor gains of decades of struggle and full employment liquidated in East workers refused to the introduction of " control practices " and , on the contrary , demanded and kept the full employment, less rigid rules , higher pay and lower wage differentiation ( wages of miners and metal workers remained at the same level as those of the engineers and managers of 2nd row).

The "malfunction" of the system was not due to technical problems, not due to "lack of market mechanisms" but mainly to workers resistance that did not tolerate "reforms" to increase exploitation.

Since the death of Stalin, the Soviet economy had been integrated progressively in the commercial and financial global system. Soviet economy depended more and more on exports of energy and raw materials, and capitalist banks and international agencies saw no disadvantages in providing credit to the USSR and other "popular democracies". At the end of the decade of the 1970s the "Soviet" system began to show unmistakable signs of economic crisis and loss of competitiveness against globalization.

This internal weakening because of worker resistance resulted in outside weakening against global capitalism, which was providing aggressive mechanisms of class domination (Monopolies and Globalization) out of reach of the Soviet bureaucracy. The economic crisis of marginal "Soviet" capitalism accelerated despite the "market" alternatives that sought to introduce the "Soviet" bourgeoisie.

The Wrong Transition

A marginal, deformed, backward, parochial and bankrupt defensive capitalism,  (with a "socialist" speech outdated and counterproductive, without clear options to go back to the Stalinist terror) , was weaker and easier to resist, and would have even been more easy to overthrow that globalized capitalism. The chances that the people of the USSR and Eastern Europe, or China, had to resist or survive capitalism, were much higher than they have now, after the aggressive penetration of transnational monopoly capitalism. The "transition" was a missed opportunity for socialist revolution in the East.

The advantages of the workers of the "Soviet" block in the workplace (security, full employment, working hours, leave, breaks, respect, freedom to change to other company, vacation, ...) and "Soviet" state benefits welfare (housing, education, health, leisure , ... ) , severely torn by decades of struggle and resistance against the Stalinist capitalism, were swept away at a stroke with the penetration of global monopoly capitalism.

The problem was that the Pole workers, Hungarians, Czechs, Russians, Lithuanians, ..., who faced and rose against the "Soviet" capitalist bourgeoisie, did not understand that it was this same "nomenklatura" who was determined to "reform" or just liquidate the “Soviet” experiment, in favor of "modernization" of the explotation system (shock therapy) even if it meant the dangerous challenge of his reintegration into the international capitalist concert. Many thought that his enemy was socialism and his friend, capitalism. Big mistake, the capital is a guy of very, very few friends.

Despite the dazzling Carrefour and Tesko capitalists shelves, most Poles, Hungarians, Czechs, Russians, Lithuanians, ... , laborers and bourgeois, have finished paying their excitement with most horrific exploitation, misery and exclusion.

During the periodic crises appears the real capitalist Mr. Hyde and is difficult to hide or camouflage the absolute social, economic and environmental macro-inefficiency of the system. The ideological bases underpinning it crumble. Social alienation cracks. The fetishes fuss. It is during crises when it is easier the socialist revolution. This is when the system is weaker and offers unprotected flanks where attack and the crisis of the Soviet bloc was one of them.

What fell was not actually existing "socialism" in the USSR , but the lost opportunity for the Pole workers, Hungarians, Czechs, Russians, Lithuanians, ..., to exploit the weakest flank crisis of capitalism, "Soviet" capitalism, to start a genuine socialist revolution.

Basic elements of the structure and functioning of the "Soviet" economy

Although the direct managers of the means of production - directors of industrial enterprises and the chairmen of collective farms - were allowed some leeway, they had to obey orders "from above". For industrial management commands came from state bodies at three levels - heads of administrations responsible for sector industries, entire industries ministries and central agencies responsible for the whole economy (the Cabinet) or specialized agencies (the State Planning Commission, State Supplies Commission , etc. . ) . In agriculture the lower levels of the hierarchy is organized on a territorial basis (municipality, province, etc.).

At least in formal terms, this was a "planned economy". The annual production planing is broken down by month. A part of the production targets, the plan specified the sources of supply of inputs (raw materials, spare parts, etc.) for each particular company and the destinations of their production. Formally, the "Soviet" companies  had no autonomy to "compete", but in practice they were competing for inputs and work force, and and the "gray market " for the inputs needed ended up being more the norm than the exception.

Money as a universal medium of exchange and capitalist accumulation theoretically did not exist in the "Soviet" economy. There were two types of money not interchangeable, each serving a different purpose - (1) the cash distributed as wages to spend on consumer goods, (2) the "non-cash" money  (unit of account) used to help monitor nonwage transactions. None of these monetary figures represented formally the central role that money has in market capitalism (wages and prices were set by the state).

The managers saw their performance evaluated and obtained the corresponding bonds based on production results. These results were measured by several indicators, which could be physical (for example, the total weight of the production, the number of items) and financial information (production cost, profit). But even when the key indicator was profit, the production target was not to "maximize profit" but to comply with the "benefit" fixed in the plan by the planner.

The managers of  Soviet enterprises were trying to reach a compromise with the unruly workers who subverted the intentions of the plan and at the same time appear as meeting with the plan specifications. To achieve this, managers were trying to respect  and get round with "quantifiable" aspects of the plan and desviate from the qualitative aspects less verifiable. The managers systematically fall to inform central authorities regarding the current production conditions. In addition, they treasured workers and scarce resources. The "Soviet" bureaucracy was a competitive device in which the operators fought each other at all levels to increase their share and advantages in the exploitation of the working class.

Thus, the "competitive" behavior  was not a circumstantial accident but was immanent characteristic of system operation. The drivers and controllers of controllers, each possessed a portion of the operating system that had to defend or expand. Not even a minister could get self-sufficient.

Disorganization was more the norm in the provisioning process. "Plans" from the time of approval entered a permanent review process. The delay on information communication and data recording as well  in relevant instructions transmission, meant that throughout the year the procurement agencies had to fight endemic imbalances, turning to pragmatism, experience, and the recurrent "procurers" (tolkachi), people with "contacts", hired by the managers so that they shall procure materials, parts and equipment needed, for whatever channel they used. Actually, it was impossible to draw a line between the "official" economy and "unofficial" economy.

Foreign trade was limited to a supporting role at the service of the plan . The products required by the plan, which could not be produced in the country, had to be imported. Exports were directed to obtain foreign exchange to pay for necessary imports (exchange controls). Foreign trade played a key role in the rapid industrialization of the 1930s ( the famous "primitive socialist accumulation" ), with Western machinery imports paid for with grain exports and raw materials, while the people were starving.

After Stalinism, foreign trade began tracking also imports of technology and consumer goods for the whole population. The trade imbalance and the resulting external debt (financial markets understand better than anyone the true nature of the Soviet regime) showed the increasing depth of the economic crisis that would end the system.

Theories

There have been many theories about the capitalist nature of the "Soviet" system.

A. Ciliga, (1938) Croatian revolutionary, had to flee his country and joined the Russian revolution in the mid of the 1920s. Successively Bolshevik Leninist, Trotskyist, extrotskista, and finally exleninista. Imprisoned by the GPU in Siberia, miraculously saved his life and was able to leave the USSR. He was among the first to consider that the system had nothing to do with socialism but it was a capitalist variant, from the very beginning .

The Trotskyists clung to the theory that it was a transition system between capitalism and socialism (a phase prior to the post-capitalis communism. Trotsky argued that it was a "degenerated workers' state" an unstable stage who will rapidly derivate to socialism or to capitalism (Trotsky thought that this situation would be resolved in either direction after WW2).

Tony Cliff (1948), British Trotskyist, given the longevity of Stalinism after WW2, stated that there was a socialist workers state until 1928. Thereafter, counterrevolutionary Stalinism definitely had been consolidated. The bureaucracy became a capitalist class and the system ceased to be a workers' state to become a particular variant of state capitalism.



Hillel Ticktin (1970s) , British Trotskyist, dismounted Cliff thesis with Marxist arguments (theory of value) to return to the original idea of Trotsky of a degenerated workers' state. But his analysis of the USSR was deeper. He warned the system malfunction to the point to qualify it as a "no mode of production" in crisis. The elite was unable to control the work process. He argued that "evil operation" and therefore, the crisis of the system, was something intrinsic in the model and not the result of worker resistance, ie the class struggle (for him, the USSR was a "workers' state" without classes struggle)

Actually, what Ticktin was analyzing and studying was not the "normal operation" of the system but the systemic crisis. A crisis that stimulated the class struggle in which the workers were earning positions that contributed to the "bad functioning"system.

Charles Bettelheim has perhaps been the most meaning defender of the characterization of the prevailing model in the USSR and Soviet bloc countries as "state capitalism". In July 1936, 23 years old, speaking Russian and the French Communist Party membership card in my pocket, Bettelheim came to Moscow where he remained six months capturing the political atmosphere of the beginning of the Stalinist purges and trials. Later he visited China during the years of the Cultural Revolution.

In his book Calcul économique et formes proprieté criticized the assumption that nationalization and state ownership of the means of production means "socialism." In a later book : Les Luttes class in the USSR 1974-1982 , characterized the Soviet system as "state capitalism". The Bolshevik party would have confiscated the people's revolution and acted as legitimizing a new technocratic elites who finished setting the same hierarchies and social differentiations that capitalism, although using the legal mirage of state ownership of the means of production to camouflage exploitation. Also proposed alternative models of economic development to the model exported by the Soviet bloc oriented only to accumulation.

The German Paul Mattick, thought that by puting the means of production into the hands of State, the Bolsheviks had not achieved their "socialization" but their nationalization of capital. The capitalist ownership had changed hands, from particular owners, to the state, but still being a "capitalist property" as the means of production were not controlled by society but remained Capital alienated from workers. The Soviet Union had not abolished the fundamental capital/labor exploitation relation.

Mattick stated that it was an advanced form of capitalism to the extent that it had overcome some of the major problems of capitalism based on private property such as competition and crises of overproduction, getting more stability and, in some ways, a decrease of class antagonisms.

Amadeo Bordiga, founder of the Italian Communist Party in 1921 ( a split of a PSI unable to organize a revolution during the "bienio rosso" - 1919-1920 -) also believed that the USSR was capitalist.

Bordiga thought Soviet Union was a society in transition to capitalism. What distinguished the "Soviet" capitalist regime  was not its advanced nature (Mattick) but, on the contrary, its delay , its underdevelopment. Russia was a peripheral backward state susceptible to  fall into the hands of developed imperialist capitalism  and become forever relegated to underdevelopment. The Bolsheviks tried to
prevent this with interventionist and protectionist methods. It was for this reason that the Soviet Union became the model to the struggle against colonialism.

For Bordiga, the "turn to the left" of Stalin in 1928, with the forced collectivization and the five-year plans, it was not a " socialist primitive accumulation" (as Preobrazhensky theses) but a wild capitalist primitive accumulation. The Stalinist excesses of the 1930s years - " a hell for the worker and a butchery of human energy "- were simply the expression of " the generation of the universal conditions for the genesis of all capitalisms" .

In 1953 he stated that " The economic process in developing Russian union territories can be defined essentially as the implementation of the capitalist mode of production, in its most modern, and the latest technological means, in backward countries, rural and East Asian."

For Bordiga the obsession in finding individual capitalists or substitutes of those, in order to characterize or label the system, was absurd. "Determinism without people is inconsistent, but men constitute the instrument of the capitalist system, but not the engine" ...

" There is not a partial subordination of capital relative to State, but a further subordination of the State to capital".  State despotism in Russia was in the service of Capitalism driving the capitalist mode of production in areas that still resisted.

Neil C. Fernandez, considers that all categories and parameters that define "Capitalism" were present in the "Soviet" system. Competition,competitiveness , merchandise, money, capital accumulation, capital gains, accumulation, ...

In an extensive treatise examines each category and how it was adopted in the "Soviet" system. But if anything defines a system is the existence of the class struggle and the kind of class struggle character.
Proponents of the socialist era Soviet Bloc faced with the contradiction of denying the existence of the class struggle against the evidence of workers' uprisings, strikes, demonstrations and protests that pitted the "Soviet" working class against "Soviet" bourgeoisie throughout the period of "actually existing socialism".

G.M. Tamás, philosopher , former Hungarian dissident leader, after the disaster happened in Hungary and the rest of  "Soviet popular democracies" and conscious of the mystification of capitalism, has become one of the staunchest defenders of the capitalist character of the "Soviet" system .

The Hungarians, Poles, Czechs, Slovaks, Romanians, Russians, Lithuanians, ..., not left behind the "Really Existing Socialism" but a variant of the most "Actually Existing Capitalism".

More information:

http://rolandoastarita.wordpress.com/tag/urss/

THE THIRD INDUSTRIAL REVOLUTION AND CAPITALISM

Spanish

THE THIRD INDUSTRIAL REVOLUTION: UNEMPLOYMENT, EXCLUSION AND PRECARIZATION

Every increase in productivity, every invention or advance to reduce the necessary work, is converted into a danger to humanity. 'Creative destruction' has in fact been converted into 'destructive creation'.

Interview with Robert Kurz (2 September 2012)

What is it that distinguishes the current crisis from the others?

"Capitalism is not an eternal circle but a historical process. Every great crisis comes at a certain level of accumulation and productivity higher than the previous crisis" ... "Past crises were overcome because capitalism had not yet reached its maximum expansion. An interior space was still available for system development" ... "However, after the 3rd industrial revolution, capitalism has no longer room for a new real-accumulation phase"

In your opinion, capitalism is coming to an end. Are we, for the first time ever confronted with the possibility of overcoming capitalism?

"We for the first time in history confronted to the possibility of superseding capitalism? Was it so that capitalism had to develop its internal contradictions for that to be possible? Was this not possible before? 

The blind dynamic of capitalism deploys itself according to its own internal laws. This process is only ‘necessary” and determined insofar as the categories and the fundamental criteria of this mode of production and of life are not reassessed in practice. 

An appropriate intervention could have permitted to stop the march of capitalism at each stage of its evolution. The socialization of production would have then taken a form on which we can say nothing because it never took place. It is not a question of objective necessity, but of critical consciousness. Neither the revolts of the XVIII century or the beginning of the XIX century, nor the old workers’ movement or the new social movements of the last decades have been able to engender such a consciousness. On the contrary , the capitalist forms of abstract work, of the valorization of value and of modern Statism have been more and more internalized. But these here are just facts. It has not been that capitalism “had” to develop its internal contradictions to the point reached today, but it did it. 

We are thus confronted with the task of reformulating the critique of capitalist forms and to the one of their abolition given the level of contradiction they have reached. It is simply the historical situation in which we find ourselves, and it would be idle to cry on the lost battles of the past. If capitalism comes up objectively against absolute historical limits, it is nevertheless true that, given the lack of sufficient critical consciousness, the emancipation can fail today also. The results would not be a new spring of accumulation, but, as Marx has said it, the fall of everyone into barbarism."

Industrial Revolutions.

Amongst economic historians it is usual to talk of three industrial revolutions. The first 1760-1830, saw the development of steam energy and railways. In the second. which ran from the 1860's to WWI, the use of electricity, internal combustion, running water, internal bathrooms, communications, training, chemical products and petroleum derivatives were developed and generalised. The third which began in the 1970's, of micro-electronics and digitalisation in which the use of computers became general in all economic sectors and in homes, the internet, robotization and mobile telephones... Some analysts who study thr industrial revolutions related to ecological disasters associated with them, also underscore the industrialization of China as a substantive element of the 3rd Industrial Revolution.

Industrial revolutions and the crisis of overproduction

In capitalism, innovations, inventions and technical improvements which reduce work time, the appearance of new domestic machines which promise to make life easier... end up complicating life, reducing wages further, and worst of all removing work and excluding many and threatening unemployment and exclusion of the rest.

In all cases the introduction and proliferation of revolutionary technical innovations mean a qualitative increase in productivity of work and the consequent fall in prices of products. The increase in productivity reduces the number of workers necessary to achieve the same productive level. Over a short period of time many industrial plants and even entire sectors become obsolete and bankrupt. The enormous increase in unemployment forces wages down causing demand to collapse and setting off a spiral of overproduction. The first industrial revolutions generated the largest waves of emigration in history. Millions of workers expelled from European industry and agriculture found it necessary to emigrate to other continents to survive.

Although the industrial revolutions caused severe socio-economic upheavals on the other hand they reinforced the capacity for the system to expand. Capitalist formations advanced along the railway tracks and the new electricity lines to the furtherest flung parts of the planet and behind them came the emigrants to find work, earn wages, establish their families and to participate again as consumers in the system. The expansion of the markets compensated for the disastrous consequences of the industrial revolutions, which in the end, in spite of the set-backs would go down in the history books as milestones in human progress.

The disasters of the third industrial revolution

As was the case in the preceding revolutions, the brilliant post-modern illusion which attended the Third Industrial Revolution in which new forms of 'immaterial work' would blossom in a the new 'information society' based on new relations between capital and labour, with an increased 'self-determination' for workers... turned out, as one would expect under capitalism, in reality to be a dark world of massive unemployment, underemployment, self-exploitation and generalised precariousness.

The Third Industrial Revolution, by its very nature of high mechanisation and robotisation, means that an ever growing proportion of of the population end up excluded from the production process, whilst those who remain in employment accept less and less remuneration owing to the fear of also being excluded. The Third Industrial Revolution has made labour costs increasingly irrelevant in the final production costs (a first generation iPad for $500 includes labour costs of about $33 of which the final assembly in China represents only $8).

In the same way as the textile factories crushed the old hand -loom weavers and the Model-T Ford put the animal transporters out of business, digital technologies have shaken the communications sector, have destroyed intermediary businesses and retail selling, have emptied the offices of administrators and decimated the factories sowing unemployment and exclusion everywhere.

In contrast to the previous revolutions, this third revolution has taken place at t time when additional expansion to the system is impossible. The system is confronting totally insurmountable barriers. One of them is internal (it is impossible to expand further than 'globalisation') and the other external (depletion of resources, serious problems of pollution and biological and environmental catastrophes).

Techno-utopias and fundamentalism of the market

Nevertheless techno-utopias and postmodern illusions of the Third Industrial Revolution do not seem to have receded: “The factories of the future will not be full of machines and men in blue overalls, Many will be absolutely clean and remain almost empty. As is already occurring in many cases (hydroelectric plants...) the majority of the jobs are not located at the factory itself, but in the nearby offices which will be full of designers, engineers, computing and logistics experts, marketing personnel and other professionals. The fabrication of the future will require greater abilities. Many of the boring repetitive tasks will become obsolete.”

This brilliant analysis avoids an internal contradiction which is becoming increasingly evident to everyone. If human labour is becoming less important in the production of goods, and the wages represent ever smaller quantities of capital destined to production (the threat of exclusion forces wages down , including those of the famous “designers, engineers, computing and logistics experts, marketing personnel...”). Who exactly is going to buy these products and with what wage? How are people going to survive in a capitalism without work?

The techno-utopians also have the answer to answer to this. The present capitalist situation is capable of redirecting itself:

Internet is making commercial participation possible along social distribution networks. This combined with the perfectionism of 3D printing and the possibility of free modular fabrication could represent an opportunity for the excluded to return to small scale mercantile production and artisan work in which the workers again possess the means of production. Modular manufacture, peer to peer, open and easily replicable in practice, which would produce on a local basis and in response to the needs of a specific community and which could be extended to many other areas such as the production of automobiles, furniture or clothes. With the growth of these new modular technologies delocalised jobs would come back home.

But in these dissertations there is a key and determinant factor which is never mentioned: the monopolies, creatures which put on weight during industrial revolutions and above all during the crises of overproduction which they generate. The Third Industrial Revolution and its associated crisis, have facilitated transnationalisation and the rapid growth of monopolies in a way in which scarcely any area can escape its penetration and control. In contrast to computers the restart button does not work with capitalism.

In the same way as has taken place with the production and commercialisation of organic-ecological food (the monopolist megastores already have their respective sections operating to capture this particular section of the global market) under capitalism the most likely scenario is that these techno-utopias end up conforming to a new system of sub-contracting and self-exploitation as seen in the 'putting out system' (for example in the case of genero de punto in the area of Modena) under the control of some monopolist multinational.

Marx or Schumpeter?

The harsh reality of these industrial revolutions has already been observed by Marx. It was Marx and not Schumpeter who highlighted for the first time the phenomenon of 'creative destruction' in industrial society, observing that in the British census of 1861, the new industries of the Second Industrial Revolution, employed comparatively fewer people than their predecessors of the First Industrial Revolution. Marx studied cases in the gasworks, telegraphs, photography, steam ships and railways. In all cases the advances in mechanisation and automation of these industries had reduced employment from 1000 000 to no more than 100 000 employees.

Later Marx showed that the industries of the Second Industrial Revolution in britain had hardly absorbed any on the expelled labour. Hence their expectations of a secular disminuacion trajectory of demand for labor. Unemployment forced down wages and demand as a result of the consequent crisis of overproduction.

The industrial revolutions increased productivity and productive capacity. This hyper-capacity met with the reduced consumption capacity of the population (the excluded or those with low wages) and generated a crisis of overproduction which expelled and excluded entire sectors of the population from the productive system as obsolete human material.

Schumpeter also observed this phenomenon but argued that this 'creative destruction' during the crisis was  capable of compensating the destruction of jobs by creating new employment in the growth of new industries. Clearly Schumpeter's theory required a continuous expansion of the system.

In the phases prior to the present globalisation the system was still capable of making use of the new technical capacity for expansion into and depredation of the periphery (appropriation of land, buildings, natural resources, fisheries, forestry, enlavement of the population...), combining coercion with violence, according to the circumstances, ripping out precapitalist modes of production, destroying their economies and their social and political systems (imperialism).

With steam engines, steam ships and the railways capitalism launched an assault and sacking of the planet disguised as civilising colonisation and assistance to development. The other face of the industrial revolutions was the crisis of overproduction, mass emigration, colonialism and imperialism.

Destruction is not creative

According to Schumpeter, 'creative destruction' favours monopolist concentration and this is good for capitalism. The First Industrial Revolution favoured the appearance of monopolies in the most dynamic sectors of the economy (steel, iron, and coal ...). With the Second Industrial Revolution and the Great Depression of the 1930's monopolies advanced taking over many sectors which had resisted until then. With the Third Industrial Revolution monopolist concentration has become generalised in each and every sector of the economy including sectors (retailing, messenger services, editing of books and magazines, internet, hotels) which nobody would have imagined only a few decades ago.

The global monopolist hyper-concentration means that capitalism has reached an internal systemic barrier which it is unable to pass. Without growth, those excluded by the Third Industrial Revolution will not be reabsorbed. The majority of the population will remain progressively excluded and definitively marginalised, without access to the revolutionary advantages of technology and productivity.

The same 'creative destruction' has ceased to function. In past industrial revolutions, the crisis of overcapacity forced the disappearance of the less competitive leaving the field free for more productive, modern and aggressive initiatives. It was a sort of rejuvenation which favoured the further expansion of the system.

At present the destruction necessary for the rejuvenation of the system no longer takes place. When one sector is shared between two corporations (duopoly) there are no marginal firms susceptible to destruction. When the recession arrives, the duopoly simply simply stops investing , fires the workers and maintains its overcapacity waiting for better times.


Under these conditions any glimmer of recuperation comes up against the impassable internal barrier given that everything is already globalised. Monopoly globalisation means that expansion outside the system is no longer possible. The railways destroyed the animal transport sector, but this exclusion was compensated by inclusion generated by the planetary expansion of railways. With the digital revolution and robotisation the same thing does not occur. There are no longer geographical zones or virgin areas available for capitalist expansion. Destruction is no longer creative it is just destruction pure and simple and the people excluded do not find and will not find a place within a system which is already global. This includes the famous stars of the techno-utopias. 'designers, engineers, computer and logistics experts and marketing personnel' who also find themselves on the street.

The signs 'for sale ' or for rent' are eternal and forever in the majority or urban areas and industrial zones throughout the planet.. Every increase in productivity, every invention or advance to reduce the necessary work , is converted into a danger to humanity. Creative destruction has been converted in fact into destructive creation.

The illusion of 'new undertakings' and the end of the SME's (Small and Medium Enterprises)

In all cases the industrial revolutions created the illusion of a better world, easier and more comfortable in which work would be reduced thanks to improvements in productivity.

With the Third Industrial Revolution the illusion consisted in that computing would imply new types of 'immaterial work', in an information society with a greater 'self-determination' for workers.

In reality, ' the information age ' brought with it mass-unemployment, underemployment, and precariousness in labour relations. The supposed 'self-determination' has driven a compulsive 'self -exploitation' in the purest tradition of the 'putting out system' (such as Bimbo making its drivers 'autonomous workers'.) The supposed 'new entrepreneurs', 'autonomous businessmen of the workforce ' or 'managers of their own human capital' are in reality aggressive forms of flexi-exploitation that leave the workers completely at the mercy of of the conditions of capitalism in crisis.

The ludopathic hope of the majority of the new entrepreneurs is to find or develop some new niche of value to sell as soon as possible for a good price to the monoplist and retire for life.

In a medium dominated by monopolies, it seems sensible to seek work as a supplier to these monopolies setting up SME's. However, supplying to a sole buyer (monopsony), capable of dictating prices and conditions means precarisation, poverty or closure for the majority of the SME's caught in the trap. These same monopsonies recommend fusion and consolidation to their suppliers (economies of scale) to reduce their costs ad libitum. SME's which are trying to operate in areas which have not yet been monopolised find that these sectors are are reducing daily even in the most far.flung geographical areas and the most unexpected fields. The figure of the octopus with which the American West denounced the railway monopoly corresponds perfectly with the monopolist ability to make use of and exploit every nook and cranny, which has been perfected in the Third Industrial Revolution.

Tertiary becomes third world

Traditional economic doctrine links the development of three sectors (primary, secondary and tertiary) with the development of successive waves of advance of productivity, the industrial revolutions.

It is clear that, from a technical and material point of view, the productivity resulting from the Third Industrial Revolution would permit humanity to spend only a small portion of its time on agricultural or industrial production and to occupy itself  all with training, education, caring, medicine culture etc.

The neoliberal techno-utopias dazzle us with a supposed progressive tertiarisation. The improvements in productivity will translate into 'a society of culture, education, caring and leisure' in an equal society which would generate a use of new services and new jobs to to improve health, education, the environment, care of the elderly and incapacitated etc,

In practice, the first part of the argument is implacably coming into effect: every day there are fewer people occupied in the primary and secondary industries. Capitalism, however, will never allow the second part of the programme to be put into effect.

In reality what is being imposed in the First World is the well-known tertiarisation of poverty habitual in the Third World. A handful of high-tech executives living in exclusive areas, going around in the latest cars and yachts, surrounded by a multitude of sycophantic waiters, bodyguards, lawyers, cooks, tailors and servants. The workers expelled from the agricultural and industrial sectors have to seek work in in other sectors which become more and more precarious or give up altogether succumbing to exclusion. Social polarisation generates an extensive range of precarious sub-jobs in which those who are expelled serve the rich or those who manage to maintain their jobs, the precarious serving the precarious (servants, drivers, waiters, escorts, prostitutes, drug-dealers etc.) following the model of Third World tertiarisation.

The apostles of tertiarisation claim that these tertiary services are bearers of the future growth of the system. In practice, however, the demand of consumers who are able to pay for these services is less every day, and the Third Industrial Revolution is already getting rid of the middle classses. The multitudes who fail are excluded from the system by the ever more exclusive appropriators of the profits of productivity. There is no capitalist future for thousands of millions of human beings.

Socialist tertiarisation

The neoliberal revolutionaries, until recently, proclaimed the coming of modern tertiarization just around the corner in glowing tones: governments prepared for the future, reducing their field of action to the improving of schools for an active, qualified population, limiting itself to laying down clear rules and a level playing field to facilitate the upsurge of new tertiary enterprises of all types. Today the weight of empirical evidence has stopped their voices and turned their words to dust.

Nevertheless, at present,with the extraordinary level of productivity reached, tertiarization constitutes the only socio-economic possible structuring  for the majority of the population.

The possibility of a future tertiary society requires a new vision of the social world, to counter an irrational system, whose absurd mechanical and organic reductionism is leading inexorably towards social and ecological catastrphe.

Premodern agrarian society was not based on the monetary production of goods. For that society, the change to an industrial society represented a break with the forms of personal dependence which were replaced with contractual and impersonal capitalist forms. In the same way, the transfer of an industrial society to a service society requires a break with the capitalist system of production and the formation of a qualitatively new and different order.

OUTSOURCING AND FINANCIALIZATION

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Ravi Bhandari (The Corporatocracy and the Global Crisis) : " The global oligopolies that at present dominate the world economy , are fully financialized. Actually we can not speak of a pure "financial sector" (banks, insurance companies, etc.) by one side and a "productive sector" on the other . The global corporatocracy, composed by a few industrial and financial giant oligopolies, control the technology, the natural resources, the finance, the communications, and the information all over the planet." ... " Many analysts talk about an allegedly separated artificial, negative "financial capitalism"  and of a supposed positive "real capitalism", creator and producer of real use. But it is the two side of the same coin. The same oligopolies have large industrial corporations and large financial institutions".

Offshoring and outsourcing

Offshoring: the production process is divided into head office and branches or subsidiaries in other countries, which for statistical and accounting purposes are "foreign direct investment". The hierarchy of a vertically integrated production chain (parent, subsidiaries), guarantees the control by the corporation. Offshoring, but seeking to reduce costs, implies a certain extent of the cost structure, working conditions, environmental responsibilities, etc. , And the obligation to stay in the "formal sector" of the economy.

Outsourcing: when a company breaks the production process and outsources to one or more independent suppliers, maintaining effective control over the overall production process. In this case, the advantages in terms of "responsibility" and cost are obvious. The corporation is evading the labor and environmental misdeeds of their contracted outsources that no longer need to stay in the "formal sector" of the economy. Outsourcing has the handicap of the loss of direct control over key segments of the business productive structure.

Unlike offshoring, outsourcing eliminates the line "foreign direct investment" and eliminates capital flows in the form of  "profits repatriation " (which should be declared). The profits (monopoly rents) are caught manipulating the prices of inputs and outputs, that is to say the "added value " of the value chain, in favor of the dominant corporation. Profits, "appear" mostly on certain links in the chain, conveniently located in tax havens. The firm "emerges" at will and convenience the profits it want to declare (social responsibility).

According to the restricted conventional definition, only the first type of company is a "transnational corporation" . In practice, the most powerful transnational corporations have outsourced most of its operations. A more appropriate to the reality definition of multinational corporation would be what economist Peter Dicken  defines as "a firm that has the power to coordinate and control business operations in more than one country, even without the ownership of them".

 

Offshoring or outsourcing?

The question, obviously, is the risk of  "loss of control" over a completely disintegrated production line. A revolution in China ( or an indefinite general strike), for example, would possible mean the operational collapse of a large number of transnational companies, given the almost total dependence on the providers installed in that country. Even a minor conflict  as could be a strike at a single company like Foxconn, which works for most electronics brands, could mean the collapse of the entire industry.

During the early stages of neoliberal globalization, monopolies feared the loss of control and preferred offshoring, but with increasing its concentration and strengthened monopoly/monopsony positions, the externalizing option, more efficient and greedy in terms of profits catches, but more risky in terms of systemic risk, has been imposing to actually become the dominant choice.

Although American  industrial relocation continues to grow, outsourcing has taken the lead, so that it represents more than three-fourths of the China-US trade.

Boeing builds its modern Boeing 785 Dreamliner by outsourcing 90% of the aircraft value, only retaining the final assembly plant in Everett, Washington.

Coca -Cola, for example, does not own or operate  any bottling plant in Colombia. No related accounting linkage exist with outsourced bottling plants, all under franchise, with the American brand. Coca-Cola has outsourced not only commercial risk and responsibility for pollution, but also the violent exploitation of its 10,000 workers on temporary contracts, for $80/month , no holidays, pensions, insurance, ... and even without the right to murmur (9 unionists murdered by death squads) . There are no profits to "repatriate". Coca -Cola monopoly rents capture their payments via patents, commodities and franchises. Thus the "value added" springs "commercially " in the Coca-Cola matrix source while Colombian Coca-Cola  sources dry at the same time.

Suppliers communalization (bottom up monopolies)

Once constituted a seller oligopoly  (GM, Ford, Chrysler, Toyota, Honda and Nissan), total market control permits them to act as oligopsony with its s. These suppliers , faced with a single buyer, are forced to reduce to the minimum their operating costs. Unbridled competition between them quickly removes the least efficient and most companies can only survive based on paltry wages and economies of scale, in turn becoming monopolies (bottom up monopolies) . That is, appears a real communalization of suppliers so that all dealer oligopoly firms acquire their components and parts from a single supplier.

GM, Ford, Chrysler, Toyota, Honda and Nissan have as "just in time" suppliers  a few supplier firms (monopoly suppliers) and , although the vehicles look different and have different names, most of their pieces come from three possible factories: Collins & Aikman or Medaldyne or Yuwei Plastics and Harware Product Company.

Acer Inc., Amazon.com, Apple Inc., Cisco, Dell, Gateway, Hewlett-Packard, Intel, Microsoft, Motorola, Nintendo, Nokia, Samsung, Sony, Toshiba and Vizio, are dependent either on Foxconn, or KYE,  or Meital Plastics and Electronics, to assemble all their products.

The "efficient" providers communalization represents a serious systemic risk. If any of the big buying firms fails, the common supplier to the entire  oligopoly can also be dragged into bankruptcy  given the narrow margins within it works. When following the collapse of Leheman Brothers in 2008, Chrysler and General Motors were technically bankrupt, Ford, its theoretical seasoned "competitor", claimed the U.S. Congress aid to rescue  "rivals " (sic!). Allan Mulally, CEO of Ford, explained that "the auto industry is totally interdependent with respect to our supply base with a common outbuilding  over 90%". That mean that he  acknowledged that the U.S. automotive oligopoly operations of GM, Ford and Chryslers were fused in 90% and the collapse of two of them would mean the collapse of their common suppliers and therefore also the Ford collapse.

Total Outsourcing: "Fabless" Companies

The first experiments were conducted in the ICT sector, the most susceptible to disintegration. Before the 1980s, the semiconductor industry was vertically integrated. The companies ran their own semiconductor manufacturing factories and developed their own technological processes for the production of its chips. Installation, performance tests and repair service, were also integrated into the chain.

After the first experiments of total outsourcing of the manufacturing process ( fab-less) in 1994, the "Fabless Semiconductor Association" (FSA) association was established  to "promote the "fabless  business model"  globally and in practice, organize operational control framework based on oligopsony power of partners.

The power of monopoly control

At present, many large "industrial" corporations do not manufacture at all, they have become fab-less companies, retaining only the segments of brand design, marketing, distribution and financial management. As many of these services are also being outsourced as well, there are many companies that practically do nothing: neither made ​​nor repair or design or investigate anything ( fab less/made ​​less), absolutely hollow monopoly firms that divert most of their huge profits into the sphere of leverage and financial engineering, the field of mergers and acquisitions (absorbing any shadow of competition), feeding the boilers financialization.

There has been a total subjugation of the real economy to the financial sphere that controls and feeds the monopolization of all sectors.

The global value chain asymmetry

 

Robert Feenstra and Gordon Hanson: " The asymmetry of market structures in global production networks, with oligopolistic firms in leadership positions and extreme competition among the suppliers of second and third level , is a strong pressure on these suppliers , the try to maintain certain profit margins should keep wages low and labor resist any improvements that could lead to a change in the supply process to another company or country. "
According to neoliberal economists, globalization means the growing subdivision of the production processes in a long "value chain" in which the participant factors of production receive their rewards according to their productivity.

These neoliberal economists are shameless ensuring that "labor productivity" does not depend on the contracting company but on the geographic location of the work force. That is, two twins workers performing identical tasks employees of two exactly alike subsidiaries companies of the same multinational but located in different countries would record different productivities (charging different salaries) as the country is located in the South (low productivity, low salary) or in the North (high wage, high productivity).

The likely reality that they pretend to hide is that current  global value structures are increasingly asymmetric: the headquarters of large corporations capture most of the "value" (monopoly rent) while the rest of the value chain (outsourced), facing the monopsony power of the multinational buyer, is forced to suicidal competence  to access the crumbs left by the matrix company.

As in the case of the Information Technology sector, oligopsony power (single buyer) of a small and exclusive group of multinational companies (Apple, Sony, HP, Motorola, Dell, Cisco, ...) subject its subcontractors (Foxconn, Solectron, Jabil, Celestica, Sanmina, Flextronics), without any possibility of contracting with other alternative customers,  to draconian conditions that they must impact on their employees and subcontractors.

The intense competition among suppliers and vendors in the wrong end of the global value chain, and the fierce global buyers oligopsony, rob the producers the  fruit of their work, swelling the accounts and the value of financial assets held by a small caste well positioned at the opposite end of the value chain.

The connection between outsourcing and Financialization

In mainstream economic literature, these two processes, curiously parallel in time are analyzed as if they are completely unrelated and have nothing to do with each other.

However, they are two phenomena that are not only contemporary and influence each other, but are closely connected internally. The growing " financialization " is the other side of the outsourcing industry and related capital flows. One could not exist without the other, and vice versa.

It is the global value chains asymmetry what can divert the huge capital flows captured by monopolies from the sphere of production into the sphere of intermediation and financial speculation,  feeding in turn monopoly concentration (mergers and acquisitions) and therefore the progress of outsourcing.

They were the large transnational corporations who built the financial offshore centers  and international money markets to facilitate its global operations. The globalization of production played a major role in international financial integration.

One consequence of outsourcing has been the development of a structural deficit between the U.S. and China (and other low-cost industrialized countries). Multinationals are interested in holding down the exchange rates of their export platforms and holding up them in the consumer countries. China and other exporting countries, controlled by transnational monopolies, are " forced" to put their growing foreign exchange reserves in U.S. treasury bonds, though not generating any return. This keeps interest rates low despite the huge debt.

With interest rates so low:

a) European and North American consumers, with down wages, chose to finance their consumption by borrowing.

b ) the bank expanded its business in search of higher returns in exchange for assuming more and more risk.

c ) appeared sophisticated alternative financial products and derivatives, outside the banking circuit, so that anyone with ample funds could act as a bank, with assets including "mortgage" derivatives holdings,  holdings credit card derivatives holdings, students credit accounts derivatives holdings, interest rate derivatives holdings, foreign exchange rates derivatives holdings, and so on and so on.



More on the subject : John Smith: Imperialism and the globalisation of production

IMPERIALISM 2.0. vs IMPERIALISM 1.0.

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Steve Pearl, head of the British National Extremism Tactical Coordination Unit (Nectu) (2009):  "Nectu worked with thousands of companies in the private sector"... "Nectu was set up by the Home Office because it was getting really pressured by big business - pharmaceuticals in particular, and the banks"..."Environmental protestors were being brought "more on the radar.""

Grover Norquist (1992) : "I don't want to abolish the government, I am content to reduce it to a size that allows us to drown it in the bathtub "John Perkins (Confessions of an Economist Sicario, 2004) : "The Corporatocracy is based on three pillars: large corporations, international banks and governments in cahoots. 

"Imperialism (definition): Submission of state power to the interests of the monopolies.

Robert Cooper, (The New Liberal Imperialism): "The pre-modern world is a world of failed states.… It is precisely because of the death of imperialism that we are seeing the emergence of the pre-modern world. Empire and imperialism are words that have become a form of abuse in the postmodern world. Today, there are no colonial powers willing to take on the job, though the opportunities, perhaps even the need for colonization, is as great as it ever was in the nineteenth century. All the conditions for imperialism are there, but both the supply and demand for imperialism have dried up. And yet the weak still need the strong and the strong still need an orderly world. A world in which the efficient and well governed export stability and liberty, and which is open for investment and growth—all of this seems eminently desirable. What is needed then is a new kind of imperialism, one acceptable to a world of human rights and cosmopolitan values"

Imperialism 1.0.

Eric Hobsawm: "The existence of a "labor aristocracy" is explained by the super- monopoly profits that allow capitalists devote a bribe to their own workers, creating a sort of alliance between workers in a particular nation and their capitalists against other countries."

In the monopoly stage 1.0 monopolies used the strength of their parent states to expand and control their markets and secure supplies of raw materials. Capital operated  internationally but concentrated its profits nationally. It was a time when the world was divided between capitalist nations more or less fortunate and capital concentrating in a shrinking number of nations. This phenomenon, known as Imperialism, was often regarded as the last stage of capitalism (Lenin).

Nationalism and strengthening the rule of State included that part of the profits of large monopolistic corporations were passed on the taxpayers. Unions and leftist parties (labor aristocracy) repeatedly supported their imperial colonial adventures. Cecil Rhodes acknowledged that to curb social unrest in their territory the British had to be imperialist.

Many of armed conflicts, including the two world wars, obeyed this pattern. Monopolies needed strengthening  nationalism and the public and military structures of their states for use them against other imperialist states.

 The dominant ideology had nothing to do with the current neoliberalism. Economic nationalism, industrialization, protectionism, economic planning, areas of influence, colonies, captive markets ...

Although the 2nd Socialist International recognized that in the age of Imperialism all wars were imperialist wars of conquest, most socialist parties ended up collaborating with their champion monopolies with various excuses. For nationalists monopolists, victory meant the expropriation and annexation. In the same way that businesses, the war would bring profits and facilitate the acumulation of capital.

The disaster and the destruction of the 2GM made ​​it clear the danger and impracticality of inter-imperialist rivalries. Soviet and central and eastern Europe Revolutions, as well as the Paris Commune, did not arise simply because of the economic crisis but the misery and confusion of war and defeat.

Monopolies, including those from the U.S., changed their strategy. Neoliberalism, although dangerous for less dynamic monopolies, would be soon offering unprecedented opportunities for the more aggressive firms, who one after another, began to become multinationals. The mighty U.S. imperialism, althogh tending to favor USA monopolies, became the "de facto" monopolies global gendarme.

Imperialism 1.0. so, would not be the "last phase of capitalism."

Imperialism 2.0.

William I. Robinson: "Once they have been captured by transnational corporations, national states internalize the structures of global capitalism. Globalisation is embodied in local structures and processes. The disciplinary power of global capitalism shifts the political power of nation states to global capitalists represented by local groups linked to globalization."

G. M. Tamás : "The old nationalism was based on force, assimilation and growth, however  the sign of the new nationalisms ( ethnicity , tribalism , ... ) is the extreme weakness" ... "With the new nationalism, countries are reinterpreted as tribes with flags, and states was mafias with statutes".

Nafeez Ahmed: "FBI documents confirmed a strategic partnership between the FBI, the Department of Homeland Security and the private sector designed to produce intelligence on behalf of the corporate security community. A PCJF spokesperson remarked that the documents show "federal agencies functioning as a de facto intelligence arm of Wall Street and Corporate America."... "surveillance has systematically targeted peaceful environment activists including anti-fracking activist"... "McDonald's, Nestle and the oil major Shell, "use covert methods to gather intelligence on activist groups, counter criticism of their strategies and practices, and evade accountability."


But a new form of imperialism was redesigned according to the coordinates drowed in advance by Karl Kautsky when he predicted the coming of  "Collective Imperialism " - Imperialism acting in block in relation to the colonies. In the "Collective Imperialism" of Kautsky , the word "collective" referred to the group of nation states in relation with their colonies, and Lenin was right stating that such cooperation would not resist inter -imperialist competition (WWI)  In the current Imperialism 2.0., the "collective"  are no longer "imperialists states" but the big  international monopoly groups .

With the reintegration of the USSR and China, what remained of the old-fashioned imperialism ceased to be functional. As they were internationalized, the  "efficient" monopolies were increasingly less interested in holding States socially and environmentally too expensive, in exchange for services that could be obtained directly or elsewhere, in better condition and almost without compensation (direct bribes ,mercenaries and international assassins, international finance, tax havens, competition  between states, ... ).

It is true that international institutions (UN, WB, IMF, WTO, EU, OECD, G7, ... ) were once controlled and manipulated in favor of the interests of the dominant powers (Washington Consensus), but currently all these institutions are working for the entire multinational guild, and have become agencies that do not hesitate to destabilize and ruin to the same national powers who once "liedered" such organisms.

The monopolistic corporations have not only taken control of international institutions, supplanting the states, but rearranged and manipulated them in order to operate better in favor of their interests and to the detriment of their theoretical states members. The latest reforms, treaties and "Constitutions" of the European Union have transformed it in a corporate agency serving the private monopolies who are acting openly and with impunity against their own state partners, imposing drastic austerity measures to weaken them, force them to privatize their services and public goods and reduce its citizens to flexible conditions for optimal exploitation to swell their profits.

 Imperialism 1.0. built infrastructure in the metropolis, but also in the colonies (White Man's Burden), since the colonies were, in a sense, an extension of the metropolis. Imperialism 1.0., as racist and exploitative as it was, was the project of a state and a government. Imperialism 2.0. do no needs to build roads or railways, simply take them.

Multinational monopolies had been released from the archaic "imperialists"structures of domination. The "modern" structures of domination are more subtle but no less brutal. Are exerted through "globalization" through regulations and international organizations ( IMF, WB, WTO, OECD, ILO, WHO, NATO, G8, G20, ... ) , "free trade treaties", supranational organizations ( Davos, Trilateral , Bloomberg, ... ), increasingly outside the weakening channels of democratic representation.

The two secret "free trade" treaties global corporate coup

Lori Wallach : " The dirty little secret is that it is not mostly "trade" "

"TPP is being negotiated with a rigged process. Multinational corporations sit down with Government representatives. No place for labor, consumer groups, health groups, environmental defenders, human rights, civil rights collectives, democracy advocates, representatives of smaller, local, not-giant-multinational businesses, or any other “stakeholder” that could possibly oppose the corporate agenda".

The US government has sought to include tobacco in a regional free-trade pact, which would enable tobacco companies to use trade rules to compromise government anti-smoking regulations.

Tobacco companies are already suing governments that try to protect their citizens, claiming this costs them profits. Philip Morris is suing Uruguay for “excessive” regulation of tobacco, because Uruguay requires health warnings to be prominent on tobacco packaging. According to a NY Times report, “Uruguay’s gross domestic product is half the size of the company’s $66 billion in annual sales.” The company is also suing Ireland and Norway, claiming that prohibitions on store displays reduce their profits.

This way of operating outside the public and democratic institutions is evident in the secret negotiation of the Free Trade Trans-Pacific (TPP: Trans-Pacific Partnership) and Transatlantic Free Trade Agreement (TTIP: Transatlantic Trade and Investement Partnership) . 

During the imperialist phase 1.0., in times of economic crisis, monopolistic champions required from their states  protectionist measures to protect their captive markets. By contrast, today, the multinational conglomerates, operating on a global scale, all act in unison and in concert to reduce any kind of restriction or control by the state and its institutions. 

In the midst of a depression and with austerity policies on both sides of the Atlantic to prepare the ground, a coalition of multinational monopolies, Cargill, Dupont, Dow, FedEx, Amwey, Chrysler, Citi, Ford, GE, IBM, Intel  Johnson & Johnson, Lilly, MetLife, UPS, JP Morgan, ... , with the enthusiastic cooperation of Obama, Merkel  Barroso & Cia, are planing to create a new structure for the global system. 

 This is a true trans-Pacific and trans-Atlantic corporate state coup. The TTIP and TPP, are, both individually and in combination, the biggest "trade agreements" in history. They are larger corporations (600), not states in crisis, which are requiring this "agreements", press and promote the agenda of political elites, and direct the whole process, ensuring that their interests are met.

These austere "treaties" that arise in all media as "the panacea for the crisis", give private monopolists unlimited access to markets, protect them from any competition, assure them subsidies of all kinds, facilitate them to privatize anything and everything , "deregulate" at their will, destroy the environment, facilitating the corporate plunder of resources, and ensure the highest level of social exploitation. Following the agreements, the already dilapidated state democratic mechanisms will be absolutely inoperative against the imperialism 2.0 onslaught.
 
The TPP goes far beyon the scope of tariff reduction and trade promotion (objectives achieved in previous treaties), in order to give unprecedented power to the big monopolies. Of the 26 negotiating chapters (according to leaked documents), only a few deal directly with trade. The other chapters enshrine new rights and privileges for large companies at the expense of the power of nation states to oppose it. The large corporations will dictate and direct the policies of states, from ad hoc organizational structures that facilitate the consolidation, regionally and globally their financial, economic and political power. A mechanism for resolving disputes between investors and states "that allows corporations to sue governments over " barriers to investment rights" through an international court (the World Bank, for example), with the power to impose sanctions on states that violate their verdicts. It pretend to create a parallel legal system of international courts to undermine national sovereignty, allowing conglomerates sue countries that threaten their monopoly profits (can lead to a sovereing state to trial for "anticipated loss of future profits").


These treaties have little to do with trade but with the expansion of rights and the power of multinational corporations who are taking a new cosmopolitic nature. Acting through industry associations, lobbying groups, think tanks and foundations (Atlantic Council, Brookings Institution, German Marshall Fund, Business Europe, the Business Roundtable, the European Round Table of Industrialist, ... ) , are focused on concocting secretive conspiracies consolidating its transnational economic and political power. 

Rather than promoting "free trade" the treaties are aimed at ensuring international regulations in favour of large multinational corporations over national laws. Rates quotas may raise the price of certain goods by 20% or 30% at best. By contrast, patents and copyright can raise the price of products "protected" by the law, 2000% or 20,000% above the marke price t "free"(monopoly patents granted to pharmaceuticals). 

In the case of TPP, the theoretically participants to the secret negotiations are elected representatives of the following countries: Brunei, Chile, New Zealand, Singapore, USA, Australia, Peru, Vietnam, Malaysia, Mexico and Canada. In practice the negotiations are led by representatives of large multinational groups (involving 600 lobbyists). The representatives of the affected are not included  (consumers, users of libraries, students, patient groups, Internet, ... or other intellectual property "users"). 

 

Basically multinationals monopolies seek a compulsive  protection system of "their " intellectual property ( copy right, patents, ... ) in all areas and levels. The "industrial property" (patents , ... ), is one of the main entry barriers that ensures a firm the strengthening and expanding of monopoly positions  and subsequent monopoly rents, hindering or forbidding, for example, manufacturing/use of generic drugs. 

Instead of watching competition, preventing the formation of monopolies in the net, aim, however , control the Internet , forcing service providers to provide agencies under its control , data boaters, surfers criminalizing who refuse to bow to their interests. This is another channel reintroduce the failed ACTA (Anti-Counterfeiting Trade Agreement) and SOPA (Stop Online Piracy Act) who were defeated by a massive protest campaign Internet users . The goal is to turn the entire Internet into a platform payment bounded. 

TTIP aims to dismantle environmental regulations (estriction of fracking, ... ), health (GMOs, pesticides, ... ) and social protection regulations, and above all, ensure "legality" (legal certainty) of the massive privatizations of public goods forced for the systematic impoverishment policies (austerity) in place throughout the area that will forcing states to sell  off its most prized garments at bargain prices. 

So the main objective of imperialism 2.0 is the pressure or even the destabilization of national states attempting to resist the interests of large multinational monopoly groups. It is not only ex-colonies, but any democratic state is exposed to the uncontrolled fury of this new imperialism. Bolivia, Venezuela, Ecuador, Cuba, ..., are priorities, but any country, regardless of its geographical situation, that seeks to hinder their goals, is and will be subject to systematic attacks from several fronts (diplomatic, financial, media, ..., and not to exclude the proliferation of "humanitarian" operations supported by the "International Community"), to bring him back to the submission to capital. 

Wars increasingly "private"

 Doug Brooks: "The reality is that any peacekeeping operation of the United Nations or other existing regional agency currently requires and uses the services of the private sector (Private Military Corporations)

The "private military corporations" (PMC), are private companies that offer "military services" to anyone who want to hire them, are secretive about their activities and customer portfolios not being regulated by any international standards (violate the International Convention against the Recruitment, financing and training of mercenaries passed by the UN in 1989) 

These services include project and business protection business in unstable regions, risk assessment, training local forces, armed security in mining areas, cash transport, intelligence, local security of business or industrial facilities, security in areas war, weapons acquisition, control and recognition of staff background, armed support, air support, logistical support, maritime security, cyber security, prisons, surveillance, psychological warfare, propaganda tactics, covert operations, personal protection, peace missions and training of military and police forces in the post-war periode ... 

Their services are requested by governments, corporations, NGOs, media, and even the UN. 

Among the PMC that did business in Iraq are : MPRI, SAIC, Armor Group, Blackwater, Erinys,  Vinnell, Global Risk Strategies, TASK, Ariscan and DynCorp, Kroll Security, ....

 The "clients" of the PMC are large corporations (or the puppet state that protects them) seeking to seize natural resources get captive markets (food, infrastructure, technology, services, ... ) hoarding "reconstruction" contracts after the destruction of "terrorism  , and in general , create a framework of full colonial dependence on transnational monopoly capital. 

The increasingly arrogant monopolistic multinationals corporations, require from the states they control to engage in military interventions difficult to justify  to their citizens. One way to avoid responsibility is to hire the services of mercenaries. 

The privatization of military services means more than one variable added to the game of international and regional diplomacy and means a radical redefinition of sovereignty in the XXI century. 

Parasites of State

Multinational monopoly corporations not only replace the Estate but weaken and parasites it so to increase their dependence on them. 

Initially the rivalry between the PMCs meant lower prices for contracting states who could thus reduce their military budgets. However, according to the globalization dynamics, capital concentration rapidly advanced in the sector: MPRI and Titan were acquired by L-3 Communications, Defence Systems Limited was acquired by Armor Holdings Inc (now Armor Group); Securicor is the result of the merger between Group 4 Falk and Wackenhut Corporation, Computer Sciences Corporation recently purchased DynCorp; ... 

The industry is growing exponentially, with some annual contracts exceeding $100 billion. The companies, based in the United States and Britain, monopolize over 70% of the world market of such services. 

Most of these companies operate as "virtual companies" or "hollow" (Nike, Westinghouse, Ikea, Dell.Inc, style , ...), in which all goods and services are outsourced to suppliers, and the PMC just stay with the minimum corporate functions (planning, coordination and administration). The subcontractors are nurtured by other subcontractors so that the recruits end up being low-cost Africans, Latin Americans, from underpaid armies or paramilitary groups (El Salvador , Colombia , Chile, ...).

Once collected exorbitant monopoly or oligopoly positions, states have been trapped by a procurement contract in which they can no longer stand as public monopsonistic demandants, but as current customers paying more rents to global monopolistic or oligopolistic PMCs.

In addition, there has been a crazy brain drain of expensively (with public funds) trained officers to this thriving private sector. 

Executives at Global Option and Diligence mercenary firms, specializing in preparing the ground and protect the business of multinationals, are, in most cases, former members of the CIA, DIA, FBI, FEMA, M16, ... Middle managers come from the ranks of special Forces units of the U.S., the UK., Israel and South Africa. 

Moreover, the vast majority of these multinationals locate their headquarters in tax havens so that even a dollar or euro could reverse to the parasitized states. 

Imperialism 2.0 for discussion 

Many left-wing thinkers have failed to understand this phenomenon. They find it hard to conceive that capital can be organized on the sidelines of the national principles and that there is a de facto transfer of sovereignty from nation states to stateless organizations (including, increasingly often, agencies or 'national' bodies as the central banks or the "technocratic" governments, ... ) that operate in direct service of multinationals.  

Some recognize the universality of capital, its transnationalization, but consistently refuse to recognize that capital has escaped the confines of the nation state, that multinational monopolies have left aside their initial national basis, and that the multiple relationships and synergies among the great transnational corporations increasingly left more lax and distended their formal relations with the states that were their former base.

Playing for change