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Transforming World Economy Lays Foundation for World Revolution

The world is being remade. The much discussed shift in the center of economic gravity to the East is only one aspect of the transformation taking place in the entire world system. Capitalist production, finance, and control of the world’s resources are concentrated in a handful of corporations and a narrow stratum of billionaires. The world economy is integrated and interconnected across national boundaries. All the world’s nations are being remade and remade again by its demands. The world economy is based on the highest level of the means of production ever known. These qualitatively new means of production are destroying the old world and all its relations, laying the foundation upon which communism can finally be built.

From one stage to another

Since WWII, under the hegemony of the U.S., the strategy of global finance capital has been the endless dismantling of every barrier to its access to the world’s markets, strengthening of the world’s monetary system around the dollar, and securing not only “developing nations,” but also “dominant nations” as an avenue for their purposes.

Neoliberalism (sometimes called the Washington Consensus) is a term applied to the general guidelines developed by the bourgeoisie at a particular stage in the development of the world economy. It was a set of guidelines that sought to address opportunities and needs that were opening up in the world at that time. Chief among these were the increased economic power of the multinational corporations (MNCs), a developing global network of transnational corporations (TNCs) and the opening up of new markets with the destruction of the former Soviet Union and the communist bloc.

A specific constellation of political conditions in the late 1980s and early 1990s made possible the implementation and advance of neoliberalism. These were the foundation laid by the policies of Ronald Reagan and the UK’s Margaret Thatcher, a developing “consensus” among the ruling powers, and, with the destruction of the Soviet Union, the unrivaled economic and geopolitical dominance of the U.S.

The State played an indispensable role in the implementation of the new guidelines. In the U.S. and the European nations, the State instituted laws and policies that drove down the cost of production by destroying the standard of living, cut the taxes of corporations and the most wealthy, removed the last barriers to financial regulation, and shifted each round of the inevitable episodic crises onto the backs of weaker nations and the world’s workers, including their own.

In the neo-colonies, in the Soviet Union and in the countries of the communist bloc, governments were overturned, the old political systems were dismantled, and the powers of the State were used to throw open the doors for exploitation by global finance capital. Yugoslavia, the Caucasus, Central Asia and Iraq among others were considered the “emerging markets” of their time. These countries were secured both as markets and as sources for raw materials either through military invasion and occupation or through entangling them in a web of debt.

Throughout the 1990s and into the 2000s, wave upon wave of financial crises revealed the neo-colonies as a weak link in the global economic system. Many of these countries labored under huge amounts of debt forced on them by the IMF and the World Bank. They were unable to develop their economies or their internal markets, or to protect themselves from speculative attacks. These crises were “contained” within the periphery, but they brought with them social and political upheaval. The bourgeoisie worried that these weaknesses could have a wider regional and possibly global impact. As the push to further integrate the global economy advanced, something had to be done to shield the system from itself.

The many articles, books and presentations about “globalization and its discontents,” as Joseph Stieglitz put it, expressed the bourgeoisie’s growing recognition of its objective problems. New guidelines started to emerge, labeled the post-Washington Consensus. Around this time, the IMF and the World Bank began advocating that “developing countries” adopt various policies designed to not only prevent their economic weaknesses from destabilizing the world economic system, but also to restructure them as a new source of economic growth, investment and profit.

These policy prescriptions furthered the interests of global capital. Instead of “aid,” developing countries were forced to go to global capital markets for credit and loans. The accumulation of foreign exchange reserves were promoted as insurance against financial crisis, but were essentially the means of creating great pools of dollars that could be cycled through the global monetary system. More diversified production and export patterns would facilitate the further development and integration of production, supply and distribution chains under the control of the MNCs/TNCs.

Between 1990 and the crash of 2008, despite the waves of financial crises, the world economy went through another round of economic integration. Indeed, those financial crises helped to lay the foundation for what Ziya Onis and Ali Burak Guyen described in their 2010 article “The Global Economic Crisis and the Future of Neoliberalism,” — “an era of prosperity for the world economy characterized by record expansion in trade volume, abundant liquidity and foreign direct investment, and more than respectable growth rates in every region.”

Economic integration, interconnection and consolidation

The world economy today is barely recognizable from even the days of the “Washington Consensus”. The structure and character of capitalist production and finance is increasingly global in scope, increasingly integrated between its productive and financial aspects and between its national and international aspects.

National capital, a national bourgeoisie (in locally based companies as well as multinationals) and national economies still exist in every country. There would be no “country” without them.

But, they are increasingly integrated into the global economy. Outsourcing, subcontracting, and various licensing agreements have resulted in a production chain and complex webs of vertical and horizontal integration across the globe in such a way that it is increasingly difficult to separate local circuits of production and distribution from globalized ones.

Multinational and transnational corporations are now responsible for about one quarter of the world’s production and two thirds of global exports. As much as 40% of global trade is between cross border affiliates, employing almost 100 million people worldwide. The revenues of 500 MNCs exceeded $212 trillion in 2007 and the combined sales of the top 200 were equivalent to 28% of the world gross domestic production.

In almost every sphere, the world’s resources, means of production and money are owned by a handful of corporations. Fifty-one percent of the world’s hundred wealthiest bodies are corporations. Raw foodstuffs and meatpacking are controlled each by just four corporations, dominated by Cargill whose $120 billion in annual revenues is bigger than the economies of more than two thirds of the world’s countries.

Where is all the money going to go? Enter the new set of “emerging markets.” As the advanced economies have experienced deep contraction, the “emerging markets” have become the lone engine of world GDP production. As the economies of the “developing countries” are reformed, all eyes are looking to the “emerging markets,” to their so-called middle class and all the projected wealth from resuscitated states. These states are now being encouraged to borrow, expand, and export the world economy into another round of moneymaking for the consolidating global financial industry and what is now a handful of networked and powerful multinationals who dominate production and distribution. No wonder there are warnings that the bond market will be the next bubble on the horizon.

Regional Blocs

The U.S. is still the most powerful nation in the world, both economically and militarily. Yet the transformation in the means of production and the restructuring of the world system is breaking up the foundation upon which this dominance has been based, signaling the historical tendency toward U.S. decline.

The bourgeoisie itself encourages the formation of trading blocs, further contributing to this historical tendency toward U.S. decline. Regional blocs foster greater efficiency and organization in supply and production chains, and are an organized conduit for the penetration of capital. Countries have to compete with the rest of the world for markets that are increasingly saturated due to the inability of the world’s consumers to buy.

Regional blocs guarantee access to foreign markets for both financial services and for products. Regional blocs also serve the national bourgeoisie of their countries, from the ranks of which are emerging new billionaires, whose business concerns are part of a global circuit of production and distribution of goods that tie them across national boundaries and into the broader global ruling class.

At the same time, the “emerging market” countries are largely poor, and struggling under massive external debt, with export oriented economies that are vulnerable to the contraction of the world market. Some are only one rung above the poorer so-called developing nations from which they emerged. (China has to be viewed as a case in itself).

At the moment, these nations, even China, are not economically strong enough to challenge the U.S. and all, even China, are forced to live for the time being under the domination of the dollar. But the growing economic instability in the world, the inability of the consumer to buy, and the competition for markets lays the foundation for the inevitable trade wars to turn into shooting wars.

Changing the form of the State

The massive concentration of the means of production and wealth inevitably calls forth the need for a concentration of State and political power. On a superficial level, this is being reflected in much hand wringing over the need for global financial regulation (which will never happen) and the incorporation of a new round of countries into the new G-20 (a case of keeping your friends close and your enemies closer).

The real issue is that the capitalists – in the “dominant countries” and in the “developing countries” alike – cannot move these markets of the world to the next stage of exploitation. The process of the merger of the State and the corporations is objective. The political superstructure has to be aligned to the changes in the base, whether this is in a “developing,” an “emerging” country or in the U.S. or Western Europe. Economies and societies must be refitted to make possible the next round of global economic integration.

The State is the only mechanism that can accomplish this. Critical to the new and emerging guidelines of the post-Washington Consensus is a reconfiguring of the form of the State and the role it must play in the next stage of development. While the actual implementation does and will vary, there are general guidelines around which a consensus is emerging. The State must operate for the market and according to market principles. A mix of public and privately held concerns is acceptable as long as they are able to compete. Social matters, such as health care and education reform, are matters of the market, growth, and the creation of buyers for all those products, not some abstract betterment of humankind.

These adjusted guidelines are the ideological and policy framework that ties together the strategy of an emerging global ruling class, regardless of how powerful or weak a country might be. In the U.S. the temporary nationalization of the banks and financial industry and the nationalization of General Motors and Chrysler were only an expression of what is becoming necessary everywhere. Health care reform is a matter of growth and the market; education reform is to educate that narrowing strata of workers for the specialized division of labor of the U.S. economy.

In the developing countries, the State is now being deployed to organize and manage an export driven economy, implement policies that seek to develop an internal market of consumers capable of buying the products being produced, and facilitate infrastructure projects that offer national and international capitalists greater scope for financial exploitation.

As we know, in the U.S. and in other places in the world these guidelines are generating their own contradictions and struggle, furthering political polarization.

Democracy only for the rich

With a world now full of propertyless, the objective foundation for bourgeois democracy is being destroyed. A new complex of ideas that defines people’s relation to society and to one another, along with society’s relation to them will have to be consciously developed.

The bourgeoisie’s thinkers are working to articulate this complex of new ideas. Democracy can only exist to the extent that it advances the exploitation of markets and the interests of a narrowing bourgeoisie as a class. Today, democracy is only for the very rich.

The purpose of the capitalist State is to manage and protect the overall interests of the capitalist class as a class. The State, forms of government, and the political system are shaped and reshaped to further these interests. The challenge to the bourgeoisie today is that the deeper integration and interconnection of the economy is taking place under conditions of the destruction of the capitalist system itself, the stark and rapidly advancing polarization of wealth and poverty and a growing instability in every aspect of the world economy. Fascism on a world scale is arising from these very conditions to protect the present and future interests of private property, and to stand against the social forces arising in opposition to its horrors.

Middle East:
Part of breaking up the old neocolonial order

The pressure to change the world’s markets is coming from both outside (global capital) and from within the countries (the national bourgeoisie, different strata and between classes of people). The Middle East is one of the least economically integrated regions in the world; that integration is blocked by, according to a February 2011 World Bank report, “Trade Integration as a Way Forward for the Arab World”, “deeply rooted privileges and unequal treatment of investors,” which are obstacles to national bourgeoisies and global capital alike. The report praises the uprisings in the Middle East for creating the “conditions for a big push toward greater regional and global trade integration of the Arab world” and sweeping away the old regimes that now stand in the way.

As revolutionaries, we stand with the peoples of the Middle East as they fight against capitalist oppression. But this should not blind us to the reality that these uprisings have been neither revolutions or even altogether “popular.” The demands of the people for the wherewithal of life have been manipulated and ultimately controlled by bourgeois forces. They became “popular uprisings” similar to the destabilizing projects against the communist bloc countries in the late 1980s and early 1990s, and the later “color revolutions.” No change was made in either economic or political relations. For example, the Egyptian military, whose corporate ventures account for almost 25% of Egyptian economic activity, remain in control.

No matter what the country or culture, the lessons are the same. The world is being transformed and it is those who are conscious of its possibilities that will win that world. This revolutionary process cannot be resolved in the interests of the workers of the world without the subjective intervention of the conscious communist element operating within that process.

Polarization of wealth and poverty makes capitalism untenable

That “emerging markets” will save world capitalism is nothing short of fantasy. The majority of the world’s people live in these developing countries and “emerging markets.” Half of the world’s people – 3 billion – live on $2.50 a day. At least 80% of humanity lives on less than $10 a day. There are 2.2 billion children in the world. 1 billion – half – live in poverty.

Almost 60% of the labor force in developing countries works in the informal economy. The International Labor Organization (ILO, an agency of the UN) projects that there has been an increase of 50 million newly unemployed worldwide since 2007, and an increase of up to 200 million new working poor earning less than $2 a day. China accounts for nearly all the world’s reduction in poverty.

The so-called emerging “middle class” in these countries is little more than an impoverished strata existing one fragile rung of the ladder above the mass of destitute. Eager financiers claim that today a wage of between $2 and $14 a day, or between or about $730 to $4700 a year, puts a person in the “middle class” in these countries. Their hope is that absolute numbers, combined with a constant lowering of the cost of production so that the world is flooded with cheap goods that even the most impoverished can buy, will create a sufficient market. The “middle class” in China is expected to expand to 600 million people by 2020, and it is almost for this reason alone that China is the most sought after prize.

Amidst this mass poverty and destitution has arisen the greatest concentration of wealth ever known. The world’s richest 1% own almost half of the world’s wealth.

Each round of the development of the economy has been characterized by consolidation, crises, polarization. The concentration of wealth and economic control in the hands of a few at one end and the simultaneous impoverishment of the world’s peoples at the other, is destroying the market and setting the basis for further polarization and instability, along with the opportunity and dangers presented by a world revolutionary process.

Foundation for world revolution

The world is entering a new stage of economic interconnection and integration, both within the realm of the production and distribution of goods and the financial system. This is still dominated by the U.S. in tandem with the other “dominant” nations. It is backed up by the continued economic power of the U.S. market, its central role in the world’s currency and trade, and its military power.

The historical tendency toward the shift in the center of economic gravity to the East is taking place within the transformation of the entire world economy, society and forms of rule. This transformation is ultimately and finally driven by the introduction of the qualitatively new means of production into world production and the generalization of its effects through globalization, including the desperate headlong plunging of the world into financial disaster.

Upon this crumbling foundation, the bourgeoisie nevertheless still paves the way for the future. In their desperate fight for more markets, more profit, more everything, they are stage by stage – based first on an interconnected economic system facilitated by digital communication – tying the world together, shaping a world culture, and laying the foundation for world revolution. This is being done with the most highly developed level of means of production in human history.

As wealth polarizes, the class of propertyless as a world-historical force of which Marx foretold is coming into being, that “mass of workers who are nothing but workers – labor power on a mass scale cut off from capital or from even a limited satisfaction [of their needs] and which presupposes the world market… [who] thus can exist only world-historically, just as communism, its activity, can only have a ‘world-historical’ existence. ”

The intensifying crisis threatens to tear down the world’s peoples before they are fully conscious of what the future truly offers. Their demands can be summed up as the demand for a cooperative society. Such a society must be based on the public ownership of the socially necessary means of production and the distribution of the social product according to need. This is the urgency that confronts the communist today – that every effort, every struggle, every moment, must be used to teach this lesson to the rising proletariat.

Political Report of the LRNA Standing Committee, April 2011

August/September 2011.Vol21.Ed4
This article originated in Rally, Comrades!
P.O. Box 477113 Chicago, IL 60647 rally@lrna.org
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Photo of Protest

30,000 March in Support of
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Photo by Ryan L Williams
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The age-old vision of a world without scarcity, without exploitation, class domination, organized violence, and stultifying labor has been the dream of millenia. The new completely socialized labor-eliminating means of production ... sets the basis for its realization. Now human history can begin, the light of the individual shining in the full brightness of liberated life, that can only be realized within true equality and cooperation: communism, a cooperative society.

'Without Vision, the People Perish'
Rally, Comrades ! May/June 2011

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Rally, Comrades! is the political paper of the League of Revolutionaries for a New America. If you are one of the thousands of revolutionaries around the country looking for a perspective on the problems we face today, and for a political strategy to achieve the goal of a world free from exploitation and poverty, then Rally, Comrades! is for you.

Rally, Comrades! examines and analyzes the real problems of the revolutionary movement, and draws political conclusions for the tasks of revolutionaries at each stage of the revolutionary process. We reach out to revolutionaries wherever they may be to engage in debate and discussion, and to provide a forum for these discussions. Rally, Comrades! provides a strategic outlook for revolutionaries by indicating and illuminating the line of march of the revolutionary process.

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