Socialist Party documents

New Technology and Globalisation


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Perspectives for the ex-Stalinist States

This is true not just of the economy but of perspectives for the ex-Stalinist states, the national question, perspectives for Europe, etc.

Paul Storey wrote: 'Resurging capitalist Russia, which, despite the depths of its crisis now, is likely in time to succeed in employing its best material resources and Its highly educated labour force to go forward.' [p7, para 24] Unbelievably, he saw the ultimate restoration of capitalism as 'progressive'.

He wrote: The elimination of Stalinism by mass movements of the working class, even where that leads to a restoration of capitalism (which, of course, we oppose) carries with it much more fundamentally progressive consequences than reactionary ones.

In essence, despite the setbacks for state ownership at this stage of the process, it is not a historical step backwards.

History has neither 'ended' nor shifted into reverse.' Tell that to the suffering masses of Eastern Europe and the former Soviet Union where production has plummeted by more than a half since these lines were written.

Why oppose the restoration of capitalism if, as Paul Storey argues, it is more 'progressive' than the previous system, a bureaucratically controlled, planned economy?

Contrast the rosy scenario of Paul Storey with the analysis of the CWI, which said that these societies faced a future not of a US or German-style capitalism, but like Latin America.

However, even enfeebled Latin American capitalism is an 'ideal' beyond the reach of these broken and tortured societies at the present time.

We pointed out that, at the most, certain 'islands' could be created of advanced industries surrounded by a sea of backwardness and disintegration. However we have yet to see Russian capitalism generate even these 'islands'.

Globalisation

In its approach towards the issue of globalisation, the CWI in the early 1990s, like every other trend within the labour movement, and the bourgeois as a whole for that matter, was seeking to come to terms with relatively new phenomena and sought to present a balanced explanation.

As Engels pointed out in his famous introduction to the Class Struggles in France, capitalism is a blind system, its laws operate behind 'the backs of society'.

Therefore, as you pass through an era it is impossible to fully grasp the full implications of what is taking place, particularly in the economic sphere.

Following developments, statistics are compiled, analyses made and conclusions drawn. If that was true of early 19th century capitalism how much more is it the case today with the colossal development of the world productive forces, world trade, the speed of transactions and the huge turnover of capital which this involves?

It is true that modern technology allows a greater and more immediate recording of economic phenomena, as they take place, but notwithstanding the advocates of 'managed capitalism' (to which the Merseyside ex-comrades are recent converts as we shall see later) the system still works in the blind.

None of this means we have to 'wait' to analyse the situation through which we are passing or that it is impossible to work out economic perspectives.

But perspectives are conditional and when new factors enter into the situation, or new information for that matter, it is necessary to modify those perspectives.

This is not an argument against perspectives, as some imagine, but looking on perspectives as a working hypothesis of the most likely developments and adapting our analysis and perspectives to changing situations.

This is a difficult task and sometimes, particularly in verbal exchanges, there are bound to be exaggerations, one-sided formulations of issues, etc.

Undoubtedly, on the issue of globalisation our critics will find this or that expression or phrase which poses things in a one-sided and therefore inaccurate fashion.

However, we have to ask our critics, did they foresee things better than us? There is no written material from our 'retrospective' critics, either in the early 1990s or since, explaining Merseyside ex-comrades' position.

We on our part, particularly in the aftermath of the collapse of Stalinism and the ferocious pro-market, ideological barrage which accompanied it, fought against the hyper-globalisers, on the one side, and those who wished to bury their heads in the sand and ignore this phenomenon, and declare that there was 'nothing new' in this phenomenon.

The implications of the hyper-globalisers' argument was that the labour movement on a national plane was prostrate, utterly helpless to resist the triumphant onslaught of a new globalised world capitalism.

Without going as far as the bourgeois hyper-globalisers there is a strong element of this approach in all the arguments that the Merseyside ex-comrades have deployed throughout the 1990s, both in terms of the effect of globalisation, which he has much exaggerated, and what this has done to the consciousness of the broad mass of the proletariat.

Globalisation was not a conscious policy of the bourgeois but grew out of developments in the late 1970s which expanded exponentially in the 1980s and the 1990s.

The basic mechanism of globalisation - companies invest in capital in foreign countries, buying existing assets or building new factories - has accelerated explosively during the last fifteen years.

The volume of foreign direct investment nearly quadrupled during the 1980s, reaching $2 trillion in the 1990s.

The 'super-' or hyper-globalisers pointed to this as the factor which was going to lead to a rebirth of capitalism, not just in the advanced industrial countries but in the underdeveloped world and a new flowering of a mighty vibrant capitalism in Eastern Europe and the former Soviet Union.

Paul Storey was honest enough to admit that was the conclusion he was beginning to draw; hence his retreat to the study.

Dave Cotterill, little by little, despite his protestations to the contrary, has been on a similar route.

Nobody, certainly not the CWI leadership, discounted the effects of new technology in certain industries.

But the key question was what effect this would have on the productive forces as a whole, particularly on the overall perspectives for the development of the world economy.

There has hardly ever been a period in history, including periods of economic crisis or 'depression', as in the 1930s, when technology has not been successfully applied to a minority of industry.

But what our critics have failed to explain is why has this 'revolution' in new technology and globalisation not led to a spectacular increase in the overall growth of the productivity of labour? Both Paul Storey and Dave Cotterill are completely silent when we point to the fact that the growth in the productivity of labour, in Britain and on a world scale, is lower in the 1990s (a period when they would argue that there has been a massive application of new technology to industry).

The average growth in productivity is less than it was in the 1980s, which in turn is spectacularly less than it was during the structural upswing of world capitalism between 1950 and 1975. (See remarks of Jonscher above, and the comparative figures for the US economy given in the CWI book, Global Turmoil, p. 161.)

This is mainly because there was not the same ploughing back of the surplus extracted from the labour of the working class by the capitalists in investment in machinery and means of production as took place during the 1950-75 upswing.

This technology was applied to a few industries with important results. As far as information technology and finance capital are concerned, the growth has been spectacular.

International bank loans have more than quadrupled during the 1980s, reaching $3.6 trillion at the beginning of this decade, while global bond financing expanded likewise.

Cross-border stockholdings in the triad - Europe, Japan and the United States - almost doubled during a few years in the late 1980s.

Foreign exchange trading totalled more than $1.2 trillion a day by the early 1990s compared to only $64 billion a day as recently as 1989.

The entire traded volume of US Treasury debt ($2.6 trillion) turns over every eight days. This colossal volume of financial trading however is conducted by a handful of financiers in the 50 biggest banks and a handful of major brokerages.

Moreover, the application of new technology to the 500 largest multinational corporations has seen a sevenfold growth in their sales, yet the worldwide employment of these global firms has 'remained virtually flat since the early 1970s, hovering around 26 million people'. [Greider, One World Ready or Not, p21]

It is true that, in the 1990s, profits of the major monopolies in the advanced industrial countries grew significantly and in some countries approached the levels of the 1960s.

This has mainly resulted not from the huge investment occasioned by new technology but by the application of neo-liberal policies: increased exploitation of the proletariat through deregulation, privatisation, part-time working, two or three jobs, worsening of working conditions, etc.

Moreover, while the rate of profit has increased up to the recent period the price ratio yields and dividends of shares have been very low, particularly in the US. In the 1990s, shareholders' wealth came from capital gains not dividends.

As far as foreign direct investment (FDI) is concerned, it has not been the lifeline for the exploited masses of Asia, Africa and Latin America promised at the height of globalisation in the early 1990s.

FDI has largely gone to the triad of Europe, America and Japan (accounting for 75% of FDI) and a few favoured countries in Asia and Latin America. 91.5% of Foreign Direct Investment goes to countries comprising 28% of the world's population.

Flowing from this analysis, the CWI has concluded that, while there are new features in the development of world capitalism flowing from globalisation (there are always new features in all the different stages of capitalist development), nevertheless, these did not and do not foreshadow a new period of structural growth for world capitalism.

The most important productive force, the working class, even during the so-called 'boom' of the mid-1990s, has not been fully integrated into production.

Mass structural unemployment and underemployment is now a permanent feature of world capitalism. The fact that one-third of the world labour force is either unemployed or underemployed is airily brushed aside by our critics or does not even feature in their analysis.

If we had faced a new structural growth in capitalism then as in the 1950-75 period this would have led to the integration of the 'surplus labour' which was a feature of world capitalism throughout the 1980s and the 'globalised' 1990s.

Our opponents can object that this integration has taken place in the case of the Anglo-Saxon countries.

In the US, unemployment, it is claimed, is at a 24-year low and an 18-year low in Britain. However, mass structural unemployment is still a phenomenon throughout world capitalism as a whole.

It is an almost permanent feature in Europe and a growing phenomenon even in Japan. The much-vaunted 'jobs growth' in Britain and the US is, as we know, largely 'McJobs', part-time and low paid, the result of government 'make-work' schemes (certainly in the case of Britain).

It does not result from a significant pick-up of industry, particularly manufacturing industry. Indeed, the Anglo-Saxon countries are now the model for huge de-industrialisation and a suicidal reliance on service industries and low-paid, super-exploited workers.

Moreover, Marx pointed out that a 'bidding-up of wages' (wage increases), and a rise in employment, is a 'harbinger of a looming crisis'.

The share going to the working class would increase and inversely profits would decrease. This, together with a general tendency for the rate of profit to decline (due to constant accumulation, the rise of constant capital compared to variable capital), could precipitate a sudden collapse.

This was the situation on the eve of the 1929-32 slump. This did not prevent Herbert Hoover (US president from 1929-33), like the modern advocates of a world economic 'paradigm', prophesying everlasting prosperity.

On 27 July 1928, he stated: 'The outlook for the world today is for the greatest era of commercial expansion in history.'

Workers' consciousness

The ex-comrades' perspectives for working class resistance to globalisation and the general prospects for the revival of the workers' movement is profoundly pessimistic, to say the least As with their criticisms of the Socialist Party and the CWI on the level of 'consciousness' of the working class, they draw entirely gloomy conclusions from the development of 1990s' world capitalism.

Throwing overboard Marxist perspectives, they are now prepared to grub along on the basis of empiricism: 'For the moment we have no reliable way of estimating this (the effects of a recession or slump), it only amounts to lucky guesswork or idle speculation.' So the accumulated experience of Marxism, of the works of Lenin and Trotsky, in particular the effects of boom and slump on the broad consciousness of the working class is characterised as 'lucky guesswork'.

It is true that it is not possible to give an arithmetically correct schema of how the consciousness of the working class will develop on the basis of a new recession or slump.

But it is possible to say (as, in fact, the CWI has argued), that the present economic world crisis will exercise a profound effect in changing the outlook of the working class.

A mood of opposition to the effects of capitalist crisis will impact on the broad mass of the working class and, in the process, a new advanced layer will begin to crystallise who will be open to the ideas of the socialist and revolutionary movement.

We fought in the early 1990s against the over pessimistic attitude of many, including some inside the ranks of the CWI, who drew one-sided conclusions from the collapse of Stalinism.

Consciousness has not been thrown back for decades and decades, as seemingly 'erudite' Marxists argued as they left the ranks of the CWI in 1991.

The effects of the collapse of Stalinism have been largely ideological but the basic potential power of the proletariat remains.

This is not to say that the ideological ban-age has not had an effect, particularly on the leadership of the trade unions and the labour movement This in turn has laid the basis for the carrying through of the measures of de-regulation and the worsening in the conditions of workers, particularly in the US, Britain and the other 'Anglo-Saxon countries'.

However, the basic organisations of the proletariat have largely remained intact, notwithstanding the victorious social counter-revolution in the former Soviet Union and Eastern Europe, and the political consequences of this in affecting the consciousness of broad layers of the proletariat.

It is only this analysis, unique to the CWI, which has allowed the cadres of the CWI to maintain the thread of Marxist understanding, a balanced approach towards the phenomena of globalisation and has prepared our parties and organisations for the new period which world capitalism is entering.

Long-term capitalist depression

The Merseyside ex-comrades, in their criticisms of our economic perspectives, make a number of basic theoretical blunders.

For instance, they refer to capitalism as a system of 'crises'. It is much more than that. Historically, as Marx pointed out, all previous modes of production were essentially conservative.

Capitalism has revolutionised and enormously developed the productive forces, which now makes it possible in our era for the first time to remove want and privation from the whole of the planet, on condition, of course, that a new social system - world socialism - harnesses these productive forces.

Capitalism in its youth, as Marx and Engels pointed out, passed through a cycle of economic development, of growth punctuated by economic crises.

In the pre-1914 period the curve of development was decisively upwards. In the 1930s in general the productive forces stagnated and only the new conditions created by the Second World War, together with the political preconditions which arose from the betrayal of the revolutionary wave in post-1945 by the Stalinists and social democrats, laid the basis for a new structural upswing of capitalism, which has now come to an end.

It is on this point which, in a number of references in their document, the Merseyside ex-comrades fundamentally oppose us.

They dismiss our analysis that capitalism, 'has been in a "depression" since 1974'. They then say: 'The Great Depression of 1873 to 1895/6 led in fact to a growth in anti-capitalist and socialist consciousness, and it led to the growth of US and German capitalism based on expanding markets and technological advance.' They reinforce this point by arguing: 'The "depressionary" analysis, which really tells us very little, is taken as a sort of article of faith. It ignores the historical experience about the Great Depression at the end of the nineteenth century, a time of imperialist expansion, the building of trade unions, and socialist parties.'

The 'Great Depression' of 1870-1895 was termed a 'depression' because of a long-term fall in prices which, together with increased competition, cut the profits of the capitalists, especially in older capitalist countries like Britain, France and Belgium.

But it was, at the same time, a period of extensive growth of world capitalism, especially in the USA and Germany, both of whom used trade protection to shelter home industries.

Falling prices, while squeezing profits, raised real wages. So in many countries there was a real strengthening of the working class with offensives on wages, hours, etc.

Speaking about the likely new situation following the collapse of Stalinism the Merseyside ex-comrades view it as posing 'the prospect for a continued expansion of markets. So a new period of cyclical growth in the world economy is likely, considering depressions are followed by periods of growth.' Clearly, the comrades have not understood the fundamental change in the character of the present phase of world capitalism, ushered in by the end of the postwar boom of 1950-75.

Moreover, there is nothing original in Merseyside's wrong-headed attempt to compare the 'depression' of the late nineteenth century to the situation confronting world capitalism today.

Many writers in the bourgeois press, such as Hamish McRae of The Independent, seeking solace from their present economic and financial woes, and hoping against hope that they have averted a slump, have also compared this period to the situation of the world economy today.

The situation of world capitalism throughout the nineteenth century, right up to 1914, in general followed an upward, curve.

As Trotsky pointed out the crises were relatively minor disturbances which did not halt this upward movement of capitalism.

The partial exception was the 'depression' of the 1880s and early 1890s. There were a number of factors which led to this but the USA offered an escape route for stagnating European capitalism and its millions of unemployed. This depression led to the 'boom' of 1896 to 1914.

Are the Merseyside ex-comrades arguing a similar scenario for world capitalism today? That the present depression is merely a hiccup, albeit a violent one, a prelude to a new upswing of capitalism, the engine of which will be investment in 'new technology'? How else to interpret the above remarks about 'continued expansion of markets' and a 'new period of cyclical growth in the world economy'?

The attempt to 'connect' the Socialist Party and CWI on economic characteristics mixes crude plagiarism with mistakes.

The Merseyside document states: 'Slump properly refers to the trough phase of the relatively short-term economic cycle when there is an absolute fall in production and trade.' What do we read in an article in Militant International Review [September/October 1993], severely criticised by Merseyside in their document, but the following: 'Slump properly refers to the trough phase of the relatively short-term economic cycle, when there is an absolute fall in production.' They then elaborate their definition of 'recessions' as being an 'absolute decline in production over three successive quarters'.

But the British Treasury's definition of a recession is a decline over two, not three, successive quarters.

We mention this not to score points, but to show the light-minded approach of Merseyside and the completely dishonest method which they employ in criticising the analysis of the CWI and Socialist Party.

The comrades take quotes, completely torn out of historical context, in order to fit in with their theses that we have been predicting almost every month, let alone every year, an impending recession or slump which is allegedly 'just round the corner'.

This method is rooted in the complete incapacity to understand the broad character of the phase through which capitalism is moving at the present time.

They attempt to show contradictions where, in reality, they do not exist. Look, they say, the Socialist Party refers to a depressionary period dating from 1974-75 and, at the same time, their document speaks of a certain growth, or boom, or even a 'cyclical growth'.

For Marxists there are 'cycles' and 'cycles'. The cycle in one period is entirely different in its strength, as a measure of the health of capitalism, than it is in another.

In a sense it is like the heartbeat of a human being. In the full bloom of youth capitalism's heartbeat was strong,

the 'booms' were greater than the occasional interruptions in production in the form of 'crises'. But the period which followed the first world war and the Russian Revolution was characterised by a much more weakened 'heartbeat' of capitalism.

The cycles were shorter, the crises were more often and deeper than the small ephemeral growth in production.

A period of 'depression' does not eliminate the cycle of growth and crisis. But a depression is marked by a general stagnation, a very feeble growth in productivity and the productive forces.

Notwithstanding any 'booms', there is no structural growth, nor broad social and political stability, in the booms of the late 1970s, of the late 1980s and 1990s, the situation that has marked out capitalism since 1974/75, even in its citadels of the US and of Europe, is the stubborn existence of mass unemployment (which has lasted in the US right up until the recent period) and is now beginning to affect Japan.

Rather than a concrete analysis of the present phase of capitalism and the different conjunctures what we get from the Merseyside ex-comrades are hints and innuendo.

For instance, reference is made to Lenin, who spent, 'a great deal of his time analysing the nature of imperialism, a higher stage of capitalism'.

This is linked to the 'nature of capitalist investment, the changing nature of social relations, new technologies, including the techniques of social and political manipulation and control'.

What does all this mean? In some of Lenin's works on imperialism the term 'higher stage' was used in the title.

But it is a mistake to speak of Lenin analysing imperialism as a 'higher stage' of capitalism, a further stage.

This was Kautsky's idea, in reality, of a 'super-imperialism' -a higher stage of capitalism. For both Lenin and Trotsky, the beginning of the First World War represented the end of capitalism's 'relatively progressive' phase.

Merseyside also gives the impression that the differences expressed in the National Committee of the Socialist Party, were mostly to do with the length of the present cycle, particularly as far as the US is concerned.


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