Seminar: Global Economic Crisis and Revolts and Protests of the Masses (Delhi, Dec 2)

on 2nd December 2012
Time : 10 AM to 8 PM

at Gandhi Peace Foundation, Deen Dayal Upadhya Marg, near ITO, New Delhi

The last five years have seen a Global Economic Crisis which is most severe in its scope and depth since the Great Depression. While the United States’ economic situation enters this prolonged slump, the European Union project flounders on the shoals of debt and various kinds of ‘austerity measures’. The turmoil still goes on, notwithstanding the over thirty trillion dollars that have been spent on various recovery efforts. While the ruling class tries to pass the burden of the crisis on the working class, the toiling masses are rising in revolt. 2011 and 2012 have witnessed increasingly widespread eruption of mass rage, particularly across Europe, US and even toppling long standing dictatorial regimes in West Asia/North Africa.

It is of immense importance in this situation, especially for those placed in and concerned with the revolutionary transformation of society, to ponder over the emerging political economic scenario, so as to equip ourselves to face the challenges of these tumultuous insurgent times.

Towards this, Inqlabi Mazdoor Kendra and Krantikari Naujawan Sabha are jointly organizing a day-long seminar on the implications and import of the Global Economic Crisis and the nature, constraints and possibilities of these mass popular struggles. A number of political organisations and individuals reflecting different political tendencies in the left revolutionary camp in India will participate and discuss their points of view, to deepen the understanding of these recent mass popular movements across the world, and sharpening our own practices while we do so.

Download the Concept Note

The Faltering Miracle Story of India

Anjan Chakrabarti

Last time Indian economy ran into a major systemic crisis was in the late 1980s; it was a result of and also the final nail in the coffin of state sponsored planned economy. Along with the collapse of Soviet style command economies, it signalled the unsustainability of economic system built on absolute or near total control of state over the economy. That crisis helped spread the philosophy of neoliberalism in India which led to this lesson from the experience of centralized planning: for the goals of rapid economic growth and poverty reduction, state control over the market economy does not work and hence should be abandoned. Since then, structural adjustment program evolved in a gradual process of two decades, giving rise to a competitive market economy that is integrated into the global economy; as against the privileged position of planners, this new paradigm also protracted the supremacy of the mass of homoeconomicus (optimizing economic man, whether as consumers or producers) whose decision making transpiring in and through this global competitive market regime are supposed to generate the economy wide outcomes that are efficient. A connection between macroeconomics and microeconomics is thus made whereby the macroeconomic outcomes were seen as result of microeconomic behaviour in a competitive market economy1; it was believed that such a connection will produce high growth rate regime, stable and reasonable inflation and rapid employment in the industrialized sector (inclusive of manufacturing and services). Among the microeconomic decision makers were, of course, the global capitalist enterprises which, like the homoeconomicus as consumers, were taken as privileged for they were seen as essential instruments of generating high value and hence growth. Evidently, this competitive market economy helped create and facilitate global capitalism in the Indian economy. It is to this structural change that we move next.

Problem over Sharing the Indian Growth Miracle

As it has evolved gradually through an assortment of reforms, this paradigm shift produced a structural remapping of Indian economy taking the shape of circuits-camp of global capital qua global capitalism and its outside world of the third2. This changing map of Indian economy was driven by, among other things, the primacy accorded to global capitalist performance, appropriation and distribution of surplus which, via high growth rate, resulted in the expansion of the circuits-camp of global capitalism; this expansion, not surprisingly, meant a war on, or primitive accumulation of, world of the third3. In other words, process of primitive accumulation ensured that growth has been exclusionary (that is, devoid of trickle down effects), where the exclusion has taken two forms: one, by excluding a vast section of the population from the benefits of rising income growth, a phenomenon symbolized by worsening Gini coefficient, and two, further exacerbating existing social inequities (based on caste, ethnicity, gender, etc.). In fact, the dual phenomena of income equality and social inequity compensated, complemented and reinforced one another to exclude a large section of Indian population (residing in the margins of the circuits-camp of global capital and world of the third) from the benefits of economic growth; while due to measurement problems there is some controversy over the exact trend of income poverty, there is a strong indication that non-income factors of poverty (captured by the statistics of malnutrition, health, education, etc.) may have stagnated or worsened. The overall picture is that of a country of increased prosperity (concentrated in the hub of the circuits-camp of global capital) but growing divide as well.

The event of exclusionary growth was acknowledged and internalized by the policy circle and many economists after the disaster of ‘Shining India’ in the 2004 elections; it was agreed that exclusionary growth must be tempered by an attempt to include the left out population through redistribution of benefits of economic growth; inclusive development aspires to become the new national trope supposedly uniting Indians, notwithstanding their other differences, into a single national project of development in which all are participants and beneficiaries4. Rather than being in conflict, this imagery sees growth and redistribution as complementarity; high growth (that is, a bigger pie) sustains greater redistribution and greater redistribution in the form of more productive investment among the poor is supposed to secure and propel further growth. Global capitalism (circuits-camp of global capital), working via the competitive market economy, is thus not only good in itself because it rapidly expands growth. It also has instrumental value by delivering direct benefits of growth (the trickle-down effect) and indirect benefit of growth (through redistribution) to reduce poverty; the former will function through market (which, in Indian case, even the policy makers agree is weak) and latter through the intervention of the state. At another level we can interpret this imagery and its underlying policy paradigm as trying to combine the capitalist performance, appropriation, distribution and surplus in a global setting that is fundamentally private-centric and the domain of redistribution which is fundamentally state-centric. Thus, Indian state now encapsulates two rationales, one liberal (minimal interference in the competitive market economy, that is, in the circuits-camp of global capital) and the other dirigiste (directly intervening and controlling the redistribution process to world of the third); it combines these to secure the modernization process via the expansion of global capitalism (or, circuits-camp of global capital). This is projected as a truly win-win situation which is a result of the gift of globalization and the benefits derived from it in the form of enhanced wealth creation that the integration of Indian economy into a globalized world has enabled. Not only has the Indian growth miracle permanently arrived, but inclusive development enables the entire country – all population – to share and be a partner in this miracle. It is of course another matter that rulers at different times spare no effort in producing and disseminating pictures (in which nothing can seemingly go wrong) that in the end turn out to be delusional; previously, the picture of ‘Garibi Hatao’ and ‘Shining India’ were two such pictures. As in all case of delusional pictures that promise everything to everybody, this imagery is now in a state of crisis in more than one ways. We discuss one axis of that crisis here.

Microfoundation of Macroeconomics: A recipe to end depression or to begin one

Critical to this imagery is the assumption of high growth; an assumption bolstered no doubt by the actual realization of high growth rate regime which in turn is traced to the creation of a competitive market economy. This in turn has led to a sacrosanct belief and robust defence of the competitive market economy as against state intervention/control, and global capitalism as against national capitalism. However, since 2007, that growth story is in serious danger which in turn forces our attention to areas taken thus far as immune from discussion. In fact, Indian economy’s trouble expands well beyond the faltering growth story. In the last five years, Indian economy has slowly moved into a terrain of a deep crisis, perhaps in the same scale as the earlier one; in the sense that it is threatening to take the semblance of a systemic crisis. This time though, with a drastically truncated role of state vis a vis market and weak trade union opposition, the blame for this crisis can only fall on the combined effects of neoliberal globalization and global capitalism or the mechanism of global capitalist centred production, distribution and consumption of goods and services functioning through the conduit of competitive market economy. Is it then the case that the source of the systemic crisis resides in the illness of competitive market economy? This though is not the accepted position; nor is it yet the point of debate in India.

The Prime Minister Manmohan Singh insists that Indian economy’s fundamentals are robust, and hence its growth story, while faltering in the short run, is protected in the long run. If we accept Keynes’ dictum that ‘in the long run we are all dead’ (by the way, five years is not a very short period either) which in no small part is substantiated by the overdetermined and contradictory processes pulling and pushing the Indian economy into who knows where, then a question crops up. What is meant by saying that the fundamentals of the economy are strong?

Now, surely the Prime Minister is not referring to the macroeconomic fundamentals. A cursory glance at the basic indicators tells a sorry story in that front: growth rate is falling, inflation rate is resiliently high (transpiring, says RBI, mostly from supply side factors which keeps accumulating the problem), falling private saving and investment, growing current account deficit driven mainly by worsening trade deficit, pressure on capital account, declining rupee value and at times volatile exchange rate movement, and increasing fiscal deficit. This is indeed a case of fundamentals gone haywire and, as we are witness to, seem to be resiliently invariant to policy changes (pertaining to fiscal, monetary and exchange rate regimes), that are transpiring rapidly, being fired from all possible directions; this trouble is in fact finding further fodder through the global inter-linkages that is exporting the global problems into India in plentiful forms (the deleterious effects from Europe being the latest addition) thereby aggravating an already difficult situation. The trouble is not merely that the economy is faltering, but that the process is transpiring in a dynamic environment that is private (competitive market economy) and global, in which many processes/variables are not under the control of the policy makers if they are at all known to them in the first place. So much has been talked about the benefits India has garnered from its integration into the global economy; our mainstream friends would like us to be held captive by that picture. Yet, the last five years have shown that there is a cost of this integration too which now can hardly be left unquestioned. A lesson: there is no win-win harvesting from globalization. Like all other entities, the process of globalization is beset with overdetermination and contradiction, throwing up unpredictable outcomes and harbouring unknown possibilities, and for a competitive market economy integrated into a globalized world thus suggests the existence and the need to not only accept the possibility of business cycles, but also of breakdowns.5

If not macroeconomics, it then appeals to reason that the Prime Minister must be referring to the strong fundamentals pertaining to microeconomic environment; this can only mean the competitive market economy materializing from the liberalization policies of the last two decades. The suggestion here is that creating such an economy has succeeded in producing a level effect meaning that the minimum bar on the growth rate has been permanently raised as compared to that of the planning era. As a justification of this position, the high growth rate in the previous decade is presented as a proof. If this is accepted then it follows that the neoliberal policies by creating this competitive market economy have done a service to India. Because of the level of high growth rate, India stands a better chance not only to become richer but also reduce its poverty sharply.6 But then, if we are to accept this, how do we reconcile a sound microeconomic environment with a disturbing macroeconomic picture? How could the two set of fundamentals be moving in opposite directions? Can they in the first place do so? This leads to a deeper issue as the following argues. Let us begin by positing the position of neoliberal economics.

That sound microeconomic picture can co-exist with a systemic failure at the macro level is contrary to the neoliberal dictum which theorizes a picture of macro economy emanating from microeconomics; this is now the consensus of mainstream neo-classical economics. In addition to this frame as being methodologically robust in the sense of capturing the concrete reality, it is further held that a competitive market economy functioning with a supporting but non-intervening state7 will produce better macroeconomic outcomes than otherwise. And, to cap it all, such an economic system rules out systemic failures such as depression; any state interference here will produce an inferior outcome or worse; the role of state is only to ensure that competitive market economy is created, facilitated and secured from outside interference (such as anti-competitive practices, trade union activities, expropriation, etc.) and its own discretionary behaviour (following rules is better than discretionary policies). The confidence entrusted in this new paradigm can be gauged from the following quote in a Nobel Prize acceptable speech by Robert Lucas.

Macroeconomics was born as a distinct field in the 1940’s, as part of the intellectual response to the Great Depression. The term then referred to the body of knowledge and expertise that we hoped would prevent the recurrence of that economic disaster. My thesis in this lecture is that macroeconomics in this original sense has succeeded: Its central problem of depression prevention has been solved, for all practical purposes, and has in fact been solved for many decades. There remain important gains in welfare from better fiscal policies, but I argue that these are gains from providing people with better incentives to work and save, not from better fine-tuning of spending flows. Taking U.S. performance over the past 50 years as a benchmark, the potential for welfare gains from between long-run, supply-side policies exceeds by far the potential from further improvements in short-run demand management. (Robert E. Lucas, JR. 2003)

Coming from arguably the chief architect of modern macroeconomics and the economist principally responsible for demolishing Keynesian macroeconomics, the claim that depression – the term mainstream economics uses to signify economic breakdown as opposed to business cycle or fluctuations around trend which is regular – is over was a colossal claim8; colossal but also one which fell flat with the appearance of the global economic crisis. It showed that macroeconomics has still not solved its self-proclaimed central problem of depression and by corollary that what some such as Paul Krugman calls the ‘voodoo’ economics of supply-side is, to put it mildly, deeply problematical. Paraphrasing Lucas from our vantage point it appears that Marx’s observation of capitalist economic system containing the seeds of its breakdown was true in 1940s as it is now. The trouble is that the ‘voodoo’ economics continue to be the dominant economics, whereby its influence is deeply rooted in the currently policy making circles; even as depression can no longer be denied, the theoretical consensus that had resulted from the anti-Keynesian revolution enacted by supply side macroeconomics continue to hold considerable sway. And this theoretical consensus presents a deeper trouble. It lies in the inherent claim that a global capitalist regime under the conditions of free agents functioning in a competitive market economy with minimal state interference will lead to the disappearance of systemic failure such as that epitomized by depression.

If evidence is any proof (and economists revel in it), then we can conclude that there must be something fundamentally wrong with the axiom of Cartesian methodological individualism in a competitive market economy producing a depression free system. This hypothesis evidently rules out any autonomy to the economic structure which is specified in neoclassical economics as general equilibrium economy. If autonomy of structure is granted then that could carry the possibility of effects and outcomes irreducible exclusively to the optimizing behaviour of the agents interacting through market.9 However, unless we agree that this autonomy exists, it becomes difficult to locate and explain the appearance of the current economic crisis that is now global. That being the case, one of the central hypotheses of neoliberal economics – if individuals are free decision-makers, markets are self-regulating and hence sufficient for the system – becomes moot. Markets do have unique features and effects, but to enable a depression free economy is certainly not its forte. In short, the framework of neo-liberalism or its economic discipline of neoclassical economics cannot explain systemic collapse. In contrast, Keynes and Marx, in their own different ways, insisted on the relative autonomy of the structure, a relative autonomy that can be traced to the structure and, at times, the non-optimizing behaviour of the agents. It has also been suggested by others that parts do not add up to the whole; that the whole also needs to be specified and analysed in terms of its unique features and effects.10 This is not to say that individual decisions and market do not influence the structure (we believe that they certain do), but that structure cannot be seen as mere sum total of individual decisions.

If, in contrast, we accept that indeed microeconomic foundations produce macro economy or even go with our milder proposition that microeconomics do partially, but not totally, influence macroeconomics, then one must confer some quarter of blame (and if we are to follow the framework of neoclassical economics) to the kind of basic economy that constitutes microeconomics. Merely blaming the Indian economic crisis on the global economic crisis (a common refrain among Indian policy makers now) sidesteps the issue we are raising here.11 Since the 1980s, the neo-liberalization of global economy has produced a transformation towards a competitive market economy, a move that was propelled by developed countries (Harvey 2007). But it is precisely in the latter that the globalness of the current crisis originated and spread.12 If indeed we accept that macroeconomic outcomes are a result of agents’ decision-action in a competitive market economy, then surely it is that economy which must be held accountable for the outcome. In other words, instead of the fundamentals of microeconomics being good, they must be seen as deeply problematical and could be held as containing seeds of instability and destruction at a broader level.

The above underscores that microeconomic environment constituted by the competitive market economy populated by free agents can and does produce economic and social disasters, as it has; far from being self-regulating, markets may produce, as it has, self-annihilation leaving people, regions and even nations struggling to survive. Therefore, not only do we get the insufficiency of the neoliberal qua neoclassical framework in locating and explaining depression (as we argued earlier), but we additionally also find its chief logical conduit of explaining the functioning of economic system faltering. Surely, there is something wrong with this microeconomic environment which in turn calls for a rethinking of the basic economic system itself, the way production, distribution and consumption of goods and services materialize under capitalist form. One the other hand, if one still maintains that microeconomic fundamentals are sound, then one will have to concede that there is a dissonance between micro and macro, that macro economy has relative autonomy including possibilities of structural failure. This realization entails the role of state including active policy ones pertaining to control of the economy, if prevention of economic crisis or disaster (or, what Lucas called depression) is considered as desirable objective. Perhaps, the current economic crisis in India shows that both the aspects are true: there is a problem with the basic economic system produced by global capitalism functioning through a competitive market economy and that a role of the state as an active and intervening player in the economy is necessitated. The importance of the first was argued for by Marx whereby he related the macroeconomic crisis (the crisis of capitalism as such) to the contradiction, convulsion and failure of the competitive market economy functioning through capitalist organization of surplus and suggested the abortion of capitalism as a recipe for resolving the macro crisis. He thus favoured a systemic transformation. The second issue was taken up by Keynes when he suggested the role of the state in overcoming recession and ensuring smoothening of business cycles by actively intervening in and influencing the market economic outcomes, a point we saw was fiercely opposed by Lucas and his acolytes. This also shows that while both Marx and Keynes appreciated the relation between macro and micro (albeit in very different ways), Marx argued that systemic instability and disaster cannot be averted except by replacing capitalism as a system and Keynes suggested that the same can be averted, that is, capitalism saved with the active role of state preventing business cycles from turning into possible depression. Not surprising, neoliberalism as an economic-politico philosophy is not just hostile to Marxism, but also to Keynesianism (even as Keynes’ objective was to save capitalism).  Leaving aside their differences, it is perhaps more pertinent to realize that the current economic crisis has demonstrated that the suggestions of both Marx and Keynes, in tandem, need to be taken seriously. Notwithstanding the Prime Minister’s allusion to strong microeconomic fundamentals which is tantamount to taking the competitive market economy as sacrosanct that in turn demands a thin role of state, it is perhaps time to seriously question this conjecture and begin a debate on both the nature of economic system and state; to debate them not distinctly, but in tandem as in overdetermination. It is my position that in the current climate of India, this is not happening, either from the Right or Left.


Policy paralysis appears in a different way here. The policy paralysis is a paralysis of thinking that shuts out any solution other than what is the ‘consensus.’ Competitive market economy with capitalist appropriation and distribution of surplus in a global setting is the consensus in this historical episode that, however, also continues to burden us with a growing set of changes or ‘reforms’ that deepen the very processes and system which are responsible for this crisis. How and in what manner these so-called ‘reforms’ are going to put the Indian economy back on track are issues not touched upon? How they are going to put some sanity into our present unstable and volatile systemic regime is left untouched? Indeed, in a scenario where the malaise is systemic encompassing both the micro and macro, it is hardly surprisingly that the policies are not working. The debate from the radical side is disturbing too, being stuck on the need for the enhanced role of state which is, at times, combined with the nationalist trope of self-reliance. There is hardly any questioning of, and debate on, the issue of systemic transformation and the politics of producing it. Well, we have moved from a state sponsored development paradigm to a private market economy driven paradigm, and found both to be wanting. Changing the role of state (say moving towards a strong state) without challenging the economic system is unsustainable as history has shown us; in fact, both must be addressed together. To put it somewhat differently, both the micro and macro, in tandem, must be made the object of questioning and transformation.

Anjan Chakrabarti is Professor of Economics, Calcutta University. He can be reached at



Chakrabarti, A and Dhar, A. 2009. Dislocation and Resettlement in Development: From Third World to World of the Third. Routledge: London.

Chakrabarti, A and A.K. Dhar. 2012. “Gravel in the Shoe: Nationalism and World of the Third,” Rethinking Marxism, 24 (1).

Chakrabarti A, A.K. Dhar and Cullenberg, S. 2012. Global Capitalism and World of the Third. World View Press: New Delhi.

Harvey, D. 2007. A Brief History of Neoliberalism. Oxford University Press, USA

Lucas, Robert, JR. 1976. “Econometric policy evaluation: A critique”. Carnegie-Rochester Conference Series on Public Policy 1 (1): 19-46.

Lucas, Robert, JR. 2003. “Macroeconomics Priorities”, American Economic Review, Vol. 93, No.1.

Resnick, S. and R, Wolff. 2010. “The Economic Crisis: A Marxian Interpretation”, Rethinking Marxism, 22(2).



[1] Under mainstream economics, Microeconomics is the study of choices of individual decision-makers (not matter how large) to fulfil their wants (satisfaction or profit) in the face of scarcity of resources, while Macroeconomics is the study of economic aggregates intending to capture the overall health and behaviour of entire economy (no matter how small). In the former, the emphasis moves to resource allocation and income distribution which in case of the latter is on economic growth, inflation and unemployment.

[2] Our usage of the terms such as circuits or camp of global capital and world of the third follows the theoretical insights of Chakrabarti, Dhar and Cullenberg (2012) and Chakrabarti and Dhar (2009, 2012) who produce a unique frame to analyse the historical phenomenon of modernization in the Southern setting. In the context of our current issue, these terms can be roughly put in the following way. Following liberalization policies in India, spurred by its wide industrial base (paradoxically, a gift of its previous import substitution policy) and fairly advanced higher education system (also paradoxically courtesy of its erstwhile planning system), Indian industries, particularly the big business houses, gradually adjusted to the rules and demands of global competition and, along with new enterprises, mutated into global capitalist enterprises. Through outsourcing and sub-contracting, they forged relation with local enterprises procreating and circumscribed within a nation’s border (the local market) and with enterprises outside the nation’s border (the global market); it is the symbiotic relation through local-global market that allowed the formation of circuits. Specifically, via the local-global market, global capital was linked to the ancillary local enterprises (big and small scale, local capitalist and non-capitalist) and other institutions (banking enterprise, trading enterprise, transport enterprise, etc.) and together they formed the circuits of global capital. Rapid growth of Indian economy propelled by the expansion of the circuits of global capital (inclusive of manufacturing and services) is feeding an explosive process of urbanization, and producing along the way a culture of individualization and consumerism. It is being complemented by new-fangled notions of success, entrepreneurship and consumerism, of ways of judging performance and conduct, of changing gender and caste relations, customs and mores, etc. Resultantly, what appears is a social cluster of practices, activities and relationships capturing literally the production of an encampment: we name it as the camp of global capital. This camp, especially its hub, is becoming the nursery ground of a new nationalist culture bent on dismantling extant meanings of good life in India and replacing it with the tooth and claw model that emphasizes competition, possession and accumulation. We refer to circuits-camp of global capital as global capitalism. Evidently, in the formation, global capital is taken as the privileged centre.

World of the third, on the other hand, is conceptualized as an overdetermined space of capitalist and non-capitalist class processes that procreate outside the circuits of global capital. A large number of these ‘non-capitalist’ class processes are independent, feudal, communitic, slave and communist as also capitalist class enterprises of simple reproduction type. World of the third is thus a space that is conceptually never part of global negotiations; it is outside, if we may borrow a term from Gayatri Spivak Chakravarty, the Empire-Nation exchange, which refers to exchanges within the local-global market connected to the circuits of global capital. In short, world of the third embrace an overdetermined cluster of class and non-class processes procreating outside the circuits of global capital and are knotted to markets as well as to non-market exchanges. Social cluster of practices, activities and relationships connected to the language-experience-logic-ethos of this space constitutes the camp of world of the third. It may be recalled that what for us is world of the third is for modernist discourses (like colonialism, development, and so on) third world: this is the Orientalist moment through which the modern emerges as the privileged centre. Third world supposedly contains inefficient practices and activities; as nurturing excess labour, labour that is presumed to be unproductive and hence a burden on society; as harbouring a large reserve army of the unemployed/underemployed. In short, it is re-presented as a figure of lack. The foregrounding of category of third world then provides an angularity to world of the third thereby foreclosing its language-experience-ethos-logic and discursively producing a deformation of its practices, activities and relationships. One does not get to appreciate the possibility of an outside to the circuits of global capital; one thus loses sight of the world of the third. Instead, what awaits us is a devalued space, a lacking underside – third world – that needs to be transgressed–transformed–mutilated-included. Thus, world of the third is brought into the discursive register and worked upon, but without taking cognizance of its language-logic-experience-ethos. Critically, this foreclosure of world of the third through the foregrounding of third world (or, by substitute signifiers such as social capital, community, etc.) helps secure and facilitate the hegemony of (global) capital and modernity over world of the third. Taken together, a knowledge formation emerges in which global capital and modern emerges as the privileged centres. Chakrabarti et al unravels and critiques this knowledge formation and through the return of the foreclosed world of the third lays down the contour of a contesting way to theorize the Southern context.     

[3] Chakrabarti and Dhar (2009).

[4] Chakrabarti and Dhar (2012).

[5] On being quizzed as to whether India’s integration into global economy has made it more prone to shocks and instabilities, a friend of mine holding a senior position in a financial institution suggested a few years back that one reason why competitive market economy is good is because it enhances the ability of the economic system to absorb and internalize shocks; this is by no means a very uncommon refrain, at least till a few years ago. In short, breakdowns can never happen. I wonder what he has to say now.

[6] Of course, as we have seen, the question of ‘who is exactly becoming richer or becoming richer much faster than others’ has raised a few hackles and is on its own a question of some importance.

[7] Unlike a robust state (of command economies or welfare capitalism) which believes in ‘more governance is good governance’, neoliberalism believes in, at the level of political philosophy at least, ‘less governance is good governance.’ Of course, given the astonishing quantum of plunder, violence and destruction produced in the name of ‘freedom’ that is neoliberal in nature, one must take this refrain with a grain of salt. But then we are discussing its logical conduit here.

[8] It is notable that macroeconomics not only originated in the West, but its central problem is fundamentally that of the modern market economy as well. USA and Europe have been the theatre of macroeconomics and developments there influenced the macroeconomics discipline and the policy paradigm of state not only in Europe but all over the world. In this sense, macroeconomics has been imperial in nature or should we say it is an indispensable component of any imperialist policies bent on modernization. Interestingly, three episodes of systemic breakdown or depression produced three turns in macroeconomics in the West that in turn enforced a switch in macroeconomic understanding and management across the world. The first was the depression of the 1930s that saw the collapse of the classical paradigm (emphasizing the dichotomy between nominal variables such as money and real variables such as output) which disparaged state intervention; this collapse saw the concurrent rise of Keynesianism (emphasizing that the classical dichotomy is wrong, at least in the short run) which maintained that state intervention and active stabilization policy is necessary to prevent depression and this could be done since there is a tradeoff between inflation rate and unemployment and between unemployment and output. The second episode of depression was marked by stagflation in USA (high inflation and stagnating output) in the late 1960s which even in the face of active stabilization policy to exploit the mentioned trade off failed to get the economy out of depression; this failure of stabilization policies saw the collapse of Keynesian economics and the rise of supply side or new classical economics that once again reiterated the classical dichotomy and the inherent inability of the state to improve welfare in the face of active and enterprising individuals. It was shown that not only did the state led stabilization policy fail to improve the welfare, but also that such interventions created inefficiencies of all kinds. Important in this attack was the paper of Lucas (1976) that showed that there is something methodologically wrong in the way Keynesianism poses its own macroeconomic structure; it does so, he claims, by treating the individuals as docile, passive who would not react to changes in the stabilization policies, precisely what the liberals have condemned as contravening the principle of freedom. Arguing that it is fundamentally wrong to treat the individuals as bereft of agency, he showed that with the introduction of stabilization policies, rather than being passive to the changes brought about by the state, the agents will internalize that information and change their behaviour which in totally will produce an outcome very different from (and inferior to) the case in which it is presumed (as under Keynesianism) that individuals behaviour will remain invariant to change in policies. The Keynesians, contrary to what the liberals would emphasize, took the structure as primary and tried to fit in the individual to this structure (the attempt of what came to known as Keynesian-neoclassical synthesis) when the liberal economists such as Lucas and Edward Prescott were emphasizing the method to be the other way round: individual was to be the primary unit from which the structure is to be derived; not surprisingly then, for the neoliberal economists (the new classical/real business cycle school) the neoclassical micro structure became that fundamental ground and (macro)economy was the derived general equilibrium structure over which macroeconomic analysis and policies are to be examined. The invariance principle and inability to posit the microfoundation of macroeconomics constituted the basis on which Keynesian macroeconomics was attacked and the stabilization role of state found wanting; the macroeconomics that developed through this attack and reconstruction via microfoundation become the missile head of neoliberalism in the field of economics and policy making. The third episode of systemic crisis or depression is the global economic crash since 2007 which has turned the table on neoliberal macroeconomics which has claimed that it has solved the problem of depression by legitimizing the creation of a competitive market economy made of private players and in which stabilization policy of state is not encouraged; a systemic crisis that rose not because of state or any third party intervention (since, in the last three decades they were heavily discouraged) but through the very mechanics of the private competitive market economy certainly did not do the reputation of neoliberal macroeconomics any good. What will come out of this crisis in the field of macroeconomics is yet to be seen though no doubt it has exploded the myth of the fundamental proposition of neo-liberal macroeconomics. As it stands now, macroeconomics lie in tatters.

[9] In modern macroeconomics, general equilibrium is after all the point of reference and departure (even in case of New Keynesian economics where markets are shown to be failing to clear as a result of the behaviour of agents in a free market environment).

[10] Micro and Macro divisions are typical of mainstream economics and not of Marx or Marxism. Accepting the importance of not reading or writing on Marx by reducing him to this structure, in this presentation at least, we invoke Marx with reference to this division of micro and macro for the sake of organization that includes an encounter with neoclassical economics. Rather than reducing Marx to neoclassical economics, it is to highlight the uniqueness of Marx’s contribution.

[11] This comes on top of the fact that this blaming is hardly stopping the policy makers from taking ‘reform’ policies that deepen India’s integration into the global economy and hence, by their own confession, must be taken as increasing the possibilities of transporting global crisis into Indian economy. In other words, the ammunition that they are supplying with the intent to overcome the crisis may end up deepening it. At least, the policy makers need to spell out clearly as to why this would not happen.

[12] For a superb analysis of US economic crisis, see Resnick and Wolff (2010).

Greece: Vote for Antarsya and a Transitional Programme

Dave Hill

In this paper I argue that Antarsya should not join Syriza in an electoral coalition or joint list, but that Antarsya should fight the elections and continue to stick with and advance its Transitional Programme.

Antarsya should announce, in advance of the June 17 parliamentary elections that it will support a Left government and hold it to its programme, while pushing for a more socialist programme such as repudiation (rather than negotiation) of the debt, nationalisations of privatised industries and the banks.

For Antarsya to continue with its Transitional Programme.

1. Programme and Strategy

The type of Programme demand by revolutionary Marxists and by Parties (such as Socialist Resistance in Britain, and OKDE in Greece) within the Fourth International is related to Strategy, i.e., whether to support the
(1) Broad Party concept strategy or
(2) the Revolutionary Unity strategy or (I guess)
(3) a revolutionary sectarian/ us alone policy

The implications can be seen in, for example
France (whether in the first round of the 2012 Presidential elections to support the (left social democrat) Front de la Gauche of Jean-Luc Melenchon, or whether to support the NPA)

The UK (what to do about the Manchester Central and other parliamentary by-elections) and more widely, to work in broad parties such as Respect, to work in broader coalitions such as the Coalition of Resistance (with, for example, the Green Left, other Greens?, Left Labour MPs and supporters), or whether to work with avowedly Marxist parties and individuals in organisations such as TUSC

In Greece, whether to support Syriza or Antarsya in the upcoming elections of 17 June and what advice we should give to OKDE, the Greek section of the FI, regarding whether Antarsya should (i) fight the elections alone, or (ii) as part of Syriza, or (iii) alone but saying we will support (and join? or support and not join) a Syriza led government (which, if it happens, will likely be in government coalition with the Democratic Left (of Fotis Kouvelis).

2. Minimum, Maximum and Transitional Demands (how to get from minimum to maximum)

The Death Agony of Capitalism: and the Tasks of the Fourth International

The Mobilization of the Masses around Transitional Demands to Prepare the Conquest of Power (1938). Trotsky explains,

The strategic task of the next period – prerevolutionary period of agitation, propaganda and organization – consists in overcoming the contradiction between the maturity of the objective revolutionary conditions and the immaturity of the proletariat and its vanguard (the confusion and disappointment of the older generation, the inexperience of the younger generation. It is necessary to help the masses in the process of the daily struggle to find the bridge between present demand and the socialist program of the revolution. This bridge should include a system of transitional demands, stemming from today’s conditions and from today’s consciousness of wide layers of the working class and unalterably leading to one final conclusion: the conquest of power by the proletariat.

Classical Social Democracy, functioning in an epoch of progressive capitalism, divided its program into two parts independent of each other: the minimum program which limited itself to reforms within the framework of bourgeois society, and the maximum program which promised substitution of socialism for capitalism in the indefinite future. Between the minimum and the maximum program no bridge existed. And indeed Social Democracy has no need of such a bridge, since the word socialism is used only for holiday speechifying. The Comintern has set out to follow the path of Social Democracy in an epoch of decaying capitalism: when, in general, there can be no discussion of systematic social reforms and the raising of he masses’ living standards; when every serious demand of the proletariat and even every serious demand of the petty bourgeoisie inevitably reaches beyond the limits of capitalist property relations and of the bourgeois state.

The strategic task of the Fourth International lies not in reforming capitalism but in its overthrow. Its political aim is the conquest of power by the proletariat for the purpose of expropriating the bourgeoisie. However, the achievement of this strategic task is unthinkable without the most considered attention to all, even small and partial, questions of tactics. All sections of the proletariat, all its layers, occupations and groups should be drawn into the revolutionary movement. The present epoch is distinguished not for the fact that it frees the revolutionary party from day-to-day work but because it permits this work to be carried on indissolubly with the actual tasks of the revolution.

The Fourth International does not discard the program of the old “minimal” demands to the degree to which these have preserved at least part of their vital forcefulness. Indefatigably, it defends the democratic rights and social conquests of the workers. But it carries on this day-to-day work within the framework of the correct actual, that is, revolutionary perspective. Insofar as the old, partial, “minimal” demands of the masses clash with the destructive and degrading tendencies of decadent capitalism – and this occurs at each step – the Fourth International advances a system of transitional demands, the essence of which is contained in the fact that ever more openly and decisively they will be directed against the very bases of the bourgeois regime. The old “minimal program” is superseded by the transitional program, the task of which lies in systematic mobilization of the masses for the proletarian revolution.

Alistair Mitchell (1985) has a good enough summary of the three different types of programme

Marx and Engels didn’t just call for the introduction of a socialist society (the maximum programme) without charting the way of getting there. Neither did they merely advocate reforms which fell way short of breaking from capitalism (the minimum programme). The key to their method lies in the extract quoted above with its steps which are by themselves inadequate, but through the workers’ struggle for them lead to other attacks on capitalism. These further measures become possible and necessary as the workers gain in confidence and rally others to their side, learn the next steps required and challenge a weakened and retreating ruling class. The method of Marx and Engels is to connect the present situation and immediate aspirations of the proletariat with the task of the socialist revolution. The minimum and maximum programmes are linked in a transitional programme’.

As Wikipedia summarises,

It is necessary to help the masses in the process of the daily struggle to find the bridge between present demand and the socialist program of the revolution. This bridge should include a system of transitional demands, stemming from today’s conditions and from today’s consciousness of wide layers of the working class and unalterably leading to one final conclusion: the conquest of power by the proletariat.

Trotsky urges that transitional demands should include the call for the expropriation of various groups of capitalists – sometimes translated in modern terms into the nationalisation of various sectors – under the control and management of the workers. Transitional demands should include opposition to imperialist war. Such demands intend to challenge the capitalist class’s right to rule.

By fighting for these “transitional” demands, in the opinion of the Trotskyists, the workers will come to realize that capitalism cannot meet their needs, and they will then embrace the full program of the Fourth International.

3. Antarsya, Syriza and Greece and the elections of 17 June 2012

Now let’s apply this to Greece

Syriza Programme following the May 6 elections (taken from the Coalition of resistance website, 9 May)

* The immediate cancellation of all impending measures that will impoverish Greeks further, such as cuts to pensions and salaries.

* The immediate cancellation of all impending measures that undermine fundamental workers’ rights, such as the abolition of collective labor agreements.

* The immediate abolition of a law granting MPs immunity from prosecution, reform of the electoral law and a general overhaul of the political system.

* An investigation into Greek banks, and the immediate publication of the audit performed on the Greek banking sector by BlackRock.

* The setting up of an international auditing committee to investigate the causes of Greece’s public deficit, with a moratorium on all debt servicing until the findings of the audit are published.

Or in the words of Andrew Burgin and Kate Hudson on the Socialist Unity website, 12 May,

• Cancelling the bailout terms, notably laws that further cut wages and pensions
• Scrapping laws that abolish workers’ rights, particularly a law abolishing collective labour agreements due to come into effect on 15 May
• Demanding proportional representation and the end to the 50 seat bonus to the first party
• Investigating Greece’s banking system which received almost 200bn euros of public money and posing the need for some kind of state control over the banks
• Setting up an international committee to find out the causes of Greece’s public deficit and putting on hold all debt servicing.

Analysis: What type of Programme is Syriza’s

I thought the 5 point plan put out for negotiation by Syriza serves well as a socialist minimum, defensive, programme.

In other countries such a plan would (currently, with existing states of political and class consciousness) be considered more than a minimum programme, but such is the state of political and class consciousness in Greece currently that this can be regarded as a minimum programme. However, it can also be analysed as a left social democratic programme, and this is my view of what it is. A huge advance on neoliberal, neo-conservative pro-austerity programmes of ND and PASOK for example, but Syriza says, essentially, overall… `no more cuts’… it does not say,` reverse the cuts! Restore the wages and pensions’.

The View of By Christos Kefalis, May 10, 2012 – Links International Journal of Socialist Renewal

SYRIZA aims to rescind the “Memorandum” and renegotiate the debt, which will include cancelling a large part of it as odious. It also demands a three-year suspension of debt obligations, which would provide important relief, if achieved. SYRIZA’s aims include nationalising a number of banks, heavier taxation of the rich and restoring the people’s living standards. SYRIZA leader Tsipras has proposed a five-point program which concretises this.

Paul Mason:

`When I interviewed a SYRIZA spokesman earlier this year I explored the problem of a far-left party, which is anti-NATO etc, taking power in a country whose riot police have been regularly clashing with that party’s youth since 2008. The message was that they would be purposefully limited in aim, and that the core of any programme would be a debtor-led partial default – that is, the suspension of interest payments on the remaining debt and a repudiation of the terms of both Troika-brokered bailouts. What SYRIZA shares with the Dem Left and PASOK it its commitment to the EU social model: they are left globalists’

… the resulting government may, in effect, be little more than a left-social democratic government, despite its symbology and the radicalism of some of its voters..

The Antarsya programme

The anti-capitalist Left, ANTARSYA, is the only tendency of the Left that openly called for an immediate annulment of debt payments and exit from the Eurozone (Sotiris)

1. Immediately terminate the loan agreement, any memoranda and all related measures.

2. Do not recognize the debt, debt cancellation and suspension of payments.

3. Break with the system and with the euro/EU.

4. Nationalize the banks and corporations without compensation under workers’ control.

5. Immediately increase wages and pensions! Cancel the poll tax and increase the taxation of capital.

6. Prohibit layoffs and fully protect the unemployed. Shorten working hours and reduce the retirement age.

7. Expropriate hundreds of closed factories and re-commission them controlled by the employees themselves.

8. Provide cheap and good quality food through agricultural cooperatives, poor and middle farmers—without middlemen and large producers.

9. The solution is a strong Left struggling for a break with the system and the anti-capitalist revolution!

The Antarsya statement continues

The parliamentary parties of the Left do not meet their historical responsibilities. SYRIZA suggests a “leftist government,” but does not dare to say anything against the euro and the EU. It is increasingly in search of “solutions” to the debt problem through agreements with the creditors! The Communist Party (KKE) now rejects the recognition of the debt and takes a stand against the EU position, but points to the metaphysical presence of “peoples’ power” that should come into existence through parliamentary channels and through the conquest of the parliamentary majority in the election. This party avoids any overt political conflict and still refuses to participate in a united front for a workers and popular uprising. Such an approach is a barrier to the struggles. Joint action is more necessary than ever!

What is needed is the mobilization and organization of goals and demands, put today on the agenda by reality itself (cancellation of debt, leaving the euro zone and the EU, nationalization and workers’ control). This can be achieved by a united front of all those who want a break with the system and revolution, by the escalation of the workers’ and popular uprising combined with strikes, occupations, demonstrations, also by the organization and coordination of struggles at the level of the rank and file on the basis of an anti-capitalist program. This is the way to achieve the power of working people, true democracy combined with a socialist and communist perspective.

This is the left ????RS?? is struggling to create. We are committed to ensuring that this left—one which will break with the system and aim for the insurrection, the anti-capitalist revolutionary left—will come out stronger from the national parliamentary elections.

In the elections we give our voice and support to ????RS??!

Analysis: What type of Programme is Antarsya’s

This is a revolutionary Marxist programme that would lead to the expropriation of Capital/ism and its replacement by a Socialist state. It can be regarded as a Transitional programme.

4. The Ways Forward for Antarsya: a) Support/ Coalition with/ Join in with Syriza/ Become, or at least Support, `the Broad’ (Left) Party

Socialist Resistance, together with Costas Lapavitsas, Andrew Burgin and Kate Hudson, various socialist and Marxist groups nationally and internationally (such as the ISO in the USA) and the SP in Britain argue for various versions of Left Unity. SR’s position (to be voted on at an NC meeting on 26 May 2012 (the fuller extract from the policy statement is below) states:

In fact the strategy of building broad parties (either anti-capitalist parties like Syriza or radical left reformist formations in other situations) capable of uniting the left and radical trade unions across the political spectrum, from revolutionary socialists to those who have not reached such conclusions, is designed for exactly this kind of situation – when no single current or tradition can meet the challenge alone.

Socialist Resistance in Britain:

In a Socialist Resistance Editorial statement of 13 May, SR stated,

We therefore make the strongest possible appeal to all sections of the Greek left to unite behind Syriza in the upcoming elections and to unite behind a Syriza-led anti-austerity government if it is elected. This is exactly the reason for building broad organisations like Syriza – in order to unite the working class in this kind of situation.

In a further statement, SR’s position is very clear, in its title for the statement: `Unite behind Syriza’s anti-austerity programme’

Editorial statement by Socialist Resistance, Britain

There is, however, a serious problem, in the face of another election, which cannot be avoided. That is the issue of the unity of the Greek left. Before the election Syriza was the only organisation to call for the most obvious thing – a united anti-austerity platform and for a united anti-austerity government if the left won. Now the situation is even worse. In the upcoming election both the KKE and Antarsya (though the KKE more stridently) have already said that they will not only stand their own candidates but will give no support to, or would ‘not prop up’ a Syriza-led government if it were elected! This, they say, is because Syriza’s platform is not a full revolutionary programme. But a more extensive programme is something that must be discussed and developed as the struggle advances and should not to be counterposed to the immediate needs of the struggle as it unfolds today.

This is a very dangerous situation. We could see an anti-austerity government either denied office – and the austerity continue with all its consequences – or opposed once taking office by other sections of the left! We therefore make the strongest possible appeal to all sections of the Greek left to unite behind Syriza in the upcoming elections and to unite behind a Syriza-led anti-austerity government if it is elected. This is exactly the reason for building broad organisations like Syriza – in order to unite the working class in this kind of situation.

The SR EC statement (sent to SR NC members, to be voted on as a statement of policyto be voted on at the SR National Council meeting of 26 May 2012) states

The most appalling sectarianism comes from the KKE, which, in pure third period style Stalinism, which declared Syriza not only to be reformist, but that reformists are the main enemy! Antarsya rejected the appeal in favour of a call for mass action against the cuts and declared that they would not ‘prop-up’ a Syriza led government! With the Greek SWP section the main force in Antarsya this approach is reflected in the SWP in Britain. An article by Alex Callinicos in SW has nothing to say about the governmental situation in Greece, or of left unity, but accuses Syriza of ambiguity, of refusing to break with social liberalism, and of seeking to contain the situation within the framework of capitalism. This he says, “underlines the necessity of building a revolutionary left that is part of this great movement sweeping Europe but maintains its own political identity”. We can agree with the last sentence but that must be as an active part of the Syriza coalition and with a united front method.

This is a dangerous situation. A victory for the left is not guaranteed, but we could see an anti-austerity government with a radical anti-capitalist action programme either denied office – and the austerity continue with all its consequences – or be opposed once taking office by other sections of the left! We therefore make the strongest possible appeal to all sections of the Greek left to unite behind Syriza in the upcoming elections and to unite behind a Syriza-led anti-austerity government if it is elected. Of course the movement must be vigilant, but in the concrete situation that exists in Greece today, building a broad anti capitalist organisation like Syriza – that can unite the working class – is what is needed, and what revolutionary Marxist currents should be engaged in.

We should call on the KKE and Antarsya to break from sectarianism to become part of such a movement and a possible left government. If Syriza carries out its programme, and there will be massive pressures against it doing this, it would be a true Workers Government, leading to the first major political battle in Europe against austerity and the capitalist crisis. The Marxist left should do everything in its power to ensure this succeeds, not stand aside in sectarian purity and isolation.

To conclude, the new elections, in which Syriza stands every chance of becoming the largest party, or winning, could lead to a coalition government of the anti-bailout, anti austerity forces. The task of revolutionaries is to fully support the formation of such a government, but with vigilance against any compromise on Syriza’s action programme. This is particularly important if the reformist Democratic Left holds the balance of power and according to opinion polls two thirds of Syriza’s voter in the first round were in favour of a political compromise to form a government. However it is important to recognise that Tsipras has shown no signs of any political compromise on Syriza’s programme. He states time and again that the “memorandum of understanding must be revoked.”

If at the end of this remarkable opportunity the Greek left and workers movement fails through internal divisions to form a government when the opportunity had been there and the right-wing take control as a result the organisations which opted for sectarian isolation will have a great deal to answer for, and not just in Greece. In fact the strategy of building broad parties (either anti-capitalist parties like Syriza or radical left reformist formations in other situations) capable of uniting the left and radical trade unions across the political spectrum, from revolutionary socialists to those who have not reached such conclusions, is designed for exactly this kind of situation – when no single current or tradition can meet the challenge alone. (my italics)

In this analysis of the Greek political situation and necessary strategy, SR stands alongside The Socialist Party/ Committee for a Workers’ International (or at least, its Greek section, Xekinima), which on 16 May stated:

In this situation, what should the Greek Left do? Xekinima welcomes Syriza’s public call for left unity. Syriza should open up and develop its structures as a broad left alliance, so that fresh layers of workers and youth can join and decide party policy democratically. Xekinima supports united action of the left parties ahead of the next elections and for working people to vote for Syriza.

This should be done concretely, with the convening of mass assemblies at local, workplace, regional and national levels to discuss and agree programme, demands and electoral tactics, to campaign for a left government and to strive to ensure that such a government pursues anti-austerity and pro-working class policies.

The communist party (KKE) and Antarsya (the Anti-capitalist Left Cooperation) both took a sectarian attitude before the last elections and rejected Syriza’s ‘left unity’ proposal, with the result that their votes remain stagnant. To the amazement of many millions of workers, the KKE leadership still continues to refuse to form a block with Syriza.

But under growing pressure from their rank and file, and the working class in general, a section of Antarsya has indicated that it is prepared to have joint collaboration with Syriza.

Michael Karadjis in an article for Links International Journal of Socialist Renewal on May 16 (republished by Socialist Resistance)made a clear call for a United Front, the article is entitled `Greece: SYRIZA, the Communist Party and the desperate need for a united front’

Karadjis concludes,

All the smaller parties of SYRIZA and Antarsya need to take the lead in ensuring continual mobilisation, alongside the ranks of Synaspismos and the KKE, as well as the trade unions and even the traditional base of PASOK, in demanding a left united front to smash the austerity as a minimum program and sustain such mobilisation through the intensification of the crisis that will inevitably result from the collapse of the Memorandum, the exit from the Eurozone and the cut-off of EU cash.

The KKE’s idea that it will gain from a “second wind” when the masses see the failure of SYRIZA is almost beyond comprehension in its sectarian reasoning. In a situation that is revolutionary, that is life and death for the masses, the nettle needs to be grasped. More likely a failure of the left to unite at such a crucial moment for Greek society will open the door to fascism as a section of the masses swing right to find an “alternative” to the crisis. The massive 7% vote for the neo-Nazi, immigrant-bashing criminal gang Golden Dawn on May 6, alongside the 10% vote for a right-wing nationalist split from ND, may end up being a signal of the future direction if the left cannot offer an alternative. Those leftists who pave the way for this will be, and ought to be, judged harshly by history.

Andrew Burgin and Kate Hudson in Socialist Unity website (12 May) states:

What is necessary in Greece is a united front of all workers’ parties. The situation is so grave that historical and programmatic differences must be set aside in the interests of the working class. Parties can maintain their own organisational independence and slogans whilst the government centres on concrete political and economic issues for the benefit of working people.

The current position of the KKE is a tragedy both for itself and the people of Greece. At the next election its vote is expected to fall and many KKE supporters will switch to Syriza – but even then it is unlikely that Syriza will be able to form a government without the support of the KKE.

The same support for a united front should come from all sections of the left in Greece. Whilst it does not have the same political weight as the KKE, the far left anti-capitalist coalition Antarsya should also back a Syriza-led government. But as a leader of the British Socialist Workers’ Party – its British sister organisation – tweeted ‘Anti-capitalist left Antarsya will not prop up SYRIZA govt but is calling for joint-action to beat austerity in strikes, occupations’.

Antarsya is not in a position to prop up any government – they got 1.2% of the vote and polled 75,000 which is down on their result in the 2010 local elections when they polled 97,000. However, Antarsya contains many good activists and they have been at the forefront of anti-fascist activity and the call that they make for united action on the streets is important. On some demonstrations in Greece this is beginning to happen in practice, notably in February when cadre from the KKE opened their lines to protect Syriza supporters from the riot police in Syntagma Square.

This view is supported by Costas Lapavitsas:

It is important to seek unity at all times, avoiding both gloating and the ancient factionalism of the Greek left. Syriza will need the active co-operation of the rest of the left if it is to muster sufficient forces to deal with the storm ahead.

As is the view of the ISO in the USA

5. The Way Forward for Antarsya: Stand separately at the elections, not joining in Broad Party, but by standing as a Revolutionary Party with a Transitional

A variety of commentators, Marxist groups and individuals nationally and internationally support this analysis, including the OKDE itself, the SWP in Britain and its sister party in Greece, which is part of the Antarsya coalition.

Alex Callinicos suggests that `Over-simplifying a little, it (Syriza) is essentially some version or other of left reformism.
Andreas Kloke (a member of OKDE, writing in International Viewpoint, 16 May)

ANTARSYA had not a sensationally good, but solid election result gaining 1.2%. It was the main force on the left that placed the importance of social resistance through strikes, occupations and mass protests, the self-organization of all victims of the memoranda policies, of the workers, young people, pensioners and of the partially “illegal“ immigrants at the center of its election campaign. ANTARSYA has shown the way how social resistance may be victorious through the propagation of a program of actual transitional solutions that are geared to the real needs of the vast majority of the population and aimed at the self-organization of these people, and by adhering to the perspective of the anti-capitalist revolutionary overthrow of the existing political and social system.

In his commentary on Syriza, Kloke argues,

The SYRIZA leadership is coming under attack because of the ambiguities of its election promises from two sides: first, the forces of the establishment can harass SYRIZA to do everything to ensure that Greece remains in the euro-zone, or make SYRIZA also responsible for a possible failure of this intention and expose it; on the other hand, there are critics on the left, pointing out quite rightly that the various promises of SYRIZA leadership are inconsistent and contradictory. It is virtually inconceivable that a Greek left-wing government, if it came about, could accomplish a revocation of the memoranda policies and thus of the credit agreements agreed with the Troika, that are leading to a strangulation of the Greek society, without Greece’s exit or expulsion from the euro-zone.

My own view is as follows.

I am a supporter of OKDE, indeed, speak at OKDE and Anratsya meetings in Greece. In Britain I am a supporter of TUSC, the Trade Unionist and Socialist Coalition, and stand for them at local, national and Euro-elections -while recognising its faults of democratic deficit/ top-down control and its gate closed policy to Marxist/ Socialist national parties other than the SP / CWI and the SWP.It has, though, welcomed, local groups and has an individual membership facility group, and an embryonic branch structure. I am a member of SR, though not in sympathy with the Broad Parties policy.

Dave Hill response (17 May)
Joining Syriza is the strategy of Socialist Resistance and the large majority of the Fourth International, the USFI, as part of its `Broad Parties’ strategy. Incidentally, yet another Broad Left party, Die Linke in North Rhine Westphalia, was punished at the polls this week for supporting big cuts. A number of other commentators have noted how broad parties swallow or eject Marxist revolutionary currents, and often end up voting for neoliberal programmes.

Dave Hill response 23 May
The view of OKDE, the Greek section of the Fourth International, is, like the view of the Irish section, opposed to the `Broad Parties’ line of SR and (most of) the FI. I happen to agree with, for example, the critique of Broad Parties put forward by John McAnulty (20 Jan 2012) in his Book Review and with the FI Discussion Document prepared by Jette Kroman in December 2011, ‘A class answer to the capitalist crises: A transitional Program of action for Europe’

My own view, like that of OKDE, and the large majority of Antarsya, is that Marxists should seek revolutionary Left unity, putting forward a Transitional, Socialist, programme. (Kokkino, which has observer status at the FI/USFI, is in Syriza, and would disagree with this view of mine and of OKDE and Antarsya more widely). This is in fact what Antarsya has decided. Different from the Syriza programme (which itself is far to the left of anything New Labour, the PS in France, European social democracy is considering).

But if Syriza can form an anti-austerity government, then my analysis is that the KKE and Antarsya should not oppose it in Parliament, should vote for those proposals that are socialist, should oppose any measures that retain any cuts, while campaigning for taxing the billionnaires, and pushing / organising the involvement of working class organs/ organisations to defend any gains by means such as nationalisations, workers control, using local assemblies as parallel systems of power.
For Antarsya, In a nutshell, not to join Syriza, but announcing in advance of the elections that it will support a Left government, hold it to its programme, while pushing for a more socialist programme such as repudiation (rather than negotiation) of the debt, nationalisations of privatised industries and the banks.

For Antarsya to continue with its Transitional Programme.

Economy Democracy Manifesto

A new historical vista is opening before us in this time of change. Capitalism as a system has spawned deepening economic crisis alongside its bought-and-paid for political establishment. Neither serves the needs of our society. Whether it is secure, well-paid and meaningful jobs or a sustainable relationship with the natural environment that we depend on, our society is not delivering the results people need and deserve. We do not have the lives we want and our children’s future is threatened because of social conditions that can and should be changed. One key cause for this intolerable state of affairs is the lack of genuine democracy in our economy as well as in our politics. One key solution is thus the institution of genuine economic democracy as the basis for a genuine political democracy as well. That means transforming the workplace in our society as we propose in what follows.

We are encouraged by The Occupy Wall Street (OWS) movement spreading across the United States and beyond. Not only does OWS express a widespread popular rejection of our system’s social injustice and lack of democracy. OWS is also a movement for goals that include economic democracy. We welcome, support, and seek to build OWS as the urgently needed, broad movement to reorganize our society, to make our institutions accountable to the public will, and to establish both economic democracy and ecological sanity.

1) Capitalism and “delivering the goods”

Capitalism today abuses the people, environment, politics and culture in equal measures. It has fostered new extremes of wealth and poverty inside most countries, and such extremes always undermine or prevent democratic politics. Capitalist production for profit likewise endangers us by its global warming, widening pollution, and looming energy crisis. And now capitalism’s recurrent instability (what others call the “business cycle”) has plunged the world into the second massive global economic crisis in the last 75 years.

Yet both Republican and Democratic governments have failed to bring a recovery to the great mass of the American people. We continue to face high unemployment and home foreclosures alongside shrinking real wages, benefits and job security. Thus, increasing personal debt is required to secure basic needs. The government uses our taxes to bring recovery from the economic crisis to banks, stock markets, and major corporations. We have waited for bailouts of the corporate rich to trickle down to the rest of us; it never happened. To pay for their recovery we are told now to submit to cuts in public services, public employment, and even our social security and Medicare benefits. The budget deficits and national debts incurred to save capitalism from its own fundamental flaws are now used to justify shifting the cost of their recovery onto everyone else. We should not pay for capitalism’s crisis and for the government’s unjust and failed response to that crisis. It is time to take a different path, to make long-overdue economic, social and political changes.

We begin by drawing lessons from previous efforts to go beyond capitalism. Traditional socialism – as in the USSR – emphasized public instead of private ownership of means of production and government economic planning instead of markets. But that concentrated too much power in the government and thereby corrupted the socialist project. Yet the recent reversions back to capitalism neither overcame nor rectified the failures of Soviet-style socialism.

We have also learned from the last great capitalist crisis in the US during the1930s. Then an unprecedented upsurge of union organizing by the CIO and political mobilizations by Socialist and Communist parties won major reforms: establishing Social Security and unemployment insurance, creating and filling 11 million federal jobs. Very expensive reforms in the middle of a depression were paid for in part by heavily taxing corporations and the rich (who were also then heavily regulated). However, New Deal reforms were evaded, weakened or abolished in the decades after 1945. To increase their profits, major corporate shareholders and their boards of directors had every incentive to dismantle reforms. They used their profits to undo the New Deal. Reforms won will always remain insecure until workers who benefit from the reforms are in the position of receiving the profits of their enterprises and using them to extend, not undermine, those reforms.

The task facing us, therefore, goes well beyond choosing between private and public ownership and between markets and planning. Nor can we be content to re-enact reforms that capitalist enterprises can and will undermine. These are not our only alternatives. The strategy we propose is to establish a genuinely democratic basis – by means of reorganizing our productive enterprises – to support those reforms and that combination of property ownership and distribution of resources and products that best serve our social, cultural and ecological needs.

2) Economic Democracy at the Workplace and in Society

The change we propose – as a new and major addition to the agenda for social change – is to occur inside production: inside the enterprises and other institutions (households, the state, schools, and so on) that produce and distribute the goods and services upon which society depends. Wherever production occurs, the workers must become collectively their own bosses, their own board of directors. Everyone’s job description would change: in addition to your specific task, you would be required to participate fully in designing and running the enterprise. Decisions once made by private corporate boards of directors or state officials – what, how and where to produce and how to use the revenues received – would instead be made collectively and democratically by the workers themselves. Education would be redesigned to train all persons in the leadership and control functions now reserved for elites.

Such a reorganization of production would finally and genuinely subordinate the state to the people. The state’s revenues (taxes, etc.) would depend on what the workers gave the state out of the revenues of the workers’ enterprises. Instead of capitalists, a small minority, funding and thereby controlling the state, the majority – workers – would finally gain that crucial social position.

Of course, workplace democracy must intertwine with community democracy in the residential locations that are mutually interactive and interdependent with work locations. Economic and political democracy need and would reinforce one another. Self-directed workers and self-directed community residents must democratically share decision-making at both locations. Local, regional and national state institutions will henceforth incorporate shared democratic decision-making between workplace and residence based communities. Such institutions would draw upon the lessons of past capitalist and socialist experiences.

3) Benefits of Workplace Democracy

When workforce and residential communities decide together how the economy evolves, the results will differ sharply from the results of capitalism. Workplace democracy would not, for example, move production to other countries as capitalist corporations have done. Workers’ self-directed enterprises would not pay a few top managers huge salaries and bonuses while most workers’ paychecks and benefits stagnate. Worker-run enterprises sharing democratic decision-making with surrounding communities would not install toxic and dangerous technologies as capitalist enterprises often do to earn more profits. They would, however, be far more likely to provide daycare, elder care and other supportive services. For the first time in human history, societies could democratically rethink and re-organize the time they devote to work, play, relationships, and cultural activities. Instead of complaining that we lack time for the most meaningful parts of our lives, we could together decide to reduce labor time, to concentrate on the consumer goods we really need, and thereby to allow more time for the important relationships in our lives. We might thereby overcome the divisions and tensions (often defined in racial, gender, ethnic, religious, and other terms) that capitalism imposes on populations by splitting them into fully employed, partly employed, and contingent laborers, and those excluded from the labor market.

A new society can be built on the basis of democratically reorganizing our workplaces, where adults spend most of their lifetimes. Over recent centuries, the human community dispensed with kings, emperors, and czars in favor of representative (and partly democratic) parliaments and congresses. The fears and warnings of disaster by those opposed to that social change were proved wrong by history. The change we advocate today takes democracy another necessary and logical step: into the workplace. Those who fear (and threaten) that it will not work will likewise be proven wrong.

4) An Immediate and Realistic Project

There are practical and popular steps we can take now toward realizing economic democracy. Against massive, wasteful and cruel unemployment and poverty, we propose a new kind of public works program. It would differ from the federal employment programs of the New Deal (when FDR hired millions of the unemployed) in two ways. First, it would focus on a “green” and support service agenda. By “green” we mean massively improving the sustainability of workplace and residential communities by, for example, building energy-saving mass transportation systems, restoring waterways, forests, etc., weatherizing residential and workplace structures, and establishing systematic anti-pollution programs. By “support service” we mean new programs of children’s day-care and elder-care to help all families coping with the conditions of work and demographics in the US today.

However, the new kind of pubic works program we propose would differ even more dramatically from all past public works projects. Instead of paying a weekly dole to the unemployed, our public works program would emphasize providing the unemployed with the funds to begin and build their own cooperative, self-directed democratic enterprises.

The gains from this project are many. The ecological benefits alone would make this the most massive environmental program in US history. Economic benefits would be huge as millions of citizens restore self-esteem damaged by unemployment and earn incomes enabling them to keep their homes and, by their purchases, provide jobs to others. Public employment at decent pay for all would go a long way toward lessening the gender, racial, and other job discriminations now dividing our people.

A special benefit would be a new freedom of choice for Americans. As a people, we could see, examine and evaluate the benefits of working inside enterprises where every worker is both employee and employer, where decisions are debated and decided democratically. For the first time in US history, we will begin to enjoy this freedom of choice: working in a top-down, hierarchically organized capitalist corporation or working in a cooperative, democratic workplace. The future of our society will then depend on how Americans make that choice, and that is how the future of a democratic society should be determined.

5) The Rich Roots Sustaining this Project

Americans have been interested in and built various kinds of cooperative enterprises – more or less non-capitalist enterprises – throughout our history. The idea of building a “cooperative commonwealth” has repeatedly attracted many. Today, an estimated 13.7 million Americans work in 11,400 Employee Stock Ownership Plan companies (ESOPs), in which employees own part or all of those companies. So-called “not-for-profit” enterprises abound across the US in many different fields. Some alternative, non-capitalist enterprises are inspired by the example of Mondragon, a federation of over 250 democratically-run worker cooperatives employing 100,000 based in Spain’s Basque region. Since their wages are determined by the worker-owners themselves, the ratio between the wages of those with mostly executive functions and others average 5:1 as compared to the 475:1 in contemporary capitalist multinational corporations.

The US cooperative movement stretches today from the Arizmendi Association (San Francisco Bay) to the Vida Verde Cleaning Cooperative (Massachusetts) to Black Star Collective Pub and Brewery (Austin, Texas), to name just a few. The largest conglomerate of worker owned co-operatives in the U.S. is the “Evergreen Cooperative Model” (or “Cleveland Model”), consisting e.g. of the Evergreen Cooperative Laundry (ECL), the Ohio Cooperative Solar (OCS), and the Green City Growers. These cooperatives share a) common ownership and democracy at the workplace; b) ecological commitments to produce sustainable goods and services and create “green jobs”, and c) new kinds of communal economic planning, mediated by “anchor institutions” (e.g. universities, non-profit hospitals), community foundations, development funds, state-owned banks or employee ownership banks etc. Such cooperatives are generating new concepts and kinds of economic development.

These examples’ varying kinds and degrees of democracy in the workplace all attest to an immense social basis of interest in and commitment to non-capitalist forms of work. Contrary to much popular mythology, there is a solid popular base for a movement to expand and diversify the options for organizing production. Workplace democracy responds to deep needs and desires.

If you are interested in getting further information about this proposal, in joining the discussion it engages, or in participating in activities to achieve its realization, please find us on Facebook at Economic Democracy Manifesto or email

“Economic Democracy Manifesto” Group

David van Arsdale
Michael McCabe
Costas Panayotakis
Jan Rehmann
Sohnya Sayres
Billy Wharton
Richard D. Wolff

The Global Town Teach-In (April 25, 2012)

The Global Town Teach-In:
Building a New Economy and New Wealth through Democracy Networks,
Green Jobs and Planning and an Alternative Financial System
Time and Day: April 25, 2012, 12 Noon Eastern Standard


The Global Teach-In is designed to address the general problems associated with the Triple Crisis and the need to address alternative security policies. The “triple crisis” can be defined by: economics (inequality, deindustrialization, mass unemployment, or the privatization and “de-democratization” of public goods), the environment (pollution, increased greenhouse gas emissions, and depletion of species) and reliance on unsustainable energy supplies (diminished stocks of cheap oil, use of oil in hard to get or insecure areas, and substitution of land used to grow food to supply alternative fuels). The need for alternative security policies involves the need to transcend costly “hard power” and traditional military strategies in an era in which growing debt, ecological threats, the opportunity costs of military spending and the rise of asymmetric warfare reveal the limits to the traditional national security model.

Policies and Alternative Institutions

The Global Teach-In will discuss policy and institutional solutions at the global, national and local levels. First, we will discuss how a Green New Deal would expand jobs, investments and research in alternative energy and mass transportation. These will provide a means for reducing carbon emissions, creating new sources of wealth and increasing living standards. Second, we will examine how Green planning can lead to the creation of metropolitan regions where residential and labor markets are more proximate, where housing is sustainable and affordable, where products are designed to be durable and recyclable, and where designs generally reflect user interests and needs. Third, we will examine a variety of ways in which alternative economic institutions have been developed that serve to promote locally anchored and sustainable communities (in terms of ecological impacts and the durability of employment). These ways include institutions and policies such as: cooperatives, community and socially minded banks, sustainable utilities, buy local and green procurement policies, electoral measures mandating clean energy, campaigns to patronize alternative economic institutions, green civilian conversion of defense and petroleum-dependent firms, and more equitable taxation and alternative budgetary policies.


The Global Teach-In has been supported by academic, professional, media, labor, peace and environmental organizations and individuals associated with these. We aim to promote a broad coalition among such groups and political leaders, entrepreneurs, trade unions and interest citizens to foster a dialogue about the need for a new, comprehensive global agenda that can be initiated through a series of related local actions. We will showcase “best practices” and barriers to extending alternative models.

Format and Ambitions

The Global Teach-In will promote local study and action circles prior to the broadcast to facilitate an agenda for questions to guide discussions.

The Event

The April 25th, 2012 broadcast will be followed by discussions within localities about how to address the agenda proposed by the teach-in. The Global Teach-In will promote links and synergies between diverse constituencies and projects to help each locality achieve its objectives. For example, money moved into community banks can fund cooperatives and green technology projects. Alternative utilities and energy can help power new mass transit systems. Electoral measures to mandate alternative or clean energy can build green markets.

The Global Teach-In will take place in multiple locations through face to face meetings linked to an electronic broadcast in the U.S. and Europe including: Ann Arbor, Belfast (UK), Boston, Los Angeles, Madison, New York, San Francisco, Stockholm (Sweden), Washington, D.C. We are also interested organizing other locations and we welcome your suggestions and ideas. Interested parties should contact us at: Thank you for your interest!

ANC Centenary: A Display of Elite Power

Ayanda Kota
Chairperson, Unemployed People’s Movement

The centenary celebrations of the African National Congress (ANC) are being used to persuade the people that a movement that has betrayed the people is our government, a government that obeys the people, instead of a government of the elites, for the elites and by the elites. It is a hugely expensive spectacular designed to drug us against our own oppression and disempowerment.

In his Communist Manifesto Karl Marx wrote that “Each step in the development of the bourgeoisie was accompanied by a corresponding political advance of that class…The executive of the modern state is but a committee for managing the affairs of the bourgeoisie”. Here Marx is referring to the ability of the bourgeois to translate economic power into state power, thus reducing our governments to mere managers acting in the interests of capital and not the people. This has happened to governments around the world. But here our politicians are not mere managers. They are, like in Russia or India, a predatory elite with their own class interests and they support capital and repress the people as long as they can get their own share.

Since 1994 there hasn’t been a reorganisation of the economy. The commanding heights of the economy continue to reside in the hands of a tiny elite, most of which is white. Unemployment is sky rocketing. Most young people have never worked. Anyone can see that there is an excessive amount of poverty in South Africa. There are shacks everywhere. In fact poverty reigns supreme in our country. Every year Jacob Zuma promises to create new jobs and every year unemployment grows.

If things were getting better, even if they were getting better slowly, people might be willing to be patient. But things are getting worse every year. Poverty and inequality are getting worse. The government is increasingly criminalising poverty instead of treating it as a political problem. When people try to organise they are always presented as a third force being used to undermine democracy and bring back racism. But it is the ANC that has failed to develop any plans to democratise the economy. It is the ANC that has failed to develop any plans to democratise the media. It is the ANC that disciplines the people for the bourgeoisie. – a role that they are very comfortable to play! It is the ANC that follows the line of the World Bank and the International Monetary Fund. It is our local leaders who taking the leap from their old bosses, stealing from us, treating is with contempt, acting like the former colonial government and oppressing us.

During the struggle our leaders embodied the aspirations of the people. But once they took state power they didn’t need us any more. We were sent home. We are only called out to vote or attend rallies. But all the time our people are evicted from farms, paving way for animals as farms are turned into game reserves under the pretext of tourism. Our people are evicted from cities. Our people are denied decent education. The party has become a mixture of what Marx would call an instrument of power in the hands of bourgeoisie and what Fanon would call a means of private advancement.

Biko wrote that:

“This is one country where it would be possible to create a capitalist black society, if whites were intelligent, if the nationalists were intelligent. And that capitalist black society, black middle class, would be very effective … South Africa could succeed in putting across to the world a pretty convincing, integrated picture, with still 70 % of the population being underdogs.”

We, as the unemployed, belong to the 70% that Biko was talking about. We were happy to see the end of apartheid and we will always fight racism where ever we see it. But we are not free. There has only been freedom for the 30%. How can a person be free with no work, no house and no hope for their life?

R100 million is being spent on the celebration – spent to entertain elites, through playing golf and drinking the most expensive whiskey. Golf players are even receiving massages from young women sponsored by SAB. This is not a people’s celebration. We are absent! How some of us wish that all that money could have been used to build houses, create employment, build sport facilities or schools for kids who continue to learn under trees! Biko was right. As the world celebrates with the ANC today they put across a pretty convincing picture of freedom while everywhere people are broken by the burdens of poverty.

In his Wretched of the Earth, in the chapter called “The Pitfalls of the National Consciousness”, Frantz Fanon wrote:

“The leader pacifies the people. For years on end after independence has been won, we see him, incapable of urging on the people to a concrete task, unable really to open the future to them or of flinging them into the path of national reconstruction, that is to say, of their own reconstruction; we see him reassessing the history of independence and recalling the sacred unity of the struggle for liberation. The leader, because he refuses to break up the national bourgeoisie, asks the people to fall back into the past and to become drunk on the remembrance of the epoch which led up to independence. The leader, seen objectively, brings the people to a halt and persists in either expelling them from history or preventing them from taking root in it. During the struggle for liberation the leader awakened the people and promised them a forward march, heroic and unmitigated. Today, he uses every means to put them to sleep, and three or four times a year asks them to remember the colonial period and to look back on the long way they have come since then.”

I am not opposed to the centenary celebration of the ANC. But if the ANC was a progressive movement they would have organised a celebration in a way that includes the people and supports us to build our power. They could have, for instance, asked people to meet all over the country, discuss how far we have come and far we still have to go, and draw up demands for a new freedom charter for the new era. But this celebration is just a spectacle that we are supposed to watch on TV. It is exactly what Fanon talks about. It is designed to keep us drunk on the memory of the past struggle, so that we must stop struggling and remain in the caves.

In a recent protest in Bloemfontein, police were there in numbers to flush the demonstrators. This has happened in many other demonstrations. The message is very clear: “Go back to your caves!” It is backed up state violence. As Fanon says a party that can’t marry national consciousness with social consciousness will disintegrated; nothing will be left but the shell of a party, the name, the emblem and the motto. He says that:

“The living party, which ought to make possible the free exchange of ideas which have been elaborated according to the real needs of the mass of the people, has been transformed into a trade union of individual interests.”

This is exactly what the party has become. Institution such as parliament and local municipalities have been severely compromised because of individual interests. Corruption is rampant. The Protection of Information Bill (Secrecy Bill), is another illustration of how the selfish interests of individuals ave taken over the party.

A true liberation movement would never have killed Andries Tatane, attacked and jailed activists of social movements. It would never send people to lull – it would encourage people to continue organising and mobilising against injustices and oppression. A progressive leader would know that he or she cannot substitute themselves for the will of the people. A progressive party would never help the government in holding the people down through fascist attacks on the media by the likes of Nceba Faku, Blade Nzimande and Julius Malema to mention but a few. A democratic party would never engage in attacks on protests as we saw most recently with the ANC and ANCYL fascism against the Democratic Left Front in Durban during COP17 Conference.

In the Congo, in Nigeria and across the Arab world people are deserting celebrations of the flag and political leaders as if they really do represent the nation. Some are turning to a politics of religious or ethnic chauvinism. Others are turning to the politics of mass democratic rebellion or a democracy that is truly owned by the people. This is a free exchange of ideas backed up with popular force. We are also seeing this in Europe and North America. Latin America has been in rebellion for many years. Across South Africa more and more people are deserting the party that spends so much money to keep them drunk on the memory of the past struggle, their own struggle, the same struggle that the ruling party has privatised and betrayed. There are occupations, road blockades and protests and the message is loud and clear: Sekwanele! Genoeg! Enough!

The only way to truly honour the struggles of the past is to stand up for what is right now. The struggle continues and will continue until we are all free.

Direct and Indirect Costs of the US Financial Crisis

Deepankar Basu

The global financial crisis that started with the bursting of the housing bubble in the U.S. in 2007 imposed both direct and indirect costs on the working and middle class populations. The direct costs are those associated with the bail-out of financial institutions, which will ultimately be borne by the taxpayers; the indirect costs are those associated with the ensuing economic crisis and the deep and prolonged recession that came in its wake, which, again, will be mostly borne by the working class population. While both costs lead to increasing deficits, and over time accumulating debt, of the federal government, they are of vastly unequal magnitudes. The direct cost (i.e., the costs associated with bailing out the financial institutions immediately after the crisis) is much smaller than the indirect cost (i.e., the cost, in terms of rising unemployment and government deficit if one considers the latter a cost, arising due to the recession); the contribution of the bail-out funds to the build-up of sovereign debt, in the US (and Europe), is minuscule compared to the contribution of the indirect cost (the widening gap between tax receipts and government outlays caused by the recession).

Many people on the left, by emphasizing the cost of bailing out financial institutions (and its contribution to sovereign debt build-up), target the wrong, and smaller, costs. There are two senses in which targeting the bail out funds is incorrect. First, the magnitude of those costs are small compared to the indirect costs. Second, if the direct costs had not been incurred, i.e., if the system continued to be organized around capitalist lines and the financial system had not been bailed out, the ensuing recession would have been deeper and hence the indirect costs, ultimately borne by the working and middle class people, even higher.

It is important to be clear that the workings of the financial sector under capitalism imposes enormous costs on the working and middle class people not only because it needs to be bailed out when the system hits the fan, as happened in 2008. The financial sector imposes much larger costs by the sheer magnitude of the externality of its actions on the working class, by the structural refusal to internalize the costs of its speculative activities, by increasing the financial fragility of the system when the bubble is inflating and ushering in the deep and prolonged recession that inevitably arrives when the bubble bursts. The direct cost of bailing out the financial system when the crisis breaks out is small compared to the indirect cost that comes from the externality of its casino-like activities. In fact, if the financial system had not been bailed out, the indirect costs would have been even higher because the recession would have almost certainly turned into a depression (of the magnitude that the world witnessed during the 1930s).

FIGURE 1: Time series plot of changes in the index of house prices in major US cities


Let us study the US economy and try to understand the difference between the direct and indirect costs of the financial crisis of 2008-09. Recall that the the housing bubble in the US started deflating from around late 2006 (Figure 1). The securitization process that had built itself on the shaky foundations of the housing bubble started unraveling within a year, and the financial crisis broke out in real earnest in 2008. The financial system went into panic, credit markets froze (as banks stopped lending to each other and to nonfinancial firms) and this sent shock-waves through the US government and the Federal Reserve circles. Monetary policy had already kicked in at least an year ago, with the Fed slashing short term interest rates and making liquidity available to the financial system (see Figure 2). But this was clearly not enough.

FIGURE 2: Short term interest rates in the US


To unfreeze credit markets and deal with the growing panic, the US Treasury department adopted the Troubled Assets Relief Program (TARP) in early October 2008. The conceptualization of the TARP went through two rounds. In the first round, the US Treasury argued that the TARP should buy out the toxic assets (i.e., assets that drew its value from the housing market like mortgage backed securities, the collateraized debt obligations, etc., and were now more or less worthless) from financial institutions to restore confidence in the financial markets and prevent widespread bankruptcies. Very soon it became clear that this strategy would not work because it was impossible to ascertain the “true” value of the toxic assets. In other words, it was not clear at what price the assets should be bought for by the US Treasury. Hence, this strategy was abandoned and in the second round of iteration, TARP was conceptualized as a recapitalization program. This entailed lending money (or other liquid assets like Treasury bills) to financial institutions but in return taking ownership shares of those institutions.

The bail out of the financial institutions that we now talk about is precisely TARP as a method to recapitalize financial institutions, in particular banks, credit market institutions, the automobile industry and the insurance giant AIG, by injecting fresh capital into their balance sheets in lieu of ownership shares. How much money was involved? Initially, TARP was thought to involve $700 billion. But, the Dodd-Frank Wall Street Reform and Consumer Protection Act reduced the maximum authorization for the TARP from $700 billion to $475 billion. The TARP ended on October 3, 2010 and had by then disbursed only a total of $411 billion. Of this, 77%, i.e., $318 billion, has already been recovered through repayments, dividends, interest and other income earnings of the US Treasury.

In fact, the part of TARP funds that was lent to banks has already been recovered with a profit: a total of $245 billion was invested in banks, and it has been recovered with a profit of about $20 billion. It is estimated that the overall cost of TARP, after all recoveries are taken into account, will amount to $70 billion, only about a tenth of the original amount of $700 billion. Hence, it is clear that the overall contribution of the TARP (the bailing-out of the financial system) to the deficit (and outstanding debt) of the US government is not large. The direct cost of the financial crisis, in terms of the funds required to bail out the financial system during the peak of the crisis, is not very large when compared to the indirect cost, to which we now turn.

FIGURE 3: Civilian Unemployment Rate in the US

(Source: Federal Reserve Bank of St Louis,

The indirect cost arose because of the magnification of the effects of a downturn into a deep and prolonged recession, the magnification being caused by the fragility of the financial system. Unemployment rates went through the roof and continues to be at historically high levels despite the official end of the recession in the second quarter of 2009; the labour force participation rates have fallen due to discouraged unemployed workers dropping out of the labour force; the median duration of unemployment has increased to extremely high levels; the share of long term unemployed workers has grown to postwar highs (see Figure 3 and 4 for some details).

FIGURE 4: Civilian Participation Rate in the US

(Source: Federal Reserve Bank of St Louis,

While it might be difficult to accurately quantify these losses, it seems clear that they are far higher than the $70 loss that the taxpayer will be saddled with due to the bail out of the financial sector. For instance, some studies suggest that about 7 million workers have been displaced from long-term employment during the Great Recession, only a subset of all workers who have been adversely hit by job losses. These 7 million workers will experience an income loss of about $774 billion over the next 25 years.

In a similar vein, the contribution of the direct investment from TARP to the growth of the fiscal deficit is small compared to the contribution due to the recession. Figure 5 plots the net outlays (i.e., net of interest payments of its debt) of the federal government, the receipts of the federal government and the difference between the two for the period 2006-2011. It can be seen from Figure 5 that the major jump in the deficit occurred between 2007 and 2009, a period during which it increased by about $1252 billion. This increase was the result of an increase in net outlays (i.e., expenditure) by about $788 billion and a fall in receipts of around $463 billion. Even assuming that the total $411 billion disbursed by the US Treasury for the TARP had occurred during that period (which it clearly did not), it is only about a third of the increase of the federal deficit during that period. Thus, close to (or more than) two-thirds of the increase in the federal government deficit was the result of non-bail out costs.

FIGURE 5: Deficit of the US Federal Government

(Source: Federal Reserve Bank of St Louis,

Looking at the plots of the outlays and receipts of the US federal government in Figure 5, we clearly see that the two series have diverged significantly since the start of the Great Recession. Even though net outlays (i.e., expenditures) have flattened out since 2010, receipts (i.e., tax revenues) have not picked up in any major way. Thus, the gap between the two continues to be big, in excess of $1000 billion every year. This huge gap is what lies behind the deficit and mounting debt of the US government, not the $70 billion that will be the net cost of the TARP. It is more or less certain that a similar account would be accurate for Europe also, i.e., the largest portion of the debt of Eurozone governments would be the result of indirect costs and not the direct cost of bailing out the financial sector during the crisis of 2008.


To conclude, let me summarize the argument. It is important to distinguish between the direct costs (i.e., bail out of the financial sector through the TARP) and indirect costs (rise in unemployment and the growth of the government debt due to the deep and prolonged recession) of the financial crisis and focus on the second rather than the first. This is because the second is much larger in magnitude than the first. In fact, it is not even clear that the first can be considered a cost because without bailing out the financial sector via recapitalization (or temporary and partial nationalization), the recession would certainly have been deeper, increasing the burden on the working people. In addition, concentrating on the second cost allows us to focus on the systemic aspect of the costs that the financial sector, in its speculative avatar, imposes on the working and middle class population of a country. This forces us to conceptualize an alternative that is likewise systemic in nature and goes beyond arguing against bail out of financial sector firms.

Deepankar Basu is an Assistant Professor in the Department of Economics, University of Massachusetts.

Andrew Kliman on “The Failure of Capitalist Production”

The Failure of Capitalist Production: Underlying Causes of the Great Recession
by Andrew Kliman,
Pluto Press

The recent financial crisis and Great Recession have been analysed endlessly in the mainstream and academia, but this is the first book to conclude, on the basis of in-depth analyses of official US data, that Marx’s crisis theory can explain these events.

Marx believed that the rate of profit has a tendency to fall, leading to economic crises and recessions. Many economists, Marxists among them, have dismissed this theory out of hand, but Andrew Kliman’s careful data analysis shows that the rate of profit did indeed decline after the post-World War II boom and that free-market policies failed to reverse the decline. The fall in profitability led to sluggish investment and economic growth, mounting debt problems, desperate attempts of governments to fight these problems by piling up even more debt – and ultimately to the Great Recession.

Kliman’s conclusion is simple but shocking: short of socialist transformation, the only way to escape the ‘new normal’ of a stagnant, crisis-prone economy is to restore profitability through full-scale destruction of existing wealth, something not seen since the Depression of the 1930s.

About The Author

Andrew Kliman is Professor of Economics at Pace University, New York. He is the author of Reclaiming Marx’s ‘Capital’: A Refutation of the Myth of Inconsistency and many writings on crisis theory, value theory and other topics.

Industrialisation and forms of struggle: Or, should industrialisation be opposed?

Raju J Das

Industrialisation is understood narrowly in the sense of manufacturing and broadly in the sense of the application of modern science and technology to the transformation of raw materials from nature. It is necessary for national development, as the economist Gavin Kitching and others argued decades ago. Industrialisation adds value to unprocessed goods extracted from nature and thus increases society’s income. Often owners of land – peasants – do not earn more – or do not earn much more — than those who work in industry as wage labourers. Industrialisation makes possible the production of a vast range of goods, which are directly used by people: clothes, materials required to build houses, traditional and western medicines, consumer durables, cultural items such as books and music instruments; the different types food that go through the manufacturing process, and so on. And, industry indeed produces the means of production necessary in both farming and industry itself. Industrialisation holds out the possibility of ending want and material suffering. It provides employment to the increasing population, including through forward and backward linkages. It makes it possible to reap scale economies and specialisation in ways not possible in agriculture. In part because of the above, industrialisation increases labour productivity, one of the fundamental indicators of progress, prosperity, and economic development in the society at large. Industrialisation breaks the mutual isolation of producers: this happens as they now work in great numbers in large cities and towns. Their geographical concentration will potentially allow them to fight for justice and equality in society, both on their behalf and on behalf of other oppressed groups. Industrialisation, connected as it is to science, promotes a culture of rational thinking and can potentially undermine the basis for superstitious and obscurantist ideas and practices. Given these and many other advantages of industrialisation, the Left – at least the Marxist left — cannot be opposed to industrialisation (although sections of the postmodern/populist Left are, as industrialisation is seen by them as a sign/carrier of modernity that supposedly destroys an authentic pre-modern culture). The question is: what form of industrialisation should the Left endorse in theory and practice? What happens when, for example, a proposed SEZ (special economic zone) displaces thousands of peasants? Should industrialisation be endorsed under this situation?

To answer this question, one may start with agriculture. Land is the most important means of production in agriculture, at least at the current stage when farming is relatively less capital-intensive. Fertility of land is a product of natural forces as well as human investments. It is normally the case that human investments in land to raise land fertility happen closer to existing centres of population and commerce than away from these. Fertile tracts of land therefore are generally located closer to existing centres of population and commerce. Now, owners of industry need also land. But their need for land is different. They need to locate their factories on: land is not used as an input in the way it is used in farming. And in a market economy, they need land in a specific location: industry tends to be located closer to existing centres of population and commerce for the reason that greater profits are made possible by greater geographical accessibility. Therefore, the fight over industrialisation often becomes a fight between owners of industry and owners of land (including peasants). This fight is over not just an absolute piece of land but over its location.

To be able to understand the on-going struggles over industrialisation, we have to carefully distinguish between industrialisation per se which is necessary in all modern societies from its various historically specific forms, and we need to also distinguish between various forms of struggle over industrialisation.
There is a strong logic to locating industry on the land which is not currently cultivated or irregularly cultivated, in relatively less accessible locations and away from the locations of fertile land on which peasants are currently dependent on or which may soon be used. Why? Firstly, as mentioned above, industry does not need fertile land as an input. Location of a factory on or close to a fertile land destroys natural fertility of soil which is almost impossible to manufacture in industry. It is indeed a great social cost to use a fertile land for industrialisation which does not need it. Secondly, forcing the industry to locate in these areas (e.g. relatively less accessible areas, away from fertile land) will result in the development of new means of transportation and communication (which will also create jobs). Industrialisation in these less accessible locations will also give an impetus to agriculture. It is unfortunate that when industries could be located in more remote locations on land that is relatively less fertile, they are being located on currently cultivated fertile land. This must be fought against. This is one form of struggle over industrialisation.

If, however, a fertile land currently being cultivated must absolutely be used for an SEZ — and whether this must be the case should be democratically decided and not decided by business — several conditions must be laid out. The value of the land as a compensation to the family must be determined in relation to what the value of the land would be after the industries have come up. Under no circumstances must the living standards of the families losing the land and the families losing access to employment on that land (farm labourers, tenants) be allowed to be worse than what they were before the change in the use of the land. Indeed, because industrialisation will make possible greater production of wealth and because this is possible only by displacing the people who currently occupy the land and depend on its use, it must be an absolute precondition of displacement that their material and cultural needs (adequate food, clothes, shelter, education, health care, etc.) are satisfied (including by giving employment to at least a single person from every affected family with a living wage in the industry) and that environmental sustainability of the place and nearby-places is maintained. Investment must be made in the lives of the people who are affected before the investment is made in the SEZ itself. This will not happen automatically. This requires democratically mobilised struggle. This is the second form of struggle over industrialisation.

Peasants as peasants have been involved in heroic battles over dispossession from their land – in Bengal, in northern Orissa, in Maharashtra, and so many other places. This is not the decisive battle against the industrialist class (domestic or foreign), however. The decisive battle against it cannot be, and will not be, fought by peasants as property owners against dispossession, although local and temporary success is possible. The battle against unjust dispossession can only be successfully fought by urban workers in an alliance with peasants and rural workers. Note also that the issue of peasants being separated from land is not a single separable visible act of a group of industrialists, backed by the state. Given, for example, the high costs of farm inputs which come from the industry and given the decreasing prices of farm products from which industry benefits, millions are going into debt, and to clear their debt, peasants are selling their land. Many are leasing their land to better-off farmers, including those who enter into contract with industrialists, domestic and foreign, to produce farm products for industrial processing. There is therefore a potential site of struggle against this insidious form of dispossession from land. The industrialists who set up an SEZ by displacing peasants from land and the industrialists who benefit from high prices of goods sold to peasants which contribute to their economic unviability and separation from land are both members of the same family. The fight against high prices of industrial goods used by peasants is therefore an important part of the fight for a particular form of industrialisation, one that would seek to remove the differences between peasants and industry and the relations of oppression between them.

There is still another form of struggle over industrialisation. Peasants turned into the proletariat in the SEZs, in newly industrialising areas – whether located on fertile land, displacing peasants or in remote locations — will and must fight against the monied class, initially for better wages and working conditions. One may respond by saying that the SEZ framework of industrialisation does not allow for the working class organisation. But then who said that the SEZ must be a necessary form of industrialisation? Or if it does, who said that an SEZ – understood as an industrial cluster — must be one where workers are to be alienated from their democratic right to organise? If business has the right to make money, then surely, and in the interest of democracy, workers have the right to organise to demand a decent life? This is the fourth form of struggle over industrialisation, the struggle that connects workers of different industrial clusters and cities politically and that demands that industrialisation must be of a particular form such that those who do the work must be fully able to meet their social and cultural needs. An SEZ, an industrial project is not based on a one-time act of separating people from their land and livelihood. Much rather, the particular form of industrialisation that is in question is based on a continuous separation: separation of people from the product of their labour, from their blood and sweat. It represents endless money-making at one pole and limitless misery at another. This form of industrialisation does not just produce things that are of potential use. It reproduces an invisible relation of separation of masses from their lives, a relation between them and those who control their lives at work (and outside). So because separation of people from their land creates a ground for the second form of separation, the struggle against the former must be connected to the struggle over the latter, and can only be fully successful if it is connected that way.

Protecting the peasants does not necessarily mean protecting the peasant property. If industrialisation can better the conditions of peasants (i.e. outside of farming), perhaps ‘sacrificing’ their property to make room for industrialisation can be favourably considered. Everyone must be provided with an opportunity to live a life with dignity. Whether it is in industry or farming should, ordinarily, be beside the matter. But there is an ‘if’, as in ‘If industrialisation can better conditions of life of peasants…’. Industrialisation, whether led by state-capital or private capital has not done much for millions of peasants. And it won’t unless it is a site of contestation.

The current struggles around SEZs and displacement appear to be a little narrow. They are often too defensive. The message of these struggles seems to be: ‘don’t take away our land, leave us alone (to our misery)’. The struggle against displacement should be a part of larger family of struggles, i.e. struggles over industrialisation as such. This is because the objects of struggle are objectively inter-connected. The fight against SEZs must be a fight against a particular existing form of industrialisation which leads to double dispossession: political acts of dispossession or primitive accumulation and dispossession through market mechanisms (rising prices of industrial goods leading to debt). A part of the fight should also be within SEZs (and other industrialised areas). Seen in another way, the fight against SEZs and displacement is a fight for a certain form of industrialisation, which, in turn, is a fight for (deepening) democracy and for the satisfaction of social, cultural and ecological needs of those who are displaced to make room for industries, those who lose land because of rising prices of industrial goods, and those who work inside the industrial areas.

Raju J Das is an Associate Professor at York University, Toronto, Canada. Email:

Beverly Silver on “The End of the long 20th Century”