Non-market socialism: Life Without Money – An Interview with Anitra Nelson

Life Without Money: Building Fair and Sustainable Economies (Pluto Press, London, 2011) that Anitra Nelson and Frans Timmerman have edited is a remarkable collection on the praxis of non-market socialism. For the contributors of the volume, socialism/communism is not just a state or goal which we have to achieve in some distant future; rather, it is built through immediate practices that reject capitalism and its key institutions – market and money. They regard the manipulation of these institutions for their gradual transcendence to be deceptive, as “the market system, and its quasi-god money, is a strong barrier to the political and cultural reforms needed to establish socialism.” The volume critiques the reduction of socialist revolution to combinatorics of state power and economic reformism.

The following discussion with Anitra Nelson, one of the editors of the volume, tries to bring out the chief tenets of non-market socialism, providing an insight into the politics of diverse experiences in this regard. Prof Nelson teaches at RMIT University in Melbourne (Australia) and has been active in the women’s liberation, peace, disability, environmental and solidarity movements. One of her previous works, Marx’s Concept of Money: The God of Commodities (Routledge, London, 1999), is considered to be an important contribution in the Marxist critique of political economy. 


Pratyush Chandra (PC): Life Without Money? Isn’t the title itself sufficiently utopian? In fact, the whole collection seems to present an explicit defence of the utopian element in the socialist project. How do you relate this utopianism to the scientificity that the critique of political economy claims? Aren’t we being prescriptive, which Marx tried to avoid all his life?

Anitra Nelson (AN): These are familiar, provocative questions worth a detailed response. Your first three questions imply that being utopian is negative and against the scientific method employed by Marx, while the last one indicates that Marx avoided being prescriptive and so we should as well. Let’s acknowledge that the terms ‘utopian’, ‘scientific’ and ‘prescriptive’ all point to Marxian controversies associated with conflicting interpretations of Marx. I will discuss them in turn as a way of elaborating on our interpretation of Marx and the way we need to address current environmental and political challenges that we face as a global community. But, first, let me briefly describe our book and the position it advocates.

Life Without Money

Life Without Money: Building Fair and Sustainable Economies has ten contributors advocating a non-market socialist position to address our current crises, i.e. in order to realise socialism we need to dispense with money and markets as a fundamental strategy and not simply expect money and markets to evaporate eventually as a result. The collection argues why we need to pursue this strategy as well as how we might do it, by offering some practical examples and theoretical visions. I initiated the project. Co-editor Frans Timmerman and I co-wrote two chapters and I was the sole author of a third. Some of the responses in this interview draw on an unpublished paper, ‘Money or socialism’ that we presented at the Historical Materialism Australasia Conference, held 20 July 2012 in Sydney. You can read more about the book and its contributors in the book’s website.

Non-market socialism

We decided that a non-market socialist position needed to be promoted urgently because humans have laid the basis for our extinction using capitalist practices and thinking. The recent rise in intensity, frequency and scope of natural disasters is linked substantially to climate change. Human beings cannot live with even a small rise in their body temperature, and any variation around the average tends to involve debilitating symptoms. Similarly, the earth is changing itself to cope with global warming in ways that will make our environments hostile to our continued existence as a species. We believe that the results of these changes will produce dramatic effects in years, not just decades or by the end of the century.

We see non-market socialism as the only way to address the combined crises we face, which are results of a capitalist system based in production for trade, relying on monetary accounting and exchange. This system contorts and confuses the values, relationships and structures that ideally exist between people and between people and nature. At the heart of the capitalist system is the practice and concept of money as a measure, even a god. The structure and relations of capital are impossible without the practice and concept of money as a general all-purpose means of exchange and unit of account. Capital is money that begets more money.  Thus monetary values come to dominate social and environmental values in more and more intensive and expansionary ways. The modern state arises as a handmaiden to capital. We buy and we vote; we are servants to both.


I always love the questions that pose that we are utopian, using ‘utopian’ pejoratively and referring to Marx to support their position. The irony of this attack is that Marx argued against what he called utopian socialists, such as Proudhon, specifically because they did not appreciate that capital evolves from money as a chicken does from an egg. Invariably those suspicious of a non-market socialist line — because they think money is okay and believe that Marx thought money was okay — call us utopians while Marx would have called them utopians! However, I do not look at Marx as a god. So, I am not appealing to Marx’s words here as evidence of the truth, or as a matter of faith. It just so happens I agree with Marx’s analysis in this instance. Furthermore, I believe his concept of money embodies some of the strongest insights responsible for making his wider analysis relevant to us today.

Marx (1976 [1867]: 126) starts Capital I by examining the ‘cell’ of capitalism, the commodity, which is both a use value and an exchange value. He immediately unpacks the contrast between the qualities or purposes of a good or service, its use value, and its exchange value, which is a ‘quantitative relation’. Use values can be expressed as implicit quantities, such as human beings, who can be weighed in kilograms and measured in centimetres and compared with one another. But commodities are brought into a relationship with one another on the market through their exchange value, their price, with money as the ‘common denominator’ (Marx 1970 [1859]: 28). It is clear then that money as a unit of account is not at all a measure but rather some kind of variable standard.

Marx (1976 [1867]: 89–90) considered this introduction would challenge the reader and ‘present the greatest difficulty’ because ‘the commodity-form of the product of labour’ and ‘value-form of the commodity’ took the ‘money-form’. As for money, Marx (1976 [1867]: 90) wrote that ‘the human mind has sought in vain for more than 2,000 years to get to the bottom of it’. Thus, amongst others, Althusser (1971) counselled workers/readers to skip the first couple of chapters. I think that this was probably the worst possible advice. Instead the advice should be to dwell on these chapters, which — as autonomist Marxist Harry Cleaver ably shows in his 1979 work Reading Capital Politically — provide the building blocks for a revolutionary analysis of contemporary capitalism.

Careful reading of Part I of Capital I (1976 [1867]) and A Contribution to the Critique of Political Economy (1970 [1859]) avoid the ridiculous conclusion that money is not a problem, only capital is. Marx opposed those who seemed to think that they could simply redefine money, issue it on different terms, regulate it in new ways, or give goods and services ‘prices’ at a distribution centre or before they reached the market (a contradiction in terms). He started his analysis of capital with money and commodities because he thought many socialists and political economists had underestimated the role of money. Yet, in actual fact, money was both the ‘ultimate product of commodity circulation’ and simultaneously ‘the first form of appearance of capital’ (Marx 1976 [1867]: 247). Proudhon, for instance, thought the social system could be altered by monetary and price reform. Marx said democratization of credit was impossible because capitalists exploit and control workers by using money, credit and debt.

In other words, if Marx were here today, he would be questioning, like we do, those socialists who only see money as a neutral tool or ineffectual form rather than appreciate that money is at the basis of practices that developed and maintain class and private property.


Marx’s dialectical approach not only allows but also demands a holistic appreciation of context, relational dynamics and transparent values. In this approach form and content can be analysed distinctly only within an overarching acknowledgement of their integration. For instance, the ‘money form’ is of, with and by the content of capital. His scientism was a call for boldness and bravery in social and political analysis. He sought the spare, essential patterns that explained economic dynamics and he engaged with the model that evolved, whatever it might imply. As a non-market socialist I would ask other Marxists to be scientific in this sense and consider whether it is simply too much of a challenge, too inconvenient, to contemplate the task of disassembling a world rotating on money.


Both the theory and practice of filmmaking and screenwriting refer constantly to ‘point of view’ (POV). The easiest example of POV is the location, slant and scope of a camera on subjects and scene. As political activists we are often poised like the cinematographer and camera within a POV. Marx positioned himself very firmly within the values of an alternative world to capitalism — whether we call it communism, socialism or anarchism hardly matters — and wrote his analyses from that POV.

Whether Marx was prepared to admit it or not this POV was, in itself, prescriptive and determined his specific dialectical method of being ‘scientific’. Not only that but a major part of his empirical and conceptual analyses, and the constant praxis operating between the two, was determined by the challenges of, and implications for, revolutionary strategies. He made no apologies for prescription here. Indeed this focus was the centre of his political and intellectual life. He and his wider family’s involvement in the rise and fall of the Paris Commune is a prime example. The rudders in his practical and theoretical approaches were essentialism and minimalism, to get to a socialist society as quickly and easily as possible.

It is true that there are points in Marx’s analysis where he gets out of explaining how a principle or criterion of socialism might operate in practice by saying, ‘Don’t you worry about that, they’ll work it out.’ Furthermore, he cautions theorists against creating blueprints which might deprive socialists of making decisions about what they do and how they do it because this act contradicts or undermines the democratic authority socialism embodies as self-governance. He has faith in socialist problem-solving once the structures, relations and values are firmly in place. By implication planned socialism, its centrist organisation and bounded markets would seem at odds with Marx’s perspective.

Marx had no quibbles at all in continuously engaging with contemporary prescriptions. His main points here were to do with breaking with money per se, rather than thinking that all you had to do was to ‘tinker’ with it and achieve large-scale change, let alone revolution. Marx’s analyses of existing experiments, such as workers’ cooperatives and labour money, assessed their (in)capacity to fulfil the principles of decision-making being transparent and just, and production efficiently and effectively satisfying social needs. Today, non-market socialists make the same points about the plethora of half-baked schemes — fair trade, carbon trading, community currencies and so on — that cannot lead to socialism unless they go hand-in-hand with political movements to erode capitalism, private property, and create a global commons focusing on production for everyone’s basic needs. Of course, many of those schemes do not profess to be socialist, mostly claiming to be on the way to either a higher stage of capitalism — developing ‘social capital’ or ‘natural capital’, terms that would drive Marx insane — or the more nebulous ‘postcapitalism’.

In short, we argue that we must unpack the terms of what postcapitalism might be to become conscious and deliberate collaborative managers of our co-existence. If this discussion is unfairly labelled discourses on utopia or prescriptive, so be it.

PC: The pragmatic socialists have always viewed money, exchange and the market important as transitional tools to achieve socialism. But, in your vision, this reduction of money to a mere tool also seems to obstruct any meaningful imagination of sustainable post-capitalism. Do you think the problems of market socialism and the social-democratic vision of socialism lie in their shared basic understanding of the meaning and power of money and market (and thus, capitalism)? What do you mean when you say, ‘the soundest critiques of capitalist developments need to be conducted in terms of use values’?

AN: Money and markets represent capitalist power, not only a vernacular of power, but also, and more importantly, existing material practice of power. We must recover that power over the means of our existence, over the conditions and practice of our existence. You cannot have capital without money. You cannot have abstract labour or labour for wages without money. Especially people who have no money understand that money is not a neutral tool, it’s a form of control. Capitalists are defined by money, their power is monetary power, their logic is a market-based logic. If our strategies for confronting, undermining and overwhelming capital are based in these simple facts, it is not hard to challenge the system. Non-market socialism is pragmatic.

In as much as market socialists and social-democratic socialists support market processes and mechanisms, I think that they share a basic misunderstanding of monetary and market practices and how they constitute capitalism. Twentieth century examples of centrally planned and market-oriented socialism, best described as state capitalism, clearly failed to democratise power and, in many ways their systems of production and distribution mimicked capitalist work and consumption. Socialist managers seemed to use market models as instruments of power to control the masses much as we are contained in capitalism. For me, socialism must mean sharing power, the power to decide what is produced, how it is produced and for whom. Socialism must be state-free and class-free because states and classes represent exclusive power.

Many critiques of capitalism highlight the contradictions between, on the one hand, economic values and dynamics and, on the other hand, the embodied social and environmental use values of resources, workers, goods and services. Many environmental and social activist campaigners appeal to a logic of use values rather than exchange values to advocate their position. For instance, they will argue that an old-growth forest has more use values and reproductive and sustainable potential to the communities that rely on it for all their basic needs, such as food, potable water, shelter, clothing and medicines, than its use for making profits for a multinational conglomerate that plans to clearfell the trees, sell them for timber, let or help the remaining forest ecosystem die, and replace it all with a tree farm. Similarly, anti-nuclear campaigners will argue that the industry is unnecessary to fulfil people’s basic needs and a risk to their wellbeing and livelihoods, while the nuclear industry will argue that it will create ‘clean’ energy to sustain growth, jobs and profits. These examples contrast arguments based in use values and those based on exchange values.

In as much as the Left continues to consciously and conscientiously argue and propose options that are based on a logic of use values we can offer a clear and unequivocal alternative to capitalism. Once we start to try to convince capitalists and the state to be more environmentally and socially sound using arguments based on economic values — ‘You can make more money this way’; ‘Why not trade in environmental values?’ — we are lost.

Again, the first couple of chapters of Capital I (1976 [1867]) — and earlier drafts of similar material in A Contribution to the Critique of Political Economy (1970 [1859]) and the Grundrisse (1973 [1857–8]) — show how important the concept of use value was to Marx’s concept of work for capital and the importance he gave to the obfuscation of use values through commodity fetishism. On the one hand, labour becomes standardised and interchangeable in the process of the production and exchange of commodities: ‘uniform, homogenous, simple labour’, ‘labour in which the individual characteristics of the workers are obliterated’, in short ‘abstract general labour’ (Marx 1970 [1859]: 29 — italics in the original). On the other hand, the quantitative relation ultimately realised in the form of a price not only represents ‘materialised labour’ but also, in the same process, ‘the qualitative difference between their use values is eliminated’. The analytical groundwork for his subsequent analysis is to show us what use values are, despite their obliteration through work and production for money. They are all we need to exist. It is capitalist ideology that mystifies the significance of money and makes us believe in its necessity and efficiency instead of ourselves.

The alienation implicit in commodity production, in capitalism, in a good or service sold for money occurs via market processes, which:

  • obliterate the human agency, which has produced the commodity
  • objectify the socially necessary labour-time as value per se
  • through a price, define the commodity in terms of its social wealth, thereby eliminating any sense of the commodity’s use value.

In one stroke, within the first few pages of all these early works of Marx, we readily understand that workers, the subjects and objects of capital(ists), will experience the world in a market-filtered and dominated way. Capitalists cannot in practice appreciate environmental and social values. The system they employ reduces everything to a market assessment, a monetary value, a price.

Furthermore, Marx’s analysis shows the absurdity and risks of efforts to try to set prices, which today focuses on making prices reflect environmental values, as in carbon and water-trading schemes or pricing forests and other environmental ‘assets’. Similarly, it is pointless to calculate and try to institute wages for housework. In my opinion his painstaking ethnography around commodity production and exchange found at the start of Capital I and his earlier works is Marx at his finest. He reveals the absurdity of market values, alludes to the workings of the market as absolutely distinct from meeting basic human needs and the needs of ecological systems. The political conclusion is:

“The religious reflections of the real world can, in any case, vanish only when the practical relations of everyday life between man and man, and man and nature, generally present themselves to him in a transparent and natural form.” (Marx 1976 [1867]: 173)

To institute socialism we only need to understand the potential, limitations and needs of a natural and built world held in commons along with the basic needs of humans — and share decision-making based on a discourse of use values and distinct measures appropriate to differing use values (Buick 1987). There is no need for a universal unit of account or means of exchange.

In his chapter on money, markets and ecology in Life Without Money, John O’Neill discusses the non-monetary thrust of Otto Neurath, who, a century ago, argued against Ludwig von Mises and Friedrich Hayek for an in natura socialist economy. In short, Neurath envisaged an economy based on use values, ecological and social values, that did not rely on any kind of standard for comparison, any universal measure, such as money. In tandem O’Neill, an ecological economist and political philosopher as well as a political economist, discusses deliberative democracy as a current that he thinks can offer ways for people to decide together what and how they produce and for whom.

Meanwhile, many socialists today fail to acknowledge the revolutionary significance of consciously acting, as well as thinking, on the basis of use values rather than exchange values. Acknowledging money as a tool of power, rather than efficiency, and as the organising principle of capitalism points to revolutionary strategies which undermine capitalism non-violently and involve instituting direct democracy in the process. So, I do not reduce money to a ‘mere tool’ at all. Rather, I see it as omnipotent, so powerful in fact that even committed and passionate socialists can complain that they cannot envisage a socialist future without some kind of monetary framework or role for money and markets.  What a dictatorship of the imagination money and its market has wrought, that even its most ardent detractors cannot think outside their prison walls.

PC: The second half of the book discusses various experiences of building a moneyless future. However, don’t you think that the marginal and isolated nature of some of these experiences and their permissibility within capitalism dilutes their capacity to become models for a socialist future? Do you think Marx’s appreciative, yet cautionary, note on cooperatives in his various writings (e.g. The Inaugural Address to the First International) are valid for understanding the scope and limits of these experiences?

AN: Again, as it so happens, my stance is quite close to Marx’s. I too have been a longstanding critic of a range of movements that regard cooperatives and, say, the Parecon (participatory economics) models of Michael Albert and Robert Hahnel as embryonic or, worse still, fully fledged institutions of a socialist future. Specifically either integration within the market, which is the hallmark of many productive cooperatives, or use of quasi-monies — a labour voucher system in the case of Parecon — have problems that Marx pointed to. We do not condone either in Life Without Money and include a brief critique of an alternative exchange/currency LETS (labour exchange or local energy trading system) by Adam Buick.

I find the space-to-exist-within-capitalism argument somewhat self-defeating. Anyway, aren’t we referring more to a forcefully created space within which to resist capitalism? Does the fact that you and I are able to conduct this conversation freely within a capitalist society mean that nothing we say can be valid for a post-capitalist future? Of course not. We conduct this discussion in resistance and defiance of capitalism. We are isolated and marginalised because that is part of the game. It might seem weird for someone like me, who spent years on a painfully detailed and constructive critique of Marx’s concept of money, to say this but I prefer to make a stand in practice than to wax lyrical about pure theory. I prefer activity to text. I prefer creation to criticism. I tolerate — even enjoy — theory, text and criticism but only because they help me live and enable me to change the way I live. I want to do. To do is to be.

The practical examples that we discuss in our book are not offered as ready-made solutions but rather constructive ways to move if we are to realise socialism in the short amount of time we now have left to do so — in decades not centuries. We are already in a process of species suicide. We are already in a process of renewal of what it is to be human. We cannot afford to think in terms of a long-term plan or reformism, if only because of the haste with which we must move. It is fitting that we take the most accurate route. There will be a revolution or, literally, nothing left of our species. We try to identify, then, embryonic and/or hybrid forms, which allow us to begin right now and know that the way we are going is contributing to establishing and maintaining socialist values, socialist production and socialist exchange.

Two well-known examples discussed in our book are Twin Oaks community in Virginia (USA) and the squatting community Can Masdeu in Catalonia (Spain). Neither promote themselves as non-market socialist. In reality both communities are open to diverse philosophical beliefs. However, their practices and approaches are near enough to non-market socialism for us to use them in our analysis. They both eschew money and markets but could not exist without a negotiated existence within capitalism, the prison we all live in. They struggle to impose alternative values and practices within, alongside and usurping capitalism. They are not ghettos. They welcome visitors and attract enough to open spaces for ‘the public’ weekly, have visitors stay and hold workshops and other activities in partnership with local and global environmental and social activist campaigners.

In 2012, I spent three weeks at Twin Oaks, living like a member and six weeks in Barcelona exploring, not only Can Masdeu but also other communal experiments, such as the eco-industrial post-capitalist colony of Ca La Fou. To me they seem less marginal and isolated than many Marxists and anarchists, both those within and those outside their fragmented parties, scholarly academies and other institutions of resistance, which seem to have little impact on mainstream society. All that said, many members of these communities are, of course, socialists and/or anarchists! Twin Oaks community and Can Masdeu exist in the fluid, ad hoc and self-governing networks that made the Occupy movement possible on a global scale. The people who move in and out of them have not waited for agreement on a correct line. They have not waited for a revolution. I see their potential in two integrated spheres — creating productive and democratic structures separate from, and in competition to, capitalism.

PC: You have been involved in the intentional community movement in Australia. Can you give a brief account of your experience in terms of its significance and limitations?

AN: During the 1990s I lived in two communities. Commonground, located in central Victoria refers to itself as an intentional community along the style of a commune. In his From Utopian Dreaming to Community Reality: Cooperative Lifestyles in Australia (1995: 140), Bill Metcalf referred to it as ‘the smallest, but also the most radical and dramatic, in this book’. Indeed, when I was there, it was self-organising on the basis of anarchist, feminist and socialist values. Twin Oaks had been an inspiration to one of the founders and certain ways that Twin Oaks operated were experimented with and instituted at Commonground. This included a ‘labour credit’ system — distinct from a labour voucher or quasi-money system — in which people elected to work on tasks that the community collectively deemed as work for a set number of hours per week.

Since Commonground had fewer than twenty people living there as members at that time, it was easy to timetable all the tasks that needed doing, then members and working visitors would select and negotiate their personal work schedule for the forthcoming week at a meeting held each Monday morning. Commonground owned almost 40 hectares of rural bush land, which gave it the opportunity to practise a modicum of sufficiency alongside its core mission to serve the social change movement. I relished my time there because it brought me into contact with so many people seeking social and environmental change, and the experience of communal life was overwhelmingly positive.

During my period at Commonground, and while I was completing my PhD on Karl Marx’s theory of money, the concept and practice of a common purse was being hotly contested within the community’s inner core. I witnessed the tensions that compromises with capitalism and a market mentality entailed as some core members argued for the cooperative mission to be fulfilled in a more business-like way, albeit a non-profit business. This was a struggle against principles of what I would later refer to as collective sufficiency — as distinct from individualised self-sufficiency — and environmental justice. The balance had always been in favour of social rather than environmental considerations. I found that hard to understand because, for me, environmental and social justice are — or can be — bound together. As I understand it, this fracture has been institutionalised within the community — as it is within the wider Left in Australia, of which it remains an active part.

After a couple of years’ living at Commonground — where everyone lived and worked under one roof — we sold the land that I owned jointly with them adjacent to their 40 hectare property, and I bought into Round the Bend Conservation Co-operative, located in a peri-urban or semi-rural enclave on the edge of Victoria’s capital city, Melbourne. This cooperative was explicitly not an intentional community but rather was developed to preserve 132 hectares of box-ironbark woodlands while providing a site for housing for each of its shareholder-members. The members own the land as a cooperative, which determines the rules under which people build and live there, jointly managing the land for conservation purposes.

Given that you could not borrow money to build on the cooperative, potential membership seemed to be limited to the well-off, though to purchase a share with its house site attached cost less than 20 per cent of comparable land purchases in the area and many had built mud-brick homes using their own labour, making it accessible to DIY activists. Though some of the members had been communists and/or radical activists, this cooperative was more mainstream than Commonground. However, I was attracted by its environmental bent and its singular achievement of spreading many of its environmental practices to a wider landscape of more than 100 private properties in the form of regulations, which became an Environmental Living Zone under the state’s planning code in 1986. Despite its limitations I concluded that it had the potential to act as a transitional form between private property and holding the Earth as a commons. Although not the hothouse that Commonground was, the co-management of land demanded sophisticated skills in communications and decision-making, which was based as much as possible on consensus. However, after a serious car accident, I left mainly because it was not convenient to public transport and I needed to be closer to places I worked and socialised in.

PC: Do you find the question of building a ‘life without money’ emerging from class struggle itself? In contrast to the voluntarist stress on the escape from the logic of capital, is it not true that the central concern in Marxist theory of praxis has been to build upon the solidarity and coordination embedded in the daily ‘guerrilla struggle’ against capital and the increasing political and economic self-capacity of the working class?

AN: In short, yes to both questions. The best reference points here are those writing in the autonomous Marxist tradition. The third chapter in Life Without Money is by autonomous Marxist Harry Cleaver and focuses on working for money.

Cleaver emphasises that Marx had a labour theory not because he saw capitalism as the means to dominate people as workers and consumers. Capitalism redefines life as work: market-oriented production and consumption. Marx’s theory of alienation was a critique of capitalist work; socialism and communism meant freeing work from that perversion. Post-capitalism meant increasing our free time to enable a growth of individuality and humanity replacing labour as the source of value in society. Revolution meant workers’ gaining control of the means of production and making work meaningful through self-organised cooperation and collective self-realisation.

Cleaver attacks the standard socialist position that leads to work under socialism being much the same as under capitalism except that the state, not capitalist, extracts the workers’ surplus value:

“The primary difference is that in ‘socialist development’ government plans and organises most of the investment. From the Soviet Union’s extraction of an agrarian surplus to finance industrialisation to the current Venezuelan Government’s appropriation and reinvestment of oil profits, the process remains approximately the same no matter the rhetoric in which these processes are cloaked.” (Cleaver in Nelson & Timmerman 2011: 48)

Moreover, the accumulation characteristic of twentieth century socialism meant that the sense of human diversity ‘implicit in Marx’s notion of the transcendence of labour value by an indeterminate free time has been both ignored and contradicted’ until, over the last few decades, some movements have revealed ‘the possibilities of real multilateralism in post-capitalist society’ (Cleaver in Nelson & Timmerman 2011: 52). Cleaver celebrates our alternative socialist tradition of collective grassroots cooperation; as capitalism intervenes in and shapes people’s lives, they resist. If they resist on the basis of work refusal then ‘the struggles of those of us who are waged and the struggles of those of us who are unwaged are inherently related’ (Cleaver in Nelson & Timmerman 2011: 60). Cleaver’s book Reading Capital Politically (1979) skilfully deconstructs class and re-elaborates class with capitalist money at the centre, thus embracing non-worker consumers and other structurally marginal people.

A non-market socialist position distances itself from any intense or central emphasis on worker cooperatives and schemes that compromise with the market or mimic capitalism. We prefer hybrid models, such as the temporary autonomous zone discussed by Bey (1985) and elaborated in Terry Leahy’s chapter in our book. Instituting a hybrid is a defiant and forthright challenge. It might focus on: expanding community gardens where there is decision-making on what is grown, how and where, as well as sharing work and produce; or squatting spaces and using ‘trash’ for art activism; or spreading crop and swap meets, holding them more and more frequently based on growing kinds of goods and services. These hybrids are not pure embryonic forms of a new society but rather act as half-way points stepping away from capitalism towards an holistic socialism. Monitoring and revising the operation of hybrids not only develops a clearer critique of capitalism but, more significantly, also enables us to be actively experimenting with being socialist. Such hybrids act as cells conscientiously working to overcome systemic barriers to greater networking between hybrids, with the potential to produce an holistic alternative future of expanding and interrelating hybrids. Developing more confidence in these alternative cells and networks we can withdraw more of our labour from the capitalist economy and polity — work refusal — and instead actively produce a new society.

PC: One of the most remarkable features of this collection is its readiness to traverse through various revolutionary traditions against capitalism. One tradition that finds space throughout the collection is that of anarchism and its various shades. How do you see the divergences and convergences between these two revolutionary traditions — of Marxism and anarchism? Further, you yourself admit that this collection can be seen as a sequel to Rubel and Crump’s volume on non-market socialism. Do you agree with Rubel’s characterisation of Marx as the theoretician of anarchism?

AN: My interpretation of Marx fits very comfortably with Maximilien Rubel’s. Though not in the first instance being conscious of the traditions that my interpretations of everyday life fell into, I too read Marx as if I were an anarcho-communist, non-market socialist or autonomous Marxist. In my twenties, I referred to myself as an anarcho-communist. While I was immediately attracted to anarchism’s open creativity and anti-state position, it always seemed too broad a church to me to support without qualification. Its representatives embraced the whole spectrum, the best and worst of political philosophies. Anyway, I had socialist values, so they came first and anarchism became the qualifier. This, of course, seemed to make me objectionable to most of my friends who neatly and commitedly kept to one camp or the other. That I was first and foremost a women’s liberationist only muddied the waters further. It is only when I chanced on the collection on non-market socialism by Rubel and Crump (1987) that I found my political home.

While they define non-market socialism as a market-free, money-free, class-free and state-free society, we add that non-market socialism needs to be want-free, sustainable and just as well. Yes, our book very much updates and expands on the Rubel and Crump collection. It is current and broad in its scope, whereas Rubel and Crump took a more historical approach, which makes their collection more fragmented and partial. The anarchist Terry Leahy wrote the chapter in Life Without Money on the gift economy, though his discussion is broad-ranging, his analysis drawing on permaculture, patriarchy and feminism.

The somewhat bad name of anarchists amongst socialists has to do with the diffuse nature of anarchist writings, their seemingly undisciplinary and joyfully undoctrinaire philosophies and anarchism’s attraction to charismatic, egotistic loose cannons. The conflict between Bakunin and Marx was to prove typical. However, in my lifetime, several connected pressures have forced a critical rapprochement. For those of us committed to environmental activism, amongst our politically sophisticated and experienced brethren, socialists proved very slow on the uptake and anarchists were more open supporters. Working from the grassroots demands a different style of politicking and creativity that anarchism can inform. Most importantly, the statism of the Marxist Left shackled its development while anarchism had done away with the state as a first principle.

PC: You have devoted considerable space in one of the initial chapters to developing a concise critique of the so-called actually existing socialisms and the debates around market and money during their revolutionary phases. You have endorsed Che Guevara’s attitude in Cuba against statisation, market and money. Can you summarise his vision of the socialist future as you understand it? How do you relate this with the questions of state and political power with which Che was always concerned as an armed revolutionary?

AN: In the early years of Soviet power the party elite seriously discussed instituting a moneyless economy. A debate occurred in Cuba also, in the mid-sixties, around whether and how to diminish the role of money. In neither Russia nor Cuba did the founding revolutionaries come to power with a clear theory or plan for how socialist exchanges might differ from market-based evaluation.

Many of the Russian leaders, such as Trotsky and Stalin, expected money would simply disappear almost of its own accord as communism developed (Bettelheim 1968: 60; Rosdolsky 1977: 130). In Russia they decided to abolish money but not monetary accounting. The debate on replacing a monetary unit of account with one based on labour, measured in time or energy, produced an enormous volume of literature in 1920–1921. It was influenced by the work of Austrian economist Otto Neurath, whose thoughts John O’Neill discusses in depth in his chapter of Life Without Money. Anyway, any advance to a moneyless communism was halted when all state industries were directed to follow principles of precise economic accounting, including demanding money for taxes as well as state-produced goods and services. While Lenin acknowledged that his New Economic Policy would ‘inevitably lead to… a revival of capitalist wage-slavery’, he defended it as a tactical retreat ‘to make better preparations for a new offensive against capitalism’ (Lenin 1976: 184­–5). I regard it a salutary lesson that this retreat solidified into a barrier to the advance of socialism.

I became particularly fascinated with the split that occurred between Fidel Castro and Che Guevara, especially around economic matters and the question of ‘money’, in which I sided with Che, though I do not think he went far enough. Is that because he did not believe we had to do away with money completely, as non-market socialists believe, or because he was pushing his point about as far as he could at the time? At least Che appreciated that this was, at base, a political rather than an economic matter, pointing to the development of a substantively political democracy as the organising principle of society. Alas, at least publicly, he believed in a limited usefulness for a unit of account — which is the fundamental function of capitalist money — but his arguments here were practical, associated with international trade, rather than ideal. As it was, he failed in his limited attempt to reorient the revolutionary strategy. It is significant that he broke with the Cuban revolution at this time because it leaves hanging the question of his essential vision of socialism. I do not think that what is left in historical records can clear up some of these key points.

Che embraced Marx’s position that monetary values reflected abstract labour, not wants or available resources. Che said that prices set by state agencies were not market prices, that planning should not mimic market forces and the law of value, but instead consciously account for non-economic factors. Belgian economist and Marxist Ernest Mandel supported Che’s position that socialism negated monetary values and trading relations. However, Che lost the debate with Castro, who agreed with abolishing money ultimately but not immediately. Che’s vision of socialism was rooted in voluntary, passionate work and a new consciousness, free of the discipline of the market.

PC: Recent developments in Latin America have rejuvenated debates on revolutionary strategies everywhere, even among the Left in Australasia. The fabricas recuperadas movement and the Unemployed Workers’ Movement in Argentina, the barrios movement to establish popular control over urban resources in Venezuela, the rise in Indigenous assertion and power in Mexico and Bolivia and the landless workers’ movement in Brazil — all have redefined much of the older debates on social control, political organisations, state etc. Many Marxists in the autonomist tradition have affirmed and critically articulated the significance of these developments. Do you find any enrichment of the discourse on market and money, as central to socialist imagination, in these experiences?

AN: Yes, experimentation in DIY revolutions, being active in spaces of resistance, is basic to the thrust of non-market socialism. We all live under intensifying capitalism, and resistance can come in unexpected forms. While we are suspicious of state socialism, we must use whatever support we are offered to show that grassroots activity is the backbone of socialism. Joan Martinez-Alier reminded a class — who I spoke with about our book at the Summer School and Workshop on Political Ecology, Environmental Justice and Conflicts in Barcelona in July 2012 — that in the Spanish Civil War (1936–39) people experimented with non-monetary exchange as well as collective production. As Allende’s Chile (1970–1973) fell to opposition forces, it was the same. As we take control of the forces of production and produce for a socialist future, then we must use our own values and distribution networks based on the logic of need and use values, not monetary values and the market.

Three contributors to Life Without Money participated in panels at the 2012 Left Forum in New York City: ecofeminist Ariel Salleh, Frans Timmerman and I. Key speakers at the Left Forum included Autonomous Marxist John Holloway, who lives in Mexico, and Marina Sitrin whose work on horizontalism (horizontalidad) in Latin America and the global Occupy movement is particularly relevant. An indication of the significance of the rejuvenation of non-monetary relations in everyday acts by Europeans in defiance of the global financial crisis is the Homage to Catalonia study led by Manuel Castells (Conill et al. 2010), some findings of which appear in his Aftermath: The Culture of the Economic Crisis (Castells et al. 2012).

The Occupy movement has been impressive if only because it has been so widespread, demonstrating a broad disenchantment with representative democracy and market economies right across the world. The general-assembly models, endorsement of horizontalism, direct engagement between crowds and speakers, the naming of the ‘1%’ against the ‘99%’ and the word ‘occupy’ identifying their chief demand has put capital in disarray and on alert. More than that, this movement is supported by many of those who are experimenting with production for direct use, alternative and gift exchange, and liberation from trade, consumption and exchange values.

PC: What is a compact society? You talk about collective sufficiency and networks, which connect the local with the global — thus establishing a global compact society. Can you explain the basics of this post-capitalist future, and how it will transform our needs and activities, and counter the negative impact on the environment?

AN: In Life Without Money, we elaborate a local–global compact society, not to lay down a hard and fast plan for a non-market socialist future but to stimulate people’s imaginations and counter those who regard it as impossible. Most significantly, for our activist practice, we need to have a clear idea of where we are going and how our different activities might ultimately constitute a socialist future. We want as many people as possible elaborating ideas of a post-capitalist future so we can argue, experiment and establish this society.

To distinguish ours, we needed to name it somehow. I liked the way that the word ‘compact’ worked in two directions, socio-political and the other environmental and material. The noun ‘compact’ refers to a social agreement and, used as an adjective, ‘compact’ is associated with efficiency and economy, referring to a condensed, small and efficient use of space. The concept of a compact world is one of multiple horizontal cells, which aim for relative collective sufficiency within neighbourhoods and bioregions, connected by networks of various sizes appropriate to their functions, with voluntarily created and agreed to compacts structuring the production and flow of goods and services. ‘Collective sufficiency’ is a term we coined to refer to material, basic-needs sufficiency evolving on the basis of a commons and people working together to ensure their communal sufficiency (in contrast to individuals or singular households developing ‘self-sufficiency’).

My concept of these cells owes much to the principles and design features of permaculture. ‘Permaculture’ — a movement starting in Australia but quickly taking root in various places globally — stands for permanent and sustainable culture, integrating human practices with natural processes to yield security in food and other basic needs (Holmgren 2003, 2012).

I was a member of the Communist Party of Australia (CPA, 1920–1991) from the early 1980s to its dissolution ten years later. I was particularly attracted by the success of green bans led by CPA officials, especially Jack Mundey, and the builders unions’ who refused to work on developments that they deemed environmentally or socially unsound (Burgmann & Burgmann 2011). I had always been — and remain —particularly frustrated with the conservative role of unions in Australia and green union strikes and activism singularly broke that mould. These actions initiated the green bans movement worldwide. My mother was practising permaculture as a gardener in the 1980s. I became more attracted to it as an efficient and sustainable approach through my political activities, drawing on anti-state and anti-capital political discourses, and growing evidence of the accuracy of the analyses of 1970s social and environmental activists who initiated more environmentally sound approaches to life.

As a set of design principles and sustainability practice, and care-and-share values, permaculture readily indicates how productive cells might function. The permaculture movement is weaker in pre-visioning the how, i.e. the relationship base, of a global commons, non-monetary production and exchange. In other words many permaculturists imagine that it is simply a matter of the economic and political structures’ absorbing their values in a higher stage of capitalism. Even if they speak in terms of post-capitalism, there are still money and markets, non-profitable firms and representative government. In contrast, non-market socialism and the concept of a compact world introduce governance and economy as challenges still to be addressed.

We often get asked if a compact society is, in effect, a return to living in the cave. People are particularly mystified that any form of advanced technology could be possible without capitalism, the magic womb. Or, of course, they offer the one other path to the same ends: state socialism, whereby the state, robot-like, dictates the establishment and maintenance of large-scale machinery in its own image. In contrast, my approach to technology is one of minimalism. I support small and appropriate technology that is established and maintained on the basis that it does not cost the Earth too much and is efficient, meaning effective, socially. Examples include some forms of renewable energy and biomimicry. Use of computers and Internet needs to be transformed to end or involve only a miniscule amount of harmful substances, such as rare earth minerals and waste, and the ways they are made need to take account of the conditions and working styles of the people making them. Diversity and resilience are both enhanced by relatively autonomous collectively sufficient neighbourhoods and bioregions.

My political activities have been very personal, grounded in everyday life, mainly in environmental grassroots movements, which are open and exploratory, and my philosophy has evolved experientially. These experiences have given me confidence that: a grassroots revolution is possible; we can ‘take over’ the state by replacing its functions in an almost unrecognisable way because, as such, it functions mainly to support capital and a non-market socialist politics is embedded in people’s direct and immediate control, of the means of production and distribution; socialism must be modest and efficient and effective at a personal and neighbourhood level.

By seeing our basic human needs and the needs of the environment in direct, scientific and practical forms and then advancing to discussing options for just and sustainable futures in terms of such use values would be a real advance. Marx’s clear analysis, based as it was on use values — in contradiction to the political economists’ submersion in economistic terms and approaches — offers a clear way forward for the Left to reassert historical-materialist methods.



Althusser, Louis (1971) Lenin and Philosophy and Other Essays. London: New Left Books.

Bettelheim, Charles (1968) Planification et rapports de production. In his La Transition Vers l’Economie Socialiste. Paris: Maspero.

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Buick, Adam (1987) The alternative to capitalism. In Buick, Adam and John Crump (eds) State Capitalism: The Wages System Under New Management. Houndmills (Hampshire): Macmillan. Accessed 22 December 2012 at

Burgmann, Meridith & Verity Burgmann (2011) Green Bans movement. Dictionary of Sydney. Accessed 22 December 2012 at

Castells, Manuel, João Caraça, & Gustavo Cardoso (eds) (2012) Aftermath: The Culture of the Economic Crisis. Oxford: Oxford University Press.

Cleaver, Harry (1979) Reading Capital Politically. Brighton (Sussex): Harvester Press (The 2012 Indian Edition published by Phoneme Books, New Delhi).

Conill, J, M Castells & A Ruiz (dirs.) (2010) Homenatge á Catalunya II. Accessed 19 November 2012 at IN3 (Open University of Catalonia) —

Holmgren, David (2002) Permaculture: Principles and Pathways Beyond Sustainability. Hepburn: Holmgren Design Services.

Holmgren, David (2012) Holmgren Design Services [website]. Accessed 22 December 2012 at

Lenin, Vladimir (1976). Collected Works 33: August 1921–March 1923. Moscow: Progress Publishers.

Marx, Karl [1867 (1976)] Capital: A Critique of Political Economy Vol. I. Harmondsworth: Penguin.

Marx, Karl [1859 (1970)] A Contribution to the Critique of Political Economy. Moscow: Progress Publishers.

Marx, Karl [1857–8 (1973)] Grundrisse: Foundations of the Critique of Politcal Economy (Rough Draft). Harmondsworth: Penguin.

Metcalf, Bill (1995) From Utopian Dreaming to Community Reality: Cooperative Lifestyles in Australia. Sydney: University of New South Wales Press.

Nelson, Anitra (1999) Marx’s Concept of Money: The God of Commodities. London: Routledge.

Rosdolsky, Roman (1977) The Making of Marx’s ‘Capital’. London: Pluto Press.

Rubel, Maximillien & John Crump (1987) Non-Market Socialism in the Nineteenth and Twentieth Centuries. London: Macmillan Press.

‘Arab Spring is part of the General Strike of the South’: An Interview with Vijay Prashad

Vijay Prashad‘s new book, Arab Spring, Libyan Winter (AK Press, 2012) captures the complexity of the Arab revolts – by bringing out the history and historical forces behind them. The book exposes the West’s imperial anxieties and their fear of the organic – the mass character of these uprisings. It demonstrates the resoluteness of the “rebels from below”, that they will not allow the Arab lands to “be the same again”, that they are dissatisfied with the Present and they want something more than the “21st century delusions” that neoliberalism delivers. Most importantly, Prashad’s book reconfirms that “the rebellion from below has its own radical imagination.” The following discussion with the author is an attempt to read the book with him to understand the implications of his analysis of the Arab revolts.

Pratyush Chandra (PC): Even the title of the book suggests you are not comfortable with the euphoric homogenisation of the recent upsurges in the Arab Arab Springworld. In fact, it seems you consider this discursive seasoning/colouring of Arab struggles to be highly ideological, not allowing us to comprehend the struggles in terms of their “deeper roots and grievances”. Do you think this impression about your book is valid? However, as the spatio-temporal interconnections are quite evident and cannot be denied, how do you assess the contextual commonality of these upsurges, and what are the limits of using this commonality as the only key to understand them?

Vijay Prashad (VP): The Arab Spring, or Arab Revolt, or whatever History shall call it, is party to a long-wave of struggle which we can call the General Strike of the Global South. It begins around the late 1980s, perhaps with the Caracazo, the uprising in Caracas, Venezuela, in 1989. Immense pressure on the lifeworld of the ordinary people in the South intensified with the debt crisis of the 1980s. The mandarins of the Global North used the debt crisis as a lever to extract massive concessions from the states of the South, mostly under the name of Structural Adjustment Programs. These included a roll-back in State intervention for social welfare, a selling off at bargain prices of the essential sectors of the economy and the welcoming of private, mostly foreign, capital into all aspects of social life that had not before been governed by the laws of capitalism (such as water delivery, electricity delivery and food delivery, notably bread delivery). This assault on the life of the ordinary people sharply increased deprivation in the South. But the totality of the society was not damaged by deprivation. Small but considerable sections were able to make quite a lot of money as sub-contractors in this phase of neo-liberalism –- they were able to collect a greater share of the rent or were able to operate as the local face of transnational firms. In many of the countries of the South, these sub-contractors were the relatives of the political class (such as Gamal Mubarak, son of Egyptian president Hosni Mubarak) or else they were special elites who had very close ties to the political class (for kin reasons or through extensive bribery or patron-client relations, the latter a familiar story in India). This links the risings in Tunisia and Egypt not just to an Arab context, or an African context, but to one of Global South.

About the discomfort with the homogeneity, this is of course true. The “Spring” does not come evenly. In some places, there was a deep freeze, such as in the Arabian Peninsula. No such opening was to be considered. Neither Yemen nor Bahrain, nor indeed Saudi Arabia, could be permitted to have a democratic opening. In Yemen, it was a “managed transition”, so that Salehism could continue under the tutelage of Hadi, who was the sole candidate in an election (Saleh’s family and regime remain in power, with open door to the US to operate its drones to kill at will in Yemen). In Bahrain, all eyes remained averted as the Saudis and then the Bahrainis smashed the demonstrations. There was no Spring here.

There was no Spring as well in Libya, which had a genuine uprising against a deeply unpopular leader (an unpopularity that Qaddafi earned; his coup in 1969 was very popular, with his policies from the mid-1980s sharply alienating him from his people). How did NATO become a force in the Arab world? This is one of themes in the second half of my book. How did NATO become Arab?

PC: Many left commentators have asserted the democratic revolutionary character of the Arab spring. However, classically a democratic revolution has come to mean (at least in the 20th century) radical social transformations at various levels. It was never merely related to the formation of representational democratic institutions or the recognition of a few formal rights, unless they become vehicles for larger changes in the political economy. What is your assessment of the development in the Arab world in this regard? Do you find the analogies of 1848, 1905, 1968 and 1989 of any use in describing the events today?

VP: The task of a revolutionary regime is not clear-cut. The Arab states of Tunisia, Egypt, Libya, Syria, and others, had and have been governed by a form of state-craft that combines neo-liberal policies and national security regimes. The jail and the private sector are hand-in-glove to dispossess and encage the ordinary people. To cut back on such a complex apparatus that reproduces deprivation and indignity is not easy. We cannot underestimate the power of dignity in these revolts. It was dignity as much as bread that pushed people to take such enormous risks (even in Egypt between a thousand and two thousand people gave their lives for the revolution). The first phase of this uprising was to set aside the culture of fear created by the national security regimes. That has been done. The task that has now come before the people is to reject the authoritarian structures and create new constitutional processes that allow their voices to be central to the formation of national policy. In this phase, the question of economic and social policy will assert itself. The workers of Mahallah, the Independent Union of General Tax Authority Workers: they played central roles in the Tahrir dynamic. Indeed, in May 2012 the Tax workers (the largest union of state government employees) were on strike for better wages, better working conditions and so on. Their demands have not evaporated before the important question of elections and more representative parliamentary institutions. Much the same in Libya, where the workers and unemployed youth have occupied the front gate of the Arabian Gulf Oil Company. They have refused to budge.

The revolts you mention – 1848 to 1989 – are explosive in their impact, but their great impact also took time to germinate. I end my book with a brief assessment of these…how 1968 might not look like it amounted to much, but on the other hand it delegitimised sexism and racism, and a kind of aristocratic idea of culture. No straight lines for revolts; everything is tangled.

PC: As is clear from your analyses the heterogeneity of class and political interests mark the Arab resistances. Taking into account this heterogeneity, the political forces that will emerge victorious will finally depend on the class(es) that hegemonise the movement. Apparently, the political alternatives that are emerging from various resistances right now do not seem to be revolutionary. In fact, most of them are residues of the old regimes. So in what sense, can we take these resistances to be a ‘stage’ in the revolutionary process? Where do we place the working class in the overall resistance?

VP: In each of the North African cases (Tunisia, Egypt, Libya), the working class will play an important role in the near future. If the military does not suffocate the short-term (a genuine concern for Egypt), it is clear that thanks to funds from the Saudis and the Qataris, and a nod and a wink from the US, the various formations of political Islam will probably have an upper hand for now. In Egypt and Tunisia, they have worked hard to build up their organisational capacity (in some ways they were also tolerated. In the 2005 elections in Egypt, the regime most likely allowed them to win to terrify the West into backing off from calls for democracy and so on.). But the forces of political Islam have no agenda for the social and economic demands of the people. They will govern, and if pushed by a vitalised working-class movement, they will fail. When they fail, if the working-class is not organised and vital, it is likely that there is a threat of restoration. That is why the historical task of the Arab revolt now is for the working class organisations and its allies to be prepared for when the moment comes. That is why the concerted strikes and struggles that have been going on are so important: they build the will of the working class not only for the present, which are often struggles over reforms and survival, but for the next great battle, which is for the working-class to become hegemonic over society in tandem with the failure of political Islam to make its mark. Political Islam is fated to fail. It has so little to offer the people. It played an important role in these struggles, with many of its disciplined cadre willing to die, to stand against the neoliberal security state. But that role is going to diminish as it begins to govern, like Hezbollah in Lebanon, as a populist force committed to neo-liberal policies.

PC: The ideological and cultural formation of the earlier ‘social-democratic’ upsurges – whether Baathist or Nasserite – was very clearly secular Pan-Arabism. Are the current movements in West Asia different on that score? Do they even have a cohesive ideological and cultural formation, if not as a totality, then at least in individual terms? Could you please elaborate upon the cultural and ideological formation of the current upsurges in terms of their social content and the materiality of their history/histories?

VP: Well, the Muslim Brotherhood and other forces of political Islam certainly have a cohesive ideological orientation. There are also the liberal platforms, such as the Egyptian Hizb El-Ghad or Tomorrow Party, which are committed to parliamentary or representative democracy and have a modest program on the economy. They are social democratic and secular in their orientation. In Libya, there is less of a basis for such a platform, which is why it is governed by the neo-liberal Diasporics who are beholden to the West rather than to a mass political constituency on the ground; they win their elections in Washington and Paris, not in Tripoli and Misrata. In Egypt, the constituency for this kind of secular social democracy is the middle class, which is substantial and was smothered by neo-liberalism’s characteristic nepotism. The working-class in Tunisia, Egypt and even in Libya, has a focused class dynamic. It is most highly developed in Egypt and Tunisia, where working-class organisations operated despite the authoritarian state, and these organisations have moved from defensive agendas to making much more substantial demands on the transforming states. It is in this process of demand escalation and general organisation of the working-class (and perhaps the peasantry in Egypt) that a clearer alignment will emerge. By the way, in Egypt, the nostalgia for secular Nasserism is not passe. There is an undercurrent that holds that standard aloft. In Tahrir Square, posters with Nasser’s picture could be seen here and there. But nostalgic Nasserism is not what North Africa needs. New ideological coordinates are needed that build a new set of policies to counter both neo-liberalism and the habits of the security state apparatus. Nasserism was a sufficient bulwark against neo-colonialism; it is not going to be enough to tackle neo-liberalism and authoritarianism.

PC: Who knows better than you that some of the states/regimes that have been under attack recently emerged as part of the larger progressive and democratic “third world project”. In fact, the term democratic revolution was often used to characterise their emergence, because they triggered significant political-economic changes (even if with a statist tenor) centred on the post-colonial national interests –- at least in the form of land reforms, the “democracies of bread”, and the constitution and empowerment of the national bourgeoisie. What is it that has happened in due course that we are once again witnessing another series of democratic revolutions, if we may legitimately call them so?

VP: It is my view that the left-leaning movements of the past century -– the socialists, the communists, the Third World nationalists -– all failed to recognise the fundamental aspiration of the people to have a say in their societies and in their state structures. They wanted bread, sure, but they also wanted dignity. You cannot get dignity by having no voice in your society, and being directed by your state. If you do not build a State apparatus that is able to harness the dignity of the population, whatever good policies you have in mind will come to nothing. Socialism cannot be administered from above nor can it come in a hurry. We learn this from the examples of Tanzania and Afghanistan. Both Nyerere and the Afghan Communists saw that the principal matter is to draw people to their agenda, not to set in place the best policies. The confidence of the people must be earned, and people must be drawn into the decision-making and state-building processes. If they are alienated from the State, the entire project is liable to failure. Nasserism was the Arab franchise of the Third World Project. It suffered from all the problems I lay out in The Darker Nations.

The arrival of Bolivarianism is in many ways a critique of the Third World Project’s demise and the rise of neo-liberal states in its place (in Venezuela, in Chile, in Argentina, in Bolivia). The Arab Spring is in line with that upsurge.

PC: You have shown the importance of Qaddafi’s Revolution of 1969, and how it transformed the Libyan society. However, you also detail the insufficiency and degeneration of the transformation. What were the socio-political forces that the 1969 revolution and subsequent changes unleashed that contributed to the overthrow of Qaddafi, or is it simply that those who were ousted by the 1969 revolution, or those who were left out from power, led the current upsurge that displaced Qaddafi?

VP: Qaddafi’s 1969 revolution was remarkable for the ease with which the Colonel’s coup took place. Not a shot was fired against it. The totality of the population, with the exception of the clique around King Idris, was with Qaddafi. I detail how for the first 15 years, Qaddafi followed a massive social policy of transferring assets to the people, and building up a modern state structure, including a national university system. This was a huge advance. But Qaddafi walked into an obvious contradiction: his regime did not diversify the Libyan economy out of dependence on sale of oil to the West, at the same time he made erratic political gestures against the West. Libya was punished by an oil embargo, which crippled the social welfare part of his regime. That led Qaddafi to a reassessment of his policies. Rather than move toward diversification (for which he now had little investible capital), he shifted to make an accommodation with the West. The Qaddafi of the 1980s onwards was in many ways the opposite of the earlier Qaddafi. I detail this story. It takes up the major portion of the book, showing how the class character of the Libyan regime shifts by the 1990s, for instance.

PC: The Libyan winter changed the season for the Atlantic powers. According to you, for them, “Libya provided a unique opportunity”. How is that? You have stressed on the uniqueness of the Libyan situation, as the Atlantic powers always seemed ready to intervene there. But how do you see the recent developments regarding Syria?

VP: Libya allowed for many things. First, it allowed the West to brush off their tainted relationship with Ben Ali of Tunisia and Mubarak of Egypt, not to speak of Qaddafi (it was Blair, Sarkozy and US Congressmen McCain and Lieberman who courted him in the 2000s). Second, it allowed the Saudis to enter Bahrain and crush that uprising. I show how the linkage between Libya and Bahrain works in my book. Third, it allowed NATO to become a force in North Africa, becoming the “mass base” of the Libyan Diasporic leaders, the neoliberals such as Jibril and el-Keib, to assert their position against those who had a genuine mass base, such as Belhaj (the political Islamists). This was the unique opportunity.

On Syria the story is not complex. On February 18, 2012, I asked the Indian ambassador to the United Nations, Hardeep Singh Puri, why there was no appetite for a strong UN resolution on Syria. After all, the violence in Syria seemed to have already exceeded that in Libya. If the UN could pass Resolution 1973 (on Libya), why was it reticent to pass a similar resolution on Syria? Puri pointed his finger directly at the North Atlantic Treaty Organization states. They had exceeded the mandate of Resolution 1973, moving for regime change using immense violence. All attempts to find a peaceful solution were blocked. The African Union’s high-level panel was prevented from entering Libya as the NATO barrage began. Any UN resolution that was sharply worded and that was not explicitly against a humanitarian intervention would open the door to a NATO-style attack. That seems to be the fear. If there is a sense that NATO exceeded the mandate of 1973, I asked, would the UN now consider an evaluation of how it was used in the Libya war? Puri told me that Russia asked the UN Security Council to evaluate Resolution 1973, which means NATO action in Libya. NATO has blocked this. They are reticent to allow any open evaluation as a result of what they see as an exceeded mandate in Libya, and of course the question of civilian casualties (Human Rights Watch released a report on May 14 on civilian casualties by NATO that underlines this question).

PC: While dealing with the attitudes of various international institutions and alliances towards the Arab revolts, you have analysed the BRICS’s position too. As you have shown in your brilliant book, The Darker Nations, there was a unity of purpose, at least initially, among the regimes that came with significant popular legitimacy that constituted the Third World. However, such unity of purpose seems absent behind the emergence of the BRICS and other international alliances among specific “third world” countries. Rather they are multi-level institutionalisation of opportunistic cooperation among competitive forces. How much do you think consistency, multipolarity and polycentricity that we demand from the BRICS are justified? Do you find in this demand an element of nostalgia for the Third World project, for statist anti-imperialism and non-alignment?

VP: The full answer to your question will be found in a book that I am now finishing up, The Poorer Nations: A Possible History of the Global South (Verso and LeftWord). It tells the story of the emergence of the G7, the fight to establish a renewed South after the debt crisis, the emergence of the BRICS, and of a potential South from below. That book has an argument that is hinted at here and there in the Libya book, although the latter is not theoretical and so the argument is only as I say hinted at. The BRICS have afforded an opening, they have moved us out of the suffocation of the Washington Consensus and on unipolarity. They have not created ideological or institutional alternatives to the previous dispensation. That is why they seem to simply ask for entry for themselves rather than an exit from this system. Their ambitions are not great, largely because their ruling elites are wrapped up in neo-liberal ideology and they seek space for themselves alone. In this challenge, they have, as I say, dented the privileges of the North Atlantic. I see their move as simply this, nothing more.

PC: You have succinctly shown throughout the book how neo-liberal forces are attempting internal coups in the ‘democracy movements’. When US diplomat David Mack complains about the Libyans not understanding the meaning of democracy –- that it is not about “housing, food, work and health”, but about elections and the rule of law, it seems the imperialist forces are trying hard to clinch the separation of the economic and the political which neo-liberal globalisation arguably seeks to achieve, thus reducing the political’s capacity to obstruct international capitalist interests. A section of the international left too stresses that the revolts are a step forward from the undemocratic past even if they are able to institutionalise only a few ‘democratic political’ rights. Don’t you think any such gradualism or limitation will be an eventual complete regression to neo-liberal counter-revolution, a betrayal of what you term the radical imaginations of the rebellion from below?

VP: You raise the core point. Will the emergent regimes build a Chinese wall between the Economic and the Political? Will they allow the great sacrifices to provide modest electoral reforms, and not touch the base? It is of course the case that there will be elements within the new political actors that will want only this small advance. Others are not going to be satisfied with it. They tasted the feeling of revolution, and already want more. That is how we must account for the ongoing strikes in Egypt, Tunisia and Libya. These strikes are a portent of the greater social dreams than simply the right to vote. When Tripoli airport was seized in May 2012, those who took it wanted their social and economic wants at the centre of the regime’s concern, not simply the June elections. The latter are important, but not singular. Elections yes, but these do not define the desire for a voice.

It is also true that the old guard will want to minimise both the democratic political and democratic economic openings. They will be backed by the US on the latter, because the US and the NATO states would like to reduce the victory to the political domain, and even there to manage the political so that the more radical Islamists are kept out of office. Moderate Islam will be allowed (we are back to Mahmood Mamdani’s “good Muslim, bad Muslim” formulation). If the rate of strikes intensifies, it is unlikely that the old guard and NATO states will get their way. As with South America, revolution moves from questions of inflation and livelihood to questions of democracy and back again to questions of food and fuel, jobs and cultural expression. Democracy cannot be sequestered to elections alone. It is a much wider concept.

PC: It is clear that the left in the West is quite impressed by the Arab Spring. What do you think is its overall political impact in a movemental sense?

VP: The Arab Spring provided a fillip out of hopelessness in the United States. There is no doubt that the Arab Spring inspired the Occupy movement. The idea of a manifestation, of taking up space in public, came to the streets of New York explicitly from Cairo. But these are all mutually reinforcing events. On a conjunctural level, these are all reactions to the contractions as a result of the Global Recession from 2007, and the Strike of the Bankers. No doubt that the movements in both the Arab lands and in southern Europe excited those in the North Atlantic to act against their own governments and their cousins in the banks. The first impact, therefore, is the end of the Left’s torpor. Where will this head, who knows? It has to be built upon, just as the North Africans are building on their revolts. They have not rested, making t-shirts of Tahrir Square and happy for the experience of the manifestations. Their demonstrations continue. That lesson, that revolts are permanent and endless, has not yet been fully grasped in the North Atlantic. It is the most important lesson.

PC: What are the implications of changes in the Arab World for the Indian subcontinent?  What lessons should the left in India draw in this regard?

VP: The General Strike of the South is yet to come to India. There have been many protests from below, and of course the anti-Corruption development. But India is a complex story. The state allows some space for democratic action, which is to say that it has not fully closed off the electoral space from the people. It is not a one-party domain, where it is easy to say, “Mubarak must go”. In that way, India is similar to the US. Even though one regime might govern for decades (say, Reaganism in the US from 1981 to the present; or Rajiv Gandhiism in India from 1991 to the present), the changes in the actual ruler seems to imply democratic possibilities…. Manmohan Singh is honest, he is not Vajpayee, or Rao; Obama is well-spoken, he is not Bush. One of the tasks of the Left has to be to demonstrate that even though the governments change and prime ministers or presidents change, the regime remains intact, and it is in the character of the regime that the problems reside, not in the personalities of this or that leader. This is a very hard task. So much easier to personify the problem with Assad, for instance, than with Manmohan Singh.

Like Egypt in the 2000s or even Chile in the 1990s and 2000s, there is a diverse Left in India. But unlike Egypt and Chile, the Left in India has not been forced to work together on campaigns. Unity of the Left, even in action, is very limited. Hostility among the Left forces is debilitating in the long run. In Egypt and Chile because of the state repression, the various factions of the Left had to work together. This meant that they forged close bonds despite the differences in their strategic and tactical outlook. These bonds, forged in action, meant that after the repression ended, there was a moment of time when the Left could build a unified approach to governance. The story is the same in Brazil, where despite the great limitation of the PT, the Workers’ Party, the Movement of the Landless and the Communist Party and so on, remain in fractious alliance. Their solidarity in action during the years of the dictatorship created a bedrock of unity, even as they disagree greatly over policy and style.

Finally, the Arab Spring might create space for India to reassess its newfound alliances with Israel and the Gulf Arab states. Would India, the so-called largest democracy in the world, like to pledge its allegiance to a power (Israel) that flagrantly violates international laws in its occupation of the Palestinians and to a set of powers (Gulf Arabs) that believe that democracy is a poison that must be handled with a prophylaxis of repression? This alignment needs to be reconsidered at the very highest levels, and at the ground level. The way the US has tried to break India’s ties to Iran and reinforce its links with Saudi Arabia is illustrative. That is why it is essential, not marginal, to fight the idea of India becoming the “subordinate ally” of the United States. This is a central fight. To say that imperialism is not as important a battle as, say, food prices, is to miss the integral relationship between the political and economic domains, something that has been revived by the Arab Spring and the General Strike in the South. That is its nature, to renew the idea that there can be no economic reforms without a simultaneous general transformation of the political will.

‘It prefigures for the Arab people a new horizon’: Vijay Prashad on the Arab revolt (Part II)

This is the concluding part of our interview with Vijay Prashad, a prominent Marxist scholar who teaches at Trinity College, Connecticut. To read the first part, please click here. His recent book, The Darker Nations, was chosen as the Best Nonfiction book by the Asian American Writers’ Workshop in 2008 and it won the Muzaffar Ahmed Book Award in 2009. 

Vijay Prashad



Pothik Ghosh (PG): Why is it that most attempts in the Perso-Arabic world to conceptualise what Gramsci called the “national-popular” have come from radical left-nationalist intellectuals such as Edward Said rather than Marxists? How should or could the peculiarity of the Saidian theoretical enterprise of the national-popular inform and enrich working-class practice in West Asia? 

Vijay Prashad (VP): Strictly speaking, Gramsci’s “national-popular” is the emergence of the mass throughurban collective action, with the rural bursting through, and then being guided by the Jacobin (his word for an organised political force). The mass might drift into a-political action or passivity, Gramsci wrote, without the guidance of that Jacobin force. In today’s times, there is a tendency to hear about something like the Jacobin and shiver in fear that the energy of the “multitude” will be usurped by the Jacobin, that the authentic politics of the street will be taken over by the Organisation. It is in essence a misreading of anarchistic politics that this sort of fear has taken hold. I do not believe that anarchism is pure disorder; for those who believe this I propose a reading of Errico Malatesta’s “Anarchy and Organisation.” Of course, for those on the Marxist side of the ledger, Gramsci’s comments are our bread and butter. There is a need for the national-popular to be articulated through mass protest and the Jacobin canals. There is not so much that divides the Black and the Red.

It is not the case that only Edward Said has dealt with the national-popular in the Arab world. Take the case of Lebanon, where it is the Marxist historian (and eminent journalist) Fawaz Trabulsi who has written a remarkably informative account of the thwarted national-popular, with the emergence of Hezbollah. To my mind, Trabulsi’s is the best account of the Lebanese problem. It must be read widely to better understand the national dilemmas and the national-popular potentialities. My own interest in the Arab predicament was partly drawn by the work of people from an earlier generation like the writer and PFLP leader Ghassan Kanafani, who was assassinated in 1972. In the context of this new Arab Revolt, I recommend Kanafani’s pamphlet The 1936-37 Revolt in Palestine, a model for how to theorise the national-popular through the material of a revolt. These are role models for those who want to do detailed work on the Arab potential. The contingent is important, no doubt, but so too are the broad structures that need to be unearthed and developed.

PG: Lebanese-French Marxist Gilbert Achcar writes in his ‘Eleven Theses on the Current Resurgence of Islamic Fundamentalism’: “What is an elementary democratic task elsewhere – separation of religion and state – is so radical in Muslim countries, especially the Middle East, that even the “dictatorship of the proletariat” will find it a difficult task to complete. It is beyond the scope of other classes.” Does the ‘Jasmine’ Revolution portend a change for the better on that score? If not, how, in your view, should the working class forces in the region go about their business of shaping an effective ideological idiom that is rooted in local culture and yet articulates a question that is fundamentally global?

VP: We tend to exaggerate the authority of the clerics, or at least to treat it as natural, as eternal. Certainly, since the 1970s, clericalism has had the upper hand in the domain of the national-popular. In the Arab world, this has everything to do with the calcification of the secular regimes of the 1950s (the new states formed out of the export of Nasserism: from Egypt to Iraq), the deterioration of the Third World Project (especially the fractures in OPEC that opened up in the summer of 1990 and led to the Iraqi invasion of Kuwait), and the promotion and funding of the advance guard of the Islamism through the World Muslim League (by the Saudis. The WML’s impact can be seen from Chechnya to Pakistan, and in parts of Indonesia).

If one goes back and looks at the period when the Third World Project and Nasserism were dominant, what you’d find is clerical intellectuals in the midst of an ideological battle against Marxism (mainly), at the same time as they borrowed from Bolshevik techniques of party building to amass their own organisational strength. I wrote about this in New Left Review (“Sadrist Stratagems,” in 2008) where I catalogued the intellectual work of Baqir al-Sadr, with his Iqtisaduna, a critique of Capital Vol. 1. Baqir’s al Da’wah al-Islamiyah was modeled on the Iraqi Communist Party, then dominant in the Shia slums of Baghdad. If you go farther East along this tendency, you will run into Haji Misbach, an Indonesian cleric, also known as Red Haji, who confronted the dynamic Indonesian Communist Party with his own brand of Islamic Communism. Like Baqir, Misbach was perplexed by the popularity of the CP in his society. He wanted to find a way to bring the spiritual to socialism. These are all precursors of Ali Shariati, the great Iranian thinker who was influenced by the Third World Project, and by Marxism, but once more wanted to bring the spiritual into it. For all these thinkers, the problem was quite the opposite to what it is today: the workers seemed ascendant, driven by the science of secular socialism. It terrified them, as much as we are assaulted by the rise of the clerics over the last few decades.

It is also not the case that the religious is more difficult to expunge in the Arab lands, or that Islam is more intractable than other faiths. If one turns toward India, or turns toward the United States, it is clear that the religious domain is often very reluctant to wither away. It was equally hard to push it away in the USSR. This is not just a question of religion, or Islam, but of cultural change in general. Cultural change from below is slow-moving, excruciating. Cultural change from above is much faster, the tempo clearer. It has to do with who controls the cultural institutions, but also with the depth of cultural resources. Religion emerges over the millenia as a shelter from the turmoil of life, and it enters so deeply into the social life of people that it cannot be so easy to remove its tentacles. Of course Islam might be harder to walk away from, given that it, unlike say Brahmanism or Catholicism, has a much finer edge to its egalitarianism. This is what propelled it from a minor Arabian religion to Andalucia and China within fifty years of its emergence.

I would say one more thing on this: since the Utopian horizon of socialism is in eclipse, why should someone risk their lives in struggle for it? The idea of the inevitability of socialism inspired generations to give themselves over to the creation of the Jacobin force. Religion has an unshakable eschatology, which secular politics absent Utopia lacks. No wonder that religion has inspired action, even if destructive rather than revolutionary, whereas secular politics is less inspirational these days.

The Arab Revolt of 2011 prefigures for the Arab people a new horizon. That is why it has moved from Tunisia to Jordan. Ben Ali’s departure set the new horizon. It is what the youth hold onto. If he can be made to flee, why not Mubarak, why not Abdullah II, and if the remanants of the Saudi Voice of the Vanguard decide to blow off the cobwebs and get to the streets, then the repellent Abdullah of Saudi (whose idea of political reform was to bring in his son-in-law into the Education ministry!).

PG: Does not the ongoing ‘Jasmine’ Revolution explode the myth of a postcolonial, anti-imperialist Third World, which is precisely what you deal with and kind of theoretically anticipate in your book The Darker Nations? If that is so, what is the new programmatic direction that the anti-imperialist struggle must now take?

VP: My book, The Darker Nations, provided the history of the collapse of the Third World Project. This collapse begins to be visible by the early 1980s. The roots are there in the defeat of the New International Economic Order (NIEO) process (that opens in the UN in 1973), in the break-down of solidarity in OPEC, in the exhaustion of the import-substitution industrialisation model, and in the narrowing of political freedoms in the Global South. The “assassination” of the Project comes through the debt crisis (1982 in Mexico opens the door) and through the reconfiguration of the international order by the late 1980s with the disapperance of the USSR, and the push for primacy by the US (the salvo was fired in Iraq in 1991, when the US pushed out the Iraqi army from Kuwait, and ignored an attempt by the USSR to mediate on behalf of Saddam Hussein). US primacy by the early 1990s throws salt on the wound of the Third World Project.

My interest in the book was to seek out the dialectics of freedom that would emerge out of the corpse of the Third World Project. What is left in it to be revived, and what are the social forces capable of building a new revolutionary horizon? The other side of history opens up with La Caracazo, the rebellion in Caracas in 1989 that prefigures the emergence of Chavez. By the way, in 2009, a Brookings survey found that Chavez was the most popular world leader in the Middle East! Where is Chavez of Arabia, we asked, but were not confident. In 2007, in his “Jottings on the Conjuncture,” Perry Anderson bemoaned the paralysis on the Arab Street. The mutterings existed, and indeed the insurgency in Iraq showed that the will was there. Protests in Western Sahara and in Lebanon had become commonplace. But these did not say what the Tunisians said, which was that they, like the Bolivarians, were prepared to stake themselves for an alternative pathway into the future. From Caracas to Cairo, the expressway of Freedom is being paved.

The Bolivarians are at a much more advanced stage. They have been able to stave off counter-revolution, and even though still in peril, they are able to leverage their oil wealth into some very interesting experiments toward socialism. It is going to be imperative to prove for our Egyptian and Arab friends that the path out of Ben Ali and Mubarak does not lead to Paris and New York, but to Caracas and La Paz. The programme of socialist construction is being tentatively written (with lots of errors, of course). We have to nudge in that direction, and against the idea of liberty as the value above egalitarianism and socialism. There are few explicitly anti-imperialist slogans in the air at this time.

By the way, this other side of history will form the final chapter of The Poorer Nations, which I am now putting together, and which should be done by the Summer of 2011.

PG: The ‘Muslim Question’ has rightly been one of the key preoccupations of the Indian Left in all its variegated multiplicity. Yet it has consistently failed to frame and articulate it as a question having a transformative potential. What lessons must the Indian Left – which has in large measure centred its articulation of the ‘Muslim Question’ on solidarity with the Islamicised anti-Americanism of the Perso-Arabic peoples – draw from the current upsurges that would enable it to overcome its failing on that score?

VP: To get to the heart of the issue of the ‘Muslim Question,’ one has to understand the theory of alliance formation. In today’s world, the principal contradiction, the Large Contradiction, is between Imperialism and Humanity. The social force of imperialism seeks to thwart the humanity of the planet by creating political rules for economic theft (the preservation of intellectual property for the Multi-national corporations, the allowance of subsidies in the North and not in the South, the enforcement of debt contracts for the South, but not for the international banks), and if these rules are broken, by military power. Imperialism is the principal problem in our planet, for our humanity.

The Lesser Contradiction is between the Left and the Reactionaries, who are not identical to imperialism. Indian Hindutva, American Evangelicalism and Zionism are all reactionary, but not part of the Lesser Contradiction. Those forms of Reaction are ensconced in the Larger Contradiction, since they are handmaidens of imperialism. What I refer to as the Reactionaries of the Lesser Contradiction are organisations such as Hezbollah and Hamas, the Muslim Brotherhood and so on. I indicate the Muslim groups not from an anti-Islamic point of view, but because, as I just mentioned, most of the other Reactionary religious formations are inside the essence of imperialism (they are joined there by the official clerics of Saudi Arabia, and of Egypt). These other groups are antagonistic to imperialism, and are from this standpoint able to capture the sentiments and politics of the people who are anti-imperialist nationalists. We are divided from them, but not against them in the same way as we are against Imperialism. To make these two contradictions the same is to fall into the liberal error of equivalence. We need to retain their separation.

That said, it is important to always offer a scrupulous and forthright critique of their shortcomings and their social degeneration. In 2007, the Communist Parties in India held an anti-imperialist meeting in Delhi. A Hezbollah representative (I think it was Ali Fayyad) came for it. At the plenary, Aijaz Ahmad lit into Fayyad regarding Hezbollah’s position on women’s rights. It is just what should be done. By all means form tactical alliances, if need be, but don’t let them get away with silence on the issues that matter to us, on social equality, on economic policy, on political rights. Even the Lesser Contradiction needs to be pushed and prodded. It has virulence at its finger tips. That has to be scorched. Clara Zetkin warned that the emergence of fascism can be laid partly on the failure of the workers and their Jacobin to move toward revolution effectively enough. Part of that effectiveness is to challenge those in the Lesser Contradiction, who are equally willing in certain circumstances to turn against the Left and become the footsoldiers of fascism.

In the 1980s, Hezbollah mercilessly killed cadre of the Lebanese Communist Party. Over the past three decades, relationships have mellowed and the much weaker LCP now works with Hezbollah in various ways. The LCP sees Hezbollah as “a party of resistance,” as it were. Part of the Lesser Contradiction. That has to be the attitude in the short-term. The LCP seeks out elements who are not fully given over to Dawa, the hardened Islamic militants in Hezbollah. There is another side that is more nationalist than Islamist. They are to be cultivated. There is also a part of Hezbollah that is perfectly comfortable with neo-liberalism, privatisation of the commons and so on. They too lean toward the Larger Contradiction. One has to be supple, forge a way ahead, be assertive in unity, find a way out of the weakness and reconstruct a left pole. A weak left with the national-popular in the hands of the “Islamist” parties: that is the context.

‘If power is not seized, counter-revolution will rise’: Vijay Prashad on the Arab revolt (Part I)

Vijay Prashad is a prominent Marxist scholar from South Asia. He is George and Martha Kellner Chair in South Asian History and Professor of International Studies at Trinity College, Connecticut. He has written extensively on international affairs for both academic and popular journals. His most recent book The Darker Nations: A People’s History of the Third World (2007) has been widely acclaimed as the most authentic rewriting of the world history of the postcolonial Global South and the idea of the “Third World”.

Vijay Prashad


Pothik Ghosh (PG): In what sense can the recent events in the Arab World be called revolutions? How are they different from the colour revolutions of the past two decades?

Vijay Prashad (VP): All revolutions are not identical. The colour revolutions in Eastern Europe had a different tempo. They were also of a different class character. They were also along the grain of US imperialism, even though the people were acting not for US but for their own specific class and national interests. I have in mind the Rose Revolution in Georgia and the Orange Revolution in the Ukraine. Otpor in the Ukraine, among others, was well lubricated by George Soros’s Open Society and the US government’s National Democratic Institute. Russian money also swept in on both sides of the ledger. These Eastern European revolutions were mainly political battles in regions of the world still unsettled by the traumatic transition from state socialism to predatory capitalism.

The Arab revolt that we now witness is something akin to a “1968” for the Arab World. Sixty per cent of the Arab population is under 30 (70 per cent in Egypt). Their slogans are about dignity and employment. The resource curse brought wealth to a small population of their societies, but little economic development. Social development came to some parts of the Arab world: Tunisia’s literacy rate is 75 per cent, Egypt’s is just over 70 per cent, Libya almost 90 per cent. The educated lower-middle-class and middle-class youth have not been able to find jobs. The concatenation of humiliations revolts these young people: no job, no respect from an authoritarian state, and then to top it off the general malaise of being a second-class citizen on the world stage – second to the US-Israel and so on – was overwhelming. The chants on the streets are about this combination of dignity, justice and jobs.

PG: Does the so-called Jasmine Revolution have in it to transform the preponderant character of the politico-ideological topography of oppositional politics – from Islamist identitarianism to an organic variant of working-class politics – in West Asia and the Maghreb? Under what circumstances can this series of general strikes, which seem to be spreading like a brushfire through the region, morph into a constellation of counter-power? Or, would that in your eyes merely be a vicarious desire of Leftists from outside the region?

VP: I fear that we are being vicarious. The youth, the working class, the middle class have opened up the tempo of struggle. The direction it will take is not clear. I am given over to analogies when I see revolutions, largely because the events of change are so contingent.

It is in the melee that spontaneity and structure jostle. The organised working class is weaker than the organised theocratic bloc, at least in Egypt. Social change of a progressive type has come to the Arab lands largely through the Colonels. Workers’ struggles have not reached fruition in any country. In Iraq, where the workers movement was advanced in the 1950s, it was preempted by the military – and then they made a tacit alliance.

One cannot say what is going to happen with certainty. The Mexican Revolution opened up in 1911, but didn’t settle into the PRI regime till the writing of the 1917 constitution and the elevation of Carranza to the presidency in 1920 or perhaps Cardenas in 1934. I find many parallels between Mexico and Egypt. In both, the Left was not sufficiently developed. Perils of the Right always lingered. If the Pharonic state withers, as Porfirio Diaz’s state did, the peasants and the working class might move beyond spontaneity and come forward with some more structure. Spontaneity is fine, but if power is not seized effectively, counter-revolution will rise forth effectively and securely.

PG: What are, in your opinion, the perils if such a transformation fails to occur? Will not such a failure lead to an inevitable consolidation of the global neoliberal conjuncture, which manifests itself in West Asia as fascistic Islamism on one hand and authoritarianism on the other?

VP: If such a transformation fails, which god willing it won’t, then we are in for at least three options: (1) the military, under Egyptian ruling class and US pressure, will take control. This is off the cards in Tunisia for now, mainly because the second option presented itself; (2) elements of the ruling coalition are able to dissipate the crowds through a series of hasty concessions, notably the removal of the face of the autocracy (Ben Ali to Saudi Arabia). If Mubarak leaves and the reins of the Mubarakian state are handed over to the safe-keeping of one of his many bloodsoaked henchman such as Omar Suleiman…. Mubarak tried this with Ahmed Shafik, but he could as well have gone to Tantawi….all generals who are close to Mubarak and seen as safe by the ruling bloc. We shall wait to see who all among the elite will start to distance themselves from Mubarak, and try to reach out to the streets for credibility. As a last-ditch effort, the Shah of Iran put Shapour Bakhtiar as PM. That didn’t work. Then the revolt spread further. If that does not work, then, (3) the US embassy will send a message to Mohamed El-Baradei, giving him their green light. El-Baradei is seen by the Muslim Brotherhood as a credible candidate. Speaking to the crowds on January 30 he said that in a few days the matter will be settled. Does this mean that he will be the new state leader, with the backing of the Muslim Brotherhood, and certainly with sections of Mubarak’s clique? Will this be sufficient for the crowds? They might have to live with it. El-Baradei is a maverick, having irritated Washington at the IAEA over Iran. He will not be a pushover. On the other hand, he will probably carry on the economic policy of Mubarak. His entire agenda was for political reforms. This is along the grain of the IMF-World Bank Structural Adjustment part 2, viz., the same old privatisation agenda alongside “good governance”. El-Baradei wanted good governance in Egypt. The streets want more. It will be a truce for the moment, or as Chavez said, “por ahora“.

PG: The Radical Islamists, their near-complete domination of the oppositional/dissident politico-ideological space in the region notwithstanding, have failed to rise up to the occasion as an effective organisational force – one especially has the Muslim Brotherhood of Egypt in mind. What do you think is the reason?

VP: The Muslim Brotherhood is on the streets. It has set its own ideology to mute. That is very clear. Its spokesperson Gamel Nasser has said that they are only a small part of the protests, and that the protest is about Egypt not Islam. This is very clever. It is similar to what the mullahs said in Iran during the protests of 1978 and 1979. They waited in the wings for the “multitude” to overthrow the Shah, and then they descended. Would the MB do that? If one says this is simply the people’s revolt and not that of any organised force, it’s, of course, true. But it is inadequate. The ‘people’ can be mobilised, can act; but can the ‘people’ govern without mediation, without some structure. This is where the structured elements come into play. If there is no alternative that forms, then the Muslim Brotherhood will take power. That the Muslim Brotherhood wants to stand behind El-Baradei means they don’t want to immediately antagonise the US. That will come later.

PG: What does the emergence of characters like El-Baradei signify? Are they really the “political face” of the resistance as the global media seems to be projecting?

VP: El-Baradei comes with credibility. He served in the Nasserite ministry of external affairs in the 1960s. He then served in the foreign ministry under Ismail Fahmi. One forgets how impressive Fahmi was. He resigned from Sadat’s cabinet when the Egyptian leader went to Jerusalem. Fahmi was a Nasserite. For one year, El-Baradei served with Boutros Boutros Ghali at the foreign ministry. That was the start of this relationship. Both fled for the UN bureaucracy. Boutros Ghali was more pliant than Fahmi. I think El-Baradei is more along Fahmi’s lines. At the IAEA he did not bend to the US pressure. Given that he spent the worst years of Mubarak’s rule outside Cairo gives him credibility. A man of his class would have been coopted into the Mubarak rule. Only an outsider like him can be both of the ruling bloc (in terms of class position and instinct) and outside the ruling apparatus (i. e. of Mubarak’s cabinet circle). It is a point of great privilege.

With the MB careful not to act in its own face, and the ‘people’ without easy ways to spot leaders, and with Ayman Nour not in the best of health, it is credible that El-Baradei takes on the mantle.

PG: Is the disappearance of working-class and other avowedly Left-democratic political organisations, which had a very strong presence in that part of the world till a few decades ago, merely the result of their brutal suppression by various authoritarian regimes (such as Saddam Hussein’s in Iraq, Hafez Assad’s in Syria and Nasser’s and Mubarak’s in Egypt) and/or their systematic physical decimation by Islamists such as the Muslim Brotherhood? Or, does it also have to do with certain inherent politico-theoretical weaknesses of those groups? Has not the fatal flaw of left/ communist/ socialist forces in the Islamic, particularly the Arab, world been their unwillingness, or inability, to grasp and pose the universal question of the “self-emancipation of the working class” in the determinateness of their specific culture and historicity?

VP: Don’t underestimate the repression. In Egypt, the 2006 budget for internal security was $1.5 billion. There are 1.5 million police officers, four times more than army personnel. I am told that there is now about 1 police officer per 37 people. This is extreme. The subvention that comes from the US  of $1.3 billion helps fund this monstrosity.

The high point of the Egyptian working class was in 1977. This was the bread uprising. It was trounced. Sadat then went to the IMF with a cat’s smile. He inaugurated the infitah. He covered the books by three means: the infitah allowed for some export-oriented production, the religious cover (al-rais al-mou’min) allowed him to try and undercut the Brotherhood, and seek some funds from the Saudis, and the bursary from the US for the deal he cut with Israel. This provided the means to enhance the security apparatus and further crush the workers’ movements.

Was there even space or time to think about creative ways to pose the self-emancipation question? Were there intellectuals who were doing this? Are we in Ajami’s Dream Palace of the Arabs, worrying about the decline of the questions? Recall that in March 1954 the major Wafd and Communist unions made a pact with the Nasserite regime; for concessions it would support the new dispensation. That struck down its independence. The unions put themselves in the service of the Nation over their Class. In the long run, this was a fatal error. But the organised working class was small (as Workers on the Nile shows, most workers were in the “informal” sector). The best that the CP and the Wafd could do in the new circumstances was to argue that the working class plays a central role in the national movement. Nasser and his Revolutionary Command Council, on the other hand, heard this but did not buy it. They saw the military as the agent of history. It was their prejudice.

Peripheral Economy, Global Capital and Movements in Bangladesh: An Interview with Anu Muhammad

Anu Muhammad is an eminent Marxist and a renowned academician from Bangladesh. He is currently serving as Professor in the Department of Economics in Jahangirnagar University, Savar, Dhaka. He is also the general secretary of National Committee to Protect Oil, Gas, Mineral Resources Power and Ports and has been involved in various people’s movements in Bangladesh. He, along with the committee, played an instrumental role in the success of the Phulbari Movement against Open Pit Mining in Phulbari, Bangladesh. He writes extensively on globalisation, social transformation, gender, NGO and energy issues and has authored more than 20 books. In this interview Prof Muhammad speaks to Manoranjan Pegu on the politico-economic trajectory of Bangladesh, in the context of capitalist globalisation and ensuing geo-political changes in South Asia, and assesses the significance of recent popular unrest in the country.

Manoranjan Pegu (MP): How do you characterise the overall nature of the Bangladeshi economy, and its location in global capitalism?

Anu Muhammad (AM): Within the global capitalist system, Bangladesh can be considered a peripheral capitalist economy. We are experiencing a phenomenon where the situation in peripheral countries such as Bangladesh is unfolding in a way very different from the standard definition. Here the state has been very effective in creating a repressive mechanism, but it has not been able to work towards formulating its own policies. Practically, it operates under a ‘bigger state’, which is the larger framework of the global capitalist power structure. The policies the government tries to implement are mostly formulated outside the national parliament and even outside people’s knowledge. The policies are formulated under different projects supported by the World Bank, IMF, DFID, USAID or some or the other UN organisation. We find presence of consultants from these agencies in every policy process and projects, which needless to say are favourable to corporate interests.

Anu Muhammad

It is a phenomenon where the system of imperialism works by ‘manufacturing consent’ within the ruling class, accommodates them within the larger global capitalist system to partner them in grabbing resources, and control the total economy and its potential. There are, of course, different political parties that comprise the ruling class. We have seen them in power in different phases of our history, we have experienced military rule too. At the level of policies, however, there has been a clear continuity, the nature of the government notwithstanding. Although the parties do not like each other or quarrels often among themselves, they implement the same policies as the policies represent the same classes and the same global corporate interests. The local ruling classes find their existence, power, security and affluence by being connected with the global empire. So, this is some sort of a negotiated arrangement the local and the global ruling classes have. With the so-called foreign aid, they have built a major support base – consultants, big private sector owners and beneficiaries from different projects. In the process, these bureaucrats, consultants, media and the ruling classes have become a vital pillar of global capital and they try to rationalise these grabbing of common resources as ‘development’.

MP: Can you briefly trace the trajectory of economic development in Bangladesh? What has been the role of foreign capital in this regard? What is the state and nature of Bangladeshi capital?

AM: In 1971, after getting independence, the initial promise was different. It was expected that Bangladesh would take a different route to development. But that promise and expectation could exist only for a very short period. As the US government’s position towards Bangladesh liberation war was hostile, the rulers did not favour the US immediately after independence. That World Bank (WB) and the IMF were also in a shaky position. Since 1973-74, the government’s position kept changing, what with the post-Liberation rulers beginning by favouring the rising rich locally and the US government globally. In 1973, the World Bank and IMF re-entered the region and the relations with the US government also began to change. After 1975, this process became stronger under military rule. It became entrenched during the 1980s under another military regime. This decade was very important in setting the present economic direction of Bangladesh.

During this period, the neo-liberal programmes became more synchronised and were rendered visible on a global scale. Bangladesh had military rule then; right-wing regimes under Margaret Thatcher in the UK and Ronald Reagan in the US were in power. All neo-liberals had succeeded in asserting their power globally through military aggression and/or financial institutions. During the same period, the Structural Adjustment Programme (SAP) was formulated by the WB-IMF and imposed on peripheral economies, Bangladesh was also a victim. Any type of autocratic rule is very useful in implementing these disastrous programmes, military rule, therefore, was very convenient for the global power. Most of the policy reforms for wholesale privatisation, trade liberalisation, withdrawing of the state’s responsibility and other related things took shape during this period. During the 1980s WB and the Asian Development Bank (ADB) entered into the energy sector and concluded that energy sector should invite foreign private companies. This was the beginning of a new phase. Accordingly, signing of production sharing contracts (PSCs ) with multinational oil companies began in the early ’90s.

Although major political parties of the country opposed the autocratic government and its policies since 1982-83, and that government was overthrown through a mass uprising in 1990, these parties as soon as they got elected, one after another (1991 and 1996, again 2001 and 2009), became busy in implementing the same policies formulated under the military regime. So, elected and non-elected, military and non-military, made no difference in the realm of government policy because ultimately all those governments represented the same class and imperialist interest.

Since 1982, governments have become more and more hostile towards public enterprises. Adamjee Jute Mills, the biggest jute mill in South Asia, and other public sector jute mills were shut down as a result of the jute sector development credit from the World Bank. The public enterprises were running losses and were going through negative growth because of motivated policies of successive governments. On the other hand, export-oriented industries have been experiencing the highest growth, of about 8% per year, thanks to the support and favourable policies of successive governments. Because of these opposite movements net employment and net industrialisation have not moved upward.

With the help of neo-liberal policy support, accumulation of capital, through grabbing of public property, institutions and money, has acquired a fresh momentum. The richest people in Bangladesh are those who have been the main defaulters in public banks. These people also occupied government lands, agricultural lands, wastelands, forest land, wet land. Meanwhile, the grabbing of financial resources too has gone on side by side. We find a new form of colonisation from within, a phenomenon that has led to the emergence of a good number of super-rich people, on the one hand, and a new flow of uprooted, very poor people, on the other. On the one hand, we find dazzling shopping malls, high-rise buildings, cars; and on the other, floating people and dismantled public institutions. This rich class has also discovered a rather profitable business proposition in real estate, directly linked to land-grab, too.

Because of SAP-related policies, crisis of public institutions in health and education sectors has intensified. The path has been cleared for the establishment of many private hospitals, clinics, coaching centres, private universities and colleges. That, needless to say, has made all these services very costly. Media institutions linked with big business houses have also been flourishing. The lumpen rich have become the strong support base of the International Financial Institutions (IFIs). Import liberalisation and unfavourable policies towards domestic industries have badly affected domestic market-oriented industries. Malls have found a more favourable policy atmosphere than mills. This mill to mall phenomenon has failed to create enough jobs. Lack of employment opportunities and continuous migration of job-seeking people to the urban areas have triggered growth of the informal sector that is unstable and uncertain. Thanks to the growth of export-oriented garment industries, we have also been experiencing an increased feminisation of the working class.The growth of the new female working class has been giving birth to new forms of resistance too.

To get a perspective, we have to look at another important phenomenon in the same period, the NGO sector. The growth of a large number and network of NGOs is an outcome of both state and market failure.  The NGO became a necessity because of rising poverty and inequality. There was a widespread belief that NGOs would fill this vacuum and help in diminishing poverty and inequalities. After working for more than three decades, it has now been proved that NGOs cannot alleviate poverty or inequality. If we look at the number, both scenarios have deteriorated. By 1995 the percentage of people living below poverty line was 48% and according to the WB reports it came down to 40% by 2005, but it has again increased to 48% in 2008. This means that the population under poverty line has increased since 1995.

However, a good number of middle-class people have got involved with this sector as employees, consultants, suppliers and so on. Many NGO honchos have emerged as part of the affluent section of society. Therefore, beneficiaries of the poverty alleviation programmes, or micro-credits etc, are not the poor, but a section of the middle class and the wealthy. In fact, with a few exceptions, creating an NGO has become a good way of earning money in the name of the poor, environment, gender, human rights. That has also led to a spread of a begging culture. This growth of NGOs is also a neo-liberal phenomenon, where the state’s responsibility towards its citizens is thoroughly reduced and the market is given full authority in every sphere of life. In this model, the NGO is a supplement to as well as an instrument of market economy.

MP: When did Bangladesh open up its boundaries and adopt neo-liberal policies and how do you contextualise the anti-mine movement in Bangladesh?

AM: Let me discuss the point in historical perspective. The history of Bangladesh and India has some fundamental differences. After independence India opted for a national protectionist policy for the local and heavy industries. Its priority was to build up national industrial capabilities and public sector institutions. Up to the 1990s that policy not only helped the Indian bourgeoisie grow but also founded a very strong industrial base. By the time India decided to adopt the neo-liberal path, the country had its own big group of companies. So, when it opened up, Indian big entrepreneurs became the biggest beneficiary and all the foreign investments had to come in joint collaborations, they had to compromise with big Indian corporate groups and Indian groups also started investing in other places. But in case of Pakistan, the rulers had no national perspective from the very beginning. They assumed the place of a client state of the US. The US has successfully used Pakistan as an instrument to materialise their regional strategy to expand their hegemony. Pakistan was always dependent on the US advisers. Thus, Pakistan grew with an over-developed military-civilian bureaucracy, dependants on the WB and the US state department.

Bangladesh, within a few years of independence from Pakistan, replicated the same system. Soon Bangladesh was trapped in the WB-US hegemonic model, where economic reforms took place not to develop its potential but to create a vicious cycle of dependence. Wholesale privatisation and opening up of the Bangladeshi economy to multinational capital and creating a group of lumpen rich became the main agenda of economic reforms. I discussed earlier its nature and consequences.

Now we come specifically to the energy sector. Up to 1974 there were some gas fields owned by the Shell. In 1974, the government nationalised all those gas fields and established Petrobangla, a national institution to take control of the energy sector. This was a good beginning. Although there were a few pockets of gas offshore, most of the gas fields were owned by the national institution. A generation of skilled human resources could be developed because of this. Until the late ’90s, almost 100 per cent gas production was done by the national agency; the same was true for power generation and distribution. As a result, both gas and power could be produced at a very low cost and distributed at a low price. Petrobangla and Power Development Board (PDB) were both making profits, although gas and power tariffs were much lower until the late ’90s.

Since 1980s, as I said earlier, a shift in this policy began. It started in 1982 with the WB and the ADB conducting an “energy sector feasibility study”. Conclusions of every study done by these agencies are well known: privatise, commercialise, hand over national resources to MNCs, etc. The same thing happened here too. The study argued that Petrobangla (a profit-making body) was a white elephant. They prescribed that to develop the energy sector two things were urgently needed:

1. To allow foreign private investment, and
2. For best utilisation of gas resources, export it to India.

Following these recommendations, steps were carefully synchronised to open up the energy sector to foreign private capital, the MNCs. Following necessary steps, signing of PSCs with oil MNCs for exploration of gas resources began in 1993-94. Now most of the rich gas blocks are with the MNCs: Chevron, Santos, Cairn Energy, Shell etc. They produce about 50 per cent of the gas supply. Government policy remains completely biased towards these companies, although their price of gas is 30 times more than the national agencies that are suffering from not only funds crunch but also from a lack of policy support to utilise and develop their capability.  Because of the higher price of MNC supply, Bangladesh is now facing increasing fiscal deficit; currently it is more than 20 billion takas per year. The same thing has happened in the power sector since the mid ’90s. In the name of development, construction of public sector power plants was stopped after the IFIs signalled that they would not finance such constructions. Gradually, this sector has also been handed over to the Independent Power Producers (IPPs) or MNCs. Bangladesh is suffering from another 15-billion-taka loss per year for high-cost power purchase. All these figures will increase further with their increasing share. As a logical outcome of these ‘development’ initiatives, periodic price rise of gas and power becomes routine, making the economy more costly and less competitive.

As usual, the same design was secretly imposed on the coal sector. In 1994, Australian Mining Company BHP came to Bangladesh to explore the possibility of coal mining in Phulbari. In the mineral rules of 1968, there was 20 per cent royalty, but after signing the feasibility agreement with BHP that was reduced to six per cent. That was itself illegal because after signing the agreement, you cannot change the rule. In 1997, BHP left Bangladesh after realising that it would not be technically feasible for open-pit mining in Phulbari because of its depth, water system and geological structure. But a mysterious thing happened before they left. A company registered in the UK was born and BHP transferred its license to that company named Asia Energy. How could it happen that such a big company transferred its license to a newly formed company, and how could the government permit that?

Before 2005, people of that area, and we who work with the National Committee, were unaware of these things because strict secrecy was maintained. When Asia Energy started public contact in 2005 for eviction, people realised that something very bad was going to happen. In the beginning, people were told that good things would happen and people were promised a lot of compensation. But at one point people realised the real dangers of open-pit mining and the company’s fraudulent activities. They started protesting against the project from the end of 2005. People formed local organisations and contacted us. In the beginning, we tried to understand open-pit mining and its probable impact. We contacted the relevant government agencies for their papers and assessment, but there were no papers, documents or assessment reports from the government. So we had to go through the Asia Energy documents to understand it, started studying Asia Energy documents from the net and the pamphlets distributed within the community. After deconstructing their propaganda documents, ‘studies’ and publications we became convinced that the project would be highly disastrous for the area and for the country as a whole. We were also convinced that we had to stop it to save our water resources, fertile land, people’s lives and livelihood and above all coal resources.

We went there and stayed there. In the National Committee, we have political parties, academics, experts and individuals. It grew as a new form of socio-political movement with its working experience on national interest, especially against bad deals with the MNCs in the past 12 years. The Phulbari movement is a huge experience for us, it has shown how people from different ethnic groups – women and men – joined the resistance movement despite the fact that many from among their leaders were in cahoots with the company. The movement is unprecedented, both in terms of the scale of the uprising and the consciousness it has ignited, and is till date successfully resisting this imperialist grabbing project.

MP: How do you assess the role and performance of micro-credit? How much has it contributed to the capitalist penetration of rural Bangladesh and its integration in the global network of finance capital?

AM: Micro-credit in different forms has been in practice for long in this region. Dr. Muhammad Yunus (Grameen Bank) and Fazle Hasan Abed (BRAC) could institutionalise it and could attract global attention through its monetary success. Initially, their micro-credit programmes began with the promise of poverty alleviation, gradually its success showed its strength in other areas. Currently, BRAC, Grameen Bank and ASA control more than 80 per cent of the micro-credit market. From micro-credit business these organisations have accumulated a lot of capital and shown that micro-credit can become a corporate success. They have also linked multinational capital with the micro-credit network.

For instance, Grameenphone started its operation by relying on micro-credit, offered borrowers mobile phone as a commodity form of micro-credit, on condition of paying back in installments. Its initial declared aim was to ‘help poor’, ‘alleviate poverty’, now Grameenphone has become the largest company in Bangladesh with 90 per cent of its subscribers being non-poor urban people. Grameenphone is actually an entity of Telenor, Norway. They started with the poor and relied on micro-credit and then at one point migrated to more profitable areas. Grameen Bank has opened many other businesses, has developed joint venture companies with French companies such as Denon and Veolia (a water company), all in the name of poor. Intel and many other companies are coming to Grameen Bank to make use of its wide network through micro-credit.

The same thing is true also for BRAC. BRAC was initially interested more in education, health and other essential public services. With its increasing accumulation of capital through micro-credit, it shifted to the business of textile, printing, education (including setting up of a university). It is also in business with multinational seed company Monsanto. In fact, its focus on education and health care for the poor shifted more towards commercial activity. Thus the micro-credit operation, in its process, has successfully been used as a weapon to make macro business to grow in tandem with global capital.

But question remains, what about the much publicised objective, i.e., poverty alleviation through micro-credit? If we look at the hard facts, compiled from different studies (not sponsored by BRAC or Grameen Bank), we find a new debt trap for the poor people has been created by micro-credit. You cannot find more than 5-10 per cent people who could change their economic conditions through micro-credit. The people who could change their economic conditions were those who had other sources of income. If we closely look into the system of micro-credit it appears clearly as a means to create a debt trap. If you take loan, you have to repay in weekly instalments and it means you have to be active, healthy and working all over the year, which is not possible. In fact, it is impossible for the poor millions, who constantly live in adverse conditions, to keep paying weekly instalments all over the year. If there are any unfavourable circumstances you are bound to be a defaulter. And once you become a defaulter it creates a chain and you have to take loan from another lender/NGO to repay the same. Micro-credit has connected the rural areas and the population with the market but has made done that by pushing them into a chronic debt trap.

Today Dr. Yunus is not talking any more about sending poverty to museum. He has come up with a ‘new’ idea of social business, which is also unclear and seems to be fraudulent. The impact of micro-credit is now well understood by people around, especially millions of victims. However, the IFIs and global corporations seem to be very happy with these experiments, as they find that the poor people can become very useful objects for profitable investment of finance capital. Thus the WB, HSBC, Citibank, and other multinational banks are entering into the micro-credit market. Bangladesh has given a gift to crisis-ridden global capitalism, which has consequently found the market of four billion poor through micro-credit. It is very relevant here to quote theWall Street Journal, an important part of the global corporate media. It said: “Around the world, four billion people live in poverty. And western companies are struggling to turn them into customers.” (26 October, 2009). Obviously, micro-credit is a very useful instrument to go with this objective.

MP: Due to more and more integration of the local economies into global capitalism, they have become vulnerable to the ups and downs in the global market. What has been the impact of the recent financial crisis on the Bangladeshi economy?

AM: The financial crisis has not affected Bangladesh much. As the number of Bangladeshis working abroad is very large, about seven million send remittances from overseas. The remittance recently crossed 10 billion USD, highest among the LDCs. It helped significantly to create a healthy foreign exchange reserve, kept the balance of payments under control, crucial in the recent financial crisis and global price rise of oil. If remittances would not have been so high, Bangladesh could have faced a much bigger crisis due to the effect of SAP. However, overseas employment has run into some problem in West Asia, Malaysia and North America.

Another probable problem area could be our export market. This is concentrated in garments, and the markets for the same are also concentrated in North America and Europe. There was a very high possibility of negative impact on the export market. However, the demand in this sector did not get impacted much, though there was a downward trend in 2008-09.

So, overseas remittances and export earnings played a key role in keeping macroeconomic stability in order. But the story did not end there. People with low and mid income reeled under the impact of the global crisis and price rise. There was a sudden rise in the price of essentials, including rice, in the home market. It was estimated that an additional 10 million (or more) of the population were forced to go down under the poverty line during this period.

MP: Has the crisis impacted foreign direct investment in Bangladesh? Has the World Bank, ADB or IMF decreased their funds?

AM: FDI in Bangladesh has been concentrated in energy and telecommunications. Investors in these sectors are in a very good shape, enjoying super-profits and other benefits because of very favourable policies of the government. New investments are also taking place. However, awareness is rising against harmful investment in energy and power sectors. Funding in the name of aid is not necessarily made for the need of countries like Bangladesh, but is related with their employment, market creation for their goods and making the economic policy compatible with the larger interest of the global empire. Thus in their own interest aid will not decline. IMF has been trying repeatedly to tag Bangladesh with new credit. WB and ADB are busy selling new projects. If the so-called foreign aid decreases I would be happy. Foreign aid comes in the disguise of facilitating poverty alleviation but it actually facilitates the entry of global grabbers of resources into Bangladesh. The ‘aid’ business has also created an unnecessary, long-term liability, and strengthened pressure from the corporate bodies to make policies for their benefit. The ‘foreign aid’ process is closely associated with increasing corruption among officials, ministers, consultants; dismantling of public institutions and, above all, erosion of national capability, confidence and vision.

MP: You have long been associated with struggles against dispossession and corporate grabbing. What is your assessment of the process of primitive accumulation in Bangladesh, and what are the modes through which this process is realised?

AM: Currently, the phenomenon of Bangladesh is closely linked with the present phase of global capitalism. The accumulation of capital, both globally and in Bangladesh, are characterised by land grab and dispossessing people. Our ruling class is accumulating property by grabbing common resources such as land, river, forests and so on; and the global empire is accumulating by occupying resources, new land or country. In Bangladesh, global corporate bodies are interested more in natural resources under the soil or water. The MNCs or global oil companies, which are already occupying the onshore gas resources in Bangladesh, are now trying to take control of the Bay of Bengal. The Bay of Bengal is important for US military hegemony in the region, thus US companies are trying to take ‘legal position’ as forerunner. Global capital has been trying to grab coal mines in Bangladesh, and to ensure higher profits they are pushing for open-pit mining, which is threatening dispossession of millions of people, destroying water resources, fertile land and ecology.

The important feature of the present-day imperialism is that it doesn’t have to go everywhere with its military to grab land. The WB, IMF and other such managerial bodies of global capital, act as ‘civilian military’ to ensure compatible policies for plunder in the name of development. These policy reforms are sufficient to legitimise new form of occupation and grabbing. That is possible if they have the local ruling classes with them.

MP: You have been in the leadership of various people’s struggles against dispossession, and in recent years, people have also talked about a growth in workers’ militancy in Bangladesh. What is your assessment of the people’s movements here? What are the problems and prospects of counter-hegemonic movements in Bangladesh?

AM: We have recently witnessed militancy among garment workers. Garment workers form a new social force that became visible in the ’90s. The gender composition of the working class has also changed due to the increasing presence of garment workers, who are mostly women, within the larger Bangladeshi working class. They are suffering from low wage, abuse, job and physical insecurity and also sexual harassment. The government and the capitalist class have made policies to ban trade unions. This repression itself created resistance, mostly spontaneous. In 2006, it created a mass uprising in Dhaka and surrounding areas. The rising anger due to inhuman working conditions, low wage and sexual harassment against women has compelled them to burst out with their discontent on to the streets again and again. Workers’ mobilisations have faced severe repressions every time, but this has tremendous impact on the working class in general.

Before the garment industry reached this stage, most of the working class was in public enterprises. Adamjee Jute Mill (large-scale private sector during the Pakistan period) has been the centre of working class resistance since the ’60s. I consider its closure in 2002 as not only an economic onslaught but a political act against the working-class movement. The global and local ruling classes tried to dismantle the potential of massive workers’ mobilisation. But the ruling class is, as always, unable to understand the dynamics of the working class. They closed down big enterprises, including Adamjee, and thought that it was the end of the workers’ resistance. But in 2006 within four years of Adamjee’s closure, Dhaka almost collapsed because of the garments workers’ resistance.

I think the prospect of counter-hegemonic movements in Bangladesh is also related to people’s movements in other parts of the world. Now we are becoming more and more global and the issues are also kind of similar. And so are the enemies. The movements in other parts of the globe inspire us as our movements do the same for the other areas. In Bangladesh, we are witnessing the re-birth of a counter-hegemonic movement. After the fall of Soviet Union, left movements in Bangladesh, like many other places, were faced with multi-faceted ideological crisis. The phase we are passing through now in the world is a phase that has to be highly creative. We have experiences of successes in Soviet Union, Latin America, China, Vietnam and so on, but we have also had failures. This recognition of failure along with successes is very important for going ahead with a clear vision.

In the late ’90s we formed a new united platform with number of left parties and other non-party persons to speak out and mobilise against, and resist imperialist hegemony. After our successful resistance against a number of anti-people projects of the MNCs, we discovered the rebirth of people’s confidence. From our experience of people’s movements on different issues, we find the potential of a breakthrough is very bright. No doubt, we need to be very creative and innovative. At this point, revolutionary militancy and revolutionary academic work should go together. As the World Bank, IMF and other corporate bodies, along with their embedded consultants, academics and media have created a strong hegemony of ruling ideas; we need well-organised efforts to break this hegemony to bring real alternative into social consciousness. Radical movements demand counter-hegemonic ideology. In Bangladesh we are now trying to address those issues.

MP: During the recent visit of India’s Finance Minister to Bangladesh, India signed an agreement offering $1-billion credit facility to Bangladesh at a particular interest rate, which many in Bangladesh have found “disgraceful” and “too high”. This line of credit for Bangladesh was the one-time single-largest credit package offered by New Delhi to any other country. And it has been frequently noted that through such lines of credit, India, like other more advanced countries, has been facilitating the overseas expansion of its domestic capital. What is your assessment of the present Indo-Bangladeshi relationship?  Don’t you find streaks of sub-imperialism (both in economic and political terms) emerging in this relationship as in the case of India’s relationship with Nepal and Sri Lanka?

AM: The question of India is very important for us. Without locating India and the role of Indian corporate big capital we cannot get rid of overall hegemony of global capitalism. India has the highest number of rich people but contradictorily India also has the highest number of poor people. The current Indian state is not representing Indian people but is representing Indian big capital. India for South Asia is the same as what the US is for the world. It is hegemonic, oppressive and undemocratic. The present India should be characterised with the rise of big capital, unprecedented accumulation of wealth and power in few hands, and its linkages with global monopoly capital. This India can be termed as sub-imperialist within the global capitalist system, and within South Asia it is imperialist. This India has recently increased its military expenditure to a record high level, also building military alliances with the US. They are both now trying to take control of the Bay of Bengal. With the increasing interests of India, China and the US in Bay of Bengal, the possibility for creation of new alliances or conflicts is rather high. Either way, Bangladesh is going to suffer.

Now global corporate bodies including the ADB, the WB or MNCs consider India a regional centre. Therefore, their projects are selected in line with the interest and long-term programme of Indian big capital. For example, the coal that the British company, Asia Energy, wanted to extract, when it attempted to start open-pit mining in Phulbari, was supposed to be exported to India. When the US oil multinational UNOCAL was trying to export gas, the destination was once again India. Now a number of projects have been conceived to build new coal-based power plants in Khulna and Chittagong. It is apparently a joint project, but the result will be different for the two countries. Bangladesh will have carbon emissions and dispossession of farmers that will create social tension and human tragedy, but Indian companies will earn huge profits.

Indian big business has access to huge potential market in Bangladesh, especially after the SAP. India’s presence is very high in every sector in Bangladesh. It is trying to monopolise each of those sectors, started utilising aid or credit, very well-known instruments of imperialist control and influence. Recently, India granted 1 billion USD loan to Bangladesh for building its own transit facilities. This transit is going to change everything in South Asia. Bangladesh is entering into the ambit of India’s military, political and economic domination on a scale not seen before.

I don’t know, how far the military aspect of the domination will go, but economically India is going to have a commanding authority over Bangladesh. India is claiming that Bangladesh is the land of terrorists and they erected fences around border, then how can they feel comfortable in taking their goods through Bangladesh? Yes, it will be used as an excuse. So, they will demand more regional security coordination under India’s control. The security system of Bangladesh will be subordinated to India status and interests.

Indian sub-imperialism behaves similarly with Nepal, Sri Lanka and other smaller countries in the region. In this context, people’s movements of India, Nepal, Bhutan, Sri Lanka, Pakistan, Bangladesh and other neighbouring countries should have a very high level of cooperation and coordination to strengthen united struggles for building a free, democratic and different South Asia not polluted by Indian or big capital’s hegemony.

Economic Crises, Marx’s Value Theory, and 21st Century Capitalism: An Interview with Cyrus Bina

Cyrus Bina, Distinguished Research Professor of Economics at the University of Minnesota (Morris Campus), USA is a prominent Marxist political economist. His work, The Economics of the Oil Crisis (New York: St. Martin’s Press, 1985) pioneered a Marxist understanding of the political economy of the oil sector. In this book and his subsequent papers he has developed a value-theoretic approach towards the energy sector, OPEC, oil rent and oil crises. He has co-edited Modern Capitalism and Islamic Ideology in Iran, London: Macmillan, 1991 and Beyond Survival: Wage Labor in the Late Twentieth Century, Armonk, New York: M.E. Sharpe, 1996. He has worked on value theory, rent theory, theory of imperialism, globalisation theory, capitalist competition, technology and skill formation, Iran’s political economy, and US foreign policy, among others, over the last three decades. He has been a longstanding member of the editorial board of the Review of Radical Political Economics (RRPE).


“To plague th’ inventor: this evenhanded justice
Commends th’ ingredients of our poisoned chalice
To our own lips. He’s here in double trust:
First, as I am his kinsman and his subject,
Strong both against the deed; then, as his host,
Who should against his murderer shut the door,
Not bear the knife myself.”
William Shakespeare (1605), Macbeth, Act 1, Scene 7

“In every stock-jobbing swindle everyone knows that
some time or other the crash must come, but everyone
hopes that it may fall on the head of his neighbor, after
he himself has caught the shower of gold and placed it
in safety.”
Karl Marx (1867), Capital, Vol. 1

Pratyush Chandra (PC): Opinion seems to be divided on the meaning and import of the so-called Dubai Crisis. On the one hand, a major section of experts don’t find it worth losing their sleep on as it is nothing more than the bursting of a real estate bubble, while on the other, the banking sector strategists think it can lead to “a major sovereign-default problem,”resonating across “global emerging markets.”  How will you describe this crisis? Is it simply another multiplicative, rather late, effect of the US housing bubble burst? Is it another moment in the unfolding of the general crisis of capitalism? What is your assessment of the global impact of Dubai Crisis, particularly in the global south?

Cyrus Bina (CB): This conversation needs an enhanced conceptual context that underpins all these concrete queries and that allow me to respond to them somewhat systematically. Thus, I would attempt, at the outset, to identify the meaning and universality of capitalist crises from the standpoint of Marx’s value-theoretic framework. It goes without saying that I am sceptical about any version of the crisis that is being displayed in ad hoc improvisation by the left and the right; an “inventiveness” that correspondingly may have pedigree in tautological reading of “finance capital” and the “infallibility of human nature.”

Cyrus Bina
Photo by Judy R Korn,
University of Minnesota (Morris Campus), May 3 2010

To answer this apt and multi-layered question, I imagine an epochal context within which such crises are possible and, while the motivation for personal gains and egotism is a necessary condition that is not sufficient for a satisfactory explication of what has so far been experienced across the global economy. For, if the question is couched in either the actions of few rotten apples on Wall Street and its counterparts, say, in London, Paris or Reykjavik, thus blaming the fallibility of “human nature,” then, one may not need to bother investigating the empirics of this systemic possibility and might as well relegate this important task to the Bible-babbling preachers of the “original sin.” In other words, we need to go beyond individual parts to be able to touch the heart of the system as a whole. This insight, while absolutely scientific, is not exclusively Marxian. For instance, one need not be a Marxist to accept the premise that unemployment in capitalism is far from voluntary, despite the fact that certain individuals in this system may wish to slough off – the very fact that escaped the intellect of the pre-Keynesian (laissez-faire) economists of the pre-“Great Depression” period. Therefore, the attempt to indict individual wrongdoers in this debacle, along with their “weapons of mass destruction” (an apt phrase by American financier Warren Buffet describing the financial derivatives), while essential, does not seem to alleviate the faulty built-in dynamics of the system as a whole.  Understanding capitalism and its recurring crises cannot be reduced to any human behaviour, real or imagined. And hiding behind the “fallacy of composition” and “methodological individualism” is an immature way of changing the conversation in this and other matters in economics.

Therefore, while no one should deny the ample opportunism, if not the criminality, of a sizeable segment of finance capital, which conspired so blatantly with notorious market fundamentalists – such as the former Chairman of the US Federal Reserve Alan Greenspan – within the US government, the real focus should be on assessment of the crisis within worldwide accumulation of capital across the landscape. Such an assessment must inevitably include the dynamics of capital accumulation, necessity of the crisis, and the renewal and rejuvenation of the system with respect to redistribution of wealth and, especially, nature of class polarisation across the global economy. The current crisis is the first full-fledged crisis of the new epoch, which was inaugurated without much notice in the early 1980s; an epoch that emerged from the implosion of the Pax Americana (1945-1979) and decline of American hegemony, a good decade before the fall of the Soviet Union.  I identify this epoch as “globalisation,” that is to say, the epoch of transnationalised social relations in which “national capitals” not only lost their personality but also effectively shed their nationalityacross the board. The latter in their transformed and obfuscated form may act in flag-waving, influence-peddling in the territories of their origin or engage in xenophobic and bigoted activities in  contexts of one’s nations-states, but when it comes to the real stuff that matters for global accumulation, they operate essentially like a nation-less entity – i.e., a transnational. Let me point out parenthetically those arguments to the contrary, which take the globalisation of capital to Marx’s time (for instance, by alluding to his phrase “chasing across the world market”), not only romanticise the globalisation of capital before the globalisation of capital but also idealise Marx’s theory of value and misrepresent the characteristic of our present epoch. Marx’s theory is a materialist theory compatible with real historical development.

The epochal quality of globalisation cannot, however, be reduced to a neoliberal policy – as many on the liberal/radical left would like us to believe – for two reasons: (1) that similar to imperialism, globalisation is not a policy but a representation of an all-encompassing structure that manifests the universalisation of Marx’s law of value and (2) that any such corporate strategies or neo-liberal policies (including their timing and their ideological persistence) are more cogently explicable by a systematic articulation and enunciation within this epochal context alone. With regard to the crisis, while the liberal/radical left tends to illuminate the dangers of total reliance on markets and thus the necessity of state intervention, they (including many self-proclaimed Marxists) nevertheless display little or no understanding with respect to globalization (i.e., a universalisation of capitalist social relations) and global accumulation beyond a mere policy or a “national” economic strategy. And when it does, it rather tautologically focuses on the United States, as a purported global hegemon and its postwar paraphernalia, the World Bank and the IMF, bizarre proxies for today’s “globalisation.”  To be sure, these institutions are now passé; these are the dinosaurs that fit in with the now defunct era of the Pax Americana. While on this subject, let me digress a bit for the sake of clarity. In my opinion, these and other relics are objects of obsession for the doctrinaire and dogmatic left that seem to have been stuck in Lenin’s era, while wishing to win the world they don’t have the faintest idea of what it is or how it has come about.  These traditional leftists – in diverse tendencies, such as Stalinism, Trotskyism, Maoism, etc.- are our best, sincere and committed kinds on the block, so to speak, but they haven’t been grown up enough to change themselves before getting ready to change the world. That is why the traditional left has nothing to point to except the windmills like the IMF, the World Bank, and the crumbling façade of the immediate past, namely, “the US Empire.” Another tragic example are the so-called postmodernists, those who are brandishing Antonio Negri and Michael Hardt’s Empire and clumsily loose nearly on every conversation that requires empirical verification, despite their insinuation towards “concrete.” To be sure, I personally do not put the latter in the same category as the traditional left with whom I share a number of viewpoints. I just wanted to make my position clear.

In other words, the left routinely treats the transnational social capital (i.e., hegemonic social relations beyond any one nation-state) as an entity dominated by the United States rather than appreciating the fact that the latter should be considered as the much transformed outcome of the former. This epochal implication in the age of maturity of capitalism, notwithstanding the now defunct Pax Americana and depleted status of American hegemony, has been lost on many radical leftists and even self-proclaimed Marxists today. Therefore, the so-called anti-globalists on the left, through fabricating the illusion of “Americanisation” by allusion to neoliberalism, helped reinforce the neoconservative idea of the “Next American Century,” set forth by the most reactionary segment of the ruling class in the United States. Since, for the ultra-right, “globalisation” is none other than Americanisation in both corporate and colonial dimensions. And this, I think, is a predicament of the left, which has long been regurgitating this anachronistic rightwing theory and thus, not unlike Don Quixote, setting itself up against the windmills and other fictitious objects such as crumbling institutions.

Capitalism is a historically specific system with particular reorganisation and renewal mechanisms. It is also “over-determined” and open, with universal uncertainty written all over it. The role of human ingenuity (and stupidity), ideology (and prejudice), and above all “progress” and class struggle in this system is also such that it makes it appear as if there is a natural perpetuity at work.  Hence, relying on the face value (i.e., phenomenal form) of factors is critically deceptive where it comes to the analysis of economic crises, in general, and the question of current global crisis, in particular. To be sure, crises in capitalism are a mechanism for restructuring and renewal and thus, necessarily, a part and parcel of the dynamics of reproduction.  That is why we would never envisage a crisis-less capitalism, except in the figment of our imagination. And the fact that the modern “mainstream” economic theory is utterly mute on the necessity of a formal theory of crisis, except in obscure randomised overtones, should tell us something about the arbitrary nature and panoramic artifice of this field of inquiry, from top to bottom. In fact, crises are a part of the DNA of capitalism and, as such, would constitute a distinguishing feature of this system in its uniqueness and historical specificity. However, a reasonable methodological materialist (i.e., someone who requires the priority of concrete phenomena over their ideas) needs to start off with crisis in concrete by investigating thepossibility of crisis and the way in which it may turn into actuality. In this sense, the current global crisis is unique, even though it must be the very outcome of general tendencies of capitalist accumulation as a whole. Another crucial point about the economic crises is that they possibly will not automatically lead to “breakdown” of capitalism. Thus, the so-called breakdown theory (with all due respect to the theorists behind it) is neither adequately informed of Marx’s theory of value nor sufficiently attentive to the role of class struggle in the transformation of history. In other words, all economic breakdowns must be necessarily met with counter-restructuring political struggles that are deeply aware of the across-the-board polarising power of capitalism and that are willing and able to provide a reasonable, feasible and visionary alternative to the post-capitalist future. Consequently, this is the most critical question that would not go away for the radical left across the globe for many years to come.

This crisis is manifold, multi-layered, and universal: it started in the US housing market, then banking system, investment and credit underwriting institutions, asset-backed commercial papers, collateralised debt obligations, credit-swap obligations, before engulfing the visible universe of money, traditional commercial credit underwriting, and individual credit market, among others. Then, the credit-swap derivatives, which were hidden from the public eye and thus floating in the invisible and unregulated side of fictitious capital, have begun to appear on our radio telescope. Why do I say: radio telescope? Since no one, to this date, has seen or been able to calculate precisely the volume or size of these derivatives accurately. This, of course, is half of the story as it is not directly coupled with the origination of surplus value (i.e., the source of profit) and the fast-moving tectonic plates of real capital (i.e., the production process). Moreover, the cauldron of worldwide accumulation, along fast-paced technological change, is not without abrupt, violent and antagonistic frictions in the process of (social) capital’s restructuring.  This is the arena in which commodities are produced and up-to-the-minute technology and skills are being created and destroyed in the blink of an eye somewhere around the globe. This is how the new value – hence the importance of Marx’s value theory – is being formed and being destroyed in the battle of competition across the globe.  In this arena, time is money, so to speak, as the rapid change in technology sets the pace for both “creative destruction” – (creation and destruction of use-value, a la Joseph Schumpeter [1883-1950]) – and “destructive creation” – (preemptive destruction of exchange value via ever newer technology, a la Bina) – in my (value-theoretic) synthesis of the two, with ever-increasing rapidity.

This is how Karl Marx (1818-1883) is already here in the 21st century with a vengeance. And this is how the engine of change and origin of time-is-money fairly and squarely emerges from the production of surplus value. The role of fictitious capital is to act for the preservation of this existing value (i.e., capital in money form) by churning and stretching it through the sphere of exchange by any means necessary – even by creation of IOU upon IOU in limitless (and unregulated) issuance of fiat credit swap obligations (CSOs). The higher the pace of technological change – and thus the rapidity in the creation and destruction of value in production – the more appetite (and desperation) for preservation of value (of money) in the sphere of exchange.  And just because the latter is able to stretch the existing value (i.e., the previously produced value in price terms) in money form, credit form or in notional derivative form, it neither should give finance (capital) an arbitrary “hegemony” over reproduction of capital nor exempt it from the constraint of surplus value production. As a result, despite finance capital’s malleability and semi-autonomous outlook, one should not fall for finance-fetish arguments, which are either anachronistically revolving around Lenin’s epoch of finance capital or else superficially hanging onto the fragmented view of prevalent reality.

According to Marx, fictitious capital, while real (as you and I who walk to work back and forth), is rather fictitious in that it cannot produce surplus value from thin air; it is only capable of churning, i.e., stretching the time for the fast-evaporating value of capital in circulation. Finance is a sphere in which the representation of a given value changes its form, say, from cold cash to stocks, without adding to productive capacity or wealth of society. It only manages to redistribute wealth similar to a gambling casino, only lager in magnitude and stranger in outcome. That’s why individuals who work in occupations associated with finance are identified as unproductive labour, despite their stressful, say, a 16-hour work day and their likely heart attack at the age of 50 or 52. A good question is why capitalism in an objective manner (itself!) should classify such a dull, dry and depressing activity as unproductive. And I would say, with Marx, because it does not add to the origin of profit, except by churning and change of hands through the sphere of exchange alone. Hence, the claptrap in Wall Street financial lingo, about this “product” or that financial “instrument” having been oversold beyond its purpose. And Karl Marx, as a keen observer, agrees with capitalism! For, there shall be no accumulation either in capitalism, or in any other socio-economic system worthy of the name, if churning of the readily-produced value were to create new value. This is an important distinction in political economy; a distinction that is lost on vulgar economists and finance junkies whose interest and whose uncritical intellect force them to look at a fragmented picture of finance, divorced from the unified circuit of social capital.

While being on the subject, I want to take issue with certain finance buffs-turned-political scientists, who keep banging on Marx’s theory of value and its core – abstract labour. Parenthetically, I should point out that abstract labour is not an axiom (i.e., a pre-given abstract) but rather an outcome of the very real process that concretely calibrates the worth of all reproducible commodities within the interface of production and circulation in everyday exchange. And this is an inescapable phenomenon for an overwhelming majority of Earth’s inhabitants on a daily basis. Here, a commonality of all concrete labours within these concretecommodities – produced and circulated within the act of exchange against one another in market exchange – is measurable in socially necessary labour (SNL). The SNL is a real magnitude established by the real labour time in the real battle of competition. In other words, abstract labour, being the outcome of a concrete social process, is as real as capitalism itself. Consequently, I am dumbfounded by the fakery (and, indeed, audacity) of individuals who put Marx’s abstract labour in the same category as that of the neoclassical “utility function,” and then insinuate rather jubilantly that they had to reject them both, before they come up with a so-called third alternative: “capital as power.” The detailed examination of such claptrap need not detain us here, yet we have to be cognisant of the trap of circularity associated with the point of departure and the point of return in such “inventive” propositions, which define “power” by itself, i.e., “power” through the sleight of hand and self-promoting gesticulation for attention. This also shows that how serious publishers themselves have developed a weak spot for vanity and fallen victim to such spectacles in this day and age.  To be sure, such “third alternatives” are counting on their squeaky wheels to get popular attention in the time when the world is muddled and the traditional left is out to lunch in the early 20th century.

As I have indicated above, this crisis is a moment in the unfolding of the general crisis of capitalism worldwide, which has turned from a possibility to an actuality and which has triggered and engulfed the entire global economy, industry by industry, sector by sector, sphere by sphere, country by country, and continent by continent in one hell of a sweeping domino. The way that this crisis had spread – from the US housing sector to its counterparts in London, Dublin, Delhi, etc.,- and the manner in which it had swept in destruction and devaluation of “fictitious” as well as “real” capital across the geography of production and exchange must be an indicative of a unique epochal occurrence worthy of observation. Here, as can be observed vividly, globalisation is not an empty word.  Those who have not yet been touched shall be touched in time and as a matter of course. Firstly, transnationalisation of capital is not a fancy (academic) phrase that could be nicknamed as a substitute for “big national capitals” and erroneously referred to – as many leftists, even self-proclaimed Marxists still do – as  “multinational corporations.” Secondly, transnationalisation, beyond the raw (i.e., unmediated) geography, is the very outcome of the synthesis of capital (as a social relation) and (synthesised) geography. In other words, in present epoch we no longer have one “logic of capital” and a different “logic of territory, ” as David Harvey informs us lately. The so-called territory has already been synthesised under the logic of capitalist social relations, for example oil rent, a modern phenomenon which is the creation of capital itself. Thirdly, transnationalisation is well beyond the conspiratorial effect of “national cartels,” which used to be doing the dirty works of the great powers – for instance in Lenin’s era in which more than two-thirds of humanity had no idea what capitalism was, let alone to have lived in it. Fourthly, transnationalisation is not “revocable,” in the manner of a neoliberal policy, by repentant and realistic policymakers. Finally, faulty trigger-points that had led to this worldwide crisis are all preconditioned upon the authenticity (and necessity) of crisis-ridden fault-lines,  which have their ancestry in primordial fabric of capitalism and which are now in need of violent display of universal restructuring.

The fact that we had the 2010 earthquake, measured 7.0 in Haiti, in 2010, or a tsunami that was triggered by a 9.3 undersea earthquake that hit Banda Aceh in 2004, does not tell us when we’re going to be hit again at these trigger-points.  We need to examine Haiti’s and Aceh’s predicaments within a larger framework that extends beyond Earth’s cosmology and geology by studying Earth’s core and the materialisation of turbulence associated with such calamities. Crises in capitalism should be studied in the same manner and with a parallel specificity of causes and effects. By the same token, a deterministic view of crisis, which often relies on idealistic symmetry and simplistic parallels, proves incapable of articulating a materialist theory of crisis. On the other hand, voluntarism and an idealistic approach to crisis tend to scratch the surface by putting the blame on deregulation, few rotten apples, financiers in cahoots with government officials and neoliberalism, without any inkling about the social fabric of capitalism. This approach often blames the “human nature” rather than the freaking system, as the market-fundamentalist Alan Greenspan would have us believe. Consequently, truth is the first casualty in this three-way quarrel between the epochal parallelism of radical left (e.g., the parallelism between “finance” in Lenin’s era and “finance” today), petty-bourgeois voluntarism of the liberal centre, and the market-fundamentalist/sinful-human-nature view of the far right.

Given the above outline, the arena of the current crisis is the globe itself, the underpinning of which interlinks the spheres of production and circulation that in turn reproduces the necessity of wholesale destruction of capital, first in financial and subsequently in “real” sectors of the economy. The so-called Dubai Crisis, therefore, is a symptom of what is known as too-big-to-fail, thus illustrating how derivative-driven financial institutions similar to AIG can go haywire on delivery and bring the economy to standstill. The delivery of the promise that is embedded in the structure and meaning of collateralised debt obligations (CDOs) in trillions upon trillions of dollars of credit swaps by these perpetual credit-printing institutions. The tragedy is that thousands upon thousands of financial and non-financial companies had already purchased these so-called CDOs and duly amalgamated them within their asset portfolios, trusting that they can turn it to real assets as the economy expands without limit. In other words, these companies relied on the myth of the “free market” in which sky is the limit. Moreover, these fellow capitalists thought that Dubais and AIGs of the world are able to honour their word to their own without passing the begging-bowl to their respective (and foreign) governments. Yet, we know for a fact that these AIGs of the world (sovereign and non-sovereign alike) not only proved unable to honour their total obligation to creditors but also remained insolvent even by a fraction of their debt at the height of the crisis. And if they had gone bankrupt on their own officially, the many holders of their “toxic assets” would have gone belly up along with them as well. Speaking of these so-called toxic assets, the alleged toxicity must refer not only to the loss of value of such assets – due to the systemic default associated with the chain-reaction within the credit system – but also to the fundamental design flaw of such derivatives, including unregulated acceleration of credit and limitless financial claim by fiat.  This is indeed equivalent, in conventional terms, to debasing of the currency by printing money non-stop.

Speaking of the debasement of currency (and credit), I wish to return for a moment to Alan Greenspan, who had a deliberate hand in this fiasco because of either sheer negligence or display of naked ideology, so that I shall not be guilty of dispensing with the role of policy. That is why the study of concrete contexts is a prerequisite for any theory of crisis in Marxian sense. The mysterious whispers of the three witches- Jevons, Menger, Walras – in Greenspan’s ears were misunderstood. The maestro’s predisposition to Ayn Rand’s crude authoritarianism, plus his religious conviction in crisis-free laissez-faire, gave him a degree of hubris unequalled in the history of the US Federal Reserve. He believed that Great Birnam Wood shall never be moved to Dunsinane. He had no imagination to look at the previous economic crises in American history. His faith in laissez-faire and the power of Wall Street was unshakable. He had no idea that capitalism operates like a double-edged sword. He had no stomach for the dynamics. Greenspan just looked at the crooked and cooked-up balance sheets of too-big-to-fail financial institutions, looked the other way, and faithfully kept his fingers crossed. But little did he know that the Birnam Wood has moved with a vengeance, tree by tree, inch by inch, sector by sector, country by country, and region by region, across the bloody landscape, to Dunsinane in one hell of a sweep. And it is pitiful that our Macbeth is still oblivious as to what has happened in the economic system and what had hit him so gruelingly in this grand tragedy.

The lack of distinction between calculable risk and incalculable uncertainty is at the heart of this particular crisis, which – among other forms – revealed itself as credit crisis. This is a question of “to be or not to be”; that is to say, a Shakespearian make-or-break between “to be” able to apply probability (i.e., a chance of occurrence) to some future event or “not to be” able to. And similarly in Hamlet, as we have seen so far, it may become a matter of life and death.  The calculability of risk unquestionably depends on the existence of prior distribution of such risk. For instance, the risk of issuing a life insurance policy is only calculable upon the availability of the probability distribution of such risks associated with the targeted population. In contrast, it would be next to impossible to know, in probabilistic terms, where the next earthquake will hit and with what frequency and intensity. We simply are not in the possession of systematic data that would provide us with the probability distribution of these occurrences. Therefore, to all intents and purposes no one is able to calculate the occurrence of the next earthquake across the planet.  In the meantime, the pattern of so many events in our everyday life does not follow linear progression and linear changes in accordance with Newton’s law of motion. In other words, a change in an “initial condition” of a particular motion (or occurrence) may not transmit with same magnitude at its termination point. Therefore, any attempt at extrapolation from a known magnitude of change to measuring an unknown change in the future, via probability, is bound to be deceptive.

This is the essence of Chaos Theory, a phenomenon that was discovered by meteorologist Edward Lorenz (1917-2008) of MIT in the early 1960s and, as the bedrock of many sciences, revolutionised our view of nature, environment, ecosystem, economic system, and the cosmos, to name a few. It also manifests the very core of dialectical change, from quantitative to qualitative change.  The occurrences, such as earthquakes (or weather patterns), are the stuff of uncertainty, i.e., a different kettle of fish altogether. Financial derivatives, such as unregulated credit swap defaults (CSDs) belong to the latter category and thus amenable to no probability calculus. Piling up CSDs upon CSDs (i.e., changing quantity) is bound to lead to change in quality, which neither is known as before nor is measurable quantitatively due to changed characteristics. It is not unlike getting to the “event horizon” in cosmological terms and knowing little about the Black Hole that’s about to gobble you down to oblivion. Therefore, when one hears the phrase, “distribution of risk,” by either Wall Street financiers or the US Department Treasury or the Federal Reserve authorities, one wonders whether all these market fundamentalists were playing dumb in unison or they themselves are victims of unrelenting cult of priesthood in mainstream economics. Come to think of it, this very simple point was lost on Larry Summers (and his immediate boss, US Secretary of the Treasury Robert Rubin and former CEO of Goldman Sachs) when it came to regulation of financial derivatives during the Clinton administration. This is what a typical mainstream (and, in the Summers’ case, very typical) economist will do, or not do, when it comes to matters that would make a hell of a difference, so to speak. The latter is a school of thought whose ideological tentacles these days extend into many social sciences for the sake of influence and universality; yet, it is embarrassingly mute on things that matter, like this very crisis, as it has no theory of crisis in the view of its crisis-ridden subject, the economy.  At any rate, this fiasco should speak broadly on hollow and ignorant state of economic theory espoused by mainstream economists and their little relevance to complexities of today’s capitalism.

Besides, not only the lax regulation but indeed the lack of any regulation in the ambience of boast and bravado on Wall Street (and its counterparts elsewhere) created monstrous shell-games unprecedented in the history of finance capital. For instance, Lehman Brothers has not been content even with its own ideological siblings in the White House. Apparently, even the most promising revolving door between the US Congress and Wall Street lobbyists did not prove sufficient for the appetite of these investment banks. Therefore, referring to conflict of interest alone would not cut the mustard here. Lehman created a dummy corporation in its shadow, in 2001, when IBEX Capital Markets was purchased before being renamed Hudson Castle. A recent front-page expose reveals: “Hudson Castle created at least four separate legal entities to borrow money in the markets by issuing short-term i.o.u.’s to investors. It then used that money to make loans to Lehman and other financial companies ….” (New York Times, April 13, 2010)  In other words, Lehman was in charge of creating IOU without limit in the dark alleys of banking deregulation, with a blind eye from US Federal Reserve under Greenspan-who brashly, after the Titanic is resting at the bottom of the ocean and so many lives lost, claims: “I was right 70 percent of the time.” He has yet to understand that resorting to percentages (and probability) in negligence of such colossal magnitude has no meaning; he fails to see that 70 percent is good for birds. Incidentally, this was the time that Timothy Geithner (current US Secretary of the Treasury) was the governor of the Federal Reserve Bank of New York, a heartbeat away from this and similar debacles. This is just a tiny example of outright swindle that has happened in every one of these financial institutions (Goldman Sachs, JP Morgan Chase, etc.) and that should make even unscrupulous (“creative”) accountants blush to their bellybutton – and, thanks to loopholes, it is not illegal. On the top of all this, the recent crude, cowardly, and criminal conduct of Goldman Sachs, done after the financial debacle and caught (April 2010) by the US Securities and Exchange Commission, should be an indication as to how blatant these outfits are turned out to behave.

Finally, the impact of the global crisis on “global south,” an apt reference to the extremely uneven and excruciating asymmetrical segment of the globe, is of course more unsettling. This can be observed in a one-two punch of the class polarisation, first through further destruction of whatever means remained of “self-sufficiency,” associated with a lesser commoditised traditional communities, and then by means of universal uneven development across the vast landscape. Therefore, from the standpoint of accumulation of capital, one has to make a distinction between the tip of the iceberg (of globalisation) – with respect to the “poverty-reducing” capitalist innovations and development of higher-paid jobs – and the nine-tenths that sows the seeds of further class polarisation via future crises, hidden from immediate view. To be sure, class polarisation can be detected through this very crisis in both the global North and the global South rather visibly and universally today.

PC: You have written extensively on the political economy of the oil sector, while developing a Marxist theory of rent. What role do the peculiarities of the Middle Eastern economies, which have been built around this sector, play in fomenting such crises? How are such crises related to specific social relations of capitalism, as perfected in these economies?

CB: Since the 1970s, the globalisation of crude oil sector instigated, more or less, an organic association and commonality among major oil exporting countries, including those in the Persian Gulf and North Africa.  The economies of these countries virtually rise and fall with the price of oil and the extent of their crude oil exports. The price of oil, of course, is determined by global (spot and futures) markets, which is but symptomatic of globalisation of the oil sector itself. Oil revenues are the major segment of state’s budget and the main source of export earnings in the majority of these countries. These revenues are indeed differential oil rents based on the differential quality (i.e., differential productivity and thus differential profitability) of crude oil across the globe – and, as such, are price-determined, not price-determining.  Consequently, whatever happens to this globalised sector will have to have a direct impact on the economies of these oil-exporting countries. In this globalised, post-cartelised  epoch of oil production, global interdependence cuts both ways: (1) the globalised oil sector no longer consists of national oil cartels (under the now defunct International Petroleum Cartel), which once divided the world oil in the vertically-integrated  Achnacarry Agreement (1928-1972), (2) the post-war (WWII) US foreign policy of the country being in cahoots with the national cartels is no longer an option, (3) the colonial oil concessions are long relegated to the museum of pre-capital’s history in these countries, (4) the de-cartelisation of oil led to sovereignty (i.e., ownership as opposed to leasehold) over oil and gas reserves in these countries, and (5) the oil-exporting countries have no control over pricing of oil – (except in the case of self-injurious political opportunism, such as Saudi Arabia’s action in the mid-1980s in support of Saddam Hussein and against Iran) – since the formation of value (and thus global price) belongs to a larger (transnational) arena and thus out of anyone’s hand.

Yet, tragically, the US policymakers (aided by ignorant liberals and dogmatic traditional left) and oil-exporting governments themselves tend to play on mutuality of their nostalgic past, despite the crystal-clarity of evidence in respect of the objectivity (and irreversibility) of the globalisation of oil. For instance, you should remember the former Saudi Ambassador to the United States, Prince Bandar, who had visited US President George Bush in Crawford, Texas, back in the summer of 2004, and who, among others, pledged to bring down oil prices by the November of 2004, so that George Bush’s chance for re-election would increase. Now, you go back to check the oil prices in the November of 2004 to see for yourself. It takes two to tango, and, indeed, two to carry on with the nostalgia of US colonial policy in oil. But this nostalgia, as pathetic as it may seem, is taken rather assiduously as a fact by the popular media. The oil-exporting countries are doubly entwined with world market: (1) through the universal transnationalisation of capital across the board and (2) via their direct and organic union with the turbulent global oil industry itself.

The business of myth-making concerning “the control of oil,” the mystery of “access,” and other popular and prevalent gimmicks, however, goes beyond the official channels. The official theory, perpetrated by conservatives, liberals, and even radical left (including many self-proclaimed Marxists), claims that today’s global oil is a monopoly and OPEC is a cartel, despite the industry’s  evolutionary de-cartelisation and eventual (competitive) globalisation since the 1970s, and contrary to the wealth of empirical evidence. Yet, there are different nuances throughout the bourgeois political spectrum. US conservatives, who religiously stick to their gospel of “free market” in capitalism, pray rather single-mindedly to a different god when it comes to the market for oil.  These market fundamentalists pay homage to the US government as their patron saint in order to dispel the curse of “foreign oil.” They play dumb by ignoring the universality of global oil market in order to conceal their xenophobic attitude and their racist mindset under the rubric of energy “self-sufficiency.” In other words, right-wingers are two-faced about their market-mongering.  A notable example of this is T Boone Pickens (a self-interested Texan oil tycoon), who has recently been energised by the power of racism and xenophobia in the United States, and who simply jumped on the bandwagon of “energy self-sufficiency” in the United States. He is currently running TV commercials in the United States, cursing the Arabs (and others) for high US oil imports from the Middle East; he claims he is planning to eliminate the US “dependence” on “foreign oil,” thus creating energy independence for his beloved country. And, as a Republican businessman to the right of Attila the Hun, his position on this energy-independence hoax is no different from his bleeding-heart liberal counterparts (see President Obama’s recent energy proposal), who play the same nationalistic card. Mr. Pickens though is no rag-tag patriot without hefty materialistic objectives; he cunningly planned to augment his private wealth with public subsidy camouflaged as deference to environment, laced with targeted fear-mongering, blatant bigotry, and taunting racism.  Hence, the Arabs, Iranians, and the Venezuelans are all fair game to be attacked by his TV commercials and other commentaries with impunity.

But all this is the least of my worries, since the ugly face of ultra-nationalism (and naked fascism) cannot be long covered by the touch of make-up crew on the television or the hint of a colorful bowtie and a $2,500 three-piece suit. My concern is the liberals who are now roaming on the left and rambling in misrepresentational intent on the “peak-oil,” “resource scarcity,” “resource wars” and other panoramic subterfuge in order to muddy the water on the nature of class conflict and class polarisation in the 21st century, where it comes to oil and energy resources. The 21st -century replicas of Reverend Thomas Robert Malthus (1766-1834) relegate the question of oil to ad hoc “scarcity” of a commodity that is supposedlyintrinsic to capitalism. These trendy protagonists tend to deceive themselves with use-value fetishism with regard to oil and evolution of capital and capitalism. They confuse the characteristic of capitalism with a static accounting system of use-value allocation in their stagnant imagination, before faking their explanation. They do not realise that coal and steam engine were once the bread-and-butter of capitalism, before being relinquished as often as not for oil and technologies that made this transition possible. They literally operate like a skinny CPA (Certified Public Accountant) with an antiseptic desk, a penchant for the balance-sheet, and much antipathy towards the intricate dynamics. These protagonists turn a blind eye to dynamics of capitalist social relations in which no commodity retains an intrinsic place within the system other than commoditylabour-power. They look at southern Sudan, for instance, and pontificate that it is a “resource war.” They look at the US invasion of Iraq and conclude that it was for “oil.” And, frankly, these urbane, educated, soft-spoken liberal/radical fellows make me a good deal more discouraged than the likes of T Boone Pickens do.

PC: As the news of the crisis in Dubai came in, panic was evident among Indian bankers and builders. This is obvious because of the deep investment of 
various private-public banks and construction companies in diverse economic activities in the Middle East. Also, the amount of remittances from West Asia is quite considerable as millions of Indian workers are working in Dubai and other West Asian cities. Further, in recent years, India, along with China, has been investing in African oilfields and acquiring major stakes in various oil projects in the Middle East (including in Iran). What do you think are the political-economic implications of such involvement in the economies of oil-producing countries? Does such involvement have any significant impact on the competitive regime in the oil industry?

CB: First of all, it would not be unreasonable to panic upon the news surrounding the Dubai crisis, particularly when it is being reported on the Financial Times’ front-page (November 26, 2009). I distinctly remember that I was traveling aboard the train from Glasgow to London where I had given a public lecture on post-election Iran the night before, and my host was reading the paper rather matter-of-factly. When he finished reading, I picked up the front page and could not believe my eyes – just like I had predicted exactly 21 days earlier in a seminar in my own institution, here was another AIG-like conglomerate turning belly up.  Yes, there are, as of yet number of unidentified AIGs and Dubai-like entities out there and there’s hardly any idea on the part of the US Federal Reserve or European central banks or any other central bank on the face of the Earth to know how many credit-swap defaults (CSDs) have so far been issued or where they are to be found or at what value are they to be denominated in the manifold scrambled portfolios held by the financial and/or “real” sectors of global economy. Any number is just a wild guess, since foreknowledge of uncertainty is a contradiction in terms.

Consequently, if the Iceland debacle is of any consequence and these black holes will turn up in some sort of sequence, any distinction between “sovereign funds” and private funds would be an obtuse proposition.  It shows how unsecure the financial system has become and to what extent these alleged instruments of “securitisation” were unsecure. In the case of Iceland, this derivative-driven financial system took the country several generations back by destroying the standard of living that has been slowly but surely achieved throughout these years.  This was because the eventual write-downs required that these of these “toxic assets” valued at many times the Iceland’s GDP be got rid of. This has, of course, become somewhat “manageable” with assistance and blessing of “rescuers” from the international community. Now, imagine that the entire estimated (notional) value of these financial derivatives, which is roughly somewhere between $70 trillion and $180 trillion (with “T”), is to be written down at the same time. The write-down for such a gargantuan amount is a nightmare scenario beyond the collective capacity of all economies on the plant; thus neither a handful of countries nor even the global economy can stand up to this eventuality. It is possible that the present-day world economy shall be dilapidated across the board so much so that the scale of destruction would relegate us to decades of stagnation and a standard of living our grandparents were used to.  The brunt of hardship, of course, is leveled against the working people, particularly the working class, everywhere.  Here, all “rescuers” on the plant shall be in need of rescue themselves.  And if you think World War III in terms of destructive capacity and polarising power is bad enough, try to imagine the ferocity of this full-blown scenario!

Credit Default Swaps are only one type of unregulated financial pandemic introduced for deliberate individual gains at the expense of rest of the capitalists. There are other types of derivatives that are equally contagious and potentially devastating with similar consequences. For instance, as we speak, there is an outstanding (notional) amount of interest rate derivatives to the tune of $414.09 trillion at the end of June 2009, according to the Bank of International Settlements (BIS) Survey of Over-the-Counter (OTC) Derivative Transactions.  Let me explain the real meaning of this staggering figure to you by referring to one of the cheerleaders of this Ponzi scheme, namely, US Federal Reserve Bank of Dallas (Issue 2, March/April 2003):

An Interest Rate Swap: Consider the most prominent type of derivatives, an interest rate swap. [… ] Suppose a small bank has a portfolio of fixed-rate loans, so that the interest payments remain the same each period. The bank wants to convert these fixed-interest payments to floating, or variable, rate payments, so that they fluctuate with market interest rate. That way, if rates rise and the bank has to pay higher rates on its liabilities, the interest it receives on the loan portfolio will also rise, thereby preserving the bank’s profit margin.  The small bank can go to a dealer, typically a large bank, to swap the fixed rate on its portfolio for a variable rate. The small bank promises to pay the dealer the fixed rate, while the dealer promises to pay the small bank the variable rate. When the variable and fixed rates are equal, no payments are traded because they would be the same; they cancel each other out. However, if the variable rate rises above the fixed rate, the dealer must pay the small bank the difference, so that the small bank can earn the variable rate. Conversely, if the variable rate falls below the fixed rate, the small bank must pay the dealer the difference, so the small bank still earns only the variable rate.

Now imagine rather conservatively that there would be just a 3% change in the rate of interest in the view of $414.09-trillion (notional) interest rate derivatives estimated above. That’s to say, 3% of these $414.09-trillion unregulated derivatives will come due without much delay. And any elementary school kid can calculate this without resorting to a calculator. A 3% fluctuation in the rate of interest in this case alone is just over $12 trillion, a near equivalent of the estimated nominal figures for the 2009 GDP of Germany, France, the United Kingdom, Brazil, India, Russia, Turkey, Sweden and Norway combined. Even if the estimated value of both sides of these swaps comprises the notional value of $414.09 trillion, we are still confronted with over $6 trillion of “credit exposure” in one breath. This is potentially equivalent to a Jurassic Park of “run on the bank,” a phenomenon that was prevalent, albeit with much limited incendiary capacity, in the Great Depression during the period of 1929-1934 in the United States and elsewhere.  Yet, some may argue that fluctuations of interest rate should eventually offset each other and such debits and credits come to some sort of “equilibrium” anyway; so what’s the problem? This is one of the typical claims in support of deceitful “distribution of risk” in the banking and finance community. But this unremorseful attitude overlooks the fact that in reality such accounting calculations are based on smooth transition in fairy-tale, fantastic and far-fetched capitalism without crisis. Speaking of the “distribution of risk” in this context is no more than tautology.

This cheerleading US Federal Reserve document, after going through several charts and other material that are as matter-of-fact, finally concludes:

As a result, banks can better manage risk by dispersing it to those most able to bear it. Organizations with little dependence on short-term liabilities, such as insurance companies and pension funds, often benefit from holding some of the risk segmented and dispersed through derivatives. When risk can be divided up and reshaped, so that it comes to the purchaser custom made, financial market participants enjoy greater flexibility and efficiency (emphases added).

Sounds familiar? This is exactly the attitude and the ideology that promoted creating something out of nothing since the invention of Tooth Fairy and Santa Claus. Aside from the total devastation, this would result in the standard of living for all working people across the plant taking a drastic plunge. Is it not the most violent form of cannibalism in the scale unprecedented in capitalism? Yet, the saddest part of this tragedy is that some of our better and brighter political economists tend to describe all this in a benign and misleading connotation as “financialisation.”

Nevertheless, going back to the localised (and limited) scenario, by plugging the leak associated with the Dubai Crisis, the threat of the domino through the network of Indian private-public banks and construction companies is seemingly attenuated for now. Yet, the impact of depression-like worldwide crisis has already been felt in the economies of the region, particularly in the construction industry, which has been ordinarily considered as the bread basket of foreign workers, second only to oil, in this region. One measure of all this is the huge number of construction cranes that are still standing and rusting to the core in Dubai today.  As for the Chinese and Indian investments in the African oilfields, pipelines, and other oil-related projects in the Middle East and North Africa, they have so far been immune from these fictitious “securitisation” and derivative-driven financial schemes. Other than extraordinary (and temporary) political upheavals, the collateral associated with these oil projects is tangible and calculable in terms of probabilitization of risks. Yet, the effect of worldwide slowdown in all economic activity, however, should not be underestimated. Therefore, without a doubt, this should have a significant impact on the economies of the oil-producing countries.

Finally, production of crude oil is according to the law of value worldwide. This is so, since the de-cartelisation and subsequent globalisation of oil in the 1970s. In this context, economic crises, including this near-depression, are all tendencies towards restructuring of capital and thus leading to further concentration and centralisation of production and exchange, which ultimately broadens competition. Contrary to the fiction of bourgeois textbooks, capitalist competition is a phenomenon that entwines with further concentration and centralisation of capital in the real world; it is the war of capital on capital as can be seen rather vividly from the turbulence within financial sectors and its spread toward engulfing the most tangible fabric of the global economy. When I say oil is de-cartelised and then globalized, it means that for the first time the production of oil worldwide is operating according to the law of value anticipated by Marx. This, of course, does not sit well with either vulgar economists (orthodox and even heterodox) or corporate ideologues or liberal/radical democrats or caricature Marxists of today. The thesis of “monopoly capital” has not only expunged competition and application of the theory of value from the contemporary stage of capitalism but also sadly reinforced the vulgarity of neoclassical competition in political economy.  It was not until the early 1970s that Marx’s value-theoretic political economy once again revived and flourished rather successfully to this day. My own contribution in political economy of oil and global energy is but a gentle reminder of this transformation and this history. In particular, I have developed a theory of rent for the oil industry (a highly integrated industry by any standard) in terms of real competition rather than through fictitious and mechanical departure from fanciful void of pure competition. And, frankly, I hardly see any distinction between rightwing ideologues and leftwing radicals today when it comes to the question of capitalist competition in the oil and energy industry.

PC: What is the role of finance in the present-day crisis? As a Marxist, you have related the global ‘financial’ crisis to the volatility intrinsic to the accumulation of capital, and you have critiqued scholars (including from the MR school) who tend to autonomise and essentialise the role of finance capital, financialisation and monopoly capital in the overall assessment of present-day global capitalism, including its crises.  Can you discuss your critique of various positions among ‘heterodox’ economists with regard to the phenomenon of capitalist crisis?

CB: The role of finance is not a standalone proposition in this or any other full-fledged crises of capitalism. Finance is one of the three forms (and circuits) of social capital, entwined with other two circuits of commodity and productive capital. Firstly, one must investigate the process of accumulation as the root cause and source from which crises emanate in capitalism. Therefore, the theories of “profit-squeeze,” “under-consumption,” “disproportion,” and so on are, for instance, pretending to establish the cause by demonstrating its apparent form in a tautological manner.  And if what meets the eye (i.e., the apparent form) is what meets the eye, then, as Marx eloquently pointed out, there would not be any need for science.Secondly, to say that crisis leads to the breakdown of capitalism is symptomatic of (1) a lack of adequate understanding of the dynamics of capitalism, particularly the operation of Marx’s theory of value and (2) a tendency towards a mistaken belief that the automatic fall of capitalism is inevitable and that the role of purposeful collective human agency for social change is nil. This, of course, is contrary to the self-evident historical experience, from our past recorded time to our very present. Therefore, despite my high opinion of both Rosa Luxemburg (1871-1919) and Henryk Grossman (1881-1950), and contrary to Roman Rosdolsky’srevered work, The Making of Marx’s Capital (1968 [English Edition 1977]), in attempting to put Luxemburg’s theoretical work in more positive light than it methodologically deserves, I do not see anything remotely in support of this line of thinking. By way of digression, I wish to point out to Luxemburg’s inadequate recognition of Marx’s method in which she mistakenly identifies capital (i.e., social capital or capital-in-general), in Capital, Vol. 1, as individual capital. Unfortunately, this view is still shared by some Marxist economists today. Also, Luxemburg rather intrinsically (and even in an empiricist fashion) emphasised on “undeveloped part of the world” in conjunction with value analysis, thus made herself a target of hollow criticism by the neo-harmonists (Grossmann’s apt characterisation) within the “Austro-Marxist” schoolOtto Bauer (1881-1938), in particular, was critical of her “breakdown” theory from the standpoint of “equilibrium” and smooth transformation of capitalism through workings of the “schemes of reproduction”, in Capital, Vol. 2. Also, prominent members of the Second International, namely, Karl Kautsky (1854-1938) and Rudolf Hilferding (1877-1941), showed the same bourgeois attitude toward the reproduction of capitalism; as it is known, the latter explicitly attributed the cause of crises to disproportional relations among individual branches of production. The debate in pre-revolutionary Russia, however, was dictated by another set of concrete circumstances. Here V. I. Lenin (1870-1924), who sided with “legal Marxists”, stood against Narodniks’ peasant-centered political position, in his celebrated 50-page essay, “On the So-called Market Question” (Collected Works, Vol. 1). Yet, on the nature of reproduction, Lenin took the symptom of crises for their cause.  Hence, my position on Lenin agrees with Rosdolsky’s (1898-1967) that “It is evident that Lenin’s postulate, according to which the relation of production and consumption is to be subsumed under the concept of proportionality, brings him unfortunately close to [Sergei Nikolaevich] Bulgakov’s [1871-1944] and[Mikhail Tugan-Baranovsky] Tugan’s [1865-1919] ‘disproportionality theory’ of crises”. And I think, these unsurpassed revolutionaries (i.e., Lenin and Luxemburg), who regrettably were at each other’s throats, were both incorrect on Marx’s theory of value, an embodiment of periodic crises in respect to restructuring of production and resultant class polarisation in capitalism.

Thirdly, the current crisis has been materialised in a number of symptomatic forms, most prominently in “credit crunch,” which has reverberated all the way through the entire intricate network of commercial (and investment) banking system, before spreading throughout the so-called real sectors of the economy across the landscape. Yet, it would be incorrect to characterise this crisis as that of “credit crunch.” Finally, the reason that Marx speaks of “possibility” and “actuality” of crisis has a deep foundation in materialist conception of history as opposed to axiomatic theorisation.

Marx starts off with the potential fault-lines of capitalism as a whole (i.e., the possibility) in order to conceptualise them in contradistinction with all other historical modes of production; yet -in order to avoid the trap of idealism (i.e., starting with an axiomatic fiat) – Marx falls back on the concrete occurrence of crisis, in historical reality on the ground, as a starting point. In this manner, capitalism – although a concrete mode of production in historical terms – is nonetheless invoked in abstract from the perspective of its (living) concrete moment. Here, a key requirement for a materialist method is to start off with the concrete – not a pre-given conceptual form; hence the necessity of abstracting from the concrete “actuality” entwined with the (living) moment. Consequently, Marx’s crisis theory, among others, is the display of Marx’s materialist (as opposed to idealist) methodology on a grand scale.  Hence, for instance, “profit-squeeze” theory of crisis – a corollary of the neo-Ricardian “class struggle” in distribution – is not only ad hoc but circular. Lastly, capitalist crises are not long-term (contrary to Stagnationist thesis) and thus “permanent,” in Marx’s view of capitalism. Crises are periodic, thus reflecting the break and the continuity, and thus the renewal of the circuit of social capital in the accumulation process.

Now, it would be impossible to speak of a crisis theory without articulating the role of “the law of tendency of the rate of profit to fall” (LTRPF) in Marx’s framework. By all accounts, however, including Marx’s own explicit assertion, this “law” (and its countertendencies) is the most important law in the critique of political economy. The question, therefore, is in what manner and why.  Here, the theory of value, as the most distinguishing feature of capitalism, has to be placed at the very centre of analysis, before the role and necessity of crisis in dynamics of value formation can be depicted. Crises provide a window into the periodicity of turbulent capital accumulation through competition, which in turn bring about change in the magnitude of value. That’s why “monopoly capital” view of capitalism (most notably in Paul Sweezy’s writings) has done away with the theory of value (given the lever of competition that goes with it) for developed contemporary capitalism of today.  This sadly demonstrates that a wrong turn away from the reality of capitalist competition (as opposed to fictional competition in bourgeois textbooks) can take a prominent figure like Sweezy (1910-2004) – a remarkable mentor of my generation – to a point of no return.  This parallel drift away from Marx’s value theory and mistaken interpretation of Marx’s competition have also befallen on many neo-Ricardian/Sraffian scholars, who took the unmediated price of commodities on its face value and consequently, in my judgment, regressed beneath the theoretical standing of their master, David Ricardo (1772-1823).

Capitalist crises are of cyclical in nature in that change in technology – (inclusive of major reorganisation, mergers and acquisition, etc.) – provoked through competition, leads to cost-cutting and rationalisation of the process of production by a few leading capitalists. Of course, in due time this newly-devised technology shall be forcefully generalised throughout the industry. At this initial stage, introduction of the new technique induces a rise in “technical composition of capital” (TCC) – which measures the rise of composition of capital in its material form. However, the rise in material composition, mirrored in value, boosts the value of constant capital, measured by magnitude of the existing value – i.e., the one that has yet to change in magnitude by way of crisis.  Marx indentified this as “organic composition of capital” (OCC). Finally, as the new technique finds sufficient emulation in competition and thus being duly generalised throughout the industry, the magnitude of value changes, the restructuring and renewal of accumulation come to pass through crisis and, accordingly, the “value composition of capital” (VCC) is rendered commensurable with the newly-formed value.  And as soon as the newly-formed value emerges, any reference to the rise of OCC (the gauge for change in composition of capital related to initiation of the new technique) is not consequential, until the next round of technological change and introduction of new technology by leading capitalists, which once again leads to repetition of the same process toward the formation of newer value.

Marxian competition operates at two distinct, yet intertwined, levels in mature capitalism: (1) the formation ofmarket value in a single industry, via intra-industry competition, and (2) the formation of prices of production, via inter-industry competition. The former leads to different profit rates for the firms in single industry. The latter gives rise to tendency of the uniform rate of profit for all industries. Notwithstanding competition, the price of production of average OCC is the same as the value magnitude. In contrast, the price of production of sectors with higher (lower) OCC must be above (below) the magnitude of value with average OCC. This is known as Marx’s “transformation problem,” an off-putting connotation that, since the early commentaries ofWerner Sombart (1894), Eugen von Böhm-Bawerk (1896) and L. J. von Bortkiewicz (1907), clarifies and at the same time obfuscates the real evolution that has led to the transformation of values to prices of production in developed capitalism. Incidentally, the phoniest of objections leveled against Marx’s value theory, I believe, was by Böhm-Bawerk (1851-1914) – a second-generation marginalist associated with the Austrian school – who, among others, objected to reduction of higher skills to undifferentiated skill (and technology) in the prices of production. He was blind to the dynamics of capitalism via crisis, as complexity was too rich for his blood and skilling and deskilling, via competition, seemed impossible in his preset imagination. This connotation, in my opinion, must be understood as a transformation procedure in order to shed light on the reality of historical evolution and transformation in capitalism. This amounts to development of capitalism within capitalism, with the emergence and development of credit system, and all the rest. Here, all deviations generated by technological change, changing skills and skill formation, productivity of labour, diverse quality of use-values, etc., are balanced in competition and through socially necessary labour (SNL) time spent in production and measured abstract labour, a common denominator of all commodities. In this manner, ordinarily, the price of production that governs any one sector manifests the most advanced capital in the industry. The exception to this is of course the interaction of capital in the presence of rent, wherein the value formation takes a quite complex excursion beyond present conversation.

Introduction of the new technique increases the initiators’ profit over and above the levels of profit gained by others for a while.  This would give these capitalists a weapon of choice in the battle of competition: (1) They produce below the (established) cost of production and still make adequate profit and (2) They take out those who fail to innovate and cut costs quickly enough in order to stay in business. This, as a mechanism within the theory of value, triggers the “tendency of the rate of profit to fall” (LTRPF). And, parenthetically, contrary to many studies, LTRPF is not an empirical law to be used for measuring the actual fall in the profit rate in the long-run; this empirical view, which enjoys popularity in certain Marxist circles, reminds me of the Classical “stationary state,” where the profit rate declines without limit. In my judgment, this fault may have something to do with exegetical reading of Marx, particularly his Grundrisse and his Capital (Vol. 3), in which there is some mention of long-term fall in the rate of profit. I tend to think, along with several well-known Marxist scholars, that what is vitally critical for us is to grasp the centrality of Marx’s method and to let nearly everything in his lifelong and spirited contribution to be subjected to rigorous criticism. This is what true Marxism is all about in both theory and practice.

Returning to main point, just before the generalisation of the new technique, there are many heads that had to be placed on chopping block, along a good deal of the destruction of capital, in mutual mutilation. This, in turn, generates the tendency for the rate of profit to fall within the not-yet-dismantled framework of the old value. In other words, due to fierce competition, so many capitalists cannot afford to hang on to their hat and consequently must file for bankruptcy or worse. As a result, as soon as the new technique will become generalised and the battlefield cleared, the newly-formed value(commensurate, in magnitude, with the new technology, new entrants, and the new rate of profit) will tend to restore the rate of profit as countertendency. Hence both the tendency and countertendency of the falling rate of profit are organically linked with the dynamics of value formation in Marx’s theory of crisis. With the formation of new value, the tectonic plates – so to speak – get ready to move again at the onset of a more intensified competitive build-up in innovative activity, coercive engagement, flourishing and perishing livelihoods, and eventually in the wholesale destruction of capital across the board. In this manner, although actual crises in capitalism are not permanent, nevertheless the spectre of crisis keeps hovering over this mode of production for good.

This is how individual interest (via private appropriation) – even within the capitalist class – works against the collective interest and well-being of the system which, in turn, proves necessary for propagation of the individual capitalist. This point goes to the heart of Marx’s visionary understanding of capitalism (and accumulation of capital) through competition rather than bourgeois monopoly. It also reveals a built-in contradiction that forces the parts to betray the whole, not just for being greedy but for the fact that they would never know whether they will be able to survive tomorrow.  Accumulation of capital, in Marx, is a macro category absolutely distinct from any individual capitalist’s decision-making or “choice.”  Therefore, clinging to shenanigans – such as “differential accumulation” (assuming a higher rate of return by some capitalist in the oil sector and turning around to accept it as conclusion) – does not only distort the question of competition in capitalism but also misrepresents the meaning of accumulation by invoking “methodological individualism,” which relies on voluntarism on the part of individual capitalists. To be sure, individual capitalist decision to engage in certain profit opportunities is not the same as what is called accumulation in any political economy worthy of mention, let alone Marx’s. Hence, Marx’s realistic view of capitalism must be understood in contradistinction with the orthodox price theory – (and its faint-heated “heterodox” variety) – whose core is built on idealistic volition – “choice.” Here, the origin of synthetic competition in Marx is like the replicating quality of the DNA in the original cell, which presupposes the quantitative division of subsequent cells. In other words, the initial derive for multiplication has nothing to do with the number of subsequent cells but has to do with the unique property that’s called DNA at the outset. This is equivalent to the seed of competition within the interaction of social capital and labour-power as a whole. Here competition is a part of the synthesis with integration – not its antithesis, in crude bourgeois terms. That’s why pointing to the number of firms in an industry for identification of “competition” or “monopoly” does not only displace the reality of competition in dynamics of crises but also decidedly conceals the edifice of violence entwined with the accumulation of capital by manufacturing a fantastic replica in pure ideological form.

PC: You have endeavoured to develop, if one may say so, a value-theoretic approach towards the present-day capitalist crisis, conceptualising it dialectically as a moment of desperation to preserve value in the circulation sphere, while it is destroyed in the production process. Can you elaborate on this understanding of crisis? 

CB: If we accept that the creation of surplus value is achievable only by purposeful human activity in the sphere of production, then human activity in value’s realisation (including its churning from one hand to another) does not add an iota of value to its original magnitude. What is added to it is the intended appreciation of its price (in money), in anticipation of the very fact that the technical change in production has already been working to reduce the socially necessary labour (SNL) that was exacted in its production. That’s why financiers always invoke: “time is money.” Therefore, speaking of creation of value (or surplus value) in finance is not much of an improvement over cheap talks by a small-town used-car salesperson, pretending to produce something new and something of value. Even conventional macroeconomists long realised that such a pretension at double-counting should be avoided in the calculation of National Income, although these economists are still missing the very meaning of unproductive labour in their social accounting calculations. In financial lingo, when one changes an asset with another, it is generally identified as “investment.”  This sleight of hand is simply the basis of all marketing gimmicks that ride on the preservation of value on the one hand, and creation of credit (i.e., an obligation to be fulfilled in the future) on the other hand, throughout the financial system. But fulfilling the future obligations cannot be postponed forever. At the same time, given the periodic decline in the magnitude of value (per unit of output), due to speedy change in technology, etc., the task of preserving the value in circulation and fulfilling the future credit obligations, aside from particularity of the financial instruments used, become harder and harder, leading to “bubbles,” etc., and bursting in the face of the entire system. The very fact that the house of cards of finance has, in this sad and sorry empirical sense, come down so precisely and so deliberately should be crystal clear to anyone with a modicum of knowledge of political economy. For, the value in production sets (the cause) the limits to finance capital (the trigger) no matter how exotic the instruments are made out to be.

Finally, the connotation, financialisation, is the most baffling expression in view of our conversation here. This silly term appears to be an attempt to erect a parallel to globalisation, a concept that is so close to genuine Marxian analysis and has yet remained misunderstood both by the bourgeois right and the petty-bourgeois liberal/radical left today. The right, while it is now a bit apprehensive, rides on the “US global role” and the neoliberal policies of Reagan and Thatcher in the early 1980s that continued for quite some time till the current worldwide crisis. The liberal/radical left, while clearly troubled by such policies, is nevertheless subscribing to what one may call the “Americanisation” of world economy, particularly after the fall of the Soviet Union. The latter also is harping, rather anachronistically, on “finance capital” and its parallelism with Lenin’s Imperialism with regard to the current crisis. Hence, a wired and meaningless construct of financialisation. Here, globalisation is made of an adjective, global, which in turn emerged from a noun, globe; similarly, financialisation is made of an adjective, financial, which in turn developed from a noun, finance. Now, globalisation is a process by which something has taken hold of everything around the globe. This something to me is the capitalist social relation.  Likewise, from the linguistic point of view, financialisation is a process by which something has taken hold around finance. And when I ask myself, what is finance, before I even raise the question of what is it that has taken hold, it would leave me nothing but with a silly tautology – if not a complete misrepresentational intent, described rather eloquently in H G Frankfurt’s On Bullshit(2005).

PC: How do you assess the responses of states towards the global crisis? Do you see any significant shift in the overall regime of accumulation? How do you differentiate the current crisis from the crisis of 1929 and the respective responses? 

CB: The response by the various states has been uneven both in terms of speed, the nature of bailout and the precautionary measures themselves.  As I have indicated elsewhere, there are many latent AIGs that may emerge in due time as this particular crisis has not yet come to its conclusion. The Dubai crisis, among others, has brought out two essential points: (1) that, when it comes to default, there is little difference between the so-called sovereign funds and private financial institutions and (2) that “finance capital” is inextricably  a part and parcel of total social capital in the accumulation process. In the case of Dubai World, as we have experienced so far, the producing sectors of the economy have all come to a standstill. For instance, the construction activity in Dubai has been reduced to a trickle and the hustling-and-bustling port looks like a deserted place, with rows upon rows of cranes resting idle and rusting out of existence.  Just a few months ago, some 1700 dock workers from India, among others, were ordered to pack their bags and go back home, as the thinning export and import traffic did not accommodate the operating costs.

The Greek financial crisis is another case in point, where reliance on credit by fiat created a national crisis. Here the same familiar financial derivatives did the job on Greek government’s credit exposure. This is yet another example of sovereign financial entity gone haywire, and a quintessential illustration of too-big-to-fail. As a member of the European Union, the Papandreou government knew in advance that Greek economy would be rescued, but at an extraordinary price to the standard of living of the Greek working people, who had no hand in bringing about this crisis. Ironically, Papandreou himself was elected prime minister just recently, after the cat was about to get out of the bag under his predecessor’s administration. Greece is by no means the only country in the EU to experience near default. There are other potential candidates in this global tragedy, including Portugal, Spain, Ireland and perhaps Italy. The culprit in all this is similar to many other financial institutions (and sovereign funds), which thrived through credit upon credit by fiat via unregulated financial derivatives. According to one study (published in the New York Times, March 12, 2010, p. A3), Greece’s current government debt and future obligations are just over 8.75 times its GDP, while the same figure for the average EU (minus Bulgaria and Romania) is just over 4.34 times.  The similar figure for the United States is 5 times its GDP.

Finally, there are many similarities and differences between the 1929 Great Depression and current crisis that have now been dubbed as the “Great Recession” by some economists. There is no doubt that multiple bubbles that burst, first in the US real-estate market and then sequentially in mortgage institutions, credit-rating and credit-swap institutions, risk assessment and “securitisation” institutions, before being transmitted in wholesale default of major banks and insurance companies, is a reminder of a parallel domino that turned similarly deadly in 1929. The massive bank failures that are still with us across the globe, particularly in the United States, are themselves a universal symptom associated with both crises. For instance, the 1999 repealing of the Glass-Steagall Act of 1933, which proved to have been an effective mechanism for the prevention of conflict of interest between commercial banking and investment banking, points to some underlying consequential similarities. Yet, there are a number of qualitative dissimilarities between this and the 1929 crisis, from the standpoint of scope, speed, and polarising effects, on the one hand, and the manner of response by the various governments, on the other hand. To be sure, in 1929, nearly two-thirds of humanity couldn’t imagine what capitalism was, let alone to live and experience it firsthand. A significant part of humanity was indeed living either in some sort of self-sufficient communities or engaging in petty commodity production, with modest exposure to capitalist market and capitalist social relations. The theory of value (i.e., capital’s social relations), de jure and de facto, had no relevance for this sizable mass of humanity. The 1929 Great Depression coincided with the epoch of imperialism, as Lenin aptly identified it. Since I have written on this very issue elsewhere, I will not repeat it here. However, as this interview was going to press, I noticed that a volume by John Milios and Dimitris Sotiropoulos (Rethinking Imperialism, 2009) tends to leap from Marx’s value theory to “imperialism” – a concept that’s reserved for domination of capitalist mode of production over the pre-capitalist area of the world. Here, the social relations of capital (captured in Marx’s value theory) are extended to external entities (i.e., in Lenin’s framework) that have yet to become capitalist in the future. And when such pre-capitalist entities turn capitalist they, methodologically, beg the question of “imperialism” when it comes to value theory.  At the same time, viewing the “internalisation” of such relations in value theory in an axiomatic vacuum, i.e., without regard for material (and historical) transformation from one stage to another, turns Marx’s theory on its head. In other words, a major difference between Marx’s theory of value and that of, say, the neoclassical economic theory, is in its logical-historical constitution, which concurs with materialist conception of history. Thus, any arbitrary definition of (external) domination of imperialist powers on pre-capitalist colonies within the theory of value is not permissible in Marx’s value system. Consequently, I believe, while traditional view of imperialism (as the highest stage of capitalism) has moved forward to the proverbial edge of the roof as to fall off from the front, this view of imperialism (renamed “the imperialist chain”) gone backward as to fall off from the rear.

Today’s economic crisis is perhaps the first fully-fledged crisis of global capitalism. It is a crisis that has transmitted in real time throughout the entire globe. This is a crisis that has engulfed nearly an overwhelming majority of humanity for the first time in history. It is a crisis of no-way-out for the majority of inhabitants on the planet.  You just look at the simple but tragic massive suicides of many farmers in India alone, and tell me that your country, other than tiny and scattered pockets of pre-capitalist past, is not yet a society under capitalist mode of production. This appears to be contrary to the traditional assessment by some leftists in India and elsewhere; and I sincerely hope that these protagonists shall wake up with the smell of coffee and of worldwide capitalism, before another round of struggle would be lost due to theoretical blunder and misdiagnosis. Lastly, this crisis and this era are manifestly expressing the globalisation of capitalist social relations and universality of the law of value perceptible in profound class polarisation across today’s transnational landscape. And as we move forward, these social relations turn out to be more befitting to what Marx had essentially anticipated in Capital.

Capital and capitalists nannied by the states: An Interview with Amiya Kumar Bagchi

Amiya K Bagchi“Capital and capitalists will continue to be nannied by the states they control, unless the crisis intensifies the struggles of workers and peasants to change this horrendously unjust and murderous social and political order. Nor will borrowers of recapitalized banks or the insured of the US company AIG benefit from lower interest rates, better access to credit or insurance or less discriminatory insurance rates. The new managers will be busy guarding the capital of their respective managed entities. Unless the rulers are made to see that money market instruments are not the proper vehicles to deliver affordable credit or insurance to the poor and are forced to carry out the structural changes needed to embody that perspective in practice, the old order will continue when the recession subsides.”  

Radical Notes: Can you explain the nature of the current crisis and how it developed?

Amiya Kumar Bagchi (AKB): A full explanation of the current crisis will be a book-length study. The immediate causes of the crisis can be put as follows: (a) unbridled financial liberalization, the most significant components of which have been the further elaboration of derivatives, including securitized products, increasing the non-transparency of the financial market, (b) the effective demolition of the distinction between deposit banks specializing in loans and investment banks, (c) conversion of the dollar into virtually the sole source of global liquidity, even while keeping a major fraction of the world’s economies in a condition of endemic deficiency of effective demand and (d) the rapid emergence of housing and related markets as sectors of the most intense speculative activity.

Radical Notes: As an economic historian, do you find any uniqueness in the present crisis in comparison to the past ones?

AKB: Capitalism has been racked by speculative crises, almost from the moment of its birth. One of the earliest of such crises was the Tulip Mania in the Netherlands in the 1630s. The second speculative crisis in order of occurrence was the crisis of 1720-21 centring around the so-called Mississippi project in France and the South Sea Company in England: this crisis threatened to engulf much of Western Europe at the time. If we take England only, there were severe banking crises in almost every decade from the 1820s , with the Baring Crisis of 1890-91, characterizing the last decade. In that crisis, the inability of Baring Bros to meet its obligations arising out of its over-exposure to loans to the Argentine government threatened to involve the whole British financial system. That is arguably the first time that the Bank of England acted as the lender of last resort. (Baring Bros collapsed in 1995, as a result of Nick Leeson, its bureau chief in Singapore, losing his bet on movements of Nekkei and the firm’s capital of £800 million disappeared). Then you have the biggest financial crisis of the twentieth century, namely, the Great Depression of the 1930s, which really ended with the onset of World War II that saw the stepping up of military and other public expenditure to unprecedented heights.

But as any student of history knows, you never step into the same stream twice. Capitalism in particular has been like a super-chameleon, transforming not only its colour but also its apparent structural relations every few decades. The changes preceding the current crisis are no exception. The uniqueness of the crisis can probably be described as a situation in which governments, so-called specialists in finance not only ignored the totally non-transparent manner in which banks, investment brokers and non-bank financial institutions carried on their business, but positively cheered them in the belief that this was the way to create wealth. One of the most ironic symbols of this atmosphere is the compilation and celebration of the growth of wealth of the ‘High Net Value Individuals’ (HNVIs) by Merrill Lynch, a firm that had to merge with Bank of America in order to stave off bankruptcy.

Radical Notes: Can we understand the present crisis as a crisis of imperialism and the US hegemony?

 Yes, we can. But we must remember that other G7 countries are also implicated in the US hegemony, and even China’s current pattern of growth is symbiotically related to US hegemony. Whether the crisis will lead to a decline in the murderousness of the US military operations remains an open question. As I have argued earlier, capital wants to win in competition, if necessary in the last instance by using armed conflict. The prospect of a USA threatened with the loss of hegemony using its fearsome arsenal of weapons of mass destruction is mind-numbing.

Radical Notes: How do you assess the impact of the crisis on the developing countries?

 In many developing countries, there are no real stock markets and even if there are, their operations do not have much of an impact on firms which are often too small to be able to raise money in the stock market. In many of them, earlier depredations of imperialism, its domestic collaborators and its agencies such as the IMF and the World Bank have led to the exclusion of most economic agents from formal credit markets. The so-called success of micro-credit agencies in Bangladesh, for example, was built not only on loans extended by foreign lenders but also on the destruction of public sector banking by local businessmen defaulting on their loans. Organizations blessed by the World Bank and foreign donors fished in such turbid waters.

The direct effect of the present crisis on such countries may not be great. But they will suffer through the further decline in the demand for their output in foreign and domestic markets because of the global recession. The countries, which have depended greatly on foreign capital for stimulation of their economies such as India, will also suffer through minor or major currency crises and the downsizing of the transactional enterprises operating in those countries and badly affected by the crisis. In the immediate future, the most distressing effect for the common people will continue to be the loss of employment in construction, services and the manufacturing sector and the high cost of food grains, induced by underinvestment in agriculture in developing countries, speculation in commodities by the big finance houses and others and the diversion of cropland to the highly subsidized biofuel in developed market economies, especially the USA.

Radical Notes: A recent report says that India and China – which are considered by many as the bulwark of capitalist growth in the 21st century – have witnessed the steepest market declines between December 2007 and September 2008. They “have lost almost 51% of market capitalization, or m-cap, and this figure could be much higher if the declines of the last fortnight are taken into account.” As latest reports indicate, industries in India, especially the aviation industry, have already started shifting the brunt of the crisis on labour, through various means. Do you think these developments are indications toward a full-fledged crisis around the corner?

AKB: As far as China is concerned, the slide in stock prices will not have a major effect on the economy, because stocks traded in the Shanghai market provide finance only to a small fraction of firms in the Chinese economy. But the effect on India is obvious not only from the retrenchments already announced by aviation companies and IT firms but also by the continued outflow of FII funds from India and consequent decline in the value of the Indian rupee. The Indian manufacturing sector was already showing a downward trend in fiscal 2007-08, and that trend has strengthened in recent weeks as shown by the Index of Industrial Production (IIP). It is disingenuous of the Finance Minister to call the IIP “not very reliable” when his government has done so much to massage the official statistics so as to produce a favourable picture of its performance in the economic field.

Radical Notes: The Reserve Bank of India (RBI) too is taking measures to ensure liquidity and boost confidence. As a historian of India’s banking sector, how do you assess India’s financial-structural ability to withstand such crisis at this juncture? How much do you think the neo-liberal policies that subsequent governments have pursued eroded this ability?

AKB: Fortunately, despite all the attempts of successive governments at the Centre since 1991 to force the pace of ‘economic reforms’, the worst of their designs could not be carried through. These include full capital account convertibility, complete privatisation of the banking and insurance sectors, and total abolition of the distinction between banks and non-banking finance companies. Every time either major international crises or electoral compulsions have stayed their hand. In 1997 and this time around, financial crisis in Asia and the global financial crisis have prevented the enforcement of capital account convertibility. The strength of Indian public sector banks compared with their private counterparts is there for all to see. The worst development under the neo-liberal regime is the naked play of money and communalism in determining the positions all major centrist or right-wing parties have adopted. Another major casualty has been the fiscal stance of the state. It will take quite an effort to get the rich to pay their taxes and to stop the indulgence the state has displayed towards punters and hot money merchants in the financial sector. The quality of Indian democracy has been further sullied under the neo-liberal regime. Hence the ability of the regime to handle the resolution of the crisis in national interest has been badly impaired.

Radical Notes: Various commentators have suggested that the bailing out strategies of different governments throughout the world has ultimately brought the state back in. What is the merit of such conclusion? Can we see this return of the state as just a moment, for which Milton Friedman once said the role of government is “to do something that market cannot do for itself”?

AKB: Yes, the state has been brought in but only to save the illegitimate earnings of the crony capitalists. Will Mr Richard Fuld, CEO of Lehman Bros, be made to disgorge the nearly $500 million he earned from his stock options and bonuses? In the financial year 2007-08 alone, according to, Fuld earned $71.50 million and in the preceding 5 years he had earned $354 million. When Lehman applied for Chapter 11 bankruptcy, Fuld took $22 million from the firm as retirement benefit. What applies to the top managers of  Lehman also applies to those of Wachovia and Merrill Lynch, to UBS of Switzerland which is being recapitalized by the Swiss government or Northern Rock, the hosing mortgage bank, which has been bailed out by the Bank of England. In 2004, I published an article with the self-explanatory title, “Nanny state for capital and Social Darwinism for Labour” (Indian Journal of Labour Economics, 47(1), January-March). Capital and capitalists will continue to be nannied by the states they control, unless the crisis intensifies the struggles of workers and peasants to change this horrendously unjust and murderous social and political order. Nor will borrowers of recapitalized banks or the insured of the US company AIG benefit from lower interest rates, better access to credit or insurance or less discriminatory insurance rates. The new managers will be busy guarding the capital of their respective managed entities. Unless the rulers are made to see that money market instruments are not the proper vehicles to deliver affordable credit or insurance to the poor and are forced to carry out the structural changes needed to embody that perspective in practice, the old order will continue when the recession subsides.

Amiya Kumar Bagchi is India’s foremost political economist and economic historian. He is the Director of the Institute of Development Studies Kolkata. He was a member of the State Planning Board until 2005, Government of West Bengal and was recently Chairman of a committee appointed by the Government of West Bengal to report on the finances of the government during the Tenth Five Year Plan period. He acted as the official historian of The State Bank of India until 1997. His recent works include (co-edited with Gary A.Dymski) Capture and Exclude: Developing Economies and the Poor in Global Finance, Tulika, New Delhi, 2007, The Perilous Passage: Mankind and the Global Ascendancy of Capital, Rowman and Littlefield, Lanham, Maryland, USA, 2005, The Developmental State in History and in the Twentieth Century, Regency Publications, New Delhi, 2004, and  Capital and Labour Re-defined: India and the Third World, Tulika, New Delhi and Anthem Press, London, 2002.