March 23, 2015

Book Review: Adam Tooze, “The Deluge”

Posted in Book Review, Economics, Europe, Fascism, History, Imperialism, Int'l Trade tagged , , , , , , , , , at 01:33 by Matthijs Krul

“Liberalism is the only thing that can save civilization from chaos – from a flood of ultra-radicalism that will swamp the world…” These are the words of Woodrow Wilson aboard the SS George Washington in December 1918, reflecting on the tasks confronted by the United States and her allies after their victory in the First World War. It is also the fundamental thesis of Adam Tooze’s The Deluge, the long-awaited followup to his brilliant discussion of the political economy of Nazi Germany (for a discussion of which, see here and following). Applying his profound talent for combining political economy with international relations, Tooze’s central subject is the aftermath of World War I and the challenge of creating a new world order amidst the ruins of the old European powers. This challenge, as he presents it, was a dual one. On the one hand it involved the recognition by all European powers, victors or vanquished, that the United States was now the pre-eminent economic power in the world, with the potential of translating this tremendous advantage into equivalent military and political power on the world stage; and on the other hand it involved the attempts by Woodrow Wilson as American President to effect this transformation of the world balance of powers while simultaneously disentangling the United States from a war alliance that he had never wanted in the first place, and which threatened to perpetually constrain the freedom of action the Americans needed to make this potential a reality.

The main dynamic through which this contest was fought out, in Tooze’s economic historical telling, is the question of debt and credit. While Tooze emphasizes that the American contribution to the Entente victory in the military sphere was modest at best, the main American contribution lay not in manpower or materiel, but in the financing of the war effort. The Entente victors ended the war owing the United States a vast sum in inter-Allied debts, and the Americans – Democrats and Republicans alike – were intent on making good on these claims and in so doing subjugate the British and French permanently to a world order of American dominance. However, what complicated the picture was the demand for reparations established by the Entente powers against (especially) Germany, which was perpetually unable to actually pay these. The efforts of international diplomacy and politics in the period 1916-1930 therefore became a veritable pyramid scheme with the United States on top, and each debtor below attempting to recoup their own losses before the whole collapsed under its contradictions. In order to forestall such a collapse and to obtain the necessary leverage combined with the equally necessary flexibility, the Entente powers attempted various means of political institutionalization of the debt and credit relations, from the League of Nations to the series of international agreements between Versailles (1919) and the Young Plan (1930).

Tooze’s narrative, while complex and providing a wealth of substantive detail on everything from the Soviet-Polish War to the internal dynamics of Japanese interwar parliaments, can roughly be summarized as follows. Wilson’s politics, Tooze argues, have wrongly been portrayed as a naive or ‘idealist’ internationalism. Instead, what Wilson recognized was that the only possibility to prevent another such political crisis as 1914 was the establishment of a new liberal order. This order must be based on the fact of American hegemony (which naturally Wilson favored), and in order to achieve this, it was necessary to avoid permanent alliances between the US and European powers, instead favoring ‘peace without victory’ in World War I. When this failed, Wilson shifted to a strategy of using the inter-Allied debt leverage to enforce his vision, seeking to use this constraint on the freedom of the victorious European powers to prevent them from any further 19th century style inter-imperialist rivalry. Instead of the old balance and rivalry of powers, there was now to be a world based on the ‘Open Door’, the freedom of the seas, and the liberal international institutions like the League of Nations. This would guarantee a world where liberal-democratic principles could slowly embed themselves in all the major states and where American economic superiority could be peacefully translated into political dominance without the need for further intercontinental entanglement.

Tooze’s tale, however, is not one of success but of failure. The two central theses he develops out of his narrative are the observations that 1) this liberal-democratic new order was the only possibility to prevent the twin radicalisms of Communism and fascism from taking hold in a serious way, and 2) that it failed to come about due to the incompatibility of the demands of the winners and losers of the post-WWI settlement and due to the repeated failure of American diplomacy to effectively cajole the main powers into a ‘peace without victory’. The result was the ‘second Thirty Years War’, as some historians are now describing it, that we are all familiar with. This approach involves a convincing reinterpretation and rehabilitation of many aspects of the period often dismissed in later years: Wilson’s internationalist vision, both less naive and less successful than often portrayed; the Versailles Treaty, a necessary step in institutionalizing the “chain gang” that bound the losing powers to the winning powers and the winning powers to the United States; and even the much-condemned Clemenceau and French foreign policy, whose supposed revanchism against Germany appears very defensible in light of the damaged and exposed position of the postwar French state.

The strength of Tooze’s narrative, besides his admirable command of source materials and the logic of international macroeconomics, is to replace the usual psychologizing narratives of WWI and its aftermath (Clemenceau’s revenge, Lloyd George’s deceit, Wilson’s naivete, Lenin’s devilishness, etc) with a plausible model that explains the diplomatic continuities across parties of the period in terms of economic and political interests. In that sense this work definitely represents the ‘realist’ approach in international relations at its best. But it is not wholly shorn of discussions of ideology and the domestic conflicts of parties and factions either: an important part of Tooze’s discussion of the would-be liberal global dispensation is the domestic opposition between the liberal-internationalist politicians, oriented towards the United States, and the radicals of left and right, seeking to prevent the former from bringing about this order. In this model it therefore makes less difference what individuals or even political ideologies were involved, but mainly what position they took vis-a-vis this “remaking of global order”, as the book’s subtitle puts it – hence the convergence between a bourgeois radical like Clemenceau and a rightwing nationalist like Stresemann. Yet both the oppositionalism of left and right radicals and the opportunism of this expansive ‘center’ meant that those in the “chain gang” failed to come to terms with the new order sufficiently to make its institutions work. The result, Tooze suggests, was the stillbirth of democracy in much of the world and the victory of the radical forces over the liberals, so that another world war became inevitable.

The obvious strengths of this explanation are also its weaknesses. Much more than in his rightly lauded previous work, The Wages of Destruction, the worldview expressed in the book seems that of a contemporary ‘muscular liberalism’. Tooze truly believes in the liberal hierarchy of nations supervised by the United States, and wishes it could have been established earlier. This necessitates some political judgements that are, to say the least, debatable. He does not hide the fundamentally imperialist nature of Britain or France after WWI or their futile efforts to combine the new internationalism with a stronger grip on their colonies. But he never quite reconciles the enduring imperialist adventures he describes – from the colonization of Egypt in 1919 to the Japanese efforts to divide and rule in China or the Franco-British schemes in the Middle East – with his repeated assertion that the new world order was based on the recognition that the ‘old imperialism’ (which Tooze argues only really started in the 1880s anyway) was no longer possible in an era of mass mobilization, and that the era of global competition was over (287). He is therefore unjustifiably sanguine about the “liberal imperialism” and its supposed moral advances over the previous era.

Tooze is honest enough to report the contradictions: “Liberal visions”, he writes in a discussion of the British suppression of Indian national liberation between the wars, “were necessary to sustain empire in the sense that they offered fundamental justifications. But they were always likely to be reduced to painful hypocrisy by the real practices of imperial power…” (391). Very true. But how are we to reconcile this hypocrisy with the seemingly self-evident desirability of the liberal order over that of the ‘radicals’? A similar problem appears in the omission of any discussion of the racial dimension. Again, Tooze honestly reports on Wilson’s white supremacist views, and how the latter’s politics were founded on his hatred of the Reconstruction period. He regularly mentions the usage of racial categories and language by the diplomats of the Entente nations, and the hasty rejection of Japan’s motion for racial equality in the Treaty of Versailles. But the connection between these views of racial hierarchy and the content of what he sometimes calls the “liberal imperial order” – even had it succeeded – is not made explicit.

This stands in strange contradiction to the importance he attaches to the racial-colonial dynamic of Nazi Germany’s war strategy in The Wages of Destruction, where precisely the importance attached to this dimension gives his narrative such an added explanatory power. Japan’s defection from the liberal order towards fascist military adventurism is portrayed as a consequence of the Great Depression, which there as elsewhere robbed the liberals of their main (economic) arguments to hold the revanchists at bay. This is true enough as it goes; but might it not also have something to do with the statement by Victor Wellesley of the Foreign Office on Chinese policy, which was founded on the observation that “the prestige of the European races has been steadily declining in the Far East… and it has suffered a severe blow as a result of the Great War” (406)? Do not the repeated expressions of racial contempt for Slavic peoples, for the ‘Jewish degenerate’ Bolsheviks, and the horror stories about the Senegalese forces in French service, combined with the white supremacist policies of the Americans, perhaps matter more than incidentally for the shape the postwar order took and the inspiration of fascism? In his previous book Tooze was clear about this; in the present it seems much more muddled.

Radicalism, for Tooze’s liberal IR realism, is all of one kind and necessarily leads to war and destruction without clear advantages. The book throughout equates Communists, fascists, anarchists and other radicals in the political sphere, making it a matter of diplomatic indifference whom one is dealing with; he equally applauds Gustav Noske’s repression of the Spartakusbund as the failure of the Beer Hall Putsch. The Soviet Union is treated with nothing but scorn and contempt, and Lenin appears as nothing but a deluded adventurer who destroyed Russian democracy (the Constituent Assembly, which gets a great deal of space) and became a puppet of German interests. (Given Tooze’s main sources on the Russian Revolution and its aftermath appear to be the works of Richard Pipes and Orlando Figes, his lopsided and absurd judgements are perhaps not so surprising.) The repeated repression of the workers’ movement, from the French miners to the revolutionary moment of 1919-1920 all the way to the UK General Strike of 1926, is virtually without fail applauded by Tooze. For him, Noske is a responsible statesman, Clemenceau a “pragmatic reformer” who was “demonised” for repressing the miners’ strikes with armed force by the “doctrinaires” of the French Socialist Party, and the Entente intervention against the October Revolution a defense of democracy. The ‘Red Scare’ and Palmer raids in the US after WWI, often seen as precursors to McCarthyism, are a mere “carnivalesque distraction” (354). The minor welfare programmes and high taxes of the Lib-Lab policies in Western Europe after the war, however, represent “immense new burdens” (250), and the pensions and compensations for war veterans a dubious “new notion of entitlement” (359).

Although Tooze repeatedly admits that the liberal imperial order he favors did not really – beyond the persona of Wilson – have the support of the great majority, he sticks to defending it without fail as “progressive” or the “progressive center”, even putting ‘imperialist’ between scare quotes when applied to its protagonists, despite his own descriptions of the fundamental accuracy of that term. In distinction to this progressivity, the radicals can never be right – that Weimar Germany or Soviet Russia attempted to come to understandings with defeated or colonized powers like China, or indeed each other, is depicted as “self-indulgent nationalist fantasy” (436). Sinn Fein’s independence movement was an expression of “apocalyptic radicalism” (377), and the repeated “political concessions to nationalism” forced upon the British empire (the only one examined in detail) are discussed with more than a hint of regret. One will find little patience with national liberation ideas or radical politics of whatever stripe in Tooze’s book: it’s the American way or the highway as far as the peace of nations is concerned.

This also generates difficulties for him in describing the deflationary policies that have become so notorious in retrospect. Whereas an economic historian like Barry Eichengreen represents mainstream opinion in (probably overly simply) seeing the crisis caused by the deflationary policy and the subsequent dissolution of the liberal-imperialist interwar order as the result of bad economic theory, Tooze is more ambivalent. He explains the virtual universality of the deflationary attachment to the gold standard as the expression of the desire to be part of the new American-led order of ‘Open Door’ international relations, surely a much more plausible explanation than simple error. However, the difficulty is that this deflationary economics undeniably was a major factor in the crisis of 1920-1921 as well as that of 1929; and these crises, in turn, destroyed the world order Tooze so favors. It therefore appears both as the necessary result of liberal internationalism and its destruction, which raises the question whether – just as with the notion of ‘liberal imperialism’ in India and elsewhere – the strategy was not too internally contradictory to have ever been a plausible historical outcome to begin with.

On that note, one final aspect of the work should be noted. It does not escape Tooze, of course, that parallels can be found between the institutionalization of international debt and credit relations between the wars and the construction of the European Economic Community after them; nor the significance of the League of Nations, the Kellogg-Briand Pact and other treaty forms of American-led international pacification for the United Nations of today. Indeed, Tooze emphasizes such continuities, suggesting that he seems to regard the present order and its problems as comparable to those of the internationalist liberalism of the Wilsonian vision. Even the role of (Soviet) Russia is perceived in this way, where German policy is portrayed as a necessary response to its inherent threat after WWII as much as before the Great War: it was the “very real threat of a Soviet takeover”, we are told, “that drove West Germany willy-nilly into the arms of the West and kept it there” (276). (In fact, Stalin repeatedly offered the possibility of a neutral and united Germany, which the West, including West Germans, declined.) For Tooze, the ad hoc alliance between the Entente nations presages NATO and the Marshall Plan, equally defined by the opposition between liberal democratic internationalism and the violent revanchism of radicals. But as the present Eurozone crisis demonstrates, the straitjacket or “chain gang” such ‘internationalism’ of debt and credit represents can do at least as much harm as the radicals, and moreover helps to bring radicalism about – a similar contradiction today to that that frustrated the Wilsonian order.

These political considerations aside, one is unlikely to find a better treatment of the intersection of global economics and diplomacy between the wars than Adam Tooze’s The Deluge. As with his previous work, it certainly helps to have a basic grasp of macroeconomics and international trade, as monetary policy, trade deficits, and budgetary constraints carry a lot of explanatory weight and the author does not pause to explain their basic mechanics. The great virtue of this work is to make reason out of folly: to make sense from the perspectives of the participants of what is often simply portrayed as naive errors of economics and politics. That is to say, at least from the perspectives of the supporters of the Wilsonian order. The tale of the rise and fall of ‘liberal imperialism’ and ‘liberal internationalism’, frustrated by the incompetence of Wilson himself, the opportunism and economic weakness of the postwar European powers, and the opposition of radical political factions, is fundamentally strong and merits a serious reading. However, Tooze’s political perspective does not allow him to tease out the inherent contradictions in these concepts and the reality of what such an order actually did and does entail, not least for those at the bottom end of the “chain gang” hierarchy. And that limits the explanatory scope of the work compared to his deeper perception in his previous book.

February 4, 2015

Comments on renewing the left in Britain

Posted in Class Struggle, Crisis, Europe, Greece, Politics, United Kingdom tagged , , , , , , , at 13:08 by Matthijs Krul

Since the electoral success of the left social-democratic Syriza coalition in Greece, and the immediate challenge to austerity and the rule of finance capital in Europe that it represents, many people are understandably keen to consider how this could be repeated in the UK. While it is clear to everyone that Syriza is not presently a revolutionary outfit and not seeking to become one in the short term, it is equally clear that for a sustained left challenge to the politics of the last few decades to emerge from this countermovement requires a deepening of political organization of the left across Europe. The northern European left has an important role to play here because of the very real possibility of isolating a left confined to Greece alone, or even just Greece, Portugal, and Spain. If we are to break the back of the intellectual coalition between the neoliberal social imagination and the economic policies of austerity and debt enforcement, it is of the greatest importance that the left in the creditor countries makes a priority of making the enforcement of such regimes by their own governments impossible – not just domestically, but internationally. In the current European context, internationalism is not just a desirable principle but an absolute precondition for success.

Given this problem, it is worth looking at some of the analysis of Syriza’s success and the possibilities of replication elsewhere that has been making the rounds. One starting point is the discussion by comrade Pierce Penniless of what it would mean to renew the left in Britain, taking inspiration from Syriza. This discussion is based on a series of discussion points raised by a certain ‘Alexander Trocchi’, attached to the post. The main points for Trocchi of why Syriza succeeded was the combination of its ability to become the electoral weapon of the social movements, and its integration of both ‘horizontalist’ and ‘bolshevik’ elements on the basis of uniting behind a (fairly moderate) programme for the short term. However, Trocchi also points to a few other points of significance: the funding of political parties in Greece, allowing membership to more effectively lead to large-scale mobilization, the collapse of the extant social-democratic party, and its charismatic leadership in the person of Alexis Tsipras (and perhaps we should now add Yanis Varoufakis too).

However, as Pierce also points out, quite a few of its claims as to what it would take to replicate such dynamics in Britain are contestable, to say the least. I agree certainly that some of the strengths of Syriza derive from its ability to become the electoral front for a variety of social (and political!) movements, and this is something for which potential on the British left scene exists and is not currently realised. Other points are also surely right but not easy to replicate – one cannot for example engineer the collapse of the Labour Party just like so; on the other hand all European social democracy has for a long time been suffering a slower version of the death that is now described as ‘Pasokification’.

More dubious are the claims ‘Trocchi’ makes about ‘identity politics’ as a major inhibiting factor for the British left, or for that matter the presence of ‘Islamic leftism'; I do not know enough about Greece to say for sure, but I rather doubt that identity issues are irrelevant there, and I do not in any case know of any evidence that either of these political phenomena have been a problem to forming a more fundamental left political organization. Rather the opposite: so-called identity politics often acts as a mobilizing factor, stemming from the confrontations people face on an everyday basis with the structures of social and economic life, and are in that sense as good as any union in the classical Marxist analysis: namely in generating the awareness of conflict between the fulfilment of human needs and the organisation of society. Equally, I don’t think that George Galloway’s opportunistic coalitions are particularly significant for the left as a whole. His modest successes have had little to do with some kind of fundamental religious defect in the British left, but rather with his campaigning on a consistent antiwar platform, combined with his Labour Party skills at mobilising local ‘community leaders’ and ward bosses to his advantage. Generally, one of the problems of the author’s analysis is the use of rather straw figures for contrasting the Greek situation to ours – ‘horizontalism’, ‘Bolsheviks’, ‘Islamic left’ etc. are not really defined, nor is it evident that their counterparts do not exist in Greece as well.

In a sense this expresses one of the actual problems of the British left, namely its rather stubborn refusal to first analyse the political and economic situation empirically before deducing what mechanisms and ideologies have most salience within it: something more than a little ironic given the long British tradition of excessive empiricism. Having said that, I want to add a few critical notes both to ‘Trocchi”s claims and to Pierce’s discussion in somewhat the same style as the original, since the question itself is really worth asking, and I think it is right to discuss the various answers that have been given to it in a straightforward way. So here are some provocations intended to sharpen this discussion a bit, written on purpose in a kind of ‘stream of consciousness’ fashion that hopefully stimulates discussion more than it suggests definitive answers.

1) There is I believe no prospect whatever of the Labour Party splitting into a left and right wing any time soon, nor are British unions at all interested in generating such a situation. People have been talking for years about how ‘when the Blairites take over’ the party would split and the opportunity for alliance with the Labour Left would come. But this is illusory. The party is already firmly in the hands of the right and in fact almost always has been in the history of its existence, and more often than not the unions have firmly preferred it that way. British unions are too weak to challenge even the rule of its ‘business wing’ even within their own party, let alone at a national level; and they are timid beyond even what is justified by their weakness. The lesson they have learned more than any other from the confrontation with Thatcher is that when an open war breaks out between their side and that of capital backed by the state, they will lose. If this was true in the 1980s, it will be true a fortiori now, and they know it. Simultaneously, they are too conservative and nostalgic in their social base and political outlook respectively to attempt any kind of regeneration based on new kinds of unionism, direct action, and so forth. The only split that can occur in the Labour Party is the split of the right from the left, not vice versa, as exemplified by the SDP and by the expulsion of the RMT. And unless the right massively overplays its hand in this, the result is simply the isolation of the left. The Blairites have proven to be competent enough not to overdo this, as shown by their willingness to indulge Ken Livingstone even after his direct challenge to Labour’s official policies and candidates in London. This being the case, there is no immediate collapse of Labour on the horizon, and talk of ‘general strikes’ is especially illusory. If Labour fails to win the upcoming election, this will probably strengthen the right over the centre (David Miliband over Ed Miliband), but these kind of factional shifts in a fundamentally centrist party are not where we should seek our own opportunities.

2) It does no good to accuse Syriza or its supporters of ‘electoralism’. Generally, the accusations of electoralism and the subsequent back and forth about parliamentary power give more heat than light. Of course the power to control the capitalist state ultimately resides in the combination of the property relations that are the legal foundation of capital and the social relations of production that are its material foundation, plus the use of violence to enforce and reproduce these relations. Parliamentary power can affect the property relations to some extent, but the amount of leeway that exists there is very variable and ultimately depends on extra-parliamentary struggle and confrontation. But this is obvious: everyone knows this. When Lenin suggested that Communists take part in “even the most reactionary Duma”, this was not a sign of his belief that the limited franchise talking shop created by the Czar’s advisors was the instrument of revolution. Equally, neither Syriza nor its (radical) supporters think this is the case: indeed Syriza functionaries have several times said the contrary. The only relevant question about electoral participation, in Britain or Greece or wherever, is whether the ability of socialists to advance social revolution, which itself depends on the class struggle in general, is increased or decreased by it, all things considered. That being said, I think there are relatively few situations in which parliamentary participation is worse than abstentionism, and I certainly do not think that this is true in Greece. Even for morale reasons alone the victory of Syriza is significant in stemming the tide of austerity, and I do not see any a priori reason to believe that it would weaken the larger social struggle in Greece.

3) In any case one observes that generally the social struggle reaches a peak very soon after the imposition of the worst reactionary measures, and then dies down within a few years at the visible level – but retains or even increases its radical potential even when seemingly slumbering in the lap of civil society. This pattern is visible in the UK and in Greece as well, where great solidarity and cooperation at the everyday level, as well as some cases of heroic strikes and occupations, have gone together with a very weak level of larger organised movement of opposition in the recent period. The Greek unions have, as far as I can tell, as little capacity to affect things in Greece as they do in the UK.

4) One factor that is relevant in electoralism that is not mentioned in the analysis often is the impact of the voting system. There’s no reason at all to think that the Green ‘surge’, if it were to materialize, would affect anything as long as the net outcome is at best a gain of 1 MP. The room for any party to be an electoral weapon of left parties and movements is much narrowed in countries that have highly restrictive voting systems like the UK does, and for this reason this is a matter of significance beyond policy wonks and LibDem naifs. It is worth pointing out that Syriza obtained its result under conditions of a more proportional representation, and that in fact its actual seat tally is an overrepresentation of Syriza MPs compared to its share of the vote – a ‘bonus principle’ introduced by previous governments of the Greek establishment precisely to keep a radical challenge out and to diminish the necessity of working with such a party! This has now backfired because of PASOK’s complete collapse.

Nevertheless it underlines that the restrictions on the possibility of electoral action in the UK greatly limit relatively the potential for a Syriza-type formation to translate a broad membership base into an equally significant electoral and institutional front. This goes also for the funding of parties based on members, something which is favorable to radical parties with a greater activist base – a fact used to its advantage by Syriza, but also for example by the Socialist Party in the Netherlands. Since the UK allows neither of these possibilities to be used, the electoral strategy must be correspondingly different: trying to maximize the number of candidates standing, for example, or using electoral participation as a means of gaining short-term political traction is probably hopeless.

5) It is worth pointing out that Greece has not suffered the worst austerity regime ever – this dubious honor surely goes to Russia in the 1990s. It is to Syriza’s credit, and indeed more so to the credit of the Greek people, that the political results of this have been considerably better there. That said, one aspect of Syriza’s reformist tactics that is underappreciated is the fear of fascism: Yanis Varoufakis has said multiple times that his desire to save the European Union and even the Eurozone within it is motivated not by love for these institutions, but because for him saving the EU as such against the New Right in Europe is an essential precondition for the survival of the left. Whether this is true and whether their tactics are helpful or counterproductive in this regard is debatable, and a discussion that should be had intensively in the coming months. But it should be understood as part and parcel of the peculiar combination of radical intellectuals and reform-oriented short term policies of Syriza, and if it has merit, it should be kept in mind elsewhere also.

An important dimension here is the dimension of time: Syriza’s reformist tactics are aimed at the very short term, whereas the question of ‘Grexit’ and its potential consequences, or the possibility of an alliance with left parties elsewhere (if they should win), arises in the short to medium term. Equally, the KKE’s critique of Syriza, namely that over time their reformism can only disappoint the hopes and radical potential of the situation, must be kept in mind: what is good in the short run can become actually an aid to the radical right (as the ‘real alternative’) in the longer run.

6) Coming to the point of mass organisation: the first observation is that Syriza is, in fact, a ‘lash-up’ of a number of divergent Communist parties (sects) from Maoists to Eurocommunists, plus elements of the left of social-democracy. This coalition came together a considerable time ago to form an electoral front of the left outside the more classically Marxist-Leninist KKE, in particular to make the connection between party organisation and the electoral and organisational possibilities this offers and on the other hand the significance of the ‘social movements’. The original formation of 1989 actually consisted of an ad hoc coalition between the KKE and the various Communist factions that had left the KKE or were outside it. The KKE left the coalition after the fall of the USSR when it made a turn towards ‘fundamentals’, following party congresses in 1991 and 1996 which focused on rebuilding the party (very damaged by the collapse of the USSR) according to traditional Third International lines, quite contrary to the general rightward trend of other ‘official’ Communists. This meant the loss of the largest and most organised faction of this coalition, but the alliance of the other groups endured.

What is significant here is to point out that throughout the 1990s this coalition remained in existence while achieving virtually nothing at the level of electoral results, membership growth, or other kinds of impact based on size. After the departure of the KKE, the coalition (Synaspismos) never achieved over 5% of the vote, usually hovering around 3% or so in national elections. In 2004, this extant ad hoc coalition then merged with more independent left-wing groups, including the DEA – formerly the UK SWP’s sister party in Greece. The charisma of its new young leader, Alexis Tsipras, certainly helped, but even so the new Syriza coalition did not get beyond the usual numbers for far left groups in continental parliaments. It is only with the current crisis and the great economic, social, and political changes it entailed that Syriza suddenly rocketed upwards into its current position.

The reason I discuss this is because this is exactly the type of narrative that many on the British left do not consider possible: that various sects can coalesce in an ad hoc way, achieve very little in the short run, and yet by the sheer fact of sticking together and forming the alternative over the long run can come to play a historic role in national politics (even if just as a political instrument). The sheer fact of party organisation does undeniably play a role here, despite the understandable skepticism of the ‘horizontalists’. While formations like Left Unity and similar groups are easy to sneer at (and there is perhaps reason to do so), it is worth observing the fact that Synaspismos and even Syriza started out in no way organisationally or politically differently to these. What seems to have made the difference is to a small extent the willingness to keep a more or less broad and nonsectarian party form going that could be identified as a ‘pole of attraction’ and the basis for communication and organisation with social movements, and to a greater extent simply the seismic shift in economic and social conditions.

Here I am afraid that the primacy of historical materialism must be recognised: the success of Syriza, such as it is, is much more the product of historical and economic factors outside the control of any of the parties or activists than it is the result of any merits or demerits of Syriza itself. Even the collapse of PASOK is the symptom of a major shift in the allegiance of the Greek working class that resulted from the falling away of old patronage networks under the pressure of austerity: a sequence of causal relations not in any way brought about by Syriza, but instrumental for its current significance. Something similar applies to the experience of the KKE, whose economically superior and more radical programme has nonetheless totally failed to bring about any reinforcement of its political or social ability to intervene: even of the unemployed vote in Greece no more than 5.4% went to the KKE.

Therefore if we want to take Syriza as a model – and there should certainly be debate about whether one should – then it may actually make more sense to have a Left Unity type organisation than it may seem, despite the evident inability of such a party to affect events in the short term. (It is generally, I suspect, the case that the British left has a rather short-termist perspective and is liable to swing wildly from one panacea to another; something perhaps the result of the lack of a large ‘official’ Communist party historically, so that the strategies and possibilities for the radical left have never been properly ‘tested’ on a mass basis.) One must then allow that such a party can only justify its existence by operating in the long run, rather than expecting any results in the here and now, so that the emphasis should be rather on playing Syriza’s role as ‘weapon of the social movements’. That this is likely to produce a rather left-reformist outlook must then be accepted as the necessary consequence of present European conditions, as Syriza has (but the KKE has not). Equally, these conditions themselves must be understood as constraining the possibilities in addition to the political-institutional limitations peculiar to the UK that I described above. By this I mean that the only meaningful ‘base’ for such a party is not the working class as such, but rather at the electoral level all those whom one can draw away from Labourism into a more principled oppositional social-democracy, and at the organisational level only those sections of the population for whom something more radical than Labour is a real economic interest (plus, perhaps, leftwing intellectuals like Syriza has in great numbers). The worst delusion of the British left in this regard is always to expect that a rich imperialist nation like the UK will somehow produce within 10 years a class conscious working class that is interested in a revolutionary programme. If the KKE’s programme cannot do this in Greece, a considerably poorer country with a long legacy of leftwing resistance to imperialism and dictatorship, then it is certainly for a long time outside the reach of the British radical left.

7) The real question is then the choice between the KKE’s approach and that of Syriza. For the KKE, the strategy is to build on the basis of its own unions and sections of the organised working class, and to maintain an explicitly revolutionary programme; but one combined with an appeal to an ‘Anti-Imperialist, Anti-Monopolies Democratic Front’. Effectively, this combines 1) party unionism, 2) a principled programme and 3) an old fashioned Marxist appeal to working class unity. Its effectiveness in Greece is very limited, and in the UK I suspect would be zero. Galloway’s experiences show that the significance of anti-imperialism and a strong antiwar programme should not be underestimated, but it is insufficient on its own. Chatter about ‘monopolies’ is jargon that belongs in the 1950s, and I doubt anyone will be much enthused by such calls for working class unity without an actual basis for such unity to exist – something less and less the case in the increasingly segmented labor markets of the West. Moreover, in the UK no real party unionism can exist as long as Labour maintains its current structure: this is shown by the total inability of the Socialist Party of England and Wales to translate the RMT union’s membership into votes for its electoral front (TUSC). The same thing applies, for that matter, to Scargill’s futile attempt at building a party based on the NUM left. Whether it may perhaps be possible to undertake such an approach in the longer run, especially given the cowardice and weakness of the existing UK unions, is worth discussing; but the anti-union legislation in the UK does not make the prospect encouraging.

Syriza’s strategy, on the other hand, is as described above: a coalition of left forces with a relatively weak immediate social base, but united on the basis of an explicitly reformist rather than revolutionary programme. The rise of Syriza really has come – as senior members themselves acknowledge – because of its principled rejection of austerity and its image as standing outside the existing power structures, which in the current Western political climate is extremely helpful. Precisely because its function as an electoral and organisational vehicle could accommodate a great deal of different groups and movements, combined with its reformist outlook corresponding to the reality of most Greeks since the crisis, it had the necessary flexibility and organisational knowledge to seize its moment. That the leadership and constituent parts consist mostly of much more radical members than its party programme is in this sense a help, because it gives (hopefully) the necessary theoretical and strategic overview over the complex relations of political economy that such a party needs in order to avoid serious mistakes. However, this does come at a considerable cost: as the KKE never fails to point out, such a strategy also makes the party itself in the longer run rather more a hindrance than a help to achieving actual social revolution, if it does not go beyond its ‘principled social-democracy’, for all the reasons the traditional critique of reformism provides. This is therefore a strategy justified under particular historical circumstances and with a certain temporality, and this must not be forgotten.

8) The bottom line therefore for me is that Syriza shows that a viable coalition of left forces is indeed possible, despite the pessimism of the British left on this point, and that the party form can indeed function as a weapon of existing sects and movements of social struggle. However, the question of time and circumstance is the most important. Syriza’s ‘Marxist social-democracy’ is justified in the short term by the circumstances of Greece and the possibility it offers, but it is not to be mistaken for a long-run strategy, either politically or organisationally. Equally, the potential of such a coalition of left groups is not to be measured in the short term, and its greatest enemy is the expectation of short term successes under conditions totally unfavorable to revolutionary militancy. Such expectations have historically in the British left immediately led to demoralization, splintering, and wild shifts of ‘line’. Rather, one must combine a longer organisational view with a willingness to adjust strategy to shifting economic and social circumstances – in particular a realistic assessment of the conditions of British unionism, changes in working class composition and outlook, the significance of British imperialism, and so forth.

This sounds obvious, but so often in the radical left the ‘wish is the father of the thought’, as the expression goes: whereas the expectation in the short and medium term must be that the room for maneouvre and the social base of such a formation is limited. To do the most within those limitations is more valuable than illusions of being a ‘mass party in miniature’. Since in the UK no immediate economic or political need exists to form another left-reformist outfit next to the Labour Party – at least as long as the Labour left remains within that party – there is no need at all to copy Syriza’s programmatic approach. Rather, the so to speak ‘propagandistic’ emphasis on principled opposition to war and austerity can be the most relevant strategy in the short term as long as this crisis endures, not least by emphasizing the contrast with Labour’s own approach in this regard. One does not for that reason have to undertake Syriza’s extreme short term rescue and repair operations, so that there is no reason why a more principled, perhaps even more direct action oriented programme could not be combined with wider appeals of the kind that have brought the SNP and the Greens into the spotlight in recent years. Ultimately, the potential of any formation of this kind will depend on the vagaries of longer term economic and social factors which are totally outside the control of any small left party, and therefore neither puffed up expectations nor sectarian ‘mass party’ ambitions are helpful. Being honest; not expecting too much; and combining wide appeals against the neoliberal order with strategic concentration on those segments where potential exists is probably the best recipe against demoralization, and the best way to keep a coalition together in the long run. “Tell no lies, claim no easy victories“.

July 22, 2013

Kliman vs Heinrich: An Exercise in Marxology

Posted in Economics, Theory tagged , , , , , at 23:43 by Matthijs Krul

The annals of Marxist political economy, c.q. the critique thereof, show a great deal of abstruse, opaque, and downright remote argumentation about minutiae. Much of this can be blamed on the persistent habit of Marxist arguments to take the form of disputes about the ‘true Marx’, about what Marx ‘really said’, rather than being arguments on the merits of theories in their own right. This substitution of philology and exegesis for direct debate cannot fail to make already quite abstract arguments even more confusing and distant from everyday political concerns, and thereby even less accessible to the average activist or intellectual interested in developments in Marxist theory. That’s deplorable, and it is incumbent on all those concerned to end this sorry tradition.

That said, the latest round of such argumentation is that between Michael Heinrich and Andrew Kliman and his collaborators on the nature and meaning of the ‘law of the tendency of the rate of profit to fall’.(1) Heinrich is the main exponent of a German school of interpretation of Marx, known as the Neue Marxlektüre, that is heavily philological. Various members of this school including Heinrich himself are involved in the project of the new scientific complete editions of Marx and Engels’ works in German (and the other original languages), known as MEGA2, which perhaps furthers this exegetic mindset. Kliman and his colleagues, on the other hand, are more prominent in the Anglosphere and represent a particular school of Marxist political economy there, best known for developing a powerful critique of prevailing assumptions about the ‘transformation problem’ that has obstructed Marxist economic thinking for so long. This approach, known as TSSI, has made quite an impact and has contributed to clearing the way for actually moving ahead with more novel and empirical work in Marxist economics, in lieu of the repetition of moves that had been the norm for most of the 20th century. Read the rest of this entry »

November 14, 2012

Book Review: Costas Lapavitsas et al., “Crisis in the Eurozone”

Posted in Book Review, Economics, Europe tagged , , , , at 00:02 by Matthijs Krul

Costas Lapavitsas, Professor of Economics at SOAS, and a number of economists associated to one extent or another with the Research Group on Money & Finance, published this book as an examination of the effects and meaning of the economic crisis of our times for the countries in the Eurozone. They limit themselves quite specifically in this manner, not discussing the wider impact on the EU, the non-Euro member states, or the nature of the crisis insofar as it does not immediately relate to the issue of the Euro and the banks of the Euro system. What one does get, however, is a remarkably precise and detailed analysis of the constituent elements of the crisis in the Euro, the European banking system, the nature of the bailout and its failures, and the relationship between debtors and creditors within the Eurozone, which have emphatically been on the political foreground in the past two years or so.

The framework is that of examining the opposition of interests between the core countries of the Eurozone, the creditor states of France, the Netherlands, Finland, Austria, etc., and most importantly Germany, and on the other hand the intra-European periphery, Greece, Portugal, Spain, and Ireland (though Ireland is not the focus of this study due to its idiosyncrasies). As Lapavitsas et al. argue, the European Central Bank and the monetary union which it underpins are essentially constructs created to achieve these purposes: first, to create a European currency which can rival with the US dollar as the ‘world money’ Marx identified capitalism must have in the absence of a metallic standard; secondly, to unify the money market and thereby the competitive strength of the financial institutions of the Eurozone; thirdly, to facilitate the imposition on the EMU member states of a permanent system of austerity, inflation-targeting, and budgetary restraint which would make any serious national opposition to the interests of European finance capital (and industrial exporters and carrying traders) impossible. In this it has succeeded wonderfully well.

However, as skeptics pointed out from the start, the Eurozone contains a serious contradiction between the interests of the capitalists of the core (well served by this) and those of the periphery, for whom this does not work as well. The authors rather unusually emphasize Germany’s primary position within this system, and its dominance over the interests of the periphery, as following not so much from its export strength as from the fact it has had the longest and most enduring neoliberal wage repression of the Eurozone. This then combines with its absolutely high levels of productivity and its political power over the ECB (located there) to make it fundamentally more ‘competitive’ than the southern countries, which have seen rising nominal wages but insufficient corresponding productivity growth. This is supported and further examined by a great deal of graphs and data, unfortunately often not clearly visually presented.

A second major section of the book is to argue the effects of the financialization of the Eurozone, and how this has played out in generating much of the crisis. The crisis started, of course, with the collapse of interlinked financial bubbles in the United States – the real estate bubble and the multiply leveraged debt bubble. But the focus is here on the Eurozone only, and this has experienced similar phenomena. It is certainly worth remarking on how commonplace it has become for commercial banks to undertake financial ‘investments’, for consumer debt to skyrocket in response to stagnating real wages and an increased dependency on credit in the open market for previously ‘shielded’ consumption like education and housing, and to note the enormous expansions of fictitious capital luring in investment from institutional investors, domestic corporations, and so forth, exposing them to much greater degrees. However, this aspect remains somewhat undertheorized in this book. There is little explanation of the political economy of financialization itself, its origins and its relationship to the rate of profit in the overall economy – other than declaring it, rightly, as part of the neoliberal project. This is perhaps defensible as such considerations can be found in various other books, and one cannot expect one book to discuss everything. But a more political economic background might engage the work more with the criticisms of much of the distributionist theories and ‘crowding out’ explanations of financialization as offered by for example Andrew Kliman, and would contribute to that debate. As it stands, financialization appears as an exogenous cause explained merely in terms of ideological drives for deregulation and the economies of scale of large corporations that allow them to self-finance investment, as also summarized by Lapavitsas here.

The third subject of the book is probably of the greatest political-economic interest, namely a practical discussion of the trends in the current crisis and the attempts to resolve it on the part of the ‘troika’, and what the periphery countries can do about it. The focus here is, understandably and rightly, mainly on Greece, although no doubt much of the same applies to Portugal and perhaps also Spain. Lapavitsas et al. take a strong stand against what they see as the failures of the political left to properly understand and critique the presuppositions of the EMU system, thereby paralyzing left politics at precisely the moment it needs to intervene strongly. One might add that this also leaves open the door to other forces to do so instead, as already becoming visible in Hungary and Greece. The left’s response has been a muddled back-and-forth between on the one hand suggesting massive lending and investment by the ECB and Eurozone countries respectively as a simple stimulus programme, and on the other hand an inchoate resistance against the European system as a whole, proposing solutions which would involve a more ‘popular’ Euro policy.

For the authors, this is inadequate and incoherent, and they make a strong case. As they describe it, there are essentially three possible routes: the first is to continue the current policy. That is to say, the troika provides liquidy and limited debt relief to periphery countries in return for severe austerity policies. The purpose of this is purely to retain the credibility of the Euro as a whole and thereby benefit the financial institutions as well as the beneficiaries of the Euro as a world money, and the costs come down entirely on the shoulders of the working people of Europe and especially of the periphery. There is some discussion here, as in many post-Keyenesian arguments, about the inability of the austerity policy to actually revive growth and investment, but this strikes me from a Marxist angle as besides the point: its sole purpose in the short to medium run is to favor financial capital interests, as with Cameron-Clegg’s policies on behalf of the City of London, and the restoration of the investment climate for the national bourgeoisies is left to the mass devaluation that results from prolongued recession and unemployment. Here, Marxism and the theory of the transnational class have considerably greater explanatory power than the (post-)Keynesian analysis, which would have us believe the ruling class is simply unable to see its own interests, and that those interests can partially coincide with those of the population as a whole. We must resist such notions.

However, on rejecting the recipe of austerity and recession, two other options remain. The second is the ‘left-EMU’ option, that is, to attempt to use or reform the EMU institutions such that a genuinely ‘popular’ policy can be followed. This seems to be the notion favored by much of the social-democracy in Europe insofar as it is having second thoughts about the neoliberal turn, and also that favored by the trade union leaderships and the left ‘civil society’ and so forth. Here Lapavitsas et al. are very useful in their denunciation of this approach, at least for the periphery. As they rightly note, there is very little reason to believe even a reform like abolition of the Stability and Growth Pact would be able to overcome the contradictions inherent in the Euro project as currently conceived, and aside from that, it is virtually inconceivable that the ruling classes of Germany, France, the Netherlands and so forth would be willing to move any further in that direction. They have already permitted the ECB to make various direct interventions to restore liquidity, they have accepted partial defaults on creditors’ terms, and they have had to substantially finance the EMU-wide bailout funds like the EFSF – all of which entails in practical terms a distribution of value from the core to the periphery. The middle classes of northern Europe are well aware of this, and are exercising strong pressure not to budge any further. A left option within the EMU is therefore for the periphery actually a more utopian possibility than the third, the option of exit.

The exit strategy is the most politically significant and the most interesting, and especially for Greece appears as the only really viable option purely from the point of view of economic development. While restoration of national fiscal and monetary power and disembedding from the EMU on the part of the periphery might be seen by some as a concession to nationalism and contrary to the international interests of the workers, it is worth considering the substantial economic historical evidence for the importance of sovereignty in achieving developmental goals.(1) Moreover, as Lapavitsas et al. make clear, there is not much choice. The various calculated scenarios of the econometricians of the troika themselves indicate that Greece will not by the current course be able to sufficiently reduce its national debts, both public and private, and the severity of the depression in the country and capital flight are further undermining the state’s tax base. The ECB cannot indefinitely keep propping it up, simply because it is not backed by a federal or united European state of which it can be the monetary-fiscal incarnation, and therefore its risk position from the point of view of transnational finance capital is relatively unstable – one major reason why the ECB’s interventions have been much more conservative than those of the Federal Reserve. More importantly, the current prospect is indefinite high unemployment, negative growth, loss of real living standards, and loss of self-determination for Greece’s working people, never mind the looming spectre of Chrysi Avyi. This cannot be allowed to go on, especially as PASOK, ND, and the ‘Democratic Left’ are by no means capable of convincing the troika of EU, IMF, and ECB to act against their own interests and pressures and let Greece off the hook.

However, as the authors make clear, there are two ways in which exit could be undertaken, and their impact would be significantly different in each case. The first is the conservative exit, which would entail a creditor-led default along the lines of the ‘haircuts’ imposed so far. The creditors would then have to accept a swap of euro-denoted debt for drachma-denoted debt, for which they will impose considerable conditions in return. The Greek small savers, pension funds, middle class small investors and the like will be hit hard, while the primary financiers of the troika will demand exemption from default in return for this manoeuvre. Greek banks would have to be recapitalized, possibly on the basis of nationalization, but managed from the outside by the troika or their comprador forces domestically (as is essentially the case now in both Greece and Italy). The northern creditors would also be hit considerably, but if the exit involves just Greece, the costs would be limited and probably surmountable. However, continued participation in the EMU structure would almost certainly entail continued or more severe austerity as precondition for a later re-entry into the euro.

The option favored by the authors instead is what they call ‘radical exit’, and this is the option which socialists within and without Greece ought to examine and discuss most seriously and earnestly. In all versions, this basically involves a unilateral declaration of default, i.e. bankruptcy, on the part of a Greek government willing to act decisively in favor of the interests of the Greek masses. There would be an enforced shift from the euro to the drachma, by unilateral declaration, and of course the necessary bank holiday and capital controls imposed upon the country to prevent bank runs and capital flight. The troika and the northern expropriators would be expropriated at a stroke, the banks nationalized under public control, and the overall debt audited as to its structure (which is not currently public knowledge) and liabilities. Such a course of action in the short term is only possible if the government is willing not just to intervene, but to intervene radically and immediately, with a clear plan. Any muddled or delayed action would worsen the situation by permitting more capital flight, steeper rises in the inevitable inflation, and worse dislocations and shocks to living standards.

It is almost certain the result would in any case be painful for the Greeks in the immediate term, with inflation, loss of lending facilities abroad, and rising costs of imports (oil, consumer goods, machine tools, and medication especially). But it would permit, as Lapavitsas et al. rightly note, an actual way out that is not permanent austerity. The restoration of national sovereignty in the political-economic sphere must be used immediately to redistribute the very unequal wealth of Greece, as it is no coincidence that the periphery nations are the poorest and the most unequal. An industrial plan must be developed to counteract unemployment, the bourgeoisie and Orthodox church seriously taxed for the first time, and the ossified political and civil society structures crushed. Depreciation can be expected to improve the ‘competitiveness’ of Greece over time, and it is a great opportunity for the modernization in productivity terms Greece has never properly undergone. The prospects for living standards in Greece would over 10 or 20 years be almost certainly considerably better than those under the current policy, and the authors use the example of Argentina’s default and state-led revival programme as analogy.

This book certainly makes a strong argument for why euro continuation is not compatible with the interests of the working people of the European periphery. However, as may be clear from the above summary, its perspective is still somewhat limited. It is in some respects still somewhat too simplistic – for example, the authors seem somewhat naive about the compatibility of the radical course with EU membership overall, handwaving this away in the sense of ‘who knows what will happen’. It seems to me such an exit would, unless shared by several countries at once, necessarily entail an exit from the EU as a whole, given the centrality the euro project now plays in it. Also, the authors do not address the political and ideological dimension adequately. Even among the Greek population there is a great reticence about the exit strategy. This is partially borne out of the real increases in wages and consumption since joining the Eurozone, fuelled considerably by the boom period’s cheap euro credit, but it is also a serious reflection of the sense that membership of the EU and its inner structures acknowledges Greece, Portugal, and similar countries as belonging to the modern, developed, and cooperative European project. Much of this is no doubt illusion, but it is a live one. The very fact that the EU to many people stands for a historically unprecedented peace between the major European states and for a guarantee of a certain formal freedom and equality – the formal equality of money – over the isolation and tyranny of Colonels and falangists cannot be ignored. Here, ideology plays an important role in holding back more radical critiques and strategies, out of fear of throwing the baby away with the bath-water. This is not a wholly unfounded fear, and any left programme of exit must address it.

Another political economic limitation is that the book’s analysis and strategic considerations do not go beyond the immediate logic of the developmental state. Indeed, much of this is no doubt intended to function as transitional demands towards a more lasting change of social formation; this is certainly true for a Marxist economist like Lapavitsas, although perhaps less so for a Keynesian like James Meadway. However this may be, the use of for example Russia’s recovery strategy after 1999 as proof of the possibility of a radical option shows the strength but also the limitation of this strategic idea. After all, how radical is Putin’s militarist, oligarchic developmental nationalism? There is little room here for at least critically discussing the traditional left critiques of nationalism and of the idealization of work, in short, the critique of productivism.

Certainly the conditions of the Eurozone and the crisis are such that the ‘development in one country’ route cannot be avoided – whatever the Trotskyist clichés may be, one must either act or not, and someone has to make the step. One could not blame Greece for a developmental nationalism in this way. But the logic of competition between nation-states under capitalism necessarily forces a contradiction between such developmental nationalism and the interests of the domestic working class, not to mention the working classes of other nations. A more thoroughgoing socialistic approach would be needed to disembed the exiting countries from these logics as well. The difficulty there is, however, that unlike China or the USSR a country like Greece or Portugal has few major resources and a small economic base to start from, and an autarkic developmental state capitalism is likely not a viable option. Here the necessity of solidarity between nations, not just in words but in actually mutually supportive political-economic strategies, is paramount; else a new Greece risks ending up a new Cuba. In saying this, I have by no means solved the strategic problem, and it is one fraught with political and economic difficulties. But in writing Crisis in the Eurozone, Lapavitsas et al. have made a major contribution to the sober and concrete consideration of the possible ways forward; it is now up to other socialist critics to join this debate.

1) See for example M. Shahid Alam’s excellent book Poverty from the Wealth of Nations (Basingstoke 2000) on this subject.

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