Notes from the Editors
Social Justice and Globalization:
Are they Compatible?
Between Barbarism and
a Solar Transition
The Long March Goes
In the May issue of MR, we published an article by James Petras, written in March, entitled “The U.S. Offensive in Latin America.” The article raised the issue of an impending military coup in Venezuela, then being actively promoted by Washington, aimed at replacing the democratically elected president Hugo Chávez with what the Bush administration had already been publicly calling a “transitional government” (or, as Petras termed it, a “transitional civic-military junta”). “Washington,” Petras wrote, “is implementing a civil-military approach to overthrow President Chávez in Venezuela….U.S. strategy is multiphased and combines media, civic, and economic attacks with efforts to provoke fissures in the military, all aimed at encouraging a military coup.” The object of the coup, from Washington’s standpoint, was threefold: to regain control of Venezuela’s oil industry which accounts for 15 percent of U.S. oil imports, to eliminate the indirect support that Venezuela has been giving to guerrillas in Colombia and to insurgent forces in Ecuador, and to put an end to Chávez’s attempt to break away from the imperialistic network—Venezuela’s step toward independence.
On April 12, while Petras’ May MR article was still at the printer, the military coup took place. It received the immediate backing of the U.S. government (with Otto Reich, the U.S. assistant secretary of state for western hemisphere affairs, giving advice to the head of the new civic-military junta over the phone) and the strong praise of the mass media in the United States. But then, in one of the most surprising and encouraging developments in recent Latin American history, a massive popular uprising, coupled with the actions of those segments of the military loyal to the elected government, restored President Chávez to power within less than forty-eight hours. According to the Wall Street Journal (April 15, 2002), “members of the middle class and business executives” backed the coup, while Chávez’s “core of supporters,” who through their widespread protests restored him to power, consisted of “poor workers from the sprawling shantytowns as well as peasants from the countryside.”
Eager to see Chávez overthrown, the U.S. corporate media establishment had wasted no time in voicing their support for the military coup against Venezuela’s elected government, declaring it a major step forward for democracy. The New York Times, as the paper of record, led the way, editorializing in its April 13, 2002 issue, that “with yesterday’s resignation [sic] of President Hugo Chávez, Venezuelan democracy is no longer threatened by a would-be dictator. Mr. Chávez, a ruinous demagogue, stepped down after the military intervened and handed power to a respected business leader, Pedro Carmona.” Insisting that Chávez’s “removal was a purely Venezuelan affair,” the New York Times, let it be known from the very moment that the coup took place that there could be no thought of possible U.S. involvement. Indeed, rather than openly admit that a democratic government had been deposed by a military coup, the Times attempted to give Chávez’s removal legitimacy by declaring that he had “alienated virtually every constituency” and thus had forfeited any claims to be seen as a democratic leader. The fact that the new civic-military junta had within a few hours deposed not only the president but also the National Assembly, the Supreme Court, and nearly all local officials, setting aside the Venezuelan Constitution itself, was news not fit to editorialize upon—as if these were simply steps on the path to true democracy.
The events of the following day, during which popular uprisings swept Chávez back into power, caught the U.S. government and the dominant U.S. media outlets still supporting the failed military coup. Subsequently, the Bush administration and the corporate media did their best to backtrack and save face. By April 16, the New York Times, while still insisting that Chávez has been a “divisive and demagogic leader” (their words for a popular elected leader opposed to Washington’s imperial designs), acknowledged that it had improperly applauded the removal by military means of a democratically elected government. As the Times editorial page put it: “That reaction [the very positive response to Chávez’s removal from power on the part of official Washington], which we shared, overlooked the undemocratic manner in which he was removed. Forcibly unseating a democratically elected leader, no matter how badly he has performed, is never something to cheer.”
Nonetheless, the New York Times had cheered—and without for a moment “overlooking” the fact that Chávez had been militarily deposed. It would undoubtedly cheer again if there were another similar reversal in Chávez’s fortunes. How else to respond to a leader that, as the Times pointed out in the same April 16 editorial, has supported left-wing guerillas in an adjacent country, created an alliance with Cuba’s Fidel Castro, and increasingly allowed Venezuela, “one of the world’s largest oil producers” that “desperately needs a steady hand in the presidential palace,” to succumb to the “confrontational agenda” of its lower classes? To act in any other way would not have been in the interests of the U.S. ruling class, which the New York Times, along with the rest of the corporate media, so dutifully serves.
Between Barbarism and a Solar
Social Justice and Globalization:
Are they Compatible?
The Long March Goes
John Bellamy Foster’s brilliant review, “Monopoly Capital and the New Globalization” (Monthly Review, January 2002), demonstrates how monopoly capitalism has reached its current crisis, one in which all the contradictions of imperialist domination and the worldwide lack of effective demand are now leading toward the stark choice between a “deadly barbarism or a humane socialism.”
That choice may come far more quickly and favorably if we consider the current prospects of dealing with the enormous environmental pollution produced by capitalist enterprise over the last two hundred years, and especially over the last fifty.
Long ago, during the Industrial Revolution, capitalists discovered that extremely profitable economies of scale could be realized by the exploitation of fossil fuels like coal and oil. They also learned that they need do nothing to cover the social costs of this exploitation, namely the associated environmental pollution.
A good example of this neglect of social and environmental cost occurred fifty years ago when U.S. policy makers saw in nuclear technology the illusory promise of unlimited control over the rest of the world. Today, they have discovered that all nuclear facilities are highly vulnerable to terrorist attacks. A single such attack could reduce even the United States to a nuclear basket case, as happened in the former Soviet Union when social order collapsed in the wake of the Chernobyl meltdown in April of 1986. The realities now facing western energy policy makers include, first and foremost, the same possible loss of political legitimacy faced by Gorbachev in 1986. And now, they must soon deal with such issues as global warming and the public health crisis produced by two hundred years of environmental pollution.
I am a statistician who has been studying the health effects of man-made, low-level radiation for many years. In fact, I published an article in Monthly Review in February 1984 (“The Future of Nuclear Power”) in which I correctly predicted the industry’s rapid decline. I have since become aware, especially after Chernobyl, of a deepening and unsolvable crisis in the nuclear industry, one that finally erupted at the close of last year.
That crisis was revealed on December 13, 2001 in a front page story carried by every British newspaper (but completely ignored by U.S. mainstream media), that a government commission appointed by Prime Minister Tony Blair has recommended that Great Britain replace all nuclear facilities with solar power. The story was taken from a report leaked to the journal, New Scientist. Here is the story, published on December 15, 2001 and titled “Death Knell Sounds for Nuclear Energy,” followed by some brief comments of my own:
Nuclear power may have had its day. The best way to cut carbon pollution and tackle global warming is to replace oil and coal-fired power stations with renewable energy sources, says a draft British government review leaked to the New Scientist. Nuclear power is simply too dangerous and expensive.
The review attempts to lay out Britain’s energy policy for the next 50 years. If the government accepts its recommendations, Britain will become one of the most environmentally friendly producers in the world.
The long-awaited study had been widely expected to embrace the nuclear industry’s plan to set up 15 new nuclear stations. Instead, it relegates nuclear power to an also-ran that could be totally phased out by 2050 if renewable sources deliver as expected.
This happens under both scenarios put forward by the study. One, labeled “global sustainability,” assumes government intervention by regulation and financial incentives, leading to a 30 percent contribution from renewables and a 60 percent cut in carbon emissions. The alternative “world markets” scenario envisages a big rise in oil and gas consumption driven by consumer demand, resulting in a 20 percent rise in carbon pollution.
Public fears about nuclear safety seem to have influenced the review, which was undertaken by the Cabinet’s Performance and Innovation Unit (PIU). The technology has an “uncertain role,” the report says, “since concerns about radioactive waste, accidents, terrorism and proliferation may limit or preclude its use.” It also wants the cost of insuring against accidents and disposal of radioactive waste to be borne by nuclear stations rather than the government.
This makes nuclear power very expensive. It is estimated that it will cost 3.0 to 4.5 pence per kilowatt-hour by 2020, compared to 1.5 to 2.4 pence per kilowatt-hour for onshore wind power. Combined heat and power costs come in at 1.6 to 2.4 pence per kilowatt-hour. “Nowhere in the world have new nuclear power stations yet been financed within a liberalized electricity market,” the report points out.
The report is enthusiastic about the potential of renewable energy, which it says is the most flexible way to reduce carbon emissions. It suggests producing at least 20 percent of electricity from renewable sources by 2020, compared with the current target of 10 percent by 2010. That could be achieved by expanding the number of wind turbines on land and offshore and by introducing wave power and underwater tidal generators.…
The report will be a bitter disappointment to the nuclear industry, which had been expecting it to kick-start a nuclear renaissance. But it does urge the government to contribute to international efforts to design cheaper, safer reactors, and to ensure that Britain’s nuclear regulators are “adequately staffed” to assess them….
The above article records a reversal of a fifty-year-old British policy based on total reliance on oil and nuclear energy. The first question we in the United States should ask is why such a truly sensational story has been totally ignored by U.S. mainstream media. Here is a heroically brief attempt to explain.
The decision by U.S. policy makers during the Second World War to invest some four trillion dollars in the development of nuclear weapons and reactors will ultimately be seen as the greatest industrial blunder in human history because there is no way known today to protect life from the radiation emanating from millions of tons of uranium, torn from the earth since 1945, or from the used radioactive fuel assemblies now residing in highly vulnerable cooling pools at each reactor site. The British were even more drawn to the use of nuclear power to restore their lost empire; they built nuclear reactors as early as the 1950s and retained possession of the world’s largest uranium mines long after U.S. oil companies sold off their own in the 1960s. The nineteen British reactors now operate in an area the size of Pennsylvania, with tragic public health consequences.
Over the past fifteen years, photovoltaics and wind turbines have become the most rapidly growing source of energy. All major oil companies today, with the notable exception of Mobil-Exxon, have small but strategic investments in photovoltaic manufacturing, as a hedge against the possible loss of cheap oil from the Middle East. If 1 percent of the four trillion dollar investment in nuclear energy were invested in solar technologies today, it would be possible someday to cover every roof top in the world with photovoltaic shingles, paving the way for the eventual elimination of both pollution and poverty.
While there would be plenty of profits accruing to the large companies from solarization, the great drawback for them is that ultimately solarization would provide electricity too cheap to meter. Sunlight, like the unpolluted air we would then breathe and the potable water we would then drink, would be far too abundant to be sold for a profit.
It may be, then, that socialism will come as a result of a fierce struggle by all who fear dying prematurely of hunger and environmental pollution, and who will fight for the coming solar transition, as the only possible alternative to barbarism and the extinction of homo sapiens as a species in a radioactive planet.
JAY M. GOULD worked as a statistical
expert in antitrust litigation, and served on the Science Advisory Board
of the Environmental Protection Agency during the Carter administration. He
is author of The Enemy Within: The High Cost of Living Near Nuclear Reactors
(New York: Four Walls Eight Windows, 1996) and you can learn more about his
work on the web at www.radiation.org.
The Unemployed Workers
Wealth Gap Woes
Also of Interest:
This Review of the Month was originally written as a chapter (“Paul Sweezy and Monopoly Capital”) for Douglas Dowd, ed., Understanding Capitalism: Critical Analysis from Karl Marx to Amartya Sen, to be published by Pluto Press in July 2002. It is printed here by permission. For more information on Pluto Press see http://www.plutobooks.com.
We live at a time when capitalism has become more extreme, and is more than ever presenting itself as a force of nature, which demands such extremes. Globalization—the spread of the self-regulating market to every niche and cranny of the globe—is portrayed by its mainly establishment proponents as a process that is unfolding from everywhere at once with no center and no discernible power structure. As the New York Times claimed in its July 7, 2001 issue, repeating now fashionable notions, today’s global reality is one of “a fluid, infinitely expanding and highly organized system that encompasses the world’s entire population,” but which lacks any privileged positions or “place of power.”*
Even the revolutionary figure of Karl Marx has been enlisted in support of this view of inexorable global destiny, which seemingly determines everything, but which has no manifest agent of change. Thus the World Bank quoted from The Communist Manifesto by Marx and Engels on the opening page of its 1996 World Development Report, arguing that the transition from planned to market economies and the entire thrust of neoliberal globalization was an inescapable, elemental process, lacking any visible hand behind it:
Constant revolutionizing of production, uninterrupted disturbance of social conditions, everlasting uncertainty and agitation…All fixed, fast frozen relations, with their train of ancient and venerable prejudices, and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air…
Gone—spirited away by ellipses in the World Bank quotation from the Manifesto—were Marx and Engels’ allusions in the same passage to “the bourgeois epoch” and their subsequent reference to how “the need for a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe.”
It is no doubt largely in response to this atmosphere of inevitability, in which globalization is divorced from all agency, that the movement against the neoliberal global project has chosen to exaggerate the role of the visible instruments of globalization at the expense of any serious consideration of historical capitalism. Radical dissenters frequently single out the WTO, the IMF, the World Bank and multinational corporations—and even specific corporations like McDonalds—for criticism, while deemphasizing the system, and its seemingly inexorable forces.
These two distorted viewpoints, one generally in support of globalization, the other generally opposed, are mutually reinforcing in their unreality. Those who wish to intervene in these processes are thus left with no real material basis on which to ground their actions. Both perspectives have in common an emphasis on the decline of nation state sovereignty. Adam Smith described capitalism in the late eighteenth century as a system that eliminated all need for a sovereign power in the economic realm, replacing the visible hand of the absolutist or mercantilist state with the invisible hand of the market. “The Sovereign,” he wrote, “is completely discharged from a duty” with respect to the market (Book 4, section 9). Now we are told that this invisible hand has been globalized to such an extent that the sovereign power of nation states over their territorial domains themselves has been vastly diminished. For New York Times foreign affairs columnist Thomas Friedman, author of The Lexus and the Olive Tree, globalization is a new technological-economic system based in the microchip and ruled by an “electronic herd” of financial investors and multinational corporations, free from any nation state or power structure, and beholden to none.
Those seeking to dispel such views might reply that capitalism with all of its contradictions remains. But most current conceptions of capitalism are too lacking in historical specificity and concreteness, and too wrapped up in the notion of unfettered competition, to be useful in countering this dominant ideology. Indeed, the very idea of capitalism is being shorn of all determinate elements. The notion of global free market hegemony without the nation state and without discernible centers of power (only highly visible instruments of the market) means a concept of capitalism that has become virtually synonymous with globalization. There is, it is proclaimed, no alternative because there is nothing outside the system, and no center within the system.
The ideological fog that pervades all aspects of the globalization debate is bound to dissipate eventually, as it becomes clear that the contradictions of capitalism, which have never been surmounted, are present in more universal and more destructive form than ever before. For those seeking to penetrate this fog at present and to understand the constellation of forces in the world today what is needed above all is a concrete and historically specific conception of capitalism that will allow us to see through such issues as globalization. Within Marxism such an analysis was provided in the twentieth century by the theory of monopoly capitalism.
The Origins of Monopoly Capital Theory
The term “monopoly capitalism” has been widely used within Marxian economics to refer to the stage of capitalism dominated by large corporations. This stage of capitalist development originated in the last quarter of the nineteenth century and reached maturity about the time of the Second World War. Marx’s Capital, like the work of the other classical political economists, had assumed that the market system was characterized by conditions of free competition, in which capitalist enterprises were small, mainly family-run firms. Classical political economy never included such absolute fantasies as “perfect” or “pure” competition, which were to be imported into economics in its later neoclassical stage. Nevertheless, it assumed in its bedrock theory of free competition that price competition was fierce, and that no individual capitalist or firm had the power to control a significant portion of the market.*
In the case of Marx, as distinct from the other classical political economists, however, capitalism was a historical system, and thus dynamic in character, passing through various stages. Although Marx himself did not present a theory of monopoly capitalism, he did point to the concentration and centralization of capital as a fundamental tendency of accumulation under capitalism. The whole development of the credit system and the stock market was for Marx “a new and terrible weapon in the battle of competition and is finally transformed into an enormous social mechanism for the centralization of capitals” (Volume 1, chapter 2, section 2). In preparing Volumes 2 and 3 of Marx’s Capital for publication two decades later, Engels emphasized the fact that free competition had reached “the end of its road” (Volume 3, chapter 27). Marx and Engels, however, were prone to see these developments as signs of new conditions of socialization of production that would help usher in a new mode of production—not as indications of a new stage of capitalism.
It remained for later thinkers, therefore, to analyze what these developments meant for capitalism’s laws of motion. The first to do so was the heterodox U.S. economist Thorstein Veblen, who in The Theory of Business Enterprise (1904) and subsequent works, charted the economic implications of the rise of big business, and the transformations in credit, corporate finance and the forms of salesmanship that went along with this. But Veblen’s influence on economics did not extend beyond the United States. Within the Marxist tradition, then centered in Germany, the first important theorist of monopoly capitalism was the Austrian economist Rudolf Hilferding in his Finance Capital: The Latest Phase of Capitalism (1910); soon followed by Lenin in his Imperialism: The Highest Stage of Capitalism (1916).
Hilferding pointed to the tendency of concentration and centralization of capital to generate a greater and greater consolidation of capital, pointing eventually to one big cartel—an overly simplistic view that failed to perceive some of the countervailing influences at work. He saw these changes as mainly quantitative in character, and though his work was full of important insights, he did not explore the question of qualitative alterations in the laws of motion of capitalism. Hilferding’s perspective did, however, inspire Lenin to connect imperialism with the monopoly stage of capitalism, and to perceive the growth of giant capital therefore as integrally related to both the expansion of capital on the world stage, and the struggle between nation states for shares of the world market. But Lenin, like Hilferding before him, did not pursue the question of how capitalism’s basic laws of motion might be modified in the monopoly stage. The concept of monopoly capitalism was to remain axiomatic for Soviet economists in the 1920s and 1930s, during which some important new departures were begun. But by the late 1930s it had been reduced to a mere dogma within the rigid orthodoxy that prevailed under Stalinism.
In the 1930s in the West, meanwhile, mainstream academic economists finally began to deal with monopoly, particularly in the work of Joan Robinson, Edward Chamberlain and the young Paul Sweezy. Yet the theory of “imperfect competition” that was to emerge from these analyses had a formal character that was usually divorced from real his torical processes. Nor was it intended as more than a minor qualification to the theory of perfect competition, which continued to be considered the general rule, and prevailed over economics as a whole. By the 1930s Marxian economics could be said to have three strands: (1) the theory of capital accumulation and crisis; (2) the beginnings of a theory of monopoly capitalism (based on Marx’s concept of the concentration and centralization of capital); and (3) the theory of imperialism. The second and third strands—growing monopolization and imperialism—had been linked to each other by Lenin. But, paradoxically, there was no theoretical analysis that linked the second strand to the first—that is, no connection was drawn between growing concentration and centralization of capital and the forms of accumulation and crisis. The debate on economic crisis in Marxian theory, which in the early twentieth century centered on Marx’s famous reproduction schemes in in Capital, Volume 2, took place in a context that was completely separate from the analysis of the growth of monopoly.
Historical developments, however, were pointing to such a connection. Since the turn of the century in the United States there had been a groundswell of popular agitation against the giant monopolies and trusts. The great merger wave at the beginning of the twentieth century was widely viewed as representing a qualitatively new reality. It has been estimated that between a quarter and a third of all U.S. capital assets underwent consolidation in mergers between 1898 and 1902 alone. The mammoth merger of the period, the formation of U.S. Steel in 1901 under the financial guidance of the investment banking house of Morgan, fused 165 separate companies. The result was a monopolistic corporation controlling about 60 percent of the total U.S. steel industry. In 1936, Arthur R. Burns wrote his classic study, The Decline of Competition: A Study of the Evolution of American Industry. And in the context of the Great Depression of the 1930s it was frequently contended within heterodox economic circles, especially among those influenced by Veblen, that the stagnation was worsened by the growth of giant corporations with a large degree of monopoly power. One of the objects of the Temporary National Economic Committee established by the Roosevelt administration during the Great Depression was to investigate this question (though the results that they came up with in the end were quite meager).
Yet, despite all of this, John Maynard Keynes’ General Theory of Employment, Interest and Money (1936), which transformed macroeconomics in response to the depression, remained rooted in the age-old assumptions of atomistic competition.
The first economist to connect the theory of crisis to the theory of monopoly was the Polish economist Michal Kalecki, who drew his inspiration from Marx and Rosa Luxemburg. Kalecki’s work in the early 1930s in Polish had developed, according to Joan Robinson and others in the circle of younger economists around Keynes, the main elements of the “Keynesian” revolution, in anticipation of Keynes himself. Kalecki moved to England in the mid-1930s where he helped further the transformation in economic analysis associated with Keynes. There he developed his concept of the “degree of monopoly,” which stood for the extent to which a firm was able to impose a price mark-up on prime production costs (workers’ wages and raw materials). In this way, Kalecki was able to link monopoly power to the distribution of national income, and to the sources of economic crisis and stagnation. Kalecki also explored the more general historical conditions affecting investment. In the closing paragraphs of his Theory of Economic Dynamics (1965) he concluded: “Long-run development is not inherent in the capitalist economy. Thus specific ‘developmental factors’ are required to sustain a long-run upward movement.”
This analysis was carried forward by Josef Steindl, a young Austrian economist who had worked closely with Kalecki in England. According to Steindl’s Maturity and Stagnation in American Capitalism (1952), giant corporations tended to promote widening profit margins, but were constantly threatened by a shortage of effective demand, due to the uneven distribution of income and resulting weakness of wage-based consumption.* New investment could conceivably pick up the slack. Yet such investment resulted in new productive capacity, that is, an enlargement of the potential supply of goods. “The tragedy of investment,” Kalecki wrote, “is that it is useful.”* Giant firms, able to control to a considerable extent their levels of price, output, and investment, would not invest if large portions of their existing productive capacity were already standing idle. Confronted with a downward shift in final demand, monopolistic or oligopolistic firms would not lower prices (as in the perfectly competitive system assumed in most economic analysis) but would instead rely almost exclusively on cutbacks in output, capacity utilization and new investment. In this way they would maintain, to whatever extent possible, existing prices and prevailing profit margins. The giant firm under monopoly capitalism was thus prone to wider profit margins (or higher rates of exploitation) and larger amounts of excess capacity than was the case for a freely competitive system, thereby generating a strong tendency toward economic stagnation.*
* The New York Times was encapsulating the views of Michael Hardt and Antonio Negri in their fashionable, postmodernist work, Empire (Cambridge, Mass.: Harvard University Press, 2000).
* Much of the discussion in this and the following paragraphs draws on Paul M. Sweezy, “Monopoly Capitalism,” New palgrave Dictionary of Economics, vol. 3 (New York: The Stockton Press, 1987), pp. 541-544.
* All books by Steindl, Sweezy, Baran, Magdoff, Braverman and Mészáros mentioned in this essay are published by Monthly Review Press in New York.
* Michal Kalecki, Essays in the Theory of Economic Fluctuations (London: Allen and Unwin, 1939), p. 149.
* The monopoly capitalist economy does not consist simply of giant firms, of course. Within manufacturing, for example, there are hundreds of thousands of firms, which together employ a substantial share of the work force. These smaller firms are often attached to the giants, some supplying parts, others occupying various other niches. Such firms tend to bear the brunt of an economic downturn. Conversely, during an expansion they tend to grow more rapidly than the dominant, monopolistic firms.
FOSTER is an editor, of Monthly Review. He is the author of Marx's Ecology: Materialism
and Nature and The Vulnerable Planet,
and co-editor of Hungry
for Profit: The Agribusiness Threat to Farmers, Food, and the Environment,
all published by Monthly Review Press.