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Tuesday, March 11, 2014

Communist Unity and Its False Friends

To paraphrase de Maistre, every political party has the leadership it deserves. It is confidence in the wisdom of this maxim that keeps me from commenting extensively on the continuing effort to retreat from Marxism-Leninism on the part of Chairman Sam Webb and the rest of the Communist Party USA top leadership. As the membership continues to shrink-- discounting internet “friends” and “likes”-- one can only marvel at the dogged loyalty of most of the remaining membership, a loyalty perhaps leftover from times when the Party was under attack from all sides. But the Party is under attack from no one today, especially since the Party's entire body of work coincides with working selflessly for Democratic Party election victories while slavishly following (off-electoral season) the leadership of the AFL-CIO.
Apparently changes are afoot in the CPUSA as it approaches its June National Convention. There will be leadership change. Unfortunately, it does not promise to be accompanied by a shift in ideological perspective. Nonetheless, some will entertain an unfounded “hope” in a new direction, a hope that will immobilize dissent.
There is also talk of dropping references to “Communism,” the final barrier, if the Webbites are to be believed, to the CPUSA becoming a party with mass support.
For an honest, critical discussion of the latest musings of Sam Webb, go here: Houston Communist Party.
Apart from its continual decline, the CPUSA counts as a small voice, but an authoritative voice, to the US left on matters pertaining to the World Communist Movement. Recently, Sue Webb, who represented the CPUSA at the International meeting of Communist and Workers Parties held in Lisbon in November of last year, gave a report of that meeting, highlighting the CPUSA’s and other parties' assessments and views on the current situation and the way forward.
Much of Sue Webb's commentary is a thinly-veiled attack upon the Greek Communist Party (KKE) under the guise of supporting diversity and independence in the world movement. At the same time, she exploits differences between Parties to justify the CPUSA's exodus from Marxism-Leninism.
Now the KKE needs no one to defend its honor or its positions; it is supremely capable of supporting both. However, it is important for all Communists and friends of Communism to examine carefully and critically the views represented in Lisbon. Sue Webb's commentary fails to reach those standards.
She disparagingly suggests that the KKE obstinately and unreasonably thwarted a final, unifying statement: “The Greek party's criticisms were so strong that it rejected and blocked issuance of any consensual final statement summarizing the thinking of the conference. In doing so, the Greek party and its supporters from a few other countries clearly went up against the thinking and policies of the overwhelming majority of parties represented at the meeting.”
At the same time, she heralds the diverse roads taken by various Parties and their relative autonomy from a single path, citing Lenin copiously as well as her Party's reliance upon "our own experiences and conditions of struggle.” In other words, she faults the KKE for not acceding to the will of others by drawing upon its “own experiences and conditions of struggle.” Apparently, she finds no inconsistency in touting the old Euro-Communist line of national Communism while chiding the KKE for its principled, independent stance in the Lisbon meeting.
The charge of instigating disunity is particularly spurious when the KKE's big role in revitalizing the international meetings, conferences, and exchanges is recognized.
Lost in Sue Webb's simplistic account is the singular contribution that the KKE brings to any discussion of the path to socialism. Without judging the merits of its every conclusion, one must respect the deep analysis that the KKE has made of the collapse of mass European Communist Parties since the Second World War. While most Parties have wrestled with the lessons of the loss of the Soviet Union and the Eastern European socialist community, few explore the theoretical consequences of the near-complete self-destruction of powerful mass Communist Parties in Italy, France, and Spain as thoroughly as does the KKE. The process of evisceration of Marxism-Leninism in non-ruling Communist and Workers Parties began well before the fall of Soviet power. It is the KKE that draws the most profound lessons from this experience. Webb ignores it entirely.
Failure to grapple with the lessons of the collapse of Eastern European socialism and the failure of Euro-Communism leads to a one-sided, distorted map of the road ahead.
It is in this context that the KKE challenges the position that there are “stages” between capitalism and socialism. After World War Two, many Parties projected an anti-monopoly stage in the transition to socialism. Still others sought to construct a stage built on a “democracy of a new type,” a system of rule that was neither bourgeois nor socialist. These strategies entailed a focus upon parliamentary struggle and collaboration with all non-monopoly capitalist forces. The Italian “Historic Compromise” was the symbolic culmination of this perspective, engaging a strategy that opened the door to the bourgeoisification of the Italian Communist Party (PCI) and consequently its inevitable demise.
One of the ideological salesmen of this approach, Giorgio Napolitano, demonstrates, with the trajectory of his life, the cruel tragedy of the PCI's failure: once a member of a university fascist youth group, Napolitano engaged with the resistance, joined the PCI, assumed a leading role in its new direction, and today reigns as the President of the Italian bourgeois Republic. With measured civility and dignity, he legitimized the government of the buffo-fascist, Silvio Berlusconi. His many honors, decorations, and prizes testify to his service to capitalism.
In an interview in 1975, Napolitano, then the economic spokesperson for the PCI, deftly danced around hard questions posed by Eric Hobsbawn: “I believe that in any country the process of socialist transformation as well as socialist regimes have to be founded on a broad basis of consensus and democratic participation... My argument about the principles and forms of democratic life to be upheld in the context of an advance to socialism and the construction of socialist society refers more concretely to the countries of Western Europe in which bourgeois democracy was born, where representative institutions have a more or less strong tradition and diverse democratic,ideological, cultural and political currents have operated more or less freely... [and] which are characterized in varying degrees... by the presence of sizable intermediate groups between the proletariat and a big bourgeoisie controlling the basic means of production.” Only a mere thirty years after Communists played a key role in the fall of anti-democratic European despotism, Napolitano vigorously celebrates the dubious Euro-tradition of bourgeois democracy while catering opportunistically to the interests of the middle strata. Unfortunately, these illusions still linger with many Communist Parties. It is this failed perspective that is vigorously opposed by the KKE.
Similarly, the mass Spanish Party, under the leadership of Santiago Carillo, collapsed into near irrelevancy thanks to the fetish of bourgeois democracy and the pandering to non-proletarian strata. Carillo argued that ”... the Communist Party should be the party of freedom and democracy...We must bring into our programme as an integral part, not only the demands of the workers, but also those of all sections of society which are under privileged.” These vacuous, shallow slogans serve the bourgeoisie well, as they do when inscribed in the platforms of modern bourgeois congressional or parliamentary parties. No wonder workers fled the PCE in droves; they understood Marxism far better than did the Party leaders.
Reflections on these tragic miscalculations should lead one to heed the warnings against opportunism issued by the KKE:
It leaves them defenseless against the corrosive work of the bourgeois and opportunist forces which are trying to assimilate the CPs into parliamentarianism, to castrate them and make them a part of the bourgeois political system, with unprincipled collaborations, with participation in governments of bourgeois management which have a “left”-“progressive” label, with entrapment in the logic of class collaboration, with support for imperialist centres, as is happening e.g. with the CPs of the so-called European Left Party, as well as other CPs that are following the same path. (G. Marinos, Member of the PB of the CC , KKE)
In the wake of the deepest global economic crisis since the Great Depression, the idea that Communist and Workers Parties should struggle to lead capitalism out of the weeds-- to better “manage” capitalism-- is an absurd strategy guaranteed to further marginalize the prospects for socialism. If only the Communists (or Communists in alliance with others) can rescue capitalism, why would they do so?
Sue Webb fails to frame the KKE positions in the context of class partisanship, an error that guarantees confusion and misunderstanding. She fails to find a difference between fighting for reforms in the framework of capitalism and refusing to take the side of a bourgeois class, a distinction that the KKE sharply makes. Where reforms benefit working people-- increases and improvements in public education, social welfare, public health, etc,-- Communists fight harder than anyone and accept allies unconditionally. But where workers are asked to stand with the bourgeoisie-- in sacrificing wages and benefits to make their employer more competitive, in boycotting products produced by foreign workers-- Communists urge that workers stand aside.
Sue Webb charges the KKE with discounting emerging economies as rivals to Western imperialism: “the concept of the BRICs countries... or others, such as in Latin America, emerging as challenges to Western imperialism is rejected.” But this is absurd; Communists see these countries as imperialist rivals to Western imperialism. That is, they have their own designs upon the global economy, their own expansionist interests. At the same time, Communists oppose aggression and war on the part of imperialist powers in every case and of every stripe. For example, Communists fervently oppose US intervention in Venezuela; they oppose EU and US meddling in Ukraine. However, they do not support the respective national bourgeoisies. This is in contrast to some “Marxist” organizations that vacillated on or capitulated to regime changes or “democratic” missionary work in countries such as Iraq or Libya.
Sue Webb scoffs at the KKE rejection of the term “financialization.“Identifying financialization as a particular feature of today's capitalism is a hoax, a diversion. Capitalism is capitalism.” One might well ask her: if capitalism is not capitalism, then what is it? I'm sure it’s lost on her that the notion that there is good capitalism and there is bad capitalism is alien to Marxism. Social Democracy and its genetic relatives all attempt to find a good capitalism to ride toward socialism. Of course in every case they have failed-- capitalism doesn't go in that direction.
Profit is the driving force of capitalism; it is impossible to imagine capitalism without profit. And profit-seeking shapes the trajectory of capitalism. Like a rabid predator, capitalists seek profits everywhere-- in the capital goods sector, in the consumer goods sector, in the service sector, and in the financial sector. The fact that the financial sector played a bigger role in profit-seeking in recent times sheds little light on capitalism's fundamental operation. Rather, anointing financial activity as a unique species of capitalism only obfuscates the basic mechanisms of capitalist accumulation. It adds nothing.
That the global crisis first broke out in capitalist financial centers is undeniable. But the fact that the initial eruptions were the result of processes long set in motion is equally undeniable. Social democrats would have us believe that the crisis was caused by aberrant behavior, a feverish fixation on financial maneuvers easily repaired by regulation and reform. This is nonsense. This is not Marxism.
Thus, the term “financialization” is a kind of hoax. A term favored by those too lazy or too afraid to examine the inner workings of a rapacious system.
One does not have to agree with every perspective, every formulation of the KKE to recognize that they are taking the lead on issues facing the World Communist Movement; they are asking the hard questions that challenge old habits, easy assumptions, and unexamined positions. Yes, they challenge convenient beliefs that make for easy interaction with other left forces, but they do so from fidelity to the Communist tradition. Yes, they do not put consensus-for-the-sake-of-consensus ahead of principle. But those of us who want to restore vitality to the Communist movement must show a deep appreciation-- and not contempt-- for their selfless commitment to resurrecting a militant Communism based upon the foundations laid by Marx and Lenin.
For all its self-congratulatory bluster about escaping from dogmatism, sectarianism, and “alien” ideas, Sue Webb's Party is about to sink into oblivion. As with a sinking ship, the CPUSA 's leadership is jettisoning its deck chairs and cabin furniture as fast as the water rises. Gone are the Party archives, the Party newspaper, Party bookstores, Party organizations, education, and even Party meetings. Gone are the Party symbols, the organizational principles, the ideology, and even the greetings of comradeship. In their place are Facebook and Twitter communications, telephone and video conferences, and common cause with liberal groups between the mandatory efforts in support of Democratic Party election campaigns.
Sue Webb says: “The outlook and policies of our party fit well into the mainstream of the world communist movement as expressed at the Lisbon meeting last November.”
Would that it were so! The current CPUSA leadership rejects audacious approaches to reaching socialism while waiting passively for the second coming of Franklin Delano Roosevelt and The New Deal. They draw their strategic line from the desperate, defensive measures necessitated by the rise of fascism eighty years ago, a temporary front with non-working class forces that quickly betrayed that alliance after World War II and the fall of fascism. Sam Webb and his leadership coterie remain locked in the thinking of another time.
Well into the mainstream”? I think not. The World Communist Movement is growing again thanks, in part, to lively, frank conversations about the way forward, as occurred in Lisbon. While consensus remains illusive, the process of discussion is, nevertheless, clarifying and unifying. But for those captured in the web of opportunism, the future is bleak.

Zoltan Zigedy

Monday, March 3, 2014

Ukraine: War on the Horizon?

As I wrote elsewhere (, Ukraine is a great tragedy for the people. Caught in the web of imperial powers, many Ukrainians were seduced by the European Union and the US into collaborating in the overthrow of the elected government. While the US and European media depicted events as reflecting a yearning for Western values and culture, they conveniently sidestepped the questions of constitutionality and electoral legitimation. The fact that the former leaders of Ukraine came to power through mechanisms worshiped in the West as the foundations of civility and the rule of law counts for nothing in the carving up of spheres of influence.
Even at the last moment, when the Ukraine government struck a deal with the opposition favorable to the anti-government insurgents and guaranteed by the EU, the Western media ignored the blatant betrayal of that agreement and the complicity of the guarantors. Shamefully, the media masked the critical role of the hyper-nationalist, Jew-baiting fascists in the front lines of the opposition’s street fighters.
In the US, the intellectual courtiers-- the obsequious academics-- dutifully filled the airwaves and newsprint with tributes to the heroic, democracy-loving opposition. They assured us that the opposition represented exactly what the US State Department said they were. How convenient!
Before the coup against Yanukovych, the Washington Post's Anne Applebaum wrote a column (Ukrainian smears and stereotypes, 2-20-14) promising to explain the Ukrainian “crisis” to those who might foolishly believe an illegal coup was brewing (“the Ukrainian crisis can seem murky”). She mocks the language of those questioning the legitimacy of the opposition in Ukraine and paints the Russians with vulgar Cold War invective and Russo-phobia: “At the same time, those who throw these terms [“fascist” or “Nazi”] around should remember that the strongest anti-Semitic, homophobic and xenophobic rhetoric in this region is not coming from the Ukrainian far right but from the Russian press, and ultimately the Russian regime.” So if the Ukrainian right are fascists, we should overlook it because the Russians are worse. Tu quoque!
It is a measure of our times that the Washington Post, on whose editorial board she serves, fails to reveal that Applebaum is married to the Polish foreign minister and is herself a Polish national, relationships that link her with the regime most ardently supportive of the opposition.
Others will know her as the Pulitzer prize-winning author of numerous “histories” of the Soviet era, all marked by an unconcealed hostility towards socialism. Her zeal for damning every aspect of the Soviet experience has earned her a place in the hearts of old Cold Warriors and on the pages of such rabid anti-Communist publications as The New York Review of Books. Her newly found status as a major media gas bag of the Bill O'Reilly school of historiography has apparently not tarnished her intellectual reputation among liberals.
Reaching for the same stature, her colleague, Timothy Snyder, is equally notorious with his histrionic and unfortunately celebrated book, Bloodlands, another victim-counting effort meant to equate Hitler and Stalin. Like Applebaum, Snyder is among a newer generation of offspring of Robert Conquest, the Cold War hack who gathered anecdotes and inflated them into millions of deaths at the hands of “blood-thirsty Bolsheviks.” We now know from Soviet archives that Conquest's numbers were vastly exaggerated. We now know from further revelations that Conquest enjoyed sponsorship from US security agents in his efforts to rally gullible minds in the West. Unfortunately, no one with sufficient credentials and major media access will today counter the similarly inflated horror stories of Applebaum and Snyder.
But we can wonder why Amy Goodman would invite Snyder on her radio/TV show, Democracy Now! (2-24-14) for his opinion of events in Ukraine. From a promising beginning as a Left media voice, Goodman has too often given credence to those fawning after US imperial posture in her coverage of Eastern Europe, Libya, Syria and other imperialist ventures.
Predictably, Snyder mounts a vigorous defense of the opposition:
It [the opposition] included people from—included Muslims. It included Jews. It included professionals. It included working-class people. And the main demand of the movement the entire time was something like normality, the rule of law.
Strange that Snyder could paint such a diverse, liberal picture of the opposition from his perch at Yale University, particularly when Goodman's other guest, Professor Petro, reporting from his vantage point in Ukraine, depicted an opposition welded together by fervent Ukrainian nationalism. Interestingly, the opposition-in-power's first acts, as reported by Professor Petro, were to restrict local use of the Russian language and a resolution to outlaw the Communist Party-- hardly an endorsement of diversity or liberalism. Snyder did not dispute this claim.
And Snyder demonizes Yanukovych:
And the reason why this demand [for the rule of law] could bring together such people of different political orientations, such different regional backgrounds, is that they were faced up against someone, the previous president, Yanukovych, whose game was to monopolize both financial and political as well as violent power in one place. The constitution, the legitimacy of which is now contested, was violated by him multiple times, and most of the protesters agree to that.
What a tangled argument! Snyder charges the former Ukrainian president with seriously violating his constitution which is immediately dismissed as “contested”! Which is it? Inviolable or not?
Nor does his concern for constitutionality and the rule of law lead him to condemn the opposition for ignoring the constitutionally sanctioned mechanisms for removing a president. Yanukovych's alleged “monopoly” on violence fails to account for the street violence conceded by Western media through lurid pictures of masked “protesters” throwing fire bombs and attacking police. Snyder treats Goodman's listeners to a dose of propaganda rather than a truthful commentary.
Professor Petro gently challenged Snyder's account, returning again and again to the fanatical Ukrainian nationalism of the opposition. Snyder responded patronizingly:
Yeah, I mean, as Professor Petro probably knows, that’s the subject of my specialization. And, of course, I share his concern. Svoboda takes its example from the history of the Organization of Ukrainian Nationalists, an interwar, extreme-right party which I would not hesitate to call fascist. The Pravi sector also refers to the same historical symbolism. Both of them speak of the necessity for a national revolution, especially Pravi sector. They are significant.
An honest “specialist” would note that the OUN was not merely extreme-right or even fascist, but made up of Nazi collaborators responsible for the deaths of thousands upon thousands of innocent Soviet civilians including much of the Jewish population. The OUN's equation of Judaism and Bolshevism invited its identification with the Nazi occupiers. One would think that Snyder's “specialization” in Eastern European history would demand that he call out the opposition on this point. At the very least, he should issue a demand to purge the coup-installed government of such elements. One would think, as well, that Amy Goodman would call out Snyder on this failing.
As Ukraine moves towards becoming the flash point of a regional or even broader war, my colleagues remind my of the similarities with Europe in 1914, with imperial powers elevating threats and demands, with a reckless empowering of forces beyond anyone's control, and with nativist sentiments rabidly unleashed.
Unfortunately, we lack a significant anti-imperialist front in most European countries and the US. Even Samuel Gompers, the reactionary leader of the AFL at the turn of the last century joined US writer Mark Twain and numerous other luminaries in founding a US Anti-Imperialist League. Today, our labor movement leaders are complicit in or silent on US meddling in Ukraine and numerous other countries. And US liberals, in all too great numbers, endorse US imperialism as a crusade for democracy and the vaunted “rule of law.” With peace so desperately needed, we lack a vibrant peace movement to counter the threat of war.
We must aggressively act to change this confusion and complacency before it is too late.
Zoltan Zigedy

Tuesday, February 11, 2014

Getting Serious about Inequality

The tenacity of the Yankees... is a result of their theoretical backwardness and their Anglo-Saxon contempt for all theory. They are punished for this by a superstitious belief in every philosophical and economic absurdity, by religious sectarianism, and by idiotic economic experiments, out of which, however, certain bourgeois cliques profit.” Frederich Engels, letter to Sorge, London, January 6, 1892. Translation by Leonard E. Mins (1938)
One hundred and twenty-two years later, the Yankees remain bereft of theory while clinging to every outlandish scheme promising to curtail the appetite of an insatiable capitalist system. Churning on without interruption, capitalism generates greater and greater wealth for its masters while devouring everyone else in its wake. From regulatory reform to alternative life styles, from tax policies to cooperative endeavors, self-proclaimed opponents of this rapacious economic behemoth have announced newly contrived exits from its destructive path. While “...people [in the US] must become conscious of their own social interests by making blunder upon blunder...” as Engels put it in another letter to his US friend Frederich Sorge, the contented capitalists merrily continue profiting.
Engels' brutal indictment of the North American allergy to theory and the affinity for unfocussed activism was tempered by an optimism based more upon hope than reality: “The movement itself will go through many and disagreeable phases, disagreeable particularly for those who live in the country and have to suffer them. But I am firmly convinced that things are now going ahead over there... notwithstanding the fact that the Americans will learn almost exclusively in practice for the time being, and not so much from theory.”
That conviction may well seem misplaced today as many of those who claim opposition to capitalism continue to decry theory and invest instead in utopian schemes and isolate burning issues from a general critique of capitalism and its social policies.
Nothing illustrates the Engels' diagnosis more than the current public discussion of inequality and poverty. It is tempting to call the new-found interest a fad or fashion, since it seems to spring from nothing more than a sitting President's alarm. But the present-day rage to address economic inequality is far more cynical. With interim national elections on the horizon and a competitive Presidential race on its heels, Democratic Party leaders served notice on the lame-duck President that it is time again to rouse the Party base, the labor unions, the progressive single-issue organizations, internet lefties, and the deep-pockets social liberals. Hence, despite the fact that inequality and poverty are neither newly discovered nor newly arrived, the alarm goes up: inequality is with us! Poverty is on the rise!
It is true, of course. Only a few outliers would deny that income and wealth growth for most people in the US have been stagnant or declining since some time in the 1970s (Even right-wing ideologue, Representative Paul Ryan, concedes that there are 47 million US citizens living in poverty). Health care has been in crisis, with millions left without any significant health options and untold numbers dying prematurely. The education system, like the physical infrastructure, is underfunded and crumbling. Employment continues to decline as discouraged workers exit the labor market. In short, poverty, disease, declining living standards, crime-- all the attendant problems of social and political neglect-- continue unabated, increasing dramatically over the last forty years.
At the same time, a privileged minority has enjoyed increasing income and wealth, a sharp rise in that group's share of the economic pie. As the economy marched forward, the “fortunate few” marched forward as well, but at an ever accelerating pace.
Without Theory
Data, not stultifying political or ideological rhetoric, must drive our agenda.” So says rising Democratic Party superstar, Senator Cory Booker, in a newsprint debate with Republican policy icon, Representative Paul Ryan. Sponsored by The Wall Street Journal (A Half Century of the War on Poverty, 1-25/26-14) to commemorate the fiftieth anniversary of the Lyndon Johnson-era “War on Poverty,” the two contestants demonstrate the futility of addressing poverty without a broad and deep understanding of its sources and its history-- the “how” and “why” of social theory. Representing the “respectable” Left in the US two-party political pantomime, Booker rehearses a host of liberal think tank palliatives based on education, job training, apprenticeships, de-criminalized drug use, and a bare-bones safety-net designed to shrink the number of those unlucky enough to fall below official government floors.
Solutions, for Booker, come through the tools of business and commerce: investments, cost-benefit analysis, returns on investment, cost savings etc. Rather than improving peoples' lives, the task of reducing poverty resembles an MBA project of this new generation of Democratic Party politician. He draws on suspect, often out-of-date correlations once found between education levels and future economic outcomes to sell education as a magic elixir. These long unexamined verities are now shaken by the absence of good paying jobs, the declining worth of higher degrees, and the enormous growth of student debt. Booker's feeble defense of the leaky safety-net that remains as a tarnished legacy of the New Deal and Johnson's anti-poverty legislation centers on food stamps and Medicaid, a formula to barely sustain life, but to not escape poverty. Add a dash of Moynihan-like sermon against single-motherhood and you have the anti-poverty program of the new generation of Democratic Party leaders-- truly a patchwork of “economic absurdity” worthy of Engels' contempt.
As for the Republicans, they argue for nothing, only against Democratic Party plans. Theirs is a simple contention: Forty-seven million US citizens remain in poverty. While the “War on Poverty” may have shifted the victims of poverty demographically, the poor are still with us and in great, stubborn numbers. For Representative Ryan, charity and moral suasion-- the remedies of two centuries ago-- are the only alternative to liberal interventionism and its failure.
Now liberals will recoil from these harsh conclusions. They can and will point to significant pockets of improvement, temporary declines in the poverty rate, or promising social experiments. But what they can neither explain nor address is the persistent reproduction of poverty by our economic system. For nearly forty years, measures of income and wealth inequality have grown, signally an inevitable increase in poverty. Even those ill-disposed to theory can surely see a relationship between growing inequality and increasing poverty.
Glaringly absent from Booker's program is any significant plan to redistribute income and wealth. We can attribute that absence to the near complete ownership of elected officials of both parties by the corporations and the wealthy. But on the periphery of mainstream politics, voices can be heard advocating measures both to grow the economy beyond mass impoverishment and/or to redistribute wealth through taxation.
The Krugmans, Reichs, and Stiglitzs and the like enjoy a measure of independence afforded by their academic tenure and widely celebrated intellectual stature, allowing them to somewhat sidestep fealty to corporate masters. As esteemed economists, they understand that the continued growth of inequality will ultimately bring harsh economic or social consequences. But their nostrums, like those of the political establishment, only treat the symptoms of a persistent malady that continually generates inequality, unemployment, and crises. A study of economic history demonstrates that bursts of economic growth and progressive taxation have indeed tempered, even slightly reversed inequality and the growth of poverty, but over time both return to their former trajectory.
A Dose of Theory
A new study by a French economist, Thomas Piketty, brings forward the view that the long-term tendency of capitalism is to produce and reproduce inequality. Though his book, Capital in the Twenty-first Century, is not scheduled for release in the English language until March, it has already generated serious discussion across the spectrum of the US commentariat. New York Times columnist, Thomas B. Edsell, asserts that the book “suggests that traditional liberal government policies on spending, taxation and regulation will fail to diminish inequality.” (Capitalism vs. Democracy, 1-28-2014)
How can that be? The liberal and social democratic consensus cries out for government spending, progressive taxation, and corporate regulation as the answer to growing inequality. A gaggle of Nobel laureates embrace these tools, attesting that they are effective means to combat inequality. What does Piketty see that they do not? 
Piketty is not afraid to study the history of inequality, a necessary condition for any proper socioeconomic theory. What he finds, according to Edsell, is that:
...the six-decade period of growing equality in western nations – starting roughly with the onset of World War I and extending into the early 1970s – was unique and highly unlikely to be repeated. That period, Piketty suggests, represented an exception to the more deeply rooted pattern of growing inequality.
According to Piketty, those halcyon six decades were the result of two world wars and the Great Depression.
In other words, growing inequality is the normal for capitalism and its shrinkage the aberration. Apologists would have us believe otherwise, that capitalism does not carry a gene for inequality. Unlike his Yankee counterparts, Piketty is willing to study the economy as a system-- capitalism-- and explore its historical trajectory. Both methodological dispositions give rise to a theory of inequality, an incomplete theory, but a theory no less.
Now Piketty and his frequent collaborator Emmanuel Saez are widely acknowledged to be among the leading experts documenting inequality world wide as well as in the US. Undoubtedly this gives a high plausibility to his core claim to identify a strong correlation between capitalism's typical course and the growth of inequality.
Of course students of Marxist theory or followers of this blog should not be surprised by Piketty's findings. For over a hundred and fifty years Marxists have maintained that inequality and impoverishment are necessary products of the capitalist system. That is, the logic of capitalism necessitates growing inequality. By locating profit at the heart of the capitalist organism, Marxists understand that wealth will invariably flow to the tiny minority of the owners of capital and away from the producers. It is this process of profit generation that overwhelms all barriers, all “reforms,” to channel society's resources to the capitalist class.
Piketty's argument is a welcome antidote to the paucity of explanatory theory presented by the liberal and social democratic punditry. The controversy stirred by Piketty's argument well before its English-language availability is a sure sign that he offers something beyond the conventional.
However, his interpretation of the long-term trajectory of capitalism, especially its departure from the norm, may be incomplete. He reportedly sees the time between 1914 and 1973-- a time when he claims that the growth of inequality was uncharacteristically retarded-- as a period when the after-tax rate of return on capital lagged behind economic growth. One could quibble that this is perhaps too simple and mechanical, the era was certainly one in which many factors worked to change the “normal” course of capitalism and often buffered the growth of inequality, together constituting a tendency.
But it would be a simplification to locate these factors entirely in economic or political events while overlooking policy. For example, throughout most of the twentieth century capitalism paid an anti-Soviet levy or rent to the working class as an inoculation against the threat of socialist or Communist ideology. That factor played no small part in moderating inequality, creating the mirage of working class equality, and ensuring labor peace.
Closer examination of Piketty's interesting thesis must await publication of the book.
For a Robust Theory of Inequality
We needn't wait for Piketty, however, to find an adequate theory of inequality. Elements of Karl Marx's theory of socioeconomic development offer the key to understanding the production and reproduction of inequality in our time as well as earlier times.
There are, of course, many possible causes for the concentration of wealth. Theft, good fortune, guile, dishonesty are only a few of the ways that humans have redistributed wealth since antiquity. Such causes occur often in history, but only haphazardly. The only systemic cause of inequality is the expropriation of the labor of one by another under the protection of social norms. Marx called this process exploitation. He was the first to identify its forms and its trajectory. He was the first to explain adequately the mechanisms of expropriation. Armed with Marx's theory of exploitation, the inequalities of slavery, feudalism, and, of course, capitalism are revealed with all their specific features. Thus, the concentration of wealth produced by expropriation of the labor of slaves, serfs, and employed workers is connected to unique socially protected forms of exploitation.
Exploitation explains how inequality arises and continues. Without recognition of this mechanism embedded in capitalist economic activity, liberals and social democrats cannot explain the persistence of inequality. They will apply inadequate reformist measures to stem the tide of wealth and income concentration springing from capitalist exploitation, but the tide will not be forestalled by reforms.
It cannot be overemphasized that inequality springs from a process, a process definitive of capitalist economic relations. Outside of the Marxist orbit, commentators view inequality as a state-of-affairs, a state-of-affairs existing between various social groupings. While they authentically decry the misery generated by inequality, they are at a loss to find the proper quantitative relationship between different groups constitutive of society. Sure, some have more than others, but what is the socially just distribution of society's goods? Granted that inequalities exist, what is the optimal way to assign shares of wealth? How much and for whom? Should everyone get an equal share? Should those on the bottom get a 10% larger share? 20%? These are the questions that perplex the non-Marxists.
The best answer from the best minds of Anglo-American social philosophy is a pretty nasty and unsatisfactory principle called Pareto efficiency. Rather than solving the inequality puzzle, Pareto efficiency justifies an unequal state-of-affairs provided that it does not diminish the well-being of others, including the least advantaged. Because of the theoretical intractability of settling on exactly what constitutes a just distribution of goods and services, modern bourgeois academic philosophers attempt to establish what would be the least objectionable, but unequal state-of-affairs. Nothing demonstrates the theoretical barrenness of Anglo-American social thought than this misguided, impossible task of determining distributive justice once and for all and for all times and places. There is no idealized state-of-affairs that could answer this question. The question itself is misguided.
Rather, in our time, the task of reducing inequality, of advancing distributive justice, is to eliminate exploitation. There can be no ideal, perfect solution to the inequality issue, but there is a way of eliminating the primary cause of indefensible inequality in a capitalist society: end labor exploitation.
Liberals and social democrats have no answer to the rightist challenge that workers today are immeasurably better off under capitalism than they were two hundred years ago. It is certainly true that most workers now live longer, are healthier, and have more free time than did their counterparts two centuries earlier. Marxist theory does not challenge that point. Instead, it asserts that the logic of the capitalist system tends to impoverish working people at all times. Whether capitalism succeeds in suppressing living standards is entirely a different matter. Other factors-- labor fight back, labor shortages, the cheapening of the means of subsistence, etc.-- may buffer, even overwhelm this tendency for a time, but the tendency never disappears.
The tendency towards impoverishment flows logically from the Marxist understanding that labor under capitalism is a commodity like any other commodity. Capitalists buy and sell the labor power of workers just as they do any other factor of production or distribution. And as with any other cost, they seek to pay the lowest possible price for it. Accordingly, the capitalist system, through the cost-cutting actions of individual capitalists (or corporations), is constantly pressuring the compensation of workers downward to levels of mere maintenance-- that is, poverty. The only systemic constraint upon that pressure is the necessity of securing labor in the future.
Therefore, we find in Marxism a basis for understanding (and addressing) inequality and poverty. Thanks to a theory that identifies the two closely related afflictions with specific historically evolved mechanisms and that connects their production and reproduction to economic systems, we can avoid the muddiness and ineffectiveness of the liberal and social democratic approaches. Both mystify the causes, offer a balm instead of a cure, and fail to halt the continuing reproduction of inequality and poverty. Like quacks and faith healers, liberals and social democrats may make the patient more comfortable, but only excising the cancer of capitalism will finally end the suffering.

Zoltan Zigedy

Monday, January 27, 2014

Book Review: The Brothers-- John Foster Dulles, Allen Dulles, and Their Secret World War

In a different time, a time when we escape the cultural waste excreted by decadent capitalism, a time without Fast and Furious 23 and the abominable cable television mini-series Spartacus, some creative and capable filmmaker might make a fascinating bio-pic out of the lives of the Dulles brothers, Allen and John Foster. Until then, we must make do with a new biography of the important duo (The Brothers, Times Books, 2013) written by Stephen Kinzer, and another, hopefully soon-to-be-available book on the subject by David Talbot.
Kinzer's book gives a fascinating, but unsatisfying look at the lives of two public figures who wielded an unprecedented concentration of global power. For the better part of a decade-- from 1953 to 1959-- the two brothers together shaped nearly the entire US policy toward the rest of the world. As director of the Central Intelligence Agency, brother Allen decided the US clandestine activities toward friends and foes alike. At the same time, he shaped the extent and few limits of the newly founded agency.
Brother John Foster did the same for the US's overt role in the world. As President D. D. Eisenhower's Secretary of State from 1953 until Dulles's death in 1959, he served the same goals and interests as his brother.
The unusual circumstance of such complete and convergent power sharing was neither coincidental nor the result of a ruthless power grab. In fact, it was consensual.
But who gave the necessary consent? Certainly not the electorate, since neither brother held elected office. Nor was it the tacit consent of the public given Allen Dulles's secretive role and publicly unknown activities. The consent question can only be answered by positing the existence in the US of a mechanism capable of deciding questions of ultimate leadership, a mechanism that could entrust US foreign policy to these two long-groomed brothers. While we cannot be sure of who exactly operates this mechanism and how it specifically functions, we can be sure that it exists with the same certainty that we can affirm the unseen existence of gravity.
It should be equally obvious that the work of the Dulles brothers through their eight years of common leadership coincided broadly with the “interests” of the US as defined by the privately-held, corporately organized heights of the US economy. While their policies only occasionally directly benefited individual capitalists (usually former legal clients), their actions were decidedly intent on benefiting the capitalist class as a whole.
It is through this mechanism that the interests of the capitalist class are protected and promoted. It is, in the end, the way in which a ruling class rules. In the end, it constitutes the best Marxist evidence for the existence of a ruling class.
Ruling class-deniers are compelled to explain how the Dulles brothers came to enjoy such exceptional power precisely at a time when US elites felt most threatened by the specter of Communism. They must offer an alternative account that brings two imposing figures associated with power, wealth, and anti-Communism to the pinnacle of power outside of the bourgeois democratic process.
Kinzer, a reliable foot soldier in the New York Times corporate empire, does not hide the uniqueness and oddity of the ascent of the brothers. But he would certainly have nothing to do with the forbidden idea of a ruling class in the US.
Nonetheless, his account offers revealing hints about how the Dulles brothers were vetted and selected, how one qualifies to be trusted agents for ruling class interests.
As early as 1921, the Dulles brothers participated in the creation of an important part of the mechanism of capitalist class rule: The Council on Foreign Relations and its subsequent public discussion journal, Foreign Affairs. To this day, the Council and its publication remain essential elements in crafting and debating foreign policy options congruent with the interests of capital.
Armed with Ivy League, foreign policy and clandestine service credentials, the Dulles brothers easily passed through the filters of ruling class trust. For John Foster, this brought him to the law firm of Sullivan and Cromwell, perhaps the leading legal agent for the international interests of US capital at the time. While rising to the top of the firm, the elder Foster ensured that US corporations, especially financial firms, were advanced and protected overseas. Kinzer recounts how the law firm could always call on the US military to back up its deal making. Moreover, he doesn't hide the close, welcoming relationship of Sullivan and Cromwell with fascist regimes. Even in the inter-war period, Foster was obsessed with forging unity with any enemies of Communism. Like the Council on Foreign Affairs, Sullivan and Cromwell was another component of the ruling class mechanism. Allen worked for the firm as well.
With much of the history of the ruthless, violent, and undemocratic trajectory of US foreign policy in the 1950s now widely acknowledged, Kinzer cannot mask the devious and bloody role of the brothers in orchestrating it. Instead, he does a shrewd job of softening it by focusing on only six covert plots against foreign “monsters” perceived as standing in the way of US interests. The six-- Iran's Mossadegh, Guatemala's Arbenz, Vietnam's Ho Chi Minh, Indonesia's Sukharno, Congo's Lumumba, and Cuba's Fidel-- are specifically targeted by the Dulles brothers for having the audacity to defy the US. All six cases are well-documented independently, with the Sukharno case the least well-known (Kinzer fails to fully indict the CIA in its collaboration in assassinating a million Indonesian Communists and their allies).
This spin on CIA extra-legal killings, coups, and assassination attempts feeds a simple-minded psychological explanation of the Dulles disposition to rearrange the world to suit US capital. Drawing on a bizarre interpretation of the celebrated movie, High Noon, Kinzer paints the Dulles brothers as counterparts to the cowboy hero “...reluctant to fight, but moved to do so because otherwise good people will suffer.” What makes this particular allusion so twisted is that the screenwriter, Carl Foreman, intended the film to be a less-than-veiled attack on the cowardice of those lacking the spine to confront anti-Communist blacklisting and McCarthyism. What was meant as an attack on the Cold War mentality is converted by Kinzer into an excuse for that Cold War mentality. Oddly, many right wingers see High Noon as Kinzer does. But the old loud-mouthed red-baiter, John Wayne, knew better-- he refused the lead because he smelled an anti-blacklist allegory.
Kinzer postures his account as a study of an aberration, a time when well-meaning people did some now embarrassing things because they exaggerated the Soviet threat. But none of these postures are proven by Kinzer; they are merely stated as fact. There seems no good reason to view two Cold Warriors as well-meaning when they brought the world to the brink of nuclear war and caused the deaths of literally millions. There is no compelling reason to conclude that there really was a Soviet threat to the security of the US, unless one assumes the Soviet desire for world socialism was somehow more intrinsically aggressive than the US desire for a capitalist world. But posturing the Dulles's foreign policy as an aberration is preposterous. The aggressiveness of the CIA and the US military after the reign of the brothers only intensified. Kinzer surely can't be blind to the US interventions in Vietnam, Angola, Panama, Grenada, Chile, and right up to the more recent aggressions against Afghanistan, Iraq, Libya, Yugoslavia, and Syria. The Dulles brothers provided a blue print and not an aberration.
So why does a distinguished writer for The New York Times writing for Times Books choose to write a critical, but sympathetic biography of these two ruthless Cold Warriors?
One finds the answer in the final chapter. Kinzer quotes Senator William Fulbright, an often lonely critic of the Fosters and US foreign policy, as saying that John Foster “misleads public opinion, confuses it, [and] feeds it pap.” But if Dulles fed the public “pap,” he did it through the intermediary of the US news media, including The New York Times. It is transparently obvious that the media of the Dulles era not only failed to challenge the Dulles world view but actively promoted and disseminated it. In that regard, Kinzer's employer is complicit in fanning the flames of Cold War fervor and sanctioning the violence and lawlessness that emerged from it.
To escape this unpleasant judgment on the Cold War media, Kinzer finds a convenient, handy scapegoat: the US public. Amidst splashes of psycho-babble, Kinzer explains:
Part of the answer lies in their personal backgrounds, part in the realm of psychology. The most important explanation, however, may be: they did it because they are us. If they were shortsighted, open to violence, and blind to the subtle realities of the world, it was because these qualities help define American foreign policy and the United States itself.
The Dulles brothers personified ideals and traits that many Americans shared during the 1950s, and still share... they embodied the national ethos. What they wanted, Americans wanted.
In all of this, the Dulles brothers were one with their fellow Americans. Their attitudes were rooted in the American character. They were pure products of the United States.
Now this is a shabby, dishonest piece of writing. Their “fellow Americans”-- millions of ordinary people-- were not like the Dulles brothers. They were not privileged Ivy League graduates born in the midst of the elite of the elites. Nor is it fair to the millions of US citizens who never had the opportunity to walk the path or through the doors open to the brothers to say that these citizens were “shortsighted,” “open to violence,” or “blind to subtle realities.” Certainly millions of their fellow citizens unwisely trusted these pillars of high society to not succumb to these character flaws. They were betrayed, just as they were betrayed by a compliant, cowardly media.
In his tortured finale, Kinzer persists in excusing the brothers and their Cold War enablers, the media. To his credit, he recognizes some of the great harm incurred on their watch; to his shame, he places the blame at the doorstep of the US public: “The blame, however, does not end with them. To gaze at their portraits and think, 'They did it,' would be reassuring. It would also be unfair. Americans who seek to understand the roots of their country's trouble in the world should look not at Foster and Allen's portraits but in a mirror.”
Kinzer would like us to believe that we collectively bear the blame for despicable deeds that were done behind our backs and without our consent, deeds that a compliant media, including his patron, The New York Times, were only too eager to ignore, distort, and approve.
Following Kinzer's logic, the public is responsible for the hyper-spying of the NSA so recently revealed by Snowden. The fact that it was kept from public scrutiny by the government and the media matters not. If we are indignant over authorities collecting our phone calls and other electronic communications, we should look “in a mirror” and accept the blame.
Of course this is ridiculous.
Kinzer serves a cold dish of obfuscation and blame-deflection with his book, The Brothers: John Foster Dulles, Allen Dulles, and their Secret World War. Readers should be wary of this calculated apology for imperialism and its high commanders. There is little new in Kinzer's account apart from some anecdotal hi-jinks. And much of the ugly side of US foreign policy is omitted. There is no indictment of an enthusiastically collaborative Cold War media either, only an embarrassing silence about their role.
Stephen Kinzer's patrons will be happy.

Zoltan Zigedy

Friday, January 17, 2014

Cooperatives: A Cure for Capitalism?

Co-ops-- cooperative economic enterprises-- have been embraced by significant groups of people at different times and places. Their attraction precedes the heyday of industrial capitalism by offering a means to consolidate small producers and take advantage of economies of scale, shared risk, and common gain.

At the advent of the industrial era, cooperatives were one of many competing solutions offered to ameliorate the plight of the emerging proletariat. Social engineers like Robert Owen experimented with cooperative enterprises and communities.

In the era of mass socialist parties and socialist construction, cooperatives were considered as intermediate steps to make the transition from feudal agrarian production towards socialist relations of production.

Under the capitalist mode of production, co-ops have filled both employment and consumption niches deferred by large scale capitalist production. Economic activities offering insufficient profitability or growth have become targets for cooperative enterprise.

In theory, cooperatives may offer advantages to both workers and consumers. Workers are thought to benefit because the profits that are expropriated by non-workers in the capitalist mode of production are shared by the workforce in a cooperative enterprise (less the present and anticipated operating expenses and investments, of course). Many argue as well that the working conditions are necessarily improved since workplace decisions are arrived at democratically absent the lash associated with the profit-mania of alienated ownership (though little attention is paid to the consequences for productivity and competitiveness against capitalist enterprises).

Consumers are said to benefit when they collectively appropriate the retail functions normally assumed by privately owned, profit-driven outlets. Benefit comes, on this view, by purchasing from wholesale suppliers, collectively meeting the labor requirements of distribution, and enjoying the cost-savings from avoiding a product markup (little attention is paid to limitations on participation dictated by class, race, or gender; the wholesale quantity discounts enjoyed by capitalist chains are also conveniently overlooked).

A case can also be made for the cooperator's dedication to quality, safety, and health- promotion.

In reality, cooperatives in the US are largely indistinguishable from small businesses. Like small private businesses, they employ few people and rely heavily upon “sweat equity” for capitalization. Like other small businesses, US cooperatives operate on the periphery of the US economy, apart from the huge monopoly capitalist firms in manufacturing, service, and finance.

Cooperatives as a Political Program

Since the demise of the Soviet Union and Eastern European socialism, many on the US Left have rummaged for a new approach to the inequalities and injustices that accompany capitalism. Where more than a decade of anti-Communist purges had wrung nearly all vestiges of socialist sympathy from the US psyche, the fall of the ludicrously-named “Iron Curtain” found Leftists further distancing themselves from Marxian socialism. Hastily interning the idea of socialism, they reached for other answers.

It is unclear whether this retreat was actually a search for a different anti-capitalist path or, in reality, grasping an opportunity to say farewell to socialism.

In recent years, several Leftists, “neo-Marxists”, or fallen Marxists have advocated cooperatives as an anti-capitalist program. Leading advocates include the Dollars and Sense collective centered around the University of Massachusetts, Amherst, GEO (Grassroots Economic Organizing), Professor Gar Alperovitz, Labor Notes, United Steel Workers of America, and media Marxist-du-jour, Professor Richard Wolff. Some are organizing around the idea of a “New Economy” or a “Solidarity Economy”, with cooperative enterprises as a centerpiece.

Now coops are not foreign to Marxist theory. After World War I, the Italian government sought to transfer ownership of unused land from big estates, latifondi, on to peasants, especially veterans. As much as 800,000 hectares were thus passed on to poor peasants. Through this process and land seizures, the number of smallholders increased dramatically. Socialists and Communists urged the consolidation of these holdings into collectives, agricultural cooperatives. Certainly more than 150,000 hectares ended up in cooperatives. In those circumstances, the rationale was to increase the productivity, to save the costs, to enhance the efficiency of peasant agriculture in order to compete with the large private estates. Cooperatives were not seen as an alternative to socialism, but a rational step away from near feudal production relations toward socialism, a transitional stage.

Likewise, in the early years of the Soviet Union, Communists sought to improve small-scale peasant production by organizing the countryside into collective farms, producers' cooperatives. They saw cooperative arrangements as rationalizing production and, therefore, freeing millions from the tedium and grind of subsistence farming and integrating them into industrial production. Through mechanization and division of labor, they expected efficiency and productivity to grow dramatically, speeding development and paving the way for socialism.

Again, cooperative enterprises counted as an intermediary for moving towards socialist relations of production. Thus, Marxists see the organization of cooperatives as a historically useful bridge between rural backwardness and socialism.

But modern day proponents of cooperatives see them differently.

The 'evolutionary reconstructive' approach is a form of change different not only from traditional reform, but different, too, from traditional theories of 'revolution'” says Gar Alperovitz of cooperatives and other elements of the “Solidarity Economy” (America beyond Capitalism, Dollars and Sense, Nov/Dec, 2011). Like most proponents, Alperovitz sees cooperatives as pioneering a “third way” between liberal reformism and socialist revolution. However, a minority of advocates (Bowman and Stone, “How Coops can Change the World”, D&S, Sept/Oct, 1998, for example) see cooperatives as the “best first step towards that goal [of a planned, democratic world economy]. They suggest that the correct road is through “spreading workplace democracy” and on to socialism.

Whether postured as a “third way” or a step towards socialism, it is difficult to get a clear picture of the extent and success of the cooperative movement; it is equally challenging to gather a sense of how it is suppose to function in a capitalist economy.

As for numbers, Alperovitz (“America beyond Capitalism”, D&S, Nov/Dec, 2011) muddies the waters by citing the numbers of “community development corporations” and “non-profits” (Alperovitz, 2011) as somehow strengthening the case for cooperatives. The fact that community development corporations have wrested control of neighborhoods from old-guard community and neighborhood groups and embraced developers and gentrification causes him no distress. Of course “non-profits” count as an even more dubious expression of a solidarity economy. In a city like Pittsburgh, PA, mega-non-profits remove 40% of the assessed property from the tax rolls. These non-profits not only evade taxes, but divide enormous “surpluses” among super-salaried executives. They beggar funding from tax shelter trusts and endowment funds, completing the circle of wink-and-a-nod tax evasion. Of course there are, as well, thousands of “non-profits” that pursue noble goals and operate on a shoestring.

Alperovitz alludes to credit unions as perhaps sharing the spirit of cooperation without noting the steady evolution of these once “third way” institutions towards a capitalist business model. Insurance companies also share this evolution, but they are too far down this path of transition to capitalist enterprise to be credibly cited by Alperovitz.

Alperovitz leaves us with “...11,000 other businesses that are owned in whole or part by their employees.” In this slippery total of whole or partial worker ownership are included ESOPs-- Employee Stock Ownership Programs, a touted solution to the plant closing surge that ripped through the Midwest in the 1980s. Alperovitz pressed vigorously for ESOPs in the steel industry in the 1980s as he does cooperatives today. When asked to sum up their track record, one sympathetic consultant, when pressed, said: “I don't think its been a real good record of success. Some have actually failed...” (Mike Locker, “Democracy in Steel?”, D&S, Sept/Oct, 1998). But we get no firm number for cooperatives in the US.

Another advocacy group for cooperatives gave a more candid picture of the cooperative movement in the Sept/Oct, 1998 issue of Dollars and Sense (“ESOPS and Coops”). A study by the Southern Appalachian Cooperative Organization claimed that there were 154 worker-owned cooperatives employing 6,545 members in the US. In sixty percent of the 154, all workers were owners. Median annual sales were $500,000 and 75 percent had 50 or fewer workers. Twenty-nine percent of the coops were retail, twenty-eight percent were small manufacturing, and twenty-three per cent food related businesses.

Interestingly, the same article claims that there were approximately 11,000 ESOPs in 1988 (source: National Center of Employee Ownership). If we take Alperovitz's 2011 claim seriously, there has been little growth in the ensuing thirteen years of “...businesses that are owned in whole or part by their employees...”.

From this profile, we can conclude that cooperatives in the US are essentially small businesses accounting for a tiny portion of the tens of millions of firms employing less than 50 employees. As such, they compete against the small service sector and niche manufacturing businesses that operate on the periphery of monopoly capitalism. Insofar as they pose a threat to capitalism, they only threaten the other small-scale and family owned businesses that struggle against the tide of price cutting, media marketing, and heavy promotion generated by monopoly chains and low-wage production. They share the lack of capital and leverage with their private sector counterparts. Cooperatives swim against the tide of monopolization and acquisition that have virtually destroyed the mom and pop store and the neighborhood business.

Some of the more clear-headed advocates acknowledge this reality. Betsy Bowman and Bob Stone concede the point: “...Marx argued in 1864 that capitalists' political power would counteract any gains that coops might make. This has proven true! When capitalists have felt threatened by cooperatives, they have conducted economic war against coops by smear campaigns, supplier boycotts, sabotage, and, especially, denying credit to them.” (Bowman and Stone, D&S, Sept/Oct, 1998).


Until recently, cooperators and their advocates had one very large arrow in their quiver.
When pressed on the apparent weakness of cooperatives as an anti-capitalist strategy, they would counter loudly: “Mondragon!”.

This large-scale network of over 100 cooperative enterprises based in Spain seemed to defy the criticisms of the cooperative alternative. With 80,000 or more worker-owners, billions of Euros in assets and 14 billion Euros in revenue last year, Mondragon was the shining star of the cooperative movement, the lodestone for the advocates of the global cooperative program.

But then in October, appliance maker Fagor Electrodomesticos, one of Mondragon's key cooperatives, closed with over a billion dollars of debt and putting 5500 people out of work. Worker-employees lost their savings invested in the firm. Mondragon's largest cooperative, the supermarket group Eroski, also owes creditors 2.5 billion Euros. Because the network is so interlocked, these setbacks pose long term threats to the entire system. As one worker, Juan Antonio Talledo, is quoted in The Wall Street Journal (“Recession Frays Ties at Spain's Co-ops”, December 26, 2013): “This is our Lehman moment.”

It is indeed a “Lehman moment”. And like the Lehman Bros banking meltdown in September of 2008, it makes a Lehman-like point. Large scale enterprises, even of the size of Mondragon and organized on a cooperative basis, are susceptible to the high winds of global capitalist crisis. Cooperative organization offers no immunity to the systemic problems that face all enterprises in a capitalist environment. That is why a cooperative solution cannot constitute a viable alternative to capitalism. That is why an island of worker-ownership surrounded by a violent sea of capitalism is unsustainable.

The failures at Mondragon have sent advocates to the wood shed (see Leading theoretical light, Gar Alperovitz, has written in response to the Mondragon blues: “Mondrag√≥n's primary emphasis has been on effective and efficient competition. But what do you do when you are up against a global economic recession, on the one hand, or radical cost challenges from Chinese and other low-cost producers, on the other?”

What do you do? Shouldn't someone have thought of that before they offered a road map towards a “third way”? Are “global economic recessions” uncommon? Is low cost production new? And blaming the Chinese is simply unprincipled scapegoating.

Alperovitz goes on: “The question of interest, however - and especially to the degree we begin to face the question of what to do about larger industry - is whether trusting in open market competition is a sufficient answer to the problem of longer-term systemic design.” Clear away the verbal foliage and Alperovitz is admitting that he never anticipated that open market competition would snag Mondragon. Did he think that Fagor sold appliances outside of the market? Did he think that Mondragon somehow got a free pass in global competition?

Of course the big losers are the workers who have lost their jobs and savings. It would be mistaken to blame the earnest organizers or idealistic cooperators who sincerely sought to make a better, more socially just workplace. They gambled on a project and lost. Of course social justice should not be a gamble.

The same sympathy cannot be shown for those continuing to tout cooperatives as an alternative to capitalism. If you want to open small businesses (organized as cooperatives), be my guest! But please don't tell me and others that it's somehow a path beyond capitalism.

Comrades and friends: It's impossible to be anti-capitalist without being pro-socialist!

Zoltan Zigedy