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Archive of Communist Workers Group of Aoteaora/New Zealand up to 2006

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Who’s Making Poverty?

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‘Making Poverty History’ and the ‘Live 8’  campaign of ‘80’s ‘Live Aid’ promoter, Sir Bob Geldof has captured the media headlines. It always was the biggest blockbuster around. Billions spent while billions die. Who needs a Terminator when you’ve got Brad Pitt campaigning for Africa? The new vanguard of the poor is no longer the working class or even the petite bourgeois intellectuals, but pop culture celebrities. For liberals like Jeffrey Sachs more aid is in the interests of the rich as well as the poor. For left media gurus like Naomi Klein mass pressure from below can ‘force’ the G8 to deliver justice. But what if poverty is the only policy for capitalism?

So Bush and Blair have persuaded the G8 to ‘forgive’ 18 African states’ $40 billion in debts (equivalent to 20 days Pentagon spending). What happened to the poorhouse? Isn’t Africa one giant poorhouse suffering the equivalent of 10 Asian Tsunamis every year? Africa is supposed to be an object lesson, like Iraq. This is where you end up if you fail the civilization test, morally and economically bankrupt. Why abandon this cautionary tale?

The fact is the West isn’t giving up on debt. When the new World Bank head, Paul Wolfowitz is a key player you can be sure of that.

The imperialists are recognizing that their global interest does not depend on actually eliminating the human race, but exploiting it. Dead people do not produce much surplus labour. Born-again liberal Jeffrey Sachs puts the case well. Western aid needs to be increased to sustainable levels. If the US spends $20 billion (instead of $3 billion) a year to keep Africans alive this would still be 10% of Bush’s tax cuts to the rich.

It’s like the poor law, you create a bread line for people who work. If they don’t work they fall below the bread line. While it’s easy to blame the neo-colonies of Africa for their own fate, it doesn’t make profits. Africa needs a workhouse. So along come the celebrities to provide more and better charity for the New African Century.

Brendan O’Neil makes this point about MPH.  

. . .The first thing to note is that Make Poverty History, even by its own admission, will not make poverty history. Indeed, that is not, strictly speaking, its aim. Its goal is to eradicate extreme poverty by putting pressure on nation states to ensure that the Millennium Development Goals – which every member of the United Nations officially endorsed in 2000 – are met.

The first Millennium Development Goal on poverty is to cut by half the proportion of people living on less than one dollar a day by 2015 – which, if achieved, would still leave hundreds of millions of people living below the one-dollar threshold. The World Bank has set up a website dedicated to explaining and winning support for these Millennium Development Goals, and even that site admits that achieving goal number 1 would not make poverty history. ‘[W]hile poverty would not be eradicated, [it] would bring us much closer to the day when we can say that all the world’s people have at least the bare minimum to eat and clothe themselves’, the site says. …Even if Make Poverty History is successful in pressurising governments to stick to their Millennium Development promises, half of the world’s poor will still live on less than a dollar a day and half will still ‘suffer from hunger’. In short, poverty will not be history – far from it. The other Millennium Developpment Goals – relating to making primary education available to more children and reversing the spread of HIV-AIDS and the incidence of malaria – are also notable for their lack of ambition.

. . .Live 8 is little more than the pop wing of G8, and Make Poverty History is little more than a management committee making sure that America, Britain, France and the rest push through their Millennium Development Goals. There is little radical or even independent about Make Poverty History and Geldof’s coinciding global pop jamboree. They might consider themselves punkish and edgy, but these pop and rock acts are merely shouting at the world powers to do what they had already planned to do – slowly and incrementally eradicate only the worst instances of poverty and starvation in the world today. Bob, Bono and the rest simply provide the soundtrack to officialdom’s slothful anti-poverty campaign.

Naomi Klein goes one step better. Aid is not enough. It doesn’t touch the roots of poverty. She says Africa is a rich continent made poor by rapacious western corporations. True enough. So what about ‘using’ Africa’s own mineral wealth to save it? ‘Using’? Does that mean the West has to change its policies from pillage to patronage? Yes, and the united social movements can do it. Klein talks about the moving examples of the Ogoni people fighting Shell oil in Nigeria [when Ken Saro-Wiwa and eight others were executed], Evo Morales fighting the oil companies in Bolivia, and the General Union of Oil workers of Basra fighting the privatization of oil in Iraq. All these movements need is unity. A symbolic statement of this can be the G8 demonstration at Edinburgh on July 2’.

Bob Geldof and the Make Poverty History crew have called for a million people to go to Edinburgh and form a giant white band around the city centre on July 2 – a reference to the ubiquitous Make Poverty History bracelets. But it seems a shame for a million people to travel all that way to be a giant bauble, a collective accessory to power. How about if, when all those people join hands, they declare themselves not a bracelet but a noose – a noose around the lethal economic policies [neo-liberalism] that have already taken so many lives, or lack of medicine and clean water, for lack of justice. A noose like that one that killed Ken.

Unfortunately for Klein, the Nigerian people, the Bolivian masses, and the Iraqi oil workers, poverty is NOT the result of the wrong, bad news neo-liberal polices of the West. Poverty is the ONLY policy for capitalism. As Marx proved, Capital’s wealth is the masses immiseration. It cannot be fixed by simply ‘forcing’ (how?) the ‘multinationals’ to change policies. Their profits dictate that Africa, Latin America and Asia continue to be plundered and pillaged. Poverty is the result of systematic expropriation of the labour of peoples and classes for profit. 500 years of colonization will not be conjured away by the World Social Forum or civil society making symbolic nooses to ‘force’ imperialism to negotiate better terms of exploitation.

The illusion that poverty can be negotiated out of existence is the illusion that capitalism can be reformed. These are the illusions that hold back the independent, armed organizations of the workers and poor peasants in Nigeria, Bolivia and Iraq. Not until the masses free themselves from these illusions can they act to solve the problem of poverty – and take back the wealth that was created by generations of labour and to socialize and plan the world economy in the interests of people and not profits.

From Class Struggle 61 May-June 2005

Imperialism: policy option or death drive?

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When anti-war activists blame US imperialism or ‘globalisation’ as the cause of wars they usually mean the ‘power elite’ – the ‘neo-cons’ etc who are backed by the oil and arms industry. Imperialism and its wars are ‘bad’ policy options on the part of the US as a ‘world power’ which can be countered by world public opinion – the ‘second world power’’, or the ‘movement of movements’ as the World Social Forum has been called. For Marxists this conception of imperialism as ‘bad policy’ open to reform by an electoral alliance of workers, peasants and ‘good’ capitalists is a reactionary utopia. It is a utopia because imperialism needs wars to survive. It’s on a death drive and cannot be pacified. It is reactionary because it disarms the masses in the face of inevitable destruction and dooms the struggle for socialism. Real anti-imperialism for us does not mean making ‘good’ ‘bad policy’, but terminating the terminator.

There are a number of theories that have arisen in recent years claiming that the Marxist/Leninist concept of imperialism as the highest and final stage of capitalism is wrong.

They argue that the main forces that Lenin saw as driving imperialism to inevitable wars, revolutions and counter-revolutions, do not exist. The rise of finance capital, capital export, the growth of monopolies etc that doomed capitalism to destruction, have been surpassed by new developments such as the new economy that have rescued capitalism and made unlimited growth and the sharing of wealth possible. If this were true, then Marxism would cease to be relevant. Lenin’s theory that class politics is the extension of class economics would be empty phrases. Social classes would not longer exist and socialism as a post-capitalist dream would be made redundant by a just and benign capitalism.

These theorists say that globalisation has replaced imperialist contest between rival capitalist powers. Multilateral agreements between imperialist powers subordinate national interests to the global market and make national conflicts a thing of the past. It was easier to argue this during the 1980’s when the major powers were all allied to the US led ‘cold-war’, and the 1990’s when the UN and NATO officially fronted the wars against Iraq and Serbia. Whatever word is used to describe this ‘consensus’, national differences are now all accommodated under a US global hegemony where all states, including the US as the world’s biggest debtor, are dependent upon one another. Indeed some radicals, like Hardt and Negri in their book Empire published in 2000, say that the US is now so economically weak that it is no longer ‘hegemonic’.[1]

But what if the underlying strength of the US economy is in terminal decline?

What if to survive the US needs to turn its back on international agreements and attack its former allies? What if the US economy is in such a deep crisis that it is forced to revert to naked imperialist aggression on any state that threatens its ‘national interests’. A reversion to unilateral aggression is exactly what has happened since 9-11 under the Bush regime when the ‘world changed’. So the question must be asked: is this reversion an aberration? An aggressive militarist policy option driven by the narrow interests of one section of the US ruling class, the oil barons and arms industries? Or is this return to military occupations and recolonisations driven by a more deep-seated desperation on the part of US capital to survive at all costs? The answer to this question is critical because the solutions offered to this post 9-11 crisis depends on the perceived causes.

The globalisation theorists explain post-9-11 as an aberration. Already they say, the world has passed on. The new knowledge economy has created more wealth across national borders that can be redistributed in rising living standards in the developing world. The new capitalism in the US, Japan and EU does not need wars to make profits, but rather new technology and increasing labour productivity. The dynamic growth areas of the world economy are driven by multinational firms that invest, produce and sell in an integrated world market.

This ‘aberration’ must therefore be caused by a rogue element of the US ruling class that has taken power and used the military to grab scarce resources such as oil and natural gas to make big profits. For example, Chalmers Johnson’s recent book the Sorrows of Empire argues that the military have taken over the US state for this purpose. Chomsky’s analysis of US power is similar; the power elite uses its control of the media to manipulate public opinion to accept an aggressive foreign policy. If these arguments about the US as a ‘rogue state’ are correct, then mass mobilisations that reclaim control of the media and democratic institutions can theoretically regain control of the state for the people. But what if these arguments are not correct and imperialism is not a policy option but a death drive.

The reality is that imperialism is in a life or death crisis.

In the 1970s the world economy experienced a classic crisis of overproduction due to falling profits. Profits fell not because they were squeezed by rising wages but because the corporates could not increase the rate of exploitation fast enough to return a profit on the massive investments that went into plant, machinery and raw materials.[2] To restore profits it was necessary to drastically cut the price of wages (variable capital) and raw materials and machines (constant capital) by whatever means. In the 1890s and 1930s the world economy revived only because depressions and wars drastically cut the costs of plant and machinery and of labour.[3]

In the years since the 1970s ‘crash’, the US economy has failed to revive its economy to outcompete its rivals. The new economy has seen some increases in output and profits, but not sufficient to outperform Japan in cars and China in consumer goods. The recent ‘jobless’ upturn is less to do with new technology replacing jobs than with fewer workers working harder and longer (i.e. increased hours and intensity of work). There has been no massive reduction in the costs of wages or raw materials and the economy has been kept afloat by state borrowing and spending. The money borrowed from its rivals, particularly Japan, means that the US is now heavily in debt. Therefore the US economy is experiencing a deepening crisis of insufficient profits from which it can only survive by embarking on open imperialist wars to recolonise other nations, plundering their raw materials and attacking workers wages and rights at home and abroad to reduce labour costs. As Marxists say, the bosses’ crisis is being solved on the backs of the world’s workers.

It is not the policy of a militarist fraction of the US ruling class that causes war, but that of the whole US ruling class. Imperialism is not an aberration but a necessary result of capitalist crisis today.

So how does the whole ruling class benefit from war? Some corporates benefit directly, while others benefit from the flow-on effects. Of course the military and war industries do gain directly from imperialist wars, but production of arms and munitions is consumed unproductively (apart from R&D spin-offs in other sectors e.g. satellites, jeeps etc) and cannot revive the US economy as a whole. The Bush family and prominent members of the cabinet like Dick Cheney and Condoleeza Rice profit as shareholders of corporations that supply the military, and the workers in the arms industry earn wages that enter into the GDP – a sort of ‘military Keynesianism’.[4] But military expenditure does not otherwise add value to the economy. A good analogy would be to say that war benefits some bosses like the production of luxury items such as fast cars and jewelry. Theories such as the Permanent Arms Economy promoted by the Cliffites to account for the post-war long boom are fundamentally flawed in failing to recognise this fact.[5]

However unlike luxury cars, planes and tanks can be used to invade and occupy other countries and expropriate their resources and labour supply. The US has seized Iraq’s oil wealth and created hundreds of military bases in the Middle East and central Asia to oversee the plunder of natural resources. In its own poodle-like fashion, the UK has rechristened Gaddafi the former ‘terrorist fiend’ as the west’s ‘loyal friend’ in order to get access to Libya’s oil and gas fields.[6] While the military and oil magnates get the biggest share of this colonial bounty, the flow on effect of the war to the whole US and UK economies will be a vital supply of oil and gas at cheap prices that will lower the price of constant capital (fuel for industry) as well as variable capital (gas for workers cars) not available to their EU and Japanese rivals.[7] At the same time the US can create client states like Bolivia, or protectorates like Bosnia, Kosovo[8] and Iraq, impose the US dollar as the main currency, and threaten to bomb any state that wants to switch from the dollar to the Euro or yen as a rival to the ‘petrodollar’.[9]

We see that the imperialist states’ militarist policies are dictated by the interests of all capitalists.

The big banks and corporations all benefit from imperialist wars and plunder. What Lenin identified as finance capital was the big banks fusing their interests with the big corporations, and becoming monopolies, that is, combines or cartels that dominated whole industries. The monopolies were vertical (like Rockefellers Standard Oil or Carnegie’s Steel Corporation in the US) or horizontal (like the big German cartels) conglomerates that bought up their rivals and set the prices of production in that industry. Because they were national monopolies they had to compete with their rivals in other nations backed by their states. It was this rivalry that led to the export of capital to colonies to gain cheap raw materials and labour and the inevitable wars to divide and rule the whole world market. In what sense do today’s multinational corporations remain monopolies dominated by finance capital which look to their nation states to go to war in their interests as the ‘national interest’?

Monopoly finance capital is now centralised mainly in the hegemonic imperialist power, the USA.

First to the question of finance capital, then that of monopoly, then the question of national interest to show that state monopoly capitalism is alive, but not well.

At the heart of monopoly is finance capital. After Lenin’s death 20th imperialism created state capitalism to survive. Private banks became regulated by the central banks which took over the management of money capital to rescue the corporate sector. Without massive state intervention and ‘military Keynesianism’ after WW1, the big US corporations would have collapsed. The ‘new deal’ like the Keynesian welfare state’ was mainly about benefits to business.[10] Therefore we can say that far from being outdated, finance capital is even more concentrated and centralised today than it was in Lenin’s day.

Today the giant US Federal Bank along with World Bank and International Monetary Fund monopolises global finance capital through the bond market and international credit. The ‘Fed’ creates dollars which are pumped into US business which it then borrows from its rival EU and Japanese money markets in the form of US bonds. But the cost of its debt is offset by the advantages of the dollar as the main international currency. Private monopoly banks, such as Morgan/Chase, BOA and Citibank, are the biggest shareholders in the World Bank and IMF and dominate the loans made to the ‘‘third world’. But such is the crisis of overproduction, most ‘capital’ today is not invested in production but in speculation as ‘fictitious capital. Not only is finance capital concentrated into giant monopolies in the form of central banks and a few giant corporate banks they are all centralised in heart of the US imperialist state. Therefore what became known as ‘state monopoly capitalism’ in Lenin’s day is still the dominant reality in the global economy.

The crisis of overproduction manifests itself as the ‘risks’ associated with anarchic capitalism destroying the forces of production. Capitalism’s quest to plunder the third world is now in its final phase of world domination –exhausting the resources of the former soviet bloc. The end of the Soviet Union has opened up central Asia. There and elsewhere, the race for scarce resources is hotting up the competition between the imperialist powers.

Today capitalist production is highly dependent on non-renewable resources, notably oil, whose supply is rapidly running out. The big corporations are oil pushers, enforcers, or oil junkies.[11] Those who control these scarce resources benefit from ‘rent’ i.e. that is the premium that can be extracted from those who do not own this resource. Capitalism today is an asset-stripping death machine. The risks associated with this drive to survive explains the behavior of all the players.

The US finances its military machine and arms industry to win control in the rent-seeking war game. This is the case in Iraq, Central Asia and Latin America. These are all military fronts in the war for oil, gas or other vital resources. But even such looting of vital resources and the massive military subsidies of the imperialist states, does not make them cheap enough to restore rising rates of surplus value and return acceptable profits on the vast capital stockpile awaiting investment in production. As capitalism drives down its path of destruction it cannot save itself.

There are inherent limits to the gains from capitalist production which is simultaneously destroying the forces of production.

The recent controversy about the US ‘jobless recovery’ illustrates this point. While thousands of migrants flood into the US to fill menial service jobs, productive industry shifts over to ‘lean production’ by exporting jobs to cheap labour countries. In Mexico or China, wage goods (clothes, white goods, electronic goods, cars etc) are produced more cheaply because of low wage costs combined with global lean production methods (cast-off production lines e.g. Korean or Indian cars). This is the same export of capital recognised by Lenin. But now it is up against more fundamental limits set by rock bottom wages as well as productivity caps.

The crisis of the period from 1914 to 1945 was hugely destructive in terms of the devaluation of variable and constant capital. Only out of such a destructive firestorm could the post-war boom emerge. But that boom was limited to the imperialist world and did not extend to the third world and the gap between ‘north and south’ widened dramatically. The accumulation of capital at the centre is now so huge that only a massive destruction of capital on a world scale will restore a return to profitable production. Windfalls like the collapse of the Soviet world extended the capitalist market to its full global reach. But while it created huge chunks of ‘new capital’ to add the world supply, it did not create sufficient means of making sufficient profits on that capital.

Thus early 21st century imperialism is unable to generate enough super-profits to keep pace with its rising capital stock. All the ‘t-shirts in China’ cannot sustain sufficient profits in the US let alone rising living standards of labour in the US. With the decline in new surplus-value from production, potential money capital becomes merely footloose money that devalues unless new sources of ‘value’ can be found. Increasingly finance capital ceases to be the productive investment that drives the development of industry and instead becomes ‘fictitious’ capital which is valueless because it cannot exchanged for commodities and must be gambled away on the prices of commodities. Take the derivatives market of ‘casino capitalism’.
Morgan/Chase the biggest international bank now has 84 times its real capital assets (stockholders funds) gambled on ‘derivatives’.

‘Derivatives’ are bets on future prices. Derivatives are a form of insurance to cover risks of production in a high-risk, unstable, crisis-prone anarchic market. That’s why 80% of such bets are on future interest rates (the price of money). For example futures brokers ‘borrow’ company shares for a fee, sell them to create cash and agree to sell the shares back at a given price. They use the money to speculate on currencies etc, and hope that the shares will be worth less when they buy them back so they can make a profit. This creates huge amounts of debt with no share asset backing. The instability in the market is itself greatly increased by the billions of hot money gambled on future prices every day.

Moreover it is workers that stand to lose most in the casino economy. For every George Soros who may lose billions of fictitious capital there are millions who lose their life savings. The finance mafia bets the savings of the ‘new middle class’ held in pension funds and bank shares. Marx talked about joint stock companies borrowing from small savers as a form of ‘socialising the costs’ of capital. Small savers would always be wiped out in any credit crash. Soros lost millions in 1998 when Russia defaulted on its debt. Morgan/Chase was similarly exposed to the Argentina collapse in 2001 even though the government froze the accounts of small savers (ahoristas) while at the same time allowed the big banks to take their money out of the country.

Such financial crashes destroy the jobs and savings of those workers who have savings. 19th and 20th century imperialist powers justified their smash and grab expansionism by selling it to their working class as a defence of the national interest. Britain had its ‘civilising mission’ and the US had its defence of the ‘free world’. All used ‘international relations’ to pacify and buy off the rising working class challenge to the power of capital. Marx, Engels and Lenin recognised the importance of colonial super-profits, which when trickled down to the ‘new middle class’ bribed it to support imperialism and to turn organised labour into cheerleaders for imperialist wars. Now 21st century imperialism cannot afford to buy off its workers and runs the ultimate risk of eliminating its support base in the ‘labour aristocracy’.

21st century imperialism cannot afford political buyouts so funds patriotic panics.

While it can’t afford to buy patriotism anymore imperialist states appeal to ‘national values’. Foreigners are blamed for taking jobs and cutting wages so that the labour movement becomes geared up to support wars against enemy aliens at home and abroad. As imperialist rivalry hots up trade protection becomes national protectionism in which workers are enlisted to fight the ‘enemy’. But as the costs of imperialist crises and wars become thrust onto the backs of workers (workers welfare axed while corporate welfare – especially oil and war industries – climbs, jobs and wages lost, workers in uniform lose their lives in the war for oil etc) the political class consensus that drove the post-war boom and which has been kept intact from the victory of capitalism over ‘communism, now becomes fractured at home and abroad. Workers and peasants see themselves as pawns in a US corporate war game for world domination. The level of anti-US sentiment outside the US is rising to massive proportions. And the class conflicts in the outside world are now being reproduced inside the US and the other imperialist powers.

This means that resistance in many forms is beginning to emerge. The WSF is a sort of ‘good cop’ imperialism that promotes the illusion that imperialism as a bad policy option that can be globally challenged and reformed. Hardt and Negri’s concept of Empire provides a popular version of this ideological position. There is a reformist labour international around Castro, including Chavez and Lula that promotes social democratic regimes coming together as an international counter-weight to US rogue imperialism. But the severity of the crisis imposed on the masses is rapidly surpassing the capacity of the reformists and their leftwing cheerleaders in the WSF to strangle the exploding resistance movements. Castro, Lula and Chavez attempts to negotiate with imperialism can only be at the expense of their worker and peasant supporters. Once we can see that 21st century imperialism is on the road to destruction, then we understand that only a world working class mobilisation for a global socialist society can offer an alternative. The cost of anarchic date-expired capitalism in the 21st century will be more wars and destruction unless it is replaced by socialism! 

From Class Struggle 55 April-May 2004

Written by raved

January 6, 2010 at 8:06 pm


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From Class Struggle 48 December 2002/January 2003

Argentina goes from IMF ‘show case’ of economic development to’ basket case’. Is the same fate in store for New Zealand/Aotearoa? Here we put forward some ideas in the hope of stimilating a debate on this question. We make some further comparisons with Australia and South Africa which have similar origins. The solution we come up with is for Socialist Federations of the Pacific, Latin America and Southern Africa! We welcome feedback from readers aboiut where they think New Zealand/Aotearoa is going.

Some History

Some basic facts: Argentina 40 million people. NZ 4 million people and 40 million sheep. Both settler semi-colonies; dependent development based on pastoral exports in 19th and early 20th centuries and post WW2 economic insulation. NZ’s competitive advantage is agricultural – dairy production, meat processing, woool –textiles etc. The semi-colonial problem is dependence on exports to maintain imports of primary and secondary manufactures. NZ’s development was limited to import-substitution secondary manufacturing (eg car assembly, whiteware, electronics etc to serve local market)

Argentina has competitive advantage in pastoral production. Its balance of payments problem was lessened by protection. Argentina was able to substitute some heavy manufacturing, such as steel, petrochemicals etc. But it never became a big regional exporter of these commodities. Argentina’s heavy industry was highly protected and uncompetitive. Thus Argentina’s dependent-development was somewhere between that of NZ (which did not substitute heavy industry) and South Africa and Australia (who produced cars, electronics etc for regional markets). We suggest that the limits to dependent-development in each case are set by the extent to which a country has competitive advantage in the manufacturing of heavy machinery (i.e. capital goods).

Semi-colonial development and crisis

Dependent-development reaches its fullest extent with the export of a limited range capital goods on the world economy. Yet competitive advantage exists only during the periods of boom and fails during recessions as regional markets contract and the small-scale economies and higher costs in the semi-colonies cannot sustain competition.

Enter the MNCs to concentrate and rationalise production globally. This has been the story of so-called globalisation. In SA and Australia, the biggest operations were internationalised. In SA most of the major industries are Multinationals. In Australia minerals (BHP) General Motors Holden/Ford etc have been globalised.


In the case of Argentina where capital goods production could be integrated profitably it survived. But most was not competitive so Argentina was de-industrialised and its import substitution capacity in heavy steel and petro-chemical industry lost. Thus import volumes rose. Import prices were reduced as the peso was pegged to the dollar, but export prices rose with the US dollar, so that overall the trade deficit increased. The balance of payments was plugged with IMF borrowing until this exceeded the capacity of exports to pay and debt mounted.

So the crisis of a re-colonised dependent economy means bankruptcy and devaluation of assets which are then sold off cheaply to multinationals and big banks. Argentina’s plight is that of all semi-colonial economies whose capacity to develop independently has been destroyed by globalisation. But the severity of the crisis is directly proportional to the depth of restructuring in the primary industry sector. How does NZ compare?

New Zealand compared

NZ’s primary sector always involved foreign investment through banks and loan agencies and the export of profits. In agriculture (dairy, meat, textiles etc) production depended heavily on imported capital, technology and machines. New Zealand never substituted for heavy industry except in isolated, exceptional cases (NZ Steel based on Iron sands).

Thus NZ was always exposed to chronic balance of payments crises. The postwar development of import substitution in secondary manufacturing for consumer goods was a weak attempt to solve the ongoing dependency of the economy. This insulation reached its limit as soon as protected industry outgrew the local market.

So, unlike SA, Australia or Argentina, the neo-liberal reversal was less deep because it affected only the post-war import substitution in the secondary sector of the economy. De-industrialisation did not hit primary production as it was already partiallly globalised. Pastoral production has always been technologically advanced, and continues to be so. The primary agricultural sector (e.g. meat, dairy, wool etc) has become more internationalised with the giant dairy monopoly Fonterra, now a multinational in its own right. The problem with this however is that little of the rent from agricultural value-added production is available for redistribution inside NZ but falls into the hands of international capital.

To complete the comparison, Argentina was able to insulate itself from extreme economic dependence by setting up internal capital goods manufacturing. In some ways similar to the situation in SA where apartheid was like the military dictatorship in regimenting social production based on super-exploitation. Like SA, when the crisis came in the early 90’s, Argentina fell further and was more severly affected by the neo-liberal crisis measures than Australia or NZ.


Argentina’s dependency, more like Australia and SA, is acute. Yet all these are relatively large economies with a broad resource base where there is the potential to resolve the crisis by socialising the economy. In Agentina the collapse of industry leaves the majority of the population out of work or underemployed. Half are under the poverty line. 20% are hungry or starving.

The most similar case is SA, and it is no accident that in Argentina the masses are frightened of becoming “Another Africa”. Like SA, nationalisation without compensation under workers’ control of the large businesses and banks is the way to revive the economy and feed the people. This has to become linked to revolutions in the rest of the region, to establish a Federation of Socialist Republics of Southern Africa, and of Latin America, to create potentially powerful regional socialist economies.

NZ’s dependency is chronic

NZ is in reality a tiny US and Australian dominated semi-colony. Its capitalist future will see it integrating with Australia as part of a larger US client state. Even that won’t buy much time for the bosses. Australia is in a similar position to Argentina. Marxism is not an exact science and predictions have to be reviewed constantly. But we would suggest Australia’s prospects over the next tens years are that it is likely to suffer a similar economic decline to Argentina.

If this is correct, NZ’s relation to Australia will see it sucked into this vortex. Therefore, workers in NZ must prepare to unite with Australian workers for the nationalisation under workers control of the assets of all the big banks and businesses and to socialise the economy as part of a Federation of Socialist Republics of the Pacific.

Written by raved

January 3, 2009 at 9:30 pm

What’s wrong with APEC? [February 1999]

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The recent APEC meeting in Malaysia was notable for its failure to push free trade in the face of the so-called Asian crisis. Instead it got into a spat about “Asian values” and “human rights”. NZ’s Jenny Shipley joined with the US vice president Al Gore to attack Dr Mahathir’s jailing and prosecution of his former deputy Anwar Ibrahim. Since the US is the world’s worst offender on human rights, what really motivates Gore’s attack is Dr Mahathir’s retreat to economic nationalism to protect the Malaysian economy from the harmful effects of economic liberalisation. Yet neither free trade nor economic nationalism in any combination can end human rights abuses. Both are against the interests of workers. We explain why.

APEC (Asian Pacific Economic Council) is widely seen to be a threat to workers everywhere. This is because APEC is designed to extend ‘free trade’ among the Asia Pacific states. Free trade is seen to be in the interest of the major powers and against the interests of the ‘developing’ states because it will drive down prices and wages in these states. It is also feared that APEC will reinforce regulations like the MAI that put severe limits on the ability of weaker states to protect and benefit from their own resources.

The alternative is posed as economic nationalism – i.e. to reject ‘free trade’ and to regulate trade and capital flows for the national benefit. This means breaking from the model of APEC and following the example of China in tightly regulating Direct Foreign Investment (DFI). Malaysia is today seen as opting for this alternative after having its economy destabilised by volatile capital flows. Japan too has turned its back on demands to free up trade in timber and fish. In a recent article in the New Left Review #231, Robert Wade and Frank Veneroso argue that the Chinese model is now seen as the solution to the so-called “Asian Crisis” by insulating the region from the worst ravages of chaotic world capitalism. The Asian economies provide half of the world’s savings so they don’t need to agree to the destructive free trade policies of the IMF or World Bank in order to get funds.

Like the Korean students we call for the IMF to get out! We are against IMF austerity and debt for equity measures as the means by which US capital gains control of semi-colonial and weaker imperialist economies. However, we do not see a retreat to economic nationalism as the real answer because it does not change the root cause of the problem – capitalism. We argue here that both free trade and protection are merely different ways of managing capitalism and that neither of these ‘alternatives’ is in the interests of workers. What we want is workers control and a planned economy that is integrated into an international socialist economy where production is for need and not profits.

What’s wrong with free trade?

The fear of free trade is well founded. The large protests that have met APEC meetings since its start, sure to continue in New Zealand in 1999 testify to this real fear. (See article on ‘APEC Security threatens democratic rights’). ‘Globalisation’ is the swear word that expresses this fear. Under the capitalist world economy, NAFTA, the WTO, MAI and APEC, are all designed to regulate super-exploitation and unequal exchange between the imperialist powers and the poor colonies and semi-colonies. Free trade under these rules disadvantages the poorer commodity producers who have almost no control over prices of exports or imports.

What is produced is determined by competitive advantage under the ownership and control of MNCs. If costs are competitive DFI will flow in and super-profits will flow out. While this arrangement has the advantage of cutting costs of production, it also depresses living standards and expands the surplus population of unemployed or under-employed. Any attempt to deregulate or interfere with these arrangements will lead to punitive law suits for breach of contract, and/or economic sanctions, and ultimately political and military intervention. The fate of Iraq during and after the Gulf War is a good example.

Is Economic Nationalism any better?

Most of the left, especially the eco-left and the Maoist left, advocates national economic controls against free trade. That is, instead of the free reign of MNCs, nation states must impose social constraints on DFI and the extraction of profits. Usually this means some form of tax on DFI that can fund a social dividend to subsidise the social downside of globalisation.

Despite its apparent progressive thrust, there are some clearly reactionary political aspects to this. Any attempt to appeal to nationalism against globalisation runs the risk of subordinating the working class to the national bourgeoisie. That is, it isolates workers in each country, separates and alienates them from their working class brothers and sisters in other countries, and gives priority to an alliance between workers and bosses in which bosses are dominant.

Logically the downside of globalisation cannot be defeated by national solutions without reimposing trade and capital barriers that lead to trade wars and ultimately military confrontations in which workers kill workers.

Second, this ‘solution’, unless it breaks free of the capitalist world economy, can be easily sucked back into the ‘new’ state form widely promoted as the ‘new middle’ (see ‘Who Runs the German Economy? Economist, November 21), the ‘third way’ or the ‘radical centre’ (See article on the ‘Smart, Wired, Zero Sum State’ in Class Struggle #24).

Under this model the local state becomes a direct agent of globalisation, as the manager of investment, and of social control. Yet because the social fund available to correct the social downside cannot be more than a token contribution without raising taxes and driving out DFI, there is no real counter to the harmful effects of globalisation upon society.

Workers internationalism

So it seems that neither alternative can escape the effects of globalisation upon the masses of workers and peasants in the ‘less developed countries’ or those impoverished sections of society in the ‘developed’ world. The answer then must be to transform those progressive struggles to limit the negative impact of globalisation on local populations, into a successful transition to socialism.

How to do this? First, we have to recognise that free trade is contradictory. It has both progressive and destructive aspects. The trick is to neutralise the destructive aspects by advancing the progressive aspects. Under the free reign of the MNCs, ownership and control is rapidly concentrated into the hands of a few powerful MNCs and their imperialist states. This amounts to a progressive ‘socialising’ of the means of production as the world economy becomes increasingly interdependent.

In that sense the world economy becomes internationalised, and along with it, the working class. So while on the one hand MNCs that span a number of countries can attempt to evade attempts at nationalisation in any one country by capital flight, on the other, MNCs cannot evade a potentially powerful international labour movement if it is organised and united.

Therefore instead of trying to break up MNCs by nationalising them in any one country, which can only lead to isolated struggles and defeats at the hands of sanctions and military offensives, it is important for the international labour movement to ‘socialise’ them further. This means giving up on the reformist idea that the capitalist state can be used in the transition to socialism, and taking up the idea that workers integrated into the global division of labour unite internationally to progressively ‘socialise’ these massive combines. By this we mean imposing the interests of labour onto the owners by extending workers control over production and planning. The solidarity that has emerged around the recent struggles of Korean workers and the Australian ‘wharfies’ is a sign of what could be possible once workers recognise that their strength in unity is must be turned into international solidarity.

Progressive nationalism?

This does not mean that some of the more progressive demands of economic nationalism should be junked. Privatised assets should be re-nationalised without compensation, and all state assets put under workers control. Similarly, progressive taxes on profits and speculation should be increased to fund social spending. Taxes on profitable industry rather than subsidies to unprofitable industry should be the basis for funding social spending. Where these social costs drive capital out of the country, capitalist property should be socialised and put under workers control.

Such demands upon the capitalist nation state would meet with rejection by the capitalists on the grounds that they would destabilise the economy by threatening the rights of private property. That’s why to be successful these measures would require a much higher level of political organisation of workers capable of supporting a Workers’ Government based on workers militia. Moreover, the success of a Workers’ Government in any given country to resist attempts by imperialist states to smash it would depend upon the strength of the international workers movement and the capacity of workers in the imperialist countries to put a halt to such armed interventions.

So whichever way you look at it, there can be no successful transition to socialism without overcoming the reactionary nationalisms that divide and rule the international working class, and putting the development of the progressive socialisation of the world economy that is rapidly occurring under globalisation, under workers’ control.

NZ out of APEC!

For Workers Internationalism!

From Class Struggle, No 25, Dec 1998-Feb 1999

Written by raved

August 26, 2007 at 10:36 pm