This is one of the speeches from the N30 Rally in stoke today. It was a moving speech by the daughter of the late John Urwin, who died in September. John was a good comrade who I first met just before the beginning of the 1984 Miners Strike. He was an electrician at Hem Heath Colliery, and I was with him in Hem Heath Club on the day that Miners there voted to come out on strike. Later after going to University, he became a lecturer in the TU Studies Department at Stoke College, where I met up with him again as a UNISON Branch Secretary, when I was trying to ensure that all of our stewards were properly trained. In fact, John's son was also one of my members, and even as a young man, he showed the same commitment to standing up for his rights.
In another speech I will be uploading soon, one of John's fellow lecturers, Ron Foulkes, who had been T&G Convenor at the local Rists factory, and who was also a Councillor from my old LP Branch, takes up this idea in a quote from Robert Tressle's "Ragged Trousered Philanthropists", talking about the role we all have to play in acting to make a difference.
Wednesday, 30 November 2011
Tuesday, 29 November 2011
The Egyptian Revolution - Part 8
In January 2008 Mahalla workers drew up a new list of demands. As well as higher wages, bonuses and allowances, it included a rise in the national minimum wage from 35 Egyptian pounds (£E) to £E1200 (£140) a month. It had not gone up since 1984! They announced a strike on April 6th if their demands were not met.
Several weeks later a group of campaigners against the Mubarak regime called for a General Strike on that day. The call was not made by organised groups of workers but was supported by some small opposition parties, intellectuals, some youth and radicals. The General Strike call spread rapidly through the Internet and text messages. Around 65,000 people signed up to a Facebook site promoting the strike. This represented a movement of largely middle class youth inspired by the growing displays of working class power.
The Interior Ministry warned that there could be violence and that people should stay off the streets. Thousands of workers did take strike action but a General Strike did not take place. In Mahalla, some of the workers’ leaders, who had played a leading role in the previous strikes, called the strike off after the monthly food allowance was doubled on April 5th. The strike had been due to start at 7.30am but at 3am hundreds of plain-clothes security moved in to the factory and arrested anyone who tried to speak out. Despite this many stayed away from work.
April 7, saw more battles with the police in Mahalla. A demonstration of 2,000 started at 4pm and grew to several demonstrations with up to 40-50,000 involved. Chants went up against the government and for the release of those arrested the previous day. It was reported that children were “throwing rocks, in a scene similar to the Palestinian intifada, against Central Security Forces officers and soldiers, while chanting ‘The revolution has come! The revolution has come!’”
On April 8th, Prime Minister Ahmed Nazif went to the factory and announced a bonus of 30 days wages! "We know Mahalla is suffering and you have passed through many crises," he told workers. The regime has balanced between repression and concessions whenever powerful workers’ movements have occurred. After Mahalla, the regime was less confident to crack down on workers in the way it did on students, community or democracy campaigners.
The April 6th Youth Movement, one of the initiators of the “Day of Anger” on January 25th 2011, took its name from these events. It attempted to repeat the success on May 4th 2008, Mubarak’s 80th birthday. However, no significant strike action took place that day and street protests were largely prevented by the security forces.
In fact, what we see developing is something that is quite common in revolutionary upheavals. Firstly, we see different social groups having different objectives. The workers who began the movement, were concerned with immediate economic concerns. Looking back to when these disputes began around 2006, it was precisely at that point, around 7 years into the new Long Wave Boom, where the economic tide had had long enough to begin to significantly raise the demand for labour-power. Trotsky, who had begun to analyse the effects of trhe Long Wave as described by Kondratiev – though Trotsky disagreed with Kondratiev in terms of method and detail – spelled it out,
“But a boom is a boom. It means a growing demand for goods, expanded production, shrinking unemployment, rising prices and the possibility of higher wages. And, in the given historical circumstances, the boom will not dampen but sharpen the revolutionary struggle of the working class. This flows from all of the foregoing. In all capitalist countries the working-class movement after the war reached its peak and then ended, as we have seen, in a more or less pronounced failure and retreat, and in disunity within the working class itself. With such political and psychological premises, a prolonged crisis, although it would doubtless act to heighten the embitterment of the working masses (especially the unemployed and semi-employed), would nevertheless simultaneously tend to weaken their activity because this activity is intimately bound up with the workers’ consciousness of their irreplaceable role in production.
Prolonged unemployment following an epoch of revolutionary political assaults and retreats does not at all work in favour of the Communist Party. On the contrary the longer the crisis lasts the more it threatens to nourish anarchist moods on one wing and reformist moods on the other. This fact found its expression in the split of the anarcho-syndicalist groupings from the Third International, in a certain consolidation of the Amsterdam International and the Two-and-a-Half International, in the temporary conglomeration of the Serrati-ites, the split of Levi’s group, and so on. In contrast, the industrial revival is bound, first of all, to raise the self-confidence of the working class, undermined by failures and by the disunity in its own ranks; it is bound to fuse the working class together in the factories and plants and heighten the desire for unanimity in militant actions.
We are already observing the beginnings of this process. The working masses feel firmer ground under their feet. They are seeking to fuse their ranks. They keenly sense the split to be an obstacle to action. They are striving not only toward a more unanimous resistance to the offensive of capital resulting from the crisis but also toward preparing a counter-offensive, based on the conditions of industrial revival. The crisis was a period of frustrated hopes and of embitterment, not infrequently impotent embitterment. The boom as it unfolds will provide an outlet in action for these feelings.”
Flood Tide
This is a potent antidote to those who operate with a crude theory, which comes to the strange conclusion that it is only by the impoverishment, and demoralisation of the working-class via some apocalyptic crisis that it can raise itself up to be fit to rule, and to challenge for power!
But, the workers, being very practical people were mostly concerned with their immediate economic condition, rather than any wider issues. But, we then see another common feature of revolutionary upheavals. The banner passes to another social group. The revolution is characterised by combined and uneven development too! The petit-bourgeoisie, and middle classes are drawn in behind the workers, drawing their own confidence from them. But, although, many of the middle classes, particularly the unemployed professionals, the young graduates that find changed circumstances have left them with an uncertain future, that Paul Mason referred to above, have immediate concerns too, their means of voicing those concerns, their means of addressing them are markedly different from the workers. The workers are brought together in frequently large conglomerations, such as the textile workers at Ghazl al-Mahalla textile mill with its 28,000 workers. Their traditional means of redressing its concerns is via industrial action, which by its nature is focussed on the place of work. But, the petit-bouregoisie and the middle classes have a quite diferent relation to the means of production. In the case of the peasantry and small artisans, they own their means of production, and depend upon their own economic activity to make a living. Although, strikes by such petty property owners are not at all unknown, they occupy a completely different role than for workers, who in striking hit at the owners of Capital. The professionals too where they have immediate economic concerns look to different solutions to them. They lack the collective economic muscle of the industrial workers. The solution to their immediate economic concerns is seen coming from a different route, from economic reforms, and liberalisation that takes the weight, particularly of a corrupt and inefficient State, off their backs, nad gives them a greater say in decision making, in order to be able to effectively press for such reforms, and for the kind of meritocracy they believe their status should be rewarded by. Their immediate frustrtations, therefore, tend to be reflected not by industrial action, but via popular protest, and the focus is not the workplace, but the Public Square. As Lenin, points out in his “Two Tactics of Social Democracy”, then we see that these different forms of protest, not only reflect the different social position of the different social strata involved in the revolution, not only reflect their differing concerns, but also provide us with a forewarning of the contradictory interests of these temporary allies, because the concerns of the petit-bourgeoisie and middle classes for the introduction of bourgeois democracy within which they seek to increase their voice, has as its aim the kind of economic reforms, the introduction of meritocratic principles, which are alien to the interests of the workers.
Back To Part 7
Forward To Part 9
Several weeks later a group of campaigners against the Mubarak regime called for a General Strike on that day. The call was not made by organised groups of workers but was supported by some small opposition parties, intellectuals, some youth and radicals. The General Strike call spread rapidly through the Internet and text messages. Around 65,000 people signed up to a Facebook site promoting the strike. This represented a movement of largely middle class youth inspired by the growing displays of working class power.
The Interior Ministry warned that there could be violence and that people should stay off the streets. Thousands of workers did take strike action but a General Strike did not take place. In Mahalla, some of the workers’ leaders, who had played a leading role in the previous strikes, called the strike off after the monthly food allowance was doubled on April 5th. The strike had been due to start at 7.30am but at 3am hundreds of plain-clothes security moved in to the factory and arrested anyone who tried to speak out. Despite this many stayed away from work.
April 7, saw more battles with the police in Mahalla. A demonstration of 2,000 started at 4pm and grew to several demonstrations with up to 40-50,000 involved. Chants went up against the government and for the release of those arrested the previous day. It was reported that children were “throwing rocks, in a scene similar to the Palestinian intifada, against Central Security Forces officers and soldiers, while chanting ‘The revolution has come! The revolution has come!’”
On April 8th, Prime Minister Ahmed Nazif went to the factory and announced a bonus of 30 days wages! "We know Mahalla is suffering and you have passed through many crises," he told workers. The regime has balanced between repression and concessions whenever powerful workers’ movements have occurred. After Mahalla, the regime was less confident to crack down on workers in the way it did on students, community or democracy campaigners.
The April 6th Youth Movement, one of the initiators of the “Day of Anger” on January 25th 2011, took its name from these events. It attempted to repeat the success on May 4th 2008, Mubarak’s 80th birthday. However, no significant strike action took place that day and street protests were largely prevented by the security forces.
In fact, what we see developing is something that is quite common in revolutionary upheavals. Firstly, we see different social groups having different objectives. The workers who began the movement, were concerned with immediate economic concerns. Looking back to when these disputes began around 2006, it was precisely at that point, around 7 years into the new Long Wave Boom, where the economic tide had had long enough to begin to significantly raise the demand for labour-power. Trotsky, who had begun to analyse the effects of trhe Long Wave as described by Kondratiev – though Trotsky disagreed with Kondratiev in terms of method and detail – spelled it out,
“But a boom is a boom. It means a growing demand for goods, expanded production, shrinking unemployment, rising prices and the possibility of higher wages. And, in the given historical circumstances, the boom will not dampen but sharpen the revolutionary struggle of the working class. This flows from all of the foregoing. In all capitalist countries the working-class movement after the war reached its peak and then ended, as we have seen, in a more or less pronounced failure and retreat, and in disunity within the working class itself. With such political and psychological premises, a prolonged crisis, although it would doubtless act to heighten the embitterment of the working masses (especially the unemployed and semi-employed), would nevertheless simultaneously tend to weaken their activity because this activity is intimately bound up with the workers’ consciousness of their irreplaceable role in production.
Prolonged unemployment following an epoch of revolutionary political assaults and retreats does not at all work in favour of the Communist Party. On the contrary the longer the crisis lasts the more it threatens to nourish anarchist moods on one wing and reformist moods on the other. This fact found its expression in the split of the anarcho-syndicalist groupings from the Third International, in a certain consolidation of the Amsterdam International and the Two-and-a-Half International, in the temporary conglomeration of the Serrati-ites, the split of Levi’s group, and so on. In contrast, the industrial revival is bound, first of all, to raise the self-confidence of the working class, undermined by failures and by the disunity in its own ranks; it is bound to fuse the working class together in the factories and plants and heighten the desire for unanimity in militant actions.
We are already observing the beginnings of this process. The working masses feel firmer ground under their feet. They are seeking to fuse their ranks. They keenly sense the split to be an obstacle to action. They are striving not only toward a more unanimous resistance to the offensive of capital resulting from the crisis but also toward preparing a counter-offensive, based on the conditions of industrial revival. The crisis was a period of frustrated hopes and of embitterment, not infrequently impotent embitterment. The boom as it unfolds will provide an outlet in action for these feelings.”
Flood Tide
This is a potent antidote to those who operate with a crude theory, which comes to the strange conclusion that it is only by the impoverishment, and demoralisation of the working-class via some apocalyptic crisis that it can raise itself up to be fit to rule, and to challenge for power!
But, the workers, being very practical people were mostly concerned with their immediate economic condition, rather than any wider issues. But, we then see another common feature of revolutionary upheavals. The banner passes to another social group. The revolution is characterised by combined and uneven development too! The petit-bourgeoisie, and middle classes are drawn in behind the workers, drawing their own confidence from them. But, although, many of the middle classes, particularly the unemployed professionals, the young graduates that find changed circumstances have left them with an uncertain future, that Paul Mason referred to above, have immediate concerns too, their means of voicing those concerns, their means of addressing them are markedly different from the workers. The workers are brought together in frequently large conglomerations, such as the textile workers at Ghazl al-Mahalla textile mill with its 28,000 workers. Their traditional means of redressing its concerns is via industrial action, which by its nature is focussed on the place of work. But, the petit-bouregoisie and the middle classes have a quite diferent relation to the means of production. In the case of the peasantry and small artisans, they own their means of production, and depend upon their own economic activity to make a living. Although, strikes by such petty property owners are not at all unknown, they occupy a completely different role than for workers, who in striking hit at the owners of Capital. The professionals too where they have immediate economic concerns look to different solutions to them. They lack the collective economic muscle of the industrial workers. The solution to their immediate economic concerns is seen coming from a different route, from economic reforms, and liberalisation that takes the weight, particularly of a corrupt and inefficient State, off their backs, nad gives them a greater say in decision making, in order to be able to effectively press for such reforms, and for the kind of meritocracy they believe their status should be rewarded by. Their immediate frustrtations, therefore, tend to be reflected not by industrial action, but via popular protest, and the focus is not the workplace, but the Public Square. As Lenin, points out in his “Two Tactics of Social Democracy”, then we see that these different forms of protest, not only reflect the different social position of the different social strata involved in the revolution, not only reflect their differing concerns, but also provide us with a forewarning of the contradictory interests of these temporary allies, because the concerns of the petit-bourgeoisie and middle classes for the introduction of bourgeois democracy within which they seek to increase their voice, has as its aim the kind of economic reforms, the introduction of meritocratic principles, which are alien to the interests of the workers.
Back To Part 7
Forward To Part 9
Monday, 28 November 2011
The Egyptian Revolution - Part 7
Unlike 1848, the bourgeoisie across MENA are not attempting to overthrow the political regime of some other ruling class. In 1848, the political regime was still under the control of the old landed aristocracy. Across MENA today, the Capitalist Class is the ruling class, it is its State which rules society. The struggle it is waging is against the military-bureaucratic elite that controls that State, and which has become powerful relative to the class whose interests it ultimately serves, just as indeed the Stalinist, Bonapartist military-bureaucratic elite became powerful in the USSR and the other Stalinist States. But, as Trotsky spelled out in relation to the Stalinist bureaucracy in the USSR, the more that elite becomes entrenched, the more the Political Revolution, required to remove it, takes on a more thoroughgoing social character. In relation to the USSR, there was no other healthy, Workers State in existence, which could have pressed down upon the Soviet bureaucracy, and provided assistance to the Russian workers. The Russian working-class existed as a ruling social class in complete isolation, which is what made their rule so weak, so dependent upon the State bureaucracy, and which, in turn provided the strength of the position of the State bureaucracy. But, the Egyptian ruling class does have lots of support from ruling Capitalist classes throughout the globe, and those Capitalist Classes have every incentive as set out above for wanting to establish their “best possible political shell for capitalism” across MENA.
To that extent, in Egypt, the Capitalist Class may be able to effect a fairly stable transition from the political regime of Bonapartism to bourgeois democracy in the same way it has done across much of Latin America, and those parts of Asia, which have experienced rapid economic growth in the last 30 years. What is more, just as this rapid economic growth in Asia and Latin America, has facilitated the adoption of the kind of strategy that was outlined by Engels, i.e. the adoption of some form of Social Democracy as a means of buying off and incorporating the working-class – Lula is probably the best example of that – so the Egyptian ruling class, especially with the assistance of its international brethren via the establishment of some of Marshall Plan For MENA, as I set out recently, may be able to accommodate workers demands for better wages and conditions. The Capitalist Class of today, is much more savvy in how to achieve such things than was its 1848 counterparts.
Under those conditions the strategy set out by Marx and Engels after 1850, and by Lenin in his “Two Tactics Of Social Democracy”, seem even more appropriate. The development of the working-class in Egypt within the context of the unfolding revolution gives considerable hope for the success of such a strategy.
In reality, in Egypt over the last few years there have been increasing signs of worker discontent, just as there have been in other parts of the world such as China, where the State has attempted to control workers demands via State run unions. According to Socialist Alternative,
“Two million workers have taken part in 3000 strikes and industrial actions since 2004, the largest movement of the working class in the Middle East for decades.
Although virtually illegal, strikes increased from 222 in 2006 to 650 in the first nine months of 2007, involving 200,000 workers. In August 2007, alone, there were 100 industrial actions.”
They detail a number of workers disputes such as,
“when Ghazl al-Mahalla textile mill (with 28,000 workers the biggest in the Middle East) became the centre of workers’ militancy. A strike and occupation forced the bosses to make big concessions. Women workers played an important role. Five thousand workers tore up their membership cards of the official union in March 2007 and a new organisation emerged, the Textile Workers’ League.
By September 2007, the workers had still not received the bonus agreed as part of the settlement, worth 150 days pay. A mass meeting of 10,000 workers decided to strike and occupy. Despite threats of police, army and prosecution 10,000-15,000 slept on the premises. During the day, over 20,000 workers were present, organising their own security guards and food deliveries.
The strikers demanded pay rises in line with inflation, affordable housing and the resignation of the official trade union leaders. “We want a change in the structure and hierarchy of the union system in this country,” said Mohammed El Attar, one of the strike leaders. “The way unions are organised is completely wrong, from top to bottom. It is organised to make it look like our representatives have been elected, when really they are in fact appointed by the government.”
Workers in Kafr al-Dawwar textile mill near Alexandria struck in solidarity for several hours and Grain Mill workers demonstrated. Workers organised collections across Egypt. After a week the Mahalla workers won a stunning victory.
In fact, these developments, reflect the kind of transformation of the world working class movement as a result of the progress of the Long Wave Boom after 1999, that I had previously outlined. In my post, Prepare To Dust Off The Sliding Scale, I wrote in 2007,
“As the economic expansion of the upswing begins this demoralised and weakened condition is not easily shaken off. Confidence has to be restored, organisation rebuilt, new leaders developed. It takes time, and with new more productive technology the demand for labour may not rise quickly, and may rise in new unorganised industries. Indeed each Kondratieff upswing has tended to see the emergence of a new economic powerhouse that challenges and replaces the former dominant economy – in the present case China appears to be fulfilling that role, and that may require the development of a whole new Labour Movement
I think all of these elements can be identified in the present conjuncture, and that should give confidence to Marxists that once more the conditions are developing for militant working class struggles. How these struggles manifest themselves will differ. In China wages are rising by 10% plus per year, and there are clear signs that Chinese workers are beginning to become more organised. The same is true of workers in South Korea and other rapidly growing Asian economies.”
That was manifest in Egypt too.
“During the summer of 2007, the movement broadened to include white-collar employees, civil servants and professionals. The single largest collective action of the entire strike movement was the December 2007 strike of 55,000 property (real estate) tax collectors employed by local authorities. After three months of strikes, a 13-day sit-down protest in front of the Finance Ministry by 5000 workers a day ended with a great victory. The strike committee continued to meet together and a year later formed Egypt’s first independent trade union.
Abd El-Kadr Nada, Assistant General Secretary of the new union, told the CWI in 2009, “There haven’t been free trade unions in Egypt since the 1920s. The government philosophy has been to build unions to control the workers and so they’ve not allowed independent unions to start. They are scared more independent unions will succeed. They are scared a revolution will happen.” (op.cit.)
Of course, Marxists have to warn workers that independent Trades Unions, are not a solution to their problems either. The whole strength of bourgeois democracy is based upon the idea that contending interests are able to struggle for their interests on something approaching a level playing field. But, no such level playing field exists. The whole basis of the Trades Unions is to continue to assume the continued existence of Class Society, and, therefore, the dominance of Capital. That dominance of Capital is itself sufficient, as Lenin points out to ensure that even “independent” Trades Unions will act as conveyor belts of bourgeois ideology, or continuing the idea of simply bargaining within the system, and will as the British Bosses soon recognised even be useful means for conveying into the working-class the kinds of “sound economical doctrines” that Engels refers to above.
Back To Part 6
Forward To Part 8
To that extent, in Egypt, the Capitalist Class may be able to effect a fairly stable transition from the political regime of Bonapartism to bourgeois democracy in the same way it has done across much of Latin America, and those parts of Asia, which have experienced rapid economic growth in the last 30 years. What is more, just as this rapid economic growth in Asia and Latin America, has facilitated the adoption of the kind of strategy that was outlined by Engels, i.e. the adoption of some form of Social Democracy as a means of buying off and incorporating the working-class – Lula is probably the best example of that – so the Egyptian ruling class, especially with the assistance of its international brethren via the establishment of some of Marshall Plan For MENA, as I set out recently, may be able to accommodate workers demands for better wages and conditions. The Capitalist Class of today, is much more savvy in how to achieve such things than was its 1848 counterparts.
Under those conditions the strategy set out by Marx and Engels after 1850, and by Lenin in his “Two Tactics Of Social Democracy”, seem even more appropriate. The development of the working-class in Egypt within the context of the unfolding revolution gives considerable hope for the success of such a strategy.
In reality, in Egypt over the last few years there have been increasing signs of worker discontent, just as there have been in other parts of the world such as China, where the State has attempted to control workers demands via State run unions. According to Socialist Alternative,
“Two million workers have taken part in 3000 strikes and industrial actions since 2004, the largest movement of the working class in the Middle East for decades.
Although virtually illegal, strikes increased from 222 in 2006 to 650 in the first nine months of 2007, involving 200,000 workers. In August 2007, alone, there were 100 industrial actions.”
They detail a number of workers disputes such as,
“when Ghazl al-Mahalla textile mill (with 28,000 workers the biggest in the Middle East) became the centre of workers’ militancy. A strike and occupation forced the bosses to make big concessions. Women workers played an important role. Five thousand workers tore up their membership cards of the official union in March 2007 and a new organisation emerged, the Textile Workers’ League.
By September 2007, the workers had still not received the bonus agreed as part of the settlement, worth 150 days pay. A mass meeting of 10,000 workers decided to strike and occupy. Despite threats of police, army and prosecution 10,000-15,000 slept on the premises. During the day, over 20,000 workers were present, organising their own security guards and food deliveries.
The strikers demanded pay rises in line with inflation, affordable housing and the resignation of the official trade union leaders. “We want a change in the structure and hierarchy of the union system in this country,” said Mohammed El Attar, one of the strike leaders. “The way unions are organised is completely wrong, from top to bottom. It is organised to make it look like our representatives have been elected, when really they are in fact appointed by the government.”
Workers in Kafr al-Dawwar textile mill near Alexandria struck in solidarity for several hours and Grain Mill workers demonstrated. Workers organised collections across Egypt. After a week the Mahalla workers won a stunning victory.
In fact, these developments, reflect the kind of transformation of the world working class movement as a result of the progress of the Long Wave Boom after 1999, that I had previously outlined. In my post, Prepare To Dust Off The Sliding Scale, I wrote in 2007,
“As the economic expansion of the upswing begins this demoralised and weakened condition is not easily shaken off. Confidence has to be restored, organisation rebuilt, new leaders developed. It takes time, and with new more productive technology the demand for labour may not rise quickly, and may rise in new unorganised industries. Indeed each Kondratieff upswing has tended to see the emergence of a new economic powerhouse that challenges and replaces the former dominant economy – in the present case China appears to be fulfilling that role, and that may require the development of a whole new Labour Movement
I think all of these elements can be identified in the present conjuncture, and that should give confidence to Marxists that once more the conditions are developing for militant working class struggles. How these struggles manifest themselves will differ. In China wages are rising by 10% plus per year, and there are clear signs that Chinese workers are beginning to become more organised. The same is true of workers in South Korea and other rapidly growing Asian economies.”
That was manifest in Egypt too.
“During the summer of 2007, the movement broadened to include white-collar employees, civil servants and professionals. The single largest collective action of the entire strike movement was the December 2007 strike of 55,000 property (real estate) tax collectors employed by local authorities. After three months of strikes, a 13-day sit-down protest in front of the Finance Ministry by 5000 workers a day ended with a great victory. The strike committee continued to meet together and a year later formed Egypt’s first independent trade union.
Abd El-Kadr Nada, Assistant General Secretary of the new union, told the CWI in 2009, “There haven’t been free trade unions in Egypt since the 1920s. The government philosophy has been to build unions to control the workers and so they’ve not allowed independent unions to start. They are scared more independent unions will succeed. They are scared a revolution will happen.” (op.cit.)
Of course, Marxists have to warn workers that independent Trades Unions, are not a solution to their problems either. The whole strength of bourgeois democracy is based upon the idea that contending interests are able to struggle for their interests on something approaching a level playing field. But, no such level playing field exists. The whole basis of the Trades Unions is to continue to assume the continued existence of Class Society, and, therefore, the dominance of Capital. That dominance of Capital is itself sufficient, as Lenin points out to ensure that even “independent” Trades Unions will act as conveyor belts of bourgeois ideology, or continuing the idea of simply bargaining within the system, and will as the British Bosses soon recognised even be useful means for conveying into the working-class the kinds of “sound economical doctrines” that Engels refers to above.
Back To Part 6
Forward To Part 8
Saturday, 26 November 2011
Friday, 25 November 2011
New Tory Housing Policy Undermines House Prices Further
The Liberal-Tory proposals to bring in a Government backed guarantee for first-time buyers of new houses, were it to work, would be yet another downward pressure on house prices, and would work to disadvantage private sellers of existing houses.
The Government is caught in a cleft stick. On the one hand, it has to recognise the fact that there are vast numbers of people who would like to buy a house, but who simply cannot afford to do so given the current bubbled up prices. So, the Government is trying to introduce measures that would make more houses available. But, it wants to avoid a fall in house prices, for several reasons.
For one thing a large part of the Tory constituency of voters, is made up of people who if not Middle Class, aspire to be so. Their view of their status and well-being is inordinately bound up with what the price of their house is considered to be. That is why the Daily Express, which also caters for this group, continually has ridiculous front page headlines proclaiming that House prices are “surging”. For another, large numbers of people have mortgages on these houses, as well as large amounts of credit card, student and other forms of debt. With, wages being squeezed, inflation rising, and employment prospects uncertain, a fall in house prices, alongside a rise in arrears and defaults could send UK Banks and Building Societies into a tailspin.
So, ironically, the Liberal-Tories, who have built their entire political narrative around a childish comparison of national debt with household debt, find themselves not only trying to get Banks and Building Societies to engage in the kind of reckless lending that led to the first Credit Crunch, but also, through schemes like the one they have just announced, attempting to get people who clearly cannot afford it, to take on large amounts of additional debt!
The Liberal-Tories are trying to get people to take on this additional debt via another scam. Having insisted that Banks and Building Societies lend more responsibly, and at the same time rebuild their Capital ratios, they now complain that the Banks are doing precisely that. The Banks have returned to the policy that used to apply until recent years, of expecting that borrowers should provide a minimum level of deposit, of around 20%. Many first time borrowers seem unable to provide even this minimum deposit. In part, that is because the savings culture that used to exist has disappeared in a society geared to consumerism, and instant gratification. In large part, it is also due to the fact that house prices are around four times their long-term inflation adjusted average, which is manifest also in the fact, that house prices are at historic highs as a multiple of average household incomes.
The obvious response to that was made by David Grossman on Monday's Newsnight. He put it to, John Stewart of the Home Builders Federation that if buyers could not afford to buy, and lenders were not prepared to lend, then house prices in such a market should fall. That is indeed, what orthodox economics, and the apologists of Market Capitalism continually tell us. However, Mr. Stewart, disagreed. First-time buyers could not raise the amount of around £50,000, for a 25% deposit on a new £200,000 house, he claimed. But, also even if prices fell by 50%, they still would not be able to save the £25,000 then required. There are of course, a number of obvious responses to this argument.
Firstly, it suggests that prices need to fall then by more than just 50%. Secondly, if potential buyers are unable to save even this level, it suggests that maybe they are not suitable to be buying such a house. If a couple could not, over a period of years, manage to save even £25,000 for such a deposit, then it suggests that either their income is too low, or the management of their personal finances is so poor that were they to take on such a mortgage they would undoubtedly have difficulty in making the payments, especially given that monthly mortgage payments are inevitably going to rise sharply as interest rates rise from their historically low current levels. It would be a cruel deception to encourage such people to take on debt under those conditions. Finally, first time buyers are generally younger people, who one would not expect to be able to buy a new house as their first home. If the price of new houses fell, then this would make it easier for people who already have a property, but who want to move up to a better new home, to do so. It would then mean that their houses became available at even lower prices for the first-time buyers to move into.
This shows why the Liberal-Tory idea of making this subsidy available to only first-time buyers, and only for new build properties is nonsensical. In fact, as Merryn Somerset Webb commented, later in the programme, the best advice that could be given to first-time buyers, rather than take on more debt, as the Government was advising, was not to be first-time buyers i.e. sit tight whilst house prices continue to fall and rent until prices become affordable. In that interview, she goes on to make the valid observation that what the Liberal-Tory measure amounts to is, not help for the first-time buyers, but a cynical means by which to provide assistance to the house builders, and to ease their cash flow problems.
In 2008, the Governor of the Bank of England, Mervyn King, came out and stated openly that it was not the duty of the Government or the Bank of England to guarantee the loans taken out. It was the responsibility of the lenders to ensure that those who they lent money to were good credit risks, and to pay the penalty via those loans going bad, where they failed to do that adequately. The Liberal-Tories have spent the last two years echoing that message. Now they want to do the exact opposite. In stark contrast to their mantra that you cannot get out of debt by taking on more debt, they want to encourage individuals to do precisely that by racking up debt of all kinds from additional student debt, to now encouraging people to buy over-priced houses they cannot afford. That is in addition to the Government by-passing the Capital Markets, and proposing to provide a guarantee for a new Financial Derivative bundling up iffy loans to small business, via their proposals for Credit Easing.
As City AM Editor, Allister Heath, pointed out in the programme, by intervening at this time, in this way, the Government were setting taxpayers up for a fall. House prices are continuing to fall at a time when unemployment is rising, and defaults are bound to rise. It would then be the Government, i.e. the taxpayer, who would then have to pick up the bill. Why, he argued correctly, should someone living in a Council House, who cannot afford to buy a house, and who has not recklessly attempted to do so, have to bail-out someone who has, or, in fact, bail-out the bank, for having made a reckless loan. He is right. There are good reasons that Banks and Building Societies are not lending to people who cannot demonstrate even a minimal commitment to the house they want to buy, in putting up a reasonable deposit. In part, it was making available mortgages on that basis in the past 20 years, which not only led many people into vast amounts of debt, but which also blew up the huge current housing bubble.
According to Rightmove, asking prices for houses fell by 3.1% in November compared with October. It is the largest monetary fall in asking prices since December 2007, when the last Credit Crunch was starting to take hold. But, as I have pointed on in my blog post House Price Crash, the figure for asking prices is highly deceptive. Sellers continue to be deluded as to what a reasonable price for their house is. They want the best of both worlds, by expecting to buy their next house at knock-down prices, whilst still obtaining the previous high price for their existing house. Selling prices are around 20-30% below asking prices already, in some cases more than that. In the last couple of weeks I have been doing a number of leisure drives around the area. It doesn't matter whether I go North, South, East or West, I have never in my lifetime seen so many houses up for sale. In every road there is a forest of for sale signs, and I know that some of these houses, despite having been reduced by more than 20% over recent months, have been up for sale for around a year.
Rightmove also point to the fact that the only reason for a small up tick in sales, and mortgage approvals in recent weeks has been due to Buy-To-Let Landlords, taking advantage of falling prices and easier credit, to buy additional properties. But, that too is a negative contrarian indicator. The Buy-To-Let Landlords are not sophisticated investors. They are amateurs, individuals who have been encouraged by a thousand TV property programmes to believe that its easy to get rich quick through buying and renting property. Such investors are always the last “Bigger fools” to enter an overstretched market before it crashes. Exactly, the same could be witnessed in the Technology Bubble of the late 90's. Then too, no one wanted to hear the lone voice warning of a crash. Those carried along on the wave of euphoria, continued to argue that things would be different this time, right up to the point when the NASDAQ crashed by 75%!!!
But, the FT last weekend showed why the measures are not likely to work anyway. In fact, it will not be the Government that is first in line to pay up, when the loans go bad. The FT reports,
“Instead, homeowners would still lose their deposits before the Government suffered losses, which would be shared with the initial lender.”
They quoted Ian Mulheirn of the Social Market Foundation, who said,
“There are good reasons why lenders are currently demanding high deposits from first-time buyers because they think there's significant risk of continued house price falls. Using taxpayers cash to reflate the lending bubble is a terrible use of public money. It will entice young buyers into an overpriced housing market, jeopardise taxpayers' money, and most of the financial benefits will fall to mortgage providers rather than buyers.”
And, as Capital Economics have pointed out, it is not the requirement for a reasonable sized deposit that is keeping first-time buyers from being able to enter the market. They say,
“Remember that the share of home loans advanced to first-time buyers fell to current levels in 2003.”
According to the BBC, Estate Agents are already reporting that first-time buyers are rarely seen. First time buyers share of the market has fallen to a three year low, down from 22% to 16%.
Were the measures to be in any way effective, then as Allister Heath pointed out they would act to distort the market to the detriment of existing private sellers. Because the guarantee only applies to new build properties, it will in effect be a subsidy to those houses. Private sellers will have to reduce their prices even further to compete. In fact, if the policy were to be really effective in creating a substantial demand for new housing, of the size that would be needed to achieve the Liberal-Tories stated objectives of raising housebuilding, and creating jobs, it would mean that the demand for existing houses would crater, with a consequent effect on their prices.
The reality is that, whichever way the Liberal-Tories turn the housing market is in a crisis, because house prices are many times what they should be, having been inflated on a sea of reckless lending. That is not going to be remedied by encouraging people to take on even more reckless lending. It will only be remedied by a bursting of the bubble, taking house prices down by around 80% to more affordable levels, and by breaking the existing monopoly on land ownership that allows Landlords to extract Monopoly Rents from the super profits of the builders. In the meantime, workers need to utilise their own resources, through their Pension Funds (especially as the Government now wants to stage a Maxwell style raid on those funds to use them for its own purposes), through the Co-op Bank and so on, to begin a process of building large numbers of Co-operatively owned and controlled housing as an alternative to the chaos of the Capitalist Housing market.
The Government is caught in a cleft stick. On the one hand, it has to recognise the fact that there are vast numbers of people who would like to buy a house, but who simply cannot afford to do so given the current bubbled up prices. So, the Government is trying to introduce measures that would make more houses available. But, it wants to avoid a fall in house prices, for several reasons.
For one thing a large part of the Tory constituency of voters, is made up of people who if not Middle Class, aspire to be so. Their view of their status and well-being is inordinately bound up with what the price of their house is considered to be. That is why the Daily Express, which also caters for this group, continually has ridiculous front page headlines proclaiming that House prices are “surging”. For another, large numbers of people have mortgages on these houses, as well as large amounts of credit card, student and other forms of debt. With, wages being squeezed, inflation rising, and employment prospects uncertain, a fall in house prices, alongside a rise in arrears and defaults could send UK Banks and Building Societies into a tailspin.
So, ironically, the Liberal-Tories, who have built their entire political narrative around a childish comparison of national debt with household debt, find themselves not only trying to get Banks and Building Societies to engage in the kind of reckless lending that led to the first Credit Crunch, but also, through schemes like the one they have just announced, attempting to get people who clearly cannot afford it, to take on large amounts of additional debt!
The Liberal-Tories are trying to get people to take on this additional debt via another scam. Having insisted that Banks and Building Societies lend more responsibly, and at the same time rebuild their Capital ratios, they now complain that the Banks are doing precisely that. The Banks have returned to the policy that used to apply until recent years, of expecting that borrowers should provide a minimum level of deposit, of around 20%. Many first time borrowers seem unable to provide even this minimum deposit. In part, that is because the savings culture that used to exist has disappeared in a society geared to consumerism, and instant gratification. In large part, it is also due to the fact that house prices are around four times their long-term inflation adjusted average, which is manifest also in the fact, that house prices are at historic highs as a multiple of average household incomes.
The obvious response to that was made by David Grossman on Monday's Newsnight. He put it to, John Stewart of the Home Builders Federation that if buyers could not afford to buy, and lenders were not prepared to lend, then house prices in such a market should fall. That is indeed, what orthodox economics, and the apologists of Market Capitalism continually tell us. However, Mr. Stewart, disagreed. First-time buyers could not raise the amount of around £50,000, for a 25% deposit on a new £200,000 house, he claimed. But, also even if prices fell by 50%, they still would not be able to save the £25,000 then required. There are of course, a number of obvious responses to this argument.
Firstly, it suggests that prices need to fall then by more than just 50%. Secondly, if potential buyers are unable to save even this level, it suggests that maybe they are not suitable to be buying such a house. If a couple could not, over a period of years, manage to save even £25,000 for such a deposit, then it suggests that either their income is too low, or the management of their personal finances is so poor that were they to take on such a mortgage they would undoubtedly have difficulty in making the payments, especially given that monthly mortgage payments are inevitably going to rise sharply as interest rates rise from their historically low current levels. It would be a cruel deception to encourage such people to take on debt under those conditions. Finally, first time buyers are generally younger people, who one would not expect to be able to buy a new house as their first home. If the price of new houses fell, then this would make it easier for people who already have a property, but who want to move up to a better new home, to do so. It would then mean that their houses became available at even lower prices for the first-time buyers to move into.
This shows why the Liberal-Tory idea of making this subsidy available to only first-time buyers, and only for new build properties is nonsensical. In fact, as Merryn Somerset Webb commented, later in the programme, the best advice that could be given to first-time buyers, rather than take on more debt, as the Government was advising, was not to be first-time buyers i.e. sit tight whilst house prices continue to fall and rent until prices become affordable. In that interview, she goes on to make the valid observation that what the Liberal-Tory measure amounts to is, not help for the first-time buyers, but a cynical means by which to provide assistance to the house builders, and to ease their cash flow problems.
In 2008, the Governor of the Bank of England, Mervyn King, came out and stated openly that it was not the duty of the Government or the Bank of England to guarantee the loans taken out. It was the responsibility of the lenders to ensure that those who they lent money to were good credit risks, and to pay the penalty via those loans going bad, where they failed to do that adequately. The Liberal-Tories have spent the last two years echoing that message. Now they want to do the exact opposite. In stark contrast to their mantra that you cannot get out of debt by taking on more debt, they want to encourage individuals to do precisely that by racking up debt of all kinds from additional student debt, to now encouraging people to buy over-priced houses they cannot afford. That is in addition to the Government by-passing the Capital Markets, and proposing to provide a guarantee for a new Financial Derivative bundling up iffy loans to small business, via their proposals for Credit Easing.
As City AM Editor, Allister Heath, pointed out in the programme, by intervening at this time, in this way, the Government were setting taxpayers up for a fall. House prices are continuing to fall at a time when unemployment is rising, and defaults are bound to rise. It would then be the Government, i.e. the taxpayer, who would then have to pick up the bill. Why, he argued correctly, should someone living in a Council House, who cannot afford to buy a house, and who has not recklessly attempted to do so, have to bail-out someone who has, or, in fact, bail-out the bank, for having made a reckless loan. He is right. There are good reasons that Banks and Building Societies are not lending to people who cannot demonstrate even a minimal commitment to the house they want to buy, in putting up a reasonable deposit. In part, it was making available mortgages on that basis in the past 20 years, which not only led many people into vast amounts of debt, but which also blew up the huge current housing bubble.
According to Rightmove, asking prices for houses fell by 3.1% in November compared with October. It is the largest monetary fall in asking prices since December 2007, when the last Credit Crunch was starting to take hold. But, as I have pointed on in my blog post House Price Crash, the figure for asking prices is highly deceptive. Sellers continue to be deluded as to what a reasonable price for their house is. They want the best of both worlds, by expecting to buy their next house at knock-down prices, whilst still obtaining the previous high price for their existing house. Selling prices are around 20-30% below asking prices already, in some cases more than that. In the last couple of weeks I have been doing a number of leisure drives around the area. It doesn't matter whether I go North, South, East or West, I have never in my lifetime seen so many houses up for sale. In every road there is a forest of for sale signs, and I know that some of these houses, despite having been reduced by more than 20% over recent months, have been up for sale for around a year.
Rightmove also point to the fact that the only reason for a small up tick in sales, and mortgage approvals in recent weeks has been due to Buy-To-Let Landlords, taking advantage of falling prices and easier credit, to buy additional properties. But, that too is a negative contrarian indicator. The Buy-To-Let Landlords are not sophisticated investors. They are amateurs, individuals who have been encouraged by a thousand TV property programmes to believe that its easy to get rich quick through buying and renting property. Such investors are always the last “Bigger fools” to enter an overstretched market before it crashes. Exactly, the same could be witnessed in the Technology Bubble of the late 90's. Then too, no one wanted to hear the lone voice warning of a crash. Those carried along on the wave of euphoria, continued to argue that things would be different this time, right up to the point when the NASDAQ crashed by 75%!!!
But, the FT last weekend showed why the measures are not likely to work anyway. In fact, it will not be the Government that is first in line to pay up, when the loans go bad. The FT reports,
“Instead, homeowners would still lose their deposits before the Government suffered losses, which would be shared with the initial lender.”
They quoted Ian Mulheirn of the Social Market Foundation, who said,
“There are good reasons why lenders are currently demanding high deposits from first-time buyers because they think there's significant risk of continued house price falls. Using taxpayers cash to reflate the lending bubble is a terrible use of public money. It will entice young buyers into an overpriced housing market, jeopardise taxpayers' money, and most of the financial benefits will fall to mortgage providers rather than buyers.”
And, as Capital Economics have pointed out, it is not the requirement for a reasonable sized deposit that is keeping first-time buyers from being able to enter the market. They say,
“Remember that the share of home loans advanced to first-time buyers fell to current levels in 2003.”
According to the BBC, Estate Agents are already reporting that first-time buyers are rarely seen. First time buyers share of the market has fallen to a three year low, down from 22% to 16%.
Were the measures to be in any way effective, then as Allister Heath pointed out they would act to distort the market to the detriment of existing private sellers. Because the guarantee only applies to new build properties, it will in effect be a subsidy to those houses. Private sellers will have to reduce their prices even further to compete. In fact, if the policy were to be really effective in creating a substantial demand for new housing, of the size that would be needed to achieve the Liberal-Tories stated objectives of raising housebuilding, and creating jobs, it would mean that the demand for existing houses would crater, with a consequent effect on their prices.
The reality is that, whichever way the Liberal-Tories turn the housing market is in a crisis, because house prices are many times what they should be, having been inflated on a sea of reckless lending. That is not going to be remedied by encouraging people to take on even more reckless lending. It will only be remedied by a bursting of the bubble, taking house prices down by around 80% to more affordable levels, and by breaking the existing monopoly on land ownership that allows Landlords to extract Monopoly Rents from the super profits of the builders. In the meantime, workers need to utilise their own resources, through their Pension Funds (especially as the Government now wants to stage a Maxwell style raid on those funds to use them for its own purposes), through the Co-op Bank and so on, to begin a process of building large numbers of Co-operatively owned and controlled housing as an alternative to the chaos of the Capitalist Housing market.
The Egyptian Revolution - Part 6
Egypt is one of those economies identified by Goldman Sachs as being one of the Next 11, economies that are developing behind the BRIC economies. In more recent years, Egypt, along with other countries in MENA, have also benefitted from closer ties with the EU through the establishment of the Union For The Mediterranean, which was a result of the Barcelona Process, started in 1995, which drew various countries from MENA into the orbit of the EU. This is a similar process to that which drew in countries from Eastern Europe, and from the Balkans. Not only is the establishment of bourgeois democracy, in MENA, therefore, in the interests of that growing national bourgeoisie, and middle class in those countries, but it is also in the interests of European Capital, both because it creates the conditions of openness, and the Rule of Law, which Capital needs in order to make large, long-term investments, free from the corruption, intimidation, and uncertainty that surround Bonapartist regimes, and because the establishment of bourgeois democracy has long been recognised by the bourgeoisie as its most effective means of rule.
In State and Revolution, Lenin notes, that Bourgeois Democracy is the “best possible political shell for capitalism”
“In a democratic republic”, Engels continues, “wealth exercises its power indirectly, but all the more surely", first, by means of the “direct corruption of officials” (America); secondly, by means of an “alliance of the government and the Stock Exchange" (France and America).
At present, imperialism and the domination of the banks have “developed” into an exceptional art both these methods of upholding and giving effect to the omnipotence of wealth in democratic republics of all descriptions. ...
Another reason why the omnipotence of “wealth” is more certain in a democratic republic is that it does not depend on defects in the political machinery or on the faulty political shell of capitalism. A democratic republic is the best possible political shell for capitalism, and, therefore, once capital has gained possession of this very best shell (through the Palchinskys, Chernovs, Tseretelis and Co.), it establishes its power so securely, so firmly, that no change of persons, institutions or parties in the bourgeois-democratic republic can shake it.”
Indeed, Engels had even noted the extent to which it was in the interests of Big Capital, not only to establish Bourgeois democracy, but also to adopt the programme of Social-Democracy. In the “Condition of the Working Class in England”, Engels writes,
“And the manufacturing capitalists, from the Chartist opposition, not to Free Trade, but to the transformation of Free Trade into the one vital national question, had learnt, and were learning more and more, that the middle class can never obtain full social and political power over the nation except by the help of the working class. Thus a gradual change came over the relations between both classes. The Factory Acts, once the bugbear of all manufacturers, were not only willingly submitted to, but their expansion into acts regulating almost all trades was tolerated. Trades Unions, hitherto considered inventions of the devil himself, were now petted and patronised as perfectly legitimate institutions, and as useful means of spreading sound economical doctrines amongst the workers. Even strikes, than which nothing had been more nefarious up to 1848, were now gradually found out to be occasionally very useful, especially when provoked by the masters themselves, at their own time. Of the legal enactments, placing the workman at a lower level or at a disadvantage with regard to the master, at least the most revolting were repealed. And, practically, that horrid People’s Charter actually became the political programme of the very manufacturers who had opposed it to the last.”
Preface to the English Edition of “The Condition of the Working Class in England"
The Bourgeois Democratic, Political Revolutions sweeping across MENA have to be viewed in this context. They reflect a maturation of these societies, a sign that economic development and industrialisation have now proceeded to an extent whereby the domestic bourgeoisie – certainly in Egypt, if not in every MENA economy – has become strong enough to be able to rule via some form of bourgeois democracy, and is challenging the Capitalist State military-bureaucratic elite, which has previously been able to raise itself above the contending social classes, and rule in its own interests. The domestic bourgeoisie, is finding support for that challenge initially within the ranks of the petit-bourgeoisie, and middle classes, which having had access to education and culture, now rails against the authoritarianism and inefficiency of the Bonapartist State, particularly as the recession since the end of 2008, has seriously threatened its living standards, and opportunities for escape to Europe. As Paul Mason wrote, in his blog a while ago,
“To amplify: I can't find the quote but one of the historians of the French Revolution of 1789 wrote that it was not the product of poor people but of poor lawyers. You can have political/economic setups that disappoint the poor for generations - but if lawyers, teachers and doctors are sitting in their garrets freezing and starving you get revolution. Now, in their garrets, they have a laptop and broadband connection.”
Paul Mason
But, it has to be borne in mind, precisely the point that Engels and Lenin were making, which is that it is precisely because Bourgeois Democracy is the “best possible political shell for capitalism”,that Capital institutes it, and where it is strong enough to do so, introduces all of those Social Democratic measures, such as some form of Welfare State etc. not out of any sense of altruism, not out of some idealistic moral imperative to do so, but precisely in order to be better able to exploit labour!!! And, it is precisely for that reason that workers, although they have their own immediate interests in winning bourgeois democratic freedoms, such as the right of free speech, to assembly, to join a Trades Union, to strike etc., because all these things facilitate the self-organisation of the working class, cannot, and should not limit their actions merely to a struggle for what is, after all, merely a more efficient means for Capital to exploit them, and to oppress them. In the end, bourgeois democracy is a sham, it is merely a very powerful means by which the Capitalist Class disguises its class Dictatorship.
In the Thesis on the Colonial Question Lenin makes that clear when he writes,
“.. the need for a determined struggle against attempts to give a communist colouring to bourgeois-democratic liberation trends in the backward countries; the Communist International should support bourgeois-democratic national movements in colonial and backward countries only on condition that, in these countries, the elements of future proletarian parties, which will be communist not only in name, are brought together and trained to understand their special tasks, i.e., those of the struggle against the bourgeois-democratic movements within their own nations. The Communist International must enter into a temporary alliance with bourgeois democracy in the colonial and backward countries, but should not merge with it, and should under all circumstances uphold the independence of the proletarian movement even if it is in its most embryonic form;”
Trotsky, further elaborates this point in the Transitional Programme, where he is dealing with how Communists respond in fascist and authoritarian regimes. He writes,
“It is from this point onward that an uncompromising divergence begins between the Fourth International and the old parties, which outlive their bankruptcy. The emigre “People’s Front” is the most malignant and perfidious variety of all possible People’s Fronts. Essentially, it signifies the impotent longing for coalition with a nonexistent liberal bourgeoisie. Had it met with success, it would simply have prepared a series of new defeats of the Spanish type for the proletariat. A merciless exposure of the theory and practice of the “People’s Front” is therefore the first condition for a revolutionary struggle against fascism.
Of course, this does not mean that the Fourth International rejects democratic slogans as a means of mobilizing the masses against fascism. On the contrary, such slogans at certain moments can play a serious role. But the formulae of democracy (freedom of press, the right to unionize, etc.) mean for us only incidental or episodic slogans in the independent movement of the proletariat and not a democratic noose fastened to the neck of the proletariat by the bourgeoisie’s agents (Spain!). As soon as the movement assumes something of a mass character, the democratic slogans will be intertwined with the transitional ones; factory committees, it may be supposed, will appear before the old routinists rush from their chancelleries to organize trade unions; soviets will cover Germany before a new Constituent Assembly will gather in Weimar. The same applies to Italy and the rest of the totalitarian and semi-totalitarian countries.”
Consequently, as I wrote in my blog Egypt What Is To Be Done,
“Our role is to help organise the working-class as an independent political force, capable of intervening not just to pursue goals which immediately are in its interests – such as the establishment or defence of basic bourgeois freedoms, but which at the same time furthers the development of the working-class as a class for itself, which develops its forms separate from those of the bosses – separate forms of property, separate forms of organisation, separate forms of democracy, and separate forms of State. That was the conclusion that Marx and Engels drew from their experiences in the Revolutions of 1848.”
And, as I set out in those posts, the revolutions sweeping MENA have a lot in common with the Revolutions of 1848. In those Revolutions, the Middle Class and the bourgeoisie needed the support of workers. To the extent that the Bonapartist State apparatus clings to power, as Gaddafi did in Libya – and as the Military may yet try to do in Egypt – the bourgeoisie, and middle classes in Egypt will also require the support of workers. In 1848, the workers were able to mobilise to push forward their own independent class interests, but the conditions were not yet ripe for Socialist Revolution. Today, independent workers organisations are springing up across MENA, breaking free from the official State Trades Unions, and today, the grip of Stalinism over the world working-class movement is not so powerful and deadening as it was in the period after the Second World War. Yet, despite rapid economic growth in Egypt and other Middle Eastern and North African economies, it is not yet possible to consider the possibility of a successful socialist revolution. Even were those conditions to exist or to develop in the coming period, the situation of these economies within the context of a powerful global capitalism has to be taken into consideration, and without the rapid spread of socialist revolution to at least Southern and Western Europe, any such revolution would quickly become isolated, and ultimately defeated.
Back To Part 5
Forward To part 7
In State and Revolution, Lenin notes, that Bourgeois Democracy is the “best possible political shell for capitalism”
“In a democratic republic”, Engels continues, “wealth exercises its power indirectly, but all the more surely", first, by means of the “direct corruption of officials” (America); secondly, by means of an “alliance of the government and the Stock Exchange" (France and America).
At present, imperialism and the domination of the banks have “developed” into an exceptional art both these methods of upholding and giving effect to the omnipotence of wealth in democratic republics of all descriptions. ...
Another reason why the omnipotence of “wealth” is more certain in a democratic republic is that it does not depend on defects in the political machinery or on the faulty political shell of capitalism. A democratic republic is the best possible political shell for capitalism, and, therefore, once capital has gained possession of this very best shell (through the Palchinskys, Chernovs, Tseretelis and Co.), it establishes its power so securely, so firmly, that no change of persons, institutions or parties in the bourgeois-democratic republic can shake it.”
Indeed, Engels had even noted the extent to which it was in the interests of Big Capital, not only to establish Bourgeois democracy, but also to adopt the programme of Social-Democracy. In the “Condition of the Working Class in England”, Engels writes,
“And the manufacturing capitalists, from the Chartist opposition, not to Free Trade, but to the transformation of Free Trade into the one vital national question, had learnt, and were learning more and more, that the middle class can never obtain full social and political power over the nation except by the help of the working class. Thus a gradual change came over the relations between both classes. The Factory Acts, once the bugbear of all manufacturers, were not only willingly submitted to, but their expansion into acts regulating almost all trades was tolerated. Trades Unions, hitherto considered inventions of the devil himself, were now petted and patronised as perfectly legitimate institutions, and as useful means of spreading sound economical doctrines amongst the workers. Even strikes, than which nothing had been more nefarious up to 1848, were now gradually found out to be occasionally very useful, especially when provoked by the masters themselves, at their own time. Of the legal enactments, placing the workman at a lower level or at a disadvantage with regard to the master, at least the most revolting were repealed. And, practically, that horrid People’s Charter actually became the political programme of the very manufacturers who had opposed it to the last.”
Preface to the English Edition of “The Condition of the Working Class in England"
The Bourgeois Democratic, Political Revolutions sweeping across MENA have to be viewed in this context. They reflect a maturation of these societies, a sign that economic development and industrialisation have now proceeded to an extent whereby the domestic bourgeoisie – certainly in Egypt, if not in every MENA economy – has become strong enough to be able to rule via some form of bourgeois democracy, and is challenging the Capitalist State military-bureaucratic elite, which has previously been able to raise itself above the contending social classes, and rule in its own interests. The domestic bourgeoisie, is finding support for that challenge initially within the ranks of the petit-bourgeoisie, and middle classes, which having had access to education and culture, now rails against the authoritarianism and inefficiency of the Bonapartist State, particularly as the recession since the end of 2008, has seriously threatened its living standards, and opportunities for escape to Europe. As Paul Mason wrote, in his blog a while ago,
“To amplify: I can't find the quote but one of the historians of the French Revolution of 1789 wrote that it was not the product of poor people but of poor lawyers. You can have political/economic setups that disappoint the poor for generations - but if lawyers, teachers and doctors are sitting in their garrets freezing and starving you get revolution. Now, in their garrets, they have a laptop and broadband connection.”
Paul Mason
But, it has to be borne in mind, precisely the point that Engels and Lenin were making, which is that it is precisely because Bourgeois Democracy is the “best possible political shell for capitalism”,that Capital institutes it, and where it is strong enough to do so, introduces all of those Social Democratic measures, such as some form of Welfare State etc. not out of any sense of altruism, not out of some idealistic moral imperative to do so, but precisely in order to be better able to exploit labour!!! And, it is precisely for that reason that workers, although they have their own immediate interests in winning bourgeois democratic freedoms, such as the right of free speech, to assembly, to join a Trades Union, to strike etc., because all these things facilitate the self-organisation of the working class, cannot, and should not limit their actions merely to a struggle for what is, after all, merely a more efficient means for Capital to exploit them, and to oppress them. In the end, bourgeois democracy is a sham, it is merely a very powerful means by which the Capitalist Class disguises its class Dictatorship.
In the Thesis on the Colonial Question Lenin makes that clear when he writes,
“.. the need for a determined struggle against attempts to give a communist colouring to bourgeois-democratic liberation trends in the backward countries; the Communist International should support bourgeois-democratic national movements in colonial and backward countries only on condition that, in these countries, the elements of future proletarian parties, which will be communist not only in name, are brought together and trained to understand their special tasks, i.e., those of the struggle against the bourgeois-democratic movements within their own nations. The Communist International must enter into a temporary alliance with bourgeois democracy in the colonial and backward countries, but should not merge with it, and should under all circumstances uphold the independence of the proletarian movement even if it is in its most embryonic form;”
Trotsky, further elaborates this point in the Transitional Programme, where he is dealing with how Communists respond in fascist and authoritarian regimes. He writes,
“It is from this point onward that an uncompromising divergence begins between the Fourth International and the old parties, which outlive their bankruptcy. The emigre “People’s Front” is the most malignant and perfidious variety of all possible People’s Fronts. Essentially, it signifies the impotent longing for coalition with a nonexistent liberal bourgeoisie. Had it met with success, it would simply have prepared a series of new defeats of the Spanish type for the proletariat. A merciless exposure of the theory and practice of the “People’s Front” is therefore the first condition for a revolutionary struggle against fascism.
Of course, this does not mean that the Fourth International rejects democratic slogans as a means of mobilizing the masses against fascism. On the contrary, such slogans at certain moments can play a serious role. But the formulae of democracy (freedom of press, the right to unionize, etc.) mean for us only incidental or episodic slogans in the independent movement of the proletariat and not a democratic noose fastened to the neck of the proletariat by the bourgeoisie’s agents (Spain!). As soon as the movement assumes something of a mass character, the democratic slogans will be intertwined with the transitional ones; factory committees, it may be supposed, will appear before the old routinists rush from their chancelleries to organize trade unions; soviets will cover Germany before a new Constituent Assembly will gather in Weimar. The same applies to Italy and the rest of the totalitarian and semi-totalitarian countries.”
Consequently, as I wrote in my blog Egypt What Is To Be Done,
“Our role is to help organise the working-class as an independent political force, capable of intervening not just to pursue goals which immediately are in its interests – such as the establishment or defence of basic bourgeois freedoms, but which at the same time furthers the development of the working-class as a class for itself, which develops its forms separate from those of the bosses – separate forms of property, separate forms of organisation, separate forms of democracy, and separate forms of State. That was the conclusion that Marx and Engels drew from their experiences in the Revolutions of 1848.”
And, as I set out in those posts, the revolutions sweeping MENA have a lot in common with the Revolutions of 1848. In those Revolutions, the Middle Class and the bourgeoisie needed the support of workers. To the extent that the Bonapartist State apparatus clings to power, as Gaddafi did in Libya – and as the Military may yet try to do in Egypt – the bourgeoisie, and middle classes in Egypt will also require the support of workers. In 1848, the workers were able to mobilise to push forward their own independent class interests, but the conditions were not yet ripe for Socialist Revolution. Today, independent workers organisations are springing up across MENA, breaking free from the official State Trades Unions, and today, the grip of Stalinism over the world working-class movement is not so powerful and deadening as it was in the period after the Second World War. Yet, despite rapid economic growth in Egypt and other Middle Eastern and North African economies, it is not yet possible to consider the possibility of a successful socialist revolution. Even were those conditions to exist or to develop in the coming period, the situation of these economies within the context of a powerful global capitalism has to be taken into consideration, and without the rapid spread of socialist revolution to at least Southern and Western Europe, any such revolution would quickly become isolated, and ultimately defeated.
Back To Part 5
Forward To part 7
Thursday, 24 November 2011
The Egyptian Revolution - Part 5
Ironically, those very trends that Lenin identifies about the need for capital to expand beyond its borders are more appropriate for the conditions that existed after WWII, even then it is just as plausible to explain the movement of capital into new parts of the globe on the basis of the principles Marx outlines in Capital, such as the tendency of capital to move into areas where it can achieve a higher rate of profit, than in terms of any “necessity” to do so.
Moreover, if the drive is merely to move into new parts of the globe to establish new productive industries, then, although this will indeed involve intense competition, between capitalist enterprises, both from the same country and from different countries – a fact that gives the recipient country some bargaining power, which undermines the notion of super-exploitation or unequal exchange – it clearly does not require a War between them to achieve that right. In fact, for the reasons Lenin himself developed in arguing against the Narodniks, in relation to the way in which capitalist development itself creates its own domestic market, such capitalist development, entails a development of the particular economy – again undermining the ideas of the “dependency” theorists – and as a result opens up the possibility of yet further opportunities for capital to invest, and exploit the available, and increasing labour force.
As I wrote in “Imperialism & War”,
“In fact, as the previous documents have shown, the division of the world into colonies can much better be explained in terms of the dynamic of feudalism, and of Merchant and Money Capitalism leading to Colonialism than it can by a Finance Capital dominated Imperialism.
And when that basic element of Imperialism set out by Lenin – the need for Productive/Industrial Capital to search out new sources of exploitable Labour – does arise, it takes the form not of Colonial powers seeking to divide up the world, but of Multinational companies, whose interest is increasingly to develop global institutions to carry out the functions of the State, and far from seeing their interests lying in the establishment of Colonial rule – which was always extremely costly – see their interests lying in the carrying through of the bourgeois democratic revolution in order that a bourgeois state can arise to shoulder those costs, and to create via some form of bourgeois democracy the best conditions under which Capital in general can operate and accumulate.”
In other words, the situation that arose, in the 19th Century, in Latin America, in respect of the alliance between the interests of Britain and the US, around the Monroe Doctrine, after WWII, became globalised, and for the same reasons. In the 19th Century, Britain, as the global hegemon, and workshop of the world, was in favour of free markets, precisely because it knew that it could undercut every other economic power. After WWII, the US held that position. It had every reason to want to break up the old colonial regimes in order to open up these markets and sources of primary products.
In fact, FDR even proposed an alliance with Stalin to break up the old colonial regimes, if Churchill and the other European powers refused to do so. In short, the basic assumption behind Permanent Revolution, behind Lenin's Two Tactics, and behind the Thesis on the Colonial Question, that the existing colonial power would wage a fight to hold on to the colony, no longer held. Moreover, the other element of Permanent Revolution, the idea that the national bourgeoisie would take fright at the potential for a proletarian revolution, and would make an alliance with the imperialist power, or the old landlord class, had been severely undermined, precisely because long experience of Stalinism from the 1920's onwards, through the murderous activities of the Spanish Civil War, and the agreements that Stalin had made with the imperialists at Potsdam and Yalta, went a long way to persuading the imperialists that the Stalinists were people they could do business with, that the Stalinists would act to police and limit the struggle of the working-class. In fact, many of these regimes were able to establish various forms of state capitalism with the support of money, materials, and advice from the USSR.
That didn't mean that Capitalists had ceased being capitalists, but Bismark and Louis Napoleon, had demonstrated that the capitalist state could play a significant role in bringing about industrialisation and modernisation.
There was plenty of scope for capitalists in such countries to extract surplus value by investing in those enterprises that were able to develop within these economies, through receipt of interest on money lent to the state, and as the Stalinists had shown, control over the state also enabled large revenues to be drawn by state officials, in an economy where the majority of the means of production were owned by the state.
Nor, did it mean that imperialism ceased being imperialism, but imperialism was now determined by the interests of multinational, industrial capital, and by transnational banks. And within this imperialist system, the need to ensure the rules of the game were adhered to became paramount, including the rules in respect of the defined spheres of influence.
The Cold War was one fought out largely on the basis of manoeuvre, bureaucratic wrangling, the buying out of national leaders etc. That is the basis of the formulation of the notion “He may be a bastard but he's our bastard.”
But, the demise of Stalinism removed this basis upon which the globe was divided, and the context in which this global competition for influence was taking place. It is no coincidence that although, the new International Division of Labour, really commenced in the 1980's, the greatest expansion of globalisation occurred after the fall of Stalinism in the USSR.
Under Nasser the method of industrialisation and modernisation, began in the 19th Century, based on state capitalism, in fact, fitted well with the top-down, statist methods of Stalinism, which meant that Egypt was able to form a close relation with the USSR, which provided it with resources when the US and UK withdrew financing of the Aswan Dam.
But, all such methods of development have proved limited. Where what is involved is large scale projects, particularly the development of heavy industry, and civil engineering, state capitalism can be effective, but, when a certain stage is passed, and production needs to shift to more complex areas, and the development of consumer goods industries etc., state capitalism has proved bureaucratic and inefficient. In China, although the state continues to play a significant role via the Five Year Plan, and uses various levers such as that in relation to its control over the banks, monetary policy etc. to direct investment into those areas determined within the plan, it has been successful by facilitating the development of private capitalism, and the market as the means by which these objectives are met.
But, Egypt did continue to develop. Under Sadat, in the 1970's, a policy similar to that undertaken in China was begun. It was known as, “Infitah”, or “Open Door”.
The economy has grown by an average of 5% per annum, but in more recent years, a liberalisation of the economy has seen growth increase to around 7-8% per annum. Between 1981 and 2006, GDP increased fourfold, whilst bringing inflation down from double figures to single figures. The economic reforms, which reduced the size of the public sector, and promoted the growth of private capitalism, created a wealthy and successful capitalist class, including the development of some significant Egyptian multinational companies such as the Orascom group, and a developing middle class. Necessarily, industrialisation brought with it, the development of an increasingly significant working-class, demonstrating once again Marx's dictum about the progressive role of capitalism in creating its own gravedigger.
Typical of such periods of industrialisation, however, the section of society which benefited least from this process were those very workers, which led to repeated outbreaks of violence and protest, as the usual channels for containing workers discontent, the trades unions and bourgeois democracy, did not exist in Egypt, which sought to suppress the workers via a Bonapartist state regime, and state run trades unions.
Wikipedia provides a List Of Egyptian Companies, and it is interesting to note that many of these that have developed in recent years have been in the new, more dynamic sectors of the economy such as in ICT, and Financial Services. In other words we see the process of combined and uneven development at work yet again, with newly industrialising economies being able to move rapidly into those new industries which represent high value added, and high rates of profit. According to the CIA World Factbook, Agriculture now accounts for around 13.5% of GDP, whilst Industry accounts for 38%, and Services nearly 49%. Given the importance of Tourism to the Egyptian economy, it is no wonder that this latter is such a high number. In terms of employment, Agriculture accounts for 32%, reflecting its labour intensive nature rather than its inefficiency – in fact Agriculture in Egypt is relatively intensive – Industry accounts for 17%, and Services 51%, again reflecting the large numbers employed in Tourism.
A measure of economic development often used by economists is energy production and consumption. Egypt comes 28th in the world in terms of electricity production, and 29th in terms of consumption. The increasing development of industry, and particularly of the newer industries is reflected in the literacy rates. The rate, for the whole population, is 71%, 83% for males, and 59% for females, and the normal time spent at school is 11 years. 30% of all those in the relevant age range go to university in Egypt, though only half of these actually graduate. However, this high number, especially given that Egypt has a very young population – its median age is just 24, and a third of its population are under 14 – indicates why this growing middle class, should become restive, as opportunities abroad diminished after the recession of 2009, and as jobs in Egypt could not grow fast enough to absorb them. It is also not surprising that it was from within this middle class section of society that the first signs of discontent were demonstrated in the April 6th Movement.Wednesday, 23 November 2011
The Egyptian Revolution - Part 4
So it can be seen that the conditions that Trotsky set out in Permanent Revolution, that Lenin set out in Two Tactics of Social Democracy, and that the Comintern set out in the Thesis on the Colonial Question, never really applied to the conditions existing in Egypt.
All of those were based on the assumption that a colonial power would wage a determined struggle to prevent independence, or that an imperialist power would be able to exert indirect control over such a state via, gunboat diplomacy, and the co-operation of a comprador bourgeoisie. But, in reality the economic basis upon which those types of regime were established was already out of date, by the time the Thesis on the Colonial Question was written. The economic basis upon which colonialism rested was in reality merely a foreign extension of feudal relations, resulting from a joint venture between the landed aristocracy, and the merchants, and the political regimes established reflected that. The idea that the imperialist powers needed to carve up the world between them, in order to obtain both cheap sources of raw materials and foodstuffs, and protected markets, into which they could sell their products, particularly their surplus production, is doubtful, in fact, ever to have been true. In fact, the main European colonial powers, such as Britain, Spain, Portugal, and Holland had developed their colonies long before the development of industrial capitalism, and, therefore, long before there was any need to dispose of surplus production, or indeed to source large new sources of primary products.
Even in Britain, although industrial capitalism had become dominant by the middle of the 19th Century, as Engels points out,
“The Reform Bill of 1831 had been the victory of the whole capitalist class over the landed aristocracy. The repeal of the Corn Laws was the victory of the manufacturing capitalist not only over the landed aristocracy, but over those sections of capitalists, too, whose interests were more or less bound up with the landed interest-bankers, stockjobbers, fundholders, etc.
Free Trade meant the readjustment of the whole home and foreign, commercial and financial policy of England in accordance with the interests of the manufacturing capitalists — the class which now [These words belong apparently not to Bright but to his adherents. See The Quarterly Review, Vol. 71, No. 141, p. 273.-Ed.] represented the nation. And they set about this task with a will. Every obstacle to industrial production was mercilessly removed. The tariff and the whole system of taxation were revolutionised. Everything was made subordinate to one end, but that end of the utmost importance to the manufacturing capitalist: the cheapening of all raw produce, and especially of the means of living of the working class; the reduction of the cost of raw material, and the keeping down – if not as yet the bringing down - of wages. England was to become the ‘workshop of the world’; all other countries were to become for England what Ireland already was-markets for her manufactured goods, supplying her in return with raw materials and food. England, the great manufacturing centre of an agricultural world, with an ever-increasing number of corn and cotton-growing Irelands revolving around her, the industrial sun. What a glorious prospect!”
In other words, the existing colonies formed a ready made basis for achieving these ends. It should also be noted that as Engels again recognises, even until the latter part of the 19th Century, the landlords, and their associates – the Bankers, Stock-jobbers and Fundholders – continued to exercise a dominant political role in Parliament. It was only with the introduction of Universal Male Suffrage that their stranglehold was broken, enabling the industrial bourgeoisie to obtain a secure measure of control over the political regime, and then only by winning the support of the workers.
“Chartism was dying out. The revival of commercial prosperity, natural after the revulsion of 1847 had spent itself, was put down altogether to the credit of Free Trade. Both these circumstances had turned the English working class, politically, into the tail of the ‘great Liberal Party’, the party led by the manufacturers. This advantage, once gained, had to be perpetuated. And the manufacturing capitalists, from the Chartist opposition, not to Free Trade, but to the transformation of Free Trade into the one vital national question, had learnt, and were learning more and more, that the middle class can never obtain full social and political power over the nation except by the help of the working class. Thus a gradual change came over the relations between both classes. The Factory Acts, once the bugbear of all manufacturers, were not only willingly submitted to, but their expansion into acts regulating almost all trades was tolerated. Trades Unions, hitherto considered inventions of the devil himself, were now petted and patronised as perfectly legitimate institutions, and as useful means of spreading sound economical doctrines amongst the workers. Even strikes, than which nothing had been more nefarious up to 1848, were now gradually found out to be occasionally very useful, especially when provoked by the masters themselves, at their own time. Of the legal enactments, placing the workman at a lower level or at a disadvantage with regard to the master, at least the most revolting were repealed. And, practically, that horrid People’s Charter actually became the political programme of the very manufacturers who had opposed it to the last. The Abolition of the Property Qualification and Vote by Ballot are now the law of the land. The Reform Acts of 1867 and 1884 make a near approach to universal suffrage, at least such as it now exists in Germany; the Redistribution Bill now before Parliament creates equal electoral districts-on the whole not more unequal than those of France or Germany; payment of members, and shorter, if not actually annual Parliaments, are visibly looming in the distance and yet there are people who say that Chartism is dead.”
In fact, the kinds of trends that Lenin identified in his “Imperialism”, in fact trends that others such as Hilferding and Hobson had set out, in relation to the export of capital could hardly be an explanation for colonialism, for the reasons Warren set out in his “Imperialism, Pioneer of Capitalism.”
As I stated in my blog, Imperialism & War,
“But, even a casual inspection showed what was wrong with this theory. Firstly, Lenin argues that the division of the world, the monopolisation of colonies is a consequence of the development of the monopolisation of production and rise of Finance Capital. There are two problems with this. Firstly, the division of the world amongst the imperialist powers was already completed by the end of the 19th century, and the main scrabble for colonies occurred at that time. Yet, even according to Lenin, the rise of Finance Capital, and the dominance of the Monopolies did not occur until the beginning of the twentieth century. So, if that occurred AFTER the world had already been divided up, it could not have been the cause of that division! Secondly, Finance Capital as analysed by Hilferding, was a description of the situation in Germany, but it did not fit the picture in Britain or France, and yet it was Britain and France who WERE the main imperialist powers, the biggest holders of Colonies. In fact, the British economy was the one, probably LEAST characterised by Monopoly at the beginning of the twentieth century.
But, there were further problems with Lenin’s theory as Bill Warren points out in “Imperialism – Pioneer of Capitalism”. For example, there does not seem to have been any particular increase in overseas investment into the colonies by the imperialist powers during this period compared with the investment of previous decades, and Lenin’s argument that it was this rather than the colonies being simply markets for the imperialist powers surplus production does not seem to be born out by the facts either. Moreover, Lenin says that there is a causal link between Monopoly economic power and colonisation, but he does not make clear what that causal link really is. In fact, the theory seems to contradict another fundamental aspect of Marxism, including Lenin’s own analysis, and that is the theory of combined and uneven development. That theory, which is readily observable, states that different economies develop at different rates, that at any one time, the world will have economies at different stages of development. But, in that case it beggars belief that all of these “imperialist economies” could have arrived at the same stage of development at the very same time i.e. the stage where there economies were dominated by monopoly. It even further beggars belief that this point in time just also happened to coincide with the moment when the entire world had been completely divided up!!! As Warren says, it is difficult not to see Lenin’s pamphlet as anything more than a first draft, and the many caveats that Lenin includes in almost every section – some as Warren says, to the extent of making the statements therein meaningless - is testament to that. Yet, on the basis of this pamphlet, many on the Left still base their explanations of the world economy, and more importantly their attitude towards “anti-imperialism”, and questions of War.”
And as I pointed out in my blog, Imperialism, Industrialisation & Trade
“Lenin’s theory of “Imperialism”, was really a theory of Colonialism not Imperialism. It was based on the idea that Colonialism had divided the world up, that each Colonial power had a Monopoly position in each particular colony. But, the Colonial Revolution put an end to that situation. Not only did it bring political independence to those former colonies meaning they were free to choose their own economic policies, but it meant that the situation of Monopoly was itself ended, and far from a position of Monopoly it meant that there was intense competition BETWEEN the “Imperialist” powers not just to secure markets for their goods within them, but to secure supplies of basic materials, food etc. and increasingly between the multinational companies that raised global economic competition to new heights, to be able to locate their production in these countries, to take account of their plentiful supplies of cheap labour, and potential markets for their products. Far from this period being one that was characterised by the limitations of Monopoly it was marked by a substantial intensification of COMPETITION!”
Tuesday, 22 November 2011
The Egyptian Revolution - Part 3
Up to the beginning of the 19th Century, Egypt was part of the Ottoman Empire. The brief invasion of Egypt by Napoleon, in 1798, provided Britain, as part of the Napoleonic Wars, opportunity to stake its claim in the country. Britain alongside Ottomans, and Mamluks drove out the French, and in the subsequent chaos, Muhammad Ali, the commander of an Albanian regiment, nominally in the service of the Ottomans, seized power.
At the beginning of the 19th Century, not even Britain was yet industrialised. The dominant forms of foreign rule were those established on the back of Landlordism and Merchant Capital. The landlords established vast estates and plantations, either employing their own agricultural workers, or else simply extracting rent from domestic peasant farmers, whilst the merchants bought cheap materials and foodstuffs in these markets to sell back in Europe, whilst selling the increasing number of manufactured goods from Britain and other European countries into these markets. By its nature, Commercial Capital makes profits from buying low and selling high, rather than by actually creating surplus value by productive activity. As a consequence on its own, it tends to be destructive of development, because it undermines the actual producers. The political regimes established in these countries, therefore, tended to mimic the feudal regimes of the colonial power, with local landlords, and rulers being drawn into a system of domination over the mass of the population.
As a result, at this time, prior to the industrialisation of Britain and other European powers, and the military power which went with that, and which allowed them to exert direct colonial power, towards the end of the 19th Century, many countries like Egypt, or indeed those in Latin America, such as Venezuela, which had experienced a degree of economic development, were able to break free from the clutches of colonialism, usually under the auspices of some local military strongman.
Indeed, Simon Bolivar, is the classic example of that. Yet, the fact that these countries were able to free themselves from direct political control by some colonial power, and which set them apart from places such as India, did not mean that they were completely free.
In the 19th Century, many of these economies had a model of development to follow. It was that, being adopted in France and Germany, where under Louis Napoleon, and Bismarck, the State was driving capitalist development from the top down.
Indeed, in the US, something similar was happening. Having consolidated power in the hands of a centralised Federal State as a result of the Civil War, that state set about furthering the development of the dominant industrial capitalism of the North, in whose interests the Civil War had been fought. The State cleared the Native Americans from the land, in order to enable the establishment of the transcontinental railway, and settling of the plains for agriculture, it established a high tariff wall to prevent imports, particularly from Britain, in order to protect the infant US industry and so on. Meanwhile, the Monroe Doctrine, at the same time as opposing any extension of European colonialism in the Americas, also facilitated access to those markets for the US and the UK, which now as the "Workshop Of the World” sought to end Mercantilism, and gain access to global markets for its products, a strategy adopted by the US in opposing colonialism after WWII, on a global scale.
But, the extent of Egypt's relative freedom in the 19th Century can be assessed by the fact that under Ali, it waged expansionist drives, taking over Northern Sudan, Syria, and parts of Arabia and Anatolia, though European powers, concerned that Egypt might actually threaten the Ottoman Empire, and the political and strategic implications that would have for Europe's Southern flank, forced him to hand most of them back to the Ottoman's. The main consequence of this was actually to strengthen Ali's position to formalise his title as hereditary, thereby establishing the dynastic rule that was to last until 1952. It also meant that he could concentrate on the economic development of Egypt, which during the 19th Century became a capitalist economy.
In Europe, various methods were used to move peasants from the land, and to create a rootless working-class, forced to work in the developing towns and factories. In Britain, the process of the landlords stealing peasant land, that had been in progress since the 15th Century, continued under the name of “Enclosure”. In 1801, it was speeded up massively with the passing of the General Enclosure Act.
In France, the Revolution had dismantled the large estates, and introduced land reform. But, the peasants, as Marx describes, then found that they had to take out large loans and mortgages, which turned them into debt slaves. The Emancipation of the Serfs in Russia had a similar effect. In Egypt, the introduction of cash crop farming, particularly in relation to cotton, which assumed the form of a monoculture, had the same effect.
In Britain, and much of Europe, the gradual extension of trade led to the replacement of payment of rent in kind and the Corvee with Money Rent. The consequence was that peasants had to produce at least a portion of their output for sale i.e. as commodities. That was the only way of obtaining money to pay the rent and taxes. This undermined the self-sufficiency of the peasant, and opened up the need for increasing specialisation, as well as providing an opening for the development of the merchant class.
In Egypt, the development of cotton on the basis of cash crop farming achieved the same result. Cotton farmers, had to buy their other goods, which they would previously have produced themselves, from the market. It provides the basis for the development of a domestic market, and domestic capitalist production. But, of course, by developing cotton as a monoculture, there is insufficient domestic demand to absorb it, and so alongside the concentration of farms, in order to produce more efficiently for the market, comes the inward investment of foreign capital into those farms, and a concentration on meeting the needs of foreign markets for cotton, i.e. initially Britain.
But, Egypt faced the same problem that many economies face in bringing about economic growth – a shortage of capital. The UK had amassed huge amounts of money wealth by the 18th Century, from piracy, and from the slave trade. That wealth was held by large well established firms of banks and merchants. It provided the basis for the investment in productive capacity that occurred during the 19th Century. Other old colonial powers had similar stores of money that could be transformed into capital. In the US, capital was brought in by Europeans emigrating there, and the Northern industrialists were able, after the Civil War, to treat the South as an internal colony.
Lenin speaks of Russia treating Siberia in a similar manner under Tsarism. But, without such “Primary Accumulation”, any economy seeking to industrialise – be it capitalist or “socialist” - has to amass the resources to fund the development from somewhere. It can squeeze the peasantry, by unequal exchange between town and country, or it can do what most countries in that situation have been forced to do – it can borrow from foreigners.
One of the lessons that economists have learned, however, is that the effectiveness of this borrowing, depends on exactly what it is going to finance. If it simply goes to finance consumption, then it can only have a negative effect, ensuring that the country falls further into debt. But, even if it is going to finance, investment, the kind of investment is also important.
In his, “Economics Of The Transition Period”, Bukharin explained this problem in relation to the USSR. In part, it relates to Marx's analysis of the role of the Rate of Turnover.
In short, what this means is that if capital is invested in things such as large, heavy industry where it takes a long time for the commodities to be produced, and sold – i.e. for the capital involved in their production to be turned over, converted into money that can be re-invested – the annual rate of profit will be lower than where that capital is invested in commodities that are quickly produced and sold, precisely because less capital has to be advanced at any one time. In fact, Bukharin argued that if too much of societies' resources was diverted to such big heavy industries, it could actually result in a reduction in the amount of social surplus that could be created. Many of the successful newly industrialised economies of the 1980's onwards, have been those that first concentrated on the production of consumer goods, with a high rate of turnover, and which then having accumulated capital on the back of that were able to divert an increasing amount of resources towards heavy industry.
In this relation, Egypt made the opposite mistake. First under Said, and then under Ismail, Egypt underwent some considerable development, but at the expense of racking up huge foreign debt.
The latter stated in 1879,
"My country (Egypt) is no longer in Africa; we are now part of Europe. It is therefore natural for us to abandon our former ways and to adopt a new system adapted to our social conditions.",
and having been educated in Paris it was no wonder that he maintained a close relation with France, including the joint venture for the establishment of the Suez Canal. The extent of modernisation that was undertaken can be summarised by the fact that under the latter the railways in Egypt, and Sudan, which had remained in Egypt's control, increased from virtually none to, “the most railways per habitable kilometer of any nation in the world.” (Wikipedia) And demonstrating that the world is far more complex than the idea that it can simply be divided into imperialist and non-imperialist camps, under Ismail, Egypt itself resumed its own expansionist and colonialist ambitions by expanding its control into Dharfur, and attempts to colonise Ethiopia. Indeed, it was these imperialist ambitions in Ethiopia that, as much as the extensive plans for economic and social modernisation, left Egypt with massive debts.
“A national debt of over one hundred million pounds sterling (as opposed to three millions when he became viceroy) had been incurred by the khedive, whose fundamental idea of liquidating his borrowings was to borrow at increased interest. The bond-holders became restive. Judgments were given against the Khedive in the international tribunals. When he could raise no more loans, he sold his Suez Canal shares (in 1875) to the British Government for only £ 3,976,582; this was immediately followed by the beginning of foreign intervention.” (ibid)
In other words, and this was true of many of the Latin American economies, the condition they found themselves in stemmed, initially, not from any colonial power invading them, or indeed from the imposition of grinding unequal terms of trade. In large part, the economic problems of these economies arose due to the economic incompetence of their rulers. But, having put themselves in that position, they did find themselves being dictated to by powerful financial powers. In the absence of any body equivalent to the IMF, at that time, Britain and France sent its own representatives directly to Egypt to oversee its affairs. At the time Engels felt that this was all part of a manoeuvre, and that Britain had little real interest in Egypt.
In a letter to Kautsky he wrote,
“The Egyptian business is a Russian diplomatic manoeuvre. Gladstone is to take Egypt (which he does not have and if he had it, would not keep for long), so that Russia can take Armenia; which of course, according to Gladstone, would again be the liberation of a Christian country from the Mohammedan yoke. Everything else in the case is pretence, humbug, subterfuge. Whether this little plan will succeeds will soon be seen.”
In 1879, the extent of British control was extended, and eventually formalised by the official recognition of Egypt as a British Protectorate in 1914. However, Egyptian nationalists after WWI, won a majority in the Egyptian Parliament. When Britain, exiled the leader of the Wafd Party to Malta, a widespread revolt broke out, which resulted in Britain issuing the Unilateral Declaration Of Egyptian Independence in 1922. However, it was not full independence, and Britain retained control over major areas of Egyptian politics such as
(a) The security of the communications of the British Empire in Egypt;
(b) The defence of Egypt against all foreign aggression or interference, direct or indirect;
(c) The protection of foreign interests in Egypt and the protection of minorities;
(d) The Sudan.
Full independence came closer with The Anglo-Egyptian Treaty of 1936, but it maintained the right of Britain to retain troops to guard the Suez Canal. It was only after WWII, and the military coup led by Nasser in 1952, which led to the eventual withdrawal of British troops that full independence was restored.