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.

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