On
Tuesday evening, the Cypriot Parliament voted against the proposed
levy. Even the governing party abstained. Part of the reason seems
to be the growing storm that surrounded the expropriation. That had
brought thousands of ordinary Cypriots out on to the streets, to show
their anger at being expropriated. That anger had forced the
government to keep banks shut until at least Thursday, with the
prospect that some of them might never open again. It now looks
likely that they will stay closed until next Tuesday at least. Even
after the vote to reject the EU proposal, it seems clear that when
banks do open, many ordinary Cypriots will still remove their
savings. Why would you believe that they will not try this again?
On Newsnight last night, one Government MP put forward as an
alternative proposal that they might nationalise the pension scheme
of state workers. In other words, instead of expropriating up to 10%
of workers savings, they would instead expropriate 100% of state
workers pensions funds!!!
Partly,
the reason lies with Russia, and shows why top down state
expropriations are usually a bad idea. Russia for decades has had a
close relation with Cyprus, a relation that goes back to their shared
Orthodox religion, and opposition to the Ottoman Empire. Although,
there are now many Russians living and investing across Europe, as
well as in the US – the talk about the Russian Mafia laundering
money through Cyprus is thoroughly hypocritical, given the amount of
Russian money involved in buying multi-million pound houses in
London, as well as buying up many British football clubs! - there
are, therefore, a greater proportion invested in Cyprus, though they
are rapidly buying up places in other Southern European countries,
such as Spain.
In
addition to the large amount of Russian money deposited in Cypriot
banks, by residents, there was also a lot of Russian money invested
in Cyprus. The threat to expropriate some of it, instigated by the
EU and IMF, was inevitably going to provoke, and may have been
intended to provoke, a reaction, given that Russia has already lent
Cyprus a lot of money to help it out of previous problems. In part
then, the decision seems to have been a recognition by Cypriot MP's,
that they might have a better friend in Russia than they have in the
EU, and IMF. Russia's Gazprom, not out of any sense of altruism, it
has to be said, is reported to have offered to underwrite the money
needed by Cyprus, €7 billion (which is peanuts) in return for
rights over the newly discovered gas fields off the coat of Cyprus,
thought to be worth tens of billions of Euros.
Herein
lies the main problem with state expropriations, the problem
recognised by Lenin, that is that in the modern world, economies are
dependent on foreign capital. They need it both to trade with, but
also to provide investment. That is particularly true of smaller
economies, but in a globalised economy it is even true of big
countries. Today, it is probably only within supra-national states
like the EU, that any kind of protection can be obtained. Even then,
because EU politicians have failed to take the necessary political
decisions to resolve the problems in Europe, by creating a single
European State, with a fiscal as well as monetary union, with a
single sovereign bond, thereby mutualising debt, and allowing each
state to borrow at the same interest rate, even the EU has had to
look to Russia, with its massive $500 billion of foreign currency
reserves, to help bail out and finance its own proposed debt
vehicles.
Some of
these problems of expropriation and of collectivisation were
understood and explained by Trotsky in his writings on Mexico. For
example, referring to the plans of the Mexican Government for
collectivisation of agriculture along Soviet lines, Trotsky wrote,
“The
results are well known. Agricultural production fell off by half,
the peasants revolted, tens of millions died as the result of
terrible famines. The bureaucracy was forced to partially
re-establish private agriculture. Nationalised industry had to
produce hundreds of thousands of tractors and farm machines for the
kolkhozes to begin making progress. Imitating these methods in
Mexico would mean heading for disaster. It is necessary to complete
the democratic revolution by giving the land, all the land to the
peasants. On the basis of this established conquest the peasants
must be given an unlimited period to reflect, compare, experiment,
with different methods of agriculture. They must be aided,
technically and financially, but not compelled. In short, it is
necessary to finish the work of Emiliano Zapata and not to
superimpose on him the methods of Joseph Stalin.”
He goes on in relation to the extending of credit in agriculture.
“The
collective enterprises must be kept viable, but the small individual
farms must continue to survive and grow as well during the historical
period necessary to accomplish “complete collectivisation”; and
this period may entail several decades.
If
methods of compulsion are used, this will only produce collectives
that exist at state expense, while lowering the general level of
agriculture and impoverishing the country.”
But, Trotsky is even clearer when it comes to industry and state
capitalism. He too points to Lenin's policy of attempting to attract
foreign capital.
“It
is true that the realisation of the democratic agrarian revolution,
i.e., handing over all the arable land to the peasantry, would
increase the capacity of the domestic market in a relatively short
time; but despite all that, the rate of industrialisation would be
very slow. Considerable international capital is seeking areas of
investment at the present time, even where only a modest (but sure)
return is possible. Turning one’s back on foreign capital and
speaking of collectivisation and industrialisation is mere
intoxication with words...
The
government defends the vital resources of the country, but at the
same time it can grant industrial concessions, above all in the form
of mixed corporations, i.e. enterprises in which the government
participates (holding 10 percent, 25 percent, 51 percent of the
stock, according to the circumstances) and writes into the contracts
the option of buying out the rest of the stock after a certain period
of time. This government participation would have the advantage of
educating native technical and administrative personnel in
collaboration with the best engineers and organisers of other
countries. The period fixed in the contract before the optional
buying out of the enterprise would create the necessary confidence
among capital investors. The rate of industrialisation would be
accelerated...
Lenin
accorded great importance to these concessions for the economic
development of the country and for the technical and administrative
education of Soviet personnel. There has been no socialist
revolution in Mexico. The international situation does not even
allow for the cancellation of the public debt. The country we repeat
is poor. Under such conditions it would be almost suicidal to close
the doors to foreign capital. To construct state capitalism, capital
is necessary.”
Of course, the main reason that Lenin had been unable to attract
foreign capital to Russia, was precisely the fact of the
expropriations undertaken under War Communism. Prior to the
revolution, the Bolsheviks had actually been provided with large
amounts of money from US capitalists, who also financed the
Mensheviks, and other democratic forces in Russia. That was not out
of any particular attraction to the Bolsheviks, but out of opposition
to Tsarism, which they saw as a feudal obstacle in the way of the
capitalist development of Russia.
It was on this basis of recognising the need to proceed according to
what the economic and social conditions made possible, rather than
simply some ultra-left, statist, emotional outburst for immediate
expropriation by the State that distinguished Lenin and Trotsky's
position from that of the sectarians and ultra-Lefts. They
recognised alongside Marx and Engels the need for a period of
transition between Capitalism and Socialism, and the need not just
for an adequate development of the forces of production but of the
most important force of production – the development of the workers
themselves. Lenin, for example, believed that the NEP would need to
run for at least 25 years, and part of his reason for wanting foreign
capitalist investment was to be able to bring about the necessary
transformation of the Russian workers, under the whip of competition.
Lenin made clear that he thought that the fact that the workers
would be exploited by this capital during the transition period would
be a price worth paying, indeed a price they had to pay.
In his April 15th 1938, letter to J.P. Cannon, for
example, Trotsky in calling for a reorganisation of the Mexican
section, refers to the ultra-left, sectarian Galicia, and his
complaint that the Cardenas Government had compensated the
expropriated capitalists. Trotsky writes, dismissively,
“Your
participation in the meeting here had one 'unexpected' result.
Galicia, in the name of the revived League, published a manifesto in
which he attacked Cardenas for his policy of compensating the
expropriated capitalists, and posted this manifesto principally on
the walls of the Casa Del Pueblo. This is the 'policy' of these
people.”
The approach of Trotsky, was consistent with the gradualist approach
to the transformation of Capitalist property adopted by Marx, Engels
and Lenin. Even in their most statist document, The Communist
Manifesto, written when they were still young and still separating
themselves from radical Liberalism, and the statist heritage of
Hegel, Marx and Engels wrote,
“The proletariat will use its political
supremacy to wrest, by degree, all capital from the bourgeoisie, to
centralise all instruments of production in the hands of the State,
i.e.,
of the proletariat organised as the ruling class;”
The important point here is that this is a proposal only for the
period AFTER the working class has become the ruling class, and
established a Workers State (a state, which they argued should
immediately begin to whither away!). It is certainly not an argument
for calling on the existing state to carry through nationalisation!
But, also, its important to note that even having won state power,
this wresting of all capital from the bourgeoisie is not something to
be done by some process of mass, immediate expropriation but is to be
achieved “by degree”. Finally, its important to understand what
Marx and Engels mean by centralising the means of production in the
hands of the State. Certainly in their later writing it is clear
that this is not to be understood in the way that statists understand
it, and the way it has been implemented by Stalinists and reformists,
in the form of nationalisation.
In arguing for the development of co-operatives, what Marx and Engels
elucidated was the problem of these operating as individual
enterprises. The solution they advanced was that all co-operatives
should belong to a single Co-operative Federation, which would
operate like a holding company, receiving a proportion of each
individual co-operative's profits. That is the appropriate response
under Capitalism, but once the workers have secured state power for
themselves, then this Co-operative Federation essentially becomes the
Workers State, because for Marx and Engels the role of this State is
essentially to act increasingly as merely a means of administration.
Engels made clear in several later writings that in the intervening,
transitional period between Capitalism and Socialism, when the
Co-operatives would play a central role as the transitional form of
property, State Ownership meant nothing more than this, than that the
State simply held the deeds to the property. The day to day
ownership and control of each Co-operative would remain in the hands
of its workers. At the same time, the organs that the workers
develop on the back of that Co-operative property, such as their own
democratic forums, the defence squads and militia, form the other
elements of that developing Workers State, its bodies of armed men,
in opposition to the existing Capitalist State.
This is clear in their later writings, where they are writing more
analytically, rather than in the propagandist terms of the Manifesto.
For example, Marx writes in the Grundrisse,
"As
the system of bourgeois economy has developed for us only by degrees
so too its negation, which is its ultimate result." p712.
Of course,
its necessary to distinguish between two different periods. There is
the period where Capitalism reigns supreme, and where the development
of the Co-operatives, like the develoment of the Trades Unions is
essentially a defensive measure adopted by the workers. Both grow as
the power of the workers develops alongside the development of
Capital. During this period the expansion of the Co-ops is
restricted because of the power of the bourgeoisie and its State.
But, the Co-operatives can and do expand, and in doing so they
demonstrate their supeiority to the workers over capitalist property,
including state capitalist property. On the back of that, the
workers engage in class struggle to defend and extend this worker
owned property, and the co-operative democratic and state forms upon
it. They fuse the class struggle on all its fronts via their co-ops,
their Trades Unions, and their Party. For example, Lenin in a
resolution to the International Socialist Conference in Copenhagen in
1910, proposed,
“It is
quite clear that there are two main lines of policy here: one—the
line of proletarian class struggle, recognition of the value of the
co-operative societies as a weapon in this struggle, as one of its
subsidiary means, and a definition of the conditions under which the
co-operative societies would really play such a part and not remain
simple commercial enterprises...
That
these societies can assume great importance for the economic and
political mass struggle of the proletariat by supporting the workers
during strikes, lock-outs, political persecution, etc. ..”
This
struggle of the workers to defend and extend worker owned property,
is what transforms the workers, and makes the workers fit both in
terms of skill, and in terms of consciousness to be the ruling
class, it is the real class struggle. Its culmination is the seizure
of state and political power by the workers. From that point on, the
state becomes the means by which the workers property and its
extension is defended against attack by the bourgeoisie. It is under
cover of its protection that the workers then begin to “ wrest,
by degree, all capital from the bourgeoisie”, but
as Marx makes clear, it is precisely because this process must be
undertaken by the workers themselves, and at the pace at which their
consciousness and ability to take on the necessary functions allows,
which means that this process must be gradual, that "As
the system of bourgeois economy has developed for us only by degrees
so too its negation, which is its ultimate result."
Otherwise,
if this process is conducted by the State from the top down, as
Trotsky pointed out, “If
methods of compulsion are used, this will only produce collectives
that exist at state expense, while lowering the general level of
agriculture and impoverishing the country.” Marx
and Engels, set out the means by which this would be achieved. In
Capital Marx writes,
“The
capitalist stock companies, as much as the co-operative factories,
should be considered as transitional forms from the capitalist mode
of production to the associated one, with the only distinction that
the antagonism is resolved negatively in the one and positively in
the other.”
And
emphasising that he saw this method as a gradual process he writes of
the method by which this expansion of Co-ops was to be accomplished.
“The
credit system is not only the principal basis for the gradual
transformation of capitalist private enterprises. into capitalist
stock companies, but equally offers the means for the gradual
extension of co-operative enterprises on a more or less national
scale...
The two
characteristics immanent in the credit system are, on the one hand,
to develop the incentive of capitalist production, enrichment through
exploitation of the labour of others, to the purest and most colossal
form of gambling and swindling, and to reduce more and more the
number of the few who exploit the social wealth; on the other hand,
to constitute the form of transition to a new mode of production.”
And now
with the State in their hands, the workers would be able to utilise
this Credit to develop those Co-operatives, and buy up the Joint
Stock Companies, as their own resources increased, and those of the
bourgeoisie declined. Today, with £800 billion in the workers
pension funds, the ability to mobilise those, if they were under the
democratic control of the workers, as they should be would speed up
that process massively.
It is this
process of the workers themselves developing their own form of
co-operative property that is the social revolution. As Marx puts it
in the Critique of the Gotha Programme,
“That
the workers desire to establish the conditions for co-operative
production on a social scale, and first of all on a national scale,
in their own country, only means that they are working to
revolutionize the present conditions of production, and it has
nothing in common with the foundation of co-operative societies with
state aid. But as far as the present co-operative societies are
concerned, they are of value only insofar as they are the independent
creations of the workers and not protégés either of the governments
or of the bourgeois.”
Where
workers have made that leap in consciousness and either develop
Co-operatives from scratch, or else expropriate capitalist property
where the existing bosses threaten closure etc. Then Marxists support
the workers in that struggle, but advise them that to overcome the
resistance of Capital, it will be necessary to join with other
co-operators, to gain the support of the Trades Unions, and to
support workers in their TU struggles, and ultimately it will be
necessary to win political power throughout society. As Engels put
it in a letter to Bebel,
“My
suggestion requires the entry of the cooperatives into the existing
production. One
should give them land which otherwise would be exploited by
capitalist means:
as
demanded by the Paris Commune, the workers should operate the
factories shut down by the factory-owners on a cooperative basis.
That is the great difference. And Marx and I never doubted that in
the transition to the full communist economy we will have to use the
cooperative system as an intermediate stage on a large scale. It must
only be so organised that society, initially the state, retains the
ownership of the means of production so that the private interests of
the cooperative vis-a-vis society as a whole cannot establish
themselves.”
Note that
even in terms of a role as aholding company, Engels states that it is
only “initially” that the state occupies that role, signifying
his and Marx's view of the State withering away.
The workers
in Cyprus today should begin a process of expropriation themselves.
If the banks are allowed to go bankrupt, the workers should them take
them over, taking no responsibility for their previous debts. They
should run them themselves as Co-operatives, and link them to the
workers Pension Funds, and should begin a process of uniting all the
Co-operative banks and financial institutions across Europe, as part
of building a Europe wide Federation of Workers Co-operatives.
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