Unlike our political opponents the Communist Party of Great Britain (Marxist Leninist) and Red Youth do not sneak about behind the backs of other groups who profess to be communist but with whom we have differences; we do not seek to hide our differences (like the Communist Party of Britain) but rather we wish to have them out in the open so the points can be debated. Nor do we reduce our political differences with others into personal gossip and rumour mongering. So many on the so-called ‘left’ retreat to the safety of the chat room and online forums to spread gossip and rumour, unable to deal in an honest and upfront manner with political disagreements. Where differences of opinion exist, we aim to deal with the political aspect openly and forthrightly. It is in this spirit that the friendly journal Lalkar has written a critique of the RCG position on Syria which can be read below. We are sure that this open polemic with those who genuinely seek to chart an anti-imperialist path for the revolutionary forces in Britain will be welcomed by all sincere communists and anti-imperialists:
Revolutionary Communist Group: sitting on the Syrian fence
From the very start of the turmoil in Syria, Lalkar, and its sister publication, Proletarian, have been crystal clear in their exposition of the realities of the situation – namely that what the country was facing was not primarily the result of any internal contradictions within Syrian society, but rather an externally directed campaign of aggression and terrorism waged by imperialism, both directly and through its regional surrogates, Turkey, the reactionary Arab states and statelets and the zionist colonial settler state of Israel, against practically the last remaining independent, anti-imperialist state in the Arab region, which, moreover, adheres to a broadly socialist orientation.
Everything that has transpired over the last nearly two years has borne out the accuracy of our analysis all too clearly. As a result, whilst our line of calling for ‘Hands off Syria’ and ‘Victory to Assad’ has remained consistent, and consistently correct, our political opponents in the anti-war and working class movements have had to slither and slide hither and thither as the inexorable unfolding of events has inevitably served to expose and highlight their opportunism.
Thus, for example, the Trotskyites of Counterfire, the main, but not only, source of misleadership and demobilisation in the Stop the War Coalition, took more than a year (not to mention the additional time they had already spent cheering on counter-revolution in Libya) to get off the imperialist fence and concede that the anti-government violence in Syria is essentially reactionary.
Even now, they refuse to prioritise the Syrian crisis in their organised inactivity of pointless protest, rather claiming to focus on a possible future war against Iran, despite the fact that the actual war being waged by imperialism in Syria is not least directed at opening the road to Tehran and, needless to say, reserving their greatest venom for those who draw the logical and correct conclusion that if one is to call for the defeat of imperialist war, one must also call for the victory of those fighting against imperialism – and in Syria this must mean the government and armed forces led by President Assad.
Within the constellation of opportunist trends that refuse to take a clear cut anti-imperialist stand, a particularly crafty and disingenuous role is being played by the Revolutionary Communist group (RCG) and its newspaper Fight Racism! Fight Imperialism! (FRFI).
An article in the current (December 2012/January 2013) issue of FRFI contains some useful information on the dirty role of British imperialism in fomenting the war against Syria and correctly concludes: “For communists in Britain, it is essential to expose and oppose the role of British imperialism. We cannot let there be a repeat of 2011’s imperialist slaughter with no real domestic opposition.”
Yet what is the RCG’s reason for opposing David Cameron’s plans to overtly arm the terrorists in Syria? With a sanctimonious air worthy of a country parson, the comrades inform us:
“Syria’s battlegrounds are already awash with foreign weapons: the Syrian army killing with Russian and Iranian products, and the rebels armed by more than three dozen countries including more than half of the membership of NATO.” (‘Syria: British imperialism takes the centre stage’)
Yet, for Marxists, it should be axiomatic that weapons, and even “killing”, per se, are not the issue. The issue is who is wielding the guns, who is killing and who is being killed and, to sum up it all up, which class interests are being served? As Lenin rightly put it:
“We would cease to be Marxists, we would cease to be socialists in general, if we confined ourselves to the Christian, so to speak, contemplation of the benignity of benign general phrases and refrained from exposing their real political significance.” (‘Bourgeois pacifism and socialist pacifism’, Collected Works, Vol. 23)
Such pious phrases as the above quoted one from the pages of FRFI would, frankly, generally pass almost without notice in the pages of mushy liberalism produced by the various Trotskyite and revisionist groups in Britain.
But the RCG made a name for itself by claiming to stand for the militant defence of national liberation movements and all those fighting imperialism – as the very name of its newspaper seeks to convey.
In particular, this organisation staked out its political territory by excoriating almost the entire British left for its shameful failure to wholeheartedly support the Irish people’s national liberation struggle. And it took solidarity with the Irish and South African struggles onto the streets in a generally militant and dynamic way. Today, it seeks to mark out similar terrain for itself with its campaigning in solidarity with socialist Cuba.
Why then does the RCG allow itself to slip into this sort of ‘plague on both your houses’ agnosticism, so characteristic of the petit bourgeoisie, in the case of Syria?
An article by the same author, Comrade Toby Harbertson, in the previous (October/November 2012) issue of FRFI sheds some more light on this.
Again, the article contains much that is correct and useful, both in terms of outlining facts concerning imperialist aggression against Syria, as well as in exposing the hopelessly reactionary position of the Trotskyite Socialist Workers’ Party (SWP), the organisation from which the RCG originally emerged. Comrade Harbertson also correctly notes that:
“ When considering Syria, the bottom line for imperialism, given the increasing capitalist crisis, is that it will not allow a politically independent country, which has not fully opened its borders to imperialist capital, and retains a strong military, to remain at the heart of the Middle East .”
Pretty clear one might think. Alas, the analysis of imperialism, and its opponents, goes downhill from that starting point. Having exposed the SWP (largely out of its own mouth) for its reactionary positions down through the decades, from Hungary, through Czechoslovakia, to Poland, Afghanistan and Ireland, the RCG asks: “In the case of Syria, are the SWP supporting reactionary forces once again?”
Alas, the RCG’s answer is not the clear-cut one that one might reasonably expect. In the blink of an eye, this “politically independent country, which has not fully opened its borders to imperialist capital” is transformed into a “ repressive government”, as Comrade Halbertson declares:
“ Popular resistance to the Ba’athist state no doubt exists and it is clear that some Syrian people were, and are, demonstrating against the repressive government .”
Like numerous other opportunist currents, although not the incorrigibly reactionary SWP, which does not even bother, the RCG has to try to square the circle of how these supposed demonstrations against a repressive government have mysteriously mutated into an imperialist war of aggression. Shamefully, the RCG’s contortions on this point lead them to even give partial absolution to the terrorist Free Syrian Army (FSA), which is guilty of countless atrocities:
“ Any popular uprising has been hijacked. In Syria, this process has accelerated in the last few months as earlier attempts such as the Free Syrian Army (FSA) lacked structure and gave too much room for hostile and unreliable Salafist and Wahabist groups to challenge for influence .”
The article also asserts that: “The repressive government of Assad and the Ba’athists was complicit with the suffering of the Palestinian people, [and] supported the imperialist invasion of Iraq.” (‘Syria: covert intervention and the failure of the British left’)
In raising such issues, the RCG is revisiting the events of decades ago (which arose from the deep splits among anti-imperialist forces in the Middle East as well as the bourgeois national limitations of the Ba’ath Party) and, in a quite dishonest manner, is presenting them as though they happened only yesterday. Even if they had, what purpose would be served by dwelling on them now, when the country is in a life-and-death fight for its very existence? But in referring to the cases of Palestine and Iraq, the RCG refers to events respectively in the mid to late 1970s and at the beginning of the 1990s, events which our comrades rightly criticised at the time – a time, incidentally, long before the present President Assad came to power.
However, it is one-sided, to say the least, to focus on these (unexplained in the article) events of long ago, without any reference to more recent and more relevant facts concerning Syria’s stance and actions with regard to both Palestine and Iraq.
At least until the last few months, Syria has been home to 11 Palestinian resistance movements. Unlike any of the other Arab countries bordering Palestine, Syria is the one country where the Palestinian population has enjoyed full economic and social rights, including to live where they choose, to build their own homes, to freely choose their occupation or profession, and to enjoy free education and medical care. Syria has been, and remains, an honourable member of the ‘axis of resistance’, providing vital aid to the Lebanese Hezbollah movement, which inflicted the greatest military defeat on the Israeli aggressors.
With regard to the invasion and occupation of Iraq in 2003, not only was this firmly opposed by Syria – Damascus opened its borders both to Iraqi refugees and to resistance fighters entering Iraq to fight the occupation.
As all of this is doubtless well known to the writers and editors of FRFI, and to the leaders of the RCG, their above quoted formulation is both reactionary and dishonest.
We make these points not because the RCG enjoys any great influence in the movement, but rather because its stubborn refusal to fully settle accounts with its Trotskyite origins leads it again and again to smuggle reactionary ideas into its ostensibly militant and anti-imperialist propaganda and practice, thereby promoting the very opportunism that it so vociferously claims to decry. Such a stance can only serve to misguide honest people and hinder the building of a genuine, strong and united anti-imperialist and communist movement. The good comrades in and around the RCG, and the whole working class movement, deserve better.
Red salute to the Communist Party of China! We take this opportunity to reproduce here along with various articles from Xinhua reporting upon the Congress, a wonderful article produced in Proletarian August 2011 celebrating the 90th birthday of the CPC!
China’s communists celebrate 90 years “Great achievements, but serious problems remain. “We will never rest on our laurels.”
The Communist Party of China celebrated its 90th founding anniversary on 1 July. A few days before this significant anniversary, the party announced that its membership had reached 80.269 million by the end of last year.
This is a very far cry from the early days of the CPC. The first congress, which founded the party, was attended by just 12 delegates, who represented a little over 50 members. The congress met in conditions of strict secrecy and illegality. Indeed, the delegates only narrowly avoided arrest, and quite possibly death, when they left the school where the congress had originally been convened shortly before the police arrived and continued their deliberations on a river cruise boat.
The objective situation of China has undergone equally radical changes over the last nine decades, thanks to wave after wave of tenacious struggles waged by the Chinese people under the leadership of the party. At the time of the party’s foundation China had been reduced to a semi-colonial, semi-feudal country, in which the masses of people lived under conditions of dire poverty and oppression.
Today, although it still faces a long and hard road ahead, China has advanced to take the position of the world’s second largest economy, the country is strong, capable of defending itself and respected in the world, and hundreds of millions of people have been lifted out of poverty.
It is against this background that the 90th anniversary of the party’s foundation was treated both as a major political event and cause for celebration across China.
The political centrepiece of the anniversary was an important speech delivered by the party’s general secretary, and the president of China, Comrade Hu Jintao, at a grand gathering held in Beijing’s Great Hall of the People. Explaining the background to the party’s formation, Hu said:
“In the 170 plus years since the Opium War of 1840 [waged by British imperialism against China – Ed], our great country has weathered untold hardships, our great nation has waged earthshaking struggles, and our great people have scored splendid achievements in the annals of history.
“Following the Opium War, China gradually became a semi-colonial and semi-feudal society, and foreign powers stepped up their aggression against China. The feudal rule became increasingly corrupt, the country was devastated by incessant wars and turbulence, and the Chinese people suffered from hunger, cold, and oppression. To salvage China from subjugation was an urgent mission for the Chinese nation. And the Chinese people faced the historic tasks of winning independence and liberation, and making China strong and prosperous.
“In those dark years, in order to change the destiny of the Chinese nation, the Chinese people, led by many leading figures with lofty ideals, waged unyielding struggles to explore a new future against great odds. Not resigned to fate, the Chinese people launched one struggle after another … but all these struggles ended in failure. The Revolution of 1911 led by Dr. Sun Yat-sen put an end to the autocratic rule that had existed in China for several thousand years. This revolution greatly boosted China’s social progress, but it did not change the country’s nature as a semi-colonial and semi-feudal society or end the misery of the Chinese people.
“Facts have shown that neither the mission of striving for national survival nor the historic task of fighting imperialism and feudalism could be accomplished by reformist self-improvement movements which did not touch the foundation of feudal rule, old-style peasant wars, revolutions led by bourgeois revolutionaries, or other attempts to copy western capitalism. To find a way of achieving China’s development and progress, one must, first of all, find an advanced theory that can guide the Chinese people in their revolution against imperialism and feudalism, and an advanced social force must rise that can lead social changes in China.
“In 1921, the CPC was born in the process of integrating Marxism Leninism with the Chinese workers’ movement. The birth of the CPC was a natural product of the development of modern and contemporary Chinese history, as well as the indomitable exploration of the Chinese people for survival of the nation. The birth of the CPC put the Chinese revolution on the right course, gave the Chinese people a powerful motivation and created bright prospects for China’s future development.”
Over the past 90 years, Hu continued, the CPC has united with and led the Chinese people in a series of earth-shaking events.
The first was to complete the new-democratic revolution, winning national independence and people’s liberation. As a result:
“The history of old China being a semi-colonial and semi-feudal society which was like a heap of loose sand was brought to an end once and for all. The unequal treaties imposed on China by imperialist powers and all the privileges they had in China were abolished. The Chinese people stood up, and the Chinese nation entered a new era of development and progress.”
The second was to complete the socialist revolution and establish a basic socialist system for a quarter of the world’s population, thereby bringing about the “most extensive and profound social changes in Chinese history”. Stressing the continued relevance and importance of these achievements, Hu Jintao summed up:
“The party’s first generation of central collective leadership, with Comrade Mao Zedong at the core, united with and led the entire party and the people of all ethnic groups in achieving the great victory of the new-democratic revolution, establishing the basic socialist system and creating the fundamental political prerequisite and institutional foundation for all development and progress in contemporary China.” (Emphasis added)
According to Hu Jintao, a review of the last 90 years meant that “we have naturally come to this basic conclusion: Success in China hinges on the party”. Accordingly, in a sober and realistic way, he proceeded to elaborate on a number of the things that need to be done to “preserve and develop its advanced nature as a Marxist political party”.
The party “should serve the people, rely on them, work for their benefit with heart and soul, draw on their wisdom and strength, and always maintain close ties with them …
“The entire party must be keenly aware that at a time of profound changes in global, national and intra-party conditions, we are now faced with many new developments, problems, and challenges in our effort to enhance the party’s leadership and governance and its ability to resist corruption and degeneration and to withstand risks … We are facing long-term, complicated and severe tests in governing the country … And the whole party is confronted with growing danger of lacking in drive, incompetence, divorce from the people, lacking in initiative, and corruption. It has thus become even more important and urgent than ever before for the party to police itself and impose strict discipline on its members.”
To face up to these and other problems, Hu advocated that, “all party members and cadres should take learning as an intellectual pursuit, study in an in-depth way and master Marxism Leninism and Mao Zedong Thought … [and] foster a worldview and methodology of dialectical materialism and historical materialism …
“The only interests the party has are those of the people, and it does not have special interests for itself. The party adheres to this lofty principle, and for all those who are loyal to the people, identify themselves with the people and dedicate themselves to the people, the party provides a big arena to give full play to their talent.”
Hu Jintao also spoke about the need and ways to develop young cadres and the need to maintain close ties with the masses. He said:
“To continuously train a large number of outstanding young cadres is of fundamental importance for carrying on the cause of the party and the people from generation to generation. To shoulder heavy responsibilities, young cadres must foster a sound worldview and correct views on power and career, and they should be loyal to the party’s cause, be identified with the people, be committed to whatever they do, and constantly improve themselves.
“Young cadres need to take the initiative to work in hardship areas and complicated environments and take up challenging positions to temper their moral character and work style and improve their ability. When young cadres come to the fore in large numbers who have honed themselves in tough and complicated environments, endured the test of major struggles, and proved themselves outstanding and promising, they will create a great future for the cause of the party and the people …
“Putting people first and governing for the people is what the party is all about. It fully embodies the party’s fundamental purpose of serving the people wholeheartedly. It is the ultimate yardstick to guide, assess, and test all governance activities of the party. All the comrades in the party must bear in mind that maintaining close ties with the people gives the party its biggest political asset, while alienation from the people poses the greatest risk to the party after it has gained political power.
“Therefore, we must always place the people’s interests before everything else, and make sure that the aim and outcome of all our work is to realise, uphold and expand the fundamental interests of the overwhelming majority of the people …
“The people will care about and feel close to the party only when the party feels the same toward them. Party and government offices at all levels and their officials should be more community-focused in their work, regularly visit communities, and stay close with the people.”
Hu laid stress on the absolute importance of fighting corruption “in a comprehensive way”, “addressing both its symptoms and root causes, and combining punishment with prevention, with emphasis on prevention. We must intensify efforts to improve party conduct, uphold integrity and combat corruption so as to maintain the advanced nature and integrity of the party as a Marxist political party.”
He said that the party “is soberly aware of the gravity and danger of corruption that has emerged”, warning that if not effectively curbed it would cost the party the trust and support of the people:
“Leading officials at all levels must bear in mind that our power is entrusted to us by the people and can only be used in their interests. In exercising power, we must serve the people, hold ourselves accountable to them, and readily subject ourselves to their oversight. We must not turn our power into an instrument for making personal gains for a handful of individuals … We must preserve the political integrity of communists.”
He also laid stress on the social policies and programmes that need to be pursued to address the problems of inequality that have become serious in China over the last period:
“To promote social development, we should focus on ensuring and improving the people’s wellbeing, and make special efforts to solve the most practical problems of the utmost and immediate concern to the people. We should ensure that development is for the people and carried out by the people and that they share in the fruits of development.
“We will strengthen the institutional arrangements for ensuring and improving the people’s wellbeing, give high priority to promoting employment in our economic and social development, and accelerate the development of education, social security, medicine and health care, low-income housing and other social programmes. We will ensure that all the people have equal access to basic public services, make more efforts to regulate income distribution, pursue prosperity for all, and strive to ensure that all the people enjoy the right to education, employment, medical and old-age care, and housing.”
In conclusion, Hu Jintao noted: “Ninety years ago, the CPC only had a few dozen members. Back then, China was a poor and backward country and its people were leading a miserable life. Today, the CPC has more than 80 million members. China is prospering and its people are living a happy life. All the achievements of the party over the past 90 years have been made by the party together with the people. We will never forget that the people are the real heroes.
“We have every reason to be proud of what the party and the people have achieved, but we have no reason to be complacent. We must not and will never rest on our laurels.”
CPGB-ML comrades assembled in Clerkenwell to take part in this years May Day celebrations.
On this day, millions across the world have taken to the streets ever since 1889, when the first congress of the Second International declared 1 May as International Workers’ Day. This day was initially chosen to honour the American workers’ triumphant strike for the eight-hour day on 1 May 1886 and as a homage to those gunned down by the Chicago police as well as their leaders – Albert Parsons, August Spiers, Adolph Fischer, George Engel, Michael Schwab, Samuel Fielden and Louis Lingg – who were condemned to death for their leadership of the strike and declared “guilty of murder” (policemen also died when they attacked the assembled protesters in Haymarket Square). One hundred and twenty years later, the echo of Spiers’ words from the gallows must continue to remind us of our strength: “There will be a time when our silence will be more powerful than the voices you strangle today.”
The strength and power of the working-class movement has been demonstrated all over the globe ever since. May Day has become an occasion when we celebrate our achievements, express international solidarity and reaffirm that socialism is the way forward for humanity. With the establishment of socialism in the USSR and its historic victory over Nazi fascism, millions of toiling people have been inspired to fight for a better life.
From the storming of the Winter Palace in 1917 to the victorious end of the anti-fascist war, when the red flag was raised on the Reichstag in Berlin in 1945, the flying of the red flag with its hammer and sickle has been indelibly linked to the achievements of our movement and is a symbol of progressive humanity. Whereas internationally, from east to west, from Asia to South America, red flags have dominated May Day, in the imperialist heartlands, far fewer are seen, as our historic day has been hijacked as a ‘spring holiday’ and drained of all revolutionary fervour by the dominance of the social-democratic leadership. It is time that socialists in Britain reclaimed the day, increased our symbolic use of the hammer and sickle, proudly declared our communist ideals and explained that communism is still the only way forward for humanity.
The following article is translated from Marxist Leninist Henri Houben’s book La Crise de Trente Ans, Chapter 10, with thanks.
It is tempting to try to separate ‘real’ [economic] activity, ie, production, on the one hand, from the financial sphere on the other. This seems to correspond with the modern economy. But is this distinction appropriate? We must return to the fundamentals of capitalist development.
Karl Marx approached this question from the starting point of the concept of accumulation. This process has three phases: first, an enterprise creates a profit; second, a part of this profit is reintroduced into the production process by way of investment; third, these investments allow an expansion of production levels and the creation of extra profit as compared to the first cycle … and so on and so forth.
So a firm needs to make as much profit as possible; this is what will determine its entire progress. And it is necessary that enough of this profit should be incorporated in the new process of production to lastingly increase capital. That is the investment. If the greater part of the excess is distributed among shareholders or invested elsewhere, the enterprise will not be able to grow. Finally, capital must itself increase as a result.
These are the three characteristics that will decide whether a company is ‘competitive’ or not. It is not profit alone, because it is the level of capital that will influence future profits. It is not capital alone, because capital on its own does not necessarily give rise to a larger future profit. It is their dynamic combination which gives rise to a company’s ability to accumulate.
A firm that accumulates more, and faster, than its competitors is going to impose its norm on the sector as a whole. Thanks to its extra profits, it is going to be able to invest more, acquire technological innovations more rapidly, and adapt itself more easily to variations in the economic climate and in demand. It is going to ‘grow’, while the others, if they do not keep up the pace, risk being left behind.
For competitors, there are only two possible solutions left: either they must merge, or they must get the capital they need from financial institutions. The supplementary capital supplied by the financial sector (whether through loans or through money raised via the issue of shares on the stock exchange) can give its recipients a real competitive boost.
Just like recourse to drugs in sport, this capital injection can give its user strength at a given moment and even force the market ‘leader’ itself to go in search of funds in order to stay ahead in the sector. In this way, as capitalist competition progresses by means of a furious battle, the financial sector, which started out playing a secondary and supplementary role, becomes absolutely central, because it is this sector that feeds the combatants the capital that is essential for their accumulation.
Historically, it has been the banks that played this essential role. The first to take on this function on a large scale were Belgian establishments, starting with the Société Générale de Belgique, and followed by the Bank of Belgium. From 1835 onwards, they transformed part of their discounting business [ie, the purchase of future assets, especially debts owed to the customer, at a discount in relation to the amount expected to be received, which really amounts to lending at interest against the promise of repayment from future receipts]– that had by then virtually metamorphosed into long-term lending (since ‘discounts’ were being perpetually renewed) – into the purchase of shares in industry, especially in coal and metal mining.
Having acquired control of over 40 percent of Borinage coal production (at the time the most important in the country), the Société Générale reduced the competition between the different mines and attempted to impose monopoly prices on its main markets both in Belgium and in northern France. After 1850, the company became a major player in the development of railways.
The bank thus became a decisive influence in Belgium’s industrialisation, one of the first and most important of the 19th century, having sunk its claws into three crucial sectors: the collieries that provided coke to the metallurgy companies, which were in turn providing rails to the railway companies.
Without the extra funds brought into production by Société Générale, what would have become of Belgian economic development? How many mines would have closed down sooner, not because they were exhausted but because of the bankruptcy of their exploiters? Would the coal-mining companies and the metallurgical industries have been able to stand up to English competition, which was particularly virulent at the time?
The success of the Belgian banks was emulated in other countries. The German banks, soon to be given the nickname of the ‘Four Ds’ because of their names (Deutsche Bank, Dresdner Bank, Disconto Gesellschaft and Darmstädter Bank), modelled themselves on their Belgian counterparts to create institutions that attracted deposits and granted loans, but also took a direct part in industrial and commercial businesses. They were what are called ‘universal’ or ‘mixed’ banks, as opposed to commercial banks, which limit themselves to lending and taking deposits. [In English, a bank whose business involves direct investment in companies would be called a merchant bank, though nowadays most banks are mixed to include a merchant banking business besides other types of banking operation.]
As we have explained, the role of the banks was taken over by other forms of financial institution. After the crash of 1929, several countries introduced laws that forbade the same entity to carry on both ‘commercial’ and ‘investment’ activity. And then, the amounts required for certain types of multinational investment became too large to be provided by a single establishment. The close links between industry and the banks weakened.
But this did not imply that industry had regained its independence. On the one hand, a good number of multinationals created their own finance departments, with assets outstripping those of many banks. At its height, between 2004-5, the financial subsidiary of General Motors (GMAC) had assets to the value of $573bn. Only the largest banks in the world administer larger sums.
On the other hand, as we have already seen, the process leading to dependence reconstituted itself, albeit no longer around banks properly so-called, but around the desiderata (requirements) of new financial players such as pension funds, investment funds, hedge funds, private equity funds, and so on.
This shows that the mechanisms that led to the domination of banks [the need for higher concentrations of invested capital] are still operative. There is still today a battle for accumulation – in fact, it is more active than ever, in certain sectors at least. And the two central features of accumulation remain the creation of profit and the supply of capital.
There is nevertheless a very small difference with the past: formerly, a bank that took over a business that was in difficulty, restructured it and reassembled it with a view to this enterprise snatching the role of leader and imposing its authority on others. But the new finance capital is far more destructive, following the logic of immediate profitability: the company taken over has to contribute its share of costs immediately, even if doing so propels it towards certain demise.
The car industry gives an excellent example of this development. In this sector, the uncontested leader is Japanese car maker Toyota. Way back, it put into place a system of production called Toyotism, which perfected traditional Fordism. This system allows it to capture additional surplus value, and to make globally superior profits. Moreover, its methods of providing a return on capital, as is often the case in Japan, offer the possibility of devoting a major part of the profit to investment.
In 1956, Toyota did not make even 50,000 cars. That year, 4 million vehicles rolled out of the General Motors factories. The Nagoya industry’s share only represented 0.4 percent of global production. In 2006, the Japanese car maker overtook General Motors and stripped it of its rank as the world’s foremost vehicle producer.
As far as profits are concerned, the Japanese enterprise has been beating record after record since 2000. In 2003, it was the first car manufacturer to have a net profit higher than $10bn, reaching $15bn in 2007 (Ford had declared a profit of $22bn in 1998, but this was as a result of exceptional circumstances). In 2008, Toyota suffered a loss of $4.3bn as a result of its major exposure to the US market and the fall of the dollar in comparison to the yen.
In 2007, Toyota owned capital amounting to almost $120bn. This total had doubled since 2001! It is a sum equivalent to the combined investment capital of Daimler, Volkswagen and Peugeot.
In order to be able to invest more, the Nagoya company puts pressure on its competitors until they go bankrupt, as is shown by the cases of General Motors and Chrysler. Here, Toyota’s advantage is such that even new finance capital provided by the private equity fund Cerberus, which bought Chrysler and half of GMAC, was unable to save them. That required intervention by the US state.
Finance capital [the domination of industry by banking capital], therefore, is not a deviation from capitalism but a necessity arising from the intense competition between larger and larger enterprises. Its domination over the ‘real economy’ is therefore entirely unsurprising.
Since the beginning of the 1980s, the rivalry between capitalist powers has given rise to two opposing models, which are sometimes called the Anglo-Saxon model and the Rhenish model (‘Rhenish capitalism’ is a term popularised by the work of the French economist Michel Albert in his 1991 book, Capitalism Against Capitalism). These models are models of two different kinds of alliance between the world of finance and the world of production.
On the one hand, there is the model that prevails mainly in Germany and Japan, where industry is supported by banks that are almost omnipotent, and this economic whole receives the support of the state machine, with the links between politicians and business being extremely strong. It is more or less a continuation of the structures put in place in the 19th century based on the universal bank.
This is a game at which the US is a loser. Therefore the US ruling class much prefers its own Anglo-Saxon model of development: ie, the supply of the necessary funds by financial markets (above all stock markets), which supply the funds needed for accumulation and are available more or less throughout the world. The US therefore uses all its power, including its state [military] power, to impose this method on the whole world.
These endeavours have been greatly helped by the fall of the USSR, which gave free rein to Washington, and by the creation of the WTO, which simultaneously sanctified free trade in commodities while at the same time defending intellectual property rights, to the advantage of existing multinationals.
With this ‘globalisation’, the German and Japanese models [being largely circumscribed by their countries’ respective frontiers] were at a disadvantage. Of course, companies like Toyota and Honda came out all right. But the mighty Japanese mechanism for accumulation is at a disadvantage. It is not designed for overseas operations. Its credit establishments were driven to the edge of bankruptcy by the bursting in 1989 of another bubble, affecting both financial and real property assets, that was specific to Japan. In order to avoid failure they were obliged to merge. Today, there are only three large banking groups in the archipelago: SMBC, Mizuho and MUFG.
Financial problems also shook Germany. The Dresdner Bank was taken over in 2002 by Allianz, before being resold in August 2008 to one of the other banking giants, the Commerzbank, which was itself obliged by the European Commission to offload half its assets when it had to receive support from the state to avoid bankruptcy. As for the Deutsche Bank, it gradually transformed itself into a strictly financial institution, abandoning its direct influence over German industry.
Financial development over the last few years has been penalising firms, especially banks, that keep hold of their stocks and shares rather than speculating on their rise and fall.
Today, the US, which once lagged behind Germany and Japan as regards competitiveness, has opted for a finance capital formula that can certainly be described as ‘hard’, ie, for autonomous markets where speculation is welcome and where today’s profits are snatched at the expense of the future, because what matters is one’s stock exchange valuation, ie, values which incorporate expected future profits.
Finance capital made in Germany or Japan cannot do the trick, quite simply because in the short term it cannot accumulate as fast. This is why it is in decline and is giving way to the financial domination of the American system …
In the 19th century, too, it was the countries that needed to catch up with globally more profitable British companies that sought support from banks and brought about the development of what became the finance capital of the time. In his analysis of the financial structure of capitalism worldwide, Pierre Grou stresses: “The special problem of control that arose at the end of the 19th century is that relating to the later-developing capitalisms of Germany, Russia, Belgium, the US – where industry needed the banks in order to be able to finance the accumulation of capital, with British industrialisation as their common model.”
It is they who in the end imposed the system of finance capitalism on the whole planet. And British capitalism was eventually overtaken, since it did not have enough companies with sufficient concentration of capital to compete with the American or German companies and others.
In the same way today, the US lags ‘behind’ Germany and Japan as far as competitiveness is concerned. So the US has opted for a different formula for finance capital that provides gigantic short-term profits.
The development of what seems to common sense to be ‘financial exuberance’ is not therefore a deviation within a capitalist system that is basically healthy: it is the logical outcome of a battle between the US, European and Japanese giants, expressed in economic, political and military rivalry between these three centres … On this point, too, the financial crisis is a crisis of capitalism as a whole.
The social and the parasitic
This capitalism is destructive. This is not only because of the development of financial excess – the problem is deeper than that. Financial domination over capitalism is not really surprising. It is the domination of money capital that is privileged at every level because competition prevents any other kind of action or reasoning.
The exaction of tribute by powerful financial conglomerates is nothing but the last stage of a process [the redistribution of profit among different sections of the exploiter classes, to the advantage of some and disadvantage of others] that resides in the very heart of production and is where everything begins to totter (something which tends to get forgotten).
Since the 1980s, the major multinationals have been abandoning the diversification strategies that were especially fashionable a decade earlier, as well as the vertical integration that Ford had developed to the extreme at the start of the last century. The multinationals instead focused, in their own words, on their ‘core business’, the central kernel of their activities, leaving other activities to other firms, be they themselves giant providers or merely entirely dependent subcontractors.
In the car industry, Toyota was one of the forerunners, as was Toshiba in electronics. Japanese companies built a system of production on a pyramid of subcontractors. Above them all is the manufacturer, ie, Toyota, which specialises in the assembly of cars and the production of strategically important components such as the motor.
Below are the high-ranking subcontractors, the suppliers of lesser components, often companies in which Toyota has some equity (although not generally very much). These enterprises, of which there are 168, are relatively large. They themselves obtain their supplies from the 5,427 second-ranking companies, which are smaller and which manufacture the components needed by the first-ranking subcontractors.
Finally, the base of the pyramid is made up of third-ranking and even sometimes fourth- or fifth-ranking companies. These 41,703 businesses generally employ fewer than 10 workers and produce parts of components or components of components to second-ranking suppliers. This reliance on the smallest of subcontractors tends to involve workers being subjected to the most precarious of working conditions.
This system has been copied by firms in other countries and in several sectors, including in car production. In the US, this system was accompanied by modularisation, ie, the production of modules, a kind of integrated sub-assembly that can be finished off by franchisees. Whereas Toyota developed a network centred on its geographical location in Toyota City, US companies use the new methods to decide which location will be the most suitable for production. “Thanks to modularisation, one can divide up the system of production and distribute it to the four corners of the earth.” (Suzanne Berger, Made in Monde: Les Nouvelles Frontières de l’Économie Mondiale, Paris, 2006)
As from the middle of the 1990s, giants such as IBM or Hewlett-Packard turned towards the provision of ‘services’ and sold off a proportion of their factories. The owner of Alcatel, Serge Tchuruk, hailed ‘the factory-free enterprise’. Multinationals focused on technological activities: design, research, marketing, image and the manufacture of strategic components.
In the textile industry, a similar phenomenon took place. Phil Knight, the Nike CEO, explained the change within his company: “For years, we thought of ourselves as a production-oriented company, meaning we put all our emphasis on designing and manufacturing the product. But now we understand that the most important thing we do is market the product.” (Quoted in Benjamin R Barber, Consumed – How Markets Corrupt Children, Infantilise Adults and Swallow Citizens Whole, New York, 2007)
Nike no longer makes anything. It gets its subcontractors situated in the third world to do it. This situation is imitated by its competitors Reebok and Adidas.
This process is sometimes described as the ‘end of the giant dinosaurs’, ie, giant enterprises. But in reality, this network of small units, which all labour in a single chain of value to create the same merchandise, is all under the tight control of the corporation that issues the instructions. This is the case in the car industry, where the manufacturer always retains control over the network by controlling prices or quality criteria. It always sends in its teams to verify how the manufacture is being done and to give appropriate advice as to cost reduction.
In the matter of distribution, the big food or clothing manufacturing chains equally impose their conditions. A giant such as Wal-Mart sits on a network of 68,000 suppliers. To ensure ever-lower prices, it presses on them even to relocate, notably to China. It has established there a purchasing depot in Shenzhen (in the south near Hong Kong), whose purpose is to find companies that can deliver at unbeatable prices, and also to incite competition between its suppliers.
This system facilitates what in Marxist language is called the transfer of surplus value. In other words, the value that is created by a subcontractor is not retained by him. As a result of the low prices at which components or goods are bought, it is the company that places the orders that obtains this advantage.
For example, in the case of Wal-Mart, as is explained by the head of a large sports clothing manufacturer, the following are the conditions in which he is expected to deal: “Wal-Mart’s philosophy is ‘always more’. They don’t always want the cheapest, but the best quality at the lowest price. If I sell a product for ten dollars this year and try to sell it for ten dollars the following year, they won’t be happy. Every year, what we do has to be ‘always more’ advantageous to them.”
Thanks to this constant pressure, the profits of the distribution giant went up from $482,000 in 1967 to $13.4bn in 2008. Since 1967 it has never shown an annual loss.
This is also true in the car industry. Toyota, and following it other car makers, insists on continual rises in productivity among its subcontractors. If necessary, the Nagoya company will assist. In this way, Toyota organised its subcontractors from 1965 onwards to move to just-in-time and total quality management, two fundamental concepts of Toyotism.
If a supplier’s costs remain too high, it is pitilessly eliminated. If, on the other hand, it can reduce them, Toyota will allow it to keep the extra profit obtained in the current year. The following year, however, that profit will be swallowed up in the lower prices that the subordinate company will be required to accept. This system allows Toyota to encourage the supplier to seek out ways of increasing productivity while in the end winning for itself the gain in surplus value.
Furthermore, this method is deployed throughout the production network, since the top-level subcontractor is supplied by second-rank subcontractors, towards whom he will behave in like manner.
US statistics show that in 2006 a production worker in a car factory [apparently] created on average a value of $190 an hour, while his colleague working for a subcontractor only provided $86 – only about half. The only plausible explanation for this difference is the transfer of value (and of surplus value) from the components sector to the assembly sector, a mechanism achieved through the constant lowering of the price of the components purchased by the multinationals. In this way, part of the value created by subcontractors is transferred to the manufacturers and accumulated in the form of profit.
This same process applies when the suppliers come from the third world. Let us stress that the multinational is not only taking advantage of the low wages that prevail there, but also of the under-valuation of values produced abroad, an undervaluation that can be reflected in the continual depreciation of the currencies of the countries of the South.
Table 1 shows the evolution of hourly value added in different countries that are the main exporters to the US.
It can be observed that, in general, there is a large gap between the value attributed to an hour’s labour in the US as opposed to that produced in other countries. In 1981, an hour’s labour was productive of about $16 in the US, $4.6 in Singapore, $2.6 in south Korea, etc.
It is obvious that the hourly added value can depend on the technological structure of the country’s manufacturing industry. If the country attracts a large number of clothing companies it will generate low hourly added value; but if, on the contrary, it is stuffed with IT, pharmaceutical or biotechnology companies, the hourly added value will be large.
Nevertheless, by and large, in 2006 an electronic component produced in Taiwan for the equivalent of £12 was worth on average £15.50 as part of the product when finished in the US. One can readily appreciate the profits to be made by the commissioning companies.
The advantage for these multinationals is not confined to this transfer. It extends also to the great flexibility of production, which would be impossible if the factories belonged to them.
Toyota makes sure it always has two subcontractors for every component it buys. In 1988, feeling that it was becoming too dependent on its electronics subsidiary, Denso (in which it had a 33 percent stake), it built a factory at Hirose (in the north of Hokkaido island) and recruited electronics engineers to work there. It considered that it could not allow itself to be tied to Denso alone for strategic components that made up 30 percent of the value of each vehicle.
The consequence of this system has been an explosion in the profits of the big manufacturing industry enterprises, as is shown in the graph in Table 2 …
Until 1991 the increase was relatively constant. Then profits doubled in 1995 to $188bn. And then almost doubled again in 2000. The crash of 2000 caused a fall: in one year the companies lost half of what they had gained. But six years later their profits multiplied by five. A record gain of $790bn was realised in 2007, a sum equivalent to the production of the whole of Africa excluding South Africa, or to the production of 900 million people! In 2008, the crisis again brought a fall in profits.
It is from these gains that finance draws its income. Without this phenomenal growth, there is no way of securing the minimum expected return [on invested capital] of 15 percent. Here, too, the disproportionate development of international finance is reflected in the insistence of the ‘industrial’ or ‘commercial’ multinationals on extracting for themselves all surplus created on the planet. It supposes a massive transfer of revenues in favour of those who control these giants’ capital …
It would be presumptuous to affirm that it is the financial sector that has caused this phenomenon and that it was this sector that, by demanding a return of 15 percent, gave rise to subcontracting, relocation and transfers in favour of the north. Even though they are linked to finance capital, Toyota and Wal-Mart are controlled by proprietor families (the Toyoda family in the case of the former and the Waltons in the case of the latter). The relevant changes were often introduced in relatively quiet times, well in advance of any financial exuberance.
It is nevertheless obvious that the requirements of the financial sector for a return of this magnitude had the effect of accelerating the adoption of these methods of capturing profit on a planetary scale …
The income produced by the lowest-level subcontractors, many of whom are in the third world, are not retained by them; they are absorbed by the larger suppliers. Subject to exceptions, the latter cannot retain these advantages; they are obliged to transfer them to the biggest multinationals, which dominate the world market and make everybody pay for the ‘surplus value’ of their technology, their names and their trademarks.
Of course, the mechanisms through which the gains make their way up the chain to the financiers can differ: through payment of dividends, payment of interest or other income, or incorporation into stock exchange values of expected future results.
Contrary to the traditional links between the banks and industry, which put credit in charge of conglomerates that are sometimes totally productive, the new finance capital grabs all it can in whichever way is quickest. Thus the average participation of hedge funds in the capital of major firms has risen to about 10 percent of the latter. Direct control is not the main objective; if the fund is not happy with the management then either it changes it, if it is strong enough to do so, or it moves its investment elsewhere. This predominance of short termism bothers quite a few commentators.
Above all, contrary to what is often believed, the socialisation of production has never been taken to such a level as it is at present. The 200 largest industrial companies in the world have since 1973 employed between 18-19 million people. In fact, they have vastly greater control than did the big enterprises formed at the beginning of the 20th century, and their power stretches across national boundaries.
Analysing this development, David Korten, an active participant in the World Social Forum, writes (retranslated from the French): “The pro-multinational liberals regularly insist that centralised economic planning is totally inefficient and incapable of responding to consumer preference. Nevertheless, the prosperous multinationals exert more control over the economies bordered by their product networks than the planners in Moscow ever had over the Soviet economy.
“Central management buys, sells, dismantles and closes production units according to its whim; it recruits and dismisses individuals with a stroke of the pen; it moves its factories to wherever it wants in the world, and decides on the percentage of receipts to be provided by subsidiaries to the parent company; it appoints and dismisses the directors of the subsidiaries; it fixes the amounts of transfers and other conditions governing the transactions taking place between the different companies that are members of the group; and it decides whether independent suppliers are able to buy and sell on the open market or are restricted to dealing with subsidiaries belonging to the group.”
All this amounts to an unimaginable development of financial parasitism, since the decisions taken by private individuals have only one aim: personal profit. It results in the routine killing of the goose that lays the golden eggs through demanding returns of a magnitude that are unobtainable in the long term. This in turn gives rise to an increase in fraudulent operations [as companies try to pretend they are delivering to the required standard in order to keep their investors happy] (Boesky in the 1980s, Enron in 2001 and Madoff more recently).
Even the defenders of capitalism are worried about these facts. For example, George Soros has said: “If people like me can bring down governments, there is something rotten in the system” …
Joseph Stiglitz makes a comparison with the ‘robber barons’ of the end of the 19th century – the Vanderbilts, Fisks and Goulds – who enriched themselves in a scandalous manner on the backs of the workers of the epoch through operations that were not far off being fraudulent, or were of dubious morality. But he is far more critical of today’s speculators:
“The rail barons of the 19th century, who enriched themselves through use of their political influence, at least left behind them an inheritance: railways, rolling stock, which unified the country and dynamically promoted its growth. What inheritance has been left by so many dot.com millionaires and billionaires, the management of Enron, Global Crossing, WorldCom or Adelphi, except horror stories to tell future generations?”
Unlike our political opponents the Communist Party of Great Britain (Marxist Leninist) and Red Youth do not sneak about behind the backs of other groups who profess to be communist but with whom we have differences; we do not seek to hide our differences (like the Communist Party of Britain) but rather we wish to have them out in the open so the points can be debated. Nor do we reduce our political differences with others into personal gossip and rumour mongering. So many on the so-called ‘left’ retreat to the safety of the chat room and online forums to spread gossip and rumour, unable to deal in an honest and upfront manner with political disagreements. Where differences of opinion exist, we aim to deal with the political aspect openly and forthrightly. It is in this spirit that the friendly journal Lalkar has written a critique of the RCG position on Syria which can be read below. We are sure that this open polemic with those who genuinely seek to chart an anti-imperialist path for the revolutionary forces in Britain will be welcomed by all sincere communists and anti-imperialists:
