Tuesday, October 23, 2012

Neoliberalism, Marx and the 'Marginal Revolution'

Neoliberalism is a contemporary form of economic liberalism that emphasizes the efficiency of private enterprise, liberalized 'free' trade and open markets to promote globalization (a term which might also be interpreted as neo-imperialism). Neoliberals therefore seek to maximize the role of the 'private sector' in determining the political and economic priorities of the world. Neoliberalism seeks to transfer control of the economy from 'public sector' (or state) to the 'private sector' under the belief that it will produce a more efficient government and improve the economy.

The definitive statement of the concrete policies advocated by neoliberalism is often taken to be John Williamson's 'Washington Consensus', - a list of policy proposals that appeared to have gained consensus approval among the Washington-based international economic organizations such as the International Monetary Fund (IMF) and World Bank. Though apparently not Williamson's original intent, the Washington Consensus has anyway become synonymous with the ideas of neoliberal market fundamentalism.

Some claim that Chicago School economists are associated with Washington Consensus The 'Chicago school' of economics describes the neoclassical school of thought within the academic community of economists focusing around the faculty of The University of Chicago, sometimes referred to as the 'freshwater school' of economics in contrast to the 'saltwater school' based in US coastal universities, notably Harvard, MIT, and Berkeley; Chicago is considered one of the world's foremost economics departments; Milton Friedman taught there for more than three decades. A significant body of economists and policy-makers argues that what was wrong with the Washington Consensus as originally formulated by Williamson had less to do with what was included than with what was missing in it, arguing that it was an incomplete project, and that countries in Latin America and elsewhere need to move beyond 'first generation' macroeconomic and trade reforms to a stronger focus on productivity-boosting reforms and direct programs to support the poor.

How did we get to this point in economic science?

'Classical economics' is the term used for the first modern school of economics. The publication of Adam Smith's Wealth of Nations in 1776 is considered to be the birth of the school. Perhaps the central idea behind it is on the ability of the market to be self-correcting as well as being the most superior institution in allocating resources. The implicit assumption is: that all individuals maximize their economic activity. At the root of Smith's modernity, though, is his and Marx's philosophical attitude towards the object of their enquiry and the way this grasped the concept, crucial to economic theory, of value.

The so-called 'paradox of value', or the diamond–water paradox, is the apparent contradiction that, although water is more useful in terms of human survival than diamonds, diamonds command a higher price in the market; Adam Smith is the classic presenter of this paradox. To paraphrase Smith: the one may be called 'value in use' and the other, 'value in exchange', the things which have the greatest value in use often have little or no value in exchange; on the contrary, those which have the greatest value in exchange have frequently little or no value in use; nothing is more useful than water, for example, but it will purchase almost nothing; almost nothing can be gained in exchange for it, whilst a diamond has scarce any use-value; but a very great quantity of other goods may frequently be had in exchange for it. For Smith, the real price of every thing, what every thing really costs to the person who wishes to acquire it, is the toil of acquiring and making it, so Smith thereby denied a necessary relationship between price and utility, and price in this view was related to productive labor. In this he was followed by Marx. Advocates of the labor theory of value saw it as the philosophically materialist resolution of the paradox of value.

The so-called 'marginal revolution' which is based on the subjective theory of value, that is understood to have occurred in Europe, led by Carl Menger, William Stanley Jevons, and Leon Walras, gave rise to what is known as the neo-classical synthesis. As we have seen, Marx had developed and used the materialist concept of use-value versus exchange value. Use-value was classically understood to give some measure of objective material usefulness. This was later 'rebranded' in the 'marginal revolution' as 'marginal benefit', which is understood as the utility of a thing counted in terms of 'common units of value', while exchange value is given as the measure of how much one good was priced in terms of another, namely what is now called relative price. The subjective theory of value identifies value as based in the inner desires and needs of the members of a society, as opposed to value being inherent to an object that exists independently of any observer or user. Once this idealist epistemology is taken as the given grounds, it is able to refer to the units of value as subjective units. Today, the marginal utility of a good or service is seen as the utility gained (or lost) from an increase (or decrease) in the consumption of that good or service, so it is the action of subjective consumption that defines the value not the objective existence of the object. Economists therefore sometimes speak of a law of diminishing marginal utility, meaning that the first unit of consumption of a good or service yields more utility than the second and subsequent units.

The concept of marginal utility played a defining conceptual role in the (so-called) marginal revolution of the late 19th century that led to the replacement of the labor theory of value of Adam Smith and Karl Marx by neoclassical value theory in which the relative prices of goods and services are thought to be simultaneously determined by marginal rates of substitution in consumption and marginal rates of transformation in production, which are apparently equal in 'economic equilibrium'. This neo-classical formulation had also been formalized by Alfred Marshall. However, it was the concept of the general equilibrium of Walras that helped solidify the research in economic science as a mathematical and deductive enterprise, the essence of which is still defined as neo-classical and makes up what is currently found in mainstream economics textbooks today. The key implication is usually that what is new (revolutionary) here is the scientific rigor, i.e. that Marx specifically is not supposed to have. In actual fact this rigor is precisely what is missing in this fudge and mystification of use value and exchange value through the concept of the marginal, which serves to obscure its idealist philosophical roots.

Macroeconomics in its modern form began with the publication of John Maynard Keynes's General Theory of Employment, Interest and Money in 1936. Keynes projected an aggregated framework to explain macroeconomic behavior, leading us to the current distinction between micro and macroeconomics. According to Keynesian theory, some individually-rational microeconomic-level actions—if taken collectively by a large proportion of individuals and firms—can lead to inefficient amassed macroeconomic outcomes, wherein the economy operates below its potential output and growth rate. Such a situation had previously been referred to by classical economists as a general glut, which in Marx is described as overproduction. Keynesian economics argues that private sector decisions sometimes lead to these inefficient macroeconomic outcomes and, therefore, advocates interventionist policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the 'business cycle'. Of special importance in Keynes' theories was his explanation of economic behavior as also being led by 'animal spirits'. In this sense, it limited the role for the so-called rational (maximizing) agent. In fact, this foundational ideology of a division of the rational ('angelic') and the irrational ('bestial') in the human subject seems to underpin the whole of modern post Smithian-Marxian economics, as well as the accepted division of macro from microeconomic theory. It avoids confronting the concept and existence of contradiction in the economic system by founding any antagonism ultimately in innate human attributes; although this underlying thesis is rarely invoked as such (it could sound racist), it is nevertheless always implied.

The neo-classical school dominated the field up until the event of the Great Depression. When the Great Depression struck, classical economists (other than Marx), had difficulty explaining how goods could go unsold and workers could be left unemployed, thus with Keynes's publication, certain of its assumptions were rejected. Keynes argued the solution to the Great Depression was to stimulate the economy ('inducement to invest') through a combination of two approaches: a reduction in interest rates and government investment in infrastructure; the theory has it that investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so on and so forth. The initial stimulation is seen as beginning a concatenation of events, whose total increase in economic activity is a multiple of the original investment; it does not explain why the situation arises in the first place, i.e. why the investments that have taken place always/already in the economy are not producing this effect, or the answer is left simply as a fault of policy. The Post-World War II period saw the widespread implementation of Keynesian economic policy in the United States and Western European countries. Its dominance in the field by the 1970s was best reflected by the controversial statement attributed to ex-President Richard Nixon and economist Milton Friedman: "We are all Keynesians now."

A central conclusion of Keynesian economics is that, in some situations, no strong automatic mechanism moves output and employment towards full employment levels. This conclusion conflicts with economic approaches that assume a strong general tendency towards 'equilibrium'. In the 'neoclassical synthesis', which combines Keynesian macro concepts with a micro foundation, the conditions of general equilibrium allow for price adjustment to eventually achieve this goal. General equilibrium theory seeks to explain the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that a set of prices exists that will result in an overall equilibrium. What here seems to have been omitted is the political as such, politics is subordinated to a technical and instrumental understanding of the problem, and (for instance) an effect, prices, are treated as a cause, or as both cause and effect of its own function. Generally speaking any material foundations or groundings are lost.

With microeconomics, macroeconomics is now one of the two most general fields in economics; the fact that macroeconomics is 'smaller' than economics seems to render the terms faintly ridiculous, notwithstanding. Macroeconomics (from Greek prefix "makros-" meaning "large" + "economics") is the branch of modern economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy. Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. They develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance. In contrast, microeconomics is primarily focused on the actions of individual agents, such as firms and consumers, and how their behavior 'determines' prices and quantities in specific markets.

New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis on the neoclassical framework; specifically, it emphasizes the importance of supposedly rigorous foundations based on microeconomics. Macroeconomics descended from the hitherto divided fields of business cycle theory and monetary theory. The quantity theory of money was particularly influential prior to World War II. It took many forms including the version based on the work of Irving Fisher. His work on the quantity theory of money inaugurated the school of economic thought known as monetarism. Both Milton Friedman and James Tobin called Fisher "the greatest economist the United States has ever produced." New classical macroeconomics strives to provide neoclassical microeconomic foundations for macroeconomic analysis; this is in contrast with its rival, the new Keynesian school that uses microfoundations such as 'price stickiness' and imperfect competition to generate macroeconomic models similar to earlier, Keynesian ones.

Problems arose in the Keynesian theory in the 1970s and early 1980s with the onset of 'stagflation'. Stagflation is a situation in which the inflation rate is high and the economic growth rate slows down but unemployment also remains high. The reasons for this were and are often placed upon factors such as oil. The decade of the 1970s saw rising oil prices caused by an OPEC oil embargo on the United States. This oil embargo ostensibly caused both high inflation and a steep economic downturn that in turn generated high unemployment. However, the question arises: what caused the high oil prices in the first place? Is the price of oil an extra economic factor, or totally political? And what was the politics based on which here apparently 'caused' the higher price of oil, if not economic factors? Keynesians were perplexed by the outbreak of stagflation because the original concept of the Phillips curve ruled out concurrent high inflation and high unemployment. The Phillips curve is a historical apparent inverse relationship between the rate of unemployment and the rate of inflation in an economy. Put simply, the lower the unemployment in an economy, the higher the rate of inflation should be. The new classical school emerged in the 1970s as a response to this failure of Keynesian economics to explain stagflation.

During the 1970s in the United States and several other industrialized countries, the Phillips curve concept and analysis became less popular. The new classical and monetarist criticisms led by Robert Lucas, Jr. and Milton Friedman respectively forced the rethinking of Keynesian economics. In particular, Lucas made the 'Lucas critique' that cast doubt on the Keynesian model. The Lucas critique suggested that if we want to predict the effect of a policy experiment, we should model the 'deep parameters' that govern individual behavior, because only such deep models can avoid merely aggregating previous policy; only then can we predict what individuals will do, taking into account the change in policy, and then aggregate the individual decisions to calculate the macroeconomic effects of the policy change. His idea of deep, though, only meant relating to preferences, technology and resource constraints and not a deeper theoretical model in the sense of its philosophical foundations (such as the theory of value). This nevertheless strengthened the case for macro models to be based on microeconomics.

Milton Friedman (July 31, 1912 - November 16, 2006) had already proposed before the phenomenon of stagflation that the Phillips curve did not exist and would fail. On this basis he theorized the existence of a 'natural rate of unemployment' that contradicted the then accepted relationship between inflation and unemployment rate, and this became a concept fundamental to monetarist economics, on which also worked Lucas Papademos (who was to become the 'technocratic' prime minister of Greece during the 2011-12 years of the crisis,; in January 2012 he warned that workers would have to accept cuts in income for a default to be avoided, he also told business and labor leaders that the 'troika'—the European Union, the IMF and the European Central Bank—was looking for Greece to take steps to open up so-called closed professions, as well as adjustments to the minimum wage, abolition of Christmas and summer vacation 'bonuses' and automatic wage increases) and Franco Modigliani. As far as many economists were concerned, the Phillips curve had little or no theoretical basis anyway. Critics like Friedman argued that the Phillips curve could not be a fundamental characteristic of economic general equilibrium because it showed a correlation between a real economic variable (the unemployment rate) and an only nominal economic variable (the inflation rate). Their counter-analysis was that government macroeconomic policy (primarily monetary policy) was being driven by a low unemployment target and that this caused expectations of inflation to change, so that steadily accelerating inflation rather than reduced unemployment was the result.

In economics, 'adaptive' expectations means that people form their expectations about what will happen in the future based on what has happened in the past. For example, if inflation has been higher than expected in the past, people would revise their expectations for the future. Chicago macroeconomic theory, as above rejected Keynesianism in favor of monetarism until the mid-1970s, when it turned to new classical macroeconomics based on the concept of rational expectations. Rational expectations is a hypothesis in economics which holds that agents' predictions of the future value of economically relevant variables are not systematically wrong in that all errors are random. Equivalently, this is to say that agents' expectations equal true statistical expected values. An alternative formulation is that rational expectations are model-consistent expectations, in that the agents inside the model assume the model's predictions are valid. Since most macroeconomic models today study decisions over many periods, the expectations of workers, consumers and firms about future economic conditions are an essential part of the model. How to model these expectations has long been controversial, and it is well known that the macroeconomic predictions of the model may differ depending on the assumptions made about expectations (e.g. see Cobweb model).

To assume rational expectations in this view is to assume that agents' expectations may be individually wrong, but are correct on average. In other words, although the future is not fully predictable, agents' expectations are assumed not to be systematically biased and use all relevant information in forming expectations of economic variables. This way of modeling expectations was originally proposed by John F. Muth (1961) and later became influential when it was used by Robert E. Lucas Jr. and others. Modeling expectations is crucial to all models which study how a large number of individuals, firms and organizations make choices under uncertainty. For example, negotiations between workers and firms will be influenced by the expected level of inflation, and the value of a share of stock is dependent on the expected future income from that stock.

Rational expectations theory is the basis for the 'efficient market hypothesis' (efficient market theory). If a security's price does not reflect all the information about it, then there exist 'unexploited profit opportunities': someone can buy (or sell) the security to make a profit, thus driving the price toward equilibrium. In the strongest versions of these theories, where all profit opportunities have been exploited, all prices in financial markets are deemed 'correct' and reflect market fundamentals (such as future streams of profits and dividends). Each financial investment is as good as any other, while a security's price reflects all information about its intrinsic value.

The idea behind the natural rate hypothesis put forward by Friedman was that any given labor market structure must involve a certain amount of unemployment, including 'frictional' unemployment associated with individuals changing jobs and possibly classical unemployment described as arising from real wages being held above the market-clearing level by minimum wage laws, trade unions or other labor market institutions. Unexpected inflation might allow unemployment to fall below the 'natural rate' by temporarily depressing real wages, but this effect would dissipate once the expectations about inflation were corrected. Only with continuously accelerating inflation could rates of unemployment below the 'natural rate' be maintained. The resulting prescription was that government economic policy (or at least monetary policy) should not be influenced by any level of unemployment below a critical level, the so-called 'natural rate'.

The analysis supporting the natural rate hypothesis proved controversial, because empirical evidence suggested that the 'natural rate' varied over time in ways that could not easily be explained by changes in labor market structures. And the analysis is especially problematic if the Phillips curve displays 'hysteresis', that is, if episodes of high unemployment raise the rate. This could happen, for example, if unemployed workers lose skills so that employers prefer to bid up of the wages of existing workers when demand increases, rather than hiring the unemployed. As a result of such problems the 'natural rate' terminology was largely dropped in favor of the NAIRU (Non-Accelerating Inflation Rate of Unemployment) , which referred to a rate of unemployment below which inflation would accelerate, but did not imply a commitment to any particular theoretical explanation, or a prediction that the rate would be stable over time. In short, the conceptual basis of the concept was left fallow, undecided, and ambiguous. There is no theoretical basis for predicting the NAIRU. The NAIRU theory was mainly intended as an argument against active Keynesian demand management and in favor of free markets (at least on the macroeconomic level).

Friedman was an economic advisor to conservative President Ronald Reagan, and his political philosophy extolled the virtues of a free market economic system with minimal intervention. In his 1962 book Capitalism and Freedom, he advocated policies such as a volunteer military, freely floating exchange rates, abolition of medical licenses, a negative income tax, and education vouchers. His ideas concerning monetary policy, taxation, privatization and deregulation influenced government policies, especially during the 1980s, and his monetary theory influenced the Federal Reserve's response to the current global financial crisis (2008-12). The advent of the global financial crisis in 2008 caused some resurgence in Keynesian thought and the Chicago school came under attack and has been at least partly blamed for the growing income inequality in the United States. Economist Brad DeLong of the University of California, Berkeley for instance says the Chicago School has experienced an 'intellectual collapse', while Nobel laureate Paul Krugman of Princeton University, said that recent comments from Chicago school economists were "the product of a Dark Age of macroeconomics in which hard-won knowledge has been forgotten." Critics also charged that the school's belief in human rationality contributed to bubbles such as seen in the financial crisis, and that the school's trust in markets to self-regulate has offered no aid to the economy in the wake of the crisis. The 'new Keynesian' view of the backlash rests on microeconomic models that indicate that nominal wages and prices are 'sticky', i.e. do not change easily or quickly with changes in supply and demand, so that quantity adjustment prevails. According to Paul Krugman, "while I regard the evidence for such stickiness as overwhelming, the assumption of at least temporarily rigid nominal prices is one of those things that works beautifully in practice but very badly in theory." This integration is further spurred by the work of other economists that questions rational decision-making in a perfect information environment as a necessity for micro-economic theory. Imperfect decision-making such as that investigated by Joseph Stiglitz underlines the importance of the management of risk in the economy. Notwithstanding, over time, many macroeconomists have returned to the IS-LM model and the Phillips curve as a first approximation of how an economy works. New versions of the Phillips curve, such as the 'Triangle Model', allow for stagflation, since the curve can shift due to supply shocks or changes in built-in inflation. In the 1990s, the original ideas of 'full employment' had been modified by the NAIRU doctrine. NAIRU advocates suggest restraint in combating unemployment, in case accelerating inflation should result. However, it is unclear exactly what the value of the NAIRU should be—or whether it even exists.

What seems obvious to any reader of Marx is that the effort in modern economics is to avoid looking at contradictions in the capitalist mode of production and how these contradictions enter into the ideology of the economy, the illusions about what the economy is doing and how it is working. Both the Keynesian and Friedmanite economic theories tackle significant problems and proffer solutions to actual economic strife, but they do so one-sidedly so that they are still unable to explain significant factors commonly occurring in the economy: high unemployment while high inflation (stagflation) for Keynes, and now, the collapse of neoliberal economics in the same kind of crisis. Neither form of the perfect market exists in which their respective theories would make sense, yet also putting them together in their positivist (a priori pre-Marxian) synthesis provides no way out. Many other commentators have suggested going back to basics and to the concept of value to look for answers. To look at one, specifically, there are the arguments of Ecological Economics: for this understanding the primary example of the concept of value in neo-classical economics is 'market value', or 'willingness to pay', which is the principal method of accounting used in 'receiver-type' theories, where the receiver (the 'interpreter of the world') determines the value. By contrast, in Ecological Economics value theory is separated into two types: 'donor-type' value and 'receiver-type' value. Ecological economists tend to believe that 'real wealth' needs a donor-determined value as a measure of what things were needed to make an item or generate a service (H.T. Odum 1996). Marx's and the Smithian labor theory of value and the 'Energy' concept is in this interpretation 'donor-type' value theories. Energy theorists, agreeing perhaps with Marx's concept of labor power, believe that this conception of value has relevance to all of philosophy, economics, sociology and psychology as well as Environmental Science (something which Marx was of course aware of long ago).

It is worth noting finally again how these ideas of value are inevitably epistemological (theory of knowledge) definitions and these definitions have inevitable political overtones. The two great camps of philosophy are materialist and idealist. In short, materialism holds that matter exists independently of thought, while idealism takes the contrary view. Marx and Smith's concept of value in their economic theory is philosophically speaking materialist in its theory of knowledge: In this, it is not the receiver's understanding and subjective valuation on the market which determines value, or the movements of the market itself, which would only explain the market by the market and therefore be tautological, but the independent properties of the entity combined with human labor power. Marx (in Volume I of Capital) distinguishes the value of a commodity into its use-value (utility) and exchange (market) value, both of which (aside from naturally occurring use values) are produced through the labor process by labor power, human effort or energy. This division is a theoretical distinction however, and not an absolute epistemological division. A characteristic of modern economics is to take exchange value as the dominant side, to extend its dominance to include dominance over use value, and then to regard this as the actual manifestation of the truth of philosophical idealism, of abstraction and the mind over matter, which in all other respects is the dominance of capital over labor, or as Marx says the dominance of dead labor over living.

Gary Tedman

Sunday, October 21, 2012

Lenin on Anarchism and Opportunism

Lenin on Anarchism and Opportunism: Chapter Four of 'Left' Wing Communism An Infantile Disorder by Thomas Riggins

In chapter four of his book "'Left Wing' Communism An Infantile Disorder" Lenin describes the struggle of the Bolsheviks to combat those enemies of the working class movement who were themselves acting within that movement ostensibly in the interests of establishing socialism. Perhaps the term "enemies" is too harsh, but the factions Lenin writes about included within their ranks both opponents of the Bolshevik line (as being not historically appropriate) and hostile elements who actively collaborated with reactionary sections of the bourgeoisie.

In any case, Lenin considered the main enemy of the workers  to be what he called "opportunism"-- the placing of the real interests on the workers on the back burner in order to pursue temporary policies which might lead to some gains in the present but which actually damaged the long term interest of the workers. He was not referring to historically necessitated retreats and compromises, but to an attitude which consistently led to cooperation and capitulation to bourgeois views where matters of principal were set aside and the long term interests of the working class ignored. The trick, as always, is to be able to spot the difference between "opportunism" and legitimate "compromise."

After 1914, the outbreak of WWI, opportunism warped into "social-chauvinism"
with so-called Marxists siding with their national bourgeoisie against the bourgeoisie AND the workers of hostile nations. Lenin thought this kind of opportunism was the "principal enemy within the working-class movement."
Even in 1920 it remained the number one enemy of the international working-class.
And here we are, 92 years down the road, and with the same enemy at work in the
working-class. Think of right-wing labor leaders who push their unions into supporting reactionary politicians because some narrow interests have temporarily benefited, say in job creation, their own union at the expense of workers elsewhere. Lenin's old enemy is still very much alive both in the socialist and union movements.

There was, however, another enemy that the Marxists had to battle. This enemy of the workers was not as well known in Lenin's day but will be recognized by everyone familiar with Marxism and the history of the 20th century worker's movement. This enemy Lenin calls PETTY-BOURGEOIS REVOLUTIONISM, a mixture of anarchism and half baked revolutionary rhetoric.

Marxist theory, Lenin maintains, has shown that the small business owner ("the petty proprietor"), independent professionals, the self employed, and other members of the so-called "middle classes" who are situated between the large capitalist corporations and the working class, are constantly finding themselves ground down economically and subject to "a most acute and rapid deterioration" of their living conditions and "even ruin."

Today this is happening throughout the capitalist world. A member of the middle class in this situation  "driven to frenzy by the horrors of capitalism is a social phenomenon which, like anarchism, is characteristic of all capitalist countries." Unfortunately, many of these people turn to right wing extremism on the one hand and to left wing groups on the other, including Marxist organizations, where they become ultra-revolutionary but are "incapable of perseverance, organization, discipline and steadfastness."  Even today it is difficult for Marxist working class parties to always spot and rid themselves of this unstable element. In any case, Lenin thinks anarchism and opportunism are "two monstrosities" that go hand in hand-- the former being the punishment doled out to the working class for the sins of the latter.

In the Russian context the most blatant example of petty-bourgeois revolutionism was to be found in the activities of the Socialist-Revolutionary Party (neither socialist not revolutionary in Lenin's view.) The Russian Marxists waged unremitting ideological struggle against this party (objectively a false friend of working people) over three of its most significant positions. In the first place the SRs would undertake political action without bothering to fully inform themselves of the issues, the class forces at work, and what the objective alignment of forces was.
[This reminds me of a small Trotskyist party whose members once told me that Cuba had betrayed the Revolution by not attacking the U.S. Navy when Grenada was invaded by Reagan.]

In the second place, the SRs engaged in personal acts of individual terrorism and political assassination which they considered to be very "Left" and very "revolutionary" actions but which the "Marxists emphatically rejected." Finally, the SRs criticized the German Social Democrats for minor opportunistic errors while they themselves were engaged in opportunistic activities far more serious than those of the Germans.

With respect to the second objection to the SRs-- i.e.,"individual terrorism", Lenin does not say that Marxists are against "individual terrorism" per se or for any "moral" reason but reject it "only on grounds of expediency." In fact, he approvingly notes that Plekhanov ("when he was a marxist") had "laughed to scorn" those who
"on principle" were opposed to "the terror of the Great French Revolution, or, in general, the terror employed by a victorious revolutionary party which is besieged by the bourgeoisie of the whole world."

The "expediency" of terrorism is still highly contentious today, but it is safe to say that who is or is not a "terrorist" seems to be determined by which side of the barricades the one making the judgement is standing. I will make no mention of the phony "War on Terrorism" being waged by the "bourgeoisie of the whole world" against the workers and peasants of the non-industrialized world by means of drones, air raids, mercenaries, apartheid walls, and military intervention and occupation.

Lenin, by the way, points out that the Russian Marxists had been proven correct in holding the position that the REVOLUTIONARY wing of  German Social Democracy
up to 1913 (and its traditions now carried on by the Russian Marxists) "CAME CLOSEST to being the party the revolutionary proletariat needs in order to achieve
victory." [Where is the "revolutionary proletariat today?" Will the present on going decline of the capitalist world order regenerate it?]

Now, Lenin says in 1920, it is obvious that of all the Western socialist parties, after the Great War, the revolutionary German Social Democrats have the best leaders. He is referring to the Spartacists (not to be confused with the petty-bourgeois Trotskyist sect in the U.S.) and the "Left,  proletarian wing of the Independent Social-Democratic Party of Germany". [This Left consisted of the Spartacists who had joined the moderate Independents, but later (1918) broke away and became the Communist Party of Germany.]

With respect to the anarchists, Lenin says the whole period from the Paris Commune to the founding of Soviet Russia proves that the Marxist critique of this group was correct. However, the demise of the Soviet Union will no doubt give a new lease of life to this ideological dead end. Lenin does, incidentally, give the anarchists credit for pointing out the opportunistic positions of the Western Marxists on the question of the state. On this question Lenin refers his readers to his book "The State and Revolution" [a work, I fear, that will not cheer the hearts of many who call themselves "Marxists" today.]

Lenin now turns his attention to discussing two major struggles that were carried on within the Bolshevik movement against the "Left" Bolsheviks (actually they were left deviationists) namely, the 1908 question of participating in the Duma and the 1918 struggle around the Treaty of Brest-Litovsk.

The problem in 1908 was that the "Left" Marxists  mechanically applied the correct tactics of 1905 when the party called for a boycott of the Duma (it was completely controlled by the Tsar and was swept away by the 1905 revolution) to the situation of 1908 where the duma was not totally subservient to the Tsar and the Bolshevik delegates could openly work to influence events and educate the masses politically. The same was true of the reactionary trade unions and other mass associations. In 1905 the boycott was correct "not because non-participation in reactionary parliaments is correct in general, but because we accurately appraised the objective situation" -- that an uprising was about to occur. There was no uprising on the horizon in 1908 after the 1905 revolution had been put down so the same tactics would have been out of place.

In fact, the party was in error by continuing to boycott the Duma in 1906  but corrected itself in 1908 and was correct in expelling the "Left" Marxists when they refused to see that new tactics were called for. The 1905 boycott helped the Party and the masses learn valuable lessons regarding the rejection of legal forms of opposition such as parliamentarianism but it is "highly erroneous to apply this experience blindly, imitatively and uncritically to OTHER conditions and OTHER situations."

Looking back at the period from 1908 to 1914, Lenin remarks that party would never have been able to educate and lead the masses had it not changed it tactics and engaged in legal activities even in the most reactionary institutions set up by the Tsar.

Although the "Left" Bolsheviks were expelled from the party in 1908 for opposing participation in the ultra-reactionary Duma (parliament) as well as other legal organizations approved by the Tsar (unions, cooperative societies, etc.,) Lenin says they were still basically good Marxists, as they recognized their errors and corrected them, and were by 1920 again members of the Communist Party and good revolutionaries.

Incidentally, Lenin in a footnote observes that "It is not he who makes no mistakes that is intelligent. There are no such men, nor can there be. It is he whose errors are not very grave and who is able to rectify them easily and quickly that is intelligent."

In 1918, with respect to the Treaty of Brest-Litovsk [which required the Soviets to surrender large areas to the Germans in order to get peace (and a breathing spell)] the "Left" Communist "faction" again erred but it did not lead to a split as their leaders (Radek and Bukharin) admitted their mistake in opposing the treaty in the same year. They considered the treaty to be a compromise "with imperialism" and thus antithetical to the revolution and to the working masses. Lenin agreed that it was definitely a compromise but one that "HAD TO BE MADE."

Lenin would become chafed when western "Marxist" opportunists would use the example of Brest-Litovsk to justify the unprincipled compromises they were making with the bourgeoisie in their own countries. He would compare  the compromise
over the treaty with the compromise a person makes with a bandit who waylays his car and threatens to shoot the occupants if they don't cooperate. That is the position the Communists found themselves in. The western opportunists (Kautsky, Bauer, Adler, Renaudel, Longuet, the Fabians, British Independents and Labourites) actually made deals with their bourgeoisies against their own workers which amounted to being "ACCOMPLICES IN BANDITRY."

Lenin's point is that there are some compromises forced on the masses against their will due to the balance of power at a particular time, and then there are some that are not really forced on the masses but made by leaders for their own interests and personal or political advantages. A true Communist must be able to spot the difference and fight against the latter while explaining to the masses the necessity of the former. "However, anyone who is out to think up for the workers some kind of
recipe that will provide them with cut-and dried solutions for all contingencies, or promises that the policy of the revolutionary proletariat will never come up against difficult or complex situations is simply a charlatan."

To make sure he is not misunderstood Lenin proposes "several fundamental rules" to be used to distinguish principled from unprincipled compromises. One can spot the former if the leaders and party advocate internationalism and reject "defense of country" in international conflicts (i.e., reject support of their own bourgeoisie against the bourgeoisie of other countries, which support actually means not supporting their own workers and the workers of other countries.) This should also involve advocating universal peace between all countries. It should also support the revolutionary efforts to overthrow bourgeois and feudal governments by workers and peasants wherever they rise up in revolt. [Lenin refers to the German Revolution specifically but his logic, I think, extends to all revolutionary movements led by the working class.]

As for the latter, the opportunists, they can be recognized by their "defense of country" and justification of its military actions (or lack of serious struggle against it-- which amounts to the same thing.) Another sign of unprincipled actions is  "entering into a coalition with the bourgeoisie of THEIR OWN country" in its struggle to prevail over foreign countries; they thus become "ACCOMPLICES in imperialist

It is on this note that Lenin ends chapter four of "Left" Wing Communism. I must stress that the context of Lenin's thought is conditioned by the presence in Russia and in large segments of the European and International working class of a revolutionary fervor gripping millions of working people. The question for us is how to adapt Lenin's views to the present pre-revolutionary outlook of millions of people who are finding themselves being crushed by the slowly spreading decline and fall of the world capitalist system as we have known it since the end of WWII. What are we to do if we don't have on hand a revolutionary proletariat?

Thursday, October 4, 2012

Lenin Today- Left Wing Communism- Chapter 3- Review

Principal Stages In The History of Bolshevism 1905-1917 and their Relevance Today

Thomas Riggins

Lenin, in his book "'Left Wing' Communism An Infantile Disorder," written in 1920, maintains that there are lessons from the Russian Revolution that may be of more general interest than to Russia alone. That was 92 years ago. The world of the early twenty-first century is one dominated by global financial capital and effectively controlled by a few advanced capitalist economic powers and at least one semi-capitalist (or quasi-socialist) economic power who (with few exceptions) lord it over the majority of the world's population dwelling in underdeveloped and super exploited regions. Trying to find what those lessons might be today may be more difficult than finding them was in 1920.

In explaining the background of the Russian Revolution and its lessons Lenin, in Chapter Three of "Left-Wing" Communism, discusses the history of Bolshevism from 1903 until the October Revolution in 1917.  Let's look at this chapter to see if there are any lessons for today or to see if it is just a record of what Lenin elsewhere calls the "historical peculiarities of Russia."

Lenin divides Bolshevik history into six stages which I shall briefly review. First is the period 1903-1905 "preparation for the revolution." This was a period when the three main classes of Russian society all sensed that a revolution was in the air and contended over the tactics to engage in and what sort of program should be advanced. The classes he mentions are the bourgeoisie (the liberals), the petty bourgeoisie (democratic forces calling themselves social democrats or social revolutionaries) and the working class (the authentic revolutionary forces). The classes grouped around the Czar had evidently already been eclipsed by the three "main" classes as Lenin doesn't mention them (although many of the liberals supported the idea of a "constitutional" monarchy). He does say, however, that besides the three main classes there were "intermediate, transitional or half-hearted forms."

Well, even with the economic crisis the world is still faced with in 2012, whose working class could be considered authentically revolutionary today? There are some glimmers of revolutionary class consciousness in Europe (Greece for example), in the Third World there are some workers and Communist/ Socialist movements that are actively fighting the capitalist system in one way or another (Nepal, parts of India), and Latin America is beginning to seriously challenge US dominance. US workers haven't even got a labor party going for themselves yet and divide their votes, along with the petty bourgeoisie  (which many workers think they are part of, calling themselves "middle class" ) between the two major parties of the bourgeoisie. As for the smell of revolution in the air, it is undetectable at the moment (perhaps masked by greenhouse gases). One gets, however, a whiff of fascism.

 In the advanced capitalist world there is not much evidence of the effects of this stage of Bolshevik history. However, there is something analogous that has been going on in Europe and elsewhere. All over the world people have been organizing and educating themselves to fight back against the corporations that have been attacking their environments and way of life. Big oil, and coal, and natural gas are increasingly finding resistance to their plans to exploit and pollute. Austerity is also being more and more rejected by the masses as a solution to the economic problems the bourgeoisie has brought upon the world. Workers in the US are beginning to wake up and fight back against the ultra-right (but this is still a very preliminary awakening.) The people may not be studying the history of Bolshevism at this point, but exploitation and oppression breeds opposition and so there is at least a family resemblance between what Lenin is writing about in the period 1903-1905 in Russia and today.

The second period, " the years of revolution", is that of 1905-1907. This is the period of the birth of the first Soviets in Russia. One would be hard pressed to find anything comparable going on today in the advanced capitalist world. However, the Occupy Wall Street movement in the U.S. and similar movements in Europe and the Near East, the so called "Arab Spring''-- where not contaminated by imperialist intrigue-- are perhaps fetal developments of future Soviets or Soviet like

While Lenin generally eschewed reliance on "spontaneity" as the motive force of revolutionary progress, he does say, "The Soviet form of organization came into being in the spontaneous development of the struggle."  This two year period was marked by a general uprising, a revolutionary upsurge against  the Russian ruling class and government. This type of  "spontaneous development" does not appear to be on the horizon in the U.S. but is detectable to some extent in the poorer areas of  the E.U. and, as the continued decline of the capitalist system now under way, becomes more and more intolerable for the general populations of these countries, we can expect to see the birth of revolutionary organizations analogous to those described by Lenin in LWC.

This will be a period of "The alteration of parliamentary and non-parliamentary forms of struggle, of the tactics of boycotting parliament and that of the participating in parliament, of legal and illegal forms of struggle, and likewise their interrelations  and connections" and all this will be "marked by an extraordinary wealth of content." This will also be the period when the working class will emerge as the main leading revolutionary force and the "vacillating and unstable" middle classes will have to submit to its leadership for meaningful change to be brought about. The coming period will give the Communist parties and their allies an opportunity to again become the leading elements within the working class and society as a whole, which if they fail to seize it will lead to their replacement by new organizational forms of struggle. These next few years will be a "dress rehearsal" for even greater struggles to come.

The next period in the development of Bolshevism Lenin called the years of reaction (1907-1910). This period is really specific to Russia as we today are still on the cusp of a serious revolutionary outbreak analogous to 1905 so we don't have a current "years of reaction" (unless the Republicans win in the United States) to worry about. It would amount to putting the cart before the horse to discuss the reaction to a revolutionary outbreak that has not yet happened.

Nevertheless some comments by Lenin in this section are of universal application at any stage of a revolutionary struggle.  One of which is "that victory is impossible unless one has learned how to attack and retreat properly." Underestimating the strength of the enemy and overestimating your own has led to many a defeat in the workers movement-- often due to a pigheaded "no compromise" attitude.

In periods of reaction those who can correctly gage the balance of forces are the ones who will ultimately prevail. During the 1907 - 1910 period the Bolsheviks emerged as the strongest party on the left "because they ruthlessly exposed and expelled the revolutionary phrase-mongers, those who did not wish to understand that one had to retreat, that one had to know how to retreat, and that one had absolutely to learn how to work legally in the most reactionary of parliaments, in the most reactionary of trade unions, co-operative and insurance societies and similar organizations." Understanding this explains the positions adopted by some Marxist groups in the U.S. under the ultra-reactionary period ushered in by the regime of George W. Bush. An advance to the rear in order to advance to the front later in US military lingo.

According to Lenin the years of reaction were followed by the years of revival (1910-1914). The revival started off slowly but speeded up because of two factors. One was the "Lena events of 1912."  Lenin is referring to a massacre of workers in the Lena gold fields in Irkutsk by Tsarist troops which outraged Russian public opinion. The second factor was the exposure of the Mensheviks as "bourgeois agents." This needs some clarification.

It is not the case that the Mensheviks were consciously working against the interests of the Russian workers and peasants. In their own minds they thought they were furthering a reform program that had the most realistic chances for bringing about the changes which would most help the Russian masses. How then can Lenin call them "bourgeois agents?"

Lenin's rationale is that the Bolshevik program aims at the the overthrow of the bourgeoisie and the creation of a worker's and peasant's state led by the working class. The Russian bourgeoisie is fighting tooth and nail, as are the Tsarists, against the Bolsheviks and seek to destroy their movement. But the attitude of the bourgeoisie towards the Mensheviks is quite different. The role of  the Mensheviks, as also anti- Bolshevik (and thus for Lenin against the true interests of the workers and peasants) "was clearly realized by the entire bourgeoisie after 1905, and whom the bourgeoisie therefore supported in a thousand ways."

As a result of the consciousness raising due to the Lena events and the realization of the role of the Mensheviks this period saw the growing empowerment of the the Bolsheviks with the Russian masses, which was the result of their following "the correct tactics of combining illegal work with the utilization of 'legal opportunities,' which they made a point of doing." Note that in modern bourgeois democracies "legal" and "illegal" have different connotations than in nondemocratic dictatorial societies such as Tsarist Russia.

The next stage is that of the "First Imperialist World War (1914-17)." It is interesting that Lenin is calling the The Great War (as it was called up to 1939) the first of its kind as if foreseeing the bloody history of the coming decades (although Charles Repington, a British war correspondent and officer, published a book in 1920 entitled The First World War).

This destructive war, one of the fruits of the vaunted capitalist system, brought about the death of millions and a redistribution of markets among the victorious capitalists at the expense of their rivals. The world socialist movement, supposedly united in opposition to the war which many saw coming, split when it actually broke out into those parties who supported "their" governments (who were labeled "social chauvinists" by Lenin) and those who actively opposed the war on the grounds of internationalism (workers of the world should be united against their exploiters not fighting each other for the greater glory of their "own" national bourgeoisie.)

The Bolshevik stance was clear-- they opposed the war and actively agitated against supporting it among the people. This anti-war position became extremely popular amongst the majority of workers and peasants who were used as cannon fodder by the reactionary bourgeoisie. Lenin credits the adoption of this principled position, and the exposure of the social chauvinism of those who betrayed the principles of the international socialist movement as one of the main "reasons why Bolshevism was able to achieve victory in 1917-20."

We come now to the last of Lenin's six stages: "The second revolution in Russia (February to October 1917)."  In February 1917 the bourgeoisie overthrew the moribund and useless Tsarist regime and instituted a democratic bourgeois republic freer, Lenin says, "than any other country in the world."  This Provisional government was overthrown in the October by the Bolsheviks. What went wrong with the government of the "freest country in the world"?

The government was dominated by the Mensheviks and the Social Revolutionaries (the SRs were a party basically representing peasant interests and petty-bourgeois socialists-- it was non, but not anti-, Marxist). Their weakness, according to Lenin, was their slavish (no pun intended) following of the discredited ideas of the social chauvinists of the Second International, called by Lenin "the ministerialists and other opportunist riffraff." The ministerialists were those so-called "socialists" who accepted portfolios in governments controlled by the reactionary bourgeoisie; this was considered rank opportunism by Lenin and the Bolsheviks, a case of what might be called right-wing socialism an infantile disorder. European workers should know all about these sorts of "socialists."

The western socialists engaging in these opportunistic tendencies were merely repeating in the West the tactics that so discredited the Mensheviks in Russia from 1905 on. "As history would have it, the opportunists of a backward country became the forerunners of the opportunists in a number of advanced countries."

Granted that the concept of "opportunism" is complex-- one person's "opportunist" is another person's "realist" -- I think Lenin uses the term to describe those who abandon principled Marxist positions to adopt positions fundamentally at odds with the long term interests of the working class because they sought temporary gains for themselves and their allies. They confuse, consciously or unconsciously, the strategic aims of Marxism with the tactical aims of the moment and mistake means for ends.

Lenin ends this chapter of LWC by pointing out that the reason "the heroes of the Second International [Lenin lists Scheidemann, Noske, Kautsky, Hilferding, Renner, Austerlitz, Bauer, Adler, Turati  and Longuet, and besides throws in the Fabians, Mensheviks, etc.-- characters we shall meet later] have all gone bankrupt and have disgraced themselves " is due to their inability to understand "the significance of the role of the Soviets and Soviet rule."

The Soviets were councils of workers and peasants that came together to replace the bourgeois government not to submit to it and which combined both legislative and executive functions in one body. The Soviets did not represent the bourgeois concept of the "separation of powers" [for better or worse] and Lenin and the Bolsheviks saw them as a higher form of democracy (actually as an expression of the dictatorship of the proletariat) than bourgeois parliamentary democracy. The aforementioned opportunists, Lenin said, were all "slaves to the prejudices of petty-bourgeois democracy." For this reason they could not lead a successful proletarian revolution while the Bolsheviks could-- and did.

Lenin concludes that the Soviet form of government is rapidly spreading throughout the world to the workers of all countries. "Experience," Lenin says, "has proved that, on certain very important questions of the proletarian revolution [he means the establishment of Soviets], ALL countries will inevitably have to do what Russia has done."  

Where are the Soviets today? If Lenin is right there will be no getting rid of capitalism without them-- or at least of getting rid of it by a working class revolution. Are there any viable alternatives to "petty-bourgeois democracy" on the horizon? If not, then, considering the fate of the Soviet Union, were the "opportunists" after all just "realists"? These are the questions to be answered as the struggle against the current capitalist  crisis deepens and advances.