No socialism in one country (2026)

From the April 2026 issue of the Socialist Standard

Capitalism is not a collection of separate national systems; it is a global network of production, trade, and competition. Every country is tied to the world market, and survival within that system requires competing for profits, investment, and economic advantage.

Because of this, any attempt to build socialism in one country alone would be forced to operate under capitalist pressures. It would have to maintain wages, compete in international markets, and prioritise economic survival over human need. Step by step, the original goal of a cooperative and democratic society would be pushed aside by the demands of global competition. History shows that isolation does not abolish capitalism — it reshapes it under new management.

Socialism, therefore, is not a national project but a humanity-level one. The working majority everywhere shares the same condition: we produce the wealth of the world yet remain dependent on wages and subject to economic insecurity. Our struggle is not against other nations or peoples, but against a system that divides us while relying on our collective labour.

The necessary conclusion is clear: real emancipation requires conscious, democratic action on a global scale. When people understand their shared interests beyond borders, they can replace production for profit with production for use, competition with cooperation, and economic domination with genuine human freedom. Socialism is not merely an ideal — it is the logical and practical next step in the struggle for a world organised by and for humanity itself.

Global networks

What is often missed in discussions about ‘banana republics’ is that the decisive transformation was not simply political independence but the globalisation of capital itself. In the past, domination appeared visible because it was concentrated in a single corporation or foreign power controlling land, labour, and government institutions directly. Today, control is more diffuse and therefore less obvious. No single company needs to govern a country when financial markets, credit systems, trade dependence, and technological monopolies can discipline entire economies.

Modern states are not passive victims; they actively compete to attract investment, secure export markets, and integrate into global production networks. This creates a situation where governments formally exercise sovereignty while simultaneously adapting policies to maintain competitiveness within the world market. The pressure no longer comes from a colonial administrator but from capital mobility itself — investment can simply move elsewhere.

This helps explain why countries with very different political ideologies often pursue similar economic strategies. Whether governments describe themselves as left, right, nationalist, or progressive, they must operate within the same global framework of profitability, productivity, and trade balance constraints.

In this sense, the historical ‘banana republic’ has not returned, but neither has dependency disappeared. What has emerged instead is a system in which economic power operates structurally rather than territorially. The question today is not who rules directly, but how global economic relations limit the range of choices available to every nation-state.

Structural problem

When reformist governments promise improvements within capitalism, they inevitably collide with economic factors they cannot control — investment decisions, profitability, need for capital accumulation, and global competition. When reforms stall or are reversed, disappointment follows, and many workers understandably turn elsewhere, sometimes towards right-wing populists who appear to challenge the status quo more decisively. This recurring pattern points to a deeper structural problem rather than individual political failure.

Historical examples like the reforms under Lyndon B. Johnson, subsidised education, or public transportation systems in countries such as Brazil show that significant social concessions can exist within capitalism. Free or subsidised services, however, were never simply the result of goodwill; they emerged under specific economic and political conditions — periods of growth, social pressure, or geopolitical competition. When those conditions change, reforms become vulnerable to cuts or restructuring, regardless of which party governs.

This helps explain why debates framed as a struggle between ‘progressive’ and ‘conservative’ administrations miss the underlying issue. Policies may differ, but governments operate within the same economic framework, which ultimately prioritises accumulation and fiscal constraints over permanent social guarantees.

The recurring cycle — reform, limitation, frustration, and political backlash — suggests that the problem may not lie primarily in voter misunderstanding or conspiracies, but in the expectation that lasting social security can be achieved through reforms that leave the basic economic structure unchanged.

Understanding this dynamic may be more useful than attributing political shifts solely to ideology or manipulation, since it highlights why similar outcomes reappear across different countries and historical periods.

Moral denunciations

The controversy surrounding Noam Chomsky and his association with Jeffrey Epstein has generated intense debate within the left, but much of the discussion reveals a deeper political confusion. The focus has largely shifted toward personal morality and individual guilt rather than examining the social structures that allow power, wealth, and influence to concentrate in the first place.

Capitalist society consistently brings intellectuals, politicians, financiers, and academics into overlapping networks because access to funding, publishing, and institutional influence depends on proximity to wealth. This is not primarily a question of individual virtue or hypocrisy, but of how a system organised around capital inevitably connects cultural authority with economic power.

Sections of the left tend to respond to such controversies through moral denunciation, as if removing flawed individuals could purify politics. Yet history shows that replacing personalities does not alter the underlying social relations that reproduce inequality and elite influence. The problem is systemic, not psychological.

A serious socialist perspective therefore avoids both personal hero-worship and moral panic. Intellectual contributions should be evaluated critically and independently of personal reputation, while recognising that meaningful change cannot come from reforming elites but from conscious democratic control of social production by the majority itself.

In that sense, the debate should move beyond personalities and return to the central question: what kind of social organisation continually produces these concentrations of power, and how can society collectively move beyond them?

R.

Endgame? (2024)

Book Review from the September 2024 issue of the Socialist Standard

Endgame. Economic Nationalism and Global Decline. By Jamie Merchant. Reaktion Books. 2004.

Is globalisation coming to an end and capitalism returning to a period like that between the two world wars of the last century when economic nationalism and beggar-thy-neighbour policies were the norm? Merchant makes out a case for this, starting from basically Marxian premises.

He describes how, from the point of view of actual production, the world is one system involving workers everywhere:

‘Pick a typical product of contemporary globalization — say a laptop computer. The laptop is sold for money by the company that owns it only as the end result of a transnational sequence of extraction, processing, manufacturing, assembly, transportation, and distribution, involving thousands of laborers doing different kinds of work for a range of contractors across dozens of countries’ (pp. 125-6).

In the course of such ‘planetary assemblages’ the world working class, as a class, produce a pool of surplus value from which firms and states compete to draw a share as profits. The profits of capitalist firms do not depend on how much surplus value its workers might be said to produce; in fact some firms, as those in the inflated financial sector, don’t produce any but are very successful in capturing some. The profits a firm makes depends on how well it is organised to draw profits from the world pool of surplus. In this, firms are helped by states.

‘National competition,’ Merchant writes, ‘is competition over the global surplus product. Monetary policies, tax laws, corporate subsidies and trade agreements are some of the measures states take to assist their national corporations in raising profitability, that is, in capturing more of this global surplus’ (p. 98).

He defines ‘globalisation’ as the period when global production, and so the pool of global surplus value, was expanding. The governments of the leading capitalist states favoured the liberalisation of world trade by abolishing or lowering tariff barriers as they believed that this would lead to world trade expanding even more.

Merchant’s basic thesis is that this period is coming to an end because the continuing mechanisation imposed by competition has led to a fall in the rate of profit, resulting in ‘the global pool of surplus value available for redistribution as profits shrink[ing] relative to total capital invested worldwide’ (pp. 153-4).

Competition to capture profits has become more intense — more of a zero-sum game — and states are being compelled to intervene more actively to try to steer profits to enterprises within their boundaries. ‘Global productivity growth’, he writes, ‘appears to be over for the foreseeable future. The result is likely to be a kind of stasis state in which national governments must take ever more extreme measures to compensate for the paralysis of private capitalism’ (p.134). Hence the rise of economic nationalism and of parties advocating ‘national sovereignty’.

Slow productivity growth and slower expansion of world production are plausible explanations for the observable move away from globalisation, as so-called ‘neo-liberalism’ on a world scale, and towards economic nationalism (from governments subsidising selected enterprises as supposed engines of growth to the rise of nationalist and nativist political parties). Whether this is the endgame for capitalism is another matter.

In the final chapter Merchant seems to envisage capitalism being overthrown and the wages system abolished by spontaneous mass rioting. That’s another matter too.

Adam Buick

Material World: Taking the gold (2024)

The Material World Column from the September 2024 issue of the Socialist Standard

Every four years the Olympics give us a demonstration of human skills, determination and intelligence. Athletes from around the world compete for honours: yet in each Olympics, it seems, only a handful of countries take home the bulk of the medals. We could reasonably expect raw human ability to be evenly distributed around the globe, and yet, the Olympics shows us that of the 200 countries and territories that compete, US, China, Australia and some European nations will win most of the events.

Racists would attribute this to some sort of inherent national ability and superiority on the part of those nations. Of course, there are more sensible explanations. The Olympics represent the sporting culture of the countries that established them: people in many countries just do not have the same interest in these sports. In many countries, there is not the participation, much less the infrastructure, to find and train the most able sports people.

Engagement in sport requires the time to train, and billions of people around the world are tied to long working weeks (and many of those simply do not have the diet available to realise their sporting potential). On top of which, some states, like the UK, spend millions on training, supporting and honing their athletes.

Further, some states are able to attract talent through migration, offering opportunities and citizenship that others cannot match.

The participation of the other countries is essential to the spectacle, though: after all, for someone to come first someone has to come second, or even last. In many ways, the Olympics can be seen as a mechanism to transfer sporting glory from a global majority to a minority.

North and south

As such, it serves as a good metaphor for the way that wealth is concentrated internationally. In July this year, Hickle, Lemos and Barbour published a paper in the journal Nature Communications entitled Unequal exchange of labour in the world economy. In it they argue ‘wealthy nations rely on a large net appropriation of labour and resources from the rest of the world through unequal exchange in international trade and global commodity chains’.

They analysed data, from 2021, showing the global breakdowns of types of labour performed, and the relative prices/wage costs of that labour. Around the world, they suggest that 9.6 trillion hours of labour were performed in the world economy. 2.1 trillion hours went into traded goods (including services). They divided the world into the global North (based on the IMF list of advanced economies: USA, United Kingdom, etc) and the global South (all other countries).

The overall net balance of trade was in favour of the global North, amounting to 826 billion hours of labour transferred from South to North. They note there is no sectoral imbalance (ie, the global South is not just producing primary products, but also intermediate and finished goods for consumption). The South is not just performing unskilled labour, but highly skilled labour across the full range of economic activities, and ‘This appropriation roughly doubles the labour that is available for Northern consumption but drains the South of productive capacity that could be used instead for local human needs and development’.

They explain that the:

‘Dynamics of unequal exchange are understood to have intensified in the 1980s and 1990s with the imposition of structural adjustment programmes (SAPs) across the global South. SAPs devalued Southern currencies, cut public employment and removed labour and environmental protections, imposing downward pressure on wages and prices. They also curtailed industrial policy and state-led investment in technological development and compelled Southern governments to prioritise “export-oriented” production in highly competitive sectors and in subordinate positions within global commodity chains. At the same time, lead firms in the core states have shifted industrial production to the global South to take direct advantage of cheaper wages and production costs, while leveraging their dominance within global commodity chains to squeeze the wages and profits of Southern producers. These interventions have further increased the North’s relative purchasing power over Southern labour and goods’.

That is, through control of international institutions and control of finance. We could add in the raw power of ownership, as many industries when decolonisation occurred still belonged to Northern capitalists. We could add naked corruption as another mechanism. And some capitalists in the periphery choose to invest their profits in the North rather than locally. Although not included in their list, we can add military dominance as well, as some Northern states will use force to ensure their position in the global chains, as well as providing the military resources that prop up rulers in the global South.

Hickle et al find that ‘Southern wages are 87–95% less than Northern wages at the same skill level, ie, for equal work as defined by the ILO. Southern wages are 87% less for high-skill labour, 93% less for medium-skill labour, and 95% less for low-skill labour’. This is also part of the driver for imbalanced trade. They conclude:

‘Given this dynamic, it is clear that the North’s development model cannot be universalised, as it relies on appropriation from elsewhere. Furthermore, it is unlikely that the North’s current levels of aggregate consumption could be maintained under fair trade conditions’.

And as they note:

‘It should be understood that unequal exchange is ultimately driven by the corporations and investors that control supply chains, and the states that determine the rules of international trade and finance, not by workers or consumers’.

Globalised workforce

There is a clear class issue here. The 9.6 trillion hours of labour that the authors calculate are performed in the world economy are performed by a globalised workforce that is being exploited through producing more value through their work than it costs in wages to maintain and reproduce their ability to work. Capitalists, North and South, compete to grab a share of this surplus value. What the authors have in effect uncovered is how successful, and how, the capitalists of the North have been in this struggle at the expense of the capitalists of the South.

They also calculate that ‘globally, labour received, on average, 51.6% of world GDP during the 5-year period 2017–2021’ and that this represents a global decline in the share going to labour. But it does not follow that a more equal sharing between the capitalists of the North and South of the 48.4% up for them to grab would alter this.

Pik Smeet

Globalisation: the left on the coat-tails of liberalism (2003)

Book Review from the January 2003 issue of the Socialist Standard

Two recent books, Globalization: Neoliberal Challenge, Radical Responses by Robert Went and The Twilight of Globalization: Property, State and Capitalism by Boris Kagarlitsky highlight the long-standing history of globalisation of trade, changing imperial relations and the failure of the modern left to come to any effective strategy to combat its renewed assertive neo-liberal ideology. In the late-nineteenth and early-twentieth century the left was able to delineate a clear position between its own anti-imperialist stance and the pro-imperialist and apologist liberal positions. By the second half of the twentieth-century, however, after the experience of running capitalism (with its consequent disillusioning impact on principles) and the disorientating policies of supporting “progressive” struggles over “reactionary” ones, the left is in a muddle. For example, a significant section of the British left backed the NATO bombing of Serbia and the support of the Labour Party for the hegemonic ambitions of the US shows how much politics has seemingly changed in the course of a century.

Or does it? The tradition of leftism in Britain, rather than being an alternative to capitalism has, when negotiating for political power been liberal rather than anything approaching socialist. The 1945 “settlement” was not based on the ideas of the Labour movement but on a programme of social-security and nationalisation that had long been part of the liberal agenda, being synthesised in the 1942 Beveridge Report (which was also incidentally supported by the Communist Party). During the twenty years following the second world war the “social-compromise” of the welfare-state and Keynesianism become the accepted centre ground of British politics.

However, following the long-term decline in economic growth liberal opinion swung away from the Keynesian orthodoxy to a new one based in classical economic theory. The left, increasingly isolated from mainstream economics, first led a failed counter-attack in the early 1980s and then slowly surrendered on all fronts under Neil Kinnock and finally the right-wing bully Tony Blair. There is and always has been, it is true, a radical left aiming at arriving at state-capitalism through the Labour Party but the “socialising” impact of the post-war nationalisations was virtually non-existent. Such measures were not accepted by the political centre as necessary on the grounds of radical social and economic ambition but because it could be defended – to an extent – in terms of the overall efficiency of capitalism.

Privatisations, pursued ideologically against perceived excess government economic activity, have generally failed and sometimes cost business more than the old nationalised equivalents. The state remains, despite globalisation, a strong social, economic and political force, which is no doubt why transnational corporations spend billions of pounds globally in influencing their decisions. This despite the continuing ideological attack on the state even to the point of damaging the stability of the capitalist state itself. Privatisation has seen the domination of ideology over pragmatism for capitalist government. A European Commission report of 1992 (quoted by Kagarlitsky) failed to find any advantage and in fact an additional cost to be borne for capitalism. The reason given, to reduce the economic role of the state and thus to reduce state expenditure has singularly failed to occur; in Russia, for example, it was said that a reduction in the state economic sector of one-tenth required an increase of the state apparatus by one-third. States are not reducing in size or reducing their role but are merely changing with an increase of unaccountable quangos and so on. Similarly the increasing role of international organisations have not been met by a reduction in the role of national governments. The situation may be summed up with the phrase “freer markets and more rules”. Thus the use of the state is open to a different approach and is open to the left, which is currently unwilling to use it.

Further, the social inequalities engendered by neo-liberal capitalism can threaten to undermine the basis of capitalist government itself. A strong state involvement in the economy has historically been a boon for, rather than the bain of, capitalism. It is essential for the creation of a social consensus for capitalist relations:

“Because the capitalist market cannot get by without non-market institutions, the state as a non-commercial entity plays a key role, not only financing public bodies but also overseeing the interaction between the development of the economy and that of the various structures of the social sphere… Without a certain consent by the governed, the state could hardly perform its class function. But this means that the state system, as an instrument of the ruling class, cannot fail to take account of the interests of other social layers as well. When the institutions of power prove incapable of this, the state system enters into crisis” (Kagarlitsky, The Twilight, p.8).

Increasing inequalities are likely to lead, if not to outright conflict, then to tensions and an increasing political demand and therefore political will, where representative democracies exist, to a likely challenge to the unapologetic inegalitarian capitalism of recent decades. Robert Went reveals that the ratio of income between the top 20 per cent and the bottom 20 per cent of the world population was 60:1 in the early 1990s and predicted to decline to 50:1 by 2010 if all went well with the world economy; given the crises of the 1990s the ratio is far likely to increase rather than decrease. Went argues that the prospects for workers globally of the continuation of current trends is bleak indeed:

“there will be a greater and more dominant dictatorship of the markets, particularly over countries that wish to attract capital; greater social inequality as a result of a dual process of polarisation, within countries and on a world scale, among countries; progressive levelling down of wages, working conditions and social security; ecological destruction and deterioration; a greater role for unaccountable international institutions and blocs; and a further undermining of democracy” (Went, p.108).

The state has also tended to be a great source of innovation in the field of technology, which is not, as widely reported, the cause of globalisation but merely facilitates it. Not least of these developments was the internet, which originated in the 1960s in the US Defence Department but also includes space technology, infrastructure and education.

The confidence of global finance capital was somewhat shaken by the capital-flow and currency crises in Mexico in 1994 and Asia in 1997, which produced several calls for international regulation of global capital flows. Further crises are likely to induce regulation if severe enough. Current actions to solve financial crises are tied to austerity packages, which avoid the global impact of such incidences but create problems of development for those countries which are subject to them. While the share of world trade of developing countries has increased from 20 per cent to 30 per cent in the post-war period, economic growth has in the main been restricted to the EU, US and Japan. The imposition of export-led growth on the resource rich developing countries means that to develop a break with neo-liberalism is needed. A degree of protectionism is needed for national capitalist economies to prioritise industrial development. Such a growth, of course, could well be a stimulus for the global economy were it not geared to the interests of finance capital in the developed world.

Successful development has generally taken place in countries or regions where the interventionist state is the norm and not under conditions of anything approaching free-trade. Selective intervention in the world economy has been the basis of most industrial growth, from the British cotton-trade to South Korea and Taiwan in the 1960s who, without government protection of the domestic market tied to export performances of amongst others the clothing industry, would still be exporting rice as its export mainstay. Protectionism then most probably must play a prominent part in any meaningful economic growth in the non-western world – the west of course being still well acquainted with it, despite its rhetoric.

In the light of the utter failure of the Kyoto agreement to result in meaningful regulation it is also clear that for any serious recognition of environmental sustainability there must be a proliferation of regulation and state-led implementation of clean-technologies and the innovation of new ones. If humans are to survive on the earth then this must be done. If ecological disaster is not to be averted by socialism then capitalism must clearly adopt such an approach.

What then is to be done? Went is clear that capitalist relations are flawed:

“It is not possible within the existing economic logic, in which profit maximization comes first, to solve the most important problems that humanity faces. Under capitalism, the individual interests of speculators, employers or investors determine what they do. The partial rationality of their actions clashes with the general social interest of present and future generations.

In fact, capitalism is becoming more and more irrational. The discrepancy between what is economically and socially possible and what is actually happening has never been greater than it is today” (Robert Went, Globalization, p.121).

Kagarlitsky is also clear that the old state driven approaches to the problems of capitalism are also little hope for the future:

“The old Big Brother is dead, meet the New Big Brother. Now Big Brother is global or multinational, but even more faceless and even less accountable than before. It is no surprise that after experiencing what globalization has in store, so many people world-wide are becoming nostalgic for the old Big Brother” (Boris Kagarlitsky, The Twilight, p.2).

It seems strange then that despite the attention that both Went and Kagarlitsky pay to the need for an adequate response to capitalism and its current ideology that both see the answer in progressive reforms, or what Kagarlitsky calls “revolutionary reforms”. Following the massive defeat of leftism across the world, it is clear that socialist revolution can well do without the pursuit of reforms. Such an attitude also ignores the extent to which any challenge to neo-liberalism will most likely be led by an ideological shift back to liberal social-pragmatism – in other words, a shift motivated not in the interests of labour but of capital.

Colin Skelly

Cooking the Books: Nothing to offer (2011)

The Cooking the Books column from the September 2011 issue of the Socialist Standard

“People in general have lost faith in the free-market, Western, democratic order,” lamented Daily Telegraph columnist Charles Moore (22 July). “They have not yet, thank God, transferred their faith, as they did in the 1930s, to totalitarianism. They merely feel gloomy and suspicious. But they ask the simple question, ‘What’s in it for me?’, and they do not hear a good answer.”

They certainly don’t. The mad-marketeers who ruled the roost at the time of Thatcher and Reagan didn’t have anything to offer, but at the time many people thought they did. Thatcher openly proclaimed that she intended to destroy “socialism”, by which she meant everything associated with the post-war Labour government (nationalisations, NHS, council housing) and her government went a long way towards doing so, even if she was only doing what the economic circumstances of British capitalism required her to do.

Then, in 1991, the USSR collapsed. The partisans of “the free-market, Western, democratic order” were elated. They proclaimed the “end of history” and that “socialism is dead”. But what had died was state-monopoly capitalism not socialism (which had never existed in Russia). A “peace dividend” was promised. It never materialised. Instead, there was the First Gulf War, to be followed by the invasion of Iraq and Afghanistan by the Western capitalist countries. In 2007 the biggest slump since the 1930s broke out. We’re still in it.

Wars, slumps, capitalism as usual. No wonder the likes of Charles Moore are disoriented and disillusioned. He even entitled his column “I’m starting to think that the Left might actually be right”, explaining:

“One of the great arguments of the Left is that what the Right calls ‘the free market’ is actually a set-up. The rich run a global system that allows them to accumulate capital and pay the lowest possible price for labour. The freedom that results applies only to them. The many simply have to work harder, in conditions that grow ever more insecure, to enrich the few. Democratic politics, which purports to enrich the many, is actually in the pocket of those bankers, media barons and other moguls who run and own everything.”

What Moore was lamenting was that the Right (to accept his term) has no answer to this criticism (only slightly caricatural) of the private corporation capitalism they uphold and promote. And they haven’t. Capitalism is now more intellectually bankrupt than ever. It has no inspiring vision to rally people, not even “freeing” people from state capitalism. As a result of the way it inevitably works, capitalism has become a dirty word again.

But what is the answer? By “the Left” Moore probably means the supporters of state capitalism (he explicitly states that “the Right” includes “the New Labour of Tony Blair and Gordon Brown”), but the above is a criticism of capitalism which we in the Socialist Party could broadly share, even though we don’t consider ourselves a part of the Left precisely because they stand for state capitalism.

We are opposed to private corporate capitalism and to state capitalism, both of which have failed. The answer is a classless society without rich or poor where productive resources have become the common heritage of all so that the production and distribution of the things we need to live and enjoy life can be carried out in accordance with the principle “from each according to their abilities, to each according to their needs”. It’s the original meaning of socialism before the experience of Russia and Labour governments made it a dirty word. It’s high time it became respectable again.

Summit's up (2005)

From the December 2005 issue of the Socialist Standard

At first there was NAFTA, then there was FTAA – or rather, there wasn’t, because talks to establish the Free Trade Area of the Americas have got bogged down in disagreements. The North American Free Trade Agreement, between the US, Canada and Mexico, came into force in 1994. Its declared aims were to eliminate trade barriers between the three countries involved and increase investment opportunities. In fact, it is far more about investment than trade, allowing US and Canadian factories to be moved to cheap-labour areas in Mexico and opening up further chances for privatisation. But it was always seen as a first step only, and the FTAA, which would extend to most of Central and South America and cover 34 countries, is the logical conclusion, originally intended to come into effect at the start of 2005.

The FTAA has many opponents. The nasty right-wing super-nationalists in the John Birch Society (see www.stoptheftaa.org) view it as part of the ongoing abolition of the United States, opening up borders to all sorts of criminals, terrorists and other undesirables, doing away with US sovereignty and creating a European Union-style integrated political unit. This isolationist conception does not fit in with that of the rulers of the US, however. There have also been opponents from the ‘left’, largely from the anti- globalisation or global justice movements (www.globalexchange.org/campaigns/ftaa/, for instance). They point to the effects of NAFTA in cutting wages in Mexico and increasing threats to the environment and public health. FTAA, they claim, will just be the same thing, writ larger. 

In early November the Summit of the Americas was held in Argentina, partly to see how FTAA could be put back on track after the rulers of  some countries objected to it. In the meantime, smaller groupings have been pushed forward, such as the Central America Free Trade Agreement (due to start in January 2006) and the Andean Free Trade Agreement (which is still under negotiation). The US is also particularly interested in expansion of the Panama Canal, which carries 14% of US foreign trade, so that it can handle more and bigger ships. But the Summit did not give the green light to FTAA, despite Bush’s threats and arm-twisting. A handful of countries stood out against it, including Venezuela, where oil resources give the rulers a bit of bargaining freedom (see the November Socialist Standard). So now things are being left to the meeting of the World Trade Organization in Hong Kong in the middle of this month.

The Argentinian Summit was marked by protests and police crackdowns, together with the usual populist anti-American pronouncements from Presidents Chavez of Venezuela and Lula of Brazil. Clearly, many workers are unconvinced that a policy is in their interests just because it suits Bush, his fat-cat backers and the American capitalist class in general. But nobody raised the real issues about the way society is run.

The truth is that arguments about ‘free trade’ or ‘fair trade’ or any other kind of trade completely miss the point. All variants on trade accept the idea that food, clothing, housing etc. should be bought and sold rather than freely available. They also accept that the earth should belong to a small class of owners rather than being the common property of all its people. They all accept the existence of capitalism rather than rejecting it entirely as Socialists do.

Who’s afraid of the WTO? (2001)

From the December 2001 issue of the Socialist Standard

The World Trade Organisation represents the interests of the capitalist class and is a product of the lessons they have learned for protecting their system

The World Trade Organisation is not to blame. Capitalism is. Although the WTO has emblazoned itself in everyone’s consciousness as the unacceptable face of globalisation – indeed as the secretive cabal directing the insidious movements of world finance – what it really represents is a trend as old as capitalism itself, and the continuation of old policies under a new name.

Capitalists are not oblivious to their own interest in preventing their system crumbling. The WTO and its associated world infrastructure is directly related to lessons they have learnt throughout the history of wars and disasters that the market has inflicted on the human race in the past century.

In the 1930s, national governments relied on the free trade in gold to regulate the relative value of their currencies, and structure international transactions. Capitalism’s tendency towards disharmonious movement and uneven economic growth meant that gold tended to concentrate into the hands of a handful of states (America possessed up to 60 percent of the world’s monetary gold at one point), leaving others (such as Germany) desperately short of the means of international trade. This imbalance in trading power led directly to the conditions which prompted the second world war, and devastated almost the entire continent of Europe.

Determined to avoid this situation happening again, the dominant capitalist powers met after the war, to construct an effective international machinery to enable trade to progress between states smoothly. The Bretton-Woods agreement, as devised largely by J M Keynes, sought to regulate international capital movements.

Likewise, the International Monetary Fund and the World Bank were created to ensure nations avoided suffering the same bankruptcy as Germany effectively endured in the 1920s. It was envisaged that these institutions would be joined by an International Trade Organisation, to lay-down the rules by which trade would be governed. This institution was, however, vetoed by the US at the Havana conference in 1947.

Unworkable system 

What stood in place of the ITO was the General Agreement on Tariffs and Trade, which came into force in 1948, and was based on the unobjectionable sections of the Havana Charter. Over time, GATT proved to be unworkable, with inadequate enforcement procedures, unclear rules and the rigidities of consensual agreement systems.

Thus, at the Uruguay round of GATT negotiations which ended in 1993, the World Trade Organisation was agreed upon, as a “superior” successor. The Uruguay round significantly expanded the scope of the international agreement’s remits, bringing agriculture, services and intellectual property within its field of competence, as well as seriously reducing tariffs and other protective measures allowed. This lead to an almost immediate increase in the volume of international transactions: according to the Eurostat Yearbook 2000 external investment by European Union states increased by almost 500 percent from 1995 -1999.

This is simply part of an on-going trend within the development of the market system. As trade progresses, so too does standardisation of the rules and groundwork. In the early nineteenth century England, for example, a merchant would have had to know how to reconcile his Durham pecks with his Dorset grains and his Norfolk drams, when selling goods by weight. Likewise, each town would have its own time (relative to its distance in minutes from Greenwich). These times and weights formed the legal framework for trade in each of these districts, and formed a burdensome cost to any business trying to operate across them.

In time, the need to concentrate capital, and increase the area and scope of the circulation of commodities meant that such discrepancies between local authorities were overcome. Usually, this meant over-ruling them through the authority of the centralised state, and enforcing a uniform set of rules across the whole economic zone. This tendency for the concentration of capital continues, and the same problem manifests itself in differences of trade regulations between nation-states, although this time there is no central authority powerful enough to completely over-rule them and impose its standards.

The reasons for the increasing concentration of capital lie, essentially, in the methods by which labour is exploited by capital. When a commodity is produced the capitalist calculates its cost of production (the cost of goods that went into it, plus labour), and then adds a profit mark up roughly in line with the expected rate of profit of their rivals. This average rate of profit applies regardless of the amount of value added by the specific production process involved, but, rather, the total value added across the whole economy.

What this means is that industries which involve a large input by labour (i.e. which add a lot of value) lose out because the average profit mark-up is less than the value they add. This means that this added value is transferred into the profits of industries which are less labour intensive. It is, therefore a competitive advantage for capitalists to increase the ratio of productive capital to labour (known as the organic composition of capital). With this increase comes an extension of the productive capacity in an industry, with capacity being taken up by fewer and fewer production units.

Alongside this concentration of capital is the increase in the transportation capacity of society. Technological advances in transport continue apace with productive capacity, meaning that, in general, the circulation of commodities and trade can increase faster than the productivity of society (more goods to transport multiplied by a faster rate of moving them). This is born out by the chart below from the WTO

In each period the rate of increase in trade is greater than the rate of increase in output of merchandise. One of the most significant details, however, if the massive increase in trade in 1990-2000, in a period in which merchandise output actually fell compared to the previous period. The effects of the inauguration of the WTO can be seen in this increase. It is an increase in excess of the usual growth in trade, and thus represents an exceptional occurrence.

The motivation for this spurt in trade may well lie in the observable decline in productive output across the whole chart. The rate of output growth is under half that of 1963-1973. Capitalists, misled by theories which see value as being created rather than realised by trade, treat trade as a good in itself, and think that by increasing the circulation of goods they will be able to dig themselves out of the profitability hole indicated by the drop in output growth. Alongside this is the temptation to exploit the differences in national and regional rates of profit to try and realise an exceptionally high profit.

What this means is, effectively, that through increased trade capitalists are attempting to rip each other off, as a result of their incapacity to exploit the workers enough. Through increasing trade competition, they are effectively increasing the scramble for a share of the total global production of surplus value. This can also be seen in the increase in currency speculation and finance capital movements around the world. Since these forms of activities are entirely unproductive they represent a mere redistribution of booty among the thieves.

This tendency can also be observed in the decision to open up services to international competition. Although British ministers maintain fervently that this does not mean the WTO will force privatisations upon countries, the fact is that International Monetary Fund (IMF) structural adjustment programmes usually force countries to attempt to decrease the size of their state sector, paving the way for firms from advanced capitalist countries to take over these services and sweat profits out of the workers there. It represents another way of opening up otherwise marginalised sources of surplus value to be taken back to the industrialised core.

Backwardness 

Vast areas of the world, the “post-colonial” zones are still dedicated to low value yielding primary products such as mono-crop agriculture and mining. Most of the increased trade remains between the industrialised manufacturing centres. The top five exporting states (EU, US, Japan, Canada, China) represent 53.2 percent of the world export market (according to WTO figures), whereas the top four importers take a 54 percent share between each other. The EU and the US both import considerably more than they export, and represent a substantial lucrative market to access.

This imbalance of trade between the core and the periphery indicates the way in which the idea that opening up free trade will benefit poor nations and assist in their development is flawed. The sheer economic clout of the big capitalist states means they can bully and force other states into letting them have their way. As George Monbiot noted in his Guardian column (6 November) one WTO delegate from a poor state saying “If I speak out too strongly, the U.S. will phone my minister. They will twist the story and say that I am embarrassing the United States. My Government will not even ask, ‘What did he say?’ they would just send me a ticket tomorrow”.

Such raw power means that whatever formal equality of the rules, they will still be used to serve the ends of the dominant states. Each national capitalist class seeks to protect its position and its investments, and is exceedingly unwilling to relinquish control of the state force which props up its power. The dominant policy is currently to pursue mutual capital interpenetration, and thus prevent losing control of their national economy at home, whilst having sufficient hostage capital to deter expropriation abroad. Whilst the times are good this policy is tolerable, but come a time of crisis each group will seek to save their own skins first and foremost. Should America sink into deep recession, it may decide to put a stop to the raiders taking a share of its profits, and throw the barriers back up.

Certainly, so long as world society depends first and foremost upon competing capitalist groups vying for profits, it will be subject to the anarchy of capitalist self-interest, and any world body will be subordinated to the Machiavellian manoeuvrings of these groups. So long as capitalism remains any world body will be used as a potential tool for exploitation and robbery. The only genuine way to move forward to a world human community is by the abolition of sectional national élite interest, and the creation of a world human interest of common ownership of the worlds wealth, so that we can end the horrendous divisions the property system has created.

Pik Smeet

Cooking the Books: Things can only get worse (2005)

The Cooking the Books column from the November 2005 issue of the Socialist Standard

Although Labour was elected to office in 1997 to the sounds of ‘Things Can Only Get Better’,  Blair is now singing a different tune. In the past the Labour Party used to argue that the state could, and should, be used to protect people from the worst effects of world market forces, through such measures as import controls, tariffs and subsidies to protect home industries and the employment they provided, and bans on the export of capital so that it was invested at home. Such views are still held by trade unionists, Leftwing reformists and the Green Party (which has taken over the Labour Party’s discarded policies in this area).

Blair now derides this as “the European social model of the past” and is actively campaigning to get other EU governments to abandon it too. In his Leader’s speech to the annual Labour Party Show in Brighton he told the audience (they can hardly be called delegates since the resolutions they pass count for nothing):

“In the era of rapid globalisation, there is no mystery about what works: an open, liberal economy, prepared constantly to change to remain competitive. The new world rewards those who are open to it. … The temptation is to use government to try to protect ourselves against the onslaught of globalisation by shutting it out – to think we protect a workforce by regulation, a company by government subsidy, an industry by tariffs. It doesn’t work today. Because the dam holding back the global economy burst years ago. The competition can’t be shut out; it can only be beaten” (Guardian, 28 September).

In other words, as the other member of the Thatcher-Blair Mutual Admiration Society used to put in: TINA. And, given capitalism, they are right; there is no alternative. What Marx called the “coercive laws of competition” can’t be overcome; they have to be applied, not just by capitalist enterprises but by governments too.

But at what cost to workers and society in general? It means running fast – in fact, running faster and faster – just to stand still, continually introducing new methods of organisation and production so as to be able to keep down costs and ward off or beat the competition. It’s a race to the bottom, involving, for those who actually produce and distribute the wealth of society, speed-ups, stress, precarious contracts, deregulations, redundancies, retraining, changing jobs – and the scrap heap for those who can’t keep up.

And, despite Blair’s optimism, there is no guarantee that, even with these changes, British capitalism will come out on top – who says competition, says losers as well as winners. Capitalism really is a rat race, or rather a treadmill, from which there’s no relief.

There Are Words for It (2005)

From the November 2005 issue of the Socialist Standard

Around five thousand languages are spoken at the moment, a number likely to be halved by the end of the twenty-first century. This is partly due to the impact of the world’s ‘major’ languages, such as Spanish, Russian and (above all, of course) English. As English becomes a truly global language, the main language of films, popular music and the internet, not only do its words find their way even into languages like German, but it completely displaces many local or minority languages. The decline in numbers is also caused by the growing role of ‘national languages’, those taught in schools and recognised as a country’s main language of communication. TupÆ, for instance, once widely spoken in Brazil, is now down to a few hundred speakers, pushed out by the expansion of Portuguese (though it will live on in words it has given to English, such as jaguar).

Endangered languages like this have existed throughout history, but are now far commoner than previously. The reasons for this are usually seen as straightforwardly political:

“large centralized political units (both the old-fashioned empire and the all-modern nation state) cause the total number of languages in their territory to decline. In so far as the world goes on being apportioned in such units, the total number of languages in the world will go on falling.” (Andrew Dalby: Language in Danger)

This statement is correct as far as it goes, but it plays down the economic factors behind language death. Languages decline and die when the communities of their speakers are disrupted (by conquest, exile, disease, and so on) or when children grow up speaking in daily life a language other than that of their parents. This can happen for various reasons, one being that the ‘new’ language is seen as a means of economic advancement, perhaps just because it has more speakers and can offer better employment prospects or a bigger market. Languages with a few thousand, or even a few million speakers, can hardly ‘compete’ with English, the language of international business.

Even the way a language is written can be affected by political and economic considerations. After the collapse of the Russian Empire in 1991, the governments of the new countries of Azerbaijan, Turkmenistan and Uzbekistan decided to switch from the Cyrillic to the Roman alphabet to write their respective national languages, which are all related to Turkish. This was partly due to anti-Russian nationalism — the Cyrillic alphabet, which is used to write Russian, having been imposed by Stalin in the 1940s. But it is also clearly motivated by a desire to attract tourists and business visitors and to make it easier for people there to learn English. Returning to the Arabic alphabet (which was used in these countries before the Cyrillic) would have been possible, but would not have served the new rulers’ westernising aims.

Besides undermining the status of languages, economic factors can lead to the creation of new languages. In The Power of Babel, John McWhorter traces the origins of Russenorsk, a kind of mixture of Russian and Norwegian, which came into being in the nineteenth century when Russian traders brought timber to Norway every summer to sell. Russenorsk was a very basic kind of language, useful for bartering and various other kinds of social interaction, but not usable for political debate or discussion of any abstract ideas. Languages like this are termed pidgins, and they usually arise when two groups of speakers come together in specific circumstances. Many Native Americans at first spoke Pidgin English when speaking to white people, while maintaining their own languages too. Unlike Russenorsk, which was a genuine mixture, this Pidgin English consisted almost entirely of words from the language of the dominant group — English — since English-speakers rarely had any desire or motivation to learn a local language. This is the usual situation: the language of the conquerors or colonists provides the vocabulary of the pidgin, which the conquered people have to use to talk with their new masters.

Pidgins often die out after a while: the subordinate group may well adopt the language of their conquerors, as happened in North America. Russenorsk ceased to be needed when the Russian Revolution put an end to the timber-trading. But sometimes a pidgin is expanded to become a full-fledged language, not one just used for a few special purposes, but one with its own individual structure and a vocabulary as large as that of any ‘normal’ language. A pidgin which has become a full language like this is called a creole; formation of a creole usually happens when people speaking different native languages and only sharing a pidgin are brought together. McWhorter mentions the case of Sranan, a creole spoken in Surinam, on the northern coast of South America. This was a British-owned slave colony, and slaves from various parts of Africa who were brought there had only Pidgin English in common at first. This eventually expanded to become Sranan, which is widely spoken in Surinam nowadays, alongside Dutch.

In fact the slave trade is the commonest causal factor in the origins of creoles. This appallingly cruel and immensely profitable system of trading in human beings resulted, among other things, in millions of people being uprooted from their homes and families, transported across the world, and set to work in desperate and scarcely-believable conditions. It should come as little surprise to learn that many languages of the West Indies are creoles (Jamaican creole, for instance), as is Tok Pisin, one of the official languages of Papua New Guinea. As creolised forms of pidgin Englishes, these still have vocabularies that are partly derived from English, but they are absolutely not debased forms of English. The languages of other colonising nations have also given rise to creoles, such as a Portuguese-based creole in the Cape Verde Islands in the North Atlantic, and the French-based creole spoken in Haiti. As McWhorter says, “most creoles have arisen amid conditions of unthinkably stark and ineradicable social injustice.”

One, rather controversial, claim is that the development of agriculture about ten thousand years ago led to the wiping out of many languages, as cultivators expanded their territories and settled down, thus overrunning existing groups of hunter-gatherers, who may well each have spoken their own language. Be that as it may, there is no doubt that capitalism, with its globalisation and its tendency to make everything homogeneous, is now killing off languages like nobody’s business. An examination of the current state and historical development of the world’s languages shows how capitalism leaves its ugly footprints everywhere, even in the way we speak.

Paul Bennett

The Truth about Globalisation? (2003)

Book Review from the October 2003 issue of the Socialist Standard

Open World: the Truth about Globalisation. By Philippe Legrain. (Abacus £7.99.)

This book has been touted as the definitive response to the ‘anti-globalisation’ movement and writers such as George Monbiot and Naomi Klein (author of No Logo). Essentially, Legrain argues that globalisation is A Good Thing, delivering jobs and a better standard of living to poor countries and cheaper goods to the developed world. Coupled with free trade, and appropriate government action to prevent any unwanted side effects, it can benefit everyone.

Legrain begins by arguing that globalisation has not proceeded as far as many people may feel. For instance, three-quarters of the goods in British shops are made in the UK, and most people work for British companies; in the US, the corresponding figures are around 90 percent in both cases. He also has a genuinely useful chapter on the history of globalisation, suggesting that it was already well under way when the Industrial Revolution started.

But he then goes on to claim that workers in poor countries benefit from globalisation. In Vietnam, for instance, foreign-run factories pay around double the average local wage, and technology and management skills are transferred inwards. Yet sometimes he is astonishingly naive: he visits a Nike contract factory there, and describes it as “bright, airy, clean and safe”, but says nothing about the many other reports of low wages and appalling working conditions in sweatshops. He justifies the vast difference between what the workers earn per shoe ($2) and what the shoes sell for ($72) by noting all the other costs and the need for Nike to make a profit. In fact, this is his general argument: though he hardly uses the word “capitalism”, he is really defending globalisation as part of capitalism, and on the same grounds that capitalist supporters defend the profit system.

Nor, he claims, do brands really rule the world, as Naomi Klein implies. Rather, consumers hold the whip hand, as the brands have to cater to their whims. We still have a choice: if we don’t like Nike, we can buy Adidas (some choice!). Klein is described as virtually fascist for suggesting that ordinary people are manipulated into buying things they don’t really want, while she of course is intelligent enough to see through it all. It is true that people cannot be manipulated in any simplistic way, but they can certainly be influenced, which is why the global brands spend millions on advertising. Legrain also blithely ignores advertising to children, who are clearly far more manipulable than adults.

Equally, companies are supposedly not all-powerful, being at the beck and call of those who buy their products and call the shots. Some of Legrain’s arguments here are just plain silly. For instance, he states that Margaret Thatcher’s privatisation programme was introduced because she thought it made economic sense, “not because she was taking handouts from big business”. But capitalist politicians do what seems to be good for capitalism, and to suggest that such actions would only be taken if they were corrupt is missing the point completely.

Basically, Legrain’s book is a hymn to capitalism and to profit-making. If you think that capitalism is basically a nice, friendly system—though it may need a bit of adjustment from time to time—then it may well be logical to support its globalising aspect. After all, it means more customers, more profits. But the anti-capitalist or anti-globalisation movement, for all its confusions, is a sign that increasing numbers of people are rejecting the idea that profit is good for everyone and that a small number of parasites should control the Earth’s resources. Open World may make the capitalists and their supporters happy about what their system is doing to the world, but in truth it is no more convincing than any other attempt to defend the profit system.

Paul Bennett

Globalization (2009)

Book Review from the September 2009 issue of the Socialist Standard

Globalization in Question. By Paul Hirst, Grahame Thompson and Simon Bromley. Polity Press, 2009

Globalization is one of the key concepts of our time, accepted by both the right and left as the cornerstone of their analysis of the international economy. In both political and academic discussions, the assumption is often made that globalization of the past few decades is a qualitatively new stage in the development of international capitalism; that integration of national economies into the international economy is an inevitable process to which national governments are largely powerless. This book challenges these notions.

The authors, using detailed evidence, argue for the following conclusions. The present highly internationalised economy is not unprecedented. In some respects, the current globalized economy has only recently become as open and integrated as the regime that prevailed from 1870 to 1914. Genuinely transnational companies are relatively rare. Most companies are based nationally and trade regionally or multinationally on the strength of a major national location. There is no major trend towards the growth of truly global companies. Foreign direct investment is still highly concentrated among the advanced industrial economies, and the Third World remains marginal in both investment and trade. The emergence of India and particularly China has disrupted this picture, though it has not significantly shifted the centre of gravity from the already advanced countries. Investment, trade and financial flows are concentrated in the Triad of Europe, Japan/East Asia and North America, and this dominance seems set to continue. Supranational regionalization (e.g. European Union, North American Free Trade Agreement, Asia-Pacific Economic Cooperation) is a trend that is possibly stronger than that of globalization. The major economic powers, centred on the G8 with China and India, have the capacity, especially if they coordinate policy, to exert powerful governance pressures over financial markets and other economic tendencies. Global markets are therefore by no means beyond regulation and control, though this will be limited by the divergent interests of states and their ruling elites.

The authors show some awareness of the historical development of capitalism, though they view this largely as the history of technological innovation. As the above shows, the emphasis in this book is on the institutional arrangements (social, economic and political) and their interrelationships within capitalism, with no real comprehension of the underlying dynamic of capitalism. As a result they do not explain that it is the competitive accumulation of profits which is the driving force of capitalism’s inherent tendency towards globalization.

Lew Higgins

What's best for British capitalism . . . (2009)

Book Review from the September 2009 issue of the Socialist Standard

Globalisation Laid Bare. Lessons in International Business. Industry and Parliament Trust. 2009. £11.99.

The Industry and Parliament Trust is a body set up to promote “mutual understanding between the UK Parliament and the worlds of business, industry and commerce” and this is their take on globalisation. Introduced by Sir Richard Branson, it is a collection of short articles by various other capitalists and their academic and political supporters.

The contributors main concerns seem to be how to avoid protectionism re-emerging in the current crisis and how to accommodate to China as an emerging industrial and commercial power. The contributors from the three main parties (Vince Cable, Alan Duncan and Baron Mandelson) all say the same thing – “down with protectionism” and “keep liberalising world trade” – reflecting their common perception of what is in the best interest of British capitalism.

The only dissenters are “Indian ecofeminist” Vandana Shiva and Clare Short.

Adam Buick

Globalisation – what does it mean? (2006)

From the September 2006 issue of the Socialist Standard

The second part of our article analysing capitalist globalisation. Last month we looked at how this affected capital. This month we examine its impact on the world’s population at large

The continuing surge in globalisation has had profound human and social effects on vast numbers of people, the fundamental nature of these effects depending on their class position in society, i.e. whether they are capitalists or workers. On the one hand the opportunities for the capitalist class to accumulate wealth has increased multilaterally with, for example, politicians and civil servants in the poorer states quite happy to find the funding for trade fairs, economic surveys, development studies, and visits by heads of state in an effort to increase the profits of that class from the global market.

On the other hand this global frenzy is resulting in upheaval for whole communities, while the transition from rural to urban living is in turn altering human geography radically with rural areas either becoming human deserts or concentrated industrial sprawl. Likewise most global housing areas resemble one another to such an extent that even the shantytowns are becoming uniform in the type of building materials used.

When these social transformations are combined with factors like the increasing mobility of labour – mobility from the peasantry to the modernity of wage slavery – they come with well known costs for the disempowered majority: misery, destitution, family breakdown and homelessness. The most visible aspects of this are to be seen with thousands of families living on the streets of Calcutta, or those families forced to scrape an existence by living on a waste tip in San Paulo, or perhaps a PhD from Addis Ababa University driving a cab in New York city, let alone those staffing a call centre in New Delhi alongside a wall full of useless diplomas.

Such potential human resources being wasted to further the interests of profit maximisation cannot but have an impact on rising social expectations and aspirations. These then come into conflict with people’s sense of achievement. Consequently, we are witnessing a sharp rise in the incidence of mental health problems. And the resulting increase in cases of anxiety, depression, insomnia, mood swings and stress, are to be evidenced in the packed waiting areas of the mental health clinics, along with the expanding appointments for the services of psychotherapists. Add this to the overcrowded waiting lists for the physically sick in the developed and developing countries and many global health services there are in crisis management mode.

Inequality

Whilst this human tragedy unfolds our political masters are still chanting the mantra that some of the wealth created will eventually ‘trickle down’ to those 2.8 billion people living on less than $2 a day and also to those 1.3 billion living in even more extreme poverty. Unable to solve the problem of absolute and relative poverty, the global politicians have now agreed in their misguided wisdom to try and tackle the problems and issues of extreme poverty only. By this they mean those 1.3 billion people who have to their cost found that the system of wage slavery holds no guarantees of the provision of a living wage, and subsequently finding it impossible to exist on less than a dollar a day. And where the material difference between relative, absolute and, and if you so wish extreme poverty, is so profoundly stark that it creates a sense of inevitability and disempowerment, it is invariably accompanied by disillusionment. This is especially so in cultural terms, with millions being forced from the rural poverty of subsistence living into becoming a landless peasant within an urban environment dominated by the tyranny of wages and surrounded by the advertising of mass consumerism.

The WHO, UN, World Bank, and Jubilee 2000 have reported many of the indicators of global inequality in recent years, and summarised they are:

• One-fifth of the world’s population is living in extreme poverty.
• 100 million children live or work on the street.
• Half the world’s population are lacking access to the most essential medicines.
• The combined wealth of the world’s 200 richest people reached $1 trillion in 1999; the combined income of 582 million living in the 43 least developed countries is $146b.
• 70 per cent of the world’s poor and two thirds of the worlds illiterate are women.
• An estimated 827.5m people are undernourished. Of which 647m, or over one third (37 percent) consist of the world’s children.
• More than 30,000 children die each day from easily preventable diseases.
• The top fifth own 86 per cent of the world’s wealth, while the lowest fifth own just one per cent.
• The wealth of the world’s three wealthiest billionaires is more than that of the GNP of all the least developing countries and their 600 million people.
• When Argentina defaulted on its debts, 300,000 people were forced to live off the garbage dumps surrounding the city of Buenos Aires.
• The number of people living in extreme poverty has actually risen by 28m.

Yet it is not only developing and undeveloped countries who are experiencing issues of inequality; even in the major developed countries, like the US, income inequality is now on the increase with one report claiming: 

“The gap between rich and poor in America is the widest in 70 years, according to a new study published by the Center for the Budget and Policy Priorities The research, based on newly released figures from the non-partisan Congressional Budget Office, shows that the top 1 percent of Americans – who earn an average of $862,000 each after tax (or $1.3m before tax) – receive more money than the 110m Americans in the bottom 40 percent of the income distribution, whose income averages $21,350 each year. The income going to the richest 1 percent has gone threefold in real terms in the past twenty years, while the income of the poorest 40 percent went up by a more modest 11 percent” (BBC News Online, 25 September, 2003 : http://news.bbc.co.uk/2/hi/business/3138232.stm ).

Much the same picture is painted in the UK with the figures from the National Statistics Office and Inland Revenue for 2002/3 showing that the richest 5 percent owned 43 percent of the wealth, while the poorest 50 percent owned just 6 percent; similarly the top 2.4m households owned assets worth around £1,300b, while the bottom 12m owned assets of around £150m. Also according to a Policy Institute report last year, 22 percent of the UK population are still living below the poverty line, including 3.8m children (or 30 percent of all children), 2.2m pensioners, and 6.6m working age adults.

In effect a total of 12.6m people in the UK population are confronted with higher mortality; lower education outcomes; less decent homes; and financial exclusion, due to surviving on, or below 60 percent of median income after housing costs.

On a much more local scale the Child Poverty Action Group revealed in their publication ‘Poverty – the Facts (5th edition)’ that over 80 percent of the children living in the Townhill district of Swansea were defined as poor; benefits make up a larger proportion of total income in Wales than in England or Scotland, with a higher proportion of children living in households claiming income support – 18.9 percent – compared to the UK-wide figure of 13.5 percent; and 32 percent of pensioners in Inner London were affected by income poverty, and children in London are even worse off than those in Wales with 24 percent of households in receipt of income support, or other means tested benefits.

Socialist Outlook

These are just some of the facts and figures that are considered normal to the modern workings of capitalism. They help to serve the purpose of illustrating that the globalisation of capitalism has masked a growing polarisation both within and between countries and that local circumstances are merely a reflection of the global situation where ‘trickle-down’ economics has in reality turned into a flood of inequality, destitution and instability. This confirms what Marxists have consistently stated that the prosperity for the few is dependant on the deprivation of the many. Indeed, despite the huge amounts of abundant wealth created by workers within capitalism, the system is incapable of accounting for the fact that the cases of millions of people dying through malnourishment, or because they lack clean water, adequate shelter, and health care is on the increase. This alone serves as a damning confirmation that there hasn’t been any fundamental shift in the ownership of wealth. It also reaffirms our position that this state of affairs is likely to continue, besides endorsing the contention that the capitalist class will use either system of trading – protectionism or free trade – when it suits their purpose to accumulate wealth.

Failure to grasp the revolutionary challenge this analysis poses has led to the formation of the anti-globalisation protest movement which campaigns on the issues of extreme poverty, world debt and the adoption of protectionist measures for those developing and undeveloped countries who have found that the reality of ‘free trade’ only applies primarily to the G8 nations. Whilst there is no denying that such campaigns have made tremendous strides in highlighting the effects of globalisation, when it comes to outlining proposals for viable alternatives to capitalism, their mindset is locked onto the belief that a ‘fairer’ global society is possible within the framework of capitalism.

Their main tactic is to bring mass protest to bear on politicians and on institutions like the G8, WTO, IMF and World Bank, despite the fact that such a mindset of working towards a ‘fairer’ global society has a long history of failure, based as it is on the false assumption that capitalism can be made to work in the interest of all – rich and poor alike.

Although the effects of globalisation with the human suffering it brings can lead to bleak and negative conclusions about the future, it is also possible to draw different conclusions, ones that are far more positive and meaningful. For what comes out of this rather gloomy picture is the certainty that capitalism has outlived its usefulness as a progressive mode of production. For it reached its early retirement at the turn of the 20th Century – once it had established itself as a global system consisting of integrated and interdependent productive units. As soon as it reached this point it had fulfilled its purpose and turned into a global monster of uncontrollable destructiveness.

With capitalism failing to deliver for the majority it has become more obvious that now is the time to move on to a system of common ownership that is capable of meeting the self-defined needs of the great majority and not just the interests of a wealthy minority. In order to attain such a system of free access an essential prerequisite is for a majority of the global working class to reach an understanding that their sense of social achievement can only be fulfilled by becoming conscious in class terms that capitalism can never be made to operate in their interests. Once they have reached this revolutionary conclusion – and only then – will capitalism lose its basis of support and be replaced by socialism.

Brian Johnson

World View: U.N. Report – No challenge to capitalism (2002)

From the September 2002 issue of the Socialist Standard

But for the damning up-to-date statistics it provides, the recently published 2002 United Nations Human Development report could have been written by any reform-minded political analyst with a knowledge of current and global affairs, for as could be expected there is little here that challenges the functioning of capitalist society and class-based antagonisms. The system itself is not seen as being at fault, but the distribution of political power and the workings of the myriad national and international institutions that operate within capitalism.

United Nations: head in the clouds?

The report tells us that whilst globalisation creates greater interdependence between countries and organisations, the world is far more fragmented, both between the rich and the poor, and between the powerful and the powerless. It informs us that whilst many developing countries are making progress on several fronts, for instance with regard to universal primary education, for much of the world the prospects are bleak, with progress continuing at such a small pace that it will take an estimated 130 years to rid the world of hunger.

Whilst economists hail the growth in new technologies, economic integration and new “economic opportunities”, certain perennial facts are hard to ignore, with 2.8 billion people existing on less that $2 per day and one percent of the world’s population receiving as much income as the poorest 57 percent. And although the proportion of the global population living in “extreme poverty” is said to have fallen from 29 percent to 23 percent – this being accounted for by economic growth in East Asia – the number of people living in extreme poverty has risen in sub-Saharan Africa from 242 million to 300 million, with 20 of these African countries poorer than they were 20 years ago.

To halve the proportion of people living on $1 per day would take an annual 3.7 percent increase in per capita income in developing countries. However, 127 countries with just over a third of the world’s population have not grown at this pace, with their share of the number living in poverty actually increasing.

Formal political equality

In a more interdependent world, argues the report “good governance”, “democracy” and “fair and accountable institutions” are essential for development. It further argues that “democracy helps protect people from economic and political catastrophes such as famines and decent into chaos” . In support of this theory, India is cited where, claims the report, there has been no famine since independence in 1947, in spite of chronic food shortages.

Democracies, it states, also contribute to political stability and wars are more frequent in non-democratic countries. These benefits of democracy are attributable to “a virtuous cycle of development”, with political freedom allowing people to campaign for policies [reforms] that expand social and economic opportunities and, all in all, allowing more people to partake in policy decisions and debates. This said, the report does then point out recent and poignant instances of people fighting for political democracy in the hope of gaining enhanced social and economic opportunities, only to have those hopes dashed. After the collapse of Soviet style capitalism in the 90s for instance, “income inequality and poverty rose sharply in Central and Eastern Europe and the Commonwealth of Independent States. And despite more widespread democracy, the number of people in Sub-Saharan Africa continued to increase”.

To its credit, the report does state that “neither authoritarianism or democracy is a factor in determining either the rate of economic growth or how it is distributed”. It further informs us that “granting all people formal political equality does not create an equal desire or capacity to participate in political processes – or an equal capacity to influence them”. And here the report is critical of the power money plays in politics with the USA in particular, singled out. In the 2000 US election, presidential candidates spent $343 million on their campaigns. Inclusive of spending by their respective parties, an estimated $1 billion was spent on the 2000 US election. A year later, Michael Bloomberg would spend a staggering $74 million just to become New York City mayor, $47 million more than his nearest opponent and close on $99 per vote.

The report is also mindful that politicians are “disproportionately influenced by business interests”. In the 2000 US election, corporations made $1.2 billion worth of political contributions and in India, big business provides major political parties with 80 percent of their funding – perhaps one reason why voter turn out is decreasing across the world with similar decline in political party membership in many countries.

Whilst the world is arguably a more “democratic” place than it was a decade ago, with 140 countries holding multi-party elections (the greatest number in history) only 80 of these, accounting for 55 percent of the world’s people, are “fully democratic by one measure”. Moreover, there are still 106 countries that impose significant restrictions on civic and political freedoms, and in 61 countries there is no free press. Although the number of countries ratifying the six main human rights conventions and covenants has increased notably in the past decade, there still remains 41 countries who are yet to ratify the International Convention on Civil and Political Rights, with 51 countries refusing to ratify the ILO’s Convention on Freedom of Association

The media also comes in for scrutiny in the report, which points out that “commercial and political pressures will always skew the playing field in the marketplace of ideas”. Even so, a free and independent media is seen as an “essential pillar of democracy”. But whilst globalisation has tended to reduce state ownership of the press, it has had the effect of intensifying concentration in private ownership. In Britain, just four media groups control 85 percent of daily newspapers. In the US, some six companies control virtually all the media

Rich and powerful

In the field of health and education, some 800 million have gained access to improved water supplies and almost 60 countries, accounting for half the world’s people have halved hunger or aim to do so by 2015. In the last 30 years infant mortality rate has fallen from 96 per thousand births to 56 per thousand births. On the downside, however, 30,000 children die each day of curable diseases (one every three seconds) and 500,000 women die as a result of pregnancy of childbirth every year (almost one per minute).

When it comes to international trade, the report states: “On average, industrial country tariffs on imports from developing countries are four times those on imports from other industrial countries. In addition, countries that belong to the …OECD provide about $1 billion a day in domestic agricultural subsidies – more than six times what they spend on official development assistance for developing countries.”

This imbalance is further reflected at the WTO. Whilst a lustre of democracy is afforded the running of the organisation, in truth “decision-making occurs by consensus, heavily influenced by the largest and richest countries”. And of almost 740 NGOs certified by the WTO’s 1999 ministerial conference in Seattle, 87 percent of these were from industrialised countries.

Ironically, the more representative global institutions, i.e. the UN General Assembly and the UN Social and Economic Council, are similarly the least potent. “The reality,” observes the UNHDR, “is that powerful countries…tend to gravitate towards institutions that give them the most influence . . . they take their power with them: whether it be to the WTO’s ‘Green Room’ meetings or the meetings on the IMF executive board.” Representatives from the UK, USA, Germany, France, Japan, the Russian Federation and Saudi Arabia account for 46 percent of the voting rights in the World Bank and 48 percent in the IMF.

Although this aims to be an impartial report, about political power and institutions, on the national and global level, and how they shape human progress, and whilst it is often critical of the status quo and postulates how advances in human development lie in improved democratic governance systems, it remains a report that is never going to contribute to the solving of the problems that it identifies for the simple reason that it was never going to query he premises and basic contradictions of capitalist society. The UN, as a capitalist institution itself, was never going to criticise the profit system and how it prioritises profits over real human needs and how, even in the most advanced democracies of the day, the drive to make profit impinges upon every aspect of our lives.

Whilst we would certainly not sniff at such improvements in global democracy – they would, after all, give countless millions the chance to at last determine their own future and further smooth the way for socialism – we are not to be found advocating reform of the present system. If the history of reforms teaches us anything, it is that they can easily be accommodated by the capitalist system. Democracy would thus be used by the master class to their own advantage, giving them the mandate to carry on their injustices, but in a democratic manner, and elected governments would remain as they are at present – the executives of the capitalist class.

In March of this year, at the UN Conference for the Financing of Development in Mexico, the world’s leaders and policy makers assessed moves towards development and poverty eradication goals which were laid down at the UN Millennium summit of 2000, pledging a global effort to realize these goals by the year 2015. The indicators considered, the UNHD report suggests that “without a dramatic turnaround there is a real possibility that a generation from now, world leaders will be setting the same targets again”. We can only comment that even with a “dramatic turnaround” in world-wide democratic procedures, the injustices of capitalism would still prevail and the maxim of capitalism would still apply: “can’t pay – can’t have”.

John Bissett