The neoliberalism debate in the ISA – Majority positions November 2020

We publish below the third part of the documents concerning the “neoliberalism debate” that took place in the ISA. This is the document of the Majority (signed by Per-ake Westerlund) criticizing the Minority positions, circulated on November 2020.
You can read the Minority document of November 2020 here.
To get the general picture for this debate, read our introduction to the publication of this material here.
You can also read the previous documents:
Majority positions of May 2020 here.
Minority positions of May 2020 here.
And the second part of the debate:
Majority positions of July 2020 here.
Minority positions of July 2020 here.

Perspectives: Neoliberalism, struggles, and the state

Text based on lead off by Per Åke W at the NC of Socialist Alternative (US), 27th of September 2020

This discussion within the ISA over neoliberalism serves to answer the most fundamental question: Where is the world going?

This is not just one single or straight forward development, but interlinked processes of the economy, class struggle and other mass struggles, power and military conflicts, climate and environment, including sudden events.

The pandemic, followed by economic depression, added to by the new cold war – has deepened already ongoing processes, but also made any perspectives even more conditional than before. Yet, we can’t abstain from discussing it, not wait until we have the full answer.

This is not about formulations or definitions, but real ongoing processes. Not a problem or surprising that we have debates and differences, that happens among marxists at every important turn. The purpose of the discussion is clarity.

The debate in the ISA centre around the following question: is this a profound change in world development, or is it a repetition of 2008-09, or even a weaker copy after which we will return back to the previous normality of neoliberalism and capitalist globalisation?

The short answer is that we are going from one era to another, it’s a fundamental shift. We are not going back. 2020 has dramatically increased the speed of processes already on their way, analysed in our discussions in the recent decade.

•  We have had three decades of rapid capitalist globalisation – centered on the US and China. In recent years a new process began, heavily escalated this year: protectionism, nationalist capitalism – again led by the US and China.

•  Just one key example: A central part in the trade conflict has been Trump attacking China for stealing intellectual property. Now, the US government leads a plan for Oracle and Walmart to take over TikTok, demanding thousands of jobs to be established in the US and  billions of dollars to the US state. This is exactly what they accused China for, in treating US companies.

•  As with any conflict there can be temporary agreements and ceasefires, but they will not last. The direction is towards increased confrontation.

•  The bourgeoisie is a national class, underlined now in the depression, with the national states intervening stronger than since the 1930s as the rescuer of the system. The role of the state is key in this debate.

•  The crisis in 2008-09 was never solved. Economic growth slowed, and so did trade and foreign direct investments. What increased were debts, inequality, protectionism and speculation.

•  The search for a way out after 2008-09 led to the revolutions in Egypt and Tunisia, general strikes in many countries, new struggles such as Occupy. Then came a certain pause, when lack of leadership, organisation and program led to defeats and exhaustion. Then mass struggles and revolts again exploded last year, combined with the climate movement and mass women’s struggles, both of them international and using strikes.

Where are we in 2020? Start with facts:

•  Deaths by corona are now over one million, based on registered cases, and we just see both first and second waves of Covid, underlining that it is not possible to be sure about how deep and long the crisis will be.

•  There are now lock downs in Israel, UK, France, Madrid. Politically, increased unsecurity leaves room for both right-wing populism and for left-wing and workers’ protests.

• Global growth prognosis is around minus 5 percent for this year, the biggest drop since the 1930s – faster and more globally spread than ever before.

ILO estimates that the equivalent of 500 million full time jobs were lost in the second quarter.

• Workers’ income loss in the first nine months was 10% = 3.5 tn dollars. It’s a huge amount – only four countries have a gdp higher than 3.5 tn dollars.

Then there is the new Cold War and its consequences. In the US election campaign. Trump and Biden are competing in being anti-China. Both have programs for breaking previous global systems of trade, finance, technology and supply chains.

Deutsche Bank in a recent report talks about the Age of Disorder. Here some reasons they give for the new age:

• US/China relations and the reversal of unfettered globalisation.

• Even higher debt and helicopter money becoming mainstream.

• Inequality worsening before a backlash and reversal takes place. Technology revolution or bubble?

The position put forward by the Greek IC comrades in their material (International Members Bulletin number 8) and in debates so far raises important questions. Their points were written as response to a proposed statement on some key aspects of perspectives written by the international FT team in May and agreed after amendments by the IE and the IC. This update is published in the same bulletin. There are also contributions by Tom C and three comrades from the Spanish state in bulletin number 10.

A. Struggles and consciousness

I start with struggles and consciousness, where I believe the Greek IC members text underestimate the effects on consciousness of events from the last decade. In their text, they say that “ 2008-9 it was much clearer, in most countries, who the enemy was” – pointing to the banks, the economic system. Now, they ask, will people blame the virus or the system?, indicating it will be the virus.

Two more examples: The comrades talk about “revolts and revolutions at a later stage” and revolutions as a “long-term perspective”. To this is added a warning against over-optimism, saying that crises will not automatically lead to “revolts and revolution”.

In any discussion about world events, we should take a global overview. Last year, we saw a revolution in Sudan, and revolts and struggles of a revolutionary character in many countries.

A number of different factors triggered struggles, but they still were linked by common features. It was not simply “crisis=revolution”, but a more complex process over a period, building up factors of complete distrust to governments – and the system.

I think it’s clear that the struggles of 2019 have continued, although restrained by the pandemic. The struggles in Lebanon and Belarus both have had revolutionary features. Youth protests in Thailand and strikes in Iran are more limited but still part of similar patterns.

And then of course BLM, the biggest protest movement ever in the US – on a higher level than before, with a young black working class in the forefront, at the same time more multiracial. BLM was also about Covid, the economy and Trump – and it spread internationally. In Sweden, 10,000 came to the biggest event. Of course, all countries are not following the same pattern. But as Marxists, we point to qualitative leaps, tipping points, breakthroughs.

The Greek IC text also questioned “health workers to be at the forefront of the struggles of the working class”, adding “– without conditions or exceptions”. The formulation in our text is actually more conditional, saying this was a possible development. But what has happened, even during the pandemic?

An African new agency wrote: “From Zimbabwe to Sierra Leone, doctors and nurses are going on strike to demand better pay and protection.” Health workers have been on strike in Congo and South Africa, and doctors in Nigeria from 10 September.  That struggle has also become generalised, our comrades are in preparations for a general strike in Nigeria tomorrow. We have seen health workers supporting BLM, demonstrations in Britain and Belgium, and so on. The most recent is Madrid doctors warning of an indefinite strike.

I definitely stand by what we wrote in May – millions, and even tens of millions, today look at the role of the working class in society differently than before the crisis. They have seen, who is essential and who is not?

That does not solve the weaknesses, lack of organisation and consciousness about the socialist alternative, but it is an important change in mass consciousness. Already last year, we showed the dangers that would stop or derail the mass movements: sharp repression, endless negotiations, revolutions halting halfway, splits in the masses. To stress revolts and mass struggles does not mean to underestimate the danger of reaction – the period is of both revolution and counter-revolution.

B. Capitalists, economic policy and globalisation

The contributions from the Greek IC and the cds in the Spanish state focus on neoliberalism, and in particular on the headline of the article by Tom C in the US magazine and the ISA website, “Bernie Sanders and the end of neoliberalism”. Tom has since replied, in the bulletin on 15th of July, explaining the article talks about an end of era, not that all policies connected to neoliberalism will disappear.

I want to make a general point here – it is undialectical to ask, as Vladimir and the other comrades do, if the processes we discuss will take place “simultaneously and in all regions” of the world. That has never happened. Keynesianism, for example, was far from a global phenomenon in the 1930s and not even in the postwar period.

Neoliberalism was introduced to find a way out for capitalism, through attacking the share of surplus value that goes to the working class – wages, public sector services, pensions etc. Through privatisations – and on a global scale privatising the stalinist economy – and increased capitalist globalisation, profits would be restored and the system go ahead. They were against the state, but of course needed the state to implement their policies – and its core: the military, police etc.

Another general point in this debate – of course not everything was privatised. But it is wrong to say that health care and education in the advanced capitalist countries and major economies were kept by the state. Massive privatisations took place in these fields – not least in Sweden, a supposed welfare state.

The first of the neoliberal targets was fulfilled – share of profits and super rich on a record level, share of wages dropped dramatically. The second, to achieve stability, was not – within just over a decade, the world has witnessed the two worst economic crises since the 1930s.This means that fundamentals of neo-liberalism and capitalist globalisation have reached their limit, do not fulfill their purpose, have to be dropped.

What has happened now? Under neoliberal rules budget deficits have been illegal or severely restricted. This year the US federal deficit will be 16% of GDP, which is about the average deficit in advanced capitalist countries. It can be compared to the budget rules in the European Union allowing a maximum 3% deficit.

This means capitalist governments breaking with the neoliberal ideology – paying unemployment benefits, extra money to health care etc, while of course most of the money spent will go to banks and big business.

There is no reason to have illusions in this change, where resources are allocated is still a question of struggle. Measures taken in the crisis 2008-09 were quickly replaced by new austerity. This is not forgotten and will together with struggles and anger from below make it harder to repeat the same again. Another main factor behind stimuli is the fear of a collapse in demand and consumption.

The policy is a variant of keynesianism – the state taking charge in order to save the system. And they will go much further if necessary. Even Trump has ordered evictions to be stopped and paid out money to the unemployed.

Keynesianism is not in itself turn to a more progressive policy, more pro-worker. It is a national policy possible for richer states. Pressure from the masses, fear of mass revolts and of a collapse of consumption can force through concessions and force governments to present it as a “fair” policy.

Capitalist politicians will leave neoliberalism, but we are not entering a Keynesian era such as in the post war period. We will not see that kind of welfare reforms. As we wrote in May, “The new variant of ‘Keynesianism’will not correspond to the expectations of the masses, but rather raise further demands from below.” In their criticism, the Greek IC comrades say that we will see “Keynesian measures (the degree of which will vary from country to country) within the general context of neoliberalism.”

What is the point of insisting that we are still in a neoliberal period? What clarity has been won? It underestimates the change taking place, not preparing members. If there are illusions in keynesianism, we should not encourage them.

In their summary of what neoliberalism is, the three comrades from the Spanish state stress: the role of the state should be limited and national barriers removed. Therefore, globalisation is a key element of this debate. The comrades from the Spanish state argue that what we see is not deglobalisation, but a halt, which by the way never happens. You can not go into the same river twice, is a classic marxist saying. Deglobalisation was a one of the key processes described in the World perspectives resolution at our world congress, and has been deepened enormously with the pandemic.

The Greek comrades argue that globalisation after a setback will increase again, since the US companies “can’t abandon the Asian market.” Facts first: Globalization was a foundation stone of neoliberalism and globalisation is not a constant factor. In fact, the degree of globalisation of the early 1900s was not restored until the 1990s.

The US tariffs against China are still in place, for two years now on products worth over 200 bn dollars. WTO recently ruled in favour of China, but it does not matter, since the US has practically withdrawn from the WTO. The US is also in trade disputes with Canada and the EU. The new cold war between the US and China is by far the most important, sharpened day by day. Only in the last weeks, Washington has made public its previously secret defence deal with Taiwan. We can no longer exclude military incidents. Also, governments are siding with the US much faster than for example I had thought – such as Australia, India and most recently Germany.

Nationalism in the ruling class is spreading everywhere, also in the Nordic countries and the EU. Capitalism is not rational, only looking at short term profits from trade. In that case, there would be no wars or sharp conflicts. The state, acting for the ruling class as a whole, sometimes has to go against the will of individuals or groups of capitalists. Capitalists globally have gone from using China to raise their profits to fear the power challenge from Beijing.

This can be seen when close neighbors of China: South Korea, Japan and Taiwan, whose big companies have benefited enormously from production in China and trade, now have an official policy to reduce its links and dependence on China.

In processes, direction and an estimations of contradictions are decisive. It is not about globalisation completely disappearing or that there will be no austerity or privatisations. Neoliberalism was not first applied with austerity.

Compare this process with the climate crisis – which direction is it going?

Even with new unprecedented measures, the factors behind the crisis will remain. The changed policies underline the crisis of the system and its ruling class, increasing the consciousness about the need for a total change.

To summarise, I will give very short answers to the questions the comrades from the Spanish state have in their article. Will the deficits increase? Yes. Will we see public investments? Yes. Free trade or protectionism? Protectionism. But again – it is not about words or definitions, what we debate is general processes.

C. What are perspectives?

The Greek IC comrades wrote they didn’t expect millions on the streets in Greece, and added “We don’t think that Greece is the only exception on the planet”.

But if there are exceptions, there must also be a rule.

Any discussion about perspectives, even for a region or a city, has to start with international perspectives. And within them find key countries and regions, in the way Trotsky pointed to Spain as a key country in the 1930s, in the midst of fascism spreading in Europe. Or the weakest link, as Russia was in 1917.

Perspective discussions is a trade mark for our tradition. We attempt to expose the most important contradictions in society, possible qualitative leaps and processes turning to their opposite.

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