BMP StatementOn the ICLS 2010 Taiwan Forum Theme
Dismantling Neoliberalism, Ending CapitalismWorkers of the world are now living in interesting times. The economic thinking that has prevailed in the last three decades, what we now call as neoliberalism, is thoroughly being challenged with its failure to prevent or even predict the 2008 global economic crisis, starting from the problems of finance capital, the drop in demand, the destruction of industries, and increasing poverty in the South.
Why is this interesting for workers? To begin with, this is an economic thinking that has been formulated primarily as an assault of labor to capital. When neoliberalism started in the 1980s capital was experiencing what was then assumed to be a productivity problem. In the United States where it all started, corporations’ profits are thought to be declining, budget deficits are ballooning due to erosion of revenues, and inflation seems to be uncontrollable. In the developing world, so-called “inefficient” governments are also experiencing huge budget deficits, leading to debt problems such as those experienced by Latin America and Asian countries. Globally, capital health is declining.
Who did capital blame? They blamed the workers. They blamed the workers for having too high salaries, too many benefits and wage extenders, and bleeding the government coffers too much because of social security and protection. Understanding this is the key to knowing why neoliberalism, as implemented in the past three decades, had been inherently anti-labor.
We have to understand that before 1980s, workers of the world are benefitting from the concessions they gained from capital, with the state disciplining the market and distributing a portion of the gains from growth. It may be too little, but there are concessions. In the United States, strong labor unions pushed President Franklin Delano Roosevelt to enact pro-labor provisions of the “New Deal”, which contributed to Roosevelt’s popularity. In fact, the recruitment line became: “The President wants you to join a union.” This peaked during Lyndon John’s “Great Society” which brought to the US universal healthcare, home guarantee, and a strong social security. Looking fast-forward to Obama’s time, this is what the neoliberal in America had successfully dismantled, and the people are demanding it back.
In Europe, we have seen the rise of “welfare states” and “full employment” policy, created by social democratic parties who thought they can permanently reconcile the interest of labor and capital. Now experiencing financial crisis and fiscal crisis due to ballooning budget deficits – the worst hit of them being Greece – right-wing Europe is now returning to the power, with some anti-immigration, pro-nationalization parties reminiscent of that fascist Italy and Nazi Germany winning the elections.
In the developing world, the situation is a bit more complicated. For countries such as South Korea, Taiwan, Thailand, Singapore, and Malaysia, strong leadership was able to discipline capital from engaging in unproductive ventures and use its gains to reduce poverty and raise wages. We have seen the rise of state-owned public goods – public railways, public transportation, public utilities which kept services accessible to the public and helped the country become more friendly for development. Thus, some of them actually climbed from “Southern” status to “North”, like South Korea and Singapore. Now, pressured as they are by global capital, the governments of the developing world are now dismantling public ownership, says that the move is more necessary so the countries will be more “competitive”. We see Japan privatizing major banks and postal services, South Korea its railways, and we are yet to see the worst for Malaysia and Thailand.
Some countries in the developing world, for example failed to take-off in period of strong state. In the Philippines and Indonesia for example, dictators Marcos and Suharto ushered a period of kleptocratic states, condemning their countries to low-growth path for the years to come. In Latin America, the economic disasters left by Carlos Menem in Argentina and Fernando Henrique Cardoso in Brazil will be very hard to reverse, although they have strong labor pro-leadership under Kirchner in Argentina and PT in Brazil.
In the world over, capital is saying the same thing, the strong interventionist state of the 1940s to 1970s is keeping the market from achieving its so-called “optimal state”, and strong labor which is extracting concessions from capital is driving productivity down. This pronouncement started what came to be the neoliberal attack to labor. Started by Margaret Thatcher in the United Kingdom and Ronald Reagan in the US, “privatization”, “deregulation”, “liberalization” in a period of “globalization” have been the buzzwords of the 80s and the 90s. This means releasing the state chokehold over the market, and chaining labor again to absolute control of capital. In a span of a decade, state-ownership of utilities and basic social protection have been dismantled in favor of privatization, “Build-Operate-Transfer” projects, Health Maintenance Organizations, joint venture of governments with corporations, among others.
Labor clearly suffered. Minimum wages have been abolished in favor of “competitive” and “market-set” wages. Pensions have been cut, mandatory retirement age has been raised, and social security has been reduced. Flexi-labor has been started, and labor unions which refused saw their jobs being outsourced offshore or contracted in China or India. Government kept wages down by increasing unemployment – forcing workers to be satisfied with decreasing salary by surrounding them with unemployed citizens. “At least I have a job” is now the new mantra. Developing countries are worse off. Labor there are not just repressed, they are thoroughly oppressed through contractualization, lack of tenure, inhumane living and working conditions, and state violence directed to union leaders.
As has been said by many people, systems, including neoliberalism, breed its own death. What has been the cause of neoliberalism’s decline? The so-called “wage repression” decreased effective demand – the demand over goods and services sold in the market. We have to put this in a context. During the 1940s, the central problem of capitalism was how to create demand. Goods are not being sold, in fact, they are being destroyed. Export markets are already saturated. The capitalist solution is increase demand by increasing labor income. And because of strong pressure from the unions, capital has no other choice but to do so. Government increased spending, government enacted wage standard. And thus the era from 1940s to 1970s.
With neoliberalism, demand decreased. How can you buy more when you have less to spend? In the developing world, this meant increase in absolute poverty. And with the government now reduced by neoliberalism to merely “regulation”, it is disempowered to resolve this problem. In the developed countries, the solution to decreased demand has been to increase credit. You can’t buy it? Use your credit card. You can’t own your home? Here is subprime loan. We know that debt is unsustainable if not coupled by rising income, and we see the whole house tumbling down during 2008 US financial crisis – the start of a worldwide capitalist crisis spreading to Greece, China, and even Latin America.
Neoliberals and the capitalists who believe them are now discredited. We see this in the Philippines by the repudiation of Arroyo who gained the reputation as the most debt and privatization-dependent President. We see this in US with a white population voting an African-American to power with the promise of change, which turned out to be false, but that is another matter. We see this with the G8, the club of rich countries, threatened by global pressure, quickly convening the G20 just to save themselves. There are many more examples.
At this point, workers of the world have two choices. Either we go back to merely capital control and labor concessions, which of course will lead to better labor welfare but will nonetheless bring about again the conditions that brought neoliberalism, or abolish capitalism altogether. Either we turn back the time a bit to better times, or make things permanently better by ushering a new system. Either we end neoliberalism only, or end capitalism itself.
And it is not as if there are no inspirations for us. Venezuela, for example, gaining victories from US-backed Venezuelan elite, is on a transitional process towards what it calls as “21st century socialism”. Brazil is now lead by woman ex-guerilla Dilma Roussef. The rest of Latin America is now catching the epidemic of anti-capitalism. Nepal voted left-wing candidates into power. The left also gained grounds in Japan with the defeat of the long-standing LDP, and in Thailand with the recent Bangkok siege.
The lesson here, as it had been the lesson in the 1940s and 1970s, is that labor must be organized not just as a company union or industry power. It must become a political power. Labor must be organized not just to obtain collective bargaining agreements, which is in fact good, but not enough. Labor must not just act to obtain industry-wide wage standards, or even increases in minimum wage. Labor must be organized and capacitated for the eventual seizure of state power. This has been the important lesson that Vladimir Lenin, then fighting against a Russian monarchy, had taught us workers. In the end, workers have nothing to lose but their chains. We must overthrow capitalism and not just end neoliberalism.
But of course, in the tactical period to come, we have to expect an intensification of the neoliberal project, so we should not be complacent. While on its death bed, neoliberalism must still be defeated by labor so we can effectively prop-up an alternative to capitalism. We have to frustrate capital’s move to privatize public utilities, railways, social security, water, and healthcare. We have to build people’s confidence on the capacity of labor to govern by leading them in struggles of the “here and now”. Neoliberalism will not die by itself; labor must dismantle it. Doing so will put labor in a position of strength as it dismantles capitalism itself.
And to quote from a Marxist thinker and Italian revolutionary Antonio Gramsci, he said, that “the challenge of modernity is to live without illusions and without becoming disillusioned.” Workers of the world should not have an illusion that ending capitalism will be easy, but it should also not think that it will be here forever.
Published at the ICLS blog http://icls.or.kr/bbs/view.php?id=en_reports&page=1&sn1=&divpage=1&sn=off&ss=on&sc=on&select_arrange=headnum&desc=asc&no=195
