Capitalism today

What is to be done?

Print edition : December 22, 2017

Petrograd,1917: Lenin speaking to the workers of the Putilov factory, painting by Isaak Brodsky (1883-1939), National Gallery, Prague, Czech Republic. The task of carrying forward the democratic revolution in countries coming late into capitalism fell on the working class, which had to form an alliance with the peasantry for this purpose. Photo: Leemage/Corbis via Getty Images

Striking Putilov workers on the first day of the February Revolution, 1917. The Putilov plant was a large machine-building factory in St. Petersburg. In 1917, it was the largest employer in the city, and strikes by its workforce played an important role in bringing about the downfall of the tsar’s regime. Photo: Heritage Images/Getty Images

Soviet propaganda poster. “In order to have more, it is necessary to produce more. In order to produce more, it is necessary to know more”. Photo: Getty Images

Soviet propaganda poster. "The benefits brought to the female worker and peasant due to the Russian Revolution." Building inscriptions read ‘kindergarten’, ‘library’, etc. Photo: Getty Images

Paris Commune was the only proletarian revolution that occurred during the lifetime of Marx and Engels. The regular French Army suppressed the Commune during "La semaine sanglante" (The Bloody Week) beginning on May 21, 1871.

World capitalism has entered a period of protracted crisis, pushing the working population into acute distress, unemployment and insecurity. As at the time of the October Revolution, there is once more a historic opportunity before the Left to forge worker-peasant alliances in order to bring about a change in the nature of the state that would lead to socialism.

THE OCTOBER REVOLUTION revolutionised the conception of a “revolution”. In a sense all revolutions do that anyway, but the October Revolution did so in a manner that continues to have an abiding relevance. Marx and Engels had essentially visualised a proletarian revolution in Europe. Engels, in his famous letter to Karl Kautsky in 1882, had talked no doubt of the possibility of revolutions in countries such as India, Egypt and Algeria, adding that “that would certainly be the best thing for us” (that is, for the proletarian revolution in Europe), but how such revolutions in the “periphery” might unfold and, in particular, how they were related to the prospects of socialism in those countries was not theorised. The focus had been on socialist revolution in Europe.

The theoretical work preceding and underlying the October Revolution broke new ground. It argued that in countries coming late to capitalism, the bourgeoisie was incapable of carrying through the anti-feudal democratic revolution, as it had done in France in 1789, because it was afraid that an attack on feudal property would rebound into an attack on bourgeois property. This meant that the task of carrying forward the democratic revolution in such countries fell on the working class, which had to form an alliance with the peasantry for this purpose. The working class, however, would not just stop at a democratic revolution, which only creates the conditions for thoroughgoing capitalist development; it would move ahead towards building socialism through a protracted and continuous revolutionary process, in the course of which its allies within the peasantry would keep changing.

This was a remarkable theoretical advance for two reasons: first, it not only recognised the revolutionary potential of the peasantry, which Marxism until then had tended to ignore, but it also saw this class as an ally of the proletariat; and secondly, it saw the countries of the “periphery” too, and not just those of the “metropolis”, as moving towards socialism, though through a more protracted process. Socialism was thus seen to be on the agenda of all countries, not just the developed ones, though the traverses towards socialism would be different across countries.

The Paris Commune

The only proletarian revolution that had occurred during the life-time of Marx and Engels, the Paris Commune, had been defeated by Adolphe Thiers, the then President of France, by enlisting the support of the peasantry against the Commune. He had done so by putting the fear into the French peasantry that an attack on bourgeois property would rebound into an attack on peasant property, and he could do so because the French peasantry had indeed obtained land ownership at the expense of the feudal lords because of the bourgeois revolution of 1789. The theory behind the October Revolution thus recognised both this particular fact and also the implications of its non-recurrence in countries coming late to capitalism such as Russia.

This theory was further developed by its integration with the understanding of imperialism that came with the First World War. Centralisation of capital in each of the advanced capitalist countries had reached a point, in the spheres of both industry and banking, where a small financial oligarchy presided over a huge mass of finance capital that was controlled by banks and employed in industry. This financial oligarchy eliminated competition within each country but only to engage in bitter rivalry across the globe with the financial oligarchies of other countries for “economic territory”, with the support of its particular state. But in a world already divided up among rival powers, this meant attempts at repartitioning it through wars, of which the First World War was a classic example.

Such wars, which were seen to characterise this entire period of “monopoly capitalism”, gave the workers in the advanced countries a choice: either to kill fellow workers across the trenches or to turn their guns against the system that made them do so; they also offered the same choice to the people from colonial and semi-colonial countries, who were recruited as canon fodder in these wars but whose consciousness developed greatly in the process of fighting them.

World revolution

Imperialism, characterised by inter-imperialist rivalry resulting in wars, thus created the conditions for a world revolution. Not only was socialism, through diverse routes of traverse, on the agenda for all countries, but such traverses had now also become historically imminent. The revolutions in different countries had got linked, not for sentimental or romantic reasons but because imperialism itself had bound the world in a chain. Not surprisingly, the October Revolution, which was perceived as breaking this chain at its weakest link, was followed by the setting up of a Communist International, the like of which the world had never seen, where representatives from Britain, France, Germany and the Soviet Union rubbed shoulders with those from India, China, Vietnam, Egypt and Mexico.

It hardly needs reiterating that this theoretical picture, of an imminent world revolution leading to a transition by different countries of the world via divergent routes towards socialism, though remarkably accurate in capturing the conjuncture that prevailed until about the end of the Second World War, has ceased to do so in the post-War period.

Within the post-War period, however, we must distinguish between two different phases. While both have been characterised by a muting of inter-imperialist rivalry, which is the key difference from the earlier period, in the first phase this muting has been a result of what some have called the “super-imperialism” of the United States, which emerged from the War as the pre-eminent capitalist power. This first phase, marked by concessions from a metropolitan capitalism that had been weakened by the War and threatened by the emergence of a socialist camp, witnessed decolonisation; universal adult franchise; the adoption of Keynesian demand management for maintaining near-full employment; and the institution of welfare state measures, at least in Europe, under Social Democracy.

But centralisation of capital within this phase itself led to the formation of even larger concentrations of finance, which wanted barriers to its free global flows removed, barriers that existed under the Bretton Woods system. Such removal was effected and it created a new entity, international finance capital. Since this globalisation of capital, especially of finance, occurred within a world of nation states, it meant that the policies of the nation states had necessarily to cater to the demands of globalised capital, for, otherwise, such capital would leave the shores of the nation en masse causing an acute financial crisis.

We thus had a reversal of many of the features of the first phase of the post-War period. Keynesian demand management was eschewed since fiscal deficits for employment generation, which finance always dislikes (as it undermines its social legitimacy), were restricted; welfare expenditures, which capital generally frowns upon anyway since they improve the workers’ bargaining strength, were sought to be curtailed; rampant privatisation of government assets and responsibilities was resorted to; and government controls and regulations over capital were done away with.

In short, in lieu of the Keynesian and the early Social Democratic vision—of the state as an external agency enforcing “social rationality” upon a spontaneous or self-driven capitalist order necessarily marked by anarchy, unemployment and unacceptable economic inequalities—what ensued with “neoliberalism” was a subordination of the state to the logic of the order itself. The “spontaneity”, the anarchy, and the tendency towards growing inequality were all restored.

International finance capital

But this phase of capitalism, which we call “globalisation” and within which we are still located, had three other extremely important features. The first was a change in the texture of imperialism. The muting of inter-imperialist rivalry in this latter period was no longer because of the overwhelming strength of one capitalist power but because of the nature of the chief actor in the drama itself, namely, international finance capital, which did not want any division of the world into separate “economic territories” that might impede its free flow across countries. Since capitals from all countries have got globalised, the corporate financial oligarchies everywhere become integrated into this globalised capital. The chief agency of imperialism today is this international finance capital, whose interests are sustained and protected by all major states and which can no longer be comprehended as the imperialism of this or that particular power.

The second feature of this phase is the resumption of rampant “primitive accumulation of capital” against the peasants and petty producers of the Third World. It is not that primitive accumulation of capital, in the sense of squeezing and dispossessing such producers, did not occur during the post-decolonisation dirigiste period in Third World countries, but that was mainly within the agricultural sector itself (for instance, with landlords evicting tenants to resume land for junker-style capitalist farming). It was not primitive accumulation as it occurs now, where the domestic corporate-financial oligarchy and international agribusiness squeeze peasant agriculture.

This squeeze takes both a “flow” form, where peasant incomes are reduced, and also a “stock” form, where peasants’ land is taken over “for a song” for use in real estate projects or industrial projects or infrastructure projects (the latter two also usually have a strong real estate component). Distress and dispossession thus come to characterise the petty production sector, including peasant agriculture. (The mass peasant suicides in India exemplify this phenomenon.)

De-segmentation of world economy

The third feature is a de-segmentation of the world economy owing to the relocation of activities from the advanced to the underdeveloped countries, to take advantage of the latter’s lower wages, for meeting global demand. Historically, the world economy had become segmented since labour from the poorer countries was not allowed to migrate to the richer ones (it still is not), while capital from the richer countries, though juridically free to migrate to the poorer countries, did not actually do so, except to sectors such as mines and plantations; the wages of workers in the richer countries, therefore, could rise with labour productivity despite the existence of vast labour reserves in poorer countries that kept wages in the latter tied to a subsistence level. Metropolitan capital’s willingness to shift activities from the developed to the underdeveloped world now makes wages in the former subject to the baneful consequences of the massive Third World labour reserves.

While this third feature keeps real wages down, even in the face of increasing labour productivity in advanced countries, the second feature implies that Third World labour reserves also do not get exhausted, since primitive accumulation of capital keeps replenishing them so that the real wages in the latter, too, remain at a subsistence level, even as the impoverishment of petty producers increases absolute poverty. The period of globalisation, therefore, witnesses a freezing, more or less, of the vector of absolute real wages across the world despite increases in the vector of labour productivity. This means a rise in the share of surplus in world output and an increase in income inequality within each country, and for the world as a whole.

But the capacity of the Left to fight against this phenomenon is impaired. First, the very mobility of capital weakens the trade union movement, which after all is organised along national lines. Second, the growing labour reserves take the form of work-sharing through casualisation, intermittent employment, and such like, which makes unionisation that much more difficult. And thirdly, privatisation also weakens the trade union movement since workers in the public sector are invariably better organised than workers in the private sector. Globalisation under the aegis of international finance capital, therefore, has the “spontaneous” effect of fragmenting the oppressed classes, making it more difficult for the Left to organise them.


The rise in the share of surplus in world output creates a tendency towards overproduction since consumption out of a unit of wage income is higher than consumption out of a unit of economic surplus. This tendency may be kept in abeyance through the formation of asset-price bubbles that stimulate expenditure, as indeed it was through the dot-com bubble in the U.S. in the 1990s and the housing bubble, also in the U.S., early this century. But with the inevitable collapse of such bubbles, the underlying tendency towards overproduction bursts forth into a world capitalist crisis, as it has since 2008, with no end in sight.

This crisis will abate if perchance a new bubble gets formed, but with its collapse the crisis will be back with us. World capitalism in short has entered a period of protracted crisis, punctuated at best by brief bubble-based recoveries, which is pushing the working population into acute distress, unemployment and insecurity.

Crisis and unemployment under capitalism, in periods when the Left is not strong enough to take the initiative, invariably give rise to a strengthening of fascist movements. Such movements hold some hapless marginalised “other” as being responsible for people’s distress and, despite not having any agenda for overcoming the crisis, attract people to their camp by projecting their own leader as a “messiah” who would miraculously deliver them from distress.

This pervasive propagation of unreason gets a boost when the financial oligarchy adopts the fascist movement to ward off any potential challenge to its hegemony. That is when the fascist movements move centre stage. An alliance is forged between big business and fascist upstarts (to use Michal Kalecki’s words), which comes to power and attempts to set up a fascist state.

We are witnessing this as a worldwide phenomenon today. While no fascist state has come into being anywhere as yet, unlike in the 1930s, fascist elements are in state power in several countries, including our own, and are attempting to convert the existing neoliberal state into a fascist state.

There is, however, a basic difference between the 1930s and now. The fascists in power then had actually succeeded in getting their countries out of the Great Depression by increasing military expenditure, which was financed by large-scale borrowing that boosted aggregate demand. The level of aggregate demand incidentally does not get boosted if government expenditure is financed by taxing workers since the workers spend much of their incomes anyway; it gets boosted only if government expenditure is financed by public borrowing or by taxing profits since much of the profits are saved. But since finance capital is opposed to both these modes of financing government expenditure and since the fascists in power are in thraldom to globalised finance, contemporary fascism cannot even boost aggregate demand to overcome the crisis, as classical fascism of the 1930s had done. And this gives the Left an opportunity to to present before the people a concrete alternative agenda that would overcome the crisis and their present distress.

In short, as at the time of the October Revolution, there is once more a historic opportunity before the Left to forge worker-peasant alliances in countries such as India to bring about a change in the nature of the state that would take us towards a transcendence of neoliberal capitalism, and through stages towards socialism.

Left’s ambivalence

A serious obstacle in the way of this praxis, no less crippling than the objective factors listed above as contributing to a weakening of the Left, is the Left’s own ambivalence towards globalisation. This ambivalence is a global phenomenon; it contributes to a general theoretical debility of the Left, which explains its present marginalisation. From the European Marxists’ opposition to any delinking from the current globalisation on the grounds that it would cause a strengthening of “nationalism” that is potentially reactionary, to Chinese Prime Minister Xi Jinping’s remark that the current globalisation is “irreversible”, we have a de facto Left endorsement of globalisation that precludes the possibility of any meaningful praxis. And this is so notwithstanding the immense hardship caused by globalisation to working people all over the world and the crisis that has only accentuated this hardship.

There are several reasons for this Left ambivalence. One is the tendency to interpret Marx’s remark that a mode of production becomes historically obsolete only when its capacity to develop the productive forces any further has got exhausted as referring to the rate of growth of the economy or to the generation of innovations within the system. This interpretation was rejected by the theory informing the October Revolution. Russia, many economic historians argue, was a rapidly growing economy in the years before the War, and so indeed was the capitalist world as a whole. And epoch-making innovations such as the automobile and the aeroplane had made their appearance precisely when Lenin was calling capitalism “moribund”. And yet such an interpretation of Marx’s remark persists to this day and sees in the rapid economic growth in the periphery a continuing dynamism of the system that makes any talk of “delinking” from the current globalisation sheer adventurist rhetoric.


The second reason for the ambivalence lies in the internationalism that informs, and must inform, the Left. With all its flaws the current globalisation represents after all an overcoming of “national” prejudices and “national” boundaries, despite the dominance of finance over it. It is internationalism of a sort, though within a bourgeois integument. The Left, it is held, should attempt to transcend this through a proletarian internationalism and not through delinking from globalisation, which any national struggle would necessarily entail, and which would actually be a step backward.

Such a view, which downplays the role of imperialism as a phenomenon underlying contemporary globalisation, and which does not distinguish between an anti-imperialist nationalism and an aggressive imperialist nationalism, which does not in other words differentiate between Gandhi’s “nationalism” and Hitler’s “nationalism”, is a major factor behind the Left’s ambivalence.

This ambivalence, no matter what causes it, is an important reason for the current worldwide paralysis of the Left, which has thereby become devoid of any credible praxis. True, there are large sections of the Left that reject this ambivalence, but in their case, too, there is a reluctance to intervene in the concrete messy present out of a sense of purity.

The point, however, is that since there are no coordinated international working-class struggles, let alone coordinated international peasant struggles, the formation of a worker-peasant alliance, not just against the persistence of the feudal legacy but also against the primitive accumulation unleashed by finance capital, has got to be a national affair. And if such an alliance acquires power, then it has no alternative to delinking from the current globalisation, at least to a certain extent, through capital controls and an appropriate measure of trade controls. It is only when the Left is willing to tailor its praxis to this understanding and shed its ambivalence towards the current globalisation that it can hope to acquire the requisite hegemony in society to carry forward the legacy of the October Revolution.

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