Corporate Personhood, Monopoly Capital, and the Precedent That Wasn't: The 1886 "Santa Clara" Case

By Curry Malott

Republished from Liberation School.

Editor’s note: Beginning with overturning Roe v. Wade, the ultra right-wing Supreme Court continues to attack hard-won and elementary democratic rights in the United States, from affirmative action to the Indian Child Welfare Act. The following article is the third in our series “Crimes of the Supreme Court,” which demonstrates the fundamentally reactionary and anti-democratic nature of the Supreme Court. By examining key decisions in the Court’s history, we explain their historical and political context, the legal concepts and frameworks used to justify their decisions, and lay out their implications for later cases. This entry focuses on an 1886 Supreme Court ruling that is often cited as the precedent guaranteeing corporations the same protections as “natural persons,” although it did no such thing. Nonetheless, this case and several preceding ones demonstrated how the struggle for corporate personhood—particularly under the “Equal Protection Clause” of the 14th Amendment—was intimately bound up in the transition to U.S. monopoly capitalism.

How do the actual people in charge of corporations manage to remain protected from the consequences of the countless crimes they commit year after year? How is it that when CEOs make clear and obvious decisions that habitually violate every existing worker-won regulation, from the Clean Air Act to the Civil Rights Act, with very few exceptions, they charge the corporation—the “artificial” or “unnatural” person—instead of the CEO—the actual, “natural person” who made those decisions?

The legal grounds that corporations have the same protections and rights as “natural persons” is commonly justified by the 1886 Supreme Court ruling in Santa Clara County v. Southern Pacific Railroad Company. As we’ll see, the Court’s decision in the case didn’t establish any precedent for corporate personhood, nor did the Court make any ruling on it. To the extent that the Supreme Court even debated “artificial,” “corporate,” and other kinds of personhood, they did so to facilitate the transition from “free competition” to monopoly capitalism in the country.

In this article, we explore the Santa Clara case before turning to debates within the institutions of power in the U.S. over the Equal Protection Clause of the 14th Amendment. These debates can only be understood if situated within their historical, political, and economic context: the transition to monopoly capital in the U.S. To conclude, we explore the case’s destructive legacy, or the way it was illegitimately used to set precedent for the growth of monopoly capital.

The facts and outcome of the case

During the 1878-79 California Constitutional Convention, the state enacted a new tax code that, in part, prevented railroad corporations from factoring existing debts and mortgages into their total taxable value. The Southern Pacific Railroad Company, along with the Central Pacific Railroad Company, refused to follow the new code. They did not pay the additional tax, nor did they pay the back taxes they subsequently owed.

The first point of contention were back taxes—including the interest on them—that railroad companies refused to pay in California, specifically the taxes being levied on the fencing along the railroads’ right-of-way. Among the handful of complaints brought forth, lawyers representing the railroads argued that it was the county and not the state that should have assessed the value of the fencing. As Thom Hartmann points out, “the railroad was refusing to pay taxes of about $30,000,” which is “like having a $10,000 car and refusing to pay a $10 tax on it—and taking the case to the Supreme Court” [1].

Faced with the loss of revenue, a number of counties in California, including San Mateo County, filed suit against the railroad companies in an attempt to collect the taxes that the railroads refused to pay. According to Southern Pacific’s executives, they were being treated unfairly relative to “legal” or “natural” persons who could deduct debts and mortgages from their taxable income or value. The cases were consolidated before reaching the California Supreme Court, which ruled mostly in favor of the counties and against the railroad companies. The one exception concerned the fences constructed around the railroads. The Court affirmed that the fences “were improperly included by the State Board in its assessments” and, as a result, there was no legal basis for the counties to collect additional taxes [2].

The origins of corporate personhood?

Interestingly, however, the Santa Clara decision is rarely remembered for the issue of taxation and, more specifically, the role of railroad monopolies, and is instead mostly cited as the first instance of the Supreme Court upholding “corporate personhood.”

One of the railroad’s defenses at the Supreme Court hearing included arguing that the “Equal Protection Clause” of the 14th Amendment applied to corporations, so therefore the state couldn’t tax them differently from other citizens. Yet this was only a minor point among the six arguments presented by the railroads.

Moreover, it seems Chief Justice Morrison Waite quickly dismissed the argument in the case by stating that it is a general, agreed upon principle that the clause applies to corporations.  According to the ruling’s “headnote,” Waite stated the Court would not even consider “whether the provision in the 14th Amendment to the Constitution, which forbids a State to deny any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does” [3].

Did the Supreme Court, then, establish a legal precedent that corporations have the same legal protections as natural persons? Despite the Supreme Court citing it as precedent for a century, and despite that it was routinely taught to law students as precedent, the ruling did no such thing.

Waite’s comment above was not part of the official ruling. Instead, it was included in a headnote written by the Court’s Reporter of Decisions, journalist J.C. Bancroft Davis, former president of the Newburgh and New York Railway Company. Headnotes are introductory summaries of cases added to Court rulings to make it easier for legal professionals and others to sift through cases.

Headnotes, therefore, are not legally-binding and hold no legal authority. It wasn’t until the 1906 ruling in United States v. Detroit Lumber Co. that the Supreme Court officially ruled in its majority opinion that headnotes aren’t part of the Court’s rulings or findings. As then-Chief Justice David Brewer wrote, “the headnote is not the work of the court, nor does it state its decision… it is simply the work of the reporter, gives his understanding of the decision, and is prepared for the convenience of the profession in the examination of the reports” [4]. This, however, hasn’t prevented the U.S. courts in general, and the Supreme Court in particular, from citing the headnote as precedent.

The headnote is significant in a few ways. First, the report of Waite’s comments didn’t include any legal or constitutional justification; it was a mere assertion. As a result, since 1886 the status of corporations as “people” protected under the Constitution has been a source of controversy. Moreover, “the concept of the corporate person lacks a principled definition and, therefore, seems to expand, or contract, depending on the circumstances and on the personal predilections of the speaker” [5].

The headnote is especially significant because of Waite’s sweeping acceptance that corporations are protected by the Equal Protection Clause of the 14th Amendment. This differs from a previous Court ruling in the 1873 Slaughterhouse Cases that made their way to the U.S. Supreme Court after an 1869 Louisiana legislature decision to issue a charter confining slaughterhouse operations in New Orleans to a single corporate entity, the Crescent City Live-Stock Landing and Slaughter-House Company.

Crescent City’s charter required the company to run its waste downstream, ordered other slaughterhouses, most of which were much smaller, to close, and forbid the establishment of any new slaughterhouses in the area for the next 25 years. In effect, the legislature produced a monopoly on slaughterhouses for the time period. This meant that all workers, including butchers, had to work for Crescent or find work elsewhere. As a result, hundreds of members of the Butchers’ Benevolent Association, which represented smaller or independent slaughterhouses, filed suit in the Louisiana Supreme Court on the basis that the monopoly violated the 13th and 14th Amendments by forcing butchers into “involuntary servitude” and taking away their property without compensation or due process.

When the U.S. Supreme Court took up the cases, the majority opinion explicitly stated that the Amendments did not apply in this instance. The dissenting opinion by Justice Stephen Field proposed a broad definition of the Amendments at stake, one that would become more expansive as the overthrow of Reconstruction solidified. The crucial issue, he stated, was “whether the recent amendments to the Federal Constitution protect the citizens of the United States against the deprivation of their common rights by State legislation.” Field closed the dissenting opinion by asserting that the 14th Amendment applies to corporations and monopolies. He wrote that the Amendment “does afford such protection, and was so intended by the Congress which framed and the States which adopted it” [6].

Between his time on California’s Ninth Circuit Court and the Supreme Court, “Field worked tirelessly to expand the 14th Amendment to include the rights of corporations.” He was driven by careerism and a desire to reach the country’s highest court and maybe even the presidency “with the support of railroad money” [7].

In his dissenting opinion in a related railroad case, Fields expressed his outrage that the Court was neglecting the crucial question, which was if “an unlawful and unjust discrimination was made . . . and to that extent depriving it of the equal protection of the laws” [8].

Whether or not the original drafters of the post-Civil War amendments explicitly considered if and how the 14th Amendment—or the 13th— could apply to corporations or any group other than Black people is unclear. Based on available records, some argue that Congress may indeed have considered or intended for corporations to be included in the 14th Amendment, as the original drafters “were inundated with petitions from insurance companies and railroads complaining about protectionist state measures” [9]. That the 14th Amendment makes a distinction between “persons” and “citizens” is also significant, as the former “are entitled to due process and equal protection” while the latter are only “guaranteed the privileges and immunities of national citizenship” [10].

What is certainly true, however, is that almost none of the 14th Amendment cases heard by the Supreme Court concerned the rights of Black people. The Supreme Court itself affirmed this in 1938. In his dissenting opinion on Connecticut Gen Life Ins C. v. Johnson, Justice Hugo Black cited Miller’s majority opinion in the 1873 Slaughterhouse cases, doubting that the 13th and 14th Amendments would include anyone except Black people. “Yet,” he continued, “of the cases in this Court in which the 14th Amendment was applied during the first fifty years after its adoption, less than one-half of 1 per cent. invoked it in protection of the negro race, and more than 50 per cent. asked that its benefits be extended to corporations” [11].

Further, recent history affirms that the U.S. ruling class considers and treats corporate entities much more humanely than they treat Black people.

Corporate personhood and a new phase of U.S. capitalism

The period leading up to the 1886 case was characterized by monumental shifts in the political, social, economic, and racial order of the U.S. This included the heroic Reconstruction era as well as its tragic defeat and the rapid growth of monopoly capital in the country.

In the decade leading up to Santa Clara case, railroad barons emerged as a new faction of the capitalist class that provided the model for monopoly capital. This is why, just before the 1878-79 California Convention, California allowed the Southern Pacific Railroad Company to absorb several other corporations. Prior to that, Congress granted 11 million acres of land to Southern Pacific, although for their expansion the company acquired additional debts through a mortgage on its construction, equipment, railcars, and so on. Southern Pacific was also granted the legal authority to construct a line connecting San Francisco to Texas.

The trend toward monopoly predated the Civil War and coincided with the ongoing conquest of the continent. Large corporations, with state funding, facilitated the expanding interstate commerce through railways and canals, which in turn led to a larger and more integrated national economy. Federal and state legislatures promoted this centralization of capital insofar as it took the economic burden off the state while still allowing the state to use the new networks for postal and military purposes.

The pressing question for the U.S. ruling class was whether or not the government-backed monopolists would ultimately represent a unique and temporary phenomenon or provide a model for capital as a whole.

There was a clear struggle between the ideologues of small enterprises that formerly dominated the economic landscape and operated similarly to the idealistic “free competition” phase of capitalism and those of monopoly capital, where the various enterprises dispersed throughout different entities were consolidated into large ones.

As Morton J. Horowitz details in his account of how legal structures raced to keep up with the latest changes in capital, in the 1880s there wasn’t any precedent about “natural” or “corporate” persons because these categories threatened individualism and free-market competition. By the turn of the century, however, the struggles over “political economy between small entrepreneurs and emergent big business over the legitimacy of large scale enterprise” erupted [12].

The debates taking place within the ruling class had to do with whether or not there was an inherent tendency for capital to centralize. At the time, most political economists didn’t give credence to the inevitability of monopolization, seeing the railroads as exceptional. It didn’t take long until politicians, bourgeois economists, and others rightly interpreted the railroad’s economic trajectory as a precursor to a coming phase of industrial monopolization.

There was a shift in power and influence within the capitalist class from the old “free enterprise” capitalists to the new monopolists:

“By the late nineteenth century in America, fundamental changes had already taken place in the legal treatment of the corporation. First, and by far the most important, was the erosion of the so-called ‘grant’ or ‘concession’ theory of the corporation, which treated the act of incorporation as a special privilege conferred by the state for the pursuit of public purposes. Under the grant theory, the business corporation was regarded as an ‘artificial being’ created by the state with powers strictly limited by its charter of incorporation. As we shall see, a number of more specific legal doctrines were also derived from the grant theory in order to enforce the state’s interest in limiting and confining corporate power” [13].

From this point of view, the rise of monopoly capitalism, or the centralization of larger and larger sectors of the means of production into fewer and fewer hands, is driven by the self-expansive and competitive nature of capitalist production. The Supreme Court provided the legal grounds for facilitating this transformation.

Legacy of the case

In the immediate aftermath of Santa Clara, “the Court did away with 230 state laws that had been passed to regulate corporations” [14]. It was clear evidence monopoly capital was in control of politics. Supreme Court decisions in the years between 1908 and 1914, often citing corporate personhood, struck down minimum-wage laws, workers’ compensation laws, utility regulation, and child labor laws—every kind of law that a people might institute to protect its citizenry from abuses” [15].

For over a century now, the state has continued to take power and rights away from working and oppressed people and transferred it to capital. They have even perverted the hard-won gains won by people’s movements into justifications for increasing corporate power, perhaps none more disgusting than the misuse of the 14th Amendment.

While even to this day there is no clear legal basis for corporate personhood, that hasn’t stopped the Supreme Court from waging class war against the people on behalf of corporations. Because the nine unelected judges determine the law, they can legally justify whatever tactics they deploy against us.

The misuse of Santa Clara’s headnote has not only severely inhibited the ability to regulate corporations, but it has created a space for CEOs and shareholders to operate with near impunity. For example, Joel Bakan notes that “corporate illegalities are rife throughout the economy…By design, the corporate form generally protects the human beings who run corporations from legal liability, leaving the corporation, a ‘person’…the main target of criminal prosecution” [16].

The Supreme Court was created to serve the interests of the capitalist class. Its very existence stands as a barrier to the working and oppressed peoples’ desire for a true democracy. As the Supreme Court unleashes its most current wave of attacks on our basic democratic rights, we will continue to fight for a new system.

References

[1] Thom Hartmann,Unequal Protection: How Corporations Became People–and How You can Fight Back(San Francisco: ‎ Berrett-Koehler Publishers, 2010), 18.
[2] Santa Clara County. v. South Pacific Railroad, 118 U.S. 394 (1886), 411. Availablehere.
[3] Ibid., 396.
[4] United States v. Detroit Lumber Co., 200 U.S. 321 (1906). Availablehere.
[5] Malcolm J. Harkins III, “The Uneasy Relationship of Hobby Lobby, Conestoga Wood, the Affordable Care Act, and the Corporate Person: How a Historical Myth Continues to Bedevil the Legal System,”Saint Louis University Journal of Health Law & Policy7, no. 2 (2014): 204.
[6] Ibid.
[7] Nicholas S. Paliewicz, “How Trains Became People: Southern Pacific Railroad Co.’s Networked Rhetorical Culture and the Dawn of Corporate Personhood,”Journal of Communication Inquiry43, no. 2 (2019): 204-205.
[8] Cited in Ibid.
[9] Matthew J. Zinn and Steven Reed, “Equal Protection and State Taxation of Interstate Business,”The Tax Lawyer41, no. 1 (1987): 89-90.
[10] Ibid., 90.
[11] Connecticut General Life Ins. Co v. Johnson, 303 U.S. 77 (1938). Availablehere.
[12] Morton J. Horowitz, “Santa Clara Revisited: The Development of Corporate Theory,”West Virginia Law Review88, no. 2 (1986): 187.
[13] Ibid., 181.
[14] Howard Zinn,A People’s History of the United States(New York: Perennial Classics, 1980/1999), 261.
[15] Hartmann,Unequal Protection, 24.
[16] Joel Bakan,The Corporation: The Pathological Pursuit of Profit and Power(New York: The Free Press, 2004), 75-79.

Whose lessons? Which direction?

[Pictured: Poster, 1962, by Nina Vatolina. The text reads: 'Peace, Labor, Freedom, Equality, Brotherhood, Happiness.']

By Jodi Dean

Republished from Liberation School.

As obituaries for neoliberalism pile up on our nightstands and Antonio Gramsci’s adage that the old is dying and the new cannot be born appears newly profound, we turn to the past for direction. What successes should guide us? What can we learn from our failures? If we are to advance politically in the twenty-first century, we need to learn the correct lessons from the twentieth. But what are they?

For some on the left, the problems we face today are as they have ever been failures of organization and collective commitment. A disciplined and organized working class could do more than compel concessions from capital; it could transform society. What’s needed is the revolutionary party. Others on the left blame labor’s political weakness on refusals to compromise. Militant organizations aren’t solutions. They’re errors. Only when unions and left parties accept capitalist social property relations do workers earn their seat at the table and engage in the bargaining that increases their share. Communist parties hinder such acceptance.

Forty years of neoliberalism reveals the bankruptcy of the latter perspective. Capital makes concessions only when it has no other choice. Ruling classes across the Global North have dismantled public sectors and decimated middle classes rather than provide the tax support necessary for maintaining social democracy. They’ve rolled back hard-won political and social gains, treating basic democratic rights as threats to their power. While strong tendencies on the right recognize radicalization as necessary for politics in a period of uncertainty and double down on their various illiberalisms, opponents of revolution insist that the lesson of the twentieth century is the necessity of compromise. Presuming there’s no alternative to capitalism, left Thatcherites declare that progress depends on leaving behind our communist baggage.

One instance of this perspective is Jonah Birch’s “The Cold War Made it Harder for the Left to Win” [1]. Criticizing Gary Gerstle’s argument in The Rise and Fall of the Neoliberal Order, Birch rejects Gerstle’s claim that it was the communist threat that made significant reform possible in the twentieth century [2]. With homogeneous Sweden as his example of social democratic success, Birch asserts that conditions were worse for labor in countries with large communist parties. He concedes that the socio-economic context that led to economic growth after World War II is unlikely to reappear. Nevertheless, Birch advises the left to accept the lesson that communists hurt the working class.

The struggle against white supremacy and fascism is class struggle

Birch’s deeply conservative message moves to the right of mainstream liberal recognition of the impact of the court of world opinion during the Cold War. It is widely accepted that competition with the Soviet Union for hearts and minds pushed the U.S. to take steps toward the abolition of Jim Crow apartheid and institutionalized white supremacy. The denial of voting rights and violent repression of activists damaged the country’s reputation as democracy’s global defender. As soon as one acknowledges the multiracial and multinational character of the working class, one realizes how the Swedish fantasy operates (even in Sweden, as Tobias Hϋbinette demonstrates in a recent piece in the Boston Review) to make a small subset of struggles—the wage struggles of white workers—stand in for the broad array of struggles of the diverse multinational working class [3].

In the U.S., for example, communist involvement in the fight against lynching, segregation, and Jim Crow was more than a propaganda point in the Cold War’s great power conflict. From its early years, the Communist Party recognized that workers would only prevail if they were united. So long as Black workers were paid lower wages than white workers and so long as Black workers excluded from unions were available as strikebreakers, the position of all workers was insecure. The struggle against white supremacy was thus central to building the collective power to win the class struggle. This analysis of the national composition of the working class under conditions of white supremacy and racism committed communists to deepening engagement in “Negro work” in multiple arenas. These arenas included organizing agricultural and domestic workers, taking on legal campaigns on behalf of the falsely accused, and drawing out the connections between the conditions facing Black people in the U.S. and oppressed and colonized people all over the world. Even more broadly, the Party demonstrated how anti-fascist, anti-colonial, and anti-imperialist movements for peace were indispensable to class struggle insofar as they all took aim at U.S. monopoly capital [4].

Communists were at the forefront of the struggle against fascism and its doctrine of Aryan superiority. Birch treats the French and Italian Communist Parties as divisive organizations. He blames them for splitting the labor movement in their respective countries, thereby marginalizing the left and isolating the working class. On the one hand, Birch’s charges are belied by his own evidence: in both countries the communists regularly won around twenty percent of the national vote in elections, hardly an indication of marginalization and isolation. Multiple localities and municipalities had communist leaders. On the other hand, Birch’s myopic focus on the expansion of social programs as the single measure of political success leads him to neglect central communist contributions. The partisans who gave their lives in the war against European fascisms, the thousands who carried out a heroic resistance in occupied countries, are erased from view. Surely their achievements are as noteworthy as the collective bargaining institutions, and generous social services that preoccupy Birch. And since Birch concedes that the economic conditions that prevailed in the post-war heyday of social democracy are unlikely to appear again, what is the political cost today of failing to acknowledge and learn from the courage of communist resistance?

Internationalism as the ground of struggle

The significance of the communist contribution continues to expand as we zoom out from a narrow focus on Europe. No one can deny the role of communist-led national liberation movements in the colonized world. In virtually every liberation struggle Marxist-Leninists played an indispensable part. Angola, Mozambique, Vietnam, Korea, Cuba, Congo-Brazzaville, Ethiopia, Indonesia, and China are not insignificant data points just because they are not from Europe.

For decades critics of colonialism and neocolonialism have pointed out that the capitalist class has been able to secure the political passivity or even support of a large layer of the working class in the imperialist core through benefits accrued from the global exploitation of Black and brown people. These critics continue a line of argument already prominent in Lenin’s analysis of the enormous super-profits generated by imperialism. That capital is international and the struggle against it must be as well is a lesson from communists in the twentieth century that remains indispensable in the twenty-first. Workers couldn’t afford nationalist myopia then and surely cannot in today’s setting of global supply chains, mass migration, and climate change.

In the U.S., Black women in and around the Communist Party in the first half of the twentieth century demonstrated the practical implications of internationalism in their organizing. As early as 1928, Williana Burroughs emphasized concrete tasks related to engaging foreign-born Black workers in the U.S. (West Indies, South America, Cape Verde Islands, Africa) and using anti-imperialism as a point of connection (“Thousands of Negroes from Haiti, Cuba, British possessions, Virgin Islands and Puerto Rico have felt the iron heel of British or American Imperialism”) [5].

The Party took the view that Black workers in the U.S. were an oppressed national minority with a right to self-determination. While controversial within and without the Party, this line constituted a fundamental ground for unifying Black and white workers because it recognized the centrality of the struggle for Black liberation. Organizing Black workers meant organizing Black women because most Black women worked for wages to support their families. Organizing Black women meant organizing immigrants and farm workers and attending to the housing, education, and neighborhood conditions impacting workers’ lives. Organizing immigrants and farm workers meant building an understanding of the patterns of oppression and resistance facing all workers. Internationalism was more than an expression of solidarity. It was a principle with repercussions for domestic organizing.

Claudia Jones’s famous International Women’s Day speech from 1950 described the global peace movement and signature campaign against the A-bomb, Marshall Plan, and Atlantic war pact. Jones noted women’s organizations’ opposition to NATO, “which spells misery for the masses of American women and their families.” She advocated rousing the internationalism of American women in protest against “Wall Street’s puppets in Marshalized Italy, in fascist Greece and Spain.” And she linked the Justice Department’s attack on the Congress of American Women as “foreign agents” with the group’s long-standing advocacy of women’s equal rights, Negro-white unity, and child welfare and education [6].

The resolute internationalism of communists in the twentieth century was indispensable to confronting imperialism and colonialism. We build the power of the working class by emphasizing the patterns of oppression and resistance, linking struggles, and targeting capitalism as the system to be defeated.

Anti-communism is the enemy

Over the last decades of neoliberalism, the right has advanced. In the U.S., UK, Brazil, Hungary, India, Israel, Italy, Poland, Sweden, and elsewhere, conservative parties use nationalism to reach out to those left behind by globalization. When socialists take as their measure of success the wages of an outmoded, masculinist, and Eurocentric image of the working class, they undermine their capacity to build mass unity, strengthening the hand of the right. Insistence on the multinational composition of the labor force of all the so-called developed countries gives the lie to nationalist and isolationist fantasies as well as to the patriarchal conceptions of the family that support them.

A component of right-wing advance has been its relentless assault on communism. Thirty years after the defeat of the Soviet Union, conservatives attack even the most common sense of public measures as communist plots. More subtle but no less reactionary are the epistemological dimensions of anti-communism, what Charisse Burden-Stelly theorizes as intellectual McCarthyism [7]. Anti-communism persists today in the suppression of knowledge of the continuities between anti-capitalist, anti-racist, anti-colonial, and anti-imperialist struggles. Instead of the site where those struggles were unified, communism is treated as a dangerous and alien ideology. Its role in the fight against white supremacy domestically and internationally is buried.

For anti-communists disorder is foreign—the refugee, the immigrant, the Black, the Muslim, the Jew. Anti-communists disavow the capitalist disorder of competition, markets, innovation, dispossession, foreclosure, debt, and imperialist war. Dramatic changes in the character of work, communities, and life that accompany disruptive and ubiquitous technology; urbanization and rural depopulation; shifts from industry and manufacture to services and servitude; the intensification of competition for decreasing numbers of affordable houses and adequately compensated jobs—these all congeal into a disorder to be dealt with by the assertion of police, family, church, and race. Anti-communism remains the lynchpin of this assertion.

The fear that anti-communism mobilizes is a fear of loss, a fear that what you have will be taken from you, what Slavoj Žižek refers to as the “theft of enjoyment” [8]. Marx and Engels call out this mobilization of fear in The Communist Manifesto when they address charges that communists want to take people’s property. They write, “in your existing society, private property is already done away with for nine-tenths of the population; its existence for the few is solely due to its non-existence in the hands of those nine-tenths” [9]. The anti-communist mobilization of fear conceals the absence of property, wealth, job security, success, sovereignty, and freedom. It posits that we have them by positioning them as stolen. Communism is what prevents you from being rich, widely admired, having lots of sex, and so on. The “theft of enjoyment” fantasy obscures the fact that under capitalism a handful of billionaires have more wealth than half the planet. By positing communism as a source of deprivation, as an ideology based on taking something away, anti-communism conceals that we don’t have what is ostensibly being stolen.

Anti-communism is not confined to the political right. It often seeps into progressive and self-described socialist circles. Left anti-communists proceed as if communism were the barrier to workers’ success, as if we would all live in a Swedish social democratic paradise but for those damned communists. Not only does this deny the multiracial and international reality of the working class, but it conceals broader left political division and weakness. Virtually nowhere does the left face the choice of reform or revolution. Virtually nowhere is the left in a position where class compromise is on the table. Anti-communism obscures this basic fact.

Communism is that modern political ideology always and everywhere on the side of the oppressed. When labor begins to appear strong, when those who have been racially, sexually, ethnically, and colonially oppressed become more visible, more organized, and more militant, anti-communism intervenes to set up barriers. On the left as well as the right, anti-communism attempts to structure the political field by establishing the terrain of possibility: which political paths are available, which are unthinkable. Even in settings where communism is dismissed as itself impossible, anti-communism mobilizes social forces to oppose it. This fight against the impossible is an ideological signal: the discussion isn’t aimed toward seriously evaluating lessons and goals. It’s about shoring up the status quo, disciplining working-class imagination by preemptive arrest of any challengers to capitalist social property relations.

The political and economic situation that prevails today differs significantly from the postwar era. The U.S. has lost both its preeminent economic status and the moral position it assumed following the end of WWII (a position always fragile and contested given the U.S.’s use of atomic weapons, backing of dictatorships, imperialist and neocolonial foreign policy, and domestic police state). Unions have lost their prior bargaining power and workers their hard-won rights and benefits. Today the issue is building organizations and movements with power sufficient to compel the socialist reconstruction of the economy in the context of a rapidly changing climate. This fight is multinational and international or it is lost.

References

[1] Jonah Birch, “The Cold War May It Harder for the Left to Win Social Democratic Reforms,”Jacobin, 15 November 2022. Availablehere.
[2] Gary Gerstle,The Rise and Fall of the Neoliberal Order(Oxford University Press, 2022).
[3] Tobias Hϋbinette, “Race and Sweden’s Fascist Turn,”Boston Review, 19 October 2022. Availablehere.
[4] See the contributions toOrganize, Fight, Win: Black Communist Women’s Political Writing, ed. Charisse Burden-Stelly and Jodi Dean (London: Verso, 2022).
[5] Williana Burroughs, “Negro Work Has Not Been Entirely Successful,”  inOrganize, Fight, Win,21-25.
[6] Claudia Jones, “International Women’s Day and the Struggle for Peace,” inOrganize, Fight, Win,181-197.
[7] Charisse Burden-Stelly, “OnBankers and Empire: Racial Capitalism, Antiblackness, and Antiradicalism,”Small Axe24, no. 2 (2020): 175-186.
[8] Slavoj Žižek,Tarrying With the Negative(Durham, NC: Duke University Press, 1993), 200-237.
[9] Karl Marx and Friedrich Engels,The Communist Manifesto, trans. S. Moore (New York: Penguin Books, 1988/1967), 237.

Empty Rhetoric That Seeks to Misinform and Appease: On Biden's Farcical Anti-Monopoly Executive Order

[Patrick Semansky/AP Photo]

By Shawgi Tell

Let me be clear: capitalism without competition isn’t capitalism. It’s exploitation

—tweet from President Joe Biden, July 9, 2021

Capitalism is exploitation, period. Lol

—a twitter response to Biden’s tweet, July 9, 2021

Not a day goes by in which major owners of capital and their political representatives do not promote illusions and disinformation about the obsolete capitalist economic system. The ruling elite and their entourage rejected economic science and embraced irrationalism, incoherence, and dogmatism more than a century ago. They are unable and unwilling to offer any useful analysis of economic realities. Nothing they put forward helps advance public understanding of the economy. The mainstream news, for example, is saturated with endless mind-numbing nonsensical economic headlines. It is no accident that mainstream economics has long been called the dismal science.

The internal core logic and intrinsic operation of capital ensures greater poverty, inequality, and monopoly over time. This is the inherent nature of capital. It is how capital moves and develops. These catastrophes are not the result of external forces, extenuating circumstances, or “bad people” making “bad decisions.” They are not the outcome of ill-conceived policies made by self-serving, immoral, or uninformed people. These worsening problems did not arise because something is wrong with the intentions of some individuals who make antisocial decisions. Such notions are facile.

While individuals have consciousness, autonomy, self-determination, and agency, many phenomena (e.g., laws of economic development) operate objectively outside the will of individuals; they do not depend on the will of individuals. The laws of motion governing economic phenomena can be known, controlled, and directed, but not extinguished; they have to be consciously mastered, harnessed, and directed in a way that meets the needs of all.

Capital is first and foremost an unequal social relationship, not a person or a thing. This unequal social relationship is relentlessly reproduced in today’s society, preventing the healthy balanced extended reproduction of society. On the one side of this unequal social relationship are the majority who own nothing but their labor power and on the other side are a tiny handful who own the means of production and live off the labor of others.

Major owners of capital are the personification of capital, the embodiment of capital. This critical theoretical insight helps us avoid the rabbit hole of personal intentions and personal will, and allows us instead to objectively locate greed, insecurity, inequality, poverty, unemployment, endless debt, and other tragedies in the intrinsic built-in nature, logic, and movement of capital itself.

One of these is the inexorable tendency of competition to lead to monopoly under capitalism. Competition means winners and losers. By definition, not everyone can win when competing. Competition means rivalry for supremacy. Thousands compete in the Olympics, for example, but only a select few (“winners”) go home with a gold medal.[1] It is no accident that the economy, media, and politics are heavily monopolized by a handful of billionaires while billions of people who actually produce the wealth in society and run society remain marginalized and disempowered.

This brutal reality cannot be reversed or overcome with the utterance of a few platitudes, the passage of some policies, or the creation of some agencies that claim to be able to fix the outdated economic system, especially when all of the above come from billionaires themselves.

On July 9, 2021, President Joe Biden issued an Executive Order on Promoting Competition in the American Economy (https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/).

The order is about 7,000 words long and full of anticonscious statements. Disinformation pervades the entire order.

The opening paragraph begins with the following disinformation:

By the authority vested in me as President by the Constitution and the laws of the United States of America, and in order to promote the interests of American workers, businesses, and consumers, it is hereby ordered….

Here, “American workers, businesses, and consumers” are casually misequated and no mention is made of citizens or humans. The implication is that consumerism is normal, healthy, and desirable, and that workers and big business somehow have the same aims, world outlook, and interests. This conceals the fact that owners of capital and workers have antagonistic irreconcilable interests and that people exist as humans and citizens, not just utilitarian consumers and shoppers in a taken-for-granted system based on chaos, anarchy, and violence.

Disinformation is further escalated in the next paragraph:

A fair, open, and competitive marketplace has long been a cornerstone of the American economy, while excessive market concentration threatens basic economic liberties, democratic accountability, and the welfare of workers, farmers, small businesses, startups, and consumers.

“Market concentration” has been the norm for generations. Monopolies, cartels, and oligopolies have been around since the late 1800s. Mergers and acquisitions have been taking place non-stop for decades. The so-called “free market” largely disappeared long ago. Objectively, there can be no fairness in a system rooted in wage-slavery and empire-building. Wage-slavery is the precondition for the tendency of the rich to get richer and the poor poorer. It is not a recipe for prosperity and security for all. This is also why inequality, tyranny, violence, and surveillance have been growing over the years. Moreover, what “threatens basic economic liberties, democratic accountability, and the welfare of workers, farmers, small businesses, startups, and consumers” is the ongoing political and economic exclusion of people from control over the economy and their lives by the financial oligarchy. There can be no liberty, accountability, and welfare when most people are deprived of real decision-making power and major owners of capital make all the decisions. Problems would not constantly worsen if people had control over their lives. The “best allocation of resources” cannot be made when the economy is carved up, fractured, and controlled by competing owners of capital.

Although recurring economic crises for well over a century have repeatedly discredited “free market” ideology, the 7,000-word executive order is saturated with the language of “choice,” “competition,” and “consumers.” This is the same worn-out language used by privatizers of all hues at home and abroad.

Further, while the executive order gives many examples of “economic consolidation” in numerous sectors, the government is not interested in creating a self-reliant vibrant diverse economy that meets the needs of all. It is not committed to reversing “the harmful effects of monopoly and monopsony.” Numerous antitrust laws have not stopped either. Big mergers and acquisitions have been going on for years. Rather, the executive order is an attempt to restructure economic and political arrangements among different factions of the wealthy elite; it reflects a new stage or form of inter-capitalist rivalry for even greater domination of the economy by fewer owners of capital. In other words, moving forward, the economy will remain monopolized by a few monopolies. Wealth is only going to become more concentrated in fewer hands in the years ahead. Mountains of data from hundreds of sources document growing wealth and income inequality every year.

The bulk of the executive order is filled with endless directives, strategies, rules, and suggestions for how to curb “unfair practices” and promote “fairness” and “competition.” But these all ring hollow given concrete realities and past experience.

Today, governments at all levels have been taken over by global private monopoly interests and have become instruments of decisions made on a supranational basis. There is a fine-tuned revolving door between officials from government and the private sector; they have become synonymous for all essential purposes. The same people who run major corporations also serve in high-level government positions where they advance the narrow interests of the private sector and then they leave government and return to their high-level corporate positions. There is a reason why the majority of members of Congress are millionaires. The Executive Branch in the United States, especially the President’s Office, is a major tool for the expression of the will of the most powerful monopolies. This is why billions of dollars are spent every few years to select the President of the country.

A modern economy must be controlled and directed by workers themselves. Only such an economy can provide for the needs of all and avoid endless economic distortions. Uneven economic development, “unfair” arrangements, “market concentration,” monopolies, oligopolies, and recurring crises cannot be avoided so long as those who actually produce the social product have no control over the social product. Workers have first claim to the wealth they produce and have the right to decide how, where, and when that wealth is used. Major owners of capital are historically superfluous and a big block to progress. They are not needed for a healthy vibrant self-reliant economy that meets the needs of all.

Shawgi Tell, PhD, is author of the book “Charter School Report Card.” His main research interests include charter schools, neoliberal education policy, privatization and political economy. He can be reached at stell5@naz.edu.

 
Notes

[1] Under capitalism the ideology of competition also falsely assumes scarcity because if nothing was scare then there would be no need for competition.

Five Characteristics of Neo-imperialism: Building on Lenin's Theory of Imperialism in the Twenty-First Century

By Cheng Enfu and Lu Baolin

Neoimperialism is the specific contemporary phase of historical development that features the economic globalization and financialization of monopoly capitalism. The characteristics of neoimperialism can be summed up on the basis of the following five key features. First is the new monopoly of production and circulation. The internationalization of production and circulation, together with the intensified concentration of capital, gives rise to giant multinational monopoly corporations whose wealth is nearly as great as that of whole countries. Second is the new monopoly of finance capital, which plays a decisive role in global economic life and generates a malformed development, namely, economic financialization. Third is the monopoly of the U.S. dollar and intellectual property, generating the unequal international division of labor and the polarization of the global economy and wealth distribution. Fourth is the new monopoly of the international oligarchic alliance. An international monopoly alliance of oligarchic capitalism, featuring one hegemonic ruler and several other great powers, has come into being and provides the economic foundation for the money politics, vulgar culture, and military threats that exploit and oppress on the basis of the monopoly. Fifth is the economic essence and general trend. The globalized contradictions of capitalism and various crises of the system often undergo an intensification that creates the new monopolistic and predatory, hegemonic and fraudulent, parasitic and decaying, transitional and moribund form of contemporary capitalism as late imperialism.

The historical evolution of capitalism has passed through several distinct stages. At the beginning of the twentieth century, capitalism reached the stage of private monopoly, which V. I. Lenin termed the imperialist stage. The era of imperialism brought with it the law of uneven economic and political development. In order to expand overseas and redistribute the territory of the world, the leading powers formed various alliances and launched a fierce struggle that led to two world wars. Eurasia suffered from continuous wars throughout the first half of the twentieth century. One after the other, national democratic revolutions and the communist movement developed continuously. After the Second World War, a number of economically underdeveloped countries adopted a socialist path of development, intensifying the confrontation between capitalism and socialism. Although The Communist Manifesto had long anticipated that capitalism would inevitably be replaced by socialism, this was only possible in a very few countries. The capitalist and imperialist system, despite suffering grave problems, survived. From the 1980s and early ’90s, capitalism carried out a strategic shift to neoliberal policies and evolved into its neoimperialist phase. This represents a new phase in the development of imperialism following the Cold War.

In his book Imperialism, the Highest Stage of Capitalism, Lenin set out the definition and characteristics of imperialism as follows:

If it were necessary to give the briefest possible definition of imperialism we should have to say that imperialism is the monopoly stage of capitalism.… We must give a definition of imperialism that will include the following five of its basic features: (1) the concentration of production and capital developed to such a high stage that it has created monopolies which play a decisive role in economic life; (2) the merging of bank capital with industrial capital, and the creation, on the basis of this “finance capital,” of a financial oligarchy; (3) the export of capital as distinguished from the export of commodities acquires exceptional importance; (4) the formation of international monopolist capitalist associations which share the world among themselves, and (5) the territorial division of the whole world among the biggest capitalist powers is completed. Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capital is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun; in which the division of all territories of the globe among the biggest capitalist powers has been completed.1

In an article published in December 1917, Lenin further elaborated that: “Imperialism is a specific historical stage of capitalism. Its specific character is threefold: imperialism is monopoly capitalism; parasitic, or decaying capitalism; moribund capitalism.”2

Based on Lenin’s theory of imperialism, we shall analyze contemporary capitalism while bearing in mind the recent changes it has undergone. Neoimperialism, we shall argue, is the phase of late imperialism that has arisen in the contemporary world, against the background of economic globalization and financialization.3 The character and features of neoimperialism can be summarized, as stated, around five aspects.

The New Monopoly of Production and Circulation

Lenin stated that the most profound economic foundation of imperialism is monopoly. This is deeply rooted in the basic law of capitalist competition, which holds that competition results in the concentration of production and capital, and that this concentration will inevitably lead to monopoly when it reaches a certain level. In the early years of the twentieth century, the capitalist world experienced two huge waves of corporate mergers as the concentration of capital and of production reinforced each other. Production came increasingly to be concentrated in a small number of large companies, with the process bringing about organization on the basis of industrial monopolies with cross-sector multiproduct management. Instead of free competition, monopoly alliances held sway. Beginning in the early 1970s, capitalism encountered a “stagflation” crisis that lasted for nearly ten years, followed by a period of secular stagnation, or a long-term decline in growth rates. Economic recession and competitive pressures in the domestic market drove monopoly capital to seek new growth opportunities overseas. With the support of a new generation of information and communications technologies, foreign direct investment and international industrial transfers have continually reached new heights, with the degree of internationalization of production and circulation dwarfing that of the past.

Monopoly capital is being redistributed globally from production to circulation. Through the decentralization and internationalization of production processes, a system has arisen in which global value chains and the operational networks for organizing and managing multinational corporations have been divided up. The multinational companies coordinate their global value chains through complex networks of supplier relationships and through various governance models. In such systems, the processes involved in the production and trading of intermediate products and services are divided up and distributed around the world. The input and output transactions are carried out in the global production and service networks of the subsidiaries, contract partners, and suppliers of the multinational companies. According to statistics, about 60 percent of global trade consists of the exchange of intermediate products and services, and 80 percent of it is achieved via multinational companies.4

Within the new monopoly structures, the second characteristic of neoimperialism is the internationalization of production and circulation. The further concentration of capital leads to the rise of giant monopoly multinational corporations whose wealth may be as great as that of whole countries. Multinational corporations are the true representatives of contemporary international monopolism. The characteristics of the giant monopoly corporations can be summarized as follows.

1. The number of multinational corporations has grown globally, and the degree of socialization and internationalization of production and circulation has reached a higher level.

   Since the 1980s, multinational corporations have become the main driving force of international economic intercourse as the bearers of foreign direct investment. In the 1980s, foreign investment worldwide grew at an unprecedented rate, much faster than the growth during the same period of other major economic variables such as world output and trade. In the 1990s, the scale of international direct investment reached an unprecedented level. Multinationals established branches and affiliates around the world via foreign direct investment, the volume of which had expanded dramatically. Between 1980 and 2008, the number of global multinational companies increased from 15,000 to 82,000. The number of overseas subsidiaries grew even faster, from 35,000 to 810,000. In 2017, an average of over 60 percent of the assets and sales of the world’s one hundred top nonfinancial multinational companies were located or achieved abroad. Foreign employees accounted for approximately 60 percent of total staff.5

   Ever since the capitalist mode of production came into being, the concentration of production activities, expanding collaboration, and the evolution of the social division of labor have led to a continuous increase in the socialization of production. The decentralized labor processes are increasingly moving toward a joint labor process. The facts have proved that the sustained growth of outward foreign direct investment has strengthened the economic ties between all countries, as well as significantly increased the level of socialization and internationalization of the production and distribution systems, in which multinationals play a key role as the dominant force at the micro level. The internationalization of production and the globalization of trade have extensively redefined the way in which countries participate in the international division of labor, and this in turn has reshaped the production methods and profit models within those countries. Throughout the world, the majority of countries and regions are integrated into the network of international production and trade created by these giant corporations. Thousands of companies around the world form value creation nodes in the system of global production chains. Within the global economy, multinational firms have become the main channels for international investment and production, the core organizers of international economic activity, and the engine of global economic growth. The rapid development of multinational corporations shows that in the new imperialist phase constructed around the globalization of capital, the concentration of production and capital is reaching ever greater dimensions. Tens of thousands of multinational corporations now dominate everything.

2. The scale of accumulation by multinational monopoly capital is increasing, forming a multinational corporate empire.

   Although the number of multinational capitalist corporations is not especially large, they all possess great strength. They not only comprise the main force in the development and use of new technologies, but also control the marketing networks and more and more natural and financial resources. On this basis, they have monopolized the proceeds of production and circulation and equipped themselves with an unparalleled competitive advantage. Between 1980 and 2013, benefiting from the expansion of markets and the decline in production factor costs, the profits of the world’s largest 28,000 companies increased from $2 trillion to $7.2 trillion, representing an increase from 7.6 percent to approximately 10 percent of gross world product.6 In addition, these multinational corporations not only form alliances with organs of state power, but also develop links with the global financial system, together forming financial monopoly organizations backed by state support. The globalization and financialization of monopoly capital further consolidate its wealth accumulation. In terms of sales revenue, the economic scale of some multinational corporations exceeds that of a number of developed countries. In 2009, for example, Toyota’s annual sales exceeded the gross domestic product (GDP) of Israel. In 2017, Walmart, rated by the Fortune 500 list as the world’s largest company, achieved total revenues of more than $500 billion, greater than the GDP of Belgium. If we combine the data for multinational corporations and the world’s total of almost two hundred countries, and draw up a list of their annual revenues and GDPs, it becomes clear that the countries represent fewer than 30 percent of the world’s one hundred largest economies, while the corporations account for more than 70 percent.

   If world development continues along these lines, there will be more and more multinational companies whose wealth is similar to that of whole countries. Although industrial globalization has made economic activity more fragmented, vast quantities of profits still flow to a few countries of the developed capitalist world. Investment, trade, exports, and technology transfer are principally managed via the giant multinational corporations or their overseas branches, and the parent companies of these multinational monopolies remain tightly concentrated in geographic terms. In 2017, corporations from the United States, Japan, Germany, France, and the United Kingdom accounted for half of the top five hundred companies in the world. Some two-thirds of the top one hundred multinationals are from these countries.

3. Multinational corporations monopolize the industries in their particular fields, controlling and running international production networks.

   The multinational giants have immense quantities of capital and formidable scientific and technological strengths, which ensure them a dominant position in global production, trade, investment, and finance, as well as in the creation of intellectual property. The economies of scale that result from the monopoly positions enjoyed by multinational corporations have expanded their competitive advantage. This is because “the larger the army of workers among whom the labour is subdivided, the more gigantic the scale on which machinery is introduced, the more in proportion does the cost of production decrease, the more fruitful is the labour.”7 The high degree of monopoly exercised by the multinational corporations means that the concentration of production and the concentration of control over markets reinforce each other, accelerating capital accumulation. Meanwhile, competition and credit, as two powerful levers for the concentration of capital, accelerate capital’s trend of coming under increasingly narrow control as it accumulates. Over the past thirty years, all of the world’s nations have promoted policy options aimed at boosting investment and relaxing the restrictions to which foreign direct investment is subject. Although the increasing scale of outward foreign direct investment by developed countries has to varying degrees accelerated capital formation and the development of human resources in underdeveloped countries, and increased their export competitiveness, it has also brought about large-scale privatization and cross-border mergers and acquisitions in these nations. This has accelerated the process through which small and medium enterprises are bankrupted or forced to merge with multinational corporations. Even relatively large enterprises are vulnerable.

   Around the world, many industries now have an oligopolistic market structure. For example, the global market for central processing units has been almost completely monopolized by the firms Intel and Advanced Micro Devices. As of 2015, the global market for seeds and pesticides was almost entirely controlled by six multinational companies—BASF, Bayer, Dow, DuPont, Monsanto, and Syngenta—that together controlled 75 percent of the global market for pesticides, 63 percent of the global market for seeds, and 75 percent of global private research in these areas. Syngenta, BASF, and Bayer alone controlled 51 percent of the global pesticide market, while DuPont, Monsanto, and Syngenta accounted for 55 percent of the seed market.8 According to statistics of the European Medical Devices Industry Group, the sales in 2010 of just twenty-five medical device companies accounted for more than 60 percent of the total sales of medical devices throughout the world. Ten multinationals controlled 47 percent of the global market for pharmaceuticals and related medical products. In China, soybeans are one of the vital food crops. All aspects of global soybean production, supply, and marketing chains are controlled by five multinational companies: Monsanto, Archer Daniels Midland, Bunge, Cargill, and Louis Dreyfus. Monsanto controls the raw materials for seed production, while the other four control planting, trading, and processing. These multinationals form various alliances through joint ventures, cooperation, and long-term contractual agreements.9 As more and more social wealth is seized by fewer and fewer private capitalist giants, monopoly capital deepens its control and exploitation of labor. This leads to capital accumulation on a world scale, aggravating global overcapacity and the polarization between rich and poor.

In the era of neoimperialism, information and communications technology is developing rapidly. The emergence of the Internet has greatly reduced the time and space required for social production and circulation, bringing about a surge of cross-border mergers, investment, and trade. Consequently, more and more noncapitalist regions have been incorporated into the process of accumulation dominated by monopoly capital, which has greatly strengthened and expanded the world capitalist system. The socialization and internationalization of production and circulation have undergone a great leap during the era of capitalist economic globalization in the twenty-first century. The pattern, described in The Communist Manifesto, according to which “a cosmopolitan character” has been given “to production and consumption in every country” has been greatly strengthened.10 The globalization of monopoly capital requires world economic and political systems to be on the same track in order to eliminate the institutional barriers between them. However, when a number of postrevolutionary countries abandoned their earlier political and economic systems and turned to capitalism, they were not rewarded with the affluence and stability preached by neoliberal economists. On the contrary, the neoimperialist phase is the setting for the rampages of hegemony and monopoly capital.

The New Monopoly of Finance Capital

In Imperialism, the Highest Stage of Capitalism, Lenin stated: “The concentration of production; the monopolies arising therefrom; the merging or coalescence of the banks with industry—such is the history of the rise of finance capital and such is the content of that concept.”11 Finance capital is a new type of capital formed by the merger of bank monopoly capital and industrial monopoly capital. The turning point in the change from general capitalist rule to that of finance capital appeared around the beginning of the twentieth century, when banks in the leading imperialist countries were transformed from ordinary intermediaries into powerful monopolists. But before the Second World War, due to recurrent wars, high information transmission costs, and technical and institutional barriers such as trade protection, the linkages between global investment, trade, finance, and the market were relatively weak. The degree of globalization of the economy remained low, hindering the outward expansion of monopoly capital. After the Second World War, economic globalization was accelerated by the new technological revolution. In the early 1970s, rising oil prices triggered a worldwide economic crisis and brought about the grotesque phenomenon, impossible for Keynesian economics to explain, in which inflation and economic stagnation coexisted. In order to find profitable investment opportunities and escape from the “stagflation” quagmire, monopoly capital transferred traditional industries overseas, thus maintaining its original competitive advantage. Meanwhile, it accelerated its decoupling from the traditional industries and sought to open up new financial territory. Capitalist globalization and financialization catalyzed and supported each other, accelerating the “virtualization” of monopoly capital and the hollowing out of the real economy. The Western economic recession of the 1970s thus acted not only as a catalyst for the internationalization of monopoly capital, but also as the starting point for the financialization of industrial capital. Since then, monopoly capital has accelerated its turn from monopoly exercised in a single country to international monopoly, from the monopoly of the industrial entity to the monopoly of the financial industry.

Within the context of the new monopoly of finance capital, the second key characteristic of neoimperialism is that financial monopoly capital plays a decisive role in global economic life, giving rise to economic financialization.

Minority of Financial Institutions Control Main Global Economic Arteries

To seek monopolistic power is the very nature of imperialism. “The big enterprises, and the banks in particular, not only completely absorb the small ones, but also ‘annex’ them, subordinate them, bring them into their ‘own’ group or ‘concern’ (to use the technical term) by acquiring ‘holdings’ in their capital, by purchasing or exchanging shares, by a system of credits, etc.,” Lenin explains. “We see the rapid expansion of a close network of channels which cover the whole country, centralising all capital and all revenues, transforming thousands and thousands of scattered economic enterprises into a single national, capitalist, and then into a world capitalist economy.”12 At the neoimperialist phase, a small number of multinational corporations, most of them banks, have spread a very extensive and detailed operational network over the world via mergers, participation, and shareholding, and thus control not only countless small and medium enterprises but also the main global economic arteries. An empirical study by three Swiss scholars, Stefania Vitali, James B. Glattfelder, and Stefano Battiston, showed that a relatively small number of multinational banks effectively dominate the whole global economy. Based on their analysis of 43,060 multinational corporations all over the world and the shareholding relationships between them, they found that the top 737 multinational corporations controlled 80 percent of total global output. After further study of the complicated network of these relationships, they came up with the even more amazing discovery that a core consisting of 147 multinational corporations controlled nearly 40 percent of the economic value. Of the 147 corporations, some three-quarters were financial intermediaries.13

The Globalization of Monopoly-Finance Capital

When imperialism evolved into neoimperialism, the financial oligarchies and their agents set the rules of trade and investment aside, and proceeded to launch currency, trade, resource, and information wars, plundering resources and wealth globally and at will. Within this system, neoliberal economists play the role of spokespeople for the financial oligarchs, advocating for financial liberalization and globalization in the interests of the monopolists and enticing developing countries to liberalize their capital account restrictions. If the countries concerned follow this advice, exercising financial supervision will become more difficult and their vulnerability to the hidden dangers of the financial system will increase. The effect will be to provide more opportunities for financial monopoly capital to plunder these countries’ wealth. In their operations on capital markets, the international financial investment giants tend to attack the fragile financial firewalls of developing countries and seize opportunities to plunder the assets these countries have accumulated over decades. This indicates that financial globalization and liberalization have certainly established a unified and open global financial system, but in the meantime have created mechanisms through which the global center appropriates the resources and surplus value of the less developed periphery. Concentrated in the hands of a minority of the international financial oligarchies and armed with actual monopoly power, finance capital has gained increasing volumes of monopoly profits through foreign investment, new business ventures, and cross-border mergers and acquisitions. As finance capital continuously levies tribute from all over the world, the rule of the financial oligarchs is consolidated.

From Production to Speculative Finance

Financial monopoly capital, which has rid itself of the constraints associated with material form, is the highest and most abstract form of capital, and is extremely flexible and speculative. In the absence of regulation, financial monopoly capital is very likely to work against the goals set by a country for its industrial development. After the Second World War, under the guidance of state interventionism, commercial and investment banks were operated separately, the securities market was strictly supervised, and the expansion of finance capital and its speculative activity were heavily restricted. In the 1970s, as the influence of Keynesianism faded and neoliberal ideas began taking over, the financial industry began a process of deregulation and the basic forces controlling the operation of financial markets ceased to be those of governments and became the leading participants in the markets themselves. In the United States, the Jimmy Carter administration in 1980 enacted the Depository Institutions Deregulation and Monetary Control Act, which abolished the deposit and loan interest rate controls, and by 1986 interest rate liberalization was complete. In 1994, the Riegle-Neal Interstate Banking and Branching Efficiency Act ended all geographical restrictions on banking operations and allowed banks to conduct business across state lines, increasing the competition between financial institutions. In 1996, the National Securities Market Improvement Act was promulgated, markedly reducing supervision over the securities industry. The Financial Services Modernization Act followed in 1999, and the enforced separation of commercial banking from investment banking and insurance, a provision that had existed for nearly seventy years, was completely abolished. Advocates of financial liberalization initially claimed that if the government relaxed its supervision over financial institutions and financial markets, the efficiency with which financial resources were allocated would be further improved and the finance industry would be better able to boost economic growth. But finance capital has many unruly tendencies, and if restraints on it are lifted, it is quite capable of behaving like a runaway horse. Excessive financialization will inevitably lead to the virtualization of economic activities and to the emergence of huge bubbles of fictitious capital.

Over the past thirty years, finance capital has expanded in a process linked to the continuous deindustrialization of the economy. Because of the lack of opportunities for productive investment, financial transactions now have less and less to do with the real economy. Capital that is otherwise redundant is directed into speculative schemes, swelling the volume of fictitious assets in the virtual economy. In line with these developments, the cash flow of large enterprises has shifted extensively from fixed capital investment to financial investment, and corporate profits now come increasingly from financial activities. Between 1982 and 1990, almost a quarter of the sums previously invested in factory plant and equipment in the private real economy were shifted to the financial, insurance, and real estate sectors.14 Since the relaxation of financial restrictions in the 1980s and ’90s, supermarket chains have offered a wider and wider variety of financial products to the public, including credit and prepaid debit cards, savings and checking accounts, insurance plans, and even home mortgages.15 The shareholder value maximization principle popularized since the 1980s has forced CEOs to prioritize short-term goals. Rather than paying off debts or improving their company’s financial structure, CEOs in many cases use profits to buy back the company’s stocks, pushing up the stock price and thus increasing their own salaries. Of the companies listed on Standard & Poor’s 500 Index between 2003 and 2012, 449 invested a total of $2,400 billion to purchase their own shares. This sum corresponded to 54 percent of their total revenues, and another 37 percent of revenues were paid as dividends.16 In 2006, the expenditure by U.S. nonfinancial companies on repurchasing their own shares was equal to 43.9 percent of non-residential investment expenditure.17

The financial sector also dominates the distribution of surplus value within the nonfinancial sector. The sums paid as dividends and bonuses in the nonfinancial corporate sector account for a greater and greater proportion of total profits. Between the 1960s and the ’90s, the dividend payout ratio (the ratio of dividends to adjusted after-tax profits) of the U.S. corporate sector underwent a significant increase. While the average in the 1960s and ’70s was 42.4 and 42.3 percent, respectively, from 1980 to 1989 it never fell below 44 percent. Although total corporate profits fell by 17 percent, total dividends increased by 13 percent and the dividend payout ratio reached 57 percent.18 In the days before the U.S. financial crisis broke out in 2008, the proportion of net bonuses to net after-tax profits amounted to about 80 percent of companies’ final capital allocations.19 Further, the boom in the virtual economy has no relation whatever to the ability of the real economy to support such growth.

Stagnation and shrinkage in the real economy coexist with excessive development of the virtual economy. The value created in the real economy depends on such purchasing power as has appeared through the expansion of asset bubbles and the rise of asset prices, the so-called wealth effect. As the gap between rich and poor continues to widen, the financial institutions are obliged, with government backing, to rely on a variety of financial innovations to support credit-fueled consumption by citizens who are not asset owners and to disperse the resulting financial risks. Meanwhile, the huge income and wealth effects generated by the appearance on the scene of derivative financial products and the growth of asset bubbles attract more investors to the virtual economy. Driven by monopoly profits, numerous derivative financial products are created. The innovations in the area of financial products also lengthen the debt chain and serve to pass on financial risks. An example is the securitization of subprime mortgage loans; layer upon layer of these were packaged together with the seeming purpose of raising the credit rating of the products involved, but actually in order to transfer high levels of risk to others. Increasingly, the trade in financial products is separated from production; it is even possible to say that it has nothing to do with production and is solely a gambling transaction.

The Monopoly of the U.S. Dollar and Intellectual Property

Again, in Imperialism: The Highest Stage of Capitalism, Lenin stated: “Typical of the old capitalism, when free competition held undivided sway, was the export of goods. Typical of the latest stage of capitalism, when monopolies rule, is the export of capital.”20 After the Second World War, the deepening and refining of the international division of labor brought more developing countries and regions into the global economic network. Within the global production mechanism, every country and enterprise is seemingly able to exercise its own comparative advantages. Even the least developed countries can rely on cheap labor and such resource advantages as it might have to allow participation in the international division of labor and cooperation. However, the real motive of monopoly capital is to compete for favorable trading platforms and to plunder high monopoly profits. In particular, the U.S. dollar hegemony and the developed-country monopoly of intellectual property mean that international exchange is seriously unequal. Thus, the characteristics of the old imperialism, coexisting with the commodity output, define the general capital output. Meanwhile, the characteristics of neoimperialism that coexist with the commodity output and the general capital output are the output of the U.S. dollar and intellectual property.

The third characteristic of neoimperialism is defined by the hegemony of the U.S. dollar and the developed-world monopoly of intellectual property, which together generate the unequal international division of labor along with a polarized global economy and wealth distribution. In each of the four aspects that can be summed up as state-capital, capital-labor, capital-capital, and state-state, the dominant forces of giant monopoly capital and neoimperialism are further strengthened under the conditions of economic globalization and financial liberalization.

The Spatial Expansion of the Capital-Labor Relation: Global Value Chains and the Global Labor Arbitrage

Through mechanisms that include outsourcing, setting up subsidiaries, and establishing strategic alliances, multinationals integrate more and more countries and companies into the global production networks they dominate. The reason why capital accumulation can be achieved on this global scale is the existence of a large, low-cost global workforce. According to data from the International Labor Organization, the world’s total workforce grew from 1.9 to 3.1 billion between 1980 and 2007. Of these people, 73 percent were from developing countries, with China and India accounting for 40 percent.21 Multinational corporations are all organized entities, while the global workforce finds it exceedingly difficult to unite effectively and defend its rights. Because of the existence of the global reserve army of labor, capital can use the strategy of divide and conquer to discipline wage workers. Over decades, monopoly capital has shifted the production sectors of developed-world economies to the countries of the Global South, compelling workforces in different areas of the globe to compete with one another for basic living incomes. Through this process, multinationals are able to extort huge imperialist rents from the world’s workers.22 In addition, these giant corporations are well able to lobby and pressure the governments of developing countries to formulate policies that benefit the flow of capital and investment. Trying to secure GDP growth by inducing international capital to invest and set up factories, many developing country governments not only ignore the protection of social welfare and labor rights, but also guarantee various preferential measures such as tax concessions and credit support. The globalization of production has thus enabled the developed capitalist countries to exploit the less developed world in a more “civil” fashion under the slogan of fair trade. In order to launch their modernization, developing countries often have little choice but to accept the capital offered by the imperialists—along with the conditions and encumbrances that go with it.

Monopoly-Finance Capital and Multinational Corporate Dominance

The new structure of the international division of labor inherits the old unbalanced and unequal system. Although production and marketing are fragmented, the control centers of research and development, finance, and profit are still the multinational corporations. These corporate entities usually occupy the top of the vertical division of labor, owning the intellectual property rights associated with core components. The giant, globe-straddling corporations are in charge of formulating technology and product standards, as well as controlling the design, research, and development links. Meanwhile, their “partners” in developing countries are typically contracted to multinational corporations and are the recipients of such product standards. They usually engage in such labor-intensive activities as production, processing, and assembly, and are responsible for producing simple parts in mass quantities. Performing relatively unspecialized factory operations for multinationals, these enterprises earn only slender profits. The jobs in these enterprises generally feature low wages, high labor intensity, long working hours, and poor working environments. Although the value embodied in the products is primarily created by production workers in developing-world factories, most of the value additions are plundered by the multinationals via unequal exchange within the production networks. The proportion of overseas profits within the total profits of U.S. corporations increased from 5 percent in 1950 to 35 percent in 2008. The proportion of overseas-retained profits increased from 2 percent in 1950 to 113 percent in 2000. The proportion of overseas profits within the total profits of Japanese corporations increased from 23.4 percent in 1997 to 52.5 percent in 2008.23 In a slightly different accounting, the share of foreign profits of U.S. corporations as a percent of U.S. domestic corporate profits increased from 4 percent in 1950 to 29 percent in 2019.24 Multinational corporations are often able to use their monopoly of intellectual property to generate huge returns. Intellectual property includes product design, brand names, and symbols and images used in marketing. These are protected by rules and laws covering patents, copyrights, and trademarks. Figures from the UN Conference on Trade and Development show that royalties and licensing fees paid to multinational corporations increased from $31 billion in 1990 to $333 billion in 2017.25

With the advance of financial liberalization, finance capital no longer merely serves industrial capital, but has far overtaken it. The financial oligarchs and rentiers are now dominant. In the space of just twenty years from 1987, debt in the international credit market soared from just under $11 billion to $48 billion, with a rate of growth far exceeding that of the world economy as a whole.26

Neoimperialism and the Neoliberal State

Since the mid–1970s, economic stagflation has seen Keynesianism abandoned by governments, or employed much less. Neoliberal approaches such as modern monetarism, the rational expectations school, and supply-side theories are hits among economists, and dominate economic theory and policy in the neoimperialist countries. This is because these approaches accord with the expanding globalization and financialization of monopoly capital. Neoliberalism is a superstructure that has arisen on the basis of financial monopoly capital; essentially, it represents the basis for the ideology and policies required to maintain the rule of neoimperialism. In the 1980s, U.S. president Ronald Reagan and British prime minister Margaret Thatcher were the world standard-bearers of neoliberalism. Advocating the ideas of modern monetarism and the positions of the private property and supply-side schools, they implemented privatization and market-oriented reforms, relaxed government supervision, and weakened the power of labor unions to defend working-class rights. After taking office, Reagan immediately approved the establishment of a special group of CEOs, with vice president George H. W. Bush as its director, to revoke or relax regulations. The changes advocated by the group related to job safety, labor protection, and the protection of consumer interests. The Reagan administration also joined forces with big capitalists to crack down on labor unions in the public and private sectors, dismissing union leaders and organizers and leaving the working class, already in a weak position, even worse off. The so-called Washington-Wall Street Complex argued that the interests of Wall Street and those of the United States were identical; what was good for Wall Street was good for the country. The U.S. government had in practice become a tool for the financial oligarchy to pursue its economic and political interests.27 Therefore, it was not the votes of citizens, or even the democratic system of the separation of powers, but the Wall Street financial oligarchy and the military-industrial complex that ultimately controlled the government. Wall Street influenced the political process and policy formation in the United States by providing campaign contributions and manipulating the media. Held captive by monopoly interest groups, the U.S. government had little power to promote the sound development of the economy and society and to improve people’s livelihood. The list of Wall Street executives with annual salaries of tens of millions of dollars features numerous matches with the people holding top U.S. government posts. For example, the seventieth U.S. secretary of the treasury, Robert Edward Rubin, had previously spent twenty-six years working for investment bankers Goldman Sachs. The seventy-fourth secretary of the treasury, Henry Paulson, had earlier served the Goldman Sachs Group as its chairman and CEO. Many senior officials of the Donald Trump administration also had histories as executives of monopoly enterprises. The existence of this “revolving door” mechanism means that even if the government were to introduce relevant financial regulatory policies, it would be hard fundamentally to shake the interests of the financial chaebols of Wall Street.

Whenever a financial crisis occurs, the government provides emergency assistance to the monopoly oligarchs of Wall Street. U.S. scholars have found that the Federal Reserve has used secret emergency loans to meet the needs of large Wall Street interest groups, in some instances providing strong support to bankers who are board members of regional Federal Reserve banks. In 2007, the U.S. subprime mortgage crisis broke out. Bear Stearns, one of Wall Street’s top five investment banks, was acquired by JPMorgan Chase. Lehman Brothers declared bankruptcy and Merrill Lynch was acquired by Bank of America. Goldman Sachs, however, survived; the main reasons include a decision by the government to urgently grant Goldman Sachs the status of a holding company, allowing it to obtain massive life-saving funds from the Federal Reserve. In addition, the U.S. Securities and Exchange Commission banned the shorting of financial stocks.28

U.S. Dollar Hegemony, Intellectual Property Rights, and the Plundering of Global Wealth

In July 1944, on the initiative of the U.S. and British governments, representatives of forty-four countries gathered in Bretton Woods, New Hampshire, to discuss plans for the postwar monetary system. In the course of the Bretton Woods Conference, the documents Final Act of the United Nations Monetary and Financial Conference, Articles of Agreement of the International Monetary Fund, and Articles of Agreement of the International Bank for Reconstruction and Development—collectively known as the Bretton Woods Agreements—were passed. A key point of the Bretton Woods system was to construct an international monetary order centered on the U.S. dollar.29 Other currencies were pegged to the dollar, which was in turn pegged to gold. The U.S. dollar then began to play the role of world currency, replacing the British pound. The unique advantage that derives from the central place of the U.S. dollar in the international monetary system gives the U.S. a special position compared to the rest of the world’s countries. The U.S. dollar makes up 70 percent of global currency reserves, while accounting for 68 percent of international trade settlements, 80 percent of foreign exchange transactions, and 90 percent of international banking transactions. Because the U.S. dollar is the internationally recognized reserve currency and trade settlement currency, the United States is not only able to exchange it for real commodities, resources, and labor, and thus to cover its long-term trade deficit and fiscal deficit, but can also make cross-border investments and carry out cross-border mergers of overseas enterprises employing the U.S. dollars that it prints at almost no cost. The hegemony of the U.S. dollar provides an excellent illustration of the predatory nature of neoimperialism. The United States can also obtain international seigniorage by exporting U.S. dollars, and can reduce its foreign debt by depreciating the U.S. dollar or assets that are priced in U.S. dollars. The hegemony of the U.S. dollar has also caused the transfer of wealth from debtor countries to creditor countries. This means that poor countries subsidize the rich, which is completely unfair.

Since the mid–1990s, international monopolies have controlled 80 percent of the world’s patents, technology transfers, and most of the internationally recognized trademarks, something that has brought them large quantities of revenue. According to figures from Science and Engineering Indicators 2018 Digest, released by the National Science Council of America in January 2018, the total global cross-border licensing income from intellectual property in 2016 was $272 billion. The United States was the largest exporter of intellectual property, with income from this source comprising as much as 45 percent of the global total. The corresponding figure for the European Union was 24 percent, for Japan 14 percent, and for China less than 5 percent. In sharp contrast, the royalties on intellectual property paid by China to other countries increased from $1.9 billion in 2001 to $28.6 billion in 2017, and China’s deficit on cross-border intellectual property transactions reached more than $20 billion. During this period, the U.S. annual net income from licensing intellectual property to other countries was at least $80 billion.30

The New Monopoly of the International Oligarchic Alliance

Lenin stated in Imperialism, the Highest Stage of Capitalism that “the epoch of the latest stage of capitalism shows us that certain relations between capitalist associations grow up, based on the economic division of the world; while parallel to and in connection with it, certain relations grow up between political alliances, between states, on the basis of the territorial division of the world, of the struggle for colonies, of the “struggle for spheres of influence.”31 Finance capital and its foreign policy, which is the struggle of the great powers for the economic and political division of the world, give rise to a number of transitional forms of state dependence. Two main groups of countries—those owning colonies and colonies themselves—are typical of this epoch, as are the diverse forms of dependent countries that, politically, are formally independent, but in fact are enmeshed in the net of financial and diplomatic dependence.32 Nowadays, neoimperialism has formed new alliances and hegemonic relations in the economic, political, cultural, and military fields.

Within the context of the new monopoly of the international oligarchs, the fourth characteristic of neoimperialism is the formation of an international monopoly capitalist alliance between one hegemon and several other great powers. An economic foundation consisting of money politics, vulgar culture, and military threats has been formed for them to exploit and oppress via monopoly both at home and abroad.

The G7 as the Mainstay of the Imperial Capitalist Core

Neoimperialism’s current international monopoly economic alliance and the framework of global economic governance are both dominated by the United States. The G6 group was formed in 1975 by six leading industrial countries, the United States, United Kingdom, Germany, France, Japan, and Italy, and became G7 when Canada joined the following year. G7 and its monopoly organizations are the coordination platforms, while the International Monetary Fund (IMF), the World Bank, and the World Trade Organization are the functional bodies. The global order of economic governance that was set up under the Bretton Woods system after the Second World War is essentially a high-level international capitalist monopoly alliance manipulated by the United States to serve its strategic economic and political interests. In the early 1970s, the U.S. dollar was decoupled from gold and the Bretton Woods currency system collapsed. One after another, summits of the G7 countries then shouldered responsibility for strengthening the Western consensus, contending against the socialist countries of the East, and boycotting the demands made by the less developed countries of the South for reforms to the international economic and political order.33 Since neoliberalism became the set of concepts dominating global economic governance, these multilateral institutions and platforms have become the driving force for the expansion of neoliberalism throughout the world. In line with the wishes of the international financial monopoly oligarchy and its allies, these bodies spare no effort to induce the developing countries to implement financial liberalization, the privatization of production factors, marketization without prior supervision, and free exchange in capital projects so as to facilitate inward and outward flows of international “hot money.” These institutions are constantly ready to control and plunder the economies of developing countries, extracting huge profits by encouraging speculation and creating financial bubbles. As Zbigniew Brzezinski stated in The Grand Chessboard, “the International Monetary Fund and the World Bank can be said to represent ‘global’ interests, and their constituency may be construed as the world. In reality, however, they are heavily American dominated.”34

Since the 1980s, the IMF and World Bank have lured developing countries to implement neoliberal reforms. When these countries have fallen into crisis because of privatization and financial liberalization, the IMF and other institutions have forced them to accept the Washington Consensus by adding various unreasonable conditions to loans provided earlier. The effect is to further intensify the impacts of neoliberal reform. Between 1978 and 1992, more than seventy developing countries or former socialist countries implemented a total of 566 structural adjustment programs imposed by the IMF and the World Bank.35 In the early 1980s, for example, the IMF used the Latin American debt crisis to force Latin American countries to accept neoliberal “reforms.” In order to curb inflation, the U.S. Federal Reserve in 1979 pushed short-term interest rates up from 10 percent to 15 percent, and finally to more than 20 percent. Because the existing debt of the developing countries was linked to U.S. interest rates, every 1 percent rise in U.S. interest rates would result in developing-world debtor countries paying an additional $40 to 50 billion per year in interest. In the second half of 1981, Latin America was borrowing at the rate of $1 billion a week, mostly in order to pay the interest on existing debt. During 1983, interest payments consumed almost half of Latin American export earnings.36 Under pressure to repay their loans, Latin American countries were forced to accept neoliberal reform plans initiated by the IMF. The main content of these plans consisted of privatizing state-owned enterprises; liberalizing trade finance; implementing economic austerity policies, with the effect of reducing living standards; cutting the taxes on monopoly enterprises; and reducing government spending on social infrastructure. During the 1997 Asian financial crisis, the IMF attached numerous conditions to assistance provided to South Korea, including that the allowance for foreign shareholdings be relaxed from 23 percent to 50 percent, and then to 55 percent by December 1998. Moreover, South Korea was required to allow foreign banks to set up branches freely.37

NATO and the International Monopoly-Capitalist Military and Political Alliance

Established in the early days of the Cold War, the North Atlantic Treaty Organization (NATO) is an international military alliance for the defense of monopoly capitalism. It is led by the United States and involves other imperialist countries. During the Cold War, NATO was the main tool used by the United States to actively contain and counter the Soviet Union and the countries of Eastern Europe, as well as to influence and control the Western European countries. At the end of the Cold War, the Warsaw Treaty Organization was dissolved and NATO became the military organization through which the United States sought to achieve its strategic goals on a global level. A capitalist military oligopoly, involving one hegemon and several other great powers, had come into being. Former U.S. secretary of state Warren Christopher stated: “Only the United States can act as a leader.… For the United States to exercise leadership requires us to own a credible force threat as a backup for diplomacy.”38 The National Security Strategy for the New Century, published in the United States in December 1998, claimed unambiguously that the goal of the United States was to “lead the entire world” and that no challenge to its leadership, from any country or group of countries, would ever be allowed to come into being.39 On December 4, 2018, U.S. secretary of state Mike Pompeo declared in a speech to the Marshall Fund in Brussels: “The United States has not given up its global leadership. It reshaped the order after WWII based on sovereignty but not the multilateral system.… Under President Trump’s leadership, we will not give up international leadership or our allies in the international system.… Trump is recovering America’s traditional status as the world center and leadership.… The United States wants to lead the world, now and always.”40

To achieve leadership and domination over the world, the United States has made every effort to promote NATO’s eastward expansion, and has expanded its own sphere of influence to control Central and Eastern Europe and to compress Russia’s strategic space. Under the control of the United States, NATO has become an ideal military tool for U.S. global interests. In March 1999, a multinational NATO force led by the United States launched a large-scale air attack on Yugoslavia. It was the first time that NATO had launched a military strike against a sovereign country during the fifty years since its foundation. In April 1999, NATO held a summit meeting in Washington, formally adopting a strategic concept that can be summarized under two points. First, NATO was permitted to conduct collective military intervention outside its defense area in response to “crimes and conflicts involving common interests.” This effectively changed NATO from a “collective defense” military alliance into an offensive political and military organization with the so-called purpose of defending common interests and shared values. Second, NATO’s military actions did not require authorization from the UN Security Council.41

In addition to NATO, U.S. military alliances formed on the basis of bilateral treaties include pacts with Japan, South Korea, Australia, and the Philippines. There are U.S. military bases on the territory of all its military allies, and these comprise a major part of the neoimperialist military alliance. The United States and its allies make military threats and carry out provocations in many regions of the world, resulting in many “hot wars,” “warm wars,” “cool wars,” and “new cold wars,” intensifying the new arms race. The acts of “state terrorism” carried out by neoimperialism, and the double standard it applies to counter-terrorism, have caused other forms of terrorism to multiply.

Cultural Hegemony Dominated by Western “Universal Values”

In addition to its economic might and the hegemony exercised through its military alliances, neoimperialism is also characterized by cultural hegemony dominated by Western “universal values.” U.S. political scientist Joseph Nye emphasized that soft power was the ability to accomplish one’s desires through attraction rather than force or purchase. The soft power of a country is constituted mainly of three resources, namely, culture (which functions where it is attractive to the local population), political values (which function when they can actually be practiced both at home and abroad), and foreign policy (which functions when it is regarded as conforming to legality and as enhancing moral prestige).42 The Western developed countries, especially the United States, utilize their capital, technology, and market advantages to infiltrate less powerful countries and regions with their culture, and propose a series of “new interventionist” cultural theories designed to impose U.S. values. The United States subjugates the cultural markets and information spaces of other countries, especially developing countries, by exporting to them U.S. values and lifestyles, with the goal of making its culture the “mainstream culture” of the world.43

Cultural hegemony or cultural imperialism exports the “universal values” of the West and implements both peaceful evolution and “color revolutions” by controlling the field of international public opinion. The objective is to achieve Richard Nixon’s strategic goal of “victory without war.” The evolution of the Soviet Union and of the socialist countries in Eastern Europe is a typical case. As is generally known, the penetration of values is usually slow, long-term, and subtle, and its communication channels are often hidden in academic exchanges, literary works, films, and television shows. For example, Hollywood is “the megaphone of American hegemonic policy.… Hollywood films are showing off the advantages of the United States to the rest of the world and trying to achieve their cultural conquest by this means.”44 Former senior CIA official Allen Dulles argued: “If we teach young people in the Soviet Union to sing our songs and dance with them, sooner or later we will teach them to think in the way we need them to.”45 Foundations and think tanks are also important driving forces for the spread of neoliberalism. For example, the U.S.-based Ford Foundation, Rockefeller Foundation, Mont Pelerin Society, and Center for International Private Enterprise participate in the promotion of neoliberal values by funding seminars and academic organizations.

Lenin once stated: “Instead of an undivided monopoly of Great Britain, we see a few imperialist powers contending for the right to share in this monopoly, and this struggle is characteristic of the whole period of the early twentieth century.”46 Since the end of the Cold War, global capitalism has been characterized by the undivided monopoly of the United States. Other powers have no intention, and lack the strength, to compete. Some individual countries such as Japan have tried to challenge U.S. “monopoly rights” economically and technologically, but have ultimately failed. So it is with the European Union, which emerged later but eventually failed to shake U.S. hegemony. In the military field, the Gulf War and the subsequent wars in Kosovo, Afghanistan, Iraq, Libya, and Syria have further fueled U.S. unilateralism and hegemonic arrogance. With the help of its economic, military, and political alliances, and employing cultural soft power, the United States promotes its “universal values,” incites street protests and color revolutions in other countries, and forces developing countries to deregulate their financial systems by targeting them for the creation of debt and financial crises. When the global governance system dominated by the United States encounters challenges, it launches trade wars, science and technology wars, financial wars, and economic sanctions, and even goes so far as to threaten or actually launch military strikes. The U.S. dollar, military, and culture are the three pillars of U.S. imperialist hegemony, supporting “hard power,” “soft power,” “strong power” (economic sanctions), and “smart power.”47

In short, the international monopoly capitalist alliance made up of one hegemon and several great powers provides the economic foundation for the money politics, vulgar culture, and military threats that exploit and oppress through the exercise of monopoly both at home and abroad, and that amplify the power of the United States as the neoimperialist hegemon.

The Economic Essence, the General Trend, and the Four Forms of Ideological Fraud

Lenin characterized imperialism as a transitional and moribund capitalism. At the neoimperialist stage known as economic globalization, the basic contradiction of the contemporary capitalist economy is manifested in the contradiction between, on the one hand, the constant socialization and globalization of the economy with its production factors under private, collective, or state ownership, and, on the other, the disorder or anarchy of production within national economies and in the world economy.48 Neoimperialism rules out the adjustments that states and international communities need to make, instead promoting self-regulation by private monopoly capital and defending its interests. The effect, very often, is to intensify various contradictions within countries or on the world level. Economic, financial, fiscal, social, and ecological crises have all become epidemic diseases. Various of these crises are interwoven with social contradictions, or with the contradictions of capital accumulation. All of them together lend a new cast to the monopolistic and predatory, hegemonic and fraudulent, parasitic and decaying, transitional and moribund capitalism of the present epoch.

If we define neoimperialism with regard to its economic nature and general tendencies, we may conclude that its three characteristics are demonstrated in the respect that the globalized contradictions and various crises of the system frequently become intensified.

The economic essence of neoimperialism is that it is a monopolistic financial capitalism established on the basis of giant multinationals. The production monopoly and financial monopoly of the multinational corporations have their origins in the higher stage of production and capital concentration, giving rise to a phase in which monopoly is deeper and broader to such an extent that “nearly every industry is concentrated into fewer and fewer hands.”49 The automobile industry may be taken as an example. The production of the top five multinational automobile corporations accounts for almost half of global automobile production, and that of the top ten accounts for 70 percent.50 International monopolistic financial capital not only controls the world’s major industries, but also monopolizes almost all sources of raw materials, scientific and technological talent, and skilled physical labor in all fields, controlling the transportation hubs and various means of production. It dominates and controls capital, and controls various other global functions via banks and a variety of financial derivatives and shareholding systems.51 If we consider the total market value and total income and assets of corporations, the scale of the leading concentrations of economic power around the world is increasing, especially in the case of the top one hundred corporations. In 2015, the market value of the world’s top hundred companies was more than seven thousand times that of the bottom two thousand companies in a database of the world’s largest nonfinancial firms, compared to only thirty-one times in 1995.52 According to the data on the Fortune Global 500 for the year 2017, the revenues of 380 of the world’s top 500 companies (excluding Chinese firms) reached $22.83 trillion, equivalent to 29.3 percent of gross world product. Total profits reached $1.51 trillion, breaking the record, and the rate of profit increased by 18.85 percent year on year.53 The rise in the indicators of both profit share and profit rate illustrates the predatory nature of neoimperialism.

Given that economic globalization, financialization, and neoliberal policies are placing a triple squeeze on labor, profits are growing rapidly, while workers’ wages are increasing much more slowly.54 Between 1982 and 2006, the average annual growth of the real wages of production workers in nonfinancial corporations in the United States was just 1.1 percent, not only much lower than the 2.43 percent recorded from 1958 to 1966, but also lower than the 1.68 percent during the economic downturn from 1966 to 1982. The slowing of wage growth allowed the corporations’ profit share to rise by 4.6 percent during this period and accounted for 82 percent of the recovery in the rate of profit. The “labor squeeze” can be seen to have played a key role here.55 Moreover, since the U.S. economy began to recover in 2009 from the Great Financial Crisis, the average rate of profit, though lower than its peak in 1997, has still been significantly higher than its level during the late 1970s and early ’80s, when it was at a low point.56 The essence of neoimperialism is its need to control and plunder. Its drive to “predatory accumulation” is not only demonstrated by its exploitation of labor in the national setting, but also by its plunder of other countries. The forms this takes, and the methods employed, consist mainly of the following.

First, financial plunder. Neoimperialism extracts huge profits from its control over the prices of major international commodities. Employing financialization and other methods, it pressures the countries that produce raw materials, seeking to keep prices low. As part of its pressures and harassment, it may create financial bubbles and crises via large-scale inflows and outflows of capital, affecting the economic and political stability of the countries concerned. Or, it may seek to achieve a “victory without war” by imposing financial sanctions.57 Financial innovation and the lag in government regulation contributes to waves of nonproductive speculation. Financial oligarchs and multinational corporations at the top of the pyramid benefit from the price inflation of financial assets and are able to plunder huge quantities of social wealth.

Second is the privatization of public resources and state-owned assets. Since Thatcher-Reaganism came to dominate economic policy-making in numerous countries some forty years ago, the world has experienced a massive wave of large-scale privatization. The public assets of many less-developed countries have fallen into the hands of private monopoly capital and multinational corporate monopolies. The global level of inequality of wealth ownership has soared accordingly. The World Inequality Report 2018 reveals that, since the 1970s, private wealth in various countries has generally increased, while the ratio of private to national income in most “rich” countries has increased from 200–350 percent to 400–700 percent. In sharp contrast, public wealth has steadily declined. The net public wealth of the United States and the United Kingdom has fallen to a negative number in recent years, and that of Japan, Germany, and France is only slightly above zero. The limited value of public assets restricts the ability of governments to adjust the income gap.58

Third is the strengthening of the center-periphery pattern. The neoimperialist countries reinforce the center-periphery pattern through their dominant positions in trade, currency, finance, the military arena, and international organizations. Taking advantage of these positions, they continuously extort the resources and wealth of the peripheral countries to consolidate their monopoly or oligopoly status, and to ensure their own development and prosperity. The international transfer rate of surplus value has a positive effect on the general rate of profit in the hegemonic countries.59 It is only the neoimperialist countries that are able to use their economic, political, and military power to transform a portion of the surplus value created by underdeveloped countries into their own national wealth. Consequently, the accumulation of monopolistic capital by neoimperialism intensifies the polarization between rich and poor and damages people’s livelihoods in countries such as the United States and France (as proved by the international Occupy Wall Street movement, which involved eighty countries with its slogan of “we are the 99 percent”), while also reinforcing the accumulation of financial and environmental wealth in the countries of the “center” and of relative poverty and pollution in the countries of the “periphery.” In 2018, the combined GDP of the G7 “central” countries reached $317 trillion, accounting for 45.5 percent of gross world product.60 According to the Global Wealth Report 2013, prepared by Credit Suisse, the wealth of the 85 richest people in the world that year was equivalent to the total assets of the world’s poorest 3.5 billion people—that is, of half the global population.61

Economic Hegemony and Fraud

Imperialism as represented by the United States employs hegemony, bullying, and unilateralism, and adheres to double standards in diplomatic policy. At one point, Pompeo publicly admitted and expressed pride in his country’s fraudulent actions. “I was the CIA director,” he said. “We lied, we cheated, we stole. It was like we had entire training courses…it reminds you of the glory of the American experiment.”62 In the post-Cold War era, the United States dominates the world, free from any powerful checks and balances. It relies on its major advantages of military force, U.S. dollar hegemony, external propaganda, and science and technology to carry out bullying all over the world and to commit fraud both at home and abroad.63

In March 2018, the United States issued a document entitled Findings of the Investigation into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation Under Section 301 of the Trade Act of 1974, which accuses China of “enforcing or compelling US enterprises to transfer technology” and “illegally invading US commercial computer networks to steal intellectual property rights and sensitive business information.” The purpose of this document was to create a pretext for launching a trade war; its accusations are nothing but rumors and do not correspond to the facts. What is the source of China’s technological progress? It flows from the efforts of gifted entrepreneurs who benefit from huge government investments in basic science. As former U.S. secretary of the treasury Lawrence Summers said, “it’s coming from an educational system that’s privileging excellence, concentrating on science and technology. That’s where their leadership is coming from, not from taking a stake in some U.S. company.”64 In provoking its economic and trade conflict with China, the United States has had an obvious intention: to blackmail and suppress China on an overall basis, starting with the trade war and gradually expanding into the areas of science and technology, finance, food, resources, and so on. U.S. authorities seek to weaken China’s strengths in trade, finance, industry, and technology, trying to ensure that China will not pose a challenge to the global hegemonic position of the United States.

With its slogan of “America First,” the Trump administration promoted U.S. hegemony and imposed economic sanctions on other economies. Its economic and trade policies were aimed principally at China, but were also directed at traditional allies such as the European Union, Japan, India, and South Korea. Time after time, Washington has practiced economic extortion and containment. It will never be forgotten that as early as the mid–1980s the United States forced Japan to sign the Plaza Accord and induced it to implement a low-interest monetary policy that brought large quantities of foreign capital into Japan. The result was that a surge of short-term demand for Japanese yen caused the country’s currency to appreciate sharply against the U.S. dollar. The influx of foreign capital and the monetary policy of low interest rates brought a soaring increase in Japanese asset prices. Despite the short-term prosperity, the eventual result involved big losses for Japan. The high asset prices meant that the foreign capital was soon cashed out and withdrawn, while the Japanese economy suffered huge setbacks and endured a “lost twenty years.”

Political Hegemony and Fraud

The United States has always labeled itself a representative of countries advocating democracy, freedom, and equality. Using political and diplomatic means, it spares no effort to impose its political system on other countries, especially the developing states it identifies as “dictatorships.” Former U.S. president George W. Bush identified Iran, Iraq, and North Korea as an “axis of evil.” The United States exerts pressure on the rulers of such countries, applying double standards on questions of human rights. Using its propaganda, it demonizes these states as “undemocratic” and “autocratic,” while subsidizing nongovernmental organizations and media, as well as inciting dissidents and the opposition to mount “color revolutions” aimed at overthrowing the legitimate governments.

Acting at the behest of its military circles and monopoly energy groups, the United States has been a consistently destructive force in the Middle East and Latin America. Syria was listed by Washington among six “evil” countries, and the United States branded the Syrian government led by Bashar al-Assad as illegal. U.S. senator John McCain, however, revealed the real purpose behind these moves. “The end of the Assad regime,” McCain stated, “would sever Hezbollah’s lifeline to Iran, eliminate a long-standing threat to Israel, bolster Lebanon’s sovereignty and independence, and inflict a strategic defeat on the Iranian regime. It would be a geopolitical success of the first order.”65 In Latin America, the United States has continued its blockade against Cuba despite twenty resolutions carried overwhelmingly in the UN General Assembly. Meanwhile, the United States is conducting an economic blockade against Venezuela, resulting in the country’s economic deterioration in recent years. Former U.S. vice president Mike Pence, setting aside Venezuela’s elections and popular support for the government, with no consideration of truth—even leaving out the U.S. economic siege war on Venezuela in violation of international law—pronounced: “The Maduro government’s vicious gangs have crippled the economy.… The true cost of the crimes of the Maduro regime cannot be assessed in numbers.… Two million people have fled the result of dictatorship and political repression that’s resulted in deprivation and created conditions near starvation. The United States will continue to help the Venezuelan people restore their freedom. The people will be free.”66

The United States is now applying to China the kind of Cold War policies that used to be employed against the Soviet Union. State department director of policy planning Kiron Skinner describes the fractious relations of the United States with China as “a fight with a really different civilization and a different ideology.”67 The U.S. ruling class knows very well that the socialist system is superior to the capitalist system. Once large socialist countries such as the former Soviet Union and China become rich and strong through peaceful competition, it is inevitable that they are faced with confronting the hegemonic aims of the United States, which seeks nothing less than a unipolar world. Any attempts to promote broad reforms in the outdated imperial economic and political order are seen as a threat to U.S. hegemony. Consequently, the United States has adopted the dual strategy of “contact and containment,” engagement and aggression, which it seeks to pass off as “peaceful evolution.”

In reality, the so-called democratic politics in the United States are nothing but an illusion. First, the electoral process in the United States has increasingly amounted to a political fight between the two parties of the monopoly bourgeoisie. As the candidates of different factions of the monopoly bourgeoisie have campaigned for election, they have resorted to rumors, personal attacks, and slanders against their opponents, sidelining the real issue. Second, so-called democratic politics in the United States involve no more than a pro forma and procedural democracy. The pro forma voting system has been reduced to monetary politics, family politics, and oligarchic politics—that is, to an essentially undemocratic “despotism of monopoly capital,” or democracy for the few.

Cultural Hegemony and Fraud

Former U.S. National Security Advisor Brzezinski believes that “strengthening American culture as the ‘model’ of the world’s cultures is a strategy that must be implemented by the United States to maintain hegemony.”68 U.S. cultural hegemony is manifested principally through its control of media outlets and education, and through the propaganda function, both at home and abroad, of its literature and art, its liberal arts academia, and its values. The United States exports films, music, and literature all over the world. It controls almost 75 percent of the world’s television programs, and owns powerful film and television companies such as WarnerMedia, Universal Pictures, Paramount Pictures, and Columbia Pictures, which every year produce dozens of high-budget films involving investments of hundreds of millions of dollars. Research and reporting carried out by the U.S. mainstream media effectively dominate the shaping of world public opinion. The United States also controls the authoritative journals that mold discourse in the area of liberal arts academia, and it is the United States that determines the standards of elite education. The 2020 QS World University Rankings provide an example. The top places in these rankings are all taken by U.S. universities, and this situation provides a powerful tool for spreading deceptive Western “universal values,” Western constitutional views, and neoliberal economic concepts throughout the world. The basic views of the U.S. liberal arts establishment have taken a firm hold on the elites and masses at home and abroad.69 For example, the United States extols vulgar examples of literary and artistic kitsch as distinguished works of culture, deserving of Oscars or Nobel Prizes.

Neoclassical economics (and its counterpart in the form of neoliberalism) is responsible for a string of economic crises and for increased polarization between rich and poor. Nevertheless, it is depicted as a scientific theory that promotes development, increases popular welfare, and is worthy of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. In the United States, works that do not conform to the literary, artistic, and liberal arts canons of monopoly capital are difficult to disseminate via authoritative media, while writers and artists of real distinction are excluded, suppressed, or defrauded. The United States also holds an absolutely dominant position in the global field of cyberspace. Of the thirteen root Domain Name System servers, nine are under the direct control of U.S. corporations, universities, or government departments, while another is directly controlled by a U.S. nonprofit organization.70 Using these root Domain Name System servers, the United States can easily steal global intelligence, carry out network monitoring, and launch cyberattacks. The surveillance program PRISM, revealed by Edward Snowden, shows that the United States has complete control over the hardware and software of networks globally, and is well able to monitor the entire world and strike any other country. Lastly, the United States controls the intelligence alliance known as the Five Eyes (the United States, United Kingdom, Canada, Australia, and New Zealand), through which it conducts large-scale monitoring activities and exercises cyber hegemony domestically and internationally.71

The cultural hegemony of the United States, its control over liberal arts academia, and the fraudulent use to which these advantages are put also appear in the stances taken by the United States on questions of ideology and values. These stances are always hostile to socialism and communism, and restrict the development of socialist countries. Previously, the United States devoted most of its efforts to smearing the Soviet Union, but the main target is now China. Early in May 1990, Nixon stated frankly: “While rebuilding the relationship with China, it is very important that we continue to pressure them to abandon socialism. Because we will use this relationship to make China’s policies milder. We must stick to this key point.”72 According to survey data from the U.S. Pew Research Center—an organization surely influenced by U.S. cultural hegemony and fraud—74 percent of Chinese college or university graduates love U.S. culture.73 It is a fact that most Chinese liberal arts scholars who have studied in the United States favor its basic institutional academic theories. To varying extents, they worship, flatter, and fear the United States. This seriously affects the confidence of Chinese citizens in Marxist culture, in socialist culture, and in China’s own rich traditional culture, and needs to be eliminated as soon as possible.

Military Hegemony and Fraud

Since the disintegration of the Soviet Union, the United States has become increasingly presumptuous and has tended to resort to military force or threats in dealing with questions of international relations. In 1999, U.S.-led NATO forces bombed the Federal Republic of Yugoslavia, invoking the formula of “human rights above sovereignty.” In 2003, despite strong opposition from other countries, the United States invaded the sovereign state of Iraq. The Iraq War was not authorized by the UN Security Council, and Washington did not have any legal basis for its military intervention. The United States falsely claimed that Iraq possessed chemical weapons of mass destruction. After occupying Iraq, however, the United States found no evidence to prove that Iraq could produce chemical weapons of mass destruction. The real purpose of the United States in fabricating this lie was to control Iraq’s oil resources by military means.

The United States has consistently emphasized that its own interests should take first place and that its military advantages are not to be challenged. Although its economic strength has declined in relative terms, the United States is still expanding its arsenal and substantially increasing its defense spending. Since the Cold War, the United States has continued to create various military threats and pressures in Europe, the Middle East, and the Asia-Pacific region. To consolidate its hegemonic status, the United States has advocated and promoted NATO’s eastward expansion, with the goal of including all the Central and Eastern European countries in NATO’s sphere of influence and thus constricting Russia’s strategic space. In the Middle East, the United States aims to subvert the legitimate regimes of countries such as Syria and Iran by military means, and to support “color revolutions” in the region. In Asia in recent times, Washington has heightened tensions on the Korean peninsula and has also implemented its “Indo-Pacific strategy” aimed at containing China. The U.S. “Indian strategy” is serving to reveal the identity of its military allies and partners. Allies of the United States include Japan, South Korea, Australia, the Philippines, and Thailand, and its claimed “partners” include Singapore, Taiwan (China), New Zealand, Mongolia; a number of South Asian countries such as India, Sri Lanka, the Maldives, and Nepal; and various Southeast Asian countries such as Vietnam, Indonesia, and Malaysia. The United States further proposes to strengthen its cooperation with Brunei, Laos, and Cambodia. In addition, it will work together with traditional allies such as Britain, France, and Canada to protect so-called Indo-Pacific freedom and openness.74

With the increase in China’s national strength, various U.S. scholars have been eager to invoke the Thucydides trap, claiming that it is difficult for Sino-U.S. relations to escape from this logic. But the truth, as China’s president Xi Jinping has pointed out, is that there is currently no Thucydides trap. Such a trap might, however, be created if the United States and its allies repeatedly make strategic miscalculations involving great powers.75 It may be asserted that it is the military hegemony and fraud of the United States that provides the root cause of the widespread instability, constant local wars, rise of war threats, and refugee crises around the world.

Neoimperialism Is a Parasitic and Decaying Late Imperialism

As Lenin stated,

Imperialism is an immense accumulation of money capital in a few countries.… Hence the extraordinary growth of a class, or rather, of a stratum of rentiers, i.e., people who live by “clipping coupons,” who take no part in any enterprise whatever, whose profession is idleness. The export of capital, one of the most essential economic bases of imperialism, still more completely isolates the rentiers from production and sets the seal of parasitism on the whole country that lives by exploiting the labour of several overseas countries and colonies.76

In the era of neoimperialism, the number of rentiers is increasing sharply, and the nature of the rentier countries is becoming more pronounced. The parasitism and decay of a small number of capitalist countries is further worsened, as can be seen specifically in the following aspects.

First, the United States employs its military, intellectual property, political, and cultural hegemony, as well as the U.S. dollar, to plunder the wealth of the world, especially that of developing countries. The United States is the world’s largest parasitic and decaying country. As evidence of this, we may take the trade between China and the United States. China sells to the United States goods produced by cheap labor, land, and environmental resources. The United States does not need to produce anything in order to buy these goods; it can simply print banknotes. With the money earned, China can then buy only virtual assets such as U.S. treasury bonds, and provide finance for U.S. consumer lending and outward expansion. The United States exports to China securities to which value cannot be added, while China exports to the United States mainly physical goods and labor services. The National Health Report released by the National Health Research Group of the Chinese Academy of Sciences shows that the United States is the country with the most hegemonic dividends in the world, due to the position of its currency, while China is the country with the largest loss of hegemonic dividends. For the year 2011, U.S. hegemonic dividends totaled $7396.09 billion, corresponding to 52.38 percent of the country’s GDP, and the average hegemonic dividends obtained per day came to $20.263 billion. Meanwhile, the sum lost by China totaled $3663.4 billion. In terms of labor time, about 60 percent of the working hours of the Chinese workforce were effectively given without recompense to serve international monopoly capital.77

Second, military spending has increased, which in turn increases the burden on working-class people. Neoimperialism leads and promotes military-related scientific and technological research, the development of advanced weapons, and the expansion of military production. As the People’s Daily observed in 2016, “the military-industrial complex supported by monopoly capital and the cultural hegemony formed on the basis of colonialism have prompted the western countries to intervene in other countries’ affairs at their will.”78 Neoimperialism has thus become the initiator of regional turmoil and instability, and the engine of war. Over the past thirty years, the United States has spent $14.2 trillion on waging thirteen wars.79 Meanwhile, lack of money hinders improvements to the living conditions of the U.S. people in areas such as medical insurance. Exorbitant military spending has become a heavy burden on the country and its people, while the parasitic monopolies in the arms industry have reaped immense profits. According to statistics of the British Institute for International Strategic Studies, official U.S. military expenditures in 2018 came to $643 billion, and in 2019 will reach $750 billion, more than the sum of the military spending of the world’s eight next largest military powers. Since the end of the first Cold War, the United States has launched or participated in six major conflicts: The Gulf War (1991), Kosovo War (1999), Afghanistan War (2001), Iraq War (2003), Libya War (2011), and Syria War (2011).80 The addiction of monopoly capitalism to war is a manifestation of its parasitic and decaying nature. This barbaric characteristic of the system runs counter to civilization and threatens the shared future of the human community. It proves that neoimperialism is the primary root of war.

Third, wealth and incomes are concentrated in the hands of a specific class of owners of financial assets, as reflected in the 1 percent versus the 99 percent formulation. At the neoimperialist stage, the socialization, informatization, and internationalization of production have reached unprecedented levels, and the ability of human beings to create wealth is many times greater than in the old imperialist period. Nevertheless, the advance of productivity that is supposed to be a common gain for humankind has mainly benefited the financial oligarchy. “The bulk of the profits go to the ‘geniuses’ of financial manipulation,” one observer notes.81 In 2001, for example, the financial wealth (excluding property rights) held by the wealthiest 1 percent of the U.S. population was four times greater than that of the poorest 80 percent. The 1 percent held assets on the stock market of $1.9 trillion, roughly equivalent to the value of the stock held by the other 99 percent.82

Fourth, monopoly hinders technological innovation, slowing its advance. The greed and parasitism of financial monopoly capital make its attitude to technological innovation ambivalent. Monopoly capital relies on technological innovation to maintain its monopoly status, but the high profits that result from this status mean that monopoly capital shows a certain inertia in promoting innovation. Even if many advanced functions of mobile phones are successfully developed in the same year, the monopoly producers of mobile phones will divide up these functions to be introduced and promoted over several years. The purpose is to ensure that consumers will continuously purchase mobile phones with new functions, allowing the corporations to obtain high monopoly profits every year.

Fifth, the tendency for monopoly capital and its agents to cause decay in the mass movement is becoming more serious. Lenin observed that “in Great Britain the tendency of imperialism to split the workers, to strengthen opportunism among them and to cause temporary decay in the working-class movement, revealed itself much earlier than the end of the nineteenth and the beginning of the twentieth centuries.”83 Neoimperialism divides the working class, striking at and weakening the labor unions using the excuse provided by the collapse of the Soviet Union and the tremendous changes in Eastern Europe. It also uses its monopoly profits to buy the support of individuals, and fosters opportunist and neoliberal forces within the workers’ movement and various other mass movements. The results of such ploys include the downturn in size and activity of labor unions and other progressive movements, the low ebb of the world socialist movement, and a more obvious and serious tendency for workers to worship the forces of neoimperialism or to be intimidated by them.

Neoimperialism Is a Transitional and Moribund Late Capitalism

Lenin’s Imperialism, the Highest Stage of Capitalism has revealed the transitional and moribund nature of monopoly capitalism for more than a century. However, except in a very small number of countries where socialism is being constructed, most capitalist societies have not perished. They have in fact achieved varying levels of development, and will continue to develop. This raises a very important question: How do we judge the transitional nature of contemporary capitalism, or its tendency to decline and perish? If we use the historical materialist method, the transitional nature of neoimperialism can be characterized on the basis of two points. First, like everything in the world, the neoimperialist system is constantly changing. It is a transient phenomenon in human history, and is not eternal. Second, there are reasons to believe that neoimperialism can eventually transition into socialism through various forms of revolutionary struggle.

In the era of neoimperialism, the developed capitalist countries have undergone many important technological and institutional reforms, which have provided the basis for a certain further development of capitalism and have delayed its demise. High and low growth rates continue to succeed each other, and the period of decay mentioned by Lenin has been greatly extended. This is because the capitalist countries have made many adjustments to their production relations and superstructure, including a degree of macroeconomic regulation, improvements to income distribution and social security, and so forth. In particular, there is no doubt that for the developed capitalist countries the advantages of economic globalization outweigh its disadvantages. Within the process of economic globalization, the powerful developed capitalist countries occupy an absolutely dominant position, through which they set out to maximize the benefits they receive. Their general drive to extend globalization in order to expand their markets does not, however, exclude the possibility of particular countries temporarily reversing the process in response to domestic crises, or as part of efforts to damage commercial competitors. “In the past two years,” a 2019 study notes, “the Trump administration has deepened its reverse globalization trend in the light of the domestic crisis. It adheres to the principle of ‘America first,’ and provokes international economic and trade disputes, trying to get rid of and pass on the domestic crisis.”84 The purpose of the United States in adopting a range of protectionist anti-globalization measures is to alleviate the domestic difficulties and crises it encounters within economic globalization, so as to advance its hegemonic interests.

Meanwhile, there is no essential conflict between the fact that neoimperialism and capitalism can look forward to existing and developing for some time to come, and the fact that a transition to a higher social formation is practically inevitable, provided that these societies do not degenerate into barbarism. The classic Marxist writers avoided setting out a specific timetable for the demise of capitalism and imperialism. Lenin’s scientific judgment is that “imperialism is a decaying but not completely decaying capitalism, a moribund but not dead capitalism.”85 He foresaw that moribund capitalism was very likely to drag out its existence for a prolonged period. Nor, on the basis of a comprehensive analysis, could it be denied that capitalism would see some kind of development even during its moribund stage. Discussing the decay of imperialism, Lenin stated: “It would be a mistake to believe that this tendency to decay precludes the rapid growth of capitalism. It does not.… On the whole, capitalism is growing far more rapidly than before; but this growth is not only becoming more and more uneven in general, its unevenness also manifests itself, in particular, in the decay of the countries which are richest in capital (England).”86

John Bellamy Foster also stressed that, “to say that capitalism is a failed system is not, of course, to suggest that its breakdown and disintegration is imminent. It does, however, mean that it has passed from being a historically necessary and creative system at its inception to being a historically unnecessary and destructive one in the present century.”87

The basic contradictions of capitalism still exist and continue to develop. Likewise, the law of capitalist accumulation still exists and continues to develop. At the point when monopoly capitalism was coming into existence in the late nineteenth and early twentieth centuries, the law of uneven economic and political development of imperialism made it possible for the revolution against capitalism to be victorious initially in one or several countries, before eventually spreading globally.

Decades after The Communist Manifesto proclaimed that capitalism would inevitably expire and Capital declared that the death knell of capitalist private ownership was about to ring, the October Revolution brought the downfall of the Tsarist Russian Empire. Then, the proletarian party led by Mao Zedong in China ended the semicolonial and semifeudal society ruled by the Kuomintang (Mao stated that China represented a feudal and comprador monopoly capitalism after the Second World War). The Soviet Communist Party led by Mikhail Gorbachev and Boris Yeltsin consciously betrayed Marxism-Leninism, resulting in the Soviet Union and the Eastern European socialist countries, with the exception of Belarus, regressing to capitalism. This demonstrates the twists, turns, and general difficulties experienced by the development of socialism and its economic system. But it cannot change the nature and general trend of the historical process.

China’s position on the main international fault lines is clear. In October 1984, Deng Xiaoping stated: “There are two major problems in the world that are very prominent. One is the issue of peace and the other is the North-South issue. There are many other issues, which are not of the same underlying importance or global and strategic significance as these two.” In March 1990, he reiterated: “As for the two major issues of peace and development, the peace issue has not been resolved, and the development issue has become more serious.”88 Deng emphasized that “peace and development” were the two major questions to be resolved.89

Based on the analysis of the character of neoimperialism, it can thus be concluded that neoimperialism represents a new phase of international monopoly into which capitalism develops after passing through the stages of free competitive capitalism, general private monopoly, and state monopoly. In addition, neoimperialism represents a new expansion of international monopoly capitalism, as well as a new system through which a minority of developed countries dominate the world and implement a new policy of economic, political, cultural, and military hegemony. If we examine the current situation on the basis of the international forces of justice and the development of the twists and turns of the international class struggle, the twenty-first century is a new era in which the world working class and the masses can carry out great revolutions and safeguard world peace; in which the socialist countries can carry out great feats of construction and promote ecological civilization; and in which progressive nations can work together to build a community with a shared future for humankind, a world in which neoimperialism and international capitalism gradually make way for global socialism.

Notes

1. ↩ I. Lenin, Selected Works: One Volume Edition (New York: International Publishers, 1971), 232–33.

2. ↩ I. Lenin, Collected Works, vol. 23 (Moscow: Progress Publishers, 1964), 105.

3. ↩ John Bellamy Foster, “Late Imperialism,” Monthly Review 71, no. 3 (July–August 2019): 1–19.

4. ↩ United Nations Conference on Trade and Development, World Investment Report 2013 (Geneva: United Nations, 2013).

5. ↩ United Nations Conference on Trade and Development, World Investment Report 2018 (Geneva: United Nations, 2018).

6. ↩ Richard Dobbs et al., Playing to Win: The New Global Competition for Corporate Profits (New York: McKinsey & Company, 2015).

7. ↩ Karl Marx, Wage-Labour and Capital, in Wage-Labour and Capital/Value, Price and Profit (New York: International Publishers, 1935), 41.

8. ↩ ETC Group, Breaking Bad: Big Ag Mega-Mergers in Play. Dow-DuPont in the Pocket? Next: Demonsanto? (Val-David, Quebec: ETC Group, 2015).

9. ↩ Wang Shaoguang, Wang Hongchuan, and Wei Xing, “Soybean Story: How Capital Threatens Human Security” [in Chinese], Open Times 3 (2013).

10. ↩ Karl Marx and Frederick Engels, The Communist Manifesto (New York: Monthly Review Press, 1964), 7-8.

11. ↩ Lenin, Selected Works, 201.

12. ↩ Lenin, Selected Works, 190.

13. ↩ Stefania Vitali, James B. Glattfelder, and Stefano Battiston, “The Network of Global Corporate Control,” PLoS ONE 6, no. 10 (2011): e25995.

14. ↩ Robert Brenner, The Economics of Global Turbulence (London: Verso, 2006).

15. ↩ Ryan Isakson, “Food and Finance: The Financial Transformation of Agro-Food Supply Chains,” Journal of Peasant Studies 41, no. 5 (2014): 749–75.

16. ↩ William Lazonick, “Profits Without Prosperity,” Harvard Business Review (September 2014).

17. ↩ Thomas I. Palley, “Financialization: What It Is and Why It Matters” (Levy Economics Institute, Working Paper No. 525, December 2007), 19.

18. ↩ Huang, Yiyi, “The Origin and Development of the Maximization of the Shareholder Value” [in Chinese], New Finance Economics 7 (2004).

19. ↩ Erdogan Bakir and Al Campbell, “Neoliberalism, the Rate of Profit and the Rate of Accumulation,” Science & Society 74, no. 3 (2010): 323–42.

20. ↩ Lenin, Selected Works, 212.

21. ↩ John Bellamy Foster, Robert W. McChesney, and R. Jamil Jonna, “The Global Reserve Army of Labor and the New Imperialism,” Monthly Review 63, no. 6 (November 2011): 3.

22. ↩ Imperialist rent is the result of the differential in the prices of labor power of equal productivity. Samir Amin, “The Surplus in Monopoly Capitalism and the Imperialist Rent,” Monthly Review 64, no. 3 (July–August 2012): 83.

23. ↩ Cui Xuedong, “Is the Contemporary Capitalist Crisis a Minsky-Type Crisis or a Marxist Crisis?” [in Chinese], Studies on Marxism 9 (2018).

24. ↩ John Bellamy Foster, R. Jamil Jonna, and Brett Clark, “The Contagion of Capital,” Monthly Review 72, no. 8 (January 2021): 9.

25. ↩ United Nations Conference on Trade and Development, World Investment Report 2018.

26. ↩ Cheng Enfu and Hou Weimin, “The Root of the Western Financial Crisis Lies in the Intensification of the Basic Contradiction of Capitalism” [in Chinese], Hongqi Wengao 7 (2018).

27. ↩ Lu Baolin, “Criticism and Reflection of the Supplyism of the ‘Reagan Revolution’ and ‘Thatcher’s New Deal’: In the Perspective of the Relations between Labor and Capital of Marxist Economics” [in Chinese], Contemporary Economic Research 6 (2016).

28. ↩ “How Powerful Is the ‘Goldman Sachs Gang’ in Influencing U.S. Politics?” [in Chinese], Global Times, January 18, 2017.

29. ↩ Chen Jianqi, “On the Issue of the Contemporary Counter-globalization and Its Response” [in Chinese], Science of Leadership Forum 10 (2017); He Bingmeng, Liu Rongcang, and Liu Shucheng, Asian Financial Crisis: Analysis and Countermeasures [in Chinese] (Beijing: Social Sciences Academic Press, 2007), 66.

30. ↩ Yang Yunxia, “The New Demonstrations of Capitalist Intellectual Property Monopoly and its Essence” [in Chinese], Studies on Marxism 3 (2019).

31. ↩ Lenin, Selected Works, 223.

32. ↩ Lenin, Selected Works, 230.

33. ↩ Lv Youzhi and Zha Junhong, “The Evolution and Influence of the G7 Group after the Cold War” [in Chinese], Chinese Journal of European Studies 6 (2002).

34. ↩ Zbigniew Brzezinski, The Grand Chessboard: American Primacy and Its Geostrategic Imperatives (New York: Basic Books, 1998).

35. ↩ Li Qiqing, “Neoliberalism Against Globalization” [in Chinese], Marxism & Reality 5 (2003).

36. ↩ Jeffry A. Frieden, Global Capitalism: Its Fall and Rise in the Twentieth Century (New York: W. W. Norton, 2007).

37. ↩ He, Liu, and Liu, Asian Financial Crisis, 84, 91.

38. ↩ Liu Zhenxia, “NATO’s New Strategy is the Embodiment of American Hegemony,” Social Sciences Journal of Universities in Shanxi 3 (1999).

39. ↩ Liu, “NATO’s New Strategy is the Embodiment of American Hegemony.”

40. ↩ “Pompeo Threatened That the United States Is Establishing a New Global Order Against China and Russia,” Guancha, December 5, 2018.

41. ↩ Liu, “NATO’s New Strategy is the Embodiment of American Hegemony.”

42. ↩ Wang Yan, “Review of Research on the Index System of Cultural Soft Power” [in Chinese], Research on Marxist Culture 1 (2019).

43. ↩ Hao Shucui, “Making the Socialist Culture with Chinese Characteristics Blossom in the Contemporary World Cultural Garden: An Interview with Professor Wang Weiguang, Member of the Standing Committee of CPPCC, Director of the Committee on Nationalities and Religion” [in Chinese], Research on Marxist Culture 1 (2018).

44. ↩ “Iranian Officials Slammed Hollywood Movies and Called them ‘Airfone,’” Huanqiu, February 3, 2012.

45. ↩ Xiao Li, “Talks of the American Politicians and Strategists on the Export of Ideology and Values” [in Chinese], World Socialism Studies 2 (2016).

46. ↩ Lenin, Selected Works, 248.

47. ↩ Cheng Enfu and Li Linan, “Marxism and Its Localized Theories in China Are the Soul and Core of Soft Power” [in Chinese], Research on Marxist Culture 1 (2019).

48. ↩ Cheng Enfu, “The New Era Will Accelerate the Process to Enrich People and Strengthen the Country,” Journal of the Central Institute of Socialism 1 (2018).

49. ↩ John Bellamy Foster, Robert W. McChesney, and R. Jamil Jonna, “Monopoly and Competition in Twenty-First Century Capitalism,” Monthly Review 62, no. 11 (2011): 1.

50. ↩ Foster, McChesney, and Jonna, “Monopoly and Competition in Twenty-First Century Capitalism,” 11.

51. ↩ Li Shenming, “Finance, Technology, Culture, and Military Hegemony Are New Features of Today’s Capital Empire” [in Chinese], Hongqi Wengao 20 (2012).

52. ↩ United Nations Conference on Trade and Development, Trade and Development Report 2017 (Geneva: United Nations, 2017).

53. ↩ “Global 500, 2018,” Fortune, accessed March 23, 2021.

54. ↩ Li Chong’s research also shows that the rate of surplus value increased. According to his calculations, from 1982 to 2006 the variable capital of U.S. corporations increased from $1,505.616 billion to $6,047.461 billion, a rise of 301.66 percent. Meanwhile, surplus value increased from $674.706 billion to $3,615.262 billion, a rise of 435.83 percent. Li Chong, “Marx’s Law of the Falling Rate of Profit: Analysis and Verification” [in Chinese], Contemporary Economic Research 8 (2018).

55. ↩ Lu Baolin, “Labor Squeeze and Profit Rate Recovery: A Discussion of the Neoliberal Accumulation System of Globalization and Financialization” [in Chinese], Teaching and Research 2 (2018).

56. ↩ Guglielmo Carchedi and Michael Roberts, “The Long Roots of the Present Crisis: Keynesians, Austerians, and Marx’s Law,” World Review of Political Economy 4, no. 1 (2013): 86–115.

57. ↩ Xie Chang’an, “Research on the Evolution of International Competition Patterns in the Age of Financial Capital” [in Chinese], World Socialism Study 1 (2019).

58. ↩ Facundo Alvaredo et al., World Inequality Report 2018 (Berkeley: World Inequality Lab, 2017), 15.

59. ↩ Wang Zhiqiang, “International Transfer of Surplus Value and the Change of the General Profit Rate: Based on the Empirical Evidence of 41 Countries” [in Chinese], Journal of World Economy 11 (2018).

60. ↩ “GDP Ranking,” World Bank, accessed March 23, 2021.

61. ↩ Credit Suisse, Global Wealth Report 2013 (Zurich: Credit Suisse, 2013).

62. ↩ Tom O’Connor, “China Responds to Iran Capturing ‘U.S. Spies’: Remember When Mike Pompeo Said CIA Lies, Cheats and Steals?,” Newsweek, July 23, 2019.

63. ↩ To cheat is to deceive people by using false words and deeds to conceal the truth. Fraud, which is even worse, involves deceptive acts committed by deceitful means. It refers to behavior intended to create confusion and misunderstanding.

64. ↩ Matthew J. Belvedere, “Larry Summers Praises China’s State Investment in Tech, Saying It Doesn’t Need to Steal from US,” CNBC, June 27, 2018.

65. ↩ Zhu Changsheng, “The Real Purpose of the West Collectively Shaming Russia Finally Surfaces” [in Chinese], Kunlunce, April 12, 2018.

66. ↩ Mike Pence, “Remarks by Vice President Pence to Migrant Community at the Santa Catarina Shelter,” U.S. Embassy & Consulates in Brazil, June 27, 2018.

67. ↩ “Stupid to Regard One Civilization as Exceptional,” China Daily, May 22, 2019.

68. ↩ Zhang Yang and Yuan Yuan, “To What Extent Does American Culture Affect China?” [in Chinese], People’s Tribune 7 (2017): 131–33.

69. ↩ Zhang and Yuan, “To What Extent Does American Culture Affect China?”

70. ↩ Shen Yi, “The Debate on Principles of Global Cyberspace Governance and China’s Strategic Choice” [in Chinese], Foreign Affairs Review 2 (2015): 65–79.

71. ↩ Yang Minqing, “Decoding US Cyber Hegemony: the ‘Victim of Cyber War’ Owns 100,000 Network Soldiers” [in Chinese], Global View, 2015.

72. ↩ Liu Liandi, “Discussion by American Politicians and Newspapers of the Peaceful Evolution of China” [in Chinese], International Data Information 8 (1991).

73. ↩ Zhang and Yuan, “To What Extent Does American Culture Affect China?”

74. ↩ Ma Xiaowen, “The United States Is Unleashing an Indo-Pacific Strategy to Shape a New Orient” [in Chinese], China Times, June 5, 2019.

75. ↩ Xi Jinping, “President Xi’s Speech on China-U.S. Ties,” China Daily, September 22, 2015.

76. ↩ Lenin, Selected Works, 241.

77. ↩ Yang Duogui and Zhou Zhitian, National Health Report I [in Chinese] (Beijing: Science Press, 2013), 217.

78. ↩ Han Zhen “The Institutional Roots of Social Chaos in the West” [in Chinese]. People’s Daily, October 23, 2016.

79. ↩ Ma Yun, “Globalization Was Controlled by 6,500 Transnational Corporations in the Past,” Tencent Financial News, January 19, 2017.

80. ↩ Zhu Tonggen, “An Analysis of the Legitimacy of the Major Wars Launched by the United States after the Cold War: Taking the Gulf War, the Afghanistan War, and the Iraq War as Examples” [in Chinese], Global Review 5 (2018).

81. ↩ Lenin, Selected Works, 185.

82. ↩ John Bellamy Foster, “The Financialization of Capitalism,” Monthly Review 58, no. 11 (April 2007): 7–8.

83. ↩ Lenin, Selected Works, 246–47.

84. ↩ Liu Mingguo, and Yang Junjun, “Beware of the New Round and More Serious Financial Crisis: An Analysis of the Economic Situation of the US in the Post-crisis Era” [in Chinese], Economics Study of Shanghai School 1 (2019).

85. ↩ Lenin, Collected Works, vol. 23, 105.

86. ↩ Lenin, Selected Works, 260.

87. ↩ John Bellamy Foster, “Capitalism Has Failed—What Next?,” Monthly Review 70, no. 9 (February 2019): 1–24.

88. ↩ Deng Xiaoping, Collected Works of Deng Xiaoping, vol. 3 [in Chinese] (Beijing: People’s Publishing House, 1993), 96, 353.

89. ↩ Li Shenming, “An Analysis of the Age and Its Theme” [in Chinese], Hongqi

The Rise and Fall of Trump and What It Means

(PHOTO CREDIT: Gage Skidmore/Flickr)

By Youssef Shawky Magdy

After Donald Trump won 2016 elections, many theorizations emerged about the rise of the right in the capitalist West. This was exacerbated by Boris Johnson's victory in Britain, and the vision became clear that there would be a tug of war between a US-British economic and political alliance against Europe under the leadership of Germany.  In addition to the rise of the right-wing movements in many European countries as Germany itself and France (some expected Marie Le Pen would win or that Le Pen will succeed Macron).  But what does the rise of the right mean basically?

Since the end of the nineteenth century, the period of competitive capitalism ended and capitalism has been entering the framework of monopoly capitalism, which was characterized by the close union of financial and industrial capital.  Lenin wrote about that stage, stressing its close connection with imperialism, and we still live in the highest stage of capitalism with the change of imperialism from a national situation to a globalized one.  The question here is when does "fascism" — or what can be called more broadly the "savior right" — rise?

The savior far right rises as a response to a comprehensive social crisis represented by an economic decline in the rate of capitalist profit that cannot be compensated for by "more foreign imperialism"(imperialism against others),  in addition to a political crisis represented by the dissolution of the ruling-class coalition and the collapse of its hegemony.  Besides the ideological crisis represented in the collapse of the principles and myths supporting the status quo. 

This is accompanied by an increase in the pace of progressive movements of a left-wing nature that offer popular and progressive solutions to the crisis, such as fair wages, a fair distribution of the surplus, and an increase in workers' power and authority within productive enterprises. Perhaps the solutions become more revolutionary that try to change the entire social system.

And when those progressive movements fail for subjective (strategic and tactical) and objective reasons, the fascist right rises up as the representative of the bourgeois class, which is in crisis.  So the right tries to fix the situation in favor of monopoly capitalism, but in a populist fashion.  So, the crisis is emptied of its content and the process of displacement is installed, which projects the problem to any demographic or cultural phenomenon, such as projecting the crisis on immigrants, for example.  The right represents the middle class but in a deceitful manner.

And now, after we knew the conditions and aspects of the savior right, are these conditions and appearances fulfilled in the current capitalist West?

Of course, the capitalist West has been going through an economic crisis since the 1990s, and the Iraq war was a temporary attempt to alleviate the crisis, but the opposite happened.  The goal of securing the oil wells was achieved, but the return was serious economic and political losses.  The crisis reached a dangerous stage in 2008, and with Covid-19 crisis, the severity of the crisis increased in several situations. The profit rate reached very low rates.

Regarding the political crisis, the United States has been suffering since the Iraq war from a decline in its hegemony over the world and the consumption of exorbitant resources in its wars, which has led to Trump's tendency to reduce those interventions and limit the intervention only to very necessary situations such as threatening to intervene in Venezuela or Iran.  In Western countries themselves, liberal democratic governmentality suffers from a deep problem represented in the vulgarization of the meaning of democracy and its focus on the representative type only.  The public’s distrust of that governmentality has been increasing.

Regarding the ideological crisis, liberal democratic values ​​are proving their failure day after day, from their forced application on the third world countries within the framework of pushing them towards economic openness (which is failing for various reasons, the most important of which is that these projects are completely unpopular) to the failure of that values in the West to achieve the desired happiness.

In addition to the neoliberal ideology that fuels religious and ethnic conflicts.

As for the signs that indicate the rise of the right, we find that they are available to a large extent; for example, Trump tells us that he is “the president of the peasants and workers!” Right-wing nationalism is spreading again, in addition to anti-immigrantism.  Racist crimes are increasing day by day.

The question here is whom the rising right represents now?

In the pre-globalization era, the right "truly" represented big monopoly capitalism that was still associated with "nation-state". That link was largely structural. So we find that the laws and rules regulating the economy were related to the framework of the nation.  The economic production cycles were deeply related to the state’s economic cycles, such as the payment of salaries, allowances, official holidays..etc. In addition, industrial capitalism prevailed, not financial capitalism.  The first, of course, needs an organization and a specific context in which to work.  In one word, capitalism was capitalist "statism". Consequently, when fascism escalated, it rose in a context that made it easier for it to perform its rescue tasks, and the statism turned into hyper-statism. The bailout has come in a national context to represent monopoly capital of a national character.

But in our time, the era of globalization, capital divorced from the national context; the globalized economic cycle, in all its complexities, has separated from the national context and Financial capital prevailed.  In fact, the crisis of global monopoly capitalism needs a solution of the same size and level of complexity, that is, it needs a global solution.

The savior right cannot provide solutions but national solutions, and thus its representation in that era is limited to capital, which is not so large as to leave the context of the nation-state.  In general, there is a conflict with those small capitalist strata, and the globalization project led by big capitalism, which seizes and controls the market and has relatively little production costs.  The protectionist measures (of all kinds) promoted by the right contradict the globalization project.

Even if an extremist right-wing project succeeds in a western country, it will be overthrown by the global system, as happened in the Second World War as When the right fails to manage the crisis, it turns to violence that is forcefully defeated.

This is how we should understand Trump's rise and fall.  The rise was a response to the crisis but an inadequate response. The new US administration is more homogenous with the world order.  Therefore, it will participate in the global solution to the crisis.

Biden's victory and the defeat of Trump have not signified the success of any progressive coalition, as some liberals think.

Some believed that Trump's rise would result in a counter-left movement, and that did happen with the rise of Bernie Sanders, but that movement was defeated. Ultimately Biden does the same job as Trump, but in a more understanding and rational way.

Firm Level Price Determination: A Comparison of Theories (Perfect Competition, Imperfect Competition, and the Theory of Real Competition)

By Ezra Pugh

“The best of all monopoly profits is a peaceful life,” (John Hicks, 1935).

“The division of labor within society brings into contact independent producers of commodities, who acknowledge no authority other than that of competition…the ‘war of all against all,’”      (Karl Marx, 1867)

George Stigler defines the term competition as “the absence of monopoly power in a market,” (Stigler 1957, 14). This could seem a curiously narrow definition to the businessperson or the worker. But this notion has been ubiquitous in the teaching of economics for decades. It originates, of course, from the Neo-Classical theory of perfect competition. Abstraction is necessary to any theoretical investigation. Assumptions must be made for the purpose of conducting analysis. But in flattening the meaning of a term like competition in such a way, is there a risk that some essential insights may be lost?

Perfect Competition

Perfect competition is the foundational parable of orthodox economics. A perfectly competitive market is an abstract ideal with a number of specific attributes:

•          There is a very large number of firms, such that no single firm can affect the overall market for its product.

•          There is a very large number of buyers for the industry’s product.

•          Each firm produces exactly the same undifferentiated product.

•          Firms, and their consumers, have perfect knowledge of all relevant economic information related to their industry and its product.

•          Firms have unrestricted power of entry and exit in their industry.

•          Firms are entitled to a ‘normal rate’ of profit, which is included in its operations costs.

• ·         Marginal costs drop at first then eventually increase with each unit sold. As a result, average cost is also upward sloping.

From its perspective, a firm in perfect competition is just a speck, dwarfed by the size of the market it competes in. The market can absorb whatever the firm can produce, provided it is sold at market price. The firm’s perceived demand curve is horizontal, or perfectly elastic. As a result, the demand curve is identical to its supply curve. The overall demand curve of the market, however, is downward sloping.

The firm must accept the prevailing market selling price for its good. If it sets its price above the prevailing price, even by an iota, the firm will lose all of its sales to the myriad other sellers. If it sets its price below, it will not be able to make enough profit to survive. A firm in a perfectly competitive market is therefore known as a price-taker, as it is powerless in the face of market pressures. Consequently, “a perfectly competitive firm has only one major decision to make—namely, what quantity to produce,” (Greenlaw 2018, 189).

Being rational, the firm’s motivating goal is to generate profit. Its profit (r), is defined as total revenue (TR) minus total cost (TC). Total revenue is made up on the products price (P) multiplied by the quantity produced (Q) minus the average cost per unit (AC) multiplied by the quantity produced. This can be written as:

To maximize its profit, the firm must continue producing more output up until the point its marginal revenue equals its marginal cost – the point where an additional unit of output contributes no more profit. Marginal revenue (MR) and marginal cost (MC) are defined thus:

Because the market price the firm experiences does not change based on its output, the firm’s marginal revenue is a constant. Each additional unit sold adds the same value, which is equal to the price of the product. If marginal revenue is equal to price, and profit maximization occurs when marginal revenue equals marginal cost, the firm should produce up until the point where its marginal costs equals the price of its product.

The firm’s average cost is its total cost divided by quantity produced, and is assumed to initially fall then eventually be upward sloping. Because innumerable sellers all sell the same good, in the long run (which generally does not have a specific definition), all ‘economic’ profits—those which are above the assumed ‘normal’ profits—are eventually eroded completely away. If positive economic profits existed, more firms would enter the market, increasing supply and lowering price. If economic profits are negative, firms would leave the market, causing the opposite effect. As a result, in the long run perfect competition causes sellers to produce their goods at the lowest point on their average cost curve.

“When profit-maximizing firms in perfectly competitive markets combine with utility-maximizing consumers, something remarkable happens,” we are told, “the resulting quantities of outputs of goods and services demonstrate both productive and allocative efficiency,” (Greenlaw 2018, 206). Productive efficiency is attained because in the long run, firms produce at their absolute lowest cost. Allocative efficiency is achieved because the resulting goods’ price is equal to its marginal cost—precisely the value of the ‘social cost’ of producing it.

Imperfect Competition and Monopoly

But of course, this state of affairs does not resemble the world in which we live. This utopian optimality, we are told, is distorted and mutated by the anti-competitive behavior of firms and government. Due to that meddling, we live in a world of imperfect competition—monopoly, monopolistic competition, and oligopoly. Paradise lost. In monopoly, a firm is the lone provider of a good, in monopolistic competition many firms produce differentiated products, and in oligopoly a small cabal of firms control the marketplace and exert price pressure.

The culprit which creates each of these distorted market types is barriers to entry. Whether natural or legal, barriers to entry prevent firms who would otherwise enter a market from entering. The few firms which are active in the market have control of too large a slice. As a result, they can affect the market price based on how many units they produce. Instead of a horizontal perceived demand curve, the firms in imperfect competition face a downward sloping demand curve.

To maximize its profit, the imperfectly competitive firm still produces at the level where MR = MC. But because of its outsized effect on the market, P no longer equals MR. With each unit produced, the increased supply exerts downward pressure on the price, which effects the price of all other units produced by the same amount. If such a firm produces too much, it can hurt its own bottom line. Because it supplies as much as it wants and not what consumers want, a true monopoly will have perpetual positive economic profits at a level which depends on the elasticity of the product’s demand schedule. Monopolistic competition, however, will in the long run result in a total erosion of economic profit as firms enter the market, all producing at a point on the AC curve, albeit not at its minimum point. As a result, none of these markets is productively or allocatively efficient. The amount of goods produced is below what consumers would have wanted under perfectly competitive conditions, they are more expensive than they are socially worth, and firms inefficiently do not produce at their minimum average cost. Customers are robbed of potential utility. Such markets are sadly the norm, because, we are told, “firms have proved to be highly creative in inventing business practices that discourage competition,” (Greenlaw 2018, 220). This is a great state of affairs for the firms, however, because “once barriers are erected, once a barrier to entry is in place, a monopoly that does not need to fear competition can just produce the same old products in the same old way,” (Greenlaw 2018, 229). Managers can kick back and watch the profits roll in.

Historical Overview

Sketched out above is the dominant parable in economic thought and teaching. Interestingly, almost none of this resembles the real world. How did we get here? An outline is sketched below.

Adam Smith is generally credited with establishing economic thought, or Political Economy, as a distinct field of study. His work An Inquiry into the Nature and Causes of the Wealth of Nations (1776) is regarded as the first modern work of economics. A key figure in the Scottish Enlightenment, Smith was interested in observing economic phenomena, describing them, and discovering the hidden patterns within. David Ricardo furthered and built on Smith’s ideas, advancing theories on rent, trade, and value. Over the course of the three volumes of Capital (1867), Karl Marx extended this theoretical framework even further with sharpened historical and class analysis, building a signature value theory in the process. Along with others, these thinkers are referred to as the Classical economists.

But in the 1870’s there occurred what is known as the Marginalist Revolution. The Long Depression (1873-96) caused a crisis of confidence in the capitalist world. Interestingly, it was during this period that the most utopian theoretical depictions of capitalism were popularized. W.S. Jevons (1871), Carl Menger (1871), and Leon Walras (1874) independently and almost simultaneously developed this new theoretical paradigm. They perceived fundamental flaws in the theoretical framework and methodologies of the Classical economists and sought to “pick up the fragments of a shattered science and to start anew,” (Jevons 1879/1965, Preface lii). The Classicals believed that the ultimate source of an item’s value was the amount of labor embodied in it and that market prices were connected to costs—prices of production. The Marginalists vehemently disagreed. “Value,” wrote Jevons, “depends entirely upon utility” (Jevons 1871/1965, 1). Echoing this sentiment, Menger wrote “there is no necessary and direct connection between the value of a good and whether, or in what quantities, labour and other goods of higher order were applied to its production” (Menger 1871/2007, 146). Value then stemmed from a buyers utility gained from a good; that utility being an index of the good’s scarcity.

Jevons and Walras both used advanced mathematics to express their ideas. Adopting algebra and calculus, they could express complex ideas with greater accuracy than was possible previously. "Why should we persist in using everyday language to explain things in the cumbersome and incorrect way, as Ricardo has often done,” wrote Walras, “when these things can be stated far more succinctly, precisely, and clearly in the language of mathematics?" (Heilbroner 1997, 226). Walras pioneered what is known as general equilibrium theory—the notion that a complex balance of supply and demand can exist in and between markets.

It is during this period that supply and demand curves and the modern theory of perfect competition are introduced. In order to make their highly abstract models functional and defined, economists had to make assumptions that did not necessarily fit with, and often outright contradicted economic reality. "The pure theory of economics, it must precede applied economics,” wrote Walras, “and this pure theory of economics is a science which resembles the physic-mathematical sciences in every respect," (Heilbroner, 224). Actual people and actual societies faded from the picture in favor of platonic ideals. This fundamental methodological shift opened up many new avenues of exploration for economists, but the descriptive and predictive usefulness of the new models was not necessarily clear. Perfect competition became the theoretical jumping off point for all ‘rigorous’ analysis, and Marshall (1890) systematized the theoretical structure into what would recognize as modern Neo-classical economics. Dobb notes, "at the purely formal level, there can be little doubt that the new context and methods, with their mathematical analogy if not mathematical form, resulted in enhanced precision and rigor of analysis…the cutting knives of economic discussion became sharper -- whether they were used to cut so deeply is another matter" (Dobb 1973, 176).

In the 1920s, unease with the dominance of perfect competition was growing. Sraffa (1925) aimed a potentially devastating critique at the then-dominant Marshallian partial equilibrium theory, demonstrating that the theoretical structure was not capable of dealing with non-constant returns (increasing or decreasing costs) adequately (Mongiovi 1996). The next year, Sraffa (1926) suggested a solution might be found using the lesser utilized monopoly theory as a starting point. Even in competitive markets, monopolistic tendencies could easily be observed because 1.) firms can exert some control over their own prices, and 2.) they frequently experience increasing returns (decreasing costs). Sraffa argued that these circumstances are not the exception, “rather they are normal and persistent features of the economic landscape, with 'permanent and even cumulative' consequences for market equilibria. When these influences are operative, each firm is to be viewed as having its own distinct market; prices are set so as to maximise profits on the supposition that the relevant demand curve is not perfectly elastic,” (Mongiovi 1996, 214). Building on these ideas, Robinson (1933) and Chamberlain (1933) independently, but simultaneously, developed the theory of imperfect competition that is taught today. Eventually abandoning Marshallian theory altogether, Sraffa’s publication of Production of Commodities by Means of Commodities (1960) is credited with establishing a distinctive Sraffian or Neo-Ricardian school.

Real Competition

In Capitalism: Competition, Conflict, Crises (2016), Anwar Shaikh erects a theoretical framework independent of perfect and imperfect competition. Formalizing insights developed by the Classical economists, a theory is built which is both analytically sound and corresponds to observed economic phenomena. The theory of real competition, as it is called, “is as different from so-called perfect competition as war is from ballet,” (Shaikh 2016, Ch. 7.I.). The classical economists stressed themes that were either diminished or omitted completely by Neo-classical economists, including conflict, class, and temporality. In Capital, Volume 1, Karl Marx writes that the economic realm is bellum omnium contra omnes, ‘war of all against all,’ (Marx 1867/1990, 477). All evidence of this is lost in the parables of perfect and imperfect competition. But in Capitalism, the theory of real competition “pits seller against seller, seller against buyer, and buyer against buyer. It pits capital against capital, capital against labor, and labor against labor,” (Shaikh 2016, Ch. 7.I.). Abstracting away from the essentiality of conflict to capitalist production and distribution makes Neo-Classical analysis not only unrealistic, but totally misleading.

But even on pure theoretical grounds there are issues with the theory of perfect competition. For one, there is a fundamental contradiction within the assumptions. Firms are assumed to have perfect knowledge of the market in which they are competing, yet their perceived demand curve is assumed to be flat. These two assumptions cannot hold at the same time. “If firms are assumed to be sensible in their expectations, then the theory of perfect competition collapses. More generally, even mildly informed firms would have to recognize that they face downward sloping demand curves under competitive conditions,” (Shaikh 2016, Ch. 8.I). If a firm in a perfectly competitive market has perfect knowledge, it would quite easily deduce that the market signals it is receiving are being received by every other firm, and those firms will react in a predictable manner. As a result, the firm would know that it does not face a flat, perfectly elastic demand curve, and would act in exactly the same manner as a monopolistic firm, with just the same results.

Another problematic assumption within the orthodox framework is that firms are entitled to a normal rate of profit, which is included within its cost structure. The action of competition completely erodes excess profits away but leaves normal profits intact. This, of course, is wildly unrealistic because “no capital is assured of any profit at all, let alone the “normal” rate of profit. Indeed, all capitals face losses at some point, and a certain number drown in red ink in every given interval. It is therefore completely illegitimate to count “normal profit” as part of operating costs,” (Shaikh 2016, Ch. 7.I.). The prospect of making a loss is the dark cloud that hangs over every business manager, driving them unceasingly into conflict with agents both inside and outside the firm. Abstracting away from this motive force fundamentally misdiagnoses the motivations of economic agents.

In the theory of perfect competition, a firm’s only decision is how much to produce. Likewise, in imperfect competition, pricing and quantity decisions are mechanically connected. But in the works of the Classicals and in the theory of real competition, firms are active price setting, cost cutting entities. Neo-Classical theory stresses that firms will flock to higher profit rates at a given price. But once firms have the power to set their own price, the picture becomes more complicated. In their endless search for higher rates of return, firms cut prices to attract more buyers and increase market-share. In the process, “the advantage in this perpetual jousting for market share goes to the firms with the lowest cost,” (Shaikh 2016, 7.II.). If firms have the power to cut their own prices, they have the power to starve out other firms—even ones that are potentially more profitable at initial prices. Neo-Classical theory stresses that firms will adopt whatever method yields the highest profit at a given price, but “when costs differ, there is always a set of prices at which the lower cost firm has the higher profit rate. This does not mean that [it] has to drive the price down to that level. It has only to get the message across to its competitor that the future has arrived,” (Shaikh 2016, 7.VII.). This is demonstrated in Table 1 below. Pricing wars, which are extremely common occurrences in the real economy, highlight the conflictual nature of economic relations—"these are the operative principles of warfare: attackers try to impose greater losses on the other side. We will see that such behavior is the norm in the business world. It follows that the highest profit that is sustainable in the face of price-cutting behavior is generally different from the price-passive profit assumed in theories of perfect and imperfect competition,” (Shaikh 2016, 7.II.). Only the theory of real competition deals with this common behavior adequately.

Conclusion

Contrary to Hicks’ assertion, a peaceful life is not included in a firm’s profit—no matter their degree of monopoly. There is perpetual conflict generated both inside and outside of the firm that must always be contended with. For real firms, “price is their weapon, advertising their propaganda, the local Chamber of Commerce their house of worship, and profit their supreme deity,” (Shaikh 2016, 7.II.). Abstraction is a necessary tool for analysis. But the specific method of abstraction used in the theories of perfect and imperfect competition does not serve to elucidate truths that would be otherwise unattainable. Neo-Classical economics was formulated during a crisis of capitalism to create a utopian vision in order to justify capitalist social relations. Capitalist relations have been shown to be the most powerful and productive in history, but that does not justify obscuring their fundamentally destructive and chaotic elements. Competition is not merely the absence of monopoly power—it is the struggle of all against all.

References

Dobb, M. (1973). The ‘Jevonian Revolution’. In Theories of Value and Distribution since Adam Smith: Ideology and Economic Theory (pp. 166-210). Cambridge: Cambridge University Press. doi:10.1017/CBO9780511559457.007

Cohen, A. J., & Harcourt, G. C. (2003). Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies? Journal of Economic Perspectives, 17(1), 199–214. doi: 10.1257/089533003321165010

Greenlaw, S. A., Taylor, T., & Shapiro, D. (2018). Principles of Microeconomics. Houston, TX: OpenStax, Rice University.

Heilbroner, R. L. (1997). Teachings from the Worldly Philosophy. New York: W.W. Norton.

Hicks, J. (1935). Annual Survey of Economic Theory: The Theory of Monopoly. Econometrica, 3(1), 1-20. doi:10.2307/1907343

Jevons, W. S. (1965). The Theory of Political Economy (5th ed.). New York, Ny: Augustus M Kelley.

Marx, K., Fowkes, B., & Fernbach, D. (1990). Capital: a Critique of Political Economy; vol.1. London New York, N.Y: Penguin Books in association with New Left Review.

Menger, C. (2007). Principles of Economics. Auburn: Ludwig von Mises Institute.

Mongiovi, G. (1996). Sraffa’s Critique of Marshall: a Reassessment. Cambridge Journal of Economics, 20(2), 207–224. doi: 10.1093/oxfordjournals.cje.a013613

Sen, A. K. (1977). Rational Fools: A Critique of the Behavioral Foundations of Economic Theory. Philosophy and Public Affairs, 6(4).

Shaikh, A. (2016). Capitalism: Competition, Conflict, Crises [Kindle version]. New York: Oxford University Press.

Smith, A., Heilbroner, R. L., Malone, L. J., Smith, A., & Smith, A. (1987). The Essential Adam Smith. New York: W.W. Norton.

Sraffa, P. (1926). The Laws of Returns under Competitive Conditions. The Economic Journal, 36(144), 535. doi: 10.2307/2959866

Sraffa, P. (1960). Production of Commodities by Means of Commodities: Prelude to a Critique of Economic Theory.

Stigler, G. J. (1957). Perfect Competition, Historically Contemplated. Journal of Political Economy, 65(1), 1–17. doi: 10.1086/257878

Capitalism and Mental Health

By David Matthews

Originally published at Monthly Review.

A mental-health crisis is sweeping the globe. Recent estimates by the World Health Organization suggest that more than three hundred million people suffer from depression worldwide. Furthermore, twenty-three million are said to experience symptoms of schizophrenia, while approximately eight hundred thousand individuals commit suicide each year.1 Within the monopoly-capitalist nations, mental-health disorders are the leading cause of life expectancy decline behind cardiovascular disease and cancer.2 In the European Union, 27.0 percent of the adult population between the ages of eighteen and sixty-five are said to have experienced mental-health complications.3 Moreover, in England alone, the predominance of poor mental health has gradually increased over the last two decades. The most recent National Health Service Adult Psychiatric Morbidity Survey illustrates that in 2014, 17.5 percent of the population over the age of sixteen suffered from varying forms of depression or anxiety, compared to 14.1 percent in 1993. Additionally, the number of individuals whose experiences were severe enough to warrant intervention rose from 6.9 percent to 9.3 percent.4

In capitalist society, biological explanations dominate understandings of mental health, infusing professional practice and public awareness. Emblematic of this is the theory of chemical imbalances in the brain—focusing on the operation of neurotransmitters such as serotonin and dopamine—which has gripped popular and academic consciousness despite remaining largely unsupported.5 Moreover, reflecting the popularity of genetic reductionism within the biological sciences, there has been an effort to identify genetic abnormalities as another cause of mental-health disorders.6 Nonetheless, explanations based on genomics have also failed to generate conclusive evidence.7 While potentially offering illuminating insights into poor mental well-being in specific cases, biological interpretations are far from sufficient on their own. What is abundantly clear is the existence of significant social patterns that elucidate the impossibility of reducing poor mental health to biological determinism.8

The intimate relationship between mental health and social conditions has largely been obscured, with societal causes interpreted within a bio-medical framework and shrouded with scientific terminology. Diagnoses frequently begin and end with the individual, identifying bioessentialist causes at the expense of examining social factors. However, the social, political, and economic organization of society must be recognized as a significant contributor to people’s mental health, with certain social structures being more advantageous to the emergence of mental well-being than others. As the basis on which society’s superstructural formation is erected, capitalism is a major determinant of poor mental health. As the Marxist professor of social work and social policy Iain Ferguson has argued, “it is the economic and political system under which we live—capitalism—which is responsible for the enormously high levels of mental-health problems which we see in the world today.” The alleviation of mental distress is only possible “in a society without exploitation and oppression.”9

In what follows, I briefly sketch the state of mental health in advanced capitalism, using Britain as an example and utilizing the psychoanalytical framework of Marxist Erich Fromm, which emphasizes that all humans have certain needs that must be fulfilled in order to ensure optimal mental health. Supporting Ferguson’s assertion, I argue that capitalism is crucial to determining the experience and prevalence of mental well-being, as its operations are incompatible with true human need. This sketch will include a depiction of the politically conscious movement of users of mental-health services that has emerged in Britain in recent years to challenge biological explanations of poor mental health and to call for locating inequality and capitalism at the heart of the problem.

Mental Health and Monopoly Capitalism

In the final chapters of Monopoly Capital, Paul Baran and Paul Sweezy made explicit the consequences of monopoly capitalism for psychological well-being, arguing that the system fails “to provide the foundations of a society capable of promoting the healthy and happy development of its members.”10 Exemplifying the widespread irrationality of monopoly capitalism, they illustrated its degrading nature. It is only for a fortunate minority that work can be considered pleasurable, while for the majority it is a thoroughly unsatisfactory experience. Attempting to avoid work at all costs, leisure frequently fails to offer any consolation, as it is also rendered meaningless. Rather than being an opportunity to fulfill passions, Baran and Sweezy argued that leisure has become largely synonymous with idleness. The desire to do nothing is reflected in popular culture, with books, television, and films inducing a state of passive enjoyment rather than demanding intellectual energies.11 The purpose of both work and leisure, they claimed, largely coalesces around increasing consumption. No longer consumed for their use, consumer goods have become established markers of social prestige, with consumption as a means to express an individual’s social position. Consumerism, however, ultimately breeds dissatisfaction as the desire to substitute old products for new ones turns maintaining one’s position in society into a relentless pursuit of an unobtainable standard. “While fulfilling the basic needs of survival,” Baran and Sweezy argued, both work and consumption “increasingly lose their inner content and meaning.”12 The result is a society characterized by emptiness and degradation. With little likelihood of the working class instigating revolutionary action, the potential reality is a continuation of the “present process of decay, with the contradictions between the compulsions of the system and the elementary needs of human nature becoming ever more insupportable,” resulting in “the spread of increasingly severe psychic disorders.”13 In the current era of monopoly capitalism, this contradiction remains as salient as ever. Modern monopoly-capitalist society continues to be characterized by an incompatibility between, on the one hand, capitalism’s ruthless pursuit of profit and, on the other, the essential needs of people. As a result, the conditions required for optimum mental health are violently undermined, with monopoly-capitalist society plagued by neuroses and more severe mental-health problems.

Erich Fromm: Mental Health and Human Nature

Baran and Sweezy’s understanding of the relationship between monopoly capitalism and the individual was significantly influenced by psychoanalysis. For one, they made references to the centrality of latent energies such as libidinous drives and the need for their gratification. Moreover, they accepted the Freudian notion that social order requires the repression of libidinal energies and their sublimation for socially acceptable purposes.14 Baran himself wrote on psychoanalysis. He had been associated with the Institute for Social Research in Frankfurt in the early 1930s and was directly influenced by the work of Eric Fromm and Herbert Marcuse.15 It is within this broad framework that a theory of mental health can be identified in Baran and Sweezy’s analysis, with the contradictions between capitalism and human need expressing themselves chiefly through the repression of human energies. It was Fromm, most notably, who was to develop a unique Marxist psychoanalytical position that remains relevant to understanding mental health in the current era of monopoly capitalism. And it was from this that Baran, in particular, was to draw.16

While making explicit the importance of Sigmund Freud, Fromm acknowledged his greater debt to Karl Marx, considering him the preeminent intellectual.17 Accepting the Freudian premise of the unconscious and the repression and modification of unconscious drives, Fromm nonetheless recognized the failure of orthodox Freudianism to integrate a deeper sociological understanding of the individual into its analysis. Turning to Marxism, he constructed a theory of the individual whose consciousness is shaped by the organization of capitalism, with unconscious drives repressed or directed toward acceptable social behavior. While Marx never produced a formal psychology, Fromm considered that the foundations of one resided in the concept of alienation.18 For Marx, alienation was an illustration of capitalism’s mortifying physical and mental impact on humans.19 At its heart, it demonstrates the estrangement people feel from both themselves and the world around them, including fellow humans. Alienation’s specific value for understanding mental health lies in illustrating the distinction that emerges under capitalism between human existence and essence. For Marx, capitalism separates individuals from their essence as a consequence of their existence. This principle permeated Fromm’s psychoanalytic framework, which maintained that, under capitalism, humans become divorced from their own nature.

Human nature, Marx argued, consists of dual qualities and we “must first deal with human nature in general, and then with human nature as modified in each historical epoch.”20 There are needs that are fixed, such as hunger and sexual desires, and then there are relative desires that originate from the historical and cultural organization of society.21 Inspired by Marx, Fromm argued that human nature is inherent in all individuals, but that its visible manifestation is largely dependent on the social context. It is untenable to assume “man’s mental constitution is a blank piece of paper, on which society and culture write their text, and which has no intrinsic quality of its own.… The real problem is to infer the core common to the whole human race from the innumerable manifestations of human nature.”22 Fromm recognized the importance of basic biological needs, such as hunger, sleep, and sexual desires, as constituting aspects of human nature that must be satisfied before all else.23 Nonetheless, as humans evolved, they eventually reached a point of transcendence, from the animal to the uniquely human.24 As humans found it increasingly easier to satisfy their basic biological needs, largely as a result of their mastery over nature, the urgency of their satisfaction gradually became less important, with the evolutionary process allowing for the development of more complex intellectual and emotional capacities.25 As such, an individual’s most significant drives were no longer rooted in biology, but in the human condition.26

Considering it imperative to construct an understanding of human nature against which mental health could be evaluated, Fromm identified five central characteristics of the human condition. The first is relatedness. Aware of being alone in the world, humans strenuously endeavor to establish ties of unity. Without this, it is intolerable to exist as an individual.27 Second, the dominance of humans over nature allows for an easier satisfaction of biological needs and for the emergence of human aptitudes, contributing to the development of creativity. Humans developed the ability to express a creative intelligence, transforming this into a core human characteristic that requires fulfillment.28 Third, humans, psychologically, require rootedness and a sense of belonging. With birth severing ties of natural belonging, individuals constantly pursue rootedness to feel at one with the world. For Fromm, a genuine sense of belonging could only be achieved in a society built on solidarity.29 Fourth, humans crucially desire and develop a sense of identity. All individuals must establish a sense of self and an awareness of being a specific person.30 Fifth, it is psychologically necessary for humans to develop a framework through which to make sense of the world and their own experiences.31

Representing what Fromm argued to be a universal human nature, the satisfaction of these drives is essential for optimum mental well-being. As he contended, “mental health is achieved if man develops into full maturity according to the characteristics and laws of human nature. Mental illness consists in the failure of such development.”32 Rejecting a psychoanalytical understanding that emphasizes the satisfaction of the libido and other biological drives, mental health, he claimed, is inherently associated with the satisfaction of needs considered uniquely human. Under capitalism, however, the full satisfaction of the human psyche is thwarted. For Fromm, the origins of poor mental health are located in the mode of production and the corresponding political and social structures, whose organization impedes the full satisfaction of innate human desires.33 The effects of this on mental health, Fromm argued, are that “if one of the basic necessities has found no fulfillment, insanity is the result; if it is satisfied but in an unsatisfactory way…neurosis…is the consequence.”34

Work and Creative Repression

Like Marx, Fromm asserted that the instinctual desire to be creative had the greatest chance of satisfaction through work. In the Economic and Philosophic Manuscripts of 1844, Marx strenuously argued that labor should be a fulfilling experience, allowing individuals to be freely expressive, both physically and intellectually. Workers should be able to relate to the products of their labor as meaningful expressions of their essence and inner creativity. Labor under capitalism, however, is an alienating experience that estranges individuals from its process. Alienated labor, Marx contended, is when “labour is external to the worker, i.e., it does not belong to his essential being…therefore, he does not affirm himself but denies himself, does not feel content but unhappy, does not develop freely his physical and mental energy but mortifies his body and ruins his mind.”35 Under capitalism, great efforts are made to ensure human energy is channeled into labor, even though it is often miserable and tedious.36 Rather than satisfying the need to express creativity, it frequently represses it through the monotonous and grueling obligation of wage labor.37

In Britain, there is widespread dissatisfaction with work. One recent survey of employees conducted in early 2018 estimated that 47 percent would consider looking for a new job during the coming year. Of the reasons given, a paucity of opportunities for career advancement was prominent, along with not enjoying work and employees feeling like they do not make a difference.38 These reasons begin to illustrate an entrenched alienation from the labor process. Many people experience work as having little meaning and little opportunity for personal fulfillment and expression.

From such evidence, a claim can be made that in Britain—as in many monopoly-capitalist nations—a substantial portion of the labor force feels disconnected from their work and does not consider it a creative experience. For Fromm, the realization of creative needs are essential to being mentally healthy. Having been endowed with reason and imagination, humans cannot exist as passive beings, but must act as creators.39 Nevertheless, it is clear that work under capitalism does not achieve this. Considerable evidence suggests that far from being beneficial to mental health, work is actually detrimental to it. Although the exact figures are likely to remain unknown due to the intangibility of such experiences, it can be inferred that, for many members of the labor force, it is commonplace for work to provoke general unhappiness, dissatisfaction, and despondency. Moreover, more severe mental-health conditions, such as stress, depression, and anxiety, are increasingly emerging as the consequences of discontentment at work. In 2017–18, such conditions constituted 44 percent of all work-related ill health in Britain, and 57 percent of all workdays lost to ill health.40 An additional study in 2017 estimated that 60 percent of British employees had suffered work-related poor mental health in the past year, with depression and anxiety being some of the most common manifestations.41

Rather than a source of enjoyment, the nature and organization of work under capitalism clearly does not act as a satisfactory means to fulfill an individual’s creativity. As Baran and Sweezy argued, “the worker can find no satisfaction in what his efforts accomplish.”42 Instead, work alienates individuals from a fundamental aspect of their nature and, in so doing, stimulates the emergence of varying negative states of mental health. With around half of the labor force in Britain having experienced work-related mental-health issues, and many more likely feeling a general sense of despondency, there exists what Fromm termed a socially patterned defect.43 It is no exaggeration to argue that the deterioration of mental well-being is a standard response to wage labor in monopoly-capitalist societies. Negative feelings become commonplace and, to varying degrees, are acknowledged as normal reactions to work. With the exception of severe mental-health disorders, many forms of mental distress that develop in response are taken for granted and not considered legitimate problems. As such, the degradation of mental well-being is normalized.

Meaningful Association and Loneliness

For Fromm, there existed an inherent relationship between positive mental health, meaningful personal relationships in the form of both love and friendship, and expressions of solidarity. Acutely aware of their “aloneness” in the world, individuals attempt to escape the psychological prison of isolation.44 Nonetheless, the operation of capitalism is such that it frequently prevents the satisfactory fulfillment of this need. The inadequacy of social relationships within monopoly-capitalist societies was identified by Baran and Sweezy. They argued a frivolity had descended over much social interaction, as it became typified by superficial conversation and a falsity of pleasantness. The emotional commitments required for friendship and the intellectual efforts needed for conversation were made largely absent as social interaction became increasingly about acquaintances and small talk.45 Contemporary monopoly capitalism is no exception. While difficulties in measuring its existence and nature abound, arguably one the most widespread neuroses to plague present-day capitalism is loneliness. It is increasingly considered a major public-health concern, perhaps most symbolically evident with the establishment of a Minister for Loneliness in 2018 by the British government.

As a neurosis, loneliness has debilitating consequences. Individuals may resort to alcohol and drug abuse to numb their misery, while persistent experience increases blood pressure and stress, as well as negatively impacts cardiovascular and immune-system functioning.46 A mental-health condition in its own right, loneliness exacerbates additional mental-health problems and is often the root cause of depression.47 In 2017, it was estimated that 13 percent of individuals in Britain had no close friends, with a further 17 percent having average- to poor-quality friendships. Moreover, 45 percent claimed to have felt lonely at least once in the previous two weeks, with 18 percent frequently feeling lonely. Although a close, loving relationship acts as a barrier to loneliness, 47 percent of people living with a partner reported feeling lonely at least some of the time and 16 percent often.48 Reflecting the dominant scientific constructs of mental health, recent efforts have been made to identify genetic causes of loneliness, with environmental conditions said to exacerbate an individual’s predisposition to it.49 However, even the most biologically deterministic analyses concede that social circumstances are important to its development. Nonetheless, few studies attempt to seriously illustrate the extent to which capitalism is a contributing factor.

Individualism has always reigned supreme as a principle upon which the ideal capitalist society is constructed. Individual effort, self-reliance, and independence are endorsed as the hallmarks of capitalism. As understood today, the notion of the individual has its origins in the feudal mode of production, and its emphasis on greater collectivist methods of labor—such as within the family or village—being surrendered to the compulsion of individuals, who have to be free to sell their labor power on the market. Prior to capitalism, life was conducted more as part of a wider social group, while the transition to capitalism developed and allowed for the emergence of the isolated, private individual and the nuclear, increasingly privatized family.50 Fromm contended that the promotion and celebration of the virtues of the individual means that members of society feel more alone under capitalism than under previous modes of production.51 Capitalism’s exaltation of the individual is made further apparent by its potent opposition to the ideals of collectivism and solidarity, and preference and incentive for competition. Individuals, it is said, must compete with each other on a general basis to enhance their personal development. More specifically, competition is, economically, one of the bases on which the market operates and, ideologically, corresponds to the widespread belief that, to be successful, one must compete with others for scarce resources. The consequence of competition is that it divides and isolates individuals. Other members of society are not considered as sources of support, but rather obstacles to personal advancement. Ties of social unity are therefore greatly weakened. Thus, loneliness is embedded within the structure of any capitalist society as an inevitable outcome of its value system.

Not only is loneliness integral to capitalist ideology, it is also exacerbated by the very functioning of capitalism as a system. As a result of capitalism’s inexorable drive for self-expansion, the growth of production is one of its elementary characteristics. Having become an axiomatic notion, rarely is the idea of expanded production challenged. The human cost of this is crippling as work takes precedence over investing in social relationships. Furthermore, neoliberal reforms have left many workers with progressively more precarious jobs and less protections, guaranteed benefits, and hours of employment—all of which have only aggravated loneliness. Amplifying the proletarianization of the labor force, with ever-more workers existing in a state of insecurity and experiencing increased exploitation, the centrality of work has become greater as the threat of not having a job, or being unable to secure an adequate standard of living, has become a reality for many in a “flexible” labor market.52 Individuals have no choice but to devote more time to work at the expense of establishing meaningful relationships.

The growing attention given to work can be illustrated in relation to working practices. Despite the fact that the average length of the working week increased in Britain following the financial crisis of 2007–09, the broader picture over the last two decades has officially been one of decline. Part-time workers, however, have witnessed the number of hours they work increase, along with the number of part-time jobs. Additionally, between 2010 and 2015, there was a 15 percent rise in the number of full-time members of the labor force working more than forty-eight hours per week (the legal limit; additional hours must be agreed upon by employer and employee).53 Furthermore, in 2016, one employee survey illustrated that 27 percent worked longer than they would like, negatively impacting their physical and mental health, and 31 percent felt that their work interfered with their personal life.54 Significantly, loneliness is not just a feature of life outside of work, but a common experience during work. In 2014, it was estimated that 42 percent of British employees did not consider any coworker to be a close friend, and many felt isolated in the workplace.

Greater engagement in productive activities at the expense of personal relationships has been labeled the “cult of busyness” by psychiatrists Jacqueline Olds and Richard Schwartz.55 While they accurately identify this trend, they nonetheless evaluate it in terms of workers freely choosing such a life. This elides any serious criticisms of capitalism and the reality that the cult of busyness has largely been an outcome of the economic system’s inherent need for self-expansion. Furthermore, Olds and Schwartz fail to accept the trend as a reflection of the structural organization of the labor market, which makes more work a necessity instead of a choice. The avoidance of loneliness and the search for meaningful relationships are fundamental human desires, but capitalism suppresses their satisfactory fulfillment, along with the opportunities to form common bonds of love and friendship, and to work and live in solidarity. In response, as Baran and Sweezy argued, the fear of being alone drives people to seek some of the least fulfilling social relationships, which ultimately result in feelings of greater dissatisfaction.56

Materialism and the Search for Identity and Creativity

For monopoly capitalism, consumption is a vital method of surplus absorption. In the era of competitive capitalism, Marx could not foresee how the sales effort would evolve both quantitatively and qualitatively to become as important for economic growth as it has.57 Advertising, product differentiation, planned obsolescence, and consumer credit are all essential means of stimulating consumer demand. At the same time, there is no shortage of individuals willing to consume. Alongside the acceptance of work, Fromm identified the desire to consume as an integral characteristic of life under capitalism, arguing it was a significant example of the uses to which human energies are directed to support the economy.58

With consumer goods valued for their conspicuity rather than their intended function, people have gone from consuming use values to symbolic values. The decision to engage in popular culture and purchase a type of automobile, brand of clothing, or technological equipment, among other goods, is frequently based on what the product is supposed to convey about the consumer. Frequently, consumerism constitutes the principal method through which individuals can construct a personal identity. People are emotionally invested in the meanings associated with consumer goods, in the hope that whatever intangible qualities items are said to possess will be passed on to them through ownership. Under monopoly capitalism, consumerism is more about consuming ideas and less about satisfying inherent biological and psychological needs. Fromm contended that “consumption should be a concrete human act in which our senses, bodily needs, our aesthetic taste…are involved: the act of consumption should be a meaningful…experience. In our culture, there is little of that. Consuming is essentially the satisfaction of artificially stimulated phantasies.”59

The need for identity and creative fulfillment encourages an insatiable appetite to consume. Each purchase, however, regularly fails to live up to its promise. Rarely is satisfaction truly achieved through consumption, because what is being consumed is an artificial idea rather than a product that imbues our existence with meaning. In this process, consumerism as a form of alienation becomes evident. Instead of consuming a product designed to satisfy inherent needs, consumer goods exemplify their synthetic nature via their manufactured meanings and symbolisms, which are designed to stimulate and satisfy a preplanned response and need.60 Any identity a person may desire, or feel they have obtained, from consuming a product, as well as any form of creativity invoked by a consumer good or item of popular culture, is false.

Rather than cultivating joy, the affluence of the monopoly-capitalist nations has bred a general widespread dissatisfaction as high value is placed on amassing possessions. While consumerism as a value exists in all capitalist societies, in those of greater inequality—with Britain displaying wider wealth disparities than most—the desire to consume and acquire greatly contributes to the emergence of neuroses, as the effort to maintain social status and emulate those at the top of society becomes an immense strain. The impact of this has been demonstrated within British families in recent years. In 2007, UNICEF identified Britain as having the lowest level of child well-being out of twenty-one of the most affluent Organisation for Economic Co-operation and Development nations. In response, an analysis of British families was conducted in 2011 comparing them to those in Spain and Sweden, countries that ranked in the top five for child well-being.61

Of the three nations, the culture of consumerism was greatest in Britain, as it was prevalent among all families regardless of affluence. British parents were considered more materialistic than their Spanish and Swedish counterparts and behaved accordingly toward their children. They purchased the most up-to-date, branded consumer goods, largely because they thought it would ensure their child’s status among their peers. This was a value shared by the children themselves, with many accepting that social prestige was based on ownership of branded consumer goods, which, evidence suggests, contributed to arising worry and anxiety, especially for children from poorer households who recognized their disadvantage. While a compulsion to purchase new goods continuously for themselves and their children was identified among British parents, many nonetheless also felt the psychological strain of attempting to maintain a materialistic lifestyle and caved to such pressures. Across all three countries, children identified the needs for their own well-being as consisting of quality time spent with parents and friends, and opportunities to indulge their creativity, especially through outdoor activities. Despite this, the research showed that, in Britain, many were not having such needs satisfied. Parents struggled to spend enough time with their children due to work commitments and often prevented them from participating in outdoor activities due to safety concerns. Subsequently, parents compensated for this with consumer goods, which largely failed to meet their children’s needs. As such, the needs of British children to form and partake in meaningful relationships and act creatively were repressed, and efforts to satisfy these needs through consumerism failed to bring them happiness.

Resistance as Class Struggle

While not denying the existence of biological causes, the structural organization of society must be recognized as having serious repercussions on people’s mental health. Monopoly capitalism functions to prevent many from experiencing mental well-being. Yet, despite this, the medical model continues to dominate, reinforcing an individualistic conception of mental health and obscuring the detrimental effects of the present mode of production. This oppresses users of mental-health services by subordinating them to the judgment of medical professionals. The medical model also encourages the suspension and curtailment of individuals’ civil rights if they experience mental distress, including by legitimizing the infringement of their voluntary action and excluding them from decision-making. For those who suffer mental distress, life under capitalism is frequently characterized by oppression and discrimination.

Aware of their oppressed status, users and survivors of mental-health services are now challenging the ideological dominance of the medical model and its obfuscation of capitalism’s psychological impact. Furthermore, they are increasingly coalescing around and putting forward as an alternative the need to accept the Marxist-inspired social model of mental health. The social model of disability identifies capitalism as instrumental to the construction of the category of disability, defined as impairments that exclude people from the labor market. Adopting a broadly materialist perspective, a social model of mental health addresses material disadvantage, oppression, and political exclusion as significant causes of mental illness.

In 2017 in Britain, the mental-health action group National Survivor User Network unequivocally rejected the medical model and planted social justice at the heart of its campaign. As part of its call for a social approach to mental health, the group explicitly denounces neoliberalism, arguing that austerity and cuts to social security have contributed to the increasing prevalence of individuals who suffer from poor mental health as well as to the exacerbation of existing mental-health issues among the population. Recognizing social inequality as a contributor to the emergence of poor mental health, National Survivor User Network proposes that the challenge posed by mental-health service users should be part of a wider indictment of the general inequality in society, arguing that “austerity measures, damaging economic policies, social discrimination and structural inequalities are causing harm to people. We need to challenge this as part of a broader social justice agenda.”62 Furthermore, the action group Recovery in the Bin positions itself and the wider mental-health movement within the class struggle, pushing for a social model that recognizes capitalism as a significant determinant of poor mental health. Moreover, representing ethnic minorities, Kindred Minds vigorously campaigns on an understanding that mental distress is less a result of biological characteristics and more a consequence of social problems such as racism, sexism, and economic inequality “pathologised as mental illness.”63 For Kindred Minds, the catalyst for deteriorating mental health is oppression and discrimination, with ethnic minorities having to suffer greater levels of social and economic inequality and prejudice.

Capitalism can never offer the conditions most conducive to achieving mental health. Oppression, exploitation, and inequality greatly repress the true realization of what it means to be human. Opposing the brutality of capitalism’s impact on mental well-being must be central to the class struggle as the fight for socialism is never just one for increased material equality, but also for humanity and a society in which all human needs, including psychological ones, are satisfied. All members of society are affected by the inhumane nature of capitalism, but, slowly and determinedly, the fight is being led most explicitly by the most oppressed and exploited. The challenge posed must be viewed as part of the wider class struggle, as being one front of many in the fight for social justice, economic equality, dignity, and respect.

David Matthews is a lecturer in sociology and social policy at Coleg Llandrillo, Wales, and the leader of its degree program in health and social care.

Notes

1. ↩ World Health Organization, Fact Sheets on Mental Health (Geneva: World Health Organization, 2017), http://who.int.

2. ↩ World Health Organization, Data and Resources (Geneva: World Health Organization, 2017), http://euro.who.int/en.

3. ↩ World Health Organization, Data and Resources.

4. ↩ Sally McManus, Paul Bebbington, Rachel Jenkins, and Traolach Brugha, Mental Health and Wellbeing in England: Adult Psychiatric Morbidity Survey 2014 (Leeds: NHS Digital, 2016).

5. ↩ Brett J. Deacon and Dean McKay, “The Biomedical Model of Psychological Problems: A Call for Critical Dialogue,” Behavior Therapist 38, no. 7 (2015): 231–35. Pharmaceutical companies who have identified it as a market opportunity have been the primary beneficiaries of this approach, exemplified by the proliferation of anti-depressants as illustrated by Brett J. Deacon and Grayson L. Baird, “The Chemical Imbalance Explanation of Depression: Reducing Blame at what Cost?,” Journal of Social and Clinical Psychology 28, no. 4 (2009): 415–35.

6. ↩ As exemplified by Jordan W. Smoller et al., “Identification of Risk Loci with Shared Effects on Five Major Psychiatric Disorders: A Genome-Wide Analysis,” Lancet 381, no. 9875 (2013): 1371–79. In this study, five of the most common mental-health disorders, including schizophrenia, bipolar disorder, and depression, were associated with genetic variations.

7. ↩ Deacon and McKay, “The Biomedical Model of Psychological Problems,” 233.

8. ↩ Social class is one of the most significant indicators of mental health, as evidenced by research within the social sciences dating back to the earlier part of the twentieth century. The first most notable study of this kind is Robert E. L. Farris and Henry W. Dunham, Mental Disorders in Urban Areas (Chicago: Chicago University Press, 1939), which identified higher rates of mental disorders in the poorest districts of Chicago. This was followed by, among others in both Britain and the United States, August B. Hollingshead and Frederick C. Redlich, Social Class and Mental Illness (New York: John Wiley, 1958); Leo Srole, Thomas S. Langer, Stanley T. Michael, Marvin K. Opler, and Thomas A. C. Rennie, Mental Health in the Metropolis: The Midtown Manhattan Study (New York: McGraw-Hill, 1962); and John J. Schwab, Roger A. Bell, George J. Warheit, and Ruby B. Schwab, Social Order and Mental Health: The Florida Health Study (New York: Brunner-Mazel, 1979).

9. ↩ Iain Ferguson, Politics of the Mind: Marxism and Mental Distress (London: Bookmarks, 2017), 15–16.

10. ↩ Paul Baran and Paul Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966), 285.

11. ↩ Baran and Sweezy, Monopoly Capital, 346–47.

12. ↩ Baran and Sweezy, Monopoly Capital, 346.

13. ↩ Baran and Sweezy, Monopoly Capital, 364.

14. ↩ Baran and Sweezy, Monopoly Capital, 354–55.

15. ↩ Paul A. Baran, The Longer View (New York: Monthly Review Press, 1969), 92–111; Paul M. Sweezy, “Paul A. Baran: A Personal Memoir,” in Paul A. Baran: A Collective Portrait (New York: Monthly Review Press, 32–33. The unpublished chapter of Baran and Sweezy’s Monopoly Capital, entitled “The Quality of Monopoly Capitalist Society II,” drafted by Baran, had included an extensive section on mental health. That chapter, however, was not included in the book because it was still unfinished at the time of Baran’s death. Nevertheless, some elements of the mental-health argument were interspersed in other parts of the book. When “The Quality of Monopoly Capitalism II” was finally published in Monthly Review in 2013, almost sixty years after it was drafted by Baran, the section on mental health was excluded due to its incomplete character. See Paul A. Baran and Paul M. Sweezy, “The Quality of Monopoly Capitalist Society: Culture and Communications” Monthly Review 65, no. 3 (July–August 2013): 43–64. It is worth noting that the treatment of mental health in Monopoly Capital did not go unnoticed and was subject to criticism by Robert Heilbroner in a review in the New York Review of Books, to which Sweezy responded in a letter, defending their analysis in this regard. See Robert Heilbroner, Between Capitalism and Socialism (New York: Vintage, 1970), 237–46; Paul M. Sweezy, “Monopoly Capital” (letter), New York Review of Books, July 7, 1966, 26.

16. ↩ The influence of Fromm is evident in Baran’s work and correspondence. He studied Fromm’s The Sane Society, together with Marcuse’s Eros and Civilization and One Dimensional Man (in manuscript form). He was undoubtedly familiar with the wider body of work by both thinkers. While Baran was not in complete agreement with the details of Marcuse’s analyses, he openly acknowledged the importance and significance of his work, identifying Eros and Civilization as having great relevance to U.S. society and recognizing a psychoanalytical analysis as vital to understanding monopoly-capitalist society. See Nicholas Baran and John Bellamy Foster, The Age of Monopoly Capital: Selected Correspondence of Paul A. Baran and Paul M. Sweezy, 1949–1964 (New York: Monthly Review Press, 2017), 127, 131. See also the “Baran-Marcuse Correspondence,” Monthly Review Foundation, https://monthlyreview.org.

17. ↩ Erich Fromm, Beyond the Chains of Illusion: My Encounter with Freud and Marx (London: Continuum, 2009), 7.

18. ↩ Fromm, Beyond the Chains of Illusion, 35.

19. ↩ Bertell Ollman, Alienation: Marx’s Conception of Man in a Capitalist Society (Cambridge: Cambridge University Press, 1977), 131.

20. ↩ Karl Marx, Capital, vol. 1 (1867; repr. London: Lawrence and Wishart, 1977), 571.

21. ↩ Erich Fromm, Marx’s Concept of Man (London: Bloomsbury, 2016), 23–24.

22. ↩ Erich Fromm, The Sane Society (London, Routledge, 2002), 13.

23. ↩ Fromm, The Sane Society, 65.

24. ↩ Fromm, The Sane Society, 22.

25. ↩ Fromm, Beyond the Chains of Illusion, 27.

26. ↩ Fromm, The Sane Society, 27.

27. ↩ Fromm, The Sane Society, 28–35.

28. ↩ Fromm, The Sane Society, 35–36.

29. ↩ Fromm, The Sane Society, 37–59.

30. ↩ Fromm, The Sane Society, 59–61.

31. ↩ Fromm, The Sane Society, 61–64

32. ↩ Fromm, The Sane Society, 14.

33. ↩ Fromm, The Sane Society, 76.

34. ↩ Fromm, The Sane Society, 66.

35. ↩ Karl Marx, Economic and Philosophic Manuscripts of 1844 (1932; repr. Radford, Virginia: Wilder Publications, 2011).

36. ↩ Fromm, Beyond the Chains of Illusion, 63.

37. ↩ Fromm, The Sane Society, 173.

38. ↩ Investors in People, Job Exodus Trends: 2018 Employee Sentiment Poll (London: Investors in People, 2018), http://investorsinpeople.com.

39. ↩ Fromm, The Sane Society, 35.

40. ↩ Health and Safety Executive, Work Related Stress, Depression or Anxiety Statistics in Great Britain, 2018 (Bootle, UK: Health and Safety Executive, 2018), 3, http://hse.gov.uk.

41. ↩ Business in the Community, Mental Health at Work Report 2017 (London: Business in the Community, 2017), http://bitc.org.uk.

42. ↩ Baran and Sweezy, Monopoly Capital, 345.

43. ↩ Fromm, The Sane Society, 15.

44. ↩ Fromm, The Sane Society, 29.

45. ↩ Baran and Sweezy, Monopoly Capital, 347–48.

46. ↩ Jo Griffin, The Lonely Society? (London: Mental Health Foundation, 2010), 6–7.

47. ↩ Griffin, The Lonely Society?, 4

48. ↩ David Marjoribanks and Anna Darnell Bradley, You’re Not Alone: The Quality of the UK’s Social Relationships (Doncaster: Relate, 2017), 17–18.

49. ↩ Luc Goossens, Eeske van Roekel, Maaike Verhagen, John T. Cacioppo, Stephanie Cacioppo, Marlies Maes, and Dorret I. Boomsma, “The Genetics of Loneliness: Linking Evolutionary Theory to Genome-Wide Genetics, Epigenetics, and Social Science,” Perspectives on Psychological Science 10, no 2 (2015): 213–26.

50. ↩ Michael Oliver, The Politics of Disablement (Basingstoke, UK: Macmillan Press, 1990); Eli Zaretsky, Capitalism, the Family, and Personal Life (London: Pluto Press, 1976).

51. ↩ Fromm, The Fear of Freedom, 93.

52. ↩ See Ricardo Antunes, “The New Service Proletariat,” Monthly Review 69, no. 11 (April 2018): 23–29, for an analysis of the evolving insecurity of labor markets within the advanced capitalist nations and the hardening of proletarian divisions.

53. ↩ Trade Union Congress, “15 Per Cent Increase in People Working More than 48 Hours a Week Risks a Return to ‘Burnout Britain’, Warns TUC,” September 9, 2015; Josie Cox, “British Employees are Working More Overtime than Ever Before—Often for No Extra Money,” Independent, March 2, 2017.

54. ↩ David Marjoribanks, A Labour of Love—or Labour Versus Love?: Our Relationships at Work; Relationships and Work (Doncaster: Relate, 2016).

55. ↩ Jacqueline Olds and Richard Schwartz, The Lonely American: Drifting Apart in the Twenty-First Century (Boston: Beacon Press, 2009).

56. ↩ Baran and Sweezy, Monopoly Capital, 347–48.

57. ↩ Baran and Sweezy, Monopoly Capital, 115.

58. ↩ Fromm, Beyond the Chains of Illusion, 63.

59. ↩ Fromm, The Sane Society, 129-130.

60. ↩ Robert Bocock, Consumption (London: Routledge, 2001), 51.

61. ↩ United Nations Children’s Fund, Innocenti Report Card 7: Child Poverty in Perspective: An Overview of Child Well-Being in Rich Countries (Florence: UNICEF Innocenti Research Centre, 2007), http://unicef-irc.org.

62. ↩ National Survivor User Network, NSUN Manifesto 2017: Our Voice, Our Vision, Our Values, (London: National Survivor User Network, 2017), http://nsun.org.uk.

63. ↩ Raza Griffiths, A Call for Social Justice: Creating Fairer Policy and Practice for Mental Health Service Users from Black and Minority Ethnic Communities (London: Kindred Minds, 2018).

Monopoly Capitalism in the 21st Century: Neoliberalism, Monetarism, and the Pervasion of Finance

By Colin Jenkins

The following is the third part of a multi-part series, "Applying Poulantzas," which analyzes the work of Greek Marxist political sociologist, Nicos Poulantzas, and applies it to the unique political and economic structures found under neoliberalism and post-industrial capitalism.


With industrial or "competitive capitalism," it was the "separation and dispossession of the direct producers (the working class) from their means of production" which created this multi-layered, class-based societal structure. [1] Globalization has resulted in a massive shift of national economies. Former industrialized nations are now considered "post-industrial" due to the ability of large production-based manufacturers to move their operations into "cheaper" labor markets. International and regional trade agreements have facilitated this shift. With post-industrial capitalism and the widespread destruction of "productive labor," or labor that produces a tangible product and is thus exploited through the creation of surplus value, it is the complete reliance on a service economy which produces no tangible value that allows for strict control through wage manipulation. The ways in which the working class interacts with the owning class has changed significantly, if only in regards to their physical worlds. In the US, financialization has replaced industrialization as the main economic driver. Alongside this shift, monopoly capitalism has effectively replaced "competitive capitalism," and globalization has ushered in the neoliberal era. These developments have rearranged the superstructure and forced capitalist states to develop new methods in maintaining a societal equilibrium that is constantly being pushed to the brink of unrest at the hands of a capitalist system that breeds concentrations in wealth and power, while simultaneously driving the working-class majority towards a state of functional serfdom.

The emergence of monopoly capitalism was inevitable. "The battle of competition is fought by cheapening of commodities," explained Marx. "The cheapness of commodities depends, ceteris paribus, on the productiveness of labor, and this again on the scale of production. Therefore the larger capitals beat the smaller."[2] Whether we are referring to technology and automation, the relation of finance and the varying degrees of access to capital, or merely the all-encompassing process of "cheapening commodities" which Marx refers to above, it all works in tandem to create a funneling effect whereas capital becomes concentrated. And with this concentration of capital comes the concentration of wealth, which in turn inevitably breeds concentrations of other forms of power, i.e. political. In this sense, what many have come to refer to as "corporatism" is more correctly viewed as a mature stage of capitalism, rather than a differentiation from capitalism. The "marriage of corporation and state" that Benito Mussolini once referred to is merely a byproduct of capitalist advancement - the natural consequence of concentrated interests relying on the state apparatus to both facilitate its progression and protect its assets.

The consequent development of financialization could also be seen as an inevitable late stage of capitalism. As Paul Sweezy explains, while paraphrasing Marx, "Further, the credit system which 'begins as a modest helper of accumulation' soon 'becomes a new and formidable weapon in the competition in the competitive struggle, and finally it transforms itself into an immense social mechanism for the centralization of capitals.'"[3]

In the US, the creation of the Federal Reserve and the use of government-approved, macroeconomic policy-making has been a crucial tool in maintaining the equilibrium that is a central theme of Poulantzas' work. It has, in a sense, represented a Captain's wheel on a chaotic ship rolling over rough seas. The Keynesian model that dominated the American landscape from the late-1930s until the late-1970s relied on fiscal policy to supplement private sector instability, mainly by stimulating and supplementing this sector through infusions of money.

A shift to monetarism in the late-1970s paralleled the arrival of the neoliberal era, an intensification of privatization, and deregulation. While the all-encompassing policy-direction found under neoliberalism extended into the geopolitical realm to include "free trade" agreements and far-reaching international policies directed by the IMF and World Bank, it was this newfound reliance on monetary policy that created more ground between the standard operations of capitalist economy and the development of a " corporate-fascistic model." In other words, it allowed for greater returns on corporate profit in spite of wage stagnation, an overall degeneration of employment, increased poverty, and a consequent decline in expendable (consumer) income from within the working class. With regards to the equilibrium, direct manipulation of the money supply has allowed for a tightly-controlled mechanism that safeguards this extension and intensification of systemic inequities. Neoliberal economist Milton Friedman echoed the call for monetarism through his analysis of the Great Depression:

"The Fed was largely responsible for converting what might have been a garden-variety recession, although perhaps a fairly severe one, into a major catastrophe. Instead of using its powers to offset the depression, it presided over a decline in the quantity of money by one-third from 1929 to 1933 ... Far from the depression being a failure of the free-enterprise system; it was a tragic failure of government." [4]

Friedman's assessment wasn't critical of the existence of the Fed, or even of the Fed's ability to manipulate the money supply, but rather quite the opposite; it was critical of the Fed's failure to increase the money supply in times of crisis. In this sense, Monetarists did not oppose the Keynesian approach of intervention, but rather the nature of that intervention -fiscal policy (government spending) versus monetary policy (Quantity Theory of Money). The former provides money to the government, which in turn creates public programs and/or increases public spending that directly affects the population. The latter provides money to the financial industry and/or government, which in turn provides money to "power players" (corporate interests, big business, bank bailouts, etc...) in the hopes that such money will make its way through the population, hence "trickle down." Modern monetarism (Post-2008 financial crisis) has intensified through multiple bouts of QE (Quantitative Easing), which has reaped tremendous growth for the financial industry and big business (see the Dow Jones Industrial Average) while having no positive effect on the population, which continues to struggle through stagnation, chronic unemployment, and impoverishment.

It is no surprise that financialization found a perfect bedfellow in neoliberalism . "The neo-liberal bias towards de-regulation, which widened the space for financialization, was more often linked to an institutional fix that relied (and still relies) on 'unusual deals with political authority', predatory capitalism, and reckless speculation - all of which have fuelled the global financial crisis," explains Bob Jessop. "As the limits to 'more market, less state' emerged, there was growing resort to flanking and supporting measures to keep the neo-liberal show on the road. This was reflected in the discourse and policies of the ' Third Way ', which maintained the course of neo-liberalization in new circumstances, and is linked to the North Atlantic Financial Crisis (witness its eruption under 'New Labour' in Britain as well as the Bush Administration in the USA)." [5]

While conducted and carried out on different spheres, and for different reasons, financialization and expansionary monetary policy have emerged in parallel to one another. Because of this, they have maintained a loose relationship in the era of neoliberalism, with one (financialization) creating massive rifts and chaotic patterns of accumulation, and the other (monetary policy) attempting to manage the aftermath of this chaos. This has added yet another element to what Poulantzas saw as the inevitable rise of the authoritarian nature of State Monopoly Capitalism (SMC), whereas the capitalist state is forced to become more and more involved in maintaining equilibrium. In the economic realm, this amounts to monetary policy; in the political realm, this amounts to steadying the superstructure (balancing austerity measures with the welfare state); and in the social realm, this amounts to increased militarization of domestic police forces and a gradual erosion of civil liberties, features that become necessary when society's equilibrium is pushed toward a breaking point (civil unrest).

In the era of finance-dominated accumulation, and especially following periodic, systemic crises, governments have extended their reach to deal with unprecedented volatility. This was seen following the financial crisis of 2008-09, as capitalist states the world over scrambled to right their ships which had been steered into a perfect storm of financialized accumulation (many guided by illegal schemes; see the mortgage-backed securities scandal). Since then, it has become commonplace for governments, through monetary policy, to "intervene periodically to underwrite the solvency of banks, to provide extraordinary liquidity and to guarantee the deposits of the public with banks." [6] This is not to suggest that government intervention in the capitalist system is a new phenomenon; only that its methods have changed as capitalism has changed. Poulantzas explains:

"In the competitive capitalist stage, the capitalist state (the liberal state) always played an economic role; the image of the liberal state being simply the gendarme or night watchman of a capitalism that 'worked by itself' is a complete myth… From taxation through to factory legislation, from customs duties to the construction of economic infrastructure such as railways, the liberal state always performed significant economic functions..." [7]

With monopoly capitalism and the onset of financialization, the tendency toward extreme developments in both accumulations of the dominant classes and dispossession of the dominated classes requires higher degrees of state intervention. These interventions inevitably extend far beyond the economic base. Poulantzas contrasts this development with its former stage of 'competitive capitalism':

"If it is possible to speak of a specific non-intervention of this state into the economy, this is only in order to contrast it with the role of the state in the stage of monopoly capitalism, the 'interventionist state' which Lenin already had in mind in his analysis of imperialism. The difference between this and the state of competitive capitalism is not, as we shall see, a mere quantitative one. In the stage of monopoly capitalism, the role of the state in its decisive intervention into the economy is not restricted essentially to the reproduction of what Engels termed the 'general conditions' of the production of surplus-value; the state is also involved in the actual process of the extended reproduction of capital as a social relation." [8]

The emergence of expansionary monetary policy, most notably in the US Federal Reserve's use of Quantitative Easing, has become the go-to method of addressing the chaotic effects of financialization. This has become a necessary component for embedded capitalist interests that have taken advantage of a system that privatizes gains and publicizes losses. For the working classes, the reliance on consumer credit for not only luxury goods but necessities has illustrated how financialization has penetrated everyday life. To the former industrialized working classes (like that in the US), this is due to the emergence of both globalization and neoliberalism, which "favour exchange- over use-value" and "treat workers as disposable and substitutable factors of production," and "the wage (including the social wage) as a cost of (international) production." [9]

The permeation of this trifecta (Globalization, Neoliberalism, and Financialization) is not lost on the working classes. "Neoliberalism tends to promote financialization, both as a strategic objective and as an inevitable outcome," Jessop writes. "As this process expands and penetrates deeper into the social and natural world, it transforms the micro-, meso- and macro-dynamics of capitalist economies." [10] For the economic base and its power players, the state's use of expansionary monetary policy becomes a lifeboat, providing eternal life to corporate accumulation. For the working-class majority, whose existence is more and more precarious due to declining wages, consumer credit (often predatory) becomes a necessity to satisfy basic needs. Jessop concludes:

"The primary aspect of the wage is its treatment as a cost of (global) production rather than as a source of (domestic) demand; this is linked to re-commodification of social welfare in housing, pensions, higher education, health insurance, and so on. This leads to growing flexibility of wage labour (especially increasing precarization), downward pressure on wages and working conditions, and cuts in the residual social wage. A further result is the financialization of everyday life as the labour force turns to credit (and usury) to maintain its standard of living and to provide for its daily, life-course, and intergenerational reproduction. Combined with the increased returns to profit-producing and interest-bearing capital, this also intensifies income and wealth inequalities in the economies subject to finance-dominated accumulation, which now match or exceed their levels in just before the 1929 Crash (Elsner 2012; Saez 2013)." [11]

Monopoly capitalism in the 21st century has become ever more reliant on capitalist states to serve as facilitators, protectors, and a damage control mechanism. Former industrialized nations have shifted the remnants of "competitive capitalism" to global labor markets (which are also state-supplemented) and replaced them with service-sector economies based in finance schemes that seek to reproduce "fictitious capital" at alarming rates. Capitalist states, in adjusting to this shift, have embraced expansionary monetary policy as a means to address the ensuing chaos by supplementing and protecting financial institutions (the dominant classes in the age of neoliberalism/financialization). Will the volatility created by this shift finally bring capitalism to its breaking point? Will the prospect of automation force governments to develop radically new welfare states that include basic income guarantees? Will highly-exploited, global labor markets radicalize and collectivize, and bring the neoliberal era to its knees? The future brings many questions.

Notes

[1] Poulantzas. Classes in Contemporary Capitalism. Verso, 1978, pp. 97-98.
[2] Marx, Karl. Capital, Volume 3. Moscow: Progress Publishers, 1894.
[3] Sweezy, Paul M. "Monopoly Capital." Monthly Review, Volume 56, Issue 5. October 2004.
[4] Friedman, Milton & Friedman, Rose. Two Lucky People: Memoirs, University of Chicago Press, 1998.
[5] 'Finance-dominated accumulation and post-democratic capitalism', in S. Fadda and P. Tridico, eds, Institutions and Economic Development after the Financial Crisis, London: Routledge, 83-105, 2013.
[6] Lapavitsas, C. (2013) Profiting without Producing: How Finance Exploits All, London: Verso.
[7] Classes in Contemporary Capitalism, p. 100.
[8] Ibid. p. 100.
[9] Bob Jessop. (April 1, 2014) "Finance-Dominated Accumulation and Post-Democratic Capitalism."
http://bobjessop.org/2014/04/01/finance-dominated-accumulation-and-post-democratic-capitalism/
[10] Jessop, 2014.
[11] Jessop, 2014.

Works Cited

Elsner, W. (2012) 'Financial capitalism - at odds with democracy: The trap of an "impossible" profit rate', Real-World Economics Review, 62: 132-159. http://www.paecon.net/PAEReview/issue62/Elsner62.pdf

Saez, E. (2013) 'Striking it richer: The evolution of top incomes in the United States (Updated with 2011 estimates)', at http://elsa.berkeley.edu/~saez/.