A Primer on the Radicalization of the Ecuadorian Left: 1959-1983

[Pictured: Workers and indigenous communities rising up against President Lenin Moreno’s economic assault in 2019]

By Sofia Lanchimba Velastegui

Republished from Scottish Centre for Global History.

During the 60s and 70s, a process of radicalization took place within the left-wing tradition that would reconfigure the militant camp and political identities. Beginning in 1959 with a massacre in Guayaquil, the increase and radicalization of protests in a scenario of economic crisis and the formation of URJE (Revolutionary Union of Ecuadorian Youth) culminated around 1983, when most of its expressions disappeared, divided, or transformed.

Political activation produced an organizational explosion. Several parties were created located to the left of the Socialist Party (PSE) and the Communist Party (PCE) that had been present in Ecuadorian history since 1926 and 1931 respectively. At the same time, important processes of social mobilization took place. In the 60s the main actor was the student movement and, in the 70s, the trade union movement.

These new parties emerged around debates on revolutionary strategy and realignments regarding Stalinism, the Sino-Soviet conflict, the Cuban revolution, Vatican politics, and anti-colonial revolutions. Thus, there was a multiplication within the left-wing family: communists, socialists, Guevarists, Trotskyists, Maoists, left-wing Christians, etc.

The banana crisis [1] that occurred at the end of the 50s  generated a situation of extreme urban and rural poverty with the growth of poverty belts, especially in Guayaquil. The general discontent of the population was evident in Portoviejo in May 1959, and a few days later in Guayaquil. The response of the government, ruled by then-Social Christian President Camilo Ponce Enríquez, was brutal repression. Under the order to “shoot to kill” there was a massacre of between 600 and 800 people [2] which has been silenced in the collective memory.

The massacre of June 2 and 3, 1959 in Guayaquil was the catalyst that ignited revolutionary spirits. One of the flyers drawn up by the Strike Committee the day after the massacre read: “May the blood shed in the streets of Portoviejo and Guayaquil, by our brothers in the cause, be the germ that makes the glorious seed of the Revolution”. Likewise, one of the then-militants claims: “from June 3, 1959, I took an option together with the exploited.” One of the survivors of the massacre, Jaime Galarza Zavala, became one of the most prominent leaders of the radicalized left and one of the notorious targets of the CIA. After the massacre, young militants from the Communist and Socialist Parties, as well as the Concentration of Popular Forces formed URJE.

A generation of militants was radicalized the same year that the Cuban Revolution had taken place. They were not the only ones, the same happened in other parts of the continent. These were years in which the international political markers of the Cold War had a greater weight in the definition of the political field and caused its polarization in a friend-enemy logic. A world divided between the Soviet Union and the United States offered greater possibilities for the strengthening of transnational identities. On the one hand, communism, and the radical left, and on the other, anti-communism and dictatorships were signs of polarization. The different expressions of the left felt more comfortable with their international families than with their countrymen. The Cold War upset the internal balances of force and gave the left the impression of having more weight and strength than they had.

Although URJE was influenced by the Communist Party, it acted with a margin of autonomy. Inside it, a radicalization was brewing against the socialist and communist parties because they demanded the abandonment of the revolutionary project. Linked to URJE, the first attempt to organize a rural guerrilla occurred. In 1962 URJE militants were arrested in the first attempt to reunite what became known as the “Toachi Guerrilla”.

The repression and the failure of the attempts to detonate the guerrilla forced a reorganization of the left and a change of strategy. During the 1970s, the organizations turned towards a mass insurrectionary policy. It was no longer about the guerrilla vanguard. All parties were committed to quantitative growth through the creation of mass fronts. At the same time, the trade union movement gained strength in the 70s, because of incipient industrialization processes. Between 1975 and 1983, the most important national strikes took place.

During the two decades, the left faced dictatorships, counterinsurgent strategies and strong anti-communism whose target was not only the members of the Communist Party or leftist militants, but all expressions of popular discontent. However, the repression only affirmed the revolutionary spirit. The biggest blow came through the legal-political reform of 1979 when Ecuador returned to constitutional order. The entrance to institutional life disarmed the revolutionary organizations. Most of its expressions entered formal political life and those that did not gradually disappeared.

Sofia Lanchimba Velastegui is an Ecuadorian sociologist and lawyer. She investigates mobilization and leftist militancy in Ecuador between the 1960’s and 90’s.

References

This article is based on the review of declassified CIA files, flyers and oral interviews with militants collected for the doctoral thesis of the Political and Social Sciences Program, UNAM.

Endnotes

[1] Ecuadorian banana exports fell. The price of essential items increased.

[2] There is no official death toll. The newspaper “El Comercio” recognizes eight dead people, however, testimonies and flyers speak of 500, 700 or 800 dead.

Capitalism's Overproduction Problem: A Primer

By Prabhat Patnaik

Republished from Monthly Review.

It is in the nature of capitalism to have “over-production crises”, i.e., crises arising from “over-production” relative to demand. “Over-production” does not mean that more and more goods keep getting produced relative to demand, so that unsold stocks keep piling up. This may happen only for a brief period in the beginning; but as stocks pile up, production gets curtailed, causing recession and greater unemployment.

“Over-production”, in short, is ex ante, in the sense that if production were to occur at full capacity use (or at some desired level of capacity utilisation), then the amount produced could not be sold because of a shortage of demand. But it manifests itself in reality in terms of recession and greater unemployment.

It is a mistake to believe that such crises are only cyclical in nature, i.e., that they get automatically reversed after a certain period of time. On the contrary, the Great Depression of the 1930s, which was a classic over-production crisis, lasted nearly a decade and was finally overcome because of the war, or, to be precise, because of military expenditure in preparation for the Second World War.

Since 2008, there has again been an over-production crisis that has persisted with varying intensity right until now. There is, thus, no question of an over-production crisis under capitalism automatically disappearing. But what was striking about the erstwhile socialist economies of the Soviet Union and Eastern Europe is that they were free from over-production crises. The question is why?

Over-production crises under capitalism arise because of two main reasons. One, investment decisions under capitalism depend upon the expected growth of demand, for which the current growth of demand is taken as a clue: if demand slows down then investment gets restrained. Two, whenever investment gets restrained, so does consumption and hence total income (this is called the “multiplier” effect of investment).

Both these factors were eliminated under socialism. Investment was undertaken according to a plan and not the dictates of profitability; hence, there was no question of investment being curtailed when the growth of demand slowed down for any reason. This is not to say that there were no fluctuations in the level of investment. These fluctuations, however, arose not in response to profit expectations, but for entirely exogenous reasons, of which, two in particular were important.

One was agricultural output fluctuations. In years when the agricultural output went down for weather-related, or some other, reasons, investment was cut, in order to prevent excessive upward pressures on food prices; correspondingly when agricultural output revived, so did investment. These investment fluctuations, however, had nothing to do with any calculations of profitability on investment; they were unavoidable even in a planned economy.

The second reason was the operation of “echo effects”. Suppose, for instance, that a whole lot of new investment had been installed in a bunched manner at a certain date, say the beginning of the planning period. These pieces of equipment would become due for retirement again in a bunched manner around the same time some years later, which would, therefore, push up the investment plan, and hence the real gross investment around that time, so that both net investment and replacement needs are accommodated. The investment figure, therefore, would not show a steady growth but would exhibit fluctuations. But these fluctuations again had nothing to do with any calculations of profitability; they arose because of past investment history.

But even when such investment fluctuations occurred, socialist economies ensured that they did not lead to fluctuations in consumption and income, i.e., those economies snapped the multiplier relationship that necessarily characterises capitalism. This is because all firms in the economy were asked to produce to their capacity, and, if demand was low because of investment being curtailed, then they were asked to lower their prices until whatever they produced got sold.

At these “market-clearing” prices, some firms would make losses, while others would still make profits; but this would not matter since both the profit-making and the loss-making firms belonged to the State, which could, therefore, cross-subsidise the loss-making ones from the profits of the profit-making ones. And taking both groups of firms together, there would always be positive net profits as long as investment was positive (even if lower than would have been otherwise).

This was a remarkable break from what happens under capitalism, and provides a clue to why output and employment fall in a crisis there. Under capitalism, a firm does not produce when prices do not cover costs; and when demand is low, prices do not fall, because they are “administered” through collusion among the oligopolistic firms. Instead, output, and hence employment, fall in order to equate supply with demand, and to eliminate stocks which might have got built up briefly.

The matter can be looked at somewhat differently. A fall in price, with money wages and employment given, which is what happened under socialism, meant a rise in the share of wages in total output; income distribution in short shifted in favour of the workers. Since workers more or less consume their entire wages, such a shift in income distribution in favour of the workers raised the share of consumption in total output. Thus, socialist economies never experienced over-production crises because even when investment fell for some reason, output was kept unchanged and the share of consumption rose to compensate for the fall in investment (through a rise in the workers’ share in output).

This, however, can never happen under capitalism because capitalists would never voluntarily agree to a lowering of their share in output and a corresponding increase in workers’ share, even in a situation of inadequate aggregate demand. This is why capitalism experiences over-production crises: income distribution here is a matter of intense class-struggle where there is no question of capitalists agreeing to lower their own share and correspondingly raise workers’ share for the sake of overcoming a situation of over-production.

The “multiplier” that operates under capitalism, whereby a reduction in investment causes a reduction in consumption and hence total output, occurs because of income distribution not being adjustable. The “multiplier”, in other words, is predicated upon the relative shares among capitalists and workers being given.

In fact, under capitalism, far from the workers’ share rising to offset the problem of insufficient demand, the tendency in periods of crisis is the exact opposite, namely, to cut wages and raise the share of profits, which, in a situation of reduced investment that brought about the crisis in the first place, actually compounds the crisis. A 10% fall in investment in such a situation does not just bring about a 10% fall in output, as the “multiplier” analysis would suggest, but a more than 10% fall in output, say a 15% fall, because an additional squeeze on consumption through a fall in workers’ share (via the wage cut) is further superimposed upon the reduction in investment.

The fact that the relative share of the workers is not allowed to increase in order to offset the tendency towards over-production, which is a basic characteristic of capitalism, also shows its supreme irrationality as a system. It shows that the system would rather have larger unutilised capacity and unemployment, i.e., a sheer waste of productive resources for lack of demand, than produce as before by avoiding this waste through giving more to the workers. From its point of view, wasted resources are preferable to using these resources to improve workers’ consumption. True, not being a planned system, it does not make such calculations consciously; but that is what its immanent tendencies amount to. Socialism avoids any waste or slack, such as is caused by a crisis, by raising the consumption of workers appropriately to avert it.

As the collapse of the Soviet Union recedes further into history, people increasingly forget that a system had existed there, which, notwithstanding its many limitations and defects, had nonetheless been free of unemployment, of over-production crises and of the irrationality of capitalism.

Prabhat Patnaik is Professor Emeritus at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. His books include Accumulation and Stability Under Capitalism (1997), The Value of Money (2009), and Re-envisioning Socialism (2011).

The Social Economy of Rojava: A Primer on the Co-op Model

By Thomas Sullivan

Since the 2011 liberation of the northern Syrian region commonly known as Rojava, the de facto leadership of the Democratic Federation of Northern Syria has begun a program of ground-up direct democracy, women's liberation, and socially-owned means of production (Knapp 2016, 52). This article will examine the economic conditions of Rojava, by way co-operative ownership, so that an evaluation with historical context may be available.

Background on Rojava

After the liberation, the people of Rojava were faced with a post-colonial, monoculture economy with little industry available for refined goods. The Ba'athist regime had limited agriculture in the three cantons to only a single crop and allowed for no means of processing these crops. Around 80% of farm land was held by the government, the rest held by private businesses (Knapp 2016, 192).

With the intent of establishing a social economy, the land was handed over to local, municipal units called communes for distribution for co-operative ownership by workers. 2,500 hectares have been distributed to the co-ops as of 2015, with 1-4 being reserved for individual use. No large land-owners have been allowed access to the seized land (Knapp 2016, 199).

Beyond land and agriculture, co-operatives focused on simple industries have been organized in cities to increase the self-sufficiency of Rojava. These include bread-baking, textiles, clothes production, dairy production, and selling cleaning supplies (Knapp 2016, 200).

Historical Context

To best examine how the co-operatives of Rojava may thrive, we would need to look at past examples as a basis for future predictions. One of the most cited examples of a successful cooperative is the Spanish Mondragon Co-operative Corporation. The organization, which dates to 1956, was founded from several co-operative organizations that joined together in 1991 to form the international corporation it is today. The co-ops showed remarkable staying power, with most of the 100 original co-ops surviving to form the united corporation. Employing upwards of 3% of the Basque region's workforce over multiple industries, the co-operatives showed that alternative corporate models could be successful when they were previously untested on a large scale (Harding 1998, 61).

However, the Mondragon example also points to a critical failing of co-ops. Mondragon has shed many of its original ideals to remain competitive with other international businesses as the globalized, capitalist economy has developed. This includes creating non-co-op subsidiaries abroad and decreasing the number of co-operative employees to 29.5% as of 2007 (Bretos 2017, 155). This example of the most well-known and well-studied co-operative falling back into a more capitalistic model would suggest that the co-op model is not sustainable in the long term.

Mondragon's change did not occur in a vacuum of some static economy. The co-operative began to require modification after the fall of the fascist Franco government, the liberalization of Spain's economy, and the opening of European free trade by way of the European Common Market and later the European Union (Harding 1998, 62). We can see from this mix of pro-capitalist institutional changes that external stress on co-operatives would result in failures or the need for structural changes.

The Rojava Difference

The situation in Rojava currently precludes such stressors. Only 20% of arable land is held by private owners, with a moratorium on any new private landowners (Knapp 2016, 199). There was little to no pre-existing industry, with most small business owners having fled when the revolution began. As such, most of all business is co-operative and directly supported by the local governments. The pressure is on private businesses to offer co-operative grade work or lose the ability to function to co-ops. Moreover, the embargo in place on Rojava by neighboring Turkey and South Kurdistan limits the possibility of inclusion with free-trade economics (Knapp 2016, 196).

Co-operatives within the Rojava system are inextricably tied to the commune system of self-governance. They are specifically forbidden by law from becoming independent private businesses. As such, local communes elect the co-ops' leadership; the economic commissions throughout the administration supports the co-ops' production. In exchange, the needs of the greater society and local commune are served by the co-ops (Knapp 2016, 205).

Local co-ops alone are obviously insufficient to meet every commune's need. They therefore pass their needs on to economic committees at the federal level. Surplus production from other regions is allocated to communes lacking in some areas, while surplus production is likewise given for distribution outside of the native commune (Knapp 2016, 206).

The Movement for a Democratic Society is one of the overlapping organizations that guides the development of co-operatives and other aspects of the emerging social economy. Their Economic Committee issues a pamphlet concerning how these co-ops are to be run (The Movement for a Democratic Society 2016). Of interest is the division of profits. Twenty percent is given over to the commune to handle any needs of the commune, 30% reserved by the co-op to purchase more goods, machines, and other capital, and 50% to shareholders. Workers received a monthly salary as well as their share of the profits yearly or when a major goal is completed.

Those who work in the co-op are considered shareholders and receive the highest allocations from net profits. Members can also contribute capital of some sort to the co-op to receive a payout, but to a lesser extent than workers.

People over Profits

Understanding the difference between this social economy and the ubiquitous capitalist economy will require a recap of labor theory and surplus-value. Karl Marx explains that the value of commodities sold on the market can be separated between the use-value of the item and the surplus-value of it. The surplus is the source of worker exploitation, where the worker is not receiving the whole possible value of their work. Allowing workers to keep the full value of their work eliminates this exploitation. Methods by which the workers can retain surplus value are varied, with no single answer for the best possible way.

For Rojava's co-operative economy, an initial glance would suggest that worker exploitation remains. The co-op pays the workers a wage and sells their production for a value higher than their combined salaries and the cost of production. As Thomas Sekine enumerates in his work, value theory can be formulated in with a simple c + v + s = end value (Sekine 1997, 129). The value c would represent any constant capital, as in the actual means of production, v would represent variable capital, as in labor-power purchased, and s would be surplus value. Sekine explains that only in the application of labor-power, by way of production, does this end value result. Surplus value alone does not contribute to the end value but is a separate part of the value added by labor-power retained by a capitalist or in this case the co-op (Sekine 1997, 130). As such, there is a part of the workers' labor-power being removed that would otherwise represent a degree of exploitation under a capitalist system.

But the Rojava system distributes the profits in a way that favors the worker over non-working members. The workers are paid the highest portion relative to the non-working capital contributors (The Movement for a Democratic Society 2016). As such, surplus value is redistributed back to the workers through yearly payouts and amounts given over to the commune used to improve the workers conditions through improving the commune collectively.

The Future of Rojava and the Co-ops

Understanding the function of the co-ops within Rojava is one step in understanding the complex interaction of municipal direct democracy, the social economy, and libertarian-socialist ideals. Historical context suggests that given a stable and supportive political economy within Northern Syria, the co-ops will prove as beneficial and successful as any capitalist model would be able.

Unfortunately, the situation surrounding this experiment may not allow for this. The Ba'athist regime still holds most of Syria, the rebels are hostile to Rojava's continuation, other Kurdish groups are unsupportive of their efforts, and Turkey has recently begun a campaign of conquest in the most western canton with threats of future invasion. Should Rojava weather this storm, they may face more external pressure from American and European economic imperialism or from neighboring powers such as Iran or Saudi Arabia.

References

Bretos, I., & Errasti, A. (2017). Challenges and opportunities for the regerneation of multinational worker cooperatives: Lessons from the Mondragon Corporation - a case study of the Fagor Ederlan Group. Organization, Vol. 24(2) 154-173.

Harding, S. (1998). The Decline of the Mondragon Cooperatives. Australian Journal of Social Issues, Vol. 33 No. 1 59-76.

Knapp, M., Flach, A., & Ayboga, E. (2016). Revolution in Rojava : Democratic Autonomy and Women's Liberation in Syrian Kurdistan. London: Pluto Press.

Marx, K. (1995, 1999). Capital, Volume One. Marx/Engels Internet Archive (marxists.org).

Sekine, T. (1997). An Outline of the Dialect of Capital, Volume One. London: Palgrave Macmillan

The Movement for a Democratic Society. (2016, February 15). The Experience of Co-operative Societies in Rojava. Retrieved from The Hampton Institute: http://www.hamptoninstitution.org/cooperatives-in-rojava.html