Another excessively long blog post.
I recently published a long article ("Marxism and the Solidarity Economy: Toward a New Theory of Revolution") that was basically just the fourth chapter of my book on worker cooperatives (albeit with some edits). Still trying to get the word out about my "revisions" to Marxism, so I thought it wouldn't do any harm to post most of that article here. (I've deleted the "empirical" section.) I frankly doubt all this "theory" stuff is as important as academic Marxists like to think, but since most of the academic and sectarian debates about Marxism are fairly empty and derivative, whereas what I've written here at least has the merit of being meaningful and original, I, too, can pretend to think theory is important.
A more thorough, and more academic, article would have to discuss the whole history of Marxist theorizing on revolution, from revisionists like Eduard Bernstein to orthodox writers like Karl Kautsky, from the classics to recent writers. It would in fact have to comment on anarchists too, from Proudhon to Kropotkin, Rudolf Rocker to Murray Bookchin. Even Maoism would have to make an appearance. The "article" would turn into a book. I've thought about writing such a book, to explain how my ideas answer a lot of the old questions and resolve old debates, exposing the inadequacies of, frankly, nearly all traditional points of view. But two considerations have prevented me from writing such a book: first, I'm too lazy, and second, as I indicated a moment ago, I'm not convinced it's important. Leftist intellectuals have dressed up all the old theoretical controversies in very fancy clothes, as if issues of incredible profundity were being discussed—as if the achievement of socialism itself hung in the balance—but the fact is that the productive work of activists goes on almost entirely in blissful ignorance of sectarian, hair-splitting Ivy Tower debates among intellectuals. However useful my intervention might be to these debates that go on in scholarly journals and conferences and on some left-wing websites (if, that is, I could embellish my writing with sufficient academic paraphernalia to be taken seriously), it would surely be of little consequence with regard to the project of actually changing the world.
Still, there's enough of an academic in me that I'm considering it.
In the twenty-first century, it is time that Marxists updated the conception of socialist revolution they have inherited from Marx, Engels, and Lenin. Slogans about the “dictatorship of the proletariat” “smashing the capitalist state” and carrying out a social revolution from the commanding heights of a reconstituted state are completely obsolete. In this article I propose a reconceptualization that accomplishes several purposes: first, it explains the logical and empirical problems with Marx’s classical theory of revolution; second, it revises the classical theory to make it, for the first time, consistent with the premises of historical materialism; third, it provides a (Marxist) theoretical grounding for activism in the solidarity economy, and thus partially reconciles Marxism with anarchism; fourth, it accounts for the long-term failure of all attempts at socialist revolution so far. In serving these functions, the revision I propose finally “modernizes” and corrects Marx’s conception of revolution.
The death of Marxism has been announced so many times that it might seem anachronistic to reconsider Marx’s ideas yet again. In the twenty-first century, haven’t we moved beyond Marxism? The answer, it seems, is no. For one thing, in recent years even the mainstream media has suggested that the ghost of Marx is haunting the world. Articles are published with headlines like “Why Marx was Right” and “Marx’s Revenge: How Class Struggle Is Shaping the World,” and mainstream economists like Paul Krugman and Nouriel Roubini invoke Marxism to explain capitalism’s current crisis. Radical thinkers such as David Harvey and Richard Wolff have become academic celebrities, and magazines like Jacobin are becoming more popular. In fact, a Gallup poll in 2019 found that young Americans have just as positive a view of socialism as of capitalism. It seems, then, that reports of Marx’s death have been greatly exaggerated.
It is worth asking why Marxism is so resilient. On the most basic level, the answer is that class struggle is indeed of central and perennial importance to human life. Since the emergence of social classes thousands of years ago, individuals’ and groups’ access to resources has been determined primarily by their positions in particular relations of production (or a “mode of production”)—and of course access to resources is of unique importance to life, since it essentially determines one’s ability to survive and to influence what happens in society. The way that economic production has worked since class structures emerged is that certain classes of people have, through various methods of “hard” and “soft” power, forced others to work for them, or rather to produce a surplus that can be appropriated by the privileged or those with power. Whether people have been aware of “forcing” others to work—or of being forced to work—is irrelevant; the point is that the system has functioned in such a way that some people have had to be slaves, serfs, wage-laborers, etc., while others have been slaveowners, landed aristocrats, capitalists, etc.—i.e., have profited off others’ labor (due to asymmetrical power relations). Exploiters and exploited have thus confronted each other in a perpetual struggle, sometimes implicit and sometimes explicit, to have more power and resources. The profound explanatory power of this analytic framework explains why academic Marxism has for decades been relatively prominent even in a capitalist society.
Incidentally, a corollary of this emphasis on class struggle and class interests is equally valid: at least if explanation is one’s goal, it is more fruitful to analyze “social being” than “consciousness.” The former is more fundamental than the latter, in part because consciousness tends to be a sublimation of social being. That is to say, ideologies, discourses, subjective identities, thoughts and conceptions of all kinds are conditioned by such non-discursive things as economic realities, institutional imperatives (the need to follow the rules of given social structures), physical environments, and the basic necessities of biological survival to a far greater degree than the latter are conditioned by the former. This is true with respect to both individuals and collectivities. For example, people in a particular social category will tend to have beliefs that legitimate their economic interests and institutional roles. Slaveowners may well believe that slavery is moral or divinely ordained; intellectuals will probably think that ideas or “discourses” are of tremendous importance in structuring the world; capitalists will be prone to thinking that capitalism and greed are natural and good. But even if some people manage to be more mentally independent than the majority, that doesn’t matter much, because there are still overwhelming pressures for their behavior to conform to social structures and institutional norms. And these are situated in a material and economic context that is, on a broad scale, structured around the power and interests of a “ruling class” (consisting of those who occupy the dominant positions in a society’s dominant mode of production).
Thus, on the societal level too, consciousness and ideas are secondary to the configuration of production relations, the resultant distribution of resources, and institutional structures in general. Ideologies will tend to predominate that either legitimate or are compatible with the interests of those people who have the most control over the most resources, i.e., the ruling class. As Marx said, “the ideas of the ruling class are in every epoch the ruling ideas.” True understanding of social dynamics, therefore, necessarily exists on a materialist foundation.
Aside from these general considerations, the obvious reason why Marxism keeps reappearing in the broader culture is that Marx was basically right in his analysis of capitalism: the economy is prone to crisis, class polarization has a pronounced tendency to increase (unless held in check by other forces), the working class tends to be relatively or absolutely immiserated, people in general are commodified and dehumanized in capitalist society, commodities are “fetishized,” and so forth. In fact, all it takes is an unbiased mind to see that Marxian perspectives on all facets of capitalism are extraordinarily penetrating: the writings of E. P. Thompson, Raymond Williams, Paul Sweezy, Paul Baran, Ernest Mandel, Harry Braverman, David Montgomery, Robert Brenner, Erik Olin Wright, Göran Therborn, Mike Davis, Thomas Ferguson, David Harvey, John Bellamy Foster, and innumerable other academic Marxists of the last seventy years are sufficient to prove this. And of course there are the writings of Marx and Engels themselves to consider, as well as of the second generation of Marxists (roughly Lenin’s generation). In short, there is no question that Marxism is here to stay.
Given the unique power of this intellectual system, it is wholly justified to reconsider what is perhaps its weakest aspect, its theory of revolution. Marxists have traditionally been hostile to worker cooperatives and the “solidarity economy” as a tool of revolution, but as we’ll see, a properly understood Marxism is in fact strategically committed to such institutions. Even more importantly, a reconsideration and modification of Marx’s theory of revolution will enable us to understand how a transition to socialism, or something like it, can happen, and what role cooperatives and other alternative “grassroots” institutions might play in that transition.
These are big topics, and the discussion in this essay will necessarily be both wide-ranging and schematic. The main point that ties it all together is that I reject what I see as Marx’s extreme statism, and I do so for reasons that I think are more faithful to Marxism than his own statist conception of the “dictatorship of the proletariat” is. I find it astonishing, in fact, that, as far as I know, no one has ever appreciated the un-Marxian character of that conception, the fact that it doesn’t follow logically from the basic premises of Marxism. Quite the contrary: one might even argue that, in many respects, the spirit of anarcho-syndicalism is closer to the essence of Marx’s thought than Leninism and statism are. This isn’t just an academic debate, by the way. For one thing, Marxists should know what they are logically committed to, and in what respects Marx got his own ideas wrong. It is also important to cleanse and update the theoretical system in order to keep it a living force, to salvage its insights and put them to use in our own urgent struggles.
My rejection of Marx’s statism, i.e., his adherence (despite his internationalism) to the framework of the nation-state, leads to my argument that only in the twenty-first century are we finally entering the revolutionary period Marx and Engels looked forward to. That is, they got the timeline wrong: international socialist revolution never could have happened in the nineteenth or twentieth centuries, for reasons I explain later. Their impatience got the best of them. Only now is “the nation-state system” beginning to deteriorate—and global revolution never could have happened before this deterioration started. In part to explain why this is the case, and what it is about our contemporary world that makes it so much more pregnant with international revolutionary potential than the world of, say, a hundred-or-more years ago was, I briefly review the “historical logic” of the evolution of capitalism and the nation-state into the neoliberal present. On the most abstract level, one can view the last 150 years or so in the West as consisting of, first, a relatively “pure” and “unregulated” capitalism that, through the conflicts it engendered between labor and capital (and the resultant economic crises of “underconsumption” and “overproduction”), necessitated the birth of the regulated Keynesian welfare state, in the heyday of the nation-state era of history between the 1930s and 1970s. This period was the interregnum, so to speak, between the first era of semi-“pure” capitalism and the second, which began in the 1980s and has continued to the present. As before, the relative lack of robust government economic regulation and the disempowerment of organized labor are leading to extreme social discontent and economic crisis/stagnation. This time, however, the old nationalist Keynesian “compromise” is not a possible solution, because the nation-state system is succumbing to the disintegrating effects of transnational capital.
So, the current decline of the nation is the world-historic development that, together with the emerging period of global economic stagnation, will make possible a (very protracted) social revolution—centered not only around the national state but also around grassroots movements, locally emergent cooperative modes of production, and transnational coordination of anti-capitalist resistance. It was always inevitable that this was how the revolution would happen, as opposed to un-Marxian fantasies of “the working class” (not a unitary entity) taking over national governments and directing economic reconstruction from above. Such a proletarian dictatorship has never happened and never can happen, as follows from the premises of Marxism itself.
After setting out this theoretical framework, I consider its implications in practice. My focus here is not on worker cooperatives, since I discuss those in other chapters of the book on which this essay is based, but on things like municipal enterprise and participatory budgeting. I argue that these may be the seeds of the new economy, the post-capitalist society that will germinate in the next century or so. After reviewing a few of these initiatives, I conclude the essay by considering why states and ruling classes will allow the “revolution” to happen despite its anti-capitalist character. At certain points I draw parallels with the earlier transition in Western Europe from feudalism to capitalism. I think that if we examine that earlier revolution carefully, we’ll find clues as to how the future may unfold.
Marx has, in effect, two theories of revolution, one that applies only to the transition from capitalism to socialism and another that is more transhistorical, applying, for instance, also to the earlier transition between feudalism and capitalism. I will consider, and revise, each of these in turn. Both see the working class as the agent of transition to a post-capitalist economy. Whatever Marx meant by “working class,” in the following I will interpret the term broadly, as denoting the majority of wage-earners—except those whose high income, high managerial positions, ownership of stocks, and so on effectively align them with the capitalist rather than the working class. It has long been known that many people in modern society, especially those in the “middle class,” have contradictory class locations, sharing some interests with capitalists and others with low-wage workers. This is what makes it possible for the middle class sometimes to act in radical ways and other times in reactionary ways. Typically, in fact, the middle class has been the conservative bastion of social order; nevertheless, the wage-earning status of most of its members always holds out the possibility that someday they will act in radical opposition to those who own capital. If they lose their middle-class status, whether through economic crisis or some other cause, this possibility becomes more likely.
Among the people who will or can serve as the agents of transition to a new society are, for example, industrial workers, clerical workers, low-wage service workers, a majority of teachers, the unemployed, and in general those people who are relatively disempowered by corporate capitalism or have grievances that can be remedied by a dismantling of capitalism. This category of people in fact also includes others whom Marx might not consider working-class: most students, peasants, dispossessed indigenous peoples, even environmental activists (for such activism is really part of the class struggle, the struggle against the predatory capitalist class). All these people and more, the totality of whom amounts to the large majority of humanity, have interests opposed to the profit-making, environmentally destructive, humanly exploitative, universally commodifying, undemocratic imperatives of corporate capital, and therefore are effectively the “workers of the world” whom Marx called to “unite.” This is how we should interpret his call in the twenty-first century.
Let’s consider, then, the basics of his theory of how capitalism will gave way to socialism. The pivot of the theory is capital’s unquenchable thirst for profit, for surplus-value. It seeks always to squeeze more surplus-value out of the worker, which is to say value for which the worker does not receive an equivalent in wages. This entails the reduction of wages to as low a level as possible (given societal conditions, workers’ power, the skill-level of the job, etc.) and the intensification of work to as high a level as possible. Capital invests its earnings in labor-saving, money-saving schemes like mechanization, ever-increasing automation so as to employ fewer workers, especially fewer skilled ones, control them more effectively, and generate more profit. At the same time, it expands its operations and puts less profitable competitors out of business. These failed competitors—who historically have included artisans, craftsmen, much of the petty-bourgeoisie, and many capitalists themselves—are forced to become wage-earners as the relatively few surviving capitalists acquire more money and power. Most of the peasantry, too, is eventually forced off the land through myriad pressures of “push” and “pull,” swelling the ranks of the working class. The “reserve army of the unemployed” also tends to grow, in part because periodic economic crises throw people out of work and shutter unprofitable businesses. Without delving into Marxian economics, we can say that these are typically crises of overproduction and/or underconsumption, the latter a product of the endemic drive to lower wages and employ as few workers as possible. That is to say, low aggregate demand leads to disincentives for business to invest and incentives to cut costs, which means laying off workers and paying them less, thus aggravating the macroeconomic problem. The end-result of all these tendencies, at least according to Marx’s ideal model, is that the working class and the unemployed population become larger and poorer, while the capitalist class gets smaller (at least relatively) and wealthier. Society becomes increasingly divided into two polarized classes. Workers’ self-interest and collective grievances impel them to fight together for their power and dignity: they form unions and other associations, some of them political, that train them in struggle and radicalize them. Because their demands can ultimately not be met in the framework of capitalism, at length they seek to take over the state so as to remake the economy along democratic, i.e. socialist, lines. Marx thinks that eventually they are destined to succeed, if only because of their overwhelming numbers and their decades of organizing themselves.
To repeat, this is an ideal model and therefore, like all models, a simplification. The question is how closely it resembles reality. The answer appears to be: in some respects very much so, in others not. In particular, the analysis of how capitalism works seems clearly to be an accurate, if idealized, model of definite tendencies in the real world. On the other hand, the prediction of radicalization of the masses—their increasing class-consciousness—and eventual overthrow of the capitalist state has not been fulfilled. Before considering these matters in greater depth, however, I’ll describe Marx’s “second” theory of revolution, the transhistorical theory.
Its locus classicus is this passage from Marx’s Preface to A Contribution to the Critique of Political Economy:
…At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or—this merely expresses the same thing in legal terms—with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution. The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure.
There are several problems with the theory as expressed here. First of all, it is clearly the barest of outlines, desperately in need of elaboration. Unfortunately, nowhere in Marx’s writings does he elaborate it in a rigorous way. Second, it is stated in functionalist terms. Revolution happens supposedly because the productive forces—i.e., technology, scientific knowledge, labor-power and labor skills, and technical methods of work organization—have advanced to such a point that production relations are no longer compatible with their socially efficient use and development. But what are the causal mechanisms that connect this functionalist concept of “fettering of the productive forces” to social revolution? As far as I know, nowhere does Marx express his theory in causal, as opposed to functionalist, terms.
Perhaps the biggest problem is that, as it is stated above, the theory verges on meaninglessness. How does one determine when production relations have started to impede the use and development of productive forces? It would seem that to some extent they are always doing so. In capitalism, for example, one could point to the following facts: (1) recurring recessions and depressions periodically make useless much of society’s productive capacity; (2) enormous amounts of resources are wasted on socially useless advertising and marketing campaigns; (3) there is a lack of incentives for capital to invest in public goods like mass transit, the provision of free education, and public parks; (4) the recent financialization of the Western economy has entailed investment not in the development of infrastructure but in glorified gambling that scarcely benefits society; (5) artificial obstacles such as intellectual copyright laws hinder the development and diffusion of knowledge and technology; (6) a colossal level of expenditures is devoted to war and destructive military technology; (7) in general, capitalism distributes resources in a profoundly irrational way, such that, for example, hundreds of millions of people starve while a few become multi-billionaires. Despite all this, however, no successful revolution has happened.
Indeed, in other respects capitalism continues to develop productive forces in a striking way, as shown by recent momentous advances in information technology. It’s true that—contrary to the fantasies of “free market” enthusiasts—this technology was originally developed in the state sector; nevertheless, the broader economic and social context was and is that of capitalism. It is clear, therefore, that a mode of production can “fetter” and “develop” productive forces at the same time, a fact Marx didn’t acknowledge.
In order to salvage his hypothesis quoted above, and in fact to make it quite useful, a subtle revision is necessary. We have to replace his idea of a conflict between productive forces and production relations with that of a conflict between two sets of production relations, one of which uses productive forces in a more rational and “un-fettering” way than the other. This change, slight as it might seem, has major consequences for the Marxist theory of revolution. It is no exaggeration to say that, in addition to making the theory logically and empirically cogent, it changes its entire orientation, from advocating a “dictatorship of the proletariat” that plans social and economic reconstruction to advocating a semi-grassroots, long-term evolution of social movements that remake the economy and society from the ground up (albeit with the crucial aid of incremental changes in state policy). I will also argue that my revision makes the theory finally compatible with the basic premises of Marxism itself, and that a statist version of Marxism, such as Leninism, is un-Marxist, idealistic, and unrealistic.
My revision to the theory, then, is simply that at certain moments in history, new forces and relations of production evolve in an older economic and social framework, undermining it from within. For different reasons in different cases, the new production relations spread throughout the society, gradually overturning the traditional economic, social, political, and cultural relations, until a more or less new social system has evolved. This happened, for example, with the Neolithic Revolution (or Agricultural Revolution), which started around 12,000 years ago. As knowledge and techniques of agriculture developed that made possible sedentary populations, the hunter-gatherer mode of production withered away, as did the ways of life appropriate to it.
Likewise, starting around the thirteenth century in parts of Europe, an economy and society organized around manorialism and feudalism began to succumb to an economy centered around the accumulation of capital. Several factors contributed to this process, among them (1) the revival of long-distance trade (after centuries of Europe’s relative isolation from the rest of the world), which stimulated the growth of merchant capitalism in the urban interstices of the feudal order; (2) mercantile support for the growth of the nation-state with a strong central authority that could dismantle feudal restrictions to trade and integrated markets; (3) the rise, particularly in England, of a class of agrarian capitalists who took advantage of new national and international markets (e.g., for wool) by investing in improved cultivation methods and enclosing formerly communal lands to use them for pasturage; (4) the partly resultant migration of masses of the peasantry to cities, where, during the centuries from the sixteenth to the nineteenth, they added greatly to the class of laborers who could be used in manufacturing; (5) the discovery of the Americas, which further stimulated commerce and the accumulation of wealth. In short, from the thirteenth to the nineteenth centuries, capitalist classes—mercantile, financial, agrarian, and industrial—emerged in Europe, aided by technological innovations such as the printing press and then, later on, by all the technologies that were made possible by the Scientific Revolution of the seventeenth century. All this is just to say that in the womb of the old society, new productive forces and production relations evolved that were more dynamic and wealth-generating than earlier ones. Moreover, on the foundation of these new technologies, economic relations, and scientific discourses arose new social, political, and cultural relations and ideologies that were propagated by the most dynamic groups with the most resources, i.e., the bourgeoisie and its intellectual hangers-on.
It is true that numerous political clashes had to occur before the rising bourgeoisie could achieve hegemony over Europe. Both the feudal aristocracy and absolutist monarchies opposed the bourgeois doctrines of economic and political liberalism, such that a series of revolutions was necessary before the bourgeoisie could accede to political power. The point relevant to the following discussion is that once capitalist economic relations had reached a relatively mature and widespread level—aided, significantly, by a “non-capitalist” absolutist state—the ultimate political victories of the capitalist class were inevitable, if only because of this class’s continuing growth and access to more resources than its opponents had. Even more pertinently, it was only when capitalist economic relations had already made significant progress that bourgeois political revolutions were possible.
We should apply the lessons of the transition from feudalism to capitalism to the future transition from capitalism to post-capitalism. This, too, will have to happen in a very gradual way, as new production relations sprout (initially) in the “interstices” of a decaying order. Briefly stated, one can expect that capitalism’s descent into long-term crisis (or stagnation) will generate—or rather, is generating—movements of resistance across the world, many of which will be devoted to establishing new cooperative modes of production and distribution that will assist millions of the unemployed and the cast-off in their tasks of survival. Explicitly political anti-capitalist resistance will spread too, but it cannot possibly attain the summits of political power without having command over tremendous resources, sufficient resources to compete against the ruling class. An important way of acquiring such resources is by accumulating capital through business activities, such as cooperatives and some other “solidarity economy” institutions do. Thus, just as the bourgeoisie could not achieve power before the capitalist economy had made inroads across Europe, so the working class cannot take over political power on a broad scale before its own economic institutions, its “socialist” institutions, have partially remade the world economy. Sooner or later, durable alliances will have to be made between the solidarity economy and political movements if the latter are to succeed in their ultimate objectives. On a global level this process can be expected to take at least a century or two.
Before examining these ideas in more detail, it is worth reviewing the advantages of the revision I’ve made to Marx’s theory of revolution. Again, my argument is just that social revolution happens when an old set of production relations fetters—or irrationally uses—productive forces in relation to a new set of widely emerging production relations. The “in relation to…” that I have added saves the theory from meaninglessness, for it indicates a definite point at which the “old” society really begins to yield to the “new” one, namely when an emergent economy has evolved to the point that it commands substantial resources, is highly visible, and is clearly more systemically “rational” than the old economy. Whether this hypothesis applies to all social revolutions is a question I won’t consider; the point is that it does apply to some, and it will surely apply to any transition between capitalism and cooperativism.
Another advantage of my revision is that it supplies a causal mechanism by which a particular mode of production’s “fettering of the productive forces” leads to revolution—indeed, to successful revolution. The mechanism is that the emergent mode of production, in being less dysfunctional and/or more “efficient” than the dominant mode, eventually (after reaching a certain visibility) attracts vast numbers of adherents who participate in it and propagandize for it—especially if the social context is one of general economic stagnation and class polarization, due to the dominant mode of production’s dysfunctionality. Moreover, this latter fact means that, after a long evolution, the emergent economic relations and their institutional partisans will have access to so many resources that they will be able to triumph economically and politically over the reactionary partisans of the old, deteriorating economy. Again, this is what ultimately ensured the political success of the bourgeoisie in its confrontations with the feudal aristocracy. Similarly, if capitalism continues to stagnate and experience manifold crises, this will ensure the global victory of a cooperative mode of production that will have developed over generations in the interstices of capitalist society.
In short, my revision provides a necessary condition for the success of an anti-capitalist revolution, and thus, as we’ll see in a moment, helps answer the old question of why no anti-capitalist revolution so far has been successful in the long term (namely because the condition has been absent). Another way of seeing the implications and advantages of the revision is by contrasting it with the views of orthodox Marxists. A single sentence from Friedrich Engels sums up these views: “The proletariat seizes state power, and then transforms the means of production into state property.” This statement, approved by Lenin and apparently also by Marx, encapsulates the mistaken statist perspective of the orthodox Marxist conception of proletarian revolution. This perspective is briefly described in the Communist Manifesto, where Marx writes “The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralize all instruments of production in the hands of the State, i.e., of the proletariat organized as the ruling class,” and then lays out a ten-point plan of social reconstruction by means of state decrees. By the 1870s Marx had abandoned the specifics of his earlier plan, but his statism remained, and transmitted itself to his followers. It’s true that orthodox Marxists expect the state, “as a state,” to somehow wither away eventually, but they do have a statist point of view in relation to the early stages of revolution.
This statist vision emerges naturally from both of Marx’s theories of revolution discussed above: from the first one, because Marx simply assumes that the only way to make a socialist revolution is to, first, completely take over the national government; from the second, because the idea of a conflict between the rational use and development of productive forces and the fettering nature of current production relations suggests that at some point a social “explosion” will occur whereby the productive forces are finally liberated from the chains of the irrational mode of production. Pressure builds up, so to speak, over many years, as the mode of production keeps fettering the socially rational use of technology and scientific knowledge; through the agency of the working class, the productive forces struggle against the shackles of economic relations; at length they burst free, when the working class takes over the state and reorganizes the economy. These are the metaphors naturally conjured by the passage quoted above from the Preface to A Contribution to the Critique of Political Economy.
But there are logical and empirical problems with this statist view that has dominated Marxist thinking, the view according to which the substance of social revolution occurs after the seizure of state power. First of all, it is in tension with the Marxian conception of social dynamics. Briefly stated, Marx sees the economy—rightly—as the relative foundation of the rest of society, including the political sphere, which suggests that a post-capitalist social revolution cannot be politically willed and imposed. This would seem to reverse the order of “dominant causality,” from politics to the economy rather than vice versa. Moreover, such extreme statism exalts will as determining human affairs, a notion that is quite incompatible with the dialectical spirit of Marxism. History really happens “behind the backs” of actors: it evolves “unconsciously,” so to speak, as Hegel understood. Social and institutional conflicts work themselves out, slowly, through the actions of large numbers of people who generally have little idea of the true historical significance of their acts. As Marx said, we should rarely put credence in the self-interpretations of historical actors (because they are constrained and influenced by objective institutional realities of which they’re little aware or which they interpret incorrectly). And yet he apparently suspends this injunction, and his whole dialectical method, when it comes to the so-called proletarian revolution. These historical actors are somehow supposed to have perfect understanding of themselves and their place in history, and their historical designs are supposed to work out perfectly and straightforwardly—despite the massive complexity and “dialectical contradictions” of society.
The reality is that if “the working class” or its ostensible representatives seize control of the state in a predominantly capitalist society—and if, miraculously, they aren’t crushed by the forces of reaction—they can expect to face overwhelming obstacles to the realization of their revolutionary plans. Some of these obstacles are straightforward: for example, divisions among the new ruling elite, divisions within the working class itself, popular resistance to plans to remake the economy, the necessity for brutal authoritarian methods of rule in order to force people to accept the new government’s plans, the inevitable creation of a large bureaucracy to carry out so-called reconstruction, etc. Fundamental to all these obstacles is the fact that, in this scenario, the revolutionaries have to contend with the institutional legacies of capitalism: relations of coercion and domination condition everything the government does, and there is no way to break free of them. They cannot be magically transcended through political will. In particular, it is impossible through top-down directives to transform production relations from authoritarian to democratic; Marxism itself would seem to suggest that the state is not socially creative in this radical way. The hope to reorganize exploitative relations of production into emancipatory, democratic relations by means of bureaucracy and the exercise of a unitary political will—the “proletarian dictatorship”—is utterly utopian, idealistic, and un-Marxist.
The record of so-called Communist revolutions in the twentieth century is instructive. While one can expect some Marxists to deny that lessons should be drawn from these revolutions, since they happened in relatively “primitive” rather than advanced capitalist countries, the experiences are at least suggestive. For what they created in their respective societies was not socialism (popular democratic control of the economy) or communism (a classless, stateless, moneyless society of anarchistic democracy) but a kind of ultra-statist state capitalism. To quote the economist Richard Wolff, “the internal organization of the vast majority of industrial enterprises [in Communist countries] remained capitalist. The productive workers continued in all cases to produce surpluses: they added more in value by their labor than what they received in return for that labor. Their surpluses were in all cases appropriated and distributed by others.” Workers continued to be exploited and oppressed, as in capitalism; the accumulation of capital continued to be the overriding systemic imperative, to which human needs were subordinated. While there are specific historical reasons for the way these economies developed, the general underlying condition was that it was and is impossible to transcend the capitalist framework if the political revolution takes place in a capitalist world, ultimately because the economy dominates politics more than political will can dominate the economy.
In any case, it was and is breathtakingly utopian to think that an attempted seizing of the state in an advanced and still overwhelmingly capitalist country, however crisis-ridden its economy, could ever succeed, because the ruling class has a virtual monopoly over the most sophisticated and destructive means of violence available in the world. Even rebellions in relatively peripheral countries have almost always been crushed, first because the ruling classes there had disproportionate access to means of violence, and second because the ruling classes in more advanced countries could send their even more sophisticated instruments of warfare to these countries in order to put down the revolution. But if a massive insurrection—or even an electorally grounded left-wing takeover of the state—happened in one of the core capitalist nations, as opposed to a peripheral one, the reaction of ruling classes worldwide would be nearly apocalyptic. They would likely prefer the nuclear destruction of civilization to permitting the working class or some radical subsection of it to completely take over a central capitalist state and dismantle big business.
My revision of Marx’s theory of revolution avoids all these problems while still retaining key insights about the inevitable causes of revolution. It is obvious that any transition to a new society, if carried out largely through the agency of the oppressed masses (which it will have to be), will be a consequence of capitalism’s socially irrational distribution of resources and fettering of the productive and democratic potential of current “forces of production.” If used sensibly, there is no question that modern wealth, technology, and scientific know-how could make possible adequate shelter, sustenance, and security for billions more people than currently enjoy them. An anti-capitalist revolution will be motivated by the imperative to redress these (and other) inequalities and injustices, and it will necessarily take the form of instituting new, more democratic property and production relations. Whether such a revolution is “inevitable,” as Marx and Engels seem to have believed, is a question I will consider later. I will also consider the reasons why the state and the ruling class will allow a revolution of the “gradual” sort I have described to happen. The point is that the only possible way—and the only Marxist way—for a transition out of capitalism to occur is that it be grounded in, and organized on the basis of, the new, gradually and widely emerging production relations themselves. This is the condition that has been absent in all attempts at revolution so far, and it explains why, aside from a few isolated pockets of momentary socialism (such as Catalonia in 1936), they never managed to transcend a kind of state capitalism. They existed in a capitalist world, so they were constrained by the institutional limits of that world.
Ironically, Marx understood that this would be the case unless the revolution was international. He understood that “socialism in one country” is impossible. He knew that unless an insurrection in, say, Russia triggered or coincided with insurrections elsewhere, which on an international scale worked together, so to speak, to build a socialist mode of production, it was doomed to failure. What he didn’t understand was that the only way a revolution can be international is that it happen in a similar way to the centuries-long “capitalist revolution” in Europe and North America, namely by sprouting on the local level, the municipal level, the regional level, and expanding on that “grassroots” basis—while aided, to be sure, by progressive changes in state policy. The hope that the states and ruling classes of many nations can fall at approximately the same time to a succession of national uprisings (whether electoral or not)—which is the only way that Marx’s conception of revolution can come to pass—is wildly unrealistic, again because of the nature of capitalist power dynamics that Marxism itself clarifies.
Indeed, only recently has capitalism attained the truly globalized condition that Marx assumed was a necessary prerequisite for revolution. While there are good reasons to say that the USSR and Communist China before the 1980s or 1990s were in some respects state capitalist, their “capitalism” was very different from the competitive, market-driven system that is impelled by economic logic to expand and spread its dominion over the planet. This capitalism, which Wolff calls “private [as opposed to state] capitalism,” has only in the last forty years spread to huge areas of the world that had for a long time managed to hold it at bay. In addition to China, the USSR, and Eastern Europe, much of Latin America and Africa until the 1990s remained outside the domain of capitalist relations of production, defined by the presence of a mass of people who own nothing but their labor-power and are consequently forced to seek employment with those who own the means of production. The absence of these production relations was the result of many factors, for instance popular and elite reactions against the predatory liberal capitalism and imperialism of the late nineteenth and early twentieth centuries. In other cases, such as parts of Central America, it was the result of international capitalism’s shoring up domestic semi-serfdom, by means of the peculiar incentive structures created by “merchant capitalism” and the international division of labor (whereby some countries export raw materials, others export finished products). Finally by the 1980s and 1990s, all this semi-capitalism, semi-feudalism, peasant resistance to proletarianization, state ownership of industries, and so on gave way to neoliberal offensives of privatization and marketization, such that the capitalist mode of production and its corresponding property relations have by now virtually conquered the world and are creating a truly global “proletariat” (or “precariat”). As they do so, resistance spreads and intensifies.
In order to understand what is likely to happen in the next fifty and a hundred years, it is useful to contextualize the historical moment we’re living in. And to properly understand its context, it helps to resurrect an old, currently unfashionable idea, viz., that there is a kind of logic to history. That is, we should return to Marx’s Hegelian notion that history, on the broadest scale, unfolds according to a certain semi-“necessity,” which is always evident in retrospect. This idea is commonly rejected nowadays, even by leftists, for two main reasons: first, it seems to deny that individuals have the power to shape history, that they are active agents in the historical process, instead treating them as mere tools of an impersonal historical “Reason”; second, it seems to valorize this Reason as being synonymous with “Progress” in some quasi-moral sense, implying (supposedly) that, e.g., the rise of Europe in modern times was both inevitable and good, and that people who resisted such things as industrial capitalism were benighted and backward, the enemies of progress. The result of these misinterpretations is that few writers now are interested in excavating the structural tendencies, the dialectical self-undermining, the logic of “the emergence of the new within the shell of the old” by which historical phases have yielded to their successors. Radical authors like Richard Wolff, David Schweickart, and Michael Albert have largely abandoned Marx’s quasi-“scientific” conception of socialism, according to which socialism not only should but will happen (by means of class struggle); their approaches to the subject are not so much historical as ethical. We should resurrect Marx’s historical approach—which follows Hegel’s in seeing the “truth,” the “meaning,” of the past as revealed by the present and future—in the process correcting his mistakes.
Consider Marx’s predictions that the impoverished working class would continue to expand until it constituted the majority of society, and that as it did so its class consciousness and radicalism would mature—internationally—to the point that world revolution would occur. In retrospect, we can see that he was wrong; he misunderstood capitalist society. While there are indeed tendencies toward class polarization, impoverishment of workers, international class solidarity, and economic crisis, there are also tendencies toward assimilation of the working class into the dominant order, toward “pure and simple trade-unionism,” toward the state’s stabilizing management of the economy, and toward workers’ identification not only with the abstract notion of a social class that spans continents but also with the more concrete facts of ethnicity, race, occupation, immediate community, and nation. These identifications make possible the working class’s fragmentation, which diminishes the likelihood of socialist revolution in the classical sense. Similarly, the historical successes of unionism obviated the necessity (from the proletariat’s perspective) of revolution; reform was sufficient, at least in the short term, to improve the life situations of a large proportion of workers. Thus was born twentieth-century social democracy and collective bargaining.
Marx was right that the capitalist class is averse to progressive initiatives like these, and that it has inordinate influence over the state; what he didn’t appreciate was the historic potential of divisions within the class. The research of Thomas Ferguson, for example, has shown that the “second New Deal” (in 1935) in the United States, which led to the welfare state and federal protection of collective bargaining, was made possible by divisions in capitalist ranks between labor-intensive, domestically oriented, protectionist businesses, such as those in the textile industry, and capital-intensive, internationally oriented businesses, such as Standard Oil and General Electric. The former were viciously opposed to labor-empowering measures like the 1935 Wagner Act, while the latter, who valued social stability more than savage repression of workers, in fact helped write the Wagner and Social Security Acts. Their support for Franklin Delano Roosevelt and the New Deal order made the U.S. welfare state possible (as did, in another sense, the struggles of millions of workers). The welfare state—and the institutionalization of collective bargaining—in turn contributed to postwar economic and political stability, which for a while seemed to invalidate Marx’s pessimistic analysis of capitalism. Unions became part of the “establishment”; much of the white working class became increasingly conservative, alienated from movements for radical social change, and intellectuals decided that Marx had been totally wrong all along.
In reality, though, what he was wrong about was the timeline, as I said earlier. It was impossible for capitalism to succumb to socialism in the nineteenth or twentieth centuries. Suppose, for instance, that by some unimaginable miracle Friedrich Engels’ eager prophecies (in the 1880s) with regard to the American union the Knights of Labor had been borne out. Aware of its experiments in cooperativism, its attempts at industrial unionism, and its radical rhetoric, Engels predicted it would serve as midwife of a revolutionary class consciousness and class organization that would lead the workers to victory over capitalism. This couldn’t have happened, of course, for obvious reasons. (The ruling class had a monopoly over the means of violence; the courts, ultra-reactionary, erected every conceivable obstacle to the advance of organized labor; divisions in the working class, between black and white, skilled and unskilled, immigrant and non-immigrant, precluded the necessary continent-wide unity.) But suppose capitalism had been overthrown in the United States in the late 1880s or 1890s and a semi-cooperative “republic of labor” had been founded, with artisans in their small workshops connected through cooperative networks, public control of industry, consumer cooperatives proliferating around the nation. What would have happened then? Capitalists in Europe would have continued amassing profit, investing in mechanization, building up industry and technology, and the artisans, craftsmen, and self-governing industrial workers in the U.S. would have been, in the long run, unable to compete with them. In the end, the U.S.’s proto-socialism would have eroded due to competition from Europe, and a degeneration to capitalism would have taken place, much as it did later in the Soviet Union. What this would have proven is that America’s proto-socialist adventure, like the USSR’s so-called “state socialism,” was a historical detour, a kind of accident.
Economic conditions—and productive forces—simply were not “ripe” then, or in the twentieth century, for international socialism. It is appalling to contemplate the irony of this fact. It’s an absurd, senseless tragedy: millions of people in the Americas, in Russia and China, in Germany, in France, in Spain and Italy and dozens more countries spending decades fighting and dying for a dream that would never have come to fruition anyway because, supposing they had achieved something like it in a particular region, such as Catalonia, and it had not been crushed by the forces of reaction, it would have slowly degenerated under market pressures from the broader capitalist society, pressures on wages—downward for the lower workers, upward for the higher—pressures to automate, and the business cycles that inevitably would have seeped in to these havens of cooperation and disturbed the order of things, and of course after the revolutionary fervor had subsided the usual daily problems of running factories would have cropped up, “alienation” would have returned because industrial work is inherently unpleasant, battles between management and the average worker would have spoiled the revolution. Mondragon’s recent history confirms these counterfactual claims. So, the irony is shockingly cruel: it is when capitalist industrialization was starting, precisely when socialism was least possible, that workers, artisans, peasants, and intellectuals fought with greatest heroism and determination for socialism. Industrialization was so brutal and so conducive to the lower classes’ radicalization that visions of, and struggles for, a cooperative society were inevitable everywhere. But they did not have the significance their participants thought they did. They were, so to speak, symptoms of the birth-pangs of industrial capitalism, not of its death-throes. Or, to view the matter from a different perspective, they were—in the long run—symptoms of the (brutal, conflict-ridden) maturation and consolidation of the nation-state, not of the imminent overcoming of capitalism. A global system structured around state-capitalist nation-states was always the inevitable outcome, despite the utopian hopes of millions of oppressed people.
This, indeed, is another way of expressing Marx’s mistake: political conditions were not ripe for international socialist revolution. Marx didn’t foresee the “mature nation-state” period of history, which is to say the twentieth century. He profoundly underestimated the power of the “nationality” principle, and of the state. In many ways he was right that the class principle is more important than the nation principle, but not in the way he wanted: business tended to be more loyal to class than to the nation, and it used the idea of nationality to divide the working class and maintain social control. (For example, big business subsidized and continues to subsidize fascist or proto-fascist movements because they distract from the class struggle and serve business’s political agendas; and its frequent support for “patriotic” wars is a function not only of their profit-making potential but also of their usefulness in stifling domestic social discontent and progressive political movements.) For other reasons too, though, the nation-state’s central authority was bound to get stronger, more thickly bureaucratic, more extensive, more “society-regulating,” more effective at manufacturing consent, than it was in, say, the 1870s. In retrospect we can see this. From the Middle Ages on, capitalism and the nation-state have grown up together in a symbiotic relationship (at least until very recently); it was inevitable that as capitalism continued to grow in power and extent in the early and middle twentieth century, the nation-state would do so as well.
There isn’t space here to discuss all the reasons for the necessary failure of Marx’s prophecies in the historical short term, or for the inevitability of the “high modernist” period of the nation-state. I could, for instance, draw from the Marxian tradition itself and argue that an era of “monopoly capital” necessarily followed the nineteenth-century era of competitive capitalism, and that monopoly capitalism necessarily engendered certain varieties of state capitalism, corporatism, fascism, welfare-statism, etc. Instead I’ll invoke Karl Polanyi’s arguments in The Great Transformation, while adding my own perspective, which brings the story up to the neoliberalism of the present day. Permit me to quote from my Notes of an Underground Humanist:
It’s always dangerous to construct abstract schemas, but there appear to have been two, or rather one-and-a-half, “cycles” in capitalist history. Abstractly you can think of it in this way: first, a lot of ancient [feudal] communal practices and public goods [such as the peasant commons] were dismantled before, during, and after the Industrial Revolution. You can call this the first wave of privatization. (It has continued unceasingly all over the world, but let’s just call it the first wave.) As it was going on, the victims of capitalism sought to maintain their old rights and/or acquire new, governmentally protected ones. At length they succeeded to some extent, and new public goods were consolidated under the 20th-century Keynesian welfare state. This was probably a nearly inevitable development, because, as Karl Polanyi argued in The Great Transformation, marketization and privatization will, if unchecked, eventually cause the total destruction of society. So popular resistance, aided by sane elements of the upper classes, succeeded in regulating further depredations and temporarily saving society after the Great Depression. But technology kept progressing, capital mobility increased, global integration continued, populations kept growing, and the politicized and “public” nature of the Keynesian state started encroaching too much on capitalist class power. Finally the masses got out of hand, got too politicized, too powerful—all those crazy ideas of democracy in the 1960s!—and there was a capitalist backlash, made possible by (and making possible) ever-more-globally-integrated markets, elite institutional networks, and extreme capital mobility worldwide. The inflationary consequences of relative popular empowerment in a context of economic stagnation (the 1970s) were tamed, namely by destroying popular empowerment. That is, the second wave of privatization occurred, after the 1970s: public goods were again dismantled and “capital accumulation by dispossession” began anew (though, in truth, it had never really stopped). This time, the old nationalist Keynesian solution to the horrors of privatization wasn’t available, since the world had become too integrated and nations themselves were deteriorating, due to the post-1970s capitalist onslaught. So transnational social movements were necessary…
Or, even more schematically:
With respect to the very long run, Marx was always right that capitalism is not sustainable. There are many reasons for this, including the contradiction between a system that requires infinite growth and a natural environment that is finite, but the reason most relevant to Marxism is that ultimately capital can never stop accumulating power at the expense of every other force in society. It is insatiable; its [competition-driven] lust for ever more profit and power condemns it to a life of Faustian discontent. It can never rest. Any accommodations, therefore, between the wage-earning class and capital—such accommodations as the welfare state and the legitimization of collective bargaining—are bound to be temporary. Sooner or later capital’s aggressiveness will overpower contrary trends and consume everything, like a societal black hole (to change the metaphor). Everything is sucked into the vortex, including social welfare, the nation-state, even nature itself. The logic is that nothing will remain but The Corporation [in the plural], and government protections of the people will be dismantled because such protections are not in the interest of capital. This absurd, totalitarian logic can never reach its theoretical culmination, but it will, it must, proceed far enough, eventually, that an apocalyptic struggle between the masses and capital ensues. A relatively mild version of this happened once before, in the 1930s and ’40s, and a compromise [in the West]—the mature welfare state—was the result. But then, as I said, capital repudiated the compromise (or is doing so as I write these words), and the old trends Marx diagnosed returned with a vengeance, and so humanity could look forward, this time, to a final reckoning. A final settling of accounts will occur in the coming century or so.
Those two paragraphs sum up my argument as to the context in which the new “alternative economy” of cooperatives and other anti-capitalist institutions is arising. The rise of neoliberalism (from the mid-1970s on) was inevitable, given the distribution of power in the West and the heightening of international economic competition after the 1960s. In other words, a resurgence of global privatization and capitalist empowerment—after the consummation of the nation-state era between the 1930s and 1960s—was bound to happen, which means that social disintegration and atomization was bound to reach the pathological extremes of the present. This was destined, sooner or later, to trigger massive resistance and creative efforts to reconstruct civil society and the economy on a new basis. These efforts are still in their infancy.
To elaborate in a little more detail: As David Harvey and others have argued, the corporate capitalist class in the U.S. and Britain faced two major problems in the mid-1970s. First, it had to rein in the 1960s’ “excess of democracy” that was threatening its political power; second, it had to restore its profits that were eroding from the combination of intense international competition and “excessively generous” social welfare programs. Moreover, these programs, and in general all the pressures resulting from the population’s relative political empowerment, were contributing to high inflation, which was bound to become intolerable to much of the ruling class sooner or later. In the end, the most effective way to curb inflation and to protect profits from the demands of organized labor was, first, to adopt a restrictive monetary policy (which Paul Volcker, chairman of the Federal Reserve, did in 1979) and, second, to dismantle the welfare, regulatory, and labor-accommodating regime that had been constructed between the 1930s and early 1970s. The Reagan and Thatcher administrations proceeded to do this with gusto in the 1980s, and their successor administrations in the 1990s and 2000s continued their work. In the U.S., for example, union density in the private sector sank from 35 percent in 1954, and 20 percent in 1980, to less than 7 percent today. Various “free trade” acts, such as NAFTA, have been negotiated that have contributed to the decimation of organized labor in the affected countries. Daily newspaper headlines remind us of the devastation of the social safety net. Numerous studies have described how government regulation of the economy has been gutted since the 1970s, making possible the financial collapse and recession of 2008 and 2009. All this grows out of the dynamics of a corporate capitalism that is throwing off the shackles imposed on it by the nation-state-centric “compromise” (between labor and capital) of the postwar period.
Moreover, by now the political economy of neoliberalism has spread from the U.S. and U.K. to the whole world. Libraries could be filled with the scholarship and popular writings on this subject. Naomi Klein provides a good popular overview in The Shock Doctrine (2007), which recounts the sordid tale of neoliberalism’s conquest of Latin America, Eastern Europe and Russia, Southeast Asia, and the Middle East (leaving out Europe, Africa, China, and India). Through IMF structural adjustment programs, trade agreements, collaboration with authoritarian governments, and other means, the U.S. has imposed its model of a liberalized economy on the entire globe. Recently even Europe, long known for its generous social welfare provisions and healthy trade-union presence, has been shredding its former social contract. This process was underway long before the 2008 recession, but since then ruling elites have adopted the motto “Never let a crisis go to waste” and accelerated their dismantling of unions and the welfare state. The pretext, as always, is the restoration of fiscal health and national economic competitiveness. The consequences are that far fewer workers are covered by collective bargaining agreements, workplace protections are being rolled back, income inequality is rising, healthcare and education are being partly privatized, and, in general, the social fabric is being re-cut to fit the pattern of the U.S.
The most important points about this worldwide hegemony of neoliberalism (and its associated productive forces, in particular information technology) are that it is causing a resurgence of economic crisis and stagnation, and it is hollowing out the nation-state as an entity. Let’s consider each of these phenomena in turn, starting with the first (which contributes to the second).
Any thoughtful observer of the neoliberal political economy has to be struck by the parallels between it and the era that culminated in the Great Depression. There is similar class polarization and vicious subjection of labor to capital, similar ‘thinness’ of government economic regulation, similar extreme subordination of government to corporate capital, similar proneness to periodic economic crisis, similar empowerment of financial capital, and so on. It’s true that there are differences. For example, since the 1960s, deindustrialization has occurred in the West, most notably in the United States. There, employment in the manufacturing sector declined as a share of total non-farm employment from 31 percent in 1950 to 20.7 percent in 1980, 13.1 percent in 2000, and 9.1 percent in 2009. As Robert Brenner argues, this trend results in large part from heightened international competition since the late 1960s and consequent declines in the growth-rates of manufacturing profitability and investment. That is, intense international (and intra-national) competition and the resultant diminished growth of profitability have necessitated firms’ feverish cost-cutting, which has meant more automation, employee layoffs, wage cuts, and outsourcing of production. The former industrial infrastructure of the West has been dismantled as firms have downsized and relocated their operations to regions with cheaper labor. In the process, industrial unionism has been destroyed, the high wages and stable jobs of what was once the core of the economy have become low wages and unstable (or nonexistent) jobs—in part because automation is making human labor superfluous—and a massive restructuring of the West’s economy has happened.
The existence of deindustrialization only supports the broader point I want to make, that (to quote David Harvey) an “underlying problem [of] excessive capitalist empowerment vis-à-vis labour and consequent wage repression, leading to problems of effective demand,” characterizes the dynamics of both neoliberalism and the political economy that eventuated in the Great Depression, which is commonly interpreted along Keynesian lines, as a product of (among other things) low aggregate demand. Deindustrialization has recently been a major contributor to this dynamic, and thus to the stagnation that afflicts the West and with it much of the world. For the loss of jobs and high wages in the manufacturing sector has not been compensated by high wages or a sufficient quantity of stable jobs in the service sector; hence, in part, the higher income inequality in the West now than fifty years ago, and the resultant lowering of aggregate demand.
Moreover, with deindustrialization, increased capital mobility since the 1960s, the demise of the Bretton Woods international regulatory framework in the 1970s, and in general the neoliberal “restoration” of capitalist class power has come a financialization of the U.S. economy even more striking than that of the late 1920s. It isn’t necessary to dwell on this point, since it has been analyzed by scores of commentators. I will only note that the financial sector’s share of corporate profits in the early 2000s was around 40 percent, though since then it has declined to 30 percent. Likewise, its share of GDP was 8.4 percent in 2011, compared to 2.8 percent in 1950. As investment has shifted from the “real” economy to the more profitable financial sector since the 1970s—a sector that employs far fewer people than manufacturing once did—wealth and income inequality have skyrocketed, growth has stagnated, economic instability driven by speculative bubbles has increased, physical and social infrastructure has deteriorated, and unemployment has grown. Neoliberalism has meant, in short, a partial “de-development” of the United States (which in this respect is not alone among advanced industrial countries).
Processes that were in some ways similarly disempowering to the majority of wage-earners helped lead to the Great Depression, from which, as we know, ultimately emerged the Keynesian compromise between capital and labor. The national state stepped in to boost aggregate demand and empower labor, so keeping the system running. At the same time, nationalism, or rather the “imagined community” of the nation, continued its earlier function as a kind of ideological glue to cohere societies and ensure order: “we,” both capitalists and workers, were “Americans” (or “British,” or “French,” or whatever) sharing a common language, a culture, a history, etc. “We” were supposed to maintain allegiance to the nation and the state, i.e., to overarching power-structures, no matter how much we might disagree with one another or want a bigger slice of the economic pie than we had. To be “disloyal” was the supreme crime, and invoking that concept proved effective as a way to tar and feather “radicals.” To call them Communists, for example, was to call them foreigners and subversives, which marginalized them and helped keep the capitalist order relatively stable. Thus the nation-statist compromise, which functioned ideologically as a kind of distraction (from immediate issues of economic, social, and political empowerment), reached its classical, high modernist phase.
Since the 1970s, however, the nation-state, after many centuries of growing in power, importance, and global extent, has finally begun its long, tortured descent into crisis and collapse. The elegant irony of history is again on display: while the evolution of capitalism hitherto had contributed to the consolidation of the nation-state, at this point capital outgrew and started to shake off its old friend and enabler, which clung to it in ever more servile fashion. The state now does almost whatever it has to to stay in the good graces of the most mobile and wealthy sector of capital, finance; but other sectors, too, have found that they have a freer hand than they once did.
Again, the essential condition of this shift in the balance of power has been the spectacular increase in capital mobility since the 1960s, made possible by the rise of new productive forces, in particular electronic technology. Actually, even apart from its enabling the ascendancy of transnational corporations and global finance, this technology is playing an important role in the downfall of the nation. Just as “print-capitalism” after the fifteenth century contributed to the rise of the nation-state (as Benedict Anderson argues), what one might call “electronic capitalism” is contributing to its fall. To be sure, the imagined community of the nation is declining faster than the national state itself. The community is fragmented by electronic media, which, at least in the context of capitalism, tend to substitute isolation and self-involvement for direct interaction with others, as well as to degrade communication into instantaneous visual and auditory stimuli whose effect is to undermine identities (be they personal, national, or whatever). As I’ve written elsewhere:
…These trends [of national disintegration] are evident when one considers the impact of television, video games, cellphones, computers, the internet, and such “social media” outlets as Twitter and Facebook. A society in which most people spend an inordinate amount of their time sitting in front of TVs, playing video games, shopping online, searching for soulmates through internet dating, imbibing bits of information in short bursts from an endless variety of global news and entertainment sources, and electronically “chatting” with acquaintances or strangers located anywhere from the next room to the other side of the world—such a society does not have much of a tangible national culture, and its “imagined community” is indeed imaginary, a mere abstraction with little basis in concrete reality. In short, the individualistic, passive, and consumerist nature of a capitalist society saturated by electronic media is interpersonally alienating and destructive of civil society, hence destructive of a shared national consciousness.
Moreover, the fact that elect