Karl Marx developed his critique of capitalism, by critiquing the ideas dominating political economy of his times through a large body of economic manuscripts written in the 1850s. His critique eventually culminated in Capital, published in 1867, where his philosophical framework, conceptual tools and political economy analysis of capitalism, were brought together in their entirety.[i] It was Marx’s masterpiece, the zenith of his creative genius.
But why should we be interested in Capital today, a century and a half after it was written? The French Marxist philosopher Louis Althusser wrote in the early 1970s that just as the Greeks in the fifth century b.c. ‘opened up’ to scientific knowledge the ‘Continent of Mathematics’ and Galileo ‘the Continent of Physics’, Marx’s critique of political economy opened up to scientific knowledge the ‘Continent of History’.[ii]
But if it is a book on the history of capitalism, how is it of interest to those who do not study history? It is interesting because it tells the history of capitalism as a social system, in a totally novel and unconventional manner. It does not narrate the history of specific nations, or their rulers and subjects; or specific events of great import like wars, conquests or the rise and fall of civilizations. What it does is to first meticulously build up concepts like surplus value, class exploitation, commodity production, reproduction and accumulation of capital; and then rewrite the history of modern society through these concepts.
Marx, moreover, believed that the ‘point’ of philosophy is not merely to ‘interpret’ the world but to ‘change’ it.[iii] This radical objective always remained at the core of all the work that he produced, Capital being its most rigorous and pristine manifestation. Such was the profundity of Marx’s analysis and the power of his critique, that it unleashed a revolutionary movement against capitalism across the globe, in search for alternatives to the capitalist order. The ebbs and flows of that movement shaped much of world history of the twentieth century.
Skeptics, however, ask today: hasn’t capitalism proved to be far more enduring than what Marx had predicted? Hasn’t capitalism changed dramatically over the past century rendering Marxist concepts outdated? What purpose does Capital’s analysis serve in the globalized world of the twenty first century? This essay addresses these critical questions.
One of the most abiding features of our social reality is the persistence of poverty among a large mass of people, despite the existence of abundant wealth and resources. The obvious reason behind this is the unequal distribution of income, wealth and resources in society. In fact, inequalities in income have grown in the advanced countries in the past three decades. An OECD report released in 2008 titled Growing Unequal?, after analysing the evidence of income distribution in 30 of its member countries, concludes:[iv]
The income of the richest 10% of people is, on average across OECD countries, nearly nine times that of the poorest 10% . . . the gap between rich and poor and the number of people below the poverty line have both grown over the past two decades. The increase is widespread, affecting three-quarters of OECD countries . . . income inequality increased significantly in the early 2000s in Canada, Germany, Norway and the United States . . .
This stark reality of capitalism today, springs out straight from the pages of Capital.
Before Capital, there were theories in political economy that explained why under capitalism, economies grow and wealth gets created on an expanding scale. There were also theories, which tried to explain, although with questionable accuracy, why poverty and inequality exist under capitalism. But it was in Capital that a theory was posited for the first time, which explained why growth and income inequality, wealth and poverty, coexist and get recursively reproduced under capitalism.
The proposition that poverty persists and inequality grows under capitalism, however, has been contested by many. They argue that increasing wealth created by capitalism gets shared with workers. So has wealth been shared with the workers under capitalism?
The United States is the richest country in the world measured in terms of GDP. Here, the total number of people living below the official poverty line for individuals was 39.5 million (22% of population) in the late 1950s. This had declined to 23 million by the early 1970s (11%) but rose to 31 million by 2000 (11.3%). Since then it has gradually increased to 37 million in 2005 (12.6%), 39.8 million (13.2%) in 2008 and 43.6 million (14.3%) in 2009.[v] There is no single poverty line the US. Poverty estimates are done on the basis of different household income thresholds, depending on the number of family members and dependents in a household. If we take the weighted average poverty threshold for a family of four in 2009 as a benchmark, the poverty line in the US currently stands at around $15 per day (per head). The poverty line is a little less for households with higher family sizes, but even for the highest family size it would not be less than $13 per day (per head). There are over forty million people living below this poverty line in the US today, which is the largest number in the last fifty years.
On the other hand, the average American CEO in 2007 earned more in one workday than what the average worker earned in the entire year (there are 260 workdays in a year). CEO pay rose on an average by 167% between 1989 to 2007, while the average nominal wage of the workers grew by only 10% during the same period. In the 1960s and 70s, CEOs in major American companies earned around 25 to 30 times more than an average worker; this ratio grew to almost 300 by the year 2000 and stood at around 275 in 2007.[vi]
What is the social consequence of this? While the earnings of the bottom 90% of Americans grew by 15% between 1979 and 2006, that of the top 1% grew by 144% and the topmost 0.1% by 324%. Consequently, the earnings of the top 0.1% of US population in 2006 was 77 times the earnings of the bottom 90%; this was around 21 times in 1979.[vii] Thus, while much of the world’s wealth gets concentrated within the US as the world’s richest country, this wealth gets further concentrated within a very narrow stratum of American society.
Such a societal outcome follows from Marx’s analysis in Capital that since capitalist production is based on class exploitation, the reproduction of capital, while creating much wealth under capitalism, also concentrates that wealth, reproduces poverty and widens income inequality. Persistence of poverty and rising inequality of income are natural corollaries of the property relations under capitalism, where the workers own nothing but their labour power, while the capitalists own everything else required for the production process. This enables the capitalists to extract surplus value from the workers in the production process and realise it as profits. What workers get as wages can never be more than a small fraction of the total value of their produce.
This concept of class exploitation under capitalism is of crucial importance, because capitalism survives by blurring this concept. What underlies the persistent poverty and growing inequality in the US and other rich countries is the exploitation of their workers by their capitalists. But this exploitation is concealed by getting the workers of the rich countries to look away from the yawning gap between their earnings and that of their business magnates, and to focus on the differences between their income and that of the workers of the poor countries. In other words, an American worker is reminded that while her/his minimum wage is $47 a day, 1.2 billion people across the world live on less than $1.25 a day.[viii] But no one points out that an American CEO earns 275 times the American worker.
Thus, exploitation is made to disappear through this sleight of hand, by first introducing relativity in exploitation: you are not exploited because there are numerous others elsewhere whose exploitation is much more than yours. Then there is an implicit threat: if you still persist with efforts to end or reduce your exploitation, you will land up with those elsewhere who are more exploited. This tightly constrains the extent to which workers can reduce their exploitation by claiming and securing more wages. Even if the wages of workers increase from time to time, they increase so slowly that prices of everything else rise manifold compared to wages, pushing the real wage down. If we compare the average minimum wage of this decade with that of past decades, the real value of the US minimum wage (in 2007 dollars) fell from around $58 per day in the 1970s to $50 per day in the 1990s, and further to around $47 per day in the 2000s.[ix]
Moreover, even as capitalist exploitation intensifies over time, the actual reason why a billion plus people earn less than $1.25 a day is also concealed from everyone. Those billion plus people are told that they are exploited because they do not earn $47 per day like the American workers, and development of capitalism over time will eventually increase their income to those levels.
But what is the actual reason behind a billion plus people living below $1.25 a day? In order to understand that we have to extend the analytical framework of Capital – which is based on a closed capitalist system in a single country – into a world which is divided between rich and poor countries. There is a second tier of exploitation under capitalism, apart from the first tier of class exploitation. Capitalism came into being through the violent and gory process of ‘primitive accumulation’; which involved expropriation of land and the destruction of domestic pre-capitalist producers like the peasants, artisans, weavers, etc., who became wage-workers under capitalism; and the expropriation of resources from across the world through colonial conquests, plunder, slave trade and slavery. Thus the initial development of capitalism itself, by exploiting the people, natural resources, minerals and other wealth of the colonies, led to the division of the world between the rich capitalist countries where wealth was concentrated and the poor countries whose populations were pauperized and robbed of their wealth.
Thus, colonialism created the second tier of exploitation under capitalism, and historically created a difference between the earnings of the wage workers in the rich countries and the pauperized masses in the colonies. The process of direct colonial rule continued till the middle of twentieth century, after which most of these poor countries attained national liberation. However, the end of colonial rule did not signify an end of the exploitation of the poor countries. Centuries of colonial rule created a world capitalist system where the big capitalist monopolies based in the rich countries owned and controlled much of capital and resources. Their imperialist domination of the world economy therefore continued and maintained the division of the world between rich and poor countries created by colonialism. Imperialist powers fought wars between them for further redivision of the poor countries, in order to extend the ‘sphere of influence’ for their respective monopoly capitalists and big banks (finance capital).[x]
Today, imperialism continues to function through the global domination of world production, trade and finance by monopoly capital; giant blocs of MNCs, banks and financial companies which can together be conceived as international finance capital; and the economic and military/strategic hegemony of the rich imperialist powers, led by the US. How does imperialist exploitation operate in today’s world of globalized capitalism? It primarily operates through uneven development, which perpetuates the historical backwardness of the poor countries. The huge mass of people in the poor countries, who were pauperized through colonial exploitation, continue to exist today as a vast reserve of labour, who do not find gainful employment. The existence of this enormous reserve of labour – the unemployed, underemployed, informal wage workers and self-employed petty producers in the urban areas alongwith the peasants and landless agricultural workers in the rural areas – ensure that the wage or earning levels of bulk of the population in these poor countries remain tethered at bare subsistence levels. Imperialist exploitation operates through the perpetuation of this ‘reserve labour’ and manifests itself in the billion plus people in the world earning less than $1.25 a day.[xi]
The class exploitation of the workers within the rich capitalist countries rests on the edifice of this imperialist exploitation. However, just as the class exploitation of the American workers is obfuscated by pointing to the wage differentials between the rich and poor countries, imperialist exploitation is obfuscated by rays of hope of the following kind, which are streamed in from the World Bank time to time:[xii]
Between 1981 and 2005, the share of the population in the developing world living below $1.25 a day was halved from 52 to 25 percent . . . reducing the number of poor by 500 million (from 1.9 billion to 1.4 billion) between 1981 and 2005.
But can the fact of 500 million more people increasing their earning over $1.25 a day, in a span of 24 years, be construed as a reduction of poverty?[xiii] Especially when a bulk of them continued to earn less than $2 a day. The same authors report that in these 24 years the number of people earning less than $2 a day remained unchanged at around 2.5 billion. It has remained unchanged because ‘reserve labour’ has persisted, signifying imperialist exploitation.
Moreover, if it takes 24 years, say, for 500 million poor people to increase their income from $1 a day to $2 a day, it will take at least another 264 years for them to reach the current minimum poverty line of the US at around $13 a day, and another 816 years to reach the $47 a day minimum wage level of the US. Broadly, this implies that at the current rate at which we are going, it will take nearly a thousand years for the ‘reserve labour’ of the poor countries to graduate from their present stage of imperialist exploitation to the stage of capitalist exploitation currently being experienced by the American workers. Moreover, would the minimum wage level in the US remain the same for the next thousand years? And if it does, what would it imply vis-à-vis the exploitation of the American workers?[xiv]
Today’s policymakers, however, are not bothered about these questions anymore. They keep themselves busy with the job of poverty ‘reduction’, embodied in the so-called Millennium Development Goals (MDGs), set by the United Nations in 2001 with the slogan, ‘We Can End Poverty’. The latest stocktaking of the MDGs by the UN, however, is quite revealing.[xv] It claims that the world is ‘on track’ to meet the MDG target of halving the proportion of people living on less than $1 a day between 1990 and 2015. Yet the numbers of those suffering from hunger went up by 13 million between 1990 and 2007. The effects of the economic crisis will push an additional 64 million people into extreme poverty in 2010. And 920 million people would continue living under $1.25 a day in 2015. In effect, therefore, we are witnessing an increase in both poverty and hunger even as the world is supposedly ‘on track’ to meet the MDG target.
What nourishes this inane exercise is the mainstream academic discourse on poverty and inequality, which evades any serious analysis of the causes behind them and obsessively revolves around issues of definitions and measurements. Why is the international poverty line set at $1.25 per day? As per the World Bank’s explanation, it is the average of poverty lines found in the 15 poorest countries. But what accounts for the average poverty line of 15 poorest countries being set at $1.25 per day? The rich and affluent sections in many of these countries earn several hundred times more than that. Yet, the bare subsistence level in the poorest countries is set as the standard for international poverty.
In the process, the distinction between capitalist and imperialist exploitation gets blurred and the value of labour gets universally degraded. And even after defining poverty in such an ideological manner, poverty alleviation targets are not being met in most countries. Just imagine the consequence of the entire poverty discourse, if the American poverty line of $13 per day is made the international poverty line.
Let us look at the process of globalization on the basis of the concepts we have built so far. The process is essentially imperialist because it enables international finance capital to globalize capitalist exploitation without upsetting the bulwark of imperialist exploitation, based on perpetuating ‘reserve labour’. Compared to the earlier phase of twentieth century imperialism, the globalization process, which can roughly be dated back to the 1970s, has led to the shifting of manufacturing processes and service based economic activities into the poor countries. This has changed the earlier pattern of international division of labour. However, the diffusion of capitalist development in the poor countries has not led to a universalization of capitalist exploitation. It has rather created enclaves of capitalist exploitation, ensconced within the overall landscape of imperialist exploitation.
This pattern of capitalist development has led to an intensification of both forms of exploitation. Those suffering from capitalist exploitation still consider themselves to be relatively fortunate in escaping imperialist exploitation. Therefore they submit to the whims and fancies of capital, staying away from trade unions, even accepting to work below minimum wages for longer working hours and undergo many more travails, just to ensure that they are not thrown out of the enclave of capitalist exploitation into the landscape of imperialist exploitation. This not only tethers the minimum wages in the poor countries to very low levels, but the mobility of capital under globalization, from the rich to the poor countries also create downward pressure on the wages in the rich countries. What capital mobility does therefore is to enable capital to use the ‘reserve labour’ of the poor countries, to weaken the bargaining strength of the workers everywhere, both in the poor as well as the rich countries. The outcome is seen in the ‘flexibilization’ of labour across the rich and poor countries, throwing to the winds all labour legislation – de jure or de facto – degrading capitalist exploitation further. It is also snatching away the hard won rights of the international working class movement of the past century.
As far as those suffering from imperialist exploitation are concerned, the carrot of ‘including’ them into the enclaves of capitalist exploitation is dangled in myriad forms. But the capitalist enclaves in the poor countries; because of the very global nature of their demand patterns, technologies, labour processes, skill requirements and financial networks; do not absorb sufficient labour from the surrounding world of ‘reserve labour’. Moreover, their backward and forward linkages are principally with the rich countries and similar capitalist enclaves in other poor countries, and not with the pre-capitalist landscape where they are ensconced. Rather than diffusing economic activities onto the pre-capitalist landscape, they remain as restricted enclaves of capitalist production. Therefore ‘reserve labour’ persists. In fact, in a replay of colonial exploitation, they are often dispossessed of their petty or common properties in land and forests in order to make way for those enclaves of capitalist exploitation. This ‘primitive’ accumulation continues alongside capitalist and imperialist exploitation.
But why does capitalist exploitation remain restricted within enclaves and not get universalised over time? What accounts for the perpetuation of ‘reserve labour’ and imperialist exploitation in the long run? It is because capitalism, even in its globalized avatar, ultimately remains a crisis-ridden system incapable of continued expanded reproduction. Periodic crises, which inevitably recur under capitalism, destroy capital and constrain its productive forces. This makes it systemically incapable of absorbing the ‘reserve labour’ by providing it with gainful employment.
Capitalism and Crisis
Capital’s analysis locates the crisis tendencies of capitalism at the very heart of its accumulation process. Wealth created under capitalism largely accrues to capitalists as higher profits. This is ensured through the nature of technological progress itself, whereby labour productivity rises continuously, restraining employment growth. As a result, the ‘reserve army’ of the unemployed persists, preventing the workers from increasing their wages and securing a better share in the social produce. These limits on the share of the workers in the social produce also limits their purchasing power, thereby limiting the growth of the market. This makes the system prone to crises, characterized by periodic over-production of commodities, which capitalists are unable to sell.
A crisis occurs when the reproduction process hits the limits of the market. Unsold commodities accumulate and profits dry up, making the capitalists unwilling to employ their capital. The entire accumulation process gets disrupted, resulting in closure of enterprises and destruction of capital on the one hand and the swelling of the ‘reserve army’ of unemployed on the other.
It is often argued that Keynes also theorized this in The General Theory of Employment, Interest and Money (1936) by analyzing how deficiency of aggregate demand can create deep recessions under capitalism. It is true that General Theory argued against cutting wages during recessions and advocated state intervention in demand management to reduce unemployment. But it did so more as an inside critique to fix the deficiencies of capitalism in the short-run. The strength of General Theory lies in its rich analysis of the speculative motive, liquidity preference and ‘animal spirits’, which is essential to understand the sharp fluctuations under capitalism in today’s age of globalized finance. However, Capital’s analysis of accumulation and crisis under capitalism is at a different plane. That difference is best understood in today’s world of globalized production and finance.
The theory of employment and unemployment contained in General Theory is a short period one. The phenomenon of jobless growth witnessed under globalization is therefore something which the General Theory would not be able to adequately explain. Capital, however, looks at technological progress – increasing automation of production – as a means of displacing labour by capital in order to maintain the reserve army of unemployed. Unemployment plays a functional role here, in enhancing the power of capital over labour, keeping it under strict discipline and restraining wage growth. An under-consumptionist tendency is built into the very nature of technological progress under capitalism. Therefore, restricted consumption of the working masses is the basic underlying cause of crisis under capitalism.
For technological progress to occur under capitalism without increasing unemployment, ever-expanding investment by the state is required. Moreover, the level of investment by the state in labour absorbing activities, must be so high as to generate sufficient employment growth which compensates for the growth of productivity in capital-intensive sectors. The pace of introduction of labour displacing technology and their diffusion also needs to be regulated by the state.
Under globalization though, neither of the conditions has worked, because the essence of the globalization process has been the unleashing of the spontaneous tendencies of capital, free from any encumbrances of the state. The growing disconnect between investment and output growth on the one hand and employment and wages on the other – jobless growth and squeeze in real wages – is a direct consequence of this. It is the aggravation of the under-consumptionist tendency under globalization, arising out of jobless growth and depressed wages on account of intensified capitalist exploitation, which set the stage for a global economic crisis, which finally erupted in 2008.[xvi]
Resurgence of Money-Capital
Nobody expected the British monarch, a relic of its pre-capitalist past, to crack one of the darkest jokes of the modern era, by asking academics at the London School of Economics in November 2008 why they did not ‘notice’ the coming of the global financial crisis. It is not as surreal as it appears though, given that Her Majesty’s personal investment portfolio is valued at £100 million, which may have shrunk a bit in that ‘awful’ mess. The academics later explained the ‘psychology of denial’ in a letter by stating that the crisis was a result of a failure to understand ‘risks to the system as a whole’. The solution offered is to develop ‘horizon-scanning capability’ so that the ‘forecasting-failure’ occurs ‘never again’.[xvii]
As far as ‘horizon-scanning capability’ is concerned, Capital does not have any theory on the state of expectations or liquidity preference, which mark the originality of General Theory. But it does contain an elaborate discussion on ‘money-capital’ (finance) and ‘real capital’, which provides deep insights into the development of the financial sphere of capitalism, its inter-relationship with the accumulation process and its role in aggravating the crisis tendencies of capitalism. This helps us to better assess the ‘risks to the system as a whole’.
Superimposed on the capital accumulation process, characterized by an under-consumptionist tendency, is the credit and financial system, which by making money owned by others available to capitalists, enables extended reproduction and centralization of capital. Centralization eventually creates a ‘superabundance’ of ‘money-capital’, which expresses itself in a ‘plethora’ of forms other than cash, like stocks, bonds and mortgages, whose transactions as commodities lead to the creation of ‘illusory’ value. This becomes ‘more and more a matter of gamble’, which attracts more and more of money-capital into these transactions. This causes sharp inflation in asset prices, which artificially causes a ‘forced expansion’ of the reproduction process. When these artificially inflated prices eventually crash, there is a rush to sell financial assets and ‘only cash payments have validity’. This causes credit to dry up because money-capitalists become unwilling to lend, and as a result the reproduction process gets disrupted, precipitating crises in both the spheres of financial and real capital.
At least three important conclusions follow from this in the context of globalization. First, ‘euthanasia of the rentier’ as prescribed by the General Theory becomes a far-fetched idea under capitalism, because while ‘money-capital’ and ‘real capital’ can be conceptually segregated with ease, they exist in the real world as a bloc deeply intertwined with each other. Even if the excesses of ‘money-capital’ can be curbed through state regulation for a while, the spontaneous tendency of centralization of real capital would inevitably bring ‘money-capital’ back in action through its ‘superabundance’.
Second, ‘socialization of investment’ naturally becomes a less preferable option for capitalism in a world where a ‘forced expansion’ of the reproduction process can be caused, however temporarily, through inflation in asset prices. Debt-driven consumption bubbles of the rich and affluent take the place of workers’ consumption as the driver of economic activity.
Third, in a world where ‘money-capital’ corners an increasing share of surplus-value by creating ‘illusory’ value, through the movement in asset prices independent of real capital – and that too across national boundaries – ‘approximation to full employment’ is bound to be abandoned as state policy. This is because international finance capital requires the stability of the international monetary system, for its own smooth functioning. This stability in the value of money (across currencies) is provided by stabilizing money wages, both through ‘flexibilization’ of labour as well as the maintenance of ‘reserve labour’.
The atrophy of social democracy as an economic philosophy within the rich countries and the ascendancy of neoliberalism follow from these developments, which have unfolded in the capitalist world since the 1970s. After being regulated and controlled by the state during the post-war decades of Keynesian demand management, money-capital witnessed resurgence in the shape of international finance capital. The results – in terms of increasing poverty and income inequality across the world, declining real wages, concentration of capital on an unprecedented scale, its cross-border mobility, skyrocketing CEO pay, financial deregulation, asset price bubbles, sub-prime lending – and all this eventually leading to the financial meltdown and great recession of 2008/2009; are there for everyone to see.
What is more revealing is the rapidity with which the ‘we-are-all-Keynesians-now’ mood of the immediate aftermath of the crisis has evaporated within the capitalist policy establishments, giving way to the same neoliberal humbug and hubris that caused the crisis in the first place. After spending humongous amounts of taxpayers’ money to bail out the failed investment banks and mortgage lenders, the policy locus in the rich countries has shifted back to the orthodoxy of cutting deficits and imposing austerity.
The pursuit of austerity measures by the governments of the rich countries, even in the backdrop of such historically high levels of unemployment, demonstrates the continued hegemony of international finance capital. While the General Theory would certainly be upset by such a predicament, which goes totally against its analysis and policy prescriptions, the strength of Capital lies in its capacity to explain why matters have come to such a pass.
Any crisis of capitalism inevitably conjures specters of the collapse of capitalism. The ongoing crisis of the capitalist world has been no exception. Is this the end of capitalism that Marx had predicted? However, this notion of capitalism as a system collapsing after hitting the dead-end of an economic crisis finds no place in the analysis of Capital. It shows capitalism to be a system which contains spontaneous and contradictory tendencies of expansion and crisis, and which moves in time through these contradictory processes. It gets out of a mess only to land up, as the Queen might say, in another ‘awful’ one. The spate of debt, currency and financial crises the capitalist world has witnessed since the 1980s, eventually leading to the grand financial meltdown in the US in 2008 and the ongoing ‘great recession’, exposes that crisis-ridden character of capitalism. It is incapable of any sustained process of expansion. There are limits.
There is, however, a story about the end of capitalism in Capital, the story of proletarian revolution. Just as capitalism was born out of a revolution against feudalism, it will come to an end through a revolution by the workers against monopoly capital. While proletarian revolutions have not occurred in the rich capitalist countries till date, the first revolution inspired by Marx’s ideas happened in Russia.[xviii] China and several other poor countries followed suit, which demonstrated the power of Marx’s concepts and analytical framework. Those revolutions were not ‘pure’ proletarian revolutions as was envisaged in Capital but were based upon innovations in both theory and praxis by revolutionary leaders like Lenin and Mao. But the starting point of all revolutionary theory since Marx has remained his framework.
The strength of the Marxian framework, as can be seen in Capital, lies in the fact that it does not look at capitalism as an ossified structure frozen in time but as a set of relationships and processes moving over time. Moreover, the framework is also adaptable, in the sense that insightful theories and objective analyses of society developed independently can also gel together with this framework, to enrich the analysis of the relationships and processes under capitalism. In other words, Marxism is and was always intended to be a scientific and revolutionary framework and not a set of religious beliefs or dogmas that claim to contain every truth about the world within its texts.
Under the present stage of imperialist globalization, the possibility of a ‘pure’ proletarian revolution in a rich capitalist country continues to look distant. It is the world of poor countries, which always remains alive with the possibility of revolution, because this world is home to the most exploited sections of humanity. The anti-imperialist upsurge in Latin America witnessed over the past decade has shown the future direction for the revolutionary struggles in the poor countries. Much of the innovations in theory and praxis introduced by Lenin and Mao, also continue to remain relevant in the context of imperialism, especially the concept of a democratic revolution based on worker-peasant alliance against imperialism and monopoly capital.
Workers and ‘Reserve Labour’
What our analysis of imperialist globalization suggests, though, is the importance of bringing the classes comprising ‘reserve labour’ in the poor countries, to the centre stage of political and revolutionary mobilization. These are the peasantry and rural labourers on the one hand and the unemployed, underemployed, informal wage workers and self-employed petty producers in the urban areas on the other. These classes within the poor countries are bearing the brunt of imperialist exploitation today, living a life of drudgery, insecurity and impoverishment, in the swamp of the informal sector.
They helplessly watch the cruel joke being played on them by the national and international policy establishments, in the name of ‘poverty reduction’, ‘inclusive growth’, ‘MDGs’ and so on, even as rising prices of food and fuel eat away the pittance that they make after a very hard day’s work. And even those low paying jobs have been snatched away from many of them by the economic crisis. These are the two billion plus who yearn the most for freedom from their exploitation.
The unity between the workers facing capitalist exploitation and the ‘reserve labour’ facing imperialist exploitation is the key. The intensification of capitalist exploitation cannot be fought back without fighting imperialist exploitation, which perpetuates ‘reserve labour’. Marx while discussing the role of the reserve army of the unemployed in Capital had noted that their existence and recreation enables the ‘despotism’ of capital. This acquires added significance in today’s world of globalized capital, where the ‘disciplined, united, organized’ workforce envisaged in Capital has increasingly given way to a multitude of casualized and irregular workers.
The structure of the capitalist production process itself has changed with decentralization, sub-contracting and outsourcing of work, which have led to an overwhelmingly unorganized working class, considerably blurring the distinction between the employed and the unemployed. In this context, the suggestion made in Capital for workers and their trade unions ‘to organize a regular co-operation between employed and unemployed in order to destroy or to weaken the ruinous effects of this natural law of capitalistic production on their class’, acquires significance.
It is on the bedrock of this revolutionary alliance between workers and ‘reserve labour’, against imperialism and the domestic ruling classes that the next tide of revolutionary transformations in this century has to be based.
[i] The first volume of Capital was published during Marx’s lifetime in 1867. After his death in 1883, the second and third volumes were published in 1885 and 1894 respectively, by Marx’s lifelong friend and collaborator, Friedrich Engels.
[ii] “Preface to Capital Volume One”, in Louis Althusser, Lenin and Philosophy and Other Essays, Monthly Review Press, 2001.
[iii] Marx’s Eleventh Thesis on Feuerbach.
[iv] Growing Unequal? Income Distribution and Poverty in OECD Countries, Organization for Economic Co-operation and Development, Paris, 2008. The OECD is a club of advanced capitalist countries, which currently has 33 members.
[v] Data sourced from the website of Institute for Research on Poverty, University of Wisconsin-Madison. Primary source of data is the US Census Bureau. The poverty estimation methodology has been revised in the US four times since the 1950s, the last time being 1981.
[vi] See Figure 3AE in Chapter 3 on Wages in Lawrence Mishel, Jared Bernstein and Heidi Shierholz, The State of Working America 2008/2009, Economic Policy Institute, New York, 2009.
[viii] The US Federal Minimum Wage was $5.85 per hour in 2008-09, i.e. nearly $47 a day (assuming 8 hours working day). This is also the decadal average minimum wage for the present decade (2000-2010). Poverty figures are from World Bank website, Poverty: Recent Estimates and Outlook (updated March 2010).
[ix] Table 3.38 in The State of Working America 2008/2009. Economist Robert Pollin has also shown on the basis of long period data that average real wages in the US peaked at $15.7 per hour in 1973 and fell since then to reach $14.13 per hour in 2000. The fall in average real wages since the 1970s occurred despite continued growth in labour productivity. See his Contours of Descent: US Economic Fractures and the Landscape of Global Austerity, Verso Books, 2005.
[x] For more on this see V.I. Lenin, Imperialism: The Highest Stage of Capitalism, with an Introduction by Prabhat Patnaik, LeftWord Books, New Delhi, 2000.
[xi] This is based on the theoretical framework developed by Prabhat Patnaik in Accumulation and Stability Under Capitalism, Clarendon Press Oxford, 1997. Patnaik identified these labour reserves in the poor countries as the ultimate shock absorbers of the world capitalist system, which provides it stability. He further develops this in Chapters 18 and 20 of The Value of Money, Tulika, New Delhi, 2009. The category of ‘reserve labour’ is conceptually different from the ‘reserve army of labour’ in Capital, which basically implies the unemployed under capitalism. In our extended framework, a person can belong to ‘reserve labour’ even when she is informally employed.
[xii] Data is based on Shaohua Chen and Martin Ravallion, 2008, ‘The developing world is poorer than we thought, but no less successful in the fight against poverty’, Policy Research Working Paper 4703, World Bank, 2008.
[xiii] These international estimates of poverty are based on Purchasing Power Parity (PPP), i.e., they are corrected for inter-country variations in inflation and exchange rates. Estimates in terms of nominal earnings and exchange rates may show much higher levels of poverty. The following argument, however, is not based on this methodological aspect.
[xiv] In fact, the federal minimum wage in the US has been increased in recent years and stands at around $58 per day since 2009. We continue to cite the decadal average of $47 per day for the sake of continuity with earlier arguments.
[xv] MDG Report, United Nations, 2010.
[xvi] For a detailed account of the financial crisis in the US, see Prasenjit Bose and Rohit (2008), ‘Global Financial Crisis: Lessons in Theory and Policy’, The Marxist, Volume XXIV, No. 3: http://cpim.org/marxist/200803_marxist_financial%20crisis-prasenjit-rohit.pdf
[xvii] The text of the letter written by two members of the British Academy is available at: http://media.ft.com/cms/3e3b6ca8-7a08-11de-b86f-00144feabdc0.pdf
[xviii] Interestingly, Eric Hobsbawm notes that while the first German edition of Capital (thousand copies) published in 1867 took five years to sell out, thousand copies of the first Russian edition of 1872 sold out in less than two months. See his The Age of Capital 1848-1875, Abacus, 1975, p.308.