Bourgeois Democracy Crumbles As It Defends Its Genocide

The Sham of Bourgeois-Democracy

Bourgeois-democracy is a sham, a fraud, a means of deluding the masses into believing that they have a real say in the running of society, when, in fact, irrespective of what colour rosette the governing parties wear, the actual control of society rests with the owners of property, and their state. Whenever the superficial rights and freedoms promised by bourgeois-democracy are, actually, used by the masses to promote their own interests, or to challenge the actions of the state, the ruling class, and its state, simply abandons even the pretext; it removes the velvet glove and exposes the iron first of its class dictatorship. Across the world, as “democratic-imperialism”, seeks to justify and defend its genocide in Gaza, in the face of popular revolt, bourgeois-democracy is crumbling, as it exposes that iron first. And, contrary to the bleating of subjectivists, such as Paul Mason, over the last few years, it is not the fascists of the type of Trump, Johnson, Le Pen, Wilders, or the AfD that are the instrument of that iron first, but those that Mason has looked to within the ranks of social-democracy, such as Biden, Starmer, Scholz, Macron et al, Bonapartists themselves, one and all.

I recently, noted the video from Owen Jones, detailing the arrest of a Jewish activist in Germany, on the grounds of “anti-Semitism”, for having taken part in opposing the Zionist genocide, as well as noting the arrest by British police of a Rabbi, on the same basis. It rather frames the context of the actions of Gideon Falter, and his claims in relation to the actions of police. It also, highlights the extent to which the contradictions inherent within bourgeois-democracy, and its attempts to defend the actions of “democratic imperialism”, in carrying out, and complicity in genocide, have reached the stage in which they must violently explode in crisis. As Owen Jones says, what more repulsive sight can there be than that of German state stormtroopers arresting German Jews, and claiming to be doing so on the grounds of anti-Semitism, whilst, in fact, what they are doing is defending the role of the German state, in, once more, being involved in a genocide?

Now, Owen Jones, in another video, featuring Yanis Varoufakis, banned by that same German state, details the crumbling of bourgeois-democracy in Germany.

For months, the genocide undertaken by the Zionist state against Palestinians has been undeniable, and has provoked ever greater popular protests against it. That genocide is backed to the hilt by “democratic imperialism”, that arms it, propagandises for it, and in the words of the likes of Biden, Starmer and co., stands “shoulder to shoulder” with it. Why does this “democratic imperialism” stand shoulder to shoulder with Zionism, and its genocide? Because the Zionist state, in Israel, is its tool, its proxy in the region, just as Zelensky and his regime, in Ukraine, and the inheritors of Chiang Kai Shek’s butchers in Taiwan, are its proxy, its foot soldiers in various parts of the world, where it has global strategic interests, and increasingly so, now, as it faces a challenge to its global hegemony, from an up and coming imperialist bloc, led by China and Russia.

The US imperialist strategy in the Middle-East, involves a regional, politico-economic bloc bringing together Israel, Egypt, Jordan, and the Gulf States. Prior to the Iraq War, and NATO’s wars in Libya and Syria, which utilised Islamist groups against the existing regimes, funded and armed by the CIA, Saudi Arabia and other Gulf states, the economic development of those states was enabling them to be drawn closer to the EU, in a similar manner to that of the former Stalinist states in Central Europe, prior to them joining the EU. That, in itself, was seen as a threat by US imperialism, as EU imperialism remains the most powerful potential rival to the US, despite its continued subservience to it, as both try to defend their current dominance against the rising imperialist bloc led by China.

The chaos caused by US imperialism in the Middle-East and North Africa by its wars in Iraq, Libya and Syria, ended that process of economic and social development, and also ended the process of closer integration with the EU, strengthening US imperialism against EU imperialism, and emphasising its continued dominance over it. But, European imperialism, older and wiser than US imperialism, knows that such developments as those now sought by US imperialism, have other consequences, in the longer term. US imperialism’s wars in Afghanistan and Iraq, cost it large amounts of treasure, and achieved its aim of removing the existing regimes, creating chaos, and so removing a potential regional power, but, in Afghanistan, China is the one, now, stepping in to offer the potential of trade and investment, furthering its own global imperialist ambitions, and influence. In Iraq, it is Iran, against whom US imperialism initially promoted Saddam Hussein as their proxy, that has gained most influence, strengthening its own sub-imperialist power, as an ally of China and Russia.

The Nature of “Democratic Imperialism”

The chaos caused in Libya spread into Mali and other parts of North Africa, and, again, it has opened the door for rivals to fill the void, most notably the role of the Russian Wagner Group, as China, also, continues to expand its economic reach. Similarly, US imperialism promotes the Zionist genocide against the Palestinians, because, much as with Sherman’s genocide against the Native Americans, and the European Colonialists genocides against indigenous peoples in Australia, New Zealand and elsewhere, it is necessary to establish its unchallenged position, as a Zionist state “from the river to the sea”, as its doctrine commits it, and as the laws of capital, in the age of imperialism requires it to do. Only then can it begin to create that wider politico-economic bloc with the other US clients in Egypt, Jordan and the Gulf states, free from the repeated rebellions of the Palestinians, and the support for them amongst the Arab masses that obstructs the actions of their rulers.

Such a development is also in the interests of EU imperialism. Indeed, it is more so than for US imperialism, in the longer run, because a stabilisation of the region, and its economic growth, will mean far greater trade, and investment opportunities for EU imperialism, as its closer neighbour. So, it is no wonder that the political representatives of US, UK and EU “democratic imperialism” have been prepared to move heaven and earth to support the genocide undertaken by Zionism in Palestine, and to claim that black is white, as they try to deny it is happening. For years, they have equated anti-Zionism with anti-Semitism, a strategy used even more intensively and fraudulently, in recent years, as they sought to attack the Left, for example, against Corbyn and his supporters.

In the 1930’s, when that same “democratic imperialism” was seeking to dupe the masses into support for its imperialist wars against Germany and Japan, it did so by claiming that it was engaged in a war for “democracy”, all the while holding millions of colonial slaves in chains! As Trotsky noted,

“Three hundred fifty million Indians must reconcile themselves to their slavery in order to support British democracy, the rulers of which at this very time, together with the slaveholders of “democratic” France, are delivering the Spanish people into Franco’s bondage. People of Latin America must tolerate with gratitude the foot of Anglo-Saxon imperialism on their neck only because this foot is dressed in a suede democratic boot. Disgrace, shame, cynicism — without end!”

(Phrases and Reality)

It does so, today, aided not only by the likes of imperialist politicians such as Biden and Starmer, but also, of social-imperialists of the type of the USC, and its components such as the AWL, who play the same role, today, in that regard, as did the Stalinists and centrists in the 1930’s. They have been complicit in this narrative of imperialism, including in its use of anti-Semitism witch hunts in the labour movement. But, to do that, they also had to claim that it was okay to criticise the actions of Israeli governments, even though, in practice, nearly every such criticism was met with the same charges of anti-Semitism. The line that it was okay to criticise Israeli governments, rather than the racist, colonialist ideology of Zionism, which underpins that state, was also meant to enable imperialism to pressure those Zionist governments, such as that of Netanyahu, which were seen as too maverick, uncontrollable, and representing the same kind of petty-bourgeois interests as those of Trump, Truss, and so on. It is the same motivation that leads to liberal Zionist newspapers such as Ha’aretz, to stand against Netanyahu, and to ridiculously claim that he has failed in his aims in Gaza. He has failed their aims, not his, and not the rationale of Zionism, as now manifest, in its requirement for a final solution against the Palestinians.

The Role of The Anti-Zionism = Anti-Semitism Lie

The line that it was okay to criticise the actions of Israeli governments was always a lie, as every such criticism led to the same claims of them really being a cover for anti-Semitism, but if its not possible to criticise the actions of the Zionist state, a rogue, Bonapartist state, headed by Netanyahu, as it visibly and undeniably commits genocide in Gaza and, increasingly the West Bank, when would such criticism be valid, and not characterised as “anti-Semitic”?! The contradictions have fully matured, and erupt violently, as appearance and reality collide. It has been erupting on the streets of the world’s major cities, every weekend for months, and, now, it is erupting on college campuses in the US, Australia and elsewhere, reminiscent of the student protests against the Vietnam War in the 1960’s. For regular readers of this blog, that should come as no surprise, as it is what has been analysed for years, on the basis that we are in an equivalent phase of the long wave cycle as that of the early 1960's.

Bourgeois-democracy is a sham, and a fraud. It was most easily seen to be so, in the early 19th century, when it took the form of liberal-democracy that only gave the vote to the owners of property. That led to an inevitable demand for a widening of the franchise by workers, and other sections of the masses, the petty-bourgeoisie and peasantry. The means of engaging in the struggle for the extension of those bourgeois-democratic rights, by workers, however, were inevitably proletarian, not bourgeois. The Chartists, in Britain, for example, pursued their aims by the organisation of General Strikes, and mass mobilisations, and for some, the mobilisation of independent, proletarian, armed struggle. It was precisely those methods that Marx and Engels advocated, as they warned the workers against being suckered in by the claims of their erstwhile allies amongst the bourgeoisie and petty-bourgeoisie. It was the same approach taken by the Bolsheviks, in 1905 and 1917, when, in pursuit of the demand for a bourgeois-democratic, republic and convening of a Constituent Assembly, they argued for the creation of soviets/workers’ councils, as independent organs of workers self-government.

But, capitalism, as it entered its imperialist stage, towards the end of the 19th century, dominated by large-scale, socialised, industrial capital, was not only able to accommodate the demands of workers for higher real wages, as productivity rose sharply, but it actively encouraged it. It needed ever larger markets, and workers formed the largest section of society. Moreover, these higher real wages helped to reinforce the idea, promoted by social-democracy, that labour and capital had the same common interests that could be advanced, more or less harmoniously, given the occasional falling out, and need for diplomacy and compromise, mediated by a growing, social-democratic, professional middle-class, whose job was to manage such relations, on behalf of the good of “society”.

Liberal bourgeois democracy, had become a fetter on the free and rational development of bourgeois-democracy, just as the monopoly of private capital had become a fetter on the rational development of capital itself. The latter fetter was “burst asunder”, as Marx puts it, in Capital I, by the development of socialised capital in the form of the cooperatives, and more extensively in the form of the joint stock companies/corporations. Alongside this development, liberal democracy gave way to social-democracy, based upon the delusion of universal suffrage, and the idea that power resides in elected parliaments, rather than in the hands of the permanent state, its civil service, bodies of armed men, judiciary, and its ideological apparatus operating through the schools and universities, the media, and religious and cultural organisations.

The Contradictions Have Matured

In fact, as Marx and Engels describe, for example in Anti-Duhring, the contradictions had already reached another breaking point. The main form of socialised capital, i.e. the joint stock company/corporation, the collective property of the workers, or associated producers as Marx calls them, is not controlled by those workers, but by shareholders, i.e. not by the owners of that capital, but by the owners of fictitious-capital, whose interests are immediately antagonistic to it. For much of the 20th century, this contradiction was contained. The owners of fictitious-capital, sought to maximise their revenues from the money-capital they loaned. Ultimately, that required that profits be used to accumulate capital, not to endlessly increase the proportion of those profits paid out as interest/dividends.

If the socialised capital was controlled by its collective owners, the associated producers, that would happen, as profits were retained and invested in additional capital. The lenders of money-capital (owners of fictitious capital) would increasingly become redundant, as a parasitic excrescence, and competition between them to lend money, would force interest rates down. However, the socialised capital was not controlled by its owners, but by shareholders, and, consequently, the Boards of Directors they appointed served their interests, not those of the company. As interest rates fell, the shareholders compensated by simply having those Directors allocate a growing portion of profits to be paid as dividends, rather than retained for investment. As Haldane has noted, in the 1970’s, only 10%, on average, of profits went to pay dividends, whereas, today, it is around 70%. (There has been a similar rise in the proportion of building costs accounted for by land prices from 10%, after WWII, to around 70%, today).

The consequence was that share prices rose inexorably, and as share prices rose, so too all other asset prices rose. The owners of fictitious-capital were no longer primarily concerned with revenue/interest/rent, but with perennial capital gains, resulting from these ever inflating asset prices. But, without expanding capital, there are limits to the expansion of profits, and without expanding profits there is no sustainable basis for an expansion of dividends/interest, rent or taxes. Consequently, there is no basis for a continued rise in asset prices, and when they stop rising, they fall. A financial crash happens, as with 1987, 2000, and 2008, and other smaller crashes in between. Only inflation, i.e. a devaluation of the standard of prices can create the illusion of continued rising asset prices, which is what QE did.

But, the ruling class is a global class of owners of this fictitious-capital — which is why, in the end, its interests conflict with those of nation states, currently trying to reverse the process of globalisation, represented by Brexit, Biden’s Inflation Reduction Act, and so on, which represent the agenda of the reactionary, nationalist petty-bourgeoisie. The capitalist state remains the state of the ruling-class, but the immediate interests of this ruling-class, not to see their wealth decimated, as asset prices crash, conflicts with the interests of the real industrial capital (objectively the collective property of workers), upon which that wealth is actually based! The social-democratic state, now, becomes the arena in which this struggle between two antagonistic forms of capitalist property (real socialised industrial capital and fictitious capital) is played out.

Ultimately, the state must represent the long-term, as against the short-term, interests of the ruling class, and that involves it representing the interests of the real industrial capital, and its need to accumulate (objectively, that also means the interests of the collective owners of that capital, i.e. the working-class, indicating, as Marx sets out in Capital III, Chapter 27, the transitional nature of this form of property). That need, in the age of imperialism, of monopoly capitalism, involves its requirement for planning and regulation, and standardisation, on an ever wider basis. Logically, the creation of a single global market and state, but which the limitations of imperialism, and continuance of nation states, frustrates. Gravity pulls matter together in the universe, but it takes the form of separated clumps of matter, in the process.

Hence the development of the EU, and other such structures, as well as attempts to create global para state bodies such as WTO, World Bank, IMF and so on, and hence, also, the dynamic driving imperialism in Israel, and the Middle East, as well as in Ukraine, Taiwan and elsewhere. These kinds of development, of creating larger single markets, and of which the process of globalisation was an inherent component, are compatible with the needs of both real industrial capital, and fictitious-capital. They reduce costs, and frictions, thereby, facilitating increased realised profits, and rates of profit, without additional capital accumulation, without profits being used for that purpose rather than being handed to shareholders. But, they are limited, and not only have those limits been temporarily reached, but, also, other factors have put them into reverse. The most obvious manifestation is Brexit.

It is the interests of the petty-bourgeoisie, politically ascendant since the 1980’s, manifest in its take over of conservative parties, and movement to the Right of the Overton Window, that conflicts with that process of globalisation. It is manifest in the fact that, not only has that petty-bourgeoisie, whose strength resides in its numbers, taken over conservative parties, but, as a result of its electoral weight, has also shifted the nature of the existing workers’ parties, such as Labour, Democrats, SPD etc. Those parties, which were, formerly, characterised as bourgeois workers’ parties, i.e. parties based upon the working-class, but dominated by bourgeois ideas, have, become petty-bourgeois workers parties, most noticeable in the collapse of Starmer’s Blue Labour into jingoism, and Brexitism, as it seeks to accommodate the interests of the reactionary petty-bourgeoisie, in search of its votes.

Real industrial capital requires not only a resumption of that process of creating larger single markets, but, also, requires that profits be used for capital accumulation, not ever rising amounts of dividends, share buybacks, rents, taxes and so on. The operation of the long-wave cycle has itself imposed that necessity on it, even though the ruling class has utilised the state to try to subvert it, and mitigate it, so as to avoid crashes in asset prices. As with the period of the early 1960’s, we have entered a phase of the long wave cycle in which the productivity gains, resulting from the microchip revolution of the 1970’s/80’s, have now dissipated. Employment has risen, and started to use up the relative surplus population created in the 1980’s/90’s. It means that wages also begin to rise, a process that was only slowed as a result of the austerity measures introduced after 2010, alongside the continued attempts to inflate asset prices, and divert money from the real economy, into such speculation, by utilising QE.

The Revolution Betrayed and Delayed

Marx and Engels, and even Lenin and Trotsky, could never have visualised the situation that exists, today. Indeed, in Anti-Duhring, Marx and Engels, noting this huge expansion of socialised capital, its requirement for state planning and regulation, and so on, at the same time that the capitalist class was reduced to a class of money-lenders, with no social function, naturally assumed that the working-class, leading the rest of society, would simply sweep them away, much as the bourgeoisie had swept away the landed aristocracy as its social function disappeared.

“In the trusts, free competition changes into monopoly and the planless production of capitalist society capitulates before the planned production of the invading socialist society. Of course, this is initially still to the benefit of the Capitalists.

But, the exploitation becomes so palpable here that it must break down. No nation would put up with production directed by trusts, with such a barefaced exploitation of the community by a small band of coupon-clippers.”

(Anti-Duhring p 358)

Unfortunately, every nation has put up with such barefaced exploitation, and worse. On the one hand, conservative social-democracy has rationalised such barefaced exploitation, by presenting the whole of society as, also, taking part in it. Even though the vast majority of fictitious-capital is owned by a tiny minority, and control of all of it, by that minority, is exercised via the banks and finance houses, it is presented as though we are all equally owners of it, via pension funds, mutual funds and so on. But, the state most certainly would not even countenance workers exercising control over the funds in their pension funds, for example, let alone, changing the law to prevent shareholders exercising control over capital they do not own, and vesting that democratic control with the associated producers that collectively do own that capital. Yet, in terms of consistent industrial democracy, this need for control by workers over their collective property is as glaring and necessary as was the demand for political democracy advanced by the Chartists, in the 19th century, or in the Revolutions of 1848.

If conservative social-democrats, as with Attlee, Wilson, and Heath in Britain, or their equivalents in Europe and North America, nationalise capital, they do so not for the benefit of workers, or to enable those workers to exercise their rightful control over their collective property, but purely for the benefit of capital as a whole. The nationalisation of Rolls Royce by Heath, and of the banks, in 2008, is an example. Yet, this state-capitalism, undertaken by even conservative social-democracy (as now, with Starmer’s commitment to rail renationalisation) is pretty much the zenith of the aspirations of the progressive social-democrats, but also of most of the so called Left, which masquerades in the clothing of Marxism. The Militant Tendency, for example, was well known, and ridiculed, for its “socialist” agenda, of calling for the nationalisation of the 200 top monopolies, but all of these Left sects, call, at one time or another, for the capitalist state to nationalise this or that industry or enterprise, as though the capitalist state would ever do that in workers’ interests, rather than the interests of capital.

But, worse than that. Rather than seeing this large-scale socialised capital as progressive, in the way that Marx, Engels, Lenin and Trotsky did, not only the progressive social democrats, but nearly all of the so called Left see it as the main object of their ire, as they have collapsed into the same kind of economic romanticism, and petty-bourgeois socialism of the kind of Sismondi, criticised by Marx and his followers. It is the basis of their “anti-capitalism”, expressed in calls for it to be hit by higher taxes than small business, and so on. Yet, if workers did have control of that capital, or as with say a very large workers’ cooperative, why on Earth would socialists want that to be more heavily taxed by the capitalist state, syphoning resources from it???

Rather than a struggle for consistent democracy, which, today, involves a demand for industrial democracy alongside a defence of political democracy, the Left, instead, looks to the capitalist state to fight its battles, to nationalise these companies, in the hope, or rather sowing the delusion, that, in doing so, “social control” over that capital is, then, somehow facilitated. Yet, everything we know, shows that no such social control is established, far less workers’ control, and that, absent any such control, these state-capitalist enterprises become bureaucratic monstrosities, inefficient and run for the benefit of their higher echelons, and leached off by other, large companies. As with the various British nationalised industries, or the NHS, their inefficiency, poor quality of service, hierarchical and oppressive structure and inevitable failure (as was also the history of Stalinism), simply undermine the idea of socialism, and create the conditions for their future privatisation, and strengthening of the ideas of the superiority of the market.

Stalinism and The Petty-Bourgeois Left, The Crisis of Leadership

The failure of the working-class to sweep away this class of money-lending leaches, whose immediate interests are antagonistic even to that of real capital, and which has led to money being diverted into useless speculation, blowing up asset price bubbles that subsequently burst, with serious effects on the real economy, is the consequence of its political leadership collapsing into the pre-Marxist, moralistic socialism of the likes of Sismondi. But, there is a material basis for that too, resulting in yet another contradiction that has reached the point of crisis.

In the post-war period, Stalinism still exerted a huge dead weight on the global working-class. It reflected the interests of the petty-bourgeois bureaucracy in the USSR, and its satellites. In the developed capitalist economies, the Stalinist parties simply merged into the wider social-democracy, itself reflecting that large professional, middle-class layer that saw society as a mechanism, and its social role being to ensure its smooth operation, mediating between capital and labour. As a new Left emerged critical of the role of Stalinism, it too was a reflection of the interests of the petty-bourgeoisie, this time as reflected in its largely studentist, and academic membership. It carried with it the same petty-bourgeois moralism, and the same views of reliance on the role of the state, and managerialism in effecting change.

For much of the post-war period, as global capital expanded, as part of the process of long wave uptrend, running from 1949 to 1974, these deficiencies could be accommodated, and were disguised as the rising social weight of the working-class imposed itself. But, it was always a dead end. As soon as the period of uptrend ceased, and a new period of crisis began after 1974, all of the limitations of the political leadership of the labour movement, began to become apparent. For a while, the strength of the working-class compensated for it, as seen in the victory of the British miners, in 1972 and 1974, over Ted Heath’s Conservative government.

But, the limitations, even then, were apparent, in the demands and slogans put forward, such as “Labour Take the Power”, as though power rested in parliament rather than in the state, and the limited aspiration expressed by “General Strike To Kick Out The Tories”, as though, if workers had reached the level of class consciousness to engage in such an overtly political general strike, they should limit their sights only to a change of bourgeois government, rather than seizing state power themselves!

When the Heath Conservative government was kicked out by the voters, the reality, manifest in Wilson, and then Callaghan’s Labour governments was not that different, and not surprisingly, as the underlying ideology of Heath and Wilson, of conservative social-democracy, was, essentially the same, “Buttskellism” as it was termed in the post-war period. Wilson, followed by Callaghan, simply continued the struggle against the working-class, intensified as the decade progressed, and the crisis phase of the long wave cycle became more acute. And, when Thatcher took over that task, in 1979, the conditions were already set for the working-class to be defeated, as the political leadership of the class was totally inadequate, armed not with the arsenal of Marxism, but that of petty-bourgeois socialism, reformism, statism and syndicalism.

The Left, today, continues to be useless, operating on the basis of mantras and formulations based on misrepresentation and misunderstanding of the teachings of Marx, Engels, Lenin and Trotsky. It proceeds as though capitalist property, today, is, essentially, the same as that of the early 19th century, and that its ownership is basically the same, of the “monopoly of private capital”, only, now, in the form of capitalist monopolies, and share ownership. It misses, almost entirely, the significance of the fundamental change in the nature of capitalist property, into socialised capital, and the social revolution it signifies. Consequently, it can make no distinction between the objective interests of the ruling class as owners of fictitious-capital, as against the interests of the dominant form of property, i.e. large-scale socialised capital.

When it examines, therefore, the actions of states, it cannot understand the contradiction inherent within them, leading to all sorts of contortions to explain its actions. That is even more the case when it, also, has to explain the actions of governments. We are repeatedly told, for example, that, in Britain, the Tory Party (and, today, it is best described as a Tory Party, in its 19th century connotation, rather than a Conservative Party, as it emerged from the Repeal of the Corn Laws) is the bourgeoisie’s “first team”, as against Labour being its second team. Yet, from the mid 90’s, at least, the Tory Party’s agenda was clearly that of the reactionary petty-bourgeoisie, not that of the ruling class, and its pushing through of Brexit is totemic of that.

The Left Has Done With Dialectics, But Dialectics Has Not Done With Them

The method of the Left, though it continues to call itself “Marxist”, is, in fact, metaphysical rather than dialectical, it is, largely moralistic rather than materialist, and so cannot identify and analyse flux, leaving it mechanically applying old categories and formulas, rather than analysing current reality. These failings have left the working-class without any effective leadership over the last 80 years, strengthening the position of social-democracy. But, social-democracy, wracked by the contradictions set out above, has also arrived at a point of crisis, and, in order to try to contain that crisis, it has had to resort to increasing degrees of Bonapartism, to make appearance and reality hang together. The Bonapartist regime of Starmer, inside Blue Labour, is a clear example of that, but the same applies inside the US Democrats, and across European social democracy. That same Bonapartism is manifest in the social-democratic state too, and the current overt abandonment of the façade of bourgeois-democracy, in order to justify genocide, and deny the masses the right to speak out against it, is just the latest, most visible, manifestation of it. There is a clear yellow line connecting the use of claims of “anti-Semitism”, against the Left, over recent years, to justify witch hunts, deny free speech, and to justify Zionism, with the current utilisation of those same tropes to suppress the global opposition to the Zionist genocide in Palestine.

The astronomical levels of liquidity thrown into circulation, via QE etc., are an indication of that underlying crisis of social-democracy, as are the astronomical levels of asset prices, that bear no resemblance to the underlying valuation of real capital, and its profitability. Its most surreal expression was negative interest rates, with more than $20 trillion of bonds, globally, at one point, having negative yields! That was not because the amount of interest being paid was small, it wasn’t, it was huge, as with the amounts paid as rents and taxes. It was simply a function of the astronomical level to which the price of assets be they bonds, shares, or land had been inflated. In other words, 100/1,000 is 10%, but if the 100 increases to 700, whilst the 1,000 rises to 70,000, it is only 1%!

The nature of socialised capital, identified by Marx, as a transitional form of property, implies and necessitates change, transition from one state to another, but the nature of the Left’s metaphysical philosophical method, means that it cannot theorise or grasp this process of transition. In one form, its either capital or not capital, utilising the method of the syllogism, manifest in the idea that the change of state occurs in one leap, effected by the proletarian revolution, pace 1917, and, in another, this change occurs superficially, at least, by the action of the capitalist state, via an act of nationalisation, for example.

But, the objective laws of capital, continue to grind on, behind Men’s backs, even though they have been churning at subterranean depths for the last 40 years, breaking through the surface every so often, as they have resulted in rising employment, rising wages, feeding through into increased aggregate demand, fuelling economic growth, and a demand for additional capital, causing interest rates to rise, and asset prices to drop, as most visibly occurred in 2008. The capitalist state, as the state of the ruling class, whose form of property is fictitious capital, has tried to reconcile this contradiction.

In 2010, it implemented austerity to slow economic growth, so trying to slow the growth in employment, and consequent rise in wages. The goal was two-fold. By holding back the rise in wages, it held back any squeeze on profits, and, secondly, by holding back the expansion of employment and rise in wages, it held back the expansion of demand for wage goods, which, in turn, dampens the role of competition in driving firms to accumulate capital so as to increase their supply. By reducing that demand for capital accumulation, it holds down interest rates, and so enables asset prices to remain inflated. Why does it do that, because, contrary to the model used by the Left, which sees capital in the terms of its early 19th century form, in which capitalists are the private owners of real industrial capital, dependent on maximising profit, the ruling class, today, is rather that class of “coupon clippers”, owners, not of real industrial capital, but of fictitious-capital, identified by Marx and Engels in Capital, and Anti-Duhring.

This ruling class, rather than seeking the maximisation of industrial profit, seeks the maximisation of its total returns from interest, rent and capital gains. For more than 20 years, it could maximise its revenues from interest and rent, at the expense of retained profits, because, in the 1980’s, the technological revolution, raised productivity, and the rate of profit, as well as creating a huge release of capital, as vast amounts of fixed capital suffered a massive moral depreciation. This reality, is also in complete contradiction to the idea, clung to by much of the Left, that capitalism is in some kind of period of decline or decay. On the contrary, in that period, it has been at its most dynamic, since its inception.

But, as with every such long wave cycle, this period in which the new technology raises productivity, as existing equipment gets replaced by new equipment (See Marx in Theories of Surplus Value, Chapter 23), and the rate of profit rises along with a release of capital, (intensive accumulation), runs out. At some point, all the old fixed capital has been replaced by the new. The rise in productivity slows, and, to increase output, it is no longer a matter of replacing old equipment with newer equipment, but of adding additional equipment itself (extensive accumulation). And, added equipment means additional workers, even if relatively fewer additional workers than would have previously been required using the old technology.

That point arose around 1999, and as I have set out many times before, going back to the early 2000’s, this period after 1999, and up to the global financial crisis of 2008, saw a huge expansion in output, again confounding the claims of the catastrophists that capitalism, globally, was in some kind of terminal decline or decay. The simple fact that, of all of Man’s output, in his entire history, 25% of it occurred in the first decade of this century, illustrates that point.

But, it was this economic expansion that spelled the end for the model of conservative social-democracy that had existed over the previous 20 years, starting with Thatcher and Reagan, and ending with Brown and Bush. Everything that has happened since 2008, is merely an attempt to deny reality, and to cling to that old model at an ever increasing cost, and ever more authoritarian means. And, again, contrary to the model used by the Left, in which this is all done in the interests of capital, rather than the interests of the ruling class, the measures undertaken have increasingly damaged the real economy, and damaged real industrial capital. It illustrates the extent to which, as Marx and Engels theorised, more than a century ago, that ruling class of coupon clippers, whose interests are antagonistic to real capital, have become a reactionary fetter on the development of capital itself.

Connected Contradictions

There are a series of contradictions faced by bourgeois-democracy, each of which is inter-related, and many of which arise as a result of the solutions utilised for previous contradictions, themselves creating new contradictions. This is very like the situation described by Marx in The Poverty of Philosophy, that resulted from Proudhon’s method, and that is not surprising, because the method of social-democracy, is pretty much that same method.

I set this out ten years ago, in my book, Marx and Engels Theories of Crisis.

The fundamental contradiction is that socialised capital, as a transitional form of property, is objectively the collective property of workers, but is controlled, not by workers but the ruling-class of money-lending capitalists (coupon clippers) whose wealth now exists in the form of fictitious-capital, not this real industrial capital. As Marx sets out in Capital III, the interests of these two forms of capital are immediately antagonistic. The money-lending capitalists (shareholders, bondholders etc.) seek to maximise their total return from interest/dividends and capital gain, but that is antagonistic to the interests of real industrial capital that seeks to minimise the amount paid as interest, or other forms of capital transfer, in order to maximise profit of enterprise, so as to maximise capital accumulation.

The collective owners of socialised capital (the workers) do not control it, and the state, as the state of the ruling class of coupon clippers/speculators, ensures they can never control it, short of a pre-revolutionary situation, of dual power, in which the workers, organised in soviets/workers’ councils, impose workers control, arms in hand. Yet, that use of force (albeit legal or legislative force) that prevents workers exercising that control, and vests it with the shareholders, does not change the underlying contradiction of the antagonistic interests of these two forms of capital. Even where social-democracy reached its zenith, in the 1970’s, with the introduction of co-determination, most noticeably in Germany, it was again just a repeat of the sham of bourgeois-democracy, transplanted into industrial democracy. The elected worker directors are always in a minority, and so simply give cover for a continuation of the domination of the shareholders.

So boards of Directors continued to denude retained profits for capital accumulation, and instead used those profits to finance excessive dividends and interest payments, capital transfers to shareholders, the buy back of shares to raise share prices, as well as exorbitant remittances to those Directors, including the use of share options and so on that further tie them in to shareholder interests as against the company interest. This condition was hidden in the 1990’s, because the technological revolution of the 1980’s, so raised productivity, and brought about a moral depreciation of fixed capital, rise in the annual rate of profit, and release of capital, that even as profit was drained into these unproductive revenues, the mass of realised profit grew to such an extent, and the mass of physical output grew so much that the aforementioned condition arose that 25% of all human production is accounted for in just the first ten years of the current century.

But, as the proportion of profits going to rent and interest payments, particularly, (but also taxes) grew, at the expense of retained profits, so asset prices rose. The growing mass of interest/dividends did not go back into financing additional capital accumulation — which simply retaining profits would have done more effectively — but went, instead, into a demand for existing shares, bonds and property, pushing up those asset prices, as monetary demand for them grew faster than a, now, constrained supply of them. That fuelled further speculation, on the basis of the now familiar fear of missing out (FOMO). Moreover, not only was it the recipients of these revenues that ploughed money into such speculation, but a proportion of wages also went into it, and, in the case of property, increasing amounts of money was simply borrowed for that purpose.

The solutions, and consequences of this fundamental contradiction, were as follows.

1. Asset prices inflated to astronomical levels acting as a drag on the real economy, and capital accumulation, contrary to the claims about so called “wealth effects”
2. The ruling-class of coupon-clippers/speculators, became more concerned with the capital gain element of total returns than with the revenue element, whether in the form of interest/dividends or rents
3. When asset price bubbles burst, as in 1987, 2000 and 2008, the state, as protector of the immediate interest of this ruling class, acted to reflate those asset prices, both by devaluing the standard of prices, and by damaging the real economy to slow the demand for capital, in order to reduce rates of interest
4. One solution to the need to expand the mass of profit, so as to facilitate the continued increase in interest/dividends and rents, without a proportional increase in capital accumulation, was to shift production to other lower cost countries in Asia, notably China, and this process got underway in the 1980’s, creating a new contradiction, now being seen, as China, is rising as an imperialist power in its own right, combining with Russia and BRICS+ to challenge the old imperialist hegemon
5. This process of “deindustrialisation” begun in the 1980’s, and shift of production to China etc., led to a weakening of large-scale socialised capital, in the developed economies. At the same time, it created conditions for a rapid growth of the petty-bourgeoisie, reversing the trend of the previous 150 years. Most of this petty-bourgeoisie was itself deprived and precarious, taking the form of the self-employed, white van man, or small business sweating other labour, including family labour. It was concentrated in the old decaying urban areas, decimated by deindustrialisation, the so called “Red Wall” constituencies. Its petty-bourgeois nature brought with it all of the reactionary ideology of that petty-bourgeois layer
6. Its strength resides, like the peasantry, in its numbers, significant only in electoral terms, not in its socio-economic strength. It does not control large masses of property or the state, as the bourgeoisie does, and nor does it have the industrial economic power that the working-class possesses. But, it does have the large numbers (around 15 million in Britain) to vote. That voting power, enabled it to seize control of the Tories, and, thereby, to push through Brexit, against the interests of both the ruling class, and the interests of large-scale socialised capital, and, thereby, of its collective owners, the working-class
7. That cut off another solution for bourgeois-democracy that of reducing costs and raising the rate of turnover of capital, by abolishing national borders and creating larger single markets, such as the EU.
8. As globalisation stalls, the world returns to the conditions prior to WWI, in which powerful nation states sought to advance their own interests at the expense of others, by dominating the economies around them. But, now, it is large, continental sized, politico-economic blocs engaged in such conflict, which drives towards WWIII. That is the context of the proxy wars in Ukraine, Israel/Palestine, Africa, and increasingly the South China Sea/Pacific.

The Great Ponzi Scheme

The theory of the so called wealth effect, which is also behind the argument for “trickle down economics”, is that, as people feel “wealthier”, as a result of the money price of their assets rising, they spend more money, and this increases aggregate demand in the economy, creating more jobs and so on. It is nonsense. What inflated asset prices did was to create a speculative fervour, so that, rather than encouraging higher levels of consumer spending, they encouraged consumers to divert spending on consumption to spending on the purchase of assets for fear of missing out. In the case of housing, it led to rampant borrowing, both to be able to afford astronomically high house prices, and, in stimulating monetary demand for those houses, acted to create, and further inflate, those astronomically high prices. Its most obvious conclusion was the creation of the sub-prime mortgage crisis, in 2008, that provided a spark for the global financial crisis.

But, it was not just consumers that diverted revenues to such speculation, and away from consumption. Companies did that too, encouraged by their boards of Directors, acting in the interests of shareholders rather than the company. They not only diverted profits away from capital accumulation, with share issuance being curtailed, but actively used profits to buy back shares, so as to raise their prices. They even borrowed money, via bond issuance, so as to buy back shares, and inflate share prices. That increased bond issuance, of course, would have caused bond prices to fall, and yields (rate of interest on the bond) to rise, except that the state created conditions for these additional bonds to be bought up in even greater quantity.

Pension funds were required to buy bonds, the state, implementing fiscal austerity, issued proportionately fewer bonds, as it sought to reduce its debt (with the new contradiction, then, being that, as austerity curtailed growth, the share of debt to GDP still rose). The most obvious policy, in this regard, was QE, whereby, central banks simply printed additional money tokens, and used them to buy up bonds, to inflate their price, as well as making cheap credit available to commercial banks and finance houses, to encourage them to buy up bonds, and so inflate their price. The activity of banks became not to finance real economic activity, but to finance this rampant speculation and gambling.

Again, far from stimulating economic growth, it did the opposite, particularly when combined with fiscal austerity, specifically designed to reduce economic growth! By inflating asset prices, money that consumers had went to buy houses whose prices had risen phenomenally. The higher house prices, driven by this speculation, led to higher land prices, which meant the cost of building new houses rose significantly too. Where, after WWII, the cost of land accounted for 10% of the cost of a new house, now, it accounts for 70%, with a consequent huge rise in the total cost of the house, after the average profit is added. Of itself, that represents a significant shift of the supply curve for houses to the left, reducing supply whatever appeals governments might make for builders to increase supply. In turn, that constrained supply, with rising monetary demand from speculation, causes prices to rise further. (As I have set out before, its not that supply has failed to grow relative to population, because, in Britain, housing supply, per capita, has risen since the 1970’s. It is that speculation has driven monetary demand.)

Higher house prices, making it impossible for many younger people to buy, leads to rising demand for rental property. But, Thatcher sold council houses, in the 1980’s, and effectively prevented councils building more, a policy continued in the 1990’s, and then by Blair and Brown. That acted to fuel house prices even further, but, also, forcing renters into the hands of private landlords led to a huge rise in rents. To sustain those higher rents, as wages were constrained, the state was led to introduce ever rising levels of subsidy, such as Housing Benefit. But, to pay for those subsidies, going straight into the pocket of landlords, higher taxes are required, acting as yet a further drain on profits that could otherwise have been used to finance capital accumulation, and real economic growth. Similar patterns occurred across Europe and North America.

Higher share and bond prices meant that fewer of them could be bought by the monthly pension contributions of workers and employers. That raised the cost of pension provision, meaning a further drain on profits, as higher contributions are required to sustain the same level of purchases. But, in fact, contributions were not increased, leading to the current huge black holes in pension funds, which, then, have to be filled by the state, requiring again increased taxes and drain on profits. In fact, in the 1990’s, and early 2000’s, as asset prices rose sharply, many employers reduced or even suspended contributions into pension schemes, on the basis that their immediate pension liabilities could be met by simply selling some of the shares/bonds in the fund, and using the proceeds, rather than using the revenues from those assets for that purpose. That further contributed to the black holes in those funds, as it reduced the real capital base of the fund, disguised by the inflated prices.

This summed up the model of conservative social-democracy during that period, a model that was doomed to failure, and to create a huge crisis, as it did so. The model is that of the farmer who, tries to maintain or increase their consumption of grain, by utilising an increasing proportion of their grain output for that purpose, and so a smaller proportion of it to be put back in the ground as seed. It is the same kind of model as that of the Ponzi Scheme, or of Bernie Madoff, but applied to the whole of the economy.

As with Madoff, when it all collapsed, in 2008, or like a farmer, who eventually finds that they have consumed so much of their seed corn that they can’t get enough seed to sustain even their current levels of output, so conservative social-democracy found that its model was no longer sustainable. Unlike Madoff, however, social-democracy has the advantage of control of the state, and so, in 2008, it was able to bail out the ruling class, by having the state buy up all of those, now, worthless paper assets. It could do so by telling the working masses that, although they had not been the beneficiaries of those astronomically inflated asset prices, they would, now, have to pay the cost of those prices having collapsed, and need to bail-out the ruling class speculators, They would have to pay for it by having a ten year period of fiscal austerity, during which basic public services, provided by state-capitalism, would be left to fall into a state of near collapse, be it of healthcare, or simply the fabric of roads, and schools. In the meantime, their taxes would rise, reducing real wages, and their money wages, particularly if they worked for the state, would be held down, or even reduced, their pensions cut, and they would be required to work for much longer, before they could even retire.

The Capitalist Ruling Class Becomes A Fetter On The Development of Capital

Marx, having noted the antagonistic relation between interest-bearing capital (fictitious capital) and industrial capital, also noted that it was impossible for the former to exist without the latter, because it is the latter, which produces the surplus-value (profits), out of which the interest/dividends of the former are paid.

“The idea of converting all the capital into money-capital, without there being people who buy and put to use means of production, which make up the total capital outside of a relatively small portion of it existing in money, is, of course, sheer nonsense. It would be still more absurd to presume that capital would yield interest on the basis of capitalist production without performing any productive function, i.e., without creating surplus-value, of which interest is just a part; that the capitalist mode of production would run its course without capitalist production. If an untowardly large section of capitalists were to convert their capital into money-capital, the result would be a frightful depreciation of money-capital and a frightful fall in the rate of interest; many would at once face the impossibility of living on their interest, and would hence be compelled to reconvert into industrial capitalists.”

(Capital III, Chapter 23)

Yet, it was, essentially just this absurdity that the model of conservative social democracy, from the 1980’s onwards was based upon. Marx’s analysis that there would be a “frightful depreciation of money-capital”, and fall in the rate of interest was correct. It was first of all the huge rise in the rate of profit, from the early 1980’s, and release of capital, resulting from the rise in productivity, that increased the supply of money-capital (realised profits) relative to the demand for it, (capital accumulation). So, interest rates fell, and those falling rates were the initial cause of rising asset prices, via the process of capitalisation.

For working-class and middle-class people, who might have acquired a modicum of savings, the fall in the interest rate had the result described by Marx, i.e. the absolute amount of interest received fell to a level that was insignificant. That was true, also, for one of the most common forms of private pension, the purchase of an annuity, which pays a fixed amount each year for the rest of the pensioner’s life. Rates of interest on savings dropped to below 1% p.a., and annuity rates not much higher. One result was that such people were encouraged to put their savings into riskier assets. Besides buying bonds and shares, usually via mutual funds, it prompted the development of a whole new class of small landlords — the buy-to-let landlords, who used their savings to buy cheap properties to rent out. In so doing, it gave another twist upwards to the growing asset price bubble.

The issue of falling yields/interest rates was not an issue for the ruling class, for the same reasons set out by Marx. If you have financial assets of $10 billion, even a yield of 1% gives you interest/dividends of $100 million a year. If you only spend $80 million, you still accumulate an additional $20 million. But, more significantly, the falling yields were the other side of rising asset prices. If the price of those assets rose by 10% during the year, that is a paper capital gain of $1 billion, far outweighing the low level of yield. Increasingly, the owners of fictitious-capital, became concerned not with the revenues they could obtain from these assets, but by the much larger capital gains they could obtain, as asset prices rose year after year. For example, large expensive residential property blocks were built in London, but left empty, because the landlords were more interested in the rapidly rising price of the property than any, even inflated, rents they might obtain.

When in 1987, those asset prices crashed, as the US Twin Deficits crisis, caused by Reaganomics (copied by Truss in 2022), resulted in a sharp rise in interest rates, central banks, led by the US Federal Reserve, began the process seen in the following decades, of simply bailing out the speculators and gamblers. So began the so called Greenspan Put, whereby, whenever financial markets appeared to be going to fall, which would have caused a sharp drop in the paper wealth of the ruling class, central banks intervened to cut policy rates of interest, increase liquidity and so on, to push those asset prices higher once more. The mantra, “Don’t fight the Fed”, was readily accepted by speculators, who learned that this was a one-way bet, the privatisation of private capital gains, and the socialisation of capital losses. Who would bother putting money into real investment in business, under those conditions, rather than just buying bonds, shares or property, whose prices were guaranteed to rise each year?

The problem is that the rise in those asset prices could not be guaranteed, for ever, no matter how much central banks and the state attempted to defy the laws of capital by the illusion of asset price inflation, and the devaluation of the currency/standard of prices. Falling yields were the flip side of rising asset prices, in conditions where the mass of interest could no longer rise proportionate to the rise in asset prices. The mass of interest/dividends (and rent and taxes) had risen faster than the mass of profit, but that was no longer tenable. The mass of profit had grown at a slower pace than the rise in asset prices, because an increasing proportion of profit had gone into the payment of interest/dividends, rent and taxes, rather than into capital accumulation, i.e. the expansion of employment, and so production of surplus value.

The rising asset prices were initially caused by falling interest rates, as the mass of realised profits grew faster than the demand for money-capital for capital accumulation. That is another way of saying, as Marx sets out in Theories of Surplus Value, that net output was growing faster than gross output. But, after 1999, when the new long wave uptrend began, that situation began to change, for the reasons set out earlier.

In short, employment rose at a faster pace, the mass of wages rose at a faster pace, causing the demand for wage goods to rise at a faster pace than during the previous 20 years. Ultimately, competition drives each firm to try to capture, at least, its share of this increased market. To do so, it must accumulate additional capital. To accumulate additional capital, it must either retain a greater proportion of its profits, or must borrow additional money-capital. Once the demand for money-capital begins to rise at a faster pace than the supply of additional money-capital from realised profits, or the mobilisation of previously unused savings, interest rates must rise. Rising interest rates, then, cause asset prices to fall. The continued use of the Greenspan Put to artificially inflate asset prices, over the previous 20 years, meant that, even a tiny rise in interest rates, by historical standards, represented a large proportional rise in those rates, and was enough to bring the entire fiction crashing down, in 2008.

But, conservative social-democracy has no ready solution. Just as in the 1970’s, when the old Keynesian orthodoxy, which represented the objective interests of socialised industrial capital, failed, resulting in stagflation, so, now the Monetarist orthodoxy adopted in its place, in the 1980’s, and representing the objective interests of fictitious-capital, also failed. To protect the interests of the ruling class, conservative social democracy has had to adopt ever more authoritarian, Bonapartist methods, to try to forcibly hold together the growing divergence of the illusion with reality.

The Rise of China

In the 1980’s, one solution for developed capitalist economies was to shift production to a range of newly industrialising economies, particularly in Asia. This production was, largely, of those mature commodities, based on high levels of output, using significant amounts of fixed capital, with very high rates of turnover of the circulating capital, and consequently small profit margins, but a much higher annual rate of profit. In other words, mostly routine assembly. Low wages in these economies helped to boost profit margins. It was not that the total volume of industrial production, in developed economies fell, either, but that, as productivity rose, it required much less labour than it had previously, and accounted for a much smaller proportion of total output value. It was the same thing that happened with agricultural production in the 19th century.

Production moved up the value chain, away from these mature, low profit margin, high volume products, to new, higher profit margin, lower volume products and services. This is the process Marx describes in The Civilising Mission of Capital, but also, in Capital III, Chapter 14.

“new lines of production are opened up, especially for the production of luxuries, and it is these that take as their basis this relative over-population, often set free in other lines of production through the increase of their constant capital. These new lines start out predominantly with living labour, and by degrees pass through the same evolution as the other lines of production. In either case the variable capital makes up a considerable portion of the total capital and wages are below the average, so that both the rate and mass of surplus-value in these lines of production are unusually high.”

By shifting the unskilled production to China, and other parts of Asia, as well as sourcing things like coal from Poland, and so on, capital, in the developed economies, expelled large amounts of labour in these industries, in a process of deindustrialisation. It, thereby, ended the labour shortages that had arisen during the period of long wave boom and crisis (1962–1985) that had caused relative wages to rise, relative profits to fall, interest rates to rise, and inflation adjusted asset prices to fall. But, it also expelled large amounts of labour, even without moving production, by simply replacing labour with technology. The microchip revolution was the means by which that was made possible. As I have written, elsewhere, it wasn’t Thatcher that defeated the British working-class, but the microchip, without which, the mass expulsion of labour would not have been possible.

This process created a new international division of labour. Globally, relative wages fell, and relative profits rose, raising the rate of profit. The moral depreciation of fixed capital, also raised the rate of profit, and brought a huge release of capital. The rise in productivity also increased the rate of turnover of capital massively, as did other methods made possible by the technology, such as the move to containerisation. The rise in the rate of turnover, massively raised the annual rate of profit. (I set this out ten years ago in my book “Marx and Engels’ Theories of Crisis). Interest rates fell, from 1982 onwards, and asset prices soared. Between 1980 and 2000, the Dow Jones Index rose by 1300%, compared to just a 250% rise in US GDP, in the same period.

The example of the Apple iPhone illustrates the point. The task of assembly of the phone takes place in China, with around 1 million workers employed at Foxconn. Which illustrates the point that although this is capital intensive, assembly work, requiring only unskilled labour, the huge volume of production, still requires large numbers of workers. But, of the total value of the iPhone, only 10% of it is accounted for by this assembly, with 90% of the value comprising the high value, skilled labour involved in designing the microchips and architecture of the phone, the development of the software and so on, all of which takes place in the US. This is all, low volume and high value, labour-intensive production. It does not employ vast numbers of workers, as with the assembly labour, but the labour employed is all high-value, complex labour, low organic composition of capital, and so with a higher than average rate of surplus value, and rate of profit.

This process had other consequences, creating further contradictions. Firstly, this shift of production to a range of newly industrialising economies in Asia, speeded up their own development. This aspect of combined and uneven development was understood by Marx, and also described by Trotsky. Contrary to the petty-bourgeois notions of moral socialists, Stalinists and Third Worldists, and their theories of super-exploitation and underdevelopment, as the basis of their reactionary “anti-imperialism”, the process of equalisation occurs faster under imperialism than was previously the case.

“In contrast to the economic systems which preceded it, capitalism inherently and constantly aims at economic expansion, at the penetration of new territories, the surmounting of economic differences, the conversion of self-sufficient provincial and national economies into a system of financial interrelationships. Thereby it brings about their rapprochement and equalizes the economic and cultural levels of the most progressive and the most backward countries. Without this main process, it would be impossible to conceive of the relative levelling out, first, of Europe with Great Britain, and then, of America with Europe; the industrialization of the colonies, the diminishing gap between India and Great Britain, and all the consequences arising from the enumerated processes upon which is based not only the program of the Communist International but also its very existence.”

(The Third International After Lenin)

As these economies industrialised, just as had happened elsewhere, in the past, it developed the domestic market alongside it. Large numbers of peasants moved to the towns and cities to become industrial workers, their living standards, low compared to those of workers in the West, but much higher than those of the peasant production they left behind, itself being a source of further demand, and expansion of the domestic market. The main thrust of the dynamic of real industrial capital moved to these areas, where real industrial capital accumulated at a faster pace, to satisfy a growing global market, whilst in the developed economies, real industrial capital was undermined, as surplus value was siphoned off into financial and property speculation, and consumption expanded on the basis of a delusion of growing wealth produced by inflated asset prices, and increased debt.

The Rise of The Reactionary Petty-Bourgeoisie

To the extent that real industrial capital expanded in the developed economies, it increasingly became concentrated in its pre-social-democratic forms. Just as newly industrialising economies filled the gaps of large-scale production, to meet the consumption needs of developed economies, so within those developed economies, a growing petty-bourgeoisie arose to meet the needs of local consumption, i.e. a growth of labour services such as window-cleaners, gardeners, child minders, domestic cleaners, back street garages, sandwich shops and so on. In addition, of course, was all of those that simply became small traders, as depicted by Del Boy Trotter, but also as epitomised by the White Van Man.

A vast reservoir of unskilled, and semi-skilled labour, thrown out of work in the 1980’s, fed into these businesses, particularly in those decaying urban areas, where that deindustrialisation had been most acute. In Britain, the growth of this reactionary petty-bourgeoisie was not only facilitated by the process of deindustrialisation, and encouragement of speculation, but also by conservative government policies, for example, the Tory introduction of the Enterprise Allowance Scheme, in the early 1980’s. But, this general, reactionary, petty-bourgeois ideology pervades the rest of politics too, much as Lenin described in his polemics against the Narodniks. As noted earlier, its not just the reactionaries in the ranks of the Classical Liberals (Libertarians), or the conservative social democrats (Neo-liberals) that have focussed their ire on large-scale socialised capital, in favour of small businesses, but it pervades the “anti-capitalism” of most of the Left too. The idea of a Universal Basic Income, to encourage the development of small business and self employment, is just another variant of the various schemas put forward by Sismondists, Narodniks, and other reactionary socialists over the years.

As I set out some months ago, this explains the transformation of the Conservatives from being a conservative social-democratic party, as it existed for much of the twentieth century, into being a petty-bourgeois, reactionary nationalist party, but explains why Labour has also been dragged along into that same camp, under Starmer. The same processes apply in North America and Europe. As I set out in that post, in the UK, the number of small businesses rose from 2.4 million in 1980 to 3.6 million in 1989, whilst the continual rise in the number of wage workers, going back 200 years, ceased in 1978, and began to fall, only resuming the upward trend in 1998. This significant change in material conditions, of the declining social weight both of the working-class, and of the ruling class, and growing social weight of the petty-bourgeoisie, was bound to exercise its reflection in the ideological and political superstructure, as it has.

The declining social weight of the working-class was greater than the fall in its numbers indicated, precisely because of those wage workers being, also, weakened industrially, as they became less secure, their organisations were undermined, and in many places they were atomised, a condition that has only begun to change with the more recent developments, as the process of labour reserves being used up, from 1999 onwards, and labour shortages arising, most notably from 2023, strengthens the hand of workers, and enables a rebuilding of their organisations. The social weight of the ruling class (already tiny to begin with in terms of its numbers) simply meant that it resorted even more to its reliance on its state, and bureaucratism. Hence, a growing Bonapartism, both on the part of the petty-bourgeoisie, and its reactionary political parties, but also on the part of the ruling-class, and its state, in opposition to it.

The Global Ruling Class and Imperialism

The ruling-class is a global class of speculators, of owners of fictitious capital. But, this global ruling class, does not have a global state to represent its interests, as every other national ruling class had in the form of the nation state. It has attempted to create such, with global para state bodies, such as the UN, WTO, World Bank, IMF and so on, but these cannot substitute for such a state, and simply continue to reflect antagonisms between the existing nation states, and the material national interests they represent. Indeed, not least amongst those interests are the material interests of the dominant form of property, the property upon which the revenues of the ruling class, and of the state depends, i.e. the interests of large-scale, socialised, industrial capital.

This is, in effect, a repeat of the analysis and debate about the United States of Europe, between Trotsky and Lenin, in 1915. Both Lenin and Trotsky agreed that imperialism drives towards such a solution, and that it is progressive, but, where, Trotsky argued, therefore, for raising the demand for a United States of Europe, Lenin argued that the divisions between the various imperialist states in Europe would prevent them from bringing it about, and that it would only be possible after the socialist revolution. In the 1920’s, Lenin and the Comintern adopted the position put forward by Trotsky, of arguing for a United States of Europe as a transitional slogan.

Lenin, in fact, consistent with his analysis in “Imperialism, The Highest Stage of Capitalism”, misunderstood the nature of imperialism, partly conflating and confusing it with the already outlived era of colonial empires, in which the world was carved up into geographically based territories controlled by the dominant colonial powers — Britain, France, Germany and Russia. Trotsky, also, was misled by this analysis of Lenin, formulated during WWI, and largely as a polemic against Kautsky, and his theory of super-imperialism. But, Trotsky, as seen in his analysis in “The Programme of Peace”, more accurately saw the true nature of imperialism, and of that war as being, not about colonialism, but about the need of capital to develop ever larger single markets, just as the nation state had so developed in the 18th and 19th century.

“At bottom of the war lay the need of the productive forces for a broader arena of development, unhampered by tariff walls. Similarly, in the occupation of the Ruhr so fatal to Europe and to mankind, we find a distorted expression of the need for uniting the coal of the Ruhr with the iron of Lorraine. Europe cannot develop economically within the state and customs frontiers imposed at Versailles. Europe is compelled either to remove these frontiers, or to face the threat of complete economic decay. But the methods adopted by the ruling bourgeoisie to overcome the frontiers it itself had created are only increasing the existing chaos and accelerating the disintegration.”

(Trotsky — Is The Time Ripe For The Slogan: ‘The United States Of Europe’?)

Trotsky raised the demand for a United States of Europe, as a transitional demand, in the same kind of way that Marxists had supported demands for the national bourgeois revolution, in the 19th century, not as an end in itself, but as part of the process of class struggle, whose goal is the socialist revolution. It was raised alongside the transitional demand for a Workers Government. In other words, the majority of the masses, including the proletariat, did not possess a revolutionary class consciousness. They continued to hold bourgeois-democratic illusions. We do not, but as long as the masses do, we have to deal with that reality, and, in the process of struggle, win the masses away from those illusions. The masses would continue to place faith in bourgeois and reformist workers parties in elections, and in periods of intense class struggle, as in 1905 or 1917 in Russia, in which these bourgeois-democratic struggles become folded into the wider class struggle (permanent revolution), the Marxists promote the development of workers’ self-government, in the form of the soviets/workers’ councils as the means of struggle for these demands.

The Marxists would not join any such Workers Government, made up of these reformist and centrist parties, but would utilise the soviets to press down on it. As he writes in The Transitional Programme,

“From April to September 1917, the Bolsheviks demanded that the SRs and Mensheviks break with the liberal bourgeoisie and take power into their own hands. Under this provision the Bolshevik Party promised the Mensheviks and the SRs, as the petty bourgeois representatives of the worker and peasants, its revolutionary aid against the bourgeoisie categorically refusing, however, either to enter into the government of the Mensheviks and SRs or to carry political responsibility for it. If the Mensheviks and SRs had actually broke with the Cadets (liberals) and with foreign imperialism, then the “workers’ and peasants’ government” created by them could only have hastened and facilitated the establishment of the dictatorship of the proletariat. But it was exactly because of this that the leadership of petty bourgeois democracy resisted with all possible strength the establishment of its own government. The experience of Russia demonstrated, and the experience of Spain and France once again confirms, that even under very favourable conditions the parties of petty bourgeois democracy (SRs, Social Democrats, Stalinists, Anarchists) are incapable of creating a government of workers and peasants, that is, a government independent of the bourgeoisie.

Nevertheless, the demand of the Bolsheviks, addressed to the Mensheviks and the SRs: “Break with the bourgeoisie, take the power into your own hands!” had for the masses tremendous educational significance. The obstinate unwillingness of the Mensheviks and SRs to take power, so dramatically exposed during the July Days, definitely doomed them before mass opinion and prepared the victory of the Bolsheviks.”

Imperialism and The Dialectic

Trotsky’s analysis was correct. In the post-war period, Europe came together to form the EEC, and, then, the EU, driving towards ever closer political union, i.e. the creation of a single European state. Similar developments have occurred in South America, North America, Asia and Africa. But, the process itself, had already, objectively, developed beyond even these limits, requiring even larger single markets, and global para state institutions. It manifest as globalisation, in which, far from the division of the world into geographically based colonies, with their closed and protected markets, the needs of imperialism (global industrial capital) was to be able to break down existing monopolies and barriers, and to exploit global labour supplies for the production of surplus value, and brought about a significant new international division of labour and rapid industrialisation and development of large parts of the globe, making the working-class, for the first time, the largest class on the planet, and bringing with it a huge increase in global trade.

Those who claim that Russia is not “imperialist”, because its businesses are not dependent on the export of capital, not only do not understand the nature of the modern ruling class, as a global class of owners of fictitious-capital, but also simply base themselves mechanically on the failed analysis of Lenin’s “Imperialism”, which was wrong in 1916, and even more wrong and irrelevant, today. If what is meant is that Russian companies do not export capital, that isn’t true, as set out, here. In 2007, Russia ranked 13th in terms of its foreign direct investment in other countries, having moved up from 35th in 1995. But, in terms of the ruling class, as now, a global class of owners of fictitious capital, this metric itself is meaningless.

The ruling class does not hold its wealth and capital in the form of real industrial capital but of fictitious capital, of global bonds, shares, property and their derivatives. The Russian ruling class, like every other such ruling class, owns its wealth in the form of these assets, and like every other part of that global ruling class, buys and sells those assets in whatever part of the world currently provides it with the greatest total return. It can buy and sell those assets at the press of a computer key, just as it is itself footloose in terms of where it lives, owning property in many metropolitan cities, and moving to them as it chooses, which is why so many Russian oligarchs are to be found, not only owning large amounts of shares in British companies, but also themselves living in London.

For the reasons set out earlier, the objective interests of this global ruling class of speculators is served by that process of globalisation, of the breaking down of national borders, and so on, because it reduces costs raising realised profits without an equivalent accumulation of capital, and because it raises the rate of turnover of capital, and so the annual rate of profit. In so doing, it increases the amount of profit available for payment of interest/dividends, and, also, thereby, creates the basis for a continued rise in asset prices. There is a notable difference in the interests of this ruling class, which owns this fictitious-capital, and those of the Libertarians, overly represented in the ranks of the financial market traders, who make their profits precisely from trading, and for whom, therefore, volatility, the potential for arbitrage across different markets is a requirement.

But, a definition of imperialism based mechanically on the idea of the export of capital, is not even consistent with Lenin either. For Lenin, the defining factor was that the capital in the given country had reached the stage of large-scale, industrial capital, organised in monopolies, oligopolies and trusts, linked to the state, via finance capital, operating through the Stock Exchange, and other financial institutions, as well as much wider considerations in terms of its relations with other imperialist states.

Trotsky, made the same point in relation to his analysis of Czechoslovakia, in rejecting the kinds of arguments raised today by the USC, for support for Ukraine.

“During the critical week in September, we have been told, voices were heard even at the left flank of socialism maintaining that in case of “single combat” between Czechoslovakia and Germany, the proletariat should help Czechoslovakia and save its “national independence” even in alliance with Benes. This hypothetical case did not occur — the heroes of Czechoslovakian independence, as was to be expected, capitulated without a struggle. However, in the interests of the future we must here point out the grave and most dangerous mistake of these untimely theoreticians of “national independence.”

Even irrespective of its international ties Czechoslovakia constitutes a thoroughly imperialist state. Economically, monopoly capitalism reigns there. Politically, the Czech bourgeoisie dominates (perhaps soon we will have to say, dominated!) several oppressed nationalities. Such a war, even on the part of isolated Czechoslovakia would thus have been carried on not for national independence but for the maintenance and if possible the extension of the borders of imperialist exploitation.

(Trotsky — Social-Patriotic Sophistry

The Dialectic and The Petty-Bourgeoisie

As noted in an earlier link to a previous post, every moment of time contains a past, present and future. The process of deindustrialisation, in the 1980’s/90’s, in developed economies, increased the social weight of the reactionary petty-bourgeoisie, as its already sizeable numbers increased by another 50%. It was this that enabled, in the late 1980’s, that reactionary petty-bourgeoisie to exert its influence inside the Conservative Party, in Britain. Thatcher went from being a representative of conservative social-democracy (neo-liberalism), and prominent advocate of a European Single Market, to being a reactionary, petty-bourgeois, nationalist, increasingly the figurehead for a growing Euroscepticism inside the party.

The US already existed as a large, single market. Its Civil War, just as with the European Wars, most notably that of 1914–18, and its continuation in 1939–45, was fought precisely for this purpose of establishing such a single state and single market. But, neither was fully completed. As Engels noted, the Federal nature of the US already acted as an impediment on the further development of capital, and the reality of that has been seen, as the forces of petty-bourgeois reaction, based around Trump, continue to utilise the division between the states and states’ rights, as against the federal state. In the EU, the continued role of the separate interests of nation states, has held back its process of political union, and the strengthened position of the petty-bourgeoisie, has been significant in that, whether in the form of UKIP in Britain, Le Pen in France, or other similar forces.

It is precisely, in this realm of bourgeois-democracy, of parliamentary elections, that the strength of the petty-bourgeoisie resides, just as, in the past, as Lenin and Trotsky described, it was where the strength of the peasantry resided. It is in this realm that the numbers of the petty-bourgeoisie count, especially when supplemented by its attendant social layers from amongst the lumpen proletariat, the backward sections of the working-class, and so on.

With the working-class severely weakened, from the 1980’s onwards, the main class battles have taken place between this reactionary petty-bourgeoisie, and its parties, against the ruling-class and professional middle-class, and its parties and its state. The bourgeoisie has been consistently losing those battles, because the one thing that enabled it to win them, since the 19th century, as described by Engels, in his later prefaces to The Condition of the Working Class, social-democracy, which enabled it to mobilise the votes of millions of workers, has itself been compromised by the failure of conservative social-democracy, and its hostility towards progressive social democracy, which it conflates with socialism. In fact, what would, at least temporarily, save that bourgeoisie, is progressive social-democracy, just as it did after WWII.

Progressive social-democracy, represents the objective interests of large-scale socialised capital, and, thereby, of its collective owners, the working-class. Those interests not only involve a continuation of the process of creating larger single markets, and globalisation, but of all the measures of increased planning, regulation and standardisation that goes with it, as described by Trotsky in the quote above. That is most certainly in the interests of the workers, and of the global ruling class, and hostile to the interests of the reactionary nationalist petty-bourgeoisie, as represented by the likes of the Tories, and now Blue Labour in Britain, as well as by both Trump and Biden in the US and so on. So, why do these mainstream politicians pursue these positions, hostile to the workers and the ruling class? Precisely, because the reactionary petty-bourgeoisie has grown since the 1980’s, to form such a sizeable electoral bloc, which, with the attendant layers of lumpen elements, and backward sections of workers, cannot be ignored by those parties, if they want to get elected, and careerist politicians do want to get elected, no matter what they have to say to achieve it. In Britain, the petty-bourgeoisie, alone, accounts for around 15 million votes, and made up the votes for Brexit, and for Boris Johnson.

But, as the experience of Brexit in general, and of the Truss fiasco, in particular, showed, this reactionary petty-bourgeois nationalism can offer no way forward. Those that actually believe in it, inevitably fail, whilst those that don’t, but who feel compelled to clothe themselves in it, not only also fail, but, in office, must betray those they tried to mislead, and must resort to bureaucratic and authoritarian means to implement the policies that reality, and the needs of that large-scale capital, imposes on them. It requires those authoritarian, Bonapartist methods, not only to sustain itself against that reactionary petty-bourgeoisie, but also against a rising working-class, for which it has no solutions, and upon which it has imposed the costs of its own failures, and requirement to bail out the ruling class’s gambling losses.

Progressive social-democracy, going back to the latter part of the 19th century, as described by Engels, brought a significant increase in the concentration and centralisation of capital, but also a significant increase in the accumulation of capital, in a period of extensive accumulation. The same thing was seen after WWII. But, the 1920’s and 30’s highlighted the problem for the ruling class. This process of extensive accumulation, strengthens the social weight of the working-class, and all of the attendant measures of state intervention, of greater standardisation, regulation and planning, required by the large-scale capital, represent, as Marx and Engels describe, the encroachment of the coming socialist society on the existing bourgeois society.

The fact that the capitalists exist only as a bunch of money-lending parasites, whilst the day to day management of businesses has passed to an expanding, middle-class of professional managers and administrators, themselves largely drawn from the ranks of the working-class, shows to workers, in practice, that they do not need the ruling-class, and that, rationally, they should simply exercise their own democratic control over their collective capital, as, indeed, they do in the worker cooperatives. The logic of that was set out in Anti-Duhring, that the ruling class, should simply wither away, having become just a class of “coupon-clippers”, living off the interest/dividends on their bonds and shares, an amount that should decline over time, as the workers simply allocate the additional money-capital required for investment out of their retained profits, rather than any need to borrow from the ruling-class.

Conservative Social Democracy, The State and Bonapartism/Fascism

A period of long wave crisis began around 1914, as the previous period had led to a significant strengthening of the working-class in Europe, of rising relative wages, falling relative profits, and a consequent overproduction of capital. It is what created the sharpened conditions that emphasised the need for a single European market and state, which was the basis of WWI, and II, as European capital confronted a rising US capital, and later a rising Japanese capital.

European capital, broke at its weakest link, in Russia, with the 1917 Revolution, and, then, with the revolutions of 1918, in Germany etc., though these latter failed, and failed, again, in Germany, in 1923. In Italy, in the 1920’s, the workers began to flex their muscles along the lines set out out, earlier, by occupying their factories, and placing production under workers’ control. In the US, Taylorism arose, as a managerialist adjunct to Fordism, a professional middle-class manifesto of scientific management, but which the US trades unions also adopted, in opposition to the old incompetent management of the private capitalists.

The needs of the dominant form of property, large-scale socialised capital, cried out for such rationalisation, but, as in 1848, the bourgeoisie shrank back in horror at the working-class, which was the apparent agent of its implementation, as had been most visibly observed in Russia, after 1917. And yet, that process of the role of the state in bringing about this rationalisation over the heads of the workers, provided an obvious solution for the ruling class. As Marx and Engels had noted, in Anti-Duhring,

“In the trusts, free competition changes into monopoly and the planless production of capitalist society capitulates before the planned production of the invading socialist society. Of course, this is initially still to the benefit of the Capitalists.

But, the exploitation becomes so palpable here that it must break down. No nation would put up with production directed by trusts, with such a barefaced exploitation of the community by a small band of coupon-clippers.”

(Anti-Duhring p 358)

And, the biggest trust of all is that of the capitalist state. One means of these trusts performing that function, therefore, becomes “national socialism”. As with Stalinism, Nazism requires a totalitarian regime. It imposes the objective interests of large-scale socialised capital, over the immediate interests of the ruling class owners of fictitious-capital, for higher interest payments and asset prices, but, in so doing, not only saves their system from proletarian revolution, but serves their long-term interests, by creating the basis for increased profits, and so out of which can be paid increased amounts of interest/dividends, rents and taxes.

In Italy, in the 1920’s, the response to the workers was the regime of Mussolini, in Britain, as the workers engaged in the mass strikes of 1920, and the General Strike of 1926, not only is the state mobilised against them, but a similar rise of fascist auxiliaries is seen, and the same is seen in Germany, and France, and in the US. The role of Stalinism, and its class collaborationist policy of the Popular Front, undermined these struggles of workers, in the 1920’s, and contributed to their defeat. So, the ruling class in these instances, did not need to resort to fascism. Even in Germany, where it was led to do so, later, in the 1930’s, it acted to slap down the fascists, in the 1920’s, when they attempted their putsch.

And, the reason for that is the difference between fascism, as a movement of the petty-bourgeoisie, whose interests are contradictory to those of the ruling-class, and National Socialism, which exists to implement the measures of rationalisation and so on, objectively required by large-scale socialised capital, by the state, over the heads of the collective owners of that socialised capital (the workers), and in the interests of the ruling class. Those measures of rationalisation and so on, in the 1930’s, included the formation of a European single market and state, which Nazism took on in WWII, as a continuation of that requirement manifest in WWI.

In Asia, Japan, as rising imperialist power, took on that role, in its occupation of China, Korea, and so on, as it sought to establish a similar large single market and state, in order to be able to produce on the same kind of scale as its main rival, US imperialism.

As Trotsky described, it is these basic laws of capital that drive towards the imperialist wars, such as WWI and II, not conflicts between “democracy” and “fascism”, or “totalitarianism”, as is again being portrayed, today, as the world marches towards WWIII, under a false flag of a war against Russia and China, the hypocrisy of which is most easily seen in the support of that “democratic imperialism” for the genocide being committed by its Zionist ally in Gaza, and by its support for, and arms shipments to numerous dictators, feudal regimes and so on, across the globe, such as that in Saudi Arabia. It is this, which is the backdrop to that genocide in Gaza, and explains why western imperialism will not act to end it, why it will continue to arm it, and act as attorney for it, and why it is led to become ever more Bonapartist and authoritarian in its own regimes, in order to prevent any morsel of criticism of it.

The Past, Present and Future Fight It Out

The present moment contains the past represented by that petty-bourgeoisie, which has grown by 50% since the 1980’s, and whose social weight, manifested in its votes, is the basis of right-wing populism and nationalism; the present represented by the ruling-class owners of fictitious-capital, which is the basis of a conservative social-democracy, whose model, based upon inflated asset prices and asset stripping, has collapsed, but which it tries to cling to, via its control of the state, and of financial markets (as witnessed by Truss in 2022); and the future represented by the working-class, as the collective owners of the dominant form of property, large-scale socialised capital, but over which they do not exercise control, and whose political manifestation is a confused, inadequate and statist, progressive social-democracy. The latter, however, also, bears within it the seeds, of the solution to these problems, international socialism.

The past, represented by the reactionary petty-bourgeoisie, and its political parties — Tories and Blue Labour, in Britain, for example — can provide no solution. Yet, the size of the petty-bourgeoisie, as a voting bloc, is the reason that these parties, historically bourgeois parties, have collapsed into this reactionary, petty-bourgeois nationalism. The extent of that is the acceptance, indeed welcoming, into Blue Labour, by Starmer, of the far right, Tory MP, Natalie Elphicke! Elphicke’s views seem to fit perfectly with the jingoistic, reactionary nationalist ideology that Starmer has imposed on Blue Labour, in search of the votes of the petty-bourgeoisie, and various bigots. He may as well welcome Nick Griffin into the party.

But, this reality, also impedes the ruling-class which requires a continuation of that process of globalisation, or, at least, the development of ever larger single markets, which, in reality, also requires ever closer political union, and the abolition of nation states. The problems of the EU, as witnessed in the Eurozone Debt Crisis, illustrate that you cannot have a single market, without a single currency, and central bank, behind which stands a single state, which requires, also, then a single fiscal regime, and debt management. The obvious route to such a solution, is to mobilise the working-class, as a progressive counter electoral force to that reactionary petty-bourgeoisie, but to do so requires that the workers themselves be provided with some material incentive to support such a process. But, since 2008, that is precisely what conservative social-democracy, as political representative of the ruling-class, cannot do. Any sign of rising relative wages, and a consequent stimulation of economic activity, means rising interest rates, and a new crash of asset prices.

The ruling-class, therefore, is forced to make common cause, not with the workers which offer it a solution to its problems, but with the reactionary petty-bourgeoisie, despite the fact that its nationalist agenda, undermines the interests of large-scale, socialised, multinational capital, and, thereby, the interests of the ruling-class, which depends on the profits of that capital, out of which is paid its interest/dividends etc. The ruling class is forced to utilise its state, and its control of financial markets, to push through its own interests, despite the existence of these reactionary nationalist governments. That provokes an inevitable response from the petty-bourgeois rank and file of those parties, manifest in an increased right-wing populism, which, in turn, provokes an increased authoritarianism, and Bonapartism from the ruling-class, via its state.

In the US, its two-party system, leaves no room for a progressive social-democratic party, and even the challenge of Bernie Sanders was snuffed out by the Democratic establishment. In Britain, the obvious vehicle for such a progressive social-democratic alternative resided in Corbyn, but was similarly snuffed out. The Liberals and Greens, offer a similar alternative, but, again, Britain’s first past the post system means that, even if they get large votes, they get few seats.

Two Imperialist Camps Again Square Up For Global War

As Trotsky described, imperialism transfers the same processes of competition, centralisation and concentration from the economic sphere into the political sphere, and relations between states. But, in the economic sphere, capital is not centralised all at once into a single monopoly. It develops into a series of large firms, oligopolies, that continue to compete with each other, as well as engaging in co-operation, and alliances. In Nature, gravity pulls all matter together, but, it also leads, to clumps of matter, be it planets, stars, or galaxies. The same kinds of processes for the world economy, means that, capital clumps together in separate politico-economic blocs, such as the EU, NAFTA and so on.

As a result of the processes described earlier, as capital in developed economies was diverted into gambling and speculation, and the inflation of asset prices, creating a delusion of paper wealth, whilst the locus of real industrial capital accumulation moved to China, Asia, Latin America, the former Stalinist economies of Central and Eastern Europe, and, more lately, Africa and the Middle East, so the power of the main beneficiary of that development, China, grew, especially as it made alliances with other rising economies in BRICS+. What had been a short-term solution for western capital, to its labour shortages of the 1970’s, and source of profits, increasingly became a threat to the global power of US imperialism, and its subordinates.

Even fifteen years ago, and less, Chinese manufacturing and construction businesses were seen as a saviour for western economies, as, in Britain, for example, David Cameron and George Osborne looked to them to build the new nuclear power stations, telecoms infrastructure and so on, required. And, in the EU, Chinese companies spent huge amounts, in Spain, for example, on new construction work. Currently, in Georgia, there are large scale demonstrations against the right-wing governments new laws requiring organisations that receive more than 20% of their financing from overseas to declare it. The Georgian government, undoubtedly seeks to utilise this law to attack those organisations critical of the government. However, it is also undoubtedly true, and is a matter of public record, that the CIA and other western powers, have, in the past, funnelled billions of dollars into these countries to influence their political development. But, what is also true, is that whilst the liberal media rightly criticise the actions of the Bonapartist regimes in Georgia, they seem to take it as read that it is quite acceptable, now, for the US government to ban Tik-Tok, or to place other such restrictions on Chinese companies operating in the West, companies who in the last couple of decades, they were welcoming!

Across the globe, it is China that has the industrial capital capable of direct investment in developing economies, as western imperialism has spent the last 40 years, using profits to simply gamble on the prices of various assets, in order to benefit from capital gains on those assets. Where, US imperialism engaged in destructive wars in Afghanistan and Iraq, leaving nothing positive in its wake — unlike even the direct investment that British colonialism engaged in in India, in the 19th century — China has acted, more like that 19th century, British imperialism. It has engaged in actual direct investment, and, in the process, extended its global strategic influence. The deal it struck between Saudi Arabia and Iran, was an indication of it.

Conclusion

The Middle-East, as with other parts of the global economy, requires a large single market, in order that capital operating in the region can produce on the same scale as the capital that operates in North America, Western Europe an so on. The increasing influence of China, in that region, especially when combined with China’s growing alliance with Russia, which has historic links into the area, as well as with Türkiye, and the Balkans, poses a global strategic threat to US imperialism, and its European subordinates, given the region’s control of huge oil reserves, as well as control over the Suez Canal. The latter was enough for a declining British and French imperialism to go to war with Egypt in 1956.

To counter that, the US and its European subordinates had been seeking to achieve a normalisation of relations between Israel and the surrounding Arab states in Egypt, Jordan, Saudi Arabia, and the other Gulf states, all of whom, currently are clients of the West, but that is a situation that could change with growing Chinese influence. In the 1980’s, as the USSR was in terminal decline, Saudi Arabia assisted the US in hastening its demise by increasing the supply of oil, driving its global price down, and so undermining Russian oil revenues. It has been notable that, in the current climate, Saudi Arabia has resisted any similar moves, despite huge US arms sales to it, and has cooperated with Russia in OPEC + to curtail oil supplies, and keep prices up.

A normalisation of relations between Israel, and these surrounding Arab states, would be the basis of a new politico-economic bloc, and creation of a large, single market. The existing influence of the US, UK and EU in that region would be a powerful force in securing the region in the sphere of western imperialism, against the encroachment of China and BRICS+, to which Saudi Arabia has already been admitted. The ruling class might have had globalisation frustrated, but, its western component could, at least, look to an opening of borders, in this region, and a securing of its own interests, for increased profits, and out of which increased payments of interest/dividends, and so a basis for its asset prices being sustained.

But, the genocide being committed, for all the world to see, by the Zionist state in Gaza, makes that currently impossible. Its not that the ruling class in these states does not want to normalise relations despite that genocide, but that, its own masses would be led into revolt were it to do so. Those states have done nothing to assist the Palestinians, and, when the Houthis, in Yemen, have taken action, in line with the provisional ICJ ruling, to deny supplies to the Zionist state, those states have been complicit in NATO’s military actions against them. When Iran sent missiles into Israel, in response to the Zionist state’s attack on the Iranian Embassy in Damascus, the Arab states supported NATO’s actions in shooting down those missiles.

The current genocide shows that the Two State Solution was no solution at all. The UN General Council voted overwhelmingly to recognise the reality that Palestine is a state, and to recognise it as such. But, the US, the main proponent of two states, on paper, voted against it, and Britain abstained. The reality is, of course, that, even if the US, Britain and every other country had voted to recognise a Palestinian state it would have made no difference. It is mere formalism. Would the Zionist state have stopped bombing Gaza, invading and occupying the West Bank, and so on? Of course not, any more than the fact that Syria is a state, and yet, is occupied, in the Golan Heights, or that Iran and Iraq are states, and yet are attacked. Ukraine is a state, but that hasn’t stopped Russia attacking it, and occupying parts of Eastern Ukraine!

A continuation of the delusion of two states would simply mean that the gradual extermination of the Palestinians by Zionism, going on for over 75 years, would drag on, with sporadic clashes like that which erupted after October 7th, and would continually get in the way of the normalisation of relations. For Zionism, and so also for its US and EU sponsors, it needs a final solution to the problem, much as with the eradication of the Native Americans, or Australasian aborigines by European settlers. That is what Zionism is doing in Gaza. Once the Palestinians have been wiped out, or reduced to such numbers as can be contained in reservations, then the Zionist state can resume the normalisation of relations with the surrounding Arab states, and the process of creating that wider economic bloc undertaken.

US and European imperialism is not going to stand in the way of that, even if the ICJ rules that a genocide has been committed, a genocide we all know has been, and is being committed. Owen Jones, is correct that the size of this genocide, and its blatant nature cannot be hidden, and yet, the western media and politicians are attempting to hide it, and all opposition to it, in western countries is being savagely attacked. The fact that we are going to see continued protest at that genocide, at the same time that western governments continue to support it, arm it and act as attorney for it, means that those states will resort to ever more Bonapartist methods to oppose it. The sham that is bourgeois-democracy will continue to crumble as it defends its genocide.