Under Lock & Key

It seems unanimous that 2023 will be a year of recession. A recent report from the United Nations Committee on Trade And Development (UNCTAD) opens up with:

“The world is headed towards a global recession and prolonged stagnation unless we quickly change the current policy course of monetary and fiscal tightening in advanced economies.

“Supply-side shocks, waning consumer and investor confidence and the war in Ukraine have provoked a global slowdown and triggered inflationary pressures.”(1)

Before talking more about the report, let’s start with some basics. Recession is something that is unique to capitalism. It is a product of capitalism’s inherent contradictions. In previous economic systems, problems of getting resources to people were caused by things like plagues, floods, droughts and war. All things that we are still familiar with today. But there is no other economics system where people go hungry because of “market forces” preventing adequate production and distribution. This happens at all times in capitalism, but it will be affecting broader swaths of the population as we go into recession.

While the pandemic was not the cause of current imbalances, it certainly helped exacerbate them. Because we live in a service economy, Amerikans had a hard time spending all their money when things were shut down. They’re used to regular entertainment, movies, costly sporting events and clubs, having people prepare food for them and the infamous getting their hair done which they cried for during the early lockdowns. Having all that cash on hand, they turned to purchasing goods, which were harder to get due to supply chains slowing down. As the U.$. government continued to roll out benefits to Amerikans they wanted to buy more things and there were less things available to buy. Companies selling things increased prices, and the pressure for inflation began.

The ability to keep printing dollars (in the forms of COVID relief money and low interest loans) is backed by the fact that the dollar is the dominant currency for international trade. And this is backed by U.$. dominance of international monetary organizations and U.$. militarism shaping the world economy in its image.

Increasing Dollar Power

In 2022, the U.$. Federal Reserve got serious about addressing inflation as it began to surpass 8% year-over-year (when they’d like it closer to 2%). In recent months, the Fed has continued to increase the interest rates by .75% at each meeting they have every 4 to 6 weeks. They have indicated that they plan to continue to do so to bring down wages and inflation. One of the goals of the Fed here is to increase unemployment and cool down the job market by making it more expensive for companies to borrow money. Recently Amerikans have had their pick of jobs with many opportunities to increase their incomes. Under capitalism, this is somehow a bad thing. Contrast this with the MIM Platform for a socialist dictatorship of the proletariat, which guarantees employment (as well as free day care, medical care, public transport and college education).

The UNCTAD report highlights the even greater negative impacts of raising interest rates in the United $tates on the Third World proletariat. Yet, UNCTAD’s calls for, “Central banks in developed economies to revert course and avoid the temptation to try to bring down prices by relying on ever higher interest rates.” seems to be a pipe dream at this point. As we discussed in our recent article on the war in Ukraine, the U.$. dollar is the reserve currency, which means what the U.$. Fed does has huge implications for money everywhere.(2) And other imperialist countries have filed suit by increasing interest rates to protect their own currencies from more extreme devaluation. The British pound just hit it’s all-time low exchange rate to the dollar, putting them almost at 1-to-1.

While Amerikans complain about oil prices rising from inflation, war and supply chain issues, OPEC has announced it is cutting production, which will increase global oil prices. This is not helping the cause of the Fed and the U.$. government trying to mitigate inflation for Amerikans.

Relatedly, Saudi Arabia is one of the few countries the UNCTAD forecasts to exceed “normal” pre-COVID GDP trends next year. However, President Biden is striking back at Saudi Arabia threatening to cut off arms sales to the country saying their leadership role in OPEC is aiding Russia, who has been engaged in a proxy war with the United $tates for more than half a year now. Again, we are seeing increasing divisions among the global powers. Similar to the divisions that precluded WWI and WWII as discussed by author Richard Krooth.

In our review of Arms & Empire in ULK 78 we quoted Krooth’s explanation of the role of the strong dollar in bringing on the Great Depression:

“…making it the hardest currency in the world, pushing up its value vis-a-vis other currencies, but also making it inaccessible to nations that otherwise would have purchased from America. When other nations could not obtain dollars by exports to the U.S., obviously they could import nothing at all. And so U.S. exports tended to fall and had to be replaced with bilateral trade agreements. Up went U.S. unemployment when markets fell away and bilateral trade could not replace them. Then down came the dollar, the U.S. devaluing in 1933 in an attempt to stimulate the exports again. But, alas, it was too late. The depression was on, production was down, America was spreading crisis to Europe!” (p.119)

While Europe is not quite in the rough shape it was at that time, de-industrialization has been the trend, as Amerikan’s have had more and more say in how their economies are structured. As we discussed in our recent article on Ukraine, the Amerikans have been conspiring to prevent a close relationship between Germany and Russia. Now it seems that the sabotage attack on the Nordstream 2 pipeline that was built to pipe gas from Russia to Germany is a continuation of those efforts by the Amerikans.

Economic Policy and Economic Systems

The UNCTAD report makes a number of recommendations to mitigate the impacts of the coming recession on the exploited Third World nations of the world, who of course will suffer the most. Again, these problems are inherent to capitalism and cannot ultimately be avoided without replacing it with a socialist economy. However, there are economic policies that can improve, or even save, the lives of millions of people today under capitalism. But they would need to be a bit more radical than those suggested by UNCTAD.

The MIM Platform includes two policies to be enforced by international banking authorities under capitalism:

1. Elimination of international currency exchange rate fixing by governments.
2. Tying of exchange rates to a standard basket of goods.

The UNCTAD report points out exchange rate depreciation in just six months this year for a number of exploited countries:

In the current system, when the currency in Sri Lanka depreciates by 77.8% that means that day-to-day expenses for the proletariat of Sri Lanka are probably about doubled. If exchange rates were tied to a standard basket of goods, then this would no longer be the case. Prices of things like food and fuel would be stabilized across the globe in local prices. The impact on the imperialist system on the people of Ghana is explained in more depth in our accompanying article.

Importantly, the above two demands by the MIM Platform would affect the ability to pay off foreign debts as well. The UNCTAD report lists the percent of government revenues spent on external debt in a number of countries:

How the heck can a state spend 97% of its revenue on debts to finance capital (or even 25% for that matter) and ever be able to provide for and serve the people of that country? Exchange rates cannot fix these huge problems, which require debt forgiveness. But the current system of exchange rates does make these debt payments increase as exchange rates worsen as is happening now with a strengthening dollar (as most debts are held in dollars). Overall, the percentage of state revenue spent on servicing debts across the Third World has doubled over the last decade according to this UNCTAD report. As surplus value extraction becomes more difficult, interest payments on debt becomes a larger part of the net flow of wealth from the exploited nations to the imperialist countries.

There seems to be no momentum for MIM’s proposed radical changes among the international bourgeoisie at this time, which means the economy will continue to tighten and shrink. And under capitalism that means people will suffer and die. The system is madness. If production of goods ceases to be profitable, production ceases, it does not matter how many people are in need of those goods. But one of the inherent contradictions within capitalism is that the tendency to compete and increase production constantly undercuts the rate of surplus value extraction. As a result profits are always (generally) becoming harder to come by. The introduction of the Chinese proletariat back into the imperialist economy after 1976, but especially in the 1990s, by the capitalists who run that country brought a breath of fresh air to imperialism with a huge, new source of surplus value. By 2008, the rates of profit had once again become harder to maintain, and today those contradictions are playing out in the form of hot wars, trade wars, currency wars and realignments of major powers.

<sup>Notes: 1. United Nations Trade and Development Report 2022.
2. MIM(Prisons), April 2022, Ukraine: Imperialism in Crisis, Under Lock & Key 77.</sup>

The overturning of Roe v. Wade is a setback for the health of mostly the gender aristocracy, but also some who are truly gender oppressed in this country. In that sense, we view this issue similar to how we view the question of universal healthcare in the United $tates.(1) However, MIM’s gender analysis is more relevant in this struggle over abortion.

In a 1997 Congress Resolution on gender, MIM said:

“The gender aristocracy by definition is not oppressed in the gender strand. Concretely, imperialist country wimmin are not gender oppressed.

For this reason, if we put forward the gender demands of the imperialist country wimmin, like it or not, we are heading in a reactionary direction.”

To those who see the overturn of Roe v. Wade as a violent attack on themselves, on wimmin, we offer some food for thought. The abortion issue was made a hot button issue with a lot of money for the purpose of mobilizing voters. As long as we live under a bourgeois democracy, this will continue to happen. For all the rhetoric about “taking money out of politics”, nothing has happened, because we live in a profit-driven system. We must overthrow capitalism and patriarchy to meet the needs of the gender oppressed.

To those who oppose abortion, we repeat that we can eliminate abortion by sterilizing men after storing semen samples from them. If you aren’t willing to talk about such alternatives, that would save the lives of wimmin, then you are not pro-life you are pro-patriarchy.

The MIM Platform calls for mandatory sex education by age 11. Under the dictatorship of the proletariat, there will be free universal health care including unlimited access to PPE such as contraception. This, combined with the overall sense of purpose and community that will come with building a new society, we believe will significantly decrease the number of abortions, which have already been declining in this country.

More than laws and policies however, what will be a decisive point in the struggle against patriarchy under proletarian dictatorship is the mass raising of class struggle and mass campaigns against patriarchy in the superstructure (from material institutions to backward ideological culture). The key support of these policies of universal healthcare under socialism is having the masses learn in practice the new society they wish to implement free from male chauvinism amongst other things. This is one thing the Maoist practice in China had that marked a qualitative leap from the Soviet Union through implementing a cultural revolution.

Of course, some abortions are in response to medical conditions that we have no control over. Following the overturn of Roe v. Wade, Pew Research found that 57% of adults disapproved of the decision and 41% approved.(2) The survey also showed that only 8% believe abortion should be illegal in all cases. As the opposition to abortion came after big-money marketing over many decades, we can expect these numbers to shift quickly in favor of access to abortion with a shift in social relations under the dictatorship of the proletariat. In other words, mass collection of semen samples and sterilization of men probably won’t be necessary to resolve contradictions in a socialist world as it is today.

<sup>Notes:
1. MIM(Prisons), January 2010, Health Care Universe Excludes Most People, Under Lock & Key No. 12.
2. Pew Research, 6 July 2022, Majority of Public Disapproves of Supreme Court’s Decision To Overturn Roe v. Wade</sup>

In a recent online debate between two random “Marxist-Leninists” and two fascists, one of the self-described “Marxist-Leninists” stated that every country in the last 100 years has been socialist. The fascists are happy to parade such meaningless dribble as “Marxism” so that they can make Marxism look bad. With Obama’s election, white nationalist fear became expressed in many derogatory words, including “communism” and “Marxism,” with no sense of irony that they were accusing the number one enemy of the world’s people of being a communist.

What is common among “Marxists” in the First World is saying every country is socialist that says it is and has some form of state intervention in the economy. This superficial analysis has also helped muddy the water of what socialism is. And it allows the fascists to say that they share many of the goals and ideals of the self-described Marxists. In particular they both look to China as a positive model of how to run a country and they both think Amerikans and various First World European nations are being victimized by the current world system. The fact that many of these fascists have chauvinist anti-Chinese views and wish war against the social-imperialist CPC is of no matter. For MIM, the question of whether today’s China is socialist or social-imperialist is a dividing line question.

To understand what socialism is, MIM has long recommended The Chinese Road to Socialism by Wheelright and MacFarlane. For the history of the coup that overthrew socialism in China MIM distributed The Capitalist Roaders Are Still on The Capitalist Road. In 1986, MIM cadre Henry Park published “Postrevolutionary China and the Soviet NEP” comparing state capitalism in the early days of the Russian revolution to state capitalism after the coup in China. In 1988, Park published “The Political Economy of Counterrevolution in China: 1976-88”, which tied all of these subjects together through a Maoist framework and analyzes the failures of state capitalism in post-Maoist China.

Pao-Yu Ching’s From Victory to Defeat serves as a more up-to-date introduction to the topic of the differences between socialism and capitalism in the last 100 years of Chinese history. It is written as a sort of FAQ and provides a broad overview, while explaining the key concepts that allow us to differentiate between the two economic systems. As such, MIM(Prisons) recommends Pao-Yu Ching’s work as a solid starting place when exploring this topic. The topic of “What is socialism?” must be fully grasped by all communists.

It seems that Pao-Yu may disagree with the Maoist class analysis. In eir introduction ey states, “Today the living conditions of the working masses in imperialist countries have grown increasingly difficult.”(p.9) Ey then alludes to rising prices, rising debt and precarious work, none of which necessarily reflect worsening objective conditions. Without a recognition that these populations are parasitic on the working classes, this line leads to the politics of the fascists and social-fascist “Marxist-Leninists” mentioned above. It is also relevant to the question of revisionism in the formerly socialist countries who looked to emulate the lifestyles of Amerikans. Since this point is not taken up in the rest of the book we will not dwell on it here, but it remains the biggest problem with this work.

What is Socialism?

Many of our readers and those who are interested in what we have to say in general are still confused as to what socialism is for the reasons mentioned above. Ultimately it is defined differently by different people, and it is used politically rather than scientifically. Pao-Yu outlines what the most advanced example of socialism looked like quite nicely in eir short book, so we will just mention some key points here to help clarify things.

Socializing industry first required that the state took control of the means of production in the form of factories, supply lines, raw materials, etc. This is where many stop with their definition of socialism. Some other key things that Pao-Yu points out is that success was no longer measured in the surplus produced but rather on improvements in the production and overall running of the enterprise.(p.20) This recognizes that some will be more profitable in a capitalist sense, but that the nation benefits more when all enterprises are improving, not just the profitable ones. Another key point is that laborers were guaranteed a job that was paid by the state at a standard rate.(p.28) This eliminated labor as a commodity that you must sell on the open market. Commodities are at the heart of capitalism. Socialism is the the transition away from commodities, starting with the most important commodity of humyn labor.

The above only applied to a minority of the country, as the vast majority of China was a peasant population. It is only in recent years that the peasantry is now less than half the population. It is in the countryside where the capitalist roaders and the Maoists disagreed the most. Pao-Yu walks us through the different phases of the transition to socialism and how the principal contradiction shifted in each phase. Ey explains the contradiction amongst the countryside, where production was not owned collectively by the whole population, and the cities where it was. The disagreement with the capitalist roaders was a disagreement over the principal contradiction at the time, which they thought was the advanced social system (of socialism) with the backward productive forces (of small scale farming by peasants). To resolve this contradiction the capitalist roaders thought they must accelerate production, industrialize agriculture, and feed the industrialized cities with the surplus of that agricultural production. This focus on production is one of the key defining lines of revisionism.

While Marx taught us that the productive forces are the economic base that define humyn history and the superstructure, he also said the contradiction with the relations of production is what leads to revolutionary transformations of society. As Pao-Yu points out, learning from Mao Zedong, during these revolutionary periods is when the relations of production become primary, in order to unleash the productive forces that have become stagnant under the previous mode of production.(p.30) In other words peasants living under semi-feudalism in China pre-liberation were not improving their conditions. They needed to revolutionize how they related to each other, how they were organized, specifically the class relations, in order to move towards a new mode of production (socialism) that could meet their needs much better. Therefore Mao focused on education, theory, class struggle, culture, the people, instead of focusing on production, profitability, surplus, and wage incentives, as the capitalist roaders did. The Maoist path took the Chinese peasants through a gradual process of increasing collectivization through communes, which was quickly dismantled after the coup in 1976.

What is Democracy?

Another question those living in bourgeois democracies often ask is how you can have democracy with only one party, where people are purged for having the wrong political line? Pao-Yu makes the point well by explaining that in established bourgeois democracies you can have many parties and many candidates, because they all represent the same class.(p.48) This is the case because these countries are stable in their mode of production (capitalism). In the transition to a new economic system the political struggle is between two classes. In the case of capitalism transitioning to socialism, it is between the bourgeoisie and the proletariat (and their class allies on each side).

The bourgeoisie by definition is always competing amongst itself, so it cannot have one party represent all of their interests, except in extreme crises when fascism becomes viable. In the United $tates today, the left-wing of the bourgeoisie are represented by the democrats while the right-wing flock to the republicans. Even amongst these parties are different bourgeois factions fighting amongst each other. The proletariat however is united in it’s class interest, so there will be no need for multiple proletarian parties. There are many books that outline the components of socialist democracy where people select their representatives at each level of administration, where free speech and criticism are encouraged, where education is universal and free and where everyone is involved in studying theory and practice to shape the decisions that affect their day-to-day lives. It does not require having multiple political parties to choose from as bourgeois democracies do in their electoral farce.

What is China?

Pao-Yu covered China before, during, and after socialism so that the reader can better understand the differences. As such the book is a good introduction to the explanation of why China has not been on the socialist road since 1976. Ey touches on the loss of the guaranteed job, with the introduction of temporary workers, the ending of the right to strike and free expression among the workers, the ability of managers to start keeping the profits from the enterprises they oversee, the loss of universal medical care, and the focus on production for other nations, while importing the pollution of those consumer nations. Ey briefly documents the struggles of the workers to maintain control of the enterprises they once owned collectively. China is now a capitalist hell hole for the majority objectively and it does not matter whether the CPC has millions of cadre who believe the opposite subjectively.

The Global Economy

One point Pao-Yu makes that we have also stressed as being important, is the role of the proletarianization of the Chinese masses in saving global imperialism from crisis. When the imperialist economies were facing economic crisis in the 1970s, one third of the world’s population was not available to be exploited by the imperialist system. One of the laws of capitalism is its need to always expand. When China went capitalist, it opened up a vast population to exploitation and super-exploitation for the imperialists. This labor was the source of value that the imperialist system thrived off of by the mid 1980s until just recently.

Interestingly, Pao-Yu says that almost 30% of the Chinese population is petty bourgeoisie, owning (often multiple) investment properties and traveling around the world.(p.111) In a previous article we explained that we saw China as a proletarian country still despite its imperialist activities. We referred to Bromma’s research that stated China’s “middle class” was 12-15% of the population some years prior. It is interesting to hear that the Chinese petty bourgeoisie has reached the same size in absolute numbers as the Amerikan one. It would be interesting to compare the wealth of these two groups, we presume the Amerikans remain wealthier. Of course, China is still majority proletariat, while Amerika is almost completely bourgeoisified, so the class interests of these nations overall remain opposed to one another. But we will rarely hear the proletarian voices from China until a new proletarian party rises there.

The housing market is one example of how China has emulated the United $tates. Investing in properties has become an important way for the new petty bourgeoisie in China to accumulate wealth without working. Just last week, the Chinese investment firm Evergrande made headlines when it became public knowledge that they would not be able to pay the billions of dollars they owe. Evergrande has significant backing from Amerikan finance capital, as is true for the Chinese economy in general. Therefore the collapse of the Chinese housing market could have real ripple effects in the global economy.

The fact that real estate investment firms exist in China, and that they are defaulting on hundreds of billions of dollars owed, is really all you need to know to see that the economy is oriented towards profit and not people. Things like inflation and bubbles and stock markets and speculation just didn’t exist during the Maoist era. The reintroduction of these things for the last four decades destroyed the progress in class struggle in China long ago.