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Neoclassical Imperialism

Recently I had a series of exchanges regarding a column on Israel and Syria that demonstrated to me that there still is a need for further understanding of neoclassical economics even after the release of Michael Hudson’s essential volume Killing the Host. Paul Craig Roberts has previously written a brilliant review of Hudson’s book but perhaps an analysis from the angle of explaining the imperial nature of neoclassical economics is in order.

First, we need to define just what exactly is the matter we discuss. Perhaps the readers have had a discussion previously wherein you have had Keynesian welfare state policies repudiated in the name of “Marxism”. The typical radical today will respond that we cannot settle for Keynesian economics and instead must have socialism.

This line of discussion is, in all frankness, one of the silliest arguments ever made in regards to economics. It totally misrepresents the relationship of John Maynard Keynes’ theoretical propositions regarding deficit spending and full employment to Marx’s labor theory of value and his critique of political economy. The Chinese Communists today work to integrate Keynes into their economic and political culture so to actualize a truly socialist system.

What I offer here is based on the essential textbook by Richard Wolff and Stephen Resnick on economic theory. We need to grasp that Keynes was a structuralist thinker whereas the classical tradition was humanist, meaning individualist. Further, the emphasis in Keynes is on macroeconomic while neoclassical is microeconomic. The results from those two key differences are where Marx comes into the picture. Das Kapital as a treatise on pre-Keynesian economic thinking moves from the micro to macro level, particularly in the infamously complex first chapter that is a tour of how commodities impact human interactions. What Marx does is bring a definite political orientation, a certain imperative, to the discussion that is otherwise missing in both Keynes and neoclassical thinking, emphasizing the centrality of the working class as the vanguard of historical development. Paul Sweezy dedicated part of his own scholarship to reconciling Marxism and Keynsian thought at a time when both were still in the mainstream last century. Louis Althusser at almost the same time in France was involved in a polemical war over the question of humanism in what was then called ‘Young Marx’. The neoclassical epoch, which began just a few years after those two discussions, was instituted by the monetarist views of Milton Friedman. However, there is room for a vast spectrum of thinking even within the monetarist perspective, exemplified by the writings of Michael Polanyi, brother of Karl, who proposed a synthesis of both trains of thought under the title Full Employment and Free Trade, published in 1945 and highly acclaimed by Paul Craig Roberts.screen-shot-2016-09-15-at-10-12-34-am

All these things need to be understood before moving forward. Keynesian economics proposes a parliamentary democratic socialism that would cause the state to whither away to what Marx called pure communism. The question of colonialism becomes optional under a Keynesian paradigm if the state in question has the opportunity to transition away from finite natural resources and replace them with renewable ones. Indeed, the great failing of the twentieth century welfare states was colonialism in relations to fossil fuel extraction, perhaps most notably in Africa and Southeast Asia. The question of colonialism in the 21st century could very well be defined by the ability of renewable energy industries to devise methods for obtaining raw materials (rare earth minerals, lithium, et cetera) used in renewable energy devices (solar panels, electric cars, household powering batteries, et cetera).

When the Bolsheviks came to power, they had no idea that they would actually survive past November 1917, let alone be in control of a treasury. As soon as the German revolutionary period and the civil war ended, they quickly realized that they would actually need to govern a landmass spanning multiple time zones and packed full of various minorities who could and would at various times feud openly with each other. On top of this, a good majority of the population made up an illiterate, superstitious peasantry that were inclined to chauvinism and had never seen an electric light bulb. With this in mind, Lenin, Stalin, Bukharin, and notably not the elitist, condescending Trotsky agreed that they would build a welfare state mimicking the German state socialist model created by Bismarck and Rathenau. War communism, an effort to combine military requisitioning with a leapfrogging effort to bring the people into pure communism, was a tragic failure wherein the Bolsheviks were crazy enough to try to abolish money. The NEP was a return of the money commodity combined with an effort to return to normalcy. This is important to grasp because there almost never has been a real “socialist” system that is different from either Keynes or Stalinist policies and the delusion otherwise needs to be abandoned.

All these points will seem like nothing new to a typical Marxist. However, there has developed in the advent of the BRICS nations and the Shanghai Cooperation Organization that presents a less Manichean vision of capitalism. When the Chinese go to Africa and build roads, bridges, and hospitals in the host country in exchange for natural resources, that is far less exploitative than the behavior of the West in the last century. We are in no place to judge here. Further, by sowing positive seeds of development, we see a Chinese foreign policy that is far less romantic than the funding of revolutions but certainly as beneficial.

The basic view of neoclassical thought is that we must allow for the most markets possible in the world. To this extent, we see neoclassical politicians support privatizing infrastructure, busting unions, and monetizing all aspects of human relations possible. Perhaps it bears mentioning here that the basis of the neoclassical economic thought are John Nash’s game theory equations, a set of mathematical formulas that fail to take into account the basic elements of economics (value, profits, supply and demand, competition, regulatory oversight, et cetera) and therefore are premised on a utopian notion of post-capitalist society. This integration of the game theory equations into the underlying structure of political economy forever altered the nature of capitalism, making it different than the Gilded Age and Victorian systems that Marx and Lenin wrote about. Prior to this integration of game theory, the study of economics did include math but in a way that was typical of social sciences like sociology or anthropology. The inclusion of game theory in the economics discipline forever changed its orientation towards a paradigm that would be akin to any mathematical discipline, failing to account for the humanitarian elements that would be normally be required of such analysis. As a result, neoclassical economics is an imperial project where the search for markets becomes internationalized and is done on the behalf of the 1%.

However, due to the intentions of the 1%, this post-capitalist society would not be a socialist or pure communist one, it would be a neo-feudal rentier economy. As such, we find ourselves in a situation where class warfare is not a fight for traditional leftist goals of socialism as much as preventing a step backwards into feudalism, at which point we see as potential allies the Libertarian movement’s center and left wings. Hudson is very clear about this in his book, making it all the more vital to read.

However, because neoclassical politicians in the Democratic Party (neoliberals) and the Republican Party (neoconservatives) do not believe in truly free markets and instead create these markets only to benefits a select group of financiers on Wall Street, we are discussing an imperial project with a new form of aristocracy, made up of 1% of the human population. Neocons believe that the way to build the most markets possible is by attacking the Levant directly, beginning with Palestine and culminating with conquest of Iran. Neoliberals prefer a northern approach, attacking Russia through sanctions and military encirclement before going south into China and the Levant.

In this sense, neoclassical economics has re-written the contours of class struggle in a fashion that makes the old paradigms of labor union organization and socialism not as much obsolete as antiquated and even class collaborationist. Dr. Hudson’s student David Graeber, the radical anthropologist and friend of the Industrial Workers of the World, was not being facetious when he created the Occupy Wall Street slogan “We Are the 99%”. Instead, it was a brilliant summary of how wide the pool of the proletariat has become. It means that a petit bourgeoisie has ceased to exist and instead small business owners, managers, and franchise owners are now proletarians also. By contrast, the 1% is such a limited group we can quite literally list their names in a column of a newspaper.

When we see a public utility like a school being privatized, that is an act of internal colonization by Wall Street that is taking control of a public resource for private gain, creating a new market to generate profit. But this engine desiring markets is ever-expanding, meaning that these financiers want to create new markets in other countries. In this sense they have begun to colonize the European Union over the past 40 years and now have their eyes set on the Levant. The events in Syria demonstrate a collision between Wall Street and the resistant Baathist government. If there be a genuine revolutionary element in Syria, that is certainly understandable. But in a geopolitical sense they lack the backing of a state power that is resistant to this 1%. Whether it is right and just that China and Russia are aligned with Assad as opposed to his opposition is unfortunately ancillary to the fact that the 1% are circling the Syrian polity like a pack of vultures. Presidents Putin and Xi, despite their shortcomings, have positioned themselves as opponents of the 1% through their fiscal policies while Obama has consolidated their stranglehold of the international economy. It bears mentioning also that, given the history of Soviet outreach to the postcolonial world, the notion of Russian “imperialism” in its sphere of influence being somehow akin to American gunboat diplomacy is a laughable claim. No, the Syrian government invited the Russians to maintain a naval base in that country just as the Cubans did during the Cold War.

Russia is not like America, it has a very different political system due to the presence of a Communist Party that holds 20% of the State Duma seats, 2 Governorships, and 460 regional legislature seats. This Communist Party embraced a notion of left wing Russian nationalism at the time when Wall Street turned the country into a colony. In this sense, while National Bolshevism can have chauvinist tendencies, it also is an ideology descended from the logic of national liberation from colonialism. One who voices more opposition to Putin or Xi than Obama thus gives comfort to the bourgeoisie while sowing discord amongst a 99% that needs unity more than ever, not unlike how certain elements of the Old Left gave active aid and comfort to militant anti-Communism, case and point being when Norman Thomas of the old Socialist Party was a member of the influential American Friends of Vietnam. Putin has on the one hand an element that wishes to integrate Russia into the Western economic order and keep America on top as a global hegemon, with perhaps Sergey Lavrov as the most prominent member of this faction known as the Atlanticists. On the other hand Putin, whatever his flaws, wishes to decentralize worldwide power in exchange for multi-polar regional leadership where the Russians and Chinese would steer their spheres of influence towards a more peaceful world order that is roughly akin to the original aims of the United Nations after World War II. We have no dialogue about those sorts of things in our political discourse, instead by default notions of America as a worldwide leader are bandied about and any power pushing for decentralized regionalism is described as “imperialists”.

What we speak of is a case of global warfare that has created a tragedy. The fact there is a divide in the Syrian people of this nature is due to our failure in the West to destroy the 1% over the past decade. In order to provide genuine support to the rebels, as well as to many other groups facing the onslaught of the 1%, such as the Palestinians, we Americans specifically must destroy this 1% by nationalizing the banking system and removing the income cap on Social Security that allows for such accumulations of wealth while instituting a progressive tax on all corporations like Apple and individuals like Mitt Romney that utilize foreign tax shelters and offshore bank accounts. This is the nature of genuine solidarity with any resistance movement in the postcolonial world today and not a delusional imitation of the paradigm created in the Spanish Civil War. We must, as Marx and Engels said, expropriate the expropriators, yet we must recognize that the expropriators are just the select 1% of the population and not anyone else. If we mean to create solidarity, we must do so through the generation of a source of capital that is autonomous from Wall Street. If you want to help Syria get rid of the Baathist leadership, get them a funding source in a treasury that is not tied to the 1%. If you want to free the Palestinians, make sure that any government they would form is not beholden to what Hudson calls the FIRE industry, a monopoly-cartel of Finance, Insurance, and Real Estate. In my own personal view, I think any political system should not be recreating monarchical trends by having family members take up the baton when a paterfamilias drops it. But then again, I think I prefer to focus my energies on those trends within the American political system than in Asian ones that I have very little direct impact on.

Oh, and one more thing. Abraham Lincoln was as awful as Putin is claimed to be. The acclaim given him is naive at best and racist in objective senses. The glory given to Lincoln, particularly by certain inbred lefties, is actually due John Brown, the abolitionist who did more to end slavery than Lincoln ever wanted to. The Popular Front-era delusions about the Great Emancipator are simply absurd. Here we have a man who said he would preserve slavery if it would preserve the union and was documented calling the ambassador from Haiti obscene racist pejoratives. What happened in the Civil War was quite clearly what he did not want, the abolitionist movement wrestled control of the country from him and turned a war over federalism into a battle over slavery. It is vital to understand that, had he been able to, Lincoln would have never allowed for these developments. While I appreciate the criticism of the recent film FREE STATE OF JONES, it does a remarkable job showing that the Union did not want to help a war against slavery. This is articulated clearly by the refusal of the Union generals to send aid and reinforcements to the multi-ethnic commune fostered around Newton Knight and freed slaves that poses a challenge to the feudal agrarian plantation aristocracy.

I mention this because quite a few unrepentant Marxist Manicheans in our world today would say it is class collaborationist to build a united front between Greens and Libertarians. But if they at the same time are willing to make excuses for the glory of Lincoln, justifying his actions as part of a “bourgeois revolution” while conveniently overlooking the actual proletarian revolution of Black Reconstruction, brilliantly rendered by no less than W.E.B. Du Bois, then we are dealing with what Mao would have called a contradiction.

In closing, buy Killing the Host to get a better grasp on modern economics. It is one of the finest books of the decade and worth your time.

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Andrew Stewart is a documentary film maker and reporter who lives outside Providence.  His film, AARON BRIGGS AND THE HMS GASPEE, about the historical role of Brown University in the slave trade, is available for purchase on Amazon Instant Video or on DVD.

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